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Sysco Annual Report, Year Ended Jun 27, 1998

Filing Date
Filed September 24, 1998
Period End
June 27, 1998
Security
SYY
In the record · 2016–202610-K1210-Q328-K147

SYY filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 147 current reports (8-K) between 2016 and 2026.

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01—Abstract

Summary

Summary of the 10-K filed September 24, 1998. Cited figures are marked; the original filing is the authoritative source.

Sysco Corporation (SYY) reported fiscal 1998 (year ended June 27, 1998) sales of $15.33 billiona, up 6% from $14.45 billion in fiscal 1997, with growth driven by the foodservice business serving traditional customers (restaurants, hospitals, schools, hotels) and chain restaurants through its SYGMA Network.

Net earnings were $296.8 millionb, or $0.86 diluted per share, down about 2% from $302.5 million, because of a one-time, after-tax, non-cash charge of $28.1 million from adopting EITF Issue No. 97-13 on computer systems reengineering costs. Earnings before that accounting change rose 7% to $324.8 million, and the company cited its twenty-second consecutive year of increased earnings before the cumulative effect of an accounting change. The balance sheet shows total assets of $3.78 billion and shareholders' equity of $1.36 billion, down from $1.40 billion.

Long-term debt rose to $867.0 millionc, and the ratio of long-term debt to total capitalization increased to 39% from 33%, within the company's stated target range of 30% to 40%. Operating cash flow fell to $357.8 million from $498.1 million, while capital expenditures were $259.4 million. Management expects fiscal 1999 capital expenditures of $240 million to $260 million.

The company repurchased 12.1 million shares for $263.4 milliond in fiscal 1998 and authorized a new 8 million share buyback on September 4, 1998. Quarterly dividends rose during the year, and the total for fiscal 1998 was $0.33 per share. The company stated that it expects Year 2000 costs to be immaterial to its results, while acknowledging that disruptions from non-compliant systems are possible and that contingency plans are under development.

Arthur Andersen LLP audited the financial statements and issued an unqualified opinion. In July 1998, Sysco issued $225 million of 6.5% debentures due 2028 and used the proceeds to repay commercial paper.

02—Key points

Key Highlights

  1. Sales rose 6% to $15.33 billion in fiscal 1998, with real sales growth of about 6% after adjusting for food price increases and acquisitions.
  2. Net earnings were $296.8 million, or $0.86 diluted per share, versus $302.5 million in fiscal 1997, reflecting a $28.1 million after-tax charge for an accounting change.
  3. Earnings before the cumulative effect of accounting change rose 7% to $324.8 million, the twenty-second consecutive year of increased earnings before that change.
  4. Long-term debt rose to $867.0 million, and long-term debt to total capitalization reached 39%, up from 33%, within the company's 30% to 40% target range.
  5. Operating cash flow declined to $357.8 million from $498.1 million, while capital expenditures were $259.4 million.
  6. The company repurchased 12,129,700 shares for $263.4 million in fiscal 1998 and authorized an additional 8 million share buyback on September 4, 1998.
  7. In July 1998 the company issued $225 million of 6.5% debentures due 2028, with proceeds used to pay down commercial paper.

03—Questions

Frequently Asked Questions

  1. How did Sysco perform in fiscal 1998?

    Sales increased 6% to $15.33 billion. Net earnings were $296.8 million, or $0.86 diluted per share, down about 2% because of a one-time $28.1 million after-tax charge from an accounting change. Earnings before that change rose 7% to $324.8 million.

  2. What was the accounting change and how did it affect results?

    In the second quarter of fiscal 1998, Sysco recorded a one-time, after-tax, non-cash charge of $28.1 million to comply with EITF Issue No. 97-13, which requires reengineering costs for computer systems development to be expensed as incurred rather than capitalized.

  3. How is Sysco's debt position and capital spending?

    Long-term debt was $867.0 million at June 27, 1998, and the ratio of long-term debt to total capitalization was 39%, up from 33%. Capital expenditures were $259.4 million in fiscal 1998, and fiscal 1999 capital expenditures are expected to be $240 million to $260 million.

  4. What is Sysco's shareholder return activity?

    Sysco paid cash dividends of $0.33 per share in fiscal 1998, up from $0.28. It repurchased 12,129,700 shares for $263.4 million during the year and authorized a new 8 million share buyback on September 4, 1998.

  5. What is Sysco's Year 2000 exposure?

    Sysco completed an assessment of its internal systems and expects to make the necessary revisions or upgrades to become Year 2000 compliant. Based on preliminary information, the costs are not expected to have a material adverse impact on results of operations or financial position. The company is developing contingency plans for possible disruptions from non-compliant systems, including those of suppliers and customers.

04—Continue

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