HOUSTON, Nov. 2, 2009 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE:SYY) today announced financial results for its 13-week first quarter ended September 26, 2009.
First Quarter Fiscal 2010 Highlights * Sales were $9.1 billion, a decrease of 8.1% from $9.9 billion in the first quarter of fiscal 2009. * Operating income was $497 million, a decrease of 1.5% compared to $505 million in last year's first quarter. * Operating margin was 5.5%, an increase of 0.4 points from the prior year. * Diluted earnings per share (EPS) was $0.55, an increase of 19.6% compared to $0.46 in last year's first quarter. * The first quarter results benefited from a $0.04 per share impact from the change in the value of corporate owned life insurance (COLI), and a $0.05 per share impact from the company's IRS settlement which was previously announced in August 2009.
"I am pleased with our solid operating performance this quarter," said Bill DeLaney, Sysco's chief executive officer. "In the midst of what continues to be an extremely challenging business environment, our operating companies managed expenses extraordinarily well. Our sales decline was largely caused by the impact of reduced consumer spending experienced by much of our customer base, as well as significant food cost deflation. Looking forward, we are encouraged by the stabilization of our volume trends in recent weeks and we remain committed to supporting our customers through this most difficult period in our industry's history."
First Quarter Fiscal 2010 Summary
Sales for the first quarter were $9.1 billion, a decrease of 8.1% compared to the same period last year. Food cost deflation, as measured by the estimated change in Sysco's cost of goods, was 3.4% percent for the quarter. Sales from acquisitions (within the last 12 months) increased sales by 0.6%. The impact of changes in foreign exchange rates for the quarter reduced sales by 0.5%.
Operating expenses declined $132 million, or 9.5%, for the first quarter of fiscal 2010 compared to the prior year period. The decrease in operating expenses was primarily a result of declining payroll expense related to reduced headcount and lower incentive compensation, as well as a change in the value of COLI. These expense declines were partially offset by an increase in pension expense related to the company-sponsored pension plan, which was higher in the first quarter due to the impact of a market-related reduction in asset values underlying the plan. As a result, operating income fell 1.5% to $497 million during the first quarter.
Net earnings for the first quarter were $326 million, an increase of $49 million, or 17.8%, and diluted EPS was $0.55, an increase of $0.09, or 19.6%, compared to the prior year period. In addition to the items noted above, these results were favorably impacted by a one-time tax benefit related to the company's IRS settlement. The tax gain combined with non-taxable COLI gains favorably impacted the effective tax rate for the first quarter.
The impact of COLI, the IRS settlement and company-sponsored pension expense on Sysco's results of operations is outlined in the table below:
Year-Over-Year Impact of
Certain Expense Items -
Better/(Worse)
----------------------------
Operating Net
(000's) Income Earnings EPS
----------------------------
Cash surrender value of COLI $ 44,060 $ 44,060 $ 0.07
Tax settlement 0 28,895 $ 0.05
Company-sponsored pensions (10,428) (7,307) ($0.01)
----------------------------
Net impact $ 33,632 $ 65,648 $ 0.11
----------------------------
Capital Spending
Capital expenditures totaled $109 million for the first quarter. The primary areas for investments included facility replacements and expansions, technology, and additions and replacements to Sysco's fleet. Looking forward, the company projects fiscal 2010 capital expenditures will be in the range of $600 million to $650 million.
Conference Call & Webcast
Sysco's first quarter fiscal 2010 earnings conference call will be held on Monday, November 2, 2009 at 10:00 a.m. EST. A live webcast of the call, as well as a copy of this press release, will be available online at www.sysco.com in the Investor Relations section.
About Sysco
Sysco is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. The company operates 186 distribution facilities serving approximately 400,000 customers. For the fiscal year 2009 that ended June 27, 2009, the company generated more than $36 billion in sales. For more information about Sysco visit the company's Internet home page at www.sysco.com.
The Sysco Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?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 the apparent stabilization of volume trends and projections regarding capital expenditures. 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 sales volume include risks relating to sensitivity to general economic conditions, including the current economic environment and decreases in consumer spending; the risk of interruption of supplies due to lack of long-term contracts, severe weather, work stoppages or otherwise; and labor issues. Capital expenditures may vary from those projected based on changes in business plans and other factors, including the timing and successful completion of acquisitions, construction schedules and the possibility that other cash requirements could result in delays or cancellations of capital spending. For a discussion of additional factors impacting Sysco's business, see the Company's Annual Report on Form 10-K for the year ended June 27, 2009 as filed with the Securities and Exchange Commission.
Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands, Except for Share and Per Share Data)
13-Week Period Ended
---------------------------
Sept. 26, Sept. 27,
2009 2008
------------ ------------
Sales $ 9,081,426 $ 9,877,429
Cost of sales 7,334,067 7,990,873
------------ ------------
Gross margin 1,747,359 1,886,556
Operating expenses 1,250,031 1,381,804
------------ ------------
Operating income 497,328 504,752
Interest expense 33,800 26,410
Other income, net (2,012) (2,813)
------------ ------------
Earnings before income taxes 465,540 481,155
Income taxes 139,335 204,341
------------ ------------
Net earnings $ 326,205 $ 276,814
============ ============
Net earnings:
Basic earnings per share $ 0.55 $ 0.46
Diluted earnings per share 0.55 0.46
Average shares outstanding 591,568,212 602,257,425
Diluted shares outstanding 591,983,474 605,707,175
Dividends declared per common share $ 0.24 $ 0.22
Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except for Share Data)
Sept. 26, June 27, Sept. 27,
2009 2009 2008
----------- ----------- -----------
(unaudited) (unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 851,036 $ 1,087,084 $ 345,625
Short-term investments 27,438 -- --
Accounts and notes receivable,
less allowances of $51,089,
$36,078 and $46,493 2,575,293 2,468,511 2,873,502
Inventories 1,747,773 1,650,666 1,933,703
Deferred taxes 91,262 -- 101,811
Prepaid expenses and other
current assets 69,013 64,418 69,065
----------- ----------- -----------
Total current assets 5,361,815 5,270,679 5,323,706
Plant and equipment at cost,
less depreciation 3,014,341 2,979,200 2,876,081
Other assets
Goodwill 1,529,066 1,510,795 1,421,460
Intangibles, less amortization 116,731 121,089 83,709
Restricted cash 121,755 93,858 93,077
Prepaid pension cost 48,750 26,746 256,017
Other assets 237,247 214,252 231,005
----------- ----------- -----------
Total other assets 2,053,549 1,966,740 2,085,268
----------- ----------- -----------
Total assets $10,429,705 $10,216,619 $10,285,055
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Accounts payable $ 1,960,354 $ 1,856,887 $ 2,051,112
Accrued expenses 767,742 797,756 757,455
Accrued income taxes 345,420 323,983 584,608
Deferred taxes -- 162,365 --
Current maturities of
long-term debt 8,743 9,163 5,269
----------- ----------- -----------
Total current liabilities 3,082,259 3,150,154 3,398,444
Other liabilities
Long-term debt 2,468,783 2,467,486 1,974,053
Deferred taxes 616,142 526,377 717,587
Other long-term liabilities 548,163 622,900 689,745
----------- ----------- -----------
Total other liabilities 3,633,088 3,616,763 3,381,385
Commitments and 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
2,000,000,000 shares, issued
765,174,900 shares 765,175 765,175 765,175
Paid-in capital 764,902 760,352 727,558
Retained earnings 6,724,058 6,539,890 6,185,935
Accumulated other
comprehensive loss (233,932) (277,986) (98,308)
Treasury stock at cost,
173,860,981, 175,148,403 and
164,083,709 shares (4,305,845) (4,337,729) (4,075,134)
----------- ----------- -----------
Total shareholders' equity 3,714,358 3,449,702 3,505,226
----------- ----------- -----------
Total liabilities and
shareholders' equity $10,429,705 $10,216,619 $10,285,055
=========== =========== ===========
Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
13-Week Period Ended
---------------------------
Sept. 26, Sept. 27,
2009 2008
------------ ------------
Cash flows from operating activities:
Net earnings $ 326,205 $ 276,814
Adjustments to reconcile net earnings to
cash provided by operating activities:
Share-based compensation expense 12,748 10,833
Depreciation and amortization 93,906 94,351
Deferred tax (benefit) provision (207,546) 182,824
Provision for losses on receivables 8,152 11,774
(Gain) on sale of assets (157) (20)
Additional investment in certain assets
and liabilities, net of effect of
businesses acquired:
(Increase) in receivables (100,167) (165,659)
(Increase) in inventories (86,167) (100,650)
(Increase) in prepaid expenses
and other current assets (4,242) (5,171)
Increase in accounts payable 89,669 6,269
(Decrease) in accrued expenses (33,896) (149,281)
Increase (decrease) in accrued
income taxes 56,113 (34,982)
(Increase) in other assets (22,083) (26,225)
(Decrease) in other long-term
liabilities and prepaid pension
cost, net (85,596) (34,507)
Excess tax benefits from share-based
compensation arrangements (465) (3,000)
------------ ------------
Net cash provided by operating
activities 46,474 63,370
------------ ------------
Cash flows from investing activities:
Additions to plant and equipment (109,405) (80,046)
Proceeds from sales of plant and
equipment 1,346 1,023
Acquisition of businesses, net of cash
acquired (8,334) (13,534)
Purchases of short-term investments (27,217) --
(Increase) in restricted cash (27,897) (490)
------------ ------------
Net cash used for investing activities (171,507) (93,047)
------------ ------------
Cash flows from financing activities:
Other debt borrowings 2,417 1,153
Other debt repayments (2,593) (1,581)
Common stock reissued from treasury for
share-based compensation awards 21,907 73,535
Treasury stock purchases -- (118,389)
Dividends paid (141,729) (132,383)
Excess tax benefits from share-based
compensation arrangements 465 3,000
------------ ------------
Net cash used for financing activities (119,533) (174,665)
------------ ------------
Effect of exchange rates on cash 8,518 (1,585)
------------ ------------
Net (decrease) in cash and cash
equivalents (236,048) (205,927)
Cash and cash equivalents at beginning
of period 1,087,084 551,552
------------ ------------
Cash and cash equivalents at end
of period $ 851,036 $ 345,625
============ ============
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 59,509 $ 44,446
Income taxes 334,833 42,425
Sysco Corporation and its Consolidated Subsidiaries
COMPARATIVE SEGMENT DATA (Unaudited)
(In Thousands)
13-Week Period Ended
---------------------------
Sept. 26, Sept. 27,
2009 2008
------------ ------------
Sales:
Broadline $ 7,308,706 $ 7,872,567
SYGMA 1,150,861 1,228,235
Other 742,877 895,740
Intersegment (121,018) (119,113)
------------ ------------
Total $ 9,081,426 $ 9,877,429
============ ============
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Comparative Supplemental Statistical Information Related to Sales
(Unaudited)
Comparative Sysco Brand Sales and Marketing Associate-Served Sales
data are summarized below.
13-Week Period Ended
---------------------------
Sept. 26, Sept. 27,
2009 2008
------------ ------------
Sysco Brand Sales as a %
of MA-Served Sales 46.92% 49.44%
Sysco Brand Sales as a %
of Total Broadline Sales 38.39% 40.85%
MA-Served Sales as a %
of Total Broadline Sales 48.23% 48.58%
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