HOUSTON, Feb. 1, 2010 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE:SYY) today announced financial results for its 13-week second quarter ended December 26, 2009.
Second Quarter Fiscal 2010 Highlights
- Sales were $8.9 billion, a decrease of 3.1% from $9.1 billion in the second quarter of fiscal 2009.
- Operating income was $462 million, an increase of 9.6% compared to $422 million in last year’s second quarter.
- Diluted earnings per share (EPS) was $0.45, an increase of 12.5% compared to $0.40 in last year’s second quarter.
First Half Fiscal 2010 Highlights
- Sales were $17.9 billion, a decrease of 5.7% from $19.0 billion in the first half of fiscal 2009.
- Operating income was $960 million, an increase of 3.6% compared to $927 million in last year’s first half.
- Diluted EPS was $1.00, an increase of 16.3% compared to $0.86 in last year’s first half.
“I am encouraged by our operating performance this quarter,” said Bill DeLaney, Sysco’s chief executive officer. “While the business environment remains challenging, deflation pressures appear to be moderating from highs we saw early in the quarter and case volume trends continue to improve. I want to recognize our associates for their efforts during the quarter, as they continued to provide excellent service to our customers, improve productivity and maintain strong cost controls.”
Second Quarter Fiscal 2010 Summary
Sales for the second quarter were $8.9 billion, a decrease of 3.1% compared to the same period last year. Food cost deflation, as measured by the estimated change in Sysco’s cost of goods, was 3.5% 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 increased sales by 1.2%.
Operating expenses declined $96 million, or 7.2%, for the second quarter of fiscal 2010 compared to the prior year period. The decrease in operating expenses was primarily a result of a $37 million favorable change in the value of Corporate Owned Life Insurance (COLI) and a $25 million decline in payroll expense related to reduced headcount. Operating income increased $40 million, or 9.6%, to $462 million during the second quarter, and operating margin was 5.2%.
Net earnings for the second quarter were $268 million, an increase of $31 million, or 12.9%. Diluted EPS was $0.45, aided by a $0.01 favorable impact from COLI, compared to $0.40 in the prior year period which included a $0.05 negative impact from COLI.
First Half Fiscal 2010 Summary
Sales for the first half of fiscal 2010 were $17.9 billion, a decrease of 5.7% 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 first half of the year. Sales from acquisitions (within the last 12 months) increased sales by 0.6%. The impact of changes in foreign exchange rates for the first half of the year increased sales by 0.3%.
Operating expenses declined $227 million, or 8.4%, for the first half of fiscal 2010 compared to the prior year period. The decrease in operating expenses was primarily a result of a $95 million decline in payroll expense related to reduced headcount and lower incentive compensation, as well as an $81 million favorable change in the value of COLI. Operating income increased $33 million, or 3.6%, to $960 million during the first half of fiscal 2010, and operating margin was 5.3%.
Net earnings for the first half of fiscal 2010 were $595 million, an increase of $80 million, or 15.6%. Diluted EPS was $1.00, aided by a $0.04 favorable impact from COLI and a $0.05 tax benefit related to the company’s IRS settlement announced in the first quarter of fiscal 2010. Diluted EPS in the prior year period was $0.86 which included a $0.09 negative impact from COLI.
Capital Spending
Capital expenditures totaled $138 million and $248 million for the second quarter and first half of fiscal 2010, respectively. The primary areas for investments included facility replacements and expansions, technology, and additions and replacements to Sysco’s fleet. For the fiscal 2010 year, the company projects capital expenditures will be in the range of $600 million to $650 million.
