[January 28, 2015] |
|
Rockwell Automation Reports First Quarter 2015 Results
Rockwell Automation, Inc. (NYSE: ROK) today reported fiscal 2015 first
quarter sales of $1,574.4 million, down 1.1 percent from $1,591.7
million in the first quarter of fiscal 2014. Organic sales grew 2.1
percent, and currency translation reduced sales by 3.4 percent.
Fiscal 2015 first quarter Adjusted EPS was $1.64, up 12 percent compared
to $1.47 in the first quarter of fiscal 2014. Total segment operating
earnings were $346.8 million in the first quarter of fiscal 2015, up 6
percent from $328.0 million in the same period of fiscal 2014. Total
segment operating margin expanded to 22.0 percent from 20.6 percent a
year ago, primarily due to higher organic sales, strong productivity,
and favorable mix, partially offset by increased spending.
On a GAAP basis, fiscal 2015 first quarter net income was $214.2 million
or $1.56 per share, compared to $198.1 million or $1.41 per share in the
first quarter of fiscal 2014. Pre-tax margin increased to 18.3 percent
in the first quarter of fiscal 2015 from 17.1 percent in the same period
last year.
Commenting on the results, Keith D. Nosbusch, chairman and chief
executive officer, said, "Organic sales growth of 2 percent in the
quarter was better than we expected, with particular strength in the
Architecture & Software segment and the Latin America region. Although
total sales were below last year due to the large currency headwind,
Adjusted EPS growth of 12 percent provided a good start to the fiscal
year."
Outlook
Commenting on the outlook, Nosbusch added, "While most GDP and
Industrial Production forecasts continue to call for stable growth in
2015, we are incorporating into our revised outlook a more significant
headwind from a stronger U.S. dollar and the anticipated impact of lower
oil prices. We now expect fiscal 2015 reported sales of about $6.6
billion, which includes a currency headwind of about 4.5 points and an
organic sales growth range of 2.5 to 5.5 percent. Based on that sales
outlook, we are revising our Adjusted EPS guidance to a range of $6.50
to $6.80.
"Our revenue diversification works, and we're executing very well across
the globe. We remain excited about our opportunities across a broad
range of industries, in Process, with OEMs and with The Connected
Enterprise, and continue to invest in all of these areas."
Following is a discussion of first quarter results for both segments.
Architecture & Software
Architecture & Software fiscal 2015 first quarter sales were $707.8
million, an increase of 1.7 percent from $695.9 million in the same
period last year. Organic sales increased 5.1 percent, and currency
translation reduced sales by 3.6 percent. Segment operating earnings
were $221.4 million in the first quarter of fiscal 2015 compared to
$211.9 million in the first quarter of fiscal 2014. Segment operating
margin increased to 31.3 percent in the first quarter of fiscal 2015
from 30.4 percent a year ago.
Control Products & Solutions
Control Products & Solutions fiscal 2015 first quarter sales were $866.6
million, a decrease of 3.3 percent compared to $895.8 million in the
same period last year. Organic sales decreased 0.3 percent, and currency
translation reduced sales by 3.2 percent. Segment operating earnings
were $125.4 million in the first quarter of fiscal 2015 compared to
$116.1 million in the first quarter of fiscal 2014. Segment operating
margin was 14.5 percent in the first quarter of fiscal 2015, up from
13.0 percent a year ago.
Other Information
Free cash flow was $232.6 million in the first quarter of fiscal 2015.
Cash flow provided by operating activities was $268.2 million in the
first quarter of fiscal 2015. Return on invested capital was 30.7
percent.
Fiscal 2015 first quarter general corporate-net expense was $22.8
million compared to $21.7 million in the first quarter of fiscal 2014.
