EXHIBIT 99.1
SYSCO [LOGO]
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SYSCO Corporation NEWS RELEASE
1390 Enclave Parkway
Houston, Texas 77077-2099
(281) 584-1390
FOR MORE INFORMATION
CONTACT: John M. Palizza
Assistant Treasurer
(281) 584-1308
SYSCO POSTS 13.0% EPS GAIN FOR THIRD QUARTER OF FISCAL 2003
HOUSTON, APRIL 28, 2003 -- SYSCO Corporation (NYSE: SYY), North America's
largest foodservice marketer and distributor, today announced results for its
third quarter of fiscal year 2003 ended March 29, 2003.
THIRD QUARTER HIGHLIGHTS:
o Diluted earnings per share rose 13.0% to $0.26 compared to $0.23 in the
same period last year
o Net earnings increased 11.2% to $168.4 million vs. $151.4 million in last
year's third quarter
o Sales for the quarter grew 13.8% to $6.4 billion vs. $5.6 billion last year
o Real sales growth for the third quarter was 5.7%
o SYSCO Brand items, excluding Canadian operations, accounted for 56.3% of
marketing associate-served sales compared to 55.7% last year
o SYSCO Brand items, excluding Canadian operations, represented 48.2% of all
traditional broadline company sales compared to 48.1% in last year's third
quarter
o Excluding Canadian operations, Marketing associate-served sales as a
percentage of traditional broadline sales were 53.9% compared to 54.0% in
the same period last year
Commenting on the third quarter, Richard J. Schnieders, SYSCO's chairman
and chief executive officer, said, "I am proud of our entire family of 47,000
associates and the earnings they helped SYSCO achieve during a quarter marked by
numerous challenges. The record snowfalls experienced across the East Coast and
Colorado, and the harsh weather suffered in the midwestern states, made this one
of the most difficult third quarters in recent history. In addition, the onset
of war in Iraq, coupled with the slowdown in business and leisure travel that
typically benefits foodservice operators, made for a very challenging operating
environment for us throughout the quarter.
"The third quarter was also unique due to the industry attention devoted to
allegations concerning one of our competitors and the resulting distractions
that it brought to the marketplace," Mr. Schnieders continued. "However, the
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professionalism of our associates and their dedication to our customers allowed
SYSCO to achieve solid sales and earnings gains and record its 108th consecutive
quarter of sales and earnings increases."
Mr. Schnieders concluded his remarks by noting that SYSCO had an all-time
record sales week in week 10 of the third quarter and also began its fourth
fiscal quarter with another record sales week. "Sales for the first week of the
fourth quarter were $536.4 million, 2.7 percent higher than the previous
record," he said. "The solid sales gains achieved in March have carried into our
final quarter."
Sales for the quarter grew 13.8% to $6.4 billion from $5.6 billion in last
year's third quarter. SYSCO's third quarter real sales growth of 5.7 percent, or
total sales growth adjusted for 0.8 percent food cost inflation and 7.3 percent
sales growth from acquisitions, represented a three percentage point improvement
compared to the 2.7 percent real sales growth reported in the same period last
year. Sales for the first 39 weeks of fiscal 2003 grew 12.5% to $19.2 billion
from $17.0 billion for the first 39 weeks last year. Through the first 39 weeks
of fiscal 2003, SYSCO's real sales increased 6.8 percent (total sales growth
adjusted for 0.8 percent deflation and 6.5 percent sales growth from
acquisitions) compared to 1.8 percent real sales growth during last year's first
39 weeks.
Thomas E. Lankford, SYSCO's president and chief operating officer, said,
"During the third quarter we were able to improve our operating efficiencies,
reducing overall operating expenses as a percentage of sales by 10 basis points.
This was primarily a result of our technology systems, especially the SYSCO
Order Selector (SOS) and our delivery vehicle routing systems. The SOS unit has
been very successful in reducing the occurrence of inaccurate orders, and with
our routing systems mapping the most efficient delivery routes, we continue to
post significant improvements in the performance areas most important to our
customers as well as internal performance metrics, including pieces per stop,
lines per stop, pieces per trip and pieces per mile.
"During the third quarter," added Mr. Lankford, "we also continued our
product and geographic expansion. Specifically, we signed a letter of intent to
acquire the meat cutting division and certain broadline assets from the Colorado
Boxed Beef Company (Auburndale, FL), a deal that was completed last week. During
the last quarter we also announced an agreement to acquire Reed Distributors
(Lewiston, ME), a paper and chemical distribution company to the foodservice
industry, and that acquisition should be completed in early May.
