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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 1, 1995
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
$5,141,000,000 AT SEPTEMBER 8, 1995 (BASED ON THE CLOSING SALES PRICE ON THE
NEW YORK STOCK EXCHANGE COMPOSITE TAPE ON SEPTEMBER 8, 1995, AS REPORTED BY THE
WALL STREET JOURNAL (SOUTHWEST EDITION)). AT SEPTEMBER 8, 1995, THE REGISTRANT
HAD ISSUED AND OUTSTANDING AN AGGREGATE OF 182,778,021 SHARES OF ITS COMMON
STOCK.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the proxy statement to be filed not later than 120 days after
July 1, 1995 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 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 meats, fully prepared
entrees, fruits, vegetables and desserts, and a full line of canned and dry
goods, fresh meats, imported specialties and fresh produce. The Company also
supplies a wide variety of nonfood items, including paper products such as
disposable napkins, plates and cups; tableware such as china and silverware;
restaurant and kitchen equipment and supplies; medical and surgical supplies;
and cleaning supplies. SYSCO 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
8,700 sales, marketing and service representatives, the Company keeps informed
of the needs of its customers 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 5% of
SYSCO's sales for its fiscal year ended July 1, 1995. Approximately 5% of
traditional foodservice sales during fiscal 1995 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 1, 1995, 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 1995 1994 1993
- ---------------- ----- ------ ------
Restaurants 60% 60% 60%
Hospitals and nursing homes 12 13 13
Schools and colleges 7 7 7
Hotels and motels 6 6 6
Other 15 14 14
--- --- ---
Totals 100% 100% 100%
=== === ===
SOURCES OF SUPPLY
SYSCO estimates that it purchases from thousands of independent sources, none
of which accounts for more than 5% of the Company's purchases. These sources
of supply consist generally of large corporations selling brand name and
private label merchandise and independent private label processors and packers.
Generally, purchasing is carried out 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 1995, fifty-one
companies have been acquired, as follows:
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Date
Company Acquired
------- --------
The Grant Grocer Company June 1970
The Albany Frosted Foods, Inc. and Affiliated Companies September 1970
Arrow Food Distributors, Inc. January 1971
Koon Food Sales, Inc. March 1971
Rome Foods Company October 1971
Saunders Food Distributors, Inc. October 1971
Hallsmith Company, Inc. April 1972
The Miesel Company June 1972
Robert Orr & Company July 1972
Jay Rodgers Co. July 1972
Hardin's, Inc. August 1972
Baraboo Food Products, Inc. May 1973
E. R. Cochran Company December 1973
The Fialkow Company December 1973
Sterling-Keeleys Incorporated December 1973
Harrisonburg Fruit & Produce Co. April 1974
Alabama Complete Foods, Inc. July 1974
Swan Food Sales, Inc. October 1974
Tri-State General Food Supply Co., Inc. December 1974
Marietta Institutional Wholesalers, Inc. June 1975
Monticello Provision Company August 1975
Oregon Film Service, Inc. and Affiliated Companies September 1975
Mid-Central Fish & Frozen Foods, Inc. December 1975
Glen-Webb & Co. December 1978
Select-Union Foods, Inc. April 1979
S.E. Lankford, Jr. Produce, Inc. September 1981
General Management Corporation and Subsidiaries January 1982
Frosted Foods, Inc. January 1982
Pegler & Company October 1983
Bell Distributing Company December 1983
DiPaolo Food Distributors, Inc. June 1985
B. A. Railton Company September 1985
CML Company, Inc. September 1985
New York Tea Company September 1985
Operating divisions of PYA/Monarch, Inc. and
PYA/Monarch of Texas, Inc. (Wholly-owned
subsidiaries of Sara Lee Corporation)
Amarillo, Texas September 1985
Austin, Texas September 1985
Beaumont, Texas September 1985
Trammell, Temple & Staff, Inc. January 1986
Deaktor Brothers Provision Co. March 1986
Bangor Wholesale Foods, Inc. June 1986
General Foodservice Supply, Inc. December 1986
Vogel's June 1987
Major-Hosking's, Inc. July 1987
Foodservice distribution - related businesses of
Staley Continental, Inc. (CFS Continental) August 1988
Olewine's, Inc. December 1988
Oklahoma City-based foodservice distribution
businesses of Scrivner, Inc. April 1990
New York and Pennsylvania-based foodservice
distribution businesses of Scrivner, Inc. April 1991
Benjamin Polakoff & Son, Inc. May 1992
Perloff Brothers, Inc. (Tartan Foods) December 1992
St. Louis Division of Clark Foodservice, Inc. February 1993
Ritter Food Corporation August 1993
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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, consisting of approximately 700 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. During fiscal 1995, 1994
and 1993, approximately $202,000,000, $161,000,000, and $128,000,000,
respectively, were invested in facility expansions, fleet additions and other
capital asset enhancements. The Company estimates its capital expenditures in
fiscal 1996 should be in the range of $210,000,000 to $230,000,000. During the
three years ended July 1, 1995, capital expenditures have been financed
primarily by internally generated funds, the Company's commercial paper program
and bank borrowings.
EMPLOYEES
As of July 1, 1995, the Company had approximately 28,100 employees, 23% of whom
are represented by unions, primarily the International Brotherhood of
Teamsters. Contract negotiations are handled locally with monitoring and
assistance by the corporate staff. Collective bargaining agreements covering
approximately 49% of the Company's union employees expire during fiscal 1996.
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.
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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.
