Sysco Reports Third Quarter Net Earnings of $260 Million and Diluted EPS of $0.44

Sysco Reports Third Quarter Net Earnings of $260 Million and Diluted EPS of
$0.44

Sales of $10.5 Billion Are the Highest on Record for the Third Quarter

HOUSTON, May 7, 2012 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE:SYY) today
announced financial results for its 13-week third fiscal quarter ending March
31, 2012.

Third Quarter Fiscal 2012 Highlights

  *Sales were $10.5 billion, an increase of 7.6% from $9.8 billion in the
    third quarter of fiscal 2011.
  *Operating income was $439 million, an increase of 2.7%, compared to $427
    million in last year's third quarter.
  *Adjusted^1 operating income was $487 million, an increase of 0.9% compared
    to $483 million in last year's third quarter.
  *Diluted earnings per share (EPS) were $0.44, which was flat compared to
    $0.44 in last year's third quarter.
  *Adjusted^1 diluted EPS was $0.49, an increase of 2.1% compared to $0.48 in
    last year's third quarter.

Year-To-Date Fiscal 2012 Highlights

  *Sales were $31.3 billion, an increase of 8.4% from $28.9 billion in the
    first 39 weeks of fiscal 2011.
  *Operating income was $1.4 billion, an increase of 0.3% compared to the
    prior year period.
  *Adjusted^1 operating income increased 3.2%, compared to the prior year
    period.
  *Diluted EPS was $1.38, a decrease of 0.7% compared to EPS of $1.39 in the
    prior year.
  *Adjusted^1 diluted EPS was $1.50, an increase of 4.2% compared to $1.44 in
    the prior year period.

"I am pleased with our volume growth trends as we grew our business throughout
the quarter by remaining focused on supporting the success of our customers,"
said Bill DeLaney, Sysco's president and chief executive officer. "Adjusted
earnings growth fell short of our expectations, however, and our leadership
team is fully committed to improving upon this aspect of our performance as we
complete our fourth quarter and approach the beginning of the new fiscal
year."

^1 "Adjusted" financial results are non-GAAP financial measures. See Non-GAAP
Reconciliations on page 9 for more information.

Third Quarter Fiscal 2012 Summary

Sales for the third quarter were $10.5 billion, an increase of 7.6% compared
to sales in the same period last year.Food cost inflation, as measured by the
estimated change in Sysco's product costs, was 5.5%. While the company's
overall rate of inflation has recently eased somewhat, inflation remains at a
high level, with double-digit price increases in the meat and poultry
categories. Sales from acquisitions (within the last 12 months) increased
sales by 0.7%, and the impact of changes in foreign exchange rates for the
third quarter decreased sales by 0.2%. Case volume for the company's Broadline
and SYGMA operations combined grew 2.9% during the quarter including
acquisitions, and 2.3% excluding acquisitions.

Gross profit for the third quarter was $1.9 billion, an increase of 2.1%,
compared to the prior year. Operating expenses in the third quarter increased
$28 million, or 2.0%, compared to operating expenses in the prior year period.
This was due mainly to a $29 million increase in payroll expense, a $24
million increase in gross business transformation expenses and a $10 million
increase in fuel expense. These increases were partially offset by a $36
million charge in the prior year quarter related to the withdrawal of an
operating company from a multi-employer pension plan (MEPP), which created a
favorable year-over-year variance. Adjusted operating expenses increased 2.6%.

Operating income was $439 million in the third quarter, increasing $11
million, or 2.7% compared to operating income in the prior year. Adjusted
operating income increased 0.9%. 

Net earnings for the third quarter were $260 million, an increase of $1
million, or 0.4%, compared to net earnings in the prior year. Diluted EPS in
the third quarter of fiscal 2012 was $0.44 which was flat compared to last
year's third quarter. Adjusted EPS was $0.49, an increase of 2.1% compared to
the prior year period.

