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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 2, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6544
SYSCO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-1648137
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
1390 ENCLAVE PARKWAY, HOUSTON, TEXAS 77077-2099
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 584-1390
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
------------------- ------------------------
Common Stock, $1.00 par value New York Stock Exchange
Liquid Yield Option Notes due 2004 New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK OF THE REGISTRANT HELD BY
STOCKHOLDERS WHO WERE NOT AFFILIATES (AS DEFINED BY REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION) OF THE REGISTRANT WAS APPROXIMATELY
$4,459,000,000 AT SEPTEMBER 9, 1994 (BASED ON THE CLOSING SALES PRICE ON THE
NEW YORK STOCK EXCHANGE COMPOSITE TAPE ON SEPTEMBER 9, 1994, AS REPORTED BY THE
WALL STREET JOURNAL (SOUTHWEST EDITION)). AT SEPTEMBER 9, 1994, THE REGISTRANT
HAD ISSUED AND OUTSTANDING AN AGGREGATE OF 183,421,732 SHARES OF ITS COMMON
STOCK.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the proxy statement to be filed not later than 120 days after
July 2, 1994 are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
Sysco Corporation (together with its subsidiaries and divisions hereinafter
referred to as "SYSCO" or the "Company") is engaged in the marketing and
distribution of a wide range of food and related products to the foodservice or
"away-from-home-eating" industry. The foodservice industry consists of two
major customer segments -- "traditional" and "chain restaurants". Traditional
foodservice customers include restaurants, hospitals, schools, hotels and
industrial caterers. SYSCO's chain restaurant customers include regional pizza
and French-style bakery operations and national hamburger, chicken and steak
chain operations.
Services to the Company's traditional foodservice and chain restaurant
customers are supported by similar physical facilities, vehicles, materials
handling equipment and techniques, and marketing, merchandising and operating
staffs.
CUSTOMERS AND PRODUCTS
The traditional foodservice segment includes businesses and organizations which
prepare and serve food to be eaten away from home. Products distributed by the
Company include a full line of frozen foods, such as frozen meats, fully
prepared frozen entrees, frozen fruits, vegetables and desserts, and a full
line of canned and dry goods. In addition, SYSCO's broader line of product
offerings includes such items as fresh meat, imported specialties and fresh
produce. The Company also supplies a wide variety of nonfood items, including
paper products such as disposable napkins, plates and cups; tableware such as
china and silverware; restaurant and kitchen equipment and supplies;
medical/surgical supplies; and cleaning supplies. SYSCO distributes both
nationally-branded merchandise and products packaged under its own private
brands.
The Company believes that prompt and accurate delivery of orders, close contact
with customers and the ability to provide a full array of products and services
to assist customers in their foodservice operations are of primary importance
in the marketing and distribution of products to the foodservice industry.
SYSCO offers daily delivery to certain customer locations and has the
capability of delivering special orders on short notice. Through its more than
8,100 sales, marketing and service representatives, the Company keeps informed
as to its customers' needs and acquaints them with new products. SYSCO also
provides ancillary services relating to its foodservice distribution such as
providing customers with product usage reports and other data, menu-planning
advice, contract services for installing kitchen equipment, installation and
service of beverage dispensing machines and assistance in inventory control.
No single traditional foodservice customer accounted for as much as 3% of
SYSCO's sales for its fiscal year ended July 2, 1994. Approximately 5% of
traditional foodservice sales during fiscal 1994 resulted from a process of
competitive bidding. There are no
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material long-term contracts with any traditional foodservice customer that may
not be cancelled by either party at its option.
The Company's SYGMA Network operations specialize in customized service to
chain restaurants, which service is also provided to a lesser extent by many of
the Company's traditional foodservice operations. SYSCO's sales to the chain
restaurant industry consist of a variety of food products necessitated by the
increasingly broad menus of chain restaurants. The Company believes that
consistent product quality and timely and accurate service are important
factors in the selection of a chain restaurant supplier. No chain restaurant
customer accounted for as much as 3% of SYSCO's sales for its fiscal year ended
July 2, 1994, and there are no material long-term contracts with any chain
restaurant customer that may not be cancelled by either party at its option.
SYSCO does not record sales on the basis of the type of foodservice industry
customer, but based upon available information, the Company estimates that
sales by type of customer during the past three fiscal years were as follows:
Fiscal Fiscal Fiscal
Type of Customer 1994 1993 1992
---------------- ------ ------ ------
Restaurants 60% 60% 60%
Hospitals and nursing homes 13 13 13
Schools and colleges 7 7 8
Hotels and motels 6 6 6
Other 14 14 13
--- --- ---
Totals 100% 100% 100%
=== === ===
SOURCES OF SUPPLY
SYSCO estimates that it purchases from thousands of independent sources, none
of which represents the source of more than 5% of the Company's purchases.
These sources of supply consist generally of large corporations selling brand
name and private label merchandise and independent private label processors and
packers. Generally, purchasing is carried out on a decentralized basis through
centrally developed purchasing programs (see "Corporate Headquarters' Services
and Controls" below) and direct purchasing programs established by the
Company's various operating subsidiaries and divisions. The Company
continually develops relationships with suppliers but has no material long-term
purchase commitments with any supplier.
ACQUISITIONS AND DIVESTITURES
Since its formation as a Delaware corporation in 1969 and commencement of
operations in March 1970, SYSCO has grown both through internal expansion of
existing operations and acquisitions of formerly independent companies. The
shareholders of nine companies exchanged their stock for SYSCO common stock at
the formation of the Company, and through the end of fiscal 1994, fifty-one
companies have been acquired, as follows:
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Date Accounted
Company Acquired for as a:
------- -------- -------------
The Grant Grocer Company June 1970 Pooling
The Albany Frosted Foods, Inc. and Affiliated Companies September 1970 Pooling
Arrow Food Distributors, Inc. January 1971 Purchase
Koon Food Sales, Inc. March 1971 Pooling
Rome Foods Company October 1971 Pooling
Saunders Food Distributors, Inc. October 1971 Purchase
Hallsmith Company, Inc. April 1972 Pooling
The Miesel Company June 1972 Pooling
Robert Orr & Company July 1972 Pooling
Jay Rodgers Co. July 1972 Pooling
Hardin's, Inc. August 1972 Pooling
Baraboo Food Products, Inc. May 1973 Pooling
E. R. Cochran Company December 1973 Purchase
The Fialkow Company December 1973 Purchase
Sterling-Keeleys Incorporated December 1973 Purchase
Harrisonburg Fruit & Produce Co. April 1974 Pooling
Alabama Complete Foods, Inc. July 1974 Pooling
Swan Food Sales, Inc. October 1974 Purchase
Tri-State General Food Supply Co., Inc. December 1974 Purchase
Marietta Institutional Wholesalers, Inc. June 1975 Purchase
Monticello Provision Company August 1975 Purchase
Oregon Film Service, Inc. and Affiliated Companies September 1975 Purchase
Mid-Central Fish & Frozen Foods, Inc. December 1975 Purchase
Glen-Webb & Co. December 1978 Purchase
Select-Union Foods, Inc. April 1979 Purchase
S.E. Lankford, Jr. Produce, Inc. September 1981 Purchase
General Management Corporation and Subsidiaries January 1982 Purchase
Frosted Foods, Inc. January 1982 Purchase
Pegler & Company October 1983 Purchase
Bell Distributing Company December 1983 Purchase
DiPaolo Food Distributors, Inc. June 1985 Purchase
B. A. Railton Company September 1985 Purchase
CML Company, Inc. September 1985 Purchase
New York Tea Company September 1985 Purchase
Operating divisions of PYA/Monarch, Inc. and
PYA/Monarch of Texas, Inc. (Wholly-owned
subsidiaries of Sara Lee Corporation)
Amarillo, Texas September 1985 Purchase
Austin, Texas September 1985 Purchase
Beaumont, Texas September 1985 Purchase
Trammell, Temple & Staff, Inc. January 1986 Purchase
Deaktor Brothers Provision Co. March 1986 Purchase
Bangor Wholesale Foods, Inc. June 1986 Purchase
General Foodservice Supply, Inc. December 1986 Purchase
Vogel's June 1987 Purchase
Major-Hosking's, Inc. July 1987 Purchase
Foodservice distribution - related businesses of
Staley Continental, Inc. (CFS Continental) August 1988 Purchase
Olewine's, Inc. December 1988 Purchase
Oklahoma City-based foodservice distribution
businesses of Scrivner, Inc. April 1990 Purchase
New York and Pennsylvania-based foodservice
distribution businesses of Scrivner, Inc. April 1991 Purchase
Benjamin Polakoff & Son, Inc. May 1992 Purchase
Perloff Brothers, Inc. (Tartan Foods) December 1992 Purchase
St. Louis Division of Clark Foodservice, Inc. February 1993 Purchase
Ritter Food Corporation August 1993 Purchase
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SYSCO sold its Global/Sysco division, its last remaining consumer-sized frozen
food distribution business, in August 1992.
Two companies were acquired in fiscal 1993. Tartan Sysco Food Services, Inc.
(formerly Perloff Brothers, Inc.) of Philadelphia, Pennsylvania is a full-line
foodservice distributor to customers in Pennsylvania, Delaware, New Jersey and
Maryland. Sysco Food Services of St. Louis, Inc. (formerly the St. Louis
Division of Clark Foodservice, Inc.) is a full-line foodservice distributor to
customers in St. Louis, Missouri and surrounding communities.
On August 20, 1993 SYSCO purchased Ritter Sysco Food Services, Inc. (formerly
Ritter Food Corporation) of Elizabeth, New Jersey, a full-line foodservice
distributor to customers in New Jersey, metropolitan New York, western
Connecticut and the Philadelphia, Pennsylvania area.
