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SYSCO CORPORATION-Form10-K20
PARTII
ITEM7Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
Results of Operations
The following table sets forth the components of our consolidated results of operations expressed as a percentage of sales for the periods indicated:
2013 2012 2011
Sales 100.0% 100.0% 100.0%
Cost of sales 82.3 81.9 81.2
Gross pro t 17.7 18.1 18.8
Operating expenses 14.0 13.6 13.9
Operating income 3.7 4.5 4.9
Interest expense 0.3 0.3 0.3
Other expense (income), net (0.0) (0.0) (0.0)
Earnings before income taxes 3.4 4.2 4.6
Income taxes 1.2 1.6 1.7
NET EARNINGS 2.2% 2.6% 2.9%
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:
2013 2012
Sales 4.8% 7.8%
Cost of sales 5.3 8.7
Gross pro t 2.5 3.8
Operating expenses 7.3 5.9
Operating income (12.3) (2.1)
Interest expense 13.3 (4.1)
Other expense (income), net 158.2(1) (52.4)(1)
Earnings before income taxes (13.3) (2.4)
Income taxes (16.2) (1.9)
NET EARNINGS (11.5)% (2.6)%
BASIC EARNINGS PER SHARE (12.0)% (2.6)%
DILUTED EARNINGS PER SHARE (12.1) (3.1)
Averageshares outstanding 0.3 0.2
Dilutedshares outstanding 0.6 0.1
(1) Other expense (income), net was income of $17.5million in fiscal 2013, $6.8million in fiscal 2012and $14.2million in fiscal 2011.
Sales
Sales for  scal 2013 were 4.8% higher than  scal 2012. Sales for  scal 2013 increased as a result of product cost in ation and the resulting increase in
selling prices, sales from acquisitions that occurred within the last 12months and case volume growth. Our sales growth in  scal 2013 was greater with
our large regional and national customers as compared to sales growth with our independent restaurant customers. We believe our independent sales
growth has been negatively in uenced by lower consumer sentiment. Case volumes excluding acquisitions within the last 12months improved 1.3% in  scal
2013. Our case volumes represent our results from our Broadline and SYGMA segments only. Sales from acquisitions within the last 12months favorably
impacted sales by 1.5% for  scal 2013. Our acquisition activity has been greater in  scal 2013 as compared to  scal 2012. We estimate the carryover
impact into  scal 2014 will cause sales to increase by approximately 1.0%. We expect to continue the trend of closing acquisitions in  scal 2014 that will
continue to add at least 1.0% in total annualized sales from new acquisitions in  scal 2014. Changes in product costs, an internal measure of in ation or
de ation, were estimated as in ation of 2.2% during  scal 2013. Case volumes including acquisitions within the last 12months improved approximately
2.6% in  scal 2013. The changes in the exchange rates used to translate our foreign sales into U.S. dollars did not have a signi cant impacton sales when
compared to  scal 2012.
Sales for  scal 2012 were 7.8% higherthan  scal 2011. Sales for  scal 2012increased as a result of product cost in ation, and the resulting increase in
selling prices, along with improving case volumes. Changes in product cost, an internal measure of in ation, were approximately 5.5% during  scal 2012.
Case volumes including acquisitions within the last 12months improved approximately 3.0% during  scal 2012. Case volumes excluding acquisitions
within the last 12months improved approximately 2.5% during  scal 2012. Sales from acquisitions in the last 12months favorably impacted sales by
0.7% for  scal 2012. The changes in the exchange rates used to translate our foreign sales into U.S. dollars did not have a signi cant impacton sales
when compared to  scal 2011.