SYSCO CORP - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED JUNE 29, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 1-6544
SYSCO CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 74-1648137
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)

1390 ENCLAVE PARKWAY 77077-2099
HOUSTON, TEXAS (Zip Code)
(Address of principal executive offices)

Registrant's Telephone Number, Including Area Code: (281) 584-1390

Securities Registered Pursuant to Section 12(b) of the Act:

Securities Registered Pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting stock of the registrant held by
stockholders who were not affiliates (as defined by regulations of the
Securities and Exchange Commission) of the registrant was approximately
$19,975,544,000 at September 10, 2002 (based on the closing sales price on the
New York Stock Exchange Composite Tape on September 10, 2002, as reported by The
Wall Street Journal (Southwest Edition)). At September 10, 2002, the registrant
had issued and outstanding an aggregate of 657,722,693 shares of its common
stock.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the proxy statement filed with the Securities and Exchange
Commission on September 23, 2002 are incorporated by reference into Part III.
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TABLE OF CONTENTS

PART I

ITEM 1. BUSINESS

OVERVIEW

Sysco Corporation, acting through its subsidiaries and divisions
(collectively referred to as "SYSCO" or the "company"), is the largest North
American distributor of food and food related products to the foodservice or
"food-prepared-away-from-home" industry. Founded in 1969, SYSCO provides its
products and services to approximately 415,000 customers, including restaurants,
healthcare and educational facilities, lodging establishments and other
foodservice customers.

SYSCO, which was formed when the stockholders of nine companies exchanged
their stock for SYSCO common stock, commenced operations in March 1970. Since
its formation, the company has grown from $115 million to over $23 billion in
annual sales both through internal expansion of existing operations and
acquisitions of formerly independent companies. Through the end of fiscal 2002,
SYSCO had acquired sixty-seven companies or divisions of companies.

In September 2001, Guest Supply, Inc., a SYSCO subsidiary, acquired
Franklin Supply Company, a supplier of housekeeping and other operating supplies
to the lodging industry headquartered in Louisburg, North Carolina. In March
2002, SYSCO acquired substantially all of the assets and certain liabilities of
the SERCA Foodservice operations of Sobeys Inc. SERCA Foodservice Inc. is a
foodservice and equipment distributor headquartered in Toronto, Ontario.

In December 2000, SYSCO acquired North Douglas Distributors, Ltd., a
broadline foodservice distributor operating on Vancouver Island, British
Columbia and the Albert M. Briggs Company, a specialty meat distributor in
Washington, D.C. In January 2001, the company acquired certain operations of the
Freedman Companies, a specialty meat supplier based in Houston, Texas. In March
2001, SYSCO acquired Guest Supply, Inc. through an exchange offer followed by a
merger. Guest Supply is a specialty distributor to the lodging industry
headquartered in Monmouth Junction, New Jersey. In May 2001, the company
acquired HRI Supply, Inc. a broadline foodservice distributor located in
Kelowna, British Columbia. In July 2001, the company acquired Fulton Provision
Co., a specialty meat company based in Portland, Oregon.

In July 1999, SYSCO acquired Newport Meat Co. Inc., a southern California
based distributor of fresh aged beef and other meats, seafood and poultry
products. In August 1999, the company acquired Doughtie's Foods, Inc., a food
distributor located in Virginia. Also in August 1999, SYSCO bought substantially
all of the assets of Buckhead Beef Company, Inc., a Georgia based distributor of
custom-cut fresh steaks and other meats, seafood and poultry products. In
November 1999, SYSCO acquired Malcolm Meats, an Ohio based distributor of
custom-cut fresh steaks and other meat and poultry products. In January 2000,
SYSCO acquired Watson Foodservice, Inc., a broadline foodservice distributor
located in Lubbock, Texas. In March 2000, SYSCO acquired FreshPoint, Inc., a
distributor of produce with locations in the U.S. and Canada.

SYSCO is organized under the laws of Delaware. The address and telephone
number of the company's executive office are 1390 Enclave Parkway, Houston,
Texas 77077-2099, (281) 584-1390.

OPERATING SEGMENTS

SYSCO provides food and other products to the foodservice or
"food-prepared-away-from-home" industry. Each of SYSCO's operating companies
generally represents a separate operating segment. Under the provisions of SFAS
No. 131 "Disclosures about Segments of an Enterprise and Related Information"
(SFAS No. 131), the company has aggregated its operating companies into five
segments, of which only Broadline and SYGMA are reportable segments as defined
in SFAS No. 131. Broadline operating companies distribute a full line of food
products and a wide variety of non-food products to both our traditional and
chain restaurant customers. SYGMA operating companies distribute a full line of
food products and a wide variety of non-food products to some of our chain
restaurant customer locations. "Other" financial information is attributable to
the company's three other segments, including the company's specialty produce,
meat and lodging industry products segments. The company's specialty produce
companies distribute fresh produce and, on a limited

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basis, other foodservice products. Specialty meat companies distribute
custom-cut fresh steaks, and other meat, seafood and poultry products. Our
lodging industry products company distributes personal care guest amenities,
housekeeping supplies, room accessories and textiles to the lodging industry.

CUSTOMERS AND PRODUCTS

The foodservice industry consists of two major customer
types -- "traditional" and "chain restaurant." Traditional foodservice customers
include restaurants, hospitals, schools, hotels and industrial caterers. SYSCO's
chain restaurant customers include regional pizza and national hamburger,
chicken and steak chain operations.

Services to the company's traditional foodservice and chain restaurant
customers are supported by similar physical facilities, vehicles, materials
handling equipment and techniques, and administrative and operating staffs.

Products distributed by the company include a full line of frozen foods,
such as meats, fully prepared entrees, fruits, vegetables and desserts, and a
full line of canned and dry goods, fresh meats, imported specialties and fresh
produce. The company also supplies a wide variety of nonfood items, including
paper products such as disposable napkins, plates and cups; tableware such as
china and silverware; restaurant and kitchen equipment and supplies; medical and
surgical supplies; and cleaning supplies. SYSCO's operating companies distribute
both nationally-branded merchandise and products packaged under SYSCO's private
brands.

The company believes that prompt and accurate delivery of orders, close
contact with customers and the ability to provide a full array of products and
services to assist customers in their foodservice operations are of primary
importance in the marketing and distribution of products to the traditional
customers. SYSCO's operating companies offer daily delivery to certain customer
locations and have the capability of delivering special orders on short notice.
Through the more than 13,150 sales and marketing representatives of SYSCO and
its operating companies, SYSCO stays informed of the needs of its customers and
acquaints them with new products and services. SYSCO's operating companies also
provide ancillary services relating to foodservice distribution such as
providing customers with product usage reports and other data, menu-planning
advice, food safety training, contract services for installing kitchen
equipment, installation and service of beverage dispensing machines and
assistance in inventory control, as well as access to various third party
services designed to add value to our customers' businesses.

No single foodservice customer accounted for as much as 10% of SYSCO's
sales for its fiscal year ended June 29, 2002. Approximately 3.7% of traditional
foodservice sales during fiscal 2002 resulted from a process of competitive
bidding. There are no material long-term contracts with any traditional
foodservice customer that may not be cancelled by either party at its option.

SYSCO's sales to chain restaurant customers consist of a variety of food
products necessitated by the increasingly broad menus of chain restaurants. The
company believes that consistent product quality and timely and accurate service
are important factors in the selection of a chain restaurant supplier. One chain
restaurant customer (Wendy's International, Inc.) accounted for 5.2% of SYSCO's
sales for its fiscal year ended June 29, 2002. Although this customer represents
41% of the SYGMA segment sales, the company does not believe that the loss of
this customer would have a material adverse effect on SYSCO as a whole. There
are no material long-term contracts with any chain restaurant customer that may
not be cancelled by either party at its option.

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Based upon available information, the company estimates that sales by type
of customer during the past three fiscal years were as follows:

SOURCES OF SUPPLY

SYSCO estimates that it purchases from thousands of independent sources,
none of which individually account for more than 5% of the company's purchases.
These sources of supply consist generally of large corporations selling brand
name and private label merchandise and independent private label processors and
packers. Generally, purchasing is carried out through centrally developed
purchasing programs (see "Corporate Headquarters' Services" below) and direct
purchasing programs established by the company's various operating companies.
The company continually develops relationships with suppliers but has no
material long-term purchase commitments with any supplier.

CORPORATE HEADQUARTERS' SERVICES

SYSCO's corporate staff, consisting of approximately 940 persons, makes
available a number of services to the company's operating companies. These
persons possess experience and expertise in, among other areas, accounting and
finance, cash management, information technology, employee benefits, engineering
and insurance. Corporate also makes available legal, marketing and tax
compliance services as well as warehousing and distribution services, which
provide assistance in space utilization, energy conservation, fleet management
and work flow.

The corporate staff also administers a consolidated product procurement
program designed to develop, obtain and assure consistent quality food and
nonfood products. The program covers the purchasing and marketing of SYSCO brand
merchandise, as well as private label and national brand merchandise,
encompassing substantially all product lines. The company's operating companies
may participate in the program at their option.

CAPITAL IMPROVEMENTS

To maximize productivity and customer service, the company continues to
construct and modernize its distribution facilities. During fiscal 2002, 2001
and 2000, approximately $416,000,000, $341,000,000 and $266,000,000,
respectively, were invested in facility expansions, fleet additions and other
capital asset enhancements. The company estimates its capital expenditures in
fiscal 2003 should be in the range of $450,000,000 to $500,000,000. During the
three years ended June 29, 2002, capital expenditures were financed primarily by
internally generated funds, the company's commercial paper program and bank
borrowings. The Company expects to finance its fiscal 2003 capital expenditures
from the same sources.

EMPLOYEES

As of June 29, 2002, SYSCO and its operating companies had approximately
46,800 full-time employees, approximately 21% of whom were represented by
unions, primarily the International Brotherhood of Teamsters. Contract
negotiations are handled locally. Collective bargaining agreements covering
approximately 22% of the company's union employees expire during fiscal 2003.
SYSCO considers its labor relations to be satisfactory.

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COMPETITION

The business of SYSCO is competitive with numerous companies engaged in
foodservice distribution. While competition is encountered primarily from local
and regional distributors, a few companies compete with SYSCO on a national
basis. The company believes that, although price and customer contact are
important considerations, the principal competitive factor in the foodservice
industry is the ability to deliver a wide range of quality products and related
services on a timely and dependable basis. Although SYSCO's share of the
foodservice industry market in the United States and Canada was approximately
11.7% as of June 29, 2002, SYSCO believes, based upon industry trade data, that
its sales to the U.S. "food-prepared-away-from-home" industry were the largest
of any foodservice distributor during fiscal 2002. While adequate industry
statistics are not available, the company believes that in most instances its
local operations are among the leading distributors of food and related nonfood
products to foodservice customers in their respective trading areas.

GOVERNMENT REGULATION

As a marketer and distributor of food products, SYSCO is subject to the
Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder by
the U.S. Food and Drug Administration ("FDA"). The FDA regulates manufacturing
and holding requirements for foods through its current good manufacturing
practice regulations, specifies the standards of identity for certain foods and
prescribes the format and content of certain information required to appear on
food product labels. For certain product lines, SYSCO is also subject to the
Federal Meat Inspection Act, the Poultry Products Inspection Act, the Perishable
Agricultural Commodities Act and regulations promulgated thereunder by the U.S.
Department of Agriculture ("USDA"). The USDA imposes standards for product
quality and sanitation including the inspection and labeling of meat and poultry
products and the grading and commercial acceptance of produce shipments from the
company's suppliers. The company and its products are also subject to state and
local regulation through such measures as the licensing of its facilities,
enforcement by state and local health agencies of state and local standards for
the company's products and regulation of the company's trade practices in
connection with the sale of its products. SYSCO's facilities are generally
inspected at least annually by state and/or federal authorities. These
facilities are also subject to inspections and regulations issued pursuant to
the Occupational Safety and Health Act by the Department of Labor, which require
the company to comply with certain manufacturing, health and safety standards to
protect its employees from accidents and to establish hazard communication
programs to transmit information on the hazards of certain chemicals present in
products distributed by the company.

The company is also subject to regulation by numerous federal, state, and
local regulatory agencies, including but not limited to the U.S. Department of
Labor, which sets employment practice standards for workers, and the U.S.
Department of Transportation, which regulates transportation of perishable and
hazardous materials and waste, and similar state and local agencies.

