SYSCO CORP

Previous wording

•U.S. Foodservice Operations – primarily includes (a) our U.S. Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, produce, specialty Italian, specialty imports and a wide variety of non-food products and (b) our U.S. Specialty operations, which include our FreshPoint fresh produce distribution business, our Specialty Meats and Seafood Group specialty protein operations, our growing Italian Specialty platform anchored by Greco & Sons, Inc., Edward Don, acquired in the second quarter of fiscal 2024, which distributes restaurant equipment and supplies, our Asian specialty distribution company and a number of other small specialty businesses that are not material to the operations of Sysco;

Current wording

•U.S. Foodservice Operations – primarily includes (a) our U.S. Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, produce, specialty Italian, specialty imports and a wide variety of non-food products and (b) our U.S. Specialty operations, which include our FreshPoint fresh produce distribution business, our Buckhead | Newport Meat & Seafood specialty protein operations, our growing Italian Specialty platform anchored by Greco & Sons, Inc., our Edward Don restaurant equipment and supplies distribution business, our Asian specialty distribution company and a number of other small specialty businesses that are not material to the operations of Sysco;

Previous wording

•International Foodservice Operations – includes operations outside of the United States (U.S.), which distribute a full line of food products and a wide variety of non-food products. The Americas primarily consists of operations in Canada, Bahamas, Mexico, Costa Rica and Panama, as well as our export operations that distribute to international customers. Our European operations primarily consist of operations in the United Kingdom (U.K.), France, Ireland and Sweden;

Current wording

•International Foodservice Operations – includes operations outside of the United States (U.S.), which distribute a full line of food products and a wide variety of non-food products. The Americas primarily consists of operations in Canada, Bahamas, Costa Rica and Panama, as well as our export operations that distribute to international customers. Our European operations primarily consist of operations in the United Kingdom (U.K.), France, Ireland and Sweden;

Previous wording

We estimate that we serve about 17% of an approximately $360 billion annual foodservice market in the U.S. based on industry data obtained from Technomic, Inc. (Technomic) as of the end of calendar year 2023. Technomic projects the market size to increase to approximately $370 billion by the end of calendar year 2024. From time to time, Technomic may revise the methodology used to calculate the size of the foodservice market and, as a result, our percentage can change not only from our sales results, but also from such revisions. We also serve certain international geographies that vary in size and amount of market share.

Current wording

We estimate that we serve about 17% of an approximately $370 billion annual foodservice market in the U.S. based on industry data obtained from Technomic, Inc. (Technomic) as of the end of calendar year 2024. Technomic projects the market size to increase to approximately $382 billion by the end of calendar year 2025. From time to time, Technomic may revise the methodology used to calculate the size of the foodservice market and, as a result, our percentage can change not only from our sales results, but also from such revisions. We also serve certain international geographies that vary in size and amount of market share.

Previous wording

◦increased 3.3%, or $2.5 billion, to $78.8 billion;

Current wording

◦increased 3.2%, or $2.5 billion, to $81.4 billion;

Previous wording

◦adjusted operating income increased 8.4%, or $271 million, to $3.5 billion;

Current wording

◦adjusted operating income increased 1.2%, or $42 million, to $3.5 billion;

Previous wording

◦adjusted net earnings increased 6.0%, or $123 million, to $2.2 billion;

Current wording

◦adjusted net earnings increased 0.8%, or $17 million, to $2.2 billion;

Previous wording

◦increased 12.7%, or $457 million, to $4.0 billion; and

Current wording

◦decreased 1.2%, or $50 million, to $4.0 billion; and

Previous wording

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Our results for fiscal 2023 were also impacted by a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer, adjustments to our bad debt reserve specific to aged receivables existing prior to the COVID-19 pandemic, adjustments to a product return allowance related to COVID-related personal protection equipment inventory and a gain on a litigation financing agreement.

Current wording

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions.

Previous wording

Free cash flow represents net cash provided from operating activities, subtracted by purchases of plant and equipment, added to proceeds from sales of plant and equipment. Sysco management considers free cash flow to be a non-GAAP liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases and sales of buildings, fleet, equipment and technology, which may potentially be used to pay for, among other things, strategic uses of cash, including dividend payments, share repurchases and acquisitions. However, free cash flow may not be available for discretionary expenditures as it may be necessary that we use it to make mandatory debt service or other payments. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. See “Liquidity and Capital Resources” for discussions of GAAP metrics, including net cash provided by operating activities and our reconciliation of this non-GAAP financial measure.