DEBT ISSUANCE
In June 1995, the Company issued $150,000,000 principal amount of 6 1/2% Senior
Notes due June 15, 2005. These notes, which were priced at 99.4% of par, are
unsecured, not redeemable prior to maturity and are not subject to any sinking
fund requirement. The notes were issued under a $500,000,000 shelf
registration filed with the Securities and Exchange Commission in June 1995.
No other securities have been issued under the shelf registration.
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 has completed 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. Installation will continue company-wide through the next several
years and such installations are expected to provide the basis for business
expansion over this period without having a material adverse effect on the
business or operations of the Company. 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 103 facilities within the United States and two in Canada.
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ITEM 2. PROPERTIES
As of July 1, 1995 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 1 65 324
Arizona 1 1,485 3,410
Arkansas 1 1,200 1,145
California 10 8,021 16,155
Colorado 5 2,759 5,476
Connecticut 1 2,417 2,659
Florida 3 6,054 5,158
Georgia 3 3,195 6,179
Idaho 1 578 656
Illinois 2 2,824 3,225
Indiana 1 1,404 1,832
Iowa 1 687 1,215
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 4,427 5,596
Massachusetts 3 3,395 3,696
Michigan 3 3,452 5,438
Minnesota 1 2,085 2,370
Mississippi 2 2,179 2,736
Missouri 1 1,128 1,348
Montana 1 2,043 1,830
Nebraska 1 2,092 2,618
New Jersey 3 1,567 5,527
New Mexico 2 1,856 2,024
New York 9 4,397 8,767
North Carolina 2 346 848
Ohio 5 4,557 8,728
Oklahoma 3 1,145 2,519
Oregon 2 2,335 3,455
Pennsylvania 6 4,125 6,068
South Dakota 1 5 100
Tennessee 4 6,305 7,351
Texas 9 10,624 15,650
Utah 1 1,810 1,845
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 105 104,950 152,770
=== ======= =======
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The Company owns approximately 219,491,000 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
1996 to 2015, 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 $65,983,000 at July 1, 1995. Such
mortgage indebtedness and industrial revenue bond financing arrangements mature
at various dates.
Facilities in Newark, New Jersey; Jackson, Mississippi; San Antonio, Texas;
Louisville, Kentucky; Cleveland, Ohio; Detroit, Michigan; Cincinnati, Ohio;
Austin, Texas; and Harrisonburg, Virginia (which in the aggregate account for
approximately 14% of total sales) are operating near maximum capacity and the
Company is currently constructing or planning replacements or expansions for
these distribution facilities. The Company is planning to complete
construction of full service distribution facilities near Milwaukee, Wisconsin
and Tampa, Florida during fiscal 1996.
The Company's fleet of approximately 4,800 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 93% 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
NAME OF OFFICER CAPACITY POSITION SINCE AGE
- -------------------------------------------------------------------------------------------------------
John F. Baugh Senior Chairman of the Board of 1985 79
Directors (1997)
John F. Woodhouse Chairman of the Board 1985 64
of Directors (1995)
Bill M. Lindig President and Chief 1985, 1995 58
Executive Officer and & 1983
Director (1996)
Charles H. Cotros Executive Vice President and 1988, 1995 58
Chief Operating Officer and & 1985
Director (1997)
O. Wayne Duncan Senior Vice President, 1995 57
Operations
Thomas E. Lankford Senior Vice President, 1995 47
Operations
Gregory K. Marshall Senior Vice President, 1993 & 48
Multi-Unit Sales and Chief 1984
Executive Officer, The
SYGMA Network, Inc.
Richard J. Schnieders Senior Vice President, 1992 47
Merchandising Services
John K. Stubblefield, Jr. Senior Vice President and 1993 & 49
Chief Financial Officer 1994
Arthur J. Swenka Senior Vice President, 1995 58
Operations and Director (1997)
James D. Wickus Senior Vice President, 1995 52
Operations
Diane S. Day Vice President and Treasurer 1994 46
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 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
Fiscal 1995
First Quarter $26-1/2 $21-1/8 $.09
Second Quarter 27-3/4 23-5/8 .09
Third Quarter 28-3/4 24-7/8 .11
Fourth Quarter 29-7/8 26-1/4 .11
The approximate number of shareholders of SYSCO's Common Stock as of July 1,
1995 was 21,100.
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Item 6.
SELECTED FINANCIAL DATA
- -----------------------------------------------------------------------------------------------------------------------
Fiscal Year Ended
- -----------------------------------------------------------------------------------------------------------------------
1993
(In thousands except for share data) 1995 1994 (53 Weeks) 1992 1991
- -----------------------------------------------------------------------------------------------------------------------
Sales $12,118,047 $10,942,499 $10,021,513 $8,892,785 $8,149,700
Earnings before income taxes 417,618 367,582 331,977 281,656 250,864
Income taxes 165,794 150,830 130,170 109,427 97,034
-------------------------------------------------------------------------
Net earnings 251,824 216,752 201,807 172,229 153,830
=========================================================================
Earnings per share 1.38 1.18 1.08 .93 .83
=========================================================================
Cash dividends per share .40 .32 .26 .17 .12
Total assets 3,094,691 2,811,729 2,530,043 2,325,206 2,177,695
Capital expenditures 201,577 161,485 127,879 134,290 134,921
Long-term debt 541,556 538,711 494,062 488,828 543,176
Shareholders' equity 1,403,603 1,240,909 1,137,216 1,056,846 918,626
-------------------------------------------------------------------------
Total capitalization 1,945,159 1,779,620 1,631,278 1,545,674 1,461,802
=========================================================================
Ratio of long-term debt to capitalization 27.8% 30.3% 30.3% 31.6% 37.2%
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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 continue to 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 2,100,000 shares for
$53,166,000 in fiscal 1995, 3,000,000 shares for $80,131,000 in fiscal 1994 and
7,200,000 shares for $180,343,000 in fiscal 1993.