Year-To-Date Fiscal 2012 Summary

Sales for the first 39 weeks of fiscal 2012 were $31.3 billion, an increase of
8.4% compared to sales in the same period last year.Food cost inflation for
the period was 6.3%. Inflation continued to be broad-based, but was impacted
most significantly by increased prices for meat and canned/dry products. In
addition, sales from acquisitions (within the last 12 months) increased sales
by 0.7%, and the impact of changes in foreign exchange rates for the first 39
weeks increased sales by 0.1%. Case volume for the company's Broadline and
SYGMA operations combined grew 2.7% during the first 39 weeks including
acquisitions, and 2.1% excluding acquisitions.

Gross profit for the first 39 weeks was $5.7 billion, an increase of 4.1%,
compared to the prior year. Operating expenses in the first 39 weeks increased
$220 million, or 5.4%, compared to operating expenses in the prior year
period. This was due mainly to a $127 million increase in payroll expense, a
$52 million increase in gross business transformation expenses and a $34
million increase in fuel expense. Adjusted operating expenses increased 4.5%.

Operating income was $1.4 billion in the first 39 weeks, increasing $4
million, or 0.3% compared to operating income in the prior year. Adjusted
operating income increased 3.2%.

Net earnings for the first 39 weeks were $812 million, a decrease of $3
million, or 0.4%, compared to net earnings in the prior year period. Diluted
EPS in the first 39 weeks of fiscal 2012 was $1.38 compared to last year's
diluted EPS of $1.39. Adjusted EPS for the first 39 weeks of fiscal 2012 was
$1.50, an increase of 4.2% compared to adjusted EPS of $1.44 in the prior year
period.

Cash Flow and Capital Spending

Cash flow from operations was $908 million for the first 39 weeks of fiscal
2012 compared to $666 million in the prior year period. Capital expenditures
totaled $199 million for the third quarter, and $633 million in the first 39
weeks of the fiscal year. This includes spending related to the company's
business transformation project of $39 million for the third quarter and $118
million for the first 39 weeks of fiscal 2012. The primary areas for
investment included facility replacements and expansions, replacements to
Sysco's fleet, and technology.

Conference Call & Webcast

Sysco's third quarter fiscal 2012 earnings conference call will be held on
Monday, May 7, 2012 at 10:00 a.m. Eastern.

For purposes of public disclosure, Sysco plans to use the investor relations
portion of its website as the primary channel for publishing key information
to its investors, some of which may contain material and previously non-public
information. As a result, a live webcast of the call, a copy of this press
release and a slide presentation, will be available online at www.sysco.com in
the Investors section.

About Sysco

Sysco is the global leader in selling, marketing and distributing food
products to restaurants, healthcare and educational facilities, lodging
establishments and other customers who prepare meals away from home. Its
family of products also includes equipment and supplies for the foodservice
and hospitality industries. The company operates 177 distribution facilities
serving approximately 400,000 customers. For the fiscal year 2011 that ended
July 2, 2011 the company generated record sales of more than $39 billion. For
more information about Sysco visit the company's Internet home page at
www.sysco.com and for investor relations news follow us at
www.twitter.com/SyscoStock.

The Sysco Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=747

Business Risks

General risks associated with our business include the risk of interruption of
supplies due to lack of long-term contracts, severe weather, work stoppages or
otherwise, inflation risks, the impact of fuel prices, and labor issues.Risks
and uncertainties also include risks impacting the economy generally,
including the risk that the current economic downturn will continue, or that
consumer confidence in the economy may not increase and decreases in consumer
spending, particularly on food prepared outside the home, may not reverse.
Also, there are risks related to our Business Transformation Project,
including that the expected costs of our Business Transformation Project in
fiscal 2012 may be greater or less than currently expected because we may
encounter the need for changes in design or revisions of the project calendar
and budget, including the incurrence of expenses at an earlier or later time
than currently anticipated; the risk that our business and results of
operations may be adversely affected if we experience operating problems,
scheduling delays, cost overages or limitations on the extent of the business
transformation during the ERP implementation process; and the risk of adverse
effects if the ERP system, and the associated process changes, do not prove to
be cost effective or result in the cost savings and other benefits that we
anticipate. In fiscal 2011, we took additional time to test the underlying ERP
system and are taking additional time in fiscal 2012 to improve the underlying
systems prior to larger scale development, and these actions have caused a
delay in the project; until we reach the point where the underlying system
functions as intended, our development timeline is uncertain.Capital
expenditures may vary from those projected based on changes in business plans
and other factors, including risks related to the implementation of our
Business Transformation Project and our regional distribution centers, the
timing and successful completions of acquisitions, construction schedules and
the possibility that other cash requirements could result in delays or
cancellations of capital spending. Fuel expense may vary from projections
based on fluctuations in fuel costs, which are impacted by general economic
conditions beyond our control. In the past, increased fuel prices have
significantly increased our costs and reduced consumers' demand for meals
served away from home.For a discussion of additional factors impacting
Sysco's business, see the Company's Annual Report on Form 10-K for the year
ended July 2, 2011, as filed with the Securities and Exchange Commission.

