SYSCO CORP - 10-Q Quarterly Report

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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 April 2, 2005

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
----- -----

633,042,914 shares of common stock were outstanding as of April 30, 2005.

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 15
Item 3. Quantitative and Qualitative Disclosures about Market Risk 24
Item 4. Controls and Procedures 25

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
Item 3. Defaults Upon Senior Securities 27
Item 4. Submission of Matters to a Vote of Security Holders 27
Item 5. Other Information 27
Item 6. Exhibits 27

Signatures 29

1

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands Except for Share Data)

Note: The July 3, 2004 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)

3

SYSCO CORPORATION and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)

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 July 3, 2004
consolidated balance sheet which was taken from the audited financial
statements included in the company's Fiscal 2004 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 2005 presentation. 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 2004 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:

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. SYSCO has chosen to satisfy these collateral requirements by
depositing funds in insurance trusts or by issuing letters of credit.

In addition, for certain acquisitions, SYSCO has placed funds into
escrow to be disbursed to the sellers in the event that specified
operating results are attained or contingencies are resolved.

A summary of restricted cash balances appears below:

In October 2004, SYSCO deposited approximately $16,000,000 in
additional funds in a trust to satisfy ongoing collateral
requirements.

On April 14, 2005, SYSCO received $102,000,000 that was released from
one of the insurance trust accounts. SYSCO then issued a letter of
credit to the insurer in the amount of $72,000,000 to replace the
collateral.

4. DEBT

As of April 2, 2005, 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.

As of April 2, 2005, SYSCO's outstanding borrowings under its
commercial paper programs were $73,043,000. During the 39-week period
ended April 2, 2005, commercial paper and short-term bank borrowings
ranged from approximately $46,327,000 to $253,384,000.

Included in current maturities of long-term debt at April 2, 2005 are
the 6.5% Senior Notes totaling $150,000,000 due June 2005 and the
4.75% Senior Notes totaling $200,000,000 due July 2005. It is the
company's intention to fund the repayment of these notes at maturity
through issuances of commercial paper, cash flow from operations or a
combination thereof. The company currently intends to issue long-term
debt totaling approximately $350,000,000 in the first quarter of
fiscal 2006 to replace the cash used and/or commercial paper issued to
repay the maturing senior notes.

In April 2005, SYSCO filed with the Securities and Exchange Commission
a $1,500,000,000 shelf registration of debt securities. The
registration statement was declared effective in May 2005.

5. ACQUISITIONS

During the first 39 weeks of fiscal 2005, the company paid cash of
$49,485,000 and issued 214,145 shares with a value of $4,195,000 for
acquisitions during fiscal 2005 and for contingent consideration
related to operations acquired in previous fiscal years.

6

Acquisitions completed during fiscal 2005 were immaterial,
individually and in the aggregate, to the consolidated financial
statements.

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 purchase price of the acquired operations is allocated to the net
assets acquired and liabilities assumed based on the estimated fair
value at the dates of acquisition with any excess of cost over the
fair value of net assets acquired, including intangibles, recognized
as goodwill. The purchase price allocations related to recent
acquisitions are based upon preliminary information and may be 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 specified operating results are
attained. Aggregate contingent consideration amounts outstanding as of
April 2, 2005 included approximately 1,059,000 shares and $95,776,000
in cash, which, if distributed, could result in the recording of up to
$118,430,000 in additional goodwill. Such amounts typically are to be
paid out over periods of up to five years from the date of
acquisition.

6. DERIVATIVE FINANCIAL INSTRUMENTS

In February 2005, SYSCO terminated $500,000,000 aggregate notional
amount of interest rate swaps which were fair value hedges against the
7.00% Senior Notes due May 2006, 7.25% Senior Notes due April 2007 and
4.60% Senior Notes due March 2014 and received cash of $5,316,000,
which represented the fair value of the swap agreements at the time of
termination. In accordance with the shortcut method provided by
Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities", a
corresponding amount was reflected as an increase in the carrying
value of the related debt to reflect the fair value at termination.
This increase in the carrying value of the debt will be amortized as a
reduction of interest expense over the remaining term of the debt.

The company currently intends to issue long-term debt totaling
approximately $350,000,000 in the first quarter of fiscal 2006. In
March 2005, SYSCO entered into a forward-starting interest rate swap
with a notional amount of $350,000,000 in order to hedge the interest
rate risk arising during the period prior to the expected issuance. In
accordance with SFAS No. 133, the company has designated this
derivative as a cash flow hedge of the variability in the cash
outflows of interest payments on the forecasted debt issuance due to
changes in the benchmark interest rate. The fair value of the swap as
of April 2, 2005 decreased $2,528,000 and was recognized as a
liability on the company's balance sheet with the corresponding amount
reflected in other comprehensive income.

7. INCOME TAXES

Reflected in the changes in the net deferred tax liability and
prepaid/accrued income tax balances from July 3, 2004 to April 2, 2005
is the reclassification of deferred tax liabilities related to supply
chain distributions to accrued income taxes. This reclassification
reflects the tax payments to be made this fiscal year related to
previously deferred supply chain distributions.

7

The determination of the company's provision for income taxes requires
significant judgment, the use of estimates and the interpretation and
application of complex tax laws. The company's provision for income
taxes reflects a combination of income earned and taxed in the various
U.S. federal and state, as well as Canadian federal and provincial
jurisdictions. Jurisdictional tax law changes, increases or decreases
in permanent differences between book and tax items, accruals or
adjustments of accruals for tax contingencies or valuation allowances,
and the company's change in the mix of earnings from these taxing
jurisdictions all affect the overall effective tax rate.

In evaluating the exposures connected with the various tax filing
positions, the company establishes an accrual when, despite
management's belief that the company's tax return positions are
supportable, management believes that certain positions may be
successfully challenged and a loss is probable. When facts and
circumstances change, these accruals are adjusted. Included in income
tax expense is the reversal of an accrual for tax contingencies of
$11,000,000. Based on additional information and supported by a third
party analysis, the company concluded that the accrual was no longer
necessary.

8. COMPREHENSIVE INCOME

Comprehensive income is net earnings plus certain other items that are
recorded directly to shareholders' equity. The following table
provides a summary of the components of other comprehensive income for
the periods presented:

39-Week Period Ended 13-Week Period Ended
------------------------------- -------------------------------
Apr. 2, 2005 Mar. 27, 2004 Apr. 2, 2005 Mar. 27, 2004
------------- ------------- ------------- -------------

Net earnings $ 676,777,000 $ 626,616,000 $ 218,220,000 $ 195,824,000
Minimum pension liability adjustment,
net of tax -- 749,000 -- --
Foreign currency translation adjustment 29,849,000 6,770,000 (5,324,000) (2,835,000)
Change in fair value of forward-starting
interest rate swap, net of tax (1,561,000) -- (1,561,000) --
------------- ------------- ------------- -------------
Comprehensive income $ 705,065,000 $ 634,135,000 $ 211,335,000 $ 192,989,000
============= ============= ============= =============

9. 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.

