EXHIBIT 99.1
SYSCO [LOGO]
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SYSCO Corporation
1390 Enclave Parkway NEWS RELEASE
Houston, Texas 77077-2099
(281)584-1390 FOR MORE INFORMATION
CONTACT: John M. Palizza
Assistant Treasurer
(281) 584-1308
SYSCO'S FOURTH QUARTER EARNINGS PER SHARE JUMP 19.3%
FISCAL 2003 EARNINGS PER SHARE UP 16.8%
HOUSTON, AUGUST 11, 2003 -- SYSCO Corporation (NYSE: SYY) today announced
its fourth quarter and fiscal year 2003 results for the period ended June 28,
2003.
FOURTH QUARTER HIGHLIGHTS:
0 Diluted earnings per share rose 19.3%, to $0.37 compared to $0.31 in
the same period last year
0 Net earnings climbed 17.9% to $243 million vs. $206 million in last
year's fourth quarter
0 Sales increased 10.5% to $6.97 billion vs. $6.31 billion in last
year's fourth quarter
0 Real sales growth for the fourth quarter was 6.1%
FISCAL YEAR HIGHLIGHTS:
0 Diluted earnings per share increased 16.8%, to $1.18 compared to $1.01
last year
0 Net earnings increased 14.5% to $778 million vs. $680 million last
year
0 Sales reached $26.14 billion, an 11.9% gain compared to sales of
$23.35 billion last year
0 Real sales growth for the fiscal year was 6.7%
Richard J. Schnieders, SYSCO's chairman and chief executive officer, said,
"Through the collective efforts of all SYSCO associates, we were able to achieve
solid sales and earnings results for both the fourth quarter and the fiscal
year. The 19.3 percent increase in earnings per share and the 10.5 percent rise
in sales for the quarter represent our 109th consecutive quarter of sales and
earnings gains. This accomplishment is a direct result of our efforts to provide
superior customer service as we seek to help our customers succeed."
Thomas E. Lankford, SYSCO's president and chief operating officer, said,
"Product costs trended upward during the last half of the fiscal year, reversing
the deflationary pressures experienced in the first half of the fiscal year,
resulting in a flat rate for the entire year. The internally estimated inflation
rate for the quarter was 2.5 percent, as opposed to the 0.8 percent inflation
for the third fiscal quarter. This rapid price change was partially responsible
for a 10-basis-point decline in fourth quarter gross margins compared to last
year's fourth quarter, since essentially we absorbed some of the increases that
occurred during the quarter.
"Operating efficiencies," he continued, "and the use of best business
practices and technology systems resulted in a 42 basis point reduction in
operating expenses at our operating companies as a percent of total sales during
the fourth quarter. Specifically, our operating company presidents have excelled
in adopting our state-of-the-art systems and have shared their expertise across
the country with other SYSCO companies, making our operations more efficient,
productive and profitable."
Mr. Lankford also noted that SYSCO remains committed to reinvesting in its
business in order to continue to drive efficiencies. Capital expenditures for
fiscal 2003 were $436 million and are projected to be between $490 and $510
million for fiscal 2004. Since the initiative began in fiscal 2002 and through
the end of fiscal 2003, total cash expended for the National Supply Chain
project was $81.2 million. Of that cumulative amount, $36.8 million has been
expensed and the remainder has been capitalized. For fiscal 2003, expenses for
the project were $7.1 million during the fourth quarter and $21.4 million for
fiscal 2003. Construction on the Northeast Redistribution Center is progressing
on time and on budget and is expected to be operational in the summer of 2004.
Located near Front Royal, Virginia, the center will receive and redistribute
food and food-related products to 14 SYSCO operating companies in the Northeast,
creating benefits for customers and suppliers, as well as for SYSCO.
Commenting on SYSCO's uses of cash and cash flow performance, Mr.
Schnieders said, "We invest to grow our business profitably through internal
growth and profitable acquisitions, which has resulted in the strong historical
sales and earnings performance that our shareholders have come to expect. The
majority of the remaining money is returned to our shareholders through
dividends and share repurchases. During fiscal 2003, SYSCO paid $262 million in
the form of dividends and spent $478 million in share repurchases for a total of
$740 million. That is approximately 95 percent of the net earnings SYSCO
generated during the year."
Mr. Schnieders also added that approximately nine million shares remain on
the company's current 20 million share repurchase program that was announced in
July 2002. "SYSCO has completed all nine prior share repurchase programs," he
said, "investing approximately three billion dollars since 1992 to buy back 219
million shares. Over the last five years SYSCO has returned $2.7 billion, or 94
percent of its net earnings, to shareholders through dividends and share
repurchases."
In concluding his remarks, Mr. Schnieders also noted that for fiscal 2004,
which will be a 53-week fiscal year, SYSCO anticipates an effective income tax
rate of 38.50 percent. This compares to the current rate of 38.25 percent, with
the increase attributable to the increasing effective rates of state taxes.
