Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

(Mark	One)

# ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT	OF 1934

# For	the	fiscal	year	ended	July	2,	2005

# TRANSITION	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)	OF	THE	SECURITIES	EXCHANGE	ACT

Commission	File	Number	1-6544

# Sysco	Corporation

(Exact	name	of	registrant	as	specified	in	its	charter)

Delaware

(State	or	other	jurisdiction	of

incorporation	or	organization)

1390	Enclave	Parkway

Houston,	Texas

(Address	of	principal	executive	offices)

Registrant's	Telephone	Number,	Including	Area	Code:	(281)	584-1390

Securities	Registered	Pursuant	to	Section	12(b)	of	the	Act:

(IRS	employer

identification	number)

(Zip	Code)

# Name	of	each	exchange	on

Securities	Registered	Pursuant	to	Section	12(g)	of	the	Act:	None

					Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past 90	days.	Yes	þ	No	o

					Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.	o

					Indicate	by	check	mark	whether	the	registrant	is	an	accelerated	filer	(as	defined	in	Rule	12b-2	of	the	Exchange	Act.)	þ

					Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Exchange	Act).	Yes	o	No	þ

					The	aggregate	market	value	of	the	voting	stock	of	the	registrant	held	by	stockholders	who	were	not	affiliates	(as	defined	by	regulations	of	the	Securities	and	Exchange Commission)	of	the	registrant	was	approximately	$24,238,453,000	at	December	31,	2004	(based	on	the	closing	sales	price	on	the	New	York	Stock	Exchange	Composite Tape	on	December	31,	2004,	as	reported	by	The	Wall	Street	Journal	(Southwest	Edition)).	At	August	27,	2005,	the	registrant	had	issued	and	outstanding	an	aggregate	of 626,984,757	shares	of	its	common	stock.

# DOCUMENTS	INCORPORATED	BY	REFERENCE:

					Portions	of	the	company's	2005	Proxy	Statement	to	be	filed	with	the	Securities	and	Exchange	Commission	no	later	than	120	days	after	the	end	of	the	fiscal	year covered	by	this	Form	10-K	are	incorporated	by	reference	into	Part	III.

|  | TABLE	OF	CONTENTS<br>PART	I | Page	No. |
| :--- | :--- | :--- |
| Item\t1. | Business | 1 |
| Item\t2. | Properties | 5 |
| Item\t3. | Legal\tProceedings | 6 |
| Item\t4. | Submission\tof\tMatters\tto\ta\tVote\tof\tSecurity\tHolders | 6 |
|  | PART\tII |  |
| Item\t5. | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 6 |
| Item\t6. | Selected\tFinancial\tData | 8 |
| Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 9 |

| Item	7A. | Quantitative	and	Qualitative	Disclosures	about	Market	Risk | 23 |
| :--- | :--- | :--- |
| Item\t8. | Financial\tStatements\tand\tSupplementary\tData | 26 |
| Item\t9. | Changes\tin\tand\tDisagreements\twith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 57 |
| Item\t9A. | Controls\tand\tProcedures | 57 |
| Item\t9B. | Other\tInformation | 57 |
|  | PART\tIII |  |
| Item\t10. | Directors\tand\tExecutive\tOfficers\tof\tthe\tRegistrant | 57 |
| Item\t11. | Executive\tCompensation | 57 |
| Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 57 |
| Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions | 57 |
| Item\t14. | Principal\tAccountant\tFees\tand\tServices | 57 |
|  | PART\tIV |  |
| Item\t15. | Exhibits\tand\tFinancial\tStatement\tSchedules | 58 |
|  | Signatures | 62 |

# 	Subsidiaries	of	the	Registrant

# 	Consent	of	Independent	Registered	Public	Accounting	Firm

	CEO	Certification	Pursuant	to	Section	302

	CFO	Certification	Pursuant	to	Section	302

# PART	I

# Item	1.	Business

# Overview

					Sysco	Corporation,	acting	through	its	subsidiaries	and	divisions	(collectively	referred	to	as	"SYSCO"	or	the	"company"),	is	the	largest	North	American	distributor	of food	and	related	products	primarily	to	the	foodservice	or	"food-prepared-away-from-home"	industry.	Founded	in	1969,	SYSCO	provides	its	products	and	services	to approximately	390,000	customers,	including	restaurants,	healthcare	and	educational	facilities,	lodging	establishments	and	other	foodservice	customers.

					SYSCO,	which	was	formed	when	the	stockholders	of	nine	companies	exchanged	their	stock	for	SYSCO	common	stock,	commenced	operations	in	March	1970.	Since its	formation,	the	company	has	grown	from	$115	million	to	over	$30	billion	in	annual	sales,	both	through	internal	expansion	of	existing	operations	and	through acquisitions.	Through	the	end	of	fiscal	2005,	SYSCO	had	acquired	130	companies	or	divisions	of	companies.

					In	May	2005,	SYSCO	acquired	Facciola	Meat	Company,	a	specialty	meat	and	seafood	distributor	located	in	Fremont,	California.	In	May	2005,	SYSCO	acquired Royalty	Foods,	Inc.,	a	specialty	meat	distributor	located	in	Orlando,	Florida.	In	January	2005,	SYSCO	acquired	Piranha	Produce,	a	full-line	fresh	fruit	and	vegetable distributor,	headquartered	in	Modesto,	California.	In	December	2004,	SYSCO	acquired	Robert's	Foods,	a	broadline	foodservice	distributor	located	in	Springfield, Illinois.	In	November	2004,	SYSCO	acquired	Honeyman's	Ltd.	and	JJ	Derma's	Meats,	custom-cut	meat	distributors	located	in	Toronto,	Ontario,	Canada.	In October	2004,	SYSCO	acquired	Nashville	Tomato,	a	regional	tomato	packager	and	distributor	headquartered	in	Nashville,	Tennessee.

					In	May	2004,	SYSCO	acquired	International	Food	Group,	Inc.,	a	distributor	of	foodservice	products	to	quick-service	restaurants	in	various	international	markets.	In April	2004,	SYSCO	acquired	Overton	Distributors,	Inc.,	a	full-line	fresh	fruit	and	vegetable	foodservice	distributor,	headquartered	in	Nashville,	Tennessee	with operations	in	Tennessee	and	North	Carolina.	In	September	2003,	SYSCO	acquired	certain	assets	of	Luzo	Foodservice	Corporation,	located	in	Bedford,	Massachusetts. In	September	2003,	SYSCO	acquired	certain	assets	of	the	Stockton,	California	foodservice	operations	from	Smart	&	Final,	Inc.

					In	May	2003,	SYSCO	acquired	the	paper	and	chemical	products	distributor	Reed	Distributors,	Inc.	located	in	Lewiston,	Maine.	In	April	2003,	SYSCO	acquired	the specialty	meat-cutting	division	of	the	Colorado	Boxed	Beef	Company	and	its	affiliated	broadline	foodservice	operation,	J&B	Foodservice	located	in	Auburndale, Florida.	In	December	2002,	SYSCO	acquired	certain	assets	of	the	Denver	operations	of	Marriott	Distribution	Services,	Inc.,	a	wholly	owned	subsidiary	of	Marriott International,	Inc.	In	November	2002,	SYSCO	acquired	Asian	Foods,	Inc.,	a	specialty	distributor	of	products	and	services	to	the	Asian	cuisine	foodservice	market located	in	St.	Paul,	Minnesota	and	Kansas	City,	Missouri.	In	October	2002,	SYSCO	acquired	the	net	assets	of	Pronamic,	the	quick-service	distribution	division	of priszm	brandz.	In	October	2002,	SYSCO	acquired	Abbott	Foods,	Inc.,	an	independently	owned	broadline	foodservice	distributor	located	in	Columbus,	Ohio.

					SYSCO	is	organized	under	the	laws	of	Delaware.	The	address	and	telephone	number	of	the	company's	executive	offices	are	1390	Enclave	Parkway,	Houston,	Texas 77077-2099,	(281)	584-1390.	This	annual	report	on	Form	10-K,	as	well	as	all	other	reports	filed	or	furnished	by	SYSCO	pursuant	to	Section	13(a)	or	15(d)	of	the Securities	Exchange	Act	of	1934,	are	available	free	of	charge	on	SYSCO's	website	at	www.sysco.com	as	soon	as	reasonably	practicable	after	they	are	electronically	filed with	or	furnished	to	the	Securities	and	Exchange	Commission.

# Operating	Segments

					SYSCO	provides	food	and	related	products	to	the	foodservice	or	"food-prepared-away-from-home"	industry.	Under	the	provisions	of	Statement	of	Financial Accounting	Standards	(SFAS)	No.	131,	"Disclosures	about	Segments	of	an	Enterprise	and	Related	Information,"	the	company	has	aggregated	its	operating	companies into	a	number	of	segments,	of	which	only	Broadline	and	SYGMA	are	reportable	segments	as	defined	in	SFAS	No.	131.	Broadline	operating	companies	distribute	a	full line	of	food	products	and	a	wide	variety	of	non-food	products	to	both	our	traditional	and	chain	restaurant	customers.	SYGMA	operating	companies	distribute	a	full	line of	food	products	and	a	wide	variety	of	non-food	products	to	chain	restaurant	customer	locations.	"Other"	financial	information	is	attributable	to	the	company's	other segments,	including	the	company's	specialty	produce,	custom-cut	meat,	Asian	cuisine	foodservice	and	lodging	industry	products	segments.	The	company's	specialty produce	companies	distribute	fresh	produce	and,	on	a	limited	basis,	other	foodservice	products.	Specialty	meat	companies	distribute	custom-cut	fresh	steaks,	other	meat, seafood	and	poultry.	Our	specialty	Asian	cuisine	foodservice	companies	distribute	a	full	line	of	food	products	and	a	wide	variety	of	non-food	products	to	restaurants serving	Asian	cuisine.	Our	lodging	industry	products	company	distributes	personal	care	guest	amenities,	equipment,	housekeeping	supplies,	room	accessories	and textiles	to	the	lodging	industry.	Selected	financial	data	for	each	of	the	company's	reportable	segments	as	well	as	financial	information	concerning	geographic	areas	can be	found	in	Business	Segment	Information	in	the	Notes	to	Consolidated	Financial	Statements	in	Item	8.

# Customers	and	Products

					The	foodservice	industry	consists	of	two	major	customer	types	—	"traditional"	and	"chain	restaurant."	Traditional	foodservice	customers	include	restaurants, hospitals,	schools,	hotels	and	industrial	caterers.	SYSCO's	chain	restaurant	customers	include	regional	and	national	hamburger,	sandwich,	pizza,	chicken,	steak	and other	chain	operations.

					Services	to	the	company's	traditional	foodservice	and	chain	restaurant	customers	are	supported	by	similar	physical	facilities,	vehicles,	material	handling	equipment and	techniques,	and	administrative	and	operating	staffs.

					Products	distributed	by	the	company	include	a	full	line	of	frozen	foods,	such	as	meats,	fully	prepared	entrees,	fruits,	vegetables	and	desserts,	a	full	line	of	canned	and dry	foods,	fresh	meats,	imported	specialties	and	fresh	produce.	The	company	also	supplies	a	wide	variety	of	non-food	items,	including:	paper	products	such	as	disposable napkins,	plates	and	cups;	tableware	such	as	china	and	silverware;	cookware	such	as	pots,	pans	and	utensils;	restaurant	and	kitchen	equipment	and	supplies;	and	cleaning supplies.	SYSCO's	operating	companies	distribute	both	nationally-branded	merchandise	and	products	packaged	under	SYSCO's	private	brands.

					The	company	believes	that	prompt	and	accurate	delivery	of	orders,	close	contact	with	customers	and	the	ability	to	provide	a	full	array	of	products	and	services	to assist	customers	in	their	foodservice	operations	are	of	primary	importance	in	the	marketing	and	distribution	of	products	to	traditional	customers.	SYSCO's	operating companies	offer	daily	delivery	to	certain	customer	locations	and	have	the	capability	of	delivering	special	orders	on	short	notice.	Through	the	more	than	13,200	sales	and marketing	representatives	and	support	staff	of	SYSCO	and	its	operating	companies,	SYSCO	stays	informed	of	the	needs	of	its	customers	and	acquaints	them	with	new products	and	services.	SYSCO's	operating	companies	also	provide	ancillary	services	relating	to	foodservice	distribution	such	as	providing	customers	with	product	usage reports	and	other	data,	menu-planning	advice,	food	safety	training	and	assistance	in	inventory	control,	as	well	as	access	to	various	third	party	services	designed	to	add value	to	our	customers'	businesses.

					No	single	customer	accounted	for	10%	or	more	of	SYSCO's	total	sales	for	its	fiscal	year	ended	July	2,	2005.

					SYSCO's	sales	to	chain	restaurant	customers	consist	of	a	variety	of	food	products.	The	company	believes	that	consistent	product	quality	and	timely	and	accurate service	are	important	factors	in	the	selection	of	a	chain	restaurant	supplier.	One	chain	restaurant	customer	(Wendy's	International,	Inc.)	accounted	for	5%	of	SYSCO's sales	for	its	fiscal	year	ended	July	2,	2005.	Although	this	customer	represents	approximately	39%	of	the	SYGMA	segment	sales,	the	company	does	not	believe	that	the loss	of	this	customer	would	have	a	material	adverse	effect	on	SYSCO	as	a	whole.

					Based	upon	available	information,	the	company	estimates	that	sales	by	type	of	customer	during	the	past	three	fiscal	years	were	as	follows:

| Type	of	Customer | 2005 | 2004 | 2003 |
| :--- | :--- | :--- | :--- |
| Restaurants | 64% | 64% | 63% |
| Hospitals\tand\tnursing\thomes | 10 | 10 | 10 |
| Schools\tand\tcolleges | 5 | 5 | 6 |
| Hotels\tand\tmotels | 6 | 6 | 6 |
| Other | 15 | 15 | 15 |
| Totals | \t100% | \t100% | \t100% |

# Sources	of	Supply

					SYSCO	purchases	from	thousands	of	suppliers,	none	of	which	individually	accounts	for	more	than	10%	of	the	company's	purchases.	These	suppliers	consist generally	of	large	corporations	selling	brand	name	and	private	label	merchandise	and	independent	regional	brand	and	private	label	processors	and	packers.	Generally, purchasing	is	carried	out	through	centrally	developed	purchasing	programs	and	direct	purchasing	programs	established	by	the	company's	various	operating	companies. The	company	continually	develops	relationships	with	suppliers	but	has	no	material	long-term	purchase	commitments	with	any	supplier.

					In	the	second	quarter	of	fiscal	2002,	SYSCO	began	restructuring	its	supply	chain.	This	National	Supply	Chain	project,	which	reorganizes	SYSCO's	supply	chain, involved	the	creation	of	the	Baugh	Supply	Chain	Cooperative	that	handles	product	procurement,	and	also	involves	the	construction	and	operation	of	regional	distribution centers	which	will	aggregate	inventory	demand	to	optimize	the	supply	chain	activities	for	certain	products	for	all	SYSCO	operating	companies	in	the	region.	The company's	National	Supply	Chain	project	is	intended	to	increase	profitability	by	lowering	aggregate	inventory	levels,	operating	costs,	and	future	facility	expansion	needs at	SYSCO's	operating	companies	while	providing	greater	value	to	our	suppliers	and	customers.	The	company	expects	to	build	from	seven	to	nine	regional	distribution centers	over	the	next	seven	years.	The	first	of	these	centers,	the	Northeast	Redistribution	Center	located	in	Front	Royal,	Virginia,	opened	during	the	third	quarter	of fiscal	2005.	As	of	August	2005,	it	was	supplying	products	to	12	of	the	14	broadline	operating	companies	in	the	Northeast	Region	and	is	expected	to	be	shipping	products to	the	remaining	two	operating	companies	in	the	Northeast	Region	by	October	2005.	The	company	expects	to	begin	construction	of	its	second	regional

redistribution	facility,	to	be	located	in	Alachua,	Florida,	in	fiscal	2006.	The	third	regional	redistribution	center	is	planned	to	be	located	in	the	Midwest	Region.

					The	Baugh	Supply	Chain	Cooperative	administers	a	consolidated	product	procurement	program	designed	to	develop,	obtain	and	ensure	consistent	quality	food	and non-food	products.	The	program	covers	the	purchasing	and	marketing	of	SYSCO	Brand	merchandise	as	well	as	products	from	a	number	of	national	brand	suppliers, encompassing	substantially	all	product	lines.	The	operating	companies	can	choose	to	purchase	product	from	the	suppliers	participating	in	the	cooperative's	programs	or from	other	suppliers,	but	SYSCO	Brand	products	are	only	available	through	the	cooperative's	programs.

# Working	Capital	Practices

					SYSCO's	growth	is	funded	through	a	combination	of	cash	flow	from	operations,	commercial	paper	issuances	and	long-term	borrowings.	See	the	discussion	in Liquidity	and	Capital	Resources	in	Management's	Discussion	and	Analysis	in	Item	7	regarding	the	company's	liquidity,	financial	position	and	sources	and	uses	of	funds.

					Credit	terms	extended	by	SYSCO	to	its	customers	can	vary	from	cash	on	delivery	to	30	days	or	more	based	on	SYSCO's	assessment	of	the	customers'	credit	risk.

SYSCO	monitors	the	customers'	accounts	and	will	suspend	shipments	to	customers	if	necessary.

					A	majority	of	SYSCO's	sales	are	filled	within	24	hours	of	when	the	customers'	orders	are	placed.	SYSCO	will	maintain	inventory	on	hand	to	be	able	to	meet customer	demand.	The	level	of	inventory	on	hand	will	vary	by	product	depending	on	product	shelf-life,	supplier	order	fulfillment	lead	times	and	customer	demand. SYSCO	also	makes	purchases	of	product	based	on	supply	or	pricing	opportunities.

					SYSCO	takes	advantage	of	suppliers'	cash	discounts	where	appropriate	and	otherwise	generally	receives	payment	terms	from	its	suppliers.	Payment	terms	received from	suppliers	range	from	weekly	to	30	days	or	more.

# Corporate	Headquarters'	Services

					SYSCO's	corporate	staff	makes	available	a	number	of	services	to	the	company's	operating	companies.	Members	of	the	corporate	staff	possess	experience	and expertise	in,	among	other	areas,	accounting	and	finance,	cash	management,	information	technology,	employee	benefits,	engineering	and	insurance.	The	corporate	office also	makes	available	legal,	marketing,	payroll,	human	resources	and	tax	compliance	services	as	well	as	warehousing	and	distribution	services,	which	provide	assistance in	space	utilization,	energy	conservation,	fleet	management	and	work	flow.

# Capital	Improvements

					To	maximize	productivity	and	customer	service,	the	company	continues	to	construct	and	modernize	its	distribution	facilities.	During	fiscal	2005,	2004	and	2003, approximately	$390,203,000,	$530,086,000	and	$435,637,000,	respectively,	were	invested	in	facility	expansions,	fleet	additions	and	other	capital	asset	enhancements. The	company	estimates	its	capital	expenditures	in	fiscal	2006	should	be	in	the	range	of	$425,000,000	to	$450,000,000.	During	the	three	years	ended	July	2,	2005,	capital expenditures	were	financed	primarily	by	internally	generated	funds,	the	company's	commercial	paper	program	and	bank	and	other	borrowings.	The	company	expects	to finance	its	fiscal	2006	capital	expenditures	from	the	same	sources.

# Employees

					As	of	July	2,	2005,	SYSCO	and	its	operating	companies	had	approximately	47,500	full-time	employees,	approximately	18%	of	whom	were	represented	by	unions, primarily	the	International	Brotherhood	of	Teamsters.	Contract	negotiations	are	handled	locally.	Collective	bargaining	agreements	covering	approximately	27%	of	the company's	union	employees	expire	during	fiscal	2006.	SYSCO	considers	its	labor	relations	to	be	satisfactory.	During	the	fourth	quarter	of	fiscal	2005,	the	number	of customer	contact	associates	increased	by	almost	2%	as	compared	to	the	number	at	the	end	of	the	third	quarter	of	fiscal	2005.	The	company	intends	to	continue	to increase	the	number	of	customer	contact	associates	in	fiscal	2006.

# Competition

					The	business	of	SYSCO	is	competitive	with	numerous	companies	engaged	in	foodservice	distribution.	Foodservice	operators	may	also	choose	to	purchase	products directly	from	retail	outlets.	While	competition	is	encountered	primarily	from	local	and	regional	distributors,	a	few	companies	compete	with	SYSCO	on	a	national	basis. The	company	believes	that	the	principal	competitive	factors	in	the	foodservice	industry	are	effective	customer	contacts,	the	ability	to	deliver	a	wide	range	of	quality products	and	related	services	on	a	timely	and	dependable	basis	and	a	competitive	price.	The	company	estimates	that	it	serves	about	14%	of	an	approximately	$210 billion	annual	market	that	includes	the	North	American	foodservice	and	hotel	amenity,	furniture	and	textile	markets.	SYSCO

believes,	based	upon	industry	trade	data,	that	its	sales	to	the	North	American	"food-prepared-away-from-home"	industry	were	the	highest	of	any	foodservice	distributor during	fiscal	2005.	While	adequate	industry	statistics	are	not	available,	the	company	believes	that	in	most	instances	its	local	operations	are	among	the	leading distributors	of	food	and	related	non-food	products	to	foodservice	customers	in	their	respective	trading	areas.

# Government	Regulation

					As	a	marketer	and	distributor	of	food	products,	SYSCO	is	subject	to	the	U.S.	Federal	Food,	Drug	and	Cosmetic	Act	and	regulations	promulgated	thereunder	by	the U.S.	Food	and	Drug	Administration	("FDA")	and	the	Canadian	Food	and	Drugs	Act	and	the	regulations	thereunder.

					The	FDA	regulates	manufacturing	and	holding	requirements	for	foods	through	its	current	good	manufacturing	practice	regulations,	specifies	the	standards	of	identity for	certain	foods	and	prescribes	the	format	and	content	of	certain	information	required	to	appear	on	food	product	labels.	For	certain	product	lines,	SYSCO	is	also	subject to	the	Federal	Meat	Inspection	Act,	the	Poultry	Products	Inspection	Act,	the	Perishable	Agricultural	Commodities	Act,	the	Packers	and	Stockyard	Act	and	regulations promulgated	thereunder	by	the	U.S.	Department	of	Agriculture	("USDA").	The	USDA	imposes	standards	for	product	quality	and	sanitation	including	the	inspection	and labeling	of	meat	and	poultry	products	and	the	grading	and	commercial	acceptance	of	produce	shipments	from	the	company's	suppliers.	SYSCO	is	also	subject	to	the Public	Health	Security	and	Bioterrorism	Preparedness	and	Response	Act	of	2002,	which	imposes	certain	registration	and	record	keeping	requirements	on	facilities	that manufacture,	process,	pack	or	hold	food	for	human	or	animal	consumption.

					In	Canada,	the	Canadian	Food	Inspection	Agency	administers	and	enforces	the	food	safety	and	nutritional	quality	standards	established	by	Health	Canada	under	the Canadian	Food	and	Drugs	Act	and	under	other	related	federal	legislation,	including	the	Canada	Agricultural	Products	Act,	the	Meat	Inspection	Act,	the	Fish	Inspection Act	and	the	Consumer	Packaging	and	Labeling	Act	(as	it	relates	to	food).	These	laws	regulate	the	processing,	storing,	grading,	packaging,	marking,	transporting	and inspection	of	certain	SYSCO	product	lines	as	well	as	the	packaging,	labeling,	sale,	importation	and	advertising	of	pre-packaged	and	certain	other	products.

					The	company	and	its	products	are	also	subject	to	state,	provincial	and	local	regulation	through	such	measures	as	the	licensing	of	its	facilities,	enforcement	by	state, provincial	and	local	health	agencies	of	state,	provincial	and	local	standards	for	the	company's	products	and	regulation	of	the	company's	trade	practices	in	connection with	the	sale	of	its	products.	SYSCO's	facilities	are	subject	to	inspections	and	regulations	issued	pursuant	to	the	U.S.	Occupational	Safety	and	Health	Act	by	the	U.S. Department	of	Labor,	together	with	similar	occupational	health	and	safety	laws	in	each	Canadian	province,	which	require	the	company	to	comply	with	certain manufacturing,	health	and	safety	standards	to	protect	its	employees	from	accidents	and	to	establish	hazard	communication	programs	to	transmit	information	on	the hazards	of	certain	chemicals	present	in	products	distributed	by	the	company.

					The	company	also	is	subject	to	regulation	by	numerous	U.S.	and	Canadian	federal,	state,	provincial	and	local	regulatory	agencies,	including,	but	not	limited	to,	the U.S.	Department	of	Labor	and	each	Canadian	provincial	ministry	of	labour,	which	set	employment	practice	standards	for	workers,	and	the	U.S.	Department	of Transportation	and	the	Canadian	Transportation	Agency,	which	regulate	transportation	of	perishable	and	hazardous	materials	and	waste,	and	similar	state,	provincial	and local	agencies.

					Most	of	the	company's	distribution	facilities	have	ammonia-based	refrigeration	systems	and	tanks	for	the	storage	of	diesel	fuel	and	other	petroleum	products	which are	subject	to	laws	regulating	such	systems	and	storage	tanks.	Other	U.S.	and	Canadian	federal,	state,	provincial	and	local	provisions	relating	to	the	protection	of	the environment	or	the	discharge	of	materials	do	not	materially	impact	the	company's	use	or	operation	of	its	facilities.

					Compliance	with	these	laws	has	not	had	and	is	not	anticipated	to	have	a	material	effect	on	the	capital	expenditures,	earnings	or	competitive	position	of	SYSCO.

# General

					SYSCO	has	numerous	trademarks	which	are	of	significant	importance	to	the	company.	The	loss	of	the	SYSCO(R)	trademark	would	have	a	material	adverse	effect	on SYSCO's	results	of	operations.

					SYSCO	is	not	engaged	in	material	research	and	development	activities	relating	to	the	development	of	new	products	or	the	improvement	of	existing	products.

					Sales	of	the	company	do	not	generally	fluctuate	significantly	on	a	seasonal	basis;	therefore,	the	business	of	the	company	is	not	deemed	to	be	seasonal.

					As	of	July	2,	2005,	SYSCO	and	its	operating	companies	operated	170	facilities	throughout	the	United	States	and	Canada,	of	which	160	were	principal	distribution facilities.

# Item	2.	Properties

					The	table	below	shows	the	number	of	distribution	facilities	and	self-serve	centers	occupied	by	SYSCO	in	each	state	or	province	and	the	aggregate	cubic	footage devoted	to	cold	and	dry	storage	as	of	July	2,	2005.

|  | Number	of | Cold	Storage | Dry	Storage |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Facilities | (Thousands | (Thousands | Segments |
| Location | and\tCenters | Cubic\tFeet) | Cubic\tFeet) | Served* |
| Alabama | 2 | 2,886 | 2,393 | BL |
| Alaska | 1 | 1,067 | 645 | BL |
| Arizona | 1 | 2,901 | 3,190 | BL |
| Arkansas | 1 | 2,477 | 2,940 | BL |
| California | 18 | 25,840 | 34,650 | BL,\tS,\tO |
| Colorado | 5 | 7,495 | 10,870 | BL,\tS,\tO |
| Connecticut | 1 | 4,244 | 3,990 | BL |
| District\tof\tColumbia | 1 | 335 | 30 | O |
| Florida | 13 | 23,013 | 24,209 | BL,\tS,\tO |
| Georgia | 6 | 5,654 | 14,937 | BL,\tS,\tO |
| Hawaii | 1 | — | 258 | O |
| Idaho | 2 | 2,023 | 2,366 | BL |
| Illinois | 5 | 4,311 | 10,065 | BL,\tS,\tO |
| Indiana | 2 | 3,905 | 1,822 | BL,\tO |
| Iowa | 1 | 1,535 | 2,082 | BL |
| Kansas | 1 | 4,003 | 3,894 | BL |
| Kentucky | 1 | 2,330 | 2,648 | BL |
| Louisiana | 1 | 3,265 | 2,994 | BL |
| Maine | 1 | 1,507 | 2,121 | BL |
| Maryland | 5 | 8,826 | 8,896 | BL,\tO |
| Massachusetts | 2 | 5,605 | 7,798 | BL,\tS |
| Michigan | 4 | 5,501 | 9,569 | BL,\tS,\tO |
| Minnesota | 2 | 4,676 | 4,308 | BL,\tO |
| Mississippi | 1 | 2,125 | 2,690 | BL |
| Missouri | 2 | 2,375 | 2,682 | BL,\tO |
| Montana | 1 | 3,288 | 2,538 | BL |
| Nebraska | 1 | 1,712 | 2,108 | BL |
| Nevada | 2 | 2,749 | 4,474 | BL,\tO |
| New\tJersey | 4 | 3,085 | 10,753 | BL,\tO |
| New\tMexico | 1 | 2,182 | 2,093 | BL |
| New\tYork | 5 | 7,433 | 10,436 | BL |
| North\tCarolina | 6 | 5,440 | 11,478 | BL,\tS,\tO |
| North\tDakota | 1 | 525 | 584 | BL |
| Ohio | 9 | 9,041 | 13,933 | BL,\tS,\tO |
| Oklahoma | 2 | 3,057 | 4,028 | BL,\tS |
| Oregon | 3 | 3,980 | 3,791 | BL,\tS,\tO |
| Pennsylvania | 4 | 6,780 | 8,286 | BL,\tS |
| South\tCarolina | 1 | 2,271 | 2,362 | BL |
| South\tDakota | 1 | 2 | 123 | BL |
| Tennessee | 3 | 6,470 | 9,277 | BL,\tO |
| Texas | 13 | 19,572 | 23,643 | BL,\tS,\tO |
| Utah | 1 | 3,600 | 3,690 | BL |
| Virginia | 3 | 13,162 | 10,091 | BL |
| Washington | 1 | 4,647 | 3,044 | BL |
| Wisconsin | 3 | 7,128 | 5,902 | BL |
| Alberta,\tCanada | 2 | 4,090 | 3,982 | BL |
| British\tColumbia,\tCanada | 8 | 3,896 | 4,649 | BL,\tO |
| Manitoba,\tCanada | 1 | 1,135 | 860 | BL |
| New\tBrunswick,\tCanada | 2 | 1,172 | 1,031 | BL |
| Newfoundland,\tCanada | 2 | 744 | 669 | BL |
| Nova\tScotia,\tCanada | 1 | 735 | 704 | BL |
| Ontario,\tCanada | 7 | 7,949 | 8,919 | BL,\tS,\tO |
| Quebec,\tCanada | 1 | 716 | 1,209 | BL |
| Saskatchewan,\tCanada | 1 | 1,271 | 750 | BL |
| Total | 170 | 255,731 | 317,454 |  |

* Segments	served	include	Broadline	(BL),	SYGMA	(S)	and	Other	(O).

					SYSCO	owns	approximately	460,967,000	cubic	feet	of	its	distribution	facilities	and	self-serve	centers	(or	80.4%	of	the	total	cubic	feet),	and	the	remainder	is	occupied under	leases	expiring	at	various	dates	from	fiscal	2006	to	fiscal	2040,	exclusive	of	renewal	options.	Certain	of	the	facilities	owned	by	the	company	are	either	subject	to mortgage	indebtedness	or	industrial	revenue	bond	financing	arrangements	totaling	$19,510,000	at	July	2,	2005.	Such	mortgage	indebtedness	and	industrial	revenue	bond financing	arrangements	mature	at	various	dates	through	fiscal	2026.

					The	company	owns	its	approximately	188,000	square	foot	headquarters	office	complex	in	Houston,	Texas	and	leases	approximately	208,000	square	feet	of	additional office	space	in	Houston,	Texas.	The	company	began	the	expansion	of	its	headquarters	office	complex	in	fiscal	2006.

					Facilities	in	Denver,	Colorado;	Lincoln,	Illinois;	St.	Louis,	Missouri;	and	Las	Vegas,	Nevada	(which	in	the	aggregate	accounted	for	approximately	2.5%	of	fiscal 2005	sales)	are	operating	near	capacity	and	the	company	is	currently	constructing	expansions	or	replacements	for	these	distribution	facilities.	New	distribution	facilities also	are	under	construction	in	Geneva	County,	Alabama;	Lancaster,	California;	and	Raleigh,	North	Carolina.	The	company	expects	to	begin	construction	of	its	second regional	redistribution	facility,	to	be	located	in	Alachua,	Florida,	in	fiscal	2006.

					As	of	July	2,	2005,	SYSCO's	fleet	of	approximately	8,550	delivery	vehicles	consisted	of	tractor	and	trailer	combinations,	vans	and	panel	trucks,	most	of	which	are either	wholly	or	partially	refrigerated	for	the	transportation	of	frozen	or	perishable	foods.	The	company	owns	approximately	86%	of	these	vehicles	and	leases	the remainder.

# Item	3.	Legal	Proceedings

					SYSCO	is	engaged	in	various	legal	proceedings	which	have	arisen	but	have	not	been	fully	adjudicated.	These	proceedings,	in	the	opinion	of	management,	will	not have	a	material	adverse	effect	upon	the	consolidated	financial	position	or	results	of	operations	of	the	company	when	ultimately	concluded.

