<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>sysco8k042604ex991.txt
<DESCRIPTION>PRESS RELEASE
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EXHIBIT 99.1
SYSCO [LOGO]
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SYSCO Corporation NEWS RELEASE
1390 Enclave Parkway
Houston, Texas 77077-2099 FOR MORE INFORMATION
(281)584-1390 CONTACT: John M. Palizza
Assistant Treasurer
(281) 584-1308
SYSCO'S THIRD QUARTER NET EARNINGS INCREASE 16.3%,
DILUTED EPS RISE 15.4%
HOUSTON, APRIL 26, 2004 -- SYSCO Corporation (NYSE: SYY), North America's
leading foodservice marketer and distributor, today announced results for the
third quarter of its fiscal year 2004 that ended March 27, 2004.
THIRD QUARTER HIGHLIGHTS:
o Net earnings climbed 16.3% to $195.8 million vs. $168.4 million in last
year's third quarter
o Diluted earnings per share rose 15.4% to $0.30 compared to $0.26 in the
same period last year
o Sales increased 9.9% to $7.0 billion vs. $6.4 billion in the third quarter
of fiscal 2003
o Operating expenses as a percent to sales declined 70 basis points, or to
14.35% compared to 15.05% in the same period last year
Richard J. Schnieders, SYSCO's chairman and chief executive officer, said,
"I am extremely proud of the way our associates performed during the third
quarter. They quite literally weathered the storm and in the process helped our
customers do the same. Our sales and earnings performance was exceptional in a
quarter which historically has been a soft period and which this year was marked
by eight weeks of severe winter weather in a number of markets. The continued
implementation of business development and business relationship strategies, the
sharing of best business practices, and our expense reduction efforts all
contributed to the strong third quarter results.
"Another equally encouraging sign was that the sales momentum our companies
exhibited in the final weeks of the third quarter continued as we began the
fourth quarter," continued Mr. Schnieders. "In fact, the fourth quarter opened
with record sales of $583.4 million for the week ended April 3, 2004 and we are
very encouraged about our fourth quarter pportunities."
"The uncharacteristically high food cost inflation we have experienced in
the last 12 months is slowly declining, although during the quarter inflation
continued to impact many of our product categories, including dairy, canned and
dry goods, fresh and frozen meats, poultry and produce." Mr. Schnieders added
that acquisitions contributed 0.4 percent to the overall sales growth of 9.9
percent in the quarter while food cost inflation for the quarter was 5.2
percent. During the same period last year acquisitions represented 7.3 percent
of sales growth and food cost inflation was 0.8 percent.
"During the quarter we continued appointing sales management personnel to
the newly created positions of either business development manager or business
relationship manager," concluded Mr. Schnieders. "The individuals charged with
business development assist marketing associates in cultivating new customer
relationships, while the business relationship managers team with marketing
associates to strengthen the partnerships they already have with existing
customers. We are encouraged by the early success of this program and believe
the additional focus it provides will be very beneficial to our customers."
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Thomas E. Lankford, SYSCO's president and chief operating officer, said,
"Our operating companies once again did an exceptional job in controlling
expenses, which as a percent to sales declined 70 basis points in the quarter.
Two key components contributed to this performance. First, by increasing pieces
per stop and pieces per trip, our delivery vehicles were more efficiently
utilized and our delivery costs were reduced. Secondly, the activity based
compensation (ABC) programs for delivery associates enhanced productivity and
performance in the quarter. In doing so, the ABC program provided an opportunity
for our associates to earn more while minimizing overtime costs."
Mr. Lankford also stated that the company's Fargo, North Dakota broadline
fold-out was completed and began distributing products during the third quarter
and that fold-out facilities in Post Falls, Idaho and Oxnard, California, are
progressing according to plan. SYSCO also announced the acquisition of Overton
Distributors, Inc., a produce distribution company with locations in Raleigh and
Charlotte, North Carolina and Nashville, Tennessee. That acquisition was
completed at the beginning of the fourth quarter.
"Capital expenditures have totaled $379 million for the three quarters of
the fiscal year, of which $131 million was spent in the third quarter," Mr.
Lankford continued. "The National Supply Chain project continued to progress
according to plan during the quarter and to date $183 million has been expended
on the project since it began in fiscal 2002." Mr. Lankford added that third
quarter expenditures for the Northeast Redistribution Center were $28 million,
$25 million of which was capitalized. The Company expects total capital
expenditures for the year to be approximately $500 million.
