1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,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, 1995FOR THE FISCAL YEAR ENDED JUNE 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File NumberCOMMISSION FILE NUMBER 1-6544
SYSCO CORPORATION
(Exact name of registrant as specified in its charter)
DelawareDELAWARE 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
------------------- ----------------------------
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Common Stock, $1.00 par value New York Stock Exchange
Preferred Stock Purchase Rights 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)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
$5,662,000,000 at September 6, 1996 (based on the closing sales price on the
New York Stock Exchange Composite Tape on September 6, 1996, 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.At September 6, 1996, the registrant
had issued and outstanding an aggregate of 179,651,013 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, 1995June
29, 1996 are incorporated by reference into Part III.
================================================================================
2
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"restaurant". 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, merchandisingadministrative 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 traditional customer
segment of 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 8,7009,500 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.June 29, 1996. Approximately 5% of
traditional foodservice sales during fiscal 19951996 resulted from a process of
competitive bidding. There are no
1
3 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
1
3
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,June 29,
1996, 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 1996 1995 1994
1993
- ---------------- ----------- ------ ------
Restaurants 60%61% 60% 60%
Hospitals and nursing homes 11 12 13 13
Schools and colleges 7 7 7
Hotels and motels 6 6 6
Other 15 1415 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 1995,1996, fifty-one
companies have been acquired, as follows:
2
4
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
3
5
On August 20, 1993Subsequent to fiscal 1996, on July 10, 1996, SYSCO purchased RitterStrano Sysco
Food Services, Inc.Foodservice Limited (formerly Ritter Food Corporation)Strano Foodservice) of Elizabeth, New Jersey,Peterborough, Ontario,
Canada, a full-line foodservice distributor to customers in New Jersey, metropolitan New York, western
Connecticutthe Toronto and
the Philadelphia, Pennsylvania area.central Ontario area of Canada.
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)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 1996, 1995
and 1994, approximately $236,000,000, $202,000,000, 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 19961997 should be in the range of $210,000,000$240,000,000 to $230,000,000.$250,000,000. During the
three years ended July 1, 1995,June 29, 1996, 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,June 29, 1996, the Company had approximately 28,10030,600 employees, 23%22% 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%10% of the Company's union employees expire during fiscal 1996.1997.
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.
4
6 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.
4
6
DEBT ISSUANCE
In May 1996, the Company issued 7.0% senior notes totaling $200,000,000 due May
1, 2006. These notes, which were priced at par, are unsecured, not redeemable
prior to maturity and are not subject to any sinking fund requirement. In June
1995, the Company issued $150,000,000 principal amount of 6 1/2% Senior
Notes6.5% 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. TheBoth series of these 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.1995 of
which $150,000,000 is still available.
GENERAL
Except for the SYSCO(R)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 twothree in
Canada.
5
7
ITEM 2. PROPERTIES
As of July 1, 1995 theThe 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 16,1558,022 16,156
Colorado 5 2,759 5,476
Connecticut 1 2,417 2,6592,489 2,737
Florida 3 6,054 5,1584 7,955 7,415
Georgia 3 3,195 6,1793,204 6,155
Idaho 1 578 656
Illinois 2 2,824 3,2253,500
Indiana 1 1,404 1,832
Iowa 1 687 1,215
Kansas 1 1,975 2,592
Kentucky 3 1,868 3,4862,510 6,134
Louisiana 1 2,575 1,875
Maine 1 429 1,008
Maryland 4 4,427 5,5965,404 6,709
Massachusetts 3 3,395 3,696
Michigan 3 3,452 5,4384,976 8,107
Minnesota 1 2,085 2,370
Mississippi 2 2,179 2,7362,185 2,790
Missouri 1 1,128 1,348
Montana 1 2,043 1,830
Nebraska 1 2,092 2,618
New Jersey 3 1,567 5,5272,407 4,897
New Mexico 2 1,856 2,024
New York 9 4,397 8,7675,369 9,433
North Carolina 2 346 848
Ohio 5 4,557 8,7284 6,153 7,473
Oklahoma 3 1,145 2,519
Oregon 2 2,3353,430 3,455
Pennsylvania 6 4,125 6,0685 4,364 6,110
South Dakota 1 5 100
Tennessee 4 6,305 7,351
Texas 9 10,624 15,65011,178 16,422
Utah 1 1,810 1,845
Virginia 1 940 9501,186 1,672
Washington 2 2,609 2,812
Wisconsin 1 2,566 2,2442 4,084 3,782
British Columbia, Canada 2 1,4261,427 1,855
Ontario, Canada 1 433 420
--- ------- -------
Total 105 104,950 152,770106 117,576 164,116
=== ======= =======
6
8
The Company owns approximately 219,491,000245,000,000 cubic feet of its distribution
facilities and self-serve centers (or 85%87% of the total cubic feet), and the
remainder is occupied under leases expiring at various dates from fiscal 19961997
to 2015,2006, 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$69,941,000 at July 1, 1995.June 29, 1996. Such mortgage
indebtedness and industrial revenue bond financing arrangements mature at
various dates.dates to 2026.
Facilities in Newark, New Jersey; Jackson, Mississippi; San Antonio, Texas;
Louisville, Kentucky; Cleveland, Ohio; Detroit, Michigan; Cincinnati, Ohio; Austin, Texas;Warners, New York; Wilsonville, Oregon; Jessup,
Maryland; Orlando, Florida; Harrisburg, Pennsylvania; and Harrisonburg, VirginiaBoise, Idaho (which
in the aggregate account for approximately 14%10% 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 also
plans to expand the distribution facility in Peterborough, Ontario during
fiscal 1997. The Company is planning to complete construction of full service
distribution facilities near Milwaukee, WisconsinAshville, North Carolina and Tampa,West Palm Beach,
Florida during fiscal 1996.1997.
The Company's fleet of approximately 4,8005,250 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%91% 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
7
9
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 termterms which, iswith
respect to each individual, occurs at the Annual Meeting of Stockholders in the
calendar year specified in parentheses below or until his successor hastheir successors have
been elected and qualified.
