SYSCO CORP 10-Q Summary: Quarter Ended October 1, 1994
Business Context and Reporting Period
This Form 10-Q covers the 13-week period ended October 1, 1994 (First Quarter of Fiscal 1995). The financial statements are unaudited, except for the July 2, 1994 balance sheet which was taken from the audited Fiscal 1994 Annual Report. The filing has been reviewed by Arthur Andersen LLP.
Key Financial Metrics
| Metric | Q1 1995 (Oct 1) | Q1 1994 (Oct 2) |
|---|---|---|
| Sales | $2,983,096 | $2,709,874 |
| Net Earnings | $58,366 | $48,060 |
| Earnings Per Share | $0.32 | $0.26 |
| Operating Margin | 3.2% | 3.3% |
| Net Cash from Operations | $15,232 | $23,079 |
| Total Debt (Current + Long-term) | $576,948 | $549,476 |
| Cash and Equivalents | $75,481 | $61,907 |
Note: All figures in thousands except per share data. Operating margin calculated as (Sales - Cost of Sales - Operating Expenses) / Sales.
Material Changes vs. Prior Period
- Revenue Growth: Sales increased 10.1% to $2.98 billion, driven by volume and new business acquisitions.
- Profitability: Net earnings rose 21.4% to $58.4 million. Earnings per share increased from $0.26 to $0.32.
- Expense Trends: Operating expenses increased slightly as a percentage of sales due to start-up costs for new business and higher operating costs for recently acquired companies.
- Interest Expense: Declined from $9.6 million to $8.5 million, primarily due to the expiration of an interest rate swap in December 1993.
- Tax Impact: The prior year included a $4.9 million tax provision related to the Omnibus Budget Reconciliation Act of 1993. Excluding this, the effective tax rate for both periods was 39.7%.
- Cash Flow: Net cash provided by operating activities decreased to $15.2 million from $23.1 million, largely due to higher increases in receivables and inventories.
Guidance, Outlook, and Risks
The filing does not provide specific forward-looking financial guidance or numerical targets for the remainder of the fiscal year. Management notes that liquidity and capital resources remain consistent with the prior year's 10-K, with the exception of the stock repurchase program.
- Stock Repurchases: The company continues its repurchase program. In the first quarter of Fiscal 1995, 531,700 shares were purchased. The Board had previously authorized an additional 10 million shares in September 1993.
- Dividends: Dividends paid per common share increased to $0.09 from $0.07 in the prior year.
- Risks/Contingencies: No specific new risks or contingencies were detailed in this excerpt beyond standard operational costs associated with new business integration.
Investor Verification Checklist
- Verify the impact of "start-up costs" and "higher than average operating costs" of recently acquired companies on future margin expansion.
- Confirm the sustainability of the 10.1% sales growth rate given the heavy investment in receivables and inventories.
- Review the details of the interest rate swap expiration to understand future interest expense volatility.
- Monitor the cash burn rate relative to operating cash flow, as net cash from operations declined significantly year-over-year.
- Check the remaining authorization under the stock repurchase program to assess potential future share count reduction.