Three quantitative accounting questions in the attached.

24. The following information is taken from Blue Company's financial statements (amounts in thousands): Inventory at LIFO Cost of goods sold Stockholders' Equity Net Income Tax rate 12/31/2012 $219,686 754,661 242,503 31,185 35% 12/31/2011 $241,154 675,138 242,712 64,150 35% Inventory Footnote: If the first-in, first-out method of accounting for inventory had been used, inventory would have been approximately $26,900 (thousands) and $25,100 (thousands) higher than reported at 12/31/2012 and 12/31/2011, respectively. Use the information above to answer the following: a. b. c. 1 Calculate what inventory would have been at 12/31/2012 and 12/31/2011 had the FIFO inventory method been used. What would net income for the year ended 12/31/2012 have been if the FIFO inventory method been used? Calculate what stockholders' equity would have been at 12/31/2012 and 12/31/2011 had the FIFO inventory method been used. 25. The following information is available from Gray Corporation: Information from the Balance Sheet: Depreciable Assets Accumulated Depreciation Depreciable Assets (Net) 2012 $2,458,600 (1,350,700) $1,107,900 From the Income Statement Depreciation Expense Use the information above to calculate the following: a. b. 2 Average age of the depreciable assets for 2012. Average remaining useful life of the depreciable assets for 2012. 2011 $1,985,400 (1,046,000) $939,400 2012 $384,500 26. NOTE: For this problem, refer to the present value tables at the end of this exam, as needed. Listed below are selected financial data for Purple Corporation and the company's operating lease disclosure (all amounts in thousands). The company's tax rate is 35%. Property, Plant, & Equipment (net) Total Assets Long-Term Debt (Current and NonCurrent) Common Shareholders' Equity 2012 $178,000 515,000 75,000 2011 $162,000 424,000 67,000 302,000 298,000 Operating Lease Commitments at the end of 2012 Year 2013 2014 2015 2016 2017 Beyond 2017 Reported Lease Commitments $ 30,000 $ 20,000 $ 20,000 $ 15,000 $ 10,000 $ 35,000 As an analyst, you have decided to restate the company's operating leases into capital leases. Using the information in the operating lease disclosure and assuming that the company has an incremental borrowing rate for secured debt of 8%, restate the operating leases into capital leases and calculate the adjusted values of the following as of the end of 2012: a. Plant, Property and Equipment. b. Long-Term Debt (It is not necessary to split this into Current and Non-Current Portions). c. Shareholders' Equity. 3 Answer 1: a) FIFO INVENTORY = LIFO INVENTORY + LIFO RESERVE LIFO RESERVE = FIFO INVENTORY - LIFO INVENTORY LIFO reserve (2012) = $26900 (given) LIFO Reserve (2011) = $25100 (given) FIFO Inventory (2012) = $219686 + $26900 = $246586 FIFO Inventory (2011) = $241154 + $25100 = $266254 b) Net Income (FIFO) = Net Income (LIFO) + (change in LIFO Reserve) * (1-tax rate) Net Income (FIFO) 2012 = 31185 + (26900 - 25100) * (1-0.35) = $32355 Net Income (FIFO) 2011 = 64150 + (26900 - 25100) * (1-035) = $65320 c) Stockholders' Equity (Retained Earnings) under FIFO = Stockholders Equity under LIFO + LIFO Reserve * (1 - tax rate) Stockholders' Equity (2012) = $242503 + $26900 *(1-0.35) = $259988 1 Stockholders' Equity (2013) = $242715 + $25100 * (1-0.35) = $259030 Answer 2: a) Average age of the depreciable asset = Accumulated Depreciation/Depreciation Expense = 1350700/384500 = 3.5 years b) Average Remaining useful life = Ending Net investment/depreciation expense = $1107900/384500 = 2.88 years 2 3 4 Financial Statement Analysis Module 5: Analysis of and Adjustments to Financial Statements (Balance Sheet) 1 Overview Balance Sheet Adjustments Capitalizing Operating Leases Convert LIFO