The Adjusted Effective Tax Rate for the first quarter of fiscal 2015 was
26.0 percent compared to 27.8 percent in the first quarter of fiscal
2014. The Company now expects the full-year Adjusted Effective Tax Rate
for fiscal 2015 to be approximately 26.5 percent. On a GAAP basis, the
effective tax rate in the first quarter of fiscal 2015 was 25.5 percent
compared to 27.4 percent a year ago. Both the quarter and the full-year
rates reflect the retroactive extension of the U.S. research and
development credit for 2014.
During the first quarter of fiscal 2015, the Company repurchased 1.55
million shares of its common stock at a cost of $167.3 million. At
December 31, 2014, $884.0 million remained available under the $1.0
billion share repurchase authorization approved in June 2014.
Organic sales, total segment operating earnings, total segment operating
margin, Adjusted Income, Adjusted EPS, Adjusted Effective Tax Rate, free
cash flow and return on invested capital are non-GAAP measures that are
reconciled to GAAP measures in the attachments to this release.
Conference Call
A conference call to discuss our financial results will take place at
8:30 a.m. Eastern Time on January 28, 2015. The call and related
financial charts will be webcast and accessible via the Rockwell
Automation website (http://www.rockwellautomation.com/investors/).
This news release contains statements (including certain projections
and business trends) that are "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. Words such as
"believe", "estimate", "project", "plan", "expect", "anticipate",
"will", "intend" and other similar expressions may identify
forward-looking statements. Actual results may differ materially from
those projected as a result of certain risks and uncertainties, many of
which are beyond our control, including but not limited to:
-
macroeconomic factors, including global and regional business
conditions, the availability and cost of capital, commodity prices,
the cyclical nature of our customers' capital spending, sovereign debt
concerns and currency exchange rates;
-
laws, regulations and governmental policies affecting our
activities in the countries where we do business;
-
the successful development of advanced technologies and demand for
and market acceptance of new and existing products;
-
the availability, effectiveness and security of our information
technology systems;
-
competitive products, solutions and services and pricing pressures,
and our ability to provide high quality products, solutions and
services;
-
a disruption of our business due to natural disasters, pandemics,
acts of war, strikes, terrorism, social unrest or other causes;
-
intellectual property infringement claims by others and the ability
to protect our intellectual property;
-
the uncertainty of claims by taxing authorities in the various
jurisdictions where we do business;
-
our ability to attract and retain qualified personnel;
-
our ability to manage costs related to employee retirement and
health care benefits;
-
the uncertainties of litigation, including liabilities related to
the safety and security of the products, solutions and services we
sell;
-
our ability to manage and mitigate the risks associated with our
solutions and services businesses;
-
a disruption of our distribution channels;
-
the availability and price of components and materials;
-
the successful integration and management of acquired businesses;
-
the successful execution of our cost productivity and globalization
initiatives; and
-
other risks and uncertainties, including but not limited to those
detailed from time to time in our Securities and Exchange Commission
(SEC) filings.
These forward-looking statements reflect our beliefs as of the date
of filing this release. We undertake no obligation to update or revise
any forward-looking statement, whether as a result of new information,
future events or otherwise.
Rockwell Automation, Inc. (NYSE: ROK), the world's largest company
dedicated to industrial automation and information, makes its customers
more productive and the world more sustainable. Headquartered in
Milwaukee, Wis., Rockwell Automation employs about 22,500 people serving
customers in more than 80 countries.
|
|
|
ROCKWELL AUTOMATION, INC.