"Our internal and external growth strategies generated additional market
share gains in fiscal 2003," he stated. "SYSCO's operational and financial
fundamentals remain strong, our industry is growing, and we have exciting
opportunities to continue to help our customers be successful."
SYSCO is the largest foodservice marketing and distribution organization in
North America, providing food and related products and services to approximately
415,000 restaurants, healthcare and educational facilities, lodging
establishments and other foodservice customers. SYSCO's operations are located
throughout the United States and Canada and include broadline companies,
specialty produce, meat and hotel supply operations and SYGMA, the company's
chain restaurant distribution subsidiary. For more information about SYSCO visit
the company's home page at www.sysco.com. As previously announced, SYSCO's
fourth quarter fiscal 2003 earnings conference call will be held at 10:00 a.m.
EST on Monday, August 11, 2003. A live webcast of the call, as well as a copy of
this press release, will be available online at www.sysco.com under Investor
Relations.
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, the impact of inflation and
deflation, future tax rates, 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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Comparative financial data for the fourth quarter of fiscal years 2003 and 2002
are summarized below.
($000 omitted except for per share data) FOR THE 13-WEEK PERIOD ENDED
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JUNE 28, 2003 JUNE 29, 2002
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SALES $ 6,971,840 $ 6,310,536
Costs and expenses
Cost of sales 5,582,663 5,046,832
Operating expenses 976,123 914,900
Interest expense 19,627 16,202
Other, net 332 (869)
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Total costs and expenses 6,578,745 5,977,065
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EARNINGS BEFORE INCOME TAXES 393,095 333,471
Income taxes 150,359 127,553
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NET EARNINGS $ 242,736 $ 205,918
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BASIC EARNINGS PER SHARE $ 0.38 $ 0.31
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DILUTED EARNINGS PER SHARE $ 0.37 $ 0.31
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AVERAGE SHARES OUTSTANDING 646,157,089 657,637,781
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DILUTED AVERAGE SHARES OUTSTANDING 655,791,441 667,725,856
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Comparative segment sales data for the fourth quarter of fiscal years 2003 and
2002 is summarized below.
($000) FOR THE 13-WEEK PERIOD ENDED
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JUNE 28, 2003 JUNE 29, 2002
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SALES
Broadline $ 5,693,056 $ 5,195,750
SYGMA 782,922 714,460
Other 573,678 455,805
Intersegment Sales (77,816) (55,479)
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TOTAL SALES $ 6,971,840 $ 6,310,536
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Comparative real sales growth data for the fourth quarter of fiscal years 2003
and 2002 as compared to previous year quarters is summarized below.
FOR THE 13-WEEK PERIOD ENDED
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JUNE 28, 2003 JUNE 29, 2002
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Total sales growth 10.5% 9.0%
Less growth from acquisitions (1.9) (5.5)
Less inflation /Add deflation (2.5) 1.7
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Real Sales Growth 6.1% 5.2%
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Inflation/deflation calculated using SYSCO's Internal Inflation Index.
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Comparative SYSCO Brand Sales and Marketing Associate-Served data for the fourth
quarter of fiscal years 2003 and 2002 is summarized below.
FOR THE 13-WEEK PERIOD ENDED
JUNE 28, 2003 JUNE 29, 2002
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SALES
SYSCO Brand as a % of MA-Served Sales 56.5% 56.0%
SYSCO Brand as a % of Traditional Broadline Sales 48.6% 48.6%
MA-Served as a % of Total Traditional
Broadline Sales 56.0% 56.6%
All SYSCO Brand and Marketing Associate-Served data excludes Canadian operations
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The comparative financial data for the 52 weeks of fiscal years 2003 and 2002
are summarized below.
($000 omitted except for per share data) FOR THE 52-WEEK PERIOD ENDED
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JUNE 28, 2003 JUNE 29, 2002
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TOTAL SALES $ 26,140,337 $ 23,350,504
Costs and expenses
Cost of sales 20,979,556 18,722,163
Operating expenses 3,836,507 3,467,379
Interest expense 72,234 62,897
Other, net (8,347) (2,805)
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Total costs and expenses 24,879,950 22,249,634
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EARNINGS BEFORE INCOME TAXES 1,260,387 1,100,870
Income taxes 482,099 421,083
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NET EARNINGS $ 778,288 $ 679,787
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BASIC EARNINGS PER SHARE $ 1.20 $ 1.03
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DILUTED EARNINGS PER SHARE $ 1.18 $ 1.01
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AVERAGE SHARES OUTSTANDING 650,600,652 661,808,432
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DILUTED AVERAGE SHARES OUTSTANDING 661,535,382 673,445,783
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Comparative segment sales data for the 52 weeks of fiscal years 2003 and 2002 is
summarized below.
