Sysco 2014 Annual Report Download

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Table of contents

  • Page 1
    Delivering on Our Commitment 20 2 014 4 Annual Report

  • Page 2
    ... population. Sysco announced an agreement to purchase a 50% interest in Mayca Distribuidores S.A., a leading foodservice distributer in Costa Rica whose operations also include retail cash-andcarry, cold storage and truck leasing. 85% of our associates participated in the third annual Sysco Speaks...

  • Page 3
    ... of foodservice trends. Our category management initiative provides a platform for product innovation by working more closely with our supplier partners to understand customer trends. In addition, we have the fresh, local and sustainably-produced products customers want to respond to changing...

  • Page 4
    ... dividend for the 45th time in our 44-year history. On Dec. 9, 2013, we announced our intent to merge with US Foods, the second-largest foodservice distributor in the United States, in an estimated $8.2 billion transaction. Pending completion of a Federal Trade Commission review, the proposed merger...

  • Page 5
    ... and markets In addition to the proposed merger with US Foods, we continued to fill out our service footprint in the fiscal year with some strategic acquisitions. Among them was an agreement to acquire a 50-percent stake in Mayca Distribuidores S.A., a leading food distributor in Costa Rica...

  • Page 6
    ... customers' requirements. The Council is composed of operating company presidents, representing some of Sysco's most effective operations. William J. DeLaney President and Chief Executive Officer G. Mitchell Elmer Senior Vice President, Shared Services Finance William W. Goetz Senior Vice President...

  • Page 7
    Financials

  • Page 8
    ... ratio Working capital Other assets Plant and equipment (net) Total assets Long-term debt Shareholders' equity Other Data Dividends declared Capital expenditures Number of employees Shareholder Data Closing price of common share at year end Price/earnings ratio at year end - diluted Market price per...

  • Page 9
    ... 38.50% 1-Year Growth Rate 2014 5% 5-Year Compound Growth Rates 2010-2014 5% 10-Year Compound Growth Rates 2005-2014 5% 20-Year Compound Growth Rates 1995-2014 8% (4) (3) ... 9 1 1 9 8 9 9 14 9 $ $ $ $ $ 1 9 7 8 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ SYSCO CORPORATION - Form 10-K 7

  • Page 10
    THIS PAGE INTENTIONALLY LEFT BLANK

  • Page 11
    ... an aggregate of 586,765,938 shares of its common stock. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the company's 2014 Proxy Statement to be filed with the Securities and Exchange Commission no later than 120 days after the end of the fiscal year covered by this Form 10-K are incorporated by...

  • Page 12
    ... Accounting and Financial Disclosure ...91 Controls and Procedures...91 Other Information...91 PART III ITEM 10 ITEM 11 ITEM 12 ITEM 13 ITEM 14 92 Directors, Executive Officers and Corporate Governance...92 Executive Compensation...92 Security Ownership of Certain Beneficial Owners and Management...

  • Page 13
    ... or food-away-from-home industry. We provide products and related services to approximately 425,000 customers, including restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. Founded in 1969, Sysco commenced operations as a public company in...

  • Page 14
    ... concerning geographic areas, can be found in Note 21, "Business Segment Information," in the Notes to Consolidated Financial Statements in Item 8. Customers and Products Sysco's customers in the foodservice industry include restaurants, hospitals and nursing homes, schools and colleges, hotels and...

  • Page 15
    ...on shelf-life, supplier order fulfillment 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...

  • Page 16
    ... companies. Members of the corporate staff possess experience and expertise in, among other areas, accounting and finance, treasury, legal, cash management, information technology, employee benefits, engineering, real estate and construction, risk management and insurance, sales and marketing...

  • Page 17
    ... programs to transmit information on the hazards of certain chemicals present in products we distribute. We are also subject to regulation by numerous federal, state and local regulatory agencies, including, but not limited to, the U.S. Department of Labor, which sets employment practice...