Current wording

Free cash flow represents net cash provided from operating activities, subtracted by purchases of plant and equipment, added to proceeds from sales of plant and equipment. Sysco management considers free cash flow to be a non-GAAP liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases and sales of buildings, fleet, equipment and technology, which may potentially be used to pay for, among other things, strategic uses of cash, including dividend payments, share repurchases and acquisitions. However, free cash flow may not be available for discretionary expenditures as it may be necessary that we use it to make mandatory debt service or other payments. Free cash flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. See “Liquidity and

Previous wording

During fiscal 2024, Sysco continued to outperform the foodservice market and successfully grew its market share, despite the foodservice market experiencing negative year-over-year foot traffic to restaurants. We expect negative foot traffic trends to continue into the first quarter of fiscal 2025, with modest industry traffic improvements in the second half of fiscal 2025. We believe the food-away-from-home sector is a healthy long-term market, and Sysco is diversified and well positioned as a market leader in food service.

Current wording

During fiscal 2025, Sysco was impacted by negative year-over-year foot traffic to restaurants. Foot traffic trends improved in the fourth quarter of fiscal 2025. We expect foot traffic in fiscal 2026 to be similar to foot traffic trends in the fourth quarter of fiscal 2025. We believe the food-away-from-home sector is a healthy long-term growth market, and Sysco is diversified and well positioned as a market leader in food service.

Previous wording

Our sales and gross profit performance are influenced by multiple factors including price, volume, inflation, customer mix and product mix. The most significant factor affecting performance in fiscal 2024 was volume growth, as we experienced a 3.1% improvement in U.S. Foodservice case volume and a 1.1% improvement in local case volume within our U.S. segment in each instance as compared to fiscal 2023. U.S. Foodservice case volume increased 3.5% and local case volume within our U.S. segment increased 0.7% in the fourth quarter of fiscal 2024, as compared to the fourth quarter of fiscal 2023. This volume reflects our broadline and specialty businesses, except for our specialty meats business, which measures its volume in pounds. Edward Don positively impacted our U.S. Foodservice volumes by 2.7% and local case volumes within our U.S. segment by 1.6% in the fourth quarter of fiscal 2024. Within our International Foodservice segment, we experienced a 5.3% improvement in local case volume compared to fiscal 2023. This growth enabled us to gain market share during fiscal 2024, as we grew more than 1.75 times the market, which exceeded our target of 1.5 times.

Current wording

Our sales and gross profit performance are influenced by multiple factors including price, volume, inflation, customer mix and product mix. The most significant factor affecting our sales and gross profit performance in fiscal 2025 was product cost inflation, as we experienced 2.5% inflation at the total enterprise level. U.S. Foodservice experienced a 0.5% improvement in total case volume and a 1.4% decrease in local case volume as compared to fiscal 2024. This volume reflects our broadline and specialty businesses, except for our specialty meats business, which measures its volume in pounds. We experienced growth in local case volume in our International Foodservice segment of approximately 4.0% in fiscal 2025, as compared to fiscal 2024.

Previous wording

Product cost inflation has also been a driver of our sales and gross profit performance. We experienced inflation at a rate of 1.6% and 1.5% in the fourth quarter and for fiscal 2024, respectively, at the total enterprise level, primarily driven by inflation in the poultry and meat categories. We have been successful in managing inflation, resulting in an increase in gross profit dollars. Gross margin decreased one basis point in the fourth quarter and increased 25 basis points for fiscal 2024, as compared to the corresponding prior year periods, primarily driven by higher volumes, the effective management of inflation and progress from our strategic sourcing efforts in our U.S. and International segments.

Current wording

We experienced inflation at a rate of 3.5% and 2.5% in the fourth quarter and for fiscal 2025, respectively, at the total enterprise level, primarily driven by inflation in the dairy, poultry, and meat categories. We have been successful in managing inflation, resulting in an increase in gross profit dollars. Gross margin decreased 13 basis points in fiscal 2025 as compared to fiscal 2024, primarily as a result of a shift in our customer mix driven by national sales volumes outpacing local sales volumes and a decrease in Sysco brand penetration rates. Gross margin increased 19 basis points in the fourth quarter of fiscal 2025 as compared to the fourth quarter of fiscal 2024, primarily as a result of disciplined strategic sourcing efforts.

