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SYSCO CORPORATION-Form10-K 37
PARTII
ITEM7Management’s Discussion and Analysis ofFinancial Condition and Results of Operations
Free cash  ow should not be used as a substitute in assessing the company’s liquidity for the periods presented. An analysis of any non-GAAP  nancial
measure should be used in conjunction with results presented in accordance with GAAP. In the tables that follow, free cash  ow for each period presented
is reconciled to net cash provided by operating activities.
(Dollars Inthousands)
2014 2013 Change in Dollars % Change
Net cash provided by operating activities (GAAP) $ 1,492,815 $ 1,511,594 $ (18,779) (1.2)%
Additions to plant and equipment (523,206) (511,862) (11,344) (2.2)
Proceeds from sales of plant and equipment 25,790 15,527 10,263 66.1
FREE CASH FLOW (NON-GAAP) $ 995,399 $ 1,015,259 $ (19,860) (2.0)%
(Dollars Inthousands)
2013 2012 Change in Dollars % Change
Net cash provided by operating activities (GAAP) $ 1,511,594 $ 1,404,180 $ 107,414 7.6%
Additions to plant and equipment (511,862) (784,501) 272,639 34.8
Proceeds from sales of plant and equipment 15,527 8,185 7,342 89.7
FREE CASH FLOW (NON-GAAP) $ 1,015,259 $ 627,864 $ 387,395 61.7%
Financing Activities
Equity Transactions
Proceeds from exercises of share-based compensation awards were $255.6 million in  scal 2014, $628.7 million in  scal 2013 and $99.4 million in  scal
2012. The level of proceeds in each year is directly related to the number of options exercised in each 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  scal years
were 10,059,000 shares for $332.4 million in  scal 2014, 21,672,403 shares for $721.6 million in  scal 2013 and 10,000,000 shares for $272.3million in
scal 2012. No additional shares were repurchased through August 13, 2014, resulting in a remaining authorization by our Board of Directors to repurchase
up to 11,655,197 shares, based on the trades made through that date. Our share repurchase strategy is to purchase enough shares to keep our average
shares outstanding relatively constant over time, excluding the impact of the 87 million shares to be issued upon closing of the potential merger with
USFoods. The number of shares we repurchase in  scal 2015 will be dependent on many factors, including the level of future stock option exercises
aswell as competing uses for available cash.
We have made dividend payments to our shareholders in each  scal year since our company’s inception over 40 years ago. We target a dividend payout
of 40% to 50% of net earnings. We paid in excess of that range in  scal 2014 and  scal 2013 primarily due to increased expenses from our Certain Items.
We believe, as we realize bene ts from our Business Transformation Project, our dividend payout will return to this targeted range. Dividends paid were
$667.2 million, or $1.14 per share, in  scal 2014, $648.3 million, or $1.10 per share, in  scal 2013 and $622.9 million, or $1.06 per share, in  scal 2012.
In May 2014, we declared our regular quarterly dividend for the  rst quarter of  scal 2015 of $0.29 per share, which was paid in July 2014.
In November 2000, we  led with the SEC a shelf registration statement covering 30,000,000 shares of common stock to be offered from time to time in
connection with acquisitions. As of August 13, 2014, 29,477,835 shares remained available for issuance under this registration statement.
Debt Activity and Borrowing Availability
Short-term Borrowings
We have uncommitted bank lines of credit, which provided for unsecured borrowings for working capital of up to $95.0 million, of which none was
outstanding as of June 28, 2014 or August 13, 2014.
The company’s Irish subsidiary, Pallas Foods, has a multicurrency revolving credit facility, which provides for capital needs for the company’s European
subsidiaries. In September 2013, this facility was extended and increased to €100.0 million (Euro). This facility provides for unsecured borrowings and
expires September 24, 2014, but is subject to extension. Outstanding borrowings under this facility were €52.0 million (Euro) as of June 28, 2014 and
August 13, 2014.
On June 30, 2011, a Canadian subsidiary of Sysco entered into a short-term demand loan facility for the purpose of facilitating a distribution from the
Canadian subsidiary to Sysco, and Sysco concurrently entered into an agreement with the bank to guarantee the loan. The amount borrowed was $182.0
million and was repaid in full on July 4, 2011.
Commercial Paper and Revolving Credit Facility
We have a Board-approved commercial paper program allowing us to issue short-term unsecured notes in an aggregate amount not to exceed $1.3 billion.