SERVED IN THIS
NAME OF OFFICER CAPACITY POSITION SINCE AGE
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
John F. Baugh Senior Chairman of the Board of 1985 7980
Directors (1997)
John F. Woodhouse Chairman of the Board 1985 6465
of Directors (1995)(1998)
Bill M. Lindig President and Chief 1985, 1995 5859
Executive Officer and & 1983
Director (1996)
Charles H. Cotros Executive Vice President and 1988, 1995 5859
Chief Operating Officer and & 1985
Director (1997)
O. Wayne Duncan Senior Vice President, 1995 5758
Operations
George L. Holm Senior Vice President, 1996 40
Operations
Thomas E. Lankford Senior Vice President, 1995 4748
Operations
Gregory K. Marshall Senior Vice President, 1993 & 4849
Multi-Unit Sales and Chief 1984
Executive Officer, The
SYGMA Network, Inc.
Richard J. Schnieders Senior Vice President, 1992 4748
Merchandising Services
John K. Stubblefield, Jr. Senior Vice President and 1993 & 4950
Chief Financial Officer 1994
Arthur J. Swenka Senior Vice President, 1995 5859
Operations and Director (1997)
James D. Wickus Senior Vice President, 1995 5253
Operations
Diane S. Day Vice President and Treasurer 1994 4647
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.
8
10
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
Fiscal 1996
First Quarter $31-3/8 $26-7/8 $.11
Second Quarter 32-5/8 26-3/4 .11
Third Quarter 34-7/8 29-1/2 .13
Fourth Quarter 35-1/4 30-3/4 .13
The approximate number of shareholdersrecord owners of SYSCO's Common Stock as of July 1,
1995June 29,
1996 was 21,100.19,160.
9
11
ItemITEM 6.
SELECTED FINANCIAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal Year Ended
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1993
(In thousands except for share data) 1996 1995 1994 (53 Weeks) 1992
1991
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sales $13,395,130 $12,118,047 $10,942,499 $10,021,513 $8,892,785 $8,149,700$ 8,892,785
Earnings before income taxes 453,943 417,618 367,582 331,977 281,656
250,864
Income taxes 177,038 165,794 150,830 130,170 109,427
97,034
------------------------------------------------------------------------------------------------------------------------------------------------
Net earnings 276,905 251,824 216,752 201,807 172,229
153,830
================================================================================================================================================
Earnings per share 1.52 1.38 1.18 1.08 .93
.83
================================================================================================================================================
Cash dividends per share .48 .40 .32 .26 .17
.12
Total assets 3,094,6913,325,405 3,097,161 2,811,729 2,530,043 2,325,206
2,177,695
Capital expenditures 235,891 201,577 161,485 127,879 134,290
134,921
Long-term debt 581,734 541,556 538,711 494,062 488,828
543,176
Shareholders' equity 1,474,678 1,403,603 1,240,909 1,137,216 1,056,846
918,626
------------------------------------------------------------------------------------------------------------------------------------------------
Total capitalization 2,056,412 1,945,159 1,779,620 1,631,278 1,545,674
1,461,802
================================================================================================================================================
Ratio of long-term debt
to capitalization 28.3% 27.8% 30.3% 30.3% 31.6% 37.2%
10
12
ItemITEM 7.
MANAGEMENT DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
SYSCO provides marketing and distribution services to foodservice customers and
suppliers throughout the contiguous United States and western and central
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 historically has had a stock repurchase program which iswas used
primarily to offset shares issued from time to time in conjunction with various
employee benefit plans and conversions of Liquid Yield Option Notes.Notes (LYON's).
In February, 1996 the company's common share repurchase program was accelerated
when the Board of Directors authorized a 6,000,000 share buyback of SYSCO's
common stock during calendar 1996. The number of shares acquired and their cost
for the past three years was 7,314,100 shares for $232,070,000 in fiscal 1996,
2,100,000 shares for $53,166,000 in fiscal 1995 and 3,000,000 shares for
$80,131,000 in fiscal 19941994.
In December 1995, SYSCO announced that it intended to redeem all outstanding
LYON's at a price of $579.92 per $1,000 principal amount at maturity, or
approximately $90,400,000 in the aggregate. The zero coupon subordinated notes
were outstanding and 7,200,000convertible into common stock at the rate of 24.512 shares
for $180,343,000per $1,000 principal amount at maturity. During fiscal 1996, bondholders
converted or redeemed 155,815 outstanding LYON's, resulting in fiscal 1993.the issuance of
3,816,525 shares of common stock.
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 $350,434,000 in 1996, $336,903,000 in 1995 and
$282,515,000 in 1994 and
$257,165,000 in 1993.1994. Expenditures for facilities, fleet and other equipment
were $235,891,000 in 1996, $201,577,000 in 1995 and $161,485,000 in 1994 and $127,879,000 in 1993.1994.
Expenditures in fiscal 19961997 should be in the range of $210,000,000$240,000,000 to
$230,000,000.$250,000,000.
In May 1996, SYSCO issued 7.0% senior notes totaling $200,000,000 due May 1,
2006. These notes, which were priced at par, are unsecured, not redeemable
prior to maturity and are not subject to any sinking fund requirement. 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. TheBoth
series of these 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.1995, of which $150,000,000
is still available.
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$581,734,000 at July 1, 1995.June 29, 1996. About 71%84% of the
total debt is at fixed rates averaging 7.42%7.45% and 29%16% of the total debt is at
floating rates averaging 6.01%5.30%. Long-term debt to capitalization iswas 28% at
June 29, 1996 and July 1, 1995, down from the 30% at July 2, 1994 and at July 3, 1993.1994. 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 1996, 1995 1994 and 1993,1994,
commercial paper and bank borrowings ranged from approximately $69,200,000 to
$355,000,000, $146,200,000 to $425,100,000 and $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 19951996 and 9% in 19941995 result from
several factors. Sales in fiscal 19951996 and 19941995 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 8% in
1996 and 9% in 1995 and 7% in 1994.1995. The cost of SYSCO's foodservice products is
11
13
estimated to have averaged an increase of about 2%2.9% from the beginning to the
end of fiscal 19951996 compared to an increase of approximately 1.9%2% in fiscal 1994.1995.