The company's distribution facilities have tanks for the storage of diesel
fuel and other petroleum products which are subject to laws regulating such
storage tanks. Other federal, state and local provisions relating to the
protection of the environment or the discharge of materials do not materially
impact the company's use or operation of its facilities.

Compliance with these laws has not had and is not anticipated to have a
material effect on the capital expenditures, earnings or competitive position of
SYSCO.

GENERAL

SYSCO has numerous trademarks which are of significant importance to the
company. The loss of the SYSCO(R) trademark would have a material adverse effect
on SYSCO's results of operations.

SYSCO is not engaged in material research activities relating to the
development of new products or the improvement of existing products.

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Sales of the company do not generally fluctuate on a seasonal basis;
therefore, the business of the company is not deemed to be seasonal.

As of September 10, 2002, SYSCO and its operating companies operated 158
facilities throughout the United States and Canada, of which 142 were principal
distribution facilities.

ITEM 2. PROPERTIES

The table below shows the number of distribution facilities and self-serve
centers occupied by SYSCO in each state or province and the aggregate cubic
footage devoted to cold and dry storage as of September 10, 2002.

SYSCO owns approximately 369,000,000 cubic feet of its distribution
facilities and self-serve centers (or 77.5% of the total cubic feet), and the
remainder is occupied under leases expiring at various dates from fiscal 2003 to
fiscal 2020, exclusive of renewal options. Certain of the facilities owned by
the company are either subject to mortgage indebtedness or industrial revenue
bond financing arrangements totaling $26,030,000 at June 29, 2002. Such mortgage
indebtedness and industrial revenue bond financing arrangements mature at
various dates to 2026.

The company owns its approximately 188,000 square foot headquarters office
complex in Houston, Texas and leases approximately 150,600 square feet of
additional office space in Houston, Texas.

Facilities in Harrisburg, Pennsylvania; Cleveland, Ohio; Lewisville, Texas;
Houston, Texas; Olathe, Kansas; Pocomoke, Maryland; Moundsview, Minnesota;
Peterborough, Ontario; Miami, Florida and Lubbock, Texas (which in the aggregate
accounted for approximately 14.4% of fiscal 2002 sales) are operating near
capacity and the company is currently constructing expansions or replacements
for these distribution facilities.

As of September 10, 2002, SYSCO's fleet of approximately 8,380 delivery
vehicles consisted of tractor and trailer combinations, vans and panel trucks,
most of which are either wholly or partially refrigerated for the transportation
of frozen or perishable foods. The company owns approximately 85% of these
vehicles and leases the remainder.

ITEM 3. LEGAL PROCEEDINGS

SYSCO is engaged in various legal proceedings which have arisen but have
not been fully adjudicated. These proceedings, in the opinion of management,
will not have a material adverse effect upon the consolidated financial position
or results of operations of the company when ultimately concluded.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

The following are the executive officers of SYSCO, each of whom serves at
the discretion of the Board and holds the office opposite his or her name below
until the meeting of the Board of Directors immediately preceding the next
Annual Meeting of Stockholders or until his or her successor has been elected or
qualified. Executive officers who also serve as directors, serve as directors
until expiration of their terms or until their successors have been elected and
qualified.

Each of the executive officers listed above has been employed by the
company throughout the past five years except Kenneth J. Carrig. Before joining
SYSCO, Mr. Carrig was Vice President of Human Resources for Continental
Airlines, Inc. from 1995 to 1997. Prior to that he was Senior Director of the
Southwest Region for PepsiCo, Inc. from 1987 to 1995.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The principal market for SYSCO's Common Stock is the New York Stock
Exchange. The table below sets forth the high and low sales prices per share for
SYSCO's Common Stock as reported on the New York Stock Exchange Composite Tape
and the cash dividends paid for the periods indicated, adjusted for the 2-for-1
stock split effected by a 100% stock dividend paid on December 15, 2000 to
stockholders of record on November 15, 2000.

The number of record owners of SYSCO's Common Stock as of September 10,
2002 was 15,583.

ITEM 6. SELECTED FINANCIAL DATA

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

SYSCO provides marketing and distribution services to foodservice customers
throughout the United States and Canada. The company intends to continue to
expand its market share through profitable sales growth, foldouts, acquisitions,
and constant emphasis on the development of its consolidated buying programs.
The company also strives to increase the effectiveness of its marketing
associates and the productivity of its warehousing and distribution activities.
These objectives require continuing investment. SYSCO's resources include cash
provided by operations and access to capital from financial markets.

SYSCO's operations historically have produced significant cash flow. Cash
generated from operations is first allocated to working capital requirements;
investments in facilities, fleet and other equipment required to meet customers'
needs; cash dividends; and acquisitions fitting within the company's overall
growth strategy. Any remaining cash generated from operations may, at the
discretion of management, be applied toward a portion of the cost of the share
repurchase program, while the remainder of the cost may be financed with
additional long-term debt. SYSCO's share repurchase program is used primarily to
offset shares issued under various employee benefit and compensation plans, for
acquisitions and to reduce shares outstanding, all of which may have the net
effect of increasing earnings per share. Management targets a long-term debt to
total capitalization ratio between 35% to 40%. The ratio may exceed the target
range from time to time due to borrowings incurred in order to fund acquisitions
and internal growth opportunities and due to fluctuations in the timing and
amount of share repurchases. The ratio may also fall below the target range due
to strong cash flow from operations and fluctuations in the timing and amount of
share repurchases. This ratio was 35.6% and 31.4% at June 29, 2002 and June 30,
2001, respectively.

The company generated net cash from operations of $1,084,980,000 in fiscal
2002, $955,224,000 in fiscal 2001 and $708,726,000 in fiscal 2000. The overall
increases in operating results contributed to the annual increases in cash flows
from operations. In addition, during the second quarter of fiscal 2002, the
company began reorganizing its supply chain to maximize consolidated
efficiencies and increase the effectiveness of the merchandising and procurement
functions performed for the benefit of our customers. The new structure resulted
in the deferral of certain federal and state income tax payments which amounted
to $266,673,000 for fiscal 2002 and was reflected in the increase in the
deferred tax provision. The company expects the positive cash flow effect of the
deferral in fiscal 2003 to increase from fiscal 2002 levels. The company expects
the cash flow impact of deferrals in fiscal 2004 and beyond to be less than
fiscal 2003 levels, as it expects to begin making payments related to these
deferrals in fiscal 2004. The company expects the cash flow impact of deferrals
in fiscal 2004 and beyond to be incrementally positive when compared to what
would have been paid on an annual basis without the deferral.

In addition, a federal tax payment of $75,000,000 normally due in the
fourth quarter of 2001 was deferred until the first quarter of 2002 as allowed
by the Internal Revenue Service due to the Texas tropical storm Allison disaster
and is reflected in the decrease of accrued income taxes in fiscal 2002.

Cash used for investing activities was $630,300,000 in fiscal 2002,
$338,751,000 in fiscal 2001 and $459,392,000 in fiscal 2000. Expenditures for
facilities, fleet and other equipment were $416,393,000 in fiscal 2002,
$341,138,000 in fiscal 2001 and $266,413,000 in fiscal 2000. The increase in
fiscal 2002 over prior years is primarily due to the construction and completion
of new fold-out facilities located in Sacramento, California and Columbia, South
Carolina and the ongoing construction of the fold-out facility in Las Vegas,
Nevada. Fiscal 2002 expenditures also included costs incurred on the
construction or expansion of facilities in Lewisville, Texas; Norman, Oklahoma;
Baraboo, Wisconsin and Jersey City, New Jersey. Total expenditures in fiscal
2003 are expected to increase to the range of $450,000,000 to $500,000,000 due
to the continuation of the fold-out program; facility, fleet and other equipment
replacements and expansions; and the company's supply chain initiatives.
Expenditures for acquisitions of businesses were $234,618,000 in fiscal 2002,
$10,363,000 in fiscal 2001, and $211,901,000 in fiscal 2000.

In February 2000, the company filed with the Securities and Exchange
Commission a shelf registration statement covering 5,700,000 shares of common
stock to be offered from time to time in connection with

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acquisitions. This registration statement was amended in January 2001 to include
an additional 1,100,000 shares. No additional shares may be issued under this
registration statement.

In November 2000, the company filed with the Securities and Exchange
Commission a shelf registration statement covering 30,000,000 shares of common
stock to be offered from time to time in connection with acquisitions. As of
June 29, 2002, 29,477,835 shares remained available for issuance under this
registration statement.

Cash used for financing activities was $359,984,000 in fiscal 2002,
$639,858,000 in fiscal 2001 and $239,509,000 in fiscal 2000. In September 2001,
the Board authorized the repurchase of an additional 16,000,000 shares. Under
this authorization, 5,563,200 shares remained available for repurchase at June
29, 2002. In July 2002, the Board authorized the repurchase of an additional
20,000,000 shares. The number of shares acquired and their cost for the past
three years were 18,000,000 shares for $473,558,000 in fiscal 2002, 16,000,000
shares for $428,196,000 in fiscal 2001 and 11,320,800 shares for $186,296,000 in
fiscal 2000.

Dividends paid were $213,275,000 in fiscal 2002, $173,701,000 in fiscal
2001 and $145,418,000 in fiscal 2000. SYSCO began paying the current quarterly
dividend rate of $0.09 per share in January 2002, an increase from the $0.07 per
share that became effective in February 2001.

In April 2002, SYSCO issued $200,000,000 principal amount of 4.75% notes
due July 30, 2005 under a shelf registration statement filed in June 1998. These
notes, which were priced at 99.8% of par, are unsecured and are not subject to
any sinking fund requirement. They include a redemption provision which allows
SYSCO to retire the notes at any time prior to maturity at the greater of par
plus accrued interest or an amount designed to insure that the note holders are
not penalized by early redemption. Proceeds from the notes were used to pay down
borrowings under the company's commercial paper program. As of August 24, 2002,
there was $425,000,000 in principal amount outstanding under the previously
filed registration statement, leaving $75,000,000 available for issuance.

Concurrent with the issuance of these notes, SYSCO entered into an interest
rate swap agreement with a notional amount of $200,000,000 whereby SYSCO
receives a fixed rate equal to 4.75% per anum and pays a benchmark interest rate
of six-month LIBOR in arrears less 84.5 basis points.

In May 2002, SYSCO International, Co., a wholly-owned subsidiary of SYSCO,
issued $200,000,000 principal amount of 6.10% notes due June 1, 2012 in a
private offering. These notes, which were priced at 99.7% of par, are fully and
unconditionally guaranteed by SYSCO Corporation and are not subject to any
sinking fund requirement. They include registration rights and a redemption
provision which allows SYSCO International, Co. to retire the notes at any time
prior to maturity at the greater of par plus accrued interest or an amount
designed to insure that the note holders are not penalized by the early
redemption. SYSCO International, Co. and SYSCO have filed a registration
statement with the Securities and Exchange Commission covering an identical
series of notes to be issued in exchange for the unregistered notes outstanding.
The proceeds from the 6.10% notes were utilized to repay commercial paper
borrowings issued by SYSCO International, Co. to fund the acquisition of a
Canadian broadline foodservice business.

SYSCO has uncommitted bank lines of credit, which provide for unsecured
borrowings for working capital up to $125,000,000, of which none was outstanding
at June 29, 2002 and $30,640,000 was outstanding at June 30, 2001.

SYSCO has a commercial paper program in the United States which was
supported by a bank credit facility in the amount of $300,000,000 as of June 29,
2002 maturing in fiscal 2004. In September, the company entered into a new
revolving loan agreement in the amount of $450,000,000 maturing in fiscal 2008.
SYSCO also has a commercial paper program in Canada which is supported by a bank
credit facility in the amount of $100,000,000 in Canadian dollars maturing in
fiscal 2003. During fiscal 2002, 2001 and 2000, commercial paper and short-term
bank borrowings ranged from approximately $51,472,000 to $538,362,000,
$157,631,000 to $411,790,000, and $199,028,000 to $469,094,000, respectively.
Commercial paper borrowings were $63,293,000 as of June 29, 2002 and $54,040,000
as of August 24, 2002. The company intends to settle outstanding commercial
paper borrowings when they come due by issuing additional commercial paper or
retiring them utilizing cash generated from operations.

