<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JULY 3, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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
incorporation or organization identification number)
1390 ENCLAVE PARKWAY, HOUSTON, TEXAS 77077-2099
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 584-1390
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Common Stock, $1.00 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
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 report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock of the registrant held by
stockholders who were not affiliates (as defined by regulations of the
Securities and Exchange Commission) of the registrant was approximately
$10,936,571,000 at September 10, 1999 (based on the closing sales price on the
New York Stock Exchange Composite Tape on September 10, 1999, as reported by The
Wall Street Journal (Southwest Edition)). At September 10, 1999, the registrant
had issued and outstanding an aggregate of 329,726,343 shares of its common
stock.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the proxy statement to be filed not later than 120 days after July
3, 1999 are incorporated by reference into Part III.
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
PART I.
<S> <C>
Item 1. Business ............................................................................................ 1
Item 2. Properties .......................................................................................... 6
Item 3. Legal Proceedings ................................................................................... 7
Item 4. Submission of Matters to a Vote of Security Holders ................................................. 7
Item 4A. Executive Officers of the Registrant ................................................................ 8
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters ............................... 9
Item 6. Selected Financial Data ............................................................................. 10
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ............... 11
Item 8. Financial Statements and Supplementary Data ......................................................... 18
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ................ 34
PART III.
Item 10. Directors and Executive Officers of the Registrant .................................................. 34
Item 11. Executive Compensation .............................................................................. 34
Item 12. Security Ownership of Certain Beneficial Owners and Management ...................................... 34
Item 13. Certain Relationships and Related Transactions ...................................................... 34
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ..................................... 35
</TABLE>
i
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PART I
ITEM 1. BUSINESS
OVERVIEW
Sysco Corporation (together with its subsidiaries and divisions collectively
referred to as "SYSCO" or the "company"), founded in 1969, is the largest North
American distributor of food and food related products to the foodservice or
"food-prepared-away-from-home" industry. SYSCO provides its products and
services to approximately 300,000 customers, including restaurants, healthcare
and educational facilities, lodging establishments and other foodservice
customers.
SYSCO, which was formed when the stockholders of nine companies exchanged their
stock for SYSCO common stock, commenced operations in March 1970. Since its
formation, the company has grown from $115 million to over $17 billion in annual
sales both through internal expansion of existing operations and acquisitions of
formerly independent companies. Through the end of fiscal 1999, SYSCO had
acquired fifty-four companies or divisions of companies.
In July 1999, the company bought Newport Meat Co. Inc., a distributor in
southern California of fresh aged beef and other meats, seafood and poultry
products. In August 1999, the company acquired Doughtie's Foods, Inc., a food
distributor located in Virginia and bought substantially all of the assets of
Buckhead Beef company, Inc., a distributor located in Georgia of custom-cut
fresh steak and other meats, seafood and poultry products.
SYSCO is organized under the laws of Delaware. The address and telephone number
of the company's executive office are 1390 Enclave Parkway, Houston, Texas
77077-2099, (281) 584-1390. As of July 3, 1999 SYSCO employed approximately
35,100 full-time employees.
CUSTOMERS AND PRODUCTS
The foodservice industry consists of two major customer segments - "traditional"
and "chain restaurant." Traditional foodservice customers include restaurants,
hospitals, schools, hotels and industrial caterers. SYSCO's chain restaurant
customers include regional pizza and national hamburger, chicken and steak chain
operations.
Services to the company's traditional foodservice and chain restaurant customers
are supported by similar physical facilities, vehicles, materials handling
equipment and techniques, and administrative and operating staffs.
The traditional foodservice segment includes businesses and organizations which
prepare and serve food to be eaten away from home. Products distributed by the
company include a full line of frozen foods, such as meats, fully prepared
entrees, fruits, vegetables and desserts, and a full line of canned and dry
goods, fresh meats, imported specialties and fresh produce. The company also
supplies a wide variety of nonfood items, including paper products such as
disposable napkins, plates and cups; tableware such as china and silverware;
restaurant and kitchen equipment and supplies; medical and surgical supplies;
and cleaning supplies. SYSCO distributes both nationally-branded merchandise and
products packaged under its own private brands.
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The company believes that prompt and accurate delivery of orders, close contact
with customers and the ability to provide a full array of products and services
to assist customers in their foodservice operations are of primary importance in
the marketing and distribution of products to the traditional customer segment
of the foodservice industry. SYSCO offers daily delivery to certain customer
locations and has the capability of delivering special orders on short notice.
Through its more than 10,600 sales, marketing and service representatives, the
company keeps informed of the needs of its customers and acquaints them with new
products. SYSCO also provides ancillary services relating to its foodservice
distribution such as providing customers with product usage reports and other
data, menu-planning advice, contract services for installing kitchen equipment,
installation and service of beverage dispensing machines and assistance in
inventory control.
No single traditional foodservice customer accounted for as much as 5% of
SYSCO's sales for its fiscal year ended July 3, 1999. Approximately 4.5% of
traditional foodservice sales during fiscal 1999 resulted from a process of
competitive bidding. There are no material long-term contracts with any
traditional foodservice customer that may not be cancelled by either party at
its option.
The company's SYGMA Network operations specialize in customized service to chain
restaurants, which service is also provided to a lesser extent by many of the
company's traditional foodservice operations. SYSCO's sales to the chain
restaurant industry consist of a variety of food products necessitated by the
increasingly broad menus of chain restaurants. The company believes that
consistent product quality and timely and accurate service are important factors
in the selection of a chain restaurant supplier. One chain restaurant customer
(Wendy's International, Inc.) accounted for 5.3% of SYSCO's sales for its fiscal
year ended July 3, 1999. There are no material long-term contracts with any
chain restaurant customer that may not be cancelled by either party at its
option.
SYSCO does not record sales on the basis of the type of foodservice industry
customer, but based upon available information, the company estimates that sales
by type of customer during the past three fiscal years were as follows:
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
Type of Customer 1999 1998 1997
---------------- ------ ------ -----
<S> <C> <C> <C>
Restaurants 64% 62% 61%
Hospitals and nursing homes 10 11 11
Schools and colleges 7 7 7
Hotels and motels 5 5 6
Other 14 15 15
--- --- ---
Totals 100% 100% 100%
=== === ===
</TABLE>
SOURCES OF SUPPLY
SYSCO estimates that it purchases from thousands of independent sources, none of
which individually account for more than 5% of the company's purchases. These
sources of supply consist generally of large corporations selling brand name and
private label merchandise and independent private label processors and packers.
Generally, purchasing is carried out on a decentralized basis through centrally
developed purchasing programs (see "Corporate Headquarters' Services and
Controls" below) and direct purchasing programs established by the company's
various operating subsidiaries and divisions.
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The company continually develops relationships with suppliers but has no
material long-term purchase commitments with any supplier.
CORPORATE HEADQUARTERS' SERVICES AND CONTROLS
SYSCO's corporate staff, consisting of approximately 800 persons, provides a
number of services to the company's operating divisions and subsidiaries. These
persons possess experience and expertise in, among other areas, accounting and
finance, cash management, data processing, employee benefits, engineering and
insurance. Corporate also provides legal, marketing and tax compliance services
as well as warehousing and distribution services which provide assistance in
space utilization, energy conservation, fleet management and work flow.
The corporate staff also administers a consolidated product procurement program
engaged in the task of developing, obtaining and assuring consistent quality
food and nonfood products. The program covers the purchasing and marketing of
SYSCO(R) brand merchandise, as well as private label and national brand
merchandise, encompassing substantially all product lines. The company's
operating subsidiaries and divisions may participate in the program at their
option.
CAPITAL IMPROVEMENTS
To maximize productivity and customer service, the company continues to
construct and modernize its distribution facilities. During fiscal 1999, 1998
and 1997, approximately $287,000,000, $259,000,000 and $211,000,000,
respectively, were invested in facility expansions, fleet additions and other
capital asset enhancements. The company estimates its capital expenditures in
fiscal 2000 should be in the range of $230,000,000 to $250,000,000. During the
three years ended July 3, 1999, capital expenditures have been financed
primarily by internally generated funds, the company's commercial paper program
and bank borrowings.
EMPLOYEES
As of July 3, 1999, SYSCO had approximately 35,100 full-time employees, 22% of
whom are represented by unions, primarily the International Brotherhood of
Teamsters. Contract negotiations are handled locally with monitoring and
assistance by the corporate staff. Collective bargaining agreements covering
approximately 33% of the company's union employees expire during fiscal 2000.
SYSCO considers its labor relations to be satisfactory.
COMPETITION
The business of SYSCO is competitive with numerous companies engaged in
foodservice distribution. While competition is encountered primarily from local
and regional distributors, a few companies compete with SYSCO on a national
basis. The company believes that, although price and customer contact are
important considerations, the principal competitive factor in the foodservice
industry is the ability to deliver a wide range of quality products and related
services on a timely and dependable basis. Although SYSCO has approximately 10%
of the foodservice industry market in the United State and Canada, SYSCO
believes, based upon industry trade data, that its sales to the
"food-prepared-away-from-home" industry are the largest of any foodservice
distributor. While adequate industry statistics are not available, the company
believes that in most instances its local operations are among the leading
distributors of food and related nonfood products to foodservice customers in
their respective trading areas.
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GOVERNMENT REGULATION
As a marketer and distributor of food products, SYSCO is subject to the Federal
Food, Drug and Cosmetic Act and regulations promulgated thereunder by the U.S.
Food and Drug Administration ("FDA"). The FDA regulates manufacturing and
holding requirements for foods through its current good manufacturing practice
regulations, specifies the standards of identity for certain foods and
prescribes the format and content of certain information required to appear on
food product labels. For certain product lines, SYSCO is also subject to the
Federal Meat Inspection Act, the Poultry Products Inspection Act, the Perishable
Agricultural Commodities Act and regulations promulgated thereunder by the U.S.
Department of Agriculture ("USDA"). The USDA imposes standards for product
quality and sanitation including the inspection and labeling of meat and poultry
products and the grading and commercial acceptance of produce shipments from the
company's suppliers. The company and its products are also subject to state and
local regulation through such measures as the licensing of its facilities,
enforcement by state and local health agencies of state and local standards for
the company's products and regulation of the company's trade practices in
connection with the sale of its products. SYSCO's facilities are generally
inspected at least annually by state and/or federal authorities. These
facilities are also subject to inspections and regulations issued pursuant to
the Occupational Safety and Health Act by the Department of Labor, which require
the company to comply with certain manufacturing, health and safety standards to
protect its employees from accidents and to establish hazard communication
programs to transmit information on the hazards of certain chemicals present in
products distributed by the company.
The company is also subject to regulation by numerous federal, state, and local
regulatory agencies, including but not limited to the U.S. Department of Labor,
which sets employment practice standards for workers, and the U.S. Department of
Transportation, which regulates transportation of perishable and hazardous
materials and waste, and similar state and local agencies.
The company's distribution facilities have tanks for the storage of diesel fuel
and other petroleum products which are subject to laws regulating such storage
tanks. Other federal, state and local provisions relating to the protection of
the environment or the discharge of materials do not materially impact the
company's use or operation of its facilities.
Compliance with these laws has not and is not anticipated to have a material
effect on the capital expenditures, earnings or competitive position of SYSCO.
GENERAL
Except for the SYSCO(R) trademark, the loss of which would have a materially
adverse effect on the operations or earnings of the company, the company does
not own or have the right to use any patents, trademarks, licenses, franchises
or concessions.
SYSCO is not engaged in material research activities relating to the development
of new products or the improvement of existing products. In fiscal 1996, the
company completed an internally developed project that involved the redesign and
development of the computer operating systems through which SYSCO's operating
companies will process, control and report the results of all transactions.
Installation will be substantially complete by December 1999 and such
installation is expected to provide the basis for business expansion over the
next several years without having a material adverse effect upon the business or
operations of the company.
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Sales of the company do not generally fluctuate on a seasonal basis, and
therefore, the business of the company is not deemed to be seasonal.
As of September 10, 1999 SYSCO operates 97 facilities within the United States,
of which 76 are distribution facilities, and three in Canada, of which two are
distribution facilities.
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ITEM 2. PROPERTIES
The table below shows the number of distribution facilities and self-serve
centers occupied by SYSCO in each state or province and the aggregate cubic
footage devoted to cold and dry storage as of September 10, 1999.
<TABLE>
<CAPTION>
Number of Cold Storage Dry Storage
Facilities (Thousands (Thousands
Location and Centers Cubic Feet) Cubic Feet)
-------- ----------- ------------ -----------
<S> <C> <C> <C>
Alabama 2 1,739 2,616
Alaska 1 246 317
Arizona 1 1,485 3,410
Arkansas 1 1,139 3,157
California 11 11,364 17,082
Colorado 4 2,759 5,176
Connecticut 1 2,489 2,737
Florida 6 13,027 16,469
Georgia 3 4,433 6,717
Idaho 1 998 1,154
Illinois 3 3,603 5,050
Indiana 1 1,590 1,832
Iowa 1 687 1,215
Kansas 1 2,735 3,793
Kentucky 1 2,330 2,648
Louisiana 1 2,577 3,254
Maine 1 1,395 1,954
Maryland 4 6,309 6,836
Massachusetts 2 7,638 7,739
Michigan 3 4,976 8,102
Minnesota 1 3,636 3,063
Mississippi 1 2,125 2,690
Missouri 1 1,128 1,348
Montana 1 2,043 1,830
Nebraska 1 2,092 2,618
New Jersey 3 2,121 4,185
New Mexico 1 1,856 1,855
New York 6 4,760 7,759
North Carolina 2 2,351 4,004
Ohio 4 6,829 11,663
Oklahoma 1 921 1,848
Oregon 2 3,431 3,458
Pennsylvania 4 6,048 7,027
South Dakota 1 3 166
Tennessee 4 6,561 9,963
Texas 6 10,803 15,057
Utah 2 1,810 1,845
Virginia 4 2,758 3,022
Washington 1 2,549 3,240
Wisconsin 2 4,083 3,782
British Columbia, Canada 2 1,426 1,855
Ontario, Canada 1 941 1,030
--- ------- -------
Total 100 143,794 194,566
=== ======= =======
</TABLE>
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SYSCO owns approximately 298,000,000 cubic feet of its distribution facilities
and self-serve centers (or 88.2% of the total cubic feet), and the remainder is
occupied under leases expiring at various dates from fiscal 2000 to 2009,
exclusive of renewal options. Certain of the facilities owned by the company are
either subject to mortgage indebtedness or industrial revenue bond financing
arrangements totaling $44,369,000 at July 3, 1999. Such mortgage indebtedness
and industrial revenue bond financing arrangements mature at various dates to
2026.
The company owns its approximately 188,000 square foot headquarters office
complex in Houston, Texas and leases approximately 100,000 square feet of
additional office space in Houston, Texas.
Facilities in Salt Lake City, Utah, New Orleans, Louisiana and Portland, Maine
(which in the aggregate account for approximately 4% of fiscal 1999 sales) are
operating near capacity and the company is currently constructing expansions for
these distribution facilities.
As of September 10, 1999 SYSCO's fleet of approximately 6,460 delivery vehicles
consists of tractor and trailer combinations, vans and panel trucks, most of
which are either wholly or partially refrigerated for the transportation of
frozen or perishable foods. The company owns approximately 91% of these vehicles
and leases the remainder.
ITEM 3. LEGAL PROCEEDINGS
SYSCO is engaged in various legal proceedings which have arisen but have not
been fully adjudicated. These proceedings, in the opinion of management, will
not have a material adverse effect upon the consolidated financial position or
results of operations of the company when ultimately concluded.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the executive officers of SYSCO, each of whom holds the office
opposite his or her name below until the meeting of the Board of Directors
immediately preceding the next Annual Meeting of Stockholders or until his or
her successor has been elected or qualified. Executive officers who are also
directors serve as directors until the expiration of their terms which, with
respect to each individual, occurs at the Annual Meeting of Stockholders in the
calendar year specified in parentheses below or until their successors have been
elected and qualified.
<TABLE>
<CAPTION>
SERVED IN THIS
NAME OF OFFICER CAPACITY POSITION SINCE AGE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John F. Woodhouse Senior Chairman of the Board 1999 68
of Directors and Chairman of the
Executive Committee (2001)
Bill M. Lindig Chairman and Chief 1999, 1995 62
Executive Officer and & 1983
Director (1999)
Charles H. Cotros President and Chief Operating 1999, 1995 62
Officer and Director (2000) & 1985
Larry J. Accardi Senior Vice President, Operations 1999 50
Kenneth J. Carrig Senior Vice President, 1999 42
Administration
O. Wayne Duncan Senior Vice President, 1995 61
Operations
George L. Holm Senior Vice President, Operations 1996 43
Thomas E. Lankford Executive Vice President, 1999 51
Merchandising & Multi-Unit Sales
Gregory K. Marshall Senior Vice President 1993 52
Diane Day Sanders Vice President and Treasurer 1994 50
Richard J. Schnieders Executive Vice President, 1999 & 1997 51
Foodservice Operations and Director
(2000)
John K. Stubblefield, Jr. Senior Vice President, 1993 & 1999 53
Finance and Administration
Arthur J. Swenka Senior Vice President, 1995 & 1994 62
Operations and Director (2000)
James D. Wickus Senior Vice President, 1995 56
Operations
</TABLE>
Each of the executive officers listed above has been employed by the company
throughout the past five years except Kenneth J. Carrig. Before joining SYSCO,
Mr. Carrig was Vice President of Human Resources for Continental Airlines, Inc.
from 1995 to 1997 and prior to that he was Senior Director of the Southwest
Region for Pepsi Co from 1987 to 1995.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The principal market for SYSCO's Common Stock is the New York Stock Exchange.
The table below sets forth the high and low sales prices per share for SYSCO's
Common Stock as reported on the New York Stock Exchange Composite Tape and the
cash dividends paid for the periods indicated, adjusted for the 2-for-1 stock
split effected by a 100% stock dividend paid on March 20, 1998.
<TABLE>
<CAPTION>
Common Stock Prices Dividends
-------------------------------- --------------
High Low Paid Per Share
---------- --------- --------------
<S> <C> <C> <C>
Fiscal 1998
First Quarter $ 19-23/32 $ 17-3/32 $0.075
Second Quarter 23-13/32 17-29/32 0.075
Third Quarter 26-3/4 21-5/8 0.085
Fourth Quarter 26-3/4 21-7/8 0.090
Fiscal 1999
First Quarter $ 25-15/16 $ 19-15/16 $0.090
Second Quarter 28-5/8 23-1/8 0.090
Third Quarter 29-7/8 24-15/16 0.100
Fourth Quarter 31-7/8 25 0.100
</TABLE>
The number of record owners of SYSCO's Common Stock as of July 3, 1999 was
15,485.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------------------
1999
(53 WEEKS) 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS EXCEPT FOR SHARE DATA)
<S> <C> <C> <C> <C> <C>
Sales......................... $17,422,815 $15,327,536 $14,454,589 $13,395,130 $12,118,047
Earnings before income
taxes....................... 593,887 532,493 495,955 453,943 417,618
Income taxes.................. 231,616 207,672 193,422 177,038 165,794
----------- ----------- ----------- ----------- -----------
Earnings before cumulative
effect of accounting
change...................... 362,271 324,821 302,533 276,905 251,824
Cumulative effect of
accounting change........... -- (28,053) -- -- --
----------- ----------- ----------- ----------- -----------
Net earnings........ 362,271 296,768 302,533 276,905 251,824
=========== =========== =========== =========== ===========
Earnings before accounting
change:
Basic earnings per share.... 1.09 0.95 0.85 0.76 0.69
Diluted earnings per
share.................... 1.08 0.95 0.85 0.75 0.68
Cumulative effect of
accounting change:
Basic earnings per share.... -- (0.08) -- -- --
Diluted earnings per
share.................... -- (0.08) -- -- --
Net earnings:
Basic earnings per share.... 1.09 0.87 0.85 0.76 0.69
Diluted earnings per
share.................... 1.08 0.86 0.85 0.75 0.68
Cash dividends per share...... 0.38 0.33 0.28 0.24 0.20
Total assets.................. 4,096,582 3,780,189 3,433,823 3,319,943 3,097,161
Capital expenditures.......... 286,687 259,353 210,868 235,891 201,577
Long-term debt................ 997,717 867,017 685,620 581,734 541,556
Shareholders' equity.......... 1,427,196 1,356,789 1,400,472 1,474,678 1,403,603
----------- ----------- ----------- ----------- -----------
Total
capitalization.... 2,424,913 2,223,806 2,086,092 2,056,412 1,945,159
=========== =========== =========== =========== ===========
Ratio of long-term debt to
capitalization.............. 41.1% 39.0% 32.9% 28.3% 27.8%
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
SYSCO provides marketing and distribution services to foodservice customers
and suppliers throughout the contiguous United States, Alaska and western and
central Canada. The company intends to continue to expand its market share
through profitable sales growth and constant emphasis on the development of its
consolidated buying programs. The company also strives to increase the
effectiveness of its marketing associates and the productivity of its
warehousing and distribution activities. These objectives require continuing
investment. SYSCO's resources include cash provided by operations and access to
capital from financial markets.
SYSCO's operations historically have produced significant cash flow. Cash
generated from operations is first allocated to working capital requirements;
investments in facilities, fleet and other equipment required to meet customers'
needs; cash dividends; and acquisitions fitting within the company's overall
growth strategy. Any remaining cash generated from operations also is applied
toward a portion of the cost of shares repurchased in the buyback program, while
the remainder of the cost may be financed with additional long-term debt.