to FIFO Convert Straight-Line to Accelerated Depreciation Adjusted Financial Statements 2 Balance Sheet Adjustments Incorporating Excluded Assets and Liabilities Revaluing Assets and Liabilities General Guidelines 3 Balance Sheet Adjustments Incorporating Excluded Assets and Liabilities Contingent liabilities Operating leases Other off-balance sheet financings 4 Balance Sheet Adjustments Incorporating Excluded Assets and Liabilities Contingent liabilities Circumstances involving potential losses that will not be resolved until some future event occurs. Include on the balance sheet if probable and can be reasonably estimated. Otherwise may be disclosed in the notes. 5 Balance Sheet Adjustments Incorporating Excluded Assets and Liabilities Operating leases Lease is classified as a capital lease if any of the following is true: - - - - Lease transfers ownership. Lease includes a bargain purchase option. Lease covers 75% or more of the economic life of the asset. Present value of lease payments is 90% or more of the asset value. Otherwise classified as an operating lease. 6 Balance Sheet Adjustments Incorporating Excluded Assets and Liabilities Operating leases Operating Lease No asset or liability recognized. Capital Lease Capital asset and long-term liability equal to the present value of lease payments recognized on the balance sheet. Annual expense consists of annual lease payment. Annual expense consists of depreciation of the capital asset and interest on the 7 Balance Sheet Adjustments Incorporating Excluded Assets and Liabilities Operating leases Why reclassify an operating lease to capital? Lease is, in effect, a capital lease structured to qualify as an operating lease. Lease payments represent a financial obligation similar to long-term debt and should be treated as debt. Enhances comparability across firms. 8 Balance Sheet Adjustments Incorporating Excluded Assets and Liabilities Other Off-Balance Sheet Financings Unconsolidated Subsidiaries Variable Interest Entities Joint Ventures Research and Development Arrangements Project Financing Arrangements 9 Balance Sheet Adjustments Revaluing Assets and Liabilities Investments and Long-Term Debt Accounts Receivable Inventory Property, Plant and Equipment (PPE) 10 General Guidelines Adjustments to the Balance Sheet must balance. - - Balance Sheet Adjustments Change in an asset or liability usually balanced with a change to Retained Earnings. But impact on Retained Earnings is reduced by the tax effect, usually captured with an adjustment to Deferred Tax Asset or Liability. Balance sheet adjustments generally result in an adjustment to the Income Statement. - Change in revenues or expenses usually triggers and adjustment to tax expense. 11 Capitalizing Operating Leases Determine the Interest Rate for Discounting Calculate the Present Value of Lease Payments Adjust Balance Sheet Adjust Income Statement 12 Capitalizing Leases Determine the Interest Rate for Discounting Interest rate on the company's long-term debt. Imputed interest rate on the company's capital leases. Interest rate on long-term debt of companies with similar credit quality. 13 Capitalizing Leases Determine the Interest Rate for Discounting 14 Capitalizing Leases Determine the Interest Rate for Discounting 15 Capitalizing Leases Determine the Interest Rate for Discounting Year E nd 2011 From Balance S heet Current Maturities of Notes & Debentures Current Obligations Under Capital Leases Total Long-Term Debt Total a Average Debt Outstanding b Interest Expense (From Income Statement) c Average Interest Rate on Debt Outstanding (b/ a) Year E nd 2012 811.3 29.2 4,569.7 5,410.2 Fiscal Year 2012 294.0 36.2 5,243.5 5,573.7 5,492.0 304.0 5.5% 16 Capitalizing Leases Calculate Present Value of Lease Payments 17 Capitalizing Leases Calculate the Present Value of the Lease Payments Operating From lease disclosure Assume annual lease payments continue at same level as 2017 until total is reached. Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total Lease Present Payments Value Factor 478.8 0.9475 455.4 0.8979 403.5 0.8508 360.2 0.8061 307.3 0.7639 307.3 0.7238 307.3 0.6858 307.3 0.6499 307.3 0.6158 307.3 0.5835 307.3 0.5529 235.5 0.5239 4,084.5 18 Present Value 453.7 408.9 343.3 290.4 234.7 222.4 210.8 199.7 189.2 179.3 169.9 123.4 3,025.6 Capitalizing Leases Adjust Balance Sheet Assets: Gross and Net PPE increase by present value of the lease payments. Liabilities: - - Total long-term debt increases by present value of the lease payments. Split total into current and non-current amounts, and adjust current and non-current portions of long term debt. No tax effect. Equity: No change. 19 Capitalizing Leases Adjust Balance Sheet Gross and net depreciable plant property and equipment increases by: Increase in long-term debt allocated to: a. Current portion [478.8 - 3,025.6*5.5%] b. Non-current portion [3,025.6 - 311.3] No change in shareholders' equity accounts 3,025.6 311.3 2,714.3 20 Capitalizing Leases Adjust Balance Sheet Cash and Equivalents Receivables Merchandise Inventories Prepaid E xpenses and Other Total Current Assets Land Depreciable Property Gross PPE Less: Accumulated Depreciation Net PPE Goodwill Prepaid Pension Cost Invest. in Unconsolidated Affiliates Deferred Tax Asset Other Assets Total Assets Remove Goodwill Impairment Charge/ Gain fr As Reported Disc Op Balance S heet 2012 352.2 909.0 2,562.0 344.7 4,167.9 1,777.5 18,972.6 20,750.1 (11,525.5) 9,224.6 471.5 0.0 191.7 0.0 601.3 14,657.0 Capitalize Operating Leases 3,025.6 21 Adjusted 352.2 909.0 2,562.0 344.7 4,167.9 1,777.5 21,998.2 23,775.7 (11,525.5) 12,250.2 471.5 0.0 191.7 0.0 601.3 17,682.6 Capitalizing Leases Adjust Balance Sheet Remove Goodwill Impairment Charge/ Gain fr As Reported Disc Op Balance S heet 2012 Current Maturities of Notes & Debentures 294.0 Current Obligations Under Capital Leases 36.2 Accounts Payable 3,125.0 Accrued Salaries and Wages 460.9 Deferred Income Taxes 45.7 Other Accrued Liabilities 643.8 Total Current Liabilities 4,605.6 Long-Term Debt 5,243.5 Deferred Income Taxes 178.5 Pension and Post Retir. Benefit Oblig. 914.5 Accrued Claims & Other Liabilities 781.5 Total Liabilities 11,723.6 Capitalize Operating Leases 311.3 2,714.3 22 Adjusted 294.0 347.5 3,125.0 460.9 45.7 643.8 4,916.9 7,957.8 178.5 914.5 781.5 14,749.2 Capitalizing Leases Adjust Income Statement No change in Net Income. Calculate Interest Expense attributable to the capitalized leases and reclassify from Operating and Administrative Expense to Interest Expense. Outstanding Principal, Operating Leases, Beginning of Year Outstanding Principal, Operating Leases, E of Year nd Outstanding Principal, Operating Leases, Average Balance Interest Rate Interest E xpense Attributable to Operating Leases 3,186.5 3,025.6 3,106.1 5.5% 171.9 23 Capitalizing Leases Adjust Income Statement Remove Goodwill Impairment Charge/ Gain fr As Reported Disc Op Income Statement 2012 Sales and Other Revenue 44,206.5 Cost of Goods S old (32,486.5) Gross Profit 11,720.0 Operating and Administrative E xpense (10,615.9) Goodwill Impairment Charge 0.0 Operating (Loss) Profit 1,104.1 Interest E xpense (304.0) Other Income, Net 28.3 Income (Loss) before Income Taxes 828.4 Income Taxes (262.2) Income from Cont Op, Net of Tax 566.2 Gain from Disc Op, Net of Tax 31.9 (31.9) Net Income (Loss) bef Alloc to NCInt 598.1 Less Income to Non Controlling Interests (1.6) Net Income (Loss) 596.5 Capitalize Operating Leases Adjusted 171.9 (171.9) 24 44,206.5 (32,486.5) 11,720.0 (10,444.0) 0.0 1,276.0 (475.9) 28.3 