10. 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, "Accounting for Stock Issued to Employees,"
and related interpretations under which no compensation expense has
been recognized for stock option grants.

The following table provides comparative pro forma net earnings and
earnings per share had compensation expense for these plans been
determined using the fair value method of SFAS No. 123, "Accounting
for Stock-Based Compensation," for all periods presented. The pro
forma presentation includes only options granted after 1995 in
accordance with SFAS 123. The pro forma effects for the periods
presented are not necessarily indicative of the pro forma effects in
future years.

8

39-Week Period Ended 13-Week Period Ended
------------------------------- -------------------------------
Apr. 2, 2005 Mar. 27, 2004 Apr. 2, 2005 Mar. 27, 2004
------------- ------------- ------------- -------------

Net earnings:
Reported net earnings $ 676,777,000 $ 626,616,000 $ 218,220,000 $ 195,824,000
Stock based compensation expense, net of taxes
(68,536,000) (55,220,000) (21,122,000) (15,548,000)
------------- ------------- ------------- -------------
Adjusted net earnings $ 608,241,000 $ 571,396,000 $ 197,098,000 $ 180,276,000
============= ============= ============= =============

Basic earnings per share:
Reported earnings per share $ 1.06 $ 0.97 $ 0.34 $ 0.31
Stock based compensation expense, net of taxes
(0.11) (0.08) (0.03) (0.03)
------------- ------------- ------------- -------------
Adjusted earnings per share $ 0.95 $ 0.89 $ 0.31 $ 0.28
============= ============= ============= =============

Diluted earnings per share:
Reported earnings per share $ 1.04 $ 0.95 $ 0.34 $ 0.30
Stock based compensation expense, net of taxes
(0.11) (0.09) (0.04) (0.03)
------------- ------------- ------------- -------------
Adjusted earnings per share $ 0.93 $ 0.86 $ 0.30 $ 0.27
============= ============= ============= =============

The weighted average fair value of options granted was $7.10 and $6.74
during the 39 weeks ended April 2, 2005 and March 27, 2004,
respectively. The fair value was estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted
average assumptions for each period presented:

39-Week Period Ended
-------------------------------------
Apr. 2, 2005 Mar. 27, 2004
------------ -------------

Dividend yield 1.45% 1.49%
Expected volatility 22% 22%
Risk-free interest rate 3.4% 3.2%
Expected life 5 years 5 years

The weighted average fair value of employee stock purchase rights
issued was $5.14 and $4.96 during the 39 weeks ended April 2, 2005 and
March 27, 2004, 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.

11. NEW ACCOUNTING STANDARDS

On December 16, 2004, the Financial Accounting Standards Board (FASB)
issued FASB Statement No. 123 (revised 2004), "Share-Based Payment"
(SFAS 123(R)), which is a revision of FASB Statement No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123(R)
supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB Opinion 25), and amends FASB Statement No. 95,
"Statement of Cash Flows." Generally, the approach in SFAS 123(R) is
similar to the approach described in SFAS 123. However, SFAS 123(R)
requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the income statement based
on their fair values. Pro forma disclosure is no longer an alternative
under the new standard.

9

SYSCO will adopt Statement 123(R) in the first quarter of fiscal 2006.
SFAS 123(R) allows for two transition methods. The basic difference
between the two methods is that the modified-prospective transition
method does not require restatement of prior periods, whereas the
modified-retrospective transition method will require restatement.

As permitted by SFAS 123, the company currently accounts for
share-based payments to employees using APB Opinion 25's intrinsic
value method and, as such, generally recognizes no compensation cost
for employee stock options or stock issuances under the employee stock
purchase plan. Although the full impact of the company's adoption of
SFAS 123(R)'s fair value method has not yet been determined, the
company expects that it will have a significant impact on its results
of operations. The disclosure in the footnotes to the company's
consolidated financial statements under Stock-Based Compensation of
pro forma net income and earnings per share as if the company had
recognized compensation cost for share based payments under SFAS 123
for periods prior to fiscal 2006 is not necessarily indicative of the
potential impact of recognizing compensation cost for share based
payments under SFAS 123(R) in future periods. The potential impact of
adopting SFAS 123(R) is dependent on levels of share-based payments
granted, the specific option pricing model utilized to determine fair
value and the transition methodology selected.

10

12. 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,
custom-cut meat, Asian cuisine foodservice 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.

39-Week Period Ended 13-Week Period Ended
------------ ------------- ------------ -------------
Apr. 2, 2005 Mar. 27, 2004 Apr. 2, 2005 Mar. 27, 2004
------------ ------------- ------------ -------------

Sales (in thousands):
Broadline $ 17,838,966 $ 17,156,599 $ 5,895,662 $ 5,648,123
SYGMA 2,840,043 2,561,446 982,842 873,344
Other 1,867,871 1,707,734 642,747 574,401
Intersegment sales (246,245) (229,393) (83,798) (70,283)
------------ ------------ ------------ ------------
Total $ 22,300,635 $ 21,196,386 $ 7,437,453 $ 7,025,585
============ ============ ============ ============

39-Week Period Ended 13-Week Period Ended
------------ ------------- ------------ -------------
Apr. 2, 2005 Mar. 27, 2004 Apr. 2, 2005 Mar. 27, 2004
------------ ------------- ------------ -------------

Earnings before income taxes (in thousands):
Broadline $ 1,070,245 $ 998,523 $ 340,313 $ 313,797
SYGMA 12,931 15,984 5,297 4,972
Other 60,545 54,622 20,657 19,892
------------ ------------ ------------ ------------
Total segments 1,143,721 1,069,129 366,267 338,661
Unallocated corporate expenses (65,540) (50,242) (30,688) (20,248)
------------ ------------ ------------ ------------
Total $ 1,078,181 $ 1,018,887 $ 335,579 $ 318,413
============ ============ ============ ============

Apr. 2, 2005 July 3, 2004 Mar. 27, 2004
------------ ------------ -------------

Assets (in thousands):
Broadline $ 4,874,343 $ 4,792,595 $ 4,715,149
SYGMA 289,509 240,418 220,768
Other 655,017 588,275 538,913
------------- ------------ ------------
Total segments 5,818,869 5,621,288 5,474,830
Corporate 2,348,367 2,226,344 1,852,002
------------- ------------ ------------
Total $ 8,167,236 $ 7,847,632 $ 7,326,832
============ ============ ============

11

13. 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 $200,000,000 of 6.10% notes due in 2012. These notes are
fully and unconditionally guaranteed by SYSCO.

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.

