download pdf

2012 Scorecard*

  • image description
  • image description
  • image description
  • image description
  • image description
  • image description
  • image description
  • image description
(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 and to properly value the Company, due to current high levels of non-cash expenses related to recent acquisitions. The Company’s 2012 results include $442 million (pretax) of charges related to merger and acquisition-related charges, the charges associated with the $200 million in cost actions implemented in 2012, as well as the charges associated with the extinguishment of debt during the third quarter of 2012. In 2011 and 2010, EBITDA excludes merger and acquisition-related charges of $236 million and $478 million, respectively, primarily associated with the Black & Decker merger and Niscayah acquisition. In 2008, EBITDA excludes the restructuring charge of $67 million pertaining to cost actions taken in response to weakened economic conditions. A full reconciliation with the relevant GAAP measurement, net earnings from continuing operations, follows:
(MILLIONS OF DOLLARS)    2012    2011    2010   2009     2008
Net earnings from continuing operations $ 450 $ 598 $ 151 $ 211 $ 201
Interest income (10) (27) (9) (3) (9)
Interest expense 144 140 110 64 92
Income taxes 79 50 18 46 65
Depreciation and amortization 407 369 307 191 171
EBITDA from continuing operations $ 1,070 $ 1,130 $ 577 $ 509 $ 520
Merger and acquisition-related charges 442 236 478
2008 Restructuring charge(b) 67
Adjusted EBITDA $ 1,512 $ 1,366 $ 1,055 $ 509 $ 587
(b) The Company has excluded the 2012, 2011, and 2010 after-tax merger and acquisition-related charges of $329 million ($1.97 of diluted EPS), $186 million ($1.09 of diluted EPS), and $380 million ($2.53 of diluted EPS), respectively, in the calculation of diluted EPS. Additionally the Company has excluded $47 million ($0.59 of diluted EPS) in the 2008 calculation of diluted EPS. These amounts were excluded because the Company believes these are better indicators of operating trends when analyzing diluted EPS, due to the unusually large magnitude of these charges and the fact that they are non-recurring. Therefore, the Company has provided these measures both including and excluding such charges.
(c) Free Cash Flow = Net cash provided by operating activities minus capital expenditures. In 2012, 2011, and 2010 free cash flow excludes $479 million, $307 million, and $382 million, respectively, of merger and acquisition-related charges and payments incurred primarily in connection with the Black & Decker merger and acquisition of Niscayah. Such normalized free cash flow is considered a meaningful metric to aid the understanding of the Company’s cash flow performance aside from the material impact of these merger and acquisition-related payments. In 2008, free cash flow also excludes income taxes paid on the gain from the CST/Berger divesture due to the fact the taxes are non-recurring and the related gross cash proceeds are classified as investing inflows. Refer to page 30 in the enclosed 10-K for the reconciliation of operating cash flow to free cash flow.
(d) Working Capital Turns are computed as year-end working capital (accounts receivable, inventory, accounts payable, and deferred revenue) divided by fourth quarter sales, annualized.
(e) Average Capital Employed is computed by dividing the 13-point average of debt and equity.
(f) ROCE is computed as net earnings from continuing operations plus after-tax expense and after-tax amortization of intangibles, divided by the 13-point average of debt and equity.  In 2012, 2011, and 2010, net earnings from continuing operations excludes $329 million, $186 million, and $380 million, respectively, of merger and acquisition-related charges and payments incurred primarily in connection with the Black & Decker merger and Niscayah acquisition.
*In December 2012, the Company sold its Hardware & Home Improvement business. The results from 2008–2011 were recast for this divestiture, for comparability.