828.4 (262.2) 566.2 0.0 566.2 (1.6) 564.6 Convert LIFO to FIFO Identify the \"LIFO Reserve\" Calculate Change in Balance Sheet Accounts Adjust Balance Sheet Calculate Change in Income Accounts Adjust Income Statement 25 Identify the \"LIFO Reserve\" 26 LIFO to FIFO LIFO to FIFO Calculate Change in Balance Sheet Accounts Inventory increases by amount of LIFO reserve. Deferred Tax Liability (current portion) increases by tax rate times LIFO reserve. - - - - Cumulative COGS would have been lower under FIFO. Cumulative income before taxes would have been higher under FIFO. Cumulative tax expense would have been higher under FIFO. Assuming no change in inventory method for tax, difference results in a deferred tax liability. Retained Earnings increases by the difference between the change in Inventory and DTL. 27 LIFO to FIFO Calculate Change in Balance Sheet Accounts Change in Balance Sheet Accts 1 Increase in Inventory (LIFO Reserve) 2 Less: Increase in DTL (.35 * LIFO Reserve) 3 Increase in Retained Earnings 2011 70.1 (24.5) 45.6 28 2012 70.5 (24.7) 45.8 LIFO to FIFO Adjust Balance Sheet Cash and E quivalents Receivables Merchandise Inventories Prepaid E xpenses and Other Total Current Assets Land Depreciable Property Gross PPE Less: Accumulated Depreciation Net PPE Goodwill Prepaid Pension Cost Invest. in Unconsolidated Affiliates Deferred Tax Asset Other Assets Total Assets Remove Goodwill Impairment Charge/ Gain fr As Reported Disc Op Balance Sheet 2012 352.2 909.0 2,562.0 344.7 4,167.9 1,777.5 18,972.6 20,750.1 (11,525.5) 9,224.6 471.5 0.0 191.7 0.0 601.3 14,657.0 Capitalize Operating Leases LIFO to FIFO Adjustment 70.5 3,025.6 29 Adjusted 352.2 909.0 2,632.5 344.7 4,238.4 1,777.5 21,998.2 23,775.7 (11,525.5) 12,250.2 471.5 0.0 191.7 0.0 601.3 17,753.1 LIFO to FIFO Adjust Balance Sheet Current Maturities of Notes & Debentures Current Obligations Under Capital Leases Accounts Payable Accrued Salaries and Wages Deferred Income Taxes Other Accrued Liabilities Total Current Liabilities Long-Term Debt Deferred Income Taxes Pension and Post Retir. Benefit Oblig. Accrued Claims & Other Liabilities Total Liabilities Remove Goodwill Impairment Charge/ Gain fr As Reported Disc Op Balance Sheet 2012 294.0 36.2 3,125.0 460.9 45.7 643.8 4,605.6 5,243.5 178.5 914.5 781.5 11,723.6 Capitalize Operating Leases LIFO to FIFO Adjustment 311.3 24.7 2,714.3 30 Adjusted 294.0 347.5 3,125.0 460.9 70.4 643.8 4,941.6 7,957.8 178.5 914.5 781.5 14,773.9 LIFO to FIFO Adjust Balance Sheet Common Stock Additional Paid-In Capital Treasury Stock Accumulated Other Comp Income (Loss) Retained Earnings Total Shareholders' Equity Non-Controlling Interest Total Equity Total Liabilities & Shareholders'' Equity Remove Goodwill Impairment Charge/ Gain fr As Reported Disc Op Balance Sheet 2012 6.1 4,505.6 (9,119.8) (73.8) 7,609.8 2,927.9 5.5 2,933.4 14,657.0 Capitalize Operating Leases LIFO to FIFO Adjustment 45.8 31 Adjusted 6.1 4,505.6 (9,119.8) (73.8) 7,655.6 2,973.7 5.5 2,979.2 17,753.1 LIFO to FIFO Calculate Change in Income Statement Accounts First, calculate the adjustment to COGS using the formula: Beginning Inventory + Purchases - Ending Inventory = COGS This formula is true regardless of Inventory method used. Purchases would be the same under either method. Second, calculate change in Income Tax Expense 32 LIFO to FIFO Calculate Change in Income Statement Accounts Calculate Change in COGS Step 1: Set up the grid and enter the as reported (LIFO) values for Beginning and Ending Inventory from the balance sheet. Y 2012 ear Beginning Inventory Plus: Purchases Less: Ending Inventory E quals: Cost of Goods Sold LIFO 2,469.6 Adjustment (2,562.0) 33 FIFO LIFO to FIFO Calculate Change in Income Statement Accounts Calculate Change in COGS Step 2: Enter the