CORPORATE HEADQUARTERS' SERVICES AND CONTROLS
SYSCO's corporate staff, currently consisting of approximately 690 persons,
provides a number of services to the Company's operating divisions and
subsidiaries. These persons possess experience and expertise in, among other
areas, accounting and finance, cash management, data processing, employee
benefits, engineering and insurance. Also provided are legal, marketing and
tax compliance services as well as warehousing and distribution services which
provide assistance in space utilization, energy conservation, fleet management
and work flow.
The corporate staff also administers a consolidated product procurement program
engaged in the task of developing, obtaining and assuring consistent quality
food and nonfood products. The program covers the purchasing and marketing of
SYSCO (R) Brand merchandise, as well as private label and national brand
merchandise, encompassing substantially all product lines. The Company's
operating subsidiaries and divisions may participate in the program at their
option.
CAPITAL IMPROVEMENTS
To maximize productivity and customer service, the Company continues to
construct and modernize its distribution facilities where the appropriate
return on investment is projected. During fiscal 1994, 1993 and 1992,
approximately $161,000,000, $128,000,000 and $134,000,000, respectively, were
invested in facility expansions, fleet additions and other capital asset
enhancements. The Company estimates its capital expenditures in fiscal 1995
should be in the range of $150,000,000 to $200,000,000. During the three years
ended July 2, 1994, capital expenditures have been financed primarily by
internally generated funds and bank borrowings.
EMPLOYEES
As of July 2, 1994, the Company had approximately 26,200 employees, 21.9% of
whom are represented by unions, primarily the International Brotherhood of
Teamsters.
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Contract negotiations are handled locally with monitoring and assistance by the
corporate staff. Collective bargaining agreements covering approximately 12% of
the Company's union employees expire during fiscal 1995. SYSCO considers its
labor relations to be satisfactory.
COMPETITION
The business of SYSCO is competitive with numerous companies engaged in
foodservice distribution. While competition is encountered primarily from
local and regional distributors, a few companies compete with SYSCO on a
national basis.
The Company believes that, although price and customer contact are important
considerations, the principal competitive factor in the foodservice industry is
the ability to deliver a wide range of quality products and related services on
a timely and dependable basis. Although SYSCO has less than 10% of the
foodservice industry market in the United States, SYSCO believes, based upon
industry trade data, that its sales to the "away-from-home-eating" industry are
the largest of any foodservice distributor. While adequate industry statistics
are not available, the Company believes that in most instances its local
operations are among the leading distributors of food and related nonfood
products to foodservice customers in their respective trading areas.
GENERAL
Except for the SYSCO (R) trademark, the Company does not own or have the right
to use any patents, trademarks, licenses, franchises or concessions, the loss
of which would have a materially adverse effect on the operations or earnings
of the Company.
SYSCO is not engaged in material research activities relating to the
development of new products or the improvement of existing products. The
Company is engaged in an internally developed project that involves the
redesign and development of the computer operating systems through which
SYSCO's operating companies will process, control and report the results of all
transactions. The project is approaching completion, with the first
installation scheduled during calendar 1995. The costs of this project will be
amortized over future earnings as completed portions of the project are put
into use.
The Company's distribution facilities have tanks for the storage of diesel fuel
and other petroleum products which are subject to laws regulating such storage
tanks. Other federal, state and local provisions relating to the protection of
the environment or the discharge of materials do not materially impact the
Company's use or operation of its facilities. The Company anticipates that
compliance with these laws will not have a material effect on the capital
expenditures, earnings or competitive position of SYSCO and its subsidiaries.
Sales of the Company do not generally fluctuate on a seasonal basis, and
therefore, the business of the Company is not deemed to be seasonal.
The Company operates 106 facilities within the United States and two in Canada.
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ITEM 2. PROPERTIES
As of July 2, 1994 the table below shows the number of distribution facilities
and self-serve centers occupied by the Company in each state or province and
the aggregate cubic footage devoted to cold and dry storage.
Number of Cold Storage Dry Storage
Facilities (Thousands (Thousands
Location and Centers Cubic Feet) Cubic Feet)
-------- ----------- ------------ -----------
Alabama 2 125 424
Arizona 1 1,485 3,410
Arkansas 1 1,200 1,145
California 9 7,566 15,479
Colorado 5 2,759 5,476
Florida 3 6,054 5,158
Georgia 3 1,969 6,381
Idaho 1 578 656
Illinois 2 2,471 2,870
Indiana 1 1,404 1,832
Iowa 1 642 1,259
Kansas 1 1,975 2,592
Kentucky 3 1,868 3,486
Louisiana 1 2,575 1,875
Maine 1 429 1,008
Maryland 4 4,515 5,609
Massachusetts 3 3,614 6,173
Michigan 4 3,649 6,067
Minnesota 1 2,085 2,370
Mississippi 2 1,318 1,991
Missouri 1 1,128 1,348
Montana 1 2,043 1,876
Nebraska 1 1,518 1,673
New Jersey 3 1,567 5,527
New Mexico 2 1,235 2,024
New York 9 4,337 8,767
North Carolina 2 346 848
Ohio 7 4,681 8,938
Oklahoma 3 1,085 2,634
Oregon 2 2,271 3,455
Pennsylvania 6 2,752 5,945
South Dakota 1 5 100
Tennessee 5 6,423 7,351
Texas 9 8,534 14,529
Utah 1 1,837 1,919
Virginia 1 940 950
Washington 2 2,609 2,812
Wisconsin 1 2,566 2,244
British Columbia, Canada 2 1,426 1,855
--- ------- -------
Total 108 95,584 150,056
=== ====== =======
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The Company owns approximately 208,678,000 cubic feet of its distribution
facilities and self-serve centers (or 85% of the total cubic feet), and the
remainder is occupied under leases expiring at various dates from fiscal 1995
to 2011, exclusive of renewal options. Certain of the facilities owned by the
Company are either subject to mortgage indebtedness or industrial revenue bond
financing arrangements totaling $71,534,000 at July 2, 1994. Such mortgage
indebtedness and industrial revenue bond financing arrangements mature at
various dates.
Facilities in Lincoln, Nebraska; Albuquerque, New Mexico; Harrisburg,
Pennsylvania; San Antonio, Texas; Newark, New Jersey; Atlanta, Georgia;
Jackson, Mississippi; and Louisville, Kentucky (which in the aggregate account
for approximately 13% of total sales) are operating near maximum capacity and
the Company is currently constructing or planning replacements or expansions
for these distribution facilities. During fiscal 1995 the Company is planning
to complete construction of a distribution facility near Hartford, Connecticut
and begin construction of a distribution facility in Milwaukee, Wisconsin.
The Company's fleet of approximately 4,500 delivery vehicles consists of
tractor and trailer combinations, vans and panel trucks, most of which are
either wholly or partially refrigerated for the transportation of frozen or
perishable foods. The Company owns approximately 91% of these vehicles and
leases the remainder.
ITEM 3. LEGAL PROCEEDINGS
SYSCO is engaged in various legal proceedings which have arisen but have not
been fully adjudicated. These proceedings, in the opinion of management, will
not have a material adverse effect upon the consolidated balance sheets or
results of operations of the Company when ultimately concluded.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the executive officers of the Company, each of whom holds the
office opposite his name below until the meeting of the Board of Directors
immediately preceding the next Annual Meeting of Stockholders or until his
successor has been elected or qualified. Executive officers who are also
directors, serve as directors until the expiration of their term which is the
Annual Meeting of Stockholders in the calendar year specified in parentheses or
until his successor has been elected and qualified.
Served
in This
Position
Name of Officer Capacity Since Age
--------------- -------- --------- ---
John F. Baugh Senior Chairman of the Board of 1985 78
Directors (1994)
John F. Woodhouse Chairman of the Board 1985 & 63
of Directors and Chief 1982
Executive Officer (1995)
Herbert Irving Vice Chairman and 1969 76
Chairman of the Finance
Committee of the Board
of Directors (1994)
Bill M. Lindig President and Chief 1985 & 57
Operating Officer and 1983
Director (1996)
Charles H. Cotros Executive Vice President and 1988, 1989 57
President, Foodservice & 1985
Operations and Director (1994)
James A. Schlindwein Executive Vice President, 1983 & 65
Procurement (until August 30, 1994) 1982
and Director (1994)
Gregory K. Marshall Senior Vice President, 1993 & 47
Multi-Unit Sales and Chief 1984
Executive Officer, The
SYGMA Network, Inc.
Richard J. Schnieders Senior Vice President, 1992 46
Merchandising Services
John K. Stubblefield, Jr. Senior Vice President, 1993 & 48
Chief Financial Officer & 1994
Controller
Each of the executive officers listed above has been employed by the Company,
or a subsidiary or division of the Company, in an executive capacity throughout
the past five years.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The principal market for SYSCO's Common Stock is the New York Stock Exchange.
The table below sets forth the high and low sales prices per share for SYSCO's
Common Stock as reported on the New York Stock Exchange Composite Tape and the
cash dividends paid for the periods indicated.
Common Stock Prices
---------------------------------- Dividends
High Low Paid
---------- --------- ---------
Fiscal 1993
First Quarter $27-1/4 $23-5/8 $.06
Second Quarter 27-3/4 23-1/2 .06
Third Quarter 27-1/8 23-1/4 .07
Fourth Quarter 27 22-1/4 .07
Fiscal 1994
First Quarter $30-3/8 $23-3/4 $.07
Second Quarter 31 27 .07
Third Quarter 29-1/4 25-1/8 .09
Fourth Quarter 26-3/8 22-5/8 .09
The approximate number of shareholders of SYSCO's Common Stock as of July 2,
1994 was 19,900.
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ITEM 6.