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
$27.5 billion for calendar year 2003. SYSCO's operations are located throughout
the United States and Canada and include broadline companies, specialty produce
and custom-cut meat operations, 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 third quarter 2004 earnings conference call
will be held at 10:00 a.m. eastern time on Monday, April 26, 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 fourth quarter opportunities and the expected impact of sales
management strategies and the ABC program, as well as statements regarding
inflationary trends, capital expenditures and the expected timing, cost and
benefits of fold-outs, 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)
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE 13-WEEK PERIOD ENDED
---------------------------------------
MARCH 27, 2004 MARCH 29, 2003
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Sales $ 7,025,585 $ 6,395,278
Costs and expenses
Cost of sales 5,684,192 5,144,473
Operating expenses 1,008,493 962,459
Interest expense 15,737 18,276
Other, net (1,250) (2,661)
--------------- ---------------
Total costs and expenses 6,707,172 6,122,547
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Earnings before income taxes 318,413 272,731
Income taxes 122,589 104,320
--------------- ---------------
Net earnings $ 195,824 $ 168,411
=============== ===============
Basic earnings per share $ 0.31 $ 0.26
=============== ===============
Diluted earnings per share $ 0.30 $ 0.26
=============== ===============
Average shares outstanding 642,038,004 649,267,210
=============== ===============
Diluted average shares outstanding 663,097,806 657,994,124
=============== ===============
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Comparative segment sales data for the third quarter of fiscal years 2004 and
2003 are summarized below.
FOR THE 13-WEEK PERIOD ENDED
(Unaudited) ----------------------------------------
($000) MARCH 27, 2004 MARCH 29, 2003
SALES ---------------- --------------
Broadline $ 5,648,123 $ 5,247,872
SYGMA 873,344 713,334
Other 574,401 502,378
Intersegment Sales (70,283) (68,306)
---------------- --------------
Total Sales $ 7,025,585 $ 6,395,278
================ ==============
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SYSCO CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE 39-WEEK PERIOD ENDED
---------------------------------------
MARCH 27, 2004 MARCH 29, 2003
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Sales $ 21,196,386 $ 19,168,497
Costs and expenses
Cost of sales 17,107,358 15,396,893
Operating expenses 3,029,682 2,860,384
Interest expense 50,744 52,607
Other, net (10,285) (8,679)
--------------- ---------------
Total costs and expenses 20,177,499 18,301,205
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Earnings before income taxes 1,018,887 867,292
Income taxes 392,271 331,740
--------------- ---------------
Net earnings $ 626,616 $ 535,552
=============== ===============
Basic earnings per share $ 0.97 $ 0.82
=============== ===============
Diluted earnings per share $ 0.95 $ 0.81
=============== ===============
Average shares outstanding 644,219,976 652,148,645
=============== ===============
Diluted average shares outstanding 662,482,772 662,873,939
=============== ===============
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Comparative segment sales data for the first 39 weeks of fiscal years 2004 and 2003 are summarized below.
