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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 1,September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-6544
SYSCO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-1648137
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1390 Enclave Parkway
Houston, Texas 77077-2099
(Address of principal executive offices)
(Zip code)
Registrant's telephone number, including area code: (713) 584-1390
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
182,352,833182,211,874 shares of common stock were outstanding as of
May 5,October 27, 1995.
2
PART I. FINANCIAL INFORMATION
---------------------------------------------------
Item 1. Financial Statements
The following consolidated financial statements
have been prepared by the Company, without
audit, with the exception of the July 2, 19941, 1995
consolidated balance sheet which was taken from
the audited financial statements included in the
Company's Fiscal 19941995 Annual Report on Form
10-K. The financial statements include
consolidated balance sheets, consolidated
results of operations and consolidated cash
flows. In the opinion of management, all
adjustments, which consist of normal recurring
adjustments, necessary to present fairly the
financial position, results of operations and
cash flows for all periods presented, have been
made.
These financial statements should be read in
conjunction with the audited financial
statements and notes thereto included in the
Company's Fiscal 19941995 Annual Report on Form
10-
K.10-K.
A review of the financial information herein has
been made by Arthur Andersen LLP, independent
public accountants, in accordance with established
professional standards and procedures for such a
review. A letter from Arthur Andersen LLP
concerning their review is included as Exhibit 15.
3
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands Except for Share Data)
AprilSept. 30, July 1, July 2, April 2,Oct. 1,
1995 1995 1994
1994---------- --------- -----------
(Unaudited) (Audited) (Unaudited)
----------- --------- -----------
ASSETS
----------
Current assets:assets
Cash $ 78,06590,265 $ 86,735133,886 $ 64,12875,481
Accounts and notes receivable,
less allowances of $34,449,
$15,999$22,023,
$16,001 and $33,046 934,482 856,448 859,284$22,861 1,037,871 932,533 935,671
Inventories 677,293 601,994 612,534730,550 667,861 672,385
Deferred taxes 24,153 38,091 36,02633,851 33,935 36,508
Prepaid expenses 21,783 16,380 22,09722,950 18,685 20,717
---------- ---------- ----------
Total current assets 1,735,776 1,599,648 1,594,0691,915,487 1,786,900 1,740,762
Plant and equipment at cost, less
depreciation 875,687 817,221 801,794926,720 896,079 826,065
Goodwill and intangibles, less
amortization 260,139 266,021 263,603256,253 258,206 264,005
Other assets 149,677 128,839 112,675158,090 153,506 139,685
---------- ---------- ----------
Total assets $3,021,279 $2,811,729 $2,772,141$3,256,550 $3,094,691 $2,970,517
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:liabilities
Notes payable $ 50,83022,190 $ 5,2471,181 $ 27,90335,771
Accounts payable 702,605 632,373 647,512806,844 708,380 705,454
Accrued expenses 189,500 176,043 163,191188,116 206,131 163,850
Accrued income taxes 14,088 29,168 30,22152,917 22,462 53,845
Current maturities of long-term
debt 5,234 3,730 6,3076,925 6,569 5,752
---------- --------- ----------
Total current liabilities 962,257 846,561 875,1341,076,992 944,723 964,672
Long-term debt 530,268 538,711 512,332535,591 541,556 535,425
Deferred taxes 196,619 185,548 173,776204,515 204,809 188,169
Shareholders' equity
Preferred stock, par value $1 per
share:share
Authorized 1,500,000 shares;
issued none --- --- ---
Common stock, par value $1 per
share:share
Authorized 500,000,000 shares;
issued 191,293,725, shares 191,294 191,294 191,294
Paid-in capital 51,282 60,003 61,44649,047 48,674 52,955
Retained earnings 1,322,345 1,200,735 1,149,8601,425,444 1,379,405 1,242,608
---------- ---------- ----------
1,564,921 1,452,032 1,402,6001,665,785 1,619,373 1,486,857
Less cost of treasury stock,
9,099,381, 8,224,5058,762,008, 8,429,203 and
7,457,6397,986,583 shares 232,786 211,123 191,701226,333 215,770 204,606
---------- ---------- ----------
Total shareholders' equity 1,332,135 1,240,909 1,210,8991,439,452 1,403,603 1,282,251
---------- ---------- ----------
Total liabilities and
shareholders' equity $3,021,279 $2,811,729 $2,772,141$3,256,550 $3,094,691 $2,970,517
========== ========== ==========
Note: The July 2, 19941, 1995 balance sheet has been taken from the audited
financial statements at that date.