  • Page 18
    ... products. Our sales do not generally fluctuate significantly on a seasonal basis; therefore, the business of the company is not deemed to be seasonal. As of June 28, 2014, we operated 194 distribution facilities throughout the U.S., Bahamas, Canada, Republic of Ireland and Northern Ireland. ITEM...

  • Page 19
    ... the merger with US Foods, or if the financial performance of Sysco, as the combined company, does not meet current expectations, then our ability to service the debt will be adversely impacted. Our credit ratings may also be impacted as a result of the incurrence of additional acquisition-related...

  • Page 20
    ... that are based on the cost of products we sell plus a percentage margin. As a result, our profit levels may be negatively impacted during periods of product cost deflation, even though our gross profit percentage may remain relatively constant. Our results of operations and financial condition may...

  • Page 21
    ... to meet our long-term strategic objectives to grow the profitability of our business depends largely on the success of the Business Transformation Project Our multi-year Business Transformation Project consists of: • the design and deployment of an Enterprise Resource Planning (ERP) system to...

  • Page 22
    ... the number of long-term contracts will increase as we progress with our category management initiative. Although our purchasing volume can provide benefits when dealing with suppliers, suppliers may not provide the foodservice products and supplies needed by us in the quantities and at the prices...

  • Page 23
    ... or our gross margins and profitability could be materially adversely affected. We may be unable to change our cost structure and pricing practices rapidly enough to successfully compete in such an environment. Expanding into international markets and complementary lines of business presents unique...

  • Page 24
    ... our cash flows, as well as the market value of our common stock. See "-Consummation of the merger will require Sysco to incur significant additional indebtedness, which could adversely impact our financial condition and may hinder our ability to obtain additional financing and pursue other business...

  • Page 25
    ... financial markets experience future declines At the end of fiscal 2012, we decided to freeze future benefit accruals under the company-sponsored qualified pension plan (Retirement Plan) as of December 31, 2012 for all U.S.-based salaried and non-union hourly employees. Effective January 1, 2013...

  • Page 26
    ... in thousands) The table below shows the number of distribution facilities occupied by Sysco in each state, province or country and the aggregate square footage devoted to cold and dry storage as of June 28, 2014. Location Alabama Alaska Arizona Arkansas California Colorado Connecticut District...

  • Page 27
    ... expiring at various dates from fiscal 2015 to fiscal 2032, exclusive of renewal options. We own our approximately 625,000 square foot headquarters office complex in Houston, Texas. In addition, we own our approximately 669,000 square foot shared services complex in Cypress, Texas. We are currently...

  • Page 28
    ... 23, 2015. Pursuant to the repurchase program, shares may be acquired in the open market or in privately negotiated transactions at the company's discretion, subject to market conditions and other factors. The Board of Directors has authorized us to enter into agreements from time to time to extend...

  • Page 29
    .../Staple Retail Index for Sysco's last five fiscal years. The graph assumes that the value of the investment in our Common Stock, the S&P 500 Index, and the S&P 500 Food/Staple Retail Index was $100 on the last trading day of fiscal 2009, and that all dividends were reinvested. Performance data for...

  • Page 30
    ... Foods acquisition unless specifically noted. Overview Sysco distributes food and related products to restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. Our operations are primarily located throughout the United States (U.S.), Bahamas, Canada...

  • Page 31
    ... foodservice market has created additional competitive pricing pressures which is in turn negatively impacting gross profits. Sales to our locally-managed customers, including independent restaurant customers, have not grown at the same rate as sales to our corporate-managed customers. Gross margin...

  • Page 32
    ...quality-assured Sysco brand products; the suite of services we provide to our customers such as business reviews and menu analysis; and our multi-regional presence in the U.S. and Canada. In addition, we have a portfolio of businesses spanning broadline, specialty meat, chain restaurant distribution...

  • Page 33
    ... chain restaurants, healthcare and educational institutions, hotels and motels, government and military organizations and retail locations. Following the completion of the proposed merger, the combined company will continue to be named Sysco and headquartered in Houston, Texas. At closing, Sysco...