|
SALES AND EARNINGS INFORMATION
|
(in millions, except per share amounts and percentages)
|
|
|
|
|
|
Three Months Ended
|
|
|
December 31,
|
|
|
2014
|
|
2013
|
Sales
|
|
|
|
|
|
|
Architecture & Software (a)
|
|
$
|
707.8
|
|
|
$
|
695.9
|
|
Control Products & Solutions (b)
|
|
866.6
|
|
|
895.8
|
|
Total sales (c)
|
|
$
|
1,574.4
|
|
|
$
|
1,591.7
|
|
|
|
|
|
|
|
|
Segment operating earnings
|
|
|
|
|
|
|
Architecture & Software (d)
|
|
$
|
221.4
|
|
|
$
|
211.9
|
|
Control Products & Solutions (e)
|
|
125.4
|
|
|
116.1
|
|
Total segment operating earnings1 (f)
|
|
346.8
|
|
|
328.0
|
|
|
|
|
|
|
|
|
Purchase accounting depreciation and amortization
|
|
(5.4
|
)
|
|
(4.6
|
)
|
General corporate-net
|
|
(22.8
|
)
|
|
(21.7
|
)
|
Non-operating pension costs
|
|
(16.2
|
)
|
|
(14.0
|
)
|
Interest expense
|
|
(14.9
|
)
|
|
(14.9
|
)
|
Income before income taxes (g)
|
|
287.5
|
|
|
272.8
|
|
Income tax provision
|
|
(73.3
|
)
|
|
(74.7
|
)
|
Net income
|
|
$
|
214.2
|
|
|
$
|
198.1
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
1.56
|
|
|
$
|
1.41
|
|
|
|
|
|
|
|
|
Adjusted EPS2
|
|
$
|
1.64
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
|
Average diluted shares
|
|
136.9
|
|
|
140.4
|
|
|
|
|
|
|
|
|
Segment operating margin
|
|
|
|
|
|
|
Architecture & Software (d/a)
|
|
31.3
|
%
|
|
30.4
|
%
|
Control Products & Solutions (e/b)
|
|
14.5
|
%
|
|
13.0
|
%
|
Total segment operating margin1 (f/c)
|
|
22.0
|
%
|
|
20.6
|
%
|
|
|
|
|
|
|
|
Pre-tax margin (g/c)
|
|
18.3
|
%
|
|
17.1
|
%
|
1Total segment operating earnings and total segment operating
margin are non-GAAP financial measures. We believe that these measures
are useful to investors as measures of operating performance. We use
these measures to monitor and evaluate the profitability of our Company.
Our measures of total segment operating earnings and total segment
operating margin may be different from those used by other companies.
2Adjusted EPS is a non-GAAP earnings measure that excludes
the non-operating pension costs and their related income tax effects.
See "Other Supplemental Information - Adjusted Income, Adjusted EPS and
Adjusted Effective Tax Rate" section for more information regarding
non-operating pension costs and a reconciliation to GAAP measures.
|
|
|
ROCKWELL AUTOMATION, INC.
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
(in millions)
|
|
|
|
|
|
Three Months Ended
|
|
|
December 31,
|
|
|
2014
|
|
2013
|
Sales
|
|
$
|
1,574.4
|
|
|
$
|
1,591.7
|
|
Cost of sales
|
|
(886.9
|
)
|
|
(928.0
|
)
|
Gross profit
|
|
687.5
|
|
|
663.7
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
(386.9
|
)
|
|
(385.4
|
)
|
Other income
|
|
1.8
|
|
|
9.4
|
|
Interest expense
|
|
(14.9
|
)
|
|
(14.9
|
)
|
Income before income taxes
|
|
287.5
|
|
|
272.8
|
|
Income tax provision
|
|
(73.3
|
)
|
|
(74.7
|
)
|
|
|
|
|
|
|
|
Net income
|
|
$
|
214.2
|
|
|
$
|
198.1
|
|
|
|
|
|
|
ROCKWELL AUTOMATION, INC.