Conference Call & Webcast
Sysco’s second quarter fiscal 2010 earnings conference call will be held on Monday, February 1, 2010 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 continued improvement in volume trend, moderation of deflation pressures 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 and deflation 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 risks related to the implementation of our business transformation project, 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 |
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| CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) |
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| (In Thousands, Except for Share and Per Share Data) |
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26-Week Period Ended |
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13-Week Period Ended |
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Dec. 26, 2009 |
Dec. 27, 2008 |
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Dec. 26, 2009 |
Dec. 27, 2008 |
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| Sales |
$17,949,925 |
$19,027,232 |
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$8,868,499 |
$9,149,803 |
| Cost of sales |
14,507,679 |
15,390,563 |
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7,173,612 |
7,399,690 |
| Gross margin |
3,442,246 |
3,636,669 |
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1,694,887 |
1,750,113 |
| Operating expenses |
2,482,567 |
2,710,053 |
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1,232,536 |
1,328,249 |
| Operating income |
959,679 |
926,616 |
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462,351 |
421,864 |
| Interest expense |
65,322 |
54,810 |
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31,522 |
28,400 |
| Other income, net |
(3,150) |
(8,036) |
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(1,138) |
(5,223) |
| Earnings before income taxes |
897,507 |
879,842 |
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431,967 |
398,687 |
| Income taxes |
302,953 |
365,374 |
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163,618 |
161,033 |
| Net earnings |
$594,554 |
$514,468 |
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$268,349 |
$237,654 |
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| Net earnings: |
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| Basic earnings per share |
$1.00 |
$0.86 |
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$0.45 |
$0.40 |
| Diluted earnings per share |
1.00 |
0.86 |
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0.45 |
0.40 |
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| Average shares outstanding |
592,110,975 |
599,903,629 |
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592,651,712 |
597,549,831 |
| Diluted shares outstanding |
592,678,989 |
601,100,591 |
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593,372,477 |
598,233,384 |
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| Dividends declared per common share |
$0.49 |
$0.46 |
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$0.25 |
$0.24 |
| Sysco Corporation and its Consolidated Subsidiaries |
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| CONSOLIDATED BALANCE SHEETS |
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| (In Thousands, Except for Share Data) |
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Dec. 26, 2009 |
June 27, 2009 |
Dec. 27, 2008 |
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(unaudited) |
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(unaudited) |
| ASSETS |
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| Current assets |
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| Cash and cash equivalents |
$647,606 |
$1,087,084 |
$373,074 |
| Short-term investments |
61,860 |
-- |
-- |
| Accounts and notes receivable, less allowances of $67,035, $36,078 and $67,400 |
2,526,044 |
2,468,511 |
2,623,509 |
| Inventories |
1,790,327 |
1,650,666 |
1,862,187 |
| Prepaid expenses and other current assets |
63,674 |
64,418 |
60,938 |
| Total current assets |
5,089,511 |
5,270,679 |
4,919,708 |
| Plant and equipment at cost, less depreciation |
3,072,721 |
2,979,200 |
2,890,641 |
| Other assets |
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| Goodwill |
1,551,550 |
1,510,795 |
1,384,790 |
| Intangibles, less amortization |
118,032 |
121,089 |
78,976 |
| Restricted cash |
128,683 |
93,858 |
93,541 |
| Prepaid pension cost |
70,753 |
26,746 |
249,840 |
| Other assets |
245,716 |
214,252 |
193,926 |
| Total other assets |
2,114,734 |
1,966,740 |
2,001,073 |
| Total assets |
$10,276,966 |
$10,216,619 |
$9,811,422 |
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| LIABILITIES AND SHAREHOLDERS' EQUITY |
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| Current liabilities |
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| Accounts payable |
$1,906,745 |
$1,856,887 |
$1,707,331 |
| Accrued expenses |
793,303 |
797,756 |
806,055 |
| Accrued income taxes |
56,775 |
323,983 |
538,790 |
| Deferred taxes |
18,482 |
162,365 |
234,286 |
| Current maturities of long-term debt |
8,438 |
9,163 |
6,747 |
| Total current liabilities |
2,783,743 |
3,150,154 |
3,293,209 |
| Other liabilities |
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| Long-term debt |
2,468,690 |
2,467,486 |
1,972,612 |
| Deferred taxes |
545,863 |
526,377 |
539,534 |
| Other long-term liabilities |
548,383 |
622,900 |
712,055 |
| Total other liabilities |
3,562,936 |
3,616,763 |
3,224,201 |
| Commitments and contingencies |
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| Shareholders' equity |
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| 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 |
788,138 |
760,352 |
750,843 |
| Retained earnings |
6,844,095 |
6,539,890 |
6,281,575 |
| Accumulated other comprehensive loss |
(180,095) |
(277,986) |
(197,287) |
| Treasury stock at cost, 173,100,605, 175,148,403 and 173,746,062 shares |
(4,287,026) |
(4,337,729) |
(4,306,294) |
| Total shareholders' equity |
