Exhibit 99.1
SYSCO Corporation NEWS RELEASE
1390 Enclave Parkway
Houston, Texas 77077-2099
(281) 584-1390
FOR MORE INFORMATION
CONTACT: John Palizza
Assistant Treasurer
281-584-1308
SYSCO BOOSTS EARNINGS 14% FOR SECOND QUARTER OF FISCAL 2002
HOUSTON, January 16, 2002 -- SYSCO Corporation (NYSE: SYY), North America's
largest foodservice marketer and distributor, today announced that earnings per
share for the fiscal 2002 second quarter ended December 29, 2001 increased 14.3
percent to $0.24 compared to $0.21, on a diluted basis, for the same period last
year. Sales for the quarter rose 5.7 percent, to $5.6 billion from $5.3 billion
in the second quarter last year. Net earnings of $158.5 million represented a
gain of 13.7 percent over the $139.4 million achieved in the second quarter of
fiscal 2001.
Diluted earnings per share for the first half of fiscal 2002 increased 14.3
percent to $0.48 compared to earnings per share of $0.42 for the first half of
fiscal 2001. Sales for the first half of fiscal 2002 were $11.4 billion, a gain
of 7.2 percent in comparison to sales of $10.7 billion for the comparable period
in the previous year. Net earnings for the first six months of fiscal 2002
increased 13.8 percent to $322.5 million compared with $283.4 million for the
year earlier period.
Charles H. Cotros, SYSCO's chairman and chief executive officer, said, "A
continued emphasis on the basics of our business, combined with the talent and
commitment of all SYSCO employees, has enabled our company to achieve strong
financial results while also undergirding the success of our customers.
Historically, we have reinforced the premise that sales to our marketing
associate-served customers, as well as the continued strength of SYSCO Brand
product sales, are where we add value and where SYSCO maintains a competitive
edge, especially in times of slower economic activity. Once again, this was
evident in our second quarter, as both of these facets, in addition to continued
leverage from our technology investments, contributed to our record performance
in the quarter."
Mr. Cotros went on to state that sales to marketing associate-served
customers were 55.3 percent of broadline sales for the quarter compared to 53.6
percent last year. In addition, SYSCO Brand sales represented 55.7 percent of
marketing associate-served sales for the quarter as opposed to 53.2 percent for
the second quarter of fiscal 2001. Broadline sales for the quarter were $4.6
billion, 3.5 percent higher than last year.
"We are particularly pleased with the sales growth of 6.5 percent in the
marketing associate-served sales portion of the broadline segment of our
business," Mr. Cotros continued. "After the events of September 11, we stressed
that in difficult times like these, our marketing associates become even more
important to our customers as they assist them with inventory and cost controls
and help them create new avenues to succeed in their businesses. We were
confident then, and remain confident now, that the strategies we have in place
and the numerous value-added services we offer can help our customers operate
their businesses more efficiently and successfully."
Mr. Cotros continued, "Internal sales growth for the quarter was
approximately 2.7 percent after eliminating the effects of 3.0 percent for
acquisitions. For the first half of fiscal 2002, internal sales growth was about
4.0 percent, after excluding the 3.2 percent adjustment for acquisitions.
Inflation was 2.0 percent for the quarter and 2.7 percent for the first half of
fiscal 2002."
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Mr. Cotros went on to discuss the performance of The SYGMA Network, SYSCO's
chain restaurant distribution operation, as well as the performance of SYSCO's
specialty companies.
"SYGMA generated a 10.3 percent increase in sales to $657.4 million for the
second quarter, as compared to $596.1 million in last year's second quarter.
This is indicative of the overall gains quickservice operators experienced in
the weeks and months following the events of September 11, and is also a
testament to our ability to develop and maintain relationships with our valued
chain restaurant customers.
