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SYSCO CORPORATION-Form10-K 1
PARTI
ITEM1 Business
Unless this Form 10-K indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “Sysco,” or “the company” as used in this Form10-K
refer to Sysco Corporation together with its consolidated subsidiaries and divisions.
Overview
Sysco Corporation, acting through its subsidiaries and divisions, is the largest North American distributor of food and related products primarily to the
foodservice 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 March 1970 when the stockholders of nine companies exchanged their stock
for Sysco common stock. Since our formation, we have grown from $115.0 million to $46.5 billion in annual sales, both through internal expansion of
existing operations and through acquisitions.
Sysco’s  scal year ends on the Saturday nearest to June 30
th
. This resulted in a 52-week year ending June 28, 2014 for  scal 2014, June 29, 2013 for
scal 2013 and June 30, 2012 for  scal 2012.
Sysco Corporation is organized under the laws of Delaware. The address and telephone number of our executive of ces are 1390 Enclave Parkway, Houston,
Texas 77077-2099, (281) 584-1390. This annual report on Form 10-K, as well as all other reports  led or furnished by Sysco pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, are available free of charge on Sysco’s website at www.sysco.com as soon as reasonably practicable after
they are electronically  led with or furnished to the Securities and Exchange Commission.
Proposed Merger with US Foods
In the second quarter of  scal 2014, Sysco announced an agreement to merge with US Foods, Inc. (US Foods). US Foods is a leading foodservice
distributorin the United States (U.S.) that markets and distributes fresh, frozen and dry food and non-food products to more than 200,000 foodservice
customers including independently owned single location restaurants, regional and national 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.
As of the time the merger agreement was announced in December 2013, Sysco agreed to pay approximately $3.5 billion for the equity of US Foods,
comprised of $3 billion of Sysco common stock and $500 million of cash. As part of the transaction, Sysco will also assume or re nance US Foods’ net debt,
which was approximately $4.7 billion as of September 28, 2013, bringing the total enterprise value to $8.2 billion at the time of the merger announcement.
As of August 13, 2014, the merger consideration is estimated as follows: approximately $3.7 billion for the equity of US Foods, comprised of $3.2 billion
of Sysco common stock valued using the seven day average through August 13, 2014, and $500 million of cash. US Foods’ net debt to be assumed or
re nanced was approximately $4.8 billion as of June 28, 2014, bringing the total enterprise value to $8.5 billion as of August 13, 2014. The value of Sysco’s
common stock and the amount of US Foods’ net debt will  uctuate. As such, the components of the transaction and total enterprise value noted above
will not be  nalized until the merger is consummated.
We have secured a fully committed bridge  nancing and expect to issue longer-term  nancing 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. 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. We expect the transaction to close by the end of the third quarter or in the fourth quarter of calendar 2014. Under certain conditions,
including lack of regulatory approval, Sysco would be obligated to pay $300 million to the owners of US Foods if the merger were cancelled, which
would be recognized as an expense.