Exhibit 99.1
SYSCO |
SYSCO Corporation | NEWS RELEASE | |
1390 Enclave Parkway | ||
Houston, Texas 77077-2099 | ||
(281) 584-1390 | ||
FOR IMMEDIATE RELEASE | FOR MORE INFORMATION | |
CONTACT: Neil A. Russell | ||
Assistant Vice President, | ||
Investor Relations | ||
(281) 584-1308 |
SYSCO REPORTS THIRD QUARTER DILUTED EPS OF $0.40,
YEAR-TO-DATE FISCAL YEAR 2008 DILUTED EPS OF $1.26
Quarterly diluted EPS increases 14.3 percent compared to the same period last year
HOUSTON, April 28, 2008 —SYSCO Corporation (NYSE: SYY) today announced financial results for its 13-week third quarter and 39 weeks of fiscal 2008 ended March 29, 2008.
Third Quarter Fiscal 2008 Highlights
§ | Sales increased 6.7% to $9.15 billion from $8.57 billion in last year’s third quarter. | |
§ | Net earnings increased 9.0% to $240.9 million compared to $221.0 million in last year’s third quarter. | |
§ | Diluted earnings per share (EPS) increased 14.3% to $0.40 compared to $0.35 in the third quarter of fiscal 2007. |
Year-To-Date Fiscal 2008 Highlights
§ | Sales increased 7.7% to $27.79 billion from $25.81 billion in the corresponding period last year. | |
§ | Net earnings increased 10.7% to $772.0 million compared to $ 697.7 million in last year’s first 39 weeks. | |
§ | Diluted EPS increased 13.5% to $1.26 compared to $1.11 in the corresponding period last year. |
“In a challenging business environment where restaurant sales growth appears to have been flat to down, we continued to grow and we leveraged that growth to our bottom line, particularly in the Broadline segment,” said Richard J. Schnieders, SYSCO’s chairman and chief executive officer. “Our strong customer focus – which centers on helping customers succeed – solidifies and enhances our business relationships for the longer term.”
Third Quarter Fiscal 2008 Summary
Sales for the third quarter grew 6.7% over the same period last year. Food cost inflation, as estimated by the change in SYSCO’s cost of goods, was 6.2% for the quarter.
Operating income for the third quarter grew 8.7% over the same period last year. As a percentage of sales, operating income increased 9 basis points.The prevailing market environment was characterized by continued high food cost inflation. In spite of these conditions, gross profit dollars increased 6.1% while operating expenses grew only 5.4% for the period.
Operating expenses for the third quarter were negatively impacted by, among other items; the cash surrender value of corporate-owned life insurance, which declined $14.3 million versus a gain of $3.8 million in the third quarter of last year, resulting in a negative comparison of $18.1 million. In addition, fuel costs were approximately $12 million higher than the same period last year. These increases were partially offset by decreases in pension and stock compensation expense of $2.2 million and $4.1 million, respectively.
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Year-To-Date Fiscal 2008 Summary
Sales for the first three quarters of 2008 grew 7.7% over the same period last year. Food cost inflation, as estimated by the change in SYSCO’s cost of goods, was 6.0% year-to-date in fiscal 2008. Operating income grew 10.2% over the same period last year as a result of gross profit dollars increasing 6.8% and operating expenses grew 5.7% for the period. Diluted EPS increased 13.5% to $1.26.
“I am encouraged by our year-to-date results,” said Richard J. Schnieders, SYSCO’s chairman and chief executive officer. “To leverage 7.7% sales growth into 13.5% earnings per share growth is an indication of the focus and strong execution of our business strategies by our more than 50,000 associates.”
Capital Spending
Capital expenditures totaled $115 million and $393 million for the third quarter and year-to-date fiscal 2008, respectively. The primary areas for investments included facility replacements and expansions, construction of fold-out operations, additions to SYSCO’s fleet. Additionally, investments included the new redistribution center in Alachua, Florida, SYSCO’s second RDC facility, which opened on schedule and began shipping product in April to five operating companies in Florida.
For the full fiscal year 2008, the company projects that capital expenditures will be in the range of $550 million to $575 million.
