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Wiki Wiki Summary
Foodservice distributor A food service distributor is a company that provides food and non-food products to restaurants, cafeterias, industrial caterers, hospitals, schools/colleges/universities, nursing homes, and anywhere food is served away from the home.\n\n\n== Description ==\nA food service distributor functions as an intermediary between food manufacturers and the food service operator (usually a chef, food service director, food and beverage manager, and independent food preparation businesses operator owners.) The distributor purchases, stores, sells, and delivers those products, providing food service operators with access to items from a wide variety of manufacturers.
Post-traumatic stress disorder after World War II Post-traumatic stress disorder (PTSD) results after experiencing or witnessing a terrifying event which later leads to mental health problems. This disorder has always existed but has only been recognized as a psychological disorder within the past forty years.
Linda Kasabian Linda Darlene Kasabian (born Drouin; June 21, 1949) is a former member of the Manson Family. Even though she was present at both the Tate and LaBianca murders, because she was the key witness in District Attorney Vincent Bugliosi's prosecution of Charles Manson and his followers for the 1969 killings, Kasabian received immunity.
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Industrial action Industrial action (Commonwealth English) or job action (North American English) is a temporary show of dissatisfaction by employees—especially a strike or slowdown or working to rule—to protest against bad working conditions or low pay and to increase bargaining power with the employer and intended to force the employer to improve them by reducing productivity in a workplace. Industrial action is usually organized by trade unions or other organised labour, most commonly when employees are forced out of work due to contract termination and without reaching an agreement with the employer.
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Tax withholding Tax withholding, also known as tax retention, Pay-as-You-Go, Pay-as-You-Earn, or a Prélèvement à la source, is income tax paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient.
Net interest margin Net interest margin (NIM) is a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example, deposits), relative to the amount of their (interest-earning) assets. It is similar to the gross margin (or gross profit margin) of non-financial companies.
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Credit Credit (from Latin credit, "(he/she/it) believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt), but promises either to repay or return those resources (or other materials of equal value) at a later date. In other words, credit is a method of making reciprocity formal, legally enforceable, and extensible to a large group of unrelated people.
Accrued liabilities Accrued liabilities are liabilities that reflect expenses that have not yet been paid or logged under accounts payable during an accounting period; in other words, a company's obligation to pay for goods and services that have been provided for which invoices have not yet been received. Examples would include accrued wages payable, accrued sales tax payable, and accrued rent payable.
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Risk Factors
SYSCO CORP Item 1A Risk Factors Low Margin Business; Inflation and Economic Sensitivity The foodservice distribution industry is characterized by relatively high inventory turnover with relatively low profit margins
SYSCO makes a significant portion of its sales at prices that are based on the cost of products it sells plus a percentage markup
As a result, SYSCO’s profit levels may be negatively impacted during periods of product cost deflation, even though SYSCO’s gross profit percentage may remain relatively constant
Prolonged periods of product cost inflation also may have a negative impact on the company’s profit margins and earnings to the extent such product cost increases are not passed on to customers due to resistance to higher prices and the timing needed to pass on such increases
The foodservice industry is sensitive to national and regional economic conditions
Inflation, fuel costs and other factors affecting consumer confidence and the frequency and amount spent by consumers for food prepared away from home may negatively impact SYSCO’s sales and operating results
SYSCO’s operating results are also sensitive to, and may be adversely affected by, other factors, including difficulties collecting accounts receivable, competitive price pressures, severe weather conditions and unexpected increases in fuel or other transportation-related costs
Although these factors have not had a material adverse impact on SYSCO’s past operations, there can be no assurance that one or more of these factors will not adversely affect future operating results
Increased Fuel Costs Increased fuel costs have recently had a negative impact on the company’s results of operations
The high cost of fuel can negatively impact consumer confidence and discretionary spending and thus reduce the frequency and amount spent by consumers for food prepared away from home
The high cost of fuel can also increase the price paid by SYSCO for products as well as the costs incurred by SYSCO to deliver products to its customers
These factors in turn negatively impact SYSCO’s sales, margins, operating expenses and operating results
Interruption of Supplies and Increases in Product Costs SYSCO obtains substantially all of its foodservice and related products from third party suppliers
For the most part, SYSCO does not have long-term contracts with its suppliers committing them to provide products to SYSCO Although SYSCO’s purchasing volume can provide leverage when dealing with suppliers, suppliers may not provide the foodservice products and supplies needed by SYSCO in the quantities and at the prices requested
Because SYSCO does not control the actual production of the products it sells, it also is subject to delays caused by interruption in production and increases in product costs based on conditions outside its control
These conditions include work slowdowns, work interruptions, strikes or other job actions by employees of suppliers, weather, crop conditions, transportation interruptions, unavailability of fuel or increases in fuel costs, competitive demands and natural disasters or other catastrophic events (including, but not limited to, the outbreak of avian flu or similar food-borne illnesses in the United States and 5 _________________________________________________________________ [46]Table of Contents Canada)
SYSCO’s inability to obtain adequate supplies of its foodservice and related products as a result of any of the foregoing factors or otherwise could mean that SYSCO could not fulfill its obligations to customers, and customers may turn to other distributors
Baugh Supply Chain Cooperative Structure The National Supply Chain project involved the creation of BSCC which administers a consolidated product procurement program to develop, obtain and ensure consistent quality food and non-food products
BSCC is a cooperative for income tax purposes
