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SYSCO CORPORATION-Form10-K 31
PARTII
ITEM7Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
Cash Flows
Operating Activities
Fiscal 2013 vs. Fiscal 2012
We generated $1.5billion in cash  ow from operations in  scal 2013, as compared to $1.4billion in  scal 2012. The increase of $107.4million or 7.6%,
was largely attributable to a favorable comparison year-over-year on the settlement payments made to the IRS, an increase in non-cash depreciation and
amortization expense and a favorable comparison for multiemployer and company-sponsored pension expense and contributions. These decreases were
partially offset by a reduction in net earnings, the redemption of some of our COLI policies in  scal 2012 and a reduction in taxes. Changes in working
capital, including accounts receivable, inventory and accounts payable, did not have a signi cant impact on the comparison of cash  ow from operations
from  scal 2013 to  scal 2012. These items are more fully described below.
In  scal 2012, we paid $212million in settlement payments to the IRS. We completed these settlement payments in  scal 2012, which resulted in a favorable
comparison in cash  ow from operations related to this item in  scal 2013. Excluding the IRS settlement payment comparison, the combined impact of
changes in deferred taxes and changes in accrued income taxes was a decrease of $171.5 in cash  ow from operations in  scal 2013 as compared to
scal 2012. This decrease resulted primarily from decreased tax expense of $107.4million year over year and an increase in non-IRS tax payments of
$59.6million which were primarily foreign tax payments related to a one-time transaction as well as increased earnings in these jurisdictions.
The increase in non-cash depreciation and amortization expense of $95.6million was primarily related to assets that were not in service in  scal 2012 that
were in service in  scal 2013. These assets include our software related to our Business Transformation Project, which was placed into service in August2012,
as well as various new facilities and expansions. We do not anticipate that our depreciation and amortization expense will increase as much in  scal 2014.
Multiemployer and company-sponsored pension expense and contributions resulted in a favorable comparison of $69.9million in cash  ow from operations
in  scal 2013 as compared to  scal 2012. Provisions for multiemployer pension withdrawals increased $20.0million in  scal 2013 as compared to  scal
2012, and payments for withdrawals decreased $1.8million. Company-sponsored pension contributions decreased $68.9million year over year, which
was partially offset by a decrease in company-sponsored pension expense of $20.8million. We anticipate making a $40.7million payment in the  rst 26
weeks of  scal 2014 related to a  scal 2013 multiemployer pension withdrawal.
The comparison of cash  ow from operations from  scal 2013 to  scal 2012 was negatively impacted by an unfavorable change of $56.4million in other
assets. This unfavorable change resulted primarily from an increase in cash in the prior year from the redemption of approximately $75million of our COLI
policies. These COLI policies were maintained to meet a portion of our obligations under the SERP and were replaced by less volatile corporate-owned
real estate assets as part of our plan to reduce the market-driven COLI impact on our earnings. There was no similar redemption in  scal 2013. Other
miscellaneous changes in other assets partially offset this decrease year over year.
Fiscal 2012 vs. Fiscal 2011
We generated $1.4billion in cash  ow from operations in  scal 2012, as compared to $1.1billion in  scal 2011. The increase of $312.7million between
scal 2013 and  scal 2012 was largely attributable to changes in working capital, a year-over-year reduction in tax payments and the redemption of some
of our COLI policies. These increases were partially offset by the year-over-year impact of multiemployer withdrawal provisions and payments. These items
are more fully described below.
Changes in working capital, speci cally accounts receivable, inventory and accounts payable, contributed $144.3million to the increase in cash  ow from
operations in  scal 2012 as compared to  scal 2011. Both periods were affected by increases in accounts receivable and inventory, partially offset by an
increase in accounts payable resulting primarily from in ation-driven increases in product costs and sales. However,  scal 2012 was impacted by these
items to a lesser extent due primarily to working capital improvements within accounts receivable and inventory and also less growth in average daily sales
in the  nal month of  scal 2012 as compared to the same period in  scal 2011.
Tax payments were $135.2million less in  scal 2012 than in  scal 2011. The decrease in tax payments was partially due to the company being in a prepaid
position at the end of  scal 2011 in certain jurisdictions. In addition, various movements in taxable temporary differences caused estimated taxable income
to be lower in  scal 2012, requiring less tax payments in  scal 2012 than in  scal 2011. We made our  nal payments on a previous IRS tax settlement of
$212million in  scal 2012.
We received approximately $75million in cash from the one-time redemption during the period of some of our investments in COLI policies that we
maintained to meet a portion of our obligations under the SERP. This resulted in a positive impact to cash  ow from operations in  scal 2012 by decreasing
other assets by $57.1million. Those redeemed COLI policies were replaced by less volatile existing corporate-owned real estate assets as part of our plan
to reduce the market-driven COLI impact on our earnings.
Multiemployer withdrawal provisions and payments had a negative impact of $53.3million on the comparison of cash  ow from operations in  scal 2013
to  scal 2012. The net impact of withdrawal provisions and payments was a cash out ow of $11.7million in  scal 2012, compared to a $41.5million
accrual in  scal 2012.