Exhibit 99.1
SYSCO |
SYSCO Corporation 1390 Enclave Parkway Houston, Texas 77077-2099 (281) 584-1390 | NEWS RELEASE |
FOR IMMEDIATE RELEASE | FOR MORE INFORMATION |
| CONTACT: | Kirk G. Drummond | ||
Sr. Vice President, Finance | ||||
and Treasurer | ||||
(281) 584-1328 |
SYSCO REPORTS FOURTH QUARTER DILUTED EPS OF $0.49 AND
FISCAL 2007 DILUTED EPS OF $1.60
FISCAL 2007 DILUTED EPS OF $1.60
HOUSTON, August 13, 2007 —SYSCO Corporation (NYSE: SYY) today announced financial results for its 13-week fourth quarter and 52 weeks of fiscal 2007 ended June 30, 2007.
Fourth Quarter Fiscal 2007 Highlights
• | Sales increased 8.5% to $9.23 billion from $8.51 billion in last year’s fourth quarter. | |
• | Net earnings were $303.4 million compared to $254.1 million in last year’s fourth quarter, an increase of 19.4%. | |
• | Diluted earnings per share (EPS) increased 19.5% to $0.49 compared to $0.41 in the fourth quarter of fiscal 2006. |
Fiscal 2007 Highlights
• | Sales increased 7.4% to $35.04 billion from $32.63 billion in fiscal 2006. | |
• | The impact of EITF 04-13 (Accounting for Purchases and Sales of Inventory with the Same Counterparty) reduced sales growth for fiscal 2007 by 0.7%. | |
• | Net earnings were $1.00 billion compared to $855.3 million in the prior fiscal year, an increase of 17.0%. | |
• | Diluted EPS increased 17.6% to $1.60 compared to $1.36 in fiscal 2006. |
“We delivered solid sales and excellent earnings growth in the fourth quarter as our operating companies successfully supported their customers in a market that experienced significant food cost inflation,” said Richard J. Schnieders, SYSCO’s chairman and chief executive officer. “Looking at fiscal 2007 overall, sales growth met our expectations and we are especially pleased with the nearly 18% EPS growth that accompanied it. It is particularly gratifying to achieve a major milestone of one billion dollars in net earnings for the first time.”
Sales
Sales for the fourth quarter grew 8.5% over the same period last year. Sales from acquisitions (less than 12 months) contributed 0.2% to the quarter’s sales growth. Food cost inflation, as estimated by the change in SYSCO’s cost of goods, was 6.1% for the quarter.
Sales for fiscal 2007 grew 7.4% over fiscal 2006. The impact of EITF 04-13 reduced sales by approximately $334.0 million in fiscal 2007 compared to $99.8 million in fiscal 2006, reducing sales growth by 0.7%. This accounting standard was effective beginning with the fourth quarter of fiscal 2006. Sales from acquisitions contributed 0.7% to the fiscal year’s sales growth. Food cost inflation was 3.4% for the year.
Gross Profit Margins
During the fourth quarter, gross profit margins were 19.51%, a 34 basis point decline from the same period in fiscal 2006. High inflation contributed significantly to the decline as a percent to sales. Nevertheless, the company was able to grow gross profit dollars by a healthy 6.6%.
For fiscal 2007, gross profit margins remained flat at 19.28%, including a 12 basis point improvement due to EITF 04-13.
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Expenses
Operating expenses as a percent of sales were 13.99% during the fourth quarter, a 76 basis point decrease from the same period last year. This unusually large decrease in expenses as a percent to sales resulted both from sound cost control management and the favorable impact of high food cost inflation.
For fiscal 2007, operating expenses were 14.41% of sales compared to 14.70% in fiscal 2006, a 29 basis point decrease, including a 9 basis point increase due to EITF 04-13.
Capital Spending
Capital expenditures totaled $146.1 million for the quarter and $603.2 million for the year.
Looking forward to fiscal 2008, the company expects to complete construction of fold-out facilities in Knoxville, TN and Longview, TX, as well as the redistribution center in Alachua, FL. Those projects, together with other facility expansion work and ongoing investments in fleet and warehouse equipment, should result in total capital expenditures for the new fiscal year in the range of $625 million to $650 million.
