What are the main non-GAAP financial measures ITW is reporting in this filing?

The main non-GAAP financial measures reported are free operating cash flow, adjusted return on average invested capital (adjusted ROIC), and the ratio of total debt to adjusted EBITDA. The company also mentions adjusted operating revenues, adjusted operating income, adjusted operating margin, and adjusted diluted earnings per share.

Why does ITW use these non-GAAP financial measures?

ITW uses these non-GAAP measures to provide investors with a more meaningful understanding of its financial performance and operational efficiency. They are intended to exclude certain items that may not be indicative of core operating results and business outlook, enhancing the evaluation of cash generation, capital management, and financial liquidity.

Where can I find the detailed calculations for these non-GAAP measures?

Detailed reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures are included in the press release (Exhibit 99.1) and the conference call presentation (Exhibit 99.2) furnished with this 8-K filing.

How does ITW define 'free operating cash flow'?

ITW defines free operating cash flow as net cash provided by operating activities less additions to plant and equipment. The company views this as a measure of cash available for dividends, acquisitions, share repurchases, and debt repayment.

ITW 8-K: Earnings & Results

Summary

Illinois Tool Works Inc. (ITW) filed an 8-K on July 23, 2013, to report its second-quarter 2013 operational and financial results. The filing primarily includes information about the company's performance and uses several non-GAAP financial measures to provide a clearer view of its operational effectiveness and financial health to investors. These measures are used to offer insights into the company's ability to generate cash, manage its capital, and meet its debt obligations. The company emphasized its use of "free operating cash flow" to assess funds available for dividends, acquisitions, share repurchases, and debt repayment, highlighting its internal cash generation capabilities. Additionally, ITW presented "adjusted return on average invested capital" (adjusted ROIC) to demonstrate the efficiency of its operations in generating profits from invested capital, notably excluding certain segments and investments. The "total debt to adjusted EBITDA" ratio was also detailed as a key metric for evaluating long-term financial liquidity. Investors are provided with supplementary materials, including a press release and a conference call presentation, which contain detailed reconciliations of these non-GAAP measures to their GAAP equivalents. This approach aims to enhance investor understanding of ITW's core operating results and business outlook beyond standard accounting figures.

Key Highlights

1ITW announced its second-quarter 2013 results via an 8-K filing on July 23, 2013.
2The company utilizes several non-GAAP financial measures to provide enhanced insights into its performance.
3Key non-GAAP metrics highlighted include free operating cash flow, adjusted return on average invested capital (adjusted ROIC), and the total debt to adjusted EBITDA ratio.
4Free operating cash flow is presented as a measure of cash available for dividends, acquisitions, share repurchases, and debt repayment.
5Adjusted ROIC is used to assess the effectiveness of capital deployment in generating profits, with specific exclusions for certain segments.
6The total debt to adjusted EBITDA ratio is employed to evaluate the company's long-term financial liquidity and ability to service debt.
7Detailed reconciliations of these non-GAAP measures to GAAP are provided in the furnished press release and conference call presentation.

ILLINOIS TOOL WORKS INC 8-K Report, Financial Results (Jul 23, 2013)

Summary

Key Highlights

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