SYSCO's initial share repurchase program was used primarily to offset shares
issued under various employee benefit and compensation plans. The company
significantly accelerated the repurchase program beginning in February 1996. The
share repurchase program reduced outstanding shares and increased earnings
per share. The long-term debt to total capitalization target ratio was increased
from a range of 30% to 40% to a range of 35% to 40% due to prior and anticipated
accelerated share repurchases and additional debt associated with those
repurchases. This range was exceeded as of July 3, 1999 due to shares
repurchased for acquisitions that closed in early fiscal 2000.
In November 1996, the Board authorized an additional 12,000,000 share
buyback to be completed in calendar 1997; in July 1997 the Board authorized an
additional 12,000,000 share buyback to be completed in fiscal 1998; and in
September 1998 the Board authorized a new 8,000,000 share buyback to be
completed in calendar 1999. The number of shares acquired and their cost for the
past three years was 7,567,300 shares for $203,958,000 in fiscal 1999,
12,129,700 shares for $263,416,000 in fiscal 1998 and 18,032,800 shares for
$305,301,000 in fiscal 1997. On July 9, 1999, the Board authorized a new
8,000,000 share buyback.
Net cash generated from operating activities was $585,303,000 in 1999,
$357,764,000 in 1998 and $498,108,000 in 1997. Expenditures for facilities,
fleet and other equipment were $286,687,000 in 1999, $259,353,000 in 1998 and
$210,868,000 in 1997. Expenditures in fiscal 2000 should be in the range of
$230,000,000 to $250,000,000.
In April, 1997, in two separate offerings, SYSCO drew down the remaining
$150,000,000 of the $500,000,000 shelf registration filed with the Securities
and Exchange Commission in June 1995. SYSCO 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. Also issued were 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. In
May 1996, SYSCO issued 7.0% senior notes totaling $200,000,000 due May 1, 2006.
These notes, which were priced at par, are unsecured, not redeemable prior to
maturity and are not subject to any sinking fund requirement.
On June 3, 1998 SYSCO filed with the Securities and Exchange Commission a
$500,000,000 shelf registration of debt securities. On July 22, 1998 SYSCO
issued 6.5% debentures totaling $225,000,000 under the shelf registration, due
August 1, 2028. These debentures were priced at 99.685% of par, are unsecured,
are not subject to any sinking fund requirement and include a redemption
provision which allows SYSCO the right to retire the debentures at any time
prior to maturity at the greater of par plus accrued interest or an amount
designed to ensure that the debenture holders are not penalized by the early
redemption. Proceeds from the debentures were used to pay down outstanding
commercial paper.
The net cash provided by operations less cash utilized for capital
expenditures, the stock repurchase program, cash dividends and other uses
resulted in net long-term debt of $997,717,000 at July 3, 1999. About 78% of the
long-term debt is at fixed rates averaging 6.75% and the remainder is at
floating rates averaging 5.15%. Long-term debt to capitalization was 41% at July
3, 1999, up 2% from the 39% at June 27, 1998 and up 8% from the 33% at June 28,
1997. SYSCO continues to have borrowing capacity available and alternative
financing arrangements are evaluated as appropriate.
SYSCO has a commercial paper program that is currently supported by a
$300,000,000 bank credit facility. During fiscal 1999, 1998 and 1997, commercial
paper and short-term bank borrowings ranged from approximately $67,769,000 to
$358,637,000, from approximately $29,581,000 to $417,924,000, and from
approximately $23,376,000 to $263,782,000, respectively.
In summary, SYSCO believes that through continued monitoring and management
of assets together with the availability of additional capital in the financial
markets, it will meet its cash requirements while maintaining proper liquidity
for normal operating purposes.
11
<PAGE> 14
MARKET RISK
SYSCO does not utilize financial instruments for trading purposes and holds
no derivative financial instruments that could expose the company to significant
market risk. SYSCO's exposure to market risk for changes in interest rates
relates primarily to its long-term debt obligations discussed above. At July 3,
1999 the company had outstanding commercial paper of $213,792,000 with
maturities through October 4, 1999. The company's remaining long-term debt
obligations of $783,925,000 were primarily at fixed rates of interest. SYSCO
has no significant cash flow exposure due to interest rate changes for
long-term debt obligations.
SALES
The annual increases in sales of 14% in 1999 (53 weeks) and 6% in 1998
resulted from several factors. Sales in fiscal 1999 and 1998 were affected by
the strong growth in the U.S. economy, as well as in the foodservice industry.
After adjusting for food price increases and acquisitions, real sales growth
including the effect of the 53rd week was about 12% in 1999 and 6% in 1998. The
cost of SYSCO's foodservice products during the first six months of fiscal 1999
were inflated about 2%, while inflation for those costs during the latter half
of the year decreased to about zero, resulting in about 1% inflation for the
entire year. This compares to zero inflation in fiscal 1998. Industry sources
estimate the total foodservice market experienced real growth of approximately
3.5% in calendar 1998 and 2.5% in calendar 1997.
Sales for fiscal 1997 through 1999 were as follows:
<TABLE>
<CAPTION>
YEAR SALES % INCREASE
- ---- --------------- ----------
<S> <C> <C>
1999 (53 Weeks).......................................... $17,422,815,000 14%
1998..................................................... 15,327,536,000 6
1997..................................................... 14,454,589,000 8
</TABLE>
A comparison of the sales mix in the principal product categories during
the last three years is presented below:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Medical supplies............................................ 1% 1% 1%
Dairy products.............................................. 10 9 9
Fresh and frozen meats...................................... 15 15 15
Seafoods.................................................... 6 6 5
Poultry..................................................... 11 10 10
Frozen fruits, vegetables, bakery and other................. 14 15 15
Canned and dry products..................................... 22 23 23
Paper and disposables....................................... 7 7 8
Janitorial products......................................... 2 2 2
Equipment and smallwares.................................... 3 3 3
Fresh produce............................................... 6 6 6
Beverage products........................................... 3 3 3
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
A comparison of sales by type of customer during the last three years is
presented below:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Restaurants................................................. 64% 62% 61%
Hospitals and nursing homes................................. 10 11 11
Schools and colleges........................................ 7 7 7
Hotels and motels........................................... 5 5 6
All other................................................... 14 15 15
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
12
<PAGE> 15
COST OF SALES
Cost of sales increased about 14% in 1999 and 6% in 1998. These increases
were generally in line with the increases in sales. The rate of increase is
influenced by SYSCO's overall customer and product mix as well as economies
realized in product acquisition.
OPERATING EXPENSES
Operating expenses include the costs of warehousing and delivering products
as well as selling and administrative expenses. These expenses as a percent of
sales were 14.6% for fiscal 1999 and 1998, and 14.4% for 1997. Changes in the
percentage relationship of operating expenses to sales result from an interplay
of several economic influences, including customer mix. Inflationary increases
in operating costs generally have been offset through improved productivity.
INTEREST EXPENSE
Interest expense increased $14,417,000 or approximately 25% in fiscal 1999
as compared to an increase of $11,920,000 or approximately 26% in fiscal 1998.
The increases in fiscal 1999 and 1998 were due primarily to increased
borrowings, principally to fund the share repurchase program, and the
replacement of floating rate debt at higher fixed rates in fiscal 1999. Interest
capitalized during the past three years was $1,812,000 in fiscal 1999,
$2,095,000 in 1998, and $2,215,000 in 1997.
OTHER, NET
Other decreased $910,000 or about 1,717% in fiscal 1999 and decreased
$215,000 or about 133% in fiscal 1998. Changes between the years result from
fluctuations in miscellaneous activities, primarily gains and losses on the sale
of surplus facilities.
EARNINGS BEFORE INCOME TAXES
Earnings before income taxes rose $61,394,000, or approximately 12% above
fiscal 1998, which had increased $36,538,000, or approximately 7%, above the
prior year. Additional sales and realization of operating efficiencies
contributed to the increases, as well as the effect of the 53rd week.
PROVISION FOR INCOME TAXES
The effective tax rate for 1999 and 1998 was approximately 39%.
EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE
Fiscal 1999 represents the twenty-third consecutive year of increased
earnings. Including the effect of the 53rd week and before the cumulative effect
of an accounting change in fiscal 1998, fiscal 1999 earnings rose $37,450,000,
or approximately 12% above fiscal 1998 which had increased $22,288,000, or
approximately 7%, over the prior year.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
In the second quarter of fiscal 1998, SYSCO recorded a one-time, after-tax,
non-cash charge of $28,053,000 to comply with a new consensus ruling by the
Emerging Issues Task Force of the Financial Accounting Standards Board, (EITF
Issue No. 97-13), requiring reengineering costs associated with computer systems
development to be expensed as they are incurred. Prior to this change, SYSCO had
capitalized business process reengineering costs incurred in connection with its
SYSCO Uniform Systems information systems redevelopment project in accordance
with generally accepted accounting principles.
NET EARNINGS
Net earnings for the year increased $65,503,000, or approximately 22% above
fiscal 1998, which had decreased $5,765,000, or approximately 2% below the prior
year. The increase was caused by the accounting change discussed above in fiscal
1998, as well as additional sales and operating efficiencies and the effect of
the 53rd week.
DIVIDENDS
The quarterly dividend rate of ten cents per share was established in
February 1999 when it was increased from the nine cents per share set in
February 1998.
13
<PAGE> 16
RETURN ON SHAREHOLDERS' EQUITY
The return on average shareholders' equity for fiscal 1999 was
approximately 26% compared to 23% in fiscal 1998 before the cumulative effect of
the accounting change and 21% in 1997. Since inception SYSCO has averaged in
excess of a 17% return on shareholders' equity before the cumulative effect of
the accounting change.
YEAR 2000
SYSCO has been replacing and enhancing its information systems to gain
operational efficiencies with the implementation of the SYSCO Uniform System
(SUS). SUS is Year 2000 compliant and implementation will be substantially
complete by December 1999.
To address the Year 2000 issue, SYSCO instituted an enterprise-wide Year
2000 compliance project in January 1998. SYSCO's Year 2000 project used two
outside technology consulting firms -- one with expertise in information
technology (IT) and project management and the other with expertise in
engineering to identify Year 2000 issues in non-IT systems and equipment that
have embedded microchips. SYSCO established a formal project management
methodology to address the Year 2000 issue. SYSCO's Year 2000 project consists
of four phases: i) Information Gathering and Planning -- This phase consisted of
gathering information about SYSCO's IT and non-IT systems, as well as
identifying significant suppliers, customers and other third parties. The
primary objective was to build a detailed inventory of information; ii)
Assessment -- This phase consisted of analyzing the information gathered during
the first phase. The process included examining and evaluating SYSCO's IT
systems and non-IT systems with embedded microchips for exposure to date
sensitivity. The primary objective of the assessment phase was to identify
components that are not Year 2000 compliant so that they could be corrected,
replaced or eliminated; iii) Remediation -- This phase consisted of correcting,
replacing or eliminating any components found during the assessment phase that
were not Year 2000 compliant. This included addressing SYSCO's internally
developed mission critical IT systems, purchased hardware and software, and
non-IT systems and equipment with embedded microchips; and iv) Testing -- This
phase consisted of systems integration testing of SYSCO's mission critical IT
systems used throughout the company, as well as specific systems interface
testing with certain customers and certain suppliers to ensure their Year 2000
readiness.
In March 1999, SYSCO completed extensive testing of its mission critical IT
systems using multiple Year 2000 date scenarios to simulate fiscal and calendar
crossovers. These systems were found to be Year 2000 compliant. SYSCO has also
completed a comprehensive assessment of its IT systems and non-IT systems with
embedded microchips and is completing upgrades and replacements of non-compliant
systems and equipment. Although the percentages of work completed vary across
SYSCO's operations, SYSCO plans to complete the remaining upgrades and
replacements by December 1999.
An important component of SYSCO's Year 2000 readiness efforts has focused
on verifying to the extent possible that its significant suppliers are currently
Year 2000 compliant or have adequate remediation plans in place to ensure Year
2000 compliance. SYSCO analyzed and categorized its suppliers and then contacted
in writing the significant suppliers to solicit information on their Year 2000
preparedness efforts. SYSCO has obtained Year 2000 information from the majority
of the identified suppliers and is in the process of contacting those few
suppliers who have not yet responded.
SYSCO does not believe that the total costs which will be incurred to
provide Year 2000 compliance will have a material impact on the financial
statements of the company.
The company has identified three most reasonably likely worst case
scenarios: (1) loss of public power supplies; (2) loss of communication
infrastructure; and (3) failure of the company's mission critical IT systems and
infrastructure. Within the three most reasonably likely worst case scenarios,
SYSCO's goal is to identify actions that can be taken prior to January 2000
that would minimize or mitigate the failures should they occur. Contingency
plans have been developed for the core business functions and are being
deployed to SYSCO's distribution centers for review and implementation.
Although SYSCO's Year 2000 efforts are intended to minimize the adverse
effects of the Year 2000 issue on its business and operations, the actual
effects of the issue and the success or failure of the company's efforts
described above cannot be known until the Year 2000. Failure by SYSCO, its
suppliers, customers and other third parties to address adequately their
respective Year 2000 issues in a timely manner, insofar as such issues relate to
the company's business and operations, could have a material adverse effect on
SYSCO.
14
<PAGE> 17
RISK FACTORS
Low Margin Business; Economic Sensitivity
The foodservice distribution industry is characterized by relatively high
inventory turnover with relatively low profit margins. SYSCO makes a significant
portion of its sales at prices that are based on the cost of products it sells
plus a percentage markup. As a result, SYSCO's profit levels may be negatively
impacted during periods of food price deflation, even though SYSCO's gross
profit percentage may remain relatively constant. The foodservice industry is
sensitive to national and economic conditions. SYSCO's operating results also
are sensitive to, and may be adversely affected by other factors, including
difficulties with the collectability of accounts receivables, inventory control,
competitive price pressures, severe weather conditions and unexpected increases
in fuel or other transportation-related costs. Although such factors have not
had a material adverse impact on SYSCO's past operations, there can be no
assurance that one or more of these factors will not adversely affect future
operating results.
Leverage and Debt Service
Because historically a substantial part of SYSCO's growth has been the result of
acquisitions and capital expansion, SYSCO's continued growth depends, in large
part, on its ability to continue this expansion. As a result, its inability to
finance acquisitions and capital expenditures through borrowed funds could
restrict its ability to expand. Moreover, any default under the documents
governing the indebtedness of SYSCO could have a significant adverse effect on
the market value of SYSCO's common stock. Further, SYSCO's leveraged position
may also increase its vulnerability to competitive pressures.
Product Liability Claims
SYSCO, like any other seller of food, faces the risk of exposure to product
liability claims in the event that the use of products sold by the company
causes injury or illness. With respect to product liability claims, SYSCO
believes it has sufficient primary or excess umbrella liability insurance.
However, this insurance may not continue to be available at a reasonable cost,
or, if available, may not be adequate to cover liabilities. SYSCO generally
seeks contractual indemnification and insurance coverage from parties supplying
its products, but this indemnification or insurance coverage is limited, as a
practical matter, to the creditworthiness of the indemnifying party and the
insured limits of any insurance provided by suppliers. If SYSCO does not have
adequate insurance or contractual indemnification available, product liability
relating to defective products could materially reduce SYSCO's net income and
earnings per share.
Interruption of Supplies
SYSCO obtains all of its foodservice products from other suppliers. For the most
part, SYSCO does not have long-term contracts with any supplier committing it to
provide products to SYSCO. Although SYSCO's purchasing volume can provide
leverage when dealing with suppliers, suppliers may not provide the foodservice
products and supplies needed by SYSCO in the quantities requested. Because SYSCO
does not control the actual production of its products, it is also subject to
delays caused by interruption in production based on conditions outside its
control. These conditions include: job actions or strikes by employees of
suppliers, weather, crop conditions, transportation interruptions, and natural
disasters or other catastrophic events. SYSCO's inability to obtain adequate
supplies of its foodservice products as a result of any of the foregoing factors
or otherwise, could mean that SYSCO could not fulfill its obligations to
customers, and customers may turn to other suppliers.
15
<PAGE> 18
Labor Relations
As of July 3, 1999, 7,641 employees are members of 45 different local unions
associated with the International Brotherhood of Teamsters and other labor
organizations, at 34 operating companies. In fiscal 2000, 18 agreements covering
2,557 employees will expire. Failure to effectively renegotiate these contracts
could result in work stoppages. Although SYSCO has not experienced any
significant labor disputes or work stoppages to date, and believes it has
satisfactory relationships with its unions, a work stoppage due to failure to
renegotiate a union contract, or otherwise, could have a material adverse effect
on SYSCO.
Integration of Acquired Companies
If SYSCO is unable to integrate acquired businesses successfully and realize
anticipated economic, operational and other benefits in a timely manner, its
profitability may decrease. Integration of an acquired business may be more
difficult when SYSCO acquires a business in a market in which it has limited or
no expertise, or with a corporate culture different from SYSCO's. If SYSCO is
unable to integrate acquired businesses successfully, it may incur substantial
costs and delays in increasing its customer base. In addition, the failure to
integrate acquisitions successfully may divert management's attention from
SYSCO's existing business and may damage SYSCO's relationships with its key
customers and suppliers.
Charter and Stockholder Rights Plan
Under its Restated Certificate of Incorporation, SYSCO's Board of Directors is
authorized to issue up to 1.5 million shares of preferred stock without
stockholder approval. Issuance of these shares would make it more difficult for
anyone to acquire SYSCO without approval of the Board of Directors because more
shares would have to be acquired to gain control. If anyone attempts to acquire
SYSCO without approval of the Board of Directors of SYSCO, the stockholders of
SYSCO have the right to purchase preferred stock of SYSCO, which also means more
shares would have to be acquired to gain control. Both of these devices may
deter hostile takeover attempts that might result in an acquisition of SYSCO
that would have been financially beneficial to SYSCO's stockholders.
16
<PAGE> 19
FORWARD-LOOKING STATEMENTS
Certain statements made herein are forward-looking statements under the Private
Securities Litigation Reform Act of 1995. They include projected sales
increases, anticipated capital expenditures, customer mix, product cost
inflation/deflation, implementation and anticipated results of "fold-outs",
potential acquisitions and any potential benefits resulting therefrom, payment
of dividends, consistency and predictability of earnings and cash flow growth,
continuation of the share repurchase program, projected sales to particular
customers, including but not limited to Wendy's International, Inc., and Year
2000 readiness efforts and time-tables and the anticipated costs of these
efforts.
These statements are based on current expectations and management's estimates
and actual results may differ materially. Decisions to pursue "fold-outs" and
acquisitions and expenditures for such could vary depending upon construction
schedules and the timing of other purchases, such as fleet and equipment, while
results from "fold-outs" and acquisitions could be impacted by competitive
conditions, labor issues and other matters. Acquisitions also depend upon the
availability and suitability of potential candidates and management's allocation
of capital. Industry growth, sales increases, customer mix, product cost
inflation/deflation, payment of dividends, the consistency and predictability of
earnings and cash flow growth and Year 2000 costs and compliance efforts could
be affected by conditions in the economy, the industry and internal factors that
may alter planned results.
Furthermore, potential Year 2000 costs and compliance efforts could be affected
by the ability of SYSCO's suppliers and customers to effectively address Year
2000 issues. Sales to particular customers could be affected by conditions in
the economy and the customer's ability to make planned levels of sales available
to SYSCO. The share repurchase program could be affected by market prices of the
company's stock as well as management's decision to utilize its capital for
other purposes.
17
<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SYSCO CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Statements:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Management on Internal Accounting Controls....................................... 19
Report of Independent Public Accountants................................................... 20
Consolidated Financial Statements:
Consolidated Balance Sheets.......................................................... 21
Consolidated Results of Operations................................................... 22
Consolidated Shareholders' Equity.................................................... 23
Consolidated Cash Flows.............................................................. 24
Summary of Accounting Policies....................................................... 25
Additional Financial Information..................................................... 26
Schedule:
II - Valuation and Qualifying Accounts.......................................................... S-1
</TABLE>
All other schedules are omitted because they are not applicable
or the information is set forth in the consolidated financial
statements or notes thereto.
18
<PAGE> 21
REPORT OF MANAGEMENT ON INTERNAL ACCOUNTING CONTROLS
The management of SYSCO is responsible for the preparation and integrity of the
consolidated financial statements of the company. The accompanying consolidated
financial statements have been prepared by the management of the company, in
accordance with generally accepted accounting principles, using management's
best estimates and judgment where necessary. Financial information appearing
throughout this Annual Report is consistent with that in the consolidated
financial statements.
To help fulfill its responsibility, management maintains a system of internal
controls designed to provide reasonable assurance that assets are safeguarded
against loss or unauthorized use and that transactions are executed in
accordance with management's authorizations and are reflected accurately in the
company's records. The concept of reasonable assurance is based on the
recognition that the cost of maintaining a system of internal accounting
controls should not exceed benefits expected to be derived from the system.
SYSCO believes that its long-standing emphasis on the highest standards of
conduct and ethics, embodied in comprehensive written policies, serves to
reinforce its system of internal controls.
The company's operations review function monitors the operation of the internal
control system and reports findings and recommendations to management and the
Board of Directors. It also oversees actions taken to address control
deficiencies and seeks opportunities for improving the effectiveness of the
system.
Arthur Andersen LLP, independent public accountants, has been engaged to express
an opinion regarding the fair presentation of the company's financial condition
and operating results. As part of their audit of the company's financial
statements, Arthur Andersen LLP considered the company's system of internal
controls to the extent they deemed necessary to determine the nature, timing and
extent of their audit tests.