Industry sources estimate the total foodservice market experienced real growth
of approximately 2% in calendar 1995 and 3% in calendar 1994
and 2.3% in calendar 1993.
11
131994.
Sales for fiscal 19931994 through 19951996 were as follows:
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
Year Sales % Increase
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
1996 $13,395,130,000 11%
1995 $12,118,047,000 11%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:
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
1993
-------------------------------------------------------
Medical supplies 1% 1% --%1%
Dairy products 89 8 8
Fresh and frozen meats 15 1615 16
Seafoods 65 6 6
Poultry 910 9 9
Frozen fruits, vegetables, bakery and other 14 15 14 15
Canned and dry products 2524 25 25
Paper and disposables 78 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:
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
1993
-------------------------------------------------------
Restaurants 60%61% 60% 60%
Hospitals and nursing homes 11 12 13 13
Schools and colleges 7 7 7
Hotels and motels 6 6 6
All other 15 15 14
14
-------------------------------------------------------
100% 100% 100%
=======================================================
COST OF SALES
Cost of sales increased about 11% in 19951996 and 9% in 1994.1995. 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 1996, 1995 1994 and 19931994 fiscal years were 14.3%, 14.3% and 14.2%,
respectively. for each of the years.
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.
12
14
INTEREST EXPENSE
Interest expense increased $2,440,000 or approximately 6% in fiscal 1996 as
compared to an increase of $2,307,000 or approximately 6% in fiscal 1995 as
compared to a decrease of $2,732,000 or approximately 7% in fiscal 1994.1995. The
increase in fiscal 19951996 is due primarily to increased borrowings, and rates,
while the
decreaseincrease in fiscal 19941995 was due primarily to the expiration of an
interest rate swap in December 1993.increased borrowings and rates.
Interest capitalized during the past three years was $2,783,000 in 1996,
$2,833,000 in 1995 and $1,313,000 in 1994 and $1,315,000 in 1993.1994.
OTHER INCOME, NET
Other income decreased $1,219,000 or about 55% in fiscal 1996 and increased
$467,000 or about 27% in fiscal 1995 and decreased
$381,000 or about 18% in fiscal 1994.1995. Changes between the years result from
fluctuations in miscellaneous activities including primarily gains and losses
on the sale of oldsurplus facilities.
EARNINGS BEFORE INCOME TAXES
Earnings before income taxes rose $36,325,000 or approximately 9% above fiscal
1995, which had increased $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 19951996 was approximately 40%39% compared to 40% in 1995
and 41% in 1994
and 39% in 1993.1994. 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 19951996 represents the nineteenthtwentieth consecutive year of increased earnings for
SYSCO. Net earnings for the year rose $25,081,000 or approximately 10% above
fiscal 1995, which had increased $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 eleventhirteen cents per share was established in
November 19941995 when it was increased from the nineeleven cents per share set in
November 1993.1994.
RETURN ON SHAREHOLDERS' EQUITY
The return on average shareholders' equity for 1996, 1995 1994 and 19931994 was
approximately 19%, 18%19% 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, 1995JUNE 29, 1996
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
Officer 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 June 29, 1996 and
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.June 29, 1996. 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 June 29, 1996 and 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,June 29, 1996, 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 a required part of the basic financial
statements. This schedule has been subjected to the auditing procedures
applied in theour 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, 1995July 31, 1996
17
19
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(In thousands except for share data) JUNE 29, 1996 July 1, 1995
July 2, 1994
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Assets
Current assets
Cash $ 133,886107,759 $ 86,735133,886
Accounts and notes receivable, less allowances of $16,380 and $16,001 and $15,9991,039,759 932,533
856,448
Inventories 723,937 667,861 601,994
Deferred taxes 33,935 38,09132,429 36,405
Prepaid expenses 18,443 18,685
16,380
--------------------------------------------------------------
Total current assets 1,786,900 1,599,6481,922,327 1,789,370
-----------------------------------
Plant and equipment at cost, less depreciation 990,642 896,079 817,221
Other assets
Goodwill and intangibles, less amortization 250,473 258,206
266,021
Other 161,963 153,506
128,839
--------------------------------------------------------------
Total other assets 412,436 411,712
394,860
--------------------------------------------------------------
Total assets $3,094,691 $2,811,729
===========================$3,325,405 $3,097,161
===================================
Liabilities and shareholders' equity
Current liabilities
Notes payable $ 1,1819,390 $ 5,2471,181
Accounts payable 779,124 708,380 632,373
Accrued expenses 212,746 206,131
176,043
Accrued incomeIncome taxes 22,462 29,16823,330 10,375
Current maturities of long-term debt 12,934 6,569
3,730
--------------------------------------------------------------
Total current liabilities 944,723 846,5611,037,524 932,636
-----------------------------------
Long-term debt 581,734 541,556 538,711
Deferred taxes 204,809 185,548231,469 219,366
-----------------------------------
Contingencies
ShareholdersShareholders' 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 35,179 48,674 60,003
Retained earnings 1,568,589 1,379,405
1,200,735
--------------------------------------------------------------
1,795,062 1,619,373 1,452,032
Less cost of treasury stock, 10,880,919 and 8,429,203 and 8,224,505 shares 320,384 215,770
211,123
--------------------------------------------------------------
Total shareholders' equity 1,474,678 1,403,603
1,240,909
--------------------------------------------------------------
Total liabilities and shareholders' equity $3,094,691 $2,811,729
===========================$3,325,405 $3,097,161
===================================
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) JUNE 29, 1996 July 1, 1995 July 2, 1994
(53 Weeks)
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sales $12,118,047 $10,942,499 $10,021,513$ 13,395,130 $ 12,118,047 $ 10,942,499
Costs and expenses
Cost of sales 10,983,796 9,927,448 8,971,628
8,225,275
Operating expenses 1,917,376 1,736,625 1,568,773
1,427,394
Interest expense 41,019 38,579 36,272 39,004
Other income, net (1,004) (2,223) (1,756)
(2,137)
-----------------------------------------------------------------------------------------------------------------------
Total costs and expenses 12,941,187 11,700,429 10,574,917
9,689,536
-----------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 453,943 417,618 367,582
331,977
Income taxes 177,038 165,794 150,830
130,170
-----------------------------------------------------------------------------------------------------------------------
Net earnings $ 276,905 $ 251,824 $ 216,752
$ 201,807
=======================================================================================================================
Earnings per share $ 1.52 $ 1.38 $ 1.18
$ 1.08
=======================================================================================================================
See Summary of Accounting Policies and Additional Financial Information.