|
CONDENSED BALANCE SHEET INFORMATION
|
(in millions)
|
|
|
|
|
|
|
|
December 31, 2014
|
|
September 30, 2014
|
Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,291.9
|
|
|
$
|
1,191.3
|
Short-term investments
|
|
620.8
|
|
|
628.5
|
Receivables
|
|
1,106.7
|
|
|
1,215.8
|
Inventories
|
|
593.5
|
|
|
588.4
|
Property, net
|
|
612.4
|
|
|
632.9
|
Goodwill and intangibles
|
|
1,297.0
|
|
|
1,296.8
|
Other assets
|
|
679.7
|
|
|
675.8
|
Total
|
|
$
|
6,202.0
|
|
|
$
|
6,229.5
|
|
|
|
|
|
|
Liabilities and Shareowners' Equity
|
|
|
|
|
|
Short-term debt
|
|
$
|
508.0
|
|
|
$
|
325.0
|
Accounts payable
|
|
479.6
|
|
|
520.6
|
Long-term debt
|
|
905.6
|
|
|
905.6
|
Other liabilities
|
|
1,739.7
|
|
|
1,820.2
|
Shareowners' equity
|
|
2,569.1
|
|
|
2,658.1
|
Total
|
|
$
|
6,202.0
|
|
|
$
|
6,229.5
|
|
|
|
ROCKWELL AUTOMATION, INC.
|
CONDENSED CASH FLOW INFORMATION
|
(in millions)
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
2014
|
|
2013
|
Operating activities:
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
214.2
|
|
|
$
|
198.1
|
|
Depreciation and amortization
|
|
40.6
|
|
|
35.9
|
|
Retirement benefits expense
|
|
36.1
|
|
|
33.3
|
|
Pension contributions
|
|
(8.6
|
)
|
|
(11.2
|
)
|
Receivables/inventories/payables
|
|
38.5
|
|
|
(24.5
|
)
|
Advanced payments from customers and deferred revenue
|
|
7.5
|
|
|
13.1
|
|
Compensation and benefits
|
|
(99.2
|
)
|
|
(67.6
|
)
|
Income taxes
|
|
46.9
|
|
|
27.6
|
|
Other
|
|
(7.8
|
)
|
|
(1.2
|
)
|
Cash provided by operating activities
|
|
268.2
|
|
|
203.5
|
|
Investing activities:
|
|
|
|
|
|
|
Capital expenditures
|
|
(40.0
|
)
|
|
(35.6
|
)
|
Acquisition of business, net of cash acquired
|
|
(21.2
|
)
|
|
(68.1
|
)
|
Purchases of short-term investments
|
|
(171.6
|
)
|
|
(87.5
|
)
|
Proceeds from maturities of short-term investments
|
|
175.7
|
|
|
95.5
|
|
Proceeds from sale of property
|
|
0.1
|
|
|
0.2
|
|
Other investing activities
|
|
-
|
|
|
(3.4
|
)
|
Cash used for investing activities
|
|
(57.0
|
)
|
|
(98.9
|
)
|
Financing activities:
|
|
|
|
|
|
|
Net issuance of short-term debt
|
|
183.0
|
|
|
72.0
|
|
Cash dividends
|
|
(88.1
|
)
|
|
(80.5
|
)
|
Purchases of treasury stock
|
|
(168.4
|
)
|
|
(110.0
|
)
|
Proceeds from the exercise of stock options
|
|
4.7
|
|
|
48.1
|
|
Excess income tax benefit from share-based compensation
|
|
4.4
|
|
|
10.7
|
|
Cash used for financing activities
|
|
(64.4
|
)
|
|
(59.7
|
)
|
Effect of exchange rate changes on cash
|
|
(46.2
|
)
|
|
0.2
|
|
Increase in cash and cash equivalents
|
|
$
|
100.6
|
|
|
$
|
45.1
|
|
|
ROCKWELL AUTOMATION, INC.
|
OTHER SUPPLEMENTAL INFORMATION
|
(in millions)
|
|
Organic Sales
|
|
Our press release contains information regarding organic sales,
which we define as sales excluding the effect of changes in currency
exchange rates and acquisitions. We believe this non-GAAP measure
provides useful information to investors because it reflects
regional and operating segment performance from our activities
without the effect of changes in currency exchange rates and/or
acquisitions. We use organic sales as one measure to monitor and
evaluate our regional and operating segment performance. We
determine the effect of changes in currency exchange rates by
translating the respective period's sales using the currency
exchange rates that were in effect during the prior year. When we
acquire businesses, we exclude sales in the current year for which
there are no comparable sales in the prior period. Organic sales
growth is calculated by comparing organic sales to reported sales in
the prior year. Sales are attributed to the geographic regions based
on the country of destination.
