HOUSTON, Aug. 09, 2022 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE: SYY) today announced financial results for its 13-week fourth fiscal quarter and its 52-week fiscal year ended July 2, 2022. In fiscal year 2021, the fourth quarter included 14 weeks, and the year included 53 weeks.1

Key highlights for the fourth quarter and full year of fiscal year 2022 include:

“Sysco generated another quarter of top-line and bottom-line improvements, topping off a strong year of financial performance, especially given the environmental conditions. This included growing more than 1.3 times the market for the year and exceeding fiscal 2019 operating income for the quarter by 6.4 percent. The strong financial performance was delivered while simultaneously investing in our Recipe For Growth strategy. We are delivering new commercial capabilities and accelerating growth in a way which will pay long-term returns for Sysco and our investors,” said Kevin Hourican, Sysco’s President and Chief Executive Officer. “I want to thank our associates around the world for their continued hard work and customer centricity.”

Key financial results for the fourth quarter of fiscal year 2022 include:

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1 Adjusted financial results, including adjusted operating income (loss), adjusted earnings per share (EPS) and adjusted EBITDA, are non-GAAP financial measures that exclude certain items, which primarily include acquisition-related costs, restructuring costs, transformational project costs, adjustments to our bad debt reserve specific to aged receivables existing prior to the COVID-19 pandemic and a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory. Specific to adjusted EPS, this year’s Certain Items include losses on the extinguishment of debt and the impact of an increase in reserves for uncertain tax positions. Specific to adjusted EPS, last year’s fourth quarter and fiscal 2021 Certain Items include the impact of a gain on sale of property and the impact of a U.K. tax law change. The fiscal 2021 Certain Items include the impact of a loss on the sale of Cake Corporation and our Spain operations. Results shown on a comparable 13 or 52 week basis are non-GAAP numbers and have been further adjusted to remove dollar amounts equal to 1/14 of the comparable 13 or 52 week basis are non-GAAP numbers and have been further adjusted to remove dollar amounts equal to 1/14 of the comparable fourth quarter non-GAAP results. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.
2 EBITDA and adjusted EBITDA are non-GAAP financial measures. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.
3 Earnings per share (EPS) are shown on a diluted basis unless otherwise specified.

Key financial results for fiscal year 2022 included:

“Sysco delivered strong financial results, growing volumes and sales, effectively managing double-digit inflation and improving profitability, all while also strengthening our balance sheet and returning $1.5 billion to our shareholders. We have many reasons to be upbeat about our business. While keeping a careful eye on macro-economic developments, we expect to grow adjusted EPS by 26% - 35%, or $4.09 - $4.394, for fiscal year 2023,” said Aaron Alt, Sysco’s Chief Financial Officer.

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4 Adjusted earnings per share is a non-GAAP financial measure; however, we cannot predict with certainty the particular certain items that would be excluded from the calculation of this measure for future periods. Due to these uncertainties, we cannot provide a quantitative reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure without unreasonable effort. However, we expect to calculate adjusted earnings per share for future periods in the same manner as the reconciliations provided for the historical periods that are included at the end of this release.

Fourth Quarter Fiscal Year 2022 Results

Total Sysco

Sales for the fourth quarter were $19.0 billion, an increase of 17.5% compared to the same period last year.

Gross profit increased 18.1% to $3.4 billion, gross margin increased 10 basis points to 18.2% and adjusted gross margin increased 33 basis points to 18.4%, compared in each case to the same period last year. The increase in gross profit for the fourth quarter was primarily driven by higher volumes and high rates of inflation that were effectively managed.

Operating expenses increased $331.5 million, or 14.1%, compared to the same period last year, driven by increased volumes and continued investments to drive our transformation initiatives. Adjusted operating expenses increased $300.5 million, or 13.0%, compared to the same period last year.

Operating income was $766.7 million, an increase of $197.0 million, or 34.6%, compared to the same period last year. Adjusted operating income was $876.8 million, an increase of $271.6 million compared to the same period last year.

U.S. Foodservice Operations

The U.S. Foodservice Operations segment generated strong sales growth, overall share gains and increased profitability.

Sales for the fourth quarter were $13.4 billion, an increase of 16.4% compared to the same period last year. Local case volume within U.S. Broadline operations decreased 7.8% for the fourth quarter, while total case volume within U.S. Broadline operations decreased 2.1%, in each case as compared to the same period last year.

Gross profit increased 17.5% to $2.6 billion, and gross margin increased 17 basis points to 19.4%, compared in each case to the same period last year. Product cost inflation was 15.3% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the dairy, poultry and fresh produce categories.

Operating expenses increased $272.3 million, or 19.8%, compared to the same period last year. Adjusted operating expenses increased $244.9 million, or 17.5%, compared to the same period last year.

Operating income was $952.0 million, an increase of $114.6 million compared to the same period last year. Adjusted operating income was $959.5 million, an increase of $141.9 million compared to the same period last year.

International Foodservice Operations

The International Foodservice Operations segment delivered another quarter of strong sales and operating leverage, driving significant profit growth.

Sales for the fourth quarter were $3.3 billion, an increase of 30.3% compared to the same period last year. On a constant currency basis5, sales for the fourth quarter were $3.5 billion, an increase of 40.4% compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations sales by 10.1% and total Sysco sales by 1.6% during the quarter.

Gross profit increased 31.4% to $651.8 million, and gross margin increased 17 basis points to 20.0%, compared in each case to the same period last year. On a constant currency basis5, gross profit increased 42.9% to $708.9 million. Foreign exchange rates decreased both International Foodservice Operations gross profit by 11.5% and total Sysco gross profit by 2.0% during the quarter.

Operating expenses increased $78.2 million, or 14.9%, compared to the same period last year. Adjusted operating expenses increased $61.3 million, or 12.4%, compared to the same period last year. On a constant currency basis5, adjusted operating expenses increased $112.7 million, or 22.7%, compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations operating expenses by 10.3% and total Sysco operating expenses by 2.4% during the quarter.