The Board of Directors oversees the company's financial reporting through its
Audit Committee which consists entirely of outside directors. The Board, after a
recommendation from the Audit Committee, selects and engages the independent
public accountants annually. The Audit Committee reviews both the scope of the
accountants' audit and recommendations from both the independent public
accountants and the internal operations review function for improvements in
internal controls. The independent public accountants have free access to the
Audit Committee and from time to time confer with them without management
representation.
SYSCO recognizes its responsibility to conduct business in accordance with high
ethical standards. This responsibility is reflected in a comprehensive code of
business conduct that, among other things, addresses potentially conflicting
outside business interests of company employees and provides guidance as to the
proper conduct of business activities. Ongoing communications and review
programs are designed to help ensure compliance with this code.
The company believes that its system of internal controls is effective and
adequate to accomplish the objectives discussed above.
/s/ BILL M. LINDIG /s/ JOHN K. STUBBLEFIELD, JR.
- ---------------------------------------- ----------------------------------
Bill M. Lindig John K. Stubblefield, Jr.
Chairman and Chief Executive Officer Senior Vice President,
Finance and Administration
19
<PAGE> 22
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Sysco Corporation
We have audited the accompanying consolidated balance sheets of Sysco
Corporation (a Delaware corporation) and subsidiaries as of July 3, 1999 and
June 27, 1998, and the related statements of consolidated results of operations,
shareholders' equity and cash flows for each of the three years in the period
ended July 3, 1999. These financial statements and the schedule referred to
below are the responsibility of the company's management. Our responsibility is
to express an opinion on these financial statements and the schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sysco Corporation
and subsidiaries as of July 3, 1999 and June 27, 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
July 3, 1999, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 14(a) is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in our
audits of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Houston, Texas
August 4, 1999
20
<PAGE> 23
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JULY 3, 1999 JUNE 27, 1998
------------ -------------
(IN THOUSANDS EXCEPT
FOR SHARE DATA)
<S> <C> <C>
Current assets
Cash...................................................... $ 149,303 $ 110,288
Accounts and notes receivable, less allowances of $21,095
and $20,081............................................ 1,334,371 1,215,610
Inventories............................................... 851,965 790,501
Deferred taxes............................................ 43,353 37,073
Prepaid expenses.......................................... 29,775 26,595
---------- ----------
Total current assets.............................. 2,408,767 2,180,067
Plant and equipment at cost, less depreciation............ 1,227,669 1,151,054
Other assets
Goodwill and intangibles, less amortization............... 302,100 307,959
Other..................................................... 158,046 141,109
---------- ----------
Total other assets................................ 460,146 449,068
---------- ----------
Total assets...................................... $4,096,582 $3,780,189
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable............................................. $ 13,377 $ 42,333
Accounts payable.......................................... 1,013,302 849,159
Accrued expenses.......................................... 374,271 292,255
Income taxes.............................................. 6,103 25,523
Current maturities of long-term debt...................... 20,487 114,920
---------- ----------
Total current liabilities......................... 1,427,540 1,324,190
Long-term debt.............................................. 997,717 867,017
Deferred taxes.............................................. 244,129 232,193
Contingencies
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 382,587,450
shares................................................ 382,587 382,587
Paid-in capital........................................... 872 --
Retained earnings......................................... 2,032,068 1,796,488
---------- ----------
2,415,527 2,179,075
Less cost of treasury stock, 52,915,065 and 47,578,288
shares................................................. 988,331 822,286
---------- ----------
Total shareholders' equity........................ 1,427,196 1,356,789
---------- ----------
Total liabilities and shareholders' equity........ $4,096,582 $3,780,189
========== ==========
</TABLE>
See Summary of Accounting Policies and Additional Financial Information.
21
<PAGE> 24
CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------------
JULY 3, 1999
(53 WEEKS) JUNE 27, 1998 JUNE 28, 1997
------------ ------------- -------------
(IN THOUSANDS EXCEPT FOR SHARE DATA)
<S> <C> <C> <C>
Sales................................................. $17,422,815 $15,327,536 $14,454,589
Costs and expenses
Cost of sales....................................... 14,207,860 12,499,636 11,835,959
Operating expenses.................................. 2,547,266 2,236,932 2,076,335
Interest expense.................................... 72,839 58,422 46,502
Other, net.......................................... 963 53 (162)
----------- ----------- -----------
Total costs and expenses.................... 16,828,928 14,795,043 13,958,634
----------- ----------- -----------
Earnings before income taxes.......................... 593,887 532,493 495,955
Income taxes.......................................... 231,616 207,672 193,422
----------- ----------- -----------
Earnings before cumulative effect of accounting
change.............................................. 362,271 324,821 302,533
Cumulative effect of accounting change................ -- (28,053) --
----------- ----------- -----------
Net earnings................................ $ 362,271 $ 296,768 $ 302,533
=========== =========== ===========
Earnings before accounting change:
Basic earnings per share............................ $ 1.09 $ 0.95 $ 0.85
Diluted earnings per share.......................... 1.08 0.95 0.85
Cumulative effect of accounting change:
Basic earnings per share............................ -- (0.08) --
Diluted earnings per share.......................... -- (0.08) --
Net earnings:
Basic earnings per share............................ 1.09 0.87 0.85
Diluted earnings per share.......................... 1.08 0.86 0.85
</TABLE>
See Summary of Accounting Policies and Additional Financial Information.
22
<PAGE> 25
CONSOLIDATED SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
---------------------- PAID-IN RETAINED ---------------------
SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT
----------- -------- -------- ---------- ---------- --------
(IN THOUSANDS EXCEPT FOR SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Balance at June 29, 1996...... 191,293,725 $191,294 $ 35,179 $1,568,589 10,880,919 $320,384
Net earnings for year ended
June 28, 1997............... 302,533
Cash dividends paid, $.28 per
share....................... (99,574)
Treasury stock purchases...... 9,016,400 305,301
Stock options exercised....... (3,069) (334,139) (9,838)
Employees' Stock Purchase
Plan........................ (789) (512,603) (15,474)
Management Incentive Plan..... 937 (195,119) (5,745)
----------- -------- -------- ---------- ---------- --------
Balance at June 28, 1997...... 191,293,725 $191,294 $ 32,258 $1,771,548 18,855,458 $594,628
Net earnings for year ended
June 27, 1998............... 296,768
Cash dividends paid, $.33 per
share....................... (110,928)
Treasury stock purchases...... 6,064,850 263,416
Stock options exercised....... (4,308) (491,795) (15,174)
Employees' Stock Purchase
Plan........................ 1,359 (433,419) (14,048)
Management Incentive Plan..... 1,084 (205,950) (6,536)
2-for-1 stock split........... 191,293,725 191,293 (30,393) (160,900) 23,789,144
----------- -------- -------- ---------- ---------- --------
Balance at June 27, 1998...... 382,587,450 $382,587 $ -- $1,796,488 47,578,288 $822,286
Net earnings for year ended
July 3, 1999................ 362,271
Cash dividends paid, $.38 per
share....................... (126,691)
Treasury stock purchases...... 7,567,300 203,958
Stock options exercised....... (5,621) (988,679) (15,954)
Employees' Stock Purchase
Plan........................ 3,679 (894,094) (15,906)
Management Incentive Plan..... 2,814 (347,750) (6,053)
----------- -------- -------- ---------- ---------- --------
Balance at July 3, 1999....... 382,587,450 $382,587 $ 872 $2,032,068 52,915,065 $988,331
=========== ======== ======== ========== ========== ========
</TABLE>
See Summary of Accounting Policies and Additional Financial Information.
23
<PAGE> 26
CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------------
JULY 3, 1999
(53 WEEKS) JUNE 27, 1998 JUNE 28, 1997
------------ ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings.......................................... $ 362,271 $ 296,768 $ 302,533
Add non-cash items:
Cumulative effect of accounting change............. -- 28,053 --
Depreciation and amortization...................... 205,005 181,234 160,292
Deferred tax provision (benefit)................... 5,656 (15,077) 11,081
Provision for losses on receivables................ 26,208 22,959 21,588
Additional investment in certain assets and
liabilities, net of effect of businesses acquired:
(Increase) in receivables.......................... (144,969) (162,276) (40,247)
(Increase) in inventories.......................... (61,464) (48,483) (6,883)
(Increase) in prepaid expenses..................... (3,180) (4,871) (2,534)
Increase in accounts payable....................... 164,143 14,114 43,145
Increase in accrued expenses....................... 82,016 50,875 27,512
(Decrease) increase in income taxes................ (19,420) 7,782 (5,589)
(Increase) in other assets......................... (30,963) (13,314) (12,790)
--------- --------- ---------
Net cash provided by operating activities..... 585,303 357,764 498,108
--------- --------- ---------
Cash flows from investing activities:
Additions to plant and equipment...................... (286,687) (259,353) (210,868)
Proceeds from sales of plant and equipment............ 24,952 8,296 2,842
Acquisition of businesses, net of cash acquired....... -- (84,473) (5,330)
--------- --------- ---------
Net cash used for investing activities........ (261,735) (335,530) (213,356)
--------- --------- ---------
Cash flows from financing activities:
Bank and commercial paper (repayments) borrowings..... (109,962) 303,996 92,039
Other debt borrowings................................. 117,273 6,813 9,885
Common stock reissued from treasury................... 38,785 33,893 28,136
Treasury stock purchases.............................. (203,958) (263,416) (305,301)
Dividends paid........................................ (126,691) (110,928) (99,574)
--------- --------- ---------
Net cash used for financing activities........ (284,553) (29,642) (274,815)
--------- --------- ---------
Net increase (decrease) in cash......................... 39,015 (7,408) 9,937
Cash at beginning of year............................... 110,288 117,696 107,759
--------- --------- ---------
Cash at end of year..................................... $ 149,303 $ 110,288 $ 117,696
========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest........................................... $ 66,706 $ 58,306 $ 44,575
Income taxes....................................... 237,990 195,133 186,153
</TABLE>
See Summary of Accounting Policies and Additional Financial Information.
24
<PAGE> 27
SUMMARY OF ACCOUNTING POLICIES
BUSINESS AND CONSOLIDATION
SYSCO Corporation (SYSCO) is engaged in the marketing and distribution of a
wide range of food and related products to the foodservice or
"food-prepared-away-from-home" industry. These services are performed from 76
distribution facilities for approximately 300,000 customers located in the 38
states where facilities are situated, in 10 adjacent states and Alaska. The
company also has one facility in Vancouver, British Columbia and one in
Peterborough, Ontario, which service customers in those areas.
The accompanying financial statements include the accounts of SYSCO and its
subsidiaries. All significant intercompany transactions and account balances
have been eliminated. Certain amounts in the prior years have been reclassified
to conform to the 1999 presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates that affect
the reported amounts of assets, liabilities and expenses. Actual results could
differ from the estimates used.
Earnings of acquisitions recorded as purchases are included in SYSCO's
results of operations from the date of acquisition.
INVENTORIES
Inventories consist of food and related products held for resale and are
valued at the lower of cost (first-in, first-out method) or market.
PLANT AND EQUIPMENT
Capital additions, improvements and major renewals are classified as plant
and equipment and are carried at cost. Depreciation is recorded using the
straight-line method which reduces the book value of each asset in equal amounts
over its estimated useful life. Maintenance, repairs and minor renewals are
charged to earnings when they are incurred. Upon the disposition of an asset,
its accumulated depreciation is deducted from the original cost, and any gain or
loss is reflected in current earnings.
Applicable interest charges incurred during the construction of new
facilities are capitalized as one of the elements of cost and are amortized over
the assets' estimated useful lives. Interest capitalized during the past three
years was $1,812,000 in 1999, $2,095,000 in 1998 and $2,215,000 in 1997.
GOODWILL AND INTANGIBLES
Goodwill and intangibles represent the excess of cost over the fair value
of tangible net assets acquired and are amortized over 40 years using the
straight-line method. Accumulated amortization at July 3, 1999, June 27, 1998
and June 28, 1997 was $84,160,000, $74,554,000 and $66,521,000, respectively.
COMPUTER SYSTEMS DEVELOPMENT PROJECT
In the second quarter of fiscal 1998, SYSCO recorded a one-time, after-tax,
non-cash charge of $28,053,000 to comply with a consensus ruling by the Emerging
Issues Task Force of the Financial Accounting Standards Board (EITF Issue No.
97-13), requiring reengineering costs associated with computer systems
development to be expensed as they are incurred. Prior to this ruling, SYSCO had
capitalized business process reengineering costs incurred in connection with its
SYSCO Uniform System information systems redevelopment project in accordance
with generally accepted accounting principles.
No costs were capitalized in fiscal 1999, 1998 and 1997. Amounts
capitalized are being amortized as completed portions are put into use.
Accumulated amortization, including the one-time charge, at July 3, 1999, June
27, 1998 and June 28, 1997 was $38,929,000, $36,532,000 and $1,624,000,
respectively.
INSURANCE PROGRAM
SYSCO maintains a self-insurance program covering portions of workers'
compensation and general and automobile liability costs. The amounts in excess
of the self-insured levels are fully insured. Self-insurance accruals are based
on claims filed and an estimate for significant claims incurred but not
reported.
INCOME TAXES
SYSCO follows the liability method of accounting for income taxes as
required by the provisions of Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes."
CASH FLOW INFORMATION
For cash flow purposes, cash includes cash equivalents such as time
deposits, certificates of deposit and all highly liquid instruments with
original maturities of three months or less.
25
<PAGE> 28
NEW ACCOUNTING STANDARDS
In fiscal 1998, SYSCO adopted SFAS No. 130, "Reporting Comprehensive
Income." The adoption of this standard did not have an effect on SYSCO's
reported net earnings as SYSCO has no additional comprehensive income under the
statement.
In fiscal 1999, SYSCO adopted SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits."This statement does not change the
measurement or recognition of those plans, but revises the disclosure
requirements for pensions and other postretirement plans.
In March 1998, the AICPA issued Statement of Position (SOP) 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." The SOP provides guidance with respect to accounting for the
various types of costs incurred for computer software developed or obtained for
SYSCO's use. SYSCO is required to and will adopt SOP 98-1 in the first quarter
of fiscal 2000 and believes that adoption will not have a significant effect on
its consolidated results of operations or financial position.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-Up Activities." At adoption, SOP 98-5 requires SYSCO to write-off any
unamortized start-up costs as a cumulative effect of a change in accounting
principle and, going forward, expense all start-up activity costs as they are
incurred. SYSCO is required to and will adopt SOP 98-5 in the first quarter of
fiscal 2000 and estimates that this charge will be in the range of $8,000,000 to
$10,000,000, after taxes.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which was
effective for fiscal years beginning after June 15, 1999. SFAS No. 133 was
amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of SFAS No. 133,"which delayed the
effective date of implementation by one year. SYSCO is required to and will
adopt SFAS No. 133 in the first quarter of fiscal 2001. SYSCO does not expect
adoption to have a significant effect on its consolidated results of operations
or financial position.
ADDITIONAL FINANCIAL INFORMATION
INCOME TAXES
The income tax provisions consist of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Federal income taxes....................... $211,478,000 $189,758,000 $176,754,000
State and local income taxes............... 20,138,000 17,914,000 16,668,000
------------ ------------ ------------
Total............................ $231,616,000 $207,672,000 $193,422,000
============ ============ ============
</TABLE>
Included in the income taxes charged to earnings are net deferred tax
provisions of $5,656,000 in 1999, deferred tax benefits of $15,077,000 in 1998
and deferred tax provisions of $11,081,000 in 1997. These components result from
the effects of net changes during the year in deferred tax assets and
liabilities arising from temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes.
Significant components of the company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
JULY 3, 1999 JUNE 27, 1998
------------ -------------
<S> <C> <C>
Deferred tax liabilities:
Excess tax depreciation and basis differences of
assets.............................................. $203,524,000 $196,429,000
Computer systems development project................... 10,991,000 11,109,000
Other.................................................. 29,614,000 24,655,000
------------ ------------
Total deferred tax liabilities................. 244,129,000 232,193,000
------------ ------------
Deferred tax assets:
Accrued pension expenses............................... 24,179,000 19,759,000
Accrued medical and casualty insurance expenses........ 6,647,000 6,709,000
Other.................................................. 12,527,000 10,605,000
------------ ------------
Total deferred tax assets...................... 43,353,000 37,073,000
------------ ------------
Net deferred tax liabilities................... $200,776,000 $195,120,000
============ ============
</TABLE>
26
<PAGE> 29
The company has enjoyed taxable earnings during each year of its thirty
year existence and knows of no reason such profitability should not continue.
Consequently, the company believes that it is more likely than not that the
entire benefit of existing temporary differences will be realized and therefore
no valuation allowance has been established for deferred tax assets.
Reconciliations of the statutory Federal income tax rate to the effective
income tax rates are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory Federal income tax rate........................... 35% 35% 35%
State and local income taxes, net of Federal income tax
benefit................................................... 4 4 4
-- -- --
39% 39% 39%
== == ==
</TABLE>
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
The allowance for doubtful accounts receivable was $21,095,000 as of July
3, 1999, $20,081,000 as of June 27, 1998 and $17,240,000 as of June 28, 1997.
Customer accounts written off, net of recoveries, were $25,914,000 or 0.15% of
sales, $21,218,000 or 0.14% of sales and $21,183,000 or 0.15% of sales for
fiscal years 1999, 1998 and 1997, respectively.
SHAREHOLDERS' EQUITY
On February 11, 1998 the Board of Directors declared a 2-for-1 stock split
effected by a 100% stock dividend paid on March 20, 1998 to shareholders of
record on February 27, 1998. All share and per share data in these financial
statements have been restated to reflect the stock split.
In fiscal 1998, SYSCO adopted the provisions of SFAS No. 128, "Earnings Per
Share," which replaced primary and fully diluted earnings per share with a
presentation of basic and diluted earnings per share. Basic earnings per share
have been computed by dividing net earnings by 332,913,546 in 1999, 340,380,477
in 1998 and 354,470,170 in 1997, which represents the weighted average number of
shares of common stock outstanding during those respective years. Diluted
earnings per share have been computed by dividing net earnings by 336,796,669 in
1999, 343,440,181 in 1998 and 356,083,594 in 1997, which represents the weighted
average number of shares of common stock outstanding during those respective
years adjusted for the dilutive effect of stock options outstanding under the
treasury stock method.
In May 1986, the Board of Directors adopted a Warrant Dividend Plan
designed to protect against those unsolicited attempts to acquire control of
SYSCO that the Board believes are not in the best interest of the shareholders.
The Board of Directors adopted an amended and restated plan in May 1996, which,
among other things, extends the expiration of the plan through May 2006, and
amended it in May 1999. As amended, the plan provides for a dividend
distribution of one-half of one Preferred Stock Purchase Right (Right) for each
outstanding share of SYSCO common stock. Each Right may be exercised to purchase
one two-thousandth of a share of Series A Junior Participating Preferred Stock
at an exercise price of $175, subject to adjustment. The Rights will not be
exercisable until a party either acquires 10% of the company's common stock or
makes a tender offer for 10% or more of its common stock. In the event of a
merger or other business combination transaction, each Right effectively
entitles the holder to purchase $350 worth of stock of the surviving company for
a purchase price of $175.
The Rights expire on May 21, 2006, and may be redeemed before expiration by
the company at a price of $0.01 per Right until a party acquires 10% of the
company's common stock or thereafter under certain circumstances. As a result of
the Rights distribution, 450,000 of the 1,500,000 authorized preferred shares
have been reserved for issuance as Series A Junior Participating Preferred
Stock.
PLANT AND EQUIPMENT
A summary of plant and equipment, including the related accumulated
depreciation, appears below:
<TABLE>
<CAPTION>
ESTIMATED
JULY 3, 1999 JUNE 27, 1998 USEFUL LIVES
--------------- -------------- ------------
<S> <C> <C> <C>
Plant and equipment, at cost
Land.................................. $ 93,107,000 $ 100,855,000
Buildings and improvements............ 957,389,000 895,915,000 10-40 years
Equipment............................. 1,266,548,000 1,146,192,000 3-20 years
--------------- --------------
2,317,044,000 2,142,962,000
Accumulated depreciation................ (1,089,375,000) (991,908,000)
--------------- --------------
Net plant and equipment................. $ 1,227,669,000 $1,151,054,000
=============== ==============
</TABLE>
27
<PAGE> 30
DEBT
At July 3, 1999 and June 27, 1998 SYSCO had $13,377,000 and $42,333,000,
respectively, of short-term bank borrowings. The level of such borrowings
fluctuates during the year based on working capital requirements.
