EXHIBIT 99.1
SYSCO [COMPANY LOGO]
- --------------------------------------------------------------------------------
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 9.4% TO $0.35
----------------------------------------------------
HOUSTON--(BUSINESS WIRE)--NOV. 1, 2004 -- SYSCO Corporation (NYSE: SYY),
North America's leading foodservice marketer and distributor, today announced
results for the first quarter of its fiscal year 2005 that ended Oct. 2, 2004.
FIRST QUARTER HIGHLIGHTS:
- --------------------------
o Diluted earnings per share rose 9.4% to $0.35 compared to $0.32 in the
same period last year.
o Net earnings climbed 8.2% to $225.9 million vs. $208.8 million in last
year's first quarter.
o Sales increased 5.6% to $7.5 billion versus $7.1 billion in the first
quarter of fiscal 2004.
o Acquisitions contributed 0.5% to sales and inflation was 5.9% during
the first quarter.
o Operating expenses as a percent of sales were 14.01%, a 35-basis point
reduction in comparison to 14.36% in the same period last year.
Richard J. Schnieders, SYSCO's chairman and chief executive officer, said,
"The first quarter performance represents a terrific response by our associates
to several strong and challenging factors, most notably the unprecedented
weather impact from the four hurricanes they faced during the quarter. I am very
grateful for their resolute and energetic efforts to help our customers succeed.
In spite of repeated weather disruptions in the Southeast, rising fuel costs and
food inflation, SYSCO's associates met and overcame these obstacles by
maintaining the strong customer service focus that has made SYSCO the leader in
foodservice distribution."
Mr. Schnieders noted that of the 11 broadline operations in Florida and
neighboring states that were affected by one or more of the four hurricanes that
hit the southeastern United States, nine of those companies recorded first
quarter sales that were greater than last year's first quarter sales. In
addition, many of SYSCO's specialty distribution locations throughout that
region also overcame the severe weather and contributed to SYSCO's strong first
quarter results.
"Our strategy of performing Business Reviews with targeted customers to
help them add value to their business has clearly begun to produce tangible
benefits and has been very successful in strengthening customer relationships,"
Mr. Schnieders continued. "SYSCO's Business Review professionals help customers
lower operating costs and increase patron traffic by assisting in reengineering
menus, assessing food costs, developing entree pricing strategies and
implementing marketing concepts and various other business building tools that
are available through our iCare program."
Mr. Schnieders added that efforts to operate more efficiently and
effectively throughout the organization resulted in the company's 35 basis point
reduction in operating expenses as a percent of sales.
"We also recognize that to be the long-term, viable source to our customers
regardless of factors such as weather, fuel costs or the inflationary pressures
that affect their businesses, it is critical that we continue to reduce our cost
structure and control expenses. By using better handling and routing methods we
can offset rising food and fuel costs, which in turn allows us to deliver food
to our customers more accurately and efficiently than our competition."
Thomas E. Lankford, SYSCO's president and chief operating officer, added,
"Our Northeast Redistribution Center in Front Royal, Va., is progressing
according to plan. Approximately three months from today it will begin
distributing product to the first of 14 broadline operating companies in that
region. Expenditures for the National Supply Chain project were $19.7 million
during the first quarter, $13.2 million of which was capitalized and the
remainder of which was expensed. This brings total expenditures on the project
to $235.8 million, of which $165.5 million has been capitalized.
-more-
5
"At the end of fiscal 2004 we advised that start-up expenses related to the
Northeast Redistribution Center would have an estimated impact of $0.04 to $0.05
on earnings per share (EPS) during fiscal 2005. We remain confident that the EPS
impact will be no greater than that amount during fiscal 2005. Furthermore, in
fiscal 2006 we expect the incremental benefits of the project to offset any
further incremental costs and for fiscal 2006 there should be no negative impact
to EPS. In fact, there could be a slight - perhaps a half-cent - contribution to
EPS in fiscal 2006."
During the first quarter SYSCO's capital expenditures were approximately
$99.9 million. It is anticipated that capital spending for fiscal 2005 will be
in a range of $400 to $450 million, somewhat below the previously announced
range of $450 to $500 million.
