Laura Terrell, at the Houstonian Hotel in Houston, is a SYSCO customer who enjoys ordering products through eSYSCO, a user-friendly Internet-based ordering system.

SYSCO's commitment to continued technological development has been a key factor in building lasting customer and supplier relationships. SYSCO's proprietary systems, primarily developed internally, are also considered SYSCO Brands.

One project, the SYSCO Uniform System (SUS), is an enterprise-wide information technology system that encompasses all business aspects on a real-time basis. SUS reporting measures and appraisal tools provide instant access to service levels and other productivity data, allowing internal benchmarking among SYSCO companies.

The SYSCO Warehouse Management System (SWMS) monitors products through every stage of the distribution cycle, and manages all facets of employee productivity. These tools reduce inventory and improve workplace safety and productivity, thereby increasing order accuracy and decreasing working capital needs and expenses.

SYSCO long has maintained a leading role in direct order entry systems and its Internet-based order entry system, eSYSCO, has replaced previous, more complex applications. An estimated $700 million in annualized sales is being channeled through eSYSCO and customers may place and confirm orders, review purchasing history and perform many other functions at their convenience.

Modifications are being added to the core SUS system to move toward error-free service through accurate order selection and timely delivery. The SYSCO Order Selector (SOS), a finger-mounted bar code scanner, verifies proper item selection, reducing errors from about one in less than 1,000 to about one in 5,000, significantly improving efficiency and reducing restocking costs. The SYSCO Load Selector (SLS) confirms the accuracy of products selected, then generates a map detailing the placement of orders on the delivery trucks, while the RoadNet system assigns delivery stops to minimize time yet meet customers' preferred delivery windows.

Whether it is improving technology, expanding brand offerings or assisting customers with value-added services, SYSCO's primary objective is exceeding customer expectations.

The SYSCO Warehouse Management System (SWMS) directs vital labor management functions. Pictured above is Sherri Edwards, Checker/Loader.

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Cover

Financial Highlights and SYSCO Stock Quotes

Letter to Shareholders

Review of Operations

Community Activities

Chairman Lindig Retires

Eleven-Year Summary of Operations and Related Information

Locations of Principal Operations

Glossary of Terms

Forward-Looking Statements