HOUSTON, Aug. 10, 2009 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE:SYY) today announced financial results for its 13-week fourth quarter and 52 weeks of fiscal 2009 ended June 27, 2009.
Fourth Quarter Fiscal 2009 Highlights
* Sales were $9.1 billion, a decrease of 6.6% from $9.7 billion in
the fourth quarter of fiscal 2008.
* Operating income was $540 million, a decrease of 3.3% compared to
$559 million in last year's fourth quarter.
* Diluted earnings per share (EPS) was $0.53, a decrease of 3.6%
compared to $0.55 in last year's fourth quarter.
Fiscal 2009 Highlights
* Sales of $36.9 billion were 1.8% lower compared to $37.5 billion in
the prior year.
* Operating income of $1.9 billion was down less than 1% compared to
last year's 52 weeks.
* Diluted EPS was $1.77, a decrease of 2.2% compared to $1.81 in the
prior year.
"The fiscal year results reflect the impact of effective cost management throughout the organization and our committed associates who deliver outstanding service to our customers," said Bill DeLaney, Sysco's chief executive officer. "Although market conditions remain difficult, Sysco's industry leadership position remained strong during fiscal 2009 and should further improve when the economy recovers."
Fourth Quarter Fiscal 2009 Summary
Sales for the fourth quarter were $9.1 billion, a decrease of 6.6% compared to the same period last year. Food cost inflation, as measured by the change in Sysco's cost of goods, was 0.5% percent for the quarter. Sales from acquisitions (less than 12 months) increased sales by 0.6%. The impact of changes in Canadian exchange rates for the quarter reduced sales by 1.3%.
Operating income for the fourth quarter was $540 million, a decrease of 3.3% over the same period last year. Diluted EPS decreased 3.6% from the fourth quarter of fiscal 2008 to $0.53. Diluted EPS was favorably impacted by $0.03 due to the higher cash surrender value of COLI, compared to no COLI-related impact in the same period last year.
Operating expenses decreased $120 million for the fourth quarter of fiscal 2009 as 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, partially offset by increased bad debt expense. The decrease in operating expenses was also impacted by a net $36 million reduction in certain expenses, as outlined in the table below:
Impact of certain expense items
-------------------------------
Operating
expense
impact
4Q09 4Q08 Better/
Expense Expense (Worse)
(000's) -------------------------------
Cash surrender value of COLI ($19,472) ($575) $18,897
Multi-employer pension plans 0 12,900 $12,900
Company-sponsored pensions 22,538 16,459 ($6,079)
Stock compensation expense 9,286 19,496 $10,210
-------------------------------
Net impact to operating expenses $12,352 $48,280 $35,928
Fiscal 2009 Summary
Sales for fiscal 2009 were $36.9 billion, down 1.8% compared to the prior year. Food cost inflation, as measured by the change in Sysco's cost of goods, was 4.7% for the fiscal year. Sales from acquisitions (less than 12 months) increased sales by 0.1%. The impact of changes in Canadian exchange rates for the fiscal year reduced sales by 1.2%.
Operating income for fiscal 2009 was $1.9 billion, down less than 1% compared to the prior year. Diluted EPS of $1.77 was 2.2% lower than in the prior year. Diluted EPS was unfavorably impacted by $0.07 due to the lower cash surrender value of COLI, compared to a $0.01 unfavorable impact in the same period last year.
Operating expenses decreased $151 million for fiscal 2009 as compared to the prior year. The decrease in operating expenses was principally a result of declining payroll expenses related to reduced headcount and lower incentive compensation, partially offset by increased bad debt expense and a net $21 million increase in certain expenses, as outlined in the table below:
Impact of certain expense items
-------------------------------
Operating
expense
impact
FY 2009 FY 2008 Better/
Expense Expense (Worse)
(000's) -------------------------------
Cash surrender value of COLI $43,812 $8,718 ($35,094)
Multi-employer pension plans 9,585 22,310 $12,725
Company-sponsored pensions 88,714 65,836 ($22,878)
Stock compensation expense 56,030 80,650 $24,620
-------------------------------
Net impact to operating expenses $198,141 $177,514 ($20,627)
Net earnings for fiscal 2009 were unfavorably impacted by a 40.4% tax rate for fiscal 2009 compared to 38.3% in the prior year. The primary contributors to this high tax rate were additional provisions for tax contingencies and the $44 million COLI loss noted above, which is not deductible for tax purposes.