# Item	4.	Submission	of	Matters	to	a	Vote	of	Security	Holders

# PART	II

# Item	5.	Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities

					The	principal	market	for	SYSCO's	Common	Stock	(SYY)	is	the	New	York	Stock	Exchange.	The	table	below	sets	forth	the	high	and	low	sales	prices	per	share	for SYSCO's	Common	Stock	as	reported	on	the	New	York	Stock	Exchange	Composite	Tape	and	the	cash	dividends	declared	for	the	periods	indicated.

|  | Common	Stock |  | Dividends |
| :--- | :--- | :--- | :--- |
|  | Prices | Prices | Declared |
|  | High | Low | Per\tShare |
| Fiscal\t2004: |  |  |  |
| First\tQuarter | $34.24 | $28.54 | $0.11 |
| Second\tQuarter | 37.57 | 31.45 | 0.13 |
| Third\tQuarter | 41.27 | 35.33 | 0.13 |
| Fourth\tQuarter | 39.73 | 34.75 | 0.13 |
| Fiscal\t2005: |  |  |  |
| First\tQuarter | $36.00 | $29.48 | $0.13 |
| Second\tQuarter | 38.43 | 29.71 | 0.15 |
| Third\tQuarter | 37.83 | 32.57 | 0.15 |
| Fourth\tQuarter | 38.04 | 34.23 | 0.15 |

					In	January	2004,	a	total	of	65,123	dividend	access	shares,	convertible	on	a	one-for-one	basis	into	SYSCO	shares,	were	released	to	the	former	owners	of	North Douglas	Distributors	pursuant	to	the	terms	of	an	escrow	agreement	executed	in	connection	with	SYSCO's	acquisition	of	North	Douglas	in	December	2000.

					In	July	2004,	a	total	of	322,256	shares	of	common	stock	were	released	to	the	former	shareholders	of	Buckhead	Beef	Company	pursuant	to	the	terms	of	an	escrow agreement	executed	in	connection	with	SYSCO's	acquisition	of	Buckhead	in	August	1999.

					In	September	2004,	a	total	of	256,096	shares	of	common	stock	were	released	to	the	former	shareholders	of	Newport	Meat	Company	pursuant	to	the	terms	of	an escrow	agreement	executed	in	connection	with	SYSCO's	acquisition	of	Newport	in	July	1999.

					All	of	the	above	issuances	were	made	pursuant	to	the	exemption	from	registration	provided	by	Section	4(2)	of	the	Securities	Act	of	1933,	as	amended.

					In	June	2005,	169,155	shares	were	issued	to	the	former	shareholders	of	North	Douglas	Distributors	upon	the	conversion	of	dividend	access	shares	issued	in connection	with	SYSCO's	acquisition	of	North	Douglas	in	December	2000.

					In	June	2005,	160,867	shares	were	issued	to	the	former	shareholders	of	HRI	Supply,	Ltd.	upon	the	conversion	of	dividend	access	shares	issued	in	connection	with SYSCO's	acquisition	of	HRI	in	May	2001.

					The	foregoing	shares	were	issued	pursuant	to	the	exemption	from	registration	contained	in	Section	3(a)(9)	of	the	Securities	Act	of	1933,	as	amended.

					SYSCO	made	the	following	share	repurchases	during	the	fourth	quarter	of	fiscal	2005:

# ISSUER	PURCHASES	OF	EQUITY	SECURITIES

|  |  |  | (c)	Total	Number |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  |  | of\tShares\tPurchased | (d)\tMaximum\tNumber |
|  |  |  | as\tPart\tof | of\tShares\tThat\tMay\tYet |
|  | (a)\tTotal\tNumber | (b)\tAverage\tPrice | Publicly\tAnnounced | be\tPurchased\tUnder |
| Period | of\tShares\tPurchased\t(1) | Paid\tPer\tShare | Plans\tor\tPrograms | the\tPlans\tor\tPrograms |
| Month\t#1 |  |  |  |  |
| April\t3\t—\tApril\t30 | 1,822,824 | $35.61 | 1,800,000 | 20,712,700 |
| Month\t#2 |  |  |  |  |
| May\t1\t—\tMay\t28 | 1,951,486 | 36.11 | 1,914,000 | 18,798,700 |
| Month\t#3 |  |  |  |  |
| May\t29\t—\tJuly\t2 | 3,000,816 | 37.04 | 2,980,000 | 15,818,700 |
| Total | 6,775,126 | $36.39 | 6,694,000 | 15,818,700 |

(1) The	total	number	of	shares	purchased	includes	22,824,	37,486	and	20,816	shares	tendered	by	individuals	in	connection	with	stock	option	exercises	in	Month	#1, Month	#2	and	Month	#3,	respectively.

					On	September	12,	2003,	the	company	announced	that	the	Board	of	Directors	approved	the	repurchase	of	20,000,000	shares.	On	February	18,	2005,	the	company announced	that	the	Board	of	Directors	approved	the	repurchase	of	an	additional	20,000,000	shares	over	a	12-	to	18-month	period.	Pursuant	to	these	repurchase programs,	shares	may	be	acquired	in	the	open	market	or	in	privately	negotiated	transactions	at	the	company's	discretion,	subject	to	market	conditions	and	other	factors. In	July	2004,	the	Board	of	Directors	authorized	the	company	to	enter	into	agreements	from	time	to	time	to	extend	its	ongoing	repurchase	program	to	include	repurchases during	company	announced	"blackout	periods"	of	such	securities	in	compliance	with	Rule	10b5-1	promulgated	under	the	Exchange	Act.

					On	November	23,	2004,	the	company	entered	into	a	stock	purchase	plan	with	Bank	of	America	Securities	LLC	to	purchase	up	to	10	million	shares	of	SYSCO common	stock	as	authorized	under	the	September	2003	repurchase	program	pursuant	to	Rules	10b5-1	and	10b-18	under	the	Exchange	Act.	A	total	of	10	million	shares were	purchased	during	the	period	between	November	29,	2004	and	May	6,	2005,	including	during	company	"blackout"	periods.	By	its	terms,	the	agreement	terminated on	May	6,	2005.

					On	May	27,	2005,	the	company	entered	into	a	stock	purchase	plan	with	Bank	of	New	York	to	purchase	up	to	10	million	shares	of	SYSCO	common	stock	as authorized	under	the	February	2005	repurchase	program	pursuant	to	Rules	10b5-1	and	10b-18	under	the	Exchange	Act.	A	total	of	6,975,000	shares	were	purchased between	June	1,	2005	and	August	16,	2005,	including	during	company	"blackout"	periods.	By	its	terms,	the	agreement	terminated	on	August	16,	2005.

					As	of	August	27,	2005,	no	shares	remained	available	for	repurchase	under	the	September	2003	repurchase	program,	and	there	were	10,443,700	shares	remaining available	for	repurchase	under	the	February	2005	repurchase	program.

# Item	6.	Selected	Financial	Data

|  |  | 2004 |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2005 | (53\tWeeks) | 2003(1) | 2002 | 2001(2) |
|  |  |  | (In\tthousands\texcept\tfor\tshare\tdata) |  |  |
| Sales | $30,281,914 | $29,335,403 | $26,140,337 | $23,350,504 | $21,784,497 |
| Earnings\tbefore\tincome\ttaxes | 1,525,436 | 1,475,144 | 1,260,387 | 1,100,870 | 966,655 |
| Income\ttaxes | 563,979 | 567,930 | 482,099 | 421,083 | 369,746 |
| Net\tearnings | $961,457 | $907,214 | $778,288 | $679,787 | $596,909 |
| Net\tearnings: |  |  |  |  |  |
| Basic\tearnings\tper\tshare | $1.51 | $1.41 | $1.20 | $1.03 | $0.90 |
| Diluted\tearnings\tper\tshare | 1.47 | 1.37 | 1.18 | 1.01 | 0.88 |
| Dividends\tdeclared\tper\tshare | 0.58 | 0.50 | 0.42 | 0.34 | 0.27 |
| Total\tassets | 8,267,902 | 7,847,632 | 6,936,521 | 5,989,753 | 5,352,987 |
| Capital\texpenditures | 390,203 | 530,086 | 435,637 | 416,393 | 341,138 |
| Current\tmaturities\tof\tlong-\tterm\tdebt | $410,933 | $162,833 | $20,947 | $13,754 | $23,267 |
| Long-term\tdebt | 956,177 | 1,231,493 | 1,249,467 | 1,176,307 | 961,421 |
| Total\tlong-term\tdebt | 1,367,110 | 1,394,326 | 1,270,414 | 1,190,061 | 984,688 |
| Shareholders'\tequity | 2,758,839 | 2,564,506 | 2,197,531 | 2,132,519 | 2,100,535 |
| Total\tcapitalization | $4,125,949 | $3,958,832 | $3,467,945 | $3,322,580 | $3,085,223 |
| Ratio\tof\tlong-term\tdebt\tto\tcapitalization | 33.1% | 35.2% | 36.6% | 35.8% | 31.9% |

(1) SYSCO	adopted	the	provisions	of	SFAS	No.	142,	"Accounting	for	Goodwill	and	Other	Intangible	Assets"	effective	at	the	beginning	of	fiscal	2003.	As	a	result, the	amortization	of	goodwill	and	intangibles	with	indefinite	lives	was	discontinued.

# Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations

# Highlights

					Sales	increased	3.2%	in	fiscal	2005	over	fiscal	2004.	Fiscal	2005	included	52	weeks,	as	compared	to	fiscal	2004	which	included	an	additional	53rd	week.	After adjusting	for	the	additional	week	in	fiscal	2004,	sales	increased	5.3%	in	fiscal	2005	over	fiscal	2004	adjusted	sales	(See	the	reconciliation	of	fiscal	2004	actual	sales	to fiscal	2004	adjusted	sales	in	"Sales"	under	"Results	of	Operations").	Gross	margins	as	a	percent	of	sales	for	fiscal	2005	decreased	from	the	prior	year	due	to	the	impact of	product	cost	increases	and	changes	in	customer	mix	and	segment	mix.	Operating	expenses	as	a	percent	of	sales	for	fiscal	2005	decreased	from	the	prior	year	due	to operating	efficiencies,	operating	costs	increasing	at	lower	rates	than	sales	price	increases,	reduced	performance-based	management	incentive	compensation	and decreased	net	pension	costs,	which	overcame	increased	fuel	costs	and	increased	expenses	incurred	on	the	National	Supply	Chain	project.	The	income	tax	provision	in fiscal	2005	includes	a	tax	benefit	of	$8.5	million	primarily	related	to	the	reversal	of	valuation	allowances	previously	recorded	on	certain	state	net	operating	loss carryforwards	and	a	tax	benefit	of	$11	million	related	to	the	reversal	of	a	tax	contingency	accrual.	The	comparison	of	fiscal	2005's	net	earnings	to	fiscal	2004	was	also negatively	impacted	by	the	additional	53rd	week	in	fiscal	2004.	Primarily	as	a	result	of	these	factors,	net	earnings	for	fiscal	2005	increased	6.0%	over	the	prior	year.

					Management	believes	that	prolonged	periods	of	rising	product	costs,	together	with	general	economic	conditions,	including	the	impact	of	increased	fuel	costs	on consumer	spending,	contributed	to	a	softness	in	the	foodservice	market	and	thus	a	slowing	of	SYSCO's	sales	growth	beginning	in	the	latter	half	of	the	fourth	quarter	of fiscal	2004	and	continuing	into	the	first	half	of	fiscal	2005.	After	adjusting	for	the	additional	week	in	last	year's	fourth	quarter,	sales	growth	remained	relatively	stable over	the	course	of	fiscal	2005.	Management	believes	that	the	declining	rate	of	product	cost	increases	over	the	course	of	fiscal	2005	has	lessened	the	overall	gross	margin pressures	experienced	during	the	year	and	has	contributed	to	the	underlying	unit	growth	experienced	in	the	latter	half	of	fiscal	2005.	Additionally,	management	believes that	the	maturation	of	the	company's	business	review	process	has	contributed	to	unit	sales	growth.

					The	company	continues	to	focus	on	customer	account	penetration	and	expense	controls,	including	managing	personnel	expenses,	improving	productivity	and	ongoing benchmarking	and	sharing	of	best	practices	at	the	operating	companies.

					SYSCO	distributes	food	and	related	products	to	restaurants,	healthcare	and	educational	facilities,	lodging	establishments	and	other	foodservice	customers.	SYSCO's operations	are	located	throughout	the	United	States	and	Canada	and	include	broadline	companies,	specialty	produce	companies,	custom-cut	meat	operations,	Asian cuisine	foodservice	operations,	hotel	supply	operations,	and	SYGMA,	the	company's	chain	restaurant	distribution	subsidiary.

					The	company	estimates	that	it	serves	about	14%	of	an	approximately	$210	billion	annual	market	that	includes	the	North	American	foodservice	and	hotel	amenity, furniture	and	textile	markets.	According	to	industry	sources,	the	foodservice,	or	food-prepared-away-from-home,	market	represents	approximately	one-half	of	the	total dollars	spent	on	food	purchases	made	at	the	consumer	level.	This	share	grew	from	about	37%	in	1972	to	its	current	level	in	1998.

					General	economic	conditions	and	consumer	confidence	can	affect	the	frequency	and	amount	spent	by	consumers	for	food-prepared-away-from-home	and	in	turn	can impact	SYSCO's	sales.	SYSCO	historically	has	grown	at	a	faster	rate	than	the	overall	industry	and	has	grown	its	market	share	in	this	fragmented	industry.

					The	company	intends	to	continue	to	expand	its	market	share	and	grow	earnings	through	strategies	which	include:

•Sales	growth:	The	company	plans	to	grow	sales	by	gaining	an	increased	share	of	products	purchased	by	existing	customers,	development	of	new	customers,	the use	of	foldouts	(new	operating	companies	created	in	established	markets	previously	served	by	other	SYSCO	operating	companies)	and	a	disciplined	acquisition program.	The	company	uses	market	information	to	estimate	the	potential	sales	and	profitability	of	new	and	existing	customers.	Marketing	resources,	SYSCO Brand	products	and	value-added	services	provided	by	SYSCO	can	be	custom-tailored	to	the	purchasing	needs	of	customers.	Additionally,	the	investment	of resources	in	any	particular	account	can	be	made	in	proportion	to	the	account's	potential	profitability.

•	 Brand	management:	SYSCO	Brand	products	are	manufactured	by	suppliers	to	meet	SYSCO's	product	specifications	using	strict	quality	assurance	standards. SYSCO	believes	that	SYSCO	Brand	products	generally	provide	higher	profitability	than	national	brand	products	to	SYSCO.	SYSCO	believes	that	SYSCO Brand	products	also	provide	a	greater	value	to	SYSCO's	customers	and	differentiate	SYSCO	from	its	customers.

•Productivity	gains:	The	company's	investment	in	warehousing	and	transportation	technology	and	the	implementation	of	best	business	practices	allows	SYSCO	to leverage	operating	expenses	relative	to	sales	growth.

•Sales	force	effectiveness:	The	company	invests	in	the	development	and	expansion	of	its	customer	contact	resources	by	hiring	additional	customer	contact personnel	through	targeted	recruiting,	hiring	and	promotion	practices,	effective	use	of	training	programs	and	improved	compensation	systems.	Expanded business	review	and	business	development	functions	allow	the	sales	force	to	strengthen	customer	relationships	and	increase	sales.

•Supply	chain	management:	The	company's	National	Supply	Chain	project	and	related	organization	is	being	developed	to	reduce	total	supply	chain	costs, operating	costs	and	working	capital	requirements	of	the	company.

					The	company's	National	Supply	Chain	project	is	intended	to	optimize	the	supply	chain	activities	for	products	for	SYSCO's	operating	companies	in	each	respective region	and	as	a	result,	increase	profitability	and	lower	inventory	and	operating	costs,	working	capital	requirements	and	future	facility	expansion	needs	at	SYSCO's operating	companies	while	providing	greater	value	to	our	suppliers	and	customers.	The	company	expects	to	build	from	seven	to	nine	regional	distribution	centers	in	the United	States	over	the	next	seven	years.	The	first	of	these	centers,	the	Northeast	Redistribution	Center	located	in	Front	Royal,	Virginia,	opened	during	the	third	quarter of	fiscal	2005.	As	of	August	2005,	it	was	supplying	products	to	12	of	the	14	broadline	operating	companies	in	the	Northeast	Region	and	is	expected	to	be	shipping products	to	the	remaining	two	operating	companies	in	the	Northeast	Region	by	October	2005.	The	company	expects	to	begin	construction	of	its	second	regional redistribution	facility,	to	be	located	in	Alachua,	Florida,	in	fiscal	2006.

					The	expenses	related	to	the	National	Supply	Chain	project	in	the	first	quarter	of	fiscal	2006	are	expected	to	be	approximately	equal	to	expenses	in	the	fourth	quarter	of fiscal	2005	or	about	$15	million.	During	the	first	half	of	fiscal	2006,	the	ramp-up	phase	of	the	Northeast	Redistribution	Center	will	be	completed.	It	is	anticipated	that the	majority	of	benefits	that	will	be	realized	in	fiscal	2006	from	the	Northeast	Redistribution	Center	will	be	realized	during	the	second	half	of	fiscal	2006	as	this	is	when the	Northeast	Redistribution	Center	is	expected	to	be	operating	at	full	volume.

# Hurricane	Katrina

					Hurricane	Katrina	principally	impacted	our	operating	companies	in	Jackson,	Mississippi	and	New	Orleans,	Louisiana	as	well	as	causing	many	of	our	customers	in	the New	Orleans	and	Mississippi	Gulf	Coast	area	to	be	closed.	The	impacted	operations	in	Jackson	have	recovered	and	service	to	customers	has	been	restored.	SYSCO's facility	in	New	Orleans	sustained	only	minor	damage	from	the	storm	but	remained	closed	after	the	storm	due	to	conditions	in	New	Orleans.	The	facility	has	recently resumed	partial	operations;	however,	most	of	the	orders	received	from	customers	of	the	New	Orleans	facility	that	are	open	for	business	have	been	temporarily	rerouted to	other	nearby	SYSCO	facilities	for	fulfillment	and	delivery	until	the	New	Orleans	facility	has	been	restored	to	full	capacity.	We	are	still	assessing	the	impact	of Hurricane	Katrina	on	our	operations	in	the	areas	affected	by	the	storm;	however,	we	do	not	expect	this	occurrence	to	have	a	material	adverse	effect	on	SYSCO's financial	position	or	fiscal	2006's	operating	results	as	a	whole.

# Results	of	Operations

					The	following	table	sets	forth	the	components	of	the	Results	of	Operations	expressed	as	a	percentage	of	sales	for	the	periods	indicated:

|  | 2005 | 2004 | 2003 |
| :--- | :--- | :--- | :--- |
| Sales | \t100.0% | \t100.0% | \t100.0% |
| Costs\tand\tExpenses |  |  |  |
| Cost\tof\tsales | 80.9 | 80.7 | 80.3 |
| Operating\texpenses | 13.9 | 14.1 | 14.7 |
| Interest\texpense | 0.2 | 0.2 | 0.2 |
| Other,\tnet | 0.0 | 0.0 | 0.0 |
| Total\tcosts\tand\texpenses | 95.0 | 95.0 | 95.2 |
| Earnings\tbefore\tincome\ttaxes | 5.0 | 5.0 | 4.8 |
| Income\ttaxes | 1.8 | 1.9 | 1.8 |
| Net\tearnings | 3.2% | 3.1% | 3.0% |

					The	following	table	sets	forth	the	change	in	the	components	of	the	Results	of	Operations	expressed	as	a	percentage	increase	or	decrease	over	the	prior	year:

|  | 2005 | 2004 |
| :--- | :--- | :--- |
| Sales | 3.2% | \t12.2% |
| Costs\tand\tExpenses |  |  |
| Cost\tof\tsales | 3.5 | 12.8 |
| Operating\texpenses | 1.3 | 7.9 |
| Interest\texpense | 7.3 | \t(3.3) |
| Other,\tnet | \t(11.8) | 48.1 |
| Total\tcosts\tand\texpenses | 3.2 | 12.0 |
| Earnings\tbefore\tincome\ttaxes | 3.4 | 17.0 |
| Income\ttaxes | (0.7) | 17.8 |
| Net\tearnings | 6.0% | \t16.6% |
| Basic\tearnings\tper\tshare | 7.1% | \t17.5% |
| Diluted\tearnings\tper\tshare | 7.3 | 16.1 |
| Average\tshares\toutstanding | (1.0) | \t(1.2) |
| Diluted\tshares\toutstanding | (1.3) | 0.1 |

# Sales

					Sales	for	fiscal	2005	were	3.2%	greater	than	fiscal	2004,	or	5.3%	greater	after	adjusting	for	the	additional	week	in	fiscal	2004.	Sales	for	fiscal	2004	were	12.2% greater	than	fiscal	2003,	or	10.0%	greater	after	adjusting	for	the	additional	week	in	fiscal	2004.	Because	the	fourth	quarter	of	fiscal	2004	contained	an	additional	week	as compared	to	fiscal	2005	and	fiscal	2003,	sales	growth	for	fiscal	years	2005,	2004	and	2003	are	not	directly	comparable.	In	order	to	provide	a	more	comparable	picture	of sales	growth,	management	believes	that	it	is	appropriate	to	adjust	the	sales	figures	for	fiscal	2004	by	the	estimated	impact	of	the	additional	week.	As	a	result,	sales	for fiscal	2004	presented	in	the	table	below	are	adjusted	by	one-fourteenth	of	total	sales	for	the	fourth	quarter.	Set	forth	below	is	a	reconciliation	of	actual	sales	growth	to adjusted	sales	growth	for	the	periods	presented:

|  | 2005 | 2004 | 2003 |
| :--- | :--- | :--- | :--- |
|  | (52\tWeeks) | (53\tWeeks) | (52\tWeeks) |
| Sales\tfor\tthe\tfiscal\tyear | $30,281,914,000 | $29,335,403,000 | $26,140,337,000 |
| Estimated\tsales\tfor\tthe\tadditional\tweek | — | 581,358,000 | — |
| Adjusted\tsales | $30,281,914,000 | $28,754,045,000 | $26,140,337,000 |
| Actual\tpercentage\tincrease | 3.2% | 12.2% | 11.9% |
| Adjusted\tpercentage\tincrease | 5.3% | 10.0% | 11.9% |

					Acquisitions	contributed	0.8%	to	the	overall	sales	growth	rate	for	fiscal	2005	and	0.9%	for	fiscal	2004.	SYSCO	generally	expects	to	pass	product	cost	increases	to	its customers;	however,	the	actual	amount	of	inflation	reflected	as	sales	price	increases	is	difficult	to	quantify.	Estimated	product	cost	increases	were	3.5%	during	fiscal 2005	as	compared	to	6.3%	during	fiscal	2004.

					Management	believes	that	prolonged	periods	of	rising	product	costs	together	with	general	economic	conditions,	including	the	impact	of	increased	fuel	costs	on consumer	spending,	contributed	to	the	softness	in	the	foodservice	market	and	thus	a	slowing	of	SYSCO's	sales	growth	beginning	in	the	latter	half	of	the	fourth	quarter	of fiscal	2004	and	continuing	into	the	first	half	of	fiscal	2005.

After	adjusting	for	the	additional	week	in	last	year's	fourth	quarter,	sales	growth	remained	relatively	stable	over	the	course	of	fiscal	2005.	Management	believes	that	the declining	rate	of	product	cost	increases	over	the	course	of	fiscal	2005	has	lessened	the	overall	gross	margin	pressures	experienced	during	the	year	and	has	contributed	to the	underlying	unit	growth	in	the	latter	half	of	fiscal	2005.	Additionally,	management	believes	that	the	maturation	of	the	company's	business	review	process	has contributed	to	unit	sales	growth.

					The	company	also	continues	its	focus	on	profitable	sales	growth.	One	part	of	this	strategy	involves	being	more	selective	with	respect	to	which	customers	we	serve, including	improving	the	profitability	of,	or	ultimately	exiting,	unprofitable	customers	and	refining	the	use	of	customer	purchasing	potential	and	profitability	data	in targeting	new	customers.	The	company	continues	to	see	reductions	in	sales	to	unprofitable	customers	over	the	comparable	prior	year	periods.	In	addition,	the	number	of customer	contact	personnel	increased	almost	2%	in	the	fourth	quarter	of	fiscal	2005	as	compared	to	the	number	at	the	end	of	the	third	quarter	of	fiscal	2005.	The company	intends	to	continue	to	increase	the	number	of	customer	contact	associates	in	fiscal	2006.

					Industry	sources	estimate	the	total	foodservice	market	experienced	real	sales	growth	of	approximately	2.4%	in	calendar	year	2004	and	real	sales	decline	of approximately	0.1%	in	calendar	year	2003.

					A	comparison	of	the	sales	mix	in	the	principal	product	categories	during	the	last	three	years	is	presented	below:

|  | 2005 | 2004 | 2003 |
| :--- | :--- | :--- | :--- |
| Fresh\tand\tfrozen\tmeats | 19% | 19% | 18% |
| Canned\tand\tdry\tproducts | 18 | 18 | 19 |
| Frozen\tfruits,\tvegetables,\tbakery\tand\tother | 14 | 14 | 14 |
| Poultry | 11 | 11 | 10 |
| Dairy\tproducts | 9 | 9 | 9 |
| Fresh\tproduce | 8 | 8 | 8 |
| Paper\tand\tdisposables | 8 | 8 | 8 |
| Seafood | 5 | 5 | 6 |
| Beverage\tproducts | 3 | 3 | 3 |
| Equipment\tand\tsmallwares | 2 | 2 | 2 |
| Janitorial\tproducts | 2 | 2 | 2 |
| Medical\tsupplies | 1 | 1 | 1 |
|  | \t100% | \t100% | \t100% |

					A	comparison	of	sales	by	type	of	customer	during	the	last	three	years	is	presented	below:

|  | 2005 | 2004 | 2003 |
| :--- | :--- | :--- | :--- |
| Restaurants | 64% | 64% | 63% |
| Hospitals\tand\tnursing\thomes | 10 | 10 | 10 |
| Schools\tand\tcolleges | 5 | 5 | 6 |
| Hotels\tand\tmotels | 6 | 6 | 6 |
| All\tother | 15 | 15 | 15 |
|  | \t100% | \t100% | \t100% |

# Gross	Margins

					Gross	margins	as	a	percentage	of	sales	declined	in	fiscal	2005	when	compared	to	the	prior	year.	Management	believes	that	this	gross	margin	decline	was	caused	by several	factors,	including	product	cost	increases,	changes	in	segment	mix,	customer	mix	and	pricing	pressure.	Product	cost	increases	in	most	of	the	product	categories had	the	impact	of	reducing	gross	margins	as	a	percentage	of	sales,	as	gross	profit	dollars	are	earned	on	a	higher	sales	dollar	base.	The	decline	in	gross	margins	as	a percent	of	sales	slowed	during	the	course	of	fiscal	2005	due	in	part	to	a	lessening	of	the	rate	of	product	cost	increases	during	the	fiscal	year.

					Gross	margins	as	a	percentage	of	sales	declined	in	fiscal	2004	when	compared	to	the	prior	year.	Management	believes	that	gross	margins	as	a	percentage	of	sales	in fiscal	2004	were	impacted	by	several	factors,	including	product	cost	increases,	changes	in	customer	mix,	segment	mix	and	product	mix	and	pricing	pressure.

# Operating	Expenses

					Operating	expenses	include	the	costs	of	warehousing	and	delivering	products	as	well	as	selling,	administrative	and	occupancy	expenses.	Changes	in	the	percentage relationship	of	operating	expenses	to	sales	result	from	an	interplay	of	several	factors,	including	improved	efficiencies,	customer	mix,	and	product	cost	increases	which result	in	increases	in	sales	prices.

					The	decrease	in	operating	expenses	as	a	percentage	of	sales	in	fiscal	2005	as	compared	to	fiscal	2004	was	aided	by	improved	operating	efficiencies.	For	example,	the Broadline	segment	continues	to	demonstrate	improving	trends	in	key	expense	metrics,	including	miles	driven	per	trip,	pieces	per	stop	and	pieces	per	error.	Increases	in product	costs	and	the	resulting	increased	average	sales	price	per	item	also	favorably	impacted	expenses	as	a	percentage	of	sales	as	operating	costs	increased	at	a	lower rate.

					Operating	expenses	were	negatively	impacted	by	increased	costs	to	deliver	product	to	customers	due	to	increased	fuel	costs	of	approximately	$31,000,000	in	fiscal 2005	over	the	prior	year.	Operating	expenses	related	to	the	National	Supply	Chain	project	were	$46,450,000	in	fiscal	2005,	as	compared	to	$29,333,000	in	fiscal	2004. Also	included	in	operating	expenses	was	the	recognition	of	a	gain	of	$13,803,000	in	fiscal	2005	to	adjust	the	carrying	value	of	life	insurance	assets	to	their	cash	surrender value,	as	compared	to	a	gain	of	$19,124,000	in	fiscal	2004.	Operating	expenses	were	favorably	impacted	by	a	reduction	of	management	performance	based	incentive bonuses	of	$26,989,000	and	a	decrease	in	net	pension	cost	of	$7,374,000	in	fiscal	2005	as	compared	to	fiscal	2004.

					The	decrease	in	expenses	as	a	percentage	of	sales	in	fiscal	2004	as	compared	to	fiscal	2003	was	attributable	to	several	factors	including	improved	operating efficiencies	as	demonstrated	by	improving	trends	in	key	expense	metrics	tracked	at	the	broadline	operating	companies,	including	pieces	sold	per	delivery,	product	line items	sold	per	delivery,	pieces	per	trip	and	pieces	per	error.	Increases	in	product	costs	and	the	resulting	increased	average	sales	price	per	item	also	favorably	impacted expenses	as	a	percentage	of	sales	as	operating	costs	increased	at	a	lower	rate.	Operating	expenses	were	negatively	impacted	by	increases	in	net	pension	costs	of $39,944,000	and	by	increases	in	expenses	related	to	the	National	Supply	Chain	project	of	$5,584,000	over	fiscal	2003.	Also	included	in	operating	expenses	was	the recognition	of	a	gain	of	$19,124,000	in	fiscal	2004	to	adjust	the	carrying	value	of	life	insurance	assets	to	their	cash	surrender	value,	as	compared	to	a	loss	of	$156,000	in fiscal	2003.

					In	order	to	partially	manage	the	volatility	and	uncertainty	of	fuel	costs,	SYSCO	from	time	to	time	will	enter	into	forward	purchase	commitments	for	a	portion	of SYSCO's	projected	monthly	diesel	fuel	requirements.	Forward	diesel	fuel	purchase	commitments	outstanding	as	of	July	2,	2005	were	not	material.

# Interest	Expense

					The	increase	in	interest	expense	in	fiscal	2005	was	due	to	increased	borrowing	interest	rates.	The	increase	in	the	company's	overall	borrowing	interest	rates	was primarily	due	to	an	increase	in	the	percentage	of	the	company's	debt	with	fixed	interest	rates	in	fiscal	2005	as	compared	to	fiscal	2004.	In	fiscal	2004,	the	company's debt	portfolio	included	a	larger	percentage	of	floating	rate	debt	in	the	form	of	either	commercial	paper	issuances	or	fixed	rate	debt	converted	to	floating	through	interest rate	swap	agreements.	In	addition,	market	interest	rates	have	increased	during	fiscal	2005.

					The	decrease	in	interest	expense	in	fiscal	2004	was	primarily	due	to	lower	borrowing	interest	rates	offsetting	moderately	higher	borrowing	levels.	The	lower	average borrowing	rates	of	the	company	in	fiscal	2004	were	due	to	lower	short-term	market	interest	rates	and	the	use	of	interest	rate	swaps	which	converted	the	fixed	rates	of interest	on	a	portion	of	SYSCO's	long	term	debt	to	lower	variable	rates	of	interest.

# Other,	Net

					Changes	between	the	years	result	from	fluctuations	in	miscellaneous	activities,	primarily	gains	and	losses	on	the	sale	of	surplus	facilities.

# Income	Taxes

					The	effective	tax	rate	was	36.97%	in	fiscal	2005,	38.50%	in	fiscal	2004	and	38.25%	in	fiscal	2003.	The	income	tax	provision	in	fiscal	2005	includes	a	tax	benefit	of $8,500,000	primarily	related	to	the	reversal	of	valuation	allowances	previously	recorded	on	certain	state	net	operating	loss	carryforwards	and	a	tax	benefit	of $11,000,000	related	to	the	reversal	of	a	tax	contingency	accrual.

# Net	Earnings

					Fiscal	2005	represents	the	twenty-ninth	consecutive	year	of	increased	earnings	before	the	cumulative	effect	of	accounting	changes.	The	increases	were	due	to	the factors	discussed	above.	In	addition,	the	comparison	of	fiscal	2005's	net	earnings	to	fiscal	2004	was	negatively	impacted	by	the	additional	53rd	week	in	fiscal	2004.