19
21
CONSOLIDATED SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Common Stock Paid-in Retained 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 $191,294191,294 48,674 1,379,405 8,429,203 215,770
Net earnings
for year ended June 29, 1996 276,905
Cash dividends paid,
$.48 per share (87,721)
Treasury stock purchases 7,314,100 232,070
Stock issued upon conversion of
Liquid Yield Option Notes (11,190) (3,816,525) (99,776)
Stock options exercised (2,642) (271,406) (7,123)
Employees' Stock Purchase Plan (610) (531,569) (14,339)
Management Incentive Plan 947 (242,884) (6,218)
--------------------------------------------------------------------------------
Balance at June 29, 1996 191,293,725 $ 48,674 $1,379,405 8,429,203 $215,770
====================================================================================191,294 $ 35,179 $ 1,568,589 10,880,919 $ 320,384
================================================================================
See Summary of Accounting Policies and Additional Financial Information.
20
22
CONSOLIDATED CASH FLOWS
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Year Ended
- -------------------------------------------------------------------------------------------------------------------------
July 3, 1993------------------------------------------------------------------------------------------------------------------------
(In thousands) JUNE 29, 1996 July 1, 1995 July 2, 1994
(53 Weeks)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 276,905 $ 251,824 $ 216,752 $ 201,807
Add non-cash items:
Depreciation and amortization 144,709 130,796 119,982 107,718
Interest on Liquid Yield Option Notes 2,274 6,013 5,740 8,004
Deferred tax provision 23,41716,079 35,504 23,292 13,281
Provision for losses on receivables 16,427 15,988 17,918 14,312
Additional investment in certain assets and liabilities,
net of effect of businesses acquired and sold:
(Increase) in receivables (123,653) (92,073) (86,487) (103,236)
(Increase) in inventories (56,076) (65,867) (58,282)
(38,114)
(Increase) decreaseDecrease (increase) in prepaid expenses 242 (2,305) 3,606 (2,864)
Increase in accounts payable 70,744 76,007 73,777 54,077
Increase in accrued expenses 6,615 30,088 15,510
13,144
(Decrease) increaseIncrease (decrease) in accrued income taxes (6,706)12,955 (18,793) 2,277 20,863
(Increase) in other assets (16,787) (30,279) (51,570)
(31,827)
-----------------------------------------------------------------------------------------------
Net cash provided by operating activities 350,434 336,903 282,515
257,165
-----------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to plant and equipment (235,891) (201,577) (161,485) (127,879)
Proceeds from sales of plant and equipment 11,024 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 (224,867) (196,489) (174,398)
(122,346)
-----------------------------------------------------------------------------------------------
Cash flows from financing activities:
Bank and commercial paper borrowings 146,775 15,747 38,798 80,363
Other debt repayments (6,521)(4,053) (6,522) (13,240) (8,981)
Common stock reissued from treasury 23,83125,375 23,832 23,506 17,362
Treasury stock purchases (232,070) (53,166) (80,131)
(180,343)
Dividends paid (87,721) (73,154) (59,074)
(48,815)
-----------------------------------------------------------------------------------------------
Net cash used for financing activities (151,694) (93,263) (90,141)
(140,414)
-----------------------------------------------------------------------------------------------
Net (decrease) increase (decrease) in cash (26,127) 47,151 17,976 (5,595)
Cash at beginning of year 133,886 86,735 68,759
74,354
-----------------------------------------------------------------------------------------------
Cash at end of year $ 107,759 $ 133,886 $ 86,735
$ 68,759
===============================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 38,527 $ 38,487 $ 36,527
$ 38,999
Income taxes 141,169 145,596 126,310 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 6768
distribution facilities for approximately 255,000260,000 customers located in the 37
states where facilities are situated and in 11 adjacent states. The company
also has two Canadian distribution facilities, one facility in Vancouver, British
Columbia and one in Peterbourgh, Ontario, which servicesservice customers in that area.those
areas.
The accompanying financial statements include the accounts of SYSCO and its
subsidiaries. All significant intercompany transactions and account balances
have been eliminated. Certain amounts in the prior years have been reclassified
to conform to the 1996 presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates that
affect the reported amounts of assets, liabilities, sales and expenses. Actual
results could differ from the estimates used.
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 $2,783,000 in 1996, $2,833,000 in 1995 and $1,313,000 in 1994 and $1,315,000 in 1993.1994.
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 June 29, 1996, July 1, 1995
and July 2, 1994 was $58,668,000, $50,935,000 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 $2,994,000, $17,593,000 $29,658,000 and $14,094,000$29,658,000 were
capitalized during fiscal 1996, 1995 1994 and 1993,1994, respectively. Amounts
capitalized will beare being amortized over future earnings as completed portions of the project are put
into use. Accumulated amortization at June 29, 1996 and July 1, 1995 was
$232,000.$753,000 and $232,000, respectively.
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.
