Sysco 2007 Annual Report Download - page 30

CAPITAL IMPROVEMENTS
To maximize productivity and customer service, we continue to construct and modernize our distribution facilities.
During fiscal 2007, 2006 and 2005, approximately $603,242,000, $513,934,000 and $390,026,000, respectively, were invested
in facility expansions, fleet additions and other capital asset enhancements. We estimate our capital expenditures in
fiscal 2008 should be in the range of $625,000,000 to $650,000,000. During the three years ended June 30, 2007,
capital expenditures were financed primarily by internally generated funds, our commercial paper program and bank
and other borrowings. We expect to finance our fiscal 2008 capital expenditures from the same sources.
EMPLOYEES
As of June 30, 2007, we had approximately 50,900 full-time employees, approximately 18% of whom were represented
by unions, primarily the International Brotherhood of Teamsters. Contract negotiations are handled by each individual
operating company. Approximately 26% of our union employees are covered by collective bargaining agreements which
will expire during fiscal 2008. We consider our labor relations to be satisfactory.
COMPETITION
SYSCO’s business environment is competitive with numerous companies engaged in foodservice distribution. Our
customers may also choose to purchase products directly from retail outlets. While competition is encountered primarily
from local and regional distributors, a few companies compete with us on a national basis. We believe that the principal
competitive factors in the foodservice industry are effective customer contacts, the ability to deliver a wide range of quality
products and related services on a timely and dependable basis and competitive prices. We estimate that we serve about
15% of an approximately $225 billion annual market that includes the foodservice and hotel amenity, furniture and textile
markets both in the United States and Canada. We believe, based upon industry trade data, that our sales to the United
States and Canada “food-prepared-away-from-home” industry were the highest of any foodservice distributor during
fiscal 2007. While adequate industry statistics are not available, we believe that in most instances our local operations
are among the leading distributors of food and related non-food products to foodservice customers in their respective
trading areas.
GOVERNMENT REGULATION
As a marketer and distributor of food products, we are subject to the U.S. Federal Food, Drug and Cosmetic Act and
regulations promulgated thereunder by the U.S. Food and Drug Administration (FDA), as well as the Canadian Food and
Drugs Act and the regulations thereunder.
The FDA regulates manufacturing and holding requirements for foods through its manufacturing practice regulations,
specifies the standards of identity for certain foods and prescribes the format and content of certain information required
to appear on food product labels. For certain product lines, we are also subject to the Federal Meat Inspection Act,
the Poultry Products Inspection Act, the Perishable Agricultural Commodities Act, the Packers and Stockyard Act and
regulations promulgated thereunder by the U.S. Department of Agriculture (USDA). The USDA imposes standards for
product quality and sanitation including the inspection and labeling of meat and poultry products and the grading and
commercial acceptance of produce shipments from our suppliers. We are also subject to the Public Health Security
and Bioterrorism Preparedness and Response Act of 2002, which imposes certain registration and record keeping
requirements on facilities that manufacture, process, pack or hold food for human or animal consumption.
In Canada, the Canadian Food Inspection Agency administers and enforces the food safety and nutritional quality standards
established by Health Canada under the Canadian Food and Drugs Act and under other related federal legislation,
including the Canada Agricultural Products Act, the Meat Inspection Act, the Fish Inspection Act and the Consumer
Packaging and Labeling Act (as it relates to food). These laws regulate the processing, storing, grading, packaging,
marking, transporting and inspection of certain SYSCO product lines as well as the packaging, labeling, sale, importation
and advertising of pre-packaged and certain other products.
We and our products are also subject to state, provincial and local regulation through such measures as the licensing of
our facilities; enforcement by state, provincial and local health agencies of state, provincial and local standards for our
products; and regulation of our trade practices in connection with the sale of our products. Our facilities are subject to
inspections and regulations issued pursuant to the U.S. Occupational Safety and Health Act by the U.S. Department of
Labor, together with similar occupational health and safety laws in each Canadian province. These regulations require
us to comply with certain manufacturing, health and safety standards to protect our employees from accidents and to
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