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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
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
Houston, Texas 77077-2099
(Address of principal executive offices)
(Zip code)
Registrant's telephone number, including area code: (281) 584-1390
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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act.)
Yes [X] No [ ]
647,152,436 shares of common stock were outstanding as of October 24, 2003.
TABLE OF CONTENTS
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk 18
Item 4. Controls and Procedures 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 22
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands Except for Share Data)
Sept. 27, 2003 June 28, 2003 Sept. 28, 2002
---------------- ---------------- ----------------
(unaudited) (unaudited)
ASSETS
Current assets
Cash $ 221,544 $ 337,447 $ 163,189
Accounts and notes receivable, less
allowances of $46,242, $35,005 and $40,967 2,123,716 2,009,627 1,869,128
Inventories 1,313,497 1,230,080 1,226,885
Deferred taxes 53,983 --- 41,699
Prepaid expenses 63,433 52,380 73,030
---------------- ---------------- ----------------
Total current assets 3,776,173 3,629,534 3,373,931
Plant and equipment at cost, less depreciation 1,958,067 1,922,660 1,718,941
Other assets
Goodwill and intangibles, less amortization 1,156,358 1,113,960 922,491
Restricted cash 125,877 83,807 57,000
Other assets 197,719 186,560 173,094
---------------- ---------------- ----------------
Total other assets 1,479,954 1,384,327 1,152,585
---------------- ---------------- ----------------
Total assets $ 7,214,194 $ 6,936,521 $ 6,245,457
================ ================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 87,967 $ 101,822 $ 50,016
Accounts payable 1,674,898 1,637,505 1,420,276
Accrued expenses 653,848 624,451 544,668
Income taxes 351,826 9,193 38,241
Deferred taxes --- 307,211 ---
Current maturities of long-term debt 21,967 20,947 13,474
---------------- ---------------- ----------------
Total current liabilities 2,790,506 2,701,129 2,066,675
Other liabilities
Long-term debt 1,195,282 1,249,467 1,265,938
Deferred taxes 632,939 498,396 554,690
Other long-term liabilities 270,873 289,998 164,469
---------------- ---------------- ----------------
Total other liabilities 2,099,094 2,037,861 1,985,097
Contingencies
Shareholders' equity
Preferred stock, par value $1 per share
Authorized 1,500,000 shares, issued none --- --- ---
Common stock, par value $1 per share
Authorized 1,000,000,000 shares, issued
765,174,900 shares 765,175 765,175 765,175
Paid-in capital 278,251 249,235 233,727
Retained earnings 3,511,438 3,373,853 2,992,849
Other comprehensive loss (152,770) (152,381) (65,435)
---------------- ---------------- ----------------
4,402,094 4,235,882 3,926,316
Less cost of treasury stock, 120,395,714,
121,517,325 and 113,371,374 shares 2,077,500 2,038,351 1,732,631
---------------- ---------------- ----------------
Total shareholders' equity 2,324,594 2,197,531 2,193,685
---------------- ---------------- ----------------
Total liabilities and shareholders' equity $ 7,214,194 $ 6,936,521 $ 6,245,457
================ ================ ================
Note: The June 28, 2003 balance sheet has been derived from the audited
financial statements at that date.
2
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share and Per Share Data)
13-Week Period Ended
------------------------------------------------
Sept. 27, 2003 Sept. 28, 2002
-------------------- -------------------
Sales $ 7,134,281 $ 6,424,422
Costs and expenses
Cost of sales 5,753,767 5,154,704
Operating expenses 1,024,336 960,635
Interest expense 18,631 16,828
Other, net (1,983) (3,412)
-------------------- -------------------
Total costs and expenses 6,794,751 6,128,755
-------------------- -------------------
Earnings before income taxes 339,530 295,667
Income taxes 130,719 113,093
-------------------- -------------------
Net earnings $ 208,811 $ 182,574
==================== ===================
Net earnings:
Basic earnings per share $ 0.32 $ 0.28
==================== ===================
Diluted earnings per share $ 0.32 $ 0.28
==================== ===================
Average shares outstanding 645,862,376 654,176,221
==================== ===================
Diluted shares outstanding 657,274,982 663,542,498
==================== ===================
Dividends declared per common share $ 0.11 $ 0.09
==================== ===================
3
SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
13 - Week Period Ended
-------------------------------------------------
Sept. 27, 2003 Sept. 28, 2002
--------------------- --------------------
Operating activities:
Net earnings $ 208,811 $ 182,574
Add non-cash items:
Depreciation and amortization 69,679 65,796
Deferred tax provision 128,924 105,609
Provision for losses on receivables 7,332 7,546
Additional investment in certain assets and liabilities,
net of effect of businesses acquired:
(Increase) in receivables (110,285) (115,847)
(Increase) in inventories (77,681) (109,016)
(Increase) in prepaid expenses (11,056) (31,064)
Increase in accounts payable 39,307 70,946
(Decrease) in accrued expenses and other
long-term liabilities (45,007) (59,082)
(Decrease) increase in income taxes (9,968) 2,342
(Increase) decrease in other assets (14,016) 7,433
-------------------- --------------------
Net cash provided by operating activities 186,040 127,237
-------------------- --------------------
Investing activities:
Additions to plant and equipment (103,056) (88,025)
Proceeds from sales of plant and equipment 1,283 4,782
Acquisition of businesses, net of cash acquired (31,640) (48)
Increase in restricted cash (45,000) (25,000)
-------------------- --------------------
Net cash used for investing activities (178,413) (108,291)
-------------------- --------------------
Financing activities:
Bank and commercial paper (repayments) borrowings (63,765) 75,509
Other debt repayments (3,150) (2,502)
Common stock reissued from treasury 55,428 41,936
Treasury stock purchases (39,764) (109,899)
Dividends paid (71,257) (59,240)
-------------------- --------------------
Net cash used for financing activities (122,508) (54,196)
-------------------- --------------------
Effect of exchange rates on cash (1,022) ---
-------------------- --------------------
Net decrease in cash (115,903) (35,250)
Cash at beginning of period 337,447 198,439
-------------------- --------------------
Cash at end of period $ 221,544 $ 163,189
==================== ====================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 12,274 $ 7,938
Income taxes 10,696 8,268
4
SYSCO CORPORATION and its Consolidated Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. BASIS OF PRESENTATION
The consolidated financial statements have been prepared by the
company, without audit, with the exception of the June 28, 2003
consolidated balance sheet which was taken from the audited financial
statements included in the company's Fiscal 2003 Annual Report on Form
10-K. The financial statements include consolidated balance sheets,
consolidated results of operations and consolidated cash flows.
