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 SECOND QUARTER DILUTED EPS RISE 5.9% TO $0.36 HOUSTON, JANUARY 31, 2005 -- SYSCO Corporation (NYSE: SYY), North America's leading foodservice marketer and distributor, today announced results for the second quarter ended January 1, 2005, of its fiscal year ending July 2, 2005. SECOND QUARTER FY2005 HIGHLIGHTS: - ----------------------------------- o Diluted earnings per share rose 5.9% to $0.36 compared to $0.34 in the same period last year. o Net earnings climbed 4.8% to $232.6 million vs. $222.0 million in last year's second quarter. o Sales increased 4.2% to $7.3 billion versus $7.0 billion in the second quarter of fiscal 2004. o Acquisitions contributed 0.7% to sales growth and inflation, as measured by product cost increases, was 3.8% in the second quarter. o Operating expenses as a percent of sales were 13.71%, a 46-basis point reduction in comparison to 14.17% in the same period last year. FIRST HALF FY2005 HIGHLIGHTS: - ------------------------------- o Diluted earnings per share rose 7.7% to $0.70 compared to $0.65 in the same period last year. o Net earnings climbed 6.4% to $458.6 million vs. $430.8 million in last year's first 26 weeks. o Sales increased 4.9% to $14.9 billion versus $14.2 billion last year. o Acquisitions contributed 0.6% to sales growth and inflation, as measured by product cost increases, was 4.7% during the period. o Operating expenses as a percent of sales were 13.86%, a 40-basis point reduction in comparison to 14.26% in the same period last year. Richard J. Schnieders, SYSCO's chairman and chief executive officer, said, "Our associates generated sound results in the second quarter by continuing to focus on controlling expenses, implementing business review and business development strategies and by leveraging our technology systems to more efficiently and accurately serve our customers. "This quarter represented our most difficult comparisons for the year. First, we faced last year's strong 21.4 percent increase in earnings per share. Second, we were confronted by two negative calendar shifts in the quarter. This year, New Year's day, when many restaurants are closed, fell in our second quarter. Additionally, both Christmas and New Year's day, which are very low volume restaurant days, fell on a Saturday, which typically is the busiest day of the week for dining traffic. Despite those factors and continued price sensitivity in our foodservice markets, SYSCO's committed workforce generated the sales and earnings reported today." "Our operating companies continue to improve in both their efficiency and quality metrics," said Mr. Schnieders. "We are confident that they are well positioned for future growth as comparisons become easier and foodservice trends pick up." -more- 5 In reviewing the company's programs for future growth, Thomas E. Lankford, SYSCO's president and chief operating officer, added, "We are very pleased to announce that our Northeast Redistribution Center in Front Royal, Virginia is completed and receiving products. In two weeks, on February 14, that facility will begin distributing products to our broadline company near Boston, followed incrementally by 13 additional broadline companies in our Northeast region. By October, all 14 companies will be receiving scheduled products from the Northeast Redistribution Center. This project is the largest strategic undertaking in the history of SYSCO, and we are convinced that our shareholders, customers and suppliers will benefit from the distribution efficiencies and competitive advantages that it will generate." Expenditures for the National Supply Chain project were $19.5 million during the second quarter, $13.1 million of which was capitalized and the remainder of which was expensed. The implementation of the project is on time, progressing according to plan and is slightly under budget. At the end of the second quarter total expenditures on the project were $256.3 million, of which $178.6 million has been capitalized. "Last quarter we advised that start-up expenses related to the Northeast Redistribution Center would have an estimated negative impact of $0.04 to $0.05 on earnings per share (EPS) during fiscal 2005," Mr. Lankford continued. "Based on our experience to date, we now anticipate a smaller EPS impact of between $0.03 and $0.04 for fiscal 2005 and that effect will be reflected in our third and fourth quarter results. For fiscal 2006 we continue to project that the benefits of the National Supply Chain project will offset any further costs and perhaps even contribute a half-cent to EPS." During the second quarter SYSCO's total capital expenditures were approximately $105.7 million, resulting in total expenditures of $205.6 million for the first 26 weeks of fiscal year 2005. The company continues to anticipate that capital spending for fiscal 2005 will be in a range of $400 to $450 million. SYSCO, the largest foodservice marketing and distribution organization in North America, provides food and related products and services to approximately 400,000 restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers, generating sales of $30.0 billion for calendar year 2004. SYSCO's operations, supported by approximately 46,000 associates, are located throughout the United States and Canada and include broadline foodservice distribution 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 second quarter 2005 earnings conference call will be held at 10:00 a.m. EST on Monday, January 31, 2005. A live webcast of the call, as well as a copy of this press release, will be available online 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 gain market share, improve operating efficiencies, leverage technology, control expenses and execute its growth strategies; capital expenditures and other future investments; industry trends; 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 -------------------------------------------------- JANUARY 1, 2005 DECEMBER 27, 2003 ---------------------- --------------------- Sales $ 7,331,257 $ 7,036,520 Costs and expenses Cost of sales 5,933,515 5,669,399 Operating expenses 1,004,919 996,853 Interest expense 17,766 16,376 Other, net (1,693) (7,052) ---------------------- --------------------- Total costs and expenses 6,954,507 6,675,576 ---------------------- --------------------- Earnings before income taxes 376,750 360,944 Income taxes (38.25% in Q05; 38.50% in Q04) 144,107 138,963 ---------------------- --------------------- Net earnings $ 232,643 $ 221,981 ====================== ===================== Basic earnings per share $ 0.36 $ 0.34 ====================== ===================== Diluted earnings per share $ 0.36 $ 0.34 ====================== ===================== Average shares outstanding 638,638,789 644,723,466 Diluted average shares outstanding 652,993,142 661,632,986 ---------------------------------------------------------------------------------------------------------- Comparative segment sales data for the second quarter of fiscal years 2005 and 2004 are summarized below. (Unaudited) FOR THE 13-WEEK PERIOD ENDED -------------------------------------------------- ($000) JANUARY 1, 2005 DECEMBER 27, 2003 ---------------------- --------------------- Sales Broadline $ 5,847,942 $ 5,681,387 SYGMA 941,421 863,539 Other 626,458 571,873 Intersegment Sales (84,564) (80,279) ---------------------- --------------------- Total Sales $ 7,331,257 $ 7,036,520 ====================== ===================== ---------------------------------------------------------------------------------------------------------- COMPARATIVE SUPPLEMENTAL STATISTICAL INFORMATION RELATED TO SALES (UNAUDITED) ----------------------------------------------------------------------------- Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data for the second quarter of fiscal years 2005 and 2004 are summarized below. FOR THE 13-WEEK PERIOD ENDED -------------------------------------------------- JANUARY 1, 2005 DECEMBER 27, 2003 ---------------------- --------------------- SYSCO Brand Sales as a % of MA-Served Sales 57.4% 57.4% SYSCO Brand Sales as a % of Total Traditional Broadline Sales 49.4% 49.0% in the U.S. MA-Served Sales as a % of Total Traditional Broadline Sales 52.9% 52.5% in the U.S. ---------------------------------------------------------------------------------------------------------- - more - 7 SYSCO CORPORATION CONSOLIDATED RESULTS OF OPERATIONS (UNAUDITED) (In Thousands Except for Share Data) FOR THE 26-WEEK PERIOD ENDED -------------------------------------------------- JANUARY 1, 2005 DECEMBER 27, 2003 ---------------------- --------------------- Sales $ 14,863,182 $ 14,170,801 Costs and expenses Cost of sales 12,028,446 11,423,166 Operating expenses 2,060,331 2,021,189 Interest expense 35,465 35,007 Other, net (3,662) (9,035) ---------------------- --------------------- Total costs and expenses 14,120,580 13,470,327 ---------------------- --------------------- Earnings before income taxes 742,602 700,474 Income taxes (38.25% in Q05; 38.50% in Q04) 284,045 269,682 ---------------------- --------------------- Net earnings $ 458,557 $ 430,792 ====================== ===================== Basic earnings per share $ 0.72 $ 0.67 ====================== ===================== Diluted earnings per share $ 0.70 $ 0.65 ====================== ===================== Average shares outstanding 638,403,789 645,301,941 Diluted average shares outstanding 652,448,434 660,127,514 ---------------------------------------------------------------------------------------------------------- Comparative segment sales data for the first 26 weeks of fiscal years 2005 and 2004 are summarized below. (Unaudited) FOR THE 26-WEEK PERIOD ENDED -------------------------------------------------- ($000) JANUARY 1, 2005 DECEMBER 27, 2003 ---------------------- --------------------- Sales Broadline $ 11,943,304 $ 11,508,476 SYGMA 1,857,201 1,688,102 Other 1,225,124 1,133,333 Intersegment Sales (162,447) (159,110) ---------------------- --------------------- Total Sales $ 14,863,182 $ 14,170,801 ====================== ===================== ----------------------------------------------- ----------------------------- --------------------------------- COMPARATIVE