values for the LIFO Reserves from the financial statements and use them to calculate the adjusted values for Beginning and Ending Inventory under FIFO. Year 2012 Beginning Inventory Plus: Purchases Less: Ending Inventory Equals: Cost of Goods Sold LIFO 2,469.6 Adjustment 70.1 FIFO 2,539.7 (2,562.0) (70.5) (2,632.5) 34 LIFO to FIFO Calculate Change in Income Statement Accounts Calculate Change in COGS Step 3: Enter the value for Cost of Goods Sold (as reported, LIFO-basis) from the Income Statement. Year 2012 Beginning Inventory Plus: Purchases Less: E nding Inventory Equals: Cost of Goods Sold LIFO 2,469.6 Adjustment 70.1 FIFO 2,539.7 (2,562.0) 32,486.5 (70.5) (2,632.5) 35 LIFO to FIFO Calculate Change in Income Statement Accounts Calculate Change in COGS, Grid Method Step 4: Use the formula to calculate Purchases under LIFO and transfer the result to the FIFO column. Year 2012 Beginning Inventory Plus: Purchases Less: Ending Inventory Equals: Cost of Goods S old LIFO 2,469.6 32,578.9 (2,562.0) 32,486.5 Adjustment 70.1 (70.5) 36 FIFO 2,539.7 32,578.9 (2,632.5) LIFO to FIFO Calculate Change in Income Statement Accounts Calculate Change in COGS, Grid Method Step 5: Use the formula to calculate Cost of Goods Sold under FIFO. Year 2012 Beginning Inventory Plus: Purchases Less: Ending Inventory Equals: Cost of Goods Sold LIFO 2,469.6 32,578.9 (2,562.0) 32,486.5 Adjustment 70.1 (70.5) 37 FIFO 2,539.7 32,578.9 (2,632.5) 32,486.1 LIFO to FIFO Calculate Change in Income Statement Accounts Calculate Change in COGS, Grid Method Step 6: Use the as reported and adjusted values for Cost of Goods Sold to complete the grid by calculating the change in Cost of Goods Sold due to conversion. Year 2012 Beginning Inventory Plus: Purchases Less: E nding Inventory Equals: Cost of Goods Sold LIFO 2,469.6 32,578.9 (2,562.0) 32,486.5 Adjustment 70.1 (70.5) (0.4) 38 FIFO 2,539.7 32,578.9 (2,632.5) 32,486.1 LIFO to FIFO Calculate Change in Income Statement Accounts Calculate Change in Income Tax Expense and Net Income Decrease in COGS Less: Increase in Income Tax Expense [-0.35 * 0.4] Increase in Net Income 0.4 (0.1) 0.3 39 LIFO to FIFO Adjust Income Statement Sales and Other Revenue Cost of Goods Sold Gross Profit Operating and Administrative Expense Goodwill Impairment Charge Operating (Loss) Profit Interest Expense Other Income, Net Income (Loss) before Income Taxes Income Taxes Income from Cont Op, Net of Tax Gain from Disc Op, Net of Tax Net Income (Loss) bef Alloc to NCInt Less Income to Non Controlling Interests Net Income (Loss) Remove Goodwill Impairment Charge/ Gain fr As Reported Disc Op Income Statement 2012 44,206.5 (32,486.5) 11,720.0 (10,615.9) 0.0 1,104.1 (304.0) 28.3 828.4 (262.2) 566.2 31.9 (31.9) 598.1 (1.6) 596.5 Capitalize Operating Leases LIFO to FIFO Adjustment 0.4 171.9 (171.9) (0.1) 40 Adjusted 44,206.5 (32,486.1) 11,720.4 (10,444.0) 0.0 1,276.4 (475.9) 28.3 828.8 (262.3) 566.5 0.0 566.5 (1.6) 564.9 Convert Straight-Line to Accelerated Depreciation Identify the DTL for Depreciation Calculate Change in Balance Sheet Accounts Adjust Balance Sheet Calculate Change in Income Accounts Adjust Income Statement 41 Depreciation Adjustment Identify the DTL for Depreciation 42 Depreciation Adjustment Calculate Change in Balance Sheet Accounts Accumulated Depreciation increases by (DTL-Plant)/(tax rate). Deferred Tax Liability (non-current portion) deceases by DTL plant. Retained Earnings declines by the difference between the change in Accumulated Depreciation and DTL. 43 Depreciation Adjustment Calculate Change in Balance Sheet Accounts Change in Balance Sheet Accts 1 Decrease in Deferred Tax Liability--Plant (fr Notes) 2 Less: Increase in Accumulated Depreciation (DTL/ .35) 3 Decrease in Retained Earnings 2011 663.8 (1,896.6) (1,232.8) 