Certain amounts in the prior periods presented have been reclassified
to conform to the fiscal 2004 presentation, including other long-term
liabilities related to pension and deferred compensation plans
previously classified as accrued expenses. In the opinion of
management, all adjustments, which consist of normal recurring
adjustments, necessary to present fairly the financial position,
results of operations and cash flows for all periods presented have
been made.
These financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the
company's Fiscal 2003 Annual Report on Form 10-K.
A review of the financial information herein has been made by Ernst &
Young LLP, independent auditors, in accordance with established
professional standards and procedures for such a review. A report from
Ernst & Young LLP concerning their review is included as Exhibit
15(a).
2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
13-Week Period Ended
------------------------------------
Sept. 27, 2003 Sept. 28, 2002
-------------- --------------
Numerator:
Income available to common shareholders $208,811,000 $182,574,000
============ ============
Denominator:
Weighted-average basic shares outstanding 645,862,376 654,176,221
Dilutive effect of employee and director stock
Options 11,412,606 9,366,277
------------ ------------
Weighted-average diluted shares outstanding 657,274,982 663,542,498
============ ============
Basic earnings per share $ 0.32 $ 0.28
============ ============
Diluted earnings per share $ 0.32 $ 0.28
============ ============
5
3. RESTRICTED CASH
SYSCO is required by its insurers to collateralize a part of the
self-insured portion of its workers' compensation and liability
claims. Previously, the collateral requirements were met by issuing
letters of credit. These letters of credit were replaced with funds
deposited in an insurance trust. In addition, in certain acquisitions,
SYSCO has placed funds into escrow to be disbursed to certain sellers
in the event that certain operating results are attained or certain
contingencies are resolved. The increase in restricted cash from June
28, 2003 to September 27, 2003 was primarily due to the deposit of an
additional $45,000,000 in a trust due to a change in underwriting
requirements adopted by the insurers regarding the percentage of the
overall risks collateralized. In addition, escrowed funds related to
certain acquisitions were released to the sellers. In the second
quarter of fiscal 2004, SYSCO deposited an additional $45,000,000 in a
trust to meet the collateral requirements of a new insurer.
4. DEBT
As of September 27, 2003, SYSCO had uncommitted bank lines of credit
which provide for unsecured borrowings for working capital of up to
$95,000,000, of which none was outstanding at September 27, 2003.
As of September 27, 2003, SYSCO's outstanding borrowings under its
commercial paper programs were $87,967,000. During the thirteen week
period ended September 27, 2003, commercial paper and short-term bank
borrowings ranged from approximately $79,458,000 to $171,074,000.
5. ACQUISITIONS
In September 2003, SYSCO acquired certain assets of the Stockton,
California foodservice operations from Smart & Final, Inc.
In September 2003, a subsidiary of SYSCO acquired certain assets of
Luzo Foodservice Corporation, located in New Bedford, Massachusetts.
Acquisitions of businesses are accounted for using the purchase method
of accounting and the financial statements of SYSCO 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 of the acquired operations was allocated to the net
assets acquired and liabilities assumed based on the estimated fair
value at the date of acquisition with any excess of cost over the fair
value of net assets (including intangibles) acquired recognized as
goodwill. The balances included in the Consolidated Balance Sheets
related to acquisitions made in the last twelve months 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.
Certain acquisitions involve contingent consideration typically
payable only in the event that certain operating results are attained.
Aggregate contingent consideration amounts outstanding as of September
27, 2003 included approximately 1,999,000 shares and $28,116,000 in
cash, which, if distributed, could result in the company recording up
to $70,964,000 in additional goodwill. Such amounts typically are to
be paid out over periods of up to five years from the date of
acquisition.
6
6. DERIVATIVE FINANCIAL INSTRUMENTS
In October 2003, SYSCO entered into $500 million aggregate notional
amount of interest rate swaps as a fair value hedge against the 7.00%
Senior Notes due May 2006, 7.25% Senior Notes due April 2007 and 6.10%
Senior Notes due June 2012. The swaps effectively convert the fixed
interest rate on each of the three series of notes into a floating
rate of six-month LIBOR averaged over a six month period plus a margin
of 461, 430 and 171 basis points, respectively, which were designated
as the respective benchmark interest rates on each of the interest
payment dates until maturity of the respective notes.
The terms of the swap agreements and the hedged items are such that
the hedges are considered perfectly effective against changes in the
fair value of the debt due to changes on the benchmark interest rate
over their term. As a result, the shortcut method provided by
Statement of Financial Accounting Standards (SFAS) No. 133 will be
applied and there will be no need to periodically reassess the
effectiveness of the hedges during the terms of the swaps. Interest
expense on the debt will be adjusted to include payments made or
received under the hedge agreements. The market value of the swaps
will be carried as an asset or a liability in our consolidated balance
sheet and the carrying value of the hedged debt will be adjusted
accordingly.