CONDENSED CONSOLIDATING BALANCE SHEET
APRIL 2, 2005
--------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)

Current assets....... $ 148,605 $ 44 $ 3,847,493 $ -- $3,996,142
Investment in
subsidiaries....... 9,537,924 285,388 158,803 (9,982,115) --
Plant and equipment, net 135,428 -- 2,112,127 -- 2,247,555
Other assets......... 641,241 -- 1,282,298 -- 1,923,539
----------- --------- ----------- ----------- ----------
Total assets......... $10,463,198 $ 285,432 $ 7,400,721 $(9,982,115) $8,167,236
=========== ========= =========== =========== ==========

Current liabilities.. $ 588,293 $ 77,666 $ 2,667,880 $ -- $3,333,839
Intercompany payables
(receivables)...... 5,967,767 8,005 (5,975,772) -- --
Long-term debt....... 783,525 199,544 49,753 -- 1,032,822
Other liabilities.... 376,055 -- 608,740 -- 984,795
Shareholders' equity 2,747,558 217 10,050,120 (9,982,115) 2,815,780
----------- --------- ----------- ----------- ----------
Total liabilities and
shareholders' equity $10,463,198 $ 285,432 $ 7,400,721 $(9,982,115) $8,167,236
=========== ========= =========== =========== ==========

CONDENSED CONSOLIDATING BALANCE SHEET
JULY 3, 2004
--------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)

Current assets....... $ 119,526 $ 34 $ 3,731,851 $ -- $3,851,411
Investment in
subsidiaries....... 8,678,729 260,501 173,986 (9,113,216) --
Plant and equipment, net 114,385 -- 2,052,424 -- 2,166,809
Other assets......... 594,811 -- 1,234,601 -- 1,829,412
----------- --------- ----------- ----------- ----------
Total assets......... $ 9,507,451 $ 260,535 $ 7,192,862 $(9,113,216) $7,847,632
=========== ========= =========== =========== ==========

Current liabilities.. $ 374,144 $ 74,948 $ 2,677,542 $ -- $3,126,634
Intercompany payables
(receivables)...... 5,298,927 (14,924) (5,284,003) -- --
Long-term debt....... 981,476 199,496 50,521 -- 1,231,493
Other liabilities.... 326,771 -- 598,228 -- 924,999
Shareholders' equity 2,526,133 1,015 9,150,574 (9,113,216) 2,564,506
----------- --------- ----------- ----------- ----------
Total liabilities and
shareholders' equity $ 9,507,451 $ 260,535 $ 7,192,862 $(9,113,216) $7,847,632
=========== ========= =========== =========== ==========

12

CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 27, 2004
-----------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)

Current assets .................... $ 98,216 $ 42 $ 3,592,292 $ -- $ 3,690,550
Investment in
subsidiaries .................... 8,322,203 259,328 172,856 (8,754,387) --
Plant and equipment, net .......... 144,879 -- 1,943,435 -- 2,088,314
Other assets ...................... 349,717 -- 1,198,251 -- 1,547,968
----------- ----------- ------------ ------------ ------------
Total assets ...................... $ 8,915,015 $ 259,370 $ 6,906,834 $ (8,754,387) $ 7,326,832
=========== =========== ============ ============ ============

Current liabilities ............... $ 242,147 $ 102,213 $ 2,503,729 $ -- $ 2,848,089
Intercompany payables
(receivables) ................... 5,061,704 (42,983) (5,018,721) -- --
Long-term debt .................... 1,166,918 199,479 53,742 -- 1,420,139
Other liabilities ................. 214,705 -- 574,851 -- 789,556
Shareholders' equity .............. 2,229,541 661 8,793,233 (8,754,387) 2,269,048
----------- ----------- ------------ ------------ ------------
Total liabilities and
shareholders' equity ............ $ 8,915,015 $ 259,370 $ 6,906,834 $ (8,754,387) $ 7,326,832
=========== =========== ============ ============ ============

CONDENSED CONSOLIDATING RESULTS OF OPERATIONS
39-WEEK PERIOD ENDED APRIL 2, 2005
-----------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)

Sales ............................. $ -- $ -- $ 22,300,635 $ -- $ 22,300,635
Cost of sales ..................... -- -- 18,060,611 -- 18,060,611
Operating expenses ................ 57,359 88 3,055,361 -- 3,112,808
Interest expense (income) ......... 233,002 8,755 (186,141) -- 55,616
Other, net ........................ (430) -- (6,151) -- (6,581)
----------- ----------- ------------ ------------ ------------
Total costs and expenses .......... 289,931 8,843 20,923,680 -- 21,222,454
----------- ----------- ------------ ------------ ------------
Earnings (losses) before
income taxes .................... (289,931) (8,843) 1,376,955 -- 1,078,181
Income tax (benefit)
provision ....................... (110,899) (3,382) 515,685 -- 401,404

Equity in earnings of
Subsidiaries .................... 855,809 3,440 -- (859,249) --
----------- ----------- ------------ ------------ ------------
Net earnings ..................... $ 676,777 $ (2,021) $ 861,270 $ (859,249) $ 676,777
=========== =========== ============ ============ ============

CONDENSED CONSOLIDATING RESULTS OF OPERATIONS
39-WEEK PERIOD ENDED MARCH 27, 2004
-----------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)

Sales ............................. $ -- $ -- $ 21,196,386 $ -- $ 21,196,386
Cost of sales ..................... -- -- 17,107,358 -- 17,107,358
Operating expenses ................ 79,788 81 2,949,813 -- 3,029,682
Interest expense (income) ......... 184,413 10,687 (144,356) -- 50,744
Other, net ........................ (197) (935) (9,153) -- (10,285)
----------- ----------- ------------ ------------ ------------
(935)
Total costs and expenses .......... 264,004 9,833 19,903,662 -- 20,177,499
----------- ----------- ------------ ------------ ------------
Earnings (losses) before
income taxes .................... (264,004) (9,833) 1,292,724 -- 1,018,887
Income tax (benefit)
provision ....................... (101,641) (3,786) 497,698 -- 392,271
Equity in earnings of
Subsidiaries .................... 788,979 5,267 -- (794,246) --
----------- ----------- ------------ ------------ ------------
Net earnings (loss) ............... $ 626,616 $ (780) $ 795,026 $ (794,246) $ 626,616
=========== =========== ============ ============ ============

CONDENSED CONSOLIDATING RESULTS OF OPERATIONS
13-WEEK PERIOD ENDED APRIL 2, 2005
-----------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)

Sales ............................. $ -- $ -- $ 7,437,453 $ -- $ 7,437,453
Cost of sales ..................... -- -- 6,032,165 -- 6,032,165
Operating expenses ................ 23,640 30 1,028,807 -- 1,052,477
Interest expense (income) ......... 83,484 3,377 (66,710) -- 20,151
Other, net ........................ (270) -- (2,649) -- (2,919)
----------- ----------- ------------ ------------ ------------
Total costs and expenses .......... 106,854 3,407 6,991,613 -- 7,101,874
----------- ----------- ------------ ------------ ------------
Earnings (losses) before
income taxes .................... (106,854) (3,407) 445,840 -- 335,579

Income tax (benefit)
provision ....................... (40,872) (1,303) 159,534 -- 117,359
Equity in earnings of
Subsidiaries .................... 284,202 (332) -- (283,870) --
----------- ----------- ------------ ------------ ------------
Net earnings (loss) ............... $ 218,220 $ (2,436) $ 286,306 $ (283,870) $ 218,220
=========== =========== ============ ============ ============