"The revision primarily results from fleet utilization efficiencies
achieved at our operating companies and it is also affected by project timing of
facility expansions," said Mr. Lankford. "We continue to invest strategically in
our growth initiatives in fiscal 2005. We are in the process of securing a
location for our 15th broadline fold-out operation, which will service the
growing demand in the eastern North Carolina market. We anticipate the facility
will have approximately 300,000 square feet of freezer, cooler, dry goods and
dock space and that it will be operational by the end of fiscal year 2006.
"Foodservice is a dynamic and constantly evolving industry," concluded Mr.
Lankford, "and SYSCO remains uniquely positioned to gain market share and assist
foodservice operators in their efforts to grow business. The hallmark to SYSCO's
successes has always been our remarkably talented associates, and we firmly
believe that their ability to execute our growth strategies will continue to set
us apart from the competition in both the near and long-term."
SYSCO is the largest foodservice marketing and distribution organization in
North America, providing food and related products and services to approximately
400,000 restaurants, healthcare and educational facilities, lodging
establishments and other foodservice customers. SYSCO's operations, supported by
46,300 associates, are located throughout the United States and Canada and
include broadline companies, specialty produce and custom-cut meat operations,
Asian cuisine foodservice distributors, hotel supply operations and chain
restaurant distribution subsidiaries. For more information about SYSCO visit the
company's Internet home page at www.sysco.com. As previously announced, SYSCO's
first quarter 2005 earnings conference call will be held at 10:00 a.m. EST on
Monday, Nov. 1, 2004. 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 gain market share, improve operating efficiencies,
reduce its cost structure, control expenses and execute its growth strategies;
capital expenditures and other future investments; the expected benefits of cost
control; and the expected timing, cost and benefits, including the impact on
earnings per share, of the 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 and consumer spending; the risk that
higher costs due to inflation cannot be passed on to customers or that the
current high levels of inflation do not return to historical levels; 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 July 3, 2004 as filed with the
Securities and Exchange Commission.
- more -
6
SYSCO CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS (UNAUDITED)
(In Thousands Except for Share Data)
FOR THE 13-WEEK PERIOD ENDED
------------------------------------------------
OCT. 2, 2004 SEPT. 27, 2003
------------------- --------------------
Sales $ 7,531,925 $ 7,134,281
Costs and expenses
Cost of sales 6,094,931 5,753,767
Operating expenses 1,055,412 1,024,336
Interest expense 17,699 18,631
Other, net (1,969) (1,983)
------------------- --------------------
Total costs and expenses 7,166,073 6,794,751
------------------- --------------------
Earnings before income taxes 365,852 339,530
Income taxes (38.25% in Q05; 38.50% in Q04) 139,938 130,719
------------------- --------------------
Net earnings $ 225,914 $ 208,811
=================== ====================
Basic earnings per share $ 0.35 $ 0.32
=================== ====================
Diluted earnings per share $ 0.35 $ 0.32
=================== ====================
Average shares outstanding 638,167,698 645,862,376
Diluted average shares outstanding 650,779,334 657,274,982
---------------------------------------------------------------------------------------------------------
Comparative segment sales data for the first quarter of fiscal years 2005 and 2004 are summarized below.
(Unaudited) FOR THE 13-WEEK PERIOD ENDED
------------------------------------------------
($000) OCT. 2, 2004 SEPT. 27, 2003
------------------- --------------------
Sales
Broadline $ 6,095,362 $ 5,827,089
SYGMA 915,780 824,563
Other 598,666 561,460
Intersegment Sales (77,883) (78,831)
------------------- --------------------
Total Sales $ 7,531,925 $ 7,134,281
=================== ====================
---------------------------------------------------------------------------------------------------------
COMPARATIVE SUPPLEMENTAL STATISTICAL INFORMATION RELATED TO SALES (UNAUDITED)
-----------------------------------------------------------------------------
Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data for the first quarter of fiscal
years 2005 and 2004 are summarized below.
FOR THE 13-WEEK PERIOD ENDED
------------------------------------------------
OCT. 2, 2004 SEPT. 27, 2003
------------------- --------------------
SYSCO Brand Sales as a % of 58.0% 57.3%
MA-Served Sales
SYSCO Brand Sales as a % of
Total Traditional Broadline Sales 49.6% 49.1%
in the U.S.
MA-Served Sales as a % of
Total Traditional Broadline Sales 54.5% 54.9%
in the U.S.