FOR THE 39-WEEK PERIOD ENDED
(Unaudited) ---------------------------------------
($000) MARCH 27, 2004 MARCH 29, 2003
SALES --------------- ---------------
Broadline $ 17,156,599 $ 15,796,806
SYGMA 2,561,446 2,133,252
Other 1,707,734 1,429,382
Intersegment Sales (229,393) (190,943)
--------------- ---------------
Total Sales $ 21,196,386 $ 19,168,497
=============== ===============
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SYSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
MARCH 27, 2004 MARCH 29, 2003
--------------- ---------------
ASSETS
Current assets
Cash $ 172,695 $ 186,956
Receivables 2,087,476 1,946,819
Inventories 1,373,251 1,256,397
Prepaid expenses 57,128 60,775
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Total current assets 3,690,550 3,450,947
Plant and equipment at cost, less depreciation 2,088,314 1,829,021
Other assets
Goodwill and intangibles 1,177,161 1,084,693
Restricted cash 169,220 84,056
Other 201,587 207,168
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Total other assets 1,547,968 1,375,917
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Total assets $ 7,326,832 $ 6,655,885
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 105,922 $ 81,492
Accounts payable 1,717,438 1,522,670
Accrued expenses 655,985 617,373
Accrued income taxes 67,673 15,242
Deferred taxes 296,567 250,383
Current maturities of long-term debt 10,296 24,684
--------------- ---------------
Total current liabilities 2,853,881 2,511,844
Other liabilities
Long-term debt 1,420,139 1,279,657
Deferred taxes 561,666 476,629
Other long-term liabilities 222,098 190,721
--------------- ---------------
Total other liabilities 2,203,903 1,947,007
Contingencies
Shareholders' equity
Preferred stock - -
Common stock, par $l per share 765,175 765,175
Paid-in capital 317,003 246,756
Retained earnings 3,762,183 3,202,358
Other comprehensive loss (144,862) (65,435)
Treasury stock (2,430,451) (1,951,820)
--------------- ---------------
Total shareholders' equity 2,269,048 2,197,034
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Total liabilities and shareholders' equity $ 7,326,832 $ 6,655,885
=============== ===============
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SYSCO CORPORATION
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
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FOR THE 39-WEEK PERIOD ENDED
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MARCH 27, 2004 MARCH 29, 2003
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Cash flows from operating activities:
Net earnings $ 626,616 $ 535,552
Add non-cash items:
Depreciation and amortization 209,054 204,155
Deferred tax provision 408,139 320,469
Provision for losses on receivables 23,613 24,444
Additional investment in certain assets and
liabilities, net of effect of businesses acquired:
(Increase) in receivables (85,195) (175,262)
(Increase) in inventories (134,750) (116,560)
(Increase) in prepaid expenses (4,701) (18,740)
Increase in accounts payable 77,154 152,606
(Decrease) in accrued expenses and other
long-term liabilities (60,333) (2,328)
(Decrease) in accrued income taxes (283,980) (20,158)
(Increase) in other assets (18,983) (19,683)
--------------- ---------------
Net cash provided by operating activities 756,634 884,495
--------------- ---------------
Cash flows from investing activities:
Additions to plant and equipment (379,390) (310,392)
Proceeds from sales of plant and equipment 13,354 9,528
Acquisition of businesses, net of cash acquired (34,091) (169,492)
Increase in restricted cash balances (90,223) (52,056)
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Net cash used for investing activities (490,350) (522,412)
--------------- ---------------
Cash flows from financing activities:
Bank and commercial paper (repayments) / borrowings (15,779) 115,039
Other debt borrowings / (repayments) 184,966 (7,432)
Cash from termination of interest rate swap 1,305 -
Common stock reissued from treasury 135,816 81,971
Treasury stock purchases (508,963) (372,808)
Dividends paid (226,271) (190,336)
--------------- ---------------
Net cash used for financing activities (428,926) (373,566)
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Effect of exchange rate changes on cash (2,111) -
--------------- ---------------
Net decrease in cash (164,753) (11,483)
Cash at beginning of period 337,448 198,439
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Cash at end of period $ 172,695 $186,956
=============== ===============
Cash paid during the period for:
Interest $ 46,875 $ 44,451
Income taxes $ 257,102 $ 36,734
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COMPARATIVE SUPPLEMENTAL STATISTICAL INFORMATION RELATED TO SALES
Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data for the
third quarter of fiscal years 2004 and 2003 is summarized below.
FOR THE 13-WEEK PERIOD ENDED
--------------------------------------
MARCH 27, 2004 MARCH 29, 2003
--------------- ---------------
SYSCO Brand Sales as a % of MA-Served Sales 57.4% 56.5%
SYSCO Brand Sales as a % of Total
Traditional Broadline Sales in the U.S. 48.7% 48.4%
MA-Served Sales as a % of Total Traditional
Broadline Sales in the U.S. 52.8% 53.3%
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Comparative SYSCO Brand Sales and Marketing Associate-Served Sales data for the
first 39 weeks of fiscal years 2004 and 2003 is summarized below.
FOR THE 39-WEEK PERIOD ENDED
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MARCH 27, 2004 MARCH 29, 2003
--------------- ---------------
SYSCO Brand Sales as a % of MA-Served Sales 57.3% 56.7%
SYSCO Brand Sales as a % of Total
Traditional Broadline Sales in the U.S. 48.9% 48.8%
MA-Served Sales as a % of Total Traditional
Broadline Sales in the U.S. 54.1% 54.5%
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