Previous wording

We expect to grow our revenue and earnings in fiscal 2025. We expect the rate of inflation for fiscal 2025 to be approximately 2%, which is consistent with recent trends experienced in fiscal 2024. Volume growth is expected to be in the low single-digits for fiscal 2025. In total, we expect these factors to result in net sales growth across the enterprise of 4% to 5%.

Current wording

We expect to grow our revenue and earnings in fiscal 2026. We expect the rate of inflation for fiscal 2026 to be approximately 2%, which is consistent with recent trends experienced in fiscal 2025. We also expect volume growth in fiscal 2026 as a result of improved sales consultant retention, increased sales consultant tenure, and from contributions from potential mergers and acquisitions. In total, we expect these factors to result in net sales growth across the enterprise of 3% to 5% in fiscal 2026.

Previous wording

Our provision for income taxes primarily reflects a combination of income earned and taxed in the various U.S. federal and state as well as foreign jurisdictions. Tax law changes, increases or decreases in book versus tax basis differences, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and our change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate. Our effective tax rate for fiscal 2024 was 23.8% and is expected to increase to approximately 25% in fiscal 2025 due to an increase in the global minimum tax rate, geographic mix, and increases in state tax rates.

Current wording

Our provision for income taxes primarily reflects a combination of income earned and taxed in the various U.S. federal and state as well as foreign jurisdictions. Tax law changes, increases or decreases in book versus tax basis differences, accruals or adjustments of accruals for unrecognized tax benefits or valuation allowances, and our change in the mix of earnings from these taxing jurisdictions all affect the overall effective tax rate. Our effective tax rate for fiscal 2025 was 24.3% and is expected to be approximately 23.5% to 24.0% in fiscal 2026.

Previous wording

We continue to focus on mergers and acquisitions as a part of our growth strategy. We plan to grow our existing businesses, while cultivating new channels, new business lines and new capabilities.

Current wording

We continue to focus on mergers and acquisitions as a part of our growth strategy. Our strategy is to grow our existing businesses, while cultivating new channels, new business lines and new capabilities.

Previous wording

The results of our acquired companies in fiscal 2024 were not material to our results.

Current wording

In the second quarter of fiscal 2025, we acquired Campbells Prime Meat, a leading specialty meat business based in Scotland. By combining the Campbells Prime Meat product offering with our broadline business, this acquisition provides a strategic opportunity to enable total team selling in this region. This company’s results are included within International Foodservice Operations and were not material to our results in fiscal 2025.

Previous wording

•Customer Teams – Our greatest strength is our people - people who are passionate about food and food service. Our diverse team delivers expertise and differentiated services designed to help our customers grow their businesses. We will continue to invest in the sales organization through incremental sales colleagues and intend to improve the effectiveness by leveraging data to increase the yield of the sales process.

Current wording

•Customer Teams – Our greatest strength is our people - people who are passionate about food and food service. Our team - diverse in perspectives, backgrounds, and life experiences - delivers expertise and differentiated services designed to help our customers grow their businesses. We will continue to invest in the sales organization through incremental sales colleagues and intend to improve the effectiveness by leveraging data to increase the yield of the sales process.

Previous wording

•Future Horizons – We are committed to responsible growth. We will cultivate new channels, new segments, and new capabilities, organically and through strategic M&A, while being stewards of our company and our planet for the long term. We will fund our journey through cost-out and efficiency improvements.

Current wording

•Future Horizons – We are committed to responsible growth. We will cultivate new channels, new segments, and new capabilities, organically and through strategic acquisitions, while being stewards of our company and our planet for the long term. We will utilize cost-out and efficiency improvements to mitigate the costs of our future investments.

Previous wording

Our U.S. Foodservice Operations and our International Foodservice Operations segments represent a substantial majority of our total segment results when compared to other reportable segments. In fiscal 2024, U.S. Foodservice Operations and International Foodservice Operations represented approximately 70.2% and 18.5%, respectively, of Sysco’s overall sales, compared to 70.3% and 17.8%, respectively, in fiscal 2023. In fiscal 2024 and fiscal 2023, U.S. Foodservice Operations represented approximately 88.3% and 89.4%, respectively, of the total segment operating income. See Note 21, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 8 for more information.