13

CONDENSED CONSOLIDATING RESULTS OF OPERATIONS
13-WEEK PERIOD ENDED MARCH 27, 2004
----------------------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES ELIMINATIONS TOTALS
----------- ------------- ------------------- ------------ ------------
(IN THOUSANDS)

Sales ............................. $ -- $ -- $ 7,025,585 $ -- $ 7,025,585
Cost of sales ..................... -- -- 5,684,192 -- 5,684,192
Operating expenses ................ 20,892 25 987,576 -- 1,008,493
Interest expense (income) ......... 62,762 3,266 (50,291) -- 15,737
Other, net ........................ (5) (7) (1,238) -- (1,250)
----------- ----------- ----------- ----------- -----------
Total costs and expenses .......... 83,649 3,284 6,620,239 -- 6,707,172
----------- ----------- ----------- ----------- -----------
Earnings (losses) before
income taxes .................... (83,649) (3,284) 405,346 -- 318,413
Income tax (benefit)
provision ....................... (32,204) (1,265) 156,058 -- 122,589
Equity in earnings of
Subsidiaries .................... 247,269 (790) -- (246,479) --
----------- ----------- ----------- ----------- -----------
Net earnings (loss) ............... $ 195,824 $ (2,809) $ 249,288 $ (246,479) $ 195,824
=========== =========== =========== =========== ===========

CONDENSED CONSOLIDATING CASH FLOWS
39-WEEK PERIOD ENDED APRIL 2, 2005
--------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES TOTALS
---------- ------------- ------------------- ------------
(IN THOUSANDS)

Net cash provided by (used for):

Operating activities .............. $ (123,839) $ (1,962) $ 947,070 $ 821,269
Investing activities .............. (52,304) -- (301,106) (353,410)
Financing activities .............. (461,099) (743) (2,310) (464,152)
Effect of exchange rate on cash ... -- -- (3,895) (3,895)
Intercompany activity 670,475 2,705 (673,180) --
---------- ---------- ---------- ----------

Net decrease in cash .............. 33,233 -- (33,421) (188)
Cash at the beginning
of the period.................... 87,507 -- 112,199 199,706
---------- ---------- ---------- ----------
Cash at the end of the period ..... $ 120,740 $ -- $ 78,778 $ 199,518
========== ========== ========== ==========

CONDENSED CONSOLIDATING CASH FLOWS
39-WEEK PERIOD ENDED MARCH 27, 2004
--------------------------------------------------------------
SYSCO OTHER NON-GUARANTOR CONSOLIDATED
SYSCO INTERNATIONAL SUBSIDIARIES TOTALS
---------- ------------- ------------------- ------------
(IN THOUSANDS)

Net cash provided by (used for):

Operating activities .............. $ (235,736) $ 3,866 $ 988,505 $ 756,635
Investing activities .............. (162,254) -- (328,096) (490,350)
Financing activities .............. (388,381) (26,852) (13,693) (428,926)
Effect of exchange rate on cash ... -- -- (2,111) (2,111)
Intercompany activity ............. 651,937 22,472 (674,409) --
---------- ---------- ---------- ----------
Net decrease in cash .............. (134,434) (514) (29,804) (164,752)
Cash at the beginning
of the period ................... 206,043 514 130,890 337,447
---------- ---------- ---------- ----------
Cash at the end of the period ..... $ 71,609 $-- $ 101,086 $ 172,695
========== ========== ========== ==========

14

14. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost for the 39-week periods
presented are as follows:

Pension Benefits Other Postretirement Plans
---------------------------------- -------------------------------
Apr. 2, 2005 Mar. 27, 2004 Apr. 2, 2005 Mar. 27, 2004
------------ ------------- ------------ -------------

Service cost $ 60,962,000 $ 56,199,000 $ 359,000 $ 316,000
Interest cost 55,369,000 45,873,000 366,000 302,000
Expected return on plan assets (61,960,000) (45,861,000) -- --
Amortization of prior service cost 1,320,000 981,000 151,000 151,000
Recognized net actuarial loss (gain) 24,454,000 28,274,000 -- (30,000)
Amortization of net transition
obligation -- 209,000 115,000 115,000
------------ ------------ ------------ ------------
Net periodic benefit cost $ 80,145,000 $ 85,675,000 $ 991,000 $ 854,000
============ ============ ============ ============

The components of net periodic benefit cost for the 13-week periods
presented are as follows:

Pension Benefits Other Postretirement Plans
---------------------------------- -------------------------------
Apr. 2, 2005 Mar. 27, 2004 Apr. 2, 2005 Mar. 27, 2004
------------ ------------- ------------ -------------

Service cost $ 20,320,000 $ 18,733,000 $ 120,000 $ 105,000
Interest cost 18,456,000 15,291,000 122,000 101,000
Expected return on plan assets (20,654,000) (15,287,000) -- --
Amortization of prior service cost 440,000 327,000 50,000 50,000
Recognized net actuarial loss (gain) 8,152,000 9,425,000 -- (10,000)
Amortization of net transition
obligation -- 70,000 38,000 38,000
------------ ------------ ------------ ------------
Net periodic benefit cost $ 26,714,000 $ 28,559,000 $ 330,000 $ 284,000
============ ============ ============ ============

SYSCO's contributions to its defined benefit plans were $84,603,000
and $164,012,000 during the 39-week periods ended April 2, 2005 and
March 27, 2004, respectively. SYSCO does not expect to make
significant additional contributions during the remainder of fiscal
2005. Total contributions in fiscal 2004 were $165,512,000.

15. MANAGEMENT INCENTIVE COMPENSATION

In September 2004, SYSCO adopted the 2004 Long-Term Incentive Cash
Plan (the Cash Plan) under which key employees have the opportunity to
earn cash incentive payments based on a performance period of at least
three years. In September 2004, performance units were awarded under
the Cash Plan to approximately 172 employees, which could result in a
maximum aggregate payout after the three-year performance period which
includes fiscal years 2005 through 2007 of $23,454,000.

15

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

This discussion should be read in conjunction with our financial
statements as of July 3, 2004, and the fiscal year then ended, and
Management's Discussion and Analysis of Financial Condition and
Results of Operations, both contained in our Annual Report on Form
10-K for the fiscal year ended July 3, 2004.

HIGHLIGHTS

Sales increased 5.2% for the first 39 weeks and 5.9% for the third
quarter of fiscal 2005 over the comparable prior year periods. Gross
margins as a percent of sales for both the first 39 weeks and third
quarter of fiscal 2005 decreased from the comparable prior year
periods due to the impact of product cost increases and changes in
customer mix and segment mix. Operating expenses as a percent of sales
for both the first 39 weeks and the third quarter of fiscal 2005
decreased from the comparable prior year periods due to operating
efficiencies and operating costs increasing at lower rates than the
sales price increases which overcame increased fuel costs, increased
expenses incurred on the National Supply Chain project and increased
expenses incurred as a result of bad weather. Included in income tax
expense is the reduction of an accrual for a tax contingency of
$11,000,000. Primarily as a result of these factors, net earnings
increased 8.0% for the first 39 weeks and 11.4% for the third quarter
of fiscal 2005 over the comparable prior year periods.