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 $336,903,000 in 1995, $282,515,000 in 1994 and
$257,165,000 in 1993. Expenditures for facilities, fleet and other equipment
were $201,577,000 in 1995, $161,485,000 in 1994 and $127,879,000 in 1993.
Expenditures in fiscal 1996 should be in the range of $210,000,000 to
$230,000,000.
In June 1995, SYSCO issued 6.5% senior notes totaling $150,000,000 due
June 15, 2005. These notes, which were priced at 99.4% of par, are unsecured,
not redeemable prior to maturity and are not subject to any sinking fund
requirement. The notes were issued under a $500,000,000 shelf registration
filed with the Securities and Exchange Commission in June 1995. No other
securities have been issued under the shelf registration.
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 $541,556,000 at July 1, 1995. About 71% of the
total debt is at fixed rates averaging 7.42% and 29% of the total debt is at
floating rates averaging 6.01%. Long-term debt to capitalization is 28% at July
1, 1995, down from the 30% at July 2, 1994 and at July 3, 1993. 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 1995, 1994 and 1993,
commercial paper and bank borrowings ranged from approximately $146,200,000 to
$425,100,000, $184,900,000 to $415,100,000 and $87,500,000 to $292,500,000,
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 11% in 1995 and 9% in 1994 result from several
factors. Sales in fiscal 1995 and 1994 were affected by the relatively modest
growth in the U.S. economy, as well as in the foodservice industry. After
adjusting for food price increases and adjusting for acquisitions in fiscal
1994, real sales growth was about 9% in 1995 and 7% in 1994. The cost of SYSCO's
foodservice products is estimated to have averaged an increase of about 2% from
the beginning to the end of fiscal 1995 compared to an increase of
approximately 1.9% in fiscal 1994. Industry sources estimate the total
foodservice market experienced real growth of approximately 3% in calendar 1994
and 2.3% in calendar 1993.
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Sales for fiscal 1993 through 1995 were as follows:
- -------------------------------------------------------------------------------
Year Sales % Increase
- -------------------------------------------------------------------------------
1995 $12,118,047,000 11%
1994 10,942,499,000 9
1993 (53 Weeks) 10,021,513,000 13
A comparison of the sales mix in the principal product categories
during the last three years is presented below:
- -------------------------------------------------------------------------------
1995 1994 1993
------------------------
Medical supplies 1% 1% --%
Dairy products 8 8 8
Fresh and frozen meats 15 16 16
Seafoods 6 6 6
Poultry 9 9 9
Frozen fruits, vegetables, bakery and other 15 14 15
Canned and dry products 25 25 25
Paper and disposables 7 7 7
Janitorial products 2 2 2
Equipment and smallwares 3 3 3
Fresh produce 6 6 6
Beverage products 3 3 3
------------------------
100% 100% 100%
========================
A comparison of sales by type of customer during the last three years
is presented below:
- -------------------------------------------------------------------------------
1995 1994 1993
------------------------
Restaurants 60% 60% 60%
Hospitals and nursing homes 12 13 13
Schools and colleges 7 7 7
Hotels and motels 6 6 6
All other 15 14 14
------------------------
100% 100% 100%
========================
COST OF SALES
Cost of sales increased about 11% in 1995 and 9% in 1994. 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 1995, 1994 and 1993 fiscal years were 14.3%, 14.3% and 14.2%,
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 increased $2,307,000 or approximately 6% in fiscal 1995 as
compared to a decrease of $2,732,000 or approximately 7% in fiscal 1994. The
increase in fiscal 1995 is due primarily to increased borrowings and rates,
while the decrease in fiscal 1994 was due primarily to the expiration of an
interest rate swap in December 1993. Interest capitalized during the past three
years was $2,833,000 in 1995, $1,313,000 in 1994 and $1,315,000 in 1993.
OTHER INCOME, NET
Other income increased $467,000 or about 27% in fiscal 1995 and decreased
$381,000 or about 18% in fiscal 1994. 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 $50,036,000 or approximately 14% above fiscal
1994, which had increased $35,605,000 or approximately 11% over the prior year.
Additional sales and realization of operating efficiencies contributed to the
increases.
PROVISION FOR INCOME TAXES
The effective tax rate for 1995 was approximately 40% compared to 41% in 1994
and 39% in 1993. 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 1995 represents the nineteenth consecutive year of increased earnings
for SYSCO. Net earnings for the year rose $35,072,000 or approximately 16%
above fiscal 1994, which had increased $14,945,000 or approximately 7% over the
prior year. After adjusting for the $4,900,000 catch-up tax provision in fiscal
1994, net earnings in 1995 increased about 14% over 1994. Excluding the impact
of the extra week in fiscal 1993 and the increased tax rate in fiscal 1994, net
earnings increased approximately 14% in 1994 over 1993.
DIVIDENDS
The quarterly dividend rate of eleven cents per share was established in
November 1994 when it was increased from the nine cents per share set in
November 1993.
RETURN ON SHAREHOLDERS' EQUITY
The return on average shareholders' equity for 1995, 1994 and 1993 was
approximately 19%, 18% and 18%, 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 1, 1995
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
Schedule:
II Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . S-1
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/ BILL M. LINDIG /s/ JOHN K. STUBBLEFIELD, JR.
