Sysco 2013 Annual Report Download - page 14

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SYSCO CORPORATION-Form10-K 3
PARTI
ITEM1Business
Sources of Supply
We purchase fromthousands of suppliers, both domestic and international, none of which individually accounts for more than 10% of our purchases.
These suppliers consist generally of large corporations selling brand name and private label merchandise, as well as independent regional brand and private
label processors and packers. Purchasing is generally carried out through both centrally developed purchasing programs and direct purchasing programs
established by our various operating companies.
We administer a consolidated product procurement program designed to develop, obtain and ensure consistent quality food and non-food products. The
program covers the purchasing and marketing of Sysco Brand merchandise as well as products from a number of national brand suppliers, encompassing
substantially all product lines. Sysco’s operating companies purchase product from the suppliers participating in theseconsolidated programs and from
other suppliers, although Sysco Brand products are only available to the operating companies through these consolidated programs. We also focus on
increasing pro tability by lowering operating costs and by lowering aggregate inventory levels, which reduces future facility expansion needs at our broadline
operating companies, while providing greater value to our suppliers and customers. This includes the construction and operation of regional distribution
centers (RDCs), which aggregate inventory demand to optimize the supply chain activities for certain products for all Sysco broadline operating companies
in the region. Currently, we have two RDCs in operation, one in Virginia and one in Florida.
Working Capital Practices
Our growth is funded through a combination of cash  ow from operations, commercial paper issuances and long-term borrowings. See the discussion in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources” at Item7 regarding our liquidity,
nancial position and sources and uses of funds.
Credit terms we extend to our customers can vary from cash on delivery to 30days or more based on our assessment of each customer’s credit worthiness.
We monitor each customer’s account and will suspend shipments if necessary.
A majority of our sales orders are  lled within 24hours of when customer orders are placed. We generally maintain inventory on hand to be able to meet
customer demand. The level of inventory on hand will vary by product depending on shelf-life, supplier order ful llment lead times and customer demand.
We also make purchases of additional volumes of certain products based on supply or pricing opportunities.
We take advantage of suppliers’ cash discounts where appropriate and otherwise generally receive payment terms from our suppliers ranging from weekly
to 30days or more.
Corporate Headquarters And Shared Services Center
Our corporate staff makes available a number of services to our operating companies. Members of the corporate staff possess experience and expertise
in, among other areas, accounting and  nance, treasury, legal, cash management, information technology, employee bene ts, engineering, real estate and
construction, risk management and insurance, sales and marketing, payroll, human resources, training and development, strategy, and tax compliance
services. The corporate of ce also makes available warehousing and distribution services, which provide assistance in operational best practices including
space utilization, energy conservation,  eet management and work  ow.
Our shared services center performs support services for employees, suppliers and customers, payroll administration, human resources, customer and
vendor contract administration,  nancial services such as vendor payments, invoicing, cash application, certain credit services, accounting and sales and
use tax administration, procurement and maintenance support and sales support for some of our operating companies.
Capital Improvements
To maximize productivity and customer service, we continue to modernize, expand and construct new distribution facilities. During  scal 2013,2012 and
2011, approximately $511.9million, $784.5million and $636.4million, respectively, were invested in delivery  eet, facilities, technology and other capital
asset enhancements. We estimate our capital expenditures in  scal 2014 should be in the range of $550million to $600million. During the three years
ended June29,2013, capital expenditures were  nanced primarily by internally generated funds, our commercial paper program and bank and other
borrowings. We expect to  nance our  scal 2014 capital expenditures from the same sources.