  • Page 34
    ... Analysis of Financial Condition and Results of Operations The following tables outline our Business Transformation Project expenditures, that are attributable to our ERP system implementation and shared service support center, for the periods presented: 2014 Operating expense Capital expenditure...

  • Page 35
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Sales Sales for fiscal 2014 were 4.7% higher than fiscal 2013. Sales for fiscal 2014 increased as a result of product cost inflation and the resulting increase in selling prices, case volume growth,...

  • Page 36
    ... office expenses to continue to rise in fiscal 2015 as we expand our corporate capabilities including a new revenue management function, organizational changes that drive greater functional support in our broadline operations and additional investments in technology. 24 SYSCO CORPORATION - Form...

  • Page 37
    ...$0.06 in fiscal 2014 as compared to fiscal 2013, primarily from reduced pay-related expenses from our sales and information technology areas and lower retirement-related expenses, partially offset by increased costs from delivery pay-related expenses. We expect our cost per case in fiscal 2015 to be...

  • Page 38
    ... case as compared to fiscal 2012 primarily from reduced pay-related expenses from our sales and information technology areas, partially offset by increased costs from delivery and warehouse pay-related expenses, increased retirement-related expenses and fuel increases. 26 SYSCO CORPORATION - Form...

  • Page 39
    ... costs associated with our pending US Foods merger, a fiscal 2013 acquisition related charge, change in estimate for self-insurance costs, charges from a liability for a settlement, facility closure charges and amortization of US Foods financing costs. Management believes SYSCO CORPORATION - Form...

  • Page 40
    ... of our general corporate expense; as a result, our fiscal 2013 period excludes BTP costs when comparing to fiscal 2014, however it includes BTP costs when comparing to fiscal 2012. The company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and...

  • Page 41
    ...2012, respectively. The fiscal 2013 acquisition-related charge had no tax impact. Cost per case is an important metric management uses to measure our expense performance. This metric is calculated by taking the total operating expense of our North American Broadline companies, divided by the number...

  • Page 42
    ...Financial Statements and Supplementary Data within Part II Item 8 of this Form 10-K. Intersegment sales represent specialty produce and imported specialty products distributed by the Broadline and SYGMA operating companies. Management evaluates the performance of each of our operating segments based...

  • Page 43
    ... restaurant customers, hospitals, schools, hotels, industrial caterers and other venues where foodservice products are served. These companies also provide custom-cut meat operations. Broadline operations have significantly higher operating margins than the rest of Sysco's operations. In fiscal 2014...

  • Page 44
    ... costs from delivery and warehouse payrelated expenses, increased retirement-related expenses and fuel increases. SYGMA Segment SYGMA operating companies distribute a full line of food products and a wide variety of non-food products to certain chain restaurant customer locations. SYGMA operations...

  • Page 45
    ...imported products, a company that distributes to international customers and our Sysco Ventures platform, our suite of technology solutions that help support the business needs of our customers. These operating segments are discussed on an aggregate basis as they do not represent reportable segments...

  • Page 46
    ...-term financing prior to closing. After completion of the transaction, the equity holders of US Foods will own approximately 87 million shares, or roughly 13%, of Sysco. This merger is currently pending a regulatory review process by the Federal Trade Commission and we estimate the merger will close...

  • Page 47
    ...increases in sales. The year-over-year impact of the change in accounts payable is favorable to cash flow from operations due to working capital improvements in accounts payable as well as an increase in fiscal 2014 in accounts payable related to inventory in transit. Fiscal 2013 vs. Fiscal 2012 We...

  • Page 48
    ..., Washington. In addition, Sysco acquired for cash a company that distributes specialty imported products headquartered in Chicago, Illinois. Free Cash Flow Free cash flow represents net cash provided from operating activities less purchases of plant and equipment plus proceeds from sales of plant...

  • Page 49
    ...year. The level of option exercises, and thus proceeds, will vary from period to period and is largely dependent on movements in our stock price. We traditionally have engaged in Board-approved share repurchase programs. The number of shares acquired and their cost during the past three fiscal years...