7. INCOME TAXES
The changes in the net deferred tax liability and accrued income tax
balances from June 28, 2003 to September 27, 2003 were primarily due
to the reclassification of certain deferred tax liabilities related to
supply chain distributions to accrued income taxes. This
reclassification reflects the tax payments to be made during the next
twelve months related to previously deferred supply chain
distributions.
The effective tax rate in fiscal 2004 is 38.50%, an increase of 0.25%
from the effective tax rate of 38.25% in fiscal 2003. The increase in
the effective tax rate is attributable to increased state income
taxes.
7
8. STOCK BASED COMPENSATION
SYSCO accounts for its stock option plans and the employee stock
purchase plan using the intrinsic value method of accounting provided
under APB Opinion No. 25 and related interpretations under which no
compensation cost has been recognized.
The following table provides comparative pro forma net earnings and
earnings per share had compensation cost for these plans been
determined using the fair value method of SFAS No. 123 for all periods
presented:
13-Week Period Ended
------------------------------------------
Sept. 27, 2003 Sept. 28, 2002
--------------- ----------------
Net earnings:
Net earnings $ 208,811,000 $ 182,574,000
Stock based compensation expense, net of taxes (14,185,000) (11,610,000)
--------------- ---------------
Pro forma net earnings $ 194,626,000 $ 170,964,000
=============== ===============
Basic earnings per share:
Basic earnings per share $ 0.32 $ 0.28
Stock based compensation expense, net of taxes (0.02) (0.02)
--------------- ---------------
Pro forma basic earnings per share $ 0.30 $ 0.26
=============== ===============
Diluted earnings per share:
Diluted earnings per share $ 0.32 $ 0.28
Stock based compensation expense, net of taxes (0.02) (0.02)
--------------- ---------------
Pro forma diluted earnings per share $ 0.30 $ 0.26
=============== ===============
The weighted average fair value of options granted was $6.73 and $6.88
during the thirteen weeks ended September 27, 2003 and September 28,
2002, 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 the thirteen weeks
ended September 27, 2003 and September 28, 2002, respectively:
dividend yield of 1.49% and 1.45%; expected volatility of 22% and 25%;
average risk-free interest rates of 3.2% and 2.7%; and expected lives
of 5 years.
The weighted average fair value of employee stock purchase rights
issued was $4.51 and $4.08 during the thirteen weeks ended September
27, 2003 and September 28, 2002, 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.
The pro forma presentation includes options granted after 1995. The
pro forma effects for the periods presented are not necessarily
indicative of the pro forma effects in future years.
8
9. COMPREHENSIVE INCOME
Comprehensive income is net earnings plus certain other items that are
recorded directly to shareholders' equity. Comprehensive income was
$208,422,000 and $182,574,000 for the thirteen weeks ended September
27, 2003 and September 28, 2002, respectively.
10. 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. In December 2002, these notes were exchanged for substantially
identical notes in an exchange offer registered under the Securities
Act of 1933. 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) and 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 were operated
as divisions of SYSCO prior to the third quarter of fiscal 2003.
Beginning with the third quarter of fiscal 2003, these divisions have
been operated as subsidiaries and their results from that point in
time are included in the Other Non-Guarantor Subsidiaries column. The
accompanying financial information includes the balances and results
of SYSCO International, Co. from the date of its inception in February
2002.
CONDENSED CONSOLIDATING BALANCE SHEET -- SEPTEMBER 27, 2003
----------------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)
Current assets ......... $ 163,852 $ 24 $ 3,612,297 $ -- $ 3,776,173
Investment in
subsidiaries ......... 7,813,065 248,713 173,071 (8,234,849) --
Plant and equipment, net 90,797 -- 1,867,270 -- 1,958,067
Other assets ........... 306,834 2,064 1,171,056 -- 1,479,954
----------- ----------- ----------- ----------- -----------
Total assets ........... $ 8,374,548 $ 250,801 $ 6,823,694 $(8,234,849) $ 7,214,194
=========== =========== =========== =========== ===========
Current liabilities .... $ 128,619 $ 99,243 $ 2,562,644 $ -- $ 2,790,506
Intercompany payables
(receivables) ........ 4,794,622 (49,903) (4,744,719) -- --
Long-term debt ......... 938,168 199,447 57,667 -- 1,195,282
Other liabilities ...... 220,144 -- 683,668 -- 903,812
Shareholders' equity
(deficit) ............ 2,292,995 2,014 8,264,434 (8,234,849) 2,324,594
----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity . $ 8,374,548 $ 250,801 $ 6,823,694 $(8,234,849) $ 7,214,194
=========== =========== =========== =========== ===========
9
CONDENSED CONSOLIDATING BALANCE SHEET -- JUNE 28, 2003
----------------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)
Current assets ......... $ 203,219 $ 549 $ 3,425,766 $ -- $ 3,629,534
Investment in
subsidiaries ......... 7,529,006 213,247 217,315 (7,959,568) --
Plant and equipment, net 84,023 -- 1,838,637 -- 1,922,660
Other assets ........... 254,047 2,135 1,128,145 -- 1,384,327
----------- ----------- ----------- ----------- -----------
Total assets ........... $ 8,070,295 $ 215,931 $ 6,609,863 $(7,959,568) $ 6,936,521
=========== =========== =========== =========== ===========
Current liabilities .... $ (15,010) $ 72,399 $ 2,643,740 $ -- $ 2,701,129
Intercompany payables
(receivables) ........ 4,694,543 (57,185) (4,637,358) -- --
Long-term debt ......... 989,899 199,431 60,137 -- 1,249,467
Other liabilities ...... 236,069 -- 552,325 -- 788,394
Shareholders' equity