Operating income was $47.1 million, an improvement of $77.6 million compared to the same period last year. Adjusted operating income increased $94.5 million compared to the same period last year. On a constant currency basis5, adjusted operating income was $100.3 million, an increase of $100.2 million compared to the same period last year. Foreign exchange rates decreased both International Foodservice Operations operating income by $5.8 million and total Sysco operating income by $3.2 million during the quarter.

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5 Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on current year results. These adjusted measures are non-GAAP financial measures. Reconciliations of all non-GAAP financial measures to the nearest corresponding GAAP financial measure are included at the end of this release.

Fiscal Year 2022 Results

Total Sysco

Sales for fiscal year 2022 were $68.6 billion, an increase of 33.8% compared to the prior year.

Gross profit increased 31.7% to $12.3 billion, and gross margin decreased 29 basis points to 18.0%, compared in each case to the prior year. The increase in gross profit for the year was primarily driven by higher volumes and high rates of inflation that were effectively managed.

Operating expenses increased $2.1 billion, or 26.0%, compared to the prior year, driven by increased volumes, expenses associated with investments to drive our transformation initiatives, and snap-back and productivity related costs. Adjusted operating expenses increased $1.9 billion, or 23.6%, compared to the prior year.

Operating income was $2.3 billion, an increase of $901.8 million, or 62.7%, compared to the prior year. Adjusted operating income was $2.6 billion, an increase of $1.2 billion, or 80.3%, compared to the prior year.

U.S. Foodservice Operations

Sales for fiscal year 2022 were $48.5 billion, an increase of 35.8% compared to the prior year. Local case volume within U.S. Broadline operations increased 10.3% for fiscal year 2022, while total case volume within U.S. Broadline operations increased 15.4%, in each case as compared to the prior year. Both increases represent organic growth.

Gross profit increased 31.2% to $9.2 billion, and gross margin decreased 67 basis points to 19.0%, compared in each case to the prior year. Product cost inflation was 15.0% in U.S. Broadline, as measured by the estimated change in Sysco’s product costs, primarily in the poultry, meat and seafood categories.

Operating expenses increased $1.5 billion, or 32.3%, compared to the prior year. Adjusted operating expenses increased $1.3 billion, or 28.0%, compared to the prior year.

Operating income was $3.2 billion, an increase of $716.2 million, or 29.2%, compared to the prior year. Adjusted operating income was $3.2 billion, an increase of $871.8 million, or 37.6%, compared to the prior year.

International Foodservice Operations

Sales for fiscal year 2022 were $11.8 billion, an increase of $3.4 billion, or 41.2%, compared to the prior year. On a constant currency basis5, sales for fiscal year 2022 were $12.0 billion, an increase of 43.3% compared to the prior year. Foreign exchange rates decreased both International Foodservice Operations sales by 2.1% and total Sysco sales by 0.3% during the year.

Gross profit increased 44.5% to $2.4 billion, and gross margin increased 47 basis points to 20.2%, compared in each case to the prior year. On a constant currency basis5, gross profit increased 47.5% to $2.4 billion, as compared to the prior year. Foreign exchange rates decreased both International Foodservice Operations gross profit by 3.0% and total Sysco gross profit by 0.5% during the year.

Operating expenses increased $396.9 million, or 21.1%, compared to the prior year. Adjusted operating expenses increased $370.0 million, or 20.9%, compared to the prior year. On a constant currency basis5, adjusted operating expenses increased $420.9 million, or 23.7%, compared to the prior year. Foreign exchange rates decreased both International Foodservice Operations operating expense by 2.8% and total Sysco operating expense by 0.7% during the year.

Operating income was $102.3 million, an improvement of $334.7 million compared to the prior year. Adjusted operating income increased $361.7 million compared to the prior year. On a constant currency basis5, adjusted operating income was $236.4 million, an increase of $365.2 million compared to the prior year. Foreign exchange rates decreased International Foodservice Operations operating income by 2.7% and increased total Sysco operating income by $0.8 million during the year.

Balance Sheet, Cash Flow and Capital Spending

As of the end of the quarter, the company had a cash balance of $867.1 million and approximately $10.6 billion of debt outstanding.

During the year, Sysco returned $1.5 billion to shareholders via $500 million of share repurchases and $959 million of dividends.

Cash flow from operations was $1.8 billion for fiscal year 2022. During the year, the company made purposeful investments in working capital to drive increased sales and profitability, including making significant investments in inventory, with rising sales also contributing to rising accounts receivable, offset by rising accounts payable.

Capital expenditures, net of proceeds from sales of plant and equipment, for fiscal year 2022 were $608.7 million.

Free cash flow6 for fiscal year 2022 was $1.2 billion.

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6 Free cash flow is a non-GAAP financial measure that represents net cash provided from operating activities less purchases of plant and equipment and includes proceeds from sales of plant and equipment. Reconciliations for all non-GAAP financial measures are included at the end of this release.

Conference Call & Webcast

Sysco will host a conference call to review the company’s fourth quarter and full fiscal year 2022 financial results on Tuesday, August 9, 2022, at 10:00 a.m. Eastern Daylight Time. A live webcast of the call, accompanying slide presentation and a copy of this news release will be available online at investors.sysco.com.

Key Highlights:
 Fourth QuarterFiscal Year
   Comparable
Adjusted		  Comparable
Adjusted
Financial Comparison:July 2, 2022
(13 Weeks)		Change
(13 vs. 14
weeks)		Change
(13 vs. 13
weeks)		July 2, 2022
(52 Weeks)		Change
(52 vs. 53
weeks)		Change
(52 vs. 52
weeks)
GAAP:      
Sales$19.0 billion17.5% $68.6 billion33.8% 
Gross profit$3.4 billion18.1% $12.3 billion31.7% 
Gross Margin18.2%10 bps 18.0%-29 bps 
Operating expenses$2.7 billion14.1% $10.0 billion26.0% 
Operating Income$766.7 million34.6% $2.3 billion62.7% 
Operating Margin4.0%51 bps 3.4%61 bps 
Net Earnings$510.0 million237.5% $1.4 billion159.2% 
Diluted Earnings Per Share$0.99241.4% $2.64158.8% 
       