# Earnings	Per	Share

					The	increases	in	earnings	per	share	were	the	result	of	factors	discussed	above,	as	well	as	a	net	reduction	of	shares	outstanding	due	primarily	to	share	repurchases.

# Return	on	Average	Shareholders'	Equity

					The	return	on	average	shareholders'	equity	was	approximately	35%	in	fiscal	2005,	39%	in	fiscal	2004	and	36%	in	fiscal	2003.	The	higher	return	in	fiscal	2004	was primarily	due	to	the	impact	of	minimum	pension	liability	adjustments	to	shareholders'	equity.	Since	its	inception,	SYSCO	has	averaged	approximately	20%	return	on average	shareholders'	equity.

# Segment	Results

					The	following	table	sets	forth	the	change	in	the	selected	financial	data	of	each	of	the	company's	reportable	segments	expressed	as	a	percentage	increase	over	the	prior year	and	should	be	read	in	conjunction	with	Business	Segment	Information	in	the	Notes	to	Consolidated	Financial	Statements:

|  | 2005 | 2005 | 2004 | 2004 |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Earnings |  | Earnings |
|  | Sales | Before\tTaxes | Sales | Before\tTaxes |
| Broadline | 1.7% | 5.3% | \t10.4% | 13.0% |
| SYGMA | 10.4 | (28.1) | 21.7 | 5.8 |
| Other | 8.2 | 6.6 | 19.0 | 53.5 |

					The	following	table	sets	forth	sales	and	earnings	before	taxes	of	each	of	the	company's	reportable	segments	expressed	as	a	percentage	of	the	respective	consolidated total	and	should	be	read	in	conjunction	with	Business	Segment	Information	in	the	Notes	to	Consolidated	Financial	Statements:

# Broadline	Segment

					Acquisitions	contributed	0.1%	to	the	overall	sales	growth	rate	for	fiscal	2005	and	0.2%	in	fiscal	2004.	The	fiscal	2005	sales	growth	was	primarily	due	to	increased sales	to	marketing	associate-served	customers	and	multi-unit	customers,	including	increased	sales	of	SYSCO	Brand	products	and	increases	in	both	sales	prices	and	unit volumes.	The	comparison	of	fiscal	2005	sales	to	fiscal	2004	is	negatively	impacted	by	the	additional	week	in	fiscal	2004.

					The	fiscal	2004	sales	growth	was	due	to	increased	sales	to	marketing	associate-served	customers	and	multi-unit	customers,	including	increased	sales	of	SYSCO	Brand products,	and	price	increases	resulting	from	higher	product	costs.	The	additional	week	also	contributed	to	the	sales	growth	in	fiscal	2004.	The	sales	growth	in	fiscal	2005 and	2004	was	obtained	through	increased	sales	to	the	existing	customer	base	as	well	as	the	acquisition	of	new	customers.

					The	decrease	of	Broadline	segment	sales	as	a	percentage	of	total	SYSCO	sales	in	fiscal	2005	was	due	primarily	to	strong	sales	growth	in	the	SYGMA	and	other segments	outpacing	the	Broadline	sales	growth,	as	well	as	the	contributions	to	sales	growth	from	the	acquisitions	of	specialty	produce	and	SYGMA	operations	during fiscal	2005	and	fiscal	2004.	The	decrease	of	Broadline	segment	sales	as	a	percentage	of	total	SYSCO	sales	in	fiscal	2004	was	due	primarily	to	strong	sales	growth	in	the SYGMA	and	other	segments	outpacing	the	Broadline	sales	growth,	as	well	as	the	contribution	to	sales	growth	from	the	acquisition	of	the	Asian	cuisine	foodservice operations	during	fiscal	2003.

					Marketing	associate-served	sales	as	a	percentage	of	broadline	sales	in	the	U.S.	increased	to	53.8%	in	fiscal	2005	as	compared	to	53.5%	in	fiscal	2004.	SYSCO	Brand sales	as	a	percentage	of	broadline	sales	in	the	U.S.	decreased	to	49.4%	for	fiscal	2005	as	compared	to	49.5%	in	fiscal	2004.

					The	increase	in	earnings	before	income	taxes	for	fiscal	2005	was	primarily	due	to	increases	in	sales	and	increased	operating	efficiencies	aided	by	lower	expenses	as	a percentage	of	sales.	Factors	contributing	to	the	lower	expenses	as	a	percentage	of	sales	were	reduced	performance	based	management	incentive	compensation	and decreased	net	periodic	pension	costs,	which	overcame	higher	fuel	costs	and	increased	expenditures	related	to	the	National	Supply	Chain	project.	The	comparison	of fiscal	2005's	earnings	before	income	taxes	to	fiscal	2004	was	also	negatively	impacted	by	the	additional	53rd	week	in	fiscal	2004.

					The	increase	in	earnings	before	income	taxes	for	fiscal	year	2004	was	primarily	due	to	increased	sales	and	reduced	expenses	as	a	percentage	of	sales,	which	more	than offset	reduced	margins	as	a	percentage	of	sales.	The	additional	week	also	contributed	to	the	earnings	growth	in	fiscal	2004.

# SYGMA	Segment

					Acquisitions	contributed	2.6%	to	the	overall	sales	growth	rate	for	fiscal	2005	and	1.9%	in	fiscal	2004.	The	comparison	of	fiscal	2005	sales	to	fiscal	2004	is	negatively impacted	by	the	additional	week	in	fiscal	2004.	Both	the	fiscal	2005	and	fiscal	2004	sales	growth	was	due	primarily	to	sales	to	new	customers,	sales	growth	in	SYGMA's existing	customer	base	related	to	new	locations	added	by	those	customers,	as	well	as	increases	in	sales	to	existing	locations,	price	increases	resulting	primarily	from higher	product	costs	and	sales	from	acquisitions.	The	additional	week	also	contributed	to	the	sales	growth	in	fiscal	2004.

					The	decrease	in	earnings	before	income	taxes	in	fiscal	2005	was	due	to	several	factors.	During	the	fourth	quarter	of	fiscal	2004	and	the	first	quarter	of	fiscal	2005, SYGMA	discontinued	servicing	a	portion	of	its	largest	customer's	locations	due	to	that	customer's	geographic	supply	chain	realignment.	SYGMA	offset	these	lost	sales by	obtaining	sales	from	additional	locations	from	this	customer	and	obtaining	new	business	from	other	customers.	In	many	cases,	this	new	business	is	being	served	out of	different	SYGMA	locations	than	those	that	originally	served	the	discontinued	business.	SYGMA	opened	a	new	facility	to	serve	a	portion	of	the	new	business	which	it began	serving	in	the	fourth	quarter	of	fiscal	2005.	As	a	result,	during	the	fourth	quarter	of	fiscal	2004	and	throughout	fiscal	2005,	SYGMA's	operating	profits	have	been impacted	by	increased	operating	expenses	as	it	transitioned	its	operations	to	serve	the	new	business	it	has	acquired.	In	addition,	SYGMA's	gross	margins	as	a	percent	of sales	in	fiscal	2005	have	declined	from	the	comparable	period	in	fiscal	2004	due	to	product	cost	increases	and	lower	agreed	upon	pricing	with	its	customers.

					The	increase	in	earnings	before	income	taxes	in	fiscal	2004	was	primarily	due	to	the	increased	sales	offset	by	increased	expenses	incurred	related	to	implementation of	new	systems,	severance	payments	related	to	certain	personnel	changes,	costs	related	to	worker's	compensation	insurance	claims	and	pension	costs.	The	additional week	also	contributed	to	the	earnings	growth	in	fiscal	2004.

# Liquidity	and	Capital	Resources

					SYSCO	provides	marketing	and	distribution	services	to	foodservice	customers	primarily	throughout	the	United	States	and	Canada.	The	company	intends	to	continue to	expand	its	market	share	through	profitable	sales	growth,	foldouts	and	acquisitions.	The	company	also	strives	to	increase	the	effectiveness	of	its	customer	contact personnel,	its	consolidated	buying	programs	and	the	productivity	of	its	warehousing	and	distribution	activities.	These	objectives	require	continuing	investment. SYSCO's	resources	include	cash	provided	by	operations	and	access	to	capital	from	financial	markets.

					SYSCO's	operations	historically	have	produced	significant	cash	flow.	Cash	generated	from	operations	is	first	allocated	to	working	capital	requirements;	investments in	facilities,	fleet	and	other	equipment	required	to	meet	customers'	needs;	cash	dividends;	and	acquisitions	compatible	with	the	company's	overall	growth	strategy.	Any remaining	cash	generated	from	operations	may,	at	the	discretion	of	management,	be	applied	toward	a	portion	of	the	cost	of	the	share	repurchase	program,	while	the remainder	of	the	cost	may	be	financed	with	additional	long-term	debt.	SYSCO's	share	repurchase	program	is	used	primarily	to	offset	shares	issued	under	various employee	benefit	and	compensation	plans,	for	acquisitions,	to	reduce	shares	outstanding	(which	may	have	the	net	effect	of	increasing	earnings	per	share)	and	to	aid	in managing	the	ratio	of	long-term	debt	to	total	capitalization.	Management	targets	a	long-term	debt	to	total	capitalization	ratio	between	35%	and	40%.	The	ratio	may exceed	the	target	range	from	time	to	time,	due	to	borrowings	incurred	in	order	to	fund	acquisitions	and	internal	growth	opportunities,	and	due	to	fluctuations	in	the timing	and	amount	of	share	repurchases.	The	ratio	also	may	fall	below	the	target	range	due	to	strong	cash	flow	from	operations	and	fluctuations	in	the	timing	and amount	of	share	repurchases.	This	ratio	was	33.1%	and	35.2%	at	July	2,	2005	and	July	3,	2004,	respectively.	For	purposes	of	calculating	this	ratio,	long-term	debt includes	both	the	current	maturities	and	long-term	portion.

					In	April	2005,	SYSCO	filed	with	the	Securities	and	Exchange	Commission	a	shelf	registration	statement	covering	$1,500,000,000	in	debt	securities.	The	registration statement	was	declared	effective	in	May	2005.	In	June	2005,	SYSCO	repaid	the	6.5%	senior	notes	totaling	$150,000,000	at	maturity	utilizing	a	combination	of	cash flow	from	operations	and	commercial	paper	issuances.	In	July	2005,	SYSCO	also	repaid	the	4.75%	senior	notes	totaling	$200,000,000	at	maturity	also	utilizing	a combination	of	cash	flow	from	operations	and	commercial	paper	issuances.	The	company	intends	to	issue	between	$350,000,000	and	$500,000,000	of	long-term	debt	in September	2005.	The	amount	of	long-term	debt	that	SYSCO	issues	will	depend	upon	market	conditions	at	the	time	of	issuance.	The	proceeds	from	such	issuance	are intended	to	be	utilized	to	repay	outstanding	commercial	paper	issuances	and	for	working	capital	and	general	corporate	purposes.

					Also	during	the	fall	of	2005,	the	company	intends	to	renegotiate	its	revolving	bank	credit	facility	which	supports	the	U.S.	commercial	paper	program.

# Operating	Activities

					Cash	flow	from	operations	in	fiscal	2005	was	negatively	impacted	by	increases	in	inventory	balances	of	$35,014,000	and	increases	in	accounts	receivable	balances	of $72,829,000,	partially	offset	by	an	increase	in	accounts	payable	balances	of	$28,080,000.	Cash	flow	from	operations	in	fiscal	2004	was	negatively	impacted	by	increases in	inventory	balances	of	$162,502,000	and	increases	in	accounts	receivable	balances	of	$177,058,000,	offset	by	an	increase	in	accounts	payable	balances	of $95,874,000.	Cash	flow	from	operations	in	fiscal	2003	was	negatively	impacted	by	increases	in	inventory	balances	of	$69,959,000	and	increases	in	accounts	receivable balances	of	$218,150,000,	offset	by	an	increase	in	accounts	payable	balances	of	$237,360,000.

					Also	impacting	cash	flow	from	operations	was	a	decrease	in	accrued	expenses	of	$32,674,000	in	fiscal	2005,	an	increase	in	accrued	expenses	of	$61,544,000	in	fiscal 2004	and	a	decrease	in	accrued	expenses	of	$12,480,000	in	fiscal	2003.	The	changes	in	accrued	expenses	in	each	year	are	primarily	due	to	the	amount	of	accrued incentive	bonuses	related	to	that	year.

					Also	impacting	cash	flow	from	operations	were	decreases	in	other	long	term	liabilities	and	prepaid	pension	cost	of	$86,338,000	in	fiscal	2005,	$35,056,000	in	fiscal 2004	and	$72,814,000	in	fiscal	2003.	The	decreases	in	other	long-term	liabilities	and	prepaid	pension	cost	in	each	year	are	primarily	due	to	the	amount	of	pension contributions	exceeding	the	net	pension	cost	recognized	in	each	year.	The	company's	contributions	to	its	defined	benefit	plans	were	$220,361,000,	$165,512,000	and $164,565,000	during	fiscal	2005,	fiscal	2004	and	fiscal	2003,	respectively.	Included	in	the	amounts	contributed	in	fiscal	2005	was	$134,000,000	voluntarily	contributed to	the	qualified	pension	plan	in	the	fourth	quarter.	The	decision	to	increase	the	contributions	to	the	qualified	pension	plan	in	fiscal	2005	was	primarily	due	to	the decreased	discount	rate,	which	increased	the	pension	obligation	and	negatively	impacted	the	fiscal	2005	year-end	pension	funded	status.	The	company	expects	to contribute	approximately	$74,000,000	to	its	defined	benefit	plans	in	fiscal	2006.

					During	the	second	quarter	of	fiscal	2002,	the	company	began	reorganizing	its	supply	chain	to	maximize	consolidated	efficiencies	and	increase	the	effectiveness	of	the merchandising	and	procurement	functions	performed	for	the	benefit	of	customers.	The	structure	results	in	the	deferral	of	certain	federal	and	state	income	tax	payments, as	supply	chain	distributions	are	not	included	in	taxable	income	until	distributed	in	periods	subsequent	to	when	they	are	recognized	in	book	income.	Fiscal	2004	is	the first	period	that	supply	chain	distributions	were	included	in	taxable	income	since	the	company	began	deferring	these	items	for	tax	purposes	in	fiscal	2002.	As	a	result	of the	impact	of	these	items	and	other	temporary	differences,	including	the	utilization	of	net	operating	loss	carryforwards,	excess	tax	depreciation	and	pension contributions,	taxes	paid	during	fiscal	2005	and	2004	increased	to	$436,378,000	and	$344,414,000,	respectively,	as	compared	to	$28,747,000	in	fiscal	2003.	The	net	cash flow	impact	of	supply	chain	distribution	deferrals	in	fiscal	2005	was	incrementally	positive	when	compared	to	what	would	have	been	paid	on	an	annual	basis	without	the deferral,	due	to	increased	volume	through	this	structure.

					The	amount	of	taxes	paid	in	fiscal	2004	was	reduced	by	$70,615,000	as	the	result	of	the	utilization	of	a	U.S.	federal	net	operating	loss	carryforward.	This	net	operating loss	carryforward	was	generated	in	fiscal	2003	primarily	as	a	result	of	the	deferral	of	supply	chain	distributions.

					Also	impacting	the	amount	of	taxes	paid	in	each	year	is	the	amount	of	deductible	pension	contributions	made	in	each	year.	As	indicated	above,	the	company	expects that	its	pension	contributions	in	fiscal	2006	will	be	substantially	less	than	the	contributions	made	in	the	preceeding	three	fiscal	years.

# Investing	Activities

					Fiscal	2005	capital	expenditures	included	the	construction	of	fold-out	facilities	in	Spokane,	Washington	and	Geneva,	Alabama,	replacement	or	significant	expansion of	facilities	in	Baltimore,	Maryland;	Cleveland,	Ohio;	Denver,	Colorado;	Milwaukee,	Wisconsin;	Miami,	Florida;	and	Hartford,	Connecticut,	and	the	completion	of	the Northeast	Redistribution	Center	in	Front	Royal,	Virginia.	Fiscal	2005	capital	expenditures	related	to	the	National	Supply	Chain	project	were	$34,009,000,	bringing	the total	amount	of	capital	expenditures	on	the	project	since	inception	to	$186,263,000.

					Fiscal	2004	capital	expenditures	included	the	construction	of	fold-out	facilities	in	Oxnard,	California	and	Fargo,	North	Dakota,	replacement	or	significant	expansion of	facilities	in	Billings,	Montana;	Cleveland,	Ohio;	Jacksonville,	Florida;	Miami,	Florida;	and	San	Antonio,	Texas,	and	the	Northeast	Redistribution	Center	in	Front Royal,	Virginia	as	well	as	continued	expenditures	related	to	the	National	Supply	Chain	project.

					Fiscal	2003	capital	expenditures	included	the	construction	of	fold-out	facilities	in	Las	Vegas,	Nevada	and	Oxnard,	California,	replacement	facilities	in	Cleveland, Ohio;	Dallas,	Texas;	and	Miami,	Florida	and	the	Northeast	Redistribution	Center	in	Front	Royal,	Virginia.

					Total	expenditures	in	fiscal	2006	are	expected	to	be	in	the	range	of	$425,000,000	to	$450,000,000.	Fiscal	2006	expenditures	will	include	the	continuation	of	the	fold- out	program;	facility,	fleet	and	other	equipment	replacements	and	expansions;	a	corporate	office	expansion;	the	company's	National	Supply	Chain	project;	and investments	in	technology.

					During	fiscal	2005,	SYSCO	acquired	for	cash	one	broadline	foodservice	operation,	four	custom	meat-cutting	operations,	and	two	specialty	produce	distributors. During	fiscal	2004,	SYSCO	acquired	for	cash	certain	assets	of	two	broadline	foodservice	operations,	a	specialty	produce	distributor,	and	one	quickservice	operation. During	fiscal	2003,	SYSCO	acquired	for	cash	a	broadline	foodservice	operation,	two	quickservice	operations,	a	custom	meat-cutting	operation,	a	specialty	distributor	of products	to	the	Asian	cuisine	foodservice	market	and	a	distributor	of	paper	and	chemical	products.

# Financing	Activities

					The	company	made	four	regular	quarterly	dividend	payments	during	each	of	fiscal	years	2005,	2004	and	2003.	SYSCO	began	paying	the	current	quarterly	dividend rate	of	$0.15	per	share	in	January	2005,	an	increase	from	the	$0.13	per	share	that	became	effective	in	January	2004.	In	May	2005,	SYSCO	declared	its	regular	quarterly dividend	for	the	first	quarter	of	fiscal	2006	of	$0.15	per	share,	which	was	paid	in	July	2005.	In	September	2005,	SYSCO	also	declared	its	regular	quarterly	dividend	for the	second	quarter	of	fiscal	2006	of	$0.15	per	share,	payable	in	October	2005.

					In	November	2000,	the	company	filed	with	the	Securities	and	Exchange	Commission	a	shelf	registration	statement	covering	30,000,000	shares	of	common	stock	to be	offered	from	time	to	time	in	connection	with	acquisitions.	As	of	August	27,	2005,	29,447,835	shares	remained	available	for	issuance	under	this	registration	statement.

					In	June	1998,	the	company	filed	with	the	Securities	and	Exchange	Commission	a	shelf	registration	statement	covering	$500,000,000	in	debt	securities.	As	of August	27,	2005,	$425,000,000	in	debt	securities	had	been	issued	under	the	registration	statement,	leaving	$75,000,000	available	for	issuance.

					In	March	2004,	SYSCO	issued	4.60%	notes	totaling	$200,000,000	due	March	15,	2014	in	a	private	offering.	Proceeds	from	the	notes	were	utilized	to	retire outstanding	commercial	paper.

					In	April	2005,	SYSCO	filed	with	the	Securities	and	Exchange	Commission	a	shelf	registration	statement	covering	$1,500,000,000	in	debt	securities.	The	registration statement	was	declared	effective	in	May	2005.	In	June	2005,	SYSCO	repaid	the	6.5%	senior	notes	totaling	$150,000,000	at	maturity	utilizing	a	combination	of	cash flow	from	operations	and	commercial	paper	issuances.	In	July	2005,	SYSCO	repaid	the	4.75%	senior	notes	totaling	$200,000,000	at	maturity	also	utilizing	a combination	of	cash	flow	from	operations	and	commercial	paper	issuances.	The	company	intends	to	issue	between	$350,000,000	and	$500,000,000	of	long-term	debt	in September	2005.	The	amount	of	long-term	debt	that	SYSCO	issues	will	depend	on	market	conditions	at	the	time	of	issuance.	The	proceeds	from	such	issuance	are intended	to	be	utilized	to	repay	outstanding	commercial	paper	issuances	and	for	working	capital	and	general	corporate	purposes.

					In	March	2005,	SYSCO	entered	into	a	forward-starting	interest	rate	swap	with	a	notional	amount	of	$350,000,000	as	a	cash	flow	hedge	of	the	variability	in	the	cash outflows	of	interest	payments	on	the	forecasted	debt	issuance	due	to	changes	in	the	benchmark	interest	rate.	The	fair	value	of	the	swap	as	of	July	2,	2005	was ($32,584,000),	which	is	reflected	in	Accrued	expenses	on	the	Consolidated	Balance	Sheet,	with	the	corresponding	amount	reflected	as	a	loss,	net	of	tax,	in	Other comprehensive	income.

					From	August	1,	2005	through	August	27,	2005,	outstanding	commercial	paper	issuances	have	averaged	$511,847,000.	This	increased	level	of	commercial	paper issuances	is	primarily	a	result	of	the	repayment	of	the	6.5%	senior	notes	and	4.75%	senior	notes,	which	matured	June	15,	2005	and	July	30,	2005,	respectively,	coupled with	a	contribution	to	the	qualified	pension	plan	of	$134,000,000	at	the	end	of	fiscal	2005.	As	described	above,	the	company	intends	to	issue	long-term	debt	in September	2005.	Until	such	time,	SYSCO	believes	that	outstanding	commercial	paper	issuances	will	continue	at	these	current	levels.	The	company	expects	to	continue to	meet	its	capital	investment	and	working	capital	requirements	during	this	period.	The	company	also	believes	that	it	continues	to	have	access	to	additional	debt financing	if	needed.

					As	part	of	normal	business	activities,	SYSCO	issues	letters	of	credit	through	major	banking	institutions	as	required	by	certain	vendor	and	insurance	agreements.	As of	July	2,	2005	and	July	3,	2004,	letters	of	credit	outstanding	were	$76,817,000	and	$11,001,000,	respectively.	The	increase	in	letters	of	credit	outstanding	from	July	3, 2004	to	July	2,	2005	was	due	primarily	to	the	issuance	of	a	letter	of	credit	in	April	2005	in	the	amount	of	$72,000,000	to	satisfy	the	collateral	requirement	for	an insurance	agreement	which	was	previously	satisfied	with	funds	on	deposit	in	an	insurance	trust.

					In	summary,	management	believes	that	the	company's	cash	flows	from	operations,	as	well	as	the	availability	of	capital	under	its	existing	commercial	paper programs,	bank	lines	of	credit,	debt	shelf	registration	and	its	ability	to	access	capital	from	financial	markets	in	the	future,	will	be	sufficient	to	meet	its	cash	requirements while	maintaining	proper	liquidity	for	normal	operating	purposes.

# Contractual	Obligations

					The	following	table	sets	forth	certain	information	concerning	SYSCO's	obligations	and	commitments	to	make	contractual	future	payments:

|  |  | Less	Than |  |  | More	Than |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Total | 1\tYear | 1-3\tYears | 3-5\tYears | 5\tYears |
|  |  |  | (In\tthousands) |  |  |
| Short-term\tdebt\tand\tcommercial\tpaper | $188,851 | $63,998 | $124,853 | $— | $— |
| Long-term\tdebt | 1,207,586 | 401,521 | 104,921 | 469 | 700,675 |
| Capital\tlease\tobligations | 34,671 | 9,412 | 4,366 | 1,024 | 19,869 |
| Long-term\tnon-capitalized\tleases | 305,402 | 56,824 | 76,772 | 51,917 | 119,889 |
| Deferred\tcompensation\t(1) | 98,929 | 4,623 | 7,415 | 5,318 | 81,573 |
| Purchase\tobligations\t(2) | 725,436 | 714,910 | 10,526 | — | — |
| Total\tcontractual\tcash\tobligations | $2,560,875 | $1,251,288 | $328,853 | $58,728 | $922,006 |

(1) 	 The	estimate	of	the	timing	of	future	payments	under	the	Executive	Deferred	Compensation	Plan	involves	the	use	of	certain	assumptions,	including	retirement	ages and	payout	periods.

(2) For	purposes	of	this	table,	purchase	obligations	include	agreements	for	purchases	of	product	in	the	normal	course	of	business,	for	which	all	significant	terms	have been	confirmed.	Such	amounts	included	in	the	table	above	are	based	on	estimates.	Purchase	obligations	also	includes	amounts	committed	with	a	third	party	to provide	hardware	and	hardware	hosting	services	(See	discussion	under	Commitments	and	Contingencies	in	the	Notes	to	Consolidated	Financial	Statements	in Item	8).

					Certain	acquisitions	involve	contingent	consideration,	typically	payable	only	in	the	event	that	certain	operating	results	are	attained	or	certain	outstanding contingencies	are	resolved.	Aggregate	contingent	consideration	amounts	outstanding	as	of	July	2,	2005	included	approximately	1,059,000	shares	of	SYSCO's	common stock	and	$105,614,000	in	cash.	These	amounts	are	not	included	in	the	table	above.

# Critical	Accounting	Policies

					The	preparation	of	financial	statements	in	conformity	with	generally	accepted	accounting	principles	requires	management	to	make	estimates	and	assumptions	that affect	the	reported	amounts	of	assets,	liabilities,	sales	and	expenses	in	the	accompanying	financial	statements.	Significant	accounting	policies	employed	by	SYSCO	are presented	in	the	notes	to	the	financial	statements.

					Critical	accounting	policies	are	those	that	are	most	important	to	the	portrayal	of	the	company's	financial	condition	and	results	of	operations.	These	policies	require management's	most	subjective	or	complex	judgments,	often	employing	the	use	of	estimates	about	the	effect	of	matters	that	are	inherently	uncertain.	Senior	management has	reviewed	with	the	Audit	Committee	of	the	Board	of	Directors	the	development	and	selection	of	the	critical	accounting	estimates	and	this	related	disclosure. SYSCO's	most	critical	accounting	policies	pertain	to	the	allowance	for	doubtful	accounts	receivable,	self-insurance	programs,	pension	plans,	income	taxes,	vendor consideration	and	accounting	for	business	combinations.

# Allowance	for	Doubtful	Accounts

					SYSCO	evaluates	the	collectibility	of	accounts	receivable	and	determines	the	appropriate	reserve	for	doubtful	accounts	based	on	a	combination	of	factors.	In circumstances	where	the	company	is	aware	of	a	specific	customer's	inability	to	meet	its	financial	obligation,	a	specific	allowance	for	doubtful	accounts	is	recorded	to reduce	the	receivable	to	the	net	amount	reasonably	expected	to	be	collected.	In	addition,	allowances	are	recorded	for	all	other	receivables	based	on	analysis	of	historical trends	of	write-offs	and	recoveries.	The	company	utilizes	specific	criteria	to	determine	uncollectible	receivables	to	be	written	off,	including	bankruptcy,	accounts referred	to	outside	parties	for	collection	and	accounts	past	due	over	specified	periods.	If	the	financial	condition	of	SYSCO's	customers	were	to	deteriorate,	additional allowances	may	be	required.

# Self-Insurance	Program

					SYSCO	maintains	a	self-insurance	program	covering	portions	of	workers'	compensation,	group	medical,	general	liability	and	vehicle	liability	costs.	The	amounts	in excess	of	the	self-insured	levels	are	fully	insured	by	third	party	insurers.	Liabilities	associated	with	these	risks	are	estimated	in	part	by	considering	historical	claims experience,	demographic	factors,	severity	factors	and	other	actuarial	assumptions.	Projections	of	future	loss	expenses	are	inherently	uncertain	because	of	the	random nature	of	insurance	claims	occurrences	and	could	be	significantly	affected	if	future	occurrences	and	claims	differ	from	these	assumptions	and	historical	trends.	In	an attempt	to	mitigate	the	risks	of	workers'	compensation,	vehicle	and	general	liability	claims,	safety	procedures	and	awareness	programs	have	been	implemented.

# Pension	Plans

					Amounts	related	to	defined	benefit	plans	recognized	in	the	financial	statements	are	determined	on	an	actuarial	basis.	Three	of	the	more	critical	assumptions	in	the actuarial	calculations	are	the	discount	rate	for	determining	the	current	value	of	plan	benefits,	the	assumption	for	the	rate	of	increase	in	future	compensation	levels	and	the expected	rate	of	return	on	plan	assets.

					The	measurement	date	for	the	pension	and	other	postretirement	benefit	plans	is	fiscal	year	end	for	fiscal	years	2005	and	prior.	Beginning	in	fiscal	2006,	the measurement	date	will	be	May	31st	which	represents	a	change	in	accounting.	The	one-month	acceleration	of	the	measurement	date	will	allow	additional	time	for management	to	evaluate	and	report	the	actuarial	pension	measurements	in	the	year-end	financial	statements	and	disclosures	within	the	accelerated	filing	deadlines	of	the Securities	and	Exchange	Commission.	The	cumulative	effect	of	this	change	in	accounting	is	expected	to	result	in	an	increase	to	earnings	in	the	first	quarter	of	fiscal	2006 of	approximately	$9,400,000,	net	of	tax.

					For	guidance	in	determining	the	discount	rate,	SYSCO	calculates	the	implied	rate	of	return	on	a	hypothetical	portfolio	of	high-quality	fixed-income	investments	for which	the	timing	and	amount	of	cash	outflows	approximates	the	estimated	payouts	of	the	pension	plans.	The	discount	rate	assumption	is	reviewed	annually	and	revised as	deemed	appropriate.	The	discount	rate	assumption	utilized	impacts	the	recorded	amount	of	net	pension	costs.	The	discount	rate	utilized	to	determine	net	pension	costs for	fiscal	2005	increased	0.25%	to	6.25%	from	the	discount	rate	utilized	to	determine	net	pension	costs	for	fiscal	2004	of	6.00%.	This	0.25%	increase	in	the	discount	rate decreased	SYSCO's	net	pension	costs	for	fiscal	2005	by	approximately	$9,500,000.	The	discount	rate	for	determining	fiscal	2006	net	pension	costs,	which	was determined	as	of	the	May	31,	2005	measurement	date,	decreased	0.65%	to	5.60%.	This	0.65%	decrease	will	increase	SYSCO's	net	pension	costs	for	fiscal	2006	by approximately	$29,300,000.

					SYSCO	looks	to	actual	plan	experience	in	determining	the	rates	of	increase	in	compensation	levels.	SYSCO	used	a	plan	specific	age-related	set	of	rates	(equivalent	to a	single	rate	of	5.89%)	for	the	qualified	pension	plan	(Retirement	Plan),	as	of	July	2,	2005	and	July	3,	2004.	The	Supplemental	Executive	Retirement	Plan	assumes annual	salary	increases	of	10%	through	fiscal	2007	and	7%	thereafter	as	of	July	2,	2005	and	July	3,	2004.

					The	expected	long-term	rate	of	return	on	plan	assets	of	the	Retirement	Plan	was	9.00%	for	fiscal	2005	and	2004.	The	expectations	of	future	returns	are	derived	from	a mathematical	asset	model	that	incorporates	assumptions	as	to	the	various	asset	class	returns,	reflecting	a	combination	of	rigorous	historical	performance	analysis	and	the forward-looking	views	of	the	financial	markets	regarding	the	yield	on	long-term	bonds	and	the	historical	returns	of	the	major	stock	markets.	Although	not	determinative of	future	returns,	the	effective	annual	rate	of	return	on	plan	assets,	developed	using	geometric/compound	averaging,	was	approximately	10.9%,	10.3%,	3.3%	and	12.3% over	the	20-year,	10-year,	5-year	and	1-year	periods	ended	December	31,	2004,	respectively.	In	addition,	in	nine	of	the	last	15	years,	the	actual	return	on	plan	assets	has exceeded	9.00%.	The	rate	of	return	assumption	is	reviewed	annually	and	revised	as	deemed	appropriate.

					The	expected	return	on	plan	assets	impacts	the	recorded	amount	of	net	pension	costs.	A	1.0%	increase	(decrease)	in	the	assumed	rate	of	return	for	fiscal	2006	would decrease	(increase)	SYSCO's	net	pension	costs	for	fiscal	2006	by	approximately	$11,600,000.

					Minimum	pension	liability	adjustments	are	recorded	so	that	the	recorded	pension	liability	is	at	least	equal	to	the	unfunded	accumulated	benefit	obligation.	Minimum pension	liability	adjustments	are	non-cash	adjustments	that	are	reflected	as	an	increase	(or	decrease)	in	the	pension	liability	and	an	offsetting	charge	(or	benefit)	to shareholders'	equity,	net	of	tax,	through	comprehensive	loss	(or	income).	Amounts	reflected	in	accumulated	other	comprehensive	income	or	loss	related	to	minimum pension	liability,	were	charges,	net	of	tax,	of	$54,286,000	as	of	July	2,	2005,	and	$20,733,000	as	of	July	3,	2004.

