991068 SYSCO Records 23% EPS GrowthOctober 26, 1999Houston, TX - SYSCO Corporation reported exceptionally strong diluted first quarter fiscal 2000 earnings per share of $0.32, before the accounting change discussed below, 23% higher than the $0.26 per share achieved during the first quarter of the prior year. Excellent momentum boosted sales 11% to $4.7 billion for the period ended October 2, 1999, as compared to $4.2 billion during the first quarter a year earlier. Net earnings before the accounting change reached $105.7 million versus $86.4 million in the same period of fiscal 1999, a 22% increase. Net earnings and earnings per share exclude a one-time non-cash charge of $8 million, or $0.02 per share, to comply with the required adoption of AICPA Statement of Position 98-5 (SOP-98-5), “Reporting on the Costs of Start-up Activities.” SOP-98-5 requires the write-off of any unamortized costs of start- up activities and organization costs. Going forward such costs will be expensed as incurred. Bill M. Lindig, chairman and chief executive officer, said, “Our strategy of building relationships that enhance the profitability of our marketing associate-served, or independent, restaurant customers continues to contribute significantly to our success. The outstanding sales momentum experienced during the final quarter of last year extended throughout the first quarter of fiscal 2000 as sales to the independent segment grew at a healthy double-digit pace. Overall real sales growth reached 10.2%, after eliminating the effects of 1.1% for acquisitions and 0.2% for deflation in food costs. Additional factors contributing to our profit growth are the operating efficiencies being realized now that the majority of the costs related to the three-year conversion and rollout of SYSCO's company-wide information systems are substantially behind us.” Mr. Lindig also noted that SYSCO(r) Brand products continue to gain acceptance by customers, particularly the marketing associate-served segment, as they enhance their profitability. SYSCO Brand sales have grown to approximately 50% of traditional foodservice sales versus 48% last year. Three acquisitions that closed during the quarter include two Certified Angus Beef fresh-cut steak and center-of-the-plate distribution operations, Buckhead Beef of Atlanta and Newport Meat Company of Irvine, California, as well as Doughtie's Foods, a full-service distributor based in Portsmouth, Virginia. “Buckhead and Newport represent the 'best of the best' in their field,” Mr. Lindig said. “This is an opportunity for SYSCO to provide a consistent supply of fresh-cut steaks and other protein products in demand in the foodservice arena and these companies have been immediately accretive to the company's results. The Doughtie's acquisition will allow SYSCO to expand its market presence and enable us to provide better service to existing customers that are currently being supplied from SYSCO's Pocomoke, Maryland operation.” SYSCO has also signed a letter of intent to acquire a third custom-cutting meat specialist, Malcolm Meats. This acquisition, located near Toledo, Ohio, is expected to close by December. “Strong economic growth and high consumer confidence continue to provide exciting opportunities,” Mr. Lindig said in conclusion. “As we move into the second quarter, we anticipate additional efficiencies and strong ongoing growth. We remain committed to supporting the needs of our customers and assisting them in achieving success. Last year we strengthened that commitment by formalizing our objectives and strategies for providing complete customer satisfaction through the C.A.R.E.S. initiative -- Customers Are Really Everything to SYSCO. By enabling our customers to be successful, we continue to build a solid framework for our own success and position SYSCO to achieve its financial objectives.”
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