SYSCO's long-term debt is comprised of the following:
<TABLE>
<CAPTION>
JULY 3, 1999 JUNE 27, 1998
-------------- -------------
<S> <C> <C>
Commercial paper, interest averaging 5.2% in 1999 and
5.7% in 1998........................................ $ 213,792,000 $ 294,798,000
Senior notes, interest at 9.95%, maturing in 1999..... -- 91,500,000
Senior notes, interest at 6.5%, maturing in 2005...... 149,463,000 149,373,000
Senior notes, interest at 7.0%, maturing in 2006...... 200,000,000 200,000,000
Senior notes, interest at 7.25%, maturing in 2007..... 99,696,000 99,657,000
Debentures, interest at 7.16%, maturing in 2027....... 50,000,000 50,000,000
Debentures, interest at 6.50%, maturing in 2029....... 224,313,000 --
Industrial Revenue Bonds, mortgages and other debt,
interest averaging 5.9% in 1999 and 6.0% in 1998,
maturing at various dates to 2026................... 80,940,000 96,609,000
-------------- -------------
Total long-term debt........................ 1,018,204,000 981,937,000
Less current maturities............................... (20,487,000) (114,920,000)
-------------- -------------
Net long-term debt.......................... $ 997,717,000 $ 867,017,000
============== =============
</TABLE>
The principal payments required to be made on long-term debt during the
next five years are shown below:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- ------------
<S> <C>
2000................................................... $ 20,487,000
2001................................................... 19,739,000
2002................................................... 7,289,000
2003................................................... 15,019,000
2004................................................... 214,901,000
</TABLE>
SYSCO has a $300,000,000 revolving loan agreement maturing in fiscal 2004
which currently supports the company's commercial paper program. The commercial
paper borrowings at July 3, 1999 were $213,792,000.
In June 1995, SYSCO issued 6.5% senior notes totaling $150,000,000 due June
12, 2005, under a $500,000,000 shelf registration filed with the Securities and
Exchange Commission in June 1995. These notes, which were priced at 99.4% of
par, are unsecured, not redeemable prior to maturity and are not subject to any
sinking fund requirement. In May 1996, SYSCO issued 7.0% senior notes totaling
$200,000,000 due May 1, 2006, under this shelf registration. These notes, which
were priced at par, are unsecured, not redeemable prior to maturity and are not
subject to any sinking fund requirement. On April 22, 1997, in two separate
offerings, SYSCO drew down the remaining $150,000,000 of the $500,000,000 shelf
registration. SYSCO 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. At that time SYSCO
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.
On June 3, 1998 SYSCO filed with the Securities and Exchange Commission a
$500,000,000 shelf registration of debt securities. On July 22, 1998 SYSCO
issued 6.5% debentures totaling $225,000,000 under the shelf registration, due
on August 1, 2028. These debentures were priced at 99.685% of par, are
unsecured, are not subject to any sinking fund requirement and include a
redemption provision which allows SYSCO the right to retire the debentures at
any time prior to maturity at the greater of par plus accrued interest or an
amount designed to ensure that the debenture holders are not penalized by the
early redemption. Proceeds from the debentures were used to pay down outstanding
commercial paper.
The Industrial Revenue Bonds have varying structures. Final maturities
range from one to twenty-seven years and certain of the bonds provide SYSCO the
right to redeem (a call) at various dates. These call provisions generally
provide the bondholder a premium in the early call years, declining to par value
as the bonds approach maturity. Certain bonds have provisions whereby the holder
may require SYSCO to purchase or redeem the bonds (a put) under certain
circumstances. If certain of these bonds are purchased from bondholders, they
can be remarketed at the then prevailing interest rates.
28
<PAGE> 31
Net long-term debt at July 3, 1999 was $997,717,000, of which 78% is at
fixed rates averaging 6.75% with an average life of fourteen years, while the
remainder is financed at floating rates averaging 5.15%. Certain loan agreements
contain typical covenants to protect noteholders including provisions to
maintain tangible net worth at specified levels.
The fair value of SYSCO's total long-term debt is estimated based on the
quoted market prices for the same or similar issues or on the current rates
offered to the company for debt of the same remaining maturities. The fair value
of total long-term debt approximates $994,275,000 at July 3, 1999.
As part of normal business activities, SYSCO issues letters of credit
through major banking institutions as required by certain supplier and insurance
agreements. As of July 3, 1999 and June 27, 1998, letters of credit outstanding
were $21,460,000 and $14,464,000, respectively. As of July 3, 1999 SYSCO has not
entered into any significant derivative or other off-balance-sheet financing
arrangements.
LEASES
Although SYSCO normally purchases assets, it has obligations under capital
and operating leases for certain distribution facilities, vehicles and
computers. Total rental expense under operating leases was $36,904,000,
$31,324,000 and $33,343,000 in fiscal 1999, 1998 and 1997, respectively.
Contingent rentals, subleases and assets and obligations under capital leases
are not significant.
Aggregate minimum lease payments under existing non-capitalized long-term
leases are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- -----------
<S> <C>
2000.................................................... $18,355,000
2001.................................................... 16,615,000
2002.................................................... 14,262,000
2003.................................................... 11,178,000
2004.................................................... 9,661,000
Later years............................................. 18,218,000
</TABLE>
STOCK COMPENSATION PLANS
Employee Incentive Stock Option Plan
The Employee Incentive Stock Option Plan adopted in fiscal 1982 provided
for the issuance of options to purchase SYSCO common stock to officers and key
personnel of the company and its subsidiaries at the market price at date of
grant, as adjusted for stock splits. No further grants will be made under this
plan which expired in November 1991 and was replaced by the 1991 Stock Option
Plan.
The following summary presents information with regard to incentive options
under this plan:
<TABLE>
<CAPTION>
OPTIONS EXERCISABLE OPTIONS OUTSTANDING
--------------------------- -------------------------
MAXIMUM WEIGHTED SHARES WEIGHTED
SHARES AVERAGE PRICE UNDER AVERAGE PRICE
EXERCISABLE PER SHARE OPTION PER SHARE
----------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Balance at June 29, 1996.............. 1,362,508 $9.84 1,362,508 $ 9.84
Granted............................. -- --
Cancelled........................... (149,542) 11.08
Exercised........................... (390,448) 9.67
---------
Balance at June 28, 1997.............. 822,518 9.70 822,518 9.70
Granted............................. -- --
Cancelled........................... -- --
Exercised........................... (303,251) 9.65
---------
Balance at June 27, 1998.............. 519,267 9.72 519,267 9.72
Granted............................. -- --
Cancelled........................... -- --
Exercised........................... (161,739) 9.22
---------
Balance at July 3, 1999............... 357,528 $9.94 357,528 $ 9.94
=========
</TABLE>
29
<PAGE> 32
The options outstanding at July 3, 1999 under this plan have exercise
prices ranging from $7.66 to $11.13 and have a weighted average remaining
contractual life of 1.7 years.
1991 Stock Option Plan
The 1991 Stock Option Plan was adopted in fiscal 1992 and originally
reserved 6,000,000 shares of SYSCO common stock for options to directors,
officers and key personnel of the company and its subsidiaries at the market
price at date of grant. This plan provides for the issuance of options which are
qualified as incentive stock options under the Internal Revenue Code of 1986,
options which are not so qualified and stock appreciation rights. During fiscal
1996, the shareholders approved an amendment to the plan for an additional
16,000,000 shares to be made available for future grants of options. To date,
the company has issued stock options but no stock appreciation rights under this
plan.
The following summary presents information with regard to options issued
under the 1991 plan:
<TABLE>
<CAPTION>
OPTIONS EXERCISABLE OPTIONS OUTSTANDING
--------------------------- -------------------------
MAXIMUM WEIGHTED SHARES WEIGHTED
SHARES AVERAGE PRICE UNDER AVERAGE PRICE
EXERCISABLE PER SHARE OPTION PER SHARE
----------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Balance at June 29, 1996.............. 2,190,690 $13.28 5,989,630 $13.64
Granted............................. 2,447,800 15.88
Cancelled........................... (236,034) 14.17
Exercised........................... (436,136) 13.33
---------
Balance at June 28, 1997.............. 3,446,628 13.53 7,765,260 14.35
Granted............................. 1,901,416 17.50
Cancelled........................... (315,422) 14.97
Exercised........................... (841,462) 13.50
---------
Balance at June 27, 1998.............. 4,886,528 13.98 8,509,792 15.11
Granted............................. 1,550,605 21.88
Cancelled........................... (307,879) 15.89
Exercised........................... (982,769) 14.11
---------
Balance at July 3, 1999............... 5,341,504 $14.66 8,769,749 $16.39
=========
</TABLE>
The options outstanding at July 3, 1999 under this plan have exercise
prices ranging from $12.63 to $26.25 and have a weighted average remaining
contractual life of 6.8 years.
Non-Employee Directors Stock Option Plan
The Non-Employee Directors Stock Option Plan adopted in fiscal 1996
permitted the issuance of up to 400,000 shares of common stock to directors who
are not employees of SYSCO. Under this plan, options to purchase 4,000 shares of
common stock at the fair market value on the date of the grant were granted to
each non-employee director annually, provided certain earnings goals were met.
As of July 3, 1999, options for 136,000 shares had been granted to nine
non-employee directors under this plan, of which options for 9,331 shares are
available for exercise. No further grants will be made under this plan, which
was replaced with the Non-Employee Directors Stock Plan.
Non-Employee Directors Stock Plan
The Non-Employee Directors Stock Plan adopted in fiscal 1999 permits the
issuance of up to 400,000 shares of common stock to directors who are not
employees of SYSCO. Under this plan non-employee directors will receive a one
time retainer stock award of 2,000 shares when first elected as a non-employee
director and an annual automatic grant of options to purchase 4,000 shares of
common stock provided certain earnings goals are met. As of July 3, 1999,
options for 40,000 shares had been granted to ten non-employee directors under
this plan, none of which were exercisable.
Employees' Stock Purchase Plan
SYSCO has an Employees' Stock Purchase Plan which permits employees (other
than directors) to invest by means of periodic payroll deductions in SYSCO
common stock at 85% of the closing price on the last business day of each
calendar quarter. During 1999, 945,711 shares of SYSCO common stock were
purchased by the participants as compared to 825,129 purchased in 1998 and
1,022,134 purchased in 1997. The total number of shares which may be sold
pursuant to the plan may not exceed 34,000,000 shares, of which 8,374,202
remained available at July 3, 1999.
Accounting Issues Relating to all Plans
SYSCO accounts for these plans under APB Opinion No. 25 and related
interpretations under which no compensation cost has been recognized. Had
compensation cost for these plans been determined using the fair value method of
SFAS No. 123,
30
<PAGE> 33
SYSCO's pro forma net earnings and diluted earnings per share would have been
$357,148,000 and $1.06 in fiscal 1999, $292,824,000 and $0.86 in fiscal 1998
and $298,895,000 and $0.85 in fiscal 1997. The disclosure requirements of SFAS
No. 123 are applicable to options granted after 1995. The pro forma effects for
fiscal 1999, 1998 and 1997 are not necessarily indicative of the pro forma
effects in future years.
The weighted average fair value of options granted was $7.05 and $6.28
during 1999 and 1998, respectively. The fair value was estimated on the date of
grant using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in fiscal 1999 and 1998, respectively;
dividend yield of 1.65% and 1.71%; expected volatility of 23% and 24%; risk-free
interest rates of 5.1% and 6.4%; and expected lives of 8 years.
The weighted average fair value of employee stock purchase rights issued
was $3.86 and $3.14 during fiscal 1999 and 1998, respectively. The fair value of
the stock purchase rights was calculated as the difference between the stock
price at date of issuance and the employee purchase price.
EMPLOYEE BENEFIT PLANS
SYSCO has defined benefit and defined contribution retirement plans for its
employees. Also, the company contributes to various multi-employer plans under
collective bargaining agreements.
The defined contribution 401(k) plan provides that under certain
circumstances the company may make matching contributions of up to 50% of the
first 6% of a participant's compensation. SYSCO's contribution to this plan was
$5,813,000 in 1999, $5,660,000 in 1998 and $4,975,000 in 1997. The defined
benefit pension plans pay benefits to employees at retirement using formulas
based on a participant's years of service and compensation.
SYSCO also has a Management Incentive Plan that compensates key management
personnel for specific performance achievements. The awards under this plan were
$27,197,000 in 1999, $20,478,000 in 1998 and $17,633,000 in 1997 and were paid
in both cash and stock. In addition to receiving benefits upon retirement under
the company's defined benefit plan, participants in the Management Incentive
Plan will receive benefits under a Supplemental Executive Retirement Plan. This
plan is a nonqualified, unfunded supplementary retirement plan. In order to meet
its obligations under this plan, SYSCO maintains life insurance policies on the
lives of the participants with carrying values of $55,975,000 at July 3, 1999
and $50,020,000 at June 27, 1998. SYSCO is the sole owner and beneficiary of
such policies.
In addition to providing pension benefits, SYSCO provides certain health
care benefits to eligible retirees and their dependents in the United States.
The funded status of the company's pension and other postretirement benefit
plans is as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS
---------------------------- ------------------------------
JULY 3, 1999 JUNE 27, 1998 JULY 3, 1999 JUNE 27, 1998
------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of
year.............................. $354,646,000 $261,734,000 $ 1,781,000 $ 2,199,000
Service cost......................... 31,058,000 24,279,000 125,000 154,000
Interest cost........................ 27,138,000 22,437,000 135,000 185,000
Amendments........................... 197,000 498,000 -- --
Actuarial (gain) loss................ (8,749,000) 54,799,000 18,000 (562,000)
Actual expenses...................... (2,418,000) (2,298,000) -- --
Total disbursements.................. (8,753,000) (6,803,000) 13,000 (195,000)
------------ ------------ ----------- -----------
Benefit obligation at end of year.... 393,119,000 354,646,000 2,072,000 1,781,000
------------ ------------ ----------- -----------
Change in plan assets:
Fair value of plan assets at
beginning of year................. 287,482,000 246,513,000 -- --
Actual return on plan assets......... 38,871,000 48,932,000 -- --
Employer contribution................ 15,259,000 1,138,000 (13,000) 195,000
Actual expenses...................... (2,418,000) (2,298,000) -- --
Total disbursements.................. (8,753,000) (6,803,000) 13,000 (195,000)
------------ ------------ ----------- -----------
Fair value of plan assets at end of
year.............................. 330,441,000 287,482,000 -- --
------------ ------------ ----------- -----------
Funded status........................ (62,678,000) (67,164,000) (2,072,000) (1,781,000)
Unrecognized net actuarial loss
(gain)............................ 10,866,000 29,415,000 (3,388,000) (3,623,000)
Unrecognized net (asset) obligation
due to initial application of SFAS
87................................ (2,813,000) (3,660,000) 2,147,000 2,301,000
Unrecognized prior service cost...... (1,612,000) (2,449,000) 589,000 661,000
------------ ------------ ----------- -----------
Accrued benefit cost................. $(56,237,000) $(43,858,000) $(2,724,000) $(2,442,000)
============ ============ =========== ===========
</TABLE>
31
<PAGE> 34
The assumptions used to value obligations at year end were:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS
---------------------------- ------------------------------
JULY 3, 1999 JUNE 27, 1998 JULY 3, 1999 JUNE 27, 1998
------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
Weighted-average assumptions as of
year end:
Discount rate...................... 7.50% 7.25% 7.50% 7.25%
Expected rate of return............ 10.50% 10.50% -- --
Rate of compensation increase...... 4.50% 5.60% -- --
</TABLE>
A health care cost trend rate is not used in the calculations because SYSCO
subsidizes the cost of postretirement medical coverage by a fixed dollar amount
with the retiree responsible for the cost of coverage in excess of the subsidy,
including all future cost increases.
The components of net pension and other postretirement benefit costs are as
follows:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS
---------------------------- ------------------------------
JULY 3, 1999 JUNE 27, 1998 JULY 3, 1999 JUNE 27, 1998
------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
Components of net periodic
benefit cost:
Service cost................... $ 31,058,000 $ 24,279,000 $ 125,000 $ 154,000
Interest cost.................. 27,138,000 22,437,000 135,000 185,000
Expected return on plan
assets...................... (29,723,000) (25,499,000) -- --
Amortization of prior service
cost........................ (640,000) (677,000) 72,000 72,000
Recognized net actuarial loss
(gain)...................... 652,000 289,000 (216,000) (189,000)
Amortization of net transition
obligation.................. (847,000) (847,000) 153,000 153,000
------------ ------------ --------- ---------
Net pension costs...... $ 27,638,000 $ 19,982,000 $ 269,000 $ 375,000
============ ============ ========= =========
</TABLE>
Multi-employer pension costs were $22,375,000 and $19,633,000 in 1999 and
1998, respectively.
The projected benefit obligation and accumulated benefit obligation were
$52,721,000 and $38,860,000, respectively, as of July 3, 1999 and $47,495,000
and $34,910,000, respectively, as of June 27, 1998. There were no pension plans
with accumulated benefit obligations in excess of plan assets.
CONTINGENCIES
SYSCO is engaged in various legal proceedings which have arisen but have
not been fully adjudicated. These proceedings, in the opinion of management,
will not have a material adverse effect upon the consolidated financial position
or results of operations of the company when ultimately concluded.
32
<PAGE> 35
QUARTERLY RESULTS (UNAUDITED)
Financial information for each quarter in the years ended July 3, 1999 and
June 27, 1998:
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------
JULY 3 FISCAL YEAR
SEPTEMBER 26 DECEMBER 26 MARCH 27 (14 WEEKS) (53 WEEKS)
------------ ----------- ---------- ---------- -----------
(IN THOUSANDS EXCEPT FOR SHARE DATA)
<S> <C> <C> <C> <C> <C>
1999
Sales.............................. $4,192,630 $4,246,675 $4,164,877 $4,818,633 $17,422,815
Cost of sales...................... 3,426,045 3,469,496 3,402,463 3,909,856 14,207,860
Operating expenses................. 607,812 616,899 625,111 697,444 2,547,266
Interest expense................... 16,931 18,397 18,414 19,097 72,839
Other, net......................... 170 245 (93) 641 963
---------- ---------- ---------- ---------- -----------
Earnings before income taxes....... 141,672 141,638 118,982 191,595 593,887
Income taxes....................... 55,252 55,239 46,403 74,722 231,616
---------- ---------- ---------- ---------- -----------
Net earnings............. $ 86,420 $ 86,399 $ 72,579 $ 116,873 $ 362,271
========== ========== ========== ========== ===========
Per share:
Diluted net earnings............. $ 0.26 $ 0.26 $ 0.22 $ 0.35 $ 1.08
Cash dividends................... 0.09 0.09 0.10 0.10 0.38
Market price -- high/low......... 26-20 29-23 30-25 32-25 32-20
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------
SEPTEMBER 27 DECEMBER 27 MARCH 28 JUNE 27 FISCAL YEAR
------------ ----------- ---------- ---------- -----------
(IN THOUSANDS EXCEPT FOR SHARE DATA)
<S> <C> <C> <C> <C> <C>
1998
Sales.............................. $3,828,244 $3,786,096 $3,711,822 $4,001,374 $15,327,536
Cost of sales...................... 3,130,883 3,082,913 3,035,112 3,250,728 12,499,636
Operating expenses................. 553,032 551,889 557,136 574,875 2,236,932
Interest expense................... 13,140 14,500 15,170 15,612 58,422
Other, net......................... (122) (303) 179 299 53
---------- ---------- ---------- ---------- -----------
Earnings before income taxes....... 131,311 137,097 104,225 159,860 532,493
Income taxes....................... 51,211 53,468 40,648 62,345 207,672
---------- ---------- ---------- ---------- -----------
Earnings before accounting
change........................... 80,100 83,629 63,577 97,515 324,821
Accounting change.................. -- (28,053) -- -- (28,053)
---------- ---------- ---------- ---------- -----------
Net earnings............. $ 80,100 $ 55,576 $ 63,577 $ 97,515 $ 296,768
========== ========== ========== ========== ===========
Per share:
Diluted earnings before
accounting change............. $ 0.23 $ 0.24 $ 0.19 $ 0.29 $ 0.95
Diluted earnings accounting
change effect................. -- (0.08) -- -- (0.08)
Diluted net earnings............. 0.23 0.16 0.19 0.29 0.86
Cash dividends................... 0.08 0.08 0.08 0.09 0.33
Market price -- high/low......... 20-17 23-18 27-22 27-22 27-17
Percentage increases -- 1999 vs.
1998:
Sales............................ 10% 12% 12% 20% 14%
Earnings before income taxes..... 8 3 14 20 12
Earnings before accounting
change........................ 8 3 14 20 12
Net earnings..................... 8 55 14 20 22
Diluted earnings per share before
accounting change............. 13 8 16 21 14
Diluted net earnings per share... 13 63 16 21 26
</TABLE>
33
<PAGE> 36
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
Except as otherwise indicated, the information required by Items 10, 11, 12 and
13 is included in the company's definitive proxy statement which was filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934 on
September 17, 1999 and such portions of said proxy statement are hereby
incorporated by reference thereto.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Executive Officers is included in Part I (Item 4A) of
this Form 10-K (page 8).
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
34
<PAGE> 37
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed, or incorporated by reference, as
part of this Form 10-K:
1. All financial statements. See index to Consolidated Financial
Statements on page 18 of this Form 10-K.
2. Financial Statement Schedule. See page 18 of this Form 10-K.
3. Exhibits.
3(a) Restated Certificate of Incorporation incorporated by
reference to Exhibit 3(a) to Form 10-K for the year
ended June 28, 1997 (File No. 1-6544).
3(b)# Bylaws of Sysco Corporation as amended May 12, 1999.
3(c) Form of Amended Certificate of Designation
Preferences and Rights of Series A Junior
Participating Preferred Stock, incorporated by
reference to Exhibit 3(c) to Form 10-K for the year
ended June 29, 1996 (File No. 1-6544).
4(a) Sixth Amendment and Restatement of Competitive
Advance and Revolving Credit Facility Agreement dated
May 31, 1996, incorporated by reference to Exhibit
4(a) to Form 10-K in the year ended June 27, 1996
(File No. 1-6544).