Conference Call & Webcast
SYSCO’s third quarter 2008 earnings conference call will be held on Monday, April 28, 2008 at 10:00 a.m. ET. 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 who 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 that ended June 30, 2007, the company generated more than $35 billion in sales. For more information about SYSCO visit the company’s Internet home page at 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 the impact of our customer focus on SYSCO’s business relationships 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 decreases in 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. Capital expenditures may vary from those projected based on changes in business plans and other factors, including those described above. 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 Annual Report on Form 10-K for the year ended June 30, 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 | ||||||||
March 29, 2008 | March 31, 2007 | |||||||
Sales | $ | 9,146,557 | $ | 8,572,961 | ||||
Cost of sales | 7,412,036 | 6,938,867 | ||||||
Gross margins | 1,734,521 | 1,634,094 | ||||||
Operating expenses | 1,316,877 | 1,249,951 | ||||||
Operating income | 417,644 | 384,143 | ||||||
Interest expense | 28,744 | 25,700 | ||||||
Other income, net | (7,285 | ) | (2,536 | ) | ||||
Earnings before income taxes | 396,185 | 360,979 | ||||||
Income taxes (39.19% in ‘08; 38.78% in ’07) | 155,284 | 139,980 | ||||||
Net earnings | $ | 240,901 | $ | 220,999 | ||||
Net earnings: | ||||||||
Basic earnings per share | $ | 0.40 | $ | 0.36 | ||||
Diluted earnings per share | $ | 0.40 | $ | 0.35 | ||||
Average shares outstanding | 603,170,150 | 617,678,739 | ||||||
Diluted average shares outstanding | 605,773,862 | 625,750,925 | ||||||
COMPARATIVE SEGMENT SALES DATA (Unaudited)
(In Thousands)
(In Thousands)
For the 13-Weeks Ended | ||||||||
March 29, 2008 | March 31, 2007 | |||||||
Sales: | ||||||||
Broadline | $ | 7,230,350 | $ | 6,716,512 | ||||
SYGMA | 1,138,660 | 1,082,534 | ||||||
Other | 888,665 | 887,156 | ||||||
Intersegment | (111,118 | ) | (113,241 | ) | ||||
Total | $ | 9,146,557 | $ | 8,572,961 | ||||
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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 39-Weeks Ended | ||||||||
March 29, 2008 | March 31, 2007 | |||||||
Sales | $ | 27,791,906 | $ | 25,813,781 | ||||
Cost of sales | 22,498,463 | 20,856,982 | ||||||
Gross margins | 5,293,443 | 4,956,799 | ||||||
Operating expenses | 3,972,154 | 3,757,800 | ||||||
Operating income | 1,321,289 | 1,198,999 | ||||||
Interest expense | 84,030 | 79,472 | ||||||
Other income, net | (18,660 | ) | (14,949 | ) | ||||
Earnings before income taxes | 1,255,919 | 1,134,476 | ||||||
Income taxes (38.53% in ‘08; 38.50% in ’07) | 483,881 | 436,791 | ||||||
Net earnings | $ | 772,038 | $ | 697,685 | ||||
Net earnings: | ||||||||
Basic earnings per share | $ | 1.27 | $ | 1.13 | ||||
Diluted earnings per share | $ | 1.26 | $ | 1.11 | ||||
Average shares outstanding | 607,380,306 | 618,988,223 | ||||||
Diluted average shares outstanding | 612,241,790 | 626,507,744 | ||||||
COMPARATIVE SEGMENT SALES DATA (Unaudited)
(In Thousands)
(In Thousands)
For the 39-Weeks Ended | ||||||||
March 29, 2008 | March 31, 2007 | |||||||
Sales: | ||||||||
Broadline | $ | 22,060,821 | $ | 20,270,627 | ||||
SYGMA | 3,371,693 | 3,240,706 | ||||||
Other | 2,706,051 | 2,648,772 | ||||||
Intersegment | (346,659 | ) | (346,324 | ) | ||||
Total | $ | 27,791,906 | $ | 25,813,781 | ||||
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SYSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
March 29, 2008 | March 31, 2007 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 243,919 | $ | 180,943 | ||||
Receivables | 2,737,464 | 2,634,273 | ||||||
Inventories | 1,836,683 | 1,693,084 | ||||||
Prepaid expenses and other current assets | 62,432 | 66,939 | ||||||
Total current assets | 4,880,498 | 4,575,239 | ||||||
Plant and equipment at cost, less depreciation | 2,857,230 | 2,649,708 | ||||||
Other assets | ||||||||
Goodwill | 1,406,700 | 1,329,745 | ||||||
Intangibles | 90,242 | 89,977 | ||||||
Restricted cash | 92,135 | 101,105 | ||||||
Prepaid pension cost | 416,151 | 423,607 | ||||||
Other | 218,029 | 257,940 | ||||||
Total other assets | 2,223,257 | 2,202,374 | ||||||
Total assets | $ | 9,960,985 | $ | 9,427,321 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Notes payable | $ | — | $ | 10,500 | ||||
Accounts payable | 2,033,198 | 1,982,126 | ||||||
Accrued expenses | 846,989 | 810,216 | ||||||
Accrued income taxes | 159,628 | 119,919 | ||||||
Deferred taxes | 385,878 | 357,629 | ||||||
Current maturities of long-term debt | 4,504 | 104,882 | ||||||
Total current liabilities | 3,430,197 | 3,385,272 | ||||||
