EXHIBIT 99.1
SYSCO [COMPANY 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 FIRST QUARTER DILUTED EPS RISE 14.3%
ON SALES INCREASE OF 11.0%
HOUSTON, OCTOBER 27, 2003 -- SYSCO Corporation (NYSE: SYY), North America's
leading foodservice marketer and distributor, today announced results for the
first quarter of fiscal year 2004 for the period ended September 27, 2003.
FIRST QUARTER HIGHLIGHTS:
o Diluted earnings per share rose 14.3% to $0.32 compared to $0.28 in
the same period last year
o Net earnings climbed 14.4% to $208.8 million vs. $182.6 million in
last year's first quarter
o Sales increased 11.0% to $7.1 billion vs. $6.4 billion in last year's
first quarter
o Operating expenses as a percent to sales improved to 14.36% compared
to last year's 14.95%
o Acquisitions contributed 1.9 percent to overall sales growth, compared
to 5.4 percent last year
o| Marketing associate-served sales as a percentage of traditional
broadline sales in the U.S. was 56.0% compared to 56.4% last year
o SYSCO Brand items accounted for 56.9% of marketing associate-served
sales and 48.8% of all traditional broadline company sales in the U.S.
Richard J. Schnieders, SYSCO's chairman and chief executive officer, said,
"The diligent efforts of our 47,400 associates, including their daily focus on
the success of our customers, resulted in a strong first quarter performance.
Despite facing a headwind of inflation and a tough comparison against last
year's extremely robust first quarter, each operating segment of our company
performed impressively as we began our new fiscal year."
Mr. Schnieders noted that inflation, as measured by the company's rise in
food costs compared to the same period a year ago, was 5.0 percent. This was
primarily attributable to rising prices in the meat, dairy, poultry and canned
and dry categories and compares to food cost deflation of 2.2 percent
experienced at the end of last year's first fiscal quarter.
"Rising food cost inflation, as well as a change in customer and product
mix, lowered our gross margins by 41 basis points. This was offset by operating
expenses, which as a percent to sales declined 59 basis points in the quarter,"
Mr. Schnieders continued. "It's important to note that while inflation impacted
our cost of goods, it did not affect our fixed expenses and for the fourth
consecutive quarter we have leveraged operating expenses to generate increased
operating income. This is a direct result of our continued technology
optimization and the success of our training programs - both of which continue
to allow our companies to enhance their warehouse, routing and delivery
functions."
Thomas E. Lankford, SYSCO's president and chief operating officer, added,
"During the first quarter we continued improving our performance in many of the
key efficiency metrics that we monitor at our distribution locations. Pieces per
stop, lines per stop and pieces per trip each had significant incremental gains,
and we also experienced reductions in areas including warehouse costs, selection
errors, inventory shrinkage and out of stocks. This performance is a testament
not only to our technology systems, but also to the success of our efforts to
understand our customers' needs and remain focused on our mission to help them
succeed."
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Mr. Lankford added that other first quarter highlights included the
purchase of certain assets of Massachusetts-based Luzo's Foodservice and the
purchase of certain foodservice assets in Stockton, California from Smart &
Final. SYSCO also continued internal geographic expansion efforts with the
announcement that a foldout operation would be constructed in Fargo, North
Dakota to serve that growing market.
"Strategic investment in our business remains a fundamental component to
our growth initiatives," continued Mr. Lankford. "Accordingly, capital
expenditures for the first quarter totaled $103.1 million and we project capital
expenditures in the range of $490 million for the fiscal year. Our National
Supply Chain project progressed according to plan during the quarter and to date
$113 million has been expended on the project since it began in fiscal 2002."
Mr. Lankford also added that first quarter expenditures for the Northeast
Redistribution Center, which is expected to begin operations in the fall of
2004, were $31 million, $22 million of which was capitalized.
"We have the right people and the proper strategies in place," concluded
Mr. Lankford. "SYSCO continues to grow at a rate above the industry, and we
remain confident that we are positioned for continued future growth and market
share gains."
SYSCO is the largest foodservice marketing and distribution organization in
North America, providing food and related products and services to approximately
420,000 restaurants, healthcare and educational facilities, lodging
establishments and other foodservice customers. The company generated sales of
$26.1 billion for the fiscal year ended June 28, 2003. SYSCO's operations are
located throughout the United States and Canada and include broadline companies,
specialty produce, meat, Asian foodservice and hotel supply operations and
SYGMA, the company's chain restaurant distribution subsidiary. For more
information about SYSCO visit the company's Internet home page at www.sysco.com.
