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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 19, 2000
SYSCO CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 1-06544 74-1648137
(State or other jurisdiction of (Commission File Number) (IRS employer Identification No.)
incorporation)
1390 Enclave Parkway 77077-2099
Houston, Texas (Zip Code)
(Address of principal executive offices)
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Registrant's telephone number, including area code: (281) 584-1390
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On January 19, 2000, SYSCO Corporation ("SYSCO") issued a press release
("Press Release") announcing its results of operations for the quarter and 26
weeks ended January 1, 2000. SYSCO hereby incorporates by reference herein the
information set forth in its Press Release dated January 19, 2000, a copy of
which is annexed hereto as Exhibit 99.
On January 7, 2000, SYSCO issued a Press Release announcing a letter of
intent to acquire FreshPoint Holdings, Inc. SYSCO hereby incorporates by
reference herein the information set forth in its Press Release dated January 7,
2000, a copy of which is annexed hereto as Exhibit 99.2.
Except for the historical information contained in this report, the
statements made by SYSCO are forward looking statements that involve risks and
uncertainties. All such statements are subject to the safe harbor created by the
Private Securities Litigation Reform Act of 1995. SYSCO's future financial
performance could differ significantly from the expectations of management and
from results expressed or implied in the Press Releases. For further information
on other risk factors, please refer to the "Risk Factors" section of SYSCO's
Form 10-K for the fiscal year ended July 3, 1999 filed with the Securities and
Exchange Commission.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
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EXHIBIT
NUMBER DESCRIPTION
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99 Press Release dated January 19, 2000
99.2 Press Release dated January 7, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
SYSCO has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
SYSCO Corporation
Date: January 19, 2000 By: /s/ JOHN K. STUBBLEFIELD, JR.
------------------------------
John K. Stubblefield, Jr.
Executive Vice President,
Finance & Administration
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INDEX OF EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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99 Press Release dated January 19, 2000
99.2 Press Release dated January 7, 2000
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Exhibit 99
[SYSCO LETTERHEAD]
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION
CONTACT: Diane Day Sanders
Vice President and Treasurer
SYSCO CONTINUES SALES AND PROFIT MOMENTUM, REPORTING 19 PERCENT
EPS GROWTH AND 9.5 PERCENT RISE IN SALES
HOUSTON, JANUARY 19, 2000 -- SYSCO Corporation (NYSE: SYY) today reported
that the company continued to achieve solid sales and earnings momentum for the
fiscal 2000 second quarter that ended January 1, 2000. Diluted earnings per
share for the quarter increased to $0.31 per share, a 19 percent gain over the
$0.26 attained during the fiscal 1999 second quarter. Sales for the period
reached $4.7 billion, 9.5 percent more than second quarter fiscal 1999 sales of
$4.2 billion. Net earnings were $101.9 million, 18 percent higher than the $86.4
million net earnings of the prior year's second quarter.
Diluted earnings per share for the first half of fiscal 2000 increased 22
percent to $0.62 before an accounting change in the first quarter of fiscal
2000, compared to $0.51 per share earned during the first half of fiscal 1999.
First half sales of $9.3 billion were 10 percent above first half fiscal 1999
sales of $8.4 billion. Net earnings before the accounting change increased to
$207.6 million, 20 percent more than the $172.8 million for the same period last
year.
"We are extremely pleased with the continuing momentum of sales and the
strength of earnings growth," said Charles H. Cotros, SYSCO's president who
assumed the additional role of chief executive officer on January 1. "Robust
sales growth during the quarter generated three record sales weeks. After
adjusting for 2.4 percent for acquisitions and 0.6 percent for food cost
deflation, which primarily related to lower costs for dairy and poultry items,
real sales growth during the quarter was 7.7 percent. For the first six months
of fiscal 2000, real sales growth was 8.9 percent after eliminating the effects
of 1.8 percent for acquisitions and 0.4 percent deflation. As expected, second
quarter real growth was 2.5 percent less than the real growth experienced in the
first quarter due to the anniversary of additional Wendy's International, Inc.
business that came on stream during the second quarter of fiscal 1999.
"Sales and earnings growth and profitability continue to be favorably
impacted by strong sales to our marketing associate-served customer base and
increasingly higher sales of SYSCO brand products. For the quarter, marketing
associate-served sales grew at double-digit levels and represented about 55
percent of traditional company sales as compared to approximately 54 percent of
sales in the fiscal 1999 second quarter. Likewise, SYSCO brand product sales, a
critical component of our growth strategy, represented about 50 percent of
marketing associate-served sales versus approximately 48 percent a year ago."
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Mr. Cotros noted that the SYSCO Uniform System (SUS) conversions were
completed on schedule as planned in early December and all operations were
transitioned smoothly from 1999 into the new year. He said the effect of having
a single operating system nationwide in the traditional companies will provide
access to information that was previously not easily obtainable and should
improve efficiencies and productivity in the company's operations.