4(b) Agreement and Seventh Amendment to Competitive
Advance and Revolving Credit Facility Agreement dated
as of June 27, 1997 incorporated by reference to
Exhibit 4(a) to Form 10-K for the year ended June 28,
1997 (File No. 1-6544).
4(c)# Agreement and Eighth Amendment to Competitive Advance
and Revolving Credit Facility Agreement dated as of
June 22, 1998.
4(d) Senior Debt, dated as of June 15, 1995, between Sysco
Corporation and First Union National Bank of North
Carolina, Trustee, incorporated by reference to
Exhibit 4(a) to Registration Statement on Form S-3
filed June 6, 1995 (File No. 33-60023).
35
<PAGE> 38
4(e) First Supplemental Indenture, dated June 27, 1995,
between Sysco Corporation and First Union Bank of
North Carolina, Trustee as amended, incorporated by
reference to Exhibit 4(e) to Form 10-K for the year
ended June 29, 1996 (File No. 1-6544).
4(f) Second Supplemental Indenture, dated as of May 1,
1996, between Sysco Corporation and First Union Bank
of North Carolina, Trustee as amended, incorporated
by reference to Exhibit 4(f) to Form 10-K for the
year ended June 29, 1996 (File No. 1-6544).
4(g) Third Supplemental Indenture, dated as of April 25,
1997, between Sysco Corporation and First Union
National Bank of North Carolina, Trustee incorporated
by reference to Exhibit 4(g) to Form 10-K for the
year ended June 28, 1997 (File No. 1-6544).
4(h) Fourth Supplemental Indenture, dated as of April 25,
1997, between Sysco Corporation and First Union
National Bank of North Carolina, Trustee incorporated
by reference to Exhibit 4(h) to Form 10-K for the
year ended June 28,1997 (File No. 1-6544).
4(i) Fifth Supplemental Indenture, dated as of July 27,
1998 between Sysco Corporation and First Union
National Bank, Trustee incorporated by reference to
Exhibit 4 (h) to Form 10-K for the year ended June
27, 1998 (File No. 1-6554).
10(a)+ Amended and Restated Sysco Corporation Executive
Deferred Compensation Plan incorporated by reference
to Exhibit 10(a) to Form 10-K for the year ended July
1, 1995 (File No. 1-6544).
10(b)+ Fifth Amended and Restated Sysco Corporation
Supplemental Executive Retirement Plan incorporated
by reference to Exhibit 10(b) to Form 10-K for the
year ended June 28, 1997 (File No. 1-6544).
10(c)# Sysco Corporation Employee Incentive Stock Option
Plan.
10(d)+ Sysco Corporation 1995 Management Incentive Plan
incorporated by reference to Exhibit 10(e) to Form
10-K for the year ended July 1, 1995 (File No.
1-6544).
10(e)+# Sysco Corporation 1991 Stock Option Plan.
36
<PAGE> 39
10(f)+ Amendments to Sysco Corporation 1991 Stock Option
Plan dated effective September 4, 1997, incorporated
by reference to Exhibit 10(f) to Form 10-K for the
year ended June 28, 1997 (File No. 1-6554).
10(g)+# Amendments to Sysco Corporation 1991 Stock Option
Plan dated effective November 5, 1998.
10(h)+ Sysco Corporation Amended and Restated Non-Employee
Directors Stock Option Plan, incorporated by
reference to Exhibit 10(g) to Form 10-K for the year
ended June 28, 1997 (File No. 1-6544).
10(i)+# Amendment to the Amended and Restated Non-Employee
Directors Stock Option Plan dated effective November
5, 1998.
10(j)+ Sysco Corporation Non-Employee Directors Stock
Plan incorporated by reference to Appendix A of the
1998 Proxy Statement (File No. 1-06544).
10(k) Amended and Restated Shareholder Rights Agreement,
incorporated by reference to Registration Statement
on Form 8-A/A, filed May 29, 1996 (File No. 1-06544).
10(l) Amendment to the Amended and Restated Shareholder
Rights Agreement dated as of May 20, 1996,
incorporated by reference to Exhibit 1 to
Registration Statement on Form 8-A/A, filed July 16,
1999 (File No. 1-06544).
21# Subsidiaries of the Registrant
23# Independent Public Accountants' Consent
27# Financial Data Schedule
--------------------------------
+ Executive Compensation Arrangement pursuant to
601(b)(10)(iii)(A) of Regulation S-K
# Filed Herewith
37
<PAGE> 40
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Sysco Corporation has duly caused this Form 10-K to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 3rd day of
September, 1999.
SYSCO CORPORATION
By /s/ BILL M. LINDIG
-----------------------------
Bill M. Lindig
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities indicated and on the date indicated above.
PRINCIPAL EXECUTIVE, FINANCIAL & ACCOUNTING OFFICERS:
/s/ BILL M. LINDIG
- ------------------------------------- Chairman of the Board
Bill M. Lindig and Chief Executive Officer
/s/ JOHN K. STUBBLEFIELD, JR.
- ------------------------------------- Senior Vice President,
John K. Stubblefield, Jr. Finance and Administration
38
<PAGE> 41
DIRECTORS:
/s/ JOHN W. ANDERSON /s/ RICHARD G. MERRILL
- --------------------------------------- -------------------------------
John W. Anderson Richard G. Merrill
- --------------------------------------- -------------------------------
Gordon M. Bethune Frank H. Richardson
/s/ COLIN G. CAMPBELL /s/ RICHARD J. SCHNIEDERS
- --------------------------------------- -------------------------------
Colin G. Campbell Richard J. Schnieders
/s/ CHARLES H. COTROS /s/ PHYLLIS S. SEWELL
- --------------------------------------- -------------------------------
Charles H. Cotros Phyllis S. Sewell
/s/ JUDITH B. CRAVEN /s/ ARTHUR J. SWENKA
- --------------------------------------- -------------------------------
Judith B. Craven Arthur J. Swenka
/s/ FRANK A. GODCHAUX III /s/ THOMAS B. WALKER, JR.
- --------------------------------------- -------------------------------
Frank A. Godchaux III Thomas B. Walker, Jr.
/s/ JONATHAN GOLDEN /s/ JOHN F. WOODHOUSE
- --------------------------------------- -------------------------------
Jonathan Golden John F. Woodhouse
/s/ BILL M. LINDIG
- ---------------------------------------
Bill M. Lindig
39
<PAGE> 42
SYSCO CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Charged to Charged to Balance at
Beginning Costs and Other Accounts Deductions End of
Description Of Period Expenses Describe (1) Describe (2) Period
--------------- --------------- --------------- ------------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Allowance
For year ended for doubtful
June 28, 1997......... accounts $16,380,000 $21,588,000 $ 455,000 $21,183,000 $17,240,000
Allowance
For year ended for doubtful
June 27, 1998......... accounts $17,240,000 $22,959,000 $1,100,000 $21,218,000 $20,081,000
Allowance
For year ended for doubtful
July 3, 1999.......... accounts $20,081,000 $26,208,000 $ -- $25,194,000 $21,095,000
</TABLE>
(1) Allowance accounts resulting from acquisitions.
(2) Customer accounts written off, net of recoveries.
S-1
<PAGE> 43
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
3(a) Restated Certificate of Incorporation incorporated by reference
to Exhibit 3(a) to Form 10-K for the year ended June 28, 1997
(File No. 1-6544).
3(b)# Bylaws of Sysco Corporation as amended May 12, 1999.
3(c) Form of Amended Certificate of Designation Preferences and Rights
of Series A Junior Participating Preferred Stock, incorporated by
reference to Exhibit 3(c) to Form 10-K for the year ended June
29, 1996 (File No. 1-6544).
4(a) Sixth Amendment and Restatement of Competitive Advance and
Revolving Credit Facility Agreement dated May 31, 1996,
incorporated by reference to Exhibit 4(a) to Form 10-K in the
year ended June 27, 1996 (File No. 1-6544).
4(b) Agreement and Seventh Amendment to Competitive Advance and
Revolving Credit Facility Agreement dated as of June 27, 1997
incorporated by reference to Exhibit 4(a) to Form 10-K for the
year ended June 28, 1997 (File No. 1-6544).
4(c)# Agreement and Eighth Amendment to Competitive Advance and
Revolving Credit Facility Agreement dated as of June 22, 1998.
4(d) Senior Debt, dated as of June 15, 1995, between Sysco Corporation
and First Union National Bank of North Carolina, Trustee,
incorporated by reference to Exhibit 4(a) to Registration
Statement on Form S-3 filed June 6, 1995 (File No. 33-60023).
</TABLE>
<PAGE> 44
<TABLE>
<S> <C>
4(e) First Supplemental Indenture, dated June 27, 1995, between Sysco
Corporation and First Union Bank of North Carolina, Trustee as
amended, incorporated by reference to Exhibit 4(e) to Form 10-K
for the year ended June 29, 1996 (File No. 1-6544).
4(f) Second Supplemental Indenture, dated as of May 1, 1996, between
Sysco Corporation and First Union Bank of North Carolina, Trustee
as amended, incorporated by reference to Exhibit 4(f) to Form
10-K for the year ended June 29, 1996 (File No. 1-6544).
4(g) Third Supplemental Indenture, dated as of April 25, 1997, between
Sysco Corporation and First Union National Bank of North
Carolina, Trustee incorporated by reference to Exhibit 4(g) to
Form 10-K for the year ended June 28, 1997 (File No. 1-6544).
4(h) Fourth Supplemental Indenture, dated as of April 25, 1997,
between Sysco Corporation and First Union National Bank of North
Carolina, Trustee incorporated by reference to Exhibit 4(h) to
Form 10-K for the year ended June 28,1997 (File No. 1-6544).
4(i) Fifth Supplemental Indenture, dated as of July 27, 1998 between
Sysco Corporation and First Union National Bank, Trustee
incorporated by reference to Exhibit 4 (h) to Form 10-K for the
year ended June 27, 1998 (File No. 1-6554).
10(a)+ Amended and Restated Sysco Corporation Executive Deferred
Compensation Plan incorporated by reference to Exhibit 10(a) to
Form 10-K for the year ended July 1, 1995 (File No. 1-6544).
10(b)+ Fifth Amended and Restated Sysco Corporation Supplemental
Executive Retirement Plan incorporated by reference to Exhibit
10(b) to Form 10-K for the year ended June 28, 1997 (File No.
1-6544).
10(c)# Sysco Corporation Employee Incentive Stock Option Plan.
10(d)+ Sysco Corporation 1995 Management Incentive Plan incorporated by
reference to Exhibit 10(e) to Form 10-K for the year ended July
1, 1995 (File No. 1-6544).
10(e)+# Sysco Corporation 1991 Stock Option Plan.
</TABLE>
<PAGE> 45
<TABLE>
<S> <C>
10(f)+ Amendments to Sysco Corporation 1991 Stock Option Plan dated
effective September 4, 1997, incorporated by reference to Exhibit
10(f) to Form 10-K for the year ended June 28, 1997 (File No.
1-6554).
10(g)+# Amendments to Sysco Corporation 1991 Stock Option Plan dated
effective November 5, 1998.
10(h)+ Sysco Corporation Amended and Restated Non-Employee Directors
Stock Option Plan, incorporated by reference to Exhibit 10(g) to
Form 10-K for the year ended June 28, 1997 (File No. 1-6544).
10(i)+# Amendment to the Amended and Restated Non-Employee Directors
Stock Option Plan dated effective November 5, 1998.
10(j)+ Sysco Corporation Non-Employee Directors Stock Plan incorporated
by reference to Appendix A of the 1998 Proxy Statement
(File No. 1-06544).
10(k) Amended and Restated Shareholder Rights Agreement, incorporated
by reference to Registration Statement on Form 8-A/A, filed May
29, 1996 (File No. 1-06544).
10(l) Amendment to the Amended and Restated Shareholder Rights
Agreement dated as of May 20, 1996, incorporated by reference to
Exhibit 1 to Registration Statement on Form 8-A/A, filed July 16,
1999 (File No. 1-06544).
21# Subsidiaries of the Registrant
23# Independent Public Accountants' Consent
27# Financial Data Schedule
-------------------------------
+ Executive Compensation Arrangement pursuant to 601(b)(10)(iii)
(A) of Regulation S-K
# Filed Herewith
</TABLE>
<PAGE> 1
EXHIBIT 3(b)
AMENDED AND RESTATED
BYLAWS
OF
SYSCO CORPORATION
(A Delaware Corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by, or in the name
of, the Corporation by the Chairman or Vice-Chairman of the Board of Directors
or the President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Corporation
certifying the number of shares owed by him in the Corporation. Any or all of
the signatures on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
Whenever the Corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
Corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The Corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost, stolen,
or destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction of any such
certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS. The Corporation shall not issue
fractions of a share. In lieu thereof it shall either pay in cash the fair value
of fractions of a share, as determined by the Board of Directors, to those
entitled thereto or issue scrip or fractional warrants in registered or bearer
form over the manual or facsimile signature of an officer of the Corporation or
of its agent, exchangeable as therein provided for full shares, but such scrip
or fractional warrants shall not entitle the holder to any rights of a
stockholder except as therein provided. Such scrip or fractional warrants may be
issued subject to the condition that the same
<PAGE> 2
shall become void if not exchanged for certificates representing full shares of
stock before a specified date, or subject to the condition that the shares of
stock for which such scrip or fractional warrants are exchangeable may be sold
by the Corporation and the proceeds thereof distributed to the holders of such
scrip or fractional warrants, or subject to any conditions which the Board of
Directors may determine.
3. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the Corporation shall be made
only on the stock ledger of the Corporation, in accordance with the terms and
procedures as outlined in The Uniform Stock Transfer Act.
4. RECORD DATE FOR STOCKHOLDERS. (a) Meetings. In order that the
Corporation may determine the stockholders entitled to notice of, or to vote at,
any meeting of stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than 60 nor less
than ten days before the record date is fixed. If no record date is fixed by the
Board of Directors: (1) the record date for determining stockholders entitled to
notice of, or to vote at, a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; and (2) the record date for determining stockholders
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) Record Date for Action by Written Consent. In order that
the Corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten (10) days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. Any stockholder of
record seeking to have the stockholders authorize or take corporate action by
written consent shall, by written notice to the Secretary, request the Board of
Directors to fix a record date. The Board of Directors may within ten (10)
business days after the date on which such a request is received, adopt a
resolution fixing the record date (unless a record date has previously been
fixed by the Board of Directors pursuant to the first sentence of this Section
4(b)). If no record date has been fixed by the Board of Directors pursuant to
the first sentence of this Section 4(b) or otherwise within ten (10) business
days after the date on which such a request is received, the record date for
determining stockholders entitled to consent to such corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or any officer or agent of the Corporation having
custody of the book in which proceedings of stockholders meetings are recorded,
to the attention of the Secretary. Delivery shall be by hand or by certified or
registered mail, return receipt requested.
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If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by applicable law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be the close of business on the date on which the Board
of Directors adopts the resolution taking such prior action.
5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the Corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation.
6. STOCKHOLDER MEETINGS.
- Time. The first annual meeting shall be held on the second Friday in
October, 1970; and each successive annual meeting shall be held on the date and
at the time and place fixed, from time to time, by the directors, and if no date
has been set by the directors, then on the first Friday in November in each
year, unless said date falls on a legal holiday, in which case the meeting shall
be held on the secular day next following. A special meeting shall be held on
the date and at the time fixed by the directors.
- Place. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the Corporation in the State of
Delaware.
- Call. Annual meetings and special meetings may be called by the
Chairman of the Board or by the directors or by any officer instructed by the
directors to call the meeting.
- Notice or Waiver of Notice. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the Corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall, (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. If any action is proposed to be taken which would, if
taken, entitle stockholders to receive payment for their shares of stock, the
notice shall
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include a statement of that purpose and to that effect. Except as otherwise
provided by the General Corporation Law, a copy of the notice of any meeting
shall be given, personally or by mail, not less than ten days nor more than
fifty days before the date of the meeting, unless the lapse of the prescribed
period of time shall have been waived, and directed to each stockholder at his
record address or at such other address which he may have furnished by request
in writing to the Secretary of the Corporation. Notice by mail shall be deemed
to be given when deposited, with postage thereon prepaid, in the United States
mail. If a meeting is adjourned to another time, not more than thirty days
hence, and/or to another place, and if an announcement of the adjourned time
and/or place is made at the meeting, it shall not be necessary to give notice of
the adjourned meeting unless the directors, after adjournment, fix a new record
date for the adjourned meeting. Notice need not be given to any stockholder who
submits a written waiver of notice by him before or after the time stated
therein. Attendance of a person at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.
- Stockholder List. The officer who has charge of the stock ledger or
the Corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at the place within the city or other municipality or community where the
meeting is to be held, which location shall be specified in the notice of the
meeting, or if not so specified, at the location where the meeting is to be
held. The list shall also be produced and kept at the time and at the location
where the meeting is to be held. The list shall also be produced and kept at the
time and at the location of the meeting during the whole time thereof, and may
be inspected by any stockholder who is present. The stock ledger shall be the
only evidence as to who the stockholders entitled to examine the stock ledger,
the list required by this section, or the books of the Corporation, or to vote
at any meeting of stockholders.
- Conduct of Meeting. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the Chairman of the Board, the President, a Vice-President, or, if
none of the foregoing is in office and present and acting, by a chairman to be
chosen by the stockholders. The Secretary of the Corporation, or in his absence,
an Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present, the Chairman of the meeting
shall appoint a secretary of the meeting.
- Proxy Representation. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy
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provides for a longer period. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and, if, and only as long as, it is coupled with
an interest sufficient in law to support an irrevocable power. A proxy may be
made irrevocable regardless of whether the interest with which it is coupled is
an interest in the stock itself or an interest in the Corporation generally.
- Inspectors and Judges. The directors, in advance of any meeting, may,
but need not, appoint one or more inspectors of election or judges of the vote,
as the case may be, to act at the meeting or any adjournment thereof. If an
inspector or inspectors or judge or judges are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors or
judges. In case any person who may be appointed as in inspector or judge fails
to appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector or judge, if any, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspector or judge at such meeting with strict impartiality and according to the
best of his ability. The inspectors or judges, if any, shall determine the
number of shares of stock outstanding and the voting power of each, the shares
of stock represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting, the
inspector or inspectors or judge or judges, if any, shall make a report in
writing of any challenge, question or matter determined by him or them and
execute a certificate of any fact found by him or them.
- Quorum. The holders of thirty-five percent (35%) of the shares
entitled to vote shall constitute a quorum at a meeting of stockholders for the
transaction of any business. The stockholders present may adjourn the meeting
despite the absence of a quorum.
- Voting. Except as may otherwise be provided in the certificate of
incorporation, or in a resolution of the Board of Directors in accordance with
Section 151 of the General Corporation Law of Delaware, each share of stock
shall entitle the holder thereof to one vote. In the election of directors, a
plurality of the votes cast shall elect. Any other action shall be authorized by
a majority of the votes cast except where the General Corporation Law prescribes
a different percentage of votes and/or a different exercise of voting power. In
the election of directors, voting need not be by ballot. Voting by ballot shall
not be required for any other corporate action, except as otherwise provided by
the General Corporation Law.
7. STOCKHOLDER ACTION WITHOUT MEETINGS. (a) Written Consent. Whenever
the vote of stockholders at a meeting thereof is required or permitted to be
taken or in connection with any corporate action, the meeting and vote of
stockholders may be dispensed with if all of the stockholders who would have
been entitled to vote upon the action if such meeting were held shall consent in
writing to such corporate action being taken; or if less than all of said
stockholders, but not less than those having at least the minimum voting power
required to take corporate action under the provisions of the General
Corporation Law, shall consent in writing to such corporate action; provided
that prompt notice by given to all stockholders of the taking of such action
without a meeting and by less than unanimous written consent.
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(b) Review of Written Consent. In the event of the delivery, in the
manner provided by Section 4(b), to the Corporation of the requisite written
consent or consents to take corporate action and/or any related revocation or
revocations (each such written consent and related revocation is referred to in
this Section 7(b) as a "Consent"), the Secretary shall provide for the
safe-keeping of such Consent and shall conduct such reasonable investigation as
he or she deems necessary or appropriate for the purpose of ascertaining the
validity of the Consent and all matters incident thereto, including, without
limitation, whether stockholders having the requisite voting power to authorize
or take the action specified in the Consent have given consent; provided,
however, that if the corporate to which the Consent relates is the election,
designation, appointment, removal or replacement of one or more members of the
Board of Directors, the Secretary shall engage nationally recognized independent
inspectors of elections for the purpose of performing the actions of the
Secretary under this Section 7(b). For the purpose of permitting the Secretary
or the independent inspectors (as the case may be) to perform the functions
under this Section 7(b), no action by written consent without a meeting shall be
effective until such date as the Secretary or the independent inspectors (as the
case may be) certify to the Corporation that the Consents delivered to the
Corporation in accordance with Section 7(b) represent at least the minimum
number of votes that would be necessary to take the corporate action. Nothing
contained in this Section 7(b) shall in any way be construed to suggest or imply
that the Board of Directors or any stockholder shall not be entitled to contest
the validity of any Consent, whether before or after such investigation or
certification by the Secretary or the independent inspectors (as the case may
be), or to take any other actions including, without limitation, the
commencement, prosecution or defense of any litigation with respect thereto, and
the seeking of injunctive relief in such litigation.
(c) Effectiveness of Written Consent. Every written consent shall
bear the date of signature of each stockholder who signs the written consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty (60) days after the date the earliest dated written
consent was received in accordance with Section 4(b), a written consent or
consents signed by a sufficient number of stockholders to take such action are
delivered to the Corporation in the manner prescribed in Section 4(b).