                                                             
Sysco Corporation and
its Consolidated                                              
Subsidiaries
CONSOLIDATED RESULTS OF                                       
OPERATIONS (Unaudited)
(In Thousands, Except
for Share and Per Share                                       
Data)
                                                             
                       13-Week Period Ended     39-Week Period Ended
                       Mar. 31, 2012 Apr. 2, 2011 Mar. 31, 2012 Apr. 2, 2011
                                                             
Sales                   $10,504,746 $9,761,660 $31,335,557 $28,897,786
Cost of sales           8,633,130    7,929,111   25,670,691   23,457,466
Gross profit            1,871,616    1,832,549   5,664,866    5,440,320
Operating expenses      1,432,786    1,405,062   4,289,698    4,069,568
Operating income        438,830      427,487     1,375,168    1,370,752
Interest expense        28,290       28,972      86,088       88,133
Other expense (income), (2,248)      (6,957)     (5,470)      (9,941)
net
Earnings before income  412,788      405,472     1,294,550    1,292,560
taxes
Income taxes            153,238      146,994     482,234      476,840
Net earnings            $259,550    $258,478   $812,316    $815,720
                                                             
Net earnings:                                                 
Basic earnings per      $0.44       $0.44      $1.38       $1.39
share
Diluted earnings per    0.44         0.44        1.38         1.39
share
                                                             
Average shares          585,823,393  583,722,009 588,004,593  585,792,383
outstanding
Diluted shares          587,214,691  585,421,864 589,232,150  587,878,509
outstanding
                                                             
Dividends declared per  $0.27       $0.26      $0.80       $0.77
common share
                                                             

                                                              
Sysco Corporation and its                                      
Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS                                    
(Unaudited)
(In Thousands, Except for Share                                
Data)
                                    Mar. 31, 2012 Jul. 2, 2011  Apr. 2, 2011
                                                              
ASSETS                                                         
Current assets                                                 
Cash and cash equivalents            $350,464    $639,765    $385,668
Accounts and notes receivable, less
allowances of $82,762, $42,436 and   3,094,175    2,898,283    2,926,033
$86,668
Inventories                          2,250,460    2,073,766    2,047,371
Deferred income taxes                144,131      --          --
Prepaid expenses and other current   85,712       72,496       79,485
assets
Prepaid income taxes                 --          48,572       --
Total current assets                 5,924,942    5,732,882    5,438,557
Plant and equipment at cost, less    3,846,870    3,512,389    3,419,862
depreciation
Other assets                                                   
Goodwill                            1,659,818    1,633,289    1,596,727
Intangibles, less amortization       116,011      109,938      101,518
Restricted cash                      140,287      110,516      110,488
Other assets                         204,185      286,541      282,782
Total other assets                   2,120,301    2,140,284    2,091,515
Total assets                         $11,892,113 $ 11,385,555 $ 10,949,934
                                                              
