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SYSCO CORPORATION-Form10-K24
PARTII
ITEM7Management’s Discussion and Analysis of Financial Condition and Results of Operations
Set forth below is a reconciliation of actual sales, operating expenses, operating income, net earnings and diluted earnings per share to adjusted results for these
measures for fi scal 2011 and fi scal 2010:
(In thousands, except for share and per share data)
2011
2010
(53Weeks) Change in Dollars % Change
Sales (GAAP) $ 39,323,489 $ 37,243,495 $ 2,079,994 5.6%
Impact of 53rd week - 739,177 (739,177)
ADJUSTED SALES (NON-GAAP) $ 39,323,489 $ 36,504,318 $ 2,819,171 7.7%
Operating expenses (GAAP) $ 5,463,210 $ 5,212,439 $ 250,771 4.8%
Impact of 53rd week - (101,442) 101,442
Impact of BTP costs (102,623) (81,140) (21,483) 26.5
Impact of MEPP charge (41,544) (2,944) (38,600)
Impact of COLI 28,197 21,554 6,643 30.9
ADJUSTED OPERATING EXPENSES (NON-GAAP) $ 5,347,240 $ 5,048,467 $ 298,773 5.9%
Operating Income (GAAP) $ 1,931,502 $ 1,975,868 $ (44,366) (2.2)%
Impact of 53rd week - (41,720) 41,720
Impact of BTP costs 102,623 81,140 21,483 26.5
Impact of MEPP charge 41,544 2,944 38,600
Impact of COLI (28,197) (21,544) (6,653) 30.9
ADJUSTED OPERATING INCOME (NON-GAAP) $ 2,047,472 $ 1,996,688 $ 50,784 2.5%
Net earnings (GAAP) $ 1,152,030 $ 1,179,983 $ (27,953) (2.4)%
Impact of 53rd week - (24,127) 24,127
Impact of BTP costs (net of tax)(1) 64,694 51,767 12,927 25.0
Impact of MEPP charge (net of tax)(1) 26,189 1,878 24,311
Impact of COLI (28,197) (21,544) (6,653) 30.9
Impact of tax benefi ts (14,032) (28,895) 14,863 (51.4)
ADJUSTED NET EARNINGS (NON-GAAP) $ 1,200,684 $ 1,159,062 $ 41,622 3.6%
Diluted earnings per share (GAAP) $ 1.96 $ 1.99 $ (0.03) (1.5)%
Impact of 53rd week(2) - (0.04) 0.04
Impact of BTP costs(2) 0.11 0.09 0.02 22.2
Impact of MEPP charge(2) 0.04 0.00 0.04
Impact of COLI(2) (0.05) (0.04) (0.01) 25.0
Impact of tax benefi ts(2) (0.02) (0.05) 0.03 (60.0)
ADJUSTED DILUTED EARNINGS PER SHARE (NON-GAAP) $ 2.04 $ 1.95 $ 0.09 4.6%
Diluted shares outstanding 588,691,546 593,590,042
(1) Tax impact of adjustments for Business Transformation Project, multiemployer pension plan expenses, restructuring charges was $53.3million and $16.3million for fiscal 2011 and 2010, respectively.
(2) Individual components of diluted earnings per share may not sum to the total adjusted diluted earnings due to rounding.
Segment Results
We have aggregated our operating companies into a number of segments, of which only Broadline and SYGMA are reportable segments as defi ned in
accounting provisions related to disclosures about segments of an enterprise. The accounting policies for the segments are the same as those disclosed
by Sysco within the Financial Statements and Supplementary Data within PartII Item8 of this Form10-K. Intersegment sales represent specialty produce
and imported specialty products distributed by the Broadline and SYGMA operating companies.
Management evaluates the performance of each of our operating segments based on its respective operating income results. Corporate expenses generally
include all expenses of the corporate offi ce and Sysco’s shared service center. These also include all share-based compensation costs and expenses related
to the company’s Business Transformation Project. While a segment’s operating income may be impacted in the short term by increases or decreases in
gross profi ts, expenses, or a combination thereof, over the long-term each business segment is expected to increase its operating income at a greater
rate than sales growth. This is consistent with our long-term goal of leveraging earnings growth at a greater rate than sales growth.
The following table sets forth the operating income of each of our reportable segments and the other segment expressed as a percentage of each segment’s sales
for each period reported and should be read in conjunction with Note21, “Business Segment Information” to the Consolidated Financial Statements in Item8:
Operating Income as a Percentage of Sales
2012 2011
2010
(53Weeks)
Broadline 7.0% 7.3% 7.7%
SYGMA 1.1 1.2 1.0
Other 3.8 4.5 4.1