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The net cash provided by operations less cash utilized for capital
expenditures, the stock repurchase program, cash dividends and other uses
resulted in net long-term debt of $1,176,307,000 at June 29, 2002. After
adjusting for the interest rate swap, approximately 82% of the long-term debt is
at fixed rates averaging 6.61% and the remainder is at floating rates averaging
1.3%. SYSCO continues to have borrowing capacity available and alternative
financing arrangements are evaluated as appropriate.

In summary, SYSCO believes that through continual monitoring and management
of assets together with the availability of additional capital in the financial
markets, it will meet its cash requirements while maintaining proper liquidity
for normal operating purposes.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The following table sets forth certain information concerning SYSCO's
obligations and commitments to make future payments under contracts, such as
debt and lease agreements, and under contingent commitments.

SALES

Sales increased 7.2% in fiscal 2002, 12.8% in fiscal 2001 and 10.8% in
fiscal 2000. The annual sales increases were attributable to a variety of
factors, including the progress of our Customers Are Really Everything to SYSCO
(C.A.R.E.S.) customer relationship initiatives, a persistent focus on increasing
sales to marketing associate-served customers, the continuing recognition by
customers of the quality and value of SYSCO Brand products, the overall growth
in the foodservice industry and acquisitions. After adjusting for food cost
increases and acquisitions, real sales growth was approximately 2.7% in 2002.
Acquisitions represented 3.4% of sales increases for fiscal 2002 and food cost
inflation was 1.1%.

After adjusting for food cost increases and acquisitions, real sales growth
was approximately 5.8% in fiscal 2001. Acquisitions represented 4.5% of total
sales in fiscal 2001 and food cost inflation was approximately 2.5%. After
adjusting for food cost increases, acquisitions and adjusting for the extra week
in fiscal 1999, real sales growth was approximately 9% in fiscal 2000.
Acquisitions represented 3.5% of sales increases in fiscal 2000 and food cost
inflation was approximately 0.4% for fiscal 2000.

The lower sales growth in 2002 was attributable to the overall softness in
the economy and comparisons to sales increases in fiscal 2001 which were among
the highest in SYSCO's history. The quarterly real sales growth trends
experienced by the company were 1.7%, 0.7%, 2.7% and 5.2% for the first, second,
third and fourth quarter of fiscal 2002, respectively, over comparable quarters
in fiscal 2001.

Industry sources estimate the total foodservice market experienced real
growth of approximately 0.5% in calendar year 2001 and 2.9% in calendar year
2000.

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Sales for fiscal 2000 through 2002 were as follows:

A comparison of the sales mix in the principal product categories during
the last three years is presented below:

A comparison of sales by type of customer during the last three years is
presented below:

COST OF SALES

Cost of sales increased approximately 6.9% in fiscal 2002, 11.9% in fiscal
2001 and 10.1% in fiscal 2000. The rate of increases were less than the rate of
sales increases leading to improved gross margins. The rate of increase is
influenced by SYSCO's overall customer and product mix, economies realized in
purchasing and higher sales of SYSCO Brand products.

OPERATING EXPENSES

Operating expenses include the costs of warehousing and delivering products
as well as selling and administrative expenses. These expenses as a percent of
sales were 14.8% for fiscal 2002 and 2001 and 14.7% for fiscal 2000. Changes in
the percentage relationship of operating expenses to sales result from an
interplay of several economic influences, including customer mix. Inflationary
increases in operating costs generally have been offset through improved
productivity.

Operating expenses in fiscal 2002 were negatively impacted by increased
costs realized during the initial operating periods of fold-outs in Sacramento,
California; Columbia, South Carolina and Las Vegas, Nevada.

12

In addition, the increase in marketing associate-served sales is accompanied by
higher expenses to serve these customers. In fiscal 2000, expenses were incurred
in connection with the closing of a facility and one-time non-recurring costs
associated with the completion of the SYSCO Uniform Systems implementation. The
sum of the costs related to fiscal 2000 were approximately $13,000,000.

INTEREST EXPENSE

Interest expense for the year decreased $8,879,000 or approximately 12.4%
below fiscal 2001, which had increased $944,000 or approximately 1.3% over
fiscal 2000. The decrease in interest expense in fiscal 2002 was primarily due
to decreases in interest rates for short-term and commercial paper borrowings.
Interest expense in fiscal 2000 included interest income in the amount of
$3,000,000 related to a Federal income tax refund on an amended return. After
adjusting for the refund, interest expense in the fiscal 2001 period decreased
$2,056,000 or approximately 2.8%. This decrease was due primarily to decreased
borrowings. Interest capitalized during construction periods for the past three
years was $3,746,000 in fiscal 2002, $2,995,000 in fiscal 2001 and $964,000 in
fiscal 2000.

OTHER, NET

Other, net was $2,805,000 income in fiscal 2002, an increase of $2,906,000
from the $101,000 expense in fiscal 2001. Fiscal 2001's expense of $101,000
decreased $1,421,000 from the $1,522,000 expense in fiscal 2000. Changes between
the years result from fluctuations in miscellaneous activities, primarily gains
and losses on the sale of surplus facilities.

EARNINGS BEFORE INCOME TAXES

Earnings before income taxes rose $134,215,000, or approximately 13.9%
above fiscal 2001 which had increased $229,047,000, or approximately 31.1%, over
fiscal 2000. Fiscal 2000 increased $143,721,000, or approximately 24.2% over
fiscal 1999. Additional sales and realization of operating efficiencies
contributed to the increases as well as the company's success in its continued
efforts to increase sales to the company's higher margin territorial street
customers and increasingly higher sales of SYSCO Brand products, both of which
generally yield higher margins.

PROVISION FOR INCOME TAXES

The effective tax rate was 38.25% in fiscal 2002 and 2001 and 38.5% in
fiscal 2000.

EARNINGS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE

Fiscal 2002 represents the twenty-sixth consecutive year of increased
earnings before the cumulative effect of an accounting change. Earnings before
cumulative effect of an accounting change rose $82,878,000 or approximately
13.9% above fiscal 2001, which had increased $143,280,000 or approximately 31.6%
over fiscal 2000. Fiscal 2000 increased $91,358,000 or approximately 25.2% over
fiscal 1999. The increases were caused by additional sales, operating
efficiencies and other factors discussed above.

CUMULATIVE EFFECT OF ACCOUNTING CHANGE

In the first quarter of fiscal 2000, SYSCO recorded a one-time, after-tax,
non-cash charge of $8,041,000 to comply with the required adoption of AICPA
Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-up
Activities." SOP 98-5 required the writeoff of any unamortized costs of start-up
activities and organization costs.

NET EARNINGS

Net earnings for the year increased $82,878,000 or approximately 13.9%
above fiscal 2001, which had increased $151,321,000 or approximately 34.0% over
fiscal 2000. Fiscal 2000 increased $83,317,000 or approximately 23.0% over
fiscal 1999.

13

RETURN ON SHAREHOLDERS' EQUITY

The return on average shareholders' equity was approximately 31% in fiscal
2002 and fiscal 2001 and 30% in fiscal 2000. Since its inception SYSCO has
averaged in excess of an 18% return on shareholders' equity before the
cumulative effect of accounting changes.

BROADLINE SEGMENT

Broadline segment sales increased by 5.8% in fiscal 2002 as compared to
fiscal 2001 and by 8.8% in fiscal 2001 as compared to fiscal 2000. The fiscal
2002 and 2001 sales growth was due primarily to increased sales to marketing
associate-served customers as well as increased sales of SYSCO Brand products.
Broadline segment sales as a percentage of total SYSCO sales decreased from
83.1% in fiscal 2001 to 82.1% in fiscal 2002 and from 86.2% in fiscal 2000 to
83.1% in fiscal 2001. The decreases in fiscal 2002 and fiscal 2001 were due
primarily to acquisitions of specialty meat, lodging industry product and
produce companies in the Other segments and greater percentage growth of
specialty meat, lodging industry companies and SYGMA segment as a percentage of
overall SYSCO sales.

Earnings before income taxes from the Broadline segment increased by 12.4%
in fiscal 2002 as compared to fiscal 2001 and by 25.6% in fiscal 2001 as
compared to fiscal 2000. The increases in earnings before income taxes for
fiscal 2002 and fiscal 2001 were driven by increased sales to marketing
associate-served customers as well as increases in sales of SYSCO Brand
products, both of which generally yield higher margins. Completion of the
installation of SYSCO Uniform Systems in the second quarter of fiscal 2000 also
impacted pretax earnings with increased efficiencies and productivity.

SYGMA SEGMENT

SYGMA segment sales increased by 10.6% in fiscal 2002 as compared to fiscal
2001 and 12.2% in fiscal 2001 as compared to fiscal 2000. The fiscal 2002 and
2001 sales growth was due primarily to sales growth in SYGMA's existing customer
base. SYGMA segment sales as a percentage of total SYSCO sales increased from
11.1% in fiscal 2001 to 11.4% in fiscal 2002 and decreased from 11.2% in fiscal
2000 to 11.1% in fiscal 2001. The decrease in fiscal 2001 was due to the
acquisition of specialty meat, lodging industry product and produce companies in
the Other segments.

Earnings before income taxes for the segment increased by 41.2% in fiscal
2002 as compared to fiscal 2001 and 213.3% in fiscal 2001 as compared to fiscal
2000. The increases in fiscal 2002 and fiscal 2001 were due to operating
efficiencies and improved labor costs realized during the current fiscal year.

OTHER SEGMENTS

The Other segment sales increased by 23.9% in fiscal 2002 as compared to
fiscal 2001 and 157.7% in fiscal 2001 as compared to fiscal 2000. Other Segment
sales as a percentage of total SYSCO sales increased from 6.3% in fiscal 2001 to
7.3% in fiscal 2002 and from 2.8% in fiscal 2000 to 6.3% in fiscal 2001. The
increases were due primarily to the timing of acquisitions made during the
periods presented.

Earnings before income taxes increased by 15.5% in fiscal 2002 as compared
to fiscal 2001 and 98.7% in fiscal 2001 as compared to fiscal 2000. The
increases were due primarily to the timing of acquisitions made during the
periods presented. In fiscal 2002, earnings were negatively impacted by the
downturn in demand in travel and resort destination cities which are serviced by
certain of the specialty companies.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, sales and
expenses in the accompanying financial statements. Significant accounting
polices employed by SYSCO are presented in the notes to the financial
statements.

14

Critical accounting policies are those that are most important to the
portrayal of the company's financial condition and results of operations. These
policies require management's most difficult, subjective or complex judgments,
often employing the use of estimates about the effect of matters that are
inherently uncertain. SYSCO's most critical accounting policies pertain to the
allowance for doubtful accounts receivable, self-insurance programs, pension
plans and accounting for business combinations.

Allowance for Doubtful Accounts Receivable

SYSCO evaluates the collectibility of accounts receivable and determines
the appropriate reserve for doubtful accounts based on a combination of factors.
In circumstances where we are aware of a specific customer's inability to meet
its financial obligation to us, we record a specific reserve for bad debts to
reduce the net recognized receivable to the amount we reasonably expect to
collect and write-off such amounts at the end of each fiscal year. In addition,
we recognize reserves for all other receivables based on analysis of historical
trends of write-offs and recoveries. If the financial condition of our customers
were to deteriorate, additional reserves may be required.

Self-Insurance Program

SYSCO maintains a self-insurance program covering portions of workers'
compensation, group medical, general liability and vehicle liability costs. The
amounts in excess of the self-insured levels are fully insured. Self-insurance
accruals are based on claims filed and include an estimate for significant
claims incurred but not reported. Projections of future loss expenses are
inherently uncertain because of the random nature of insurance claims
occurrences and could be significantly affected if future occurrences and claims
differ from these assumptions and historical trends. In an attempt to mitigate
our risks of workers' compensation, vehicle and general liability claims, we
have implemented safety procedures and awareness programs.

Pension Plans

SYSCO maintains defined benefit and defined contribution retirement plans
for its employees. The company also contributes to various multi-employer plans
under collective bargaining agreements. The defined benefit pension plans pay
benefits to employees at retirement using formulas based on a participant's
years of service and compensation. SYSCO also maintains a non-qualified,
unfunded Supplementary Executive Retirement Plan (SERP) for key employees. In
order to meet its obligations under the SERP, the company maintains life
insurance policies on the lives of participants. SYSCO is the sole owner and
beneficiary of such policies, which are excluded from plan assets in arriving at
prepaid (accrued) benefit cost. Cash surrender values of such policies were
$71,418,000 at June 29, 2002 and $79,083,000 at June 30, 2001.

