HOUSTON, May 2, 2005 (PRIMEZONE) -- SYSCO Corporation (NYSE:SYY), North America's leading foodservice marketer and distributor, today announced results for the third quarter ended April 2, 2005, of its fiscal year ending July 2, 2005.
Third Quarter FY2005 Highlights:
--------------------------------
-- Diluted earnings per share rose 13.3% to $0.34 compared to
$0.30 in the same period last year.
-- Net earnings climbed 11.4% to $218.2 million vs. $195.8 million
in last year's third quarter.
-- Sales increased 5.9% to $7.4 billion versus $7.0 billion in the
third quarter of fiscal 2004.
-- Non-comparable acquisitions contributed 1.0% to sales growth,
and inflation, as measured by product cost increases, was 3.8%
in the third quarter.
First 39 weeks FY2005 Highlights:
---------------------------------
-- Diluted earnings per share rose 9.5% to $1.04 compared to
$0.95 in the same period last year.
-- Net earnings climbed 8.0% to $676.8 million vs. $626.6 million
in last year's first 39 weeks.
-- Sales increased 5.2% to $22.3 billion versus $21.2 billion
last year.
-- Non-comparable acquisitions contributed 0.7% to sales growth,
and inflation, as measured by product cost increases, was 4.4%
during the period.
Richard J. Schnieders, SYSCO's chairman and chief executive officer, said, "In addition to the improvement in sales growth compared to last year, we were also pleased to see sequential improvement in the rate of sales growth during the fiscal third quarter over the second quarter. We believe the foodservice operating environment is progressively gaining strength and our operating companies continued focusing on business reviews and business development with the objective of helping our customers succeed.
"I am especially proud of the way our companies overcame the more difficult operating expense environment that resulted from higher fuel costs and harsh weather in the Northeast and the Midwest," he continued, noting that SYSCO's operating companies recorded a strong 20 basis-point reduction in operating expenses as a percent to sales in the third quarter.
"I remain optimistic about both the direction of our industry and SYSCO's opportunity to capitalize on future sales and earnings gains," added Mr. Schnieders. "We will be growing our entire base of Customer Contact associates in the coming quarters to take advantage of our improving operating environment and further strengthen our efforts to help our customers succeed."
Mr. Schnieders also noted that SYSCO benefited from a reversal of an $11.0 million accrual for an income tax contingency during the quarter. Based on additional information and supported by a third party analysis, the company believes that the tax accrual is no longer warranted.
Thomas E. Lankford, SYSCO's president and chief operating officer, added, "Among the most significant activities of the third quarter was the successful opening of our northeast Redistribution Center (RDC) in Front Royal, Virginia. On February 14 it shipped its first truckload to our broadline company near Boston, and to date it is supplying five of the 14 broadline companies in the Northeast Region. By the end of this month one-half of those companies will be receiving shipments from the northeast RDC. The project remains on time, on budget and is performing better than our planned projections."
During the third quarter, $14 million was expensed and $5.5 million was capitalized related to the National Supply Chain Project compared to last year's third quarter when $3 million was expensed and $25 million was capitalized. Through the end of the third fiscal quarter the total amount expensed on the National Supply Chain Project was $95.7 million and the total amount capitalized was $184.1 million.
"Our FreshPoint subsidiary continued to expand its distribution reach with the acquisition of a specialty produce distributor in Modesto, California, during the quarter," continued Mr. Lankford. "In terms of internal growth activity, our broadline fold-out company in Post Falls, Idaho began distributing products in April to the Spokane, Washington and surrounding foodservice markets. Going forward, our goal is to open at least three fold-out companies per year to ensure we continue achieving the efficiencies and benefits of being closer to our customers."
During the third quarter SYSCO's total capital expenditures were approximately $98.8 million, resulting in total expenditures of $304.4 million for the first 39 weeks of fiscal year 2005. The company now anticipates that capital spending for fiscal 2005 will be in a range of $400 to $425 million, a slight revision to the previously provided range of $400 to $450 million.
"Sales continue to head in the right direction and we are committed to building on this momentum," concluded Mr. Lankford. "Our skilled and committed associates' efforts on behalf of our customers, our growth initiatives and the continued success we are experiencing from the implementation of our RDC will continue to set us apart from the competition and position SYSCO for future market share gains."
SYSCO, the largest foodservice marketing and distribution organization in North America, provides food and related products and services to approximately 400,000 restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers, generating sales of approximately $30.0 billion for calendar year 2004. SYSCO's operations, supported by approximately 46,000 associates, are located throughout the United States and Canada and include broadline foodservice distribution companies, specialty produce and custom-cut meat operations, Asian cuisine foodservice distributors, hotel supply operations and chain restaurant distribution subsidiaries. For more information about SYSCO visit the company's Internet home page at www.sysco.com. As previously announced, SYSCO's second quarter 2005 earnings conference call will be held at 10:00 a.m. EST on Monday, May 2, 2005. A live webcast of the call, as well as a copy of this press release, will be available online at www.sysco.com.