SUPPLEMENTAL STATISTICAL INFORMATION RELATED TO SALES (UNAUDITED) ----------------------------------------------------------------------------- Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data for the first 26 weeks of fiscal years 2005 and 2004 are summarized below. FOR THE 26-WEEK PERIOD ENDED -------------------------------------------------- JANUARY 1, 2005 DECEMBER 27, 2003 ---------------------- --------------------- SYSCO Brand Sales as a % of MA-Served Sales 57.7% 57.3% SYSCO Brand Sales as a % of Total Traditional Broadline Sales 49.5% 49.0% in the U.S. MA-Served Sales as a % of Total Traditional Broadline Sales 53.7% 53.7% in the U.S. ---------------------------------------------------------------------------------------------------------- - more - 8 SYSCO CORPORATION CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In Thousands) JANUARY 1, 2005 DECEMBER 27, 2003 ---------------------- --------------------- ASSETS Current assets Cash $ 152,926 $ 232,595 Receivables 2,167,931 2,086,107 Inventories 1,546,007 1,359,886 Deferred taxes -- -- Prepaid expenses 64,714 60,201 ---------------------- --------------------- Total current assets 3,931,578 3,738,789 Plant and equipment at cost, less depreciation 2,232,172 2,029,718 Other assets Goodwill and intangibles 1,258,716 1,166,336 Restricted cash 185,660 170,877 Prepaid pension cost 289,464 -- Other 203,297 199,857 ---------------------- --------------------- Total other assets 1,937,137 1,537,070 ---------------------- --------------------- Total assets $ 8,100,887 $7,305,577 ====================== ===================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable $ 67,153 $ 124,609 Accounts payable 1,684,567 1,645,948 Accrued expenses 626,651 583,559 Accrued income taxes 239,984 172,420 Deferred taxes 183,748 190,175 Current maturities of long-term debt 367,853 12,322 ---------------------- --------------------- Total current liabilities 3,169,956 2,729,033 Other liabilities Long-term debt 1,101,852 1,395,981 Deferred taxes 716,977 524,989 Other long-term liabilities 268,878 289,750 ---------------------- --------------------- Total other liabilities 2,087,707 2,210,720 Contingencies Shareholders' equity Preferred stock - - Common stock, par $l per share 765,175 765,175 Paid-in capital 364,738 290,744 Retained earnings 4,239,352 3,649,583 Other comprehensive income (loss) 52,813 (142,027) Treasury stock (2,578,854) (2,197,651) ---------------------- --------------------- Total shareholders' equity 2,843,224 2,365,824 ---------------------- --------------------- Total liabilities and shareholders' equity $8,100,887 $7,305,577 ====================== ===================== - more - 9 SYSCO CORPORATION CONSOLIDATED CASH FLOWS (UNAUDITED) (In Thousands) FOR THE 26-WEEK PERIOD ENDED -------------------------------------------------- JANUARY 1, 2005 DECEMBER 27, 2003 ---------------------- --------------------- Cash flows from operating activities: Net earnings $ 458,557 $ 430,792 Add non-cash items: Depreciation and amortization 150,294 138,679 Deferred tax provision 265,289 265,053 Provision for losses on receivables 15,019 14,895 Additional investment in certain assets and liabilities, net of effect of businesses acquired: Decrease (increase) in receivables 32,612 (73,428) (Increase) in inventories (123,510) (120,215) (Increase) in prepaid expenses (9,378) (7,755) (Decrease) increase in accounts payable (78,330) 3,905 (Decrease) in accrued expenses (107,609) (69,771) (Decrease) in accrued income taxes (224,079) (186,649) (Increase) in other assets (7,689) (24,644) (Decrease) in other long-term liabilities and prepaid pension cost, net (9,453) (6,083) ---------------------- --------------------- Net cash provided by operating activities 361,723 364,779 ---------------------- --------------------- Cash flows from investing activities: Additions to plant and equipment (205,585) (248,697) Proceeds from sales of plant and equipment 7,331 9,815 Acquisition of businesses, net of cash acquired (33,439) (33,703) Increase in restricted cash (16,334) (90,000) ---------------------- --------------------- Net cash used for investing activities (248,027) (362,585) ---------------------- --------------------- Cash flows from financing activities: Bank and commercial paper (repayments) borrowings (6,881) 182,739 Other debt borrowings (repayments) 68,973 (12,964) Common stock reissued from treasury 103,168 86,337 Treasury stock purchases (154,858) (218,149) Dividends paid (166,234) (142,501) ---------------------- --------------------- Net cash used for financing activities (155,832) (104,538) ---------------------- --------------------- Effect of exchange rate changes on cash (4,644) (2,508) ---------------------- --------------------- Net decrease in cash (46,780) (104,852) Cash at beginning of period 199,706 337,447 ---------------------- --------------------- Cash at end of period $ 152,926 $ 232,595 ====================== ===================== Cash paid during the period for: Interest $ 34,841 $ 36,598 Income taxes 237,694 190,761 # # #