Non-GAAP (1):      
Sales$19.0 billion17.5%26.5%$68.6 billion33.8%36.9%
Gross profit$3.5 billion19.6%28.8%$12.4 billion32.5%35.5%
Gross Margin18.4%33 bps33 bps18.1%-18 bps-18 bps
Operating Expenses$2.6 billion13.0%21.7%$9.8 billion23.6%26.2%
Operating Income$876.8 million44.9%56.0%$2.6 billion80.3%85.8%
Operating Margin4.6%88 bps88 bps3.8%99 bps101 bps
EBITDA$971.7 million24.8%34.4%$3.1 billion42.7%46.4%
Adjusted EBITDA$1.0 billion34.2%44.5%$3.3 billion54.4%58.5%
Net Earnings$588.3 million60.6%73.0%$1.7 billion126.0%134.2%
Diluted Earnings Per Share (2)$1.1562.0%74.2%$3.25125.7%133.8%
       
Case Growth (3):      
U.S. Broadline-2.1% 5.4%15.4% 17.9%
Local-7.8%  10.3%  
       
Sysco Brand Sales as a % of Cases:      
U.S. Broadline36.6%0 bps 36.2%-29 bps 
Local45.4%78 bps 44.5%55 bps 
Note:
(1) Reconciliations of all non-GAAP financial measures to the nearest respective GAAP financial measures are included at the end of this release.
(2) Individual components in the table above may not sum to the totals due to the rounding.
(3) Case growth for 13-week and 52-week comparable columns show year-over-year growth.
NM represents that the percentage change is not meaningful.

Forward-Looking Statements  

Statements made in this press release or in our earnings call for the fourth quarter of fiscal year 2022 that look forward in time or that express management’s beliefs, expectations or hopes are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the views of management at the time such statements are made and are subject to a number of risks, uncertainties, estimates, and assumptions that may cause actual results to differ materially from current expectations. These statements include statements concerning: the effect, impact, potential duration or other implications of the COVID-19 pandemic and any expectations we may have with respect thereto; our expectations regarding future improvements in productivity; our belief that improvements in our organizational capabilities will deliver compelling outcomes in future periods; our expectations regarding improvements in international volume; our expectations that our transformational agenda will drive long-term growth; our expectations regarding the continuation of an inflationary environment; our expectations regarding improvements in the efficiency of our supply chain; our expectations regarding the impact of our Recipe for Growth strategy and the pace of progress in implementing the initiatives under that strategy; our expectations regarding Sysco’s ability to outperform the market in future periods; our expectations that our strategic priorities will enable us to grow faster than the market; our expectations regarding our efforts to reduce overtime rates and the incremental investments in hiring; our expectations regarding the expansion of our driver academy and our belief that the academy will enable us to provide upward career path mobility for our warehouse associates and improve associate retention; our expectations regarding the benefits of the six-day delivery model; our plans to improve the capabilities of our sales team; our expectations regarding the impact of our growth initiatives and their ability to enable Sysco to consistently outperform the market; our expectations regarding the impact of the Coastal Companies acquisition on our business; our expectations regarding our ability to grow faster than the total market in fiscal 2023 and to exceed our growth target by the end of fiscal 2024; our ability to deliver against our strategic priorities; economic trends in the United States and abroad; our plans to make continued capital investments over the next three fiscal years in our technology, fleet and buildings; our belief that there is further opportunity for profit in the future; our future growth, including growth in sales and earnings per share; our expectations regarding profits and sales in fiscal 2023; the pace of implementation of our business transformation initiatives; our expectations regarding our balanced approach to capital allocation and rewarding our shareholders; our plans to improve associate retention, training and productivity; our belief that our Recipe for Growth transformation is creating capabilities that will help us profitably grow for the long term; our expectations regarding our long-term financial outlook; and our expectations regarding additional improvements from snap-back costs and productivity expenses during the fiscal fourth quarter.

It is important to note that actual results could differ materially from those projected in such forward-looking statements based on numerous factors, including those outside of Sysco’s control. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see our Annual Report on Form 10-K for the year ended July 3, 2021, as filed with the SEC, and our subsequent filings with the SEC. We do not undertake to update our forward-looking statements, except as required by applicable law.

About Sysco

Sysco is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home. Its family of products also includes equipment and supplies for the foodservice and hospitality industries. With more than 71,000 associates, the company operates 333 distribution facilities worldwide and serves approximately 700,000 customer locations. For fiscal year 2022 that ended July 2, 2022, the company generated sales of more than $68 billion. Information about our CSR program, including Sysco’s 2021 Corporate Social Responsibility Report, can be found at sysco.com/csr2021report.

For more information, visit www.sysco.com or connect with Sysco on Facebook at www.facebook.com/SyscoFoods. For important news and information regarding Sysco, visit the Investor Relations section of the company’s Internet home page at investors.sysco.com, which Sysco plans to use as a primary channel for publishing key information to its investors, some of which may contain material and previously non-public information. In addition, investors should continue to review our news releases and filings with the SEC. It is possible that the information we disclose through any of these channels of distribution could be deemed to be material information.

Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED RESULTS OF OPERATIONS (Unaudited)
(In Thousands, Except for Share and Per Share Data)
 Quarter Ended Year Ended
 Jul. 2, 2022 Jul. 3, 2021 Jul. 2, 2022 Jul. 3, 2021
        
Sales$18,957,258  $16,136,893  $68,636,146  $51,297,843 
Cost of sales 15,512,986   13,221,115   56,315,622   41,941,094 
Gross profit 3,444,272   2,915,778   12,320,524   9,356,749 
Operating expenses 2,677,557   2,346,094   9,981,489   7,919,507 
Operating income 766,715   569,684   2,339,035   1,437,242 
Interest expense 128,512   441,149   623,643   880,137 
Other income, net (3,676)  (13,483)  (31,381)  (27,623)
Earnings before income taxes 641,879   142,018   1,746,773   584,728 
Income tax expense (benefit) 131,890   (9,075)  388,005   60,519 
Net earnings$509,989  $151,093  $1,358,768  $524,209 
        