8. ADVANCE NOTICE PROVISIONS FOR ELECTION OF DIRECTORS. Only persons
who are nominated in accordance with the following procedures shall be eligible
for election as directors of the Corporation. Nominations of persons for
election to the Board of Directors may be made at any annual meeting of
stockholders, or at any special meeting of stockholders called for the purpose
of electing directors, (a) by or at the direction of the Board of Directors (or
any duly authorized committee thereof) or (b) by any stockholder of the
Corporation (i) who is a stockholder of record on the date of the giving of the
notice provided for in this Section 8 and on the record date for the
determination of stockholders entitled to vote at such meeting and (ii) who
complies with the notice procedures set forth in this Section 8.
In addition to any other applicable requirements, for a nomination to
be made by a stockholder such stockholder must have given timely notice thereof
in proper written form to the Secretary of the Corporation.
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To be timely, a stockholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
(a) in the case of an annual meeting, not less than ninety (90) days nor more
than 130 days prior to the date of the anniversary of the previous year's annual
meeting; provided, however, that in the event the annual meeting is scheduled to
be held on a date more than thirty (30) days prior to or delayed by more than
sixty (60) days after such anniversary date, notice by the stockholder in order
to be timely must be so received not later than the later of the close of
business ninety (90) days prior to such annual meeting or the tenth (10th) day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual meeting was made and
(b) in the case of a special meeting of stockholders called for the purpose of
electing directors, not later than the close of business on the tenth (10th) day
following the day on which notice of the date of the special meeting was mailed
or public disclosure of the date of the special meeting was made, whichever
first occurs (and in no event shall the public announcement of an adjournment of
the meeting commence a new time period for a giving of a stockholder's notice
under this Section).
To be in proper written form, a stockholder's notice to the Secretary
must set forth (a) as to each person whom the stockholder proposes to nominate
for election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the person and (iv) any
other information relating to the person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed nominee to being named
as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 8. If the Chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the Chairman shall declare to
the meeting that the nomination was defective and such defective nomination
shall be disregarded.
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9. STOCKHOLDER PROPOSALS; BUSINESS TO BE TRANSACTED AT MEETINGS. At any
special meeting of the stockholders, only such business shall be conducted as
shall have been brought before the meeting by or at the direction of the Board
of Directors (or any duly authorized committee thereof). No business may be
transacted at an annual meeting of stockholders, other than business that is
either (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors (or any duly authorized
committee thereof), (b) otherwise properly brought before the annual meeting by
or at the direction of the Board of Directors (or any duly authorized committee
thereof) or (c) otherwise properly brought before the annual meeting by any
stockholder of the Corporation (i) who is a stockholder of record on the date of
the giving of the notice provided for in this Section 9 and on the record date
for the determination of stockholders entitled to vote at such annual meeting
and (ii) who complies with the notice procedures set forth in this Section 9.
In addition to any other applicable requirements (including, without
limitation, Securities and Exchange Commission rules and regulations with
respect to inclusion of stockholder proposals in the Corporation's annual Proxy
Statement), for business to be properly brought before an annual meeting by a
stockholder, such stockholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than ninety (90) days nor more than 130 days prior to the date of the
anniversary of the previous year's annual meeting; provided, however, that in
the event the annual meeting is scheduled to be held on a date more than thirty
(30) days prior to or delayed by more than sixty (60) days after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the later of the close of business ninety (90) days
prior to such annual meeting or the tenth (10th) day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was first made by the Corporation.
In no event shall the public announcement of an adjournment of an annual meeting
commence a new time period for a giving of a stockholder's notice under this
Section 9.
To be in proper written form, a stockholder's notice to the Secretary
must set forth as to each matter such stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and record address of such stockholder, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by such stockholder, (iv) a description of
all arrangements or understandings between such stockholder and any other person
or persons (including their names) in connection with the proposal of such
business by such stockholder and any material interest of such stockholder in
such business, (v) the names and addresses of other stockholders known by the
stockholder proposing such business to support the proposal, and the class and
number of shares of the Corporation's capital stock known to be beneficially
owned by such other stockholders, and (vi) a representation that such
stockholder intends to appear in person or by proxy at the annual meeting to
bring such business before the meeting.
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No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 9, provided, however, that, once business
has been properly brought before the annual meeting in accordance with such
procedures, nothing in this Section 9 shall be deemed to preclude discussion by
any stockholder of any such business. If the Chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business of the Corporation shall be
managed by the Board of Directors of the Corporation. The use of the phrase
"whole board" herein refers to the total number of directors which the
Corporation would have if there were no vacancies.
2. QUALIFICATION AND NUMBER. The property, affairs and business of the
Corporation shall be managed by its Board of Directors, consisting of not less
than three nor more than sixteen persons, with the exact number of directors
determined from time to time by the Board of Directors. A director need not be a
stockholder, a citizen of the United States or a resident of the State of
Delaware.
The directors shall be divided into three classes. The first class
(Class I) shall consist of five directors and the term of office of such class
shall expire at the next Annual Meeting of Stockholders in 1978. The second
class (Class II) shall consist of five directors and the term of office of such
class shall expire at the Annual Meeting of Stockholders in 1979. The third
class (Class III) shall consist of five directors and the term of office of such
third class shall expire at the Annual Meeting of Stockholders in 1980. At the
Annual Meeting of Stockholders in 1977, five directors shall be elected as Class
III directors whose term of office shall expire at the Annual Meeting of
Stockholders in 1980, one director shall be elected as a Class I director whose
term of office shall expire at the Annual Meeting of Stockholders in 1978, and
one director shall be elected as a Class II director whose term of office shall
expire at the Annual Meeting of Stockholders in 1979. Should the number of
directors be increased or decreased in the future, no class of directors shall
have more than one director more than any other class of directors. At each
annual election commencing at the Annual Meeting of Stockholders in 1978, the
successors to the class of directors whose term expires at that time shall be
elected to hold office for the term of three years to succeed those whose term
expires, so that the term of office of one class of directors shall expire in
each year. Each director shall hold office for the term for which he is elected
or appointed or until his successor shall be elected or qualified, or until his
death, removal or resignation. Newly created directorships resulting from an
increase in the number of directors by action of the Board of Directors, may be
filled by the Board of Directors at the meeting at which the number of directors
is increase, or any subsequent meeting of the directors, by a majority of the
directors then in office, although less than a quorum, or by the stockholders at
a meeting called for the purpose of electing directors.
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3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
first Annual Meeting of Stockholders and until their successors have been
elected and qualified or until their earlier resignation or removal and shall
serve staggered terms as provided for in ARTICLE II, Paragraph 2 of these
Bylaws. Any director may resign at any time upon written notice to the
Corporation. Thereafter, directors who are elected at an annual meeting of
stockholders, and directors who are elected in the interim to fill vacancies and
newly created directorships, shall hold office until the term of office to which
they are elected or until their successors have been elected and qualified or
until their earlier resignation or removal. In the interim between annual
meetings of stockholders or of special meetings of stockholders called for the
election of directors and/or for the removal of one or more directors and for
the filling of any vacancy in that connection, newly created directorships and
any vacancies in the Board of Directors, including vacancies resulting from the
removal of directors for cause or without cause, may be filled only for the
remainder of the term of the director or directors whose term he or they may
fill, by the vote of a majority of the remaining directors then in office,
although less than a quorum, or by the sole remaining director.
4. MEETINGS.
- Time. Meetings shall be held at such time as the Board shall fix
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- Place. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- Call. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, or the President, or of a majority of
the directors in office.
- Notice or Actual or Constructive Waiver. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings upon three days' notice for the convenient assembly of the
directors thereat. The notice of any meeting need not specify the purpose of the
meeting. Any requirement of furnishing a notice shall be waived by any director
who signs a written waiver of such notice before or after the time stated
therein.
- Quorum and Action. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, and
except as otherwise provided by the General Corporation Law, the act of the
Board shall be the act by vote of a majority of the directors present at a
meeting, a quorum being present. The quorum and voting provisions herein stated
shall not be construed as conflicting with any provisions of the General
Corporation Law and these Bylaws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board.
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- Chairman of the Meeting. The Chairman of the Board, and if present
and acting, shall preside at all meetings. Otherwise, the President, if present
and acting, or any other Director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Any and all of the directors may be removed
for cause or without cause by the stockholders. One or more of the directors may
be removed for cause by the Board of Directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, including an
Executive Committee, each committee to consist of two or more of the directors
of the Corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it. In the absence or disqualification of any member of any such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
7. ACTION IN WRITING. Any action required or permitted to be taken at
any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The directors shall elect a Chairman of the Board, a President, a
Secretary, and a Treasurer, and may elect a Vice-Chairman thereof, and one or
more Vice-Presidents, Assistant Secretaries, and Assistant Treasurers, and may
elect or appoint such other officers and agents as are desired. The President
may but need not be a director. Any number of offices may be held by the same
person. In the absence, disqualification, death or removal of the Chairman of
the Board, the Vice Chairman, the President, or any other director chosen by the
Board, shall serve in lieu of the said Chairman. The Chairman of the Board shall
be an ex officio member of all standing committees unless otherwise provided in
the resolution appointing such committees. The Chairman of the Board shall have
power to call meetings of the shareholders and directors of the Corporation and
shall have the power to act as chairman of such meetings.
Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of stockholders and until his successor has
been elected and qualified. Any officer may resign at any time upon written
notice.
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The Chairman, if any, of the Board of Directors shall preside at all
meetings of stockholders and directors. Except where by law the signature of the
President is required, he shall possess the same power as the President to sign
all certificates, contracts and other instruments of the Corporation which may
be authorized by the Board of Directors. During the absence or disability of the
President he shall exercise all the powers and discharge all the duties of the
President.
The President, in the absence of the Chairman of the Board, shall
preside at all meetings of stockholders and directors, shall have general
supervision of the affairs of the Corporation, shall sign or countersign all
certificates, contracts and other instruments of the Corporation as authorized
by the Board of Directors; shall make reports to the Board of Directors and
stockholders and perform all such other duties as are incident to his office or
are properly required of him by the Board of Directors.
The Vice Presidents, during the absence or disability of the President
and the Chairman of the Board of Directors, in the order designated by the Board
of Directors, shall exercise all the functions of the President. Each Vice
President shall have such powers and discharge such duties as may be assigned to
him from time to time by the Board of Directors.
The Secretary shall issue notice of all meetings of stockholders and
directors, shall keep minutes of all meetings, shall have charge of the seal of
the Corporation and the corporate books, and shall make such reports and perform
such other duties as are incident to his office, or are properly required of him
by the Board of Directors.
The Treasurer shall have the custody of all monies and securities of
the Corporation and shall keep regular books of account. He shall disburse the
funds of the Corporation in payment of the just demands against the Corporation
or as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Board of Directors from time to time as
may be required of him, an account of all his transactions as Treasurer and of
the financial condition of the Corporation. He shall perform all duties incident
to his office or that are properly required of him by the Board of Directors.
The Assistant Treasurers, in the order of their seniority, shall, in
the absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer, and shall perform such other duties as the Board of
Directors shall prescribe.
In the case of absence or inability to act of any officer of the
Corporation and of any person herein authorized to act in his place, the Board
of Directors may, from time to time, delegate the powers or duties of such
officer to any other officer or any director or other person whom it may select.
Vacancies in any office arising from any cause may be filled by the
directors at any regular or special meeting.
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<PAGE> 13
The Board of Directors may appoint such other officers and agents as it
shall deem necessary or expedient, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
The Board of Directors may remove any officer for cause or without
cause.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe. The Corporation seal may be a facsimile seal, if the Board
shall so determine.
ARTICLE V
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be subject
to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
The power to amend, alter, and repeal these Bylaws and to adopt new
Bylaws shall be vested in the Board of Directors; provided, that the Board of
Directors may delegate such power, in whole or in part, to the stockholders; and
provided, further, that any Bylaw, other than an initial Bylaw, which provides
for the election of directors by classes for staggered terms shall be adopted by
the stockholders.
ARTICLE VII
INDEMNIFICATION
(a) Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another Corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee, or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader
13
<PAGE> 14
indemnification rights than permitted prior thereto), against all expense,
liability and loss (including attorney's fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (c) of this Article VII hereof with respect to proceedings to enforce
rights to indemnification, the Corporation shall indemnify any such indemnitee
in connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.
(b) Right to Advancement of Expenses. The right to indemnification
conferred in paragraph (a) of this Article VII shall include the right to be
paid by the Corporation the expenses incurred in defending any proceeding for
which such right to indemnification is applicable in advance of its final
disposition (hereinafter an "advancement of expenses"; provided, however, that,
if the Delaware General Corporation Law requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an employee benefit plan)
shall be made only upon the delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Article VII or otherwise.
(c) Right of Indemnitee to Bring Suit. The rights to indemnification
and to the advancement of expenses conferred in paragraphs (a) or (b) of this
Article VII shall be contract rights. If a claim under paragraph (a) or (b) of
this Article VII is not paid in full by the Corporation within sixty days after
a written claim has been received by the Corporation, except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be twenty days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to any advancement of expenses), it shall be a defense that the
indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. In any suit by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking, the
Corporation shall be entitled to recover such expenses upon a final adjudication
that the indemnitee has not met any applicable standard for indemnification set
forth in the Delaware General Corporation Law. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel or its
stockholders) that the indemnitee has not
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<PAGE> 15
met Such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article VII or otherwise shall be on the Corporation.
(d) Non-Exclusivity of Rights. The rights to indemnification and to
the advancement of expenses conferred in this Article VII shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, the Corporation's certificate of incorporation, Bylaw, agreement, vote
of stockholders or disinterested directors or otherwise.
(e) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
-------------------------------------------
Secretary
[CORPORATE SEAL]
15
<PAGE> 1
EXHIBIT 4(c)
EXECUTION COPY
AGREEMENT AND EIGHTH AMENDMENT
TO
COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
THIS AGREEMENT AND EIGHTH AMENDMENT TO COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT (this "Amendment") dated as of June 22, 1998
is among SYSCO CORPORATION, a Delaware corporation (the "Company"), the banks
listed on the signature pages hereof (the "Banks"), CHASE BANK OF TEXAS, N.A.
(formerly known as Texas Commerce Bank National Association), a national banking
association, as agent for the Banks (in such capacity, the "Agent"), and THE
CHASE MANHATTAN BANK, a New York banking corporation (successor to Chemical
Bank), as auction administration agent (in such capacity, the "Auction
Administration Agent").
PRELIMINARY STATEMENT
The Company, the Banks, certain other banks, the Agent and the Auction
Administration Agent have entered into a Competitive Advance and Revolving
Credit Facility Agreement dated as of July 27, 1988 as modified by an Agreement
and First Amendment to Competitive Advance and Revolving Credit Facility
Agreement dated as of February 14, 1989, by an Agreement and Second Amendment to
Competitive Advance and Revolving Credit Facility Agreement and Modification of
Notes dated as of May 1, 1989, by an Agreement and Third Amendment to
Competitive Advance and Revolving Credit Facility Agreement and Modification of
Notes dated as of January 2, 1990, by an Agreement and Fourth Amendment to
Competitive Advance and Revolving Credit Facility Agreement dated as of January
31, 1994, and by an
<PAGE> 2
Agreement and Fifth Amendment to Competitive Advance and Revolving Credit
Facility Agreement dated as of November 15, 1994, as amended and restated by a
Sixth Amendment and Restatement of Competitive Advance and Revolving Credit
Facility Agreement dated as of May 31, 1996, and as further modified by an
Agreement and Seventh Amendment to Competitive Advance and Revolving Credit
Facility Agreement dated as of June 27, 1997 (said Competitive Advance and
Revolving Credit Facility Agreement as so modified, amended and restated and
further modified being the "Credit Agreement"). All capitalized terms defined in
the Credit Agreement and not otherwise defined herein shall have the same
meanings herein as in the Credit Agreement. The Company, the Banks, the Agent
and the Auction Administration Agent have agreed, upon the terms and conditions
specified herein, to amend the Credit Agreement as hereinafter set forth:
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the Company, the Banks, the Agent and the
Auction Administration Agent hereby agree as follows:
SECTION 1. Amendments to Section 1.01 of the Credit Agreement. The
definition of the term "Original Termination Date" contained in Section 1.01 of
the Credit Agreement is hereby amended in its entirety to read as follows:
" 'Original Termination Date' means July 7, 2003.".
SECTION 2. Conditions of Effectiveness. This Amendment shall become
effective when, and only when the following conditions shall have been
fulfilled:
(a) the Company, the Agent, the Auction Administration Agent and each
Bank shall have executed a counterpart hereof and delivered the same to the
Agent or, in the case of any Bank as to which an executed counterpart hereof
shall not have been so delivered, the Agent shall
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<PAGE> 3
have received written confirmation by telecopy or other similar writing from
such Bank of execution of a counterpart hereof by such Bank; and
(b) the Agent shall have received from the Company a certificate of the
Secretary or Assistant Secretary of the Company certifying that attached thereto
is (i) a true and complete copy of the general borrowing resolutions of the
Board of Directors of the Company authorizing the execution, delivery and
performance of the Credit Agreement, as amended hereby, and (ii) the incumbency
and specimen signature of each officer of the Company executing this Amendment.
SECTION 3. Representations and Warranties True; No Default or Event of
Default. The Company hereby represents and warrants to the Agent, the Auction
Administration Agent and the Banks that after giving effect to the execution and
delivery of this Amendment (a) the representations and warranties set forth in
the Credit Agreement (as modified hereby) are true and correct on the date
hereof as though made on and as of such date; provided, however, that for
purposes of this clause (a), Schedule II as used in Section 4.02 of the Credit
Agreement shall be deemed to include any supplements to such Schedule delivered
to the Agent and the Banks by the Company prior to the date of this Amendment
and (b) neither any Default nor Event of Default has occurred and is continuing
as of the date hereof.
SECTION 4. Reference to the Credit Agreement and Effect on the Notes
and Other Documents Executed Pursuant to the Credit Agreement.
(a) Upon the effectiveness of this Amendment, each reference in the
Credit Agreement to "this Agreement," "hereunder," "herein," "hereof" or words
of like import shall mean and be a reference to the Credit Agreement, as amended
hereby.
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<PAGE> 4
(b) Upon the effectiveness of this Amendment, each reference in the
Notes and the other documents and agreements delivered or to be delivered
pursuant to the Credit Agreement shall mean and be a reference to the Credit
Agreement, as amended hereby.
(c) The Credit Agreement and the Notes and other documents and
agreements delivered pursuant to the Credit Agreement, and modified by the
amendments referred to above, shall remain in full force and effect and are
hereby ratified and confirmed.
SECTION 5. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
SECTION 6. GOVERNING LAW; BINDING EFFECT. THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
APPLICABLE FEDERAL LAW AND SHALL BE BINDING UPON THE COMPANY, THE AGENT, THE
AUCTION ADMINISTRATION AGENT AND THE BANKS AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS.
SECTION 7. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
SECTION 8. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED HEREBY,
THE NOTES AND THE LETTER AGREEMENTS REFERRED TO IN SECTIONS 2.05(b) AND 2.05(c)
OF THE CREDIT AGREEMENT CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION
26.02 OF THE TEXAS BUSINESS
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<PAGE> 5
AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed effective as of the date first stated herein, by their respective
officers thereunto duly authorized.
SYSCO CORPORATION
By: /s/ DIANE DAY SANDERS
-------------------------------------
Name: Diane Day Sanders
Title: Vice President & Treasurer
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
(FORMERLY KNOWN AS TEXAS COMMERCE BANK
NATIONAL ASSOCIATION),
INDIVIDUALLY AND AS AGENT
By: /s/ MARY ARNOLD
-------------------------------------
Mary Arnold
Vice President
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<PAGE> 7
THE CHASE MANHATTAN BANK
(SUCCESSOR TO CHEMICAL BANK), AS AUCTION
ADMINISTRATION AGENT
By: /s/ JANET M. BELDEN
-------------------------------------
Name: Janet M. Belden
Title: Vice President
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<PAGE> 8
BANK OF AMERICA ILLINOIS
(FORMERLY KNOWN AS CONTINENTAL BANK N.A.)
By: /s/ W. THOMAS BARNETT
----------------------------------------
Name: W. Thomas Barnett
Title: Managing Director
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<PAGE> 9
NATIONSBANK, N.A.
(SUCCESSOR BY MERGER TO NATIONSBANK OF
TEXAS, N.A.)
By: /s/ RICHARD L. NICHOLS, JR.
-------------------------------------
Name: Richard L. Nichols, Jr.
Title: Vice President
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<PAGE> 10
FIRST UNION NATIONAL BANK
By: /s/ MARY J. AMATORE
-------------------------------------
Name: Mary J. Amatore
Title: Vice President
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THE TORONTO-DOMINION BANK
By: /s/ AZAR S. AZARPOUR
-------------------------------------
Name: Azar S. Azarpour
Title: Mgr. Cr. Admin.