Future Outlook
“Throughout SYSCO’s history, our growth has consistently outpaced that of the foodservice industry. We are encouraged with the progress of our national supply chain, sourcing and integrated delivery initiatives to date and remain confident that the successful execution of these initiatives going forward will position us well to participate in the growth and success of our customers for years to come. Therefore, although industry growth has moderated somewhat in recent years, over the long term we are targeting 7% to 9% annual nominal sales growth, excluding the impact of major acquisitions,” said Schnieders. “With our continuing improvement in operating leverage capabilities, we expect to convert this sales growth into low- to mid-double digit annualized EPS growth.”
Conference Call & Webcast
SYSCO’s fourth quarter and fiscal 2007 year end earnings conference call will be held on Monday, August 13, 2007 at 10:00 a.m. EDT. A live webcast of the call, as well as a copy of this press release, will be available online at www.sysco.com in the Investor Relations section.
About SYSCO
SYSCO is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers that prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. For the fiscal year 2007, the company generated $35.0 billion in sales. For more information about SYSCO visit www.sysco.com.
Forward-Looking Statements
Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They include statements regarding sales and earnings growth; and projections regarding capital expenditures. These statements involve risks and uncertainties and are based on management’s current expectations and estimates; actual results may differ materially. Those risks and uncertainties that could impact these statements include risks that pertain to SYSCO’s business, including the risks relating to the foodservice distribution industry’s relatively low profit margins and sensitivity to general economic conditions, including the current economic environment and consumer spending; increased fuel costs; SYSCO’s leverage and debt risks; the successful completion of acquisitions and integration of acquired companies as well as the risk that acquisitions could negatively impact the Company’s stock price, operating results or debt ratio or significantly increase the Company’s liquidity requirements; the risk of interruption of supplies due to lack of long-term contracts, severe weather, work stoppages or otherwise; construction schedules; management’s allocation of capital and the timing of capital purchases such as fleet and equipment; competitive conditions; labor issues; and internal factors such as the ability to control expenses. Earnings are also impacted by option expensing, which is based on certain assumptions regarding the number and fair value of options granted, resulting tax benefits and shares outstanding. For a discussion of additional factors that could cause actual results to differ from those described in the forward-looking statements, see the Company’s Quarterly Report onForm 10-Q for the quarter ended March 31, 2007 as filed with the Securities and Exchange Commission.
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SYSCO CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
For the 13-Weeks Ended | ||||||||
June 30, 2007 | July 1, 2006 | |||||||
Sales | $ | 9,228,294 | $ | 8,509,077 | ||||
Costs and expenses | ||||||||
Cost of sales | 7,427,621 | 6,819,459 | ||||||
Operating expenses | 1,291,190 | 1,254,906 | ||||||
Interest expense | 25,530 | 28,186 | ||||||
Other, net | (2,786 | ) | (2,862 | ) | ||||
Total costs and expenses | 8,741,555 | 8,099,689 | ||||||
Earnings before income taxes | 486,739 | 409,388 | ||||||
Income taxes (37.67% in ‘07; 37.93% in ‘06) | 183,348 | 155,279 | ||||||
Net earnings | $ | 303,391 | $ | 254,109 | ||||
Net earnings: | ||||||||
Basic earnings per share | $ | 0.49 | $ | 0.41 | ||||
Diluted earnings per share | $ | 0.49 | $ | 0.41 | ||||
Average shares outstanding | 616,366,328 | 619,241,061 | ||||||
Diluted average shares outstanding | 623,993,792 | 625,004,355 | ||||||
Comparative segment sales data.
