Good morning, everyone. I would like to welcome everyone to today’s Sysco Corporation Third Quarter Fiscal Year 2009 Earnings Conference Call. As a reminder today’s call is being recorded. At this time for opening remarks and introductions I would like to turn the call over to Mr. Neil Russell, Vice President of Investor Relations.

Thank you, Patrick, and good morning everyone. Thank you for joining us for Sysco’s Third Quarter 2009 Conference Call. On today’s call you will hear from Bill DeLaney our Chief Executive Officer and Chief Financial Officer and Ken Spitler our Vice Chairman, President, and Chief Operating. Before we begin, please not that statements made in the course of this presentation that state the Company’s or managements intentions, beliefs, expectations, or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ in a material manner. Additional information concerning factor’s that could cause actual results to differ in a material manner from those in the forward-looking statements is contained in the Company’s SEC filings including, but not limited to, risk factors contained in the Company’s annual report on Form 10-K for the year ended June 28, 2008 and in the Company’s press release issued earlier this morning. Please understand that all comparisons given during the call refer to changes between the third quarter of fiscal 2009 and the third quarter of fiscal 2008 unless otherwise noted. Also, all comments about earnings per share refer to diluted earnings per share unless otherwise noted. With that out of the way, I will turn it over to our Chief Executive Officer Bill DeLaney.

Thank you, Neil. This morning Sysco reported third quarter operating income of $405 million. Year-to-date operating income was $1.3 billion, a 1% increase compared to last year. Sales for the quarter were down 4.5% and our flat for the year-to-date period. Diluted earnings per share were $0.38 for the third quarter and $1.24 for the year-to-date period, a 1.6% decrease for the first three quarters of our fiscal year. These results reflect the ability of our operating companies to produce quality earnings in the midst of severe market conditions. While creating operating leverage in a declining sales environment is becoming more challenging, we remain steadfast in providing value to our customers and relentlessly managing our cost structure throughout the Sysco organization. During today’s call Ken and I will provide additional details of our third quarter and year-to-date results and update you on our plans for the business. For now I will turn it over to Ken for a discussion of our operational results.

Okay, thanks Bill. Overall I am pleased with our ability to continue to support our customers and control expenses in what continues to be a difficult business environment. Providing excellent customer service and giving our associates the tools they need to perform the job remains priority #1 for Sysco. By focusing on the broad line business we continue to distance ourselves from the competition and expand our market leadership position. Also, the SYGMA segment continues to improve performance as evidenced by increased sales and operating income. Without question, the key to our success in this environment is continuing to improve operational efficiency, and I am pleased with how our operations have responded. For example, for our Broadline companies during the first nine months of 2009 compared to the same period last year, our diesel gallon usage was down 7.5% compared to a mileage decrease of 5.7%; Kilowatt hours were down 8%; cases per trip were up 2%, cases per man hour have improved 5%; and sales per employee have increased 6%. Inflation as measured by our product cost increases was 3.3% during the third quarter. Inflation for the year-to-date period was 6.2%. We experienced a steady decline of inflation through out the quarter in various categories. We are experiencing further moderation of inflation in the current quarter as input costs continue to decrease. Historically inflation of 2% to 3% has proven to be a manageable level for both Sysco and our customers. During the quarter we entered into additional forward purchase agreements for diesel. Currently we have contracts in place for approximately 70% of planned consumption through the fourth quarter and approximately 40% of planned consumption for the next 39 weeks of next year. We continually manage enterprise wide headcount in a manner consistent with the sales environment. At the…