|
|
The following is a reconciliation of reported sales to organic sales
for the three months ended December 31, 2014 compared to sales for
the three months ended December 31, 2013:
|
|
|
Three Months Ended December 31,
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding
|
|
|
|
|
|
|
|
|
|
|
Effect of
|
|
Effect of
|
|
|
|
|
|
|
|
|
|
|
Changes in
|
|
Changes in
|
|
Effect of
|
|
Organic
|
|
|
|
|
Sales
|
|
Currency
|
|
Currency
|
|
Acquisitions
|
|
Sales
|
|
Sales
|
United States
|
|
$
|
836.8
|
|
|
$
|
0.6
|
|
|
$
|
837.4
|
|
|
$
|
(1.0
|
)
|
|
$
|
836.4
|
|
|
$
|
836.4
|
Canada
|
|
100.0
|
|
|
7.8
|
|
|
107.8
|
|
|
-
|
|
|
107.8
|
|
|
99.6
|
Europe, Middle East, Africa
|
|
296.9
|
|
|
26.5
|
|
|
323.4
|
|
|
(2.5
|
)
|
|
320.9
|
|
|
324.4
|
Asia Pacific
|
|
207.2
|
|
|
5.5
|
|
|
212.7
|
|
|
-
|
|
|
212.7
|
|
|
206.8
|
Latin America
|
|
133.5
|
|
|
13.6
|
|
|
147.1
|
|
|
-
|
|
|
147.1
|
|
|
124.5
|
Total
|
|
$
|
1,574.4
|
|
|
$
|
54.0
|
|
|
$
|
1,628.4
|
|
|
$
|
(3.5
|
)
|
|
$
|
1,624.9
|
|
|
$
|
1,591.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of reported sales to organic sales for
our operating segments for the three months ended December 31, 2014
compared to sales for the three months ended December 31, 2013:
|
|
Three Months Ended December 31,
|
|
|
2014
|
|
2013
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding
|
|
|
|
|
|
|
|
|
|
|
Effect of
|
|
Effect of
|
|
|
|
|
|
|
|
|
|
|
Changes in
|
|
Changes in
|
|
Effect of
|
|
Organic
|
|
|
|
|
Sales
|
|
Currency
|
|
Currency
|
|
Acquisitions
|
|
Sales
|
|
Sales
|
Architecture & Software
|
|
$
|
707.8
|
|
|
$
|
25.4
|
|
|
$
|
733.2
|
|
|
$
|
(1.6
|
)
|
|
$
|
731.6
|
|
|
$
|
695.9
|
Control Products & Solutions
|
|
866.6
|
|
|
28.6
|
|
|
895.2
|
|
|
(1.9
|
)
|
|
893.3
|
|
|
895.8
|
Total
|
|
$
|
1,574.4
|
|
|
$
|
54.0
|
|
|
$
|
1,628.4
|
|
|
$
|
(3.5
|
)
|
|
$
|
1,624.9
|
|
|
$
|
1,591.7
|
|
ROCKWELL AUTOMATION, INC.
|
OTHER SUPPLEMENTAL INFORMATION
|
(in millions, except per share amounts and percentages)
|
|
Adjusted Income, Adjusted EPS and
Adjusted Effective Tax Rate
|
|
Our press release contains financial information and earnings
guidance regarding Adjusted Income, Adjusted EPS and Adjusted
Effective Tax Rate, which are non-GAAP earnings measures that
exclude non-operating pension costs and their related income tax
effects. We define non-operating pension costs as defined benefit
plan interest cost, expected return on plan assets, amortization of
actuarial gains and losses and the impact of any plan curtailments
or settlements. These components of net periodic benefit cost
primarily relate to changes in pension assets and liabilities that
are a result of market performance; we consider these costs to be
unrelated to the operating performance of our business. We believe
that Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate
provide useful information to our investors about our operating
performance and allow management and investors to compare our
operating performance period over period. Our measures of Adjusted
Income, Adjusted EPS and Adjusted Effective Tax Rate may be
different from measures used by other companies. These non-GAAP
measures should not be considered a substitute for income from
continuing operations, diluted EPS and effective tax rate.