SELECTED FINANCIAL DATA
- - - ----------------------------------------------------------------------------------------------------------------------------------
Fiscal Year Ended
- - - ----------------------------------------------------------------------------------------------------------------------------------
1993
(In thousands except for share data) 1994 (53 weeks) 1992 1991 1990
- - - ----------------------------------------------------------------------------------------------------------------------------------
Sales $10,942,499 $10,021,513 $ 8,892,785 $8,149,700 $7,590,568
Earnings before income taxes 367,582 331,977 281,656 250,864 216,086
Income taxes 150,830 130,170 109,427 97,034 83,625
----------- ---------- ----------- ---------- ----------
Net earnings 216,752 201,807 172,229 153,830 132,461
=========== ========== =========== ========== ==========
Earnings per share 1.18 1.08 .93 .83 .73
=========== ========== =========== ========== ==========
Cash dividends per share .32 .26 .17 .12 .10
Total assets 2,811,729 2,530,043 2,325,206 2,177,695 2,001,020
Capital expenditures 161,485 127,879 134,290 134,921 182,387
Long-term debt 538,711 494,062 488,828 543,176 583,496
Shareholders' equity 1,240,909 1,137,216 1,056,846 918,626 770,829
----------- ---------- ----------- ---------- ----------
Total capitalization 1,779,620 1,631,278 1,545,674 1,461,802 1,354,325
=========== ========== =========== ========== ==========
Ratio of long-term debt to capitalization 30.3% 30.3% 31.6% 37.2% 43.1%
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ITEM 7.
MANAGEMENT DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
SYSCO provides marketing and distribution services to foodservice customers
throughout the contiguous United States and western Canada. The company intends
to continually expand its market share through profitable sales growth and
constant emphasis on the development of its consolidated buying programs. The
company also strives to increase the effectiveness of its marketing associates
and the productivity of its warehousing and distribution activities. These
objectives require continuing investment. SYSCO's resources include cash
provided by operations and access to capital from financial markets.
SYSCO has a stock repurchase program which is used primarily to offset
shares issued from time to time in conjunction with various employee benefit
plans and conversions of Liquid Yield Option Notes. The number of shares
acquired and their cost for the past three years was 3,000,000 shares for
$80,131,000 in fiscal 1994, 7,200,000 shares for $180,343,000 in fiscal 1993
and 800,0000 shares for $19,803,000 in fiscal 1992.
SYSCO's operations generate a significant amount of cash which is used
to fund the company's investment in facilities, fleet and other equipment
required to meet its customers' needs and provide for growth. Net cash
generated from operating activities was $282,515,000 in 1994, $257,165,000 in
1993 and $234,552,000 in 1992. Expenditures for facilities, fleet and other
equipment were $161,485,000 in 1994, $127,879,000 in 1993 and $134,290,000 in
1992. Expenditures in fiscal 1995 should be in the range of $150,000,000 to
$200,000,000.
The net cash provided by operations less cash utilized for capital
expenditures, the stock repurchase program, cash dividends and other uses
resulted in long-term debt of $538,711,000 at July 2, 1994. About 47% of the
total long-term debt is at fixed rates averaging 7.98% and 53% was at floating
rates averaging 4.36%. Long-term debt to capitalization is 30% at July 2, 1994,
equal to the 30% at July 3, 1993 and down from the 32% at June 27, 1992. SYSCO
continues to have borrowing capacity available and alternative financing
arrangements are evaluated as appropriate.
SYSCO has a commercial paper program which is currently supported by a
$300,000,000 bank credit facility. During fiscal 1994, 1993 and 1992,
commercial paper and bank borrowings ranged from approximately $184,900,000 to
$415,100,000, $87,500,000 to $292,500,000 and $130,000,000 to $380,000,000,
respectively.
In summary, SYSCO believes that through continual monitoring and
management of assets together with the availability of additional capital in
the financial markets, it will meet its cash requirements while maintaining
proper liquidity for normal operating purposes.
SALES
The annual increases in sales of 9% in 1994 and 13% in 1993 result from several
factors. Sales in fiscal 1994 and 1993 were affected by modest growth in the
U.S. economy, as well as in the foodservice industry, and acquisitions.
Excluding the impact of the 53rd week in fiscal 1993, sales increased about
11.5% in fiscal 1994 and about 10% in fiscal 1993. After adjusting for
acquisitions, food price increases and eliminating the sales effect of the 53rd
week in fiscal 1993, real sales growth was about 7% in 1994 and 9% in 1993. The
cost of SYSCO's foodservice products is estimated to have averaged an increase
of about 1.9% from the beginning to the end of fiscal 1994 compared to an
increase of approximately 1.2% in fiscal 1993. Industry sources estimate the
total foodservice market experienced real growth of approximately 2.3% in
calendar 1993 and 1.2% in calendar 1992.
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Sales for fiscal 1992 through 1994 were as follows:
- - - ------------------------------------------------------------------------------------------------
Year Sales % Increase
- - - ------------------------------------------------------------------------------------------------
1994 $10,942,499,000 9%
1993 (53 Weeks) 10,021,513,000 13
1992 8,892,785,000 9
A comparison of the sales mix in the principal product categories
during the last three years is presented below:
- - - --------------------------------------------------------------------------------------------------------------
1994 1993 1992
------------------------------
Medical supplies 1% --% --%
Dairy products 8 8 8
Fresh and frozen meats 16 16 17
Seafoods 6 6 6
Poultry 9 9 8
Frozen fruits, vegetables, bakery and other 14 15 15
Canned and dry products 25 25 26
Paper and disposables 7 7 7
Janitorial products 2 2 2
Equipment and smallwares 3 3 3
Fresh produce 6 6 5
Beverage products 3 3 3
--- --- ---
100% 100% 100%
=== === ===
A comparison of sales by type of customer during the last three years
is presented below:
- - - --------------------------------------------------------------------------------------------------------------
1994 1993 1992
------------------------------
Restaurants 60% 60% 60%
Hospitals and nursing homes 13 13 13
Schools and colleges 7 7 8
Hotels and motels 6 6 6
All other 14 14 13
--- --- ---
100% 100% 100%
=== === ===
COST OF SALES
Cost of sales increased about 9% in 1994 and 13% in 1993. These increases were
generally in line with the increases in sales. The rate of increase is
influenced by SYSCO's overall customer and product mix as well as economies
realized in product acquisition.
OPERATING EXPENSES
Operating expenses include the costs of warehousing and delivering products as
well as selling and administrative expenses. These expenses as a percent of
sales for the 1994, 1993 and 1992 fiscal years were 14.3%, 14.2% and 14.3%,
respectively. Changes in the percentage relationship of operating expenses to
sales result from an interplay of several economic influences. Inflationary
increases in operating costs generally have been offset through improved
productivity.
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INTEREST EXPENSE
Interest expense decreased $2,732,000 or approximately 7% in fiscal 1994 as
compared to a decrease of $4,271,000 or approximately 10% in fiscal 1993. The
decrease in fiscal 1994 is due primarily to the expiration of the interest rate
swap in December 1993, while the decrease in fiscal 1993 was due to a reduction
in average borrowings. Interest capitalization during the past three years was
$1,313,000 in 1994, $1,315,000 in 1993 and $2,292,000 in 1992.
OTHER INCOME, NET
Other income decreased $381,000 or about 18% in fiscal 1994 and decreased
$4,292,000 or about 67% in fiscal 1993. About one-half of the decrease in
fiscal 1993 resulted from the sale of the last retail distribution company on
August 3, 1992. This company previously had significant income from storage and
handling activities. Other changes between the years result from fluctuations
in miscellaneous activities including gains and losses on the sale of old
facilities.
EARNINGS BEFORE INCOME TAXES
Earnings before income taxes rose $35,605,000 or approximately 11% above fiscal
1993, which had increased $50,321,000 or approximately 18% over the prior year.
Additional sales and realization of operating efficiencies contributed to the
increases.
PROVISION FOR INCOME TAXES
The effective tax rate for 1994 was approximately 41% and in 1993 and 1992 was
approximately 39%. In August 1993 the Omnibus Budget Reconciliation Act of 1993
became effective. This legislation increased the top corporate tax rate from
34% to 35% effective January 1, 1993. Consequently, in the first quarter of
fiscal 1994 SYSCO had a charge to earnings for taxes of $4,900,000 relating to
transactions and events through July 3, 1993. About $3,300,000 of the charge
relates to an increase in deferred taxes and $1,600,000 relates to the
retroactivity of the tax rate increase to January 1, 1993. The effective tax
rate for fiscal 1994, excluding the effect of the $4,900,000 charge, was 40%.
NET EARNINGS
Fiscal 1994 represents the eighteenth consecutive year of increased earnings
for SYSCO. Net earnings for the year rose $14,945,000 or approximately 7% above
fiscal 1993, which had increased $29,578,000 or approximately 17% over the
prior year. Excluding the impact of the extra week in fiscal 1993 and the
increased tax rate in fiscal 1994, net earnings would have increased
approximately 14% in 1994 and approximately 15% in fiscal 1993.
DIVIDENDS
The quarterly dividend rate of nine cents per share was established in November
1993 when it was increased from the seven cents per share set in November 1992.
RETURN ON SHAREHOLDERS' EQUITY
The return on average shareholders' equity for 1994, 1993 and 1992 was
approximately 18%, 18% and 17%, respectively. Since inception SYSCO has
averaged in excess of a 16% return on shareholders' equity.
13
15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SYSCO CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 2, 1994
Financial Statements:
Page
Report of Management on Internal Accounting Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Consolidated Financial Statements:
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Consolidated Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Consolidated Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Consolidated Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Summary of Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Additional Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Schedules:
V Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
VI Accumulated Depreciation and Amortization of Plant and Equipment . . . . . . . . . . . . . . . . . . . . . S-2
VIII Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
IX Short-term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
All other schedules are omitted because they are not
applicable or the information is set forth in the consolidated
financial statements or notes thereto.