SYSCO accounts for its defined benefit pension plans in accordance with
SFAS No. 87, "Employers' Accounting for Pensions" as amended by SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits -- an
amendment of FASB Statements No. 87, 88, and 106." These statements require that
the amounts recognized in the financial statements be determined on an actuarial
basis which include assumptions regarding the expected rate of return on plan
assets, a discount rate for determining the current value of plan benefits, and
the assumption for the rate of increase in future compensation levels, as well
as other assumptions.

For guidance in determining the discount rate, SYSCO looks at rates of
return on high-quality fixed-income investments. This rate was 7.25% and 7.50%
as of June 29, 2002 and June 30, 2001, respectively. SYSCO looks to actual plan
experience in determining the rates of increase in compensation levels. SYSCO
used a plan specific age-related set of rates (equivalent to a single rate of
5.89%), as of June 29, 2002 and June 30, 2001. The expected long-term rate of
return on plan assets was 9.50% and 10.50% as of June 29, 2002 and June 30,
2001, respectively. Management believes that this assumption is reasonable based
on the investment policy and expectations of future returns for the various
asset classes in which trust assets are invested. Although not determinative of
future returns, the effective annual rate of return on plan assets was 9.9%,
9.3% and a negative 2.2% over the ten-year, five-year and one-year periods ended
December 31, 2001, respectively. The rate of return assumption is reviewed
annually and revised as deemed appropriate.

15

The performance of the stock market in 2002 and 2001 resulted in a decline
in the value of the assets held by the pension plans. As a result, the company
was required to reflect a minimum pension liability of $65,435,000, net of tax,
as of June 29, 2002 and $5,624,000, net of tax, as of June 30, 2001. Minimum
pension liability adjustments are non-cash adjustments that are reflected as an
increase in the pension liability and on offsetting charge to shareholders'
equity, net of tax, through comprehensive loss rather than net income.

The company's prepaid benefit cost prior to the recognition of the
additional minimum pension liability was $1,063,000 at June 29, 2002 and its
accrued benefit cost prior to the recognition of the additional minimum pension
liability was $30,736,000 at June 30, 2001. Included in arriving at accrued
benefit cost are $236,852,000 in deferred net actuarial losses resulting from
the variance of actual experience from that projected by actuarial assumptions.
A portion of this unrecognized loss is amortized and recognized in accordance
with SFAS No. 87 in pension expense over time. The company recognized net
pension costs of $51,336,000 and $30,359,000 for fiscal years 2002 and 2001,
respectively.

Accounting for Business Combinations

Goodwill and intangible assets represent the excess of consideration over
the fair value of tangible net assets acquired. Certain assumptions and
estimates are employed in determining the fair value of assets acquired
including goodwill and other intangible assets as well as determining the
allocation of goodwill to the appropriate reporting unit. In addition, SYSCO
assesses the recoverability of these intangibles by determining whether the
amortization of these intangibles over their remaining lives can be recovered
through undiscounted future net cash flows of the acquired operations. The
amount of impairment, if any, is measured by the amount in which the carrying
amounts exceed the projected discounted future operating cash flows. SYSCO will
adopt SFAS No. 142, "Accounting for Goodwill and Other Intangible Assets" in
fiscal year 2003 which discontinues the amortization of goodwill and indefinite
life intangibles and requires an annual test of impairment based on a comparison
of fair value to carrying values. The evaluation of impairment under both the
existing rules and SFAS No. 142 requires the use of projections, estimates and
assumptions as to the future performance of the operations. Actual results could
differ from projections resulting in the company revising its assumptions and,
if required, recognizing an impairment loss. Based on a preliminary assessment,
SYSCO does not believe its goodwill is impaired and does not expect to record a
charge from the adoption of SFAS No. 142.

New Accounting Standards

In fiscal 2000, SYSCO adopted the AICPA Statement of Position 98-1 (SOP
98-1), "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." SOP 98-1 provides guidance with respect to accounting for the
various types of costs incurred for computer software developed or obtained for
SYSCO's use. The adoption of SOP 98-1 did not have a significant effect on
SYSCO's consolidated results of operations or financial position.

In fiscal 2001, SYSCO adopted the Financial Accounting Standards Board's
(FASB) Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting
for Derivative Instruments and Hedging Activities," SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities -- Deferral of the Effective
Date of SFAS No. 133," and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities -- an amendment of SFAS No. 133."
These statements outline the accounting treatment for all derivative activity
and their adoption did not have a significant effect on SYSCO's consolidated
results of operations or financial position.

In fiscal 2001, SYSCO adopted the Securities and Exchange Commission Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition." SAB 101 provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements. The adoption of SAB 101 had no effect on SYSCO's consolidated
results of operations or financial position.

In June 2001, SYSCO adopted SFAS No. 141, "Accounting for Business
Combinations." SFAS No. 141 requires that all business combinations be accounted
for using the purchase method of accounting and prohibits the
pooling-of-interests method for business combinations initiated after June 20,
2001. SYSCO is

16

adopting the provisions of SFAS No. 142, "Accounting for Goodwill and Other
Intangible Assets" effective with the beginning of fiscal year 2003. As a
result, the amortization of goodwill and indefinite life intangibles will be
discontinued. Goodwill and indefinite life intangibles arising from business
combinations after June 30, 2001 are also not amortized. The recoverability of
goodwill and intangibles will be assessed annually or as needed by determining
whether the fair value of the applicable reporting units exceed their carrying
values. SYSCO has six months from the date it adopts SFAS No. 142 to test for
cumulative effect of a change in accounting principle. Thereafter, any
impairment losses will be included, net of tax, within the results of continuing
operations. Management has completed its preliminary assessment of the impact
that the adoption of SFAS No. 142 will have on the company's consolidated
financial statements and believes that goodwill is not impaired. Goodwill
amortization, after tax, recognized by SYSCO was $14,533,000 in 2002,
$12,089,000 in 2001 and $7,812,000 in 2000.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long -- Lived Assets." SFAS 144 supersedes SFAS 121
and the portion of the Accounting Principle Board Opinion No. 30 that deals with
disposal of a business segment. Management does not expect SFAS 144, which is
effective for fiscal 2003, to have a material effect on the results of
operations.

RISK FACTORS

Low Margin Business; Economic Sensitivity

The foodservice distribution industry is characterized by relatively high
inventory turnover with relatively low profit margins. SYSCO makes a significant
portion of its sales at prices that are based on the cost of products it sells
plus a percentage markup. As a result, SYSCO's profit levels may be negatively
impacted during periods of food price deflation, even though SYSCO's gross
profit percentage may remain relatively constant. The foodservice industry is
sensitive to national and regional economic conditions. SYSCO's operating
results are also sensitive to, and may be adversely affected by, other factors,
including difficulties with the collectability of accounts receivable, inventory
control, competitive price pressures, severe weather conditions and unexpected
increases in fuel or other transportation-related costs. Although these factors
have not had a material adverse impact on SYSCO's past operations, there can be
no assurance that one or more of these factors will not adversely affect future
operating results.

Leverage and Debt Service

Because historically a substantial part of SYSCO's growth has been the
result of acquisitions and capital expansion, SYSCO's continued growth depends,
in large part, on its ability to continue this expansion. As a result, its
inability to finance acquisitions and capital expenditures through borrowed
funds could restrict its ability to expand. Moreover, any default under the
documents governing the indebtedness of SYSCO could have a significant adverse
effect on the market value of SYSCO's common stock. Further, SYSCO's leveraged
position may also increase its vulnerability to competitive pressures.

Product Liability Claims

SYSCO, like any other seller of food, faces the risk of exposure to product
liability claims in the event that the use of products sold by the company
causes injury or illness. With respect to product liability claims, SYSCO
believes it has sufficient primary or excess umbrella liability insurance.
However, this insurance may not continue to be available at a reasonable cost,
or, if available, may not be adequate to cover all of SYSCO's liabilities. SYSCO
generally seeks contractual indemnification and insurance coverage from parties
supplying its products, but this indemnification or insurance coverage is
limited, as a practical matter, to the creditworthiness of the indemnifying
party and the insured limits of any insurance provided by suppliers. If SYSCO
does not have adequate insurance or contractual indemnification available,
product liability relating to defective products could materially reduce SYSCO's
net income and earnings per share.

17

Interruption of Supplies

SYSCO obtains substantially all of its foodservice products from third
party suppliers. For the most part, SYSCO does not have long-term contracts with
its suppliers committing them to provide products to SYSCO. Although SYSCO's
purchasing volume can provide leverage when dealing with suppliers, suppliers
may not provide the foodservice products and supplies needed by SYSCO in the
quantities requested. Because SYSCO does not control the actual production of
the products it sells, it is also subject to delays caused by interruption in
production based on conditions outside its control. These conditions include job
actions or strikes by employees of suppliers, weather, crop conditions,
transportation interruptions, and natural disasters or other catastrophic
events. SYSCO's inability to obtain adequate supplies of its foodservice
products as a result of any of the foregoing factors or otherwise, could mean
that SYSCO could not fulfill its obligations to customers, and customers may
turn to other distributors.

Labor Relations

As of June 29, 2002, approximately 9,700 employees at 50 operating
companies were members of 59 different local unions associated with the
International Brotherhood of Teamsters and other labor organizations. In fiscal
2003, 14 agreements covering approximately 2,130 employees will expire. Failure
of the operating companies to effectively renegotiate these contracts could
result in work stoppages. Although SYSCO's operating subsidiaries have not
experienced any significant labor disputes or work stoppages to date, and SYSCO
believes they have satisfactory relationships with their unions, a work stoppage
due to failure of one or more operating subsidiaries to renegotiate a union
contract, or otherwise, could have a material adverse effect on SYSCO.

Integration of Acquired Companies

If SYSCO is unable to integrate acquired businesses successfully and
realize anticipated economic, operational and other benefits in a timely manner,
its profitability may decrease. Integration of an acquired business may be more
difficult when SYSCO acquires a business in a market in which it has limited or
no expertise, or with a corporate culture different from SYSCO's. If SYSCO is
unable to integrate acquired businesses successfully, it may incur substantial
costs and delays in increasing its customer base. In addition, the failure to
integrate acquisitions successfully may divert management's attention from
SYSCO's existing business and may damage SYSCO's relationships with its key
customers and suppliers.

Charter and Stockholder Rights Plan

Under its Restated Certificate of Incorporation, SYSCO's Board of Directors
is authorized to issue up to 1.5 million shares of preferred stock without
stockholder approval. Issuance of these shares could make it more difficult for
anyone to acquire SYSCO without approval of the Board of Directors, depending on
the rights and preferences of the stock issued. In addition, if anyone attempts
to acquire SYSCO without approval of the Board of Directors of SYSCO, the
stockholders of SYSCO have the right to purchase preferred stock of SYSCO
pursuant to its Stockholder Rights Plan, which could result in substantial
dilution to a potential acquiror. The existence of either of these provisions
could deter hostile takeover attempts that might result in an acquisition of
SYSCO that could otherwise have been financially beneficial to SYSCO's
stockholders.

FORWARD-LOOKING STATEMENTS

Certain statements made herein that look forward in time or express
management's expectations or beliefs with respect to the occurrence of future
events are forward-looking statements under the Private Securities Litigation
Reform Act of 1995. They include statements about SYSCO's ability to increase
its market share and sales, long-term debt to capitalization target ratios,
anticipated capital expenditures, and SYSCO's ability to meet future cash
requirements and remain profitable.

These statements are based on management's current expectations and
estimates; actual results may differ materially due in part to the risk factors
discussed above. In addition, SYSCO's ability to increase its market share and
sales, meet future cash requirements and remain profitable could be affected by
conditions
18

in the economy and the industry and internal factors such as the ability to
control expenses. The ability to meet long-term debt to capitalization target
ratios may also be affected by share repurchases, cash flow, acquisitions and
internal growth.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

SYSCO does not utilize financial instruments for trading purposes. SYSCO's
use of debt directly exposes the company to interest rate risk. Floating rate
debt, where the interest rate fluctuates periodically, exposes the company to
short-term changes in market interest rates. Fixed rate debt, where the interest
rate is fixed over the life of the instrument, exposes the company to changes in
the market interest rates reflected in the fair value of the debt and to the
risk that the company may need to refinance maturing debt with new debt.