					Changes	in	the	assumptions,	including	changes	to	the	discount	rate	discussed	above,	together	with	the	normal	growth	of	the	plan,	the	impact	of	actuarial	losses	from prior	periods	and	the	timing	and	amount	of	contributions,	decreased	net	pension	costs	$7,374,000	in	fiscal	2005	and	is	expected	to	increase	net	pension	costs	in	fiscal 2006	by	approximately	$23,700,000.

					The	company	made	cash	contributions	to	its	pension	plans	of	$220,361,000	and	$165,512,000	in	fiscal	years	2005	and	2004,	respectively,	including	voluntary contributions	to	the	Retirement	Plan	of	$214,000,000	and	$160,000,000	in	fiscal	2005	and	fiscal	2004,	respectively.	Included	in	the	amounts	contributed	in	fiscal	2005 was	$134,000,000	voluntarily	contributed	to	the	qualified	pension	plan	in	the	fourth	quarter.	The	decision	to	increase	the	contributions	to	the	Retirement	Plan	in	fiscal 2005	was	primarily	due	to	the	decreased	discount	rate,	which	increased	the	pension	obligation	and	negatively	impacted	the	fiscal	2005	year-end	pension	funded	status.	In fiscal	2006,	as	in	the	previous	years,	contributions	to	the	Retirement	Plan	will	not	be	required	to	meet	ERISA	minimum	funding	requirements	but	the	company anticipates	that	it	will	make	voluntary	contributions	of	approximately	$66,000,000,	which	is	the	estimated	maximum	amount	that	will	be	tax	deductible	in	fiscal	2006. The	estimated	fiscal	2006	contributions	to	fund	benefit	payments	for	the	SERP	and	other	post-retirement	plans	together	are	approximately	$7,997,000.

					The	determination	of	the	company's	provision	for	income	taxes	requires	significant	judgment,	the	use	of	estimates	and	the	interpretation	and	application	of	complex tax	laws.	The	company's	provision	for	income	taxes	reflects	a	combination	of	income	earned	and	taxed	in	the	various	U.S.	federal	and	state,	as	well	as	Canadian	federal and	provincial	jurisdictions.	Jurisdictional	tax	law	changes,	increases	or	decreases	in	permanent	differences	between	book	and	tax	items,	accruals	or	adjustments	of accruals	for	tax	contingencies	or	valuation	allowances,	and	the	company's	change	in	the	mix	of	earnings	from	these	taxing	jurisdictions	all	affect	the	overall	effective	tax rate.

					In	evaluating	the	exposures	connected	with	the	various	tax	filing	positions,	the	company	establishes	an	accrual	when,	despite	management's	belief	that	the	company's tax	return	positions	are	supportable,	management	believes	that	certain	positions	may	be	successfully	challenged	and	a	loss	is	probable.	When	facts	and	circumstances change,	these	accruals	are	adjusted.

# Vendor	Consideration

					SYSCO	recognizes	consideration	received	from	vendors	when	the	services	performed	in	connection	with	the	monies	received	are	completed	and	when	the	related product	has	been	sold	by	SYSCO.	There	are	several	types	of	cash	consideration	received	from	vendors.	In	many	instances,	the	vendor	consideration	is	in	the	form	of	a specified	amount	per	case	or	per	pound.	In	these	instances,	SYSCO	will	recognize	the	vendor	consideration	as	a	reduction	of	cost	of	sales	when	the	product	is	sold.	In	the situations	where	the	vendor	consideration	is	not	related	directly	to	specific	product	purchases,	SYSCO	will	recognize	these	as	a	reduction	of	cost	of	sales	when	the earnings	process	is	complete,	the	related	service	is	performed	and	the	amounts	realized.	In	certain	of	these	latter	instances,	the	vendor	consideration	represents	a reimbursement	of	a	specific	incremental	identifiable	cost	incurred	by	SYSCO.	In	these	cases,	SYSCO	classifies	the	consideration	as	a	reduction	of	those	costs	with	any excess	funds	classified	as	a	reduction	of	cost	of	sales	and	recognizes	these	in	the	period	in	which	the	costs	are	incurred	and	related	services	performed.

# Accounting	for	Business	Combinations

					Goodwill	and	intangible	assets	represent	the	excess	of	consideration	paid	over	the	fair	value	of	tangible	net	assets	acquired.	Certain	assumptions	and	estimates	are employed	in	determining	the	fair	value	of	assets	acquired,	including	goodwill	and	other	intangible	assets,	as	well	as	determining	the	allocation	of	goodwill	to	the appropriate	reporting	unit.	In	addition,	SYSCO	assesses	the

recoverability	of	these	intangibles	by	determining	whether	the	fair	values	of	the	applicable	reporting	units	exceed	their	carrying	values.	The	evaluation	of	fair	value requires	the	use	of	projections,	estimates	and	assumptions	as	to	the	future	performance	of	the	operations	in	performing	a	discounted	cash	flow	analysis,	as	well	as assumptions	regarding	sales	and	earnings	multiples	that	would	be	applied	in	comparable	acquisitions	in	the	industry.	Actual	results	could	differ	from	these	assumptions and	projections,	resulting	in	the	company	revising	its	assumptions	and,	if	required,	recognizing	an	impairment	loss.

# New	Accounting	Standards

					On	December	16,	2004,	the	Financial	Accounting	Standards	Board	(FASB)	issued	SFAS	No.	123	(revised	2004),	"Share-Based	Payment"	(SFAS	123(R)),	which	is	a revision	of	SFAS	No.	123,	"Accounting	for	Stock-Based	Compensation"	(SFAS	123).	SFAS	123(R)	supersedes	APB	Opinion	No.	25,	"Accounting	for	Stock	Issued	to Employees"	(APB	Opinion	25),	and	amends	SFAS	No.	95,	"Statement	of	Cash	Flows."	Generally,	the	approach	in	SFAS	123(R)	is	similar	to	the	approach	described	in SFAS	123.	However,	SFAS	123(R)	requires	all	share-based	payments	to	employees,	including	grants	of	employee	stock	options,	to	be	recognized	in	the	income statement	based	on	their	fair	values.	Pro	forma	disclosure	is	no	longer	an	alternative	under	the	new	standard.

					SYSCO	will	adopt	SFAS	123(R)	in	the	first	quarter	of	fiscal	2006.	SFAS	123(R)	allows	for	two	transition	methods.	The	basic	difference	between	the	two	methods	is that	the	modified-prospective	transition	method	does	not	require	restatement	of	prior	periods,	whereas	the	modified-retrospective	transition	method	will	require restatement.

					As	permitted	by	SFAS	123,	the	company	currently	accounts	for	share-based	payments	to	employees	using	APB	Opinion	25's	intrinsic	value	method	and,	as	such, generally	recognizes	no	compensation	cost	for	employee	stock	options	or	stock	issuances	under	the	employee	stock	purchase	plan.	Although	the	full	impact	of	the company's	adoption	of	SFAS	123(R)'s	fair	value	method	has	not	yet	been	determined,	the	company	expects	that	it	will	have	a	significant	impact	on	its	results	of operations.	The	disclosure	in	the	footnotes	to	the	company's	consolidated	financial	statements	under	Stock-Based	Compensation	of	pro	forma	net	income	and	earnings per	share	as	if	the	company	had	recognized	compensation	cost	for	share-based	payments	under	SFAS	123	for	periods	prior	to	fiscal	2006	is	not	necessarily	indicative	of the	potential	impact	of	recognizing	compensation	cost	for	share-based	payments	under	SFAS	123(R)	in	future	periods.	The	company	estimates	that	the	earnings	per share	impact	to	fiscal	2006	resulting	from	recording	compensation	expense	related	to	stock	options	and	the	Employees'	Stock	Purchase	Plan	will	be	approximately	$0.11 to	$0.13.	The	potential	impact	of	adopting	SFAS	123(R)	on	fiscal	2006's	results	of	operations	and	earnings	per	share	is	dependent	on	several	factors,	including	the number	of	options	granted	in	fiscal	2006,	the	fair	value	of	those	options	which	will	be	determined	at	the	date	of	grant,	the	level	of	participation	in	the	Employees'	Stock Purchase	Plan,	the	related	income	tax	benefits	recorded	and	the	diluted	shares	outstanding.	This	estimate	is	based	on	certain	assumptions	as	to	these	factors	and	the actual	impact	may	differ	if	actual	results	vary	from	the	assumptions.

					In	May	2005,	the	FASB	issued	SFAS	No.	154,	"Accounting	Changes	and	Error	Corrections,"	a	replacement	of	APB	Opinion	No.	20,	"Accounting	Changes,"	and SFAS	No.	3,	"Reporting	Accounting	Changes	in	Interim	Financial	Statements."	The	standard	changes	the	requirements	for	accounting	for	and	reporting	of	a	voluntary change	in	accounting	principle	requiring	a	retrospective	application	to	prior	periods'	financial	statements	of	the	change	in	principle	unless	it	is	impracticable	rather	than the	recording	of	a	cumulative	effect	of	the	change	in	accounting	principle	in	net	income	in	the	year	of	change.	The	standard	is	effective	for	accounting	changes	and corrections	of	errors	made	in	fiscal	years	beginning	after	December	15,	2005.

# 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. 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	with	the	collectability	of	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	may	have	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	product	as	well	as	the	costs	incurred	by	SYSCO	to	deliver	product	to	its	customers.	These	factors	in	turn	may	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	job	actions	or	strikes	by	employees	of	suppliers,	weather,	crop	conditions,	transportation	interruptions,	increases	in	fuel	costs,	competitive demands	and	natural	disasters	or	other	catastrophic	events.	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.

# 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	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.

# Labor	Relations

					As	of	July	2,	2005,	approximately	8,700	employees	at	54	operating	companies	were	members	of	61	different	local	unions	associated	with	the	International Brotherhood	of	Teamsters	and	other	labor	organizations.	In	fiscal	2006,	16	agreements	covering	approximately	2,400	employees	will	expire.	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	one	or	more operating	subsidiaries	to	renegotiate	a	union	contract,	or	otherwise,	could	have	a	material	adverse	effect	on	SYSCO.

# Integration	of	Acquired	Companies

					If	SYSCO	is	unable	to	integrate	acquired	businesses	successfully	and	realize	anticipated	economic,	operational	and	other	benefits	in	a	timely	manner,	its	profitability may	decrease.	Integration	of	an	acquired	business	may	be	more	difficult	when	SYSCO	acquires	a	business	in	a	market	in	which	it	has	limited	or	no	expertise,	or	with	a corporate	culture	different	from	SYSCO's.	If	SYSCO	is	unable	to	integrate	acquired	businesses	successfully,	it	may	incur	substantial	costs	and	delays	in	increasing	its customer	base.	In	addition,	the	failure	to	integrate	acquisitions	successfully	may	divert	management's	attention	from	SYSCO's	existing	business	and	may	damage SYSCO's	relationships	with	its	key	customers	and	suppliers.

# Charter	and	Stockholder	Rights	Plan

					Under	its	Restated	Certificate	of	Incorporation,	SYSCO's	Board	of	Directors	is	authorized	to	issue	up	to	1.5	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	stockholders	of	SYSCO	have	the	right	to	purchase	preferred	stock	of	SYSCO	pursuant	to	its	Stockholder	Rights	Plan, which	could	result	in	substantial	dilution	to	a	potential	acquiror.	The	existence	of	either	of	these	provisions	could	deter	hostile	takeover	attempts	that	might	result	in	an acquisition	of	SYSCO	that	could	otherwise	have	been	financially	beneficial	to	SYSCO's	stockholders.

# Forward-Looking	Statements

					Certain	statements	made	herein	that	look	forward	in	time	or	express	management's	expectations	or	beliefs	with	respect	to	the	occurrence	of	future	events	are	forward- looking	statements	under	the	Private	Securities	Litigation	Reform	Act	of	1995.	They	include	statements	about	SYSCO's	ability	to	increase	its	market	share	and	sales, long-term	debt	to	capitalization	target	ratios,	anticipated	capital	expenditures,	timing	and	expected	benefits	of	the	National	Supply	Chain	project	and	related	regional distribution	centers,	and	SYSCO's	ability	to	meet	future	cash	requirements	and	remain	profitable.

					These	statements	are	based	on	management's	current	expectations	and	estimates;	actual	results	may	differ	materially	due	in	part	to	the	risk	factors	discussed	above.	In addition,	SYSCO's	ability	to	increase	its	market	share	and	sales,	meet	future	cash	requirements	and	remain	profitable	could	be	affected	by	conditions	in	the	economy and	the	industry	and	internal	factors	such	as	the	ability	to	control	expenses.	The	ability	to	meet	long-term	debt	to	capitalization	target	ratios	also	may	be	affected	by	cash flow	including	amounts	spent	on	share	repurchases	and	acquisitions	and	internal	growth.

# Item	7A.	Quantitative	and	Qualitative	Disclosures	About	Market	Risk

					SYSCO	does	not	utilize	financial	instruments	for	trading	purposes.	SYSCO's	use	of	debt	directly	exposes	the	company	to	interest	rate	risk.	Floating	rate	debt,	where the	interest	rate	fluctuates	periodically,	exposes	the	company	to	short-term	changes	in	market	interest	rates.	Fixed	rate	debt,	where	the	interest	rate	is	fixed	over	the	life of	the	instrument,	exposes	the	company	to	changes	in	market	interest	rates	reflected	in	the	fair	value	of	the	debt	and	to	the	risk	that	the	company	may	need	to	refinance maturing	debt	with	new	debt	at	a	higher	rate.

					SYSCO	manages	its	debt	portfolio	to	achieve	an	overall	desired	position	of	fixed	and	floating	rates	and	may	employ	interest	rate	swaps	as	a	tool	to	achieve	that	goal. The	major	risks	from	interest	rate	derivatives	include	changes	in	the	interest	rates	affecting	the	fair	value	of	such	instruments,	potential	increases	in	interest	expense	due to	market	increases	in	floating	interest	rates	and	the	creditworthiness	of	the	counterparties	in	such	transactions.

					At	July	2,	2005,	the	company	had	outstanding	$157,851,000	of	commercial	paper	at	variable	rates	of	interest	with	maturities	through	July	29,	2005.	The	company's total	long-term	debt	obligations	of	$1,367,110,000	were	primarily	at	fixed	rates	of	interest.	The	company	intends	to	issue	between	$350,000,000	and	$500,000,000	of long-term	debt	in	September	2005.	The	amount	of	long-term	debt	that	SYSCO	issues	will	depend	upon	market	conditions	at	the	time	of	issuance.	In	March	2005, SYSCO	entered	into	a	forward-starting	interest	rate	swap	with	a	notional	amount	of	$350,000,000	as	a	cash	flow	hedge	of	the	variability	in	the	cash	outflows	of	interest payments	on	$350,000,000	of	the	forecasted	debt	issuance	due	to	changes	in	the	benchmark	interest	rate.

					During	fiscal	2004	and	part	of	fiscal	2005,	SYSCO	had	several	fixed	to	floating	interest	rate	swaps	outstanding.	These	were	entered	into	in	fiscal	2004	as	management believed	that	floating	interest	rates	were	more	advantageous.	During	fiscal	2005,	SYSCO	terminated	the	fixed	to	floating	interest	rate	swaps	outstanding	locking	in effective	yields	on	the	related	debt.

					Management	believes	that	present	market	conditions	reflect	fixed	long	term	rates	near	historical	lows.	As	such,	management	believes	that	fixed	long	term	rates present	a	better	opportunity	than	in	the	recent	past	and	intends	to	issue	long	term	debt	at	fixed	rates	with	extended	terms	in	September	2005.

					In	the	following	tables,	commercial	paper	issuances	are	reflected	as	floating	rate	debt	and	the	U.S.	commercial	paper	is	classified	as	long-term	based	on	the	maturity of	the	company's	revolving	loan	agreement	which	supports	the	company's	U.S.	commercial	paper	program	and	the	company's	intent	to	continue	to	refinance	this	facility on	a	long-term	basis.

					The	following	tables	present	the	company's	interest	rate	position	as	of	July	2,	2005.	All	amounts	are	stated	in	U.S.	dollar	equivalents.

# Rate	A	—	six-month	LIBOR	(in	advance)

					At	July	3,	2004,	the	company	had	outstanding	$73,834,000	of	commercial	paper	at	variable	rates	of	interest	with	maturities	through	October	7,	2004.	The	company's total	long-term	debt	obligations	of	$1,394,326,000	were	primarily	at	fixed	rates	of	interest.	In	addition,	the	company	entered	into	interest	rate	swap	agreements	totaling $500,000,000	in	notional	amount	whereby	the	company	received	interest	payments	at	fixed	rates	of	interest	and	paid	interest	at	variable	rates.	The	following	tables present	the	company's	interest	rate	position	as	of	July	3,	2004.	All	amounts	are	stated	in	U.S.	dollar	equivalents.

|  |  |  |  |  |  |  |  | Fair |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2005 | 2006 | 2007 | 2008 | 2009 | Thereafter | Total | Value |
|  |  |  |  |  | (In\tthousands) |  |  |  |
| U.S.\t$\tDenominated: |  |  |  |  |  |  |  |  |
| Fixed\tRate\tDebt | $162,734 | $417,062 | $105,093 | $3,226 | $1,442 | $675,498 | $1,365,055 | $1,424,411 |
| Average\tInterest\tRate | 6.3% | 4.1% | 7.1% | 7.9% | 5.5% | 5.9% | 5.5% |  |
| Floating\tRate\tDebt | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $15,000 | $15,000 | $15,000 |
| Average\tInterest\tRate | — | — | — | — | — | 1.4% | 1.4% |  |
| Canadian\t$\tDenominated: |  |  |  |  |  |  |  |  |
| Fixed\tRate\tDebt | $99 | $196 | $287 | $316 | $350 | $18,453 | $19,701 | $20,558 |
| Average\tInterest\tRate | 9.4% | 9.8% | 9.8% | 9.8% | 9.8% | 9.8% | 9.8% |  |
| Floating\tRate\tDebt | $73,834 | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $73,834 | $73,834 |

# Interest	Rate	Position	as	of	July	3,	2004

# Notional	Amount	by	Expected	Maturity

|  |  |  |  |  |  |  |  | Fair |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2005 | 2006 | 2007 | 2008 | 2009 | Thereafter | Total | Value |
|  |  |  |  | (In\tthousands) | (In\tthousands) |  |  |  |
| Interest\tRate\tSwaps\tRelated\tto\tDebt: |  |  |  |  |  |  |  |  |
| Pay\tvariable/receive\tfixed | $— | $— | $200,000 | $100,000 | $— | $— | $300,000 | $(4,964) |
| Average\tvariable\trate\tpaid: |  |  |  |  |  |  |  |  |
| Rate\tA\tplus | — | — | 4.61% | 4.30% | — | — | 4.50% |  |
| Fixed\trate\treceived | — | — | 7.00% | 7.25% | — | — | 7.08% |  |
| Pay\tvariable/receive\tfixed | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $—\t $—\t $—\t $—\t $— | $200,000 | $200,000 | $(466) |
| Average\tvariable\trate\tpaid: |  |  |  |  |  |  |  |  |
| Rate\tB\tminus | — | — | — | — | — | 0.62% | 0.62% |  |
| Fixed\trate\treceived | — | — | — | — | — | 4.60% | 4.60% |  |

# Rate	A	—	six-month	LIBOR	averaged	over	a	six	month	period

# Rate	B	—	six-month	LIBOR	in	arrears

					The	company	does	not	believe	that	its	foreign	operations	expose	it	to	significant	foreign	exchange	risk,	since	the	exposure	is	limited	primarily	to	Canada	and	for which	the	amounts	are	not	material	on	an	overall	basis	to	SYSCO.

					Increased	fuel	costs	may	have	a	negative	impact	on	the	Company's	results	of	operations	in	three	areas.	First,	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.	Second,	the	high	cost	of	fuel can	increase	the	price	paid	by	SYSCO	for	product	purchases	for	which	SYSCO	may	not	be	able	to	pass	these	costs	fully	to	its	customers.	Third,	increased	fuel	costs impact	the	costs	incurred	by	SYSCO	to	deliver	product	to	its	customers.	During	fiscal	2005,	2004	and	2003,	fuel	costs	represented	approximately	0.4%,	0.3%	and	0.3% of	sales,	respectively.	Fuel	costs	incurred	by	SYSCO	in	fiscal	2005	increased	by	approximately	$31,000,000	over	fiscal	2004.

# Item	8.	Financial	Statements	and	Supplementary	Data

# SYSCO	CORPORATION	AND	SUBSIDIARIES

# INDEX	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

| Report	of	Management	on	Internal	Control	Over	Financial	Reporting | 27 |
| :--- | :--- |
| Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 28 |
| Report\tof\tIndependent\tRegistered\tPublic\tAccounting\tFirm | 29 |
| Consolidated\tBalance\tSheets | 30 |
| Consolidated\tResults\tof\tOperations | 31 |
| Consolidated\tShareholders'\tEquity | 32 |
| Consolidated\tCash\tFlows | 33 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 34 |

					All	other	schedules	are	omitted	because	they	are	not	applicable	or	the	information	is	set	forth	in	the	consolidated	financial	statements	or	notes	thereto.

# REPORT	OF	MANAGEMENT	ON	INTERNAL	CONTROL	OVER	FINANCIAL	REPORTING

					The	management	of	SYSCO	Corporation	("SYSCO")	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting	for	the company.	SYSCO's	internal	control	system	is	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the	preparation	and	fair presentation	of	published	financial	statements.	All	internal	control	systems,	no	matter	how	well	designed,	have	inherent	limitations.	Therefore,	even	those	systems determined	to	be	effective	can	provide	only	reasonable	assurance	with	respect	to	financial	statement	preparation	and	presentation.

					SYSCO's	management	assessed	the	effectiveness	of	SYSCO's	internal	control	over	financial	reporting	as	of	July	2,	2005.	In	making	this	assessment,	it	used	the criteria	set	forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	in	Internal	Control	–	Integrated	Framework.	Based	on	this	assessment, management	concluded	that,	as	of	July	2,	2005,	SYSCO's	internal	control	over	financial	reporting	was	effective	based	on	those	criteria.

					Ernst	&	Young	LLP	has	issued	an	audit	report	on	management's	assessment	of	SYSCO's	internal	control	over	financial	reporting	as	of	July	2,	2005.

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

# To	the	Shareholders	and	Board	of	Directors

					We	have	audited	management's	assessment,	included	in	the	accompanying	Report	of	Management	on	Internal	Control	Over	Financial	Reporting,	that	SYSCO Corporation	and	its	subsidiaries	("SYSCO"	or	"the	Company")	maintained	effective	internal	control	over	financial	reporting	as	of	July	2,	2005,	based	on	criteria established	in	Internal	Control—Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(the	COSO	criteria). SYSCO's	management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting	and	for	its	assessment	of	the	effectiveness	of	internal	control	over financial	reporting.	Our	responsibility	is	to	express	an	opinion	on	management's	assessment	and	an	opinion	on	the	effectiveness	of	the	company's	internal	control	over financial	reporting	based	on	our	audit.

					We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	evaluating	management's	assessment,	testing	and	evaluating	the	design	and	operating effectiveness	of	internal	control,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe	that	our	audit	provides	a	reasonable basis	for	our	opinion.

					A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	and	directors	of	the	company;	and	(3)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

					Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the policies	or	procedures	may	deteriorate.

					In	our	opinion,	management's	assessment	that	SYSCO	maintained	effective	internal	control	over	financial	reporting	as	of	July	2,	2005,	is	fairly	stated,	in	all	material respects,	based	on	the	COSO	criteria.	Also,	in	our	opinion,	SYSCO	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	July	2, 2005,	based	on	the	COSO	criteria.

					We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	SYSCO's	consolidated	balance	sheets	as of	July	2,	2005	and	July	3,	2004	and	the	related	consolidated	results	of	operations,	shareholders'	equity	and	cash	flows	for	each	of	the	three	years	in	the	period	ended July	2,	2005	and	our	report	dated	September	9,	2005	expressed	an	unqualified	opinion	thereon.

ERNST	&	YOUNG	LLP

					We	have	audited	the	accompanying	consolidated	balance	sheets	of	SYSCO	Corporation	(a	Delaware	Corporation)	and	subsidiaries	as	of	July	2,	2005	and	July	3, 2004,	and	the	related	consolidated	results	of	operations,	shareholders'	equity,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	July	2,	2005.	Our	audits	also included	the	financial	statement	schedule	at	Item	15(a),	No.	2.	These	financial	statements	and	schedule	are	the	responsibility	of	the	Company's	management.	Our responsibility	is	to	express	an	opinion	on	these	financial	statements	and	schedule	based	on	our	audits.

					We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a	test basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

					In	our	opinion,	the	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	consolidated	financial	position	of	SYSCO	Corporation	and subsidiaries	at	July	2,	2005	and	July	3,	2004,	and	the	consolidated	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the	period	ended	July	2, 2005,	in	conformity	with	U.S.	generally	accepted	accounting	principles.	Also,	in	our	opinion,	the	related	financial	statement	schedule,	when	considered	in	relation	to	the basic	financial	statements	taken	as	a	whole,	presents	fairly	in	all	material	respects	the	information	set	forth	therein.

					We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	effectiveness	of	SYSCO Corporation's	internal	control	over	financial	reporting	as	of	July	2,	2005,	based	on	criteria	established	in	the	Internal	Control-Integrated	Framework	issued	by	the Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	and	our	report	dated	September	9,	2005	expressed	an	unqualified	opinion	thereon.

# SYSCO

# CONSOLIDATED	BALANCE	SHEETS

| Cash | $191,678 | $199,706 |
| :--- | :--- | :--- |
| Accounts\tand\tnotes\treceivable,\tless\tallowances\tof\t$29,604\tand\t$34,175 | 2,284,033 | 2,189,127 |
| Inventories | 1,466,161 | 1,404,410 |
| Prepaid\texpenses | 59,914 | 54,903 |
| Prepaid\tincome\ttaxes | — | 3,265 |
| Total\tcurrent\tassets | 4,001,786 | 3,851,411 |
| Plant\tand\tequipment\tat\tcost,\tless\tdepreciation | 2,268,301 | 2,166,809 |
| Other\tassets |  |  |
| Goodwill\tand\tintangibles,\tless\tamortization | 1,284,459 | 1,218,700 |
| Restricted\tcash | 101,731 | 169,326 |
| Prepaid\tpension\tcost | 389,766 | 243,996 |
| Other | 221,859 | 197,390 |
| Total\tother\tassets | 1,997,815 | 1,829,412 |
| Total\tassets | $8,267,902 | $7,847,632 |
| LIABILITIES\tAND\tSHAREHOLDERS'\tEQUITY |  |  |
| Current\tliabilities |  |  |
| Notes\tpayable | $63,998 | $73,834 |
| Accounts\tpayable | 1,795,824 | 1,742,578 |
| Accrued\texpenses | 742,282 | 724,970 |
| Income\ttaxes | 10,195 | — |
| Deferred\ttaxes | 434,338 | 422,419 |
| Current\tmaturities\tof\tlong-term\tdebt | 410,933 | 162,833 |
| Total\tcurrent\tliabilities | 3,457,570 | 3,126,634 |
| Other\tliabilities |  |  |
| Long-term\tdebt | 956,177 | 1,231,493 |
| Deferred\ttaxes | 724,929 | 686,705 |
| Other\tlong-term\tliabilities | 370,387 | 238,294 |
| Total\tother\tliabilities | 2,051,493 | 2,156,492 |
| Contingencies |  |  |
| Shareholders'\tequity |  |  |
| Preferred\tstock,\tpar\tvalue\t$1\tper\tshare |  |  |
| Authorized\t1,500,000\tshares,\tissued\tnone | — | — |
| Common\tstock,\tpar\tvalue\t$1\tper\tshare |  |  |
| Authorized\tshares\t2,000,000,000;\tissued\t765,174,900\tshares | 765,175 | 765,175 |
| Paid-in\tcapital | 389,053 | 332,041 |
| Retained\tearnings | 4,552,379 | 3,959,714 |
| Accumulated\tother\tcomprehensive\t(loss)\tincome | (13,677) | 17,640 |
|  | 5,692,930 | 5,074,570 |
| Less\tcost\tof\ttreasury\tstock,\t136,607,370\tand\t128,639,869\tshares | 2,934,091 | 2,510,064 |
| Total\tshareholders'\tequity | 2,758,839 | 2,564,506 |
| Total\tliabilities\tand\tshareholders'\tequity | $8,267,902 | $7,847,632 |

# CONSOLIDATED	RESULTS	OF	OPERATIONS

# Year	Ended

|  |  | July	3,	2004 |  |
| :--- | :--- | :--- | :--- |
|  | July\t2,\t2005 | (53\tWeeks) | June\t28,\t2003 |
|  |  | (In\tthousands\texcept\tfor\tshare\tdata) |  |
| Sales | $30,281,914 | $29,335,403 | $26,140,337 |
| Costs\tand\texpenses |  |  |  |
| Cost\tof\tsales | 24,498,200 | 23,661,514 | 20,979,556 |
| Operating\texpenses | 4,194,184 | 4,141,230 | 3,836,507 |
| Interest\texpense | 75,000 | 69,880 | 72,234 |
| Other,\tnet | (10,906) | (12,365) | (8,347) |
| Total\tcosts\tand\texpenses | 28,756,478 | 27,860,259 | 24,879,950 |
| Earnings\tbefore\tincome\ttaxes | 1,525,436 | 1,475,144 | 1,260,387 |
| Income\ttaxes | 563,979 | 567,930 | 482,099 |
| Net\tearnings | $961,457 | $907,214 | $778,288 |
| Net\tearnings: |  |  |  |
| Basic\tearnings\tper\tshare | $1.51 | $1.41 | $1.20 |
| Diluted\tearnings\tper\tshare | 1.47 | 1.37 | 1.18 |

See	Notes	to	Consolidated	Financial	Statements

# CONSOLIDATED	SHAREHOLDERS'	EQUITY

|  | Common	Stock | Common	Stock |  |  | Other | Treasury	Stock | Treasury	Stock |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Paid-in | Retained | Comprehensive |  |  |
|  | Shares | Amount | Capital | Earnings | Income\t(Loss) | Shares | Amount |
|  |  |  |  | (In\tthousands\texcept\tfor\tshare\tdata) | (In\tthousands\texcept\tfor\tshare\tdata) |  |  |
| Balance\tat\tJune\t29,\t2002 | \t 765,174,900 | $ 765,175 | $ 217,891 | $2,869,417 | $(65,435) | 111,634,603 | $1,654,529 |
| Net\tearnings\tfor\tyear\tended |  |  |  |  |  |  |  |
| June\t28,\t2003 |  |  |  | 778,288 |  |  |  |
| Dividends\tdeclared |  |  |  | (273,852) |  |  |  |
| Treasury\tstock\tpurchases |  |  |  |  |  | 16,500,000 | 478,471 |
| Treasury\tstock\tissued\tfor |  |  |  |  |  |  |  |
| acquisitions |  |  | 6,984 |  |  | (951,127) | (9,270) |
| Disqualifying\tdispositions |  |  | 8,386 |  |  |  |  |
| Stock\toptions\texercised |  |  | (8,895) |  |  | (2,918,905) | (42,588) |
| Employees'\tStock\tPurchase\tPlan |  |  | 14,410 |  |  | (1,886,090) | (29,809) |
| Management\tIncentive\tPlan |  |  | 10,459 |  |  | (861,156) | (12,982) |
| Minimum\tpension\tliability |  |  |  |  |  |  |  |
| adjustment |  |  |  |  | (119,683) |  |  |
| Foreign\tcurrency\ttranslation |  |  |  |  |  |  |  |
| adjustment |  |  |  |  | 32,737 |  |  |
| Balance\tat\tJune\t28,\t2003 | \t 765,174,900 | $ 765,175 | $ 249,235 | $3,373,853 | $(152,381) | 121,517,325 | $2,038,351 |
| Net\tearnings\tfor\tyear\tended |  |  |  |  |  |  |  |
| July\t3,\t2004 |  |  |  | 907,214 |  |  |  |
| Dividends\tdeclared |  |  |  | (321,353) |  |  |  |
| Treasury\tstock\tpurchases |  |  |  |  |  | 16,884,300 | 623,653 |
| Treasury\tstock\tissued\tfor |  |  |  |  |  |  |  |
| acquisitions |  |  | 21,582 |  |  | (2,007,089) | (20,411) |
| Disqualifying\tdispositions |  |  | 26,763 |  |  |  |  |
| Stock\toptions\texercised |  |  | 4,007 |  |  | (5,193,289) | (86,745) |
| Employees'\tStock\tPurchase\tPlan |  |  | 18,540 |  |  | (1,620,535) | (28,833) |
| Management\tIncentive\tPlan |  |  | 11,914 |  |  | (940,843) | (15,951) |
| Minimum\tpension\tliability |  |  |  |  |  |  |  |
| adjustment |  |  |  |  | 164,385 |  |  |
| Foreign\tcurrency\ttranslation |  |  |  |  |  |  |  |
| adjustment |  |  |  |  | 5,636 |  |  |
| Balance\tat\tJuly\t3,\t2004 | \t 765,174,900 | $ 765,175 | $ 332,041 | $3,959,714 | $17,640 | 128,639,869 | $2,510,064 |
| Net\tearnings\tfor\tyear\tended |  |  |  |  |  |  |  |
| July\t2,\t2005 |  |  |  | 961,457 |  |  |  |
| Dividends\tdeclared |  |  |  | (368,792) |  |  |  |
| Treasury\tstock\tpurchases |  |  |  |  |  | 16,735,200 | 596,080 |
| Treasury\tstock\tissued\tfor |  |  |  |  |  |  |  |
| acquisitions |  |  | 2,660 |  |  | (152,591) | (1,537) |
| Disqualifying\tdispositions |  |  | 22,795 |  |  |  |  |
| Stock\toptions\texercised |  |  | 397 |  |  | (5,901,240) | (116,468) |
| Employees'\tStock\tPurchase\tPlan |  |  | 15,986 |  |  | (1,712,244) | (34,375) |
| Management\tIncentive\tPlan |  |  | 15,174 |  |  | (1,001,624) | (19,673) |
| Minimum\tpension\tliability |  |  |  |  |  |  |  |
| adjustment |  |  |  |  | (33,553) |  |  |
| Foreign\tcurrency\ttranslation |  |  |  |  |  |  |  |
| adjustment |  |  |  |  | 22,357 |  |  |
| Change\tin\tfair\tvalue\tof\tforward- |  |  |  |  |  |  |  |
| starting\tinterest\trate\tswap |  |  |  |  | (20,121) |  |  |
| Balance\tat\tJuly\t2,\t2005 | \t 765,174,900 | $ 765,175 | $ 389,053 | $4,552,379 | $(13,677) | 136,607,370 | $2,934,091 |