LIABILITIES AND SHAREHOLDERS' EQUITY                           
Current liabilities                                            
Notes payable                        $3,250      $181,975    $2,250
Accounts payable                     2,285,744    2,183,417    2,143,219
Accrued expenses                     870,674      856,569      800,155
Accrued income taxes                 88,112       --          84,838
Deferred income taxes                --          146,083      98,946
Current maturities of long-term debt 455,972      207,031      7,042
Total current liabilities            3,703,752    3,575,075    3,136,450
Other liabilities                                              
Long-term debt                       2,412,477    2,279,517    2,663,470
Deferred income taxes                245,496      204,223      130,453
Other long-term liabilities          652,373      621,498      812,356
Total other liabilities              3,310,346    3,105,238    3,606,279
Commitments and contingencies                                  
Shareholders' equity                                           
Preferred stock, par value $1 per
share, Authorized 1,500,000 shares,  --          --          --
issued none
Common stock, par value $1 per
share, Authorized 2,000,000,000      765,175      765,175      765,175
shares, issued 765,174,900 shares
Paid-in capital                      923,189      887,754      861,835
Retained earnings                    8,024,536    7,681,669    7,499,532
Accumulated other comprehensive loss (286,623)    (259,958)    (330,060)
Treasury stock at cost,
179,884,245,173,597,346 and         (4,548,262)  (4,369,398)  (4,589,277)
182,347,524 shares
Total shareholders' equity           4,878,015    4,705,242    4,207,205
Total liabilities and shareholders'  $11,892,113 $ 11,385,555 $ 10,949,934
equity
                                                              

                                                                
Sysco Corporation and its Consolidated Subsidiaries              
CONSOLIDATED CASH FLOWS (Unaudited)                              
(In Thousands)                                                   
                                                   39-Week Period Ended
                                                   Mar. 31, 2012 Apr. 2, 2011
Cash flows from operating activities:                            
Net earnings                                        $812,316    $815,720
Adjustments to reconcile net earnings to cash                    
provided by operating activities:
Share-based compensation expense                    54,328       48,518
Depreciation and amortization                       304,966      298,307
Deferred income taxes                               (276,947)    (244,658)
Provision for losses on receivables                 29,663       35,624
Other non-cash items                                (1,267)      (7,286)
Additional investment in certain assets and                      
liabilities, net of effect of businesses acquired:
(Increase) in receivables                           (225,668)    (301,932)
(Increase) in inventories                           (167,964)    (244,636)
(Increase) in prepaid expenses and other current    (10,380)     (7,486)
assets
Increase in accounts payable                        104,239      158,488
Increase (decrease) in accrued expenses             4,117        (83,826)
Increase in accrued income taxes                    141,784      83,580
Decrease (increase) in other assets                 67,443       (26,622)
Increase in other long-term liabilities             71,674       142,253
Excess tax benefits from share-based compensation   (15)         (285)
arrangements
Net cash provided by operating activities           908,289      665,759
                                                                
Cash flows from investing activities:                            
Additions to plant and equipment                    (633,196)    (454,054)
Proceeds from sales of plant and equipment          5,852        15,286
Acquisition of businesses, net of cash acquired     (83,354)     (35,486)
Maturities of short-term investments                --          24,713
(Increase) decrease in restricted cash              (29,771)     14,000
Net cash used for investing activities              (740,469)    (435,541)
                                                                
Cash flows from financing activities:                            
Bank and commercial paper borrowings (repayments)   211,267      188,249
net
Other debt borrowings                              3,090        2,592
Other debt repayments                               (6,424)      (6,516)
Debt issuance costs                                 (977)        (7)
Proceeds from common stock reissued from treasury   82,545       103,328
for share-based compensation awards
Treasury stock purchases                            (272,299)    (291,600)
Dividends paid                                      (464,809)    (445,406)
Excess tax benefits from share-based compensation   15           285
arrangements
Net cash used for financing activities              (447,592)    (449,075)
Effect of exchange rates on cash                    (9,529)      19,082
Net (decrease) in cash and cash equivalents         (289,301)    (199,775)
Cash and cash equivalents at beginning of period    639,765      585,443
Cash and cash equivalents at end of period          $350,464    $385,668
                                                                
Supplemental disclosures of cash flow information:               
Cash paid during the period for:                                 
Interest                                            $109,618    $111,924
Income taxes                                        617,640      657,961
                                                                