Management believes that prolonged periods of rising product costs
together with general economic conditions, including the impact of
increased fuel costs on consumer spending, contributed to the softness
in the foodservice market and thus a slowing of SYSCO's sales growth
beginning in the latter half of the fourth quarter of fiscal 2004 and
continuing in fiscal 2005. The company continues to focus on customer
account penetration and expense controls, including managing personnel
expenses, improving productivity and ongoing benchmarking and sharing
of best practices at the operating companies.

OVERVIEW

SYSCO distributes food and related products to the foodservice
industry including restaurants, healthcare and educational facilities,
lodging establishments and other foodservice customers. SYSCO's
operations are located throughout the United States and Canada and
include broadline companies, specialty produce companies, custom-cut
meat operations, Asian cuisine foodservice operations, hotel supply
operations, and SYGMA, the company's chain restaurant distribution
subsidiary.

The company estimates that it serves more than 14% of an approximately
$207 billion annual foodservice market that includes the North
American foodservice, non-food and hotel amenity, furniture and
textile markets. The foodservice, or food-prepared-away-from-home,
market represents approximately one-half of the total dollars spent on
food purchases made at the consumer level. This share has grown from
about 37% in 1972 to its current level in 1998. This growth was a
result of food purchases in the foodservice industry increasing more
rapidly than food purchases in the retail grocery industry over most
of that time period. Factors influencing the mix of dollars spent on
food-prepared-away-from-home versus retail grocery purchases include
increases in dual-worker and single-parent families; busier
lifestyles; the general aging of the population; growing affluence;
and the increasing demand for the variety, convenience and
entertainment afforded by the proliferation of restaurants and other
foodservice operations.

16

General economic conditions and consumer confidence can affect the
frequency and amount spent by consumers for
food-prepared-away-from-home and in turn can impact SYSCO's sales.
SYSCO has historically grown at a faster rate than the overall
industry and has grown its market share in this fragmented industry.

The company intends to continue to expand its market share and grow
earnings through strategies which include:

o Profitable sales growth: In addition to expansion through
foldouts (new operating companies created in established markets
previously served by other SYSCO operating companies) and a
disciplined acquisition program, refining the use of customer
purchasing potential and profitability data in targeting new
customers, deepening relationships with existing customers,
tailoring products and services and allocating associated
resources by customer, and managing the profitability of, or
exiting, low profit or unprofitable customers.
o Brand management: Leveraging brand strength to grow sales and
profitability while ensuring strict quality control processes and
providing greater value to customers.
o Productivity: Deploying the latest technology and implementing
best business practices to improve operating efficiencies and
leverage expenses to sales growth.
o Sales force effectiveness: Targeted recruiting, training and
compensation of customer contact associates, increasing the
number of customer contact associates and expanding the business
development and business review functions to further strengthen
our customer relationships.
o Supply chain optimization: Creating a more efficient and
effective supply chain infrastructure through the National Supply
Chain project.

The company's National Supply Chain project is intended to optimize
the supply chain activities for products from SYSCO's operating
companies in each respective region and as a result, increase
profitability and lower inventory and operating costs, working capital
requirements and future facility expansion needs at SYSCO's operating
companies while providing greater value to our suppliers and
customers. The company expects to build from seven to nine regional
distribution centers over a period of ten years. The first of which,
the Northeast Redistribution Center located in Front Royal, Virginia,
opened during the third quarter of fiscal 2005. As of May 2, it was
supplying products to five of the 14 broadline operating companies in
the northeast region and is expected to be shipping products to one
half of the operating companies in the northeast region by the end of
May. The company expects that all 14 companies will be receiving
products from the Northeast Redistribution Center by October 2005. The
company expects to begin construction of its second regional
redistribution facility, to be located in the Southeast, in fiscal
2006.

Management estimates that additional expenses related to the Northeast
Redistribution Center over what was incurred in fiscal 2004 will have
a negative impact of $0.03 to $0.04 on earnings per share during
fiscal 2005. In fiscal 2006, management estimates that the benefits of
the project are expected to offset any further costs, and that there
should be no additional negative impact, and perhaps a one-half cent
contribution, to earnings per share.

17

RESULTS OF OPERATIONS

The following table sets forth the components of the Results of Operations
expressed as a percentage of sales for the periods indicated:

39-Week Period Ended 13-Week Period Ended
----------------------------- -----------------------------
Apr. 2, 2005 Mar. 27, 2004 Apr. 2, 2005 Mar. 27, 2004
------------ ------------- ------------ -------------

Sales 100.0% 100.0% 100.0% 100.0%

Costs and Expenses
Cost of sales 81.0 80.7 81.1 80.9
Operating expenses 14.0 14.3 14.1 14.4
Interest expense 0.2 0.2 0.3 0.2
Other, net 0.0 0.0 0.0 0.0
----- ----- ----- -----

Total costs and expenses 95.2 95.2 95.5 95.5
----- ----- ----- -----

Earnings before income taxes 4.8 4.8 4.5 4.5
Income taxes 1.8 1.8 1.6 1.7
----- ----- ----- -----
Net earnings 3.0% 3.0% 2.9% 2.8%
===== ===== ===== =====

The following table sets forth the change in the components of the
Results of Operations expressed as a percentage increase or decrease
over the comparable period in the prior year:

39-Week Period 13-Week Period
-------------- --------------

Sales 5.2% 5.9%

Costs and Expenses
Cost of sales 5.6 6.1
Operating expenses 2.7 4.4
Interest expense 9.6 28.0
Other, net
(36.0) 133.5
----- -----
Total costs and expenses 5.2 5.9
----- -----
Earnings before income taxes 5.8 5.4
Income taxes 2.3 (4.3)
----- -----
Net earnings 8.0% 11.4%
===== =====
Basic earnings per share 9.3% 9.7%
Diluted earnings per share 9.5 13.3

Average shares outstanding (1.0) (1.0)
Diluted shares outstanding (1.4) (1.9)

18

SALES Acquisitions contributed 0.7% to the overall sales growth rate
for the first 39 weeks of fiscal 2005 and 1.0% for the third quarter
of fiscal 2005. In addition, increases in both sales prices and unit
volumes shipped contributed to the sales growth. SYSCO generally
expects to pass product cost increases to its customers; however, the
actual amount of product cost increases reflected as increases in
sales price is difficult to quantify. Estimated product cost increases
were 4.4% during the first 39 weeks of fiscal 2005 and 3.8% during the
third quarter of fiscal 2005.

Management believes that prolonged periods of rising product costs
together with general economic conditions, including the impact of
increased fuel costs on consumer spending, contributed to the softness
in the foodservice market and thus a slowing of SYSCO's sales growth
beginning in the latter half of the fourth quarter of fiscal 2004 and
continuing into fiscal 2005. However, sales growth of 5.9% in the
third quarter of fiscal 2005 over the comparable prior year period
represents a sequential increase when compared to the sales growth of
4.2% for the second quarter of fiscal 2005 over the comparable prior
year period. In addition, sales growth in the third quarter of fiscal
2005 was negatively impacted by bad weather particularly in the
Northeast and Midwest.