22
24
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
24NEW ACCOUNTING STANDARDS
SYSCO is required to adopt SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of" and SFAS No. 123,
"Accounting for Stock Based Compensation" during its fiscal year ending June
28, 1997. Adoption of SFAS No. 121 will not have a significant effect on
SYSCO's consolidated financial statements. SYSCO expects to disclose the fair
value of options granted and stock issued under stock purchase plans in a
footnote to its June 28, 1997 consolidated financial statements, as required by
SFAS No. 123.
ADDITIONAL FINANCIAL INFORMATION
INCOME TAXES
The income tax provisions consist of the following:
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
1993
------------------------------------------------------------------------------------------------------------
Federal income taxes $161,142,000 $144,574,000 $130,733,000 $108,990,000
State and local income taxes 15,896,000 21,220,000 20,097,000
21,180,000
------------------------------------------------------------------------------------------------------------
Total $177,038,000 $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$16,079,000 in 1996, $35,504,000 in 1995 and $23,292,000 in 1994 and $13,281,000 in 1993.1994.
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:
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
JUNE 29, 1996 July 1, 1995
July 2, 1994
------------------------------------------------------------------------
Deferred tax liabilities:
Excess tax depreciation and basis differences of assets $191,058,000 $178,548,000 $165,353,000
Computer systems development project 23,411,000 24,293,000
17,190,000
Other 1,968,000 3,005,000
--------------------------------17,000,000 16,525,000
---------------------------------------
Total deferred tax liabilities 204,809,000 185,548,000
--------------------------------231,469,000 219,366,000
---------------------------------------
Deferred tax assets:
Accrued pension expenses 11,109,000 14,963,000 13,003,000
Accrued medical and casualty insurance expenses 7,602,000 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
--------------------------------13,718,000 13,962,000
---------------------------------------
Total deferred tax assets 33,935,000 38,091,000
--------------------------------32,429,000 36,405,000
---------------------------------------
Net deferred tax liabilities $170,874,000 $147,457,000
================================$199,040,000 $182,961,000
=======================================
The company has enjoyed taxable earnings during each year of its
twenty-sixtwenty-seven 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.
The23
25
Reconciliations of the statutory Federal income tax rates to the effective
income tax rate was 40% in 1995, 41% in 1994 and 39% in 1993 and
an analysis isrates were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
1993
-------------------------------------------------------------------------
Statutory Federal income tax rate 35% 35% 34%35%
Retroactive Federal income tax charge --- -- 1
State and local income taxes, net of Federal income tax benefit 4 5 5
5
-----------------------------------------------------------------------
39% 40% 41%
39%
=======================================================================
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
The allowance for doubtful accounts receivable was $16,380,000 as of June 29,
1996, $16,001,000 as of July 1, 1995 and $15,999,000 as of July 2, 1994 and $15,122,000 as of July 3, 1993.1994.
Customer accounts written off, net of recoveries, were $16,048,000 or .12% of
sales, $15,986,000 or .13% of sales and $17,291,000 or .16% of sales and $13,163,000 or .13% of sales for fiscal
years 1996, 1995 1994 and 1993,1994, respectively.
SHAREHOLDERS' EQUITY
Earnings per share have been computed by dividing net earnings by 182,598,897
in 1996, 182,779,806 in 1995 and 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. TheIn May
1996, the Board of Directors adopted an amended and restated Plan as adjusted,which, among
other things, extends the expiration of the Plan through May 2006. As amended,
the Plan 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-hundredthtwo-thousandth of a share of newly created Series A Junior
Participating Preferred Stock at an exercise price of $135,$175, subject to
adjustment. The Rights will not be exercisable until a party either acquires
20%10% of the company's common stock or makes a tender offer for 20%10% 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$350 worth
of stock of the surviving company for a purchase price of $135.$175.
The Rights expire on May 30, 199621, 2006, and may be redeemed before expiration by
the company at a price of $.05$.01 per Right until a party acquires 20%10% of the
company's common stock or thereafter under certain circumstances. As a result of
the Rights distribution, 600,000450,000 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
JUNE 29, 1996 July 1, 1995 July 2, 1994 Useful Lives
-----------------------------------------------------------------------------------------------------------------------------
Plant and equipment, at cost
Land $ 86,185,00082,247,000 $ 81,933,00086,185,000
Buildings and improvements 754,733,000 675,011,000 606,986,000 10-40 years
Equipment 917,164,000 807,826,000 718,410,000 3-20 years
--------------------------------------------------------------------------------
1,754,144,000 1,569,022,000 1,407,329,000
Accumulated depreciation (763,502,000) (672,943,000)
(590,108,000)
--------------------------------------------------------------------------------
Net plant and equipment $ 990,642,000 $ 896,079,000
$ 817,221,000
================================================================================
DEBT
At June 29, 1996 and July 1, 1995 and July 2, 1994 SYSCO had $1,181,000$9,390,000 and $5,247,000,$1,181,000,
respectively, of short-term bank borrowings. The level of such borrowings
fluctuates during the year based on working capital requirements.
24
26
SYSCO's long-term debt is comprised of the following:
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
JUNE 29, 1996 July 1, 1995
July 2, 1994
------------------------------ --------------------------------------------------------------------------------------------------------------------------
Commercial paper, interest averaging 5.4% in 1996 and 6.1% in 1995 and 4.4% in 1994$ 75,878,000 $ 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 149,193,000 149,103,000
-Senior notes, interest at 7.0%, maturing in 2006 200,000,000 --
Liquid Yield Option Notes, interest at 6.25%, maturingredeemed in 2004December 1995 -- 88,045,000 95,653,000
Industrial Revenue Bonds, mortgages and other debt,
interest averaging 6.8% in 1996 and 7.1% in 1995, and 6.9% in 1994,
maturing at various dates to 2026 78,097,000 74,967,000
81,488,000
-----------------------------------------------------------------------
Total long-term debt 594,668,000 548,125,000 542,441,000
Less current maturities (12,934,000) (6,569,000)
(3,730,000)
-----------------------------------------------------------------------
Net long-term debt $ 581,734,000 $ 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
------------------------------------------------------------------------------------------------------------------------------------------------------------------------
19961997 $ 6,569,000
1997 9,499,00012,934,000
1998 2,644,0003,025,000
1999 101,549,000102,478,000
2000 152,930,0007,307,000
2001 91,421,000
24
26
SYSCO has a $300,000,000 revolving loan agreement maturing in 20002001 which
currently supports the company's commercial paper program. The commercial paper
borrowings at July 1,June 29, 1996 were $75,878,000. In December 1995, were $144,510,000. TheSYSCO announced
that it intended to redeem all outstanding Liquid Yield Option Notes have no periodic interest payments, will yield 6.25% if held to(LYON's)
at a price of $579.92 per $1,000 principal amount at maturity, or approximately
$90,400,000 in the aggregate. These zero coupon subordinated notes were
outstanding and can be convertedconvertible into SYSCO common stock at a conversionthe rate of 24.512 shares per
note. Each note,$1,000 principal amount at maturity. During fiscal 1996, bondholders converted
or redeemed 155,815 outstanding LYON's, resulting in the issuance of 3,816,525
shares of common stock.