Current wording

Our U.S. Foodservice Operations and our International Foodservice Operations segments represent a substantial majority of our total segment results when compared to other reportable segments. In fiscal 2025, U.S. Foodservice Operations and International Foodservice Operations represented approximately 70.0% and 18.3%, respectively, of Sysco’s overall sales, compared to 70.2% and 18.5%, respectively, in fiscal 2024. In fiscal 2025 and fiscal 2024, U.S. Foodservice Operations represented approximately 88.8% and 88.3%, respectively, of the total segment operating income. See Note 21, “Business Segment Information,” in the Notes to Consolidated Financial Statements in Item 8 for more information.

Previous wording

In fiscal 2024, the U.S. Foodservice Operations operating results represented approximately 70.2% of Sysco’s overall sales and 88.3% of the aggregated operating income of Sysco’s reporting segments. Several factors contributed to these higher operating results as compared to the other operating segments. We invested substantial amounts in assets, operating methods, technology and management expertise in this segment. The breadth of its sales force, geographic reach of its distribution area and its purchasing power enable this segment to generate its relatively stronger results of operations.

Current wording

In fiscal 2025, the U.S. Foodservice Operations operating results represented approximately 70.0% of Sysco’s overall sales and 88.8% of the aggregated operating income of Sysco’s reporting segments. Several factors contributed to these higher operating results as compared to the other operating segments. We have invested substantial amounts in assets, operating methods, technology and management expertise in this segment. The breadth of its sales force, geographic reach of its distribution area and its purchasing power enable this segment to generate its relatively stronger results of operations.

Previous wording

The sales growth in our U.S. Foodservice Operations was driven by higher inflation and volume growth, inclusive of benefits from acquisitions in fiscal 2024. Case volumes from our U.S. Foodservice Operations increased 3.1%, as compared to fiscal 2023. This included a 1.1% increase in local customer case volume as compared to fiscal 2023.

Current wording

The sales growth in our U.S. Foodservice Operations was driven by higher inflation in fiscal 2025. Case volumes from our U.S. Foodservice Operations increased 0.5%, as compared to fiscal 2024. This included a 1.4% decrease in local customer case volume as compared to fiscal 2024.

Previous wording

The increase in operating income for fiscal 2024, as compared to fiscal 2023, was driven by gross profit dollar growth and case volume growth as a result of acquisitions, partially offset by an increase in operating expenses.

Current wording

The decrease in operating income for fiscal 2025, as compared to fiscal 2024, was driven by increases in operating expenses, partially offset by gross profit dollar growth and case volume growth.

Previous wording

Gross profit dollar growth was driven primarily by case volume growth as a result of acquisitions, effective management of product cost fluctuations, and progress from our strategic sourcing efforts. The estimated change in product costs, an internal measure of inflation or deflation, increased in fiscal 2024. For fiscal 2024, this change in product costs was primarily driven by inflation in the poultry and meat categories. Sysco brand penetration for U.S. Broadline decreased by 19 basis points to 36.7% for fiscal 2024, as compared to fiscal 2023. Specific to local customers, Sysco brand penetration for U.S. Broadline improved by 11 basis points to 47.0% for fiscal 2024, as compared to fiscal 2023.

Current wording

Gross profit dollar growth in fiscal 2025 was driven primarily by disciplined strategic sourcing efforts and case volume growth from recent acquisitions. The estimated change in product costs, an internal measure of inflation or deflation, increased in fiscal 2025. For fiscal 2025, this change in product costs was primarily driven by inflation in the dairy and poultry categories. Sysco brand penetration for U.S. Broadline decreased by 81 basis points to 35.8% for fiscal 2025, as compared to fiscal 2024. Specific to local customers, Sysco brand penetration for U.S. Broadline decreased by 81 basis points to 46.2% for fiscal 2025, as compared to fiscal 2024.

Previous wording

In fiscal 2024, the International Foodservice Operations operating results represented approximately 18.5% of Sysco’s overall sales.

Current wording

In fiscal 2025, the International Foodservice Operations operating results represented approximately 18.3% of Sysco’s overall sales.