The company also continues its focus on profitable sales growth. One
part of this strategy involves being more selective with respect to
which customers we serve, including managing the profitability of, or
exiting, unprofitable customers and refining the use of customer
purchasing potential and profitability data in targeting new
customers. The company continues to see reductions in sales to
unprofitable customers over the comparable prior year periods.

GROSS MARGINS Gross margins as a percentage of sales declined in the
first 39 weeks and third quarter of fiscal 2005 when compared to the
comparable prior year periods. Management believes that this gross
margin decline was caused by several factors, including product cost
increases, changes in segment mix, customer mix and pricing pressure.
Product cost increases in most of the product categories had the
impact of reducing gross margins as a percentage of sales, as gross
profit dollars are earned on a higher sales dollar base.

OPERATING EXPENSES The decrease in operating expenses as a percentage
of sales was aided by improved operating efficiencies. For example,
the Broadline segment continues to demonstrate improving trends in key
expense metrics, including miles driven per trip and pieces per error.
Increases in product costs and the resulting increased average sales
price per item also favorably impacted expenses as a percentage of
sales as operating costs increased at a lower rate.

Operating expenses were favorably impacted by the recognition in
income of $12,430,000 in the first 39 weeks and negatively impacted by
the recognition of a loss of $1,765,000 in the third quarter of fiscal
2005 to adjust the carrying value of life insurance assets to their
cash surrender value. This compared to the recognition in income of
$19,221,000 and $2,437,000 in the comparable periods of fiscal 2004,
respectively.

Operating expenses were negatively impacted by increased costs to
deliver product to customers due to increased fuel costs of
approximately $22,000,000 in the first 39 weeks and $7,000,000 in the
third quarter of fiscal 2005 over comparable periods of fiscal 2004.
The impact of increasing fuel costs was partially offset by a
reduction in both miles driven and number of stops. Operating expenses
were also negatively impacted by bad weather conditions.

19

Operating expenses related to the National Supply Chain project were
$29,581,000 in the first 39 weeks and $14,030,000 in the third quarter
of fiscal 2005, as compared to $20,684,000 and $3,392,000 in the
comparable periods of fiscal 2004.

The company's focus on managing personnel expenses has resulted in a
reduction of the number of associates by approximately 2,100 from July
3, 2004 to April 2, 2005. The company believes that this has resulted
in the total number of associates being more aligned with the current
sales volumes and as a result, has aided in the company's efforts to
manage overall expenses. The company will adjust its workforce levels
in the future as actual or expected sales volumes change. In the
coming periods, the company will be focusing its efforts on increasing
the number of customer contact associates.

INTEREST EXPENSE The increase in interest expense was due to increased
borrowing rates in fiscal 2005 as compared to fiscal 2004. The
increase in the company's overall borrowing rates was primarily due to
an increase in the percentage of the company's debt with fixed
interest rates in fiscal 2005 as compared to fiscal 2004. In fiscal
2004, the company's debt portfolio included a larger percentage of
floating rate debt in the form of either commercial paper borrowings
or fixed rate debt converted to floating through interest rate swap
agreements. In addition, market interest rates have increased over the
last year.

OTHER INCOME The company recognized a gain on the sale of a facility
of approximately $5,700,000 in the second quarter of fiscal 2004.

INCOME TAXES The effective tax rate was 37.23% and 34.97% for the
first 39 weeks and third quarter of fiscal 2005, respectively, as
compared to 38.5% for the comparable prior year periods. Included in
income tax expense in the third quarter of fiscal 2005 is the
reduction of an accrual for a tax contingency of $11,000,000.

EARNINGS PER SHARE The increases in earnings per share were the result
of factors discussed above, as well as a net reduction of shares
outstanding due primarily to share repurchases.

SEGMENT RESULTS

The following table sets forth the change in the selected financial
data of each of the company's reportable segments expressed as a
percentage increase (decrease) over the comparable period in the prior
year and should be read in conjunction with Business Segment
Information (Footnote No. 12) in the Notes to Consolidated Financial
Statements:

39-Week Period 13-Week Period
--------------------- ------------------
Earnings Earnings
before before
Sales taxes Sales taxes
----- -------- ----- --------

Broadline 4.0% 7.2% 4.4% 8.5%
SYGMA 10.9 (19.1) 12.5 6.5
Other 9.4 10.8 11.9 3.8

20

The following tables set forth sales and earnings before income taxes
of each of the company's reportable segments expressed as a percentage
of the respective consolidated total and should be read in conjunction
with Business Segment Information (Footnote No. 12) in the Notes to
Consolidated Financial Statements:

39-Week Period Ended
------------------------------------------------
Apr. 2, 2005 Mar. 27, 2004
---------------------- ---------------------
Earnings Earnings
Sales before taxes Sales before taxes
----- ------------ ----- ------------

Broadline 80.0% 99.2% 80.9% 98.0%
SYGMA 12.7 1.2 12.1 1.6
Other 8.4 5.6 8.1 5.3
Intersegment sales (1.1) (1.1)
Unallocated corporate expenses (6.0) (4.9)
----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====

13-Week Period Ended
------------------------------------------------
Apr. 2, 2005 Mar. 27, 2004
---------------------- ---------------------
Earnings Earnings
Sales before taxes Sales before taxes
----- ------------ ----- ------------

Broadline 79.3% 101.4% 80.4% 98.6%
SYGMA 13.2 1.6 12.4 1.6
Other 8.6 6.1 8.2 6.2
Intersegment sales (1.1) (1.0)
Unallocated corporate expenses (9.1) (6.4)
----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====

BROADLINE SEGMENT Acquisitions contributed 0.1% to the overall sales
growth rate for the Broadline segment for the first 39 weeks and 0.2%
for the third quarter of fiscal 2005. The sales increases were
primarily due to increased sales to marketing associate-served
customers and multi-unit customers, including increased sales of SYSCO
Brand products and increases in both sales prices and unit volumes.
Marketing associate-served sales as a percentage of broadline sales in
the U.S. were 53.3% and 52.6% for the first 39 weeks and third quarter
of fiscal 2005, respectively, as compared to 53.1% and 51.7%,
respectively, for the comparable prior year periods. SYSCO Brand sales
as a percentage of broadline sales in the U.S. were 49.4% and 48.8%
for the first 39 weeks and the third quarter of fiscal 2005,
respectively, as compared to 49.3% and 49.1%, respectively, for the
comparable prior year periods.

The increases in earnings before income taxes for the Broadline
segment were primarily due to increases in sales and increased
operating efficiencies which overcame higher fuel costs, resulting in
lower expenses as a percentage of sales.