- ------------------------------------- -------------------------------
Bill M. Lindig John K. Stubblefield, Jr.
President and Chief Executive Officer Senior Vice President and
Chief Financial Officer
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 1, 1995 and
July 2, 1994, and the related statements of consolidated results of operations,
shareholders' equity and cash flows for each of the three years in the period
ended July 1, 1995. These financial statements and the schedule referred to
below are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and the schedule 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 1, 1995 and July 2, 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
July 1, 1995, 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 schedule listed in Item 14(a) is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states 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 2, 1995
17
19
CONSOLIDATED BALANCE SHEETS
- ---------------------------------------------------------------------------------------------------------------------
(In thousands except for share data) July 1, 1995 July 2, 1994
- ---------------------------------------------------------------------------------------------------------------------
Assets
Current assets
Cash $ 133,886 $ 86,735
Accounts and notes receivable, less allowances of $16,001 and $15,999 932,533 856,448
Inventories 667,861 601,994
Deferred taxes 33,935 38,091
Prepaid expenses 18,685 16,380
---------------------------
Total current assets 1,786,900 1,599,648
Plant and equipment at cost, less depreciation 896,079 817,221
Other assets
Goodwill and intangibles, less amortization 258,206 266,021
Other 153,506 128,839
---------------------------
Total other assets 411,712 394,860
---------------------------
Total assets $3,094,691 $2,811,729
===========================
Liabilities and shareholders' equity
Current liabilities
Notes payable $ 1,181 $ 5,247
Accounts payable 708,380 632,373
Accrued expenses 206,131 176,043
Accrued income taxes 22,462 29,168
Current maturities of long-term debt 6,569 3,730
---------------------------
Total current liabilities 944,723 846,561
Long-term debt 541,556 538,711
Deferred taxes 204,809 185,548
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 48,674 60,003
Retained earnings 1,379,405 1,200,735
---------------------------
1,619,373 1,452,032
Less cost of treasury stock, 8,429,203 and 8,224,505 shares 215,770 211,123
---------------------------
Total shareholders' equity 1,403,603 1,240,909
---------------------------
Total liabilities and shareholders' equity $3,094,691 $2,811,729
===========================
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 1, 1995 July 2, 1994 (53 Weeks)
- ----------------------------------------------------------------------------------------------------------------
Sales $12,118,047 $10,942,499 $10,021,513
Costs and expenses
Cost of sales 9,927,448 8,971,628 8,225,275
Operating expenses 1,736,625 1,568,773 1,427,394
Interest expense 38,579 36,272 39,004
Other income, net (2,223) (1,756) (2,137)
---------------------------------------------------
Total costs and expenses 11,700,429 10,574,917 9,689,536
---------------------------------------------------
Earnings before income taxes 417,618 367,582 331,977
Income taxes 165,794 150,830 130,170
---------------------------------------------------
Net earnings $ 251,824 $ 216,752 $ 201,807
===================================================
Earnings per share $ 1.38 $ 1.18 $ 1.08
===================================================
See Summary of Accounting Policies and Additional Financial Information.
19
21
CONSOLIDATED SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------------------
Common Stock Treasury Stock
----------------------- Paid-in Retained ------------------------
(In thousands except for share data) Shares Amount Capital Earnings Shares Amount
- -------------------------------------------------------------------------------------------------------------------------------
Balance at June 27, 1992 186,583,586 $186,584 $ 890,065 807,514 $ 19,803
Net earning for year ended July 3, 1993 201,807
Cash dividends paid,
$.26 per share (48,815)
Treasury stock purchases 7,200,000 180,343
Stock issued upon conversion of Liquid
Yield Option Notes 4,710,139 4,710 $ 85,649
Stock options exercised (8,284) (466,306) (11,557)
Employees' Stock Purchase Plan (1,625) (517,504) (12,785)
Management Incentive Plan (1,582) (187,375) (4,511)
------------------------------------------------------------------------------------
Balance at July 3, 1993 191,293,725 191,294 74,158 1,043,057 6,836,329 171,293
Net earnings for year ended July 2, 1994 216,752
Cash dividends paid, $.32 per share (59,074)
Treasury stock purchases 3,000,000 80,131
Stock issued upon conversion of
Liquid Yield Option Notes (642) (130,228) (3,282)
Stock options exercised (9,741) (652,732) (16,055)
Employees' Stock Purchase Plan (1,461) (561,368) (14,262)
Management Incentive Plan (2,311) (267,496) (6,702)
------------------------------------------------------------------------------------
Balance at July 2, 1994 191,293,725 191,294 60,003 1,200,735 8,224,505 211,123
Net earnings
for year ended July 1, 1995 251,824
Cash dividends paid,
$.40 per share (73,154)
Treasury stock purchases 2,100,000 53,166
Stock issued upon conversion of
Liquid Yield Option Notes (1,812) (592,700) (15,170)
Stock options exercised (6,297) (437,654) (11,196)
Employees' Stock Purchase Plan (2,635) (623,071) (15,944)
Management Incentive Plan (585) (241,877) (6,209)
------------------------------------------------------------------------------------
Balance at July 1, 1995 191,293,725 $191,294 $ 48,674 $1,379,405 8,429,203 $215,770
====================================================================================
See Summary of Accounting Policies and Additional Financial Information.