(Unaudited)
($000)
(Unaudited)
($000)
For the 13-Weeks Ended | ||||||||
June 30, 2007 | July 1, 2006 | |||||||
Sales: | ||||||||
Broadline | $ | 7,289,746 | $ | 6,660,414 | ||||
SYGMA | 1,140,249 | 1,069,119 | ||||||
Other | 922,441 | 892,339 | ||||||
Intersegment | (124,142 | ) | (112,795 | ) | ||||
Total | $ | 9,228,294 | $ | 8,509,077 | ||||
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SYSCO CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
For the 52-Weeks Ended | ||||||||
June 30, 2007 | July 1, 2006 | |||||||
Sales | $ | 35,042,075 | $ | 32,628,438 | ||||
Costs and expenses | ||||||||
Cost of sales | 28,284,603 | 26,337,107 | ||||||
Operating expenses | 5,048,990 | 4,796,301 | ||||||
Interest expense | 105,002 | 109,100 | ||||||
Other, net | (17,735 | ) | (9,016 | ) | ||||
Total costs and expenses | 33,420,860 | 31,233,492 | ||||||
Earnings before income taxes | 1,621,215 | 1,394,946 | ||||||
Income taxes (38.25% in ‘07; 39.35% in ‘06) | 620,139 | 548,906 | ||||||
Earnings before cumulative effect of accounting change | 1,001,076 | 846,040 | ||||||
Cumulative effect of accounting change | — | 9,285 | ||||||
Net earnings | $ | 1,001,076 | $ | 855,325 | ||||
Earnings before cumulative effect of accounting change: | ||||||||
Basic earnings per share | $ | 1.62 | $ | 1.36 | ||||
Diluted earnings per share | $ | 1.60 | $ | 1.35 | ||||
Net earnings: | ||||||||
Basic earnings per share | $ | 1.62 | $ | 1.38 | ||||
Diluted earnings per share | $ | 1.60 | $ | 1.36 | ||||
Average shares outstanding | 618,338,752 | 621,382,766 | ||||||
Diluted average shares outstanding | 626,366,798 | 628,800,647 | ||||||
Comparative segment sales data.
(Unaudited)
($000)
(Unaudited)
($000)
For the 52-Weeks Ended | ||||||||
June 30, 2007 | July 1, 2006 | |||||||
Sales: | ||||||||
Broadline | $ | 27,560,375 | $ | 25,758,646 | ||||
SYGMA | 4,380,955 | 4,131,665 | ||||||
Other | 3,571,213 | 3,139,278 | ||||||
Intersegment | (470,468 | ) | (401,151 | ) | ||||
Total | $ | 35,042,075 | $ | 32,628,438 | ||||
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SYSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
June 30, 2007 | July 1, 2006 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 207,872 | $ | 201,897 | ||||
Receivables | 2,610,885 | 2,483,720 | ||||||
Inventories | 1,714,187 | 1,608,233 | ||||||
Prepaid expenses and other current assets | 123,284 | 59,154 | ||||||
Prepaid income taxes | 19,318 | 46,690 | ||||||
Total current assets | 4,675,546 | 4,399,694 | ||||||
Plant and equipment at cost, less depreciation | 2,721,233 | 2,464,900 | ||||||
Other assets | ||||||||
Goodwill | 1,355,313 | 1,302,591 | ||||||
Intangibles | 91,366 | 95,651 | ||||||
Restricted cash | 101,929 | 102,274 | ||||||
Prepaid pension cost | 352,390 | 388,650 | ||||||
Other | 221,154 | 238,265 | ||||||
Total other assets | 2,122,152 | 2,127,431 | ||||||
Total assets | $ | 9,518,931 | $ | 8,992,025 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Notes payable | $ | 18,900 | $ | 29,300 | ||||
Accounts payable | 1,981,190 | 1,891,357 | ||||||
Accrued expenses | 922,582 | 745,781 | ||||||
Deferred taxes | 488,849 | 453,700 | ||||||
Current maturities of long-term debt | 3,568 | 106,265 | ||||||
Total current liabilities | 3,415,089 | 3,226,403 | ||||||
Other liabilities | ||||||||
Long-term debt | 1,758,227 | 1,627,127 | ||||||
Deferred taxes | 626,695 | 723,349 | ||||||
Other long-term liabilities | 440,520 | 362,862 | ||||||
Total other liabilities | 2,825,442 | 2,713,338 | ||||||
Contingencies | ||||||||
Shareholders’ equity | ||||||||
Preferred stock | — | — | ||||||
Common stock, par $l per share | 765,175 | 765,175 | ||||||
Paid-in capital | 637,154 | 525,684 | ||||||
Retained earnings | 5,544,078 | 4,999,440 | ||||||
Other comprehensive (loss) income | (4,061 | ) | 84,618 | |||||
Treasury stock | (3,663,946 | ) | (3,322,633 | ) | ||||
Total shareholders’ equity | 3,278,400 | 3,052,284 | ||||||
Total liabilities and shareholders’ equity | $ | 9,518,931 | $ | 8,992,025 | ||||