(deficit) ............ 2,164,794 1,286 7,991,019 (7,959,568) 2,197,531
----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity.. $ 8,070,295 $ 215,931 $ 6,609,863 $(7,959,568) $ 6,936,521
=========== =========== =========== =========== ===========
CONDENSED CONSOLIDATING BALANCE SHEET -- SEPTEMBER 28, 2002
----------------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)
Current assets .......... $ 565,283 $ 4 $ 2,808,644 $ -- $ 3,373,931
Investment in
subsidiaries .......... 5,492,419 203,680 195,237 (5,891,336) --
Plant and equipment, net 277,563 -- 1,441,378 -- 1,718,941
Other assets ............ 241,716 1,379 909,490 -- 1,152,585
----------- ----------- ----------- ----------- -----------
Total assets ............ $ 6,576,981 $ 205,063 $ 5,354,749 $(5,891,336) $ 6,245,457
=========== =========== =========== =========== ===========
Current liabilities ..... $ 521,915 $ 54,287 $ 1,490,473 $ -- $ 2,066,675
Intercompany payables
(receivables) ......... 2,553,593 (45,376) (2,508,217) -- --
Long-term debt .......... 1,023,040 199,383 43,515 -- 1,265,938
Other liabilities ....... 284,748 -- 434,411 -- 719,159
Shareholders' equity
(deficit) ............. 2,193,685 (3,231) 5,894,567 (5,891,336) 2,193,685
----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity .. $ 6,576,981 $ 205,063 $ 5,354,749 $(5,891,336) $ 6,245,457
=========== =========== =========== =========== ===========
CONDENSED CONSOLIDATING RESULTS OF OPERATIONS
FOR THE 13-WEEK PERIOD ENDED SEPTEMBER 27, 2003
----------------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- -------------- ------------
(IN THOUSANDS)
Sales ...................... $ -- $ -- $ 7,134,281 $ -- $ 7,134,281
Cost of sales .............. -- -- 5,753,767 -- 5,753,767
Operating expenses ......... 37,555 36 986,745 -- 1,024,336
Interest expense (income) .. 61,055 3,710 (46,134) -- 18,631
Other, net ................. (283) -- (1,700) -- (1,983)
----------- ----------- ----------- ------------- -----------
Total costs and expenses ... 98,327 3,746 6,692,678 -- 6,794,751
----------- ----------- ----------- ------------- -----------
Earnings (losses) before
income taxes ............... (98,327) (3,746) 441,603 -- 339,530
Income tax (benefit)
provision ................ (37,856) (1,442) 170,017 -- 130,719
Equity in earnings of
Subsidiaries ............. 269,282 2,826 -- (272,108) --
----------- ----------- ----------- ------------- -----------
Net earnings (loss) ........ $ 208,811 $ 522 $ 271,586 $ (272,108) $ 208,811
=========== =========== =========== ============= ===========
10
CONDENSED CONSOLIDATING RESULTS OF OPERATIONS
FOR THE 13-WEEK PERIOD ENDED SEPTEMBER 28, 2002
------------------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)
Sales ..................... $ 847,894 $ -- $ 5,576,528 $ -- $ 6,424,422
Cost of sales ............. 655,633 -- 4,499,071 -- 5,154,704
Operating expenses ........ 166,263 316 794,056 -- 960,635
Interest expense (income) . 75,619 2,536 (61,327) -- 16,828
Other, net ................ (37) 1 (3,376) -- (3,412)
----------- ----------- ----------- ----------- -----------
Total costs and expenses .. 897,478 2,853 5,228,424 -- 6,128,755
----------- ----------- ----------- ----------- -----------
Earnings (losses) before
income taxes .............. (49,584) (2,853) 348,104 -- 295,667
Income tax (benefit)
provision ............... (18,966) (1,091) 133,150 -- 113,093
Equity in earnings of
Subsidiaries ............ 213,192 -- -- (213,192) --
----------- ----------- ----------- ----------- -----------
Net earnings .............. $ 182,574 $ (1,762) $ 214,954 $ (213,192) $ 182,574
=========== =========== =========== =========== ===========
CONDENSED CONSOLIDATING CASH FLOWS
FOR THE 13-WEEK PERIOD ENDED SEPTEMBER 27, 2003
----------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES TOTALS
----------- ------------- ------------------- ------------
(IN THOUSANDS)
Net cash provided by (used for):
Operating activities ............. $ (31,972) $ 41,303 $ 176,709 $ 186,040
Investing activities ............. (55,250) -- (123,163) (178,413)
Financing activities ............. (108,295) (13,839) (374) (122,508)
Effect of exchange rate on
cash ........................... -- -- (1,022) (1,022)
Intercompany activity ............ 114,228 (39,269) (74,959) --
--------- --------- --------- ---------
Net increase (decrease) in cash .. (81,289) (11,805) (22,809) (115,903)
Cash at the beginning of the
period ......................... 206,043 514 130,890 337,447
--------- --------- --------- ---------
Cash at the end of the
period ......................... $ 124,754 $ (11,291) $ 108,081 $ 221,544
========= ========= ========= =========
CONDENSED CONSOLIDATING CASH FLOWS
FOR THE 13-WEEK PERIOD ENDED SEPTEMBER 28, 2002
---------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES TOTALS
---------- ------------- ------------------- ------------
(IN THOUSANDS)
Net cash provided by (used for):
Operating activities ........... $ (23,346) $ 1,287 $ 149,296 $ 127,237
Investing activities ........... (36,026) -- (72,265) (108,291)
Financing activities ........... (36,833) (13,628) (3,735) (54,196)
Intercompany activity .......... 62,369 2,335 (64,704) --
--------- --------- --------- ---------
Net increase (decrease) in cash (33,836) (10,006) 8,592 (35,250)
Cash at the beginning of the
period ....................... 92,447 10,006 95,986 198,439
--------- --------- --------- ---------
Cash at the end of the
period ....................... $ 58,611 $ -- $ 104,578 $ 163,189
========= ========= ========= =========
11
11. BUSINESS SEGMENT INFORMATION
The company has aggregated its operating companies into a number of
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 other segments, including the company's specialty produce,
meat and lodging industry products segments. The company's Canadian
operations are not significant for geographical disclosure purposes.
