Excludes merger and acquisition-related charges, with the exception of Free Cash Flow. 2017 EPS also excludes net gain on sales of businesses and one-time net tax charge related to recently enacted tax legislation.
*
Free Cash Flow = Net cash flow from operating activities less capital and software expenditures.
**
In the first quarter of 2015, the Company combined the legacy CDIY business with certain complementary elements of the legacy IAR and Healthcare businesses (formerly part of the Industrial and Security segments, respectively) to form one Tools & Storage business. As a result of this change, the former CDIY segment was renamed Tools & Storage. The results from 2013–2014 were recast to align with this change in organizational structure. There was no impact to the consolidated financial statements of the Company as a result of this change.
Pre-tax merger and acquisition-related charges and other
(108)
–
–
54
390
Adjusted EBITDA
2,062
1,805
1,732
1,745
1,560
(a)
“EBITDA” (earnings before interest, taxes, depreciation, and amortization) is a non-GAAP measurement. Management believes it is important for the ability to determine the earnings power of the Company. The Company’s 2017 results exclude $156 million of (pre-tax) charges related to merger and acquisition-related charges and a $264 million (pre-tax) gain on sales of businesses. The Company’s 2014 results exclude $54 million (pre-tax) of charges related to merger and acquisition-related charges. The Company’s 2013 results exclude $390 million (pre-tax) of charges related to merger and acquisition-related charges as well as the charges associated with the extinguishment of debt during the fourth quarter of 2013.
(b)
The Company has excluded $91 million of after-tax income ($0.59 of diluted EPS) related to the gain on sales of businesses, partially offset by merger and acquisition-related charges and a one-time net tax charge related to recently enacted U.S. tax legislation, in the 2017 calculation of diluted EPS. The Company has excluded the 2014 and 2013 after-tax merger and acquisition-related charges of $49 million ($0.30 of diluted EPS) and $270 million ($1.70 of diluted EPS), respectively, in the calculation of diluted EPS. These amounts were excluded because the Company believes doing so provides a better indicator of operating trends when analyzing diluted EPS, due to the unusually large magnitude of these amounts and the fact that they are non-recurring. Therefore, the Company has provided these measures both including and excluding such amounts.
(c)
Free Cash Flow = Net cash flow from operating activities less capital and software expenditures.
(d)
Working Capital Turns are computed as annualized fourth quarter sales divided by year-end working capital (accounts receivable, inventory, accounts payable, and deferred revenue).
(e)
Average Capital Employed is computed by dividing the 2-point average of debt and equity.
(f)
Cash Flow Return on Investment is computed as cash from operations plus after-tax interest expense, divided by the 2-point average of debt and equity.