Thank you, Ken. There are a few additional items I would like to address regarding our third quarter and fiscal year-to-date results. As previously mentioned, sales of $28 billion for the first 39 weeks of fiscal 2009 were essentially flat compared to the prior year. Looking forward we believe we will continue to experience a difficult economic environment for the remainder of fiscal 2009 and therefore expect our recent sales trends will not improve during the fourth quarter. This will likely place corresponding pressure on operating earnings during the fourth quarter of ’09. Earnings per share of $1.24 for the first nine months decreased 1.6% compared to the same period last year. Excluding the $0.11 per share negative impact of COLI in the first nine months of fiscal 2009 and the $0.02 per share negative impact of COLI in the first nine months of fiscal 2008 diluted EPS increased 5% for the first nine months of fiscal 2009 as compared to the prior year period. We believe this comparison, which removes the impact of unrealized losses resulting from financial market volatility better reflects our operating performance. Similar to previous quarters our effective tax rate during the third quarter was unusually high at 40.6%, approximately 1 ½ to 2 percentage points higher than our typical run rate. The $8.7 million COLI loss for the quarter, which is not deductible for income tax purposes, contributed to this higher tax rate. For the third quarter operating expenses were $85 million lower than the previous year. The decrease in operating expenses was driven by lower payroll expense of $90 million which was a result of decreased headcount and reduced incentive compensation. This reduction in operating expenses was partially offset by increased bad debt expense of $20 million for the third quarter. We remain committed…

(Operator Instructions) Your first question comes from Simi Bhaumik with Cannacord Adams.

My question is on the demand environment. It looks like the real growth is somewhat stable or is that too early to call given that you’re going into some important months coming up ahead?

Well Simi, we chose our words carefully in this news release. Obviously we saw a bigger decline here in the third quarter than what we have seen in the later part of the second quarter and it is unclear at this point. We are certainly encouraged by some of what we’re reading, some of what we’re hearing, where people seem more optimistic, but at this point I can’t really tell you that we’ve necessarily hit a bottom.

Got it and then the distribution of your sales the other business I realize is not big, but that business seems to be more sensitive to the economy, is that fair? Is that because of the nature of what it sells?

Are you referring to SYGMA or are you referring to the specialty companies?

I guess the specialty, the produce, and the meat?

Yes they are particularly sensitive to the economy particularly like [Geth] Supply deals mostly with the hotel business which is significantly off. Of course what drives our meat companies is the high-end steak which we’re seeing a decline there that is greater than the market in general.

Okay and a question on the expense side and I think you also alluded to this in the comments with expense dollar growth down almost 7% or so in the quarter. It does sound like you are starting to get up to sort of a feeling in terms of how much costs can be taken out absent sort of the variable changes in the business?

I am not sure what you are asking.

Well I mean how much more can the cost structure be lowered without sort of, I am talking more on the fixed side, if you take the variable stuff out of the equation. Meaning, how much more flex can you go if the top line environment weakens by another couple hundred basis points?

Fortunately we are in the business that our expenses predominately are in personnel, driven pretty much by a case of productivity around moving that case in and out. So, we’ve still got room to go, but to your point we’re not significantly there yet, but there is a point where that becomes a problem.

I think, Simi, one of the things we tried to bring out in the comments this morning is we remain very, very focused on managing our expenses and our headcount and all of that type of thing. With that said, when you get into a declining sales environment creating operating leverage does become more challenging. To Ken’s point, there is some room there, but it is getting more difficult.

Then lastly along those lines about the environment, the acquisition criteria doesn’t change, but do size differences become, more manageable meaning deals that are on the smaller side that may not necessarily move the dial, but there are very contiguous distribution centers where you can leverage off the expense base a bit. Does that become more in play?

Yes. I think I understand your question. We typically don’t announce those, but in our world they are called fold-ins and the smaller distribution centers may be general broadliners, may be specific paper or something like that. Yes we are seeing a little more activity around that.

And, do you think potential deals are more tilted in that regard or it is hard to say?

It is hard to say right now.

I think right now what we’re seeing is more on the smaller side, but again over time that could change.

I got it, thanks.

Your next question comes from Meredith Adler with Barclays Capital.

I would like to start with a number you gave us last quarter and I’m not sure if you gave it this quarter, which is what happened to case volume?