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.
13-Weeks Ended
--------------------------------
Sept. 27, 2003 Sept. 28, 2002
-------------- --------------
Sales (in thousands):
Broadline $ 5,827,089 $ 5,321,257
SYGMA 824,563 709,584
Other 561,460 451,350
Intersegment sales (78,831) (57,769)
----------- -----------
Total $ 7,134,281 $ 6,424,422
=========== ===========
13-Weeks Ended
------------------------------
Sept. 27, 2003 Sept. 28, 2002
-------------- --------------
Earnings before income taxes
(in thousands):
Broadline $343,412 $300,223
SYGMA 5,341 5,238
Other 15,165 11,982
-------- --------
Total segments 363,918 317,443
Unallocated corporate expenses (24,388) (21,776)
-------- --------
Total $339,530 $295,667
======== ========
Sept. 27, 2003 June 28, 2003 Sept. 28, 2002
-------------- ------------- --------------
Assets (in thousands):
Broadline $4,709,015 $4,513,533 $4,149,164
SYGMA 197,155 190,406 165,527
Other 503,578 501,236 459,835
---------- ---------- ----------
Total segments 5,409,748 5,205,175 4,774,526
Corporate 1,804,446 1,731,346 1,470,931
---------- ---------- ----------
Total $7,214,194 $6,936,521 $6,245,457
========== ========== ==========
12
12. 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 statements of the company when ultimately
concluded.
13. NEW ACCOUNTING STANDARDS
SYSCO adopted the provisions of SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and
Equity," effective at the beginning of fiscal 2004. The adoption of
SFAS No. 150 has not had a material effect on the company's
consolidated financial statements.
14. SHAREHOLDERS' EQUITY
On November 7, 2003, SYSCO's shareholders approved the adoption of an
amendment to SYSCO's Restated Certificate of Incorporation to increase
the number of shares of common stock that SYSCO will have the
authority to issue to two billion shares, an increase from the
previous authorization of one billion shares.
13
Item 2. 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 and acquisitions. The company also strives to
increase the effectiveness of its marketing associates, its
consolidated buying programs 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.
The company generated $186,040,000 in net cash from operations for the
first quarter of fiscal 2004, compared with $127,237,000 for the
comparable period in fiscal 2003.
Cash flow from operations for the first quarter of fiscal 2004 was
negatively impacted by increases in accounts receivable balances of
$110,285,000 and inventory balances of $77,681,000 partially offset by
increases in accounts payable balances of $39,307,000. The increases
in accounts receivable, inventory and accounts payable were primarily
due to the increased sales volumes for the month of September 2003 as
compared to June 2003. An additional contributor to the increase in
accounts receivable balances was sales to national contract customers.
Total national contract customer sales represented a larger percentage
of total SYSCO sales in September 2003 as compared to June 2003. This
was due to normal sales patterns where sales to national contract
customers as a group are traditionally higher in September as compared
to June due to school openings. In addition, the growth in sales to
national contract customers outpaced the growth in SYSCO's overall
sales. National contract customer payment terms are traditionally
longer than the overall SYSCO average; thus, the increased sales to
this group of customers caused the accounts receivable balances at
September 2003 to increase. In addition, SYSCO had approximately
$37,000,000 in receivables past due at the end of fiscal 2003 from a
U.S. military contractor that was collected in the first quarter of
fiscal 2004. Accounts receivable, inventory and accounts payable
balances at the end of the first quarter of fiscal 2003 were similarly
impacted by the traditional increases in sales volume.
The deferral of supply chain distributions was not a significant
factor in cash flow from operations in the first quarter of fiscal
2004 or the first quarter of fiscal 2003 as federal and state tax
payments are traditionally not significant in the first quarter of
SYSCO's fiscal year due to the timing of quarterly federal estimated
tax payments. Tax payments were $10,696,000 and $8,268,000, during the
first quarter of fiscal 2004 and the first quarter of fiscal 2003,
respectively.
The company will make substantial tax payments in the second quarter
of fiscal 2004 as it makes the first two quarterly federal estimated
tax payments of fiscal 2004. These federal estimated tax payments will
reflect the recognition in taxable income of supply chain
distributions which were distributed in fiscal 2004 and which had been
deferred in prior years.
The company expects the net cash flow impact of the deferral of supply
chain distributions in fiscal 2004 and beyond to be incrementally
positive when compared to what would have been paid for taxes on an
annual basis without the deferral due to the company's belief that its
volume of purchases through this structure will continue to grow.