Capital Spending
Capital expenditures totaled $150 million and $465 million for the fourth quarter and fiscal 2009, respectively. 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 fourth quarter 2009 earnings conference call will be held on Monday, August 10, 2009 at 10:00 a.m. EDT. 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 company's ability to improve its industry position 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 these statements include risks that pertain to Sysco's business, including 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 decreases in consumer spending; increased fuel costs; Sysco's leverage and debt risks; the successful completion of acquisitions and integration of acquired companies as well as the risk that acquisitions could negatively impact the Company's stock price, operating results or debt ratio or significantly increase the Company's liquidity requirements; 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; risks related to the Company's implementation of its enterprise wide integrated software project, including the risk that the project may not be successfully implemented or may not prove cost effective; and internal factors such as the ability to control expenses. Earnings are also impacted by COLI, pension expense, and option expensing, which is based on certain assumptions regarding the number and fair value of options granted, resulting tax benefits and shares outstanding. Capital expenditures may vary from those projected based on changes in business plans and other factors, including those described above. 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 year ended June 28, 2008 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)
52-Week Period Ended 13-Week Period Ended
------------------------- -------------------------
June 27, June 28, June 27, June 28,
2009 2008 2009 2008
------------ ------------ ------------ ------------
Sales $ 36,853,330 $ 37,522,111 $ 9,086,748 $ 9,730,205
Cost of sales 29,816,999 30,327,254 7,324,162 7,828,791
------------ ------------ ------------ ------------
Gross margin 7,036,331 7,194,857 1,762,586 1,901,414
Operating
expenses 5,164,120 5,314,908 1,222,314 1,342,754
------------ ------------ ------------ ------------
Operating income 1,872,211 1,879,949 540,272 558,660
Interest expense 116,322 111,541 33,279 27,511
Other income, net (14,945) (22,930) (3,395) (4,270)
------------ ------------ ------------ ------------
Earnings before
income taxes 1,770,834 1,791,338 510,388 535,419
Income taxes 714,886 685,187 195,074 201,306
------------ ------------ ------------ ------------
Net earnings $ 1,055,948 $ 1,106,151 $ 315,314 $ 334,113
============ ============ ============ ============
Net earnings:
Basic earnings
per share $ 1.77 $ 1.83 $ 0.53 $ 0.56
Diluted earnings
per share 1.77 1.81 0.53 0.55
Average shares
outstanding 595,127,577 605,905,545 590,550,464 601,481,271
Diluted shares
outstanding 596,069,204 610,970,783 591,045,208 605,081,076
Dividends
declared per
common share $ 0.94 $ 0.85 $ 0.24 $ 0.22
Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except for Share Data)
June 27, 2009 June 28, 2008
------------- -------------
ASSETS
Current assets
Cash and cash equivalents $ 1,087,084 $ 551,552
Accounts and notes receivable, less
allowances of $36,078 and $31,730 2,468,511 2,723,189
Inventories 1,650,666 1,836,478
Prepaid expenses and other current assets 64,418 63,814
Prepaid income taxes 105,206 --
------------ ------------
Total current assets 5,375,885 5,175,033
Plant and equipment at cost, less
depreciation 2,979,200 2,889,790
Other assets
Goodwill 1,510,795 1,413,224
Intangibles, less amortization 121,089 87,528
Restricted cash 93,858 92,587
Prepaid pension cost 26,746 215,159
Other assets 214,252 208,972
------------ ------------
Total other assets 1,966,740 2,017,470
------------ ------------
Total assets $ 10,321,825 $ 10,082,293
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,856,887 $ 2,048,759
Accrued expenses 797,756 917,892
Accrued income taxes -- 11,665
Deferred taxes 568,045 516,131
Current maturities of long-term debt 9,163 4,896
------------ ------------
Total current liabilities 3,231,851 3,499,343
Other liabilities
Long-term debt 2,467,486 1,975,435
Deferred taxes 484,659 540,330
Other long-term liabilities 688,127 658,199
------------ ------------
Total other liabilities 3,640,272 3,173,964
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