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SYSCO CORPORATION
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
For the 52-Weeks Ended | ||||||||
June 30, 2007 | July 1, 2006 | |||||||
Cash flows from operating activities: | ||||||||
Net earnings | $ | 1,001,076 | $ | 855,325 | ||||
Adjustments to reconcile net earnings to cash provided by operating activities: | ||||||||
Cumulative effect of accounting change | — | (9,285 | ) | |||||
Share-based compensation expense | 97,985 | 126,837 | ||||||
Depreciation and amortization | 362,559 | 345,062 | ||||||
Deferred tax provision | 545,971 | 482,111 | ||||||
Provision for losses on receivables | 28,156 | 19,841 | ||||||
(Gain) loss on sale of assets | (6,279 | ) | 847 | |||||
Additional investment in certain assets and liabilities, net of effect of businesses acquired: | ||||||||
(Increase) in receivables | (134,153 | ) | (162,586 | ) | ||||
(Increase) in inventories | (95,932 | ) | (119,392 | ) | ||||
(Increase) decrease in prepaid expenses | (62,773 | ) | 1,741 | |||||
Increase in accounts payable | 85,422 | 49,775 | ||||||
Increase in accrued expenses | 132,936 | 29,161 | ||||||
(Decrease) in accrued income taxes | (491,993 | ) | (545,634 | ) | ||||
(Increase) in other assets | (36,426 | ) | (17,937 | ) | ||||
(Decrease) increase in other long-term liabilities and prepaid pension cost, net | (14,817 | ) | 75,382 | |||||
Excess tax benefits from share-based compensation arrangements | (8,810 | ) | (6,569 | ) | ||||
Net cash provided by operating activities | 1,402,922 | 1,124,679 | ||||||
Cash flows from investing activities: | ||||||||
Additions to plant and equipment | (603,242 | ) | (513,934 | ) | ||||
Proceeds from sales of plant and equipment | 16,008 | 21,037 | ||||||
Acquisition of businesses, net of cash acquired | (59,322 | ) | (114,378 | ) | ||||
Increase in restricted cash balances | (2,155 | ) | (2,243 | ) | ||||
Net cash used for investing activities | (648,711 | ) | (609,518 | ) | ||||
Cash flows from financing activities: | ||||||||
Bank and commercial paper borrowings (repayments), net | 121,858 | 240,017 | ||||||
Other debt borrowings | 5,290 | 500,987 | ||||||
Other debt repayments | (109,656 | ) | (413,383 | ) | ||||
Debt issuance costs | (7 | ) | (3,998 | ) | ||||
Cash paid for termination of interest rate swap | — | (21,196 | ) | |||||
Common stock reissued from treasury | 221,736 | 128,055 | ||||||
Treasury stock purchases | (550,865 | ) | (544,131 | ) | ||||
Dividends paid | (445,416 | ) | (397,537 | ) | ||||
Excess tax benefits from share-based compensation arrangements | 8,810 | 6,569 | ||||||
Net cash used for financing activities | (748,250 | ) | (504,617 | ) | ||||
Effect of exchange rate changes on cash | 14 | (325 | ) | |||||
Net increase in cash | 5,975 | 10,219 | ||||||
Cash at beginning of period | 201,897 | 191,678 | ||||||
Cash at end of period | $ | 207,872 | $ | 201,897 | ||||
Cash paid during the period for: | ||||||||
Interest | $ | 107,109 | $ | 107,242 | ||||
Income taxes | 563,968 | 619,442 |
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Comparative Supplemental Statistical Information Related to Sales (Unaudited)
Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data are summarized below.
For the 13-Weeks Ended | ||||||||
June 30, 2007 | July 1, 2006 | |||||||
SYSCO Brand Sales as a % of MA-Served Sales | 51.56 | % | 54.32 | % | ||||
SYSCO Brand Sales as a % of Total Traditional Broadline Sales in the U.S. | 44.63 | % | 47.34 | % | ||||
MA-Served Sales as a % of Total Traditional Broadline Sales in the U.S. | 52.69 | % | 52.44 | % |
For the 52-Weeks Ended | ||||||||
June 30, 2007 | July 1, 2006 | |||||||
SYSCO Brand Sales as a % of MA-Served Sales | 52.55 | % | 55.51 | % | ||||
SYSCO Brand Sales as a % of Total Traditional Broadline Sales in the U.S. | 45.49 | % | 48.08 | % | ||||
MA-Served Sales as a % of Total Traditional Broadline Sales in the U.S. | 52.03 | % | 51.89 | % |
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