01—Abstract
Summary
Summary of the 10-K filed August 31, 2010. Cited figures are marked; the original filing is the authoritative source.
Sysco Corporation (SYY) reported fiscal 2010, a 53-week year ending July 3, 2010, with sales of $37.24 billiona, up 1.1% from $36.85 billion in fiscal 2009.
The filing attributes the increase primarily to the additional week, which the company estimates contributed approximately 2.0% to growth, along with improving case volumes in the second half. Product cost deflation of an estimated 1.5% and weak economic conditions partially offset these gains. Operating income rose to $1.98 billionb, a 5.5% increase, and net earnings were $1.18 billion, or $1.99 per diluted share, compared with $1.77 in fiscal 2009.
The company notes that a one-time IRS settlement reversal and non-taxable COLI gains together added $0.09c per share to earnings. Cash flow from operations fell to $885.4 million from $1.58 billion in fiscal 2009, largely due to a $528.0 million payment related to the IRS settlement and $140.0 million of pension contributions made in advance. Management expects capital expenditures of $700 million to $750 million in fiscal 2011 and a Business Transformation Project (ERP system) with total cash outlay of approximately $900 million, with costs expected to exceed benefits in the early stages, including fiscal 2011.
Net company-sponsored pension costs are expected to rise by approximately $60.3 milliond in fiscal 2011. Total debt was $2.48 billion, about 81% at fixed rates, and the company stated it was in compliance with all debt covenants.
Shareholders' equity increased to $3.83 billion from $3.45 billion. The Board approved a new share repurchase program covering an additional 20,000,000 shares on August 27, 2010, and quarterly dividends were raised to $0.25 per share.
02—Key points
Key Highlights
- Sales of $37.24 billion, up 1.1%; the additional 53rd week contributed approximately 2.0% to growth, and adjusted sales declined 0.9%.
- Diluted earnings per share of $1.99, up 12.4% from $1.77; the company estimates an adjusted figure of $1.95 excluding the extra week.
- Net earnings of $1.18 billion, up 11.7%, aided by a $29.0 million IRS-related tax benefit and $21.6 million of COLI gains.
- Operating cash flow fell to $885.4 million from $1.58 billion, reflecting a $528.0 million IRS settlement payment and $140.0 million of pension contributions.
- Fiscal 2011 capital expenditures are expected to be $700 million to $750 million, and the ERP Business Transformation Project has an expected total cash outlay of about $900 million.
- Total debt of $2.48 billion, with approximately 81% at fixed rates; the company reports compliance with all debt covenants.
- A new share repurchase program of 20,000,000 shares was approved on August 27, 2010, and the quarterly dividend was $0.25 per share.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Sysco kept $0.03.
- Revenue$37.24B100.0%
- Cost of revenue−$30.06B80.7%
- Gross profit$7.19B19.3%
- Operating costs−$5.21B14.0%
- Operating income$1.98B5.3%
- Interest, other & tax−$795.9M2.1%
- Net income$1.18B3.2%
Where FY2010 revenue went
$37.24B- Cost of revenue: $30.14B, 81% of revenue
- Operating costs: $5.13B, 14% of revenue
- Net income: $1.18B, 3.2% of revenue
- Interest, other & tax: $795.9M, 2.1% of revenue
Kept 3.2% as net incomeNet income $1.18B · 3.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed August 31, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $37.24B$36.85B | +1.1% |
| Cost of Revenue | $30.14B$29.82B | +1.1% |
| Gross Profit | $7.19B$7.04B | +2.2% |
| Operating Expenses | $5.21B$5.16B | +0.9% |
| Operating Income | $1.98B$1.87B | +5.5% |
| Interest Expense | $125.48M$116.32M | +7.9% |
| Net Income | $1.18B$1.06B | +11.7% |
| EPS (Basic) | $1.99$1.77 | +12.4% |
| EPS (Diluted) | $1.99$1.77 | +12.4% |
| Shares Outstanding (Basic) | 592.16M595.13M | −0.5% |
| Shares Outstanding (Diluted) | 593.59M596.07M | −0.4% |
05—Questions
Frequently Asked Questions
How did Sysco perform in fiscal 2010?
Sales rose 1.1% to $37.24 billion, and operating income increased 5.5% to $1.98 billion. Net earnings reached $1.18 billion, or $1.99 per diluted share. The filing states the 53rd week was a major contributor to these gains.
What drove the earnings improvement?
The filing cites the additional week, lower operating expenses from reduced fuel costs and lower COLI losses, and a decrease in the effective tax rate to 36.20%. The IRS settlement reversal and COLI gains each contributed to the favorable tax and earnings impact.
Why did operating cash flow decline?
Cash flow from operations was $885.4 million, compared with $1.58 billion in fiscal 2009. The decline was driven largely by $528.0 million in payments related to the IRS settlement and $140.0 million of pension contributions made in advance for fiscal 2011.
What are the major investment plans and risks ahead?
Capital expenditures are expected to be $700 million to $750 million in fiscal 2011. The ERP Business Transformation Project is expected to cost about $900 million in total, and the filing states costs will exceed benefits in its early stages, including fiscal 2011. Net pension costs are expected to increase by approximately $60.3 million.
How is Sysco's balance sheet and shareholder return positioned?
Total debt was $2.48 billion, with about 81% at fixed rates and a weighted average rate of 5.9%. Shareholders' equity rose to $3.83 billion. The Board approved a new 20,000,000-share repurchase program on August 27, 2010, and the company said it expects to repurchase more shares in fiscal 2011 than in fiscal 2010.
06—Continue