($000) FOR THE 52-WEEK PERIOD ENDED
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JUNE 28, 2003 JUNE 29, 2002
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SALES
Broadline $ 21,489,862 $ 19,163,449
SYGMA 2,916,174 2,671,110
Other 2,003,060 1,707,229
Intersegment Sales (268,759) (191,284)
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TOTAL SALES $ 26,140,337 $ 23,350,504
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Comparative real sales growth data for the 52 weeks of fiscal years 2003 and
2002 as compared to prior fiscal years is summarized below.
FOR THE 52-WEEK PERIOD ENDED
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JUNE 28, 2003 JUNE 29, 2002
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Total sales growth 11.9% 7.2%
Less growth from acquisitions (5.2) (3.4)
Less inflation /Add deflation 0.0 (1.1)
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Real Sales Growth 6.7% 2.7%
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Inflation/deflation calculated using SYSCO's Internal Inflation Index.
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Comparative SYSCO Brand Sales and Marketing Associate-Served data for the 52
weeks of fiscal years 2003 and 2002 is summarized below.
FOR THE 52-WEEK PERIOD ENDED
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JUNE 28, 2003 JUNE 29, 2002
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SALES
SYSCO Brand as a % of MA-Served Sales 56.5% 55.7%
SYSCO Brand as a % of Traditional
Broadline Sales 48.6% 48.2%
MA-Served as a % of Total Traditional
Broadline Sales 55.5% 55.3%
All SYSCO Brand and Marketing Associate-Served data excludes Canadian operations
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SYSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
June 28, 2003 June 29, 2002
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Current assets
Cash $ 337,447 $ 198,439
Receivables 2,009,627 1,760,827
Inventories 1,230,080 1,117,869
Deferred taxes - 34,188
Prepaid expenses 52,380 41,966
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Total current assets 3,629,534 3,153,289
Plant and equipment at cost, less depreciation 1,922,660 1,697,782
Other assets
Goodwill and intangibles 1,113,960 922,222
Restricted cash 83,807 32,000
Other 186,560 184,460
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Total other assets 1,384,327 1,138,682
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Total assets $ 6,936,521 $ 5,989,753
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Current liabilities
Notes payable $ 101,822 $ 66,360
Accounts payable 1,637,505 1,349,330
Accrued expenses 624,451 599,324
Accrued income taxes 9,193 41,596
Deferred taxes 307,211 -
Current maturities of long-term debt 20,947 13,754
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Total current liabilities 2,701,129 2,070,364
Other liabilities
Long-term debt 1,249,467 1,176,307
Deferred taxes 498,396 441,570
Other long-term liabilities 289,998 168,993
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Total other liabilities 2,037,861 1,786,870
Shareholders' equity
Common stock, par $l per share 765,175 765,175
Paid-in capital 249,235 217,891
Retained earnings 3,373,853 2,869,417
Other comprehensive loss (152,381) (65,435)
Treasury stock (2,038,351) (1,654,529)
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Total shareholders' equity 2,197,531 2,132,519
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Total liabilities and shareholders' equity $ 6,936,521 $ 5,989,753
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SYSCO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(In Thousands)
For the 52-Week Period Ended
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June 28, 2003 June 29, 2002
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Cash flows from operating activities:
Net earnings $ 778,288 $ 679,787
Add non-cash items:
Depreciation and amortization 273,142 278,251
Deferred tax provision 481,330 263,492
Provision for losses on receivables 27,133 25,904
Additional investment in certain assets and
liabilities, net of effect of
businesses acquired:
(Increase) in receivables (218,150) (32,360)
(Increase) in inventories (69,959) (17,804)
(Increase) in prepaid expenses (9,509) (680)
Increase (decrease) in accounts payable 237,360 (357)
(Decrease) in accrued expenses (85,294) (23,403)
(Decrease) in accrued income taxes (33,121) (81,736)
(Increase) in other assets (8,380) (6,114)
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Net cash provided by operating activities 1,372,840 1,084,980
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Cash flows from investing activities:
Additions to plant and equipment (435,637) (416,393)
Proceeds from sales of plant and equipment 14,629 20,711
Acquisition of businesses, net of cash acquired (209,010) (234,618)
Increase in restricted cash balances (51,807) (32,000)
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Net cash used for investing activities (681,825) (662,300)
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Cash flows from financing activities:
Bank and commercial paper borrowings (repayments) 85,224 (143,593)
Other debt (repayments) borrowings (12,098) 384,114
Cash from termination of interest rate swap 15,359 -
Common stock reissued from treasury 101,312 86,328
Treasury stock purchases (478,471) (473,558)
Dividends paid (261,854) (213,275)
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Net cash used for financing activities (550,528) (359,984)
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Effect of exchange rate changes on cash (1,479) -
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Net increase in cash 139,008 62,696
Cash at beginning of period 198,439 135,743
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Cash at end of period $ 337,447 $ 198,439
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Cash paid during the period for:
Interest $ 69,103 $ 61,354
Income taxes $ 28,747 $ 239,792
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