(a) Income from continuing operations, before interest expense, income tax provision, and purchase accounting depreciation and amortization, 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, multiplied by;

(c) one minus the effective tax rate for the period.

ROIC is calculated as follows:
Twelve Months Ended
September 30,
2012     2011
(a) Return
Income from continuing operations $ 737.0 $ 697.1
Interest expense 60.1 59.5
Income tax provision 228.9 170.5
Purchase accounting depreciation and amortization 19.8   19.8  
Return 1,045.8   946.9  
(b) Average invested capital
Short-term debt 207.2
Long-term debt 905.0 904.9
Shareowners’ equity 1,881.5 1,709.7
Accumulated amortization of goodwill and intangibles 751.0 716.7
Cash and cash equivalents (878.8 ) (922.7 )
Short-term investments (232.5 )  
Average invested capital 2,633.4   2,408.6  
(c) Effective tax rate
Income tax provision 228.9 170.5
Income from continuing operations before income taxes $ 965.9   $ 867.6  
Effective tax rate 23.7 % 19.7 %
(a) / (b) * (1-c) Return On Invested Capital 30.3 % 31.6 %


Adjusted Income and Adjusted EPS

Our press release contains financial information and earnings guidance regarding Adjusted Income and Adjusted EPS, 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 impacts 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 and Adjusted EPS provide useful information to our investors about our operating performance and allow management and investors to compare our operating performance period over period. Our measure of Adjusted Income and Adjusted EPS may be different from measures used by other companies. These non-GAAP measures should not be considered a substitute for income from continuing operations and diluted EPS.

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