HOUSTON, April 30, 2024 (GLOBE NEWSWIRE) -- Sysco Corporation (NYSE:SYY) ("Sysco" or the "company") today announced financial results for its 13-week third fiscal quarter ended March 30, 2024. Key financial results for the third quarter of fiscal year 2024 include the following (comparisons are to the same period in fiscal year 2023): Sales increased 2.7%; U.S. Foodservice volume increased 2.9%; U.S. local volumes grew 0.4%; Gross profit increased 5.2% to $3.6 billion; Operating income increased 3.8% to $722.0 million, and adjusted1 operating income increased 8.4% to $799.3 million; EBITDA increased 5.4% to $933.0 million, and adjusted EBITDA increased 8.5% to $976.6 million2; EPS3 increased 1.2% to $0.85, compared to $0.84 in the same period last year, and adjusted1 EPS increased 6.7% to $0.96; Raising cost-out targets from $100 million to $120 million for fiscal year 2024; and Sysco returned approximately $753 million of capital to shareholders via $500 million of share repurchases and $253 million of dividends and remains on target to return approximately $2.25 billion back to shareholders in fiscal year 2024. "Our third quarter performance demonstrated disciplined efforts to deliver strong profit growth, despite a softer macro backdrop. I am proud of our team for taking actions in the quarter to deliver strong gross profit margins and manage expenses. The agility and accountability of the leadership team enabled us to deliver our profit objectives for the quarter, despite softer sales and case volumes. Lower traffic to restaurants year over year negatively impacted case volumes, but sequentially improved during the quarter. We converted the negative traffic at restaurants into sales and case growth at Sysco by taking market share, profitably. With that said, we are focused upon improving local case volume performance through a set of specific actions, inclusive of continued investments into our people, process, and technology in local sales," said Kevin Hourican, Sysco's Chair of the Board and Chief Executive Officer. _______________________________________________1 Adjusted financial results, including adjusted operating expense, 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 and severance costs, and transformational project costs. Last year's Certain Items include 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 and adjustments to a product return allowance related to COVID-related personal protection equipment inventory.2 Earnings before interest, taxes, depreciation and amortization (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. "Our third quarter operating profit included our sixth consecutive quarter of positive operating leverage, as gross profit expanded at a faster rate than operating expenses. Our teams proactively addressed variable and structural operating expenses this quarter, giving us confidence in raising our cost-out targets to $120 million this fiscal year. Additionally, our balanced approach to capital allocation demonstrates the importance of investing in the business and rewarding our shareholders. We continue to re-invest in the business and remain on target to return approximately $2.25 billion back to shareholders in fiscal year 2024, including our recently raised dividend. We remain confident in our fiscal year 2024 guidance of five to ten percent adjusted EPS growth to $4.20 to $4.40," said Kenny Cheung, Sysco's Chief Financial Officer. Third Quarter Fiscal Year 2024 Results (comparisons are to the same period in fiscal year 2023) Total Sysco Sales for the third quarter increased 2.7% to $19.4 billion. Gross profit increased 5.2% to $3.6 billion, and gross margin increased 44 basis points to 18.6%. Product cost inflation was 1.9% at the total enterprise level, as measured by the estimated change in Sysco's product costs, primarily in the meat and frozen categories. The increase in gross profit for the third quarter was primarily driven by positive volumes, as well as continued progress with effective management of product cost inflation and our strategic sourcing initiative. Operating expenses increased 5.5%, driven by increased volumes and cost inflation. Adjusted operating expenses increased 4.3%. Operating income increased 3.8% to $722.0 million, and adjusted operating income increased 8.4% to $799.3 million. U.S. Foodservice Operations The U.S. Foodservice Operations segment results were driven by higher volumes and effective margin management, which resulted in continued profit growth. Sales for the third quarter increased 3.4% to $13.7 billion. Total case volume within U.S. Foodservice grew 2.9% for the third quarter, while local case volume within U.S. Foodservice increased 0.4%. Gross profit increased 4.2% to $2.7 billion, and gross margin increased 15 basis points to 19.4%. Operating expenses increased 6.6%, and adjusted operating expenses increased 6.0%. Operating income decreased 0.5% to $852.4 million, and adjusted operating income increased 0.7% to $874.8 million. International Foodservice Operations The International Foodservice Operations segment delivered another strong quarter of sales and profit growth. Sales for the third quarter increased 4.5% to $3.5 billion. On a constant currency basis4, sales for the third quarter were $3.4 billion, an increase of 2.4%. Foreign