SYSCO manages its debt portfolio to achieve an overall desired position of
fixed and floating rates and may employ interest rate swaps as a tool to achieve
that goal. The major risks from interest rate derivatives include changes in the
interest rates affecting the fair value of such instruments, potential increases
in interest expense due to market increases in floating interest rates and the
creditworthiness of the counterparties in such transactions. At June 29, 2002,
the company had outstanding one interest rate swap agreement whereby SYSCO
exchanged the fixed interest payments on the $200,000,000 principal amount of
4.75% notes for floating interest payments. At June 29, 2002 the company had
outstanding $63,293,000 of commercial paper at variable rates of interest with
maturities through September 3, 2002. The company's long-term debt obligations
of $1,190,061,000 were primarily at fixed rates of interest except for
$200,000,000 in fixed rate debt swapped to a floating rate of interest as
discussed above.

19

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

SYSCO CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

All other schedules are omitted because they are not applicable or the
information is set forth in the consolidated financial statements or notes
thereto.

20

REPORT OF MANAGEMENT ON INTERNAL ACCOUNTING CONTROLS

July 31, 2002

The management of SYSCO is responsible for the preparation and integrity of
the consolidated financial statements of the company. The accompanying
consolidated financial statements have been prepared by the management of the
company, in accordance with generally accepted accounting principles, using
management's best estimates and judgment where necessary. Financial information
appearing throughout this Annual Report is consistent with that in the
consolidated financial statements.

To help fulfill its responsibility, management maintains a system of
internal controls designed to provide reasonable assurance that assets are
safeguarded against loss or unauthorized use and that transactions are executed
in accordance with management's authorizations and are reflected accurately in
the company's records. The concept of reasonable assurance is based on the
recognition that the cost of maintaining a system of internal accounting
controls should not exceed benefits expected to be derived from the system.
SYSCO believes that its long-standing emphasis on the highest standards of
conduct and ethics, embodied in comprehensive written policies, serves to
reinforce its system of internal controls.

The company's operations review function monitors the operation of the
internal control system and reports findings and recommendations to management
and the Board of Directors. It also oversees actions taken to address control
deficiencies and seeks opportunities for improving the effectiveness of the
system.

Ernst & Young, LLP, independent auditors, has been engaged to express an
opinion regarding the fair presentation of the company's financial condition and
operating results. As part of their audit of the company's financial statements,
Ernst & Young, LLP considered the company's system of internal controls to the
extent they deemed necessary to determine the nature, timing and extent of their
audit tests.

The Board of Directors oversees the company's financial reporting through
its Audit Committee which consists entirely of outside directors. The Audit
Committee selects and engages the independent auditors annually. The Audit
Committee reviews both the scope of the accountants' audit and recommendations
from both the independent auditors and the internal operations review function
for improvements in internal controls. The independent auditors have unlimited
access to the Audit Committee and from time to time confer with them without
management representation.

SYSCO recognizes its responsibility to conduct business in accordance with
high ethical standards. This responsibility is reflected in a comprehensive code
of business conduct that, among other things, addresses potentially conflicting
outside business interests of company employees and provides guidance as to the
proper conduct of business activities. Ongoing communications and review
programs are designed to help ensure compliance with this code.

The company believes that its system of internal controls is effective and
adequate to accomplish the objectives discussed above.

/s/ CHARLES H. COTROS /s/ JOHN K. STUBBLEFIELD, JR.
- ----------------------------------------------------- -----------------------------------------------------
Charles H. Cotros John K. Stubblefield, Jr.
Chairman and Chief Executive Officer Executive Vice President,
Finance and Administration

21

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
SYSCO Corporation

We have audited the accompanying consolidated balance sheets of SYSCO
Corporation (a Delaware corporation) and subsidiaries as of June 29, 2002 and
June 30, 2001, and the related statements of consolidated results of operations,
shareholders' equity and cash flows for each of the three years in the period
ended June 29, 2002. Our audits also included the financial statement schedule
at Item 15(a), No. 2. These financial statements and schedule are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of SYSCO
Corporation and subsidiaries as of June 29, 2002 and June 30, 2001, and the
results of their operations and their cash flows for each of the three years in
the period ended June 29, 2002 in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

ERNST & YOUNG LLP

Houston, Texas
July 31, 2002

22

SYSCO

CONSOLIDATED BALANCE SHEETS

See Summary of Accounting Policies and Additional Financial Information.

23

SYSCO

CONSOLIDATED RESULTS OF OPERATIONS

See Summary of Accounting Policies and Additional Financial Information.

24

SYSCO

CONSOLIDATED SHAREHOLDERS' EQUITY

See Summary of Accounting Policies and Additional Financial Information.

25

SYSCO

CONSOLIDATED CASH FLOWS

See Summary of Accounting Policies and Additional Financial Information.

26

SUMMARY OF ACCOUNTING POLICIES

BUSINESS AND CONSOLIDATION

SYSCO Corporation (SYSCO) is engaged in the marketing and distribution of a
wide range of food and related products to the foodservice or
"food-prepared-away-from-home" industry. These services are performed for about
415,000 customers from 142 distribution facilities located throughout the United
States and Canada.

The accompanying financial statements include the accounts of SYSCO and its
subsidiaries. All significant intercompany transactions and account balances
have been eliminated. Certain amounts in the prior years have been reclassified
to conform to the fiscal 2002 presentation including the reflection of dividends
on a declared versus paid basis.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates that affect
the reported amounts of assets, liabilities, sales and expenses. Actual results
could differ from the estimates used.

Earnings of acquisitions recorded as purchases are included in SYSCO's
results of operations from the date of acquisition.

INVENTORIES

Inventories consist of food and related products held for resale and are
valued at the lower of cost (first-in, first-out method) or market.

PLANT AND EQUIPMENT

Capital additions, improvements and major renewals are classified as plant
and equipment and are carried at cost. Depreciation is recorded using the
straight-line method, which reduces the book value of each asset in equal
amounts over its estimated useful life. Maintenance, repairs and minor renewals
are charged to earnings when they are incurred. Upon the disposition of an
asset, its accumulated depreciation is deducted from the original cost, and any
gain or loss is reflected in current earnings.

Applicable interest charges incurred during the construction of new
facilities are capitalized as one of the elements of cost and are amortized over
the assets' estimated useful lives. Interest capitalized during construction
periods for the past three years was $3,746,000 in 2002, $2,995,000 in 2001, and
$964,000 in 2000.

A summary of plant and equipment, including the related accumulated
depreciation, appears below:

GOODWILL AND INTANGIBLES

Goodwill and intangibles represent the excess of cost over the fair value
of tangible net assets acquired. Goodwill and intangibles arising from
acquisitions initiated on or prior to June 30, 2001 are amortized over 25 to 40
years using the straight-line method. Goodwill and intangibles arising from
acquisitions initiated after

27

June 30, 2001 are not amortized. See New Accounting Standards for further
discussion. The company reviews goodwill and intangibles to evaluate whether
events or changes have occurred that would suggest an impairment of carrying
value. SYSCO assesses the recoverability of these intangibles by determining
whether the amortization of these intangibles over their remaining lives can be
recovered through undiscounted future net cash flows of the acquired operations.
The amount of impairment, if any, is measured by the amount in which the
carrying amounts exceed the projected discounted future operating cash flows.
Accumulated amortization at June 29, 2002, June 30, 2001 and July 1, 2000 was
$139,977,000, $116,439,000 and $96,862,000, respectively.

COSTS OF START-UP ACTIVITIES

In the first quarter of fiscal 2000, SYSCO recorded a one-time, after-tax,
non-cash charge of $8,041,000 to comply with the required adoption of AICPA
Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs of Start-up
Activities." SOP 98-5 requires the write-off of any unamortized costs of
start-up activities and organization costs. Such costs are now expensed as
incurred.

INSURANCE PROGRAM

SYSCO maintains a self-insurance program covering portions of workers'
compensation, group medical, general and vehicle liability costs. The amounts in
excess of the self-insured levels are fully insured. Self-insurance accruals are
based on claims filed and an estimate for significant claims incurred but not
reported.

REVENUE RECOGNITION

The company recognizes revenue from the sale of a product at the time the
product is delivered to the customer.

INCOME TAXES

SYSCO follows the liability method of accounting for income taxes as
required by the provisions of Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes."

CASH FLOW INFORMATION

For cash flow purposes, cash includes cash equivalents such as time
deposits, certificates of deposit, short-term investments and all highly liquid
instruments with original maturities of three months or less.

SHIPPING AND HANDLING COSTS

Shipping and handling costs include costs associated with the selection of
products and delivery to customers. Included in operating expenses are shipping
and handling costs of approximately $1,328,428,000 in fiscal 2002,
$1,297,944,000 in fiscal 2001 and $1,140,116,000 in fiscal 2000.

ACQUISITIONS

During fiscal 2002, SYSCO acquired for cash and/or stock, a custom
meat-cutting operation, a company that supplies products to the lodging industry
and acquired substantially all of the assets and certain liabilities of a
Canadian broadline foodservice operation. In the aggregate, SYSCO paid cash of
$233,618,000 and issued 343,468 shares to the former owners of the acquired
companies.

During fiscal 2001, SYSCO acquired for cash and/or stock, two custom
meat-cutting operations, two broadline foodservice companies and one company
that supplies products to the lodging industry. In the aggregate, SYSCO paid
cash of $8,848,000 and issued 12,399,957 shares to the former owners of the
acquired companies. During fiscal 2002, SYSCO issued an additional 119,245
shares to the former owners of the acquired companies.

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During fiscal 2000, SYSCO acquired for cash and/or stock, three custom
meat-cutting operations, two broadline foodservice companies and one specialty
produce company. In the aggregate, SYSCO paid cash of $211,901,000 and issued
9,968,994 shares to the former owners of the acquired companies. During fiscal
2001, SYSCO paid additional cash of $1,515,000 related to these acquisitions and
issued an additional 152,002 shares to former owners of the acquired companies.
During fiscal 2002, SYSCO paid additional cash of $1,000,000 related to these
acquisitions and issued an additional 703,311 shares to the former owners of the
acquired companies.

Certain acquisitions involve contingent consideration typically payable
only in the event that certain operating results are attained or certain
outstanding contingencies are resolved. Aggregate contingent consideration
amounts outstanding as of June 29, 2002 included approximately 4,135,000 shares
and $1,857,000 with a total aggregate value of $87,586,000.

The transactions were accounted for using the purchase method of accounting
and the financial statements include the results of the acquired companies from
the respective dates they joined SYSCO. The acquisitions were immaterial,
individually and in the aggregate, to the consolidated financial statements.

The purchase price was allocated to the net assets acquired based on the
estimated fair value at the date of acquisition. The balances included in the
Consolidated Balance Sheets related to the current year acquisitions are based
upon preliminary information and are subject to change when final asset and
liability valuations are obtained. Material changes to the preliminary
allocations are not anticipated by management.

DERIVATIVE FINANCIAL INSTRUMENTS

SYSCO manages its debt portfolio by targeting an overall desired position
of fixed and floating rates and may employ interest rate swaps from time to time
to achieve this goal. The company does not use derivative financial instruments
for trading or speculative purposes.

In March 2002, SYSCO entered into an interest rate swap agreement with a
notional amount of $200,000,000 related to the $200,000,000 aggregate principal
amount of 4.75% notes due July 30, 2005. The objective of such transaction is to
protect the debt against changes in fair value due to changes in the benchmark
interest rate, which has been designated as six-month LIBOR in arrears less 84.5
basis points. Under the interest rate swap agreement, SYSCO receives the fixed
rate equal to 4.75% per annum and pays the benchmark interest rate. SYSCO has
designated its interest rate swap agreement as a fair value hedge of the
underlying debt. Interest expense on the debt is adjusted to include payments
made or received under the hedge agreement. The recorded value of the swap
agreement (not material in amount) and the related debt are carried on the
Consolidated Balance Sheets at fair value.

NEW ACCOUNTING STANDARDS

In fiscal 2000, SYSCO adopted the AICPA Statement of Position 98-1 (SOP
98-1), "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." SOP 98-1 provides guidance with respect to accounting for the
various types of costs incurred for computer software developed or obtained for
SYSCO's use. The adoption of SOP 98-1 did not have a significant effect on
SYSCO's consolidated results of operations or financial position.