As previously announced, SYSCO's first quarter 2004 earnings conference call
will be held at 10:00 a.m. eastern time on Monday, October 27, 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 profitably grow its business, improve
its operational efficiencies and performance and gain market share, as well as
statements regarding capital expenditures and the expected timing, cost and
benefits of its national supply chain project and northeast redistribution
center. 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; 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; 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. 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 28,
2003 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)
FOR THE 13-WEEK PERIOD ENDED
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SEPTEMBER 27, 2003 SEPTEMBER 28, 2002
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Sales $7,134,281 $6,424,422
Costs and expenses
Cost of sales 5,753,767 5,154,704
Operating expenses 1,024,336 960,635
Interest expense 18,631 16,828
Other, net (1,983) (3,412)
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Total costs and expenses 6,794,751 6,128,755
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Earnings before income taxes 339,530 295,667
Income taxes 130,719 113,093
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Net earnings $ 208,811 $ 182,574
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Basic earnings per share $ 0.32 $ 0.28
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Diluted earnings per share $ 0.32 $ 0.28
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Average shares outstanding 645,862,376 654,176,221
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Diluted average shares outstanding 657,274,982 663,542,498
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Comparative segment sales data for the first quarter of fiscal years 2004 and 2003 are summarized below.
($000) FOR THE 13-WEEK PERIOD ENDED
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SEPTEMBER 27, 2003 SEPTEMBER 28, 2002
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SALES
Broadline $ 5,827,089 $ 5,321,257
SYGMA 824,563 709,584
Other 561,460 451,350
Intersegment Sales (78,831) (57,769)
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Total Sales $ 7,134,281 $ 6,424,422
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Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data for the first quarter of fiscal years 2004 and 2003 is
summarized below.
FOR THE 13-WEEK PERIOD ENDED
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SEPTEMBER 27, 2003 SEPTEMBER 28, 2002
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SYSCO Brand Sales as a % of MA-Served Sales 56.9% 56.5%
SYSCO Brand Sales as a % of Total
Traditional Broadline Sales 48.8% 48.9%
MA-Served Sales as a % of Total Traditional
Broadline Sales 56.0% 56.4%
All SYSCO Brand and Marketing Associate-Served Sales data excludes Canadian operations
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SYSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
September 27, 2003 September 28, 2002
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ASSETS
Current assets
Cash $ 221,544 $ 163,189
Receivables 2,123,716 1,869,128
Inventories 1,313,497 1,226,885
Deferred taxes 53,983 41,699
Prepaid expenses 63,433 73,030
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Total current assets 3,776,173 3,373,931
Plant and equipment at cost, less depreciation 1,958,067 1,718,941
Other assets
Goodwill and intangibles 1,156,358 922,491
Restricted cash 125,877 57,000
Other 197,719 173,094
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Total other assets 1,479,954 1,152,585
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Total assets $ 7,214,194 $6,245,457
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 87,967 $ 50,016
Accounts payable 1,674,898 1,420,276
Accrued expenses 653,848 544,668
Accrued income taxes 351,826 38,241
Current maturities of long-term debt 21,967 13,474
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Total current liabilities 2,790,506 2,066,675
Other liabilities
Long-term debt 1,195,282 1,265,938
Deferred taxes 632,939 554,690
Other long-term liabilities 270,873 164,469
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Total other liabilities 2,099,094 1,985,097
Contingencies
Shareholders' equity
Preferred stock - -
Common stock, par $l per share 765,175 765,175
Paid-in capital 278,251 233,727
Retained earnings 3,511,438 2,992,849
Other comprehensive loss (152,770) (65,435)
Treasury stock (2,077,500) (1,732,631)
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Total shareholders' equity 2,324,594 2,193,685
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Total liabilities and shareholders' equity $7,214,194 $6,245,457
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SYSCO CORPORATION
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
For the 13-Week Period Ended
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September 27, 2003 September 28, 2002
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Cash flows from operating activities:
Net earnings $ 208,811 $ 182,574
Add non-cash items:
Depreciation and amortization 69,679 65,796
Deferred tax provision 128,924 105,609
Provision for bad debts 7,332 7,546
Additional investment in certain assets and liabilities, net
of effect of businesses acquired:
(Increase) in receivables (110,285) (115,847)
(Increase) in inventories (77,681) (109,016)
(Increase) in prepaid expenses (11,056) (31,064)
Increase in accounts payable 39,307 70,946
(Decrease) in accrued expenses (45,007) (59,082)
(Decrease) increase in accrued income taxes (9,968) 2,342
(Increase) decrease in other assets (14,016) 7,433
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Net cash provided by operating activities 186,040 127,237
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Cash flows from investing activities:
Additions to plant and equipment (103,056) (88,025)
Proceeds from sales of plant and equipment 1,283 4,782
Acquisition of businesses, net of cash acquired (31,640) (48)
Increase in restricted cash (45,000) (25,000)
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Net cash used for investing activities (178,413) (108,291)
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Cash flows from financing activities:
Bank and commercial paper borrowings (63,765) 75,509
Other debt repayments (3,150) (2,502)
Common stock reissued from treasury 55,428 41,936
Treasury stock purchases (39,764) (109,899)
Dividends paid (71,257) (59,240)
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Net cash used for financing activities (122,508) (54,196)
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Effect of exchange rate changes on cash (1,022) -
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Net decrease in cash (115,903) (35,250)
Cash at beginning of period 337,447 198,439
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Cash at end of period $ 221,544 $ 163,189
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Cash paid during the period for:
Interest $ 12,274 $ 7,938
Income taxes 10,696 8,268
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