In concluding his remarks Mr. Cotros said, "We are excited about the growth
opportunities available to us during the balance of fiscal 2000. The
acquisitions of the three custom-cut steak distribution operations during the
year significantly enhance SYSCO's ability to provide fine center-of-the-plate
products to its restaurant customers. We anticipate closing the acquisition of
Watson Foodservice, a broadline distributor in Lubbock, Texas, during the third
quarter. The recently announced agreement with FreshPoint Holdings, Inc., a
specialty fresh produce distribution network, is expected to close by the end of
the fiscal year, and will add approximately $750 million in annualized revenues
to the $1.0 billion in fresh produce sales generated by SYSCO during fiscal
1999. These additional operations, combined with the ongoing growth of our core
business and the strength of the SYSCO brand products will continue to provide
impetus to expand SYSCO's position as the leader in the $165 billion foodservice
distribution industry."
SYSCO, listed on the New York Stock Exchange, is the largest foodservice
marketing and distribution organization in North America. Generating in excess
of $18.5 billion in annual sales, the company provides food and related products
and services to approximately 325,000 restaurants, healthcare and educational
facilities, lodging establishments and other foodservice customers. The SYSCO
distribution network extends throughout the entire continental United States, as
well as Alaska and portions of Canada.
Forward-Looking Statements
Certain statements made herein are forward-looking statements under the
Private Securities Litigation Reform Act of 1995. They include statements
regarding annualized sales, sales momentum, earnings growth, continued strength
of SYSCO brand products, industry growth, fiscal 2000 projections, improved
operating efficiencies and productivity related to information systems and
acquisitions. Closing of the FreshPoint Holdings, Inc. transaction is subject to
conditions including completion of due diligence and the negotiation and
execution of definitive agreements. These statements involve risks and
uncertainties and are based on current expectations and management's estimates;
actual results may differ materially. Those risks and uncertainties that could
impact these statements include the possibility that the company's information
systems will not operate as anticipated and therefore not provide the company
with the expected competitive edge, the risks relating to the foodservice
distribution industry's relatively low profit margins and sensitivity to
economic conditions, SYSCO's leverage and debt risks, the successful completion
and integration of acquisitions, the risk of interruption of supplies due to
lack of long-term contracts, work stoppages or otherwise, and other risk factors
detailed in SYSCO's Form 10-K for the fiscal year ended July 3, 1999 filed with
the Securities and Exchange Commission.
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The comparative financial data for the second quarter of fiscal years 2000 and
1999 are summarized below.
($000 omitted except for per share data)
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FOR THE 13-WEEK PERIOD ENDED
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JANUARY 1, 2000 DECEMBER 26, 1998
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SALES $ 4,651,535 $ 4,246,675
Costs and expenses
Cost of sales 3,771,998 3,469,496
Operating expenses 695,418 616,899
Interest expense 16,680 18,397
Other, net 1,754 245
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TOTAL COSTS AND EXPENSES 4,485,850 4,105,037
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EARNINGS BEFORE INCOME TAXES 165,685 141,638
Income taxes 63,789 55,239
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NET EARNINGS $ 101,896 $ 86,399
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BASIC EARNINGS PER SHARE $ 0.31 $ 0.26
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DILUTED EARNINGS PER SHARE $ 0.31 $ 0.26
============ ============
BASIC AVERAGE SHARES OUTSTANDING 328,478,205 333,885,574
============ ============
DILUTED AVERAGE SHARES OUTSTANDING 333,544,018 337,894,965
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-4-
The comparative financial data for the 26-weeks of fiscal years 2000 and 1999
are summarized below.
($000 omitted except for per share data)
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FOR THE 26-WEEK PERIOD ENDED
----------------------------------------
JANUARY 1, 2000 DECEMBER 26, 1998
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TOTAL SALES $ 9,308,569 $ 8,439,305
Costs and expenses
Cost of sales 7,565,198 6,895,541
Operating expenses 1,369,662 1,224,711
Interest expense 34,624 35,328
Other, net 1,565 415
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TOTAL COSTS AND EXPENSES 8,971,049 8,155,995
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EARNINGS BEFORE INCOME TAXES 337,520 283,310
Income taxes 129,945 110,491
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EARNINGS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 207,575 172,819
Cumulative effect of accounting change (8,041) --
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NET EARNINGS $ 199,534 $ 172,819
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EARNINGS BEFORE ACCOUNTING CHANGE:
BASIC EARNINGS PER SHARE $ 0.63 $ 0.52
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DILUTED EARNINGS PER SHARE $ 0.62 $ 0.51
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CUMULATIVE EFFECT OF ACCOUNTING CHANGE:
BASIC EARNINGS PER SHARE $ (0.02) $ --
============= =============
DILUTED EARNINGS PER SHARE $ (0.02) $ --
============= =============
NET EARNINGS:
BASIC EARNINGS PER SHARE $ 0.61 $ 0.52
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DILUTED EARNINGS PER SHARE $ 0.60 $ 0.51
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BASIC AVERAGE SHARES OUTSTANDING
328,701,719 334,367,309
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DILUTED AVERAGE SHARES OUTSTANDING 333,686,134 338,039,496
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EXHIBIT 99.2
[SYSCO LETTERHEAD]
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION
CONTACT: Toni R. Spigelmyer
Assistant Vice President,
Investor and Media Relations
(281) 584-1458
SYSCO TO ACQUIRE $750 MILLION FRESHPOINT HOLDINGS, INC.