Financial Statements of the Registrant are omitted because the
Registrant is primarily an operating company and all
subsidiaries are wholly-owned.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
14
16
REPORT OF MANAGEMENT ON INTERNAL ACCOUNTING CONTROLS
The management of SYSCO is responsible for the preparation and integrity of the
consolidated financial statements of the Company. The accompanying
consolidated financial statements have been prepared by the management of the
Company, in accordance with generally accepted accounting principles, using
management's best estimates and judgment where necessary. Financial
information appearing throughout this Annual Report is consistent with that in
the consolidated financial statements.
To help fulfill its responsibility, management maintains a system of internal
controls designed to provide reasonable assurance that assets are safeguarded
against loss or unauthorized use and that transactions are executed in
accordance with management's authorizations and are reflected accurately in the
Company's records. The concept of reasonable assurance is based on the
recognition that the cost of maintaining a system of internal accounting
controls should not exceed benefits expected to be derived from the system.
SYSCO believes that its long-standing emphasis on the highest standards of
conduct and ethics, embodied in comprehensive written policies, serves to
reinforce its system of internal controls. The Company's operations review
function monitors the operation of the internal control system and reports
findings and recommendations to management and the Board of Directors. It also
oversees actions taken to address control deficiencies and seeks opportunities
for improving the effectiveness of the system.
Arthur Andersen LLP, independent public accountants, has been engaged to
express an opinion regarding the fair presentation of the Company's financial
condition and operating results. As part of their audit of the Company's
financial statements, Arthur Andersen LLP considered the Company's system of
internal controls to the extent they deemed necessary to determine the nature,
timing and extent of their audit tests.
The Board of Directors oversees the Company's financial reporting through its
Audit Committee which consists entirely of outside directors. The Board, after
a recommendation from the Audit Committee, selects and engages the independent
public accountants annually. The Audit Committee reviews both the scope of the
accountants' audit and recommendations from both the independent public
accountants and the internal operations review function for improvements in
internal controls. The independent public accountants have free access to the
Audit Committee and from time to time confer with them without management
representation.
15
17
SYSCO recognizes its responsibility to conduct business in accordance with high
ethical standards. This responsibility is reflected in a comprehensive code of
business conduct that, among other things, addresses potentially conflicting
outside business interests of Company employees and provides guidance as to the
proper conduct of business activities. Ongoing communications and review
programs are designed to help ensure compliance with this code.
The Company believes that its system of internal controls is effective and
adequate to accomplish the objectives discussed above.
/s/ John F. Woodhouse /s/ John K. Stubblefield, Jr.
--------------------- -----------------------------
John F. Woodhouse John K. Stubblefield, Jr.
Chairman & Chief Executive Officer Senior Vice President,
Chief Financial Officer & Controller
16
18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Sysco Corporation
We have audited the accompanying consolidated balance sheets of Sysco
Corporation (a Delaware corporation) and subsidiaries as of July 2, 1994 and
July 3, 1993, and the related consolidated results of operations, shareholders'
equity and cash flows for each of the three years in the period ended July 2,
1994. These financial statements and the schedules referred to below are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sysco Corporation
and subsidiaries as of July 2, 1994 and July 3, 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
July 2, 1994, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in Item 14(a) are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Houston, Texas
August 3, 1994
17
19
CONSOLIDATED BALANCE SHEETS
- - - -----------------------------------------------------------------------------------------------------------------------------------
(In thousands except for share data) July 2, 1994 July 3, 1993
- - - -----------------------------------------------------------------------------------------------------------------------------------
Assets
Current assets
Cash $ 86,735 $ 68,759
Accounts and notes receivable, less
allowances of $15,999 and $15,122 856,448 770,553
Inventories 601,994 534,167
Deferred taxes 38,091 28,878
Prepaid expenses 16,380 17,379
------------- ------------
Total current assets 1,599,648 1,419,736
Plant and equipment at cost, less depreciation 817,221 759,857
Other assets
Goodwill and intangibles, less amortization 266,021 267,056
Other 128,839 83,394
------------- ------------
Total other assets 394,860 350,450
------------- ------------
Total assets $ 2,811,729 $ 2,530,043
============= ============
Liabilities and shareholders' equity
Current liabilities
Notes payable $ 5,247 $ 6,609
Accounts payable 632,373 550,507
Accrued expenses 176,043 159,056
Accrued income taxes 29,168 26,929
Current maturities of long-term debt 3,730 3,372
------------- ------------
Total current liabilities 846,561 746,473
Long-term debt 538,711 494,062
Deferred taxes 185,548 152,292
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 500,000,000 shares, issued
191,293,725 shares 191,294 191,294
Paid-in capital 60,003 74,158
Retained earnings 1,200,735 1,043,057
------------- ------------
1,452,032 1,308,509
Less cost of treasury stock, 8,224,505 and 6,836,329 shares 211,123 171,293
------------- ------------
Total shareholders' equity 1,240,909 1,137,216
------------- ------------
Total liabilities and shareholders' equity $ 2,811,729 $ 2,530,043
============= ============
See Summary of Accounting Policies and Additional Financial Information.
18
20
CONSOLIDATED RESULTS OF OPERATIONS
- - - -----------------------------------------------------------------------------------------------------------------------------------
Year Ended
- - - -----------------------------------------------------------------------------------------------------------------------------------
July 3, 1993
(In thousands except for share data) July 2, 1994 (53 Weeks) June 27, 1992
- - - -----------------------------------------------------------------------------------------------------------------------------------
Sales $ 10,942,499 $ 10,021,513 $ 8,892,785
Costs and expenses
Costs of sales 8,971,628 8,225,275 7,303,886
Operating expenses 1,568,773 1,427,394 1,270,397
Interest expense 36,272 39,004 43,275
Other income, net (1,756) (2,137) (6,429)
------------- ------------- ------------
Total costs and expenses 10,574,917 9,689,536 8,611,129
------------- ------------- ------------
Earnings before income taxes 367,582 331,977 281,656
Income taxes 150,830 130,170 109,427
------------- ------------- ------------
Net earnings $ 216,752 $ 201,807 $ 172,229
============= ============= ============
Earnings per share $ 1.18 $ 1.08 $ .93
============= ============= ============
See Summary of Accounting Policies and Additional Financial Information.
19
21
CONSOLIDATED SHAREHOLDERS' EQUITY
- - - ------------------------------------------------------------------------------------------------------------------------------------
Cost of
Common Paid-In Retained Treasury
(In thousands) Stock Capital Earnings Stock
- - - ------------------------------------------------------------------------------------------------------------------------------------
Balance at June 29, 1991 $ 92,600 $ 49,616 $ 776,410
Net earnings for year ended June 27, 1992 172,229
Cash dividends paid, $.17 per share (31,637)
Treasury stock purchses, net $ 19,803
Stock issued upon conversion of Liquid
Yield Option Notes 1 42
Stock options exercised 386 7,437
Employees' Stock Purchase Plan 186 6,137
Management Incentive Plan 119 3,123
2-for-1 stock split 93,292 (66,355) (26,937)
---------- --------- ----------- ---------
Balance at June 27, 1992 186,584 -- 890,065 19,803
Net earnings for year ended July 3, 1993 201,807
Cash dividends paid, $.26 per share (48,815)
Treasury stock purchases 180,343
Stock issued upon conversion of Liquid
Yield Option Notes 4,710 85,649
Stock options exercised (8,284) (11,557)
Employees' Stock Purchase Plan (1,625) (12,785)
Management Incentive Plan (1,582) (4,511)
---------- --------- ----------- ---------
Balance at July 3, 1993 191,294 74,158 1,043,057 171,293
Net earnings for year ended July 2, 1994 216,752
Cash dividends paid, $.32 per share (59,074)
Treasury stock purchases 80,131
Stock issued upon conversion of Liquid
Yield Option Notes (642) (3,282)
Stock options excercised (9,741) (16,055)
Employees' Stock Purchase Plan (1,461) (14,262)
Management Incentive Plan (2,311) (6,702)
---------- --------- ----------- ---------
Balance at July 2, 1994 $ 191,294 $ 60,003 $1,200,735 $ 211,123
========== ========= ========== =========
See Summary of Accounting Policies and Additional Financial Information.
20
22
CONSOLIDATED CASH FLOWS
- - - ------------------------------------------------------------------------------------------------------------------------------------
Year Ended
- - - ------------------------------------------------------------------------------------------------------------------------------------
July 3, 1993
(In thousands) July 2, 1994 (53 Weeks) June 27, 1992
- - - ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 216,752 $ 201,807 $ 172,229
Add non-cash items:
Depreciation and amortization 119,982 107,718 99,510
Interst on Liquid Yield Option Notes 5,740 8,004 10,552
Deferred tax provision 23,292 13,281 15,521
Provision for losses on receivables 17,918 14,312 14,422
Additional investment in certain assets and
liabilities, net of effect of businesses acquired and sold:
(Increase) in receivables (86,487) (103,236) (69,192)
(Increase) in inventories (58,282) (38,114) (27,190)
Decrease (increase) in prepaid expenses 3,606 (2,864) (1,211)
Increase in accounts payable 73,777 54,077 40,413
Increase (decrease) in accrued expenses 15,510 13,144 (3,421)
Increase in accrued income taxes 2,277 20,863 3,190
(Increase) in other assets (51,570) (31,827) (20,271)
------------ ------------ -----------
Net cash provided by operating activities 282,515 257,165 234,552
------------ ------------ -----------
Cash flows from investing activities:
Additions to plant and equipment (161,485) (127,879) (134,290)
Proceeds from sales of plant and equipment 2,693 5,136 16,379
Acquisitions of businesses, net of cash acquired (15,606) (10,481) (12,996)
Proceeds from sale of business -- 10,878 --
------------ ------------ -----------
Net cash used for investing activities (174,398) (122,346) (130,907)
------------ ------------ -----------
Cash flows from financing activities:
Bank and commercial paper borrowings (repayments) 38,798 80,363 (59,389)
Other debt repayments (13,240) (8,981) (6,094)
Common stock issuances -- -- 17,431
Common stock reissued from treasury 23,506 17,362 --
Treasury stock purchases (80,131) (180,343) (19,803)
Dividends paid (59,074) (48,815) (31,637)
------------ ------------ -----------
Net cash used for financing activities (90,141) (140,414) (99,492)
------------ ------------ -----------
Net increase (decrease) in cash 17,976 (5,595) 4,153
Cash at beginning of year 68,759 74,354 70,201
------------ ------------ -----------
Cash at end of year $ 86,735 $ 68,759 $ 74,354
============ ============ ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 36,527 $ 38,999 $ 44,058
Income taxes 126,310 96,291 89,478
See Summary of Accounting Policies and Additional Financial Information.