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<PAGE> 12
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By: /s/ PHILIPPE R. SANDMEIER
-------------------------------------
Name: Philippe R. Sandmeier
Title: Director
By: /s/ PAULA MUELLER
-------------------------------------
Name: Paula Mueller
Title: Vice President Structured Finance
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WACHOVIA BANK OF GEORGIA,
NATIONAL ASSOCIATION
By: /s/ STEVEN M. TAKEI
-------------------------------------
Name: Steven M. Takei
Title: Senior Vice President
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WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ EDITH R. LIM
-------------------------------------
Name: Edith R. Lim
Title: Vice President
By: /s/ JUDY A. VODHANEL
-------------------------------------
Name: Judy A. Vodhanel
Title: Vice President
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<PAGE> 1
EXHIBIT 10(c)
EMPLOYEE INCENTIVE STOCK OPTION PLAN
SYSCO CORPORATION
1. PURPOSE.
This Employee Incentive Stock Option Plan (the "Plan") is intended as
an incentive and to encourage stock ownership by certain officers and other key
executive employees of Sysco Corporation (the "Corporation"), or of its
subsidiary corporations as that term is defined in Section 425(f) of the
Internal Revenue Code of 1954 (the "Subsidiary" or "Subsidiaries"), or of its
Operating Divisions as that term is defined in Subdivision (C) of Section
6(e)(2)(X) below (subsidiaries and Operating Divisions are herein collectively
called "Subsidiaries") so that they may acquire or increase their proprietary
interest in the Corporation, and to reward them properly for meritorious or
profit producing services to the Corporation or the Subsidiaries. It is further
intended that options issued pursuant to this Plan shall constitute incentive
stock options within the meaning of Sec. 422A of the Internal Revenue Code of
1954, as amended by the Economic Recovery Act of 1951.
2. ADMINISTRATION.
The Plan shall be administered by a committee appointed by the Board of
Directors of the Corporation (the "Committee"). The Committee shall consist of
not less than three members of the Corporation's Board of Directors. The Board
of Directors may from time to time remove members from or add members to the
Committee. Vacancies on the Committee, however caused, shall be filled by the
Board of Directors. The Committee shall select one of its members as Chairman
and shall hold meetings at such times and places as it may determine. The action
of a majority of the Committee at which a quorum is present, or acts reduced to
or approved in writing by a majority of the members of the Committee, shall be
the valid acts of the Committee. Each Director while a member of the Committee
shall meet the definition of "disinterested person" contained in Rule 16b-3 of
the Securities Exchange Commission. The Committee shall from time to time at its
discretion designate the key executive employees who shall be granted options
and the number of shares to be optioned to each.
The interpretation and construction by the Committee of any provisions
of the Plan or of any option granted under it shall be final. No member of the
Board of Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it.
3. ELIGIBILITY.
The persons who shall be eligible to receive options shall be such key
executive employees (including officers, whether or not they are Directors) of
the Corporation or its Subsidiaries as the Committee shall select from time to
time ("Optionee" or "Optionees"). An
<PAGE> 2
Optionee may hold more than one option, but only on the terms and subject to the
restrictions hereafter set forth.
4. STOCK.
The stock subject to the options shall be shares of the Corporation's
authorized and unissued or reacquired $1 par value common stock (the term
"shares" as used herein shall refer to the said $1 par value common voting
shares of the Corporation, and the term "Shares" shall refer to shares which are
subject to an option granted under the Plan). The aggregate number of shares
which may be issued under options pursuant to the Plan shall not exceed 600,000
shares. The limitations established by each of the preceding sentences shall be
subject to adjustment as provided in Section 660 of the Plan.
In the event that any outstanding option under the Plan for any reason
expires or is terminated, the Shares allocable to the unexercised portion of
such option may again be subjected to an option under the Plan.
5. ANNUAL LIMITATION.
No Optionee shall be granted in any calendar year, options to purchase
shares having an aggregate fair market value (determined at the date of grant of
such options) in excess of (i) $100,000 plus (ii) with respect to each of the
three preceding calendar years one-half of the difference between the aggregate
fair market value determined (at the date of grant of the options) of the Shares
for which the Optionee was granted options pursuant to this Plan in such year
and $100,000; provided that any amount for any such year taken into account in
determining the aggregate fair market value of Shares for which options are
granted in a subsequent calendar year (the "First Carryover Year") shall not
again be taken into account in a year subsequent to the First Carryover Year.
6. TERMS AND CONDITIONS OF OPTION.
Options granted pursuant to the Plan shall be authorized by the
Committee and shall be evidenced by agreements in such form as the Committee
shall from time to time approve which agreements shall contain specifically or
be subject to the following terms and conditions:
(a) Optionee's Agreement. Each Optionee shall agree to remain in
the employ of and to render to the Corporation or its Subsidiaries, his
services for a period of two years from the date of grant of the
option, but such agreement shall not impose upon the Corporation or its
Subsidiaries any obligation to retain the Optionee in its employ for
any period.
(b) Number of Shares. Each option shall state the number of
Shares to which it pertains.
(c) Option Price. Each option shall state the option price which
shall be not less than 100% of the fair market value of the Shares
subject to the option. Fair market value shall be determined by taking
the mean between the highest and lowest quoted selling prices on the
New York Stock Exchange on the date of grant for shares of the
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<PAGE> 3
Corporation of the same class as the Shares subject to the option, or,
if there were no sales on such date on such Exchange, the value
determined under Treasury Regulations 20.2031-2. Subject to the
foregoing, the Committee, in fixing the option price, shall have full
authority and discretion and be fully protected in doing so.
(d) Medium and Time of Payment. The option price shall be payable
on the exercise of the option and may be paid (i) in United States
Dollars in cash or by check or (ii) by transferring a number of shares,
valued as provided in Section 6(c) above, as of the date of transfer
having a value equal the option price or (iii) by part payment in cash
or by check as provided in (i) above and by payment of the balance by
transferring shares to the Corporation as provided in (ii) above.
(e) Conditions to Exercise of Options.
(1) No option granted pursuant to this Plan shall be exercised in
whole or in part more than ten years after it is granted and such
option shall be subject to such further terms and conditions as to the
time of its exercise as the Committee may prescribe.
Notwithstanding anything to the contrary contained in this Plan
or any limitations prescribed by the Committee as to the exercise of an
option, all options previously granted under this Plan shall become
immediately exercisable if a person or persons who are acting together
for the purpose of acquiring shares of the Corporation to acquire
beneficial ownership (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934) of 25% or more of the outstanding shares of the
Corporation.
(2) In order to exercise an option granted hereunder, in whole or
in part, all of the following conditions must be fulfilled at the time
of exercise:
(X) The Optionee must be in the employ of the Corporation or
one of its Subsidiaries. However, any Optionee who is totally and
permanently disabled at the time of exercise of an option and who
has ceased to work for the Corporation or one of its Subsidiaries
as a result of which disability shall not be required to be
employed by the Corporation at the time he exercises such option
as long as he was employed by the Corporation or one of its
Subsidiaries within one year prior to the date of exercise of
such option. Permanent and total disability for such purposes
shall mean that such Optionee, at the time he ceased his
employment by the Corporation, was unable to engage in any
substantial gainful activity by reason of a medically
determinable physical or mental impairment which could be
expected to result in death or which at such time could be
expected to last for a continuous period of not less than twelve
(12) months. Such Optionee shall furnish proof of his disability
in form and substance satisfactory to the Committee.
For all purposes of this Incentive Stock Option Plan: (A) an
employee of an Operating Division (as hereinafter defined) shall
be deemed to be an employee of a Subsidiary; (B) in the event of
the liquidation or merger of a Subsidiary into the Corporation,
employees of the merged or liquidated Subsidiary who continue
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<PAGE> 4
to be employed by an Operating Division of the corporation shall
be deemed to be employees of a Subsidiary, and (C) an "Operating
Division," of the Corporation is hereby defined as any separate,
unincorporated business unit, section or component of the
Corporation which has been designated as an "Operating Division"
by the Directors or the Committee at the time of the grant of an
option.
Neither the transfer of an employee from employment by one of
the Corporation's Subsidiaries to another Subsidiary, nor the
transfer of an employee from the employment by one of the
Subsidiaries to the Corporation or by the Corporation to one of
its Subsidiaries shall be deemed the termination of the
employment of the employee by the Corporation or any of its
Subsidiaries.
(Y) The Optionee shall have met any additional specific
conditions imposed by the Committee at the time of the granting
of the option. Such specific conditions may be in the form of
achievement goals for the individual Optionee based upon
predetermined minimum increases over a specified period or
periods of time, in sales, gross profits, pre-tax earnings,
productivity, or other goals or standards. The imposition of such
achievement goals and conditions shall be in the sole discretion
of the Committee, and such goals and conditions may differ
between individual employees of the Corporation and/or its
Subsidiaries; and between classes of employees of the Corporation
and/or any Subsidiary, and between the employees of the
Corporation, as a class, and the employees of the Subsidiaries as
a class.
(f) Prior Outstanding Option. No option (for purposes of this
Section 6(f) called "New Option") shall be exercisable while there is
outstanding any Incentive Stock Option (as defined in Section 422A of
the Internal Revenue Code of 1954), which Incentive Stock Option was
granted, before the granting of the New Option to the person to whom
the New Option is granted, to purchase shares of the Corporation or in
a corporation which at the time the New Option is granted, is a patent
or subsidiary corporation (as those terms are defined in Section 425 of
the Internal Revenue Code of 1954) of the Corporation, or is a
predecessor corporation of the Corporation or such parent or subsidiary
corporation. An incentive stock option shall be treated as outstanding
until such option is exercised in full or expires by reason of a lapse
of time.
(g) Termination of Employment Except by Death. In the event that
an Optionee shall cease to be employed by the Corporation or any of its
Subsidiaries for any reason other than his death or disability as
defined in Section 6(e)(2)(X) and shall be no longer in the employ of
any of them, such Optionee shall not have the right to exercise the
unexercised portion of the option and such portion of the option shall
become null and void after such termination of employment. Whether
authorized leave of absence or absence for military or governmental
service shall constitute termination of employment, for the purposes of
the Plan, shall be determined by the Committee, whose determination
shall be final and conclusive.
(h) Death of Optionee and Transfer of Option. If the Optionee
shall die while in the employ of the Corporation or a Subsidiary and
shall not have fully exercised the
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<PAGE> 5
option, the option may be exercised subject to the condition that no
option shall be exercisable after the expiration of ten years from the
date it is granted, to the extent that the Optionee's right to exercise
such option had accrued pursuant to this Section 6 of the Plan at the
time of his death and had not previously been exercised at any time
within six months after the Optionee's death by the executors or
administrators of the Optionee or by any person or persons who shall
have acquired the option directly from the Optionee by request or
inheritance.
No option shall be transferable by the Optionee otherwise than by
will or under the laws of descent and distribution.
(i) Recapitalization. Subject to any required action by the
stockholders, the number of shares covered by each outstanding option,
and the price per Share thereof in each such option, shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of the Corporation resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on
the shares) or any other increase or decrease in the number of such
shares effected without receipt of consideration by the Corporation.
Subject to any required action by the stockholders, if the
Corporation shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain to and apply to
the securities to which a holder of the number of shares subject to the
option would have been entitled. A dissolution or liquidation of the
Corporation or a merger or consolidation in which the Corporation is
not the surviving corporation, shall cause each outstanding option to
terminate, provided that each Optionee shall, in such event, if a
period of two years from the date of grant the option shall have
expired, have the right immediately prior to such dissolution or
liquidation or merger or consolidation in which the Corporation is not
the surviving corporation, to exercise his option in whole or in part
subject to the provisions of this Section 6 of the Plan.
In the event of a change in the shares of the Corporation as
presently constituted, which is limited to a change of all of its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any
such change shall be deemed to be the shares within the meaning of the
Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Committee whose determination in that respect shall be final, binding
and conclusive, provided that each option granted pursuant to this Plan
shall not be adjusted in a manner that causes the option to fail to
continue to qualify as an incentive stock option within the meaning of
Sec. 422A of the Internal Revenue code of 1954.
Except as hereinbefore expressly provided in this Section 6, the
Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of
shares of stock of any class or by reason of any dissolution,
liquidation, merger or consolidation or spinoff of assets or stock of
another corporation, and any issue
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by the Corporation of shares of stock of any class, shall not affect
and, no adjustment by reason thereof shall be made with respect to the
number or price of Shares subject to the option.
The grant of any option pursuant to the Plan shall not affect in
any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or
assets; provided, however, that if any such adjustment shall result in
a fractional share for any optionee under any option hereunder, such
fraction shall be completely disregarded and the optionee shall only be
entitled to the whole number of shares resulting from such adjustment.
(j) Rights as a Stockholder. An optionee or a transferee of an
option shall have no rights as a stockholder with respect to any Shares
covered by his option until the date of the issuance of a stock
certificate to him for such Shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record
date is prior to the date such stock certificate is issued, except as
provided in Section 6 hereof.
(k) Investment Purpose. The Company shall not be obligated to
sell or issue any shares pursuant to any option unless the Shares with
respect to which the option is being exercised are at that time
effectively registered or exempt from registration under the Securities
Act of 1933, as amended.
Notwithstanding anything in the Plan to the contrary, each option
under the Plan shall be granted on the condition that the purchases of
Shares thereunder shall be for investment purposes, and not with a view
to resale or distribution except that in the event the Shares subject
to such Option are registered under the Securities Act of 1933, as
amended, or in the event a resale of such Shares without such
registration would otherwise be permissible, such condition shall be
inoperative if in the opinion of counsel for the Corporation such
condition is not required under the Securities Act of 1933 or any other
applicable law, regulation, or rule of any governmental agency.
(l) Other Provisions. Options authorized under the Plan shall
contain such other provisions, including, without limitation,
restrictions upon the exercise of the option, as the Committee or the
Board of Directors of the Corporation shall deem advisable subject to
any limitation on the discretion of the Board of Directors required by
Rule 16b-3. Any such option agreement shall contain such limitations
and restrictions upon the exercise of the option as shall be necessary
in order that such Option will be an Incentive Stock Option as defined
in Sec. 422A of the Internal Revenue Code of 1954 or to conform to any
change in the law and shall not contain any provisions, restrictions or
limitations which shall prevent such option from being an Incentive
Stock Option as aforesaid.
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7. TERM OF PLAN.
Options may be granted pursuant to the Plan from time to time within a
period of ten years from the date the Plan is adopted or the date the Plan is
approved by the Stockholders, whichever is earlier.
8. INDEMNIFICATION OF COMMITTEE.
In addition to such other rights of indemnification as they may have as
Directors or as members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Option granted
thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by the independent legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment in any such action, a
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member is liable
for negligence or misconduct in the performance of his duties; provided that
within sixty (60) days after institution of any such action, suit or proceeding
a Committee member shall in writing offer the Corporation the opportunity, at
its own expense, to handle and defend the same.
9. AMENDMENT TO THE PLAN.
The Board of Directors of the Corporation may, insofar as permitted by
law, from time to time, with respect to any shares at the time not subject to
options, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever except that, without approval of the stockholders, no such revision
or amendment shall change the number of shares subject to the Plan, change the
designation of the class of employees eligible to receive options, decrease the
price at which Options may be granted, remove the administration of the Plan
from the Committee, or render any member of the Committee eligible to receive an
option under the Plan while serving thereon. Furthermore, the Plan may not,
without the approval of the stockholders, be amended in any manner that will
cause options issued under it to fail to meet the requirements of Incentive
stock options as defined in Sec. 422A of the 1954 Internal Revenue Code.
10. APPLICATION OF FUNDS.
The proceeds received by the Corporation from the sale of Shares
pursuant to options will be used for general corporate purposes.
11. NO OBLIGATION TO EXERCISE OPTION.
The granting of an option shall impose no obligation upon the Optionee
to exercise such option.
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12. APPROVAL OF STOCKHOLDERS.
The Plan shall not take effect until approved by the holders of a
majority of the outstanding shares which approval must occur within the period
beginning twelve months before and ending twelve months after the date the Plan
is adopted by the Board of Directors.
13. LIMITATIONS ON GRANT OF OPTION.
No option may be granted under this Plan to any person who owns, or
who, by reason of the exercise of such option will own more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Corporation, its parent or subsidiary, as provided in Section 422A(b)(6) of the
Internal Revenue Code of 1954.
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EXHIBIT 10(e)
SYSCO CORPORATION
1991 STOCK OPTION PLAN
1. PURPOSE.
This 1991 Stock Option Plan (the "Plan") is intended as an incentive
and to encourage stock ownership by certain officers and other key employees of
Sysco Corporation (the "Corporation"), or of its subsidiary corporations (the
"Subsidiary" or "Subsidiaries") as that term is defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended (the "Code") and certain others so
that they may acquire or increase their proprietary interest in the Corporation
and to reward them properly for meritorious or profit producing services to the
Corporation or the Subsidiaries. It is intended that certain of the options
granted pursuant to the Plan shall be incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Code, or any succeeding
provisions, and the remainder of the options granted pursuant to the Plan be
options which are not Incentive Stock Options ("Nonincentive Stock Options").
Options granted pursuant to the Plan that are intended to be Incentive Stock
Options shall be specifically designated as Incentive Stock Options upon grant
of the options. No option not specifically designated as an Incentive Stock
Option upon grant of the option shall be treated as an Incentive Stock Option
for any purpose under the Plan.
2. ADMINISTRATION.
The Plan shall be administered by a committee appointed by the Board of
Directors of the Corporation (the "Committee"). The Committee shall consist of
not less than three members of the Corporation's Board of Directors. The Board
of Directors may from time to time remove members from or add members to the
Committee. Vacancies on the Committee, however caused, shall be filled by the
Board of Directors. The Committee shall select one of its members as Chairman
and shall hold meetings at such times and places as it may determine. The action
of a majority of the Committee at which a quorum is present, or acts reduced to
or approved in writing by a majority of the members of the Committee, shall be
the valid acts of the Committee. Each Director while a member of the Committee
shall meet the definition of "disinterested person" contained in Rule 16b-3 of
the Securities and Exchange Commission. The Committee shall from time to time at
its discretion (i) designate the key employees and Directors who shall be
granted options, the number of shares to be optioned to each, and which options
are to be Incentive Stock Options and which are to be Nonincentive Stock
Options, and (ii) make such other determinations and designations as are
provided in the Plan.
The interpretation and construction by the Committee of any provisions
of the Plan or of any option granted under it shall be final. No member of the
Board of Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it.
<PAGE> 2
3. ELIGIBILITY.
The persons who shall be eligible to receive options as the Committee
shall select from time to time shall be key employees of the Corporation or its
Subsidiaries (including officers, whether or not they are Directors) and
Directors (in either case, an "Optionee" or collectively, "Optionees"); provided
that persons who are Directors but not employees or officers of the Corporation
or its Subsidiaries shall only be eligible to receive Nonincentive Stock
Options. An Optionee may hold more than one option, but only on the terms and
subject to the restrictions hereafter set forth.
4. STOCK.
The stock subject to the options shall be shares of the Corporation's
authorized and unissued or reacquired $1 par value Common Stock (the term
"shares" as used herein shall refer to shares of said $1 par value Common Stock
of the Corporation, and the term "Shares" shall refer to shares which are
subject to an option granted under the Plan). The aggregate number of shares
which may be issued under options pursuant to the Plan shall not exceed
1,500,000 shares, and the maximum number of shares which may be issued under
Incentive Stock Options pursuant to the Plan shall not exceed 1,500,000 shares.
The limitations established by each of the preceding sentences shall be subject
to adjustment as provided in Section 6(h) of the Plan.
If any outstanding option under the Plan for any reason expires or is
terminated, the Shares allocable to the unexercised portion of such option may
again be subjected to an option under the Plan.
5. ANNUAL LIMITATION.
To the extent that the fair market value (determined at the date of
grant of the option in accordance with Section 6(d) of the Plan) of the Shares
with respect to which Incentive Stock Options first become exercisable by an
Optionee during any calendar year (under the Plan and any other plans granting
Incentive Stock Options which are established by the Corporation or its
Subsidiaries) exceeds $100,000, such options shall be treated as Nonincentive
Stock Options.
6. TERMS AND CONDITIONS OF OPTIONS.
Options granted pursuant to the Plan shall be authorized by the
Committee on such terms and conditions as shall be determined by the Committee
subject to the following terms and conditions:
(a) Option Designation. Each option granted hereunder shall be
clearly identified at the time of grant as an Incentive Stock Option or
a Nonincentive Stock Option. An Incentive Stock Option may not be
granted in a tandem stock option arrangement under the Plan (i.e.,
where an Incentive Stock Option is issued together with a Nonincentive
Stock Option and the exercise of either type of option affects the
right to exercise the other type of option).
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<PAGE> 3
(b) Individual Stock Option Agreements. Each option granted
pursuant to the Plan shall be evidenced by an agreement in such form as
the Committee shall from time to time approve. All such agreements
shall comply with and be subject to the terms of this Plan.
(c) Number of Shares. Each option shall state the number of
Shares to which it pertains.
(d) Option Price. Each option shall state the option price,
which shall be not less than 100% of the fair market value of the
Shares subject to the option. Fair market value shall be determined as
the last closing price of the shares on the New York Stock Exchange
(the "Exchange") prior to the grant of the option by the Committee.
Subject to the foregoing, the Committee, in fixing the option price,
shall have full authority and discretion and be fully protected in
doing so.
(e) Medium and Time of Payment. The option price shall be
payable on the exercise of the option and may be paid (i) in United
States Dollars in cash or by check or (ii) by transferring a number of
shares, valued as provided in Section 6(d) above, as of the date of
transfer having a value equal the option price, or (iii) by part
payment in cash or by check as provided in (i) above and by payment of
the balance by transferring shares to the Corporation as provided in
(ii) above.
(f) Conditions to Exercise of Options.