Mr. Lankford also stated that the construction of SYSCO's Northeast
Redistribution Center and the fulfillment of all associated staffing and
networking needs are progressing according to plan. Located near Front Royal,
Virginia, SYSCO's Northeast Redistribution Center is expected to be operational
in the summer of 2004 and will receive and redistribute food and food-related
products to 14 SYSCO operating companies in the Northeast. Total cash expended
for the National Supply Chain project has been $59.6 million since the
initiative began in fiscal 2002. Of that figure, $29.6 million has been expensed
and the remainder has been capitalized. During the recently completed quarter,
expenses for the project amounted to $4.5 million for a cumulative $14 million
during fiscal year 2003. When the Northeast Redistribution Center is completed
and operational, total cash expenditures for this phase of the National Supply
Chain project are expected to be between $275 million and $325 million, which
includes developmental costs and information technology systems which will
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benefit a nationwide rollout. Approximately 75 percent of this amount is
capitalizable. Capitalized costs for any future redistribution center in other
regions are expected to range between $65 million and $75 million.
"SYSCO is uniquely positioned, in terms of our financial strength, our
national presence and our supply chain expertise and proficiencies, to
successfully undertake this initiative," Mr. Lankford continued. "Once the
facility is operational, we expect to begin achieving significant reductions in
inventory at the local operating companies as we transition product flow and
safety stock to the redistribution center. The redistribution center will also
free capacity at our operating companies throughout the region, postponing
investments in warehouse expansion.
"Our expansion efforts and growth strategies have proven to be sound and
successful," concluded Mr. Lankford. "SYSCO is positioned for continued growth
as we help our customers succeed in the $200 billion industry we serve."
SYSCO is the largest foodservice marketing and distribution organization in
North America, generating sales of $24.7 billion for calendar year 2002. The
company's 147 distribution locations in the United States and Canada provide
food and related products and services to approximately 415,000 restaurants,
healthcare and educational facilities, lodging establishments and other
foodservice customers. 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 SYSCO's ability to continue to grow its business, control or reduce
expenses and increase operating efficiencies, and statements regarding the
timing, cost and expected benefits of the Northeast Redistribution Center and
the national supply chain project. 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 environment; SYSCO's
leverage and debt risks; risks relating to the successful completion of
acquisitions and fold-outs and integration of acquired companies; risks and
uncertainties relating to the successful completion of the Northeast
Redistribution Center; 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. 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 29, 2002 as filed with the Securities and Exchange
Commission.
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SYSCO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
For the 13-Week Period Ended
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March 29, 2003 March 30, 2002
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Sales $ 6,395,278 $ 5,620,324
Costs and expenses
Cost of sales 5,144,473 4,510,059
Operating expenses 962,459 851,668
Interest expense 18,276 14,318
Other, net (2,661) (877)
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Total costs and expenses 6,122,547 5,375,168
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Earnings before income taxes 272,731 245,156
Income taxes 104,320 93,772
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Net earnings $ 168,411 $ 151,384
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Basic earnings per share $ 0.26 $ 0.23
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Diluted earnings per share $ 0.26 $ 0.23
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Average shares outstanding 649,267,210 661,144,231
================== ==================
Diluted average shares outstanding 657,994,124 672,528,949
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The comparative segment sales data for the third quarter of fiscal years 2003 and 2002 are summarized below.
For the 13-Week Period Ended (Unaudited)
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March 29, 2003 March 30, 2002
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Sales (In Thousands)
Broadline $ 5,247,872 $ 4,589,066
SYGMA 713,334 648,925
Other 502,378 430,951
Intersegment (68,306) (48,618)
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Total sales $ 6,395,278 $ 5,620,324
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The comparative sales growth data for the third quarter of fiscal years 2003 and 2002 are summarized below.
For the 13-Week Period Ended (Unaudited)
------------------------------------------------
March 29, 2003 March 30, 2002
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Total sales growth 13.8% 5.2%
Less growth from acquisitions (7.3) (1.5)
Less inflation (0.8) (1.0)
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Real Sales Growth 5.7% 2.7%
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Inflation/deflation calculated using SYSCO's Internal Inflation Index.