21

SYGMA SEGMENT Acquisitions contributed 2.8% to the overall sales
growth rate for the SYGMA segment for the first 39 weeks and 2.8% for
the third quarter of fiscal 2005. The remaining increase was due
primarily to sales to new customers, sales growth in SYGMA's existing
customer base related to new locations added by those customers, as
well as increases in sales to existing locations, and price increases
resulting primarily from higher product costs.

The decrease in earnings before income taxes for the SYGMA segment for
the first 39 weeks of fiscal 2005 over the comparable prior year
period was primarily as a result of the factors discussed below.
Earnings before income taxes for the third quarter of fiscal 2005
increased over the comparable prior year period but was also impacted
by the factors discussed below.

During the fourth quarter of fiscal 2004 and the first quarter of
fiscal 2005, SYGMA discontinued servicing a portion of its largest
customer's locations due to that customer's geographic supply chain
realignment. SYGMA is offsetting these lost sales by obtaining sales
from additional locations from this customer and obtaining new
business from other customers. In many cases, this new business is
being served out of different SYGMA locations than those that
originally served the discontinued business. SYGMA opened a new
facility to serve a portion of the new business which it began serving
in the fourth quarter of fiscal 2005. As a result, during the fourth
quarter of fiscal 2004 and throughout fiscal 2005, SYGMA's operating
profits have been impacted by increased operating expenses as it
transitioned its operations to serve the new business it has acquired.
In addition, SYGMA's gross margins as a percent of sales in fiscal
2005 have declined from the comparable period in fiscal 2004 due to
product cost increases and lower agreed upon pricing with its
customers.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities, 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.

Operating Activities

Cash flow from operations in the first 39 weeks of fiscal 2005 was
negatively impacted by increases in inventory balances of $69,578,000
and increases in accounts receivable balances of $48,948,000, offset
by a modest increase in accounts payable balances of $7,967,000.

Also impacting cash flow from operations was a decrease in accrued
expenses of $38,225,000. This decrease primarily reflects the payment
of annual incentive based bonuses for fiscal 2004 which were paid in
early fiscal 2005, partially offset by accruals for fiscal 2005
incentive based bonuses.

The company's contributions to its defined benefit plans were
$84,603,000 and $164,012,000 during the 39-week periods ended April 2,
2005 and March 27, 2004, respectively. SYSCO does not expect to make
significant additional contributions during the remainder of fiscal
2005, whereas total contributions in fiscal 2004 were $165,512,000.

Investing Activities

Total capital expenditures in fiscal 2005 are expected to be
approximately $400,000,000 to $425,000,000. Projected capital
expenditures include the fold-out program; facility, fleet and other
equipment replacements and expansions; the company's National Supply
Chain project;

22

and investments in technology. Amounts capitalized in the first 39
weeks of fiscal 2005 related to the company's National Supply Chain
project totaled $31,814,000. Total amounts capitalized on the project
since inception were $184,069,000 through April 2, 2005.

Financing Activities

During the first 39 weeks of fiscal 2005, a total of 10,096,200
shares were repurchased at a cost of $354,078,000, as compared to
13,805,400 shares at a cost of $508,963,000 for the comparable period
in fiscal 2004. An additional 2,070,000 shares at a cost of
$73,480,000 have been purchased through April 30, 2005. In February
2005, the Board authorized an additional 20,000,000 shares for
repurchase, resulting in 20,442,700 shares remaining available for
repurchase as authorized by the Board as of April 30, 2005.

The company made three regular quarterly dividend payments during the
first 39 weeks of fiscal 2005, totaling $0.41 per share. In February
2005, SYSCO declared its regular quarterly dividend for the fourth
quarter of fiscal 2005, at $0.15 per share, which was paid in April
2005.

As of April 2, 2005, SYSCO's borrowings under its commercial paper
programs were $73,043,000. Such borrowings were $41,326,000 as of
April 30, 2005. During the 39-week period ended April 2, 2005,
commercial paper and short-term bank borrowings ranged from
approximately $46,327,000 to $253,384,000.

As of April 2, 2005, 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 April 2, 2005. There
were no outstanding borrowings under these lines of credit as of
April 30, 2005.

Included in current maturities of long-term debt are the 6.5% Senior
Notes totaling $150,000,000 due June 2005 and the 4.75% Senior Notes
totaling $200,000,000 due July 2005. It is the company's intention to
fund the repayment of these notes at maturity through issuances of
commercial paper, cash flow from operations or a combination thereof.
The company currently intends to issue long-term debt totaling
approximately $350,000,000 in the first quarter of fiscal 2006 to
replace the cash used and/or commercial paper issued to repay the
maturing senior notes.

In April 2005, SYSCO filed with the Securities and Exchange
Commission a $1,500,000,000 shelf registration of debt securities.
The registration statement was declared effective in May 2005.

The long-term debt to capitalization ratio was 33.2% at April 2,
2005, which is slightly below the company's long-term 35% to 40%
target range. For purposes of calculating this ratio, long-term debt
includes both the current maturities and long-term portion.

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 April 2, 2005, letters of credit
outstanding were $8,971,000. In April 2005, SYSCO issued a letter of
credit in the amount of $72,000,000 to satisfy the collateral
requirement for an insurance agreement which was previously satisfied
with funds on deposit in an insurance trust. As of April 30, 2005,
letters of credit outstanding were $80,971,000.

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

23

credit, debt shelf registration and its 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.

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are those that are most important to the
portrayal of the company's financial position and results of
operations. These policies require management's most subjective
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,
self-insurance programs, pension plans and accounting for business
combinations, and are described in Item 7 of the company's Annual
Report on Form 10-K for the year ended July 3, 2004. There were no
changes in critical accounting policies during the third quarter of
fiscal 2005.

NEW ACCOUNTING STANDARDS

On December 16, 2004, the Financial Accounting Standards Board (FASB)
issued FASB Statement No. 123 (revised 2004), "Share-Based Payment"
(SFAS 123(R)), which is a revision of FASB Statement No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123(R)
supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB Opinion 25), and amends FASB Statement No. 95,
"Statement of Cash Flows." Generally, the approach in SFAS 123(R) is
similar to the approach described in SFAS 123. However, SFAS 123(R)
requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the income statement
based on their fair values. Pro forma disclosure is no longer an
alternative under the new standard.

SYSCO will adopt Statement 123(R) in the first quarter of fiscal
2006. SFAS 123(R) allows for two transition methods. The basic
difference between the two methods is that the modified-prospective
transition method does not require restatement of prior periods,
whereas the modified-retrospective transition method will require
restatement.

As permitted by SFAS 123, the company currently accounts for
share-based payments to employees using APB Opinion 25's intrinsic
value method and, as such, generally recognizes no compensation cost
for employee stock options or stock issuances under the employee
stock purchase plan. Although the full impact of the company's
adoption of SFAS 123(R)'s fair value method has not yet been
determined, the company expects that it will have a significant
impact on its results of operations. The disclosure in the footnotes
to the company's consolidated financial statements under Stock-Based
Compensation of pro forma net income and earnings per share as if the
company had recognized compensation cost for share based payments
under SFAS 123 for periods prior to fiscal 2006 is not necessarily
indicative of the potential impact of recognizing compensation cost
for share based payments under SFAS 123(R) in future periods. The
potential impact of adopting SFAS 123(R) is dependent on levels of
share-based payments granted, the specific option pricing model
utilized to determine fair value and the transition methodology
selected.