Previous wording

The increase in operating expenses for fiscal 2024, as compared to fiscal 2023, was primarily due to increases in sales volume, inflation, and the impact of foreign currency translation.

Current wording

The increase in operating expenses for fiscal 2025, as compared to fiscal 2024, was primarily due to increases in colleague-related costs and depreciation expense.

Previous wording

For the operations that are grouped within our Other segment, sales were 5.1% lower in fiscal 2024, as compared to fiscal 2023. Operating income decreased $17 million in fiscal 2024, as compared to fiscal 2023. The operations of this group mainly consist of our hospitality business, Guest Worldwide. We expect our Other segment to have modest operating income growth in fiscal 2025.

Current wording

For the operations that are grouped within our Other segment, sales were 7.3% lower in fiscal 2025, as compared to fiscal 2024. Operating income decreased $113 million in fiscal 2025, as compared to fiscal 2024. The operations of this group mainly consist of our hospitality business, Guest Worldwide. In fiscal 2025, a noncash goodwill impairment charge of $92 million was recorded within operating expenses for a portion of the goodwill attributable to our Guest Worldwide reporting unit. This impairment charge is considered a Certain Item (defined above). We do not expect a similar impairment charge in fiscal 2026 and as a result, are expecting improved operating results within our Other segment in fiscal 2026.

Previous wording

Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses increased $13 million in fiscal 2024, or 1.3% as compared to fiscal 2023, primarily due to increases in self-insurance reserves, depreciation expense, miscellaneous expenses, partially offset by decreases in fuel hedging program expenses, colleague-related costs, and professional fees.

Current wording

Our Global Support Center generally includes all expenses of the corporate office and Sysco’s shared service operations. These expenses decreased $56 million in fiscal 2025, or 5.7% as compared to fiscal 2024, primarily due to decreases in colleague-related costs, including lower incentive compensation.

Previous wording

Included in Global Support Center expenses are Certain Items that totaled $81 million in fiscal 2024, as compared to $45 million in fiscal 2023. Certain Items impacting fiscal 2024 were primarily expenses associated with severances, our business technology transformation initiatives, and expenses associated with acquisitions. In fiscal 2023, Certain Items that impacted the year were primarily expenses associated with our business technology transformation initiatives.

Current wording

Included in Global Support Center expenses are Certain Items that totaled $79 million in fiscal 2025, as compared to $81 million in fiscal 2024. Certain Items impacting fiscal 2025 were primarily expenses associated with severances, our business technology transformation initiatives, and expenses associated with acquisitions. In fiscal 2024, Certain Items that impacted the year were primarily expenses associated with severances, our business technology transformation initiatives, and expenses associated with acquisitions.

Previous wording

Net earnings increased 10.5% in fiscal 2024, as compared to fiscal 2023, due primarily to the items noted previously for operating income and interest expense, as well as items impacting our income taxes that are discussed in Note 19, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 8. Adjusted net earnings, excluding Certain Items, increased 6.0% in fiscal 2024, primarily due to an increase in sales volume as a result of acquisitions.

Current wording

Net earnings decreased 6.5% in fiscal 2025, as compared to fiscal 2024, due primarily to the items noted previously for operating income and interest expense, as well as items impacting our income taxes that are discussed in Note 19, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 8. Adjusted net earnings, excluding Certain Items, increased 0.8% in fiscal 2025, primarily due to an increase in sales volume as a result of recent acquisitions and disciplined strategic sourcing efforts.

Previous wording

Basic earnings per share in fiscal 2024 were $3.90, an 11.7% increase from the comparable prior year period amount of $3.49 per share. Diluted earnings per share in fiscal 2024 were $3.89, a 12.1% increase from the comparable prior year period amount of $3.47 per share. Adjusted diluted earnings per share, excluding Certain Items (which is a non-GAAP financial measure for which a reconciliation is provided in “Non-GAAP Reconciliations” on the subsequent page), in fiscal 2024 were $4.31, a 7.5% increase from the comparable prior year period amount of $4.01 per share. These results were primarily attributable to the factors discussed previously related to net earnings in fiscal 2024.

