First-Quarter 2019 Results
Q1 Non-GAAP Measures Definitions
Free cash flow in 2019 and 2018 is defined as net cash provided by (used in) continuing operating activities, less capital
expenditures, plus cash payments for restructuring. In 2018, the Company updated its definition of free cash flow to exclude the
impacts of discontinued operations. Please refer to the free cash flow reconciliation on table 9 of the news release.
Working capital measures a firm's operating liquidity position and its overall effectiveness in managing the enterprises' current
accounts.
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Working capital is calculated by adding net accounts and notes receivables and inventories and subtracting total current
liabilities that exclude short term debt, dividend payables and income tax payables.
Working capital as a percent of revenue is calculated by dividing the working capital balance (e.g. as of March 31) by the
annualized revenue for the period (e.g. reported revenues for the three months ended March 31) multiplied by 4 to annualize
for a full year.
Adjusted effective tax rate for 2019 is defined as the ratio of income tax expense, plus or minus the tax effect of adjustments for
restructuring costs and acquisition related transaction costs, divided by earnings from continuing operations before income taxes
plus restructuring costs and acquisition related transaction costs. Adjusted effective tax rate for 2018 is defined as the ratio of
income tax expense, plus or minus the tax effect of adjustments for restructuring costs and debt redemption premium and
related charges, divided by earnings from continuing operations before income taxes plus restructuring costs and debt
redemption premium and related charges. This measure allows for a direct comparison of the effective tax rate between periods.
Operating leverage is defined as the ratio of the change in adjusted operating income for the current period (e.g. Q1 2019) less
the prior period (e.g. Q1 2018), divided by the change in net revenues for the current period less the prior period.
R Ingersoll Rand.
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