Other liabilities | ||||||||
Long-term debt | 2,040,546 | 1,633,091 | ||||||
Deferred taxes | 554,137 | 688,239 | ||||||
Other long-term liabilities | 655,158 | 385,198 | ||||||
Total other liabilities | 3,249,841 | 2,706,528 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity | ||||||||
Preferred stock | — | — | ||||||
Common stock | 765,175 | 765,175 | ||||||
Paid-in capital | 697,970 | 618,087 | ||||||
Retained earnings | 5,839,698 | 5,357,045 | ||||||
Accumulated other comprehensive income | 47,422 | 67,441 | ||||||
Treasury stock | (4,069,318 | ) | (3,472,227 | ) | ||||
Total shareholders’ equity | 3,280,947 | 3,335,521 | ||||||
Total liabilities and shareholders’ equity | $ | 9,960,985 | $ | 9,427,321 | ||||
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SYSCO CORPORATION
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
For the 39-Weeks Ended | ||||||||
March 29, 2008 | March 31, 2007 | |||||||
Cash flows from operating activities: | ||||||||
Net earnings | $ | 772,038 | $ | 697,685 | ||||
Adjustments to reconcile net earnings to cash provided by operating activities: | ||||||||
Share-based compensation expense | 61,154 | 75,749 | ||||||
Depreciation and amortization | 275,747 | 270,236 | ||||||
Deferred tax provision | 450,569 | 405,228 | ||||||
Provision for losses on receivables | 25,926 | 23,251 | ||||||
Gain on sale of assets | (2,496 | ) | (5,791 | ) | ||||
Additional investment in certain assets and liabilities, net of effect of businesses acquired: | ||||||||
(Increase) in receivables | (138,425 | ) | (170,145 | ) | ||||
(Increase) in inventories | (112,867 | ) | (86,722 | ) | ||||
Decrease (increase) in prepaid expenses and other current assets | 61,230 | (7,933 | ) | |||||
Increase in accounts payable | 41,082 | 101,707 | ||||||
(Decrease) increase in accrued expenses | (81,931 | ) | 47,928 | |||||
(Decrease) in accrued income taxes | (362,878 | ) | (352,399 | ) | ||||
Decrease (increase) in other assets | 4,427 | (26,976 | ) | |||||
Increase (decrease) in other long-term liabilities and prepaid pension cost, net | 2,398 | (12,621 | ) | |||||
Excess tax benefits from share-based compensation arrangements | (3,352 | ) | (7,032 | ) | ||||
Net cash provided by operating activities | 992,622 | 952,165 | ||||||
Cash flows from investing activities: | ||||||||
Additions to plant and equipment | (392,706 | ) | (457,174 | ) | ||||
Proceeds from sales of plant and equipment | 11,428 | 14,119 | ||||||
Acquisition of businesses, net of cash acquired | (50,464 | ) | (48,534 | ) | ||||
Decrease (increase) in restricted cash | 2,794 | (1,331 | ) | |||||
Net cash used for investing activities | (428,948 | ) | (492,920 | ) | ||||
Cash flows from financing activities: | ||||||||
Bank and commercial paper borrowings (repayments ), net | (486,122 | ) | (10,235 | ) | ||||
Other debt borrowings | 755,892 | 4,480 | ||||||
Other debt (repayments) | (5,497 | ) | (7,418 | ) | ||||
Debt issuance costs | (4,192 | ) | (7 | ) | ||||
Common stock reissued from treasury | 102,438 | 184,950 | ||||||
Treasury stock purchases | (529,179 | ) | (329,342 | ) | ||||
Dividends paid | (365,333 | ) | (328,029 | ) | ||||
Excess tax benefits from share-based compensation arrangements | 3,352 | 7,032 | ||||||
Net cash used for financing activities | (528,641 | ) | (478,569 | ) | ||||
Effect of exchange rates on cash | 1,014 | (1,630 | ) | |||||
Net increase (decrease) in cash | 36,047 | (20,954 | ) | |||||
Cash at beginning of period | 207,872 | 201,897 | ||||||
Cash at end of period | $ | 243,919 | $ | 180,943 | ||||
Cash paid during the period for: | ||||||||
Interest | $ | 88,514 | $ | 86,733 | ||||
Income taxes | 386,570 | 383,076 |
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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.
Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data are summarized below.
For the 13-Weeks Ended | ||||||||
March 29, 2008 | March 31, 2007 | |||||||
SYSCO Brand Sales as a % of MA-Served Sales | 50.91 | % | 51.57 | % | ||||
SYSCO Brand Sales as a % of Total | ||||||||
Broadline Sales | 41.51 | % | 42.89 | % | ||||
MA-Served Sales as a % of Total | ||||||||
Broadline Sales | 47.59 | % | 48.42 | % |
For the 39-Weeks Ended | ||||||||
March 29, 2008 | March 31, 2007 | |||||||
SYSCO Brand Sales as a % of MA-Served Sales | 51.29 | % | 52.14 | % | ||||
SYSCO Brand Sales as a % of Total | ||||||||
Broadline Sales | 42.29 | % | 43.68 | % | ||||
MA-Served Sales as a % of Total | ||||||||
Broadline Sales | 48.85 | % | 49.43 | % |
Note: Beginning with the earnings release for the first quarter of fiscal 2008, this information is now presented to include Canadian broadline sales statistics.
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