Sysco 2011 Annual Report Download - page 40

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The following table sets forth the change in the components of our consolidated results of operations expressed as a percentage increase or
decrease over the prior year:
2011
2010
(53 Weeks)
Sales ............................................................................. 5.6% 1.1%
Cost of sales ........................................................................ 6.2 1.1
Gross profit . ........................................................................ 3.0 1.0
Operating expenses ................................................................... 5.0 (0.6)
Operating income..................................................................... (2.2) 5.5
Interest expense ..................................................................... (5.7) 7.9
Other expense (income), net . ............................................................
(1) (1)
Earnings before income taxes ............................................................ (1.2) 4.4
Income taxes ........................................................................ 0.9 (6.3)
Net earnings ........................................................................ (2.4)% 11.7%
Basic earnings per share ................................................................ (1.5)% 12.4%
Diluted earnings per share . . . ............................................................ (1.5) 12.4
Average shares outstanding. . ............................................................ (1.0) (0.5)
Diluted shares outstanding . . ............................................................ (0.8) (0.4)
(1)
Other expense (income), net was income of $14.2 million in fiscal 2011, expense of $0.8 million in fiscal 2010 and income of $14.9 million in
fiscal 2009.
Impact of 53-week fiscal year in Fiscal 2010
Sysco’s fiscal year ends on the Saturday nearest to June 30th. This resulted in a 52-week year ending July 2, 2011, a 53-week year ending July 3,
2010 for fiscal 2010 and a 52-week year June 27, 2009 for 2009. Because the fourth quarter of fiscal 2010 contained an additional week as
compared to fiscal 2011, our Results of Operations for fiscal 2010 are not directly comparable to the current or prior year. Management believes
that adjusting the fiscal 2010 Results of Operations for the estimated impact of the additional week provides more comparable financial results on
a year-over-year basis. As a result, the Results of Operations discussion for fiscal 2010 presented below in certain instances discusses operating
items that have been adjusted by one-fourteenth of the total metric for the fourth quarter, except as otherwise noted with respect to adjusted
diluted earnings per share. Failure to make these adjustments would cause the year-over-year changes in certain metrics such as sales, operating
income, net earnings and diluted earnings per share to be overstated, whereas in certain cases, a metric may actually have increased rather than
declined or declined rather than increased on a more comparable year-over-year basis. Our Results of Operations discussion includes
reconciliations of the actual results for fiscal 2010 to the adjusted results for fiscal 2010 based on a 52-week fiscal year.
Sales
Sales for fiscal 2011 were 5.6% higher in fiscal 2011 than fiscal 2010. After adjusting for the estimated impact of the 53
rd
week in fiscal 2010,
the increase in sales in fiscal 2011 would have been 7.7%. Sales for fiscal 2010 were 1.1% higher than fiscal 2009. After adjusting for the estimated
impact of the 53
rd
week in fiscal 2010, fiscal 2010 would have had a sales decrease of 0.9%. Set forth below is a reconciliation of actual sales growth
to adjusted sales growth/decline for the periods presented (see further discussion at “Impact of 53-week fiscal year in Fiscal 2010” above):
2011
2010
(53 Weeks) 2009
(In thousands)
Sales for the 53/52 week periods ........................................ $39,323,489 $37,243,495 $36,853,330
Estimated sales for the additional week in fiscal 2010 .......................... — 739,177 —
Adjusted Sales . .................................................... $39,323,489 $36,504,318 $36,853,330
Actual percentage increase............................................. 5.6% 1.1%
Adjusted percentage increase (decrease) ................................... 7.7% (0.9)%
Sales for fiscal 2011, excluding the negative impact of the extra week in fiscal 2010, increased as a result of product cost inflation and the
resulting increase in selling prices along with improving case volumes. Estimated product cost increases, an internal measure of inflation, were
approximately 4.6% during fiscal 2011. Sales from acquisitions in the last 12 months favorably impacted sales by 0.7% for fiscal 2011. The changes
in the exchange rates used to translate our foreign sales into U.S. dollars positively impacted sales by 0.5% compared to fiscal 2010.
Sales for fiscal 2010, in addition to the positive impact of the extra week in fiscal 2010, were increased by improving case volumes. The
changes in the exchange rates used to translate our foreign sales into U.S. dollars positively impacted sales by 0.9% compared to fiscal 2009. Sales
from acquisitions within the last 12 months favorably impacted sales by 0.5% for fiscal 2010. Product cost deflation and the resulting decrease in
selling prices had a significant impact on sales levels in fiscal 2010. Estimated changes in product costs, an internal measure of deflation or
inflation, were estimated as deflation of 1.5% during fiscal 2010. A change in customer sales mix as compared to fiscal 2009 also negatively
impacted fiscal 2010 sales. Case volumes increased at a greater rate within our contract based customer group which generally receives lower
pricing for higher volume.
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