Net earnings:       
Basic earnings per share$1.00  $0.29  $2.66  $1.03 
Diluted earnings per share 0.99   0.29   2.64   1.02 
        
Average shares outstanding 510,593,953   512,423,938   510,630,645   510,696,398 
Diluted shares outstanding 513,426,966   516,036,842   514,005,827   513,555,088 


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands, Except for Share Data)
 Jul. 2, 2022 Jul. 3, 2021
    
ASSETS
Current assets   
Cash and cash equivalents$867,086  $3,007,123 
Accounts receivable, less allowances of $70,790 and $117,695 4,868,779   3,781,510 
Inventories 4,448,154   3,695,219 
Prepaid expenses and other current assets 303,789   240,956 
Income tax receivable 35,934   8,759 
Total current assets 10,523,742   10,733,567 
Plant and equipment at cost, less accumulated depreciation 4,456,420   4,326,063 
Other long-term assets   
Goodwill 4,542,315   3,944,139 
Intangibles, less amortization 952,683   746,073 
Deferred income taxes 377,604   352,523 
Operating lease right-of-use assets, net 723,297   709,163 
Other assets 550,150   602,011 
Total other long-term assets 7,146,049   6,353,909 
Total assets$22,126,211  $21,413,539 
    
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities   
Accounts payable$5,793,481  $4,884,781 
Accrued expenses 2,270,753   1,814,837 
Accrued income taxes 40,042   22,644 
Current operating lease liabilities 105,690   102,659 
Current maturities of long-term debt 580,611   494,923 
Total current liabilities 8,790,577   7,319,844 
Long-term liabilities   
Long-term debt 10,066,931   10,588,184 
Deferred income taxes 250,171   147,066 
Long-term operating lease liabilities 636,417   634,481 
Other long-term liabilities 967,907   1,136,480 
Total long-term liabilities 11,921,426   12,506,211 
Commitments and contingencies   
Noncontrolling interest 31,948   34,588 
Shareholders’ equity   
Preferred stock, par value $1 per share Authorized 1,500,000 shares, issued none —   — 
Common stock, par value $1 per share Authorized 2,000,000,000 shares, issued 765,174,900 shares 765,175   765,175 
Paid-in capital 1,766,305   1,619,995 
Retained earnings 10,539,722   10,151,706 
Accumulated other comprehensive loss (1,482,054)  (1,148,764)
Treasury stock at cost, 256,531,543 and 253,342,595 shares (10,206,888)  (9,835,216)
Total shareholders’ equity 1,382,260   1,552,896 
Total liabilities and shareholders’ equity$22,126,211  $21,413,539 


Sysco Corporation and its Consolidated Subsidiaries
CONSOLIDATED CASH FLOWS (Unaudited)
(In Thousands)
 Year Ended
 Jul. 2, 2022 Jul. 3, 2021
Cash flows from operating activities:   
Net earnings$1,358,768  $524,209 
Adjustments to reconcile net earnings to cash provided by operating activities:   
Share-based compensation expense 122,315   95,815 
Depreciation and amortization 772,881   737,916 
Operating lease asset amortization 108,052   113,906 
Amortization of debt issuance and other debt-related costs 22,305   26,115 
Deferred income taxes (64,454)  (157,864)
Provision for losses on receivables (15,494)  (152,740)
Loss on extinguishment of debt 115,603   293,897 
Loss on sale of business —   22,737 
Other non-cash items (12,692)  (16,502)
Additional changes in certain assets and liabilities, net of effect of businesses acquired:   
Increase in receivables (1,001,037)  (662,345)
Increase in inventories (719,266)  (551,405)
Decrease (increase) in prepaid expenses and other current assets 4,805   (32,577)
Increase in accounts payable 850,974   1,459,222 
Increase in accrued expenses 423,429   167,181 
Decrease in operating lease liabilities (125,741)  (142,351)
(Decrease) increase in accrued income taxes (9,775)  118,953 
(Increase) decrease in other assets (1,082)  18,822 
(Decrease) increase in other long-term liabilities (38,305)  40,853 
Net cash provided by operating activities 1,791,286   1,903,842 
    
Cash flows from investing activities:   
Additions to plant and equipment (632,802)  (470,676)
Proceeds from sales of plant and equipment 24,144   59,147 
Acquisition of businesses, net of cash acquired (1,281,137)  — 
Purchase of marketable securities (19,318)  (53,148)
Proceeds from sales of marketable securities 16,648   35,979 
Other investing activities (1) 14,259   — 
Net cash used for investing activities (1,878,206)  (428,698)
    
Cash flows from financing activities:   
Bank and commercial paper (repayments) borrowings, net —   (826,182)
Other debt borrowings including senior notes 1,248,207   1,484 
Other debt repayments including senior notes (494,585)  (2,003,135)
Redemption premiums and repayments for senior notes (1,395,668)  (999,996)
Cash received from termination of interest rate swap agreements 23,127   — 
Proceeds from stock option exercises 128,167   130,374 
Stock repurchases (499,825)  — 
Dividends paid (958,937)  (917,564)
Other financing activities (2) (37,384)  (13,209)
Net cash (used for) provided by financing activities (1,986,898)  (4,628,228)
    
Effect of exchange rates on cash, cash equivalents and restricted cash (31,906)  94,614 
    
Net decrease in cash and cash equivalents (3) (2,105,724)  (3,058,470)
Cash, cash equivalents and restricted cash at beginning of period 3,037,100   6,095,570 
Cash, cash equivalents and restricted cash at end of period (3)$931,376  $3,037,100 
    
Supplemental disclosures of cash flow information:   
Cash paid during the period for:   
Interest$498,349  $877,512 
Income taxes, net of refunds 450,148   103,547 


(1)Change primarily includes proceeds from the settlement of corporate-owned life insurance policies.
(2)Change includes cash paid for shares withheld to cover taxes, settlement of interest rate hedges and other financing activities.
(3)Change includes restricted cash included within other assets in the Consolidated Balance Sheet.