21
23
SUMMARY OF ACCOUNTING POLICIES
BUSINESS AND CONSOLIDATION
SYSCO Corporation (SYSCO) is engaged in the marketing and distribution of a
wide range of food and related products to the foodservice or
"away-from-home-eating" industry. These services are performed from 68
distribution facilities for approximately 245,000 customers located in the 36
states where the facilities are situated and in 12 adjacent states. The
company also has one facility in Vancouver, British Columbia, which provides
services to customers in that area.
The accompanying financial statements include the accounts of SYSCO
and its subsidiaries. All significant intercompany transactions and account
balances have been eliminated. Certain amounts in the prior years have been
reclassified to conform to the 1994 presentation.
Earnings of acquisitions recorded as purchases are included in SYSCO's
results of operations from the date of acquisition.
INVENTORIES
Inventories consist of food and related products held for resale and are
valued at the lower of cost (first-in, first-out method) or market.
PLANT AND EQUIPMENT
Capital additions, improvements and major renewals are classified as plant and
equipment and are carried at cost. Depreciation is recorded using the
straight-line method which reduces the book value of each asset in equal
amounts over its estimated useful life. Maintenance, repairs and minor
renewals are charged to earnings when they are incurred. Upon the disposition
of an asset, its accumulated depreciation is deducted from the original cost,
and any gain or loss is reflected in current earnings.
Applicable interest charges incurred during the construction of new
facilities are capitalized as one of the elements of cost and are amortized
over the assets' estimated useful lives. Interest capitalized during the past
three years was $1,313,000 in 1994, $1,315,000 in 1993 and $2,292,000 in 1992.
GOODWILL AND INTANGIBLES
Goodwill and intangibles represents the excess of cost over the fair value of
tangible net assets acquired and is being amortized over 40 years using the
straight-line method. Accumulated amortization at July 2, 1994, July 3, 1993
and June 27, 1992 is $43,120,000, $35,416,000 and $27,929,000, respectively.
COMPUTER SYSTEMS DEVELOPMENT PROJECT
SYSCO has capitalized direct costs incurred in connection with an internal
computer systems development project. The capitalization of these costs began
once it was reasonably certain that the new system would be completed and
would fulfill its intended use. Costs of $29,658,000, $14,094,000 and
$2,660,000 were capitalized during fiscal 1994, 1993 and 1992, respectively.
Amounts capitalized will be amortized over future earnings commencing in fiscal
1995 as completed portions of the project are put into use.
INSURANCE PROGRAM
SYSCO maintains a self-insurance program covering portions of workers'
compensation, general and auto liability costs. The amounts in excess of the
self-insured levels are fully insured. Self-insurance accruals are based on
claims filed and an estimate for significant claims incurred but not reported.
INCOME TAXES
SYSCO follows the liability method for deferred income taxes as required by
the provisions of Statement of Financial Accounting Standard (SFAS) 109,
"Accounting for Income Taxes."
CASH FLOW INFORMATION
For cash flow purposes, cash includes cash equivalents such as time deposits,
certificates of deposit and all highly liquid instruments with original
maturities of three months or less.
22
24
ADDITIONAL FINANCIAL INFORMATION
INCOME TAXES
The income tax provisions consist of the following:
- - - ------------------------------------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------
Federal income taxes $130,733,000 $108,990,000 $91,747,000
State and local income taxes 20,097,000 21,180,000 17,680,000
------------ ------------ ------------
Total $150,830,000 $130,170,000 $109,427,000
============ ============ ============
Included in the income taxes charged to earnings are net deferred tax
provisions of $23,292,000 in 1994, $13,281,000 in 1993 and $15,521,000 in 1992.
The provisions result from the effects of net changes during the year in
deferred tax assets and liabilities arising from temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.
Significant components of the company's deferred tax assets and
liabilities are as follows:
- - - ------------------------------------------------------------------------------------------------------
July 2, 1994 July 3, 1993
-------------------------------
Deferred tax liabilities:
Excess tax depreciation and basis differences of assets $165,353,000 $143,995,000
Computer systems development project 17,190,000 5,833,000
Other 3,005,000 2,464,000
------------ ------------
Total deferred tax liabilities 185,548,000 152,292,000
------------ ------------
Deferred tax assets:
Accrued pension expenses 13,003,000 9,367,000
Accrued medical and casualty insurance expenses 8,519,000 9,264,000
Bad debt reserve 6,138,000 4,065,000
Uniform capitalization of inventory 4,746,000 3,560,000
Other 5,685,000 2,622,000
------------ ------------
Total deferred tax assets 38,091,000 28,878,000
------------ ------------
Net deferred tax liabilities $147,457,000 $123,414,000
============ ============
The company has enjoyed taxable earnings during each of its twenty-five
year existence and knows of no reason such profitability should not continue.
Consequently, the company believes that it is more likely than not that the
entire benefit of existing temporary differences will be realized and therefore
no valuation allowance has been established for deferred assets.
The effective tax rate was 41% in 1994 and 39% in 1993 and 1992 and an
analysis is as follows:
- - - ------------------------------------------------------------------------------------------------------
1994 1993 1992
------------------------------------------
Statutory Federal income tax rate 35% 34% 34%
Retroactive Federal income tax charge 1 -- --
State and local income taxes,
net of Federal income tax benefit 5 5 5
-- -- --
41% 39% 39%
== == ==
23
25
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
The allowance for doubtful accounts receivable was $15,999,000 as of July 2,
1994, $15,122,000 as of July 3, 1993 and $13,673,000 as of June 27, 1992.
Customer accounts written off, net of recoveries were $17,291,000 or .16% of
sales, $13,163,000 or .13% of sales and $14,377,000 or .16% of sales for fiscal
years 1994, 1993 and 1992, respectively.
SHAREHOLDERS' EQUITY
Earnings per share have been computed by dividing net earnings by 184,338,616
in 1994, 186,745,576 in 1993 and 186,001,381 in 1992, which represents the
weighted average number of shares of common stock outstanding during those
respective years.
In May 1986, the Board of Directors adopted a Warrant Dividend Plan
designed to protect against those unsolicited attempts to acquire control of
SYSCO that the Board believes are not in the best interest of the shareholders.
The plan, as adjusted, provides for a dividend distribution of one-fourth of
one Preferred Stock Purchase Right (Right) for each outstanding share of SYSCO
common stock. Each Right may be exercised to purchase one one-hundredth of a
share of newly created Series A Junior Participating Preferred Stock at an
exercise price of $135, subject to adjustment. The Rights will not be
exercisable until a party either acquires 20% of the company's common stock or
makes a tender offer for 20% or more of its common stock. In the event of a
merger or other business combination transaction, each Right effectively
entitles the holder to purchase $270 worth of stock of the surviving company
for a purchase price of $135.
The Rights expire on May 30, 1996 and may be redeemed before
expiration by the company at a price of $.05 per Right until a party acquires
20% of the company's common stock or thereafter under certain circumstances.
As a result of the Rights distribution, 600,000 of the 1,500,000 authorized
preferred shares have been reserved for issuance as Series A Junior
Participating Preferred Stock.
PLANT AND EQUIPMENT
A summary of plant and equipment, including the related accumulated
depreciation, appears below:
- - - --------------------------------------------------------------------------------------------------------------
Estimated
July 2, 1994 July 3, 1993 Useful Lives
-------------------------------------------------------------------
Plant and equipment, at cost
Land $ 81,933,000 $ 70,254,000
Buildings and improvements 606,986,000 566,153,000 10-40 years
Equipment 718,410,000 619,183,000 3-20 years
------------------- --------------------
1,407,329,000 1,255,590,000
Accumulated depreciation (590,108,000) (495,733,000)
------------------- --------------------
Net plant and equipment $ 817,221,000 $ 759,857,000
=================== ====================
DEBT
At July 2, 1994 and July 3, 1993 SYSCO had $5,247,000 and $6,609,000,
respectively, of short-term bank borrowings. The level of such borrowings
fluctuates during the year based on working capital requirements.