"As has widely been reported, many travel and resort destination cities
experienced a considerable downturn in demand. Our specialty businesses which
serve the hotels, theme parks and other travel-related industries in certain
areas also were impacted. On the other hand, pockets of the country not
dependent on such business reported continued growth, somewhat offsetting the
weakness in tourism locations. We are seeing business in the major destination
cities slowly increasing, which bodes well for all our companies, as well as our
specialty meat, produce and hotel supply operations."
Richard J. Schnieders, SYSCO's president and chief operating officer,
remarked, "We continue to be enthusiastic about the prospects for this fiscal
year and the overall growth of our industry, as recognized by our capital
spending program, which is currently expected to be in the $400 - $425 million
range for the fiscal year. Included in that figure are investments in the
construction of the Columbia, South Carolina fold-out, which will open as
planned by the end of February, and the Las Vegas, Nevada operation that is
expected to be operational by the end of the summer. In addition," said Mr.
Schnieders, "due diligence is ongoing on the recently announced purchase of the
Canadian SERCA Food Service operations from Sobeys, and we expect the
transaction to close either late in the third quarter or early in the final
quarter of fiscal 2002.
"In conclusion," Mr. Schnieders added, "we are encouraged by the trends
that we see developing. Sales growth had strengthened in the latter part of the
second quarter and there are indications that strength is carrying over into the
third quarter. We are well-positioned to support our customers' needs."
SYSCO is the largest foodservice marketing and distribution organization in
North America. Generating sales of approximately $22.6 billion for calendar year
2001, the company provides products and services to about 370,000 customers,
including restaurants, healthcare and educational institutions, lodging
establishments and other foodservice operations. The SYSCO distribution network,
supported by more than 43,000 employees, currently extends throughout the entire
contiguous United States, Alaska and Hawaii as well as portions of Canada. For
more information about SYSCO, visit the company's 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 implementation and timing of "fold-out" operations and the SERCA
acquisition, foodservice industry growth, sales trends, anticipated capital
expenditures and increases in tourism related business. 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, including the current economic downturn; SYSCO's leverage
and debt risks; the successful completion of acquisitions and integration of
acquired companies; 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, the SERCA acquisition and other acquisitions could be
impacted by competitive conditions, labor issues, weather, satisfactory
completion of due diligence, ability to obtain regulatory approvals 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 June 30, 2001 as
filed with the Securities and Exchange Commission.
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The comparative financial data for the second quarter of fiscal years 2002 and
2001 are summarized below.
($000 omitted except for per share data)
For the 13-Week Period Ended
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December 29, 2001 December 30, 2000
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Sales $ 5,590,966 $ 5,290,530
Costs and expenses
Cost of sales 4,481,655 4,250,987
Operating expenses 836,355 795,674
Interest expense 16,513 18,034
Other, net (290) 46
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Total costs and expenses 5,334,233 5,064,741
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Earnings before income taxes 256,733 225,789
Income taxes 98,200 86,364
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Net earnings $ 158,533 $ 139,425
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Basic earnings per share $ 0.24 $ 0.21
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Diluted earnings per share $ 0.24 $ 0.21
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Basic average shares outstanding 661,959,339 664,089,758
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Diluted average shares outstanding 671,799,409 675,760,002
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The comparative financial data for the first 26 weeks of fiscal years 2002 and
2001 are summarized below.
($000 omitted except for per share data)
For the 26-Week Period Ended
-------------------------------------
December 29, 2001 December 30, 2000
----------------- -----------------
Total sales $ 11,419,644 $ 10,650,704
Costs and expenses
Cost of sales 9,165,272 8,573,771
Operating expenses 1,700,811 1,583,171
Interest expense 32,377 35,435
Other, net (1,059) (587)
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Total costs and expenses 10,897,401 10,191,790
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Earnings before income taxes 522,243 458,914
Income taxes 199,758 175,535
Net earnings $ 322,485 $ 283,379
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Basic earnings per share $ 0.49 $ 0.43
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Diluted earnings per share $ 0.48 $ 0.42
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Basic average shares outstanding 664,361,281 664,070,815
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Diluted average shares outstanding 675,082,031 675,428,912
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