24

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; industry growth; the impact of
ongoing legal proceedings; the timing, expected cost savings and
other benefits, including the expected impact on earnings per share
of the National Supply Chain project, including the Northeast
Redistribution Center; anticipated capital expenditures; the ability
to increase market share and grow earnings; sales growth; growth
strategies; SYSCO's ability to refinance current maturities of
long-term debt; the anticipated amount and timing of debt issuances
and SYSCO's ability to meet its 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; changing customer needs; SYSCO's leverage and
debt risks; the successful completion and integration of acquisitions
and fold-outs; the effect of competition on SYSCO and its customers;
the ultimate outcome of litigation; potential impact of product
liability claims; the risk of interruption of supplies due to lack of
long-term contracts, severe weather, work stoppages or otherwise;
labor issues; construction schedules; management's allocation of
capital and the timing of capital purchases; 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 improve efficiencies, control expenses
and successfully execute growth strategies.

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 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 July 3, 2004.

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 April 2, 2005, the company had outstanding $73,043,000 of
commercial paper at variable rates of interest with maturities
through July 7, 2005. The company's long-term debt obligations of
$1,398,577,000 were primarily at fixed rates of interest.

In February 2005, SYSCO terminated $500,000,000 aggregate notional
amount of interest rate swaps which were fair value hedges against
the 7.00% Senior Notes due May 2006,

25

7.25% Senior Notes due April 2007 and 4.60% Senior Notes due March
2014 and received cash of $5,316,000, which represented the fair
value of the swap agreements at the time of termination.

The company currently intends to issue long-term debt totaling
approximately $350,000,000 in the first quarter of fiscal 2006. In
March 2005, SYSCO entered into a forward-starting interest rate swap
with a notional amount of $350,000,000 in order to hedge the interest
rate risk arising during the period prior to the expected issuance.
The company has designated this derivative as a cash flow hedge of
the variability in the cash outflows of interest payments on the
forecasted debt issuance due to changes in the benchmark interest
rate.

Item 4. Controls and Procedures

As of April 2, 2005, 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 April 2, 2005 in providing reasonable assurances
that material information required to be disclosed is recorded,
processed, summarized and reported on a timely basis in the reports
it files with the Securities and Exchange Commission. Furthermore,
the company's management noted that, as a result of their evaluation
of changes in internal control over financial reporting, they
identified no changes during the third quarter of fiscal 2005 that
materially affected, or would be reasonably likely to materially
affect, the company's internal control over financial reporting.

26

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. Unregistered Sales of Equity Securities and Use of Proceeds

SYSCO made the following share repurchases during the third
quarter of fiscal 2005:

-----------------------------------------------------------------------------------------------------------
ISSUER PURCHASES OF EQUITY SECURITIES
-----------------------------------------------------------------------------------------------------------
(c) TOTAL NUMBER
OF SHARES (d) MAXIMUM NUMBER
PURCHASED AS PART OF SHARES THAT MAY
(a) TOTAL NUMBER (b) AVERAGE OF PUBLICLY YET BE PURCHASED
OF SHARES PRICE PAID ANNOUNCED PLANS OR UNDER THE PLANS OR
PERIOD PURCHASED(1) PER SHARE PROGRAMS PROGRAMS
-----------------------------------------------------------------------------------------------------------

Month #1
Jan. 2 - Jan. 29 1,717,785 $36.59 1,706,000 6,472,700
-----------------------------------------------------------------------------------------------------------
Month #2
Jan. 30 - Feb. 26 1,731,878 34.95 1,710,000 24,762,700
-----------------------------------------------------------------------------------------------------------
Month #3
Feb. 27 - Apr. 2 2,290,120 34.24 2,250,000 22,512,700
-----------------------------------------------------------------------------------------------------------
Total 5,739,783 35.16 5,666,000 22,512,700
-----------------------------------------------------------------------------------------------------------

(1) The total number of shares purchased includes 11,875, 21,878
and 40,120 shares tendered by individuals in connection with
stock option exercises in Month #1, Month #2 and Month #3,
respectively.

On September 12, 2003, the company announced that the Board of
Directors approved the repurchase of 20,000,000 shares. In July
2004, the Board of Directors authorized the company to enter into
agreements from time to time to extend its ongoing repurchase
program to include repurchases during company announced "blackout
periods" of such securities in compliance with Rule 10b5-1
promulgated under the Exchange Act.

On November 23, 2004, the company entered into a stock purchase
plan with Banc of America Securities LLC to purchase shares of
SYSCO common stock pursuant to Rules 10b5-1 and 10b-18 under the
Exchange Act. Subject to certain conditions, the shares will be
purchased during the period between November 29, 2004 and August
16, 2005, including during company "blackout" periods. The
maximum share authorization under this agreement was reached in
May 2005; therefore, no further shares will be purchased under
this agreement.

On February 18, 2005, the company announced that the Board of
Directors approved the repurchase of an additional 20,000,000
shares over a 12- to 18-month period.

In March 2005, 35,520 Dividend Access Shares, convertible on a
one-for-one basis into SYSCO shares, were released to the former
shareholders of North Douglas Distributors ("North Douglas")
pursuant to the terms of an escrow agreement executed in
connection with SYSCO's acquisition of North Douglas in December
2000.

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.

27

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

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 Form10-Q
for the quarter ended January 1, 2000 (File No.
1-6544).

3(e) Certificate of Amendment to Restated Certificate of
Incorporation increasing authorized shares,
incorporated by reference to Exhibit 3(e) to Form 10-Q
for the quarter ended December 27, 2003 (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).

28

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).

4(j) Seventh Supplemental Indenture, including form of Note,
dated March 5, 2004 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(j)
to Form 10-Q for the quarter ended March 27, 2004 (File
No. 1-6544).

*10(a) Form of CEO Supplemental Performance-Based Bonus
Agreement.

*15(a) Report from Ernst & Young LLP dated May 12, 2005, 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

29

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: May 12, 2005

By /s/ John K. Stubblefield, Jr.
--------------------------------------
John K. Stubblefield, Jr.
Executive Vice President, Finance and
Chief Financial Officer

Date: May 12, 2005

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 Form10-Q
for the quarter ended January 1, 2000 (File No.
1-6544).

3(e) Certificate of Amendment to Restated Certificate of
Incorporation increasing authorized shares,
incorporated by reference to Exhibit 3(e) to Form 10-Q
for the quarter ended December 27, 2003 (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).

4(j) Seventh Supplemental Indenture, including form of Note,
dated March 5, 2004 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(j)
to Form 10-Q for the quarter ended March 27, 2004 (File
No. 1-6544).

*10(a) Form of CEO Supplemental Performance-Based Bonus
Agreement.

*15(a) Report from Ernst & Young LLP dated May 12, 2005, 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