Year-To-Date Fiscal 2013 Summary

Sales for the first 39 weeks of fiscal 2013 were $32.8 billion, an increase of 4.7% compared to sales in the same period last year. Food cost inflation was 2.3%, as measured by the estimated change in Sysco's product costs, driven mainly by inflation in the poultry and meat categories. In addition, sales from acquisitions (within the last 12 months) increased sales by 1.2%, and there was no impact from foreign exchange rates. Case volume for the company's Broadline and SYGMA operations combined grew 2.5% during the first 39 weeks, including acquisitions, and approximately 1.5%, excluding acquisitions.

Gross profit for the first 39 weeks was $5.8 billion, an increase of 2.9%, compared to the prior year. Operating expenses in the first 39 weeks increased $343 million, or 8.0%, compared to operating expenses in the prior year period. This increase was due primarily to a $119 million increase in gross business transformation expenses, a $69 million increase in payroll expense, a $65 million increase in certain items and an $18 million increase in fuel expense. Excluding certain items and business transformation expenses, adjusted operating expenses increased 3.8%.

Operating income was $1.2 billion in the first 39 weeks, decreasing $177 million, or 12.8%, compared to operating income in the prior year. Excluding certain items and business transformation expenses, adjusted operating income increased 0.5%.

Net earnings for the first 39 weeks were $709 million, a decrease of $103 million, or 12.7%, compared to the prior year. Diluted EPS in the first 39 weeks of fiscal 2013 was $1.20, which was 13.0% lower compared to the prior year period. Excluding certain items and business transformation expenses, adjusted diluted EPS was $1.55, which was an increase of 2.0%, compared to the prior year.

Cash Flow and Capital Spending

Cash flow from operations was $759 million for the first 39 weeks of fiscal 2013, compared to $908 million in the first 39 weeks of fiscal 2012, a decrease of $149 million or 16%. Capital expenditures totaled $111 million for the third quarter and $373 million for the first 39 weeks of the year. The primary areas for investment included facility replacements and expansions, replacements to Sysco's fleet, and technology.

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