In fiscal 2001, SYSCO adopted the Financial Accounting Standards Board's
(FASB) Statement of Financial Accounting Standard (SFAS) No. 133, "Accounting
for Derivative Instruments and Hedging Activities," SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities -- Deferral of the Effective
Date of SFAS No. 133," and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities -- an amendment of SFAS No. 133."
These statements outline the accounting treatment for all derivative activity
and their adoption did not have a significant effect on SYSCO's consolidated
results of operations or financial position.

In fiscal 2001, SYSCO adopted the Securities and Exchange Commission Staff
Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition." SAB 101 provides
guidance on the recognition, presentation

29

and disclosure of revenue in financial statements. The adoption of SAB 101 had
no effect on SYSCO's consolidated results of operations or financial position.

In June 2001, SYSCO adopted SFAS No. 141, "Accounting for Business
Combinations." SFAS No. 141 requires that all business combinations be accounted
for using the purchase method of accounting and prohibits the
pooling-of-interests method for business combinations initiated after June 30,
2001. SYSCO is adopting the provisions of SFAS No. 142, "Accounting for Goodwill
and Other Intangible Assets" effective with the beginning of fiscal year 2003.
As a result, the amortization of goodwill and indefinite life intangibles will
be discontinued. Goodwill and indefinite life intangibles arising from business
combinations after June 30, 2001 are also not amortized. The recoverability of
goodwill and intangibles will be assessed annually or as needed by determining
whether the fair value of the applicable reporting units exceed their carrying
values. SYSCO has six months from the date it adopts SFAS No. 142 to test for
impairment and any impairment charge resulting from the initial application of
the new rule must be classified as the cumulative effect of a change in
accounting principle. Thereafter, any impairment losses will be included, net of
tax, within the results of continuing operations. Management has completed its
preliminary assessment of the impact that the adoption of SFAS No. 142 will have
on the company's consolidated financial statements and believes that its
goodwill is not impaired. Goodwill amortization, after tax, recognized by SYSCO
was $14,533,000 in 2002, $12,089,000 in 2001 and $7,812,000 in 2000.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS 144 supersedes SFAS 121 and
the portion of the Accounting Principle Board Opinion No. 30 that deals with
disposal of a business segment. Management does not expect SFAS 144, which is
effective for fiscal 2003, to have a material effect on the results of
operations.

ADDITIONAL FINANCIAL INFORMATION

INCOME TAXES

The income tax provisions consist of the following:

Included in the income taxes charged to earnings are net deferred tax
provisions of $263,492,000, and $6,199,000 in fiscal 2002 and 2001,
respectively, and a deferred tax benefit of $25,528,000 in fiscal 2000. The
deferred tax provisions (benefits) result from the effects of net changes during
the year in deferred tax assets and liabilities arising from temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.

30

Significant components of SYSCO's deferred tax assets and liabilities are
as follows:

The company has had taxable earnings during each year of its 33-year
existence and knows of no reason such profitability should not continue.
Consequently, SYSCO believes that it is more likely than not that the entire
benefit of existing differences will be realized and therefore no valuation
allowance has been established for deferred tax assets.

Reconciliations of the statutory Federal income tax rate to the effective
income tax rates are as follows:

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE

The allowance for doubtful accounts receivable was $30,338,000 as of June
29, 2002 and $43,112,000 as of June 30, 2001.

SHAREHOLDERS' EQUITY

On November 3, 2000 the Board of Directors declared a 2-for-1 stock split
effected by a 100% stock dividend paid on December 15, 2000 to shareholders of
record on November 15, 2000. All share and per share data in these financial
statements have been restated to reflect the stock split.

Basic earnings per share have been computed by dividing net earnings by
661,808,432 in 2002, 665,551,228 in 2001 and 659,164,948 in 2000, which
represents the weighted average number of shares of common stock outstanding
during those respective years. Diluted earnings per share have been computed by
dividing net earnings by 673,445,783 in 2002, 677,949,351 in 2001 and
669,555,856 in 2000, which represents the weighted average number of shares of
common stock outstanding during those respective years adjusted for the diluted
effect of stock options outstanding using the treasury stock method.

Comprehensive income is net earnings, plus certain other items that are
recorded directly to shareholders' equity. The only such item currently
applicable to the company relates to minimum pension liability. Comprehensive
income was $619,976,000, $591,285,000 and $445,588,000 at June 29, 2002, June
30, 2001 and July 1, 2000, respectively.

31

DEBT

SYSCO has uncommitted bank lines of credit, which provide for unsecured
borrowings for working capital of up to $125,000,000 of which none was
outstanding at June 29, 2002 and $30,640,000 was outstanding at June 30, 2001.

SYSCO's debt consists of the following:

The principal payments required to be made on debt during the next five
years are shown below:

SYSCO had a revolving loan agreement in the amount of $300,000,000 as of
June 29, 2002 maturing in fiscal 2004 which supported the company's U.S.
commercial paper program. There were no U.S. commercial paper borrowings
outstanding at June 29, 2002. In September 2002, the company entered into a new
revolving loan agreement in the amount of $450,000,000 maturing in fiscal 2008.

SYSCO also has a revolving loan agreement in the amount of $100,000,000 in
Canadian dollars (CAD) maturing in fiscal 2003 which supports the company's
Canadian commercial paper program. The Canadian commercial paper borrowings
outstanding at June 29, 2002 were CAD $99,252,000 ($63,293,000 in U.S. dollars).

In June 1995, SYSCO issued 6.5% senior notes totaling $150,000,000 due June
12, 2005, under a $500,000,000 shelf registration filed with the Securities and
Exchange Commission. These notes, which were priced at 99.4% of par, are
unsecured, not redeemable prior to maturity and are not subject to any sinking
fund requirement. In May 1996, SYSCO issued 7.0% senior notes totaling
$200,000,000 due May 1, 2006, under this shelf registration. These notes, which
were priced at par, are unsecured, not redeemable prior to maturity and are not
subject to any sinking fund requirement. In April 1997, in two separate
offerings, SYSCO drew down the remaining $150,000,000 of the $500,000,000 shelf
registration. SYSCO issued 7.16% debentures totaling $50,000,000 due April 15,
2027. These debentures were priced at par, are unsecured, are not subject to any
sinking fund requirement and are redeemable at the option of the holder on April
15, 2007, but otherwise

32

are not redeemable prior to maturity. At that time, SYSCO also issued 7.25%
senior notes totaling $100,000,000 due April 15, 2007. These notes were priced
at 99.611% of par and are unsecured, not redeemable prior to maturity and not
subject to any sinking fund requirement.

In June 1998, SYSCO filed with the Securities and Exchange Commission
another $500,000,000 shelf registration of debt securities. In July 1998, SYSCO
issued 6.5% debentures totaling $225,000,000 under the shelf registration, due
on August 1, 2028. These debentures were priced at 99.685% of par, are
unsecured, are not subject to any sinking fund requirement and include a
redemption provision which allows SYSCO to retire the debentures at any time
prior to maturity at the greater of par plus accrued interest or an amount
designed to ensure that the debenture holders are not penalized by the early
redemption. Proceeds from the debentures were used to retire commercial paper
borrowings.

In April 2002, SYSCO issued 4.75% notes totaling $200,000,000 under this
shelf registration, due on July 30, 2005. These notes, which were priced at
99.8% of par, are unsecured, are not subject to any sinking fund requirement and
include a redemption provision which allows SYSCO to retire the notes at any
time prior to maturity at the greater of par plus accrued interest or an amount
designed to ensure that the note holders are not penalized by the early
redemption. Proceeds from the notes were utilized to retire commercial paper
borrowings. Concurrent with the issuance of these notes, SYSCO entered into an
interest rate swap agreement with a notional amount of $200,000,000 whereby
SYSCO receives a fixed rate equal to 4.75% per annum and pays a benchmark
interest rate of six-month LIBOR in arrears less 84.5 basis points.

In May 2002, SYSCO International, Co., a wholly-owned subsidiary of SYSCO,
issued 6.10% notes totaling $200,000,000 due June 1, 2012 in a private offering.
These notes, which were priced at 99.7% of par, are fully and unconditionally
guaranteed by SYSCO Corporation, are not subject to any sinking fund
requirement, include registration rights for the note holders, and include a
redemption provision which allows SYSCO International, Co. to retire the notes
at any time prior to maturity at the greater of par plus accrued interest or an
amount designed to ensure that the note holders are not penalized by the early
redemption. SYSCO International, Co. and SYSCO have filed a registration
statement with the Securities and Exchange Commission covering an identical
series of notes to be issued in exchange for the unregistered notes outstanding.
The proceeds from these notes were utilized to repay commercial paper issued by
SYSCO International, Co. to fund the acquisition of a Canadian broadline
foodservice business.

The Industrial Revenue Bonds have varying structures. Final maturities
range from one to 24 years and certain of the bonds provide SYSCO the right to
redeem (or call) the bonds at various dates. These call provisions generally
provide the bondholder a premium in the early call years, declining to par value
as the bonds approach maturity.

Net long-term debt at June 29, 2002 was $1,176,307,000. After adjusting for
the effect of the interest rate swap, 82% of the long-term debt is fixed at
rates averaging 6.61% with an average life of 12 years, while the remainder is
financed at floating rates averaging 1.3%. Certain loan agreements contain
typical debt covenants to protect noteholders including provisions to maintain
tangible net worth in excess of a specified level. SYSCO was in compliance with
all debt covenants at June 29, 2002.

The fair value of SYSCO's total long-term debt is estimated based on the
quoted market prices for the same or similar issues or on the current rates
offered to the company for debt of the same remaining maturities. The fair value
of total long-term debt approximates $1,241,246,000 at June 29, 2002 and
$990,390,000 at June 30, 2001.

As part of normal business activities, SYSCO issues letters of credit
through major banking institutions as required by certain vendor and insurance
agreements. As of June 29, 2002 and June 30, 2001, letters of credit outstanding
were $15,619,000 and $42,129,000, respectively.

LEASES

Although SYSCO normally purchases assets, it has obligations under capital
and operating leases for certain distribution facilities, vehicles and
computers. Total rental expense under operating leases was

33

$64,130,000, $59,833,000 and $44,015,000 in fiscal 2002, 2001 and 2000,
respectively. Contingent rentals, subleases and assets and obligations under
capital leases are not significant.

Aggregate minimum lease payments under existing non-capitalized long-term
leases are as follows:

STOCK COMPENSATION PLANS

Employee Incentive Stock Option Plan

The Employee Incentive Stock Option Plan adopted in fiscal 1982 provided
for the issuance of options to purchase SYSCO common stock to officers and key
personnel of the company and its subsidiaries at the market price at the date of
grant, as adjusted for stock splits. No further grants will be made under this
plan which expired in November 1991 and was replaced by the 1991 Stock Option
Plan.

The following summary presents information with regard to options under
this plan:

1991 Stock Option Plan

The 1991 Stock Option Plan (1991 Plan) was adopted in fiscal 1992 and
originally reserved 12,000,000 shares of SYSCO common stock for options to
directors, officers and key personnel of the company and its subsidiaries at the
market price at the date of grant. The 1991 Plan provided for the issuance of
options qualified as incentive stock options under the Internal Revenue Code of
1986, options which are not so qualified and stock appreciation rights. During
fiscal 1996, the shareholders approved an amendment to the 1991 Plan for an
additional 32,000,000 shares to be made available for future grants of options.
No stock appreciation rights were issued under this plan. No further grants will
be made under this plan which expired in November 2000 and was replaced by the
2000 Stock Incentive Plan.

34

The following summary presents information with regard to options under the
1991 Plan:

The following table summarizes information about options outstanding under
the 1991 Plan as of June 29, 2002:

2000 Stock Incentive Plan

The 2000 Stock Incentive Plan (2000 Plan) was adopted in fiscal 2001 and
provides for option grants and other stock based awards to directors, officers
and other employees of the company and its subsidiaries at the market price at
the date of grant. The 2000 Plan reserves 40,000,000 shares of SYSCO common
stock, plus any shares of common stock which were available for grants under the
1991 Plan but which were not utilized prior to its expiration and any shares
issued under the 1991 Plan that are forfeited, expire or are canceled
(approximately 4,220,000 shares at June 29, 2002) and, to the extent authorized
by the Board of Directors, up to 10,000,000 shares of common stock which are
reacquired by the company in the open market or in private transactions after
November 3, 2000. The 2000 Plan provides for the issuance of options qualified
as incentive stock options under the Internal Revenue Code of 1986, options
which are not so qualified, stock appreciation rights and other stock based
awards. To date, the company has issued stock options but no stock appreciation
rights under the 2000 Plan.