---------------------------------------------------------------------------------------------------------
- more -
7
SYSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In Thousands)
OCT. 2, 2004 SEPT. 27, 2003
------------------- --------------------
ASSETS
Current assets
Cash $ 189,603 $ 221,544
Receivables 2,247,088 2,123,716
Inventories 1,457,180 1,313,497
Deferred taxes 53,019 53,983
Prepaid expenses 65,891 63,433
------------------- --------------------
Total current assets 4,012,781 3,776,173
Plant and equipment at cost, less depreciation 2,196,550 1,958,067
Other assets
Goodwill and intangibles 1,221,978 1,156,358
Restricted cash 169,439 125,877
Prepaid pension cost 307,549 -
Other 197,509 197,719
------------------- --------------------
Total other assets 1,896,475 1,479,954
------------------- --------------------
Total assets $ 8,105,806 $ 7,214,194
=================== =====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 54,129 $ 87,967
Accounts payable 1,710,066 1,674,898
Accrued expenses 586,605 628,296
Accrued income taxes 450,763 351,826
Deferred taxes - -
Current maturities of long-term debt 368,780 21,967
------------------- --------------------
Total current liabilities 3,170,343 2,764,954
Other liabilities
Long-term debt 1,082,345 1,195,282
Deferred taxes 836,298 632,939
Other long-term liabilities 254,914 296,425
------------------- --------------------
Total other liabilities 2,173,557 2,124,646
Contingencies
Shareholders' equity
Preferred stock - -
Common stock, par $l per share 765,175 765,175
Paid-in capital 354,910 278,251
Retained earnings 4,102,437 3,511,438
Other comprehensive income (loss) 34,153 (152,770)
Treasury stock (2,494,769) (2,077,500)
------------------- --------------------
Total shareholders' equity 2,761,906 2,324,594
------------------- --------------------
Total liabilities and shareholders' equity $ 8,105,806 $ 7,214,194
=================== =====================
- more -
8
SYSCO CORPORATION
CONSOLIDATED CASH FLOWS (UNAUDITED)
(In Thousands)
FOR THE 13-WEEK PERIOD ENDED
------------------------------------------------
OCT. 2, 2004 SEPT. 27, 2003
------------------- --------------------
Cash flows from operating activities:
Net earnings $ 225,914 $ 208,811
Add non-cash items:
Depreciation and amortization 74,065 69,679
Deferred tax provision 147,999 128,924
Provision for losses on receivables 7,498 7,332
Additional investment in certain assets and liabilities,
net of effect of businesses acquired:
(Increase) in receivables (57,114) (110,285)
(Increase) in inventories (47,435) (77,681)
(Increase) in prepaid expenses (10,812) (11,056)
(Decrease) increase in accounts payable (39,571) 39,307
(Decrease) in accrued expenses, other long-term
liabilities and prepaid pension cost, net (163,578) (45,007)
(Decrease) in accrued income taxes (17,174) (9,968)
Decrease (increase) in other assets 955 (14,016)
------------------- --------------------
Net cash provided by operating activities 120,747 186,040
------------------- --------------------
Cash flows from investing activities:
Additions to plant and equipment (99,905) (103,056)
Proceeds from sales of plant and equipment 3,496 1,283
Acquisition of businesses, net of cash acquired (52) (31,640)
Increase in restricted cash (113) (45,000)
------------------- --------------------
Net cash used for investing activities (96,574) (178,413)
------------------- --------------------
Cash flows from financing activities:
Bank and commercial paper repayments (19,705) (63,765)
Other debt borrowings (repayments) 54,537 (3,150)
Common stock reissued from treasury 65,474 55,428
Treasury stock purchases (48,912) (39,764)
Dividends paid (83,062) (71,257)
------------------- --------------------
Net cash used for financing activities (31,668) (122,508)
------------------- --------------------
Effect of exchange rate changes on cash (2,608) (1,022)
------------------- --------------------
Net decrease in cash (10,103) (115,903)
Cash at beginning of period 199,706 337,447
------------------- --------------------
Cash at end of period $ 189,603 $ 221,544
=================== ====================
Cash paid during the period for:
Interest $ 13,522 $ 12,274
Income taxes 5,423 10,696
# # #
CONTACT: SYSCO Corporation, Houston
John M. Palizza, 281-584-1308
SOURCE: SYSCO Corporation
9