20
22
CONSOLIDATED CASH FLOWS
- -------------------------------------------------------------------------------------------------------------------------
Year Ended
- -------------------------------------------------------------------------------------------------------------------------
July 3, 1993
(In thousands) July 1, 1995 July 2, 1994 (53 Weeks)
- -------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 251,824 $ 216,752 $ 201,807
Add non-cash items:
Depreciation and amortization 130,796 119,982 107,718
Interest on Liquid Yield Option Notes 6,013 5,740 8,004
Deferred tax provision 23,417 23,292 13,281
Provision for losses on receivables 15,988 17,918 14,312
Additional investment in certain assets and liabilities,
net of effect of businesses acquired and sold:
(Increase) in receivables (92,073) (86,487) (103,236)
(Increase) in inventories (65,867) (58,282) (38,114)
(Increase) decrease in prepaid expenses (2,305) 3,606 (2,864)
Increase in accounts payable 76,007 73,777 54,077
Increase in accrued expenses 30,088 15,510 13,144
(Decrease) increase in accrued income taxes (6,706) 2,277 20,863
(Increase) in other assets (30,279) (51,570) (31,827)
---------------------------------------------
Net cash provided by operating activities 336,903 282,515 257,165
---------------------------------------------
Cash flows from investing activities:
Additions to plant and equipment (201,577) (161,485) (127,879)
Proceeds from sales of plant and equipment 5,088 2,693 5,136
Acquisitions of businesses, net of cash acquired -- (15,606) (10,481)
Proceeds from sale of business -- -- 10,878
---------------------------------------------
Net cash used for investing activities (196,489) (174,398) (122,346)
---------------------------------------------
Cash flows from financing activities:
Bank and commercial paper borrowings 15,747 38,798 80,363
Other debt repayments (6,521) (13,240) (8,981)
Common stock reissued from treasury 23,831 23,506 17,362
Treasury stock purchases (53,166) (80,131) (180,343)
Dividends paid (73,154) (59,074) (48,815)
---------------------------------------------
Net cash used for financing activities (93,263) (90,141) (140,414)
---------------------------------------------
Net increase (decrease) in cash 47,151 17,976 (5,595)
Cash at beginning of year 86,735 68,759 74,354
---------------------------------------------
Cash at end of year $ 133,886 $ 86,735 $ 68,759
=============================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 38,487 $ 36,527 $ 38,999
Income taxes 145,596 126,310 96,291
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 67
distribution facilities for approximately 255,000 customers located in the 37
states where facilities are situated and in 11 adjacent states. The company
also has one facility in Vancouver, British Columbia, which services 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.
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 $2,833,000 in 1995, $1,313,000 in 1994 and $1,315,000 in 1993.
GOODWILL AND INTANGIBLES
Goodwill and intangibles represent the excess of cost over the fair value of
tangible net assets acquired and are amortized over 40 years using the
straight-line method. Accumulated amortization at July 1, 1995, July 2, 1994
and July 3, 1993 is $50,935,000, $43,120,000 and $35,416,000, 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 $17,593,000, $29,658,000 and $14,094,000
were capitalized during fiscal 1995, 1994 and 1993, respectively. Amounts
capitalized will be amortized over future earnings as completed portions of the
project are put into use. Accumulated amortization at July 1, 1995 was
$232,000.
INSURANCE PROGRAM
SYSCO maintains a self-insurance program covering portions of workers'
compensation and general and automobile 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 Standards (SFAS) No. 109,
"Accounting for Income Taxes."
CASH FLOW INFORMATION
For cash flow purposes, cash includes cash equivalents such as time deposits,
certificates of deposit 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:
- ------------------------------------------------------------------------------------------------------
1995 1994 1993
------------------------------------------
Federal income taxes $144,574,000 $130,733,000 $108,990,000
State and local income taxes 21,220,000 20,097,000 21,180,000
------------------------------------------
Total $165,794,000 $150,830,000 $130,170,000
==========================================
Included in the income taxes charged to earnings are net deferred tax
provisions of $23,417,000 in 1995, $23,292,000 in 1994 and $13,281,000 in 1993.
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 1, 1995 July 2, 1994
---------------------------------
Deferred tax liabilities:
Excess tax depreciation and basis differences of assets $178,548,000 $165,353,000
Computer systems development project 24,293,000 17,190,000
Other 1,968,000 3,005,000
--------------------------------
Total deferred tax liabilities 204,809,000 185,548,000
--------------------------------
Deferred tax assets:
Accrued pension expenses 14,963,000 13,003,000
Accrued medical and casualty insurance expenses 7,480,000 8,519,000
Bad debt reserve 5,424,000 6,138,000
Uniform capitalization of inventory 4,918,000 4,746,000
Other 1,150,000 5,685,000
--------------------------------
Total deferred tax assets 33,935,000 38,091,000
--------------------------------
Net deferred tax liabilities $170,874,000 $147,457,000
================================
The company has enjoyed taxable earnings during each year of its
twenty-six 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 40% in 1995, 41% in 1994 and 39% in 1993 and
an analysis is as follows:
- ---------------------------------------------------------------------------------------------------------------------
1995 1994 1993
---------------------------------
Statutory Federal income tax rate 35% 35% 34%
Retroactive Federal income tax charge - 1
State and local income taxes, net of Federal income tax benefit 5 5 5
---------------------------------
40% 41% 39%
=================================
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
The allowance for doubtful accounts receivable was $16,001,000 as of July 1,
1995, $15,999,000 as of July 2, 1994 and $15,122,000 as of July 3, 1993.
Customer accounts written off, net of recoveries, were $15,986,000 or .13% of
sales, $17,291,000 or .16% of sales and $13,163,000 or .13% of sales for fiscal
years 1995, 1994 and 1993, respectively.
