SYSCO Corporation NEWS RELEASE
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1390 Enclave Parkway
Houston, Texas 77077-2099
(281) 584-1390
FOR MORE INFORMATION
CONTACT: Diane Day Sanders
Vice President and Treasurer
281-584-1303
SYSCO'S SALES RISE 13.7%, EPS UP 40% IN 2Q FISCAL 2001 DUE TO ACCOUNT
PENETRATION, SYSCO BRAND SALES GROWTH, TECHNOLOGY GAINS
HOUSTON, January 17, 2001 -- SYSCO Corporation (NYSE: SYY) today
announced that continued penetration of marketing associate-served independent
customers as well as strategic multi-unit business, growth in SYSCO Brand sales
and technology benefits resulted in substantial sales and earnings growth for
the second quarter of fiscal 2001 ended December 30, 2000. Diluted earnings per
share reached $0.21 for the quarter, a 40 percent increase over second quarter
fiscal 2000 earnings per share of $0.15 (restated for the two-for-one stock
split of December 15, 2000). Sales of $5.3 billion for the quarter were 13.7
percent higher than the $4.7 billion reported during the same period in fiscal
2000, and net earnings were $139.4 million, 36.8 percent above the $101.9
million recorded during the prior year's second quarter.
For the first half of fiscal 2001, diluted earnings per share increased
35.5 percent, rising to $0.42, compared to $0.31 per share earned before an
accounting change during the first half of fiscal 2000. First half sales of
$10.7 billion and net earnings of $283.4 million signified increases of 14.4
percent and 36.5 percent, respectively, in comparison to the $9.3 billion and
$207.6 million before an accounting change incurred during the first half of
fiscal 2000.
"We experienced solid sales growth in the quarter, which resulted in
two record sales weeks for the period," said Charles H. Cotros, SYSCO's chairman
and chief executive officer. "We continue to be pleased that our commitment to
helping our customers achieve success is enabling us to further penetrate the
marketing associate-served, or independent, customer segment of our business.
"For the quarter," continued Mr. Cotros, "marketing associate-served
sales represented 54.3 percent of traditional broadline sales, compared to 53.6
percent in fiscal 2000. Another component of our strong performance is the
increasing acceptance of the quality and value advantages provided by the
company's own branded products, boosting sales of SYSCO Brand products to 53.3
percent of marketing associate-served sales this period, compared to 50.0
percent in last year's second quarter. Equally important is the performance of
our new information technology systems, which are continuing to provide
effective tools for immediate actions, allowing our companies to better and more
efficiently serve our customers. In addition, the broadline, fresh-cut steak and
specialty produce acquisitions made in fiscal 2000 are also contributing to our
performance. We are equally excited about the addition of the specialty meat
divisions of the Freedman Companies, the closing of which was announced
yesterday.
"After adjusting 4.6 percent for acquisitions and 1.5 percent for
inflation, real sales growth during the quarter was 7.6 percent, in line with
our stated long-term sustainable high single-digit objective. For the first half
of fiscal 2001, real sales growth was 7.9 percent after eliminating the effects
of 4.9 percent for acquisitions and 1.6 percent for inflation, again in line
with our objective."
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Mr. Cotros also discussed the two-for-one stock split and dividend
increase that occurred during SYSCO's second quarter. "The split was the ninth
in SYSCO's history and the dividend increase was the 32nd in our 30 years as a
public company," he stated. "Both actions reflect the confidence that management
and our Board of Directors have in SYSCO's ability to increase market share,
maintain operating efficiencies and generate cash flow in excess of that needed
to fund existing operations and internal expansion efforts.
"We consistently have pursued internal growth opportunities through a
focus on expense reduction, maintaining an appropriate customer mix and our
'fold-out' strategy," continued Mr. Cotros. "Both the Nevada and South Carolina
'fold-out' facilities, which are expected to open during the first quarter of
calendar year 2002, are indicative of our internal growth opportunities. In
addition, two new facilities -- in the Hampton Roads area of Virginia and in
Sacramento, California -- are on schedule to open in the summer and fall of this
year, respectively. Our desire to pursue selective acquisition candidates also
continued during the second quarter as we finalized the acquisition of a
broadline operation in western Canada and a specialty meat provider in
Washington, D.C.
"Looking toward the remainder of the year, we typically plan for the
normal weather-related risks inherent during the March quarter and then enjoy
strong fourth quarter results," Mr. Cotros concluded. "During last year's third
quarter, unseasonably mild weather averted any distribution interruptions and,
ultimately, we posted our strongest third quarter in decades. We have been very
successful at developing strategies that help our customers succeed -- and help
SYSCO to increase shareholder value -- and we are optimistic about the company's
continued growth prospects."