The SYSCO Corporation logo is available at: http://media.primezone.com/prs/single/?pkgid=747
Forward-Looking Statements
Certain statements made herein are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They include statements regarding SYSCO's ability to increase sales, gain market share, improve operating efficiencies, control expenses and execute its growth strategies; capital expenditures and other future investments; industry trends; the expected timing, cost and benefits of the national supply chain project and northeast redistribution center and the expected timing and anticipated impact of fold-outs and acquisitions. These statements involve risks and uncertainties and are based on management's current expectations and estimates; actual results may differ materially. Those risks and uncertainties that could impact these statements include the risks relating to the foodservice distribution industry's relatively low profit margins and sensitivity to general economic conditions, including the current economic environment and consumer spending; the risk that higher costs due to inflation cannot be passed on to customers or that the current high levels of inflation do not return to historical levels; SYSCO's leverage and debt risks; the successful completion and integration of acquisitions and fold-outs; the risk of interruption of supplies due to lack of long-term contracts, severe weather, work stoppages or otherwise; construction schedules; management's allocation of capital and the timing of capital purchases such as fleet and equipment; competitive conditions; labor issues; and internal factors such as the ability to control expenses. For a discussion of additional factors that could cause actual results to differ from those described in the forward-looking statements, see the Company's Annual Report on Form 10-K for the fiscal year ended July 3, 2004 as filed with the Securities and Exchange Commission.
SYSCO CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
For the 13-Week Period Ended
-------------------------------
April 2, 2005 March 27, 2004
------------- --------------
Sales $ 7,437,453 $ 7,025,585
Costs and expenses
Cost of sales 6,032,165 5,684,192
Operating expenses 1,052,477 1,008,493
Interest expense 20,151 15,737
Other, net (2,919) (1,250)
----------- -----------
Total costs and expenses 7,101,874 6,707,172
----------- -----------
Earnings before income taxes 335,579 318,413
Income taxes
(34.97% in Q05; 38.50% in Q04) 117,359 122,589
----------- -----------
Net earnings $ 218,220 $ 195,824
=========== ===========
Basic earnings per share $ 0.34 $ 0.31
=========== ===========
Diluted earnings per share $ 0.34 $ 0.30
=========== ===========
Average shares outstanding 635,654,561 642,038,004
Diluted average shares outstanding 650,753,697 663,097,806
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Comparative segment sales data for the third quarter of fiscal years
2005 and 2004 are summarized below.
(Unaudited) For the 13-Week Period Ended
($000) -------------------------------
April 2, 2005 March 27, 2004
------------- --------------
Sales
Broadline $ 5,895,662 $ 5,648,123
SYGMA 982,842 873,344
Other 642,747 574,401
Intersegment Sales (83,798) (70,283)
----------- -----------
Total Sales $ 7,437,453 $ 7,025,585
=========== ===========
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Comparative Supplemental Statistical Information
Related to Sales (Unaudited)
------------------------------------------------
Comparative SYSCO Brand Sales and Marketing Associate-Served Sales
data for the third quarter of fiscal years 2005 and 2004 are
summarized below.
For the 13-Week Period Ended
-------------------------------
April 2, 2005 March 27, 2004
------------- --------------
SYSCO Brand Sales as a % of
MA-Served Sales 56.6% 57.5%
SYSCO Brand Sales as a % of Total
Traditional Broadline Sales
in the U.S. 48.8% 49.1%
MA-Served Sales as a % of Total
Traditional Broadline Sales
in the U.S. 52.6% 51.7%
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SYSCO CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands Except for Share Data)
For the 39-Week Period Ended
--------------------------------
April 2, 2005 March 27, 2004
------------- --------------
Sales $22,300,635 $21,196,386
Costs and expenses
Cost of sales 18,060,611 17,107,358
Operating expenses 3,112,808 3,029,682
Interest expense 55,616 50,744
Other, net (6,581) (10,285)
----------- -----------
Total costs and expenses 21,222,454 20,177,499
----------- -----------
Earnings before income taxes 1,078,181 1,018,887
Income taxes
(37.23% in 05; 38.50% in 04) 401,404 392,271
----------- -----------
Net earnings $ 676,777 $ 626,616
=========== ===========
Basic earnings per share $ 1.06 $ 0.97
=========== ===========
Diluted earnings per share $ 1.04 $ 0.95
=========== ===========
Average shares outstanding 637,487,017 644,219,976
Diluted average shares outstanding 653,057,150 662,482,772
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Comparative segment sales data for the 39 weeks of fiscal years 2005
and 2004 are summarized below.