# CONSOLIDATED	CASH	FLOWS

|  |  | July	3,	2004 |  |
| :--- | :--- | :--- | :--- |
|  | July\t2,\t2005 | (53\tWeeks) | June\t28,\t2003 |
|  |  | (In\tthousands) |  |
| Cash\tflows\tfrom\toperating\tactivities: |  |  |  |
| Net\tearnings | $961,457 | $907,214 | $778,288 |
| Add\tnon-cash\titems: |  |  |  |
| Depreciation\tand\tamortization | 316,743 | 283,595 | 273,142 |
| Deferred\ttax\tprovision | 554,850 | 608,152 | 481,330 |
| Provision\tfor\tlosses\ton\treceivables | 18,587 | 27,377 | 27,133 |
| Additional\tinvestment\tin\tcertain\tassets\tand\tliabilities,\tnet\tof\teffect\tof\tbusinesses\tacquired: |  |  |  |
| (Increase)\tin\treceivables | (72,829) | (177,058) | (218,150) |
| (Increase)\tin\tinventories | (35,014) | (162,502) | (69,959) |
| (Increase)\tin\tprepaid\texpenses | (4,058) | (2,183) | (9,509) |
| Increase\tin\taccounts\tpayable | 28,080 | 95,874 | 237,360 |
| (Decrease)\tincrease\tin\taccrued\texpenses | (32,674) | 61,544 | (12,480) |
| (Decrease)\tin\taccrued\tincome\ttaxes | (438,779) | (392,197) | (33,121) |
| (Increase)\tin\tother\tassets | (18,185) | (25,238) | (8,380) |
| (Decrease)\tin\tother\tlong-term\tliabilities\tand\tprepaid\tpension\tcost,\tnet | (86,338) | (35,056) | (72,814) |
| Net\tcash\tprovided\tby\toperating\tactivities | 1,191,840 | 1,189,522 | 1,372,840 |
| Cash\tflows\tfrom\tinvesting\tactivities: |  |  |  |
| Additions\tto\tplant\tand\tequipment | (390,203) | (530,086) | (435,637) |
| Proceeds\tfrom\tsales\tof\tplant\tand\tequipment | 25,482 | 15,851 | 14,629 |
| Acquisition\tof\tbusinesses,\tnet\tof\tcash\tacquired | (115,637) | (79,247) | (209,010) |
| Decrease\t(increase)\tin\trestricted\tcash | 66,918 | (90,329) | (51,807) |
| Net\tcash\tused\tfor\tinvesting\tactivities | (413,440) | (683,811) | (681,825) |
| Cash\tflows\tfrom\tfinancing\tactivities: |  |  |  |
| Bank\tand\tcommercial\tpaper\t(repayments)\tborrowings | (9,836) | (77,849) | 85,224 |
| Other\tdebt\t(repayments)\tborrowings | (32,796) | 185,087 | (12,098) |
| Cash\tfrom\ttermination\tof\tinterest\trate\tswap | 5,316 | 1,305 | 15,359 |
| Common\tstock\treissued\tfrom\ttreasury | 208,004 | 167,652 | 101,312 |
| Treasury\tstock\tpurchases | (597,660) | (608,506) | (478,471) |
| Dividends\tpaid | (357,298) | (309,540) | (261,854) |
| Net\tcash\tused\tfor\tfinancing\tactivities | (784,270) | (641,851) | (550,528) |
| Effect\tof\texchange\trates\ton\tcash | (2,158) | (1,601) | (1,479) |
| Net\t(decrease)\tincrease\tin\tcash | (8,028) | (137,741) | 139,008 |
| Cash\tat\tbeginning\tof\tyear | 199,706 | 337,447 | 198,439 |
| Cash\tat\tend\tof\tyear | $191,678 | $199,706 | $337,447 |
| Supplemental\tdisclosures\tof\tcash\tflow\tinformation: |  |  |  |
| Cash\tpaid\tduring\tthe\tyear\tfor: |  |  |  |
| Interest | $73,939 | $68,481 | $69,103 |
| Income\ttaxes | 436,378 | 344,414 | 28,747 |

# NOTES	TO	CONSOLIDATED	FINANCIAL	STATEMENTS

# SUMMARY	OF	ACCOUNTING	POLICIES

# Business	and	Consolidation

					Sysco	Corporation	(SYSCO	or	the	company)	is	engaged	in	the	marketing	and	distribution	of	a	wide	range	of	food	and	related	products	primarily	to	the	foodservice	or "food-prepared-away-from-home"	industry.	These	services	are	performed	for	approximately	390,000	customers	from	160	principal	distribution	facilities	located throughout	the	United	States	and	Canada.

					The	accompanying	financial	statements	include	the	accounts	of	SYSCO	and	its	subsidiaries.	All	significant	intercompany	transactions	and	account	balances	have been	eliminated.	Certain	amounts	in	the	prior	years	have	been	reclassified	to	conform	to	the	fiscal	2005	presentation.

					The	preparation	of	financial	statements	in	conformity	with	generally	accepted	accounting	principles	requires	management	to	make	estimates	that	affect	the	reported amounts	of	assets,	liabilities,	sales	and	expenses.	Actual	results	could	differ	from	the	estimates	used.

# Accounts	Receivable

					Accounts	receivable	consist	primarily	of	trade	receivables	from	customers	and	receivables	from	suppliers	for	marketing	or	incentive	programs.	SYSCO	evaluates	the collectibility	of	accounts	receivable	and	determines	the	appropriate	reserve	for	doubtful	accounts	based	on	a	combination	of	factors.	In	circumstances	where	the company	is	aware	of	a	specific	customer's	inability	to	meet	its	financial	obligation	to	SYSCO,	a	specific	allowance	for	doubtful	accounts	is	recorded	to	reduce	the receivable	to	the	net	amount	reasonably	expected	to	be	collected.	In	addition,	allowances	are	recorded	for	all	other	receivables	based	on	an	analysis	of	historical	trends	of write-offs	and	recoveries.	The	company	utilizes	specific	criteria	to	determine	uncollectible	receivables	to	be	written	off	including	bankruptcy,	accounts	referred	to outside	parties	for	collection	and	accounts	past	due	over	specified	periods.	The	allowance	for	doubtful	accounts	receivable	was	$29,604,000	as	of	July	2,	2005	and $34,175,000	as	of	July	3,	2004.	Customer	accounts	written	off,	net	of	recoveries,	were	$20,840,000	or	0.07%	of	sales,	$28,485,000	or	0.10%	of	sales,	and	$24,771,000 or	0.09%	of	sales	for	fiscal	2005,	2004	and	2003,	respectively.

# Inventories

					Inventories	consisting	primarily	of	finished	goods	include	food	and	related	products	held	for	resale	and	are	valued	at	the	lower	of	cost	(first-in,	first-out	method)	or market.	Elements	of	costs	include	the	purchase	price	of	the	product	and	freight	charges	to	deliver	the	product	to	the	company's	warehouses	and	are	net	of	certain	cash	or non-cash	consideration	received	from	vendors	(see	"Vendor	Consideration").

# Plant	and	Equipment

					Capital	additions,	improvements	and	major	replacements	are	classified	as	plant	and	equipment	and	are	carried	at	cost.	Depreciation	is	recorded	using	the	straight-line method,	which	reduces	the	book	value	of	each	asset	in	equal	amounts	over	its	estimated	useful	life.	Maintenance,	repairs	and	minor	replacements	are	charged	to	earnings when	they	are	incurred.	Upon	the	disposition	of	an	asset,	its	accumulated	depreciation	is	deducted	from	the	original	cost,	and	any	gain	or	loss	is	reflected	in	current earnings.

					Applicable	interest	charges	incurred	during	the	construction	of	new	facilities	and	development	of	software	for	internal	use	are	capitalized	as	one	of	the	elements	of cost	and	are	amortized	over	the	assets'	estimated	useful	lives.	Interest	capitalized	for	the	past	three	years	was	$4,316,000	in	2005,	$7,495,000	in	2004	and	$5,244,000	in 2003.

					A	summary	of	plant	and	equipment,	including	the	related	accumulated	depreciation,	appears	below:

|  | July	2,	2005 | July	3,	2004 | Useful	Lives |
| :--- | :--- | :--- | :--- |
| Plant\tand\tequipment,\tat\tcost: |  |  |  |
| Land | $208,189,000 | $186,628,000 |  |
| Buildings\tand\timprovements | 1,916,454,000 | 1,774,870,000 | 10-40\tyears |
| Fleet,\tequipment\tand\tsoftware | 2,121,307,000 | 2,021,326,000 | 3-20\tyears |
|  | 4,245,950,000 | 3,982,824,000 |  |
| Accumulated\tdepreciation | (1,977,649,000) | (1,816,015,000) |  |
| Net\tplant\tand\tequipment | $2,268,301,000 | $2,166,809,000 |  |

# Long-Lived	Assets

					Management	reviews	long-lived	assets	for	indicators	of	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	value	may	not	be recoverable.	Cash	flows	expected	to	be	generated	by	the	related	assets	are	estimated	over	the	asset's	useful	life	based	on	updated	projections.	If	the	evaluation	indicates that	the	carrying	amount	of	the	asset	may	not	be	recoverable,	the	potential	impairment	is	measured	based	on	a	projected	discounted	cash	flow	model.

# Goodwill	and	Intangibles

Goodwill	and	intangibles	represent	the	excess	of	cost	over	the	fair	value	of	tangible	net	assets	acquired.	Goodwill	and	intangibles	with	indefinite	lives	are	not	amortized. Intangibles	with	definite	lives	are	amortized	over	their	useful	lives,	generally	ranging	from	three	to	ten	years.	Intangibles,	net	of	amortization,	totaled	$71,856,000	and $43,716,000	as	of	July	2,	2005	and	July	3,	2004,	respectively,	and	relate	primarily	to	customer	relationships,	trademarks	and	non-compete	agreements	with	key personnel.	Goodwill	is	assigned	to	the	reporting	units	that	are	expected	to	benefit	from	the	synergies	of	the	combination.	The	recoverability	of	goodwill	and	intangibles	is assessed	annually,	or	more	frequently	as	needed	when	events	or	changes	have	occurred	that	would	suggest	an	impairment	of	carrying	value,	by	determining	whether	the fair	values	of	the	applicable	reporting	units	exceed	their	carrying	values.	The	evaluation	of	fair	value	requires	the	use	of	projections,	estimates	and	assumptions	as	to	the future	performance	of	the	operations	in	performing	a	discounted	cash	flow	analysis,	as	well	as	assumptions	regarding	sales	and	earnings	multiples	that	would	be	applied in	comparable	acquisitions.

					Goodwill	and	intangibles	allocated	by	reportable	segment	are	as	follows:

|  | July	2,	2005 | July	3,	2004 |
| :--- | :--- | :--- |
| Broadline | $674,682,000 | $658,075,000 |
| SYGMA | 60,660,000 | 61,851,000 |
| Other | 549,117,000 | 498,774,000 |
| Total | $1,284,459,000 | $1,218,700,000 |

# Foreign	Currency	Translation

					The	assets	and	liabilities	of	all	Canadian	subsidiaries	are	translated	at	current	exchange	rates.	Related	translation	adjustments	are	recorded	as	a	component	of accumulated	other	comprehensive	income.

# Revenue	Recognition

					The	company	recognizes	revenue	from	the	sale	of	a	product	when	it	is	considered	to	be	realized	or	realizable	and	earned.	The	company	determines	these	requirements to	be	met	at	the	point	at	which	the	product	is	delivered	to	the	customer.	The	company	grants	certain	customers	sales	incentives	such	as	rebates	or	discounts	and	treats these	as	a	reduction	of	sales	at	the	time	the	sale	is	recognized.

# Insurance	Program

					SYSCO	maintains	a	self-insurance	program	covering	portions	of	workers'	compensation,	group	medical,	general	and	vehicle	liability	costs.	The	amounts	in	excess	of the	self-insured	levels	are	fully	insured	by	third	party	insurers.	Liabilities	associated	with	these	risks	are	estimated	in	part	by	considering	historical	claims	experience, demographic	factors,	severity	factors	and	other	actuarial	assumptions.

# Stock-Based	Compensation

					SYSCO	accounts	for	its	stock	compensation	plans	using	the	intrinsic	value	method	provided	by	Accounting	Principles	Board	(APB)	Opinion	No.	25,	"Accounting	for Stock	Issued	to	Employees,"	and	related	interpretations	under	which	no	compensation	cost	has	been	recognized	for	stock	option	grants.	SYSCO	will	adopt	SFAS No.	123	(revised	2004),	"Share-Based	Payment"	in	the	first	quarter	of	fiscal	2006.	See	"New	Accounting	Standards"	for	further	discussion	of	this	new	standard	and	the impact	to	SYSCO.

					Options	issued	before	September	2001	generally	vest	over	a	five-year	period	beginning	on	the	date	of	grant	if	certain	operating	performance	measures	are	attained,	or will	vest	fully	nine	and	one-half	years	from	the	date	of	grant	to	the	extent	not	previously	vested.	Options	issued	in	September	2001	and	after	generally	vest	ratably	over	a specified	five-year	period.

					The	following	table	provides	comparative	pro	forma	net	earnings	and	earnings	per	share	had	compensation	cost	for	these	plans	been	determined	using	the	fair	value method	of	SFAS	No.	123,	"Accounting	for	Stock-Based	Compensation,"	for	all	periods	presented:

|  |  | 2004 |  |
| :--- | :--- | :--- | :--- |
|  | 2005 | (53\tWeeks) | 2003 |
| Net\tearnings: |  |  |  |
| Reported\tnet\tearnings | $961,457,000 | $907,214,000 | $778,288,000 |
| Add:\tStock-based\temployee\tcompensation\texpense\tincluded\tin\treported\tearnings,\tnet\tof |  |  |  |
| related\ttax\teffects\t(1) | 11,349,000 | 22,620,000 | 17,307,000 |
| Deduct:\tTotal\tstock-based\temployee\tcompensation\texpense\tdetermined\tunder\tfair\tvalue\tbased |  |  |  |
| method\tfor\tall\tawards,\tnet\tof\trelated\ttax\teffects | (99,330,000) | (108,179,000) | (100,838,000) |
| Pro\tforma\tnet\tearnings | $873,476,000 | $821,655,000 | $694,757,000 |
| Basic\tearnings\tper\tshare: |  |  |  |
| Reported\tbasic\tearnings\tper\tshare | $1.51 | $1.41 | $1.20 |
| Pro\tforma\tbasic\tearnings\tper\tshare | 1.37 | 1.28 | 1.07 |
| Diluted\tearnings\tper\tshare: |  |  |  |
| Reported\tdiluted\tearnings\tper\tshare | $1.47 | $1.37 | $1.18 |
| Pro\tforma\tdiluted\tearnings\tper\tshare | 1.36 | 1.26 | 1.06 |

(1)	 Amounts	represent	the	after-tax	compensation	costs	for	stock	grants.

					The	weighted	average	fair	value	of	options	granted	was	$7.12,	$6.74	and	$6.88	per	share	during	fiscal	2005,	2004	and	2003,	respectively.	The	fair	value	on	the	date of	grant	was	estimated	using	the	Black-Scholes	option	pricing	model	with	the	following	weighted	average	assumptions	for	each	fiscal	year:

|  | 2005 | 2004 | 2003 |
| :--- | :--- | :--- | :--- |
| Dividend\tyield | \t1.45% | \t1.49% | \t1.45% |
| Expected\tvolatility | 22% | 22% | 25% |
| Risk-free\tinterest\trate | 3.4% | 3.2% | 2.7% |
| Expected\tlife | 5\tyears | 5\tyears | 5\tyears |

					The	weighted	average	fair	value	of	employee	stock	purchase	rights	issued	pursuant	to	the	Employees'	Stock	Purchase	Plan	was	$5.19,	$5.17	and	$4.14	per	share during	fiscal	2005,	2004	and	2003,	respectively.	The	fair	value	of	the	stock	purchase	rights	was	calculated	as	the	difference	between	the	stock	price	at	date	of	issuance and	the	employee	purchase	price.

					The	pro	forma	presentation	includes	only	options	granted	after	1995.	The	pro	forma	effects	for	fiscal	2005,	2004	and	2003	are	not	necessarily	indicative	of	the	pro forma	effects	in	future	years.

# Shipping	and	Handling	Costs

					Shipping	and	handling	costs	include	costs	associated	with	the	selection	of	products	and	delivery	to	customers.	Included	in	operating	expenses	are	shipping	and handling	costs	of	approximately	$1,718,485,000	in	fiscal	2005,	$1,624,552,000	in	fiscal	2004,	and	$1,505,360,000	in	fiscal	2003.

					SYSCO	follows	the	liability	method	of	accounting	for	income	taxes	as	required	by	the	provisions	of	SFAS	No.	109,	"Accounting	for	Income	Taxes."

# Cash	Flow	Information

					For	cash	flow	purposes,	cash	includes	cash	equivalents	such	as	time	deposits,	certificates	of	deposit,	short-term	investments	and	all	highly	liquid	instruments	with original	maturities	of	three	months	or	less.

# Acquisitions

					During	fiscal	2005,	in	the	aggregate,	the	company	paid	cash	of	$115,637,000	and	issued	214,145	shares	with	a	value	of	$4,196,000	for	acquisitions	during	fiscal	2005 and	for	contingent	consideration	related	to	operations	acquired	in	previous	fiscal	years.	In	addition,	escrowed	funds	related	to	certain	acquisitions	in	the	amount	of $676,000	were	released	to	sellers	during	fiscal	2005.

					Acquisitions	of	businesses	are	accounted	for	using	the	purchase	method	of	accounting	and	the	financial	statements	include	the	results	of	the	acquired	operations	from the	respective	dates	they	joined	SYSCO.	The	acquisitions	were	immaterial,	individually	and	in	the	aggregate,	to	the	consolidated	financial	statements.

					The	purchase	price	of	the	acquired	entities	is	allocated	to	the	net	assets	acquired	and	liabilities	assumed	based	on	the	estimated	fair	value	at	the	dates	of	acquisition, with	any	excess	of	cost	over	the	fair	value	of	net	assets	acquired,	including	intangibles,	recognized	as	goodwill.	The	balances	included	in	the	Consolidated	Balance Sheets	related	to	recent	acquisitions	are	based	upon	preliminary	information	and	are	subject	to	change	when	final	asset	and	liability	valuations	are	obtained.	Material changes	to	the	preliminary	allocations	are	not	anticipated	by	management.

					Certain	acquisitions	involve	contingent	consideration	typically	payable	only	in	the	event	that	certain	operating	results	are	attained	or	certain	outstanding	contingencies are	resolved.	Aggregate	contingent	consideration	amounts	outstanding	as	of	July	2,	2005	included	approximately	1,059,000	shares	and	$105,614,000	in	cash,	which,	if distributed,	could	result	in	the	recording	of	up	to	$126,992,000	in	additional	goodwill.	Such	amounts	typically	are	to	be	paid	out	over	periods	of	up	to	five	years	from	the date	of	acquisition.

# Derivative	Financial	Instruments

					SYSCO	manages	its	debt	portfolio	by	targeting	an	overall	desired	position	of	fixed	and	floating	rates	and	may	employ	interest	rate	swaps	from	time	to	time	to achieve	this	goal.	The	company	does	not	use	derivative	financial	instruments	for	trading	or	speculative	purposes.

					During	fiscal	years	2003,	2004	and	2005,	the	company	entered	into	various	interest	rate	swap	agreements	as	fair	value	hedges	of	the	related	debt.	The	terms	of	these swap	agreements	and	the	hedged	items	were	such	that	the	hedges	are	considered	perfectly	effective	against	changes	in	the	fair	value	of	the	debt	due	to	changes	in	the benchmark	interest	rates	over	their	terms.	As	a	result,	the	shortcut	method	provided	by	SFAS	No.	133,	"Accounting	for	Derivative	Instruments	and	Hedging	Activities," was	applied	and	there	was	no	need	to	periodically	reassess	the	effectiveness	of	the	hedges	during	the	terms	of	the	swaps.	Interest	expense	on	the	debt	was	adjusted	to include	payments	made	or	received	under	the	hedge	agreements.	The	fair	value	of	the	swaps	was	carried	as	an	asset	or	a	liability	on	the	Consolidated	Balance	Sheet	and the	carrying	value	of	the	hedged	debt	was	adjusted	accordingly.	As	of	July	3,	2004,	the	fair	value	of	the	outstanding	swaps	designated	as	fair	value	hedges	was ($5,430,000),	which	is	reflected	in	Other	long-term	liabilities	on	the	Consolidated	Balance	Sheet,	and	the	carrying	amount	of	the	related	debt	has	been	decreased	by	the same	amount.	There	were	no	fair	value	hedges	outstanding	as	of	July	2,	2005.

					The	amount	received	upon	termination	of	swap	agreements	was	$5,316,000,	$1,305,000	and	$15,359,000	in	fiscal	years	2005,	2004	and	2003,	respectively.	The amount	received	upon	termination	of	swap	agreements	is	reflected	as	an	increase	in	the	carrying	value	of	the	related	debt	to	reflect	its	fair	value	at	termination.	This increase	in	the	carrying	value	of	the	debt	is	amortized	as	a	reduction	of	interest	expense	over	the	remaining	term	of	the	debt.

					The	company	intends	to	issue	between	$350,000,000	and	$500,000,000	of	long-term	debt	in	September	2005.	The	amount	of	long-term	debt	that	SYSCO	issues	will depend	on	market	conditions	at	the	time	of	issuance.	In	March	2005,	SYSCO	entered	into	a	forward-starting	interest	rate	swap	with	a	notional	amount	of	$350,000,000. In	accordance	with	SFAS	No.	133,	the	company	has	designated	this	derivative	as	a	cash	flow	hedge	of	the	variability	in	the	cash	outflows	of	interest	payments	on $350,000,000	of	the	forecasted	debt	issuance	due	to	changes	in	the	benchmark	interest	rate.	The	fair	value	of	the	swap	as	of	July	2,	2005	was	($32,584,000),	which	is reflected	in	Accrued	expenses	on	the	Consolidated	Balance	Sheet,	with	the	corresponding	amount	reflected	as	a	loss,	net	of	tax,	in	Other	comprehensive	income.

					On	December	16,	2004,	the	FASB	issued	SFAS	No.	123	(revised	2004),	"Share-Based	Payment"	(SFAS	123(R)),	which	is	a	revision	of	SFAS	No.	123,	"Accounting for	Stock-Based	Compensation"	(SFAS	123).	SFAS	123(R)	supersedes	APB	Opinion	No.	25,	"Accounting	for	Stock	Issued	to	Employees"	(APB	Opinion	25),	and amends	SFAS	No.	95,	"Statement	of	Cash	Flows."	Generally,	the	approach	in	SFAS	123(R)	is	similar	to	the	approach	described	in	SFAS	123.	However,	SFAS	123(R) requires	all	share-based	payments	to	employees,	including	grants	of	employee	stock	options,	to	be	recognized	in	the	income	statement	based	on	their	fair	values.	Pro forma	disclosure	is	no	longer	an	alternative	under	the	new	standard.

					As	permitted	by	SFAS	123,	the	company	currently	accounts	for	share-based	payments	to	employees	using	APB	Opinion	25's	intrinsic	value	method	and,	as	such, generally	recognizes	no	compensation	cost	for	employee	stock	options	or	stock	issuances	under	the	employee	stock	purchase	plan.	Although	the	full	impact	of	the company's	adoption	of	SFAS	123(R)'s	fair	value	method	has	not	yet	been	determined,	the	company	expects	that	it	will	have	a	significant	impact	on	its	results	of operations.	The	disclosure	in	the	footnotes	to	the	company's	consolidated	financial	statements	under	Stock-Based	Compensation	of	pro	forma	net	income	and	earnings per	share	as	if	the	company	had	recognized	compensation	cost	for	share-based	payments	under	SFAS	123	for	periods	prior	to	fiscal	2006	is	not	necessarily	indicative	of the	potential	impact	of	recognizing	compensation	cost	for	share-based	payments	under	SFAS	123(R)	in	future	periods.	The	company	estimates	that	earnings	per	share impact	to	fiscal	2006	resulting	from	recording	compensation	expense	related	to	stock	options	and	the	Employees'	Stock	Purchase	Plan	will	be	approximately	$0.11	to $0.13.	The	potential	impact	of	adopting	SFAS	123(R)	on	fiscal	2006's	results	of	operations	and	earnings	per	share	is	dependent	on	several	factors	including	the	number of	options	granted	in	fiscal	2006,	the	fair	value	of	those	options	which	will	be	determined	at	the	date	of	grant,	the	level	of	participation	in	the	Employees'	Stock Purchase	Plan,	the	related	income	tax	benefits	recorded	and	the	diluted	shares	outstanding.	This	estimate	is	based	on	certain	assumptions	as	to	these	factors	and	the actual	impact	may	differ	if	actual	results	vary	from	the	assumptions.

# ADDITIONAL	FINANCIAL	INFORMATION

					The	income	tax	provision	for	each	fiscal	year	consists	of	the	following:

|  |  | 2004 |  |
| :--- | :--- | :--- | :--- |
|  | 2005 | (53\tWeeks) | 2003 |
| United\tStates\tfederal\tincome\ttaxes | $485,499,000 | $473,757,000 | $408,902,000 |
| State,\tlocal\tand\tforeign\tincome\ttaxes | 78,480,000 | 94,173,000 | 73,197,000 |
| Total | $563,979,000 | $567,930,000 | $482,099,000 |

					Included	in	the	income	taxes	charged	to	earnings	are	net	deferred	tax	provisions	of	$554,850,000,	$608,152,000,	and	$481,330,000	in	fiscal	2005,	2004	and	2003, respectively.	The	deferred	tax	provisions	result	from	the	effects	of	net	changes	during	the	year	in	deferred	tax	assets	and	liabilities	arising	from	temporary	differences between	the	carrying	amounts	of	assets	and	liabilities	for	financial	reporting	purposes	and	the	amounts	used	for	income	tax	purposes.	In	addition	to	the	deferred	tax provision,	changes	in	the	deferred	tax	liability	balances	in	fiscal	2005,	2004	and	2003	were	also	impacted	by	the	reclassification	of	deferred	supply	chain	distributions from	current	deferred	tax	liabilities	to	accrued	income	taxes	based	on	the	timing	of	when	payments	related	to	these	items	become	payable.	These	reclassifications	were $473,970,000	and	$412,339,000	in	fiscal	2005	and	2004,	respectively.

					Significant	components	of	SYSCO's	deferred	tax	assets	and	liabilities	are	as	follows:

|  | July	2,	2005 | July	3,	2004 |
| :--- | :--- | :--- |
| Deferred\ttax\tliabilities: |  |  |
| Deferred\tsupply\tchain\tdistributions | $856,741,000 | $814,707,000 |
| Excess\ttax\tdepreciation\tand\tbasis\tdifferences\tof\tAssets | 398,690,000 | 373,369,000 |
| Pension | 59,836,000 | 33,610,000 |
| Other | 13,864,000 | 12,499,000 |
| Total\tdeferred\ttax\tliabilities | 1,329,131,000 | 1,234,185,000 |
| Deferred\ttax\tassets: |  |  |
| Net\toperating\ttax\tloss\tcarryforwards | 83,609,000 | 68,501,000 |
| Deferred\tcompensation | 40,640,000 | 31,343,000 |
| Casualty\tinsurance | 33,246,000 | 30,479,000 |
| Receivables | 25,081,000 | 23,123,000 |
| Inventory | 32,856,000 | 23,738,000 |
| Other | 31,766,000 | 16,378,000 |
| Total\tdeferred\ttax\tassets | 247,198,000 | 193,562,000 |
| Valuation\tallowances | 77,334,000 | 68,501,000 |
| Total\tnet\tdeferred\ttax\tliabilities | $1,159,267,000 | $1,109,124,000 |

					Deferred	supply	chain	distributions	are	classified	as	current	or	deferred	tax	liabilities	based	on	when	the	related	income	tax	payments	will	become	payable.	Fiscal 2004	was	the	first	fiscal	year	that	these	supply	chain	distributions	were	recognized	in	taxable	income	since	the	company	began	deferring	these	items	for	tax	purposes	as	a result	of	the	reorganization	of	its	supply	chain	in	fiscal	year	2001.	As	a	result	of	the	impact	of	these	items	and	other	temporary	differences,	including	the	utilization	of net	operating	loss	carryforwards,	excess	tax	depreciation	and	pension	contributions,	taxes	paid	during	fiscal	2005	and	2004	increased	to	$436,378,000	and	$344,414,000, respectively,	as	compared	to	$28,747,000	in	fiscal	2003.	The	net	cash	flow	impact	of	supply	chain	distribution	deferrals	in	fiscal	2005	was	incrementally	positive	when compared	to	what	would	have	been	paid	on	an	annual	basis	without	the	deferral,	due	to	increased	volume	through	this	structure.

					Also	impacting	the	amount	of	taxes	paid	in	each	year	is	the	amount	of	deductible	pension	contributions	made	in	each	year.	The	company	expects	that	its	pension contributions	in	fiscal	2006	will	be	substantially	less	than	the	contributions	made	in	the	preceeding	three	fiscal	years.

					The	company	had	state	and	Canadian	net	operating	losses	at	July	2,	2005	and	July	3,	2004,	respectively.	The	net	operating	losses	outstanding	at	July	2,	2005	expire	in fiscal	years	2006	through	2025.	A	valuation	allowance	of	$77,334,000	and	$68,501,000	was	recorded	as	of	July	2,	2005	and	July	3,	2004,	respectively,	as	management believes	that	it	is	more	likely	than	not	that	the	benefits	of	these	state	and	Canadian	tax	loss	carryforwards	will	not	be	realized	through	future	taxable	income.

					Reconciliations	of	the	statutory	federal	income	tax	rate	to	the	effective	income	tax	rates	for	each	fiscal	year	are	as	follows:

|  | 2005 | 2004 | 2003 |
| :--- | :--- | :--- | :--- |
| United\tStates\tstatutory\tfederal\tincome\ttax\trate | \t35.00% | \t35.00% | \t35.00% |
| State\tand\tlocal\tincome\ttaxes,\tnet\tof\tfederal\tincome\ttax\tbenefit | 2.74 | 3.21 | 3.07 |
| Other | \t(0.77) | 0.29 | 0.18 |
|  | \t36.97% | \t38.50% | \t38.25% |

					In	evaluating	the	exposures	connected	with	the	various	tax	filing	positions,	the	company	establishes	an	accrual	when,	despite	management's	belief	that	the	company's tax	return	positions	are	supportable,	management	believes	that	certain	positions	may	be	successfully	challenged	and	a	loss	is	probable.	When	facts	and	circumstances change,	these	accruals	are	adjusted.	Included	in	income	tax	expense	for	fiscal	2005	is	the	reversal	of	an	accrual	for	tax	contingencies	of	$11,000,000.	Based	on additional	information	and	supported	by	a	third	party	analysis,	the	company	concluded	that	the	accrual	was	no	longer	necessary.	Liabilities	recorded	related	to	tax contingencies	as	of	July	2,	2005	are	not	material.