TO ENHANCE ITS CURRENT $1 BILLION IN FRESH PRODUCE SALES
HOUSTON, JANUARY 7, 2000 -- SYSCO Corporation (NYSE: SYY), the leading
foodservice marketer and distributor in North America, announced today that it
has signed a letter of intent to acquire FreshPoint Holdings, Inc., one of the
largest foodservice and wholesale produce distribution companies in North
America. Headquartered in Dallas, Texas, the company initially began operations
in 1996 following a management buyout of substantially all the North American
produce distribution businesses of Albert Fisher, a conglomerate of food
distribution companies based in England. Current annualized sales of FreshPoint
Holdings, Inc. are approximately $750 million, approaching the $1.0 billion in
produce sales generated by SYSCO during fiscal year 1999. Terms of the
transaction were not disclosed.
Albert Fisher began developing a North American presence in 1984 by
acquiring the recognized premier produce distributors in certain established
markets and retaining management who continue to operate the family-owned
businesses they founded decades earlier. The company has continued to build its
reputation through acquisitions and internal growth, creating a network of 28
facilities located in Washington, D.C., Georgia, Florida, Texas, Nevada,
Colorado and California, as well as the Canadian provinces of British Columbia
and Alberta.
FreshPoint currently distributes a product mix of 60 percent fresh
vegetables, 25 percent fresh fruit and 15 percent other produce and refrigerated
products. Its customer base of more than 20,000 includes foodservice
establishments such as restaurants, hotels, cruise ships, government facilities
and other institutional customers, wholesale locations such as grocery stores,
and
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other produce and broadline distributors. The company maintains approximately
1.4 million square feet of warehouse storage and delivers products through a
fleet of more than 750 temperature-controlled vehicles.
Discussing the acquisition, Charles H. Cotros, SYSCO's president and chief
executive officer, said, "Industry sources report that produce sales within the
United States have grown about 5.5 percent annually over the past five years and
they project additional growth in the four to five percent range during the next
five to 10 years. FreshPoint is a premier produce distributor with outstanding
purchasing capabilities that will enhance SYSCO's goal of continuing to be the
leading produce distributor in its markets. By combining SYSCO's purchasing with
theirs, we will be able to assure that the highest quality fresh produce will be
available to our customers from sources throughout the world."
Bill M. Lindig, SYSCO's chairman of the board, said management was
surprised by how little customer duplication exists between the two companies.
"We've often said this great North American foodservice distribution market of
$165 billion in calendar 1998 had plenty of opportunity for growth and SYSCO
holds only about a 10 percent market share. With our current produce sales at
about 6 percent of total sales, this acquisition will give us the ability to
grow by providing just-in-time and more frequent produce deliveries to customers
that require these superior service levels. Additionally, FreshPoints' minimal
overlap of customers will open windows of opportunity for their customers to
access SYSCO's broad array of other products."
Mitt Parker, FreshPoint's president and chief executive officer, said "We
are pleased to become part of the SYSCO family by aligning ourselves with the
premier foodservice distributor in the industry. This solidifies a long-term
future for our employees and also offers national coverage for multi-unit chain
customers. This will also give us the financial strength to continue our
expansion as the leader in fresh produce distribution."
FreshPoint Holdings, Inc. will become a subsidiary of SYSCO. The FreshPoint
organization is entrepreneurial in nature, similar to SYSCO's structure, and
SYSCO plans to continue operating it separately, retaining key management
individuals who will continue to be responsible for day-to-day operations of the
organization. Both Mr. Parker and Brian Sturgeon, FreshPoint's chief operating
officer, will continue in their current positions.
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SYSCO, listed on the New York Stock Exchange, is the largest foodservice
marketing and distribution organization in North America. Generating annualized
sales in excess of $18.5 billion, SYSCO provides its products and services to
about 325,000 customers. The SYSCO distribution network currently extends
throughout the entire contiguous United States as well as portions of Alaska and
Canada.
Safe Harbor statement under the Private Securities Litigation Reform Act of
1995:
Certain statements made herein are forward-looking statements under the
Private Securities Litigation Reform Act of 1995. They include statements
regarding annualized sales, growth of the produce industry and growth of the
foodservice distribution industry. These statements involve risks and
uncertainties and are based on current expectations and management's estimates;
actual results may differ materially. Closing of the transaction is subject to
conditions including completion of due diligence, negotiation and execution of
definitive agreements, and final board approval of both companies. Those risks
and uncertainties that could impact these statements include the risk and
uncertainty relating to sensitivity to conditions in the economy and the
foodservice distribution industry, SYSCO's leverage and debt risks, the risk of
interruption of supplies due to lack of long-term contracts, work stoppages or
otherwise, the successful integration of acquisitions as explained in the
"Integration of Acquired Companies" section of the Risk Factors in SYSCO's Form
10-K for the fiscal year ended July 3, 1999, and other risk factors detailed in
SYSCO's Form 10-K for the fiscal year ended July 3, 1999 filed with the
Securities and Exchange Commission.
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