35

The following summary presents information with regard to options under the
2000 Plan:

The options outstanding at June 29, 2002 under the 2000 Plan have exercise
prices ranging from $26.16 to $29.82 and have a weighted average remaining
contractual life of eight years.

1993 and 1996 Guest Supply Stock Incentive Plans

Prior to March 2001, Guest Supply, Inc. maintained the 1993 Stock Option
Plan and the 1996 Long-Term Incentive Plan (Guest Supply Plans). In connection
with SYSCO's acquisition of Guest Supply in March 2001, all outstanding options
exercisable to purchase Guest Supply common stock were converted into options to
purchase shares of SYSCO common stock. The number of shares underlying such
options, as well as the exercise price, were adjusted pursuant to the terms of
the Merger Agreement and Plan of Reorganization dated January 22, 2001. These
options are fully vested and expire in ten years from the original grant date.
No new options will be issued under any of the Guest Supply Plans.

The following summary presents information with regard to options under the
Guest Supply Plans:

The following table summarizes information about options outstanding under
the Guest Supply Plans as of June 29, 2002:

Non-Employee Directors Stock Option Plan

The Non-Employee Directors Stock Option Plan adopted in fiscal 1996
permitted the issuance of up to 800,000 shares of common stock to non-employee
directors. As of June 29, 2002, options for 272,000 shares, net of
cancellations, had been granted to nine non-employee directors under this plan,
72,000 shares had been

36

exercised and 200,000 shares were available for exercise. No further grants will
be made under this plan, which was replaced by the Non-Employee Directors Stock
Plan.

Non-Employee Directors Stock Plan

The Non-Employee Directors Stock Plan adopted in fiscal 1999 permits the
issuance of up to 800,000 shares of common stock to non-employee directors.
Under this plan, non-employee directors receive a one time retainer stock award
of 4,000 shares when first elected as a non-employee director and an annual
grant of options to purchase shares of common stock provided certain earnings
goals are met. As of June 29, 2002, options for 296,000 shares had been granted
to twelve non-employee directors under this plan, 18,664 shares have been
exercised and 151,450 shares are available for exercise.

Employees' Stock Purchase Plan

SYSCO has an Employees' Stock Purchase Plan which permits employees (other
than directors) to invest by means of periodic payroll deductions in SYSCO
common stock at 85% of the closing price on the last business day of each
calendar quarter. During fiscal 2002, 1,821,946 shares of SYSCO common stock
were purchased by the participants as compared to 1,619,001 purchased in fiscal
2001 and 1,820,752 purchased in fiscal 2000. The total number of shares which
may be sold pursuant to the plan may not exceed 68,000,000 shares, of which
11,486,705 remained available at June 29, 2002.

Accounting Issues Relating to all Plans

Options issued before September 2001 may vest over a five-year period
beginning on the date of grant if certain operating performance measures are
attained, or will vest fully nine and one-half years from the date of grant to
the extent not previously vested. Options issued in September 2001 and after
generally vest ratably over a specified five-year period.

SYSCO accounts for these plans under APB Opinion No. 25 and related
interpretations under which no compensation cost has been recognized. Had
compensation cost for these plans been determined using the fair value method of
SFAS No. 123, SYSCO's pro forma net earnings and diluted earnings per share
would have been $642,443,000 and $0.96 in fiscal 2002, $585,503,000 and $0.86 in
fiscal 2001 and $437,773,000 and $0.65 in fiscal 2000. The disclosure
requirements of SFAS No. 123 are applicable to options granted after 1995. The
pro forma effects for fiscal 2002, 2001 and 2000 are not necessarily indicative
of the pro forma effects in future years.

The weighted average fair value of options granted was $8.81 and $7.98
during fiscal 2002 and 2001, respectively. The fair value was estimated on the
date of grant using the Black-Scholes option pricing model with the following
weighted average assumptions used for grants in fiscal 2002 and 2001,
respectively: dividend yield of 1.26% and 1.33%; expected volatility of 22% and
24%; risk-free interest rates of 4.8% and 6.0%; and expected lives of eight
years.

The weighted average fair value of employee stock purchase rights issued
was $3.96 and $3.73 during fiscal 2002 and 2001, respectively. The fair value of
the stock purchase rights was calculated as the difference between the stock
price at date of issuance and the employee purchase price.

EMPLOYEE BENEFIT PLANS

SYSCO has defined benefit and defined contribution retirement plans for its
employees. Also, the company contributes to various multi-employer plans under
collective bargaining agreements.

The defined contribution 401(k) plan provides that under certain
circumstances the company may make matching contributions of up to 50% of the
first 6% of a participant's compensation. SYSCO's contribution to this plan was
$23,421,000 in 2002, $9,561,000 in 2001 and $15,899,000 in 2000. The defined
benefit pension plans pay benefits to employees at retirement using formulas
based on a participant's years of service and compensation.

37

SYSCO also has a Management Incentive Plan that compensates key management
personnel for specific performance achievements. The awards under this plan were
$51,981,000 in 2002, $52,540,000 in 2001 and $40,977,000 in 2000 and were paid
in both cash and stock. In addition to receiving benefits upon retirement under
the company's defined benefit plan, participants in the Management Incentive
Plan will receive benefits under a Supplemental Executive Retirement Plan
(SERP). This plan is a nonqualified, unfunded supplementary retirement plan. In
order to meet its obligations under the SERP, SYSCO maintains life insurance
policies on the lives of the participants with carrying values of $71,418,000 at
June 29, 2002 and $79,083,000 at June 30, 2001. SYSCO is the sole owner and
beneficiary of such policies. Projected benefit obligations and accumulated
benefit obligations for the SERP were $145,884,000 and $92,220,000,
respectively, as of June 29, 2002 and $111,412,000 and $70,648,000,
respectively, as of June 30, 2001.

In addition to providing pension benefits, SYSCO provides certain health
care benefits to eligible retirees and their dependents in the United States.

The funded status of the defined benefit plans is as follows (including the
SERP benefit obligations but excluding the cash surrender values of life
insurance policies from plan assets):

38

Additional information related to SYSCO's defined benefit plans is as
follows:

The performance of the stock market in 2002 and 2001 resulted in a decline
in the value of the assets held by the company's pension plans. As a result, the
company was required to reflect a minimum pension liability of $65,435,000, net
of tax, as of June 29, 2002 and $5,624,000, net of tax, as of June 30, 2001.
Minimum pension liability adjustments are noncash adjustments that are reflected
as an increase in the pension liability and an offsetting charge to
shareholders' equity, net of tax, through comprehensive loss rather than net
income.

The assumptions used to value obligations at year end were:

A healthcare cost trend rate is not used in the calculations because SYSCO
subsidizes the cost of postretirement medical coverage by a fixed dollar amount
with the retiree responsible for the cost of coverage in excess of the subsidy,
including all future cost increases.

39

The components of net pension costs are as follows:

The components of other postretirement benefit costs are as follows:

Multi-employer pension costs were $27,511,000, $26,246,000 and $23,540,000
in 2002, 2001 and 2000, respectively.

CONTINGENCIES

SYSCO is engaged in various legal proceedings which have arisen but have
not been fully adjudicated. These proceedings, in the opinion of management,
will not have a material adverse effect upon the consolidated financial position
or results of operations of the company when ultimately concluded.

SUPPLEMENTAL GUARANTOR INFORMATION

SYSCO International, Co. is an unlimited liability company organized under
the laws of the Province of Nova Scotia, Canada and is a wholly owned subsidiary
of SYSCO. In May 2002, SYSCO International, Co. issued, in a private offering,
$200,000,000 of 6.10% notes due in 2012 (See "Debt"). SYSCO International, Co.
and SYSCO have filed a registration statement with the Securities and Exchange
Commission covering an identical series of notes to be issued in exchange for
the unregistered notes outstanding. These notes are fully and unconditionally
guaranteed by SYSCO. SYSCO International, Co. is a holding company with no
significant sources of income or assets, other than its equity interests in its
subsidiaries and interest income from loans made to its subsidiaries. The
proceeds from the issuance of the 6.10% notes were used to repay commercial
paper issued to fund the fiscal 2002 acquisition of a Canadian broadline
foodservice operation.

The following condensed consolidating financial statements present
separately the financial position, results of operations and cash flows of the
parent guarantor (SYSCO), the subsidiary issuer (SYSCO International), all other
non-guarantor subsidiaries of SYSCO (Other Non-Guarantor Subsidiaries) on a
combined basis and eliminating entries. The financial information for SYSCO
includes corporate activities as well as certain operating companies which are
operated as divisions of SYSCO. The accompanying financial information includes
the balances and results of SYSCO International, Co. from the date of its
inception in February, 2002.

40

BUSINESS SEGMENT INFORMATION

SYSCO provides food and other products to the foodservice or
"food-prepared-away-from-home" industry. SYSCO's operating segments are
comprised of separate operating companies or a group of operating companies
which are managed as one by the company's chief operating decision maker. Under
the provisions of SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" (SFAS No. 131), the company has aggregated its operating
companies into five segments based upon the economic characteristics of each
operating company, of which Broadline and SYGMA are reportable segments.
Broadline operating companies distribute a full line of food products and a wide
variety of non-food products to both SYSCO's traditional and chain restaurant
customers. SYGMA operating companies distribute a full line of food products and
a wide variety of non-food products to some of our chain restaurant customer
locations. "Other" financial information is attributable to SYSCO's three other
segments, including the company's specialty produce, lodging industry and meat
segments. SYSCO's Canadian operations are insignificant for geographical
disclosure purposes.

The accounting policies for the segments are the same as those disclosed by
SYSCO. Intersegment sales represent specialty produce and meat company products
distributed by the Broadline and SYGMA operating companies. The segment results
include allocation of centrally incurred costs for shared services that
eliminate upon consolidation. Centrally incurred costs are allocated based upon
the relative level of service used by each operating company.

44

The following table sets forth the financial information for SYSCO's
business segments:

45

The sales mix for the principal product categories during the three years
ended June 29, 2002 is as follows:

46

QUARTERLY RESULTS (UNAUDITED)

Financial information for each quarter in the years ended June 29, 2002 and
June 30, 2001:

47

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Information concerning a change in accountants is included in the company's
Form 8-K dated March 27, 2002.

PART III

Except as otherwise indicated, the information required by Items 10, 11, 12
and 13 is included in the company's definitive proxy statement which was filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934 on
September 23, 2002 and such portions of said proxy statement are hereby
incorporated by reference thereto.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning Executive Officers is included in Part I (Item 4A)
of this Form 10-K (page 7).

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ITEM 14. CONTROLS AND PROCEDURES

Item 307(a) of Regulation S-K is not applicable pursuant to Transition
Provisions of Securities Exchange Act of 1934 Release 34-46427 because this
report covers a period ended prior to the effective date of Rule 13a-14. As a
result, the evaluation called for by Item 307(b) has not yet been completed. For
a discussion of the effectiveness and adequacy of the Company's internal
accounting controls as of July 31, 2002, see "Report of Management on Internal
Accounting Controls" at page 21.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed, or incorporated by reference, as
part of this Form 10-K:

1. All financial statements. See index to Consolidated Financial
Statements on page 20 of this Form 10-K.

2. Financial Statement Schedule. See page 20 of this Form 10-K.

3. Exhibits.

3(a) -- Restated Certificate of Incorporation, incorporated by
reference to Exhibit 3(a) to Form 10-K for the year ended
June 28, 1997 (File No. 1-6544).
3(b) -- Amended and Restated Bylaws of Sysco Corporation dated
February 8, 2002, incorporated by reference to Exhibit 3(b)
to Form 10-Q for the quarter ended December 29, 2001 (File
No. 1-6544).
3(c) -- Form of Amended Certificate of Designation, Preferences and
Rights of Series A Junior Participating Preferred Stock,
incorporated by reference to Exhibit 3(c) to Form 10-K for
the year ended June 29, 1996 (File No. 1-6544).
3(d) -- Certificate of Amendment of Certificate of Incorporation
increasing authorized shares, incorporated by reference to
Exhibit 3(d) to Form 10-Q for the quarter ended January 1,
2000 (File No. 1-6544).
4(a) -- Sixth Amendment and Restatement of Competitive Advance and
Revolving Credit Facility Agreement dated May 31, 1996,
incorporated by reference to Exhibit 4(a) to Form 10-K in
the year ended June 27, 1996 (File No. 1-6544).