|
|
The following are the components of operating and non-operating
pension costs for the three months ended December 31, 2014 and 2013:
|
|
|
Three Months Ended December 31,
|
|
|
2014
|
|
2013
|
Service cost
|
|
$
|
21.7
|
|
|
$
|
19.7
|
|
Amortization of prior service credit
|
|
(0.7
|
)
|
|
(0.7
|
)
|
Operating pension costs
|
|
21.0
|
|
|
19.0
|
|
|
|
|
|
|
|
|
Interest cost
|
|
42.3
|
|
|
43.6
|
|
Expected return on plan assets
|
|
(56.1
|
)
|
|
(54.5
|
)
|
Amortization of net actuarial loss
|
|
30.0
|
|
|
24.9
|
|
Non-operating pension costs
|
|
16.2
|
|
|
14.0
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
37.2
|
|
|
$
|
33.0
|
|
|
|
|
|
|
|
|
|
|
The following are reconciliations of income from continuing operations,
diluted EPS from continuing operations, and effective tax rate to
Adjusted Income, Adjusted EPS and Adjusted Effective Tax Rate:
|
|
Three Months Ended December 31,
|
|
|
2014
|
|
2013
|
Income from continuing operations
|
|
$
|
214.2
|
|
|
$
|
198.1
|
|
Non-operating pension costs
|
|
16.2
|
|
|
14.0
|
|
Tax effect of non-operating pension costs
|
|
(5.6
|
)
|
|
(5.0
|
)
|
Adjusted Income
|
|
$
|
224.8
|
|
|
$
|
207.1
|
|
|
|
|
|
|
|
|
Diluted EPS from continuing operations
|
|
$
|
1.56
|
|
|
$
|
1.41
|
|
Non-operating pension costs per diluted share
|
|
0.12
|
|
|
0.10
|
|
Tax effect of non-operating pension costs per diluted share
|
|
(0.04
|
)
|
|
(0.04
|
)
|
Adjusted EPS
|
|
$
|
1.64
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
25.5
|
%
|
|
27.4
|
%
|
Tax effect of non-operating pension costs
|
|
0.5
|
%
|
|
0.4
|
%
|
Adjusted Effective Tax Rate
|
|
26.0
|
%
|
|
27.8
|
%
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Fiscal 2015
|
|
September 30,
|
|
|
Guidance
|
|
2014
|
|
|
|
|
|
|
Diluted EPS from continuing operations
|
|
$6.19 - $6.49
|
|
$
|
5.91
|
|
Non-operating pension costs per diluted share
|
|
0.48
|
|
0.40
|
|
Tax effect of non-operating pension costs per diluted share
|
|
(0.17)
|
|
(0.14
|
)
|
Adjusted EPS
|
|
$6.50 - $6.80
|
|
$
|
6.17
|
|
|
ROCKWELL AUTOMATION, INC.
|
OTHER SUPPLEMENTAL INFORMATION
|
(in millions, except percentages)
|
|
Free Cash Flow
|
|
Our definition of free cash flow, which is a non-GAAP financial
measure, takes into consideration capital investments required to
maintain the operations of our businesses and execute our strategy.