  • Page 50
    PART II ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations Sysco and one of its subsidiaries, Sysco International, ULC, have a revolving credit facility supporting the company's U.S. and Canadian commercial paper programs. The facility provides for ...

  • Page 51
    ... the company's long-term debt to total capital ratio below a specified level. We are currently in compliance with all debt covenants. Other As part of normal business activities, we issue letters of credit through major banking institutions as required by certain vendor and insurance agreements. In...

  • Page 52
    ... Financial Statements in Item 8) and fixed fuel purchase commitments. Purchase obligations exclude full requirements electricity contracts where no stated minimum purchase volume is required. (6) In the second quarter of fiscal 2014, the company announced an agreement to merge with US Foods. Sysco...

  • Page 53
    ... that Sysco's pension plans are frozen, net company-sponsored pension cost is not as sensitive to discount rate changes as compared to when these plans were active. The expected long-term rate of return on plan assets of the Retirement Plan was 7.75% for fiscal 2014 and fiscal 2013. The expectations...

  • Page 54
    ... ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations We made cash contributions to our company-sponsored pension plans of $24.8 million and $93.6 million in fiscal years 2014 and 2013, respectively. There was no contribution to the Retirement Plan in fiscal...

  • Page 55
    ... incentive stock option. In such cases, we would record a tax benefit related to the tax deduction in an amount not to exceed the corresponding cumulative compensation cost recorded in the financial statements on the particular options multiplied by the statutory tax rate. SYSCO CORPORATION - Form...

  • Page 56
    ... 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...

  • Page 57
    ... in the cash outflows of interest payments on 10-year and 30-year debt expected to be issued in fiscal 2015. These forward starting swaps were recognized as a liability within the consolidated balance sheet at fair value within accrued expenses of $133.5 million. SYSCO CORPORATION - Form 10-K 45

  • Page 58
    ...borrowing cost and was designated as a fair value hedge since the swap hedges against the changes in fair value of fixed rate debt resulting from changes in interest rates. As of June 29, 2013, the fiscal 2014 swap was recognized as an asset within the consolidated balance sheet at fair value within...

  • Page 59
    ... fuel costs impact the costs we incur to deliver product to our customers. During each of fiscal 2014, 2013 and 2012, fuel costs related to outbound deliveries represented approximately 0.7% of sales. Fuel costs, excluding any amounts recovered through fuel surcharges, incurred by Sysco increased...

  • Page 60
    ... reduce our shareholders' equity on our balance sheet as of June 28, 2014 by $181.0 million. ITEM 8. Financial Statements and Supplementary Data Sysco Corporation and Subsidiaries Index to Consolidated Financial Statements Consolidated Financial Statements: Report of Management on Internal Control...

  • Page 61
    ... II ITEM 8 Financial Statements and Supplementary Data Report of Management on Internal Control Over Financial Reporting The management of Sysco Corporation ("Sysco") is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Sysco's internal...

  • Page 62
    ... Public Accounting Firm on Internal Control Over Financial Reporting The Board of Directors and Shareholders of Sysco Corporation We have audited Sysco Corporation (a Delaware Corporation) and subsidiaries' (the "Company") internal control over financial reporting as of June 28, 2014, based...

  • Page 63
    ... Public Accounting Firm on Consolidated Financial Statements The Board of Directors and Shareholders of Sysco Corporation We have audited the accompanying consolidated balance sheets of Sysco Corporation (a Delaware Corporation) and subsidiaries (the ''Company") as of June 28, 2014 and June 29, 2013...

  • Page 64
    PART II ITEM 8 Financial Statements and Supplementary Data Consolidated Balance Sheets (In thousands except for share data) June 28, 2014 June 29, 2013 ASSETS Current assets Cash and cash equivalents Accounts and notes receivable, less allowances of $49,902 and $47,345 Inventories Deferred ...

  • Page 65
    PART II ITEM 8 Financial Statements and Supplementary Data Consolidated Results Of Operations (In thousands except for share and per share data) Sales Cost of sales Gross profit Operating expenses Operating income Interest expense Other expense (income), net Earnings before income taxes Income ...