SYSCO's long-term debt is comprised of the following:
- - - ----------------------------------------------------------------------------------------------------------
July 2, 1994 July 3, 1993
-----------------------------------------
Revolving loan agreement and commercial paper,
interest averaging 4.4% in 1994 and 3.2% in 1993 $ 273,800,000 $ 218,778,000
Senior notes, interest at 9.95%, maturing in 1999 91,500,000 91,500,000
Liquid Yield Option Notes, interest at 6.25%, maturing in 2004 95,653,000 92,614,000
Industrial Revenue Bonds, mortgages and other, interest
averaging 6.9% in 1994 and 7.3% in 1993, maturing at
various dates to 2026 81,488,000 94,542,000
---------------- ----------------
Total long-term debt 542,441,000 497,434,000
Less current maturities (3,730,000) (3,372,000)
---------------- ----------------
Net long-term debt $ 538,711,000 $ 494,062,000
================ ================
24
26
The principal payments required to be made on long-term debt during
the next five years are shown below:
Year Amount
---- ------
1995 $ 3,730,000
1996 3,324,000
1997 9,547,000
1998 2,611,000
1999 101,610,000
SYSCO has a $300,000,000 revolving loan agreement maturing in 1997
which currently supports the company's commercial paper program. Management
anticipates extending this agreement prior to its maturity date. The
commercial paper borrowings at July 2, 1994 were $273,800,000. The Liquid
Yield Option Notes have no periodic interest payments, will yield 6.25% if held
to maturity, and can be converted into SYSCO common stock at a conversion rate
of 24.512 shares per note. Each note which initially sold for $397.27 has an
accreted value of $531.37 at July 2, 1994.
The Industrial Revenue Bonds have varying structures. Final
maturities range from one to thirty-two years and certain of the bonds provide
SYSCO the right to redeem (a call) at various dates. These call provisions
generally provide the bondholder a premium in the early call years, declining
to par value as the bonds approach maturity. Certain bonds have provisions
whereby the holder may require SYSCO to purchase or redeem the bonds (a put)
under certain circumstances. If certain of these bonds are purchased from
bondholders, they can be remarketed at the then prevailing interest rates.
Long-term debt at July 2, 1994 was $538,711,000, of which 47% is
secured at fixed rates averaging 7.98% with the average life of eight years,
while the remainder is financed at floating rates averaging 4.36%. Certain
loan agreements contain typical covenants to protect noteholders including
provisions to maintain tangible net worth and funded indebtedness at specified
levels.
The fair value of SYSCO's long-term debt is estimated based on the
quoted market prices for the same or similar issues or on the current rates
offered to the company for debt of the same remaining maturities. The fair
value of long-term debt approximates $562,000,000 at July 2, 1994. 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 July 2, 1994, SYSCO had not entered into any significant derivative or
other off-balance-sheet financing arrangements.
LEASES
Although SYSCO normally purchases assets, it has obligations under capital and
operating leases for certain distribution facilities, vehicles and computers.
Total rental expense under operating leases was $31,089,000, $27,506,000 and
$26,759,000 in fiscal 1994, 1993 and 1992, respectively. Contingent rentals,
subleases, assets and obligations under capital leases are not significant.
Aggregate minimum lease payments under existing non-capitalized
long-term leases are as follows:
Year Amount
---- ------
1995 $ 13,487,000
1996 10,253,000
1997 7,176,000
1998 4,942,000
1999 3,444,000
Later years 5,612,000
25
27
INCENTIVE STOCK OPTION PLANS
EMPLOYEE INCENTIVE STOCK OPTION PLAN
The Employee Incentive Stock Option Plan adopted in fiscal 1982 provided for
the issuance of options to purchase SYSCO common stock to officers and key
personnel of the company and its subsidiaries at the market price at date of
grant, as adjusted for stock splits. No further grants will be made under this
plan which expired in November 1991 and was replaced by the 1991 Stock Option
Plan.
The following summary presents information with regard to incentive
options under this plan:
- - - ----------------------------------------------------------------------------------------------------------
Maximum Shares
Shares Under Average Price
Exercisable Option Per Share
-----------------------------------------------------
Balance at June 29, 1991 1,579,124 3,683,210 $ 11.77
Granted 740,548 22.25
Cancelled (169,788) 13.25
Exercised (860,080) 9.12
---------
Balance at June 27, 1992 1,682,890 3,393,890 14.65
Granted -- --
Cancelled (191,991) 14.60
Exercised (527,829) 9.77
---------
Balance at July 3, 1993 1,940,987 2,674,070 15.62
Granted -- --
Cancelled (112,187) 13.02
Exercised (757,604) 12.39
---------
Balance at July 2, 1994 1,600,282 1,804,279 17.14
=========
1991 STOCK OPTION PLAN
The 1991 Stock Option Plan was adopted in fiscal 1992 and reserves 3,000,000
shares of SYSCO common stock for options to directors, officers and key
personnel of the company and its subsidiaries at the market price at date of
grant. This plan provides for the issuance of options which are qualified as
incentive stock options under the Internal Revenue Code of 1986, options which
are not so qualified and stock appreciation rights. To date, the company has
issued stock options but no stock appreciation rights.
The following summary presents information with regard to options
issued under the 1991 plan:
- - - ----------------------------------------------------------------------------------------------------------
Maximum Shares
Shares Under Average Price
Exercisable Option Per Share
-----------------------------------------------------
Balance at June 27, 1992 -- -- $ --
Granted 525,580 25.25
Cancelled (10,260) 25.25
Exercised -- --
---------
Balance at July 3, 1993 -- 515,320 25.25
Granted 633,650 28.88
Cancelled (26,484) 26.50
Exercised (8,071) 25.25
---------
Balance at July 2, 1994 163,305 1,114,415 27.28
=========
26
28
EMPLOYEE BENEFIT PLANS
SYSCO and each of its subsidiaries have defined benefit and defined
contribution retirement plans for their employees. Also, the company
contributes to various multi-employer plans under collective bargaining
agreements.
The defined benefit pension plans pay benefits to employees at
retirement using formulas based on a participant's years of service and
compensation. The defined contribution 401(k) plans provide that under certain
circumstances the company may make matching contributions of up to 50% of the
first 6% of a participant's compensation.
The funded status of the defined benefit plans is as follows:
- - - --------------------------------------------------------------------------------------------------------
July 2, 1994 July 3, 1993
------------------------------------
Assets available for benefits $ 110,344,000 $ 106,338,000
Projected benefit obligation
Vested (103,437,000) (88,688,000)
Nonvested (9,778,000) (9,181,000)
--------------- --------------
Total accumulated benefit obligation (113,215,000) (97,869,000)
Effect of projected future compensation increases (16,322,000) (11,299,000)
--------------- --------------
Total actuarial projected benefit obligation (129,537,000) (109,168,000)
--------------- --------------
Assets (less than) projected obligation $ (19,193,000) $ (2,830,000)
=============== ==============
Consisting of:
Amounts to be offset against (charged to) future pension costs
Remaining assets in excess of obligation existing at
adoption of SFAS 87 in 1986 $ 10,313,000 $ 11,493,000
Unrecognized actuarial loss due to differences in
assumptions and actual experience (21,302,000) (11,161,000)
Unrecognized prior service cost 10,011,000 11,194,000
Accrued pension costs (18,215,000) (14,356,000)
--------------- --------------
$ (19,193,000) $ (2,830,000)
=============== ==============
The projected unit credit method was used to determine the actuarial
present value of the accumulated benefit obligation and the projected benefit
obligation. The discount rate used was 7.75% in 1994, 1993 and 1992 and the
rate of increase in future compensation levels used was 5.5% in each year. The
expected long-term rate of return on assets used was 10% in 1994 and 12% in
1993 and 1992. The plans invest primarily in marketable securities and time
deposits.
Net pension costs were as follows:
- - - -------------------------------------------------------------------------------------------------------
1994 1993 1992
--------------------------------------------------
Defined benefit plans
Benefits earned during the year $ 16,866,000 $ 18,410,000 $ 14,584,000
Interest accrued on benefits earned
in prior years 9,655,000 8,663,000 6,467,000
Actual return on plan assets 378,000 (14,355,000) (9,664,000)
Net amortization and deferral (13,356,000) 3,063,000 (1,119,000)
------------ ------------ -------------
Net pension costs from defined
benefit plans 13,543,000 15,781,000 10,268,000
Defined contribution plans 8,407,000 3,326,000 5,892,000
Multi-employer pension plans 12,412,000 10,285,000 8,776,000
------------ ------------ -------------
Net pension costs $ 34,362,000 $ 29,392,000 $ 24,936,000
============ ============ =============
SYSCO also has a Management Incentive Plan that compensates key
management personnel for specific performance achievements. The awards under
this plan were $12,508,000 in 1994, $11,725,000 in 1993 and $8,026,000 in 1992.
In addition to the company's defined benefit plan, participants in the
Management Incentive Plan will receive benefits upon retirement under a
Supplemental Executive Retirement Plan. This plan is a nonqualified,
unfunded supplementary retirement plan for which SYSCO has purchased
life insurance on the
27
29
lives of the participants with carrying values of $33,199,000 at July 2, 1994
and $26,740,000 at July 3, 1993. The company is the sole owner and beneficiary
of such policies. The periodic pension costs of this plan were $3,109,000 in
1994 and $2,996,000 in 1993. The actuarially determined accumulated benefit
obligation for this plan included in accrued expenses was $16,558,000 at July
2, 1994 and $13,898,000 at July 3, 1993. After taking into consideration the
effect of future compensation increases, the projected benefit obligation of
this plan was $23,941,000 at July 2, 1994 and $19,224,000 at July 3, 1993.
SYSCO has an Employees' Stock Purchase Plan which permits employees
(other than directors) who have been employed for at least one year to invest
by means of periodic payroll deductions in SYSCO common stock at 85% of the
closing price on the last business day of each fiscal quarter. During 1994,
579,916 shares of SYSCO common stock were purchased by the participants as
compared to 538,923 purchased in 1993 and 514,392 purchased in 1992. The total
number of shares which may be sold pursuant to the plan may not exceed
12,000,000 shares of which 1,691,079 remained available at July 2, 1994.