48

4(b) -- Agreement and Seventh Amendment to Competitive Advance and
Revolving Credit Facility Agreement dated as of June 27,
1997, incorporated by reference to Exhibit 4(a) to Form 10-K
for the year ended June 28, 1997 (File No. 1-6544).
4(c) -- Agreement and Eighth Amendment to Competitive Advance and
Revolving Credit Facility Agreement dated as of June 22,
1998, incorporated by reference to Exhibit 4(c) to Form 10-K
for the year ended July 3, 1999 (File No. 1-6544).
4(d) -- Senior Debt Indenture, dated as of June 15, 1995, between
Sysco Corporation and First Union National Bank of North
Carolina, Trustee, incorporated by reference to Exhibit 4(a)
to Registration Statement on Form S-3 filed June 6, 1995
(File No. 33-60023).
4(e) -- First Supplemental Indenture, dated June 27, 1995, between
Sysco Corporation and First Union National Bank of North
Carolina, Trustee as amended, incorporated by reference to
Exhibit 4(e) to Form 10-K for the year ended June 29, 1996
(File No. 1-6544).
4(f) -- Second Supplemental Indenture, dated as of May 1, 1996,
between Sysco Corporation and First Union National Bank of
North Carolina, Trustee as amended, incorporated by
reference to Exhibit 4(f) to Form 10-K for the year ended
June 29, 1996 (File No. 1-6544).
4(g) -- Third Supplemental Indenture, dated as of April 25, 1997,
between Sysco Corporation and First Union National Bank of
North Carolina, Trustee, incorporated by reference to
Exhibit 4(g) to Form 10-K for the year ended June 28, 1997
(File No. 1-6544).
4(h) -- Fourth Supplemental Indenture, dated as of April 25, 1997,
between Sysco Corporation and First Union National Bank of
North Carolina, Trustee, incorporated by reference to
Exhibit 4(h) to Form 10-K for the year ended June 28,1997
(File No. 1-6544).
4(i) -- Fifth Supplemental Indenture, dated as of July 27, 1998
between Sysco Corporation and First Union National Bank,
Trustee, incorporated by reference to Exhibit 4(h) to Form
10-K for the year ended June 27, 1998 (File No. 1-6544).
4(j) -- Agreement and Ninth Amendment to Competitive Advance and
Revolving Credit Facility Agreement dated as of December 1,
1999, incorporated by reference to Exhibit 4(j) to Form 10-Q
for the quarter ended January 1, 2000 (File No. 1-6544).
4(k) -- Sixth Supplemental Indenture dated April 5, 2002 between
Sysco Corporation and Wachovia Bank, National Association,
incorporated by reference to Exhibit 4.1 to Form 8-K dated
April 5, 2002.
4(l) -- Indenture dated May 23, 2002 between Sysco International,
Co., Sysco Corporation and Wachovia Bank, National
Association, incorporated by reference to Exhibit 4.1 to
Registration Statement on Form S-4 filed August 21, 2002
(File No. 333-98489).
10(a)+ -- Amended and Restated Sysco Corporation Executive Deferred
Compensation Plan, incorporated by reference to Exhibit
10(a) to Form 10-K for the year ended July 1, 1995 (File No.
1-6544).
10(b)+ -- Fifth Amended and Restated Sysco Corporation Supplemental
Executive Retirement Plan, incorporated by reference to
Exhibit 10(b) to Form 10-K for the year ended June 28, 1997
(File No. 1-6544).
10(c)+ -- Sysco Corporation Employee Incentive Stock Option Plan,
incorporated by reference to Exhibit 10(c) to Form 10-K for
the year ended July 3, 1999 (File No. 1-6544).
10(d)+ -- Sysco Corporation 1995 Management Incentive Plan,
incorporated by reference to Exhibit 10(e) to Form 10-K for
the year ended July 1, 1995 (File No. 1-6544).
10(e)+ -- Sysco Corporation 1991 Stock Option Plan, incorporated by
reference to Exhibit 10(e) to Form 10-K for the year ended
July 3, 1999 (File No. 1-6544).
10(f)+ -- Amendments to Sysco Corporation 1991 Stock Option Plan dated
effective September 4, 1997, incorporated by reference to
Exhibit 10(f) to Form 10-K for the year ended June 28, 1997
(File No. 1-6544).
10(g)+ -- Amendments to Sysco Corporation 1991 Stock Option Plan dated
effective November 5, 1998, incorporated by reference to
Exhibit 10(g) to Form 10-K for the year ended July 3, 1999
(File No. 1-6544).

49

10(h)+ -- Sysco Corporation Amended and Restated Non-Employee
Directors Stock Option Plan, incorporated by reference to
Exhibit 10(g) to Form 10-K for the year ended June 28, 1997
(File No. 1-6544).
10(i)+ -- Amendment to the Amended and Restated Non-Employee Directors
Stock Option Plan dated effective November 5, 1998,
incorporated by reference to Exhibit 10(i) to Form 10-K for
the year ended July 3, 1999 (File No. 1-6544).
10(j)+ -- Sysco Corporation Non-Employee Directors Stock Plan,
incorporated by reference to Appendix A of the 1998 Proxy
Statement (File No. 1-6544).
10(k) -- Amended and Restated Shareholder Rights Agreement,
incorporated by reference to Registration Statement on Form
8-A/A, filed May 29, 1996 (File No. 1-6544).
10(l) -- Amendment to the Amended and Restated Shareholder Rights
Agreement dated as of May 20, 1996, incorporated by
reference to Exhibit 1 to Registration Statement on Form
8-A/A, filed July 16, 1999 (File No. 1-6544).
10(m)+ -- Sysco Corporation Split Dollar Life Insurance Plan,
incorporated by reference to Exhibit 10(m) to Form 10-Q for
the quarter ended January 1, 2000 (File No. 1-6544).
10(n)+ -- Executive Compensation Adjustment Agreement -- Bill M.
Lindig, incorporated by reference to Exhibit 10(n) to Form
10-Q for the quarter ended January 1, 2000 (File No.
1-6544).
10(o)+ -- Executive Compensation Adjustment Agreement -- Charles H.
Cotros, incorporated by reference to Exhibit 10(o) to Form
10-Q for the quarter ended January 1, 2000 (File No.
1-6544).
10(p)+ -- First Amendment to Fifth Amended and Restated Sysco
Corporation Supplemental Executive Retirement Plan dated
effective June 29, 1997, incorporated by reference to
Exhibit 10(p) to Form 10-Q for the quarter ended January 1,
2000 (File No. 1-6544).
10(q)+ -- First Amendment to Amended and Restated Sysco Corporation
Executive Deferred Compensation Plan dated effective June
29, 1997, incorporated by reference to Exhibit 10(q) to Form
10-Q for the quarter ended January 1, 2000 (File No.
1-6544).
10(r)+ -- First Amendment to Sysco Corporation 1995 Management
Incentive Plan dated effective June 29, 1997, incorporated
by reference to Exhibit 10(r) to Form 10-Q for the quarter
ended January 1, 2000 (File No. 1-6544).
10(s)+ -- 2000 Management Incentive Plan, incorporated by reference to
Appendix A to Proxy Statement filed September 25, 2000 (File
No. 1-6544).
10(t)+ -- 2000 Stock Incentive Plan, incorporated by reference to
Appendix B to Proxy Statement filed on September 25, 2000
(File No. 1-6544).
10(u)+ -- Amended and Restated Non-Employee Directors Stock Plan,
incorporated by reference to Appendix B to Proxy Statement
filed on September 24, 2001 (File No. 1-6544).
10(v)+ -- Second Amendment dated as of May 10, 2000, to the Fifth
Amended and Restated SYSCO Corporation Supplemental
Executive Retirement Plan, incorporated by reference to
Exhibit 10(a) to Form 10-Q for the quarter ended September
30, 2000 filed on November 13, 2000 (File No. 1-6544).
10(w)+ -- Second Amendment dated as of May 10, 2000, to Amended and
Restated SYSCO Corporation Executive Deferred Compensation
Plan, incorporated by reference to Exhibit 10(b) to Form
10-Q for the quarter ended September 30, 2000 filed on
November 13, 2000 (File No. 1-6544).
10(x)+ -- First Amendment dated as of May 10, 2000 to Amended and
Restated SYSCO Corporation Board of Directors Deferred
Compensation Plan, incorporated by reference to Exhibit
10(c) to Form 10-Q for the quarter ended September 30, 2000
filed on November 13, 2000 (File No. 1-6544).
10(y)+ -- First Amendment, dated September 1, 2000, to the Executive
Compensation Adjustment Agreement between Sysco and Charles
H. Cotros, incorporated by reference to Exhibit 10(d) to
Form 10-Q for the quarter ended September 30, 2000 filed on
November 13, 2000 (File No. 1-6544).
10(z)+# -- Equity Deferral Plan dated April 1, 2002.

- ---------------

+ Executive Compensation Arrangement pursuant to 601(b)(10)(iii)(A) of
Regulation S-K

# Filed Herewith

(b) The following reports on Form 8-K were filed during the fourth quarter
of fiscal 2002:

1. On April 17, 2002, the company filed a Form 8-K announcing the
issuance of 4.75% notes due July 30, 2005.

2. On April 24, 2002, the company filed a Form 8-K announcing the
results of its third quarter ended March 29, 2002.

3. On May 31, 2002, the company filed a Form 8-K announcing the
issuance by Sysco International, Co. of 6.10% notes due June 1, 2012.

51

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Sysco Corporation has duly caused this Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized, on this 25th
day of September, 2002.

SYSCO CORPORATION

By /s/ CHARLES H. COTROS
--------------------------------------
Charles H. Cotros
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated and on the date indicated above.

PRINCIPAL EXECUTIVE, FINANCIAL & ACCOUNTING OFFICERS:

/s/ CHARLES H. COTROS Chairman of the Board and Chief Executive
- -------------------------------------------- Officer
Charles H. Cotros

/s/ JOHN K. STUBBLEFIELD, JR. Executive Vice President, Finance and
- -------------------------------------------- Administration
John K. Stubblefield, Jr.

DIRECTORS:

/s/ JOHN W. ANDERSON /s/ RICHARD G. MERRILL
- -------------------------------------------- --------------------------------------------
John W. Anderson Richard G. Merrill

/s/ COLIN G. CAMPBELL /s/ FRANK H. RICHARDSON
- -------------------------------------------- --------------------------------------------
Colin G. Campbell Frank H. Richardson

/s/ CHARLES H. COTROS /s/ RICHARD J. SCHNIEDERS
- -------------------------------------------- --------------------------------------------
Charles H. Cotros Richard J. Schnieders

/s/ JUDITH B. CRAVEN /s/ PHYLLIS S. SEWELL
- -------------------------------------------- --------------------------------------------
Judith B. Craven Phyllis S. Sewell

/s/ JONATHAN GOLDEN /s/ JACKIE M. WARD
- -------------------------------------------- --------------------------------------------
Jonathan Golden Jackie M. Ward

/s/ THOMAS E. LANKFORD
- --------------------------------------------
Thomas E. Lankford

52

CERTIFICATIONS

I, Charles H. Cotros, certify that:

1. I have reviewed this annual report on Form 10-K of Sysco
Corporation;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this annual report; and

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
annual report.

Date: September 25, 2002

/s/ CHARLES H. COTROS
--------------------------------------
Charles H. Cotros
Chairman and Chief Executive Officer

I, John K. Stubblefield, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Sysco
Corporation;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this annual report; and

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
annual report.

Date: September 25, 2002

/s/ JOHN K. STUBBLEFIELD, JR.
--------------------------------------
John K. Stubblefield, Jr.
Executive Vice President, Finance and
Administration

[PARAGRAPHS 4, 5 AND 6 ARE OMITTED PURSUANT TO THE TRANSITION PROVISIONS OF
SECURITIES EXCHANGE ACT OF 1934 RELEASE 34-46427 BECAUSE THIS ANNUAL REPORT ON
FORM 10-K COVERS A PERIOD ENDED PRIOR TO THE EFFECTIVE DATE OF RULE 13A-14.]

53

SYSCO CORPORATION AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

- ---------------

(1) Allowance accounts resulting from acquisitions and other adjustments.

(2) Customer accounts written off, net of recoveries.

S-1

INDEX TO EXHIBITS

- ---------------

+ Executive Compensation Arrangement pursuant to 601(b)(10)(iii)(A) of
Regulation S-K

# Filed Herewith