  • Page 66
    ...postretirement benefit plans amounts to net earnings, net of tax Pension funded status adjustment, net of tax Dividends declared Treasury stock purchases Share-based compensation awards BALANCE AS OF JUNE 28, 2014 765,174,900 See Notes to Consolidated Financial Statements 54 SYSCO CORPORATION - Form...

  • Page 67
    ... long-term liabilities Excess tax benefits from share-based compensation arrangements Net cash provided by operating activities Cash flows from investing activities: Additions to plant and equipment Proceeds from sales of plant and equipment Acquisition of businesses, net of cash acquired (Increase...

  • Page 68
    ...of food and related products primarily to the foodservice or food-away-from-home industry. These services are performed for approximately 425,000 customers from 194 distribution facilities located throughout the United States (U.S.), Bahamas, Canada, Ireland and Northern Ireland. Sysco's fiscal year...

  • Page 69
    ... in Corporate-Owned Life Insurance Investments in corporate-owned life insurance (COLI) policies are recorded at their cash surrender values as of each balance sheet date. Changes in the cash surrender value during the period are recorded as a gain or loss within operating expenses. The company does...

  • Page 70
    ... period of the related share-based compensation award. Cash flows resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) are classified as financing cash flows on the consolidated cash flows statements. Income Taxes Sysco recognizes...

  • Page 71
    ... effective tax rate. Acquisitions Acquisitions of businesses are accounted for using the purchase method of accounting, and the financial statements include the results of the acquired operations from the respective dates of acquisition. The purchase price of the acquired entities is allocated...

  • Page 72
    ... chain restaurants, healthcare and educational institutions, hotels and motels, government and military organizations and retail locations. Following completion of the proposed merger, the combined company will continue to be named Sysco and headquartered in Houston, Texas. 60 SYSCO CORPORATION...

  • Page 73
    ... million shares, or roughly 13% of Sysco. A representative from each of US Foods' two majority shareholders will join Sysco's Board of Directors upon closing. This merger is currently pending a regulatory review process by the Federal Trade Commission. The company estimates the merger will close by...

  • Page 74
    ... The carrying values of accounts receivable and accounts payable approximated their respective fair values due to the short-term maturities of these instruments. The fair value of Sysco's total debt is estimated based on the quoted market prices for the same or similar issue or on the current rates...

  • Page 75
    ... II ITEM 8 Financial Statements and Supplementary Data NOTE 8 Goodwill and Other Intangibles The changes in the carrying amount of goodwill and the amount allocated by reportable segment for the years presented are as follows: (In thousands) Carrying amount as of June 30, 2012 Goodwill acquired...

  • Page 76
    ... 2014, fiscal 2013 and fiscal 2012. The interest rate swaps do not contain credit-risk-related contingent features. NOTE 10 Self-Insured Liabilities Sysco maintains a self-insurance program covering portions of workers' compensation, general and vehicle liability and property insurance costs...

  • Page 77
    ... notes payable and commercial paper, are shown below: (In thousands) 2015 2016 2017 2018 2019 $ Amount 304,777 4,669 3,444 506,478 252,486 Short-term Borrowings As of June 28, 2014, Sysco had uncommitted bank lines of credit, which provided for unsecured borrowings for working capital of...

  • Page 78
    ... of time for general corporate purposes, which may include acquisitions, refinancing of debt, working capital, share repurchases and capital expenditures. In February 2013, Sysco repaid the 4.2% senior notes totaling $250.0 million at maturity utilizing a combination of cash flow from operations and...

  • Page 79
    ... to the MSP are limited by the amounts contributed by the company to the participant's 401(k) account. Sysco's expense related to its defined contribution plans was $118.6 million in fiscal 2014, $65.3 million in fiscal 2013, and $17.2 million in fiscal 2012. SYSCO CORPORATION - Form 10-K 67

  • Page 80
    ... II ITEM 8 Financial Statements and Supplementary Data De ned Bene t Plans Sysco maintains a qualified pension plan (Retirement Plan) that pays benefits to employees at retirement, using formulas based on a participant's years of service and compensation. At the end of fiscal 2012, Sysco approved...