                                                                                                                 
Sysco Corporation and its Consolidated Subsidiaries                                                               
COMPARATIVE SEGMENT DATA(Unaudited)                                                                                           
(In Thousands)                                                                                                                 
                                                                             13-Week Period Ended   39-Week Period Ended
                                                                             Mar. 31, 2012 Apr. 2,    Mar. 31, 2012 Apr. 2,
                                                                                            2011                     2011
Sales:                                                                                                            
Broadline                                                                     $8,513,483  $         $25,493,000 $
                                                                                            7,910,994                23,453,164
SYGMA                                                                         1,445,214    1,315,439 4,233,238    3,947,705
Other                                                                         586,440      586,050   1,734,123    1,627,588
Intersegment                                                                 (40,391)     (50,823)  (124,804)    (130,671)
Total                                                                        $10,504,746 $         $31,335,557 $
                                                                                            9,761,660                28,897,786

                                                                                                                 

ComparativeSupplementalStatisticalInformationRelatedtoSales(Unaudited)                                     
Comparative Sysco Brand Sales and Marketing Associate-Served Sales data are summarized below.
                                                                                                                 
                                                                             13-Week Period Ended   39-Week Period Ended
                                                                             Mar. 31, 2012 Apr. 2,    Mar. 31, 2012 Apr. 2,
                                                                                            2011                     2011
Sysco Brand Sales as a % of MA-Served Sales                                  45.97%        45.64%     46.13%        45.77%
Sysco Brand Sales as a % of Broadline Sales                                  35.49%        35.84%     35.83%        36.21%
MA-Served Sales as a % of Broadline Sales                                     42.21%        42.49%     43.72%        43.90%
                                                                                                                 
Data excludes U.S. Meat operations
                                                                                                                 

                                                                
Sysco Corporation and its Consolidated Subsidiaries
Non-GAAP Reconciliation(Unaudited)
Impact of Business Transformation Expenses, Multiemployer Pension Plan
Expenses, COLI and Tax Benefits
(In Thousands, Except for Share and Per Share Data)
                                                                
Sysco's results of operations are impacted by costs from our multi-year
Business Transformation Project, significant charges from the withdrawal from
multiemployer pension plan and recognized tax benefits.Additionally, near the
end of fiscal 2011, we reallocated all of our investments in our COLI policies
into low-risk, fixed-income securities and therefore we do not expect
significant volatility in operating expenses, operating income, net earnings
and diluted earnings per share in future periods related to these policies.We
experienced significant gains in these policies during fiscal 2011.Management
believes that adjusting its operating expenses, operating income, net earnings
and diluted earnings per share to remove the impact of the Business
Transformation Project expenses, multiemployer pension plan charges, COLI
gains and tax benefits provides an important perspective of underlying
business trends and results and provides meaningful supplemental information
to both management and investors that is indicative of the performance of the
company's underlying operations and facilitates comparison on a year-over year
basis.
The company uses these non-GAAP measures when evaluating its financial results
as well as for internal planning and forecasting purposes.These financial
measures should not be used as a substitute in assessing the company's results
of operations for the periods presented.An analysis of any non-GAAP financial
measure should be used in conjunction with results presented in accordance
with GAAP.As a result, in the tables that follow, each period presented is
adjusted to remove expenses related to the Business Transformation Project,
significant charges incurred from the withdrawal from a multiemployer pension
plan, gains recorded on the adjustments to the carrying value of COLI policies
and to remove the impact of tax benefits in fiscal 2011.
                                                                
                                                                
                      13 Week Period   13 Week Period   13 Week     13 Week
                     Ended Mar. 31,   Ended Apr. 2,    Period      Period %
                      2012             2011             Change in   Change
                                                        Dollars
Operating expenses    $1,432,786     $1,405,062     $27,724   2.0%
(GAAP)
Impact of Business
Transformation        (49,478)        (25,158)        (24,320)   96.7
Project costs
Impact of MEPP charge --             (36,118)        36,118     
Impact of COLI        872             5,655           (4,783)    -84.6
Adjusted operating    $1,384,180     $1,349,441     $34,739   2.6%
expenses (Non-GAAP)
                                                                
Operating Income      $438,830       $427,487       $11,343   2.7%
(GAAP)
Impact of Business
Transformation        49,478          25,158          24,320     96.7
Project costs
Impact of MEPP charge --             36,118          (36,118)   
Impact of COLI        (872)           (5,655)         4,783      -84.6
Adjusted operating    $487,436       $483,108       $4,328    0.9%
income (Non-GAAP)
                                                                