SHAREHOLDERS' EQUITY
Earnings per share have been computed by dividing net earnings by 182,779,806
in 1995, 184,338,616 in 1994 and 186,745,576 in 1993, 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
23
25
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 1, 1995 July 2, 1994 Useful Lives
----------------------------------------------------------------
Plant and equipment, at cost
Land $ 86,185,000 $ 81,933,000
Buildings and improvements 675,011,000 606,986,000 10-40 years
Equipment 807,826,000 718,410,000 3-20 years
-----------------------------------------
1,569,022,000 1,407,329,000
Accumulated depreciation (672,943,000) (590,108,000)
-----------------------------------------
Net plant and equipment $ 896,079,000 $ 817,221,000
=========================================
DEBT
At July 1, 1995 and July 2, 1994 SYSCO had $1,181,000 and $5,247,000,
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 1, 1995 July 2, 1994
-----------------------------
Commercial paper, interest averaging 6.1% in 1995 and 4.4% in 1994 $ 144,510,000 $ 273,800,000
Senior notes, interest at 9.95%, maturing in 1999 91,500,000 91,500,000
Senior notes, interest at 6.5%, maturing in 2005 149,103,000 -
Liquid Yield Option Notes, interest at 6.25%, maturing in 2004 88,045,000 95,653,000
Industrial Revenue Bonds, mortgages and other debt, interest averaging 7.1%
in 1995 and 6.9% in 1994, maturing at various dates to 2026 74,967,000 81,488,000
-----------------------------
Total long-term debt 548,125,000 542,441,000
Less current maturities (6,569,000) (3,730,000)
-----------------------------
Net long-term debt $ 541,556,000 $ 538,711,000
=============================
The principal payments required to be made on long-term debt during the
next five years are shown below:
-----------------------------------------------------------------------------------------
Year Amount
-----------------------------------------------------------------------------------------
1996 $ 6,569,000
1997 9,499,000
1998 2,644,000
1999 101,549,000
2000 152,930,000
24
26
SYSCO has a $300,000,000 revolving loan agreement maturing in 2000 which
currently supports the company's commercial paper program. The commercial paper
borrowings at July 1, 1995 were $144,510,000. 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 per $1,000 of face
value at maturity, has an accreted value at July 1, 1995 of $565.01
per $1,000 of face value.
In June 1995, SYSCO issued 6.5% senior notes totaling $150,000,000 due
June 15, 2005. These notes, which were priced at 99.4% of par, are unsecured,
not redeemable prior to maturity and are not subject to any sinking fund
requirement. The notes were issued under a $500,000,000 shelf registration
filed with the Securities and Exchange Commission in June 1995. No other
securities have been issued under the shelf registration.
The Industrial Revenue Bonds have varying structures. Final maturities
range from one to thirty-one 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 1, 1995 was $541,556,000, of which 71% is at
fixed rates averaging 7.42% with an average life of eight years, while the
remainder is financed at floating rates averaging 6.01%. 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 $584,000,000 at July 1, 1995.
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 1, 1995 and July 2, 1994 letters of credit outstanding
were $29,664,000 and $30,664,000, respectively. As of July 1, 1995 SYSCO has
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 $32,105,000, $31,089,000 and
$27,506,000 in fiscal 1995, 1994 and 1993, 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
--------------------------------------------------------
1996 $14,815,000
1997 11,808,000
1998 8,984,000
1999 6,904,000
2000 4,324,000
Later years 7,418,000
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.
25
27
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 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 (111,719) 12.98
Exercised (757,604) 12.39
---------
Balance at July 2, 1994 1,600,594 1,804,747 17.14
Granted -- --
Cancelled (153,024) 15.30
Exercised (558,506) 14.40
---------
Balance at July 1, 1995 1,093,217 1,093,217 18.80
=========
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 under this plan.
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
Granted 1,004,100 25.50
Cancelled (83,168) 26.83
Exercised (4,901) 25.25
---------
Balance at July 1, 1995 504,915 2,030,446 26.42
=========
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
In December 1994, the Board of Directors adopted, subject to the approval of the
shareholders at the annual meeting in November 1995, a non-employee directors
stock option plan which permits the issuance of up to 200,000 shares of
common stock to directors who are not employees of SYSCO. Under this plan
options to purchase common stock, at the fair market
26
28
value on the date of the grant, are granted to each non-employee director
annually, provided certain earnings goals are met. As of July 1, 1995, options
for 18,000 shares had been contingently granted to nine non-employee
directors under this plan.
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) plan provides that under certain
circumstances the company may make matching contributions of up to 50% of the
first 6% of a participant's compensation. SYSCO's contribution to this plan was
$4,254,000 in 1995, $8,163,000 in 1994 and $2,901,000 in 1993.
The funded status of the defined benefit plans is as follows:
- --------------------------------------------------------------------------------------------------------------------------------
July 1, 1995 July 2, 1994
-----------------------------
Assets available for benefits $ 137,613,000 $ 110,344,000
-----------------------------
Projected benefit obligation
Vested (129,265,000) (103,437,000)
Nonvested (10,651,000) (9,778,000)
-----------------------------
Total accumulated benefit obligation (139,916,000) (113,215,000)
Effect of projected future compensation increases (22,238,000) (16,322,000)
-----------------------------
Total actuarial projected benefit obligation (162,154,000) (129,537,000)
-----------------------------
Assets (less than) projected obligation $ (24,541,000) $ (19,193,000)
=============================
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 $ 9,134,000 $ 10,313,000
Unrecognized actuarial loss due to differences in assumptions and actual experience (21,538,000) (21,302,000)
Unrecognized prior service cost 9,074,000 10,011,000
Accrued pension costs (21,211,000) (18,215,000)
-----------------------------
$ (24,541,000) $ (19,193,000)
=============================
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 8% in 1995 and 7.75% in 1994 and 1993 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 9% in 1995, 10% in 1994
and 12% in 1993. The plans invest primarily in marketable securities and time
deposits.