exchange rates increased both International Foodservice Operations sales by 2.1% and total Sysco sales by 0.4% during the quarter. Gross profit increased 12.0% to $719.7 million, and gross margin increased 138 basis points to 20.6%. On a constant currency basis4, gross profit increased 9.5% to $704.0 million. Foreign exchange rates increased both International Foodservice Operations gross profit by 2.5% and total Sysco gross profit by 0.5% during the quarter. Operating expenses increased 6.9%, and adjusted operating expenses increased 6.0%. On a constant currency basis4, adjusted operating expenses increased 3.6%. Foreign exchange rates increased both International Foodservice Operations operating expenses by 2.4% and total Sysco operating expenses by 0.5% during the quarter. Operating income increased 73.9% to $83.9 million, and adjusted operating income increased 63.4% to $109.4 million. On a constant currency basis4, adjusted operating income was $107.4 million, an increase of 60.4%. Foreign exchange rates increased both International Foodservice Operations operating income by 3.0% and total Sysco operating income by 0.1% during the quarter. Balance Sheet, Cash Flow and Capital Spending As of the end of the quarter, the company had a cash balance of $598.3 million. During the first 39 weeks of fiscal year 2024, Sysco returned $1.5 billion to shareholders via $699.9 million of share repurchases and $758.1 million of dividends. Cash flow from operations was $1.4 billion for the first 39 weeks of fiscal year 2024, which was a decrease of $52.6 million over the prior year period. Capital expenditures, net of proceeds from sales of plant and equipment, for the first 39 weeks of fiscal year 2024 were $509.5 million. Free cash flow5 for the first 39 weeks of fiscal year 2024 was $863.7 million, which was a decrease of $115.9 million over the prior year period. _______________________________________________4 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.5 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 third quarter fiscal year 2024 financial results on Tuesday, April 30, 2024, 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:   13-Week Period Ended 39-Week Period Ended           Financial Comparison: March 30, 2024 Change March 30, 2024 Change GAAP:         Sales $19.4 billion 2.7% $58.3 billion 3.0% Gross Profit $3.6 billion 5.2% $10.8 billion 4.9% Gross Margin  18.6% 44 bps  18.5% 33 bps Operating Expenses $2.9 billion 5.5% $8.5 billion 4.2% Operating Income $722.0 million 3.8% $2.2 billion 7.3% Operating Margin  3.7% 4 bps  3.8% 16 bps Net Earnings $424.7 million -1.1% $1.3 billion 29.6% Diluted Earnings Per Share $0.85  1.2% $2.66  31.0%           Non-GAAP (1):         Gross Profit $3.6 billion 5.2% $10.8 billion 4.9% Gross Margin  18.6% 44 bps  18.5% 34 bps Operating Expenses $2.8 billion 4.3% $8.4 billion 3.7% Operating Income $799.3 million 8.4% $2.4 billion 9.4% Operating Margin  4.1% 22 bps  4.1% 24 bps EBITDA $933.0 million 5.4% $2.9 billion 24.3% Adjusted EBITDA $976.6 million 8.5% $2.9 billion 10.6% Net Earnings $483.4 million 5.0% $1.5 billion 8.3% Diluted Earnings Per Share (2) $0.96  6.7% $2.92  9.4%           Case Growth:         U.S. Foodservice  2.9%    3.0%   Local  0.4%    1.3%             Sysco Brand Sales as a % of Cases:         U.S. Broadline  36.3% -19 bps  36.8% -6 bps Local  46.5% 3 bps  46.9% 26 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.     Forward-Looking Statements Statements made in this press release or in our earnings call for the third quarter of fiscal year 2024 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: 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 Sysco Driver Academy and our belief that the academy will enable us to provide upward career path mobility for our warehouse colleagues and improve colleague retention; our expectations regarding the benefits of the six-day delivery and last mile distribution models; our plans to improve the capabilities of our sales team; our plans to refine our engineering labor standards; our expectations regarding the impact of our growth initiatives and their ability to enable Sysco to consistently outperform the market; our expectations 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 belief that there is further opportunity for profit in the future; our future growth, including growth in sales and earnings per share; 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 colleague 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; our expectations of the effects labor harmony will have on sales and case volume, as well as mitigation expenses; our expectations for customer acquisition in the local/street space; our expectations regarding the effectiveness of our Global Support Center expense control measures; and our expectations regarding the growth and resilience of our food away from home market. 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 1, 2023, 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 72,000 colleagues, the company operates 334 distribution facilities worldwide and serves approximately 725,000 customer locations. For fiscal year 2023 that ended July 1, 2023, the company generated sales of more than $76 billion. Information about our Sustainability program, including Sysco's 2023 Sustainability Report and 2023 Diversity, Equity & Inclusion Report, can be found at www.sysco.com. 