Sysco Corp. announced financial results for its 13-week fourth quarter and 52-week fiscal year 2011 ended July 2, 2011. In fiscal 2010, the fourth quarter included 14 weeks and the year included 53 weeks.
Record fourth quarter sales of $10.4 billion, were 0.7 percent higher compared to $10.3 billion in the fourth quarter of fiscal 2010. On a comparable 13-week basis, sales in the fourth quarter of fiscal 2011 increased 8.5 percent.
Operating income was $561 million, a decrease of 4.0 percent compared to $584 million in last year's fourth quarter. On a comparable 13-week basis, operating income in the fourth quarter of fiscal 2011 increased 3.4 percent.
Diluted earnings per share (EPS) of $0.57 were flat compared to last year's fourth quarter. On a comparable 13-week basis, diluted EPS in the fourth quarter of fiscal 2011 increased 7.5 percent, and set a company record.
Full year record sales of $39.3 billion were 5.6 percent higher compared to $37.2 billion in the prior year. On a comparable 52-week basis, sales in fiscal 2011 increased 7.7 percent.
Operating income was $1.9 billion, a decrease of 2.2 percent compared to $2.0 billion in the prior year. This result included a $36 million charge related to the withdrawal of an operating company from a multi-employer pension plan (MEPP). On a comparable 52-week basis, excluding the MEPP charge, operating income in fiscal 2011 increased 1.7 percent.
Diluted EPS was $1.96, or 1.5 percent lower than diluted EPS of $1.99 in the prior year. Fiscal 2011 diluted EPS included a $0.04 negative impact from the MEPP charge and a $0.02 tax benefit. Fiscal 2010 diluted EPS included a $0.04 benefit from the extra week of operations and a $0.05 benefit from the company's IRS settlement. Excluding the extra week, MEPP charge and tax benefits, diluted EPS for fiscal 2011 increased 4.2 percent.
"We successfully supported our customers and profitably grew our share of market this past year in the midst of an economic recovery that remains slow and choppy," said Bill DeLaney, Sysco's president and chief executive officer. "Looking forward, we remain committed to optimizing our core business through the solid execution of our business plan and the effective implementation of our business transformation initiative."
As mentioned above, Sysco's fourth quarter of fiscal 2010 included an extra week of operations. As a result, financial results for the fourth quarter of fiscal 2011 are not comparable to the fourth quarter of fiscal 2010. The table below has been provided to aid in comparing year-over-year results for the fourth quarter.
Sales for the fourth quarter were $10.4 billion, an increase of $817 million, or 8.5 percent compared to adjusted sales in the same period last year. Food cost inflation, as measured by the estimated change in Sysco's product costs, was 5.9 percent, driven mainly by increased prices for dairy, meat, seafood and canned/dry products. This compares to inflation of 5.1 percent in the third quarter of fiscal 2011 and 2.2 percent in the prior year period. In addition, compared to adjusted sales in the prior year period, acquisitions (within the last 12 months) increased sales by 0.9 percent, and the impact of changes in foreign exchange rates for the fourth quarter increased sales by 0.7 percent. This equates to real sales growth, as defined under "Non-GAAP Reconciliations" below, of 1.0 percent.
Gross profit for the fourth quarter was $1.9 billion, an increase of $97 million, or 5.3 percent, compared to adjusted gross profit in the prior year. Gross profit as a percentage of sales declined 57 basis points year-over-year to 18.6 percent due to accelerating inflation rates and strategic pricing initiatives during the quarter.
Operating expenses in the fourth quarter increased $78 million, or 6.0 percent compared to adjusted operating expenses in the prior year period due mainly to increased expenses for salaries and related costs, fuel, the corporate-sponsored pension plan and the company's business transformation initiative. As a result, operating income was $561 million in the fourth quarter, increasing $18 million, or 3.4 percent compared to adjusted operating income in the prior year.