					Also	included	in	income	tax	expense	in	the	fourth	quarter	of	fiscal	2005	are	income	tax	adjustments	totaling	$8,500,000.	These	adjustments	primarily	related	to	the reversal	of	valuation	allowances	of	certain	state	tax	loss	carryforwards.	In	the	fourth	quarter	of

fiscal	2005,	management	determined	that	it	is	more	likely	than	not	that	the	benefits	of	certain	state	tax	loss	carryforwards	will	be	realized	and	reversed	the	related valuation	allowances	recording	a	benefit	to	income	tax	expense	totaling	$6,275,000.

					The	company	intends	to	permanently	reinvest	the	undistributed	earnings	of	its	Canadian	subsidiaries	in	those	businesses	outside	of	the	United	States	and,	therefore, has	not	provided	for	deferred	income	taxes	on	such	undistributed	foreign	earnings.	The	determination	of	the	amount	of	the	unrecognized	deferred	tax	liability	related	to the	undistributed	earnings	is	not	practicable.

# Restricted	Cash

					SYSCO	is	required	by	its	insurers	to	collateralize	a	part	of	the	self-insured	portion	of	its	workers'	compensation	and	liability	claims.	SYSCO	has	chosen	to	satisfy these	collateral	requirements	by	depositing	funds	in	insurance	trusts	or	by	issuing	letters	of	credit.

					In	addition,	for	certain	acquisitions,	SYSCO	has	placed	funds	into	escrow	to	be	disbursed	to	the	sellers	in	the	event	that	specified	operating	results	are	attained	or contingencies	are	resolved.	Escrowed	funds	related	to	certain	acquisitions	in	the	amount	of	$676,000	were	released	to	sellers	during	fiscal	2005.

					A	summary	of	restricted	cash	balances	appears	below:

|  | July	2,	2005 | July	3,	2004 |
| :--- | :--- | :--- |
| Funds\tdeposited\tin\tinsurance\ttrusts | $80,410,000 | $147,329,000 |
| Escrow\tfunds\trelated\tto\tacquisitions | 21,321,000 | 21,997,000 |
| Total | $101,731,000 | $169,326,000 |

# Shareholders'	Equity

					On	November	7,	2003,	SYSCO's	shareholders	approved	an	amendment	to	SYSCO's	restated	Certificate	of	Incorporation	to	increase	the	number	of	shares	of common	stock	that	SYSCO	will	have	the	authority	to	issue	to	two	billion	shares,	an	increase	from	the	previous	authorization	of	one	billion	shares.

					Basic	earnings	per	share	have	been	computed	by	dividing	net	earnings	by	the	weighted	average	number	of	shares	of	common	stock	outstanding	for	each	respective year.	Diluted	earnings	per	share	have	been	computed	by	dividing	net	earnings	by	the	weighted	average	number	of	shares	of	common	stock	outstanding	during	those respective	years	adjusted	for	the	dilutive	effect	of	stock	options	outstanding	using	the	treasury	stock	method.

					A	reconciliation	of	the	numerators	and	the	denominators	of	the	basic	and	diluted	per	share	computations	for	the	periods	presented	follows:

|  |  | 2004 |  |
| :--- | :--- | :--- | :--- |
|  | 2005 | (53\tWeeks) | 2003 |
| Numerator:\nIncome\tavailable\tto\tcommon\tshareholders | $961,457,000 | $907,214,000 | $778,288,000 |
| Denominator: |  |  |  |
| Weighted-average\tbasic\tshares\toutstanding | 636,068,266 | 642,688,614 | 650,600,652 |
| Dilutive\teffect\tof\temployee\tand\tdirector\tstock\toptions | 17,088,851 | 19,230,620 | 10,934,730 |
| Weighted-average\tdiluted\tshares\toutstanding | 653,157,117 | 661,919,234 | 661,535,382 |
| Basic\tearnings\tper\tshare | $1.51 | $1.41 | $1.20 |
| Diluted\tearnings\tper\tshare | 1.47 | 1.37 | 1.18 |

					The	number	of	options	which	were	not	included	in	the	diluted	earnings	per	share	calculation	because	the	effect	would	have	been	anti-dilutive	was	approximately 68,000,	zero	and	13,620,000	for	fiscal	2005,	2004	and	2003,	respectively.

					In	May	1986,	the	Board	of	Directors	adopted	a	Warrant	Dividend	Plan	designed	to	protect	against	those	unsolicited	attempts	to	acquire	control	of	SYSCO	that	the Board	believes	are	not	in	the	best	interests	of	the	shareholders.	In	May	1996,	the	Board	of	Directors	adopted	an	Amended	and	Restated	Rights	Agreement	(the	Plan)	to replace	the	Warrant	Dividend	Plan	and,	among	other	things,	extend	the	expiration	of	the	Plan	through	May	2006.	The	Board	adopted	further	amendments	in	May	1999. The	Plan	provides	for	an	initial	dividend	distribution	(which	took	place	in	1996)	and	subsequent	issuances	of	Preferred	Stock	Purchase	Rights	(Rights)	concurrently	with future	common	share	issuances	such	that,	prior	to	any	adjustments,	each	outstanding	share	of	SYSCO	common	stock	would	be	associated	with	one	Right.	After adjustments	for	common	stock	splits,	there	is	now	one	quarter	of	a	Right	associated	with	each	common	share.

					The	Rights	will	not	be	exercisable	until	a	public	announcement	is	made	that	a	party	has	acquired	10%	or	more	of	SYSCO's	common	stock	or	a	party	makes	a	tender offer	for	10%	or	more	of	its	common	stock,	without	Board	approval	(each	a	Trigger	Event).	Currently,	following	occurrence	of	a	Trigger	Event,	each	whole	Right would,	upon	exercise,	entitle	its	holder	to	purchase	one	two-thousandth	of	a	share	of	Series	A	Junior	Participating	Preferred	Stock	(Preferred)	at	an	exercise	price	of $175.	The	terms	are	subject	to	adjustment	upon	certain	future	events.	In	addition	to	the	foregoing,	subject	to	limited	exceptions,	if	a	public	announcement	is	made	that	a party	has	acquired	10%	or	more	of	SYSCO's	common	stock,	a	Rightholder	may,	for	a	limited	time,	purchase	$350	worth	of	Preferred	for	a	purchase	price	of	$175.	In the	event	of	a	merger	or	other	business	combination	transaction	not	approved	by	the	Board,	each	Right	effectively	entitles	the	holder	to	purchase	$350	worth	of	stock	of the	surviving	company	for	a	purchase	price	of	$175.

					The	Rights	may	be	redeemed	by	SYSCO	at	a	price	of	$0.01	per	Right	at	any	time	before	a	party	acquires	10%	of	SYSCO's	common	stock.	Unless	sooner	redeemed or	exercised,	the	Rights	will	expire	at	close	of	business	May	31,	2006.	As	a	result	of	the	Rights	distribution,	450,000	of	the	1,500,000	authorized	preferred	shares	have been	reserved	for	issuance	as	Series	A	Junior	Participating	Preferred	Stock.

# Other	Comprehensive	Income

					Comprehensive	income	is	net	earnings	plus	certain	other	items	that	are	recorded	directly	to	shareholders'	equity.

					The	following	table	provides	a	summary	of	the	changes	in	accumulated	other	comprehensive	income	(loss)	for	the	years	presented:

|  | Minimum	Pension | Foreign	Currency | Forward-Starting |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Liability | Translation | Interest\tRate\tSwap | Total |
| Balance\tat\tJune\t29,\t2002 | $(65,435,000) | $—\t $— | $—\t $— | $(65,435,000) |
| Minimum\tpension\tliability\tadjustment,\tnet\tof\ttax\tof\t($74,136,000) | (119,683,000) | — | — | (119,683,000) |
| Foreign\tcurrency\ttranslation\tadjustment | — | 32,737,000 | — | 32,737,000 |
| Balance\tat\tJune\t28,\t2003 | (185,118,000) | 32,737,000 | — | (152,381,000) |
| Minimum\tpension\tliability\tadjustment,\tnet\tof\ttax\tof\t$101,689,000 | 164,385,000 | — | — | 164,385,000 |
| Foreign\tcurrency\ttranslation\tadjustment | — | 5,636,000 | — | 5,636,000 |
| Balance\tat\tJuly\t3,\t2004 | (20,733,000) | 38,373,000 | — | 17,640,000 |
| Minimum\tpension\tliability\tadjustment,\tnet\tof\ttax\tof\t($20,861,000) | (33,553,000) | — | — | (33,553,000) |
| Foreign\tcurrency\ttranslation\tadjustment | — | 22,357,000 | — | 22,357,000 |
| Change\tin\tfair\tvalue\tof\tforward-starting\tinterest\trate\tswap,\tnet\tof\ttax |  |  |  |  |
| of\t($12,463,000) | — | — | (20,121,000) | (20,121,000) |
| Balance\tat\tJuly\t2,\t2005 | $(54,286,000) | $60,730,000 | $(20,121,000) | $(13,677,000) |

					The	following	table	provides	a	summary	of	the	components	of	other	comprehensive	income	for	the	years	presented:

|  |  | 2004 |  |
| :--- | :--- | :--- | :--- |
|  | 2005 | (53\tWeeks) | 2003 |
| Net\tearnings | $961,457,000 | $907,214,000 | $778,288,000 |
| Minimum\tpension\tliability\tadjustment,\tnet\tof\ttax | (33,553,000) | 164,385,000 | (119,683,000) |
| Foreign\tcurrency\ttranslation\tadjustment | 22,357,000 | 5,636,000 | 32,737,000 |
| Change\tin\tfair\tvalue\tof\tforward-starting\tinterest\trate\tswap,\tnet\tof\ttax | (20,121,000) | — | — |
| Other\tcomprehensive\tincome | $930,140,000 | $1,077,235,000 | $691,342,000 |

|  | July	2,	2005 | July	3,	2004 |
| :--- | :--- | :--- |
| Short-term\tborrowings,\tinterest\tat\t3.6%\tas\tof\tJuly\t2,\t2005 | $31,000,000 | $— |
| Commercial\tpaper,\tinterest\taveraging\t3.2%\tas\tof\tJuly\t2,\t2005\tand\t2.1%\tas\tof\tJuly\t3,\t2004 | 157,851,000 | 73,834,000 |
| Senior\tnotes,\tinterest\tat\t6.5%,\tmaturing\tin\tfiscal\t2005 | — | 149,915,000 |
| Senior\tnotes,\tinterest\tat\t7.0%,\tmaturing\tin\tfiscal\t2006 | 198,011,000 | 197,151,000 |
| Senior\tnotes,\tinterest\tat\t4.75%,\tmaturing\tin\tfiscal\t2006 | 200,551,000 | 207,739,000 |
| Senior\tnotes,\tinterest\tat\t7.25%,\tmaturing\tin\tfiscal\t2007 | 98,335,000 | 97,776,000 |
| Senior\tnotes,\tinterest\tat\t6.1%,\tmaturing\tin\tfiscal\t2012 | 200,655,000 | 200,749,000 |
| Senior\tnotes,\tinterest\tat\t4.6%,\tmaturing\tin\tfiscal\t2014 | 209,644,000 | 199,423,000 |
| Debentures,\tinterest\tat\t7.16%,\tmaturing\tin\tfiscal\t2027 | 50,000,000 | 50,000,000 |
| Debentures,\tinterest\tat\t6.5%,\tmaturing\tin\tfiscal\t2029 | 224,453,000 | 224,427,000 |
| 2004,\tmaturing\tat\tvarious\tdates\tto\tfiscal\t2026 | 60,608,000 | 67,146,000 |
| Total\tdebt | 1,431,108,000 | 1,468,160,000 |
| Less\tcurrent\tmaturities\tand\tshort-term\tdebt | (474,931,000) | (236,667,000) |
| Net\tlong-term\tdebt | $956,177,000 | $1,231,493,000 |

					The	principal	payments	required	to	be	made	on	debt	during	the	next	five	fiscal	years	are	shown	below:

| The	principal	payments	required	to	be	made	on	debt	during	the	next	five	fiscal	years	are	shown	below: |  |
| :--- | :--- |
|  | Amount |
| 2006 | $474,931,000 |
| 2007 | 105,031,000 |
| 2008 | 129,109,000 |
| 2009 | 732,000 |
| 2010 | 761,000 |

					SYSCO	has	uncommitted	bank	lines	of	credit,	which	provided	for	unsecured	borrowings	for	working	capital	of	up	to	$95,000,000.	Borrowings	outstanding	under these	lines	of	credit	were	$31,000,000	and	zero,	as	of	July	2,	2005	and	July	3,	2004,	respectively.

					SYSCO	has	a	revolving	loan	agreement	in	the	amount	of	$450,000,000,	maturing	in	fiscal	2008,	which	supports	the	company's	United	States	commercial	paper program.	It	is	the	company's	intent	to	continue	to	refinance	this	facility	on	a	long-term	basis	and	expects	to	do	so	in	the	fall	of	2005.	As	a	result,	the	commercial	paper issuances	supported	by	this	agreement	have	been	classified	as	long-term	debt.	The	United	States	commercial	paper	issuances	outstanding	at	July	2,	2005	and	July	3, 2004	were	$124,853,000	and	zero,	respectively.

					In	April	2005,	SYSCO	filed	with	the	Securities	and	Exchange	Commission	a	shelf	registration	statement	covering	$1,500,000,000	in	debt	securities.	The	registration statement	was	declared	effective	in	May	2005.	In	June	2005,	SYSCO	repaid	the	6.5%	senior	notes	totaling	$150,000,000	at	maturity	utilizing	a	combination	of	cash flow	from	operations	and	commercial	paper	issuances.	In	July	2005,	SYSCO	repaid	the	4.75%	senior	notes	totaling	$200,000,000	at	maturity	also	utilizing	a combination	of	cash	flow	from	operations	and	commercial	paper	issuances.	The	company	intends	to	issue	between	$350,000,000	and	$500,000,000	of	long-term	debt	in September	2005.	The	amount	of	long-term	debt	that	SYSCO	issues	will	depend	upon	market	conditions	at	the	time	of	issuance.	The	proceeds	from	such	issuance	are intended	to	be	utilized	to	repay	outstanding	commercial	paper	issuances	and	for	working	capital	and	general	corporate	purposes.

					The	6.5%	debentures	due	August	1,	2028	and	the	4.60%	Notes	due	March	15,	2014	are	unsecured,	are	not	subject	to	any	sinking	fund	requirement	and	include	a redemption	provision	which	allows	SYSCO	to	retire	the	debentures	at	any	time	prior	to	maturity	at	the	greater	of	par	plus	accrued	interest	or	an	amount	designed	to ensure	that	the	debenture	holders	are	not	penalized	by	the	early	redemption.

					The	7.0%	senior	notes	due	May	1,	2006	and	the	7.25%	senior	notes	due	April	15,	2007	are	unsecured,	are	not	redeemable	prior	to	maturity	and	are	not	subject	to	any sinking	fund	requirement.

					The	7.16%	debentures	due	April	15,	2027	are	unsecured,	are	not	subject	to	any	sinking	fund	requirement	and	are	redeemable	at	the	option	of	the	holder	on	April	15, 2007,	but	otherwise	are	not	redeemable	prior	to	maturity.

					The	6.10%	senior	notes	due	June	1,	2012	,	issued	by	SYSCO	International,	Co.,	a	wholly-owned	subsidiary	of	SYSCO,	are	fully	and	unconditionally	guaranteed	by Sysco	Corporation,	are	not	subject	to	any	sinking	fund	requirement,	and	include	a	redemption	provision	which	allow	SYSCO	International,	Co.	to	retire	the	notes	at	any time	prior	to	maturity	at	the	greater	of	par	plus	accrued	interest	or	an	amount	designed	to	ensure	that	the	note	holders	were	not	penalized	by	the	early	redemption.

					SYSCO's	Industrial	Revenue	Bonds	have	varying	structures.	Final	maturities	range	from	six	to	21	years	and	certain	of	the	bonds	provide	SYSCO	the	right	to	redeem (or	call)	the	bonds	at	various	dates.	These	call	provisions	generally	provide	the	bondholder	a	premium	in	the	early	call	years,	declining	to	par	value	as	the	bonds approach	maturity.

					Total	debt	at	July	2,	2005	was	$1,431,108,000,	of	which	approximately	86%	was	at	fixed	rates	averaging	5.6%	with	an	average	life	of	9	years,	and	the	remainder	was at	floating	rates	averaging	3.2%.	Certain	loan	agreements	contain	typical	debt	covenants	to	protect	noteholders,	including	provisions	to	maintain	the	company's	long- term	debt	to	total	capital	ratio	below	a	specified	level.	SYSCO	was	in	compliance	with	all	debt	covenants	at	July	2,	2005.

					The	fair	value	of	SYSCO's	total	long-term	debt	is	estimated	based	on	the	quoted	market	prices	for	the	same	or	similar	issues	or	on	the	current	rates	offered	to	the company	for	debt	of	the	same	remaining	maturities.	The	fair	value	of	total	long-term	debt	approximated	$1,442,721,000	at	July	2,	2005	and	$1,459,969,000	at	July	3, 2004,	respectively.

# Leases

					Although	SYSCO	normally	purchases	assets,	it	has	obligations	under	capital	and	operating	leases	for	certain	distribution	facilities,	vehicles	and	computers.	Total rental	expense	under	operating	leases	was	$92,710,000,	$86,842,000,	and	$83,597,000	in	fiscal	2005,	2004	and	2003,	respectively.	Contingent	rentals,	subleases	and assets	and	obligations	under	capital	leases	are	not	significant.

					Aggregate	minimum	lease	payments	by	fiscal	year	under	existing	non-capitalized	long-term	leases	are	as	follows:

# Stock-Based	Compensation	Plans

# 1991	Stock	Option	Plan

					The	1991	Stock	Option	Plan	(1991	Plan)	was	adopted	in	fiscal	1992	and	originally	reserved	12,000,000	shares	of	SYSCO	common	stock	for	options	to	directors, officers	and	key	personnel	of	the	company	and	its	subsidiaries	at	the	market	price	at	the	date	of	grant.	The	1991	Plan	provided	for	the	issuance	of	options	qualified	as incentive	stock	options	under	the	Internal	Revenue	Code	of	1986,	options	which	are	not	so	qualified	and	stock	appreciation	rights.	Vesting	requirements	for	awards under	this	plan	vary	by	individual	grant	and	include	a	combination	of	both	time-based	and	performance-based	vesting.	The	contractual	life	of	all	options	granted	under this	plan	is	10	years.	During	fiscal	1996,	the	shareholders	approved	an	amendment	to	the	1991	Plan	for	an	additional	32,000,000	shares	to	be	made	available	for	future grants	of	options.	No	stock	appreciation	rights	were	issued	under	this	plan.	No	further	grants	will	be	made	under	this	plan,	which	expired	in	November	2000	and	was replaced	by	the	2000	Stock	Incentive	Plan.

					The	following	summary	presents	information	with	regard	to	options	under	the	1991	Plan:

|  | Options	Exercisable | Options	Exercisable | Options	Outstanding | Options	Outstanding |
| :--- | :--- | :--- | :--- | :--- |
|  | Maximum | Weighted | Shares | Weighted |
|  | Shares | Average\tExercise | Under | Average\tExercise |
|  | Exercisable | Price\tPer\tShare | Option | Price\tPer\tShare |
| Balance\tat\tJune\t29,\t2002 | 11,251,541 | $11.38 | 17,939,346 | $13.78 |
| Cancelled |  |  | (224,261) | 16.33 |
| Exercised |  |  | (2,686,279) | 11.76 |
| Balance\tat\tJune\t28,\t2003 | 11,514,379 | 13.01 | 15,028,806 | 14.12 |
| Cancelled |  |  | (120,053) | 15.25 |
| Exercised |  |  | (3,334,121) | 12.13 |
| Balance\tat\tJuly\t3,\t2004 | 10,020,584 | 14.50 | 11,574,632 | 14.68 |
| Cancelled |  |  | (74,530) | 16.39 |
| Exercised |  |  | (2,628,670) | 12.85 |
| Balance\tat\tJuly\t2,\t2005 | 8,256,214 | $15.29 | 8,871,432 | $15.20 |

					The	following	table	summarizes	information	about	options	outstanding	under	the	1991	Plan	as	of	July	2,	2005:

|  | Options	Exercisable | Options	Exercisable | Options	Outstanding | Options	Outstanding | Options	Outstanding |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Weighted |  | Weighted\tAverage | Weighted |
|  |  | Average\tExercise |  | Remaining\tContractual | Average\tExercise |
| Range\tof\tExercise\tPrices | Shares | Price\tPer\tShare | Shares | Life\t(Yrs) | Price\tPer\tShare |
| $7.19\tto\t$8.75 | \t 2,125,816 | $8.24 | \t 2,416,253 | 1.54 | $8.26 |
| $10.94\tto\t$16.28 | \t 3,025,575 | 14.52 | \t 3,100,862 | 3.83 | 14.49 |
| $17.25\tto\t$20.97 | \t 3,104,823 | 20.86 | \t 3,354,317 | 5.17 | 20.87 |
| Balance\tat\tJuly\t2,\t2005 | \t 8,256,214 | $15.29 | \t 8,871,432 | 3.71 | $15.20 |

# 2000	Stock	Incentive	Plan

					The	2000	Stock	Incentive	Plan	(2000	Plan)	was	adopted	in	fiscal	2001	and	provided	for	option	grants	and	other	stock-based	awards	to	directors,	officers	and	other employees	of	the	company	and	its	subsidiaries	at	the	market	price	at	the	date	of	grant.	The	2000	Plan	originally	reserved	40,000,000	shares	of	SYSCO	common	stock, plus	any	shares	of	common	stock	which	were	available	for	grants	under	the	1991	Plan	but	which	were	not	utilized	prior	to	its	expiration	and	any	shares	issued	under	the 1991	Plan	that	are	forfeited,	expire	or	are	cancelled	and	up	to	10,000,000	shares	of	common	stock	which	were	reacquired	by	the	company	in	the	open	market	or	in private	transactions	after	November	3,	2000.	The	2000	Plan	provided	for	the	issuance	of	options	qualified	as	incentive	stock	options	under	the	Internal	Revenue	Code	of 1986,	options	which	are	not	so	qualified,	stock	appreciation	rights	and	other	stock-based	awards.	Vesting	requirements	for	awards	under	this	plan	vary	by	individual grant	and	include	a	combination	of	both	time-based	and	performance-based	vesting.	The	contractual	life	of	all	options	granted	under	this	plan	through	July	3,	2004	is	10 years;	options	granted	after	July	3,	2004	have	a	contractual	life	of	seven	years.	No	stock	appreciation	rights	or	other	stock-based	awards	were	issued	under	this	plan.	No further	grants	will	be	made	under	this	plan,	which	expired	in	November	2004	and	was	replaced	by	the	2004	Stock	Option	Plan.

					The	following	summary	presents	information	with	regard	to	options	under	the	2000	Plan:

|  | Options	Exercisable | Options	Exercisable | Options	Outstanding | Options	Outstanding |
| :--- | :--- | :--- | :--- | :--- |
|  | Maximum | Weighted | Shares | Weighted |
|  | Shares | Average\tExercise | Under | Average\tExercise |
|  | Exercisable | Price\tPer\tShare | Option | Price\tPer\tShare |
| Balance\tat\tJune\t29,\t2002 | 2,422,383 | $27.77 | 30,219,105 | $27.80 |
| Granted |  |  | 13,650,211 | 30.57 |
| Cancelled |  |  | (1,332,640) | 28.48 |
| Exercised |  |  | (292,313) | 27.79 |
| Balance\tat\tJune\t28,\t2003 | 5,391,843 | 27.78 | 42,244,363 | 28.67 |
| Granted |  |  | 13,344,746 | 31.77 |
| Cancelled |  |  | (1,097,937) | 29.45 |
| Exercised |  |  | (2,223,216) | 28.15 |
| Balance\tat\tJuly\t3,\t2004 | 21,420,393 | 28.89 | 52,267,956 | 29.47 |
| Granted |  |  | 8,515,000 | 32.19 |
| Cancelled |  |  | (1,464,852) | 30.24 |
| Exercised |  |  | (3,151,807) | 28.69 |
| Balance\tat\tJuly\t2,\t2005 | 28,541,947 | $29.09 | 56,166,297 | $29.90 |

					The	following	table	summarizes	information	about	options	outstanding	under	the	2000	Plan	as	of	July	2,	2005:

|  | Options	Exercisable | Options	Exercisable | Options	Outstanding | Options	Outstanding | Options	Outstanding |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Weighted |  | Weighted\tAverage | Weighted |
|  |  | Average\tExercise |  | Remaining\tContractual | Average\tExercise |
| Range\tof\tExercise\tPrices | Shares | Price\tPer\tShare | Shares | Life\t(Yrs) | Price\tPer\tShare |
| $26.16\tto\t$29.82 | \t 17,163,127 | $27.79 | \t 23,749,467 | 6.20 | $27.80 |
| $30.57\tto\t$34.73 | \t 11,378,820 | 31.06 | \t 32,416,830 | 7.31 | 31.45 |
| Balance\tat\tJuly\t2,\t2005 | \t 28,541,947 | $29.09 | \t 56,166,297 | 6.84 | $29.90 |

# 2004	Stock	Option	Plan

					The	2004	Stock	Option	Plan	(2004	Plan)	was	adopted	in	fiscal	2005	and	reserves	23,500,000	shares	of	SYSCO	common	stock	for	grants	of	options	and	dividend equivalents	to	directors,	officers	and	other	employees	of	the	company	and	its	subsidiaries	at	the	market	price	at	the	date	of	grant.	The	2004	Plan	provides	for	the	issuance of	options	qualified	as	incentive	stock	options	under	the	Internal	Revenue	Code	of	1986,	options	which	are	not	so	qualified,	and	dividend	equivalents.	Vesting requirements	for	awards	under	this	plan	will	vary	by	individual	grant	and	may	include	a	combination	of	both	time-based	and	performance-based	vesting.	The	contractual life	of	all	options	granted	under	this	plan	will	be	no	greater	than	seven	years.	During	fiscal	2005,	108,000	options	were	granted	to	20	key	employees.	As	of	July	2,	2005, there	were	23,392,000	remaining	shares	authorized	and	available	for	grant.

					The	following	summary	presents	information	with	regard	to	options	under	the	2004	Plan:

|  | Options	Exercisable | Options	Exercisable | Options	Outstanding | Options	Outstanding |
| :--- | :--- | :--- | :--- | :--- |
|  | Maximum | Weighted | Shares | Weighted |
|  | Shares | Average\tExercise | Under | Average\tExercise |
|  | Exercisable | Price\tPer\tShare | Option | Price\tPer\tShare |
| Granted |  |  | 108,000 | $37.06 |
| Balance\tat\tJuly\t2,\t2005 | — | $— | 108,000 | $37.06 |

					The	following	table	summarizes	information	about	options	outstanding	under	the	2004	Plan	as	of	July	2,	2005:

|  | Options	Exercisable | Options	Exercisable | Options	Outstanding | Options	Outstanding | Options	Outstanding |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Weighted |  | Weighted\tAverage | Weighted |
|  |  | Average\tExercise |  | Remaining\tContractual | Average\tExercise |
| Range\tof\tExercise\tPrices | Shares | Price\tPer\tShare | Shares | Life\t(Yrs) | Price\tPer\tShare |
| $37.05\tto\t$37.18 | — | $— | 108,000 | 6.88 | $37.06 |
| Balance\tat\tJuly\t2,\t2005 | — | $— | 108,000 | 6.88 | $37.06 |

# 1993	and	1996	Guest	Supply	Stock	Incentive	Plans

					Prior	to	March	2001,	Guest	Supply,	Inc.	maintained	the	1993	Stock	Option	Plan	and	the	1996	Long-Term	Incentive	Plan	(Guest	Supply	Plans).	In	connection	with SYSCO's	acquisition	of	Guest	Supply	in	March	2001,	all	outstanding	options	exercisable	to	purchase	Guest	Supply	common	stock	were	converted	into	options	to purchase	shares	of	SYSCO	common	stock.	The	number	of	shares	underlying	such	options,	as	well	as	the	exercise	price,	were	adjusted	pursuant	to	the	terms	of	the Merger	Agreement	and	Plan	of	Reorganization	dated	January	22,	2001.	These	options	are	fully	vested	and	expire	10	years	from	the	original	grant	date.	No	new	options will	be	issued	under	any	of	the	Guest	Supply	Plans.

					The	following	summary	presents	information	with	regard	to	options	under	the	Guest	Supply	Plans:

|  | Options	Exercisable | Options	Exercisable | Options	Outstanding | Options	Outstanding |
| :--- | :--- | :--- | :--- | :--- |
|  | Maximum | Weighted | Shares | Weighted |
|  | Shares | Average\tExercise | Under | Average\tExercise |
|  | Exercisable | Price\tPer\tShare | Option | Price\tPer\tShare |
| Balance\tat\tJune\t29,\t2002 | 466,719 | $10.82 | 466,719 | $10.82 |
| Exercised |  |  | (134,251) | 7.11 |
| Balance\tat\tJune\t28,\t2003 | 332,468 | 12.31 | 332,468 | 12.31 |
| Exercised |  |  | (102,780) | 10.35 |
| Balance\tat\tJuly\t3,\t2004 | 229,688 | 13.19 | 229,688 | 13.19 |
| Exercised |  |  | (9,373) | 11.59 |
| Balance\tat\tJuly\t2,\t2005 | 220,315 | $13.26 | 220,315 | $13.26 |

					The	following	table	summarizes	information	about	options	outstanding	under	the	Guest	Supply	Plans	as	of	July	2,	2005:

|  | Options	Exercisable | Options	Exercisable | Options	Outstanding | Options	Outstanding | Options	Outstanding |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Weighted |  | Weighted\tAverage | Weighted |
|  |  | Average\tExercise |  | Remaining\tContractual | Average\tExercise |
| Range\tof\tExercise\tPrices | Shares | Price\tPer\tShare | Shares | Life\t(Yrs) | Price\tPer\tShare |
| $10.00\tto\t$14.84 | 132,634 | $10.94 | 132,634 | 3.28 | $10.94 |
| $15.95\tto\t$18.43 | 87,681 | 16.76 | 87,681 | 2.57 | 16.76 |
| Balance\tat\tJuly\t2,\t2005 | 220,315 | $13.26 | 220,315 | 3.00 | $13.26 |

# Non-Employee	Directors	Stock	Option	Plan	and	Non-Employee	Directors	Stock	Plan

					The	Non-Employee	Directors	Stock	Option	Plan	adopted	in	fiscal	1996	permitted	the	issuance	of	up	to	800,000	shares	of	common	stock	to	non-employee	directors. No	further	grants	will	be	made	under	this	plan,	which	was	replaced	by	the	Non-Employee	Directors	Stock	Plan	in	November	1998.	The	plan	was	amended	and	restated in	November	2001.

					The	Non-Employee	Directors	Stock	Plan	permits	the	issuance	of	up	to	800,000	shares	of	common	stock	to	non-employee	directors.	Under	this	plan,	non-employee directors	may	receive	an	annual	grant	of	options	to	purchase	shares	of	common	stock	if	certain	earnings	goals	are	met.	Vesting	requirements	for	awards	under	these plans	vary	by	individual	grant	and	include	a	combination	of	both	time-based	and	performance-based	vesting.	The	contractual	life	of	all	options	granted	under	this	plan through	July	3,	2004	is	10	years;	options	granted	after	July	3,	2004	have	a	contractual	life	of	seven	years.

					As	of	July	2,	2005,	options	for	a	total	of	824,000	shares	have	been	granted	under	these	plans,	of	which	194,664	have	been	exercised,	32,000	have	been	cancelled	and 432,536	are	available	for	exercise.	As	of	July	2,	2005,	there	were	135,898	remaining	shares	authorized	and	available	for	grant	under	the	Non-Employee	Directors	Stock Plan.

					The	following	table	summarizes	information	about	options	outstanding	under	both	of	the	Non-Employee	Director	Plans	as	of	July	2,	2005:

|  | Options	Exercisable | Options	Exercisable | Options	Outstanding | Options	Outstanding | Options	Outstanding |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Weighted |  | Weighted\tAverage | Weighted |
|  |  | Average\tExercise |  | Remaining\tContractual | Average\tExercise |
| Range\tof\tExercise\tPrices | Shares | Price\tPer\tShare | Shares | Life\t(Yrs) | Price\tPer\tShare |
| $7.47\tto\t$10.00 | 128,000 | $8.82 | 128,000 | 1.47 | $8.82 |
| $13.75\tto\t$19.56 | 114,668 | 16.72 | 114,668 | 3.86 | 16.72 |
| $25.56\tto\t$35.06 | 189,868 | 27.56 | 354,668 | 6.68 | 29.55 |
| Balance\tat\tJuly\t2,\t2005 | 432,536 | $19.14 | 597,336 | 5.02 | $22.65 |

					In	addition	to	the	options	summarized	in	the	tables	above,	one-time	retainer	awards	of	restricted	stock	were	granted	to	new	non-employee	directors	in	the	amount	of 4,000	shares	with	a	fair	value	at	date	of	grant	of	$35.25	per	share	in	fiscal	2005,	4,000	shares	with	a	fair	value	at	date	of	grant	of	$34.12	per	share	in	fiscal	2004	and 4,000	shares	with	a	fair	value	at	date	of	grant	of	$31.47	per	share	in	fiscal	2003.