Sysco Corporation and its Consolidated Subsidiaries
Non-GAAP Reconciliation (Unaudited)
Impact of Certain Items
 
Our discussion of our results includes certain non-GAAP financial measures, such as EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove the impact of (A) restructuring and transformational project costs consisting of: (1) restructuring charges, (2) expenses associated with our various transformation initiatives and (3) facility closure and severance charges; acquisition-related costs consisting of: (1) intangible amortization expense and (B) acquisition costs and due diligence costs related to our acquisitions; and (C) the reduction of bad debt expense previously recognized in fiscal 2020 due to the impact of the COVID-19 pandemic on the collectability of our pre-pandemic trade receivable balances. Our results for fiscal 2022 were also impacted by: (1) a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory, (2) debt extinguishment costs and (3) the increase in reserves for uncertain tax positions. Our results for fiscal 2021 were also impacted by losses on the sale of businesses.
 
The results of our foreign operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our total Sysco and our International Foodservice Operations results on a constant currency basis. Constant currency operating results are calculated by translating current-period local currency operating results with the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period.
 
Management believes that adjusting its operating expenses, operating income, net earnings and diluted earnings per share to remove these Certain Items and presenting its International Foodservice Operations results on a constant currency basis, provides an important perspective with respect to our underlying business trends and results and provides meaningful supplemental information to both management and investors that (1) is indicative of the performance of the company’s underlying operations and (2) facilitates comparisons on a year-over-year basis.
 
Sysco has a history of growth through acquisitions and excludes from its non-GAAP financial measures the impact of acquisition-related intangible amortization, acquisition costs and due-diligence costs for those acquisitions. We believe this approach significantly enhances the comparability of Sysco’s results for fiscal 2022 and fiscal 2021.
 
Set forth below is a reconciliation of sales, operating expenses, operating income, other (income) expense, net earnings and diluted earnings per share to adjusted results for these measures for the periods presented. Individual components of diluted earnings per share may not add up to the total presented due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.


Sysco Corporation and its Consolidated Subsidiaries
Non-GAAP Reconciliation (Unaudited)
Impact of Certain Items
(Dollars in Thousands, Except for Share and Per Share Data)
  13-Week
Period Ended
Jul. 2, 2022		 14-Week
Period Ended
Jul. 3, 2021		 Change in
Dollars		 % Change
Sales (GAAP) (A) $18,957,258  $16,136,893  $2,820,365  17.5%
Impact of currency fluctuations (1)  255,672   —   255,672  1.6 
Comparable sales using a constant currency basis (Non-GAAP)  19,212,930   16,136,893   3,076,037  19.1 
Less 1 week fourth quarter sales (B)  —   (1,152,635)  1,152,635  9.1 
Comparable sales using a constant currency and a 13 week basis (Non-GAAP)  19,212,930   14,984,258   4,228,672  28.2 
Comparable sales using a 13 week basis (Non-GAAP) (C)(D) $18,957,258  $14,984,258  $3,973,000  26.5%
         
Cost of sales (GAAP) $15,512,986  $13,221,115  $2,291,871  17.3%
Impact of inventory valuation adjustment (2)  (43,673)  —   (43,673) (0.3)
Cost of sales adjusted for Certain Items (Non-GAAP)  15,469,313   13,221,115   2,248,198  17.0 
Less 1 week fourth quarter cost of sales  —   (944,365)  944,365  9.0 
Comparable cost of sales adjusted for a 13 week basis (Non-GAAP) $15,469,313  $12,276,750  $3,192,563  26.0%
         
Gross profit (GAAP) $3,444,272  $2,915,778  $528,494  18.1%
Impact of inventory valuation adjustment (2)  43,673   —   43,673  1.5 
Comparable gross profit adjusted for Certain Items (Non-GAAP) (A)  3,487,945   2,915,778   572,167  19.6 
Impact of currency fluctuations (1)  58,256   —   58,256  2.0 
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)  3,546,201   2,915,778   630,423  21.6 
Less 1 week fourth quarter gross profit (B)  —   (208,270)  208,270  9.4 
Comparable gross profit adjusted for Certain Items using a constant currency and a 13 week basis (Non-GAAP)  3,546,201   2,707,508   838,693  31.0 
Comparable gross profit adjusted for Certain Items using a 13 week basis (Non-GAAP) (C) $3,487,945  $2,707,508  $780,437  28.8%
         
Gross margin (GAAP)  18.17%  18.07%   10 bps
Impact of inventory valuation adjustment (2)  0.23   —    23 bps
Comparable gross margin adjusted for Certain Items (Non-GAAP) (A)  18.40   18.07    33 bps
Impact of currency fluctuations (1)  0.06   —    6 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)  18.46   18.07    39 bps
Less 1 week fourth quarter gross margin (B)  —   —    0 bps
Comparable gross margin adjusted for Certain Items using a constant currency and a 13 week basis (Non-GAAP)  18.46   18.07    39 bps
Comparable gross margin adjusted for Certain Items using a 13 week basis (Non-GAAP) (C)  18.40%  18.07%   33 bps
         
Operating expenses (GAAP) $2,677,557  $2,346,094  $331,463  14.1%
Impact of restructuring and transformational project costs (3)  (39,474)  (33,110)  (6,364) (19.2)
Impact of acquisition-related costs (4)  (35,724)  (24,826)  (10,898) (43.9)
Impact of bad debt reserve adjustments (5)  8,783   22,441   (13,658) (60.9)
Operating expenses adjusted for Certain Items (Non-GAAP) (A)  2,611,142   2,310,599   300,543  13.0 
Impact of currency fluctuations (1)  55,085   —   55,085  2.4 
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)  2,666,227   2,310,599   355,628  15.4 
Less 1 week fourth quarter operating expenses (B)  —   (165,043)  165,043  8.9 
Comparable operating expenses adjusted for Certain Items using a constant currency and a 13 week basis (Non-GAAP)  2,666,227   2,145,556   520,671  24.3 
Comparable operating expenses adjusted for Certain Items using a 13 week basis (Non-GAAP) (C) $2,611,142  $2,145,556  $465,586  21.7%
         
Operating expense as a percentage of sales (GAAP)  14.12%  14.54%   -42 bps
Impact of certain item adjustments  (0.35)  (0.22)   -13 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)  13.77%  14.32%   -55 bps
         