14
Cash used for investing activities was $178,413,000 for the first
quarter of fiscal 2004, compared with $108,291,000 used in the
comparable period in fiscal 2003. Expenditures for facilities, fleet
and other equipment were $103,056,000 for the first quarter of fiscal
2004, compared with $88,025,000 for the comparable period in fiscal
2003. Total capital expenditures in fiscal 2004 are expected to be
approximately $490,000,000. Projected capital expenditures include the
continuation of the fold-out program; facility, fleet and other
equipment replacements and expansions; and the National Supply Chain
project. Expenditures in the first quarter of fiscal 2004 related to
the company's National Supply Chain project totaled $31,377,000 of
which $22,465,000 was capitalized. Total expenditures on the project
since inception are $112,588,000 of which $66,897,000 have been
capitalized. The Northeast Redistribution Center is expected to be
operational in the fall of 2004.
During the first quarter of fiscal 2004, SYSCO expended approximately
$31,640,000 in cash related to acquisitions. In September 2003, SYSCO
acquired certain assets of the Stockton, California foodservice
operations from Smart & Final, Inc., and a subsidiary of SYSCO
acquired certain assets of Luzo Foodservice Corporation, located in
New Bedford, Massachusetts.
Cash used for financing activities was $122,508,000 for the first
quarter of fiscal 2004, compared with $54,196,000 for the comparable
period in fiscal 2003. Stock repurchases in the first quarter of
fiscal 2004 totaled 1,214,800 shares at a cost of $39,764,000 as
compared to 3,778,800 shares at a cost of $109,899,000 for the
comparable period in fiscal 2003. An additional 1,601,100 shares at a
cost of $54,057,000 have been purchased through October 31, 2003
resulting in 26,247,300 shares remaining available for repurchase as
authorized by the Board as of that date.
Dividends paid in the first quarter of fiscal 2004 were $71,257,000,
or $0.11 per share, as compared to $59,240,000, or $0.09 per share, in
the comparable period of fiscal 2003. In September 2003, SYSCO
declared its regular quarterly dividend for the second quarter of
fiscal 2004, at $0.11 per share, payable in October 2003. In November
2003, SYSCO also declared its regular quarterly dividend for the third
quarter of fiscal 2004, increasing it to $0.13 per share, payable in
January 2004.
As of September 27, 2003, SYSCO had uncommitted bank lines of credit,
which provide for unsecured borrowings for working capital of up to
$95,000,000, of which none was outstanding at September 27, 2003. Such
borrowings were $10,000,000 as of October 31, 2003.
As of September 27, 2003, SYSCO's borrowings under its commercial
paper programs were $87,967,000. Such borrowings were $297,136,000 as
of October 31, 2003. During the thirteen week period ended September
27, 2003, commercial paper and short-term bank borrowings ranged from
approximately $79,458,000 to $171,074,000.
Long-term debt to capitalization ratio was 33.9% at September 27,
2003, which was slightly below the company's long-term 35% to 40%
target ratio.
Cash generated from operations is first allocated to working capital
requirements. Any remaining cash generated from operations, as
supplemented by commercial paper and other bank borrowings, may, at
the discretion of management, be applied towards investments in
facilities, fleet and other equipment; cash dividends; acquisitions
fitting within the company's overall growth strategy; and the share
repurchase program. Management believes that the company's cash flows
from operations, as well as the availability of additional capital
under its existing commercial paper programs, bank lines of credit,
debt shelf registration and its
15
ability to access capital from financial markets in the future, will
be sufficient to meet its cash requirements while maintaining proper
liquidity for normal operating purposes.
Results of Operations
Sales increased 11.0% in the first quarter of fiscal 2004 over the
comparable period of the prior year. Acquisitions represented 1.9% of
the sales growth for the first quarter of fiscal 2004 and 5.4% for the
first quarter of fiscal 2003. Also contributing to sales growth was
estimated product cost increases, an internal measure of inflation, of
5.0% during the first quarter of fiscal 2004 over the comparable
period in the prior year. The company estimated its product cost
decreases were 2.2% during the first quarter of fiscal 2003 over the
comparable period in the prior year. SYSCO generally expects to pass
product cost increases to its customers; however, the actual amount of
inflation reflected as sales price increases cannot be quantified.
Cost of sales increased 11.6% in the first quarter of fiscal 2004 over
the comparable period of the prior year. Management believes that cost
of sales as a percentage to sales was impacted by many factors
including change in customer mix, segment mix, product mix and
inflation; the specific impact of each can be difficult to quantify.
Contract customer sales, which traditionally yield lower gross
margins, coupled with lower expenses, than marketing associate-served
sales, grew faster than sales to marketing associate-served sales over
the comparable period in the prior year. Sales at the SYGMA and the
Other segments, which traditionally have lower margins than the
Broadline segment, grew faster, at 19.4% combined, than sales at the
Broadline segment which grew 9.5% over the comparable period in the
prior year. In the area of product mix, fresh-cut meat sales, as an
example, continue to grow as a percentage of overall sales. These are
higher price and higher gross margin dollars per case and lower gross
margin percentage products. Increased sales of these products had the
effect of decreasing overall gross margins as a percent of sales even
as gross margin dollars increased. Higher than normal product cost
increases also had the impact of reducing gross margins as a
percentage of sales when they are experienced with products that are
traditionally priced on a cents per pound and fee per case mark-up
basis.
Operating expenses were 14.4% of sales for the first quarter of fiscal
2004, as compared to 15.0% for the comparable period in the prior
year. The decrease in operating expenses as a percentage to sales was
primarily attributable to improved operating efficiencies as
demonstrated by improving trends in key expense metrics including
pieces sold per delivery, product line items sold per delivery, pieces
per trip and pieces per error. Short-term increases in product costs
and the resulting increased sales price per item also impacted
expenses as a percentage to sales favorably as operating costs
increased at a lower rate.
