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Sysco Annual Report, Year Ended Jul 2, 2005

Filing Date
Filed September 15, 2005
Period End
July 2, 2005
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.

  1. FY2017 annual report10-K · Aug ’17Aug ’17
  2. Material agreement8-K · Feb ’20Feb ’20
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Leadership change8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed September 15, 2005. Cited figures are marked; the original filing is the authoritative source.

Sysco Corporation (SYY) reported fiscal 2005 (52 weeks ended July 2, 2005) sales of $30.28 billiona, up 3.2% from $29.34 billion in fiscal 2004, which included a 53rd week.

Adjusting for that extra week, sales grew 5.3%. Net earnings rose 6.0% to $961.5 millionb, and diluted earnings per share were $1.47 versus $1.37. Management attributed the gross margin decline to product cost increases, mix changes and pricing pressure, while lower operating expenses as a percent of sales, reduced performance-based incentive compensation and lower net pension costs helped offset rising fuel costs and National Supply Chain expenses.

The company describes itself as the largest North American distributor of food and related products to the foodservice industry, serving about 390,000 customers from 170 facilities in the United States and Canada. Financial position remained solid, with total assets of $8.27 billionc, shareholders' equity of $2.76 billion, and a long-term debt to total capitalization ratio of 33.1%, below the company's 35% to 40% target range. Operating cash flow was $1.19 billion and capital expenditures were $390.2 million.

Management expects fiscal 2006 capital expenditures of $425 million to $450 milliond and plans to issue $350 million to $500 million of long-term debt in September 2005 to refinance commercial paper. Management also noted that Hurricane Katrina affected operations in New Orleans and Jackson, but does not expect a material adverse effect on fiscal 2006 results.

The company also disclosed a $134 million voluntary pension contribution in the fourth quarter of fiscal 2005, and it expects a $0.11 to $0.13 per share earnings impact in fiscal 2006 from adopting SFAS 123(R). Share repurchases totaled 16.8 million shares for $597.7 million during fiscal 2005.

02—Key points

Key Highlights

  1. Sales of $30.28 billion in fiscal 2005, up 3.2% from $29.34 billion; up 5.3% after adjusting for the 53rd week in fiscal 2004
  2. Net earnings of $961.5 million, up 6.0%; diluted EPS of $1.47 versus $1.37 in fiscal 2004
  3. Gross margins as a percent of sales declined, driven by product cost increases, customer and segment mix, and pricing pressure
  4. Operating expenses fell to 13.9% of sales from 14.1%, aided by lower incentive compensation and pension costs, partly offset by higher fuel costs and National Supply Chain expenses of $46.5 million
  5. Long-term debt to total capitalization of 33.1%, below the company's 35% to 40% target range; operating cash flow of $1.19 billion
  6. Capital expenditures of $390.2 million in fiscal 2005, with $425 million to $450 million planned for fiscal 2006
  7. Quarterly dividend raised to $0.15 per share; 10.4 million shares remained authorized for repurchase as of August 27, 2005

03—Questions

Frequently Asked Questions

  1. How did Sysco perform financially in fiscal 2005?

    Sales rose 3.2% to $30.28 billion and net earnings rose 6.0% to $961.5 million. Diluted EPS was $1.47, up from $1.37. The company noted that fiscal 2004 included an extra week, so adjusted sales growth was 5.3%.

  2. What pressures affected Sysco's margins?

    Gross margin as a percent of sales declined due to product cost increases, changes in customer and segment mix, and pricing pressure. Fuel costs rose about $31 million over fiscal 2004, and National Supply Chain project expenses were $46.5 million.

  3. How strong is Sysco's balance sheet?

    Long-term debt to total capitalization was 33.1% at July 2, 2005, below management's 35% to 40% target. Shareholders' equity was $2.76 billion and total assets were $8.27 billion. The company repaid $350 million of senior notes during the year and planned a $350 million to $500 million debt issuance in September 2005.

  4. What are Sysco's plans for capital spending and the supply chain?

    The company expects fiscal 2006 capital expenditures of $425 million to $450 million. It opened the Northeast Redistribution Center in Front Royal, Virginia, during fiscal 2005, and plans to build seven to nine regional distribution centers over the next seven years, with the second planned for Alachua, Florida.

  5. Did Hurricane Katrina materially affect Sysco?

    Management said Katrina principally affected operations in Jackson, Mississippi and New Orleans, Louisiana. Jackson operations recovered, and the New Orleans facility has partially resumed operations. Management does not expect a material adverse effect on fiscal 2006 financial position or operating results.

04—Continue

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