(1) No option granted pursuant to this Plan shall be exercised
in whole or in part more than ten years after it is granted, and such
option shall be subject to such further terms and conditions as to the
time of its exercise as the Committee may prescribe.
(2) In order to exercise an option granted hereunder, in whole
or in part, the Optionee must meet any additional specific conditions
imposed by the Committee at the time of the granting of the option.
Such specific conditions may be in the form of achievement goals for
the individual Optionee based upon predetermined minimum increases over
a specified period or periods of time, in sales, gross profits, pre-tax
earnings, productivity, or other goals or standards. The imposition of
such achievement goals and conditions shall be in the sole discretion
of the Committee; and such goals and conditions may differ between
individual employees of the Corporation and/or of its Subsidiaries; and
between classes of employees of the Corporation and/or any Subsidiary;
and between the employees of the Corporation, as a class, and the
employees of the Subsidiaries as a class.
(3) Notwithstanding anything to the contrary contained in this
Plan or any limitations prescribed by the Committee as to the exercise
of an option, all options previously granted under this Plan shall
become immediately exercisable if a person or persons who are acting
together for the purpose of acquiring shares of the Corporation acquire
beneficial ownership (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of the
Corporation.
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<PAGE> 4
(g) Death of Optionee and Transfer of Option. If the Optionee
shall die while in the employ of the Corporation or a Subsidiary and
shall not have fully exercised the option, the option may be exercised,
subject to the condition that no option shall be exercisable after the
expiration of ten years from the date it is granted, to the extent that
the Optionee's right to exercise such option had accrued pursuant to
this Section 6 of the Plan at the time of his death and had not
previously been exercised, at any time within one (1) year after the
Optionee's death, by the executors or administrators of the Optionee or
by any person or persons who shall have acquired the option directly
from the Optionee by bequest or inheritance.
No option shall be transferable by the Optionee otherwise than
by will or under the laws of descent and distribution and each option
shall be exercisable, during the Optionee's lifetime, only by him.
(h) Changes in Capitalization. Subject to any required action
by the stockholders, the number of Shares covered by each outstanding
option and the price per Share in each such option, shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of the Corporation resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on
the shares) or any other increase or decrease in the number of such
shares effected without receipt of consideration by the Corporation.
If the Corporation merges or consolidates with another
corporation, whether or not the Corporation is a surviving corporation,
or if the Corporation is liquidated or sells or otherwise disposes of
substantially all of its assets while unexercised Options remain
outstanding under the Plan, (a) subject to the provisions of clause (c)
below, after the effective date of the merger, consolidation,
liquidation, sale or other disposition, as the case may be, each holder
of an outstanding option shall be entitled, upon exercise of that
option, to receive, in lieu of Shares, the number and class or classes
of shares of stock or other securities or property to which the holder
would have been entitled if, immediately prior to the merger,
consolidation, liquidation, sale or other disposition, the holder had
been the holder of record of a number of Shares equal to the number of
Shares as to which that option may be exercised; (b) if options have
not already become exercisable under paragraph 6(f)(3) hereof, the
Board of Directors may waive any limitations set forth in or imposed
pursuant to this Plan so that all options, from and after a date prior
to the effective date of that merger, consolidation, liquidation, sale
or other dispositions, as the case may be, specified by the Board of
Directors, shall be exercisable in full; and (c) all outstanding
options may be cancelled by the Board of Directors as of the effective
date of any merger, consolidation, liquidation, sale or other
disposition provided that any Optionee shall have the right immediately
prior to such event to exercise his option to the extent such Optionee
is otherwise able to do so in accordance with this Plan (including
paragraph 6(f)(3) hereof) or his individual stock option agreement.
In the event of a change in the shares of the Corporation as
presently constituted, which is limited to a change of all of its
authorized shares with par value into the same
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<PAGE> 5
number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be the shares
within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock
or securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding
and conclusive; provided, that each option which, upon grant of the
option, is specifically designated as an Incentive Stock Option shall
not be adjusted in a manner that causes the option to fail to continue
to qualify as an Incentive Stock Option.
Except as hereinbefore expressly provided in this Section 6,
the Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of
shares of stock of any class or by reason of any dissolution,
liquidation, merger, or consolidation or spinoff of assets or stock of
another corporation, and any issue by the Corporation of shares of
stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares
subject to the option.
The grant of any option pursuant to the Plan shall not affect
in any way the right or power of the Corporation (A) to make
adjustments, reclassifications, reorganizations or changes of its
capital or business structure, (B) to merge or consolidate, (C) to
dissolve, liquidate or sell, or transfer all or any part of its
business or assets or (D) to issue any bonds, debentures, preferred or
other preference stock ahead of or affecting the shares. If any action
described in the preceding sentence results in a fractional share for
any Optionee under any option hereunder, such fraction shall be
completely disregarded and the Optionee shall only be entitled to the
whole number of shares resulting from such adjustment.
(i) Rights as a Stockholder. An Optionee or a transferee of an
option shall have no rights as a stockholder with respect to any Shares
covered by his option until the date of the issuance of a stock
certificate to him for such Shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record
date is prior to the date such stock certificate is issued, except as
provided in Section 6 hereof.
(j) Investment Purpose. The Company shall not be obligated to
sell or issue any shares pursuant to any option unless the Shares with
respect to which the option is being exercised are at that time
effectively registered or exempt from registration under the Securities
Act of 1933, as amended.
Notwithstanding anything in the Plan to the contrary, each
option under the Plan shall be granted on the condition that the
purchases of Shares thereunder shall be for investment purposes, and
not with a view to resale or distribution except that in the event the
Shares subject to such Option are registered under the Securities Act
of 1933, as amended, or in the event a resale of such Shares without
such registration would
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<PAGE> 6
otherwise be permissible, such condition shall be inoperative if in the
opinion of counsel for the Corporation such condition is not required
under Securities Act of 1933 of any other applicable law, regulation,
or rule of any governmental agency.
(k) Other Provisions. Options authorized under the Plan shall
contain such other provisions, including, without limitation,
restrictions upon the exercise of the option, as the Committee or the
Board of Directors of the Corporation shall deem advisable subject to
any limitation in the discretion of the Board of Directors required by
Rule 16b-3.
7. TERM OF PLAN.
Options may be granted pursuant to the Plan from time to time within a
period of ten years from the date the Plan is adopted or the date the Plan is
approved by the Stockholders, whichever is earlier.
8. SUBSTITUTION FOR OR ASSUMPTION OF OPTIONS GRANTED BY OTHERS.
The Corporation may issue or assume any stock option in any transaction
or transactions upon such terms and conditions and, in the case of any option so
assumed, with such modifications or adjustments therein, as shall be determined
by the Committee. Any such option so issued or assumed shall be deemed to be an
option granted under this Plan, notwithstanding that any provision of this Plan
would not, except for this Section 8, permit the grant of an option having the
terms and conditions, including the option price, of such option as so issued or
assumed.
9. INDEMNIFICATION OF COMMITTEE.
In addition to such other rights of indemnification as they may have as
Directors or as members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Option granted
thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by the independent legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment in any such action, a
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member is liable
for negligence or misconduct in the performance of his duties; provided that
within sixty (60) days after institution of any such action, suit or proceeding
a Committee member shall in writing offer the Corporation the opportunity, at
its own expense, to handle and defend the same.
10. STOCK APPRECIATION RIGHTS.
(a) Grant of SARs. The Committee, in its discretion, may grant
stock appreciation rights ("SARs") to some or all Optionees. SARs may
be granted in
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conjunction with all or a part of any option granted under the Plan,
either at the time of the grant of such option or at any subsequent
time prior to the expiration of such option; provided, however, that
SARs shall not be offered or granted in connection with a prior option
without the consent of the holder of such option. SARs may not be
exercised by an Optionee who is a director or officer (within the
meaning of Rule 16a-1(f) under the Securities Exchange Act of 1934) of
the Company within six months after the right is granted, except this
limitation shall not be applicable in the event of death or disability
of such Optionee occurring prior to the expiration of such six-month
period.
(b) Agreements. The SAR shall be set forth in an agreement
(which may be the agreement described in Section, 6(b)) between the
Optionee and the Company which shall contain such terms and conditions
as the Committee may deem appropriate.
(1) All SARs shall be subject to the following terms and
conditions:
(A) SARs shall be exercisable only at such time and
to the extent that the options to which they relate (the
"Related Option") shall be exercisable. Both a SAR and the
Related Option may be exercised concurrently only when the
Related Option is a Nonincentive Stock Option.
(B) Upon exercise of a SAR, the Optionee shall be
entitled to the difference between the market value of one
Share and the option price per Share specified in the Related
Option times the number of Shares in respect of which the SARs
shall have been exercised (the "Economic Value"). The market
value of Shares on the date of exercise of the SARs shall be
the "fair market value" as such term is used in Section 6(d).
(C) An Optionee, upon the exercise of SARs shall
receive the Economic Value thereof, and the Committee in its
sole discretion shall determine the form in which payment of
such Economic Value will be made, either in cash, Shares or
any combination thereof; and
(D) A SAR may be exercised without exercising the
Related Option but the Related Option shall be cancelled for
all purposes under the Plan to the extent of the SAR exercise.
A Related Option may be exercised without exercising the SAR
but the SAR shall be cancelled for all purposes under the Plan
to the extent of the Related Option exercise.
(2) In addition to the conditions set forth in clause
10(b)(1), SARs issued in connection with Incentive Stock Options shall
meet the following conditions:
(A) Each SAR must expire not later than the
expiration of the Related Option;
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<PAGE> 8
(B) The SAR shall be transferable only when the
Related Option is transferable and under the same conditions;
and
(C) The SAR may be exercised only when there is a
positive spread, that is, when the fair market value of the
Stock subject to the option (determined in accordance with
Section 6(d) hereof) exceeds the exercise price of the option.
11. FORFEITURE.
Notwithstanding any other provision of this Plan, if the Committee
finds by a majority vote, that: (i) the Optionee, before or after termination of
his employment with the Corporation or a Subsidiary (as used in this Section 11,
an "Employer"), committed fraud, embezzlement, theft, a felony, or proven
dishonesty in the course of his employment by Employer which damaged Employer,
or for disclosing trade secrets of Employer, or (ii) the Optionee, before or
after termination of his employment with Employer for any reason, participated,
engaged in or had a financial or other interest (whether as an employee,
officer, director, consultant, contractor, shareholder, owner, or otherwise) in
any commercial endeavor in the United States which is competitive with the
business of Employer, then any outstanding options which have not been exercised
by Optionee will be forfeited. The decision of the Committee as to the nature of
an Optionee's conduct, the damage done to Employer and the extent of the
Optionee's competitive activity will be final. No decision of the Committee,
however, will affect the finality of the discharge of the Optionee by Employer
in any manner. In order to provide the Corporation with an opportunity to
enforce this Section 11, no option may be exercised without the certification by
the Committee that no such forbidden action has been raised for their
determination.
12. AMENDMENT TO THE PLAN.
The Board of Directors of the Corporation may, insofar as permitted by
law, from time to time, with respect to any shares at the time not subject to
options, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever except that, without approval of the stockholders, no such revision
or amendment shall change the number of shares subject to the Plan, change the
designation of the class of employees eligible to receive options, decrease the
price at which options may be granted or remove the administration of the Plan
from the Committee.
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<PAGE> 1
EXHIBIT 10(g)
AMENDMENTS TO THE SYSCO CORPORATION
1991 STOCK OPTION PLAN
The Sysco Corporation 1991 Stock Option Plan (the "Plan"), which was
approved by the shareholders on November 8, 1991 and amended effective September
4, 1997, was amended by the Board of Directors effective November 5, 1998,
pursuant to Section 12 of the Plan which empowers the Board to amend the Plan
from time to time. These amendments are as set forth below.
1. The second sentence of paragraph (d) of Section 6 of the Plan is hereby
deleted in its entirety and replaced by the following:
"For purposes of this Plan, "fair market value" shall be
determined as the last closing price of the Corporation's
Common Stock on the New York Stock Exchange (the
"Exchange") prior to the date on which fair market value
is to be determined."
2. Paragraph (e) of Section 6 of the Plan is hereby deleted in its entirety
and replaced by the following:
"(e) Medium and Time of Payment. The option price shall be
payable on the exercise of the option and may be paid (i)
in United States Dollars in cash or by check or (ii) in
shares of Corporation Common Stock having an aggregate
value equal to the option price or (iii) by a combination
of (i) and (ii) above. For purposes of this Section 6(e),
"value" means, for any given business day, the average of
the quoted daily high and low prices of Corporation Common
Stock on the Exchange on such day."
3. Except as amended in the manner described above, the Plan shall be and
remain in full force and effect.
<PAGE> 1
EXHIBIT 10(i)
AMENDMENT TO
AMENDED AND RESTATED SYSCO CORPORATION
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Amended and Restated Sysco Corporation Non-Employee Directors Stock
Option Plan (the "Plan"), dated effective September 4, 1997, was amended by the
Board of Directors effective November 5, 1998 pursuant to Paragraph 10 of the
Plan, which empowers the Board to amend the Plan from time to time. This
amendment is as set forth below.
1. Paragraph 7 is hereby deleted in its entirety and replaced by the
following:
"The Option exercise price shall be paid in cash in U.S.
dollars at the time the Option is exercised or in shares of
Corporation Common Stock having an aggregate Fair Market Value
(determined as of the last business day prior to the date of
exercise) equal to the Option exercise price or by a
combination of cash and Common Stock. For purchases of the
Plan, "Fair Market Value" means, for any given business day,
the average of the quoted daily high and low prices of
Corporation Common Stock on the NYSE on such day."
2. Except as amended in the manner describe above, the Plan shall be and
remain in full force and effect.
<PAGE> 1
EXHIBIT 21
SYSCO CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
Registrant: Sysco Corporation
The following is a list of wholly-owned subsidiaries of the Registrant.
STATE OR JURISDICTION
NAME OF SUBSIDIARY OF INCORPORATION
- --------------------------------- -------------------------
Buckhead Beef Company Delaware
Doughtie's Sysco Food Services, Inc. Delaware
K.W. Food Distributors Ltd. British Columbia, Canada
Nobel/Sysco Food Services Company Colorado
*Sysco Equipment & Furnishings Company Delaware
Pegler-Sysco Food Services Company Nebraska
*Pegler-Sysco Transportation Co. Nebraska
Ritter Sysco Food Services, Inc. New Jersey
*Dowd Food Discount Corp. New Jersey
Sysco Administrative Services, Inc. Delaware
Sysco Financial Services, Inc. Delaware
*Hardin's-Sysco Food Services, Inc. Tennessee
*Lankford-Sysco Food Services, Inc. Maryland
*Robert Orr-Sysco Food Services Company Tennessee
*Sysco Food Services of Austin, Inc. Delaware
*Sysco Food Services of Dallas, Inc. Delaware
*Sysco Food Services of Houston, Inc. Delaware
*Sysco Food Services of New Orleans, Inc. Delaware
*Sysco Food Services of San Antonio, Inc. Delaware
Sysco Food Services of Arizona, Inc. Delaware
*Sysco Arizona Leasing, Inc. Delaware
Sysco Food Services of Arkansas, Inc. Arkansas
Sysco Food Services of Atlanta, Inc. Delaware
Sysco Food Services of Central Alabama, Inc. Delaware
Sysco Food Services of Central Florida, Inc. Delaware
Sysco Food Services of Central Pennsylvania, Inc. Pennsylvania
Sysco Food Services of Charlotte, Inc. North Carolina
Sysco Food Services-Chicago, Inc. Delaware
Sysco Food Service of Cleveland, Inc. Delaware
Sysco Food Services of Detroit, Inc. Delaware
Sysco Food Services of Grand Rapids, Inc. Michigan
Sysco Food Services of Idaho, Inc. Idaho
<PAGE> 2
STATE OR JURISDICTION
NAME OF SUBSIDIARY OF INCORPORATION
- -------------------------------------- -------------------------
Sysco Food Services of Indianapolis, Inc. Delaware
Sysco Food Services of Iowa, Inc. Delaware
Sysco Food Services - Jacksonville, Inc. Delaware
Sysco Food Services of Kansas City, Inc. Missouri
Sysco Food Services of Los Angeles, Inc. Delaware
Sysco Food Services of Minnesota, Inc. Delaware
Sysco Food Services of Modesto, Inc. California
Sysco Food Services of Montana, Inc. Delaware
Sysco Food Services of Northern New England, Inc. Maine
Sysco Food Services of Oklahoma, Inc. Delaware
Sysco Food Services of Philadelphia, Inc. Pennsylvania
*Garden Cash & Carry, Inc. Delaware
Sysco Food Services of Pittsburgh, Inc. Pennsylvania
Sysco Food Services of Portland, Inc. Delaware
Sysco Food Services of San Diego, Inc. Delaware
Sysco Food Services of San Francisco, Inc. California
Sysco Food Services of Seattle, Inc. Delaware
Sysco Food Services of South Florida, Inc. Delaware
Sysco Food Services of Southeast Florida, Inc. Delaware
Sysco Food Services of St. Louis, Inc. Delaware
Sysco Food Services of Virginia, Inc. Virginia
Sysco Food Services - West Coast Florida, Inc. Delaware
Sysco Holdings Limited New Brunswick, Canada
*Strano Sysco Foodservice Limited Ontario, Canada
Sysco Intermountain Food Services, Inc. Delaware
Sysco/Louisville Food Services Co. Delaware
Sysco Newport Meat Company Delaware
Sysco Proprietary LP Texas
Sysco Services LP Texas
The SYGMA Network, Inc. Delaware
INACTIVE SUBSIDIARIES
- --------------------------------------
DiPaolo/Sysco Food Services, Inc. Ohio
Grants - Sysco Food Services, Inc. Michigan
Olewine's Sysco Food Services Company Delaware
SyscoMed, Inc. Delaware
*Sysco Food Services of Beaumont, Inc. Delaware
*2nd Tier Subsidiary
<PAGE> 1
EXHIBIT 23
SYSCO CORPORATION AND SUBSIDIARIES
INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K for the year ended July 3, 1999, into the
company's previously filed (i) Post-Effective Amendment No. 1 of the
Registration Statement and Prospectus of Sysco Corporation relating to the
offering of Sysco Common Stock under the Sysco Corporation Management Incentive
Plan (Registration No. 2-73392), (ii) Registration Statement and Prospectus of
Sysco Corporation relating to the Sysco Corporation 1974 Employee's Stock
Purchase Plan (Registration No. 33-10906), (iii) Post-Effective Amendment No. 1
of the Registration Statement and Prospectus relating to the offering of Sysco
Common Stock under the Sysco Corporation Employee Incentive Stock Option Plan
(Registration No. 2-76096), (iv) Registration Statement and Prospectus of Sysco
Corporation relating to the offering of additional shares of Sysco Common Stock
under the Sysco Corporation 1995 Management Incentive Plan (Registration No.
33-45804), (v) Registration Statement and Prospectus of Sysco Corporation
relating to the offering of Sysco Common Stock under the Sysco Corporation 1991
Stock Option Plan (Registration No. 33-45820), (vi) Registration Statement of
Sysco Corporation relating to the offering of Sysco Common Stock under the Sysco
Corporation Non-Employee Directors Stock Option Plan (Registration No.
333-1259), (vii) Registration Statement of Sysco Corporation relating to the
offering of additional shares of Sysco Common Stock under the Sysco Corporation
1991 Stock Option Plan (Registration No. 333-1255), (viii) Registration
Statement of Sysco Corporation relating to the offering of additional shares of
Sysco Common Stock under the Sysco Corporation 1995 Management Incentive Plan
(Registration No. 333-1257), (ix) Registration Statement of Sysco Corporation
relating to the offering of additional shares of Sysco Common Stock under the
Sysco Corporation 1974 Employees Stock Purchase Plan (Registration No.
333-27405), (x) Registration Statement and Prospectus of Sysco Corporation
relating to the offering of Sysco Debt Securities (Registration No. 333-52897),
(xi) Registration Statement of Sysco Corporation relating to the offering of
additional shares of SYSCO Common Stock under the Non-Employee Directors Stock
Plan (Registration No. 333-66987), (xii) Registration Statement of Sysco
Corporation under the Securities Act of 1933 (Registration No. 333-83525) and
(xiii) Registration Statement of Sysco Corporation under the Securities Act of
1933 (Registration No. 333-86273).
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Houston, Texas
September 24, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Item 8.,
Financial Statements and Supplementary Data and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> JUL-03-1999
<CASH> 149,303
<SECURITIES> 0
<RECEIVABLES> 1,355,466
<ALLOWANCES> (21,095)
<INVENTORY> 851,965
<CURRENT-ASSETS> 2,408,767
<PP&E> 2,317,044
<DEPRECIATION> (1,089,375)
<TOTAL-ASSETS> 4,096,582
<CURRENT-LIABILITIES> 1,427,540
<BONDS> 997,717
0
0
<COMMON> 382,587
<OTHER-SE> 1,044,609
<TOTAL-LIABILITY-AND-EQUITY> 4,096,582
<SALES> 17,422,815
<TOTAL-REVENUES> 17,422,815
<CGS> 14,207,860
<TOTAL-COSTS> 16,828,928
<OTHER-EXPENSES> 963
<LOSS-PROVISION> 26,208
<INTEREST-EXPENSE> 72,839
<INCOME-PRETAX> 593,887
<INCOME-TAX> 231,616
<INCOME-CONTINUING> 362,271
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 362,271
<EPS-BASIC> 1.09
<EPS-DILUTED> 1.08
</TABLE>