SYSCO is the largest foodservice marketing and distribution
organization in North America, providing food and related products and services
to about 356,000 customers. The SYSCO distribution network, supported by more
than 40,000 employees, currently extends throughout the entire contiguous United
States, Alaska, the District of Columbia, Hawaii and portions of Canada. For
fiscal 2000, which ended July 1, 2000, the company reported sales of $19.3
billion.
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 MOMENTUM, REAL SALES GROWTH, EARNINGS GROWTH, CONTINUED STRENGTH
OF SYSCO BRAND PRODUCTS, INDUSTRY GROWTH, IMPROVED OPERATING EFFICIENCIES AND
PRODUCTIVITY RELATED TO INFORMATION SYSTEMS, THE ABILITY TO INCREASE MARKET
SHARE, ANTICIPATED THIRD AND FOURTH QUARTER RESULTS, AND IMPLEMENTATION AND
TIMING OF "FOLD-OUT" OPERATIONS AND ACQUISITIONS. 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 THE RISKS RELATING TO THE FOODSERVICE
DISTRIBUTION INDUSTRY'S RELATIVELY LOW PROFIT MARGINS AND SENSITIVITY TO GENERAL
ECONOMIC CONDITIONS; SYSCO'S LEVERAGE AND DEBT RISKS; THE SUCCESSFUL COMPLETION
OF ACQUISITIONS AND INTEGRATION OF ACQUIRED COMPANIES; 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 RISK OF INTERRUPTION
OF SUPPLIES DUE TO LACK OF LONG-TERM CONTRACTS, SEVERE WEATHER, WORK STOPPAGES
OR OTHERWISE; AND INTERNAL FACTORS SUCH AS THE ABILITY TO CONTROL EXPENSES. IN
ADDITION, THE DECISION TO PURSUE ACQUISITIONS AND "FOLD-OUTS" COULD VARY DUE TO
CONSTRUCTION SCHEDULES AND THE TIMING OF OTHER EXPENDITURES, WHILE THE
IMPLEMENTATION AND TIMING OF "FOLD-OUT" OPERATIONS AND ACQUISITIONS COULD BE
IMPACTED BY COMPETITIVE CONDITIONS, LABOR ISSUES, WEATHER, SATISFACTORY
COMPLETION OF DUE DILIGENCE AND OTHER MATTERS. 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
FISCAL YEAR ENDED JULY 1, 2000 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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The comparative financial data for the second quarter of fiscal years 2001 and
2000 are summarized below.
($000 omitted except for per share data)
For the 13-Week Period Ended
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December 30, 2000 January 1, 2000
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Sales $5,290,530 $4,651,535
Costs and expenses
Cost of sales 4,250,987 3,771,998
Operating expenses 795,674 695,418
Interest expense 18,034 16,680
Other, net 46 1,754
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Total costs and expenses 5,064,741 4,485,850
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Earnings before income taxes 225,789 165,685
Income taxes 86,364 63,789
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Net earnings $ 139,425 $ 101,896
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Basic earnings per share $ 0.21 $ 0.16
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Diluted earnings per share $ 0.21 $ 0.15
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Basic Average number of
shares outstanding 664,089,758 656,956,410
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Diluted Average number of
shares outstanding 675,760,002 667,088,036
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Note: All share information has been adjusted for the 2-for-1 stock split of
December 15, 2000.
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The comparative financial data for the 26-weeks of fiscal years 2001 and 2000
are summarized below. ($000 omitted except for per share data)
For the 26-Week Period Ended
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December 30, 2000 January 1, 2000
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Total sales $10,650,704 $9,308,569
Costs and expenses
Cost of sales 8,573,771 7,565,198
Operating expenses 1,583,171 1,369,662
Interest expense 35,435 34,624
Other, net (587) 1,565
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Total costs and expenses 10,191,790 8,971,049
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Earnings before income taxes 458,914 337,520
Income taxes 175,535 129,945
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Earnings before cumulative
effect of accounting change 283,379 207,575
Cumulative effect of accounting
change -- (8,041)
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Net earnings $ 283,379 $ 199,534
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Earnings before accounting change:
Basic earnings per share $ 0.43 $ 0.32
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Diluted earnings per share $ 0.42 $ 0.31
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Cumulative effect of accounting
change:
Basic earnings per share $ -- $ (0.01)
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Diluted earnings per share $ -- $ (0.01)
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Net earnings:
Basic earnings per share $ 0.43 $ 0.30
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Diluted earnings per share $ 0.42 $ 0.30
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Basic Average number of
shares outstanding 664,070,815 657,403,438
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Diluted Average number of
shares outstanding 675,428,912 667,372,268
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Note: All share information has been adjusted for the 2-for-1 stock split of
December 15, 2000.
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