How did Sysco perform financially in fiscal 2003?

Sysco reported sales of $26.14 billion, up 11.9% from fiscal 2002, and net earnings of $778.3 million, up about 14.5% from $679.8 million. Diluted earnings per share were $1.18 compared with $1.01. The filing notes this was the twenty-seventh consecutive year of increased net earnings.

Is Sysco generating enough cash to fund its growth?

Operating cash flow was $1.37 billion in fiscal 2003, up from $1.08 billion. The filing attributes part of this increase to deferred federal and state income tax payments from the supply chain reorganization, which it expects to reverse in fiscal 2004 and beyond. Cash used for investing was $681.8 million, including capital spending and acquisitions, and cash used for financing was $550.5 million, largely for share repurchases and dividends.

What is Sysco's debt position?

Total debt was $1.37 billion at June 28, 2003, about 88% at fixed rates averaging 5.7%, with the remainder at floating rates averaging 2.5%. The long-term debt-to-total-capitalization ratio was 36.2%, within management's target range of 35% to 40%. The company stated it was in compliance with all debt covenants.

What are the main risks to Sysco's business?

The filing cites a low-margin business sensitive to economic conditions, with profit levels that can be hurt by product cost deflation or by inflation the company cannot pass on to customers. Other risks include reliance on third-party suppliers without long-term contracts, labor relations (about 20% of employees are unionized), integration of acquired companies, and product liability exposure.

What is Sysco's plan for capital spending and growth?

Sysco expects fiscal 2004 capital expenditures of $490 million to $510 million, covering fold-out facilities, replacements and expansions, and the National Supply Chain initiative, including the Northeast Redistribution Center in Front Royal, Virginia, expected to be operational in summer 2004. The company intends to grow through sales growth and acquisitions, and it held a shelf registration with 29,477,835 shares available for acquisition-related issuance.

SYY 10-K FY2003 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed September 26, 2003. Cited figures are marked; the original filing is the authoritative source.

Sysco Corporation (SYY) reported record fiscal 2003 results for the year ended June 28, 2003, with sales of $26.14 billion^a, up 11.9% from $23.35 billion in fiscal 2002.

Net earnings rose to $778.3 million^b, or $1.18 per diluted share, compared with $679.8 million, or $1.01 per diluted share, the prior year. The filing describes this as the twenty-seventh consecutive year of increased net earnings. The company describes itself as the largest North American distributor of food and food-related products to the foodservice industry, serving approximately 420,000 customers through 162 facilities in the United States and Canada.

Cash flow from operations reached $1.37 billion^c, up from $1.08 billion, aided by deferral of federal and state income tax payments tied to the company's National Supply Chain initiative, which the filing estimates saved about $410 million in cash flow in fiscal 2003. Capital expenditures were $435.6 million, and fiscal 2004 capital spending is expected to be $490 million to $510 million. Total debt was $1.37 billion at June 28, 2003, with the long-term debt-to-capitalization ratio at 36.2%, within management's 35% to 40% target range.

Total assets grew to $6.94 billion^d. Shareholder dividends rose to $0.42 per share for the year, and the board authorized repurchase of an additional 20 million shares in September 2003.

The filing flags several risks, including the low-margin, economically sensitive nature of foodservice distribution, reliance on third-party suppliers without long-term contracts, and the operational challenges of integrating acquisitions. Management states that pending legal proceedings are not expected to have a material adverse effect on the company's financial position or results of operations.

02—Key points

Key Highlights

Net sales of $26.14 billion in fiscal 2003, up 11.9% from $23.35 billion in fiscal 2002
Net earnings of $778.3 million, or $1.18 diluted EPS, versus $1.01 in fiscal 2002; the filing cites 27 consecutive years of increased net earnings
Cash from operations of $1.37 billion, up from $1.08 billion, helped by deferred tax payments tied to the supply chain reorganization (estimated $410 million benefit)
Capital expenditures of $435.6 million in fiscal 2003, with $490 million to $510 million expected in fiscal 2004
Total debt of $1.37 billion; long-term debt-to-capitalization of 36.2%, within the 35% to 40% target range
Quarterly dividend increased to $0.11 per share; the board authorized an additional 20 million share repurchase in September 2003
Acquisitions in fiscal 2003 included Reed Distributors, J&B Foodservice, and a Stockton, California operation from Smart & Final, for $209.0 million in cash

03—Questions

Frequently Asked Questions

How did Sysco perform financially in fiscal 2003?
Sysco reported sales of $26.14 billion, up 11.9% from fiscal 2002, and net earnings of $778.3 million, up about 14.5% from $679.8 million. Diluted earnings per share were $1.18 compared with $1.01. The filing notes this was the twenty-seventh consecutive year of increased net earnings.
Is Sysco generating enough cash to fund its growth?
Operating cash flow was $1.37 billion in fiscal 2003, up from $1.08 billion. The filing attributes part of this increase to deferred federal and state income tax payments from the supply chain reorganization, which it expects to reverse in fiscal 2004 and beyond. Cash used for investing was $681.8 million, including capital spending and acquisitions, and cash used for financing was $550.5 million, largely for share repurchases and dividends.
What is Sysco's debt position?
Total debt was $1.37 billion at June 28, 2003, about 88% at fixed rates averaging 5.7%, with the remainder at floating rates averaging 2.5%. The long-term debt-to-total-capitalization ratio was 36.2%, within management's target range of 35% to 40%. The company stated it was in compliance with all debt covenants.
What are the main risks to Sysco's business?
The filing cites a low-margin business sensitive to economic conditions, with profit levels that can be hurt by product cost deflation or by inflation the company cannot pass on to customers. Other risks include reliance on third-party suppliers without long-term contracts, labor relations (about 20% of employees are unionized), integration of acquired companies, and product liability exposure.
What is Sysco's plan for capital spending and growth?
Sysco expects fiscal 2004 capital expenditures of $490 million to $510 million, covering fold-out facilities, replacements and expansions, and the National Supply Chain initiative, including the Northeast Redistribution Center in Front Royal, Virginia, expected to be operational in summer 2004. The company intends to grow through sales growth and acquisitions, and it held a shelf registration with 29,477,835 shares available for acquisition-related issuance.

04—Continue

← View all 10-K filings