Net pension costs were as follows:
- --------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
----------------------------------------------
Defined benefit plans
Benefits earned during the year $ 17,622,000 $ 16,866,000 $ 18,410,000
Interest accrued on benefits earned in prior years 11,476,000 9,655,000 8,663,000
Actual return on plan assets (19,078,000) 378,000 (14,355,000)
Net amortization and deferral 7,125,000 (13,356,000) 3,063,000
----------------------------------------------
Net pension costs from defined benefit plans 17,145,000 13,543,000 15,781,000
Defined contribution plans 4,274,000 8,407,000 3,326,000
Multi-employer pension plans 13,550,000 12,412,000 10,285,000
----------------------------------------------
Net pension costs $ 34,969,000 $ 34,362,000 $ 29,392,000
==============================================
SYSCO also has a Management Incentive Plan that compensates key
management personnel for specific performance achievements. The awards under
this plan were $16,545,000 in 1995, $12,508,000 in 1994 and $11,725,000 in 1993.
In addition to receiving benefits under the company's defined benefit plan,
participants in the Management Incentive Plan will
27
29
receive benefits upon retirement under a Supplemental Executive Retirement Plan.
This plan is a nonqualified, unfunded supplementary retirement plan. In order to
meet its obligations under this plan, SYSCO maintains life insurance policies on
the lives of the participants with carrying values of $40,200,000 at July 1,
1995 and $33,199,000 at July 2, 1994. SYSCO is the sole owner and beneficiary
of such policies. The periodic pension costs of this plan were $3,659,000 in
1995 and $3,109,000 in 1994. The actuarially determined accumulated benefit
obligation for this plan included in accrued expenses was $19,004,000 at July 1,
1995 and $16,558,000 at July 2, 1994. After taking into consideration the effect
of future compensation increases, the projected benefit obligation of this plan
was $27,046,000 at July 1, 1995 and $23,941,000 at July 2, 1994.
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 1995,
584,526 shares of SYSCO common stock were purchased by the participants as
compared to 579,916 purchased in 1994 and 538,923 purchased in 1993. The total
number of shares which may be sold pursuant to the plan may not exceed
12,000,000 shares of which 1,106,553 remained available at July 1, 1995.
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 provided, through December 31,
1994, 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 costs were as follows:
- ----------------------------------------------------------------------------------------------------------------
1995 1994
------------------------------
Service cost - benefits earned during the period $288,000 $238,000
Interest cost 377,000 280,000
Amortization of transition obligation 165,000 173,000
Amortization of prior service cost 83,000 -
------------------------------
Net periodic postretirement benefit cost $913,000 $691,000
==============================
The components of the postretirement benefit obligation, included in
accrued expenses at July 1, 1995 and July 2, 1994 were:
- ----------------------------------------------------------------------------------------------------------------
July 1, 1995 July 2, 1994
--------------------------------
Retirees $ 472,000 $ 589,000
Fully eligible active participants 1,721,000 1,588,000
Other active employees 2,534,000 2,420,000
--------------------------------
Accumulated postretirement benefit obligation 4,727,000 4,597,000
Unrecognized net gain (loss) and effects of changes in assumptions 263,000 (123,000)
Unrecognized prior service cost (1,012,000) (1,095,000)
Unrecognized transition obligation (2,761,000) (3,250,000)
--------------------------------
Accrued postretirement benefit liability $ 1,217,000 $ 129,000
================================
The discount rate used to determine the accumulated postretirement
benefit obligation was 7.75% in 1995 and 8% in 1994. 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.
At the beginning of fiscal 1995, SYSCO implemented SFAS 112, "Employers'
Accounting for Postemployment Benefits," which requires that accrual accounting
be used for the cost of certain obligations to be paid to former or inactive
employees after employment but before retirement. Such obligations include
salary continuation, disability, severance and workers' compensation. This
accounting change had no significant effect on net earnings or financial
condition in fiscal 1995.
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 1, 1995 and July
2, 1994:
- -----------------------------------------------------------------------------------------------------------------------------------
1995 Quarter Ended
-----------------------------------------------------------------
(In thousands except for share data) October 1 December 31 April 1 July 1 Fiscal Year
- -----------------------------------------------------------------------------------------------------------------------------------
Sales $ 2,983,096 $ 3,006,663 $ 2,966,355 $ 3,161,933 $ 12,118,047
Cost of sales 2,448,788 2,463,576 2,432,677 2,582,407 9,927,448
Operating expenses 429,591 428,276 436,443 442,315 1,736,625
Interest expense 8,453 9,968 10,317 9,841 38,579
Other income, net (528) (545) (624) (526) (2,223)
------------------------------------------------------------------------------------
Earnings before income taxes 96,792 105,388 87,542 127,896 417,618
Income taxes 38,426 41,839 34,754 50,775 165,794
------------------------------------------------------------------------------------
Net earnings $ 58,366 $ 63,549 $ 52,788 $ 77,121 $ 251,824
====================================================================================
Per share:
Earnings $ .32 $ .35 $ .29 $ .42 $ 1.38
Cash dividends .09 .09 .11 .11 .40
Market price 27-21 28-24 29-25 30-26 30-21
- -----------------------------------------------------------------------------------------------------------------------------------
1994 Quarter Ended
-----------------------------------------------------------------
(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
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increases--1995 vs. 1994:
Sales 10% 13% 10% 10% 11%
Earnings before income taxes 10 14 16 14 14
Net earnings 21 14 16 14 16
Earnings per share 23 17 16 14 17
29
31
PART III
Except as otherwise indicated, the information required by Items 10, 11, 12 and
13 is included in the Company's definitive proxy statement which will be filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934 no later
than 120 days after the close of the 1995 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
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 Schedule. 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 hereby incorporated by reference to Form 10-K for
the year ended July 2, 1994.