Current wording

Basic earnings per share in fiscal 2025 were $3.74, a 4.1% decrease from the fiscal 2024 amount of $3.90 per share. Diluted earnings per share in fiscal 2025 were $3.73, a 4.1% decrease from the fiscal 2024 amount of $3.89 per share. Adjusted diluted earnings per share, excluding Certain Items (which is a non-GAAP financial measure for which a reconciliation is provided in “Non-GAAP Reconciliations” on the subsequent page), in fiscal 2025 were $4.46, a 3.5% increase from the fiscal 2024 amount of $4.31 per share. These results were primarily attributable to the factors discussed previously related to net earnings in fiscal 2025.

Previous wording

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Our results for fiscal 2023 were also impacted by a pension settlement charge that resulted from the purchase of a nonparticipating single premium group annuity contract that transferred defined benefit plan obligations to an insurer, adjustments to our bad debt reserve specific to aged receivables existing prior to the COVID-19 pandemic, adjustments to a product return allowance related to COVID-related personal protection equipment inventory and a gain on a litigation financing agreement.

Current wording

The discussion of our results includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, that we believe provide important perspective with respect to underlying business trends. Other than EBITDA and free cash flow, any non-GAAP financial measures will be denoted as adjusted measures to remove (1) restructuring charges; (2) expenses associated with our various transformation initiatives; (3) severance charges; and (4) acquisition-related costs consisting of: (a) intangible amortization expense and (b) acquisition costs and due diligence costs related to our acquisitions. Adjustments provided herein for fiscal 2025 results of operations also remove the impact of a goodwill impairment charge. No similar charge was applicable in fiscal 2024.

Previous wording

The results of our operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our 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.

Current wording

The results of our operations can be impacted due to changes in exchange rates applicable in converting local currencies to U.S. dollars. We measure our 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. We also measure our sales growth excluding the impact of our joint venture in Mexico which was divested in the second quarter of fiscal 2025.

Previous wording

Management believes that adjusting its operating expenses, operating income, other (income) expense, net earnings and diluted earnings per share to remove these Certain Items and presenting its results on a constant currency basis provides an important perspective with respect to our underlying business trends and results. It 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.

Current wording

Management believes that adjusting its operating expenses, operating income, operating margin, net earnings and diluted earnings per share to remove these Certain Items, presenting its results on a constant currency basis, and adjusting its sales results to exclude the impact of its joint venture in Mexico provides an important perspective with respect to our underlying business trends and results. It 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.

Previous wording

Set forth on the following page 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 be equal to the total presented when added due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

Current wording

Set forth on the following page is a reconciliation of sales, operating expenses, operating income, 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 be equal to the total presented when added due to rounding. Adjusted diluted earnings per share is calculated using adjusted net earnings divided by diluted shares outstanding.

Previous wording

•Cash flows from operations were $3.0 billion in fiscal 2024, compared to $2.9 billion in fiscal 2023;

Current wording

•Cash flows from operations were $2.5 billion in fiscal 2025, compared to $3.0 billion in fiscal 2024;

Previous wording

•Net capital expenditures totaled $753 million in fiscal 2024, compared to $751 million in fiscal 2023;

Current wording

•Net capital expenditures totaled $692 million in fiscal 2025, compared to $753 million in fiscal 2024;

Previous wording

•Free cash flow was $2.2 billion in fiscal 2024, compared to $2.1 billion in fiscal 2023 (see “Cash Flows – Free Cash Flow – Non-GAAP Reconciliation” below for an explanation of this non-GAAP financial measure);

Current wording

•Free cash flow was $1.8 billion in fiscal 2025, compared to $2.2 billion in fiscal 2024 (see “Cash Flows – Free Cash Flow – Non-GAAP Reconciliation” below for an explanation of this non-GAAP financial measure);

Previous wording

•Cash used for acquisition of businesses was $1.2 billion in fiscal 2024, compared to $37 million in fiscal 2023;

Current wording

•Cash used for acquisition of businesses was $40 million in fiscal 2025, compared to $1.2 billion in fiscal 2024;

Previous wording

•Dividends paid were $1.0 billion in fiscal 2024, compared to $996 million in fiscal 2023;

Current wording

•Dividends paid were $1.0 billion in fiscal 2025, and in fiscal 2024;

Previous wording

•Cash paid for treasury stock repurchases was $1.2 billion in fiscal 2024, compared to $500 million in fiscal 2023;

Current wording

•Cash paid for treasury stock repurchases was $1.3 billion in fiscal 2025, compared to $1.2 billion in fiscal 2024;