(Unaudited) For the 39-Week Period Ended
($000) --------------------------------
April 2, 2005 March 27, 2004
------------- --------------
Sales
Broadline $ 17,838,966 $ 17,156,599
SYGMA 2,840,043 2,561,446
Other 1,867,871 1,707,734
Intersegment Sales (246,245) (229,393)
------------ -------------
Total Sales $ 22,300,635 $ 21,196,386
============ ============
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Comparative Supplemental Statistical Information
Related to Sales (Unaudited)
------------------------------------------------
Comparative SYSCO Brand Sales and Marketing Associate-Served Sales
data for the 39 weeks of fiscal years 2005 and 2004 are summarized
below.
For the 39-Week Period Ended
--------------------------------
April 2, 2005 March 27, 2004
------------- --------------
SYSCO Brand Sales as a % of
MA-Served Sales 57.3% 57.4%
SYSCO Brand Sales as a % of
Total Traditional Broadline Sales 49.4% 49.3%
in the U.S.
MA-Served Sales as a % of
Total Traditional Broadline Sales 53.3% 53.1%
in the U.S.
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SYSCO CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
April 2, 2005 March 27, 2004
------------- --------------
ASSETS
Current assets
Cash $ 199,518 $ 172,695
Receivables 2,242,837 2,087,476
Inventories 1,490,305 1,373,251
Prepaid expenses 63,482 57,128
----------- -----------
Total current assets 3,996,142 3,690,550
Plant and equipment at cost,
less depreciation 2,247,555 2,088,314
Other assets
Goodwill and intangibles 1,267,914 1,177,161
Restricted cash 185,233 169,220
Prepaid pension cost 272,266 --
Other 198,126 201,587
----------- -----------
Total other assets 1,923,539 1,547,968
----------- -----------
Total assets $ 8,167,236 $ 7,326,832
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 73,043 $ 105,922
Accounts payable 1,770,379 1,717,438
Accrued expenses 698,135 650,193
Accrued income taxes 114,170 67,673
Deferred taxes 312,357 296,567
Current maturities of long-term debt 365,755 10,296
----------- -----------
Total current liabilities 3,333,839 2,848,089
Other liabilities
Long-term debt 1,032,822 1,420,139
Deferred taxes 705,918 561,666
Other long-term liabilities 278,877 227,890
----------- -----------
Total other liabilities 2,017,617 2,209,695
Contingencies
Shareholders' equity
Common stock, par $l per share 765,175 765,175
Paid-in capital 377,067 317,003
Retained earnings 4,362,360 3,762,183
Other comprehensive income (loss) 45,928 (144,862)
Treasury stock (2,734,750) (2,430,451)
----------- -----------
Total shareholders' equity 2,815,780 2,269,048
----------- -----------
Total liabilities and
shareholders' equity $ 8,167,236 $ 7,326,832
=========== ===========
SYSCO CORPORATION
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
For the
39-Week Period Ended
-------------------------
April 2, March 27,
2005 2004
--------- ---------
Cash flows from operating activities:
Net earnings $ 676,777 $ 626,616
Add non-cash items:
Depreciation and amortization 230,964 209,054
Deferred tax provision 383,852 408,139
Provision for losses on receivables 21,873 23,613
Additional investment in certain assets
and liabilities, net of effect of
businesses acquired:
(Increase) in receivables (48,948) (85,195)
(Increase) in inventories (69,578) (134,750)
(Increase) in prepaid expenses (8,080) (4,701)
Increase in accounts payable 7,967 77,154
(Decrease) increase in accrued expenses (38,225) 7,567
(Decrease) in income taxes (342,831) (283,980)
(Increase) in other assets (10,245) (18,982)
Increase (decrease) in other long-term
liabilities and prepaid pension
cost, net 17,743 (67,900)
--------- ---------
Net cash provided by operating activities 821,269 756,635
--------- ---------
Cash flows from investing activities:
Additions to plant and equipment (304,400) (379,390)
Proceeds from sales of plant and equipment 17,059 13,354
Acquisition of businesses,
net of cash acquired (49,485) (34,091)
Increase in restricted cash (16,584) (90,223)
--------- ---------
Net cash used for investing activities (353,410) (490,350)
--------- ---------
Cash flows from financing activities:
Bank and commercial paper (repayments) (791) (15,779)
Other debt (repayments) borrowings (3,092) 184,966
Cash from termination of interest rate swap 5,316 1,305
Common stock reissued from treasury 150,467 135,816
Treasury stock purchases (354,078) (508,963)
Dividends paid (261,974) (226,271)
--------- ---------
Net cash used for financing activities (464,152) (428,926)
--------- ---------
Effect of exchange rate changes on cash (3,895) (2,111)
--------- ---------
Net decrease in cash (188) (164,752)
Cash at beginning of period 199,706 337,447
--------- ---------
Cash at end of period $ 199,518 $ 172,695
========= =========
Cash paid during the period for:
Interest $ 50,136 $ 46,875
Income taxes 357,135 257,102