I don’t recall giving a case volume number last quarter.

I thought you said it was down 4%?

No. I am not sure. I know our sales were down about 1%, I think, last quarter Meredith. We go through our inflation methodology with you, so we had I don’t remember the exact numbers right now. I don’t have them in front of me, but we don’t disclose case line actually.

Oh, okay, because I am just trying to distinguish between trading down which is going to be visible in sales, as well as actual declines in volume, but we can move on that is not really a big deal. I was wondering about, you obviously have bad debt. Do you feel like there is some kind of a noticeable change in the number of restaurants that are out there and then the same question for distributors? I did hear from somebody about a couple of slightly larger distributors who went out of business recently, one in San Fran and one on the East Coast, but I was just wondering what you guys are seeing.

What we are seeing in terms of the number of restaurants or the number of distributors?

Both.

Distributors are a significant pick up and the number that have gone out as of recent times and we anticipate that continue.

Okay. I had also heard that there was some fragmentation of purchases that restaurants were chasing deals and were willing to sort of go anywhere to get those deals. Are you seeing anything like that?

I think that is anecdotal information. We’re not feeling it, if you’re asking that question. Typically when people are kind of scrambling that kind of anecdotal information flows up, but I am sure there are folks out there doing that, but they’ve always been doing it.

I think on the restaurant side, Meredith, we’ve talked for awhile now that most people that follow this industry feel that there is a fair amount of over capacity in the industry and we are seeing that in certainly closures. I don’t know exactly that we have a number here for you, but we don’t necessarily see that as a bad thing. In other words, I don’t see that as an additional problem to what’s going on in the market, it is more or less the market adjusting to the volume that is out there today. As that connects with bad debt expense, some of issues with bad debt expense are with people that are going out of business, some aren’t. It just depends. So it is not a total correlation there as far as the bad debt and the restaurant closings go. A lot of these folks are going through some type of restructuring.

Got it and then my final question is about your own capacity. You have pretty efficient distribution centers, but if you got to the point where you couldn’t cut costs more, would it ever make sense to close any facilities?

At this point we just recently closed one in Jamestown, New York, but it was more of really just geographically not suitable. We could look at that, but we are a long ways from looking at that.

We have very few facilities that don’t provide a very good return on investments. I think you would see us continue to do what we’re doing, which is to manage our headcount and manage our productivity as best we can. Those facilities are geographically for the most part, I am talking about our Broadline business, but for the most part those facilities are in markets that we need to be in to service customers.

Okay, great. Thank you very much.

Your next question comes from Jason Whitmer with Cleveland Research Company.

Bill, you have had a few months maybe to take a step back and think about the business from a different perspective. I am curious, after you have talked to more of your employees, more of your customers, more suppliers, what some of your primary take away been, and maybe what some of the top focal points you see as you look out into fiscal 2010?

I am doing my Ronal Reagen impersonation here, Jason! No, I would say it is similar to what you and I have talked about in the past, that even though we’ve got a transition going on here in terms of my role, the biggest thing we’re really dealing with in the Company is more of the market and what’s happened here in the last six to nine months. So, from that perspective, I don’t think a whole lot has changed. Our primary focus continues to be staying as close as we an to our customers and working with those folks to, if not grow their business, at least help them stay competitive in their respective marketplaces, and along the way to do the things we were talking about already this morning, which is to manage our costs. That is a long way of saying that we are committed to slugging it out here in the near term and then over time, as Ken alluded to in his comments, there are some things we are working on, our technology side, to help us in other areas to improve our productivity and take some of the complexity out of this business. So, we are in the early stages of design there. That is a potentially big opportunity for us and we will talk to you more about that as time goes along. Thirdly, as things hopefully stabilize here at some point over the next year or so, we are going to continue to look for opportunities to grow this business whether it be primarily, hopefully, through acquisitions. Initially, in our core business we really do believe just like there is pressure on the restaurant side that on the competitors side that there will and should be more opportunities. We’re having discussions and that has picked up a little bit, as we mentioned in the comments this morning. It hasn’t picked up dramatically. Quite honestly, a lot of our conversations don’t always lead to a result, because not every transaction is one that we can get done. Longer term we would hope to be able to grow through acquisitions and identify additional markets.