Operating expenses were favorably impacted by the recognition of
$4,566,000 in income in the first quarter of fiscal 2004 to adjust the
carrying value of life insurance assets to their cash surrender value
as compared to the recognition of a loss of $15,469,000 in the first
quarter of fiscal 2003. The company maintains policies on the lives of
participants in the company's Supplemental Executive Retirement Plan
and the Executive Deferred Compensation Plan. Operating expenses were
negatively impacted by an increase in net periodic pension cost of
$9,986,000 in the first quarter of fiscal 2004 as compared to the
first quarter of fiscal 2003.
Interest expense increased 10.7% during the first quarter of fiscal
2004 over the comparable period of the prior year, primarily due to
increased interest rates.
Other net income decreased to $1,983,000 in the first quarter of
fiscal 2004. Changes between the years typically result from
fluctuations in miscellaneous activities such as gains or losses on
sales of facilities or equipment.
16
Income taxes for the periods presented reflect an effective rate of
38.50% for fiscal 2004 and 38.25% for fiscal 2003. The increase in the
effective tax rate is attributable to increased state income taxes.
Pretax earnings increased 14.8% and net earnings increased 14.4% for
the first quarter of fiscal 2004 over the comparable period of the
prior year. The increases were due to the factors discussed above.
Basic and diluted earnings per share increased 14.3% for the first
quarter of fiscal 2004 over the comparable period of the prior year.
The increase was the result of factors discussed above.
Broadline Segment
The Broadline segment sales increased 9.5% in the first quarter of
fiscal 2004 as compared to the comparable period of the prior year.
This increase was due to increased sales to marketing associate-served
customers and multi-unit customers, including increased sales of SYSCO
Brand products. These increases were reflected in increased sales to
the company's existing customer base and to new customers. Marketing
associate-served sales as a percentage of broadline sales in the U.S.
decreased to 56.0% for the first quarter of fiscal 2004 as compared to
56.4% for the comparable prior year period. This decrease was due to
the increase in sales to national contract customers exceeding the
increase in sales to marketing associate-served customers. SYSCO Brand
sales as a percentage of broadline sales in the U.S. decreased to
48.8% for the first quarter of fiscal 2004 as compared to 48.9% for
the comparable prior year period.
Pretax earnings for the Broadline segment increased by 14.4% for the
first quarter of fiscal 2004 over the comparable prior year period.
The increase in pretax earnings was primarily due to increases in
sales and increased operating efficiencies resulting in lower expenses
as a percentage to sales.
SYGMA Segment
SYGMA segment sales increased by 16.2% for the first quarter of fiscal
2004 over the comparable prior year period. The increase was due
primarily to sales to new customers, sales growth in SYGMA's existing
customer base and the acquisitions of Pronamics and the Denver
operations of Marriott Distribution Services, Inc.
Pretax earnings for the SYGMA segment increased by 2.0% for the first
quarter of fiscal 2004 over the comparable prior year period. The
increase was primarily a result of the increased sales offset by
higher operating expenses and costs associated with the newly acquired
operations.
Other Segments
Other segments sales increased by 24.4% for the first quarter of
fiscal 2004 over the comparable prior year period. The increase was
due to increased sales to the existing customer base, sales to new
customers, the acquisition of Asian Foods, Inc. and increased sales to
SYSCO Broadline companies.
17
Pretax earnings for the Other segments increased by 26.6% for the
first quarter of fiscal 2004 over the comparable prior year period.
The increase is primarily a result of the sales increases and improved
operating efficiencies.
New Accounting Standards
SYSCO adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity,"
effective at the beginning of fiscal 2004. The adoption of SFAS No.
150 has not had a material effect on the company's consolidated
financial statements.
Forward-Looking Statements
Certain statements made herein are forward-looking statements under
the Private Securities Litigation Reform Act of 1995. They include
statements regarding potential future repurchases under the share
repurchase program, market risks, the impact of ongoing legal
proceedings, the timing, expected cost savings and other benefits of
the National Supply Chain project, including the Northeast
Redistribution Center, anticipated capital expenditures, the ability
to increase market share, sales growth, and SYSCO's ability to meet
cash requirements while maintaining proper liquidity. These statements
involve risks and uncertainties and are based on management's current
expectations and estimates; actual results may differ materially.
Those risks and uncertainties that could impact these statements
include the risks relating to the foodservice distribution industry's
relatively low profit margins and sensitivity to general economic
conditions, including the current economic environment; SYSCO's
leverage and debt risks; the ultimate outcome of litigation; risks
relating to the successful completion and operation of the National
Supply Chain project including the Northeast Redistribution Center,
and internal factors such as the ability to control expenses.
In addition, share repurchases could be affected by market prices for
the company's securities as well as management's decision to utilize
its capital for other purposes. The effect of market risks could be
impacted by future borrowing levels and certain economic factors such
as interest rates. For a more detailed discussion of these and other
factors that could cause actual results to differ from those contained
in the forward-looking statements, see the company's Annual Report on
Form 10-K for the fiscal year ended June 28, 2003.
18
Item 3. 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 market
interest rates reflected in the fair value of the debt and to the risk
the company may need to refinance maturing debt with new debt at a
higher rate.
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 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
September 27, 2003, the company had no interest rate swaps
outstanding. At September 27, 2003, the company had outstanding
$87,967,000 of commercial paper at variable rates of interest with
maturities through February 27, 2004. The company's long-term debt
obligations at September 27, 2003 of $1,217,249,000 were primarily at
fixed rates of interest.