In May 1996, SYSCO issued 7.0% senior notes totaling $200,000,000 due May 1,
2006. These notes, which initially sold for $397.27 per $1,000 of face
valuewere priced at par, are unsecured, not redeemable
prior to maturity has an accreted value at July 1, 1995 of $565.01
per $1,000 of face value.and are not subject to any sinking fund requirement. 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. TheBoth
series of these 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.1995, of which $150,000,000
is still available.
The Industrial Revenue Bonds have varying structures. Final maturities range
from one to thirty-onethirty 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, 1995June 29, 1996 was $541,556,000,$581,734,000, of which 71%84% is at fixed
rates averaging 7.42%7.45% with an average life of eight years, while the remainder
is financed at floating rates averaging 6.01%5.30%. Certain loan agreements contain
typical covenants to protect noteholders including provisions to maintain
tangible net worth and funded indebtedness at specified levels.
25
27
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$594,000,000 at July 1, 1995.June 29, 1996.
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 June 29, 1996 and July 1, 1995 and July 2, 1994 letters of credit outstanding
were $29,664,000$33,164,000 and $30,664,000,$29,664,000, respectively. As of July 1, 1995June 29, 1996 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 $29,976,000, $32,105,000 $31,089,000 and
$27,506,000$31,089,000 in fiscal 1996, 1995 1994 and 1993,1994, 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$15,650,000
1998 8,984,00012,449,000
1999 6,904,00010,112,000
2000 4,324,0006,946,000
2001 5,535,000
Later years 7,418,00012,376,000
STOCK OPTION PLANS
EMPLOYEE INCENTIVE STOCK OPTION PLANEmployee 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
Granted -- --
Cancelled (140,393) 16.46
Exercised (271,570) 17.83
---------
BALANCE AT JUNE 29, 1996 681,254 681,254 19.67
=========
26
28
1991 STOCK OPTION PLANStock Option Plan
The 1991 Stock Option Plan was adopted in fiscal 1992 and reservesoriginally reserved
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. During fiscal 1996, the
shareholders approved an amendment to the plan for an additional 8,000,000
shares to be made available for future grants of options. 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
Granted 1,104,450 28.75
Cancelled (77,247) 27.18
Exercised (62,834) 25.88
---------
BALANCE AT JUNE 29, 1996 1,095,345 2,994,815 27.27
=========
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
In December 1994, the Board ofNon-Employee Directors Stock Option Plan
The Non-Employee Directors Stock Option Plan adopted subject to the approval of the
shareholders at the annual meeting in November 1995, a non-employee directors
stock option plan whichfiscal 1996 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 2,000 shares of 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,June 29, 1996, options for 18,00036,000 shares had been contingently granted to nine non-employee
directors under this plan.plan, none of which are currently exercisable.
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 $4,629,000 in
1996, $4,254,000 in 1995 and $8,163,000 in 1994 and $2,901,000 in 1993.1994.
27
29
The funded status of the defined benefit plans is as follows:
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
JUNE 29, 1996 July 1, 1995
July 2, 1994
---------------------------------------------------------------
Assets available for benefits $ 137,613,000191,220,000 $ 110,344,000
-----------------------------137,613,000
Projected benefit obligation
Vested (153,071,000) (129,265,000)
(103,437,000)
Nonvested (10,755,000) (10,651,000)
(9,778,000)
-------------------------------------------------------------
Total accumulated benefit obligation (163,826,000) (139,916,000) (113,215,000)
Effect of projected future compensation increases (24,679,000) (22,238,000)
(16,322,000)
-------------------------------------------------------------
Total actuarial projected benefit obligation (188,505,000) (162,154,000)
(129,537,000)
-------------------------------------------------------------
Assets (less than)more (less) than projected obligation $ 2,715,000 $ (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 $ 9,134,0007,956,000 $ 10,313,0009,134,000
Unrecognized actuarial loss due to differences in assumptions and actual experience (1,424,000) (21,538,000) (21,302,000)
Unrecognized prior service cost 8,136,000 9,074,000 10,011,000
Accrued pension costs (11,953,000) (21,211,000)
(18,215,000)
-------------------------------------------------------------
$ 2,715,000 $ (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 7.75% in 1996, 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 1996
and 1995 and 10% in 1994
and 12% in 1993.1994. The plans invest primarily in marketable securities
and time deposits.