I am curious if there has been any change in the impact of your business reviews plus or minus, or if they are just more of the same, or anything else you can add to that platform. Or, just your general sales and marketing initiatives in general to help try to drive more volume even though the market remains depressed.

The business is always evolving and improving, at least we hope so. We have concentrated more on the menu itself, on the profitability of the menu. When customers are struggling a bit that becomes increasingly more important, so our focus is and continues to be on the profitability of that individual units menu.

The other thing we have been pretty consistent in explaining to people is on these business reviews. When you get into an environment like we’re in today it just reemphasizes, or doubly emphasizes the importance of continuing to develop those relationships with the customers that we do have, so certainly lost business. When we talk about lost business that is basically when you lose an account that a year ago you were selling, the business reviews are very, very impactful there and we continue to see very little lost business on the accounts that we review in an effective manner.

Any quick examples of how when you talk about technology transformation initiatives you have on the plate, how that will make it easier for your customers? Is there any sort of user interface that they can be approached with, or better transparency on thing? Are there any one or two items that you think can really stand out as opportunities to really penetrate your customers?

Just generally the user interface both for our sales people as well as for the customers order direct at would be a significant one. Then hopefully over time providing better tools for the customers as well to help them manage their business, manage their purchasing, that type of thing.

Great, thank you very much.

Your next question comes from John Heinbockel with Goldman Sachs.

So Bill it sounds like you have not yet seen, what you can say is, a bottoming in volumes or tonnage? We may not have hit the bottom yet, or can you just not tell yet.

I think what we are saying is, is that we are not ready to make that call yet at this point. I think we need to see a little bit more here over the next two or three months and hear a little more about what’s going on in some of the other parts of the economy. So, I guess at some point we’ll be able to look back and say when we saw it, but right now looking forward it’s not clear.

If you look at the restaurant business it looked like January and February were clearly better than December and then March slipped a little bit from January to February. Did you see something similar or you are behaving a little bit differently than that?

I guess we are different. We didn’t see that at all. We saw January, February, March all being off.

On a unit basis?

Yes.

Do you think you are gaining share, maybe on a unit basis in this environment, or is it hard to tell?

I think it is hard to tell, probably, at this point. The numbers are not that accurate in the shorter term. Historically certainly we feel we gained share. I am hesitating a little bit on the answer, because I don’t even know that that’s the most critical thing right now. The market is down. We are off a little bit. One of the things we have to do, and it kind of comes back to Meredith’s question, is you have to be a little careful you don’t gain too much share in this type of environment, because there is business out there that is potentially not the best from a credit standpoint. Our folks are doing a good job out there balancing going after new business as well as making sure that we don’t take on undue risk.

Some of the cost cutting that you guys have done, has that contributed to any weakness in sales, or were you pretty careful to avoid that the last couple of months?

John, we are very careful with that. I can say, in fact, that that is not the case.

All right and it looks like we probably will go to some level of deflation at least temporarily. Will that have a positive impact on units and menu prices, or probably not?

First of all, we are not clear that we will go to deflation. We are seeing it in the diary category right now. We’re seeing kind of break even pricing in a lot of categories, but canned, dried, frozen are still up and you probably have a better handle on that John. But, clearly some of these manufacturers are not passing along the decreases for their own reasons. So, it is not clear, but what is clear is we are seeing moderating inflation. To the second part of your question, I don’t see deflation as a good thing. What we would continue to tell you is that a relatively low-level inflation at 2% to 3% has served us well over the years and generally is pretty good for our customers.