At the beginning of fiscal 1994, SYSCO implemented SFAS 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." This
statement requires that the cost of retiree benefits other than pensions be
recognized in the financial statements during the years the employee provides
services. In the prior years, the company's portion of the cost of these
benefits has been expensed under the pay-as-you-go method. SYSCO provides
postretirement health care benefits to eligible retired employees and their
dependents. This accounting change had no significant effect on net earnings or
financial condition in fiscal 1994.
Net periodic postretirement benefit cost for fiscal 1994 was as
follows:
- - - ----------------------------------------------------------------------------------
Service cost-benefits earned during the period $238,000
Interest cost 280,000
Amortization of transition obligation 173,000
--------
Net periodic postretirement benefit cost $691,000
========
The components of the postretirement benefit obligation, included in
accrued expenses at July 2, 1994 were:
- - - ----------------------------------------------------------------------------------
Retirees $ 589,000
Fully eligible active participants 1,588,000
Other active employees 2,420,000
------------
Accumulated postretirement benefit obligation 4,597,000
Unrecognized net loss and effects of changes in assumptions (123,000)
Unrecognized prior service cost (1,095,000)
Unrecognized transition obligation (3,250,000)
------------
Accrued postretirement benefit liability $ 129,000
============
The discount rate used to determine the accumulated postretirement
benefit obligation was 8%. A health care cost trend rate is not used in the
calculations because SYSCO subsidizes the cost of postretirement medical
coverage by a fixed dollar amount with the retiree responsible for the cost of
coverage in excess of the subsidy, including all future cost increases.
The Financial Accounting Standards Board (FASB) has issued an
Accounting Standard, which when effective, will require the recognition of
certain benefits paid to former or inactive employees after employment but
before retirement. SYSCO will recognize the provisions of the FASB Standard in
its fiscal year ending July 1, 1995. If the Standard had been adopted in fiscal
1994, the effects on net earnings or financial condition would not be
significant.
CONTINGENCIES
SYSCO is engaged in various legal proceedings which have arisen but have not
been fully adjudicated. These proceedings, in the opinion of management, will
not have a material adverse effect upon the consolidated financial position or
results of operations of the company when ultimately concluded.
28
30
QUARTERLY RESULTS (UNAUDITED)
Financial information for each quarter in the years ended July 2, 1994 and
July 3, 1993:
- - - ------------------------------------------------------------------------------------------------------------------------------------
Quarter Ended
1994 ---------------------------------------------------------------
(In thousands except for share data) October 2 January 1 April 2 July 2 Fiscal Year
- - - ------------------------------------------------------------------------------------------------------------------------------------
Sales $ 2,709,874 $ 2,665,882 $ 2,684,854 $ 2,881,889 $ 10,942,499
Cost of sales 2,224,155 2,179,225 2,209,780 2,358,468 8,971,628
Operating expenses 389,249 384,340 391,844 403,340 1,568,773
Interest expense 9,602 10,347 7,949 8,374 36,272
Other income, net (959) (175) (496) (126) (1,756)
------------ ------------ ------------ ------------ ------------
Earnings before income taxes 87,827 92,145 75,777 111,833 367,582
Income taxes 39,767 36,582 30,083 44,398 150,830
------------ ------------ ------------ ------------ ------------
Net earnings $ 48,060 $ 55,563 $ 45,694 $ 67,435 $ 216,752
============ ============ ============ ============ ============
Per share:
Earnings $ .26 $ .30 $ .25 $ .37 $ 1.18
Cash dividends .07 .07 .09 .09 .32
Market price 30-24 31-27 29-25 26-23 31-23
- - - ------------------------------------------------------------------------------------------------------------------------------------
Quarter Ended
---------------------------------------------------------------
1993 July 3 Fiscal Year
(In thousands except for share data) September 26 December 26 March 27 (14 Weeks) (53 Weeks)
- - - ------------------------------------------------------------------------------------------------------------------------------------
Sales $ 2,415,827 $ 2,392,345 $ 2,399,326 $ 2,814,015 $ 10,021,513
Cost of sales 1,987,820 1,961,447 1,968,664 2,307,344 8,225,275
Operating expenses 345,632 341,758 351,825 388,179 1,427,394
Interest expense 9,608 9,769 9,369 10,258 39,004
Other income, net (773) 103 (661) (806) (2,137)
------------ ------------ ------------ ------------ ------------
Earnings before income taxes 73,540 79,268 70,129 109,040 331,977
Income taxes 28,681 30,914 27,350 43,225 130,170
------------ ------------ ------------ ------------ ------------
Net earnings $ 44,859 $ 48,354 $ 42,779 $ 65,815 $ 201,807
============ ============ ============ ============ ============
Per share:
Earnings $ .24 $ .26 $ .23 $ .35 $ 1.08
Cash dividends .06 .06 .07 .07 .26
Market price 27-24 28-24 27-23 27-22 28-22
- - - ------------------------------------------------------------------------------------------------------------------------------------
Percentage increases -- 1994 vs 1993:
Sales 12% 11% 12% 2% 9%
Earnings before income taxes 19 16 8 3 11
Net earnings 7 15 7 2 7
Earnings per share 8 15 9 6 9
29
31
PART III
The information required by Items 10, 11, 12 and 13 is included in the
Company's definitive proxy statement which will be filed pursuant to Regulation
14A under the Securities Exchange Act of 1934 no later than 120 days after the
close of the 1994 fiscal year, and said proxy statement is hereby incorporated
by reference thereto.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning Executive Officers is included in Part I (Item 4A) of
this Form 10-K (page 8).
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Disclosures regarding related transactions are included in the definitive proxy
statement on page 14 under the caption "Compensation Committee Interlocks and
Insider Participation."
30
32
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) The following documents are filed, or incorporated by
reference, as part of this Form 10-K:
1. All financial statements. See index to Consolidated
Financial Statements on page 14 of this Form 10-K.
2. Financial Statement Schedules. See page 14 of this
Form 10-K.
3. Exhibits.
3(a) Restated Certificate of Incorporation, as
amended, hereby incorporated by reference to
Form 10-K for the year ended June 29, 1991.
3(b) BYLAWS, AS AMENDED.
4(a) Competitive Advance and Revolving Credit
Facility Agreement dated as of July 27,
1988, as amended February 14, 1989 and May 1,
1989 hereby incorporated by reference to the
Form 10-K for the year ended July 1, 1989.
Agreement and Third Amendment to Competitive
Advance and Revolving Credit Facility and
Modification of Notes dated as of January 2,
1990 hereby incorporated by reference to Form
10-K for the year ended June 30, 1990.
AGREEMENT AND FOURTH AMENDMENT TO COMPETITIVE
ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT, DATED AS OF JANUARY 31, 1994.
4(b) Sysco Corporation Note Agreement dated as of
June 1, 1989 hereby incorporated by
reference to the Form 10-K for the year
ended July 1, 1989.
4(c) Indenture, dated as of October 1, 1989,
between Sysco Corporation and Chemical Bank,
Trustee hereby incorporated by reference to
Registration Statement on Form S-3 (File No.
33-31227).
31
33
10(a) Amended and restated Sysco Corporation
Executive Deferred Compensation Plan
incorporated by reference to Form 10-K for
the year ended July 3, 1993.
10(b) Amended and restated Sysco Corporation
Supplemental Executive Retirement Plan
incorporated by reference to Form 10-K for
the year ended July 3, 1993.
10(c) Sysco Corporation Employee Incentive Stock
Option Plan incorporated by reference to the
Form S-8 filed under
the Securities Act of 1933, as amended, dated
April 1, 1987, as amended.
10(d) SYSCO CORPORATION AMENDED AND RESTATED
MANAGEMENT INCENTIVE PLAN (SUBJECT TO
APPROVAL BY STOCKHOLDERS AT 1994 ANNUAL
MEETING).
10(e) Sysco Corporation 1991 Stock Option Plan
incorporated by reference to Form 10-K for
the year ended June 27, 1992.
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
21 SUBSIDIARIES OF THE REGISTRANT
23 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
27 FINANCIAL DATA SCHEDULE
(b) Reports on Form 8-K
None
32
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Sysco Corporation has duly caused this Form 10-K to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 2nd day of
September, 1994.
SYSCO CORPORATION
By /s/ JOHN F. WOODHOUSE
John F. Woodhouse
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated and on the date indicated above.
PRINCIPAL EXECUTIVE, FINANCIAL & ACCOUNTING OFFICERS:
/s/ JOHN F. BAUGH Senior Chairman of the
John F. Baugh Board of Directors
/s/ JOHN K. STUBBLEFIELD, JR. Senior Vice President,
John K. Stubblefield, Jr. Chief Financial Officer & Controller
33
35
DIRECTORS:
/s/ JOHN W. ANDERSON /s/ BILL M. LINDIG
John W. Anderson Bill M. Lindig
/s/ JOHN F. BAUGH /s/ RICHARD G. MERRILL
John F. Baugh Richard G. Merrill
_________________________ /s/ DONALD H. PEGLER, JR.
Colin G. Campbell Donald H. Pegler, Jr.
/s/ CHARLES H. COTROS /s/ FRANK H. RICHARDSON
Charles H. Cotros Frank H. Richardson
/s/ FRANK A. GODCHAUX III /s/ JAMES A. SCHLINDWEIN
Frank A. Godchaux III James A. Schlindwein
/s/ JONATHAN GOLDEN /s/ PHYLLIS SHAPIRO SEWELL
Jonathan Golden Phyllis Shapiro Sewell
/s/ HERBERT IRVING /s/ THOMAS B. WALKER, JR.
Herbert Irving Thomas B. Walker, Jr.