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SYSCO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
For the 39-Week Period Ended
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March 29, 2003 March 30, 2002
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Sales $ 19,168,497 $ 17,039,968
Costs and expenses
Cost of sales 15,396,893 13,675,331
Operating expenses 2,860,385 2,552,479
Interest expense 52,607 46,695
Other, net (8,679) (1,936)
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Total costs and expenses 18,301,206 16,272,569
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Earnings before income taxes 867,291 767,399
Income taxes 331,739 293,530
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Net earnings $ 535,552 $ 473,869
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Basic earnings per share $ 0.82 $ 0.71
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Diluted earnings per share $ 0.81 $ 0.70
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Average shares outstanding 652,148,645 663,289,299
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Diluted average shares outstanding 662,873,938 675,028,798
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The comparative segment sales data for the 39 weeks of fiscal years 2003 and 2002 are summarized below.
For the 39-Week Period Ended (Unaudited)
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March 29, 2003 March 30, 2002
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Sales (In Thousands)
Broadline $ 15,796,806 $ 13,967,699
SYGMA 2,133,252 1,956,650
Other 1,429,382 1,251,424
Intersegment (190,943) (135,805)
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Total sales $ 19,168,497 $ 17,039,968
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The comparative sales growth data for the 39 weeks of fiscal years 2003 and 2002 are summarized below.
For the 39-Week Period Ended (Unaudited)
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March 29, 2003 March 30, 2002
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Total sales growth 12.5% 6.5%
Less growth from acquisitions (6.5) (2.6)
Plus deflation, less inflation 0.8 (2.2)
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Real Sales Growth 6.8% 1.7%
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Inflation/deflation calculated using SYSCO's Internal Inflation Index.
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SYSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
March 29, 2003 March 30, 2002
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Current assets
Cash $ 186,956 $ 346,083
Receivables 1,946,819 1,625,314
Inventories 1,256,397 1,089,334
Deferred taxes - 104,993
Prepaid expenses 60,775 52,133
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Total current assets 3,450,947 3,217,857
Plant and equipment at cost, less depreciation 1,829,021 1,646,465
Other assets
Goodwill and intangibles 1,084,693 774,694
Restricted cash 84,056 -
Other 207,168 187,970
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Total other assets 1,375,917 962,664
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Total assets $ 6,655,885 $ 5,826,986
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Current liabilities
Notes payable $ 81,492 $ 271,195
Accounts payable 1,522,670 1,305,245
Accrued expenses 808,094 587,975
Accrued income taxes 15,242 65,351
Deferred taxes 250,383 -
Current maturities of long-term debt 24,684 11,400
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Total current liabilities 2,702,565 2,241,166
Other liabilities
Long-term debt 1,279,657 877,035
Deferred taxes 476,629 428,169
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Total other liabilities 1,756,286 1,305,204
Shareholders' equity
Common stock, par $l per share 765,175 765,175
Paid-in capital 246,756 213,748
Retained earnings 3,202,358 2,782,545
Other comprehensive loss (65,435) (5,624)
Treasury stock (1,951,820) (1,475,228)
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Total shareholders' equity 2,197,034 2,280,616
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Total liabilities and shareholders' equity $ 6,655,885 $ 5,826,986
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SYSCO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In Thousands)
For the 39-Week Period Ended
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March 29, 2003 March 30, 2002
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Cash flows from operating activities:
Net earnings $ 535,552 $ 473,869
Add non-cash items:
Depreciation and amortization 204,155 203,477
Deferred tax provision 320,469 142,237
Provision for bad debts 24,444 25,647
Additional investment in certain assets and liabilities,
net of effect of businesses acquired:
(Increase) decrease in receivables (175,262) 3,251
(Increase) in inventories (116,560) (43,691)
(Increase) in prepaid expenses (18,740) (11,647)
Increase in accounts payable 152,606 31,683
(Decrease) in accrued expenses (2,328) (19,976)
(Decrease) in accrued income taxes (20,158) (57,981)
(Increase) in other assets (19,683) (2,553)
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Net cash provided by operating activities 884,495 744,316
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Cash flows from investing activities:
Additions to plant and equipment (310,392) (309,343)
Proceeds from sales of plant and equipment 9,528 8,024
Acquisition of businesses, net of cash acquired (169,492) (12,198)
Increase in restricted cash (52,056) -
Net cash used for investing activities (522,412) (313,517)
Cash flows from financing activities:
Bank and commercial paper borrowings 115,039 161,111
Other debt repayments (7,432) (16,809)
Common stock reissued from treasury 81,971 71,612
Treasury stock purchases (372,808) (282,904)
Dividends paid (190,336) (153,469)
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Net cash used for financing activities (373,566) (220,459)
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Net (decrease) increase in cash (11,483) 210,340
Cash at beginning of period 198,439 135,743
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Cash at end of period $ 186,956 $ 346,083
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Cash paid during the period for:
Interest $ 44,451 $ 44,082
Income taxes $ 36,734 $ 208,730
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