We account for share-based compensation under U.S. GAAP, which
requires that we report the excess income tax benefit from
share-based compensation as a financing cash flow rather than as an
operating cash flow. We have added this benefit back to our
calculation of free cash flow in order to generally classify cash
flows arising from income taxes as operating cash flows.
|
|
In our opinion, free cash flow provides useful information to
investors regarding our ability to generate cash from business
operations that is available for acquisitions and other investments,
service of debt principal, dividends and share repurchases. We use
free cash flow, as defined, as one measure to monitor and evaluate
performance. Our definition of free cash flow may be different from
definitions used by other companies.
|
|
The following table summarizes free cash flow by quarter:
|
|
|
Quarter Ended
|
|
|
Dec. 31,
|
|
Mar. 31,
|
|
Jun. 30,
|
|
Sep. 30,
|
|
Dec. 31,
|
|
|
2013
|
|
2014
|
|
2014
|
|
2014
|
|
2014
|
Cash provided by continuing operating activities
|
|
$
|
203.5
|
|
|
$
|
202.8
|
|
|
$
|
301.1
|
|
|
$
|
325.9
|
|
|
$
|
268.2
|
|
Capital expenditures
|
|
(35.6
|
)
|
|
(22.7
|
)
|
|
(38.1
|
)
|
|
(44.6
|
)
|
|
(40.0
|
)
|
Excess income tax benefit from share-based compensation
|
|
10.7
|
|
|
7.9
|
|
|
10.5
|
|
|
0.8
|
|
|
4.4
|
|
Free cash flow
|
|
$
|
178.6
|
|
|
$
|
188.0
|
|
|
$
|
273.5
|
|
|
$
|
282.1
|
|
|
$
|
232.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return On Invested Capital
Our press release contains information regarding Return On Invested
Capital (ROIC), which is a non-GAAP financial measure. We believe that
ROIC is useful to investors as a measure of performance and of the
effectiveness of the use of capital in our operations. We use ROIC as
one measure to monitor and evaluate performance. Our measure of ROIC may
be different from that used by other companies. We define ROIC as the
percentage resulting from the following calculation:
(a) Income from continuing operations, before interest expense, income
tax provision, and purchase accounting depreciation and amortization,
for the most recent twelve months, divided by;
(b) average invested capital for the year, calculated as a five quarter
rolling average using the sum of short-term debt, long-term debt,
shareowners' equity, and accumulated amortization of goodwill and other
intangible assets, minus cash and cash equivalents and short-term
investments, multiplied by;
(c) one minus the effective tax rate for the twelve-month period.
ROIC is calculated as follows:
|
|
Twelve Months Ended
|
|
|
December 31,
|
|
|
2014
|
|
2013
|
(a) Return
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
842.9
|
|
|
$
|
793.0
|
|
Interest expense
|
|
59.3
|
|
|
60.4
|
|
Income tax provision
|
|
306.0
|
|
|
243.5
|
|
Purchase accounting depreciation and amortization
|
|
22.4
|
|
|
18.7
|
|
Return
|
|
1,230.6
|
|
|
1,115.6
|
|
(b) Average invested capital
|
|
|
|
|
|
|
Short-term debt
|
|
341.3
|
|
|
227.8
|
|
Long-term debt
|
|
905.4
|
|
|
905.1
|
|
Shareowners' equity
|
|
2,677.4
|
|
|
2,253.9
|
|
Accumulated amortization of goodwill and intangibles
|
|
778.6
|
|
|
774.4
|
|
Cash and cash equivalents
|
|
(1,228.8
|
)
|
|
(1,078.6
|
)
|
Short-term investments
|
|
(534.8
|
)
|
|
(364.6
|
)
|
Average invested capital
|
|
2,939.1
|
|
|
2,718.0
|
|
(c) Effective tax rate
|
|
|
|
|
|
|
Income tax provision
|
|
306.0
|
|
|
243.5
|
|
Income from continuing operations before income taxes
|
|
$
|
1,148.9
|
|
|
$
|
1,036.5
|
|
Effective tax rate
|
|
26.6
|
%
|
|
23.5
|
%
|
(a) / (b) * (1-c) Return On Invested Capital
|
|
30.7
|
%
|
|
31.4
|
%
|
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