Sysco 2013 Annual Report Download - page 22

SYSCO CORPORATION-Form10-K 11
PARTI
ITEM1BUnresolved Staff Comments
Failure to successfully renegotiate union contracts could result in work stoppages
As of June29,2013, approximately 8,100employees at 51 operating companies were members of 57 different local unions associated with the International
Brotherhood of Teamsters and other labor organizations. In  scal 2014, 19agreements covering approximately 2,800employees have expired or will expire.
Since June29,2013, twocontract covering approximately 300 of suchemployees have been renegotiated. Failure of our operating companies to effectively
renegotiate these contracts could result in work stoppages. Although our operating subsidiaries have not experienced any signi cant labor disputes or work
stoppages to date, and we believe they have satisfactory relationships with their unions, a work stoppagedue to failure of multiple operating subsidiaries
to renegotiate union contracts could have a material adverse effect on us.
A shortage of qualifi ed labor could negatively impact our business and materially reduce earnings
Our operations rely heavily on our employees, particularly drivers, and any shortage of quali ed labor could signi cantly affect our business. Our recruiting
and retention efforts and efforts to increase productivity gains may not be successful and there may be a shortage of quali ed drivers in future periods. Any
such shortage would decrease Sysco’s ability to effectively serve our customers. Such a shortage would also likely lead to higher wages for employees
and a corresponding reduction in our net earnings.
A cybersecurity incident and other technology disruptions could negatively impact our business and our relationships
with customers
We use computers in substantially all aspects of our business operations.We also use mobile devices, social networking and other online activities to connect
with our employees, suppliers, business partners and our customers.Such uses give rise to cybersecurity risks, including security breach, espionage,
system disruption, theft and inadvertent release of information.Our business involves the storage and transmission of numerous classes of sensitive and/
or con dential information and intellectual property, including customers’ and suppliers personal information, private information about employees, and
 nancial and strategic information about the Company and its business partners.Further, as the Company pursues its strategy to grow through acquisitions
and to pursue new initiatives that improve our operations and cost structure, the Company is also expanding and improving its information technologies,
resulting in a larger technological presence and corresponding exposure to cybersecurity risk.If we fail to assess and identify cybersecurity risks associated
with acquisitions and new initiatives, we may become increasingly vulnerable to such risks.Additionally, while we have implemented measures to prevent
security breaches and cyber incidents, our preventative measures and incident response efforts may not be entirely effective.The theft, destruction, loss,
misappropriation, or release of sensitive and/or con dential information or intellectual property, or interference with our information technology systems or
the technology systems of third parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws,
loss of customers, potential liability and competitive disadvantage.
Our authorized preferred stock provides anti-takeover benefi ts that may not be viewed as benefi cial to stockholders
Under our Restated Certi cate of Incorporation, Sysco’s Board of Directors is authorized to issue up to 1,500,000shares of preferred stock without
stockholder approval. Issuance of theseshares could make it more dif cult for anyone to acquire Sysco without approval of the Board of Directors, depending
on the rights and preferences of the stock issued. In addition, if anyone attempts to acquire Sysco without approval of the Board of Directors of Sysco,
the existence of this undesignated preferred stock could allow the Board of Directors to adopt a shareholder rights plan without obtaining stockholder
approval, which could result in substantial dilution to a potential acquirer. As a result, hostile takeover attempts that might result in an acquisition of Sysco,
that could otherwise have been  nancially bene cial to our stockholders, could be deterred.
ITEM1B Unresolved Staff Comments
None.