/s/ DONALD J. KELLER /s/ JOHN F. WOODHOUSE
Donald J. Keller John F. Woodhouse
Director and
Chief Executive Officer
34
36
SYSCO CORPORATION AND SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
BALANCE AT OTHER CHANGES- BALANCE
BEGINNING ADDITIONS RETIREMENT ADD (DEDUCT) AT END
CLASSIFICATION OF PERIOD AT COST OR SALES DESCRIBE OF PERIOD
-------------- -------------- ------------ ------------ ------------ --------------
YEAR ENDED JUNE 27, 1992
------------------------
Land.................................. $ 63,903,000 $ 6,348,000 $ (1,351,000) $ 400,000 (A) $ 69,300,000
Buildings and improvements............ 498,386,000 57,621,000 (20,091,000) 5,024,000 (A) 540,940,000
Machinery, fixtures and equipment..... 495,699,000 70,321,000 (18,195,000) 944,000 (A) 548,769,000
-------------- ------------ ------------ ------------ --------------
TOTALS $1,057,988,000 $134,290,000 $(39,637,000) $ 6,368,000 $1,159,009,000
============== ============ ============ ============ ==============
YEAR ENDED JULY 3, 1993
-----------------------
Land.................................. $ 69,300,000 $ 3,265,000 $ (2,362,000) $ 51,000 (A) $ 70,254,000
4,077,000 (A)
Buildings and improvements............ 540,940,000 33,300,000 (1,116,000) (11,048,000) (B) 566,153,000
6,364,000 (A)
Machinery, fixtures and equipment..... 548,769,000 91,314,000 (21,811,000) (5,453,000) (B) 619,183,000
-------------- ------------ ------------ ------------ --------------
TOTALS $1,159,009,000 $127,879,000 $(25,289,000) $ (6,009,000) $1,255,590,000
============== ============ ============ ============ ==============
YEAR ENDED JULY 2, 1994
-----------------------
Land.................................. $ 70,254,000 $ 11,719,000 $ (40,000) $ 81,933,000
Buildings and improvements............ 566,153,000 39,759,000 (2,080,000) $ 3,154,000 (A) 606,986,000
Machinery, fixtures and equipment..... 619,183,000 110,007,000 (25,519,000) 14,739,000 (A) 718,410,000
-------------- ------------ ------------ ------------ --------------
TOTALS $1,255,590,000 $161,485,000 $(27,639,000) $ 17,893,000 $1,407,329,000
============== ============ ============ ============ ==============
(A) Allocation of purchase price to plant and equipment at date of
acquisition of companies purchased in the fiscal year.
(B) Allocation of cost of plant and equipment at date of sale of business
sold in the fiscal year.
S-1
37
SYSCO CORPORATION AND SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PLANT AND EQUIPMENT
ADDITIONS
BALANCE AT CHARGED TO OTHER CHANGES- BALANCE
BEGINNING COSTS AND RETIREMENT ADD (DEDUCT) AT END
CLASSIFICATION OF PERIOD EXPENSES OR SALES DESCRIBE OF PERIOD
-------------- -------------- ------------ ------------ ------------ --------------
YEAR ENDED JUNE 27, 1992
------------------------
Buildings and improvements........... $ 95,796,000 $ 25,078,000 $ (7,620,000) $ 22,000 (A) $113,276,000
Machinery, fixtures and equipment.... 263,091,000 63,349,000 (15,710,000) 580,000 (A) 311,310,000
------------ ------------ ------------ ----------- ------------
TOTALS.............. $358,887,000 $ 88,427,000 $(23,330,000) $ 602,000 $424,586,000
============ ============ ============ =========== ============
YEAR ENDED JULY 3, 1993
-----------------------
$ 740,000 (A)
Buildings and improvements........... $113,276,000 $ 25,464,000 $ (861,000) (5,680,000) (B) $132,939,000
4,987,000 (A)
Machinery, fixtures and equipment.... 311,310,000 69,524,000 (19,292,000) (3,735,000) (B) 362,794,000
------------ ------------ ------------ ----------- ------------
TOTALS.............. $424,586,000 $ 94,988,000 $(20,153,000) $(3,688,000) $495,733,000
============ ============ ============ =========== ============
YEAR ENDED JULY 2, 1994
-----------------------
Buildings and improvements........... $132,939,000 $ 28,396,000 $ (1,139,000) $ 2,251,000 (A) $162,447,000
Machinery, fixtures and equipment.... 362,794,000 78,820,000 (23,807,000) 9,854,000 (A) 427,661,000
------------ ------------ ------------ ----------- ------------
TOTALS.............. $495,733,000 $107,216,000 $(24,946,000) $12,105,000 $590,108,000
============ ============ ============ =========== ============
(A) Allocation to plant and equipment at date of acquisition of companies
purchased in the fiscal year.
(B) Allocation of cost to plant and equipment at date of sale of business
sold in the fiscal year.
S-2
38
SYSCO CORPORATION AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
Balance at Charged to Charged to Balance at
Beginning Costs and Other Accounts Deductions End of
Description of Period Expenses Describe (1) Describe Period
----------- ---------- ---------- -------------- ---------- ----------
Allowance
For year ended for doubtful $14,377,000 (2)
June 27, 1992......... accounts $13,583,000 $14,422,000 $ 75,000 30,000 (3) $13,673,000
Allowance
For year ended for doubtful $13,163,000 (2)
July 3, 1993.......... accounts $13,673,000 $14,312,000 $ 350,000 50,000 (3) $15,122,000
Allowance
For year ended for doubtful
July 2, 1994.......... accounts $15,122,000 $17,918,000 $ 250,000 $17,291,000 (2) $15,999,000
(1) Allowance accounts added from acquisitions.
(2) Customer accounts written off, net of recoveries.
(3) Allowance accounts deducted due to sales of businesses.
S-3
39
SYSCO CORPORATION AND SUBSIDIARIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
WEIGHTED MAXIMUM AVERAGE AMOUNT WEIGHTED AVERAGE
BALANCE AT AVERAGE AMOUNT OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE END INTEREST OUTSTANDING DURING THE DURING THE
SHORT-TERM BORROWINGS OF PERIOD RATE DURING THE PERIOD PERIOD (3) PERIOD (3)
--------------------- ---------- -------- ----------------- -------------- ----------------
YEAR ENDED JUNE 27, 1992
------------------------
Bank credit lines (1)............. $ 2,057,000 5.93% $ 65,500,000 $ 18,198,000 5.57%
Commercial paper (2).............. 127,588,000 3.86 250,200,000 160,692,000 5.07
Revolving loan agreement (2)...... -- -- 35,000,000 11,814,000 5.95
YEAR ENDED JULY 3, 1993
-----------------------
Bank credit lines (1)............. $ 6,609,000 4.90% $ 66,800,000 $ 22,717,000 3.65%
Commercial paper (2)............. 218,778,000 3.22 250,000,000 165,543,000 3.36
Revolving loan agreement (2)...... -- -- -- -- --
YEAR ENDED JULY 2, 1994
-----------------------
Bank credit lines (1)............. $ 5,247,000 6.17% $ 125,100,000 $ 47,534,000 3.65%
Commercial paper (2)............. 273,800,000 4.41 300,000,000 255,056,000 3.50
Revolving loan agreement (2)...... -- -- -- -- --
(1) Bank credit lines primarily reflect the overnight funding of working
capital requirements.
(2) The Company currently maintains a $300,000,000 revolving credit facility
with a group of banks, which supports the commercial paper program and
provides short-term fundings as requested. Borrowings under the
commercial paper program and the revolving loan agreement are issued
with specific maturity dates, generally one to three months. The
revolving credit facility expires in fiscal 1997.
(3) Average amounts outstanding and weighted average interest rates were
computed based upon the weighted average of short-term borrowings and
related interest rates during the period.
S-4
40
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
------ ----------------------
3(a) Restated Certificate of Incorporation, as amended, hereby
incorporated by reference to Form 10-K for the year ended
June 29, 1991.
3(b) BYLAWS, AS AMENDED.
4(a) Competitive Advance and Revolving Credit Facility
Agreement dated as of July 27, 1988, as amended
February 14, 1989 and May 1, 1989 hereby incorporated
by reference to the Form 10-K for the year ended
July 1, 1989.
Agreement and Third Amendment to Competitive Advance
and Revolving Credit Facility and Modification of Notes
dated as of January 2, 1990 hereby incorporated by reference
to Form 10-K for the year ended June 30, 1990.
AGREEMENT AND FOURTH AMENDMENT TO COMPETITIVE
ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT,
DATED AS OF JANUARY 31, 1994.
4(b) Sysco Corporation Note Agreement dated as of June 1,
1989 hereby incorporated by reference to the Form 10-K
for the year ended July 1, 1989.
4(c) Indenture, dated as of October 1, 1989, between Sysco
Corporation and Chemical Bank, Trustee hereby
incorporated by reference to Registration Statement on
Form S-3 (File No. 33-31227).
10(a) Amended and restated Sysco Corporation Executive
Deferred Compensation Plan incorporated by reference to
Form 10-K for the year ended July 3, 1993.
10(b) Amended and restated Sysco Corporation Supplemental
Executive Retirement Plan incorporated by reference to
Form 10-K for the year ended July 3, 1993.
41
Exhibit
Number Description of Exhibit
------ ----------------------
10(c) Sysco Corporation Employee Incentive Stock Option Plan
incorporated by reference to the Form S-8 filed under the
Securities Act of 1933, as amended, dated April 1, 1987,
as amended.
10(d) SYSCO CORPORATION AMENDED AND RESTATED MANAGEMENT INCENTIVE
PLAN (SUBJECT TO APPROVAL BY STOCKHOLDERS AT 1994 ANNUAL MEETING).
10(e) Sysco Corporation 1991 Stock Option Plan incorporated
by reference to Form 10-K for the year ended June 27, 1992.
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
21 SUBSIDIARIES OF THE REGISTRANT
23 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
27 FINANCIAL DATA SCHEDULE