					In	total,	144,102	shares	of	restricted	stock	have	been	issued	to	non-employee	directors	under	the	Non-Employee	Directors	Stock	Plan.

# Employees'	Stock	Purchase	Plan

					SYSCO	has	an	Employees'	Stock	Purchase	Plan	which	permits	employees	(other	than	directors)	to	invest	by	means	of	periodic	payroll	deductions	in	SYSCO common	stock	at	85%	of	the	closing	price	on	the	last	business	day	of	each	calendar	quarter.	During	fiscal	2005,	1,712,244	shares	of	SYSCO	common	stock	were purchased	by	the	participants	as	compared	to	1,620,535	shares	purchased	in	fiscal	2004	and	1,886,090	shares	purchased	in	fiscal	2003.	The	total	number	of	shares	which may	be	sold	pursuant	to	the	plan	may	not	exceed	68,000,000	shares,	of	which	6,735,112	remained	available	at	July	2,	2005.	In	July	2005,	410,375	shares	were purchased	by	participants.

# Management	Incentive	Compensation

					SYSCO	has	a	Management	Incentive	Plan	that	compensates	key	management	personnel	for	specific	performance	achievements.	The	bonuses	earned	and	expensed under	this	plan	were	$50,505,000	in	fiscal	2005,	$77,494,000	in	fiscal	2004	and	$62,486,000	in	fiscal	2003;	these	amounts	were	paid	in	the	following	fiscal	year	in	both cash	and	stock	or	deferred	for	payment	in	future	years	at	the	election	of	each	participant.	There	were	174,	174	and	165	participants	in	the	plan	in	fiscal	2005,	2004	and 2003,	respectively.	A	total	of	1,001,624	shares,	940,843	shares	and	861,156	shares	at	a	fair	value	of	$34.80,	$29.55	and	$27.22	were	issued	pursuant	to	this	plan	in	fiscal 2005,	2004	and	2003,	respectively,	for	bonuses	earned	in	the	preceding	fiscal	years.	As	of	July	2,	2005,	there	were	4,345,650	remaining	shares	that	may	be	issued	under the	Management	Incentive	Plan.	In	August	2005,	617,637	shares	were	issued	in	payment	for	the	portion	of	the	bonuses	earned	in	fiscal	2005	elected	to	be	received	in stock.	Participants	in	the	Management	Incentive	Plan	also	have	the	option	to	defer	portions	of	their	salary	and	bonuses	pursuant	to	the	Executive	Deferred	Compensation Plan.

# Employee	Benefit	Plans

					SYSCO	has	defined	benefit	and	defined	contribution	retirement	plans	for	its	employees.	Also,	the	company	contributes	to	various	multi-employer	plans	under collective	bargaining	agreements	and	provides	certain	health	care	benefits	to	eligible	retirees	and	their	dependents.

					SYSCO	maintains	a	qualified	retirement	plan	(Retirement	Plan)	that	pays	benefits	to	employees	at	retirement,	using	formulas	based	on	a	participant's	years	of	service and	compensation.

					In	addition	to	receiving	benefits	upon	retirement	under	the	company's	defined	benefit	plan,	participants	in	the	Management	Incentive	Plan	(see	"Management Incentive	Compensation"	under	"Stock	Based	Compensation	Plans")	will	receive	benefits	under	a	Supplemental	Executive	Retirement	Plan	(SERP).	This	plan	is	a nonqualified,	unfunded	supplementary	retirement	plan.	In	order	to	meet	its	obligations	under	the	SERP,	SYSCO	maintains	life	insurance	policies	on	the	lives	of	the participants	with	carrying	values	of	$138,931,000	at	July	2,	2005	and	$87,104,000	at	July	3,	2004.	These	policies	are	not	included	as	plan	assets	or	in	the	funded	status amounts	in	the	table	below.	SYSCO	is	the	sole	owner	and	beneficiary	of	such	policies.	Projected	benefit	obligations	and	accumulated	benefit	obligations	for	the	SERP were	$375,491,000	and	$264,010,000,	respectively,	as	of	July	2,	2005	and	$269,815,000	and	$153,652,000,	respectively,	as	of	July	3,	2004.

					The	company	made	cash	contributions	to	its	pension	plans	of	$220,361,000	and	$165,512,000	in	fiscal	years	2005	and	2004,	respectively,	including	$214,000,000 and	$160,000,000	in	voluntary	contributions	to	the	Retirement	Plan	in	fiscal	2005	and	2004,	respectively.	Included	in	the	amounts	contributed	in	fiscal	2005	was $134,000,000	voluntarily	contributed	to	the	qualified	pension	plan	in	the	fourth	quarter.	The	decision	to	increase	the	contributions	to	the	qualified	pension	plan	in	fiscal 2005	was	primarily	due	to	the	decreased	discount	rate,	which	increased	the	pension	obligation	and	negatively	impacted	the	fiscal	2005	year-end	pension	funded	status.	In fiscal	2006,	as	in	previous	years,	contributions	to	the	Retirement	Plan	will	not	be	required	to	meet	ERISA	minimum	funding	requirements,	yet	the	company	anticipates	it will	make	voluntary	contributions	of	approximately	$66,000,000.	The	company's	contributions	to	the	SERP	and	other	post-retirement	plans	are	made	in	the	amounts needed	to	fund	current	year	benefit	payments.	The	estimated	fiscal	2006	contributions	to	fund	benefit	payments	for	the	SERP	and	other	post-retirement	plans	are $7,659,000	and	$338,000,	respectively.

					Estimated	future	benefit	payments	are	as	follows:

|  |  | Postretirement |
| :--- | :--- | :--- |
|  | Pension\tBenefits | Plans |
| 2006 | $27,316,000 | $338,000 |
| 2007 | 29,356,000 | 392,000 |
| 2008 | 33,825,000 | 467,000 |
| 2009 | 39,738,000 | 535,000 |
| 2010 | 46,957,000 | 627,000 |
| Subsequent\tfive\tyears | 355,550,000 | 4,234,000 |

					The	funded	status	of	the	defined	benefit	plans	is	as	follows	(including	the	SERP	benefit	obligations	but	excluding	from	plan	assets	the	cash	surrender	values	of	life insurance	policies):

|  | Pension	Benefits | Pension	Benefits | Other	Postretirement	Plans | Other	Postretirement	Plans |
| :--- | :--- | :--- | :--- | :--- |
|  | July\t2,\t2005 | July\t3,\t2004 | July\t2,\t2005 | July\t3,\t2004 |
| Change\tin\tbenefit\tobligation: |  |  |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $1,192,357,000 | $1,028,352,000 | $7,996,000 | $6,836,000 |
| Service\tcost | 81,282,000 | 74,934,000 | 477,000 | 422,000 |
| Interest\tcost | 73,824,000 | 61,162,000 | 488,000 | 402,000 |
| Amendments | 25,617,000 | 2,155,000 | — | — |
| Actuarial\tloss\t(gain) | 230,052,000 | 48,316,000 | (65,000) | 516,000 |
| Actual\texpenses | (6,815,000) | (4,456,000) | — | — |
| Total\tdisbursements | (21,599,000) | (18,106,000) | (78,000) | (180,000) |
| Benefit\tobligation\tat\tend\tof\tyear | 1,574,718,000 | 1,192,357,000 | 8,818,000 | 7,996,000 |
| Change\tin\tplan\tassets: |  |  |  |  |
| Fair\tvalue\tof\tplan\tassets\tat\tbeginning\tof\tyear | 859,279,000 | 605,202,000 | — | — |
| Actual\treturn\ton\tplan\tassets | 90,412,000 | 111,127,000 | — | — |
| Employer\tcontribution | 220,361,000 | 165,512,000 | 78,000 | 180,000 |
| Actual\texpenses | (6,815,000) | (4,456,000) | — | — |
| Total\tdisbursements | (21,599,000) | (18,106,000) | (78,000) | (180,000) |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear | 1,141,638,000 | 859,279,000 | — | — |
| Funded\tstatus | (433,080,000) | (333,078,000) | (8,818,000) | (7,996,000) |
| Unrecognized\tnet\tactuarial\tloss\t(gain) | 644,116,000 | 454,468,000 | (773,000) | (708,000) |
|  | — | — | 1,227,000 | 1,381,000 |
| Unrecognized\tprior\tservice\tcost | 45,087,000 | 21,230,000 | 994,000 | 1,196,000 |
| Net\tamount\trecognized | $256,123,000 | $142,620,000 | $(7,370,000) | $(6,127,000) |

Additional	information	related	to	SYSCO's	defined	benefit	plans	is	as	follows:

|  | July	2,	2005 | July	3,	2004 |
| :--- | :--- | :--- |
| Net\tamount\trecognized\tconsists\tof: |  |  |
| Prepaid\tpension\tcost | $389,766,000 | $243,996,000 |
| Accrued\tbenefit\tliability | (264,010,000) | (153,652,000) |
| Intangible\tasset | 42,240,000 | 18,563,000 |
| Accumulated\tother\tcomprehensive\tloss | 88,127,000 | 33,713,000 |
| Net\tamount\trecognized | $256,123,000 | $142,620,000 |
| Plans\twith\taccumulated\tbenefit\tobligation\tin\texcess\tof\tfair\tvalue\tof\tplan\tassets: |  |  |
| Projected\tbenefit\tobligation | $375,491,000 | $269,815,000 |
| Accumulated\tbenefit\tobligation | 264,010,000 | 153,652,000 |
| Fair\tvalue\tof\tplan\tassets\tat\tend\tof\tyear | — | — |
| Additional\tinformation: |  |  |
| Accumulated\tbenefit\tobligation | $1,329,725,000 | $954,875,000 |
| Increase\t(decrease)\tin\tminimum\tliability\tincluded\tin\tother\tcomprehensive\tincome | 54,414,000 | (266,075,000) |

					Minimum	pension	liability	adjustments	result	when	the	accumulated	benefit	obligation	exceeds	the	fair	value	of	plan	assets	and	are	recorded	so	that	the	recorded pension	liability	is	at	a	minimum	equal	to	the	unfunded	accumulated	benefit	obligation.	Minimum	pension	liability	adjustments	are	non-cash	adjustments	that	are reflected	as	an	increase	(or	decrease)	in	the	pension	liability	and	an	offsetting	charge	(or	benefit)	to	shareholders'	equity,	net	of	tax,	through	comprehensive	loss	(or income)	rather	than	net	income.

					As	a	result	of	changes	in	assumptions,	including	the	increase	in	the	discount	rate	to	6.25%	for	fiscal	2005	from	6.00%	in	fiscal	2004,	together	with	the	normal	growth of	the	plan,	the	impact	of	losses	from	prior	periods	and	the	amount	and	timing	of	contributions,	net	pension	costs	decreased	$7,374,000	in	fiscal	2005.	Net	pension	costs in	fiscal	2006	are	expected	to	increase	by	approximately	$23,700,000	due	primarily	to	a	decrease	in	the	discount	rate	to	5.60%,	which	is	based	on	the	new	measurement date	of	May	31st	discussed	below,	for	fiscal	2006.	The	components	of	net	pension	costs	for	each	fiscal	year	are	as	follows:

|  |  | 2004 |  |
| :--- | :--- | :--- | :--- |
|  | 2005 | (53\tWeeks) | 2003 |
| Service\tcost | $81,282,000 | $74,934,000 | $51,806,000 |
| Interest\tcost | 73,824,000 | 61,162,000 | 50,809,000 |
| Expected\treturn\ton\tplan\tassets | (82,613,000) | (61,148,000) | (46,462,000) |
| Amortization\tof\tprior\tservice\tcost | 1,760,000 | 1,308,000 | 3,346,000 |
| Recognized\tnet\tactuarial\tloss | 32,605,000 | 37,697,000 | 15,341,000 |
| Amortization\tof\tnet\ttransition\tobligation | — | 279,000 | (552,000) |
| Net\tpension\tcosts | $106,858,000 | $114,232,000 | $74,288,000 |

					The	components	of	other	postretirement	benefit	costs	for	each	fiscal	year	are	as	follows:

|  |  | Other	Postretirement	Plans |  |
| :--- | :--- | :--- | :--- |
|  |  | 2004 |  |
|  | 2005 | (53\tWeeks) | 2003 |
| Service\tcost | $477,000 | $422,000 | $318,000 |
| Interest\tcost | 488,000 | 402,000 | 372,000 |
| Expected\treturn\ton\tplan\tassets | — | — | — |
| Amortization\tof\tprior\tservice\tcost | 202,000 | 202,000 | 202,000 |
| Recognized\tnet\tactuarial\tgain | — | (40,000) | (123,000) |
| Amortization\tof\tnet\ttransition\tobligation | 154,000 | 153,000 | 153,000 |
| Net\tother\tpostretirement\tbenefit\tcosts | $1,321,000 | $1,139,000 | $922,000 |

					Weighted-average	assumptions	used	to	determine	benefit	obligations	at	year	end	were:

|  | Pension	Benefits | Pension	Benefits | Other	Postretirement	Plans | Other	Postretirement	Plans |
| :--- | :--- | :--- | :--- | :--- |
|  | July\t2,\t2005 | July\t3,\t2004 | July\t2,\t2005 | July\t3,\t2004 |
| Discount\trate | 5.40% | 6.25% | 5.40% | 6.25% |
| Rate\tof\tcompensation\tincrease\t—\tRetirement\tPlan | 5.89 | 5.89 | — | — |

					For	determining	the	benefit	obligations	at	year	end,	the	SERP	calculations	assume	annual	salary	increases	of	10%	through	fiscal	2007	and	7%	thereafter	as	of	July	2, 2005	and	July	3,	2004.

					Weighted-average	assumptions	used	to	determine	net	pension	costs	and	other	postretirement	benefit	costs	for	each	fiscal	year	were:

|  | Pension	Benefits | Pension	Benefits | Pension	Benefits | Other	Postretirement	Plans | Other	Postretirement	Plans | Other	Postretirement	Plans |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 |
| Discount\trate | 6.25% | 6.00% | 7.25% | 6.25% | 6.00% | 7.25% |
| Expected\trate\tof\treturn | 9.00 | 9.00 | 9.50 | — | — | — |
| Rate\tof\tcompensation\tincrease\t—\tRetirement |  |  |  |  |  |  |
| Plan | 5.89 | 5.89 | 5.89 | — | — | — |

For	determining	net	pension	costs	for	each	fiscal	year,	the	SERP	calculations	assume	annual	salary	increases	of	10%	through	fiscal	2007	and	7%	thereafter	for	fiscal 2005	and	annual	salary	increases	of	8%	through	fiscal	2005	and	7%	thereafter	for	fiscal	2004	and	2003.

					A	healthcare	cost	trend	rate	is	not	used	in	the	calculations	because	SYSCO	subsidizes	the	cost	of	postretirement	medical	coverage	by	a	fixed	dollar	amount	with	the retiree	responsible	for	the	cost	of	coverage	in	excess	of	the	subsidy,	including	all	future	cost	increases.

					For	guidance	in	determining	the	discount	rate,	SYSCO	calculates	the	implied	rate	of	return	on	a	hypothetical	portfolio	of	high-quality	fixed-income	investments	for which	the	timing	and	amount	of	cash	outflows	approximates	the	estimated	payouts	of	the	pension	plans.	The	discount	rate	assumption	is	reviewed	annually	and	revised as	deemed	appropriate.

					The	expected	long-term	rate	of	return	on	plan	assets	is	derived	from	a	mathematical	asset	model	that	incorporates	assumptions	as	to	the	various	asset	class	returns, reflecting	a	combination	of	rigorous	historical	performance	analysis	and	the	forward-looking	views	of	the	financial	markets	regarding	the	yield	on	long-term	bonds	and the	historical	returns	of	the	major	stock	markets.	The	rate	of	return	assumption	is	reviewed	annually	and	revised	as	deemed	appropriate.

					SYSCO's	investment	objectives	target	a	mix	of	investments	that	can	potentially	achieve	an	above-average	rate	of	return.	SYSCO	has	determined	that	this	strategy	is appropriate	due	to	the	relatively	low	ratio	of	retirees	as	a	percentage	of	participants,	low	average	years	of	participant	service	and	low	average	age	of	participants	and	is willing	to	accept	the	above-average	level	of	short-term	risk	and	variability	in	returns	to	attempt	to	achieve	a	higher	level	of	long-term	returns.	As	a	result,	the	company's strategy	targets	a	mix	of	investments	which	include	70%	stocks	(including	a	mix	of	large	capitalization	U.S.	stocks,	small-	to	mid-capitalization	U.S.	stocks	and international	stocks)	and	30%	fixed	income	investments	and	cash	equivalents.

					The	percentage	of	the	fair	value	of	plan	assets	by	asset	category	is	as	follows:

|  | July	2,	2005 | July	3,	2004 |
| :--- | :--- | :--- |
| Equity\tsecurities | 71.2% | 70.5% |
| Debt\tsecurities | 28.8 | 29.5 |
| Total | 100.0% | 100.0% |

# Commitments	and	Contingencies

					SYSCO	has	committed	with	a	third	party	service	provider	to	provide	hardware	and	hardware	hosting	services.	The	services	are	to	be	provided	over	a	ten	year	period beginning	in	fiscal	2005	and	ending	in	fiscal	2015.	The	total	cost	of	the	services	over	that	period	are	expected	to	be	approximately	$300,000,000.	This	amount	may	be reduced	by	SYSCO	utilizing	less	than	estimated	resources	and	can	be	increased	by	SYSCO	utilizing	more	than	estimated	resources	and	the	adjustments	for	inflation provided	for	in	the	agreements.	SYSCO	may	also	cancel	a	portion	or	all	of	the	services	provided	beginning	in	fiscal	2007	subject	to	termination	fees	which	decrease	over time.	Although	it	does	not	expect	to,	if	SYSCO	were	to	terminate	all	of	the	services	in	fiscal	2007,	the	total	estimated	costs	incurred	during	fiscal	2006	and	fiscal	2007 would	be	approximately	$32,000,000.	SYSCO	believes	that	these	agreements	will	provide	a	more	secure	environment	for	its	data	processing	as	well	as	reduce	overall operating	costs	over	the	ten	year	period.

# 					Supplemental	Guarantor	Information

					SYSCO	International,	Co.	is	an	unlimited	liability	company	organized	under	the	laws	of	the	Province	of	Nova	Scotia,	Canada	and	is	a	wholly-owned	subsidiary	of SYSCO.	In	May	2002,	SYSCO	International,	Co.	issued,	in	a	private	offering,	$200,000,000	of	6.10%	notes	due	in	2012	(see	"Debt").	In	December	2002,	these	notes were	exchanged	for	substantially	identical	notes	in	an	exchange	offer	registered	under	the	Securities	Act	of	1933.	These	notes	are	fully	and	unconditionally	guaranteed by	SYSCO.	SYSCO	International,	Co.	is	a	holding	company	with	no	significant	sources	of	income	or	assets,	other	than	its	equity	interests	in	its	subsidiaries	and	interest income	from	loans	made	to	its	subsidiaries.	The	proceeds	from	the	issuance	of	the	6.10%	notes	were	used	to	repay	commercial	paper	issued	to	fund	the	fiscal	2002 acquisition	of	a	Canadian	broadline	foodservice	operation.

					The	following	condensed	consolidating	financial	statements	present	separately	the	financial	position,	results	of	operations	and	cash	flows	of	the	parent	guarantor (SYSCO),	the	subsidiary	issuer	(SYSCO	International),	all	other	non-guarantor	subsidiaries	of	SYSCO	(Other	Non-Guarantor	Subsidiaries)	on	a	combined	basis	and eliminating	entries.	The	financial	information	for	SYSCO	includes	corporate	activities	as	well	as	certain	operating	companies	which	were	operated	as	divisions	of SYSCO	prior	to	fiscal	2003.	Beginning	with	the	third	quarter	of	fiscal	2003,	these	divisions	have	been	operated	as	subsidiaries	and	their	results	from	that	point	in	time are	included	in	the	Other	Non-Guarantor	Subsidiaries	column.	The	accompanying	financial	information	includes	the	balances	and	results	of	SYSCO	International,	Co. from	the	date	of	its	inception	in	February	2002.

|  |  | SYSCO | Other	Non-Guarantor |  | Consolidated |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | SYSCO | International | Subsidiaries | Eliminations | Totals |
|  |  |  | (In\tthousands) |  |  |
| Current\tassets | $156,812 | $32 | $3,844,942 | $— | $4,001,786 |
| Investment\tin\tsubsidiaries | 9,979,188 | 283,033 | 164,218 | (10,426,439) | — |
| Plant\tand\tequipment,\tnet | 120,800 | — | 2,147,501 | — | 2,268,301 |
| Other\tassets | 698,283 | — | 1,299,532 | — | 1,997,815 |
| Total\tassets | $10,955,083 | $283,065 | $7,456,193 | $(10,426,439) | $8,267,902 |
| Current\tliabilities | $696,995 | $34,330 | $2,726,245 | $— | $3,457,570 |
| Intercompany\tpayables\t(receivables) | 6,342,306 | 10,546 | (6,352,852) | — | — |
| Long-term\tdebt | 709,452 | 199,560 | 47,165 | — | 956,177 |
| Other\tliabilities | 508,221 | — | 587,095 | — | 1,095,316 |
| Shareholders'\tequity | 2,698,109 | 38,629 | 10,448,540 | (10,426,439) | 2,758,839 |
| Total\tliabilities\tand\tshareholders'\tequity | $10,955,083 | $283,065 | $7,456,193 | $(10,426,439) | $8,267,902 |

|  |  |  | July	3,	2004 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | SYSCO | Other\tNon-Guarantor |  | Consolidated |
|  | SYSCO | International | Subsidiaries | Eliminations | Totals |
|  |  |  | (In\tthousands) |  |  |
| Current\tassets | $119,526 | $34 | $3,731,851 | $— | $3,851,411 |
| Investment\tin\tsubsidiaries | 8,678,729 | 260,501 | 173,986 | (9,113,216) | — |
| Plant\tand\tequipment,\tnet | 114,385 | — | 2,052,424 | — | 2,166,809 |
| Other\tassets | 594,811 | — | 1,234,601 | — | 1,829,412 |
| Total\tassets | $9,507,451 | $260,535 | $7,192,862 | $(9,113,216) | $7,847,632 |
| Current\tliabilities | $374,144 | $74,948 | $2,677,542 | $— | $3,126,634 |
| Intercompany\tpayables\t(receivables) | 5,298,927 | (14,924) | (5,284,003) | — | — |
| Long-term\tdebt | 981,476 | 199,496 | 50,521 | — | 1,231,493 |
| Other\tliabilities | 326,771 | — | 598,228 | — | 924,999 |
| Shareholders'\tequity | 2,526,133 | 1,015 | 9,150,574 | (9,113,216) | 2,564,506 |
| Total\tliabilities\tand\tshareholders'\tequity | $9,507,451 | $260,535 | $7,192,862 | $(9,113,216) | $7,847,632 |

# Condensed	Consolidating	Results	of	Operations

|  |  | SYSCO | Other	Non-Guarantor |  | Consolidated |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | SYSCO | International | Subsidiaries | Eliminations | Totals |
|  |  |  | (In\tthousands) |  |  |
| Sales | $— | $— | $30,281,914 | $— | $30,281,914 |
| Cost\tof\tsales | — | — | 24,498,200 | — | 24,498,200 |
| Operating\texpenses | 100,595 | 115 | 4,093,474 | — | 4,194,184 |
| Interest\texpense\t(income) | 312,901 | 11,510 | (249,411) | — | 75,000 |
| Other,\tnet | (747) | — | (10,159) | — | (10,906) |
| Total\tcosts\tand\texpenses | 412,749 | 11,625 | 28,332,104 | — | 28,756,478 |
| Earnings\t(loss)\tbefore\tincome\ttaxes | (412,749) | (11,625) | 1,949,810 | — | 1,525,436 |
| Income\ttax\t(benefit)\tprovision | (157,876) | (4,447) | 726,302 | — | 563,979 |
| Equity\tin\tearnings\tof\tsubsidiaries | 1,216,330 | 6,500 | — | (1,222,830) | — |
| Net\tearnings\t(loss) | $961,457 | $(678) | $1,223,508 | $(1,222,830) | $961,457 |

|  |  |  | Condensed	Consolidating	Results	of	Operations | Condensed	Consolidating	Results	of	Operations |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Year\tEnded\tJuly\t3,\t2004 |  |  |
|  |  |  | (53\tWeeks) |  |  |
|  |  | SYSCO | Other\tNon-Guarantor |  | Consolidated |
|  | SYSCO | International | Subsidiaries | Eliminations | Totals |
|  |  |  | (In\tthousands) |  |  |
| Sales | $— | $— | $29,335,403 | $— | $29,335,403 |
| Cost\tof\tsales | — | — | 23,661,514 | — | 23,661,514 |
| Operating\texpenses | 118,937 | 109 | 4,022,184 | — | 4,141,230 |
| Interest\texpense\t(income) | 255,708 | 13,923 | (199,751) | — | 69,880 |
| Other,\tnet | (372) | (1,028) | (10,965) | — | (12,365) |
| Total\tcosts\tand\texpenses | 374,273 | 13,004 | 27,472,982 | — | 27,860,259 |
| Earnings\t(loss)\tbefore\tincome\ttaxes | (374,273) | (13,004) | 1,862,421 | — | 1,475,144 |
| Income\ttax\t(benefit)\tprovision | (144,095) | (5,007) | 717,032 | — | 567,930 |
| Equity\tin\tearnings\tof\tsubsidiaries | 1,137,392 | 5,267 | — | (1,142,659) | — |
| Net\tearnings\t(loss) | $907,214 | $(2,730) | $1,145,389 | $(1,142,659) | $907,214 |

|  |  |  | Condensed	Consolidating	Results	of	Operations | Condensed	Consolidating	Results	of	Operations |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Year\tEnded\tJune\t28,\t2003 |  |  |
|  |  | SYSCO | Other\tNon-Guarantor |  | Consolidated |
|  | SYSCO | International | Subsidiaries | Eliminations | Totals |
|  |  |  | (In\tthousands) |  |  |
| Sales | $1,651,729 | $— | $24,488,608 | $— | $26,140,337 |
| Cost\tof\tsales | 1,278,537 | — | 19,701,019 | — | 20,979,556 |
| Operating\texpenses | 377,861 | 975 | 3,457,671 | — | 3,836,507 |
| Interest\texpense\t(income) | 355,192 | 10,586 | (293,544) | — | 72,234 |
| Other,\tnet | 272 | — | (8,619) | — | (8,347) |
| Total\tcosts\tand\texpenses | 2,011,862 | 11,561 | 22,856,527 | — | 24,879,950 |
| Earnings\t(loss)\tbefore\tincome\ttaxes | (360,133) | (11,561) | 1,632,081 | — | 1,260,387 |
| Income\ttax\t(benefit)\tprovision | (137,751) | (4,422) | 624,272 | — | 482,099 |
| Equity\tin\tearnings\tof\tsubsidiaries | 1,000,670 | 7,204 | — | (1,007,874) | — |
| Net\tearnings | $778,288 | $65 | $1,007,809 | $(1,007,874) | $778,288 |

|  |  | SYSCO | Other	Non-Guarantor | Consolidated |
| :--- | :--- | :--- | :--- | :--- |
|  | SYSCO | International | Subsidiaries | Totals |
|  |  | (In\tthousands) | (In\tthousands) |  |
| Net\tcash\tprovided\tby\t(used\tfor): |  |  |  |  |
| Operating\tactivities | $(223,678) | $(6,958) | $1,422,476 | $1,191,840 |
| Investing\tactivities | 36,865 | — | (450,305) | (413,440) |
| Financing\tactivities | (739,109) | (40,772) | (4,389) | (784,270) |
| Exchange\trate\ton\tcash | — | — | (2,158) | (2,158) |
| Intercompany\tactivity | 964,163 | 47,730 | (1,011,893) | — |
| Net\tincrease\t(decrease)\tin\tcash | 38,241 | — | (46,269) | (8,028) |
| Cash\tat\tthe\tbeginning\tof\tthe\tperiod | 87,507 | — | 112,199 | 199,706 |
| Cash\tat\tthe\tend\tof\tthe\tperiod | $125,748 | $— | $65,930 | $191,678 |
|  |  | Condensed\tConsolidating\tCash\tFlows | Condensed\tConsolidating\tCash\tFlows |  |
|  |  | Year\tEnded\tJuly\t3,\t2004 | Year\tEnded\tJuly\t3,\t2004 |  |
|  |  | (53\tWeeks) | (53\tWeeks) |  |
|  |  | SYSCO | Other\tNon-Guarantor | Consolidated |

|  | SYSCO | International | Subsidiaries | Totals |
| :--- | :--- | :--- | :--- | :--- |
|  |  | (In\tthousands) | (In\tthousands) |  |
| Net\tcash\tprovided\tby\t(used\tfor): |  |  |  |  |
| Operating\tactivities | $(171,732) | $24,676 | $1,336,578 | $1,189,522 |
| Investing\tactivities | (193,274) | — | (490,537) | (683,811) |
| Financing\tactivities | (597,137) | (27,923) | (16,791) | (641,851) |
| Exchange\trate\ton\tcash | — | — | (1,601) | (1,601) |
| Intercompany\tactivity | 843,607 | 2,733 | (846,340) | — |
| Net\t(decrease)\tin\tcash | (118,536) | (514) | (18,691) | (137,741) |
| Cash\tat\tthe\tbeginning\tof\tthe\tperiod | 206,043 | 514 | 130,890 | 337,447 |
| Cash\tat\tthe\tend\tof\tthe\tperiod | $87,507 | $— | $112,199 | $199,706 |
|  |  | Condensed\tConsolidating\tCash\tFlows | Condensed\tConsolidating\tCash\tFlows |  |
|  |  | Year\tEnded\tJune\t28,\t2003 | Year\tEnded\tJune\t28,\t2003 |  |
|  |  | SYSCO | Other\tNon-Guarantor | Consolidated |

|  | SYSCO | International | Subsidiaries | Totals |
| :--- | :--- | :--- | :--- | :--- |
|  |  |  | (In\tthousands) |  |
| Net\tcash\tprovided\tby\t(used\tfor): |  |  |  |  |
| Operating\tactivities | $(180,033) | $(28,100) | $1,580,973 | $1,372,840 |
| Investing\tactivities | (307,303) | — | (374,522) | (681,825) |
| Financing\tactivities | (576,747) | 38,594 | (12,375) | (550,528) |
| Exchange\trate\ton\tcash | — | — | (1,479) | (1,479) |
| Intercompany\tactivity | 1,177,679 | (19,986) | (1,157,693) | — |
| Net\tincrease\t(decrease)\tin\tcash | 113,596 | (9,492) | 34,904 | 139,008 |
| Cash\tat\tthe\tbeginning\tof\tthe\tperiod | 92,447 | 10,006 | 95,986 | 198,439 |
| Cash\tat\tthe\tend\tof\tthe\tperiod | $206,043 | $514 | $130,890 | $337,447 |

# Business	Segment	Information

					The	company	has	aggregated	its	operating	companies	into	a	number	of	segments,	of	which	only	Broadline	and	SYGMA	are	reportable	segments	as	defined	in	SFAS No.	131.	Broadline	operating	companies	distribute	a	full	line	of	food	products	and	a	wide	variety	of	non-food	products	to	both	traditional	and	chain	restaurant	customers. SYGMA	operating	companies	distribute	a	full	line	of	food	products	and	a	wide	variety	of	non-food	products	to	certain	chain	restaurant	customer	locations.	"Other" financial	information	is	attributable	to	the	company's	other	segments,	including	the	company's	specialty	produce,	custom-cut	meat,	Asian	cuisine	foodservice	and lodging	industry	products	segments.

					The	accounting	policies	for	the	segments	are	the	same	as	those	disclosed	by	SYSCO.	Intersegment	sales	represent	specialty	produce	and	meat	company	products distributed	by	the	Broadline	and	SYGMA	operating	companies.	The	segment	results	include	allocation	of	centrally	incurred	costs	for	shared	services	that	eliminate	upon consolidation.	Centrally	incurred	costs	are	allocated	based	upon	the	relative	level	of	service	used	by	each	operating	company.

