Sysco 2012 Annual Report Download - page 60

SYSCO CORPORATION-Form10-K 37
PARTII
ITEM7Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our option grants include options that qualify as incentive stock options for income tax purposes. In the period the compensation cost related to incentive
stock options is recorded, a corresponding tax benefi t is not recorded as it is assumed that we will not receive a tax deduction related to such incentive
stock options. We may be eligible for tax deductions in subsequent periods to the extent that there is a disqualifying disposition of the incentive stock option.
In such cases, we would record a tax benefi t related to the tax deduction in an amount not to exceed the corresponding cumulative compensation cost
recorded in the fi nancial statements on the particular options multiplied by the statutory tax rate.
Forward-Looking Statements
Certain statements made herein that look forward in time or express management’s expectations or beliefs with respect to the occurrence of future events
are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They include statements about Sysco’s ability to increase its sales
and market share and grow earnings, the continuing impact of economic conditions on consumer confi dence and our business, sales and expense trends,
including expectations regarding pay-related expense defi ned contribution plan costs and pension costs, anticipated multiemployer pension related liabilities
and contributions to various multiemployer pension plans, expectations regarding potential payments of unrecognized tax benefi ts and interest, expectations
regarding share repurchases, dividend payments, expected trends in fuel pricing, usage costs and surcharges, our expectation regarding the provision for
losses on accounts receivable, expected implementation, costs and benefi ts of the ERP system, estimated expenses and capital expenditures related to
our Business Transformation Project in fi scal 2013, beliefs regarding future ERP conversions at our operating companies, expectations regarding our other
Business Transformation initiatives including cost transformation and product cost reduction initiatives, beliefs regarding the timeline for the realization of
benefi ts from each of our initiatives within our Business Transformation Project, our plan to continue to explore and identify opportunities to grow in international
markets and adjacent areas that complement our core business, the impact of ongoing legal proceedings, the loss of SYGMA’s largest customer not having
a material adverse effect on Sysco as a whole, compliance with laws and government regulations not having a material effect on our capital expenditures,
earnings or competitive position, anticipated acquisitions and capital expenditures and the sources of fi nancing for them, continued competitive advantages
and positive results from strategic initiatives, anticipated company-sponsored pension plan liabilities, our expectations regarding cash fl ow from operations,
our intentions regarding the repayment of debt, the impact of initiatives to improve working capital, the availability and adequacy of insurance to cover liabilities,
predictions regarding the impact of changes in estimates used in impairment analyses, expectations regarding the cost of hardware and hardware hosting
services, the anticipated impact of changes in foreign currency exchange rates and Sysco’s ability to meet future cash requirements and remain profi table.
These statements are based on management’s current expectations and estimates; actual results may differ materially due in part to the risk factors discussed
at Item1.A. in the Annual Report on Form10-K and elsewhere. In addition, the success of Sysco’s strategic initiatives could be affected by conditions in
the economy and the industry and internal factors such as the ability to control expenses, including fuel costs. Expected trends related to fuel costs and
usage are impacted by fl uctuations in the economy generally and numerous factors affecting the oil industry that are beyond our control. Our efforts to lower
our cost of goods sold may be impacted by factors beyond our control, including actions by our competitors and/or customers. We have experienced
delays in the implementation of our Business Transformation Project and the expected costs of our Business Transformation Project may be greater or less
than currently expected, as we may encounter the need for changes in design or revisions of the project calendar and budget. Our business and results of
operations may be adversely affected if we experience operating problems, scheduling delays, cost overages, or limitations on the extent of the business
transformation during the ERP implementation process. As implementation of the ERP system and other initiatives within the Business Transformation Project
begins, there may be changes in design or timing that impact near-term expense and cause us to revise the project calendar and budget, and additional
hiring and training of employees and consultants may be required, which could also impact project expense and timing. Our Business Transformation Project
initiatives related to ERP implementation, cost transformation and produce cost reduction may not provide the expected benefi ts or cost savings in a timely
fashion, if at all. If we are unable to realize the anticipated benefi ts from our cost cutting efforts, we could become cost disadvantaged in the marketplace,
and our competitiveness and our profi tability could decrease. Defi ned contribution plan costs are impacted by the number of employees participating in the
plan and the level of contributions made by each employee. Company-sponsored pension plan liabilities are impacted by a number of factors including the
discount rate for determining the current value of plan benefi ts, the assumption for the rate of increase in future compensation levels and the expected rate
of return on plan assets. The amount of shares repurchased in a given period is subject to a number of factors, including available cash and our general
working capital needs at the time. Meeting our dividend target objectives depends on our level of earnings. Our plans with respect to growth in international
markets and adjacent areas that complement our core business are subject to the company’s other strategic initiatives and plans and economic conditions
generally. Legal proceedings are impacted by events, circumstances and individuals beyond the control of Sysco. The need for additional borrowing or other
capital is impacted by factors that include capital expenditures or acquisitions in excess of those currently anticipated, stock repurchases at historical levels,
or other unexpected cash requirements. Plans regarding the repayment of debt are subject to change at any time based on management’s assessment of
the overall needs of the company. The anticipated impact of compliance with laws and regulations also involves the risk that estimates may turn out to be
materially incorrect, and laws and regulations, as well as methods of enforcement, are subject to change.