  • Page 81
    ... value of plan assets at end of year (1) Information under Pension Benefits as of June 28, 2014 and June 29, 2013 includes both the Retirement Plan and the SERP. Components of Net Bene t Costs and Other Comprehensive Income The components of net company-sponsored pension costs for each fiscal year...

  • Page 82
    ...716 Employer Contributions The company made cash contributions to its company-sponsored pension plans of $24.8 million and $93.6 million in fiscal years 2014 and 2013, respectively. There were no required contributions to the Retirement Plan to meet ERISA minimum funding requirements in fiscal 2014...

  • Page 83
    ... long-term rate of return to be used in the calculation of fiscal 2015 net company-sponsored benefit costs for the Retirement Plan is 7.75%. Plan Assets Investment Strategy The company's overall strategic investment objectives for the Retirement Plan are to preserve capital for future benefit...

  • Page 84
    ... bid price based on a compilation of observable market information. Inputs used include yields, the underlying security "best price", adjustments for corporate actions and exchange prices of underlying and common stock of the same issuer. Equity securities valued at the closing price reported on...

  • Page 85
    ... II ITEM 8 Financial Statements and Supplementary Data The following table presents the fair value of the Retirement Plan's assets by major asset category as of June 28, 2014: Assets Measured at Fair Value as of June 28, 2014 (In thousands) Level 1 $ 218,165 135,781 (127) 353,819 $ Cash and cash...

  • Page 86
    ... the period Purchases and sales, net Transfers in and/or out of Level 3 BALANCE, JUNE 28, 2014 $ $ $ $ NOTE 15 Multiemployer Employee Bene t Plans De ned Bene t Pension Plans Sysco contributes to several multiemployer defined benefit pension plans in the U.S. and Canada based on obligations...

  • Page 87
    ... had a valuation date of December 31, 2012. As the valuation date for all of these plans was December 31, 2012, the company's estimate reflects the condition of the financial markets as of that date. Due to the lack of current information, management believes Sysco's current share of the withdrawal...

  • Page 88
    ... and Vicinity New York State Teamsters Conference Pension and Retirement Fund Truck Drivers and Helpers Local Union No. 355 Retirement Pension Fund Minneapolis Food Distributing Industry Pension Plan $ 2014 21,893 $ 1,977 1,444 1,874 3,214 2013 20,561 $ 2,256 1,399 1,624 2,976 2012 19,829...

  • Page 89
    ...the related tax effects for each of the years presented is as follows: Location of Expense (Income) Recognized in Net Earnings 2014 Before Tax Amount Tax Net of Tax Amount (In thousands) Pension and other postretirement bene t plans: Reclassification adjustments: Amortization of prior service cost...

  • Page 90
    ... II ITEM 8 Financial Statements and Supplementary Data (In thousands) Location of Expense (Income) Recognized in Net Earnings 2012 Before Tax Amount Tax Net of Tax Amount Pension and other postretirement bene t plans: Reclassification adjustments: Amortization of prior service cost Amortization...

  • Page 91
    ... compensation benefits to employees and non-employee directors under several share-based payment arrangements including various employee stock option plans, a non-employee director plan and the Employees' Stock Purchase Plan. Stock Incentive Plans In November 2013, Sysco's Long-term Incentive Plan...

  • Page 92
    ... by the non-employee director that is subsequent to the award's stated vesting date. The fair value of the restricted awards is based on the company's stock price as of the date of grant. The weighted average grant-date fair value of the shares granted during fiscal 2014, 2013 and 2012 was $33.40...

  • Page 93
    ...33 per share during fiscal 2014, 2013 and 2012, respectively. The fair value of the stock purchase rights was calculated as the difference between the stock price at date of issuance and the employee purchase price. All Share-Based Payment Arrangements The total share-based compensation cost that...