4
SYSCO Corporation and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
39-Week Period Ended 13-Week Period Ended
----------------------------
-----------------------------
AprilSept. 30, Oct. 1, April 2, April 1, April 2,
1995 1994
1995 1994
------------ ------------ ------------ -----------
Sales $ 8,956,1143,291,910 $ 8,060,610 $ 2,966,355 $ 2,684,8542,983,096
Costs and expenses
Cost of sales 7,345,041 6,613,160 2,432,677 2,209,7802,704,658 2,448,788
Operating expenses 1,294,310 1,165,433 436,443 391,844469,847 429,591
Interest expense 28,738 27,898 10,317 7,9499,372 8,453
Other income, net (1,697) (1,630) (624) (496)(444) (528)
------------ ----------- ------------ ------------
Total costs and expenses 8,666,392 7,804,861 2,878,813 2,609,0773,183,433 2,886,304
------------ ----------- ------------ ------------
Earnings before income taxes 289,722 255,749 87,542 75,777108,477 96,792
Income taxes 115,019 106,432 34,754 30,083
------------ ------------42,306 38,426
------------ ------------
Net earnings $ 174,70366,171 $ 149,317 $ 52,788 $ 45,694
============ ============58,366
============ ============
Average number of shares
outstanding 182,905,450 184,624,948 182,531,301 184,201,317
============ ============182,791,952 183,295,130
============ ============
Earnings per share $ 0.960.36 $ 0.81 $ 0.29 $ 0.25
============ ============0.32
============ ============
Dividends paid per common
share $ 0.290.11 $ 0.23 $ 0.11 $ 0.09
============ ============ ============
============ (/Table)============
5
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS - (Unaudited)
(In Thousands)
39-Week13- Week Period Ended
------------------------
AprilSept. 30, Oct. 1, April 2,
1995 1994
-------- ----------
Cash flows from operating activities:
Net earnings $ 174,703 $149,31766,171 $ 58,366
Add non-cash items:
Depreciation and amortization 97,224 88,96133,916 31,819
Interest on Liquid Yield Option Notes 4,500 4,2731,350 1,466
Deferred tax provision 25,009 13,784(210) 4,204
Provision for losses on accounts receivable 14,209 14,3464,631 5,099
Additional investment in certain assets
and liabilities net of effect of business
acquired:
(Increase) in receivables (92,243) (85,751)(109,969) (84,322)
(Increase) in inventories (75,299) (68,822)(62,689) (70,391)
(Increase) in prepaid expenses (5,403) (2,111)(4,265) (4,337)
Increase in accounts payable 70,232 88,916
Increase98,464 73,081
(Decrease) in accrued expenses 13,457 2,658
(Decrease) increase(18,015) (12,193)
Increase in accrued income taxes (15,080) 3,13130,455 24,677
(Increase) in other assets (24,941) (33,514)(5,969) (12,237)
-------- --------
Net cash provided by operating activities 186,368 175,18833,870 15,232
-------- --------
Cash flows from investing activities:
Additions to plant and equipment (149,514) (117,494)(61,469) (37,975)
Proceeds from sales of plant and equipment 3,809 1,976
Acquisitions of business, net of cash
acquired --- (11,897)250 719
-------- --------
Net cash used for investing activities (145,705) (127,415)(61,219) (37,256)
-------- --------
Cash flows from financing activities:
Bank and commercial paper borrowings 40,406 34,45111,018 28,877
Other debt repayments (6,257) (8,983)borrowings (repayments) 3,041 (1,084)
Common stock reissued from treasury 20,122 19,35411,415 12,721
Treasury stock purchases (50,511) (54,712)(21,614) (13,251)
Dividends paid (53,093) (42,514)(20,132) (16,493)
-------- --------
Net cash used for(used for) provided
by financing activities (49,333) (52,404)(16,272) 10,770
-------- --------
Net (decrease)decrease in cash (8,670) (4,631)(43,621) (11,254)
Cash at beginning of period 133,886 86,735 68,759
-------- --------
Cash at end of period $ 78,06590,265 $ 64,12875,481
======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 26,6974,724 $ 26,0226,128
Income taxes 104,536 91,34110,688 8,928
6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
-------------------------------
The liquidity and capital resources discussion
included on page 11 of the Company's Fiscal 19941995
Annual Report on Form 10-K remains applicable,
other than the common stock repurchase program
described below.
In Fiscal 1992, the Company began a common stock
repurchase program and purchased 8,000,000 shares
in Fiscal 1992 and 1993. In September 1993, the
Board of Directors authorized an additional
10,000,000 shares to be purchased under thisits stock
repurchase program. Under this program, 3,000,000
shares were purchased in Fiscal 1994, 2,100,000
shares in Fiscal 1995 and 2,000,000766,000 shares through April 1, 1995.in the
first quarter of Fiscal 1996.
Results of Operations
---------------------
Sales and cost of sales increased 11%10.4% during the
39 weeks and 10% in
the thirdfirst quarter of Fiscal 19951996 over the comparable
periodssame
quarter of the prior year. Cost of sales increased
11% during the 39 weeks and 10% in the third quarter
of Fiscal 1995 which is generally in line with the
sales increases. Operating expenses for
the periods presented remained approximately the
same as a percent of sales.
Interest expense in the current periodsperiod increased fromover
the prior periodsperiod primarily due increased borrowings andto rates.
Income taxes for the prior 39 weeks includes a $4.9
million provision relating to the retroactive impact
of the Omnibus Budget Reconciliation Act of 1993.
Excluding this charge, thecurrent period reflect an
effective tax rate for
the current and prior periods was 39.7%, reflecting
the current federal tax rate of 35%.39.0% as compared to 39.7% in the
prior year. The rate reduction results from the
effects of several tax savings initiatives.
Increases in pretax earnings, net earnings and
earnings per share for the periods shown resulted
from a combination of the above factors.
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PART II. OTHER INFORMATION
-------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11, Statement re computation of per
share earnings.
Exhibit 15, Letter from Arthur Andersen LLP
dated May 12,November 9, 1995, re unaudited financial
statements.
Exhibit 27, Financial Data Schedule.data schedule.
(b) No reports on Form 8-K have been filed during
the quarter for which this report is filed.
8
SIGNATURES
------------------
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYSCO CORPORATION
(Registrant)
By /s/ JOHN K. STUBBLEFIELD, JR.
-----------------------------
John K. Stubblefield, Jr.
Senior Vice President &and
Chief Financial Officer
Date: May 12,November 9, 1995
9
EXHIBIT INDEX
----------------------
SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- - - -
- - ----- ----------------------------------------- -------------
11 SYSCO Corporation and its Consolidated
Subsidiaries statement re computation of
per share earnings 10
15 Letter from Arthur Andersen LLP dated
May 12,November 9, 1995, re unaudited financial
statements 11
27 SYSCO Corporation and its Consolidated
Subsidiaries Financial Data Schedulefinancial data schedule 12