Sysco Announces $2 Billion Senior Notes Offering and Accelerated Share Repurchase Program
September 28 2015 - 5:00PM
Sysco Corporation (NYSE:SYY) today announced that it closed the
offering of $2 billion in aggregate principal amount of senior
unsecured notes pursuant to an effective registration statement
previously filed with the Securities and Exchange Commission.
Further, the company announced that it has entered into accelerated
share repurchase (ASR) agreements with Goldman, Sachs & Co.
(Goldman) to repurchase an aggregate of $1.5 billion of the
company's common stock. This ASR is part of Sysco's $3 billion
share repurchase program previously authorized by the Board of
Directors and recently announced on June 29, 2015.
Sysco intends to use the net proceeds from the senior notes
offering to fund a portion of the repurchases of outstanding shares
of its common stock pursuant to its previously announced share
repurchase programs, to repay approximately $500 million of its
outstanding commercial paper, and for general corporate purposes.
Under terms of the ASR agreements, Sysco has agreed to repurchase
an aggregate of $1.5 billion of its common stock with an initial
delivery of approximately 32 million shares based on current market
prices. The final number of shares to be repurchased under the ASR
will be based on a discount to the volume-weighted average stock
price for Rule 10b-18 eligible transactions in Sysco's common stock
during the term of the relevant transaction. Purchases under the
ASR are expected to be completed by May 2016, although the exact
date of completion will depend on whether or when Goldman exercises
an acceleration option that it has under the ASR Agreement. Sysco
expects to continue to repurchase shares in the open market from
time to time, subject to market and other conditions.
This news release shall not constitute an offer to sell or a
solicitation of an offer to buy any securities, nor shall there be
any sale of these securities in any state or jurisdiction in which
such an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state or jurisdiction.
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 196 distribution facilities
serving approximately 425,000 customers. For Fiscal Year 2015 that
ended June 27, 2015, the company generated sales of more than $48
billion. For more information, visit www.sysco.com or connect with
Sysco on Facebook at www.facebook.com/SyscoCorporation or Twitter
at https://twitter.com/Sysco. For important news regarding Sysco,
visit the Investor Relations section of the company's Internet home
page at www.sysco.com/investors, follow us at
www.twitter.com/SyscoStock and download the new Sysco IR App,
available on the iTunes App Store and the Google Play Market. In
addition, investors should also continue to review our news
releases and filings with the Securities and Exchange Commission.
It is possible that the information we disclose through any of
these channels of distribution could be deemed to be material
information.
Forward-Looking Statements
Statements made in this press release that look forward in time
or that express management's beliefs, expectations or hopes are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements reflect the views of management at the time such
statements are made and are subject to a number of risks,
uncertainties, estimates, and assumptions that may cause actual
results to differ materially from current expectations. These
statements include our plans and expectations related to our
ability to generate cash flow from operations, free cash flow, uses
of that cash including capital investments, payment of dividends
and share repurchases. They also include our outlook and
expectations for fiscal 2016, fiscal 2017 and fiscal 2018. The
success of our initiatives and expectations regarding our operating
performance are subject to the general risks associated with our
business, including the risks of interruption of supplies due to
lack of long-term contracts, severe weather, crop conditions, work
stoppages, intense competition, technology disruptions, dependence
on large regional and national customers, inflation risks, the
impact of fuel prices, adverse publicity, and labor issues. Risks
and uncertainties also include risks impacting the economy
generally, including the risks that the current general economic
conditions will deteriorate, or consumer confidence in the economy
may not improve and decreases in consumer spending, particularly on
food-away-from-home, may not reverse. Market conditions may not
improve. If sales from our locally managed customers do not grow at
the same rate as sales from regional and national customers, our
gross margins may decline. Our ability to meet our long-term
strategic objectives to grow the profitability of our business
depends largely on the success of our various business initiatives.
There are various risks related to these efforts, including the
risk that these efforts may not provide the expected benefits in
our anticipated time frame, if at all, and may prove costlier than
expected; the risk that the actual costs of any initiatives may be
greater or less than currently expected; and the risk of adverse
effects to our business, results of operations and liquidity if
past and future undertakings, and the associated changes to our
business, do not prove to be cost effective or do not result in the
cost savings and other benefits at the levels that we anticipate.
Our plans related to and the timing of any initiatives are subject
to change at any time based on management's subjective evaluation
of our overall business needs. If we are unable to realize the
anticipated benefits from our cost cutting efforts, we could become
cost disadvantaged in the marketplace, and our competitiveness and
our profitability could decrease. Capital expenditures may vary
from those projected based on changes in business plans and other
factors, including risks related to the implementation of various
initiatives, 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. Periods of high inflation, either overall or in certain
product categories, can have a negative impact on us and our
customers, as high food costs can reduce consumer spending in the
food-away-from-home market, and may negatively impact our sales,
gross profit, operating income and earnings. Expanding into
international markets presents unique challenges and risks,
including compliance with local laws, regulations and customs and
the impact of local political and economic conditions, and such
expansion efforts may not be successful. Any business that we
acquire may not perform as expected, and we may not realize the
anticipated benefits of our acquisitions. Expectations regarding
the accounting treatment of any acquisitions may change based on
management's subjective evaluation. Expectations regarding tax
rates are subject to various factors beyond management's control.
For a discussion of additional factors impacting Sysco's business,
see the Company's Annual Report on Form 10-K for the year ended
June 27, 2015, as filed with the Securities and Exchange
Commission, and the Company's subsequent filings with the SEC.
Sysco does not undertake to update its forward-looking
statements.
CONTACT: For more information contact:
Neil Russell
Vice President, Investor Relations
T 281-584-1308
Charley Wilson
Vice President, Corporate Communications
T 281-584-2423
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