Inflation dropped off in this quarter. We didn’t see an improvement in unit volume. We eventually should see that. Is that going to be driven more by, I guess it will be more by the economy and less by disinflation?

Yes, I think that is fair, John. These are not the normal times that we would go back and look at trends off of deflation and inflation and I think whether it is economy or peoples perception of their future income stream, I think that probably is going to drive it more than anything else.

All right, then finally if you look at gross margin going forward how do you think about passing along price decreases to your customers? And, what is going to be the primary driver going forward of gross? Is it getting customer mix or the level of inflation?

Normal price declines we pass through. If you are talking about margins as a way of gaining business, then frankly we haven’t found that to be as powerful a tool as you might think.

It is a pretty slippery slope, John, as you well know. What we really try to do is to work with our customers where we can identify, let’s say, some share savings opportunities, then we will work with them there. But, across the board price reductions where we don’t have cost savings to go with it has never been a good thing for Sysco and we don’t think it’s a good thing for the industry.

Okay, thanks.

Your next question comes from Gregory Badishkanian from Citigroup.

You made an initial comment that you haven’t seen an improvement in sale really and you could see some pressure on operating profits in the fourth quarter. So I am just wondering if it is going to be the same kind of pressure that we saw in the third quarter, or is it going to be a little bit less, or maybe a little bit more as we go forward?

All of the above, but really Greg, we don’t know. What we are trying to tell you there is we are early in the quarter. We haven’t seen the bottom as we said. At least we can’t tell you that we’ve seen the bottom and we’re just trying to acknowledge that when you get into this level of sales decline; were it to get a little worse, it is more challenging to create any operating leverage. So, we have got still two months to go in this quarter. Even if we were to give guidance, which we don’t, it would be pretty difficult to predict.

That is helpful and it is good to see that you are not chasing around accounts that might be distressed.

We just try to make good business decisions.

Absolutely and obviously bad debt expense has risen third quarter. Would you expect that to kind of stabilize over the next few quarters, or does it just get worse as the environment and the cash cushion that a lot of these restaurants, the small independent owners have dwindled, to see more and more bankruptcies? How do you see that playing out?

I am going to default to my lagging indicator assessment here that we have been using for several quarters. I think the bad debt phenomenon could be with us for a good while.

Yes, okay great. Thank you very much.

Your next question comes from John Ivankoe with J.P. Morgan.

I was wondering if you could shed some light on your gross margin in the third quarter. It looks like it’s been lower than it has been for some time. Was there anything unusual there that I should focus on, whether it is your customers demanding lower prices, what have you? Was there some one-time type of things? Just continuing on with that, do you think it goes back to the 80.9 type of level 81 flat type of level where it has been over the last looks like 8 or 10 quarters?

Just looking at the quarter you are right, we are off a little bit in margin. We have had a fuel surcharge employed out there that is indexed now for our street customers and so we fell below the index early in the quarter. We didn’t have that in the margin this quarter, so that was certainly part of it. Clearly, in an environment like this you are competing very hard on the price line every day, so there is always good price pressure. I would say the fuel surcharge would be the only tangible thing I can think of.

Is that worth 10, 20, 30 basis points?

We will give you come disclosure, I think, in the Q, when we file that here in a day or two, that will quantify that to some extent. I don’t have that with me right this morning, but I don’t believe it is 20 basis points, no.

In terms of the total number of restaurants that are out there, are you seeing an increase in the number of closures? Are you seeing stability in the number of closures? In other words, were you seeing an accelerated rate of closures over the last six months or were you at a steady state level in terms of what you see in the broad industry?

We don’t have great data on that. I would say that we’re seeing a slowly increasing level of closures. But, again, as I said earlier, and I am not trying to minimize it, that is not necessarily a bad thing for the industry. There are too many restaurants out there and so we try to partner up with the folks that are committed to the industry and so the fact that some people are falling by the wayside is unfortunate, but it is not a bad thing for the industry.