SYSCO believes that the cooperative entity is appropriate for BSCC based on the business operations of this affiliate and on the legal structure applied
However, if the application of the cooperative structure was to be disallowed by any federal, state or local tax authority, SYSCO could be required to accelerate the payment of a portion or all of its income tax liabilities that it otherwise has deferred until future periods and be liable for interest on such amounts
Amounts included as deferred income tax liabilities related to BSCC deferred supply chain distributions were dlra924cmam902cmam000 as of July 1, 2006
If SYSCO was required to accelerate a significant portion of these deferred tax liabilities, the company may be required to raise additional capital through debt financing or the issuance of equity or it may be required to forego or defer planned capital expenditures or share repurchases or a combination thereof and may be required to pay interest on amounts deferred
Leverage and Debt Service Because a substantial part of SYSCO’s growth historically has been the result of acquisitions and capital expansion, SYSCO’s continued growth depends, in large part, on its ability to continue this expansion
As a result, its inability to finance acquisitions and capital expenditures through borrowed funds could restrict its ability to expand
Moreover, any default under the documents governing the indebtedness of SYSCO could have a significant adverse effect on the company’s cash flows, as well as the market value of SYSCO’s common stock
Further, SYSCO’s leveraged position may also increase its vulnerability to competitive pressures
Product Liability Claims SYSCO, like any other seller of food, faces the risk of exposure to product liability claims in the event that the use of products sold by the company causes injury or illness
With respect to product liability claims, SYSCO believes it has sufficient primary or excess umbrella liability insurance
However, this insurance may not continue to be available at a reasonable cost, or, if available, may not be adequate to cover all of SYSCO’s liabilities
SYSCO generally seeks contractual indemnification and insurance coverage from parties supplying its products, but this indemnification or insurance coverage is limited, as a practical matter, to the creditworthiness of the indemnifying party and the insured limits of any insurance provided by suppliers
If SYSCO does not have adequate insurance or contractual indemnification available, product liability relating to defective products could materially reduce SYSCO’s net earnings and earnings per share
Reputation and Media Exposure Maintaining a good reputation is critical to SYSCO’s business, particularly to selling SYSCO Brand products
Anything that damages that reputation (whether or not justified), including adverse publicity about the quality, safety or integrity of the company’s products, could quickly affect its revenues and profits
Reports, whether true or not, of food-borne illnesses (such as e-coli, avian flu, bovine spongiform encephalopathy, hepatitis A, trichinosis or salmonella) and injuries caused by food tampering could also severely injure the company’s reputation
If patrons of the company’s restaurant customers become ill from food-borne illnesses, the customers could be forced to temporarily close restaurant locations and SYSCO’s sales would be correspondingly decreased
In addition, instances of food-borne illnesses or food tampering or other health concerns, even those unrelated to the use of SYSCO products, can result in negative publicity about the food service distribution industry and cause our sales to decrease dramatically
Labor Relations and Availability of Qualified Labor As of July 1, 2006, approximately 8cmam800 employees at 55 operating companies were members of 61 different local unions associated with the International Brotherhood of Teamsters and other labor organizations
Failure of the operating companies to effectively renegotiate these contracts could result in work stoppages
Although SYSCO’s operating subsidiaries have not experienced any significant labor disputes or work stoppages to date, and SYSCO believes they have satisfactory relationships with their unions, a work stoppage due to failure of multiple operating subsidiaries to renegotiate union contracts could have a material adverse effect on SYSCO 6 _________________________________________________________________ [47]Table of Contents SYSCO’s operations rely heavily on its employees, particularly drivers, and any shortage of qualified labor could significantly affect the company’s business
Our recruiting and retention efforts and efforts to increase productivity gains may not be successful and there may be a shortage of qualified drivers in future periods
Any such shortage would decrease SYSCO’s ability to effectively serve its customers
Such a shortage would also likely lead to higher wages for employees and a corresponding reduction in the company’s revenue and earnings
Charter and Preferred Stock Under its Restated Certificate of Incorporation, SYSCO’s Board of Directors is authorized to issue up to 1dtta5 million shares of preferred stock without stockholder approval
Issuance of these shares could make it more difficult for anyone to acquire SYSCO without approval of the Board of Directors, depending on the rights and preferences of the stock issued
In addition, if anyone attempts to acquire SYSCO without approval of the Board of Directors of SYSCO, the existence of this undesignated preferred stock could allow the Board of Directors to adopt a shareholder rights plan without obtaining stockholder approval, which could result in substantial dilution to a potential acquiror
As a result, hostile takeover attempts that might result in an acquisition of SYSCO that could otherwise have been financially beneficial to SYSCO’s stockholders could be deterred
Tax Audit As of July 1, 2006, the company’s 2003 and 2004 federal income tax returns were under audit by the Internal Revenue Service (IRS)
The company believes that it has appropriate support for the positions taken on these tax returns and has recorded a liability for its best estimate of the probable loss on certain of these positions
However, if the IRS disagrees with the positions taken by the company on its tax returns, SYSCO could have additional tax liability, including interest and penalties
If material, payment of such amounts upon final adjudication of any disputes could have an adverse effect on the company’s financial results and cash flows
Reliance on Technology SYSCO’s ability to decrease costs and increase profits, as well as its ability to serve customers most effectively, depends on the reliability of its technology network
The company uses software and other technology systems to load trucks in the most efficient manner to optimize the use of storage space and minimize the time spent at each stop
Any disruption to these computer systems could adversely impact SYSCO’s customer service, decrease the volume of its business and result in increased costs
While SYSCO has invested and continues to invest in technology security initiatives and disaster recovery plans, these measures cannot fully insulate the company from technology disruption that could result in adverse effects on operations and profits