					The	following	table	sets	forth	the	financial	information	for	SYSCO's	business	segments:

|  |  | 2004 |  |
| :--- | :--- | :--- | :--- |
|  | 2005 | (53\tWeeks) | 2003 |
|  |  | (In\tthousands) |  |
| Sales: |  |  |  |
| Broadline | $24,128,143 | $ 23,718,955 | $21,489,862 |
| SYGMA | 3,916,255 | 3,548,693 | 2,916,174 |
| Other | 2,578,923 | 2,383,692 | 2,003,060 |
| Intersegment\tsales | (341,407) | (315,937) | (268,759) |
| Total | $30,281,914 | $ 29,335,403 | $26,140,337 |
| Earnings\tbefore\tincome\ttaxes: |  |  |  |
| Broadline | $1,518,336 | $1,442,105 | $1,276,206 |
| SYGMA | 18,143 | 25,231 | 23,841 |
| Other | 83,709 | 78,531 | 51,170 |
| Total\tsegments | 1,620,188 | 1,545,867 | 1,351,217 |
| Unallocated\tcorporate\texpenses | (94,752) | (70,723) | (90,830) |
| Total | $1,525,436 | $1,475,144 | $1,260,387 |
| Depreciation\tand\tamortization: |  |  |  |
| Broadline | $236,081 | $221,699 | $213,877 |
| SYGMA | 20,836 | 18,684 | 17,479 |
| Other | 22,283 | 18,698 | 17,669 |
| Total\tsegments | 279,200 | 259,081 | 249,025 |
| Corporate | 37,543 | 24,514 | 24,117 |
| Total | $316,743 | $283,595 | $273,142 |
| Capital\texpenditures: |  |  |  |
| Broadline | $260,411 | $342,374 | $338,346 |
| SYGMA | 51,840 | 24,475 | 17,898 |
| Other | 34,503 | 33,782 | 18,519 |
| Total\tsegments | 346,754 | 400,631 | 374,763 |
| Corporate | 43,449 | 129,455 | 60,874 |
| Total | $390,203 | $530,086 | $435,637 |
| Assets: |  |  |  |
| Broadline | $4,840,989 | $4,792,595 | $4,513,533 |
| SYGMA | 301,729 | 240,418 | 190,406 |
| Other | 680,735 | 588,275 | 501,236 |
| Total\tsegments | 5,823,453 | 5,621,288 | 5,205,175 |
| Corporate | 2,444,449 | 2,226,344 | 1,731,346 |
| Total | $8,267,902 | $7,847,632 | $6,936,521 |

					The	sales	mix	for	the	principal	product	categories	for	each	fiscal	year	is	as	follows:

|  |  | 2004 |  |
| :--- | :--- | :--- | :--- |
|  | 2005 | (53\tWeeks) | 2003 |
|  |  | (In\tthousands) |  |
| Fresh\tand\tfrozen\tmeats | $5,732,834 | $5,533,217 | $4,671,794 |
| Canned\tand\tdry\tproducts | 5,417,418 | 5,370,859 | 4,966,046 |
| Frozen\tfruits,\tvegetables,\tbakery\tand\tother | 4,104,170 | 3,946,468 | 3,607,449 |
| Poultry | 3,222,927 | 3,166,806 | 2,666,831 |
| Dairy\tproducts | 2,878,904 | 2,766,425 | 2,264,145 |
| Fresh\tproduce | 2,459,295 | 2,329,638 | 2,228,954 |
| Paper\tand\tdisposables | 2,353,104 | 2,225,532 | 2,053,362 |
| Seafood | 1,591,022 | 1,559,133 | 1,474,140 |
| Beverage\tproducts | 962,039 | 928,073 | 809,562 |
| Equipment\tand\tsmallwares | 681,653 | 625,801 | 592,234 |
| Janitorial\tproducts | 670,105 | 655,305 | 591,663 |
| Medical\tsupplies | 208,443 | 228,146 | 214,157 |
| Total | $30,281,914 | $ 29,335,403 | $26,140,337 |

					Information	concerning	geographic	areas	is	as	follows:

|  |  | 2004 |  |
| :--- | :--- | :--- | :--- |
|  | 2005 | (53\tWeeks) | 2003 |
|  |  | (In\tthousands) |  |
| Sales:\t(1) |  |  |  |
| United\tStates | $27,850,921 | $27,144,352 | $24,218,466 |
| Canada | 2,430,993 | 2,191,051 | 1,921,871 |
| Total | $30,281,914 | $29,335,403 | $26,140,337 |
| Long-lived\tassets:\t(2) |  |  |  |
| United\tStates | $2,156,588 | $2,073,404 | $1,833,118 |
| Canada | 111,713 | 93,405 | 89,542 |
| Total | $2,268,301 | $2,166,809 | $1,922,660 |

(1) 	 Represents	sales	from	external	customers	from	businesses	operating	in	these	countries.

(2) 	 Long-lived	assets	represents	net	property,	plant	and	equipment	reported	in	the	country	in	which	they	are	held.

# Quarterly	Results	(unaudited)

					Financial	information	for	each	quarter	in	the	years	ended	July	2,	2005	and	July	3,	2004	is	set	forth	below:

|  | Fiscal | Fiscal | 2005	Quarter	Ended | 2005	Quarter	Ended |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | October\t2 | January\t1 | April\t2 | July\t2 | Fiscal\tYear |
|  |  |  | (In\tthousands\texcept\tfor\tshare\tdata) |  |  |
| Sales | $7,531,925 | $7,331,257 | $7,437,453 | $7,981,279 | $30,281,914 |
| Cost\tof\tsales | 6,094,931 | 5,933,515 | 6,032,165 | 6,437,589 | 24,498,200 |
| Operating\texpenses | 1,055,412 | 1,004,919 | 1,052,477 | 1,081,376 | 4,194,184 |
| Interest\texpense | 17,699 | 17,766 | 20,151 | 19,384 | 75,000 |
| Other,\tnet | (1,969) | (1,693) | (2,919) | (4,325) | (10,906) |
| Total\tcosts\tand\texpenses | 7,166,073 | 6,954,507 | 7,101,874 | 7,534,024 | 28,756,478 |
| Earnings\tbefore\tincome\ttaxes | 365,852 | 376,750 | 335,579 | 447,255 | 1,525,436 |
| Income\ttaxes | 139,938 | 144,107 | 117,359 | 162,575 | 563,979 |
| Net\tearnings | $225,914 | $232,643 | $218,220 | $284,680 | $961,457 |
| Per\tshare: |  |  |  |  |  |
| Basic\tnet\tearnings | $0.35 | $0.36 | $0.34 | $0.45 | $1.51 |
| Diluted\tnet\tearnings | 0.35 | 0.36 | 0.34 | 0.44 | 1.47 |
| Dividends\tdeclared | 0.13 | 0.15 | 0.15 | 0.15 | 0.58 |
| Market\tprice\t—\thigh/low | 36-29 | 38-30 | 38-33 | 38-34 | 38-29 |

|  |  |  |  | July	3 | Fiscal	Year |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | September\t27 | December\t27 | March\t27 | (14\tWeeks) | (53\tWeeks) |
|  |  | (In\tthousands\texcept\tfor\tshare\tdata) | (In\tthousands\texcept\tfor\tshare\tdata) |  |  |
| Sales | $7,134,281 | $7,036,520 | $7,025,585 | $8,139,017 | $29,335,403 |
| Cost\tof\tsales | 5,753,767 | 5,669,399 | 5,684,192 | 6,554,156 | 23,661,514 |
| Operating\texpenses | 1,024,336 | 996,853 | 1,008,493 | 1,111,548 | 4,141,230 |
| Interest\texpense | 18,631 | 16,376 | 15,737 | 19,136 | 69,880 |
| Other,\tnet | (1,983) | (7,052) | (1,250) | (2,080) | (12,365) |
| Total\tcosts\tand\texpenses | 6,794,751 | 6,675,576 | 6,707,172 | 7,682,760 | 27,860,259 |
| Earnings\tbefore\tincome\ttaxes | 339,530 | 360,944 | 318,413 | 456,257 | 1,475,144 |
| Income\ttaxes | 130,719 | 138,963 | 122,589 | 175,659 | 567,930 |
| Net\tearnings | $208,811 | $221,981 | $195,824 | $280,598 | $907,214 |
| Per\tshare: |  |  |  |  |  |
| Basic\tnet\tearnings | $0.32 | $0.34 | $0.31 | $0.44 | $1.41 |
| Diluted\tnet\tearnings | 0.32 | 0.34 | 0.30 | 0.43 | 1.37 |
| Dividends\tdeclared | 0.11 | 0.13 | 0.13 | 0.13 | 0.50 |
| Market\tprice\t—\thigh/low | 34-29 | 38-31 | 41-35 | 40-35 | 41-29 |
| Percentage\tincreases\t—\t2005\tvs.\t2004: |  |  |  |  |  |
| Sales | 6% | 4% | 6% | (2)% | 3% |
| Earnings\tbefore\tincome\ttaxes | 8 | 4 | 5 | (2) | 3 |
| Net\tearnings | 8 | 5 | 11 | 1 | 6 |
| Basic\tnet\tearnings\tper\tshare | 9 | 6 | 10 | 2 | 7 |
| Diluted\tnet\tearnings\tper\tshare | 9 | 6 | 13 | 2 | 7 |

# Item	9.	Changes	in	and	Disagreements	with	Accountants	on	Accounting	and	Financial	Disclosure

# Item	9A.	Controls	and	Procedures

					As	of	July	2,	2005,	an	evaluation	was	performed	under	the	supervision	and	with	the	participation	of	the	company's	management,	including	the	CEO	and	CFO,	of	the effectiveness	of	the	design	and	operation	of	the	company's	disclosure	controls	and	procedures.	Based	on	that	evaluation,	the	company's	management,	including	the	CEO and	CFO,	concluded	that	the	company's	disclosure	controls	and	procedures	were	effective	as	of	July	2,	2005	in	providing	reasonable	assurances	that	material information	required	to	be	disclosed	is	included	on	a	timely	basis	in	the	reports	it	files	with	the	Securities	and	Exchange	Commission.	Furthermore,	the	company's management	noted	that,	as	a	result	of	their	evaluation	of	changes	in	internal	control	over	financial	reporting,	they	identified	no	changes	during	the	fourth	quarter	of	fiscal 2005	that	materially	affected,	or	would	be	reasonably	likely	to	materially	affect,	the	company's	internal	control	over	financial	reporting.	See	Management's	Report	on Internal	Control	Over	Financial	Reporting	included	under	Item	8.

# Item	9B.	Other	Information

# PART	III

# Item	10.	Directors	and	Executive	Officers	of	the	Registrant

					The	information	required	by	this	item	is	included	in	our	proxy	statement	for	the	2005	Annual	Meeting	of	Stockholders	under	the	following	captions,	and	is incorporated	herein	by	reference	thereto:	"Election	of	Directors,"	"Executive	Officers,"	"Section	16(a)	Beneficial	Ownership	Reporting	Compliance,"	"Report	of	the Audit	Committee"	and	"Corporate	Governance."

# Item	11.	Executive	Compensation

					The	information	required	by	this	item	is	included	in	our	proxy	statement	for	the	2005	Annual	Meeting	of	Stockholders	under	the	following	captions,	and	is incorporated	herein	by	reference	thereto:	"Director	Compensation"	and	"Executive	Compensation."

# Item	12.	Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters

					The	information	required	by	this	item	is	included	in	our	proxy	statement	for	the	2005	Annual	Meeting	of	Stockholders	under	the	following	captions,	and	is incorporated	herein	by	reference	thereto:	"Stock	Ownership"	and	"Equity	Compensation	Plan	Information."

# Item	13.	Certain	Relationships	and	Related	Transactions

					The	information	required	by	this	item	is	included	in	our	proxy	statement	for	the	2005	Annual	Meeting	of	Stockholders	under	the	following	caption,	and	is incorporated	herein	by	reference	thereto:	"Certain	Relationships."

# Item	14.	Principal	Accountant	Fees	and	Services

					The	information	required	by	this	item	is	included	in	our	proxy	statement	for	the	2005	Annual	Meeting	of	Stockholders	under	the	following	caption,	and	is incorporated	herein	by	reference	thereto:	"Fees	Paid	to	Independent	Public	Accountants."

# PART	IV

# Item	15.	Exhibits	and	Financial	Statement	Schedules

					(a)	The	following	documents	are	filed,	or	incorporated	by	reference,	as	part	of	this	Form	10-K:

					1.	All	financial	statements.	See	index	to	Consolidated	Financial	Statements	on	page	26	of	this	Form	10-K.

					2.	Financial	Statement	Schedule.	See	page	S-1	of	this	Form	10-K.

  3(b) — Amended	and	Restated	Bylaws	of	Sysco	Corporation	dated	February	8,	2002,	incorporated	by	reference	to	Exhibit	3(b)	to	Form	10-Q	for the	quarter	ended	December	29,	2001	(File	No.	1-6544).

   3(c) — Form	of	Amended	Certificate	of	Designation,	Preferences	and	Rights	of	Series	A	Junior	Participating	Preferred	Stock,	incorporated	by reference	to	Exhibit	3(c)	to	Form	10-K	for	the	year	ended	June	29,	1996	(File	No.	1-6544).

  3(d) — Certificate	of	Amendment	of	Certificate	of	Incorporation	increasing	authorized	shares,	incorporated	by	reference	to	Exhibit	3(d)	to Form	10-Q	for	the	quarter	ended	January	1,	2000	(File	No.	1-6544).

   3(e) — Certificate	of	Amendment	to	Restated	Certificate	of	Incorporation	increasing	authorized	shares,	incorporated	by	reference	to Exhibit	3(e)	to	Form	10-Q	for	the	quarter	ended	December	27,	2003	(File	No.	1-6544).    4(a) — Amended	and	Restated	Shareholder	Rights	Agreement,	incorporated	by	reference	to	Exhibit	1	to	Registration	Statement	on	Form	8-A/A, filed	May	29,	1996	(File	No.	1-6544).   4(b) — Amendment	to	the	Amended	and	Restated	Shareholder	Rights	Agreement	dated	as	of	May	20,	1996,	incorporated	by	reference	to Exhibit	1	to	Registration	Statement	on	Form	8-A/A,	filed	July	16,	1999	(File	No.	1-6544).    4(c) — Senior	Debt	Indenture,	dated	as	of	June	15,	1995,	between	Sysco	Corporation	and	First	Union	National	Bank	of	North	Carolina, Trustee,	incorporated	by	reference	to	Exhibit	4(a)	to	Registration	Statement	on	Form	S-3	filed	June	6,	1995	(File	No.	33-60023).   4(d) — Second	Supplemental	Indenture,	dated	as	of	May	1,	1996,	between	Sysco	Corporation	and	First	Union	National	Bank	of	North	Carolina, Trustee	as	amended,	incorporated	by	reference	to	Exhibit	4(f)	to	Form	10-K	for	the	year	ended	June	29,	1996	(File	No.	1-6544).    4(e) — Third	Supplemental	Indenture,	dated	as	of	April	25,	1997,	between	Sysco	Corporation	and	First	Union	National	Bank	of	North	Carolina, Trustee,	incorporated	by	reference	to	Exhibit	4(g)	to	Form	10-K	for	the	year	ended	June	28,	1997	(File	No.	1-6544).    4(f) — Fourth	Supplemental	Indenture,	dated	as	of	April	25,	1997,	between	Sysco	Corporation	and	First	Union	National	Bank	of	North Carolina,	Trustee,	incorporated	by	reference	to	Exhibit	4(h)	to	Form	10-K	for	the	year	ended	June	28,1997	(File	No.	1-6544).   4(g) — Fifth	Supplemental	Indenture,	dated	as	of	July	27,	1998	between	Sysco	Corporation	and	First	Union	National	Bank,	Trustee, incorporated	by	reference	to	Exhibit	4(h)	to	Form	10-K	for	the	year	ended	June	27,	1998	(File	No.	1-6544).   4(h) — Indenture	dated	May	23,	2002	between	Sysco	International,	Co.,	Sysco	Corporation	and	Wachovia	Bank,	National	Association, incorporated	by	reference	to	Exhibit	4.1	to	Registration	Statement	on	Form	S-4	filed	August	21,	2002	(File	No.	333-98489).

   4(i) — Credit	Agreement	dated	September	13,	2002	by	and	among	SYSCO	Corporation,	JPMorgan	Chase	Bank,	individually	and	as Administrative	Agent,	the	Co-Syndication	Agents	named	therein	and	the	other	financial	institutions	party	thereto,	incorporated	by reference	to	Exhibit	4(i)	to	Form	10-Q	for	the	quarter	ended	September	28,	2002	filed	on	May	13,	2003	(File	No.	1-6544).

   4(j) — Seventh	Supplemental	Indenture,	including	form	of	Note,	dated	March	5,	2004	between	SYSCO	Corporation,	as	Issuer,	and	Wachovia Bank,	National	Association	(formerly	First	Union	National	Bank	of	North	Carolina),	as	Trustee,	incorporated	by	reference	to Exhibit	4(j)	to	Form	10-Q	for	the	quarter	ended	March	27,	2004	(File	No.	1-6544).

10(a)† — Amended	and	Restated	Sysco	Corporation	Executive	Deferred	Compensation	Plan,	incorporated	by	reference	to	Exhibit	10(a)	to Form	10-K	for	the	year	ended	July	1,	1995	(File	No.	1-6544).

10(b)† — Fifth	Amended	and	Restated	Sysco	Corporation	Supplemental	Executive	Retirement	Plan,	incorporated	by	reference	to	Exhibit	10(b)	to Form	10-K	for	the	year	ended	June	28,	1997	(File	No.	1-6544). 10(c)† — Sysco	Corporation	1991	Stock	Option	Plan,	incorporated	by	reference	to	Exhibit	10(e)	to	Form	10-K	for	the	year	ended	July	3,	1999 (File	No.	1-6544).

10(d)† — Amendments	to	Sysco	Corporation	1991	Stock	Option	Plan	dated	effective	September	4,	1997,	incorporated	by	reference	to Exhibit	10(f)	to	Form	10-K	for	the	year	ended	June	28,	1997	(File	No.	1-6544). 10(e)† — Amendments	to	Sysco	Corporation	1991	Stock	Option	Plan	dated	effective	November	5,	1998,	incorporated	by	reference	to Exhibit	10(g)	to	Form	10-K	for	the	year	ended	July	3,	1999	(File	No.	1-6544). 10(f)† — Sysco	Corporation	Amended	and	Restated	Non-Employee	Directors	Stock	Option	Plan,	incorporated	by	reference	to	Exhibit	10(g)	to Form	10-K	for	the	year	ended	June	28,	1997	(File	No.	1-6544). 10(g)† — Amendment	to	the	Amended	and	Restated	Non-Employee	Directors	Stock	Option	Plan	dated	effective	November	5,	1998,	incorporated by	reference	to	Exhibit	10(i)	to	Form	10-K	for	the	year	ended	July	3,	1999	(File	No.	1-6544). 10(h)† — Sysco	Corporation	Non-Employee	Directors	Stock	Plan,	incorporated	by	reference	to	Appendix	A	of	the	1998	Proxy	Statement	(File No.	1-6544). 10(i)† — First	Amendment	to	Fifth	Amended	and	Restated	Sysco	Corporation	Supplemental	Executive	Retirement	Plan	dated	effective	June	29, 1997,	incorporated	by	reference	to	Exhibit	10(p)	to	Form	10-Q	for	the	quarter	ended	January	1,	2000	(File	No.	1-6544). 10(j)† — First	Amendment	to	Amended	and	Restated	Sysco	Corporation	Executive	Deferred	Compensation	Plan	dated	effective	June	29,	1997, incorporated	by	reference	to	Exhibit	10(q)	to	Form	10-Q	for	the	quarter	ended	January	1,	2000	(File	No.	1-6544).

10(k)† — 2000	Management	Incentive	Plan,	incorporated	by	reference	to	Appendix	A	to	Proxy	Statement	filed	September	25,	2000	(File	No.	1- 6544). 10(l)† — 2000	Stock	Incentive	Plan,	incorporated	by	reference	to	Appendix	B	to	Proxy	Statement	filed	on	September	25,	2000	(File	No.	1-6544). 10(m)† — Amended	and	Restated	Non-Employee	Directors	Stock	Plan,	incorporated	by	reference	to	Appendix	B	to	Proxy	Statement	filed	on September	24,	2001	(File	No.	1-6544).

10(n)† — Second	Amendment	dated	as	of	May	10,	2000,	to	the	Fifth	Amended	and	Restated	SYSCO	Corporation	Supplemental	Executive Retirement	Plan,	incorporated	by	reference	to	Exhibit	10(a)	to	Form	10-Q	for	the	quarter	ended	September	30,	2000	filed	on November	13,	2000	(File	No.	1-6544).

10(o)† — Second	Amendment	dated	as	of	May	10,	2000,	to	Amended	and	Restated	SYSCO	Corporation	Executive	Deferred	Compensation	Plan, incorporated	by	reference	to	Exhibit	10(b)	to	Form	10-Q	for	the	quarter	ended	September	30,	2000	filed	on	November	13,	2000	(File No.	1-6544).

10(p)† — First	Amendment	dated	as	of	May	10,	2000	to	Amended	and	Restated	SYSCO	Corporation	Board	of	Directors	Deferred	Compensation Plan,	incorporated	by	reference	to	Exhibit	10(c)	to	Form	10-Q	for	the	quarter	ended	September	30,	2000	filed	on	November	13,	2000 (File	No.	1-6544).

10(s)† — First	Amendment	to	Second	Amended	and	Restated	Board	of	Directors	Deferred	Compensation	Plan	dated	July	12,	2002,	incorporated by	reference	to	Exhibit	10(bb)	to	Form	10-K	for	the	year	ended	June	29,	2002	filed	on	September	25,	2002	(File	No.	1-6544).

10(u)† — First	Amendment	to	Second	Amended	and	Restated	Executive	Deferred	Compensation	Plan	dated	July	12,	2002,	incorporated	by reference	to	Exhibit	10(dd)	to	Form	10-K	for	the	year	ended	June	29,	2002	filed	on	September	25,	2002	(File	No.	1-6544).

10(v)† — Third	Amendment	to	Fifth	Amended	and	Restated	Supplemental	Executive	Retirement	Plan	dated	July	12,	2002,	incorporated	by reference	to	Exhibit	10(ee)	to	Form	10-K	for	the	year	ended	June	29,	2002	filed	on	September	25,	2002	(File	No.	1-6544).

10(x)† — Second	Amendment	to	Second	Amended	and	Restated	Executive	Deferred	Compensation	Plan	effective	July	9,	2004,	incorporated	by reference	to	Exhibit	10(gg)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544).

10(y)† — Fourth	Amendment	to	Fifth	Amended	and	Restated	Supplemental	Executive	Retirement	Plan	effective	July	9,	2004,	incorporated	by reference	to	Exhibit	10(hh)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544).

10(z)† — Executive	Severance	Agreement	dated	July	6,	2004	between	SYSCO	Corporation	and	Richard	J.	Schnieders,	incorporated	by	reference to	Exhibit	10(ii)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544).

10(aa)† — Form	of	Executive	Severance	Agreement	between	SYSCO	Corporation	and	each	of	Thomas	E.	Lankford	(dated	July	12,	2004),	John	K. Stubblefield,	Jr.	(dated	July	6,	2004),	Kenneth	F.	Spitler	(dated	July	14,	2004)	and	Larry	J.	Accardi	(dated	August	18,	2004), incorporated	by	reference	to	Exhibit	10(jj)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(bb)† — Form	of	First	Amendment	dated	September	3,	2004	to	Executive	Severance	Agreement	between	SYSCO	Corporation	and	each	of Richard	J.	Schnieders,	Thomas	E.	Lankford,	John	K	Stubblefield,	Jr.,	Kenneth	F.	Spitler	and	Larry	J.	Accardi,	incorporated	by	reference to	Exhibit	10(kk)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544).

10(dd)† — Form	of	Performance	Unit	Grant	Agreement	issued	to	executive	officers	effective	September	3,	2004	under	the	Long-Term	Incentive Cash	Plan,	incorporated	by	reference	to	Exhibit	10(b)	to	Form	8-K	filed	on	September	10,	2004	(File	No.	1-6544).

10(ee)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	2,	2004	under	the	2000	Stock	Incentive	Plan, incorporated	by	reference	to	Exhibit	10(a)	to	Form	8-K	filed	on	September	9,	2004	(File	No.	1-6544).

10(ff)† — Form	of	Stock	Option	Grant	Agreement	issued	to	non-employee	directors	on	September	3,	2004	under	the	Non-Employee	Directors Stock	Plan,	incorporated	by	reference	to	Exhibit	10(b)	to	Form	8-K	field	on	September	9,	2004	(File	No.	1-6544).

10(gg)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	August	31,	1995	under	the	1991	Stock	Option	Plan,	incorporated by	reference	to	Exhibit	10(pp)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(hh)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	5,	1996	under	the	1991	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	10(qq)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1- 6544). 10(ii)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	4,	1997	under	the	1991	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	10(rr)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(jj)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	3,	1998	under	the	1991	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	10(ss)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(kk)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	2,	1999	under	the	1991	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	10(tt)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(ll)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	7,	2000	under	the	1991	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	10(uu)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1- 6544). 10(mm)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	11,	2001	under	the	2000	Stock	Incentive	Plan, incorporated	by	reference	to	Exhibit	10(vv)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1- 6544). 10(nn)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	11,	2001	under	the	2000	Stock	Incentive	Plan, incorporated	by	reference	to	Exhibit	10(ww)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1- 6544). 10(oo)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	12,	2002	under	the	2000	Stock	Incentive	Plan, incorporated	by	reference	to	Exhibit	10(xx)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1- 6544). 10(pp)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	11,	2003	under	the	2000	Stock	Incentive	Plan, incorporated	by	reference	to	Exhibit	10(yy)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1- 6544).

10(qq)† — Form	of	Retainer	Stock	Agreement	for	issuance	to	Non-Employee	Directors	under	the	Non-Employee	Directors	Stock	Plan, incorporated	by	reference	to	Exhibit	10(a)	to	Form	10-Q	for	the	quarter	ended	January	1,	2005	filed	on	February	10,	2005	(File	No.	1- 6544).

10(ss)†# — Description	of	Compensation	Arrangements	with	Named	Executive	Officers.

10(tt)† — Description	of	Compensation	Arrangements	with	Non-Employee	Directors,	incorporated	by	reference	to	Exhibit	10(d)	to	Form	10-Q	for the	quarter	ended	January	1,	2005	filed	on	February	10,	2005	(File	No.	1-6544).

10(uu)† — Form	of	CEO	Supplemental	Performance-Based	Bonus	Agreement,	incorporated	by	reference	to	Exhibit	10(a)	to	Form	10-Q	for	the quarter	ended	April	2,	2005	filed	on	May	12,	2005	(File	No.	1-6544).

10(vv)†# — Form	of	2006	Management	Incentive	Bonus	Grant	Agreement	issued	to	Richard	J.	Schnieders,	John	K.	Stubblefield,	Jr.,	Larry	J. Accardi,	Kenneth	F.	Spitler,	Kenneth	J.	Carrig	and	Larry	G.	Pulliam	under	the	2000	Management	Incentive	Plan. 10(ww)†# — Separation	Agreement	and	Mutual	Release	dated	June	14,	2005	between	the	Company	and	Thomas	E.	Lankford.   10(xx)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	8,	2005	under	the	2004	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	99.1	to	Form	8-K	filed	on	September	14,	2005	(File	No.	1-6544).

10(yy)†# — Form	of	2006	Management	Incentive	Bonus	Grant	Agreement	issued	to	Senior	Vice	Presidents	of	Operations	under	the	2000 Management	Incentive	Plan.

† 	 Executive	Compensation	Arrangement	pursuant	to	601(b)(10)(iii)(A)	of	Regulation	S-K

# Filed	Herewith

# SIGNATURES

					Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	Sysco	Corporation	has	duly	caused	this	Form	10-K	to	be	signed	on	its behalf	by	the	undersigned,	thereunto	duly	authorized,	on	this	15th	day	of	September,	2005.

	 By /s/	RICHARD	J.	SCHNIEDERS

Richard	J.	Schnieders

Chairman	of	the	Board,

Chief	Executive	Officer	and	President

					Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	the	Registrant	in	the capacities	indicated	and	on	the	date	indicated	above.

# PRINCIPAL	EXECUTIVE,	FINANCIAL	&	ACCOUNTING	OFFICERS:

/s/	RICHARD	J.	SCHNIEDERS

Chairman	of	the	Board,	Chief	Executive	Officer

and	President

/s/	JOHN	M.	CASSADAY

John	M.	Cassaday

/s/	JUDITH	B.	CRAVEN

Judith	B.	Craven

/s/	JONATHAN	GOLDEN

Jonathan	Golden

Joseph	A.	Hafner,	Jr.

/s/	RICHARD	G.	MERRILL

Richard	G.	Merrill

/s/	PHYLLIS	S.	SEWELL

Phyllis	S.	Sewell

/s/	JOHN	K.	STUBBLEFIELD,	JR.

John	K.	Stubblefield,	Jr.

/s/	RICHARD	G.	TILGHMAN

Richard	G.	Tilghman

/s/	JACKIE	M.	WARD

Jackie	M.	Ward

# SCHEDULE	II	—	VALUATION	AND	QUALIFYING	ACCOUNTS

|  | Balance	at | Charged	to | Charged	to |  | Balance	at |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Beginning\tof | Costs\tand | Other\tAccounts | Deductions | End\tof |
| Description | Period | Expenses | Describe(1) | Describe(2) | Period |
| Allowance |  |  |  |  |  |
| for |  |  |  |  |  |
| doubtful |  |  |  |  |  |
| accounts | $30,338,000 | $27,133,000 | $2,305,000 | $24,771,000 | $35,005,000 |
| Allowance |  |  |  |  |  |
| for |  |  |  |  |  |
| doubtful |  |  |  |  |  |
| accounts | $35,005,000 | $27,392,000 | $263,000 | $28,485,000 | $34,175,000 |
| Allowance |  |  |  |  |  |
| for |  |  |  |  |  |
| doubtful |  |  |  |  |  |
| accounts | $34,175,000 | $17,959,000 | $(1,690,000) | $20,840,000 | $29,604,000 |

(1) 	 Allowance	accounts	resulting	from	acquisitions	and	other	adjustments.

(2) 	 Customer	accounts	written	off,	net	of	recoveries.

# INDEX	TO	EXHIBITS

10(a)† — Amended	and	Restated	Sysco	Corporation	Executive	Deferred	Compensation	Plan,	incorporated	by	reference	to	Exhibit	10(a)	to Form	10-K	for	the	year	ended	July	1,	1995	(File	No.	1-6544). 10(b)† — Fifth	Amended	and	Restated	Sysco	Corporation	Supplemental	Executive	Retirement	Plan,	incorporated	by	reference	to	Exhibit	10(b)	to Form	10-K	for	the	year	ended	June	28,	1997	(File	No.	1-6544). 10(c)† — Sysco	Corporation	1991	Stock	Option	Plan,	incorporated	by	reference	to	Exhibit	10(e)	to	Form	10-K	for	the	year	ended	July	3,	1999 (File	No.	1-6544).

10(f)† — Sysco	Corporation	Amended	and	Restated	Non-Employee	Directors	Stock	Option	Plan,	incorporated	by	reference	to	Exhibit	10(g)	to Form	10-K	for	the	year	ended	June	28,	1997	(File	No.	1-6544).

10(bb)† — Form	of	First	Amendment	dated	September	3,	2004	to	Executive	Severance	Agreement	between

Exhibit	Number Description	of	Exhibit SYSCO	Corporation	and	each	of	Richard	J.	Schnieders,	Thomas	E.	Lankford,	John	K	Stubblefield,	Jr.,	Kenneth	F.	Spitler	and	Larry	J. Accardi,	incorporated	by	reference	to	Exhibit	10(kk)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File No.	1-6544). 10(cc)† — 2004	Long-Term	Incentive	Cash	Plan	dated	September	3,	2004,	incorporated	by	reference	to	Exhibit	10(a)	to	Form	8-K	filed	on September	10,	2004	(File	No.	1-6544). 10(dd)† — Form	of	Performance	Unit	Grant	Agreement	issued	to	executive	officers	effective	September	3,	2004	under	the	Long-Term	Incentive Cash	Plan,	incorporated	by	reference	to	Exhibit	10(b)	to	Form	8-K	filed	on	September	10,	2004	(File	No.	1-6544).

10(hh)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	5,	1996	under	the	1991	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	10(qq)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(ii)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	4,	1997	under	the	1991	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	10(rr)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(jj)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	3,	1998	under	the	1991	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	10(ss)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(kk)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	2,	1999	under	the	1991	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	10(tt)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(ll)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	7,	2000	under	the	1991	Stock	Option	Plan, incorporated	by	reference	to	Exhibit	10(uu)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(mm)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	11,	2001	under	the	2000	Stock	Incentive	Plan, incorporated	by	reference	to	Exhibit	10(vv)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(nn)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	11,	2001	under	the	2000	Stock	Incentive	Plan, incorporated	by	reference	to	Exhibit	10(ww)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1- 6544). 10(oo)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	12,	2002	under	the	2000	Stock	Incentive	Plan, incorporated	by	reference	to	Exhibit	10(xx)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544). 10(pp)† — Form	of	Stock	Option	Grant	Agreement	issued	to	executive	officers	on	September	11,	2003	under	the	2000	Stock	Incentive	Plan, incorporated	by	reference	to	Exhibit	10(yy)	to	Form	10-K	for	the	year	ended	July	3,	2004	filed	on	September	16,	2004	(File	No.	1-6544).


what is the percentage change in pension benefits to be paid between 2006 and 2010?
pension_benefit_increase = 46957000 - 27316000
pension_benefit_decrease = 27316000 - 33825000
answer = pension_benefit_increase / 27316000 * 100