Operating income (GAAP) $766,715  $569,684  $197,031  34.6%
Impact of inventory valuation adjustment (2)  43,673   —   43,673  NM
Impact of restructuring and transformational project costs (3)  39,474   33,110   6,364  19.2 
Impact of acquisition-related costs (4)  35,724   24,826   10,898  43.9 
Impact of bad debt reserve adjustments (5)  (8,783)  (22,441)  13,658  60.9 
Operating income adjusted for Certain Items (Non-GAAP) (A)  876,803   605,179   271,624  44.9 
Impact of currency fluctuations (1)  3,171   —   3,171  0.5 
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)  879,974   605,179   274,795  45.4 
Less 1 week fourth quarter operating income (B)  —   (43,227)  43,227  11.2 
Comparable operating income adjusted for Certain Items using a constant currency and a 13 week basis (Non-GAAP)  879,974   561,952   318,022  56.6 
Comparable operating income adjusted for Certain Items using a 13 week basis (Non-GAAP) (C)(E) $876,803  $561,952  $314,851  56.0%
         
Operating margin (GAAP)  4.04%  3.53%   51 bps
Operating margin adjusted for Certain Items (Non-GAAP)  4.63%  3.75%   88 bps
Operating margin adjusted for Certain Items using a constant currency basis (Non-GAAP)  4.58%  3.75%   83 bps
Operating margin excluding Certain Items using a constant currency and a 13 week basis (Non-GAAP)  4.58%  3.75%   83 bps
Operating margin adjusted for Certain Items using a 13 week basis (Non-GAAP) (F)  4.63%  3.75%   88 bps
         
Interest expense (GAAP) $128,512  $441,149  $(312,637) (70.9)%
Impact of loss on extinguishment of debt  —   (293,897)  293,897  NM
Interest expense adjusted for Certain Items (Non-GAAP)  128,512   147,252   (18,740) (12.7)
Less 1 week fourth quarter interest expense  —   (10,518)  10,518  6.7 
Interest expense adjusted for Certain Items using a 13 week basis (Non-GAAP) $128,512  $136,734  $(8,222) (6.0)%
         
Other income (GAAP) $(3,676) $(13,483) $9,807  72.7%
Impact of other non-routine gains and losses  2,057   12,374   (10,317) (83.4)
Other income adjusted for Certain Items (Non-GAAP)  (1,619)  (1,109)  (510) (46.0)
Less 1 week fourth quarter other income  —   79   (79) (11.2)
Other income adjusted for Certain Items using a 13 week basis (Non-GAAP) $(1,619) $(1,030) $(589) (57.2)%
         
Net earnings (GAAP) $509,989  $151,093  $358,896  237.5%
Impact of inventory valuation adjustment (2)  43,673   —   43,673  NM
Impact of restructuring and transformational project costs (3)  39,474   33,110   6,364  19.2 
Impact of acquisition-related costs (4)  35,724   24,826   10,898  43.9 
Impact of bad debt reserve adjustments (5)  (8,783)  (22,441)  13,658  60.9 
Impact of loss on extinguishment of debt  —   293,897   (293,897) NM
Impact of other non-routine gains and losses  (2,057)  (12,374)  10,317  83.4 
Tax impact of inventory valuation adjustment (6)  (11,452)  —   (11,452) NM
Tax impact of restructuring and transformational project costs (6)  (10,613)  (5,530)  (5,083) (91.9)
Tax impact of acquisition-related costs (6)  (9,847)  (4,204)  (5,643) (134.2)
Tax impact of bad debt reserves adjustments (6)  2,383   347   2,036  NM
Tax impact of loss on extinguishment of debt (6)  (699)  (79,323)  78,624  99.1 
Tax impact of other non-routine gains and losses (6)  531   4,557   (4,026) (88.3)
Impact of foreign tax rate change  —   (17,649)  17,649  NM
Net earnings adjusted for Certain Items (Non-GAAP)  588,323   366,309   222,014  60.6 
Less 1 week fourth quarter net earnings  —   (26,165)  26,165  12.4 
Net earnings adjusted for Certain Items using a 13 week basis (Non-GAAP) $588,323  $340,144  $248,179  73.0%
         
Diluted earnings per share (GAAP) $0.99  $0.29  $0.70  241.4%
Impact of inventory valuation adjustment (2)  0.09   —   0.09  NM
Impact of restructuring and transformational project costs (3)  0.08   0.06   0.02  33.3 
Impact of acquisition-related costs (4)  0.07   0.05   0.02  40.0 
Impact of bad debt reserve adjustments (5)  (0.02)  (0.04)  0.02  50.0 
Impact of loss on extinguishment of debt  —   0.57   (0.57) NM
Impact of other non-routine gains and losses  —   (0.02)  0.02  NM
Tax impact of inventory valuation adjustment (6)  (0.02)  —   (0.02) NM
Tax impact of restructuring and transformational project costs (6)  (0.02)  (0.01)  (0.01) (100.0)
Tax impact of acquisition-related costs (6)  (0.02)  (0.01)  (0.01) (100.0)
Tax impact of loss on extinguishment of debt (6)  —   (0.15)  0.15  NM
Tax impact of other non-routine gains and losses (6)  —   0.01   (0.01) NM
Impact of foreign tax rate change  —   (0.03)  0.03  NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7)  1.15   0.71   0.44  62.0 
Less 1 week fourth quarter earnings per share  —   (0.05)  0.05  12.2 
Diluted earnings per share adjusted for Certain Items using a 13 week basis (Non-GAAP) $1.15  $0.66  $0.49  74.2%
         
Diluted shares outstanding  513,426,966   516,036,842     


 For purposes of comparable items using a 13 week basis, items are mathematically calculated using the row labels as follows: A+B=C and E/D=F
(1)Represents a constant currency adjustment, which eliminates the impact of foreign currency fluctuations on the current year results.
(2)Represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.
(3)Fiscal 2022 includes $31 million related to restructuring, severance, and facility closure charges and $8 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2021 includes $17 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy and $16 million related to restructuring charges.
(4)Fiscal 2022 includes $31 million of intangible amortization expense and $5 million in acquisition and due diligence costs. Fiscal 2021 represents intangible amortization expense.
(5)Fiscal 2022 and fiscal 2021 represent the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(6)The tax impact of adjustments for Certain Items are calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
(7)Individual components of diluted earnings per share may not add up to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
 NM represents that the percentage change is not meaningful.