Net pension costs were as follows:
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
1993
----------------------------------------------- ---------------------------------------------------------------------------------------------------------------------
Defined benefit plans
Benefits earned during the year $ 19,885,000 $ 17,622,000 $ 16,866,000 $ 18,410,000
Interest accrued on benefits earned in prior years 13,812,000 11,476,000 9,655,000 8,663,000
Actual return on plan assets (31,865,000) (19,078,000) 378,000 (14,355,000)
Net amortization and deferral 16,999,000 7,125,000 (13,356,000)
3,063,000
-------------------------------------------------------------------------------------------------
Net pension costs from defined benefit plans 18,831,000 17,145,000 13,543,000 15,781,000
Defined contribution plans 4,629,000 4,274,000 8,407,000 3,326,000
Multi-employer pension plans 16,560,000 13,550,000 12,412,000
10,285,000
-------------------------------------------------------------------------------------------------
Net pension costs $ 40,020,000 $ 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 $15,208,000 in 1996, $16,545,000 in 1995 and $12,508,000 in 1994 and $11,725,000were
paid in 1993.both cash and stock. In addition to receiving benefits upon retirement
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 $43,354,000
at June 29, 1996 and $40,200,000 at July 1, 1995 and $33,199,000 at July 2, 1994.1995. SYSCO is the sole owner and
beneficiary of such policies. The periodic pension costs of this plan were
$3,830,000 in 1996 and $3,659,000 in 1995 and $3,109,000 in 1994.1995. The actuarially determined
accumulated benefit obligation for this plan included in accrued expenses was
$23,556,000 at June 29, 1996 and $19,004,000 at July 1, 1995 and $16,558,000 at July 2, 1994.1995. After taking
into consideration the effect of future compensation increases, the projected
benefit obligation of this plan was $33,472,000 at June 29, 1996 and
$27,046,000 at July 1, 1995 and $23,941,000 at July 2, 1994.1995.
28
30
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 fiscalcalendar quarter. During 1995,
584,5261996, 522,965
shares of SYSCO common stock were purchased by the participants as compared to
584,526 purchased in 1995 and 579,916 purchased in 1994 and 538,923 purchased in 1993.1994. The total number of
shares which may be sold pursuant to the plan may not exceed 12,000,000 shares
of which 1,106,553583,588 remained available at July 1, 1995.
At the beginning of fiscal 1994,June 29, 1996.
In addition to providing pension benefits, 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, postretirementcertain health care
benefits to eligible retired employeesretirees and their dependents. This accounting change had no significant effect on net
earnings or financial conditiondependents in fiscal 1994.the United States.
Net periodic postretirement benefit costs were as follows:
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1996 1995
1994
------------------------------- --------------------------------------------------------------------------------------------------------------
Service cost - benefits earned during the period $288,000 $238,000$ 312,000 $ 288,000
Interest cost 366,000 377,000 280,000
Amortization of transition obligation 153,000 165,000 173,000
Amortization of prior service cost 83,000 -
------------------------------83,000
-------------------------------
Net periodic postretirement benefit cost $913,000 $691,000
==============================$ 914,000 $ 913,000
===============================
The components of the postretirement benefit obligation, included in accrued
expenses at June 29, 1996 and July 1, 1995 and July 2, 1994 were:
- ----------------------------------------------------------------------------------------------------------------
July-------------------------------------------------------------------------------------------------------------
JUNE 29,1996 JULY 1, 1995
July 2, 1994
-------------------------------------------------------------------
Retirees $ 472,000233,000 $ 589,000472,000
Fully eligible active participants 1,773,000 1,721,000 1,588,000
Other active employees 2,500,000 2,534,000
2,420,000
-----------------------------------------------------------------
Accumulated postretirement benefit obligation 4,506,000 4,727,000 4,597,000
Unrecognized net gain (loss) and effects of changes in assumptions 969,000 263,000 (123,000)
Unrecognized prior service cost (929,000) (1,012,000) (1,095,000)
Unrecognized transition obligation (2,607,000) (2,761,000)
(3,250,000)
-----------------------------------------------------------------
Accrued postretirement benefit liability $ 1,939,000 $ 1,217,000
$ 129,000
=================================================================
The discount rate used to determine the accumulated postretirement benefit
obligation was 7.75% in 19951996 and 8% in 1994.1995. 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 1996 and 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.
2829
3031
QUARTERLY RESULTS (UNAUDITED)
Financial information for each quarter in the years ended June 29, 1996 and
July 1, 1995 and July
2, 1994:1995:
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1996 QUARTER ENDED
-------------------------------------------------------------
(IN THOUSANDS EXCEPT FOR SHARE DATA) SEPTEMBER 30 DECEMBER 30 MARCH 30 JUNE 29 FISCAL YEAR
- ---------------------------------------------------------------------------------------------------------------------
SALES $ 3,291,910 $ 3,301,585 $ 3,257,110 $3,544,525 $ 13,395,130
COST OF SALES 2,704,658 2,705,801 2,675,844 2,897,493 10,983,796
OPERATING EXPENSES 469,847 469,894 479,109 498,526 1,917,376
INTEREST EXPENSE 9,372 10,332 10,271 11,044 41,019
OTHER INCOME, NET (444) (350) (411) 201 (1,004)
--------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES 108,477 115,908 92,297 137,261 453,943
INCOME TAXES 42,306 45,204 35,996 53,532 177,038
--------------------------------------------------------------------------------
NET EARNINGS $ 66,171 $ 70,704 $ 56,301 $ 83,729 $ 276,905
--------------------------------------------------------------------------------
PER SHARE:
EARNINGS $ .36 $ .39 $ .31 $ .46 $ 1.52
CASH DIVIDENDS .11 .11 .13 .13 .48
MARKET PRICE 31-27 33-27 35-30 35-31 35-27
- ---------------------------------------------------------------------------------------------------------------------
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 $ .26.32 $ .30.35 $ .25.29 $ .37.42 $ 1.181.38
Cash dividends .07 .07 .09 .09 .32.11 .11 .40
Market price 30-24 31-2727-21 28-24 29-25 26-23 31-2330-26 30-21
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Percentage increases--1995increases--1996 vs. 1994:1995:
Sales 10% 13% 10% 10% 12% 11%
Earnings before income taxes 12 10 14 16 14 145 7 9
Net earnings 21 14 16 14 1613 11 7 9 10
Earnings per share 23 17 16 14 1713 11 7 10 10
2930
3132
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 19951996 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
3031
3233
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.