Net earnings (GAAP)   $259,550       $258,478       $1,072    0.4%
Impact of Business
Transformation        31,112          16,038          15,074     94.0
Project costs (net of
tax)
Impact of MEPP charge --             23,025          (23,025)   
(net of tax)
Impact of COLI        (872)           (5,655)         4,783      -84.6
Impact of tax         --             (10,000)        10,000     
benefits
Adjusted net earnings $289,790       $281,886       $7,904    2.8%
(Non-GAAP)
                                                                
Diluted earnings per  $0.44          $0.44          $--      0.0%
share (GAAP)
Impact of Business
Transformation        0.05            0.03            0.02       66.7
Project costs (net of
tax) ^(1)
Impact of MEPP charge --             0.04            (0.04)     
(net of tax) ^(1)
Impact of COLI        --             (0.01)          0.01       
Impact of tax         --             (0.02)          0.02       
benefits
Adjusted diluted
earnings per share    $0.49          $0.48          $0.01     2.1%
(Non-GAAP)
                                                                
Diluted shares        587,214,691     585,421,864                
outstanding
                                                                
^(1) Tax impact of adjustments for Business Transformation and Multiemployer
Pension Plan expenses was $18,366 and $22,213 for the 13-week periods ended
March 31, 2012 and April 2, 2011, respectively.



                                                                
Sysco Corporation and its Consolidated Subsidiaries
Non-GAAP Reconciliation(Unaudited)
Impact of Business Transformation Expenses, Multiemployer Pension Plan
Expenses, COLI and Tax Benefits - continued
(In Thousands, Except for Share and Per Share Data)
                                                                
                          39 Week        39 Week        39 Week     39 Week
                         Period Ended   Period Ended   Period      Period %
                          Mar. 31, 2012  Apr. 2, 2011   Change in   Change
                                                        Dollars
Operating expenses (GAAP) $4,289,698   $4,069,568   $220,130  5.4%
Impact of Business
Transformation Project    (122,839)     (71,130)      (51,709)   72.7
costs
Impact of MEPP charge     --           (36,118)      36,118     
Impact of COLI            2,651         29,508        (26,857)   -91.0
Adjusted operating        $4,169,510   $3,991,828   $177,682  4.5%
expenses (Non-GAAP)
                                                                
Operating Income (GAAP)   $1,375,168   $1,370,752   $4,416    0.3%
Impact of Business
Transformation Project    122,839       71,130        51,709     72.7
costs
Impact of MEPP charge     --           36,118        (36,118)   
Impact of COLI            (2,651)       (29,508)      26,857     -91.0
Adjusted operating income $1,495,356   $1,448,492   $46,864   3.2%
(Non-GAAP)
                                                                
Net earnings (GAAP)       $812,316     $815,720     $(3,404)  -0.4%
Impact of Business
Transformation Project    77,081        44,890        32,191     71.7
costs (net of tax) ^(1)
Impact of MEPP charge     --           22,794        (22,794)   
(net of tax) ^(1)
Impact of COLI            (2,651)       (29,508)      26,857     -91.0
Impact of tax benefits    --           (10,000)      10,000     
Adjusted net earnings     $886,746     $843,896     $42,850   5.1%
(Non-GAAP)
                                                                
Diluted earnings per      $1.38        $1.39        $(0.01)   -0.7%
share (GAAP)
Impact of Business
Transformation Project    0.12          0.08          0.04       50.0
costs
Impact of MEPP charge     --           0.04          (0.04)     
Impact of COLI            --           (0.05)        0.05       
Impact of tax benefits    --           (0.02)        0.02       
Adjusted diluted earnings $1.50        $1.44        $0.06     4.2%
per share (Non-GAAP)
                                                                
Diluted shares            589,232,150   587,878,509              
outstanding
                                                                
^(1) Tax impact of adjustments for Business Transformation and Multiemployer
Pension Plan expenses was $45,758 and $39,564 for the 39-week periods ended
March 31, 2012 and April 2, 2011, respectively.

                                                                  

CONTACT: Neil Russell
         Vice President, Investor Relations
         T  281-584-1308
        
         Charley Wilson
         Vice President, Corporate Communications
         T  281-584-2423

Sysco Corporation