Sysco Corporation and its Consolidated Subsidiaries
Non-GAAP Reconciliation (Unaudited)
Impact of Certain Items
(Dollars in Thousands, Except for Share and Per Share Data)
  13-Week
Period Ended
Jul. 2, 2022		 13-Week
Period Ended
Jun. 29, 2019		 Change in
Dollars		 % Change
Sales (GAAP) $18,957,258  $15,474,862  $3,482,396  22.5%
         
Cost of sales (GAAP) $15,512,986  $12,495,670  $3,017,316  24.1%
Impact of inventory valuation adjustment (1)  (43,673)  —   (43,673) (0.3)
Cost of sales adjusted for Certain Items (Non-GAAP) $15,469,313  $12,495,670  $2,973,643  23.8%
         
Gross profit (GAAP) $3,444,272  $2,979,192  $465,080  15.6%
Impact of inventory valuation adjustment (1)  43,673   —   43,673  1.5 
Comparable gross profit adjusted for Certain Items (Non-GAAP) $3,487,945  $2,979,192  $508,753  17.1%
         
Gross margin (GAAP)  18.17%  19.25%   -108 bps
Impact of inventory valuation adjustment (1)  0.23   —    23 bps
Comparable Gross margin adjusted for Certain Items (Non-GAAP)  18.40%  19.25%   -85 bps
         
Operating expenses (GAAP) $2,677,557  $2,258,662  $418,895  18.5%
Impact of restructuring and transformational project costs (2)  (39,474)  (77,753)  38,279  49.2 
Impact of acquisition-related costs (3)  (35,724)  (19,789)  (15,935) (80.5)
Impact of bad debt reserve adjustments (4)  8,783   —   8,783  NM
Comparable operating expenses adjusted for Certain Items (Non-GAAP) $2,611,142  $2,161,120  $450,022  20.8%
         
Operating income (GAAP) $766,715  $720,530  $46,185  6.4%
Impact of inventory valuation adjustment (1)  43,673   —   43,673  NM
Impact of restructuring and transformational project costs (2)  39,474   77,753   (38,279) (49.2)
Impact of acquisition-related costs (3)  35,724   19,789   15,935  80.5 
Impact of bad debt reserve adjustments (4)  (8,783)  —   (8,783) NM
Operating income adjusted for Certain Items (Non-GAAP) $876,803  $818,072  $58,731  7.2%
         
Other income (GAAP) $(3,676) $(51,558) $47,882  92.9%
Impact of gain on sale of Iowa Premium (5)  —   66,309   (66,309) NM
Impact of other non-routine gains and losses  2,057   —   2,057  NM
Other income (expense) adjusted for Certain Items (Non-GAAP) $(1,619) $14,751  $(16,370) (111.0)%
         
Net earnings (GAAP) $509,989  $535,766  $(25,777) (4.8)%
Impact of inventory valuation adjustment (1)  43,673   —   43,673  NM
Impact of restructuring and transformational project costs (2)  39,474   77,753   (38,279) (49.2)
Impact of acquisition-related costs (3)  35,724   19,789   15,935  80.5 
Impact of bad debt reserve adjustments (4)  (8,783)  —   (8,783) NM
Impact of gain on sale of Iowa Premium (5)  —   (66,309)  66,309  NM
Impact of other non-routine gains and losses  (2,057)  —   (2,057) NM
Tax impact of inventory valuation adjustment (6)  (11,452)  —   (11,452) NM
Tax impact of restructuring and transformational project costs (6)  (10,613)  (16,891)  6,278  37.2 
Tax impact of acquisition-related costs (6)  (9,847)  (4,352)  (5,495) (126.3)
Tax impact of bad debt reserves adjustments (6)  2,383   —   2,383  NM
Tax impact of loss on extinguishment of debt (6)  (699)  —   (699) NM
Tax impact of gain on sale of Iowa Premium (6)  —   18,119   (18,119) NM
Tax impact of other non-routine gains and losses (6)  531   —   531  NM
Impact of France, U.K. and Sweden tax law changes  —   6,464   (6,464) NM
Impact of US transition tax  —   2,631   (2,631) NM
Net earnings adjusted for Certain Items (Non-GAAP) $588,323  $572,970  $15,353  2.7%
         
Diluted earnings per share (GAAP) $0.99  $1.03  $(0.04) (3.9)%
Impact of inventory valuation adjustment (1)  0.09   —   0.09  NM
Impact of restructuring and transformational project costs (2)  0.08   0.15   (0.07) (46.7)
Impact of acquisition-related costs (3)  0.07   0.04   0.03  75.0 
Impact of bad debt reserve adjustments (4)  (0.02)  —   (0.02) NM
Impact of gain on sale of Iowa Premium (5)  —   (0.13)  0.13  NM
Tax impact of inventory valuation adjustment (6)  (0.02)  —   (0.02) NM
Tax impact of restructuring and transformational project costs (6)  (0.02)  (0.03)  0.01  33.3 
Tax impact of acquisition-related costs (6)  (0.02)  (0.01)  (0.01) (100.0)
Tax impact of gain on sale of Iowa Premium (6)  —   0.03   (0.03) NM
Impact of France, U.K. and Sweden tax law changes  —   0.01   (0.01) NM
Impact of US transition tax  —   0.01   (0.01) NM
Diluted earnings per share adjusted for Certain Items (Non-GAAP) (7) $1.15  $1.10  $0.05  4.5%


(1)Represents a write-down of COVID-related personal protection equipment inventory due to the reduction in the net realizable value of inventory.
(2)Fiscal 2022 includes $31 million related to restructuring, severance, and facility closure charges and $8 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy. Fiscal 2019 includes $41 million related to restructuring, facility closure and severance charges and $37 million related to various transformation initiative costs, primarily consisting of changes to our business technology strategy.
(3)Fiscal 2022 includes $31 million of intangible amortization expense and $5 million in acquisition and due diligence costs. Fiscal 2019 includes intangible amortization expense.
(4)Fiscal 2022 represents the reduction of bad debt charges previously taken on pre-pandemic trade receivable balances in fiscal 2020.
(5)Represents a gain on sale from disposition of a business, Iowa Premium.
(6)The tax impact of adjustments for Certain Items is calculated by multiplying the pretax impact of each Certain Item by the statutory rates in effect for each jurisdiction where the Certain Item was incurred.
(7)Individual components of diluted earnings per share may not add up to the total presented due to rounding. Total diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.
 NM represents that the percentage change is not meaningful.