AGREEMENT AND FIFTH AMENDMENT TO COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT, DATED AS OF NOVEMBER
15, 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.
31
33
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).
4(d) Indenture, dated as of June 15, 1995, between Sysco
Corporation and First Union National Bank of North
Carolina, Trustee, hereby incorporated by reference to
Registration Statement on Form S-3 (File No. 33-60023).
10(a) AMENDED AND RESTATED SYSCO CORPORATION EXECUTIVE DEFERRED
COMPENSATION PLAN
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 incorporated by reference to Form 10-K for
the year ended July 2, 1994.
10(e) SYSCO CORPORATION 1995 MANAGEMENT INCENTIVE PLAN (SUBJECT
TO APPROVAL BY STOCKHOLDERS AT THE 1995 ANNUAL MEETING).
10(f) Sysco Corporation 1991 Stock Option Plan incorporated by
reference to Form 10-K for the year ended June 27, 1992.
10(g) SYSCO CORPORATION NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(SUBJECT TO APPROVAL BY STOCKHOLDERS AT THE 1995 ANNUAL
MEETING).
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 1st day of
September, 1995.
SYSCO CORPORATION
By /s/ BILL M. LINDIG
-------------------------------------
Bill M. Lindig
President 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. WOODHOUSE Chairman of the Board
- ------------------------------------
John F. Woodhouse
/s/ JOHN K. STUBBLEFIELD, JR. Senior Vice President and
- ---------------------------------- Chief Financial Officer
John K. Stubblefield, Jr.
33
35
DIRECTORS:
/s/ JOHN W. ANDERSON /s/ RICHARD G. MERRILL
- -------------------------------- --------------------------------
John W. Anderson Richard G. Merrill
/s/ JOHN F. BAUGH /s/ DONALD H. PEGLER, JR.
- -------------------------------- --------------------------------
John F. Baugh Donald H. Pegler, Jr.
/s/ COLIN G. CAMPBELL /s/ FRANK H. RICHARDSON
- -------------------------------- --------------------------------
Colin G. Campbell Frank H. Richardson
/s/ CHARLES H. COTROS /s/ PHYLLIS SHAPIRO SEWELL
- -------------------------------- --------------------------------
Charles H. Cotros Phyllis Shapiro Sewell
/s/ FRANK A. GODCHAUX III /s/ ARTHUR J. SWENKA
- -------------------------------- --------------------------------
Frank A. Godchaux III Arthur J. Swenka
/s/ JONATHAN GOLDEN /s/ THOMAS B. WALKER, JR.
- -------------------------------- --------------------------------
Jonathan Golden Thomas B. Walker, Jr.
/s/ DONALD J. KELLER /s/ JOHN F. WOODHOUSE
- -------------------------------- --------------------------------
Donald J. Keller John F. Woodhouse
/s/ BILL M. LINDIG
- --------------------------------
Bill M. Lindig
34
36
SYSCO CORPORATION AND SUBSIDIARIES
SCHEDULE II -- 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 $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
Allowance
For year ended for doubtful
July 1, 1995......... accounts $15,999,000 $15,988,000 $ -- $15,986,000 (2) $16,001,000
(1) Allowance accounts added from acquisitions.
(2) Customer accounts written off, net of recoveries.
(3) Allowance accounts deducted due to sales of businesses.
S-1
37
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended July 1, 1995 Commission File No. 1-6544
SYSCO CORPORATION
(Exact Name of Registrant as Specified in its Charter)
EXHIBITS
38
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 hereby incorporated by
reference to Form 10-K for the year ended July 2, 1994.
AGREEMENT AND FIFTH AMENDMENT TO COMPETITIVE AND
REVOLVING CREDIT FACILITY AGREEMENT, DATED AS OF
NOVEMBER 15, 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).
4(d) Indenture, dated as of June 15, 1995, between Sysco
Corporation and First Union National Bank of North
Carolina, Trustee, hereby incorporated by reference to
Registration Statement on Form S-3 (File No. 33-60023).
39
Exhibit
Number Description of Exhibit
- ------ ----------------------
10(a) AMENDED AND RESTATED SYSCO CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN.
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 incorporated by reference to Form 10-K for the year ended
July 2, 1994.
10(e) SYSCO CORPORATION 1995 MANAGEMENT INCENTIVE PLAN
(SUBJECT TO APPROVAL BY STOCKHOLDERS AT 1995 ANNUAL MEETING).
10(f) Sysco Corporation 1991 Stock Option Plan incorporated by
reference to Form 10-K for the year ended June 27, 1992.
10(g) SYSCO CORPORATION NON-EMPLOYEE DIRECTORS STOCK OPTION
PLAN (SUBJECT TO APPROVAL BY STOCKHOLDERS AT THE 1995
ANNUAL MEETING).
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
21 SUBSIDIARIES OF THE REGISTRANT
23 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
27 FINANCIAL DATA SCHEDULE