Understood and agreed. Thanks, that is it for me.

Your next question comes from Andy Wolf with BB & T Capital Markets. Andy Wolf - BB & T Capital Markets : In regards to Broadline, can you discuss a little bit of the slowing in the sale by mix, differentiating between independents and the other half of the business which is small chains and institutional? I guess what I am getting at are the independents, did the independents sales slow much faster than the rest of the Broadline business?

We don’t really give a lot of detail on that, Andy, but I think just generally we would acknowledge that you can tell from the disclosures we do in terms of the MH sure sales that the street sales are off a little bit more than the program sales. Andy Wolf - BB & T Capital Markets : Fair enough. So, at least for us outside the Company we could look to that statistic as, I guess, a coincidence indicator?

It is a good proxy. Andy Wolf - BB & T Capital Markets : Okay and on the gross margin, I know you have a lot of your fuel, at least at this quarter, hedged at higher costs and the surcharge came off. Is that sort of what we’re talking about? So, if that weren’t the case, you know the gross margin would have been improved by what’s not in the adverse hedge?

No, let me be clear. What I was trying to say is in answer to why the margins were off somewhat for the quarter, I would say the one tangible thing we can look at is the fuel surcharge. There will be some additional disclosure on that in the Q. That is part of it, but that is not all of it. I would attribute a lot of the rest of it just to competitive pressures. Andy Wolf - BB & T Capital Markets : Okay, I’m sorry; I sort of misspoke a little. It would have been improved by some amount and we will read about it in your Q, if you were just flat and not hedged.

Correct. Andy Wolf - BB & T Capital Markets : Lastly, on the bad debt accrual, was there an event or two in there that really you had to catch up on with some bankruptcies? I hear it is going to be at a higher level than you have ever seen, but was there something you had to catch up in there? Or, big events that you just think are going to continue? Or, is it just generally looking across the business and getting more conservative about where things are going?

It is across the business, Andy. Andy Wolf - BB & T Capital Markets : Okay that’s it for me. Thank you.

Your next question is a follow up question from Meredith Adler from Barclays Capital.

On the gross margin would inflation of deflation in some categories, like dairy, have an impact on the gross margin?

Yes they would.

They would in different ways to be honest with you. Meredith, we are in kind of this awkward period where we’ve got insulation in some categories and deflation in some others, so it is hard to isolate all of that for you. Generally inflation there is pressure on your downward gross margin percentages, whereas in deflation the percentages conceivably can go up a little bit. But, with that said the pressure on deflation is on your cost side, because your operating costs aren’t necessarily going down.

Okay and then a follow up to Andy’s question. I believe you put the fuel surcharge in gross margin, but the fuel expense goes in SG&A or do I have that wrong?

No, you have that exactly right. The surcharge is in margin and the expenses in delivery expense were in SG&A, as you call it.

Then could you comment on, I know you have hedged your fuel, but just some idea for the fuel that you’re buying spot. I am trying to get a sense of what the environment looks like now. Are prices down year-over-year?

Oh yes, significantly.

And we will see that for a few months?

Yes.

We haven’t seen a major increase in our net expense because even though we are hedged out there on a good part of our volume at higher rates, the spot prices are down considerably from last year.

My final question is about the money that you raised the $500million. Have you said anything about what you’re going to do with the proceeds? I am having trouble figuring out what you need the money for.

I think our thoughts there were, as we said in the comments that generally you want to borrow money when you can borrow money. From a liquidity standpoint certainly we are in pretty unusual times here from a business standpoint, so we just thought it was a good time to go out and create some liquidity. Certainly the interest rates by any historical standard were very attractive as well. With that said, I would think you would expect us over time to spend the money as we always do: invest in our business, hopefully we will have some acquisitions, and that type of thing.

Great, thank you very much.

There are no further questions in the queue. That concludes today’s question and answer session and it also concludes today’s conference. We thank everyone for their participation.