  • Page 94
    ... benefits Pension Share-based compensation Deferred compensation Self-insured liabilities Receivables Inventory Cash flow hedge Other Total deferred tax assets TOTAL NET DEFERRED TAX (ASSETS) LIABILITIES $ $ The company's net operating tax loss carryforwards as of June 28, 2014 and June 29, 2013...

  • Page 95
    PART II ITEM 8 Financial Statements and Supplementary Data The effective tax rate of 35.87% for fiscal 2013 was favorably impacted primarily by two items. First, the company recorded a tax benefit of $14.0 million related to changes in estimates for the prior year domestic tax provision. Second, ...

  • Page 96
    ... where foodservice products are served. These companies also provide custom-cut meat operations. SYGMA operating companies distribute a full line of food products and a wide variety of non-food products to certain chain restaurant customer locations. "Other" financial information is attributable...

  • Page 97
    ... financial statements. Intersegment sales represent specialty produce and imported specialty products distributed by the Broadline and SYGMA operating companies. Management evaluates the performance of each of our operating segments based on its respective operating income results. Corporate...

  • Page 98
    ...and debentures of Sysco Corporation. Borrowings under the company's revolving credit facility supporting the company's U.S. and Canadian commercial paper programs and the company's US Foods acquisition bridge facility are also covered under these guarantees. As of June 28, 2014, Sysco had a total of...

  • Page 99
    PART II ITEM 8 Financial Statements and Supplementary Data The following condensed consolidating financial statements present separately the financial position, comprehensive income and cash flows of the parent issuer (Sysco Corporation), the guarantors (the majority of Sysco's U.S. Broadline ...

  • Page 100
    PART II ITEM 8 Financial Statements and Supplementary Data (In thousands) Sales Cost of sales Gross profit Operating expenses Operating income (loss) Interest expense (income) Other expense (income), net Earnings (losses) before income taxes Income tax (benefit) provision Equity in earnings of ...

  • Page 101
    ...Operating activities Investing activities Financing activities Effect of exchange rate on cash Intercompany activity Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ $ $ $ SYSCO CORPORATION...

  • Page 102
    ...) Sales Cost of sales Gross profit Operating expenses Operating income Interest expense Other (income), net Earnings before income taxes Income taxes NET EARNINGS Per share: BASIC NET EARNINGS DILUTED NET EARNINGS Dividends declared Market price - high/low PERCENTAGE CHANGE - 2014 VS. 2013: Fiscal...

  • Page 103
    ..., 2014, our chief executive officer and chief financial officer concluded that, as of such date, Sysco's disclosure controls and procedures were effective at the reasonable assurance level. Management's report on internal control over financial reporting is included in the financial statement pages...

  • Page 104
    ... by reference thereto: "Stock Ownership" and "Equity Compensation Plan Information." ITEM 13 Certain Relationships and Related Transactions, and Director Independence The information required by this item will be included in our proxy statement for the 2014 Annual Meeting of Stockholders under the...

  • Page 105
    ... within Item 8. Financial Statements and Supplementary Data. Exhibits. 3. The exhibits listed on the Exhibit Index immediately preceding such exhibits, which is hereby incorporated herein by reference, are filed or furnished as part of this Annual Report on Form 10-K. SYSCO CORPORATION - Form 10...

  • Page 106
    ... Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on this 25th day of August, 2014. SYSCO CORPORATION By /s/ WILLIAM J. DELANEY William J. DeLaney President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report...

  • Page 107
    ... meet our long-term strategic objectives to grow the profitability of our business depends largely on the success of our Business Transformation Project. Periods of high inflation, either overall or in certain product categories, can have a negative impact on us and our customers, as high food costs...

  • Page 108
    1390 Enclave Parkway Houston, Texas 77077-2099 281.584.1390 www.sysco.com View this online annual report at: www.sysco.com/OnlineAnnual2014 Cover and narrative printed on FSC®-certified, 100% post-consumer recycled paper, and paper made from environmentally responsible Eucalyptus pulp. The use of...