01—Abstract
Summary
Summary of the 10-K filed September 25, 2002. Cited figures are marked; the original filing is the authoritative source.
Sysco Corporation (SYY) reported fiscal 2002 (year ended June 29, 2002) sales of $23,350,504 thousanda, up 7.2% from $21,784,497 thousand in fiscal 2001, and net earnings of $679,787 thousand, up 13.9% from $596,909 thousand.
Diluted earnings per share were $1.01b versus $0.88. The company described itself as the largest North American distributor of food and food-related products to the foodservice industry, serving approximately 415,000 customers from 158 facilities in the United States and Canada. Management attributed the slower sales growth to softness in the economy and tough comparisons to fiscal 2001.
Real sales growth, adjusted for food cost increases and acquisitions, was approximately 2.7% in 2002, compared with 5.8% in 2001. Cash flow from operations rose to $1,084,980 thousandc from $955,224 thousand, helped by a deferral of $266,673 thousand in federal and state income tax payments tied to a supply chain reorganization. Capital expenditures were $416,393 thousand, and the company expects fiscal 2003 capital spending of $450,000 thousand to $500,000 thousand.
Long-term debt was $1,176,307 thousandd, and the long-term debt-to-capitalization ratio was 35.6%, within management's stated target range of 35% to 40%. The company repurchased 18,000,000 shares for $473,558 thousand during fiscal 2002, and the Board authorized an additional 20,000,000 shares in July 2002. The filing notes that SFAS No. 142 will be adopted in fiscal 2003, discontinuing goodwill amortization, and management believes goodwill is not impaired.
Pension plan assets declined with the stock market, resulting in a minimum pension liability of $65,435 thousand, net of tax, recorded through shareholders' equity. Management believes the outcome of pending legal proceedings will not have a material adverse effect on the company.
02—Key points
Key Highlights
- Sales of $23,350,504 thousand in fiscal 2002, up 7.2% from fiscal 2001, with real sales growth of approximately 2.7% after adjusting for food cost increases and acquisitions.
- Net earnings of $679,787 thousand, up 13.9% from $596,909 thousand; diluted EPS of $1.01 versus $0.88.
- Net cash from operations of $1,084,980 thousand, supported by a $266,673 thousand deferral of federal and state income tax payments linked to a supply chain reorganization.
- Capital expenditures of $416,393 thousand in fiscal 2002, with fiscal 2003 expected to be $450,000 thousand to $500,000 thousand.
- Share repurchases of 18,000,000 shares for $473,558 thousand in fiscal 2002; the Board authorized an additional 20,000,000 shares in July 2002.
- Long-term debt of $1,176,307 thousand, a long-term debt to total capitalization ratio of 35.6%, within the company's 35% to 40% target range.
- Pension plans recorded a minimum pension liability of $65,435 thousand, net of tax, through shareholders' equity after asset declines in the stock market.
03—Questions
Frequently Asked Questions
How did Sysco's sales and earnings grow in fiscal 2002?
Sales rose 7.2% to $23,350,504 thousand, and net earnings rose 13.9% to $679,787 thousand. Diluted EPS was $1.01, compared with $0.88 in fiscal 2001. Management attributed the slower sales growth to a softer economy and comparisons with the high sales increases of fiscal 2001.
How much of the operating cash flow came from tax deferrals?
Net cash provided by operating activities was $1,084,980 thousand. The filing states that a supply chain reorganization resulted in deferral of federal and state income tax payments of $266,673 thousand for fiscal 2002, and it expects the positive cash flow effect of the deferral to increase in fiscal 2003. Payments related to these deferrals are expected to begin in fiscal 2004.
What are the company's capital spending and share repurchase plans?
Capital expenditures were $416,393 thousand in fiscal 2002 and are expected to be $450,000 thousand to $500,000 thousand in fiscal 2003. During fiscal 2002, the company repurchased 18,000,000 shares for $473,558 thousand. In July 2002, the Board authorized the repurchase of an additional 20,000,000 shares.
How is the company's debt position?
Net long-term debt was $1,176,307 thousand at June 29, 2002, and the long-term debt to total capitalization ratio was 35.6%, compared with 31.4% a year earlier. Management targets a ratio between 35% and 40%. Approximately 82% of long-term debt is at fixed rates averaging 6.61%, and the remainder is at floating rates averaging 1.3%.
Does the filing identify material legal or accounting risks?
The filing states that legal proceedings are not expected to have a material adverse effect on the company's financial position or results of operations. It also notes that SFAS No. 142 will be adopted in fiscal 2003, discontinuing goodwill amortization, and that management believes goodwill is not impaired. Pension plan asset declines led to a minimum pension liability of $65,435 thousand, net of tax.
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