AGREEMENT3(c) AMENDED CERTIFICATE OF DESIGNATION
4(a) SIXTH AMENDMENT AND FIFTH AMENDMENT TORESTATEMENT OF COMPETITIVE
ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT DATED AS OF NOVEMBER
15, 1994.MAY 31, 1996.
4(b) Sysco Corporation Note Agreement dated as of June 1, 1989
hereby incorporated by reference to the Form 10-K10- 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 RESTATED4(e) FIRST SUPPLEMENTAL INDENTURE, DATED AS OF JUNE 27, 1995,
BETWEEN SYSCO CORPORATION EXECUTIVE DEFERRED
COMPENSATION PLAN
10(b)AND FIRST UNION BANK OF NORTH
CAROLINA, TRUSTEE.
4(f) SECOND SUPPLEMENTAL INDENTURE, DATED AS OF MAY 1, 1996,
BETWEEN SYSCO CORPORATION AND FIRST UNION BANK OF NORTH
CAROLINA, TRUSTEE.
32
34
10(a) Amended and restatedRestated Sysco Corporation Supplemental
Executive RetirementDeferred
Compensation Plan incorporated by reference to Form 10-K
for the year ended July 3, 1993.1, 1995. *
10(b) FOURTH AMENDED AND RESTATED SYSCO CORPORATION SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN.
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 Restated1995 Management Incentive Plan
incorporated by reference to Form 10-K for the year ended
July 2, 1994.1, 1995. *
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(f) Sysco Corporation Non-Employee Directors Stock Option Plan
incorporated by reference to Form 10-K for the year ended
July 1, 1995. *
10(g) SYSCO CORPORATION NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(SUBJECT TO APPROVAL BY STOCKHOLDERS AT THE 1995 ANNUAL
MEETING).Amended and Restated Shareholder Rights Agreement,
incorporated by reference to registration statement on
Form 8-A/A, filed May 29, 1996.
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- ---------------
* Management contract or compensatory plan or arrangement.
33
3435
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 1st6th day of
September, 1995.1996.
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
- ----------------------------------/s/ JOHN F. WOODHOUSE
- -------------------------------------------
John F. Woodhouse Chairman of the Board
/s/ JOHN K. STUBBLEFIELD, JR. Senior Vice President and
- ------------------------------------------- Chief Financial Officer
John K. Stubblefield, Jr.
3334
3536
DIRECTORS:
/s/ JOHN W. ANDERSON /s/ RICHARD G. MERRILL
- -------------------------------- --------------------------------- ---------
/s/ JOHN W. ANDERSON /s/ BILL M. LINDIG
- ----------------------------------- -----------------------------------
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/s/ JOHN F. BAUGH /s/ RICHARD G. MERRILL
- ----------------------------------- -----------------------------------
John F. Baugh Richard G. Merrill
/s/ COLIN G. CAMPBELL /s/ DONALD H. PEGLER, JR.
- ----------------------------------- -----------------------------------
Colin G. Campbell Donald H. Pegler, Jr.
/s/ CHARLES H. COTROS /s/ FRANK H. RICHARDSON
- ----------------------------------- -----------------------------------
Charles H. Cotros Frank H. Richardson
/s/ JUDITH B. CRAVEN /s/ PHYLLIS S. SEWELL
- ----------------------------------- -----------------------------------
Judith B. Craven Phyllis S. 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
35
3637
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(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.........1994............. accounts $15,122,000 $17,918,000 $250,000$ 250,000 $17,291,000 (2) $15,999,000
Allowance
For year ended for doubtful
July 1, 1995.........1995............. accounts $15,999,000 $15,988,000 $ -- $15,986,000 (2) $16,001,000
Allowance
For year ended for doubtful
June 29, 1996............ accounts $16,001,000 $16,427,000 $ -- $16,048,000 (2) $16,380,000
(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
3738
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, 1995June 29, 1996 Commission File No. 1-6544
SYSCO CORPORATION
(Exact Name of Registrant as Specified in its Charter)
EXHIBITS
3839
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.
AGREEMENT3(c) AMENDED CERTIFICATE OF DESIGNATION.
4(a) SIXTH AMENDMENT AND FIFTH AMENDMENT TORESTATEMENT OF COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT DATED AS OF NOVEMBER 15, 1994.MAY 31, 1996.
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, herebyincorporated
by reference to Registration Statement on Form S-3 (File No.
33-60023).
4(e) FIRST SUPPLEMENTAL INDENTURE, DATED AS OF JUNE 27, 1995, BETWEEN
SYSCO CORPORATION AND FIRST UNION BANK OF NORTH CAROLINA, TRUSTEE.
4(f) SECOND SUPPLEMENTAL INDENTURE, DATED AS OF MAY 1, 1996, BETWEEN
SYSCO CORPORATION AND FIRST UNION BANK OF NORTH CAROLINA, TRUSTEE.
10(a) Amended and Restated Sysco Corporation Executive Deferred
Compensation Plan incorporated by reference to Registration Statement on Form S-3 (File No. 33-60023).10-K for the
year ended July 1, 1995.
3940
Exhibit
Number Description of Exhibit
- ------ ----------------------
10(a)10(b) FOURTH AMENDED AND RESTATED SYSCO CORPORATION SUPPLEMENTAL EXECUTIVE
DEFERRED COMPENSATIONRETIREMENT 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 Restated1995 Management Incentive Plan incorporated by
reference to Form 10-K for the year ended July 2, 1994.1, 1995.
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(f) Sysco Corporation Non-Employee Directors Stock Option Plan
incorporated by reference to Form 10-K for the year ended July 1,
1995.
10(g) SYSCO CORPORATION NON-EMPLOYEE DIRECTORS STOCK OPTION
PLAN (SUBJECT TO APPROVAL BY STOCKHOLDERS AT THE 1995
ANNUAL MEETING).Amended and Restated Shareholder Rights Agreement, incorporated by
reference to registration statement on Form 8-A/A, filed May 29,
1996.
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
21 SUBSIDIARIES OF THE REGISTRANT
23 INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
27 FINANCIAL DATA SCHEDULE