In October 2003, SYSCO entered into $500 million aggregate notional
amount of interest rate swaps as a fair value hedge against the 7.00%
Senior Notes due May 2006, 7.25% Senior Notes due April 2007 and 6.10%
Senior Notes due June 2012. The swaps effectively convert the fixed
interest rate on each of the three series of notes into a floating
rate of six-month LIBOR averaged over a six month period plus a margin
of 461, 430 and 171 basis points, respectively.
Item 4. Controls and Procedures
As of September 27, 2003, an evaluation was performed under the
supervision and with the participation of the company's management,
including the CEO and CFO, of the effectiveness of the design and
operation of the company's disclosure controls and procedures. Based
on that evaluation, the company's management, including the CEO and
CFO, concluded that the company's disclosure controls and procedures
were effective as of September 27, 2003 in providing reasonable
assurances that material information required to be disclosed is
included on a timely basis in the reports it files with the Securities
and Exchange Commission. Furthermore, the company's management noted
that no changes occurred during the first quarter of fiscal 2004 that
materially affected, or would be reasonably likely to materially
affect, the company's internal controls over financial reporting.
19
PART II. OTHER INFORMATION
Item 1. 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 statements of the company when
ultimately concluded.
Item 2. Changes in Securities and Use of Proceeds.
In September 2003, a total of 64,452 shares of Common Stock were
issued to the former shareholders of Buckhead Beef Company
("Buckhead") pursuant to the terms of an escrow agreement
executed in connection with SYSCO's acquisition of Buckhead in
August 1999.
In September 2003, a total of 26,034 Dividend Access Shares,
convertible on a one-for-one basis into SYSCO shares, were issued
to the former owners of HRI Supply, Ltd. ("HRI") pursuant to the
terms of an escrow agreement executed in connection with SYSCO's
acquisition of HRI in May 2001.
In September 2003, a total of 64,024 shares of Common Stock were
issued to the former shareholders of Newport Meat Company
("Newport") pursuant to the terms of an escrow agreement executed
in connection with SYSCO's acquisition of Newport in July 1999.
All of the above issuances were made pursuant to the exemption
from registration provided by Section 4(2) of the Securities Act
of 1933, as amended.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) 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) Bylaws, as amended and restated February 8, 2002,
incorporated by reference to 3(b) 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
20
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) 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(b) 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(c) 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(d) 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(e) 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(f) 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. 1-6554).
4(g) Sixth Supplemental Indenture, including form of Note, dated
April 5, 2002 between SYSCO Corporation, as Issuer, and
Wachovia Bank, National Association (formerly First Union
National Bank of North Carolina), as Trustee, incorporated
by reference to Exhibit 4.1 to Form 8-K dated April 5, 2002
(File No. 1-6544).
4(h) 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).
4(i) Credit Agreement dated September 13, 2002 by and among
SYSCO Corporation, JPMorgan Chase Bank, individually and as
Administrative Agent, the Co-Syndication Agents named
therein and the other financial institutions party thereto,
incorporated by reference to Exhibit 4(i) to Form 10-Q for
the quarter ended September 28, 2002 (File No. 1-6544).
21
*15(a) Report from Ernst & Young LLP dated November 10, 2003, re:
unaudited financial statements.
*15(b) Acknowledgment letter from Ernst & Young LLP.
*31(a) CEO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
*31(b) CFO Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
*32(a) CEO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
*32(b) CFO Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
- ---------------------
* Filed herewith.
(b) Reports on Form 8-K:
1. On July 11, 2003, the company filed a current report on Form 8-K
announcing under Item 5 thereof that Richard J. Schnieders,
Chairman and CEO of Sysco Corporation, entered into a stock
trading plan with Smith Barney to sell shares of stock owned by
him pursuant to Rule 10b5-1 under the Securities Exchange Act of
1934, as amended.
2. On August 11, 2003, the company filed a current report on Form
8-K announcing under Items 7 and 12 thereof the results of its
fourth quarter ended June 28, 2003.
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYSCO CORPORATION
(Registrant)
By /s/ RICHARD J. SCHNIEDERS
------------------------------------
Richard J. Schnieders
Chairman and Chief Executive Officer
Date: November 10, 2003
By /s/ JOHN K. STUBBLEFIELD, JR.
------------------------------------
John K. Stubblefield, Jr.
Executive Vice President,
Finance & Administration
Date: November 10, 2003
EXHIBIT INDEX
NO. DESCRIPTION
- ------ -----------------------------------------------------------------------
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) Bylaws, as amended and restated 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) 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(b) 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(c) 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(d) 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(e) 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(f) 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. 1-6554).
4(g) Sixth Supplemental Indenture, including form of Note, dated April 5,
2002 between SYSCO Corporation, as Issuer, and Wachovia Bank, National
Association (formerly First Union National Bank of North Carolina), as
Trustee, incorporated by reference to Exhibit 4.1 to Form 8-K dated
April 5, 2002 (File No. 1-6544).
4(h) 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).
4(i) Credit Agreement dated September 13, 2002 by and among SYSCO
Corporation, JPMorgan Chase Bank, individually and as Administrative
Agent, the Co-Syndication Agents named therein and the other financial
institutions party thereto, incorporated by reference to Exhibit 4(i)
to Form 10-Q for the quarter ended September 28, 2002 (File No.
1-6544).
*15(a) Report from Ernst & Young LLP dated November 10, 2003, re: unaudited
financial statements.
*15(b) Acknowledgment letter from Ernst & Young LLP.
*31(a) CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
*31(b) CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
*32(a) CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
*32(b) CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
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* Filed herewith.