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 SubsidiariesCONSOLIDATED RESULTS OF OPERATIONS (Unaudited)(In Thousands, Except for Share and Per Share Data)     Quarter Ended   Year Ended     Mar. 30, 2024   Apr. 1, 2023   Mar. 30, 2024   Apr. 1, 2023                   Sales   $ 19,379,500   $ 18,875,676   $ 58,287,896   $ 56,596,459 Cost of sales     15,770,444     15,444,316     47,517,435     46,326,628 Gross profit     3,609,056     3,431,360     10,770,461     10,269,831 Operating expenses     2,887,010     2,735,633     8,544,790     8,196,480 Operating income     722,046     695,727     2,225,671     2,073,351 Interest expense     157,853     134,931     441,867     391,123 Other expense (income), net (1) (2)     10,380     6,759     22,265     354,813 Earnings before income taxes     553,813     554,037     1,761,539     1,327,415 Income taxes     129,125     124,433     418,217     291,027 Net earnings   $ 424,688   $ 429,604   $ 1,343,322   $ 1,036,388                   Net earnings:                 Basic earnings per share   $ 0.85   $ 0.85   $ 2.67   $ 2.04 Diluted earnings per share     0.85     0.84     2.66     2.03                   Average shares outstanding     499,642,505     507,716,975     503,027,209     507,635,083 Diluted shares outstanding     501,921,446     509,842,400     504,973,406     510,123,782 (1) Gains and losses related to the disposition of fixed assets have been recognized within operating expenses. Prior year amounts have been reclassified to conform to this presentation. (2) Sysco's second quarter of fiscal 2023 included a charge of $315.4 million in other expense related to pension settlement charges.         Sysco Corporation and its Consolidated SubsidiariesCONSOLIDATED BALANCE SHEETS(In Thousands, Except for Share Data)     Mar. 30, 2024   Jul. 1, 2023     (Unaudited)     ASSETS         Current assets         Cash and cash equivalents   $ 598,322     $ 745,201   Accounts receivable, less allowances of $85,590 and $45,599     5,556,703       5,091,970   Inventories     4,733,966       4,480,812   Prepaid expenses and other current assets     310,069       284,566   Income tax receivable     5,815       5,815   Total current assets     11,204,875       10,608,364   Plant and equipment at cost, less accumulated depreciation     5,290,437       4,915,049   Other long-term assets         Goodwill     5,220,989       4,645,754   Intangibles, less amortization     1,136,869       859,530   Deferred income taxes     442,256       420,450   Operating lease right-of-use assets, net     882,211       731,766   Other assets     534,703       640,232   Total other long-term assets     8,217,028       7,297,732   Total assets   $ 24,712,340     $ 22,821,145             LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities         Accounts payable   $ 5,869,479     $ 6,025,757   Accrued expenses     2,246,595       2,251,181   Accrued income taxes     33,988       101,894   Current operating lease liabilities     122,984       99,051   Current maturities of long-term debt     93,225       62,550   Total current liabilities     8,366,271       8,540,433   Long-term liabilities         Long-term debt     12,113,205       10,347,997   Deferred income taxes     312,927       302,904   Long-term operating lease liabilities     791,007       656,269   Other long-term liabilities     995,420       931,708   Total long-term liabilities     14,212,559       12,238,878   Commitments and contingencies         Noncontrolling interest     32,557       33,212   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     1,846,743       1,814,681   Retained earnings     11,898,772       11,310,664   Accumulated other comprehensive loss     (1,231,221 )     (1,252,590 ) Treasury stock at cost, 266,250,088 and 260,062,834 shares     (11,178,516 )     (10,629,308 ) Total shareholders' equity     2,100,953       2,008,622   Total liabilities and shareholders' equity   $ 24,712,340     $ 22,821,145   Sysco Corporation and its Consolidated SubsidiariesCONSOLIDATED CASH FLOWS (Unaudited)(In Thousands)     39-Week Period Ended     Mar. 30, 2024   Apr. 1, 2023 Cash flows from operating activities:         Net earnings   $ 1,343,322     $ 1,036,388   Adjustments to reconcile net earnings to cash provided by operating activities:         Pension settlement charge     —       315,354   Share-based compensation expense     76,688       73,765   Depreciation and amortization     646,848       574,945   Operating lease asset amortization     91,694       83,959   Amortization of debt issuance and other debt-related costs     13,695       15,019   Deferred income taxes     (25,465 )     (163,044 ) Provision for losses on receivables     43,409       21,899   Other non-cash items     (2,488 )     2,787   Additional changes in certain assets and liabilities, net of effect of businesses acquired:         Increase in receivables     (325,108 )     (405,372 ) Increase in inventories     (125,859 )     (172,117 ) Decrease (increase) in prepaid expenses and other current assets     23,267       (6,242 ) (Decrease) increase in accounts payable     (281,506 )     88,995   Increase (decrease) in accrued expenses     29,019       (55,162 ) Decrease in operating lease liabilities     (102,969 )     (100,847 ) (Decrease) increase in accrued income taxes     (67,906 )     119,784   Decrease in other assets     25,621       23,843   Increase (decrease) in other long-term liabilities     10,931       (28,172 ) Net cash provided by operating activities     1,373,193       1,425,782   Cash flows from investing activities:         Additions to plant and equipment     (530,161 )     (474,456 ) Proceeds from sales of plant and equipment     20,708       28,313   Acquisition of businesses, net of cash acquired     (1,181,188 )     (37,384 ) Purchase of marketable securities     (11,422 )     (15,078 ) Proceeds from sales of marketable securities     —       11,641   Other investing activities (1)     1,414       5,610   Net cash used for investing activities     (1,700,649 )     (481,354 ) Cash flows from financing activities:         Bank and commercial paper borrowings, net     524,593       —   Other debt borrowings including senior notes     1,261,208       174,262   Other debt repayments including senior notes     (338,721 )     (81,345 ) Debt issuance costs     (13,035 )     —   Proceeds from stock option exercises     103,496       67,115   Stock repurchases     (699,947 )     (377,800 ) Dividends paid     (758,128 )     (747,378 ) Other financing activities (2)     (19,206 )     (57,906 ) Net cash provided by (used for) financing activities     60,260       (1,023,052 ) Effect of exchange rates on cash, cash equivalents and restricted cash     (6,206 )     1,713   Net decrease in cash, cash equivalents and restricted cash     (273,402 )     (76,911 ) Cash, cash equivalents and restricted cash at beginning of period     966,033       931,376   Cash, cash equivalents and restricted cash at end of period   $ 692,631     $ 854,465             Supplemental disclosures of cash flow information:         Cash paid during the period for:         Interest   $ 376,465     $ 343,402   Income taxes, net of refunds     510,458       306,174   (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.         Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Impact of Certain Items 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 adjustments to a product return allowance pertaining to COVID-related personal protection equipment inventory, 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 and 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. 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. Management believes that adjusting its operating expenses, operating income, 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. 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 year 2024 and fiscal year 2023. 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.   Sysco Corporation and its Consolidated SubsidiariesNon-GAAP Reconciliation (Unaudited)Impact of Certain Items(Dollars in Thousands, Except for Share and Per Share Data)     13-Week Period Ended Mar. 30, 2024   13-Week Period Ended Apr. 1, 2023   Change in Dollars   %/bps Change Sales (GAAP)   $ 19,379,500     $ 18,875,676     $ 503,824     2.7 % Impact of currency fluctuations (1)     (69,576 )     —       (69,576 )   (0.4 ) Comparable sales using a constant currency basis (Non-GAAP)   $ 19,309,924     $ 18,875,676     $ 434,248     2.3 %                   Cost of sales (GAAP)   $ 15,770,444     $ 15,444,316     $ 326,128     2.1 %                   Gross profit (GAAP)   $ 3,609,056     $ 3,431,360     $ 177,696     5.2 % Impact of currency fluctuations (1)     (15,662 )     —       (15,662 )   (0.5 ) Comparable gross profit adjusted for Certain Items using a constant currency basis (Non-GAAP)   $ 3,593,394     $ 3,431,360     $ 162,034     4.7 %                   Gross margin (GAAP)     18.62 %     18.18 %       44 bps Impact of currency fluctuations (1)     (0.01 )     —         -1 bp   Comparable gross margin adjusted for Certain Items using a constant currency basis (Non-GAAP)     18.61 %     18.18 %       43 bps                   Operating expenses (GAAP)   $ 2,887,010     $ 2,735,633     $ 151,377     5.5 % Impact of restructuring and transformational project costs (2)     (28,472 )     (12,255 )     (16,217 )   NM Impact of acquisition-related costs (3)     (48,734 )     (29,004 )     (19,730 )   (68.0 ) Impact of bad debt reserve adjustments (4)     —       (90 )     90     NM Operating expenses adjusted for Certain Items (Non-GAAP)     2,809,804       2,694,284       115,520     4.3   Impact of currency fluctuations (1)     (14,433 )     —       (14,433 )   (0.5 ) Comparable operating expenses adjusted for Certain Items using a constant currency basis (Non-GAAP)   $ 2,795,371     $ 2,694,284     $ 101,087     3.8 %                   Operating expense as a percentage of sales (GAAP)     14.90 %     14.49 %       41 bps Impact of certain item adjustments     (0.40 )     (0.22 )       -18 bps Adjusted operating expense as a percentage of sales (Non-GAAP)     14.50 %     14.27 %       23 bps                   Operating income (GAAP)   $ 722,046     $ 695,727     $ 26,319     3.8 % Impact of restructuring and transformational project costs (2)     28,472       12,255       16,217     NM Impact of acquisition-related costs (3)     48,734       29,004       19,730     68.0   Impact of bad debt reserve adjustments (4)