3,930,287 |
3,449,702 |
3,294,012 |
| Total liabilities and shareholders' equity |
$10,276,966 |
$10,216,619 |
$9,811,422 |
| Sysco Corporation and its Consolidated Subsidiaries |
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| CONSOLIDATED CASH FLOWS (Unaudited) |
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| (In Thousands) |
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26-Week Period Ended |
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Dec. 26, 2009 |
Dec. 27, 2008 |
| Cash flows from operating activities: |
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| Net earnings |
$594,554 |
$514,468 |
Adjustments to reconcile net earnings to cash provided by
operating activities: |
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| Share-based compensation expense |
39,913 |
35,129 |
| Depreciation and amortization |
189,428 |
190,609 |
| Deferred tax (benefit) provision |
(172,756) |
337,453 |
| Provision for losses on receivables |
19,815 |
30,652 |
| Other non-cash items |
536 |
(112) |
| Additional investment in certain assets and liabilities, net of effect of businesses acquired: |
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| (Increase) decrease in receivables |
(53,597) |
26,769 |
| (Increase) in inventories |
(121,626) |
(57,859) |
| Decrease in prepaid expenses and other current assets |
1,307 |
2,144 |
| Increase (decrease) in accounts payable |
27,688 |
(301,018) |
| (Decrease) in accrued expenses |
(16,974) |
(149,811) |
| (Decrease) in accrued income taxes |
(236,099) |
(68,877) |
| (Increase) decrease in other assets |
(30,372) |
2,087 |
(Decrease) increase in other long-term liabilities and
prepaid pension cost, net |
(97,343) |
2,889 |
Excess tax benefits from share-based compensation
arrangements |
(475) |
(2,774) |
| Net cash provided by operating activities |
143,999 |
561,749 |
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| Cash flows from investing activities: |
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| Additions to plant and equipment |
(247,575) |
(178,596) |
| Proceeds from sales of plant and equipment |
2,422 |
2,077 |
| Acquisition of businesses, net of cash acquired |
(9,161) |
(16,277) |
| Purchases of short-term investments |
(60,162) |
-- |
| (Increase) in restricted cash |
(34,825) |
(954) |
| Net cash used for investing activities |
(349,301) |
(193,750) |
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| Cash flows from financing activities: |
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| Other debt borrowings |
4,580 |
9,316 |
| Other debt repayments |
(5,601) |
(5,610) |
| Common stock reissued from treasury for share-based compensation awards |
36,914 |
85,628 |
| Treasury stock purchases |
-- |
(358,751) |
| Dividends paid |
(283,766) |
(264,687) |
Excess tax benefits from share-based compensation
arrangements |
475 |
2,774 |
| Net cash used for financing activities |
(247,398) |
(531,330) |
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| Effect of exchange rates on cash |
13,222 |
(15,147) |
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| Net (decrease) in cash and cash equivalents |
(439,478) |
(178,478) |
| Cash and cash equivalents at beginning of period |
1,087,084 |
551,552 |
| Cash and cash equivalents at end of period |
$647,606 |
$373,074 |
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| Supplemental disclosures of cash flow information: |
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| Cash paid during the period for: |
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| Interest |
$67,670 |
$55,577 |
| Income taxes |
759,704 |
73,830 |
| Sysco Corporation and its Consolidated Subsidiaries |
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| COMPARATIVE SEGMENT DATA(Unaudited) |
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| (In Thousands) |
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26-Week Period Ended |
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13-Week Period Ended |
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Dec. 26, 2009 |
Dec. 27, 2008 |
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Dec. 26, 2009 |
Dec. 27, 2008 |
| Sales: |
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| Broadline |
$14,393,429 |
$15,077,939 |
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$7,084,723 |
$7,205,372 |
| SYGMA |
2,308,174 |
2,460,809 |
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1,157,313 |
1,232,574 |
| Other |
1,495,543 |
1,726,797 |
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752,666 |
831,057 |
| Intersegment |
(247,221) |
(238,313) |
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(126,203) |
(119,200) |
| Total |
$17,949,925 |
$19,027,232 |
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$8,868,499 |
$9,149,803 |
| Comparative Supplemental Statistical Information Related to Sales (Unaudited) |
| Comparative Sysco Brand Sales and Marketing Associate-Served Sales data are summarized below. |
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26-Week Period Ended |
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13-Week Period Ended |
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Dec. 26, 2009 |
Dec. 27, 2008 |
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Dec. 26, 2009 |
Dec. 27, 2008 |
| Sysco Brand Sales as a % |
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| of MA-Served Sales |
46.82% |
49.17% |
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46.71% |
48.86% |
| Sysco Brand Sales as a % |
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| of Total Broadline Sales |
37.97% |
40.35% |
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37.54% |
39.83% |
| MA-Served Sales as a % |
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| of Total Broadline Sales |
46.52% |
47.02% |
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44.76% |
45.31% |
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CONTACT: Sysco Corporation
Neil Russell, Vice President, Investor Relations
281-584-1308