Paid-in capital 760,352 712,208
Retained earnings 6,539,890 6,041,429
Accumulated other comprehensive
(loss) income (277,986) (68,768)
Treasury stock, 178,148,403 and
163,942,358 shares (4,337,729) (4,041,058)
------------ ------------
Total shareholders' equity 3,449,702 3,408,986
------------ ------------
Total liabilities and shareholders' equity $ 10,321,825 $ 10,082,293
============ ============
Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
52-Week Period Ended
----------------------------
June 27, 2009 June 28, 2008
------------- -------------
Cash flows from operating activities:
Net earnings $ 1,055,948 $ 1,106,151
Adjustments to reconcile net earnings to
cash provided by operating activities:
Share-based compensation expense 56,030 80,650
Depreciation and amortization 382,339 372,529
Deferred tax provision 683,616 643,480
Provision for losses on receivables 74,638 32,184
(Gain) on sale of assets (3,586) (2,747)
Additional investment in certain assets
and liabilities, net of effect of
businesses acquired:
Decrease (increase) in receivables 188,748 (128,017)
Decrease (increase) in inventories 177,590 (110,925)
(Increase) decrease in prepaid expenses
and other current assets (678) 59,896
(Decrease) increase in accounts payable (192,692) 54,451
(Decrease) in accrued expenses (120,314) (22,721)
(Decrease) in accrued income taxes (717,523) (509,783)
(Increase) decrease in other assets (15,701) 11,926
Increase in other long-term liabilities
and prepaid pension cost, net 16,847 13,459
Excess tax benefits from share-based
compensation arrangements (2,921) (4,404)
------------ ------------
Net cash provided by operating activities 1,582,341 1,596,129
------------ ------------
Cash flows from investing activities:
Additions to plant and equipment (464,561) (515,963)
Proceeds from sales of plant and
equipment 25,244 13,320
Acquisition of businesses, net of cash
acquired (218,075) (55,259)
(Increase) decrease in restricted cash (1,271) 2,342
------------ ------------
Net cash used for investing activities (658,663) (555,560)
------------ ------------
Cash flows from financing activities:
Bank and commercial paper borrowings
(repayments), net -- (550,726)
Other debt borrowings 506,611 757,972
Other debt repayments (10,173) (7,628)
Debt issuance costs (3,693) (4,192)
Common stock reissued from treasury 111,780 128,238
Treasury stock purchases (438,843) (529,179)
Dividends paid (548,246) (497,467)
Excess tax benefits from share-based
compensation arrangements 2,921 4,404
------------ ------------
Net cash used for financing activities (379,643) (698,578)
------------ ------------
Effect of exchange rates on cash (8,503) 1,689
------------ ------------
Net increase in cash and cash equivalents 535,532 343,680
Cash and cash equivalents at beginning
of period 551,552 207,872
------------ ------------
Cash and cash equivalents at end of period $ 1,087,084 $ 551,552
============ ============
Supplemental disclosures of cash flow
information: Cash paid during the
period for:
Interest $ 108,608 $ 98,330
Income taxes 735,772 530,169
Sysco Corporation and its Consolidated Subsidiaries
COMPARATIVE SEGMENT DATA (Unaudited)
(In Thousands)
52-Week Period Ended 13-Week Period Ended
------------------------- -------------------------
June 27, June 28, June 27, June 28,
2009 2008 2009 2008
------------ ------------ ------------ ------------
Sales:
Broadline $ 29,234,199 $ 29,824,553 $ 7,258,134 $ 7,739,696
SYGMA 4,839,036 4,574,880 1,183,991 1,203,187
Other 3,242,115 3,590,738 763,842 908,723
Intersegment (462,020) (468,060) (119,219) (121,401)
------------ ------------ ------------ ------------
Total $ 36,853,330 $ 37,522,111 $ 9,086,748 $ 9,730,205
============ ============ ============ ============
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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.
52-Week Period Ended 13-Week Period Ended
------------------------- -------------------------
June 27, June 28, June 27, June 28,
2009 2008 2009 2008
------------ ------------ ------------ ------------
Sysco Brand Sales
as a % of
MA-Served Sales 48.47% 50.75% 47.38% 50.02%
Sysco Brand Sales
as a % of Total
Broadline Sales 39.39% 41.57% 38.64% 41.03%
MA-Served Sales
as a % of Total
Broadline Sales 47.40% 48.10% 48.10% 48.70%
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CONTACT: Sysco Corporation
Neil Russell, Vice President, Investor Relations
281-584-1308