Sysco Corporation and its Consolidated Subsidiaries
Non-GAAP Reconciliation (Unaudited)
Impact of Certain Items
(Dollars in Thousands, Except for Share and Per Share Data)
  52-Week
Period Ended
Jul. 2, 2022		 53-Week
Period Ended
Jul. 3, 2021		 Change in
Dollars		 % Change
Sales (GAAP) (A) $68,636,146  $51,297,843  $17,338,303  33.8%
Impact of currency fluctuations (1)  178,629   —   178,629  0.3 
Comparable sales using a constant currency basis (Non-GAAP)  68,814,775   51,297,843   17,516,932  34.1 
Less 1 week fourth quarter sales (B)  —   (1,152,635)  1,152,635  3.1 
Comparable sales using a constant currency and a 52 week basis (Non-GAAP)  68,814,775   50,145,208   18,669,567  37.2 
Comparable sales using a 52 week basis (Non-GAAP) (C)(D) $68,636,146  $50,145,208  $18,490,938  36.9%
         
Cost of sales (GAAP) $56,315,622  $41,941,094  $14,374,528  34.3%
Impact of inventory valuation adjustment (2)  (73,224)  —   (73,224) (0.2)
Cost of sales adjusted for Certain Items (Non-GAAP)  56,242,398   41,941,094   14,301,304  34.1 
Less 1 week fourth quarter cost of sales  —   (944,365)  944,365  3.1 
Comparable cost of sales adjusted for Certain Items using a 52 week basis (Non-GAAP) $56,242,398  $40,996,729  $15,245,669  37.2%
         
Gross profit (GAAP) $12,320,524  $9,356,749  $2,963,775  31.7%
Impact of inventory valuation adjustment (2)  73,224   —   73,224  0.8 
Comparable gross profit adjusted for Certain Items (Non-GAAP) (A)  12,393,748   9,356,749   3,036,999  32.5 
Impact of currency fluctuations (1)  50,131   —   50,131  0.5 
Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)  12,443,879   9,356,749   3,087,130  33.0 
Less 1 week fourth quarter gross profit (B)  —   (208,270)  208,270  3.0 
Comparable gross profit adjusted for Certain Items using a constant currency and a 52 week basis (Non-GAAP)  12,443,879   9,148,479   3,295,400  36.0 
Comparable gross profit adjusted for Certain Items using a 52 week basis (Non-GAAP) (C) $12,393,748  $9,148,479  $3,245,269  35.5%
         
Gross margin (GAAP)  17.95%  18.24%   -29 bps
Impact of inventory valuation adjustment (2)  0.11   —    11 bps
Comparable gross margin adjusted for Certain Items (Non-GAAP) (A)  18.06   18.24    -18 bps
Impact of currency fluctuations (1)  0.02   —    2 bps
Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)  18.08   18.24    -16 bps
Less 1 week fourth quarter gross margin (B)  —   —    0 bps
Comparable gross margin adjusted for Certain Items using a constant currency and a 52 week basis (Non-GAAP)  18.08%  18.24%   -16 bps
Comparable gross margin adjusted for Certain Items using a 52 week basis (Non-GAAP) (C)  18.06%  18.24%   -18 bps
         
Operating expenses (GAAP) $9,981,489  $7,919,507  $2,061,982  26.0%
Impact of restructuring and transformational project costs (3)  (109,532)  (128,187)  18,655  14.6 
Impact of acquisition-related costs (4)  (139,173)  (79,540)  (59,633) (75.0)
Impact of bad debt reserve adjustments (5)  27,999   184,813   (156,814) (84.9)
Operating expenses adjusted for Certain Items (Non-GAAP) (A)  9,760,783   7,896,593   1,864,190  23.6 
Impact of currency fluctuations (1)  50,908   —   50,908  0.7 
Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)  9,811,691   7,896,593   1,915,098  24.3 
Less 1 week fourth quarter operating expenses (B)  —   (165,043)  165,043  2.6 
Comparable operating expenses adjusted for Certain Items using a constant currency and a 52 week basis (Non-GAAP)  9,811,691   7,731,550   2,080,141  26.9 
Comparable operating expenses adjusted for Certain Items using a 52 week basis (Non-GAAP) (C) $9,760,783  $7,731,550  $2,029,233  26.2%
         
Operating expense as a percentage of sales (GAAP)  14.54%  15.44%   -90 bps
Impact of certain item adjustments  (0.32)  (0.05)   -27 bps
Adjusted operating expense as a percentage of sales (Non-GAAP)  14.22%  15.39%   -117 bps
         
Operating income (GAAP) $2,339,035  $1,437,242  $901,793  62.7%
Impact of inventory valuation adjustment (2)  73,224   —   73,224  NM
Impact of restructuring and transformational project costs (3)  109,532   128,187   (18,655) (14.6)
Impact of acquisition-related costs (4)  139,173   79,540   59,633  75.0 
Impact of bad debt reserve adjustments (5)  (27,999)  (184,813)  156,814  84.9 
Operating income adjusted for Certain Items (Non-GAAP) (A)  2,632,965   1,460,156   1,172,809  80.3 
Impact of currency fluctuations (1)  (776)  —   (776) — 
Comparable operating income adjusted for Certain Items using a constant currency basis (Non-GAAP)  2,632,189   1,460,156   1,172,033  80.3 
Less 1 week fourth quarter operating income (B)  —   (43,227)