44 2012 662.4 (1,892.6) (1,230.2) Depreciation Adjustment Adjust Balance Sheet Cash and E quivalents Receivables Merchandise Inventories Prepaid Expenses and Other Total Current Assets Land Depreciable Property Gross PPE Less: Accumulated Depreciation Net PPE Goodwill Prepaid Pension Cost Invest. in Unconsolidated Affiliates Deferred Tax Asset Other Assets Total Assets Remove Goodwill Impairment Capitalize Charge/ Gain fr Operating As Reported Disc Op Leases Balance Sheet 2012 352.2 909.0 2,562.0 344.7 4,167.9 1,777.5 18,972.6 3,025.6 20,750.1 (11,525.5) 9,224.6 471.5 0.0 191.7 0.0 601.3 14,657.0 Straight Line to Accelerated LIFO to FIFO Deprectiation Adjustment Adjustment 70.5 (1,892.6) 45 Adjusted 352.2 909.0 2,632.5 344.7 4,238.4 1,777.5 21,998.2 23,775.7 (13,418.1) 10,357.6 471.5 0.0 191.7 0.0 601.3 15,860.5 Depreciation Adjustment Adjust Balance Sheet Current Maturities of Notes & Debentures Current Obligations Under Capital Leases Accounts Payable Accrued Salaries and Wages Deferred Income Taxes Other Accrued Liabilities Total Current Liabilities Long-Term Debt Deferred Income Taxes Pension and Post Retir. Benefit Oblig. Accrued Claims & Other Liabilities Total Liabilities Remove Goodwill Impairment Capitalize Charge/ Gain fr Operating As Reported Disc Op Leases Balance Sheet 2012 294.0 36.2 311.3 3,125.0 460.9 45.7 643.8 4,605.6 5,243.5 2,714.3 178.5 914.5 781.5 11,723.6 Straight Line to Accelerated LIFO to FIFO Deprectiation Adjustment Adjustment 24.7 (662.4) 46 Adjusted 294.0 347.5 3,125.0 460.9 70.4 643.8 4,941.6 7,957.8 (483.9) 914.5 781.5 14,111.5 Depreciation Adjustment Adjust Balance Sheet Common S tock Additional Paid-In Capital Treasury Stock Accumulated Other Comp Income (Loss) Retained E arnings Total S hareholders' E quity Non-Controlling Interest Total E quity Total Liabilities & S hareholders'' Equity Remove Goodwill Impairment Capitalize Charge/ Gain fr Operating As Reported Disc Op Leases Balance S heet 2012 6.1 4,505.6 (9,119.8) (73.8) 7,609.8 2,927.9 5.5 2,933.4 14,657.0 S traight Line to Accelerated LIFO to FIFO Deprectiation Adjustment Adjustment 45.8 47 (1,230.2) Adjusted 6.1 4,505.6 (9,119.8) (73.8) 6,425.5 1,743.6 5.5 1,749.1 15,860.5 Depreciation Adjustment Calculate Change in Income Statement Accounts First, calculate the adjustment to Depreciation Expense using the formula: Beginning Net PPE + Net Acquisitions - Depreciation Expense = Ending Net PPE This formula is true regardless of depreciation method used. Acquisitions would be the same under either method. Assume Net Acquisitions would also be the same. Second, calculate change in Income Tax Expense 48 Depreciation Adjustment Calculate Change in Income Statement Accounts Year 2012 Beginning Net PPE Plus: Net Acquisitions Less: Ending Net PPE Equals: Depreciation E xpense S traight-Line 9,637.6 721.3 (9,224.6) 1,134.3 Adjustment (1,896.6) 1,892.6 (4.0) Decrease in Depreciation Expense Increase in Income Tax Expense [4.0 * 0.35] Accelerated 7,741.0 721.3 (7,332.0) 1,130.3 4.0 1.4 49 Depreciation Adjustment Adjust Income Statement Sales and Other Revenue Cost of Goods Sold Gross Profit Operating and Administrative Expense Goodwill Impairment Charge Operating (Loss) Profit Interest E xpense Other Income, Net Income (Loss) before Income Taxes Income Taxes Income from Cont Op, Net of Tax Gain from Disc Op, Net of Tax Net Income (Loss) bef Alloc to NCInt Less Income to Non Controlling Interests Net Income (Loss) Remove Goodwill Impairment Capitalize Charge/ Gain fr Operating As Reported Disc Op Leases Income Statement 2012 44,206.5 (32,486.5) 11,720.0 (10,615.9) 171.9 0.0 1,104.1 (304.0) (171.9) 28.3 828.4 (262.2) 566.2 31.9 (31.9) 598.1 (1.6) 596.5 Straight Line to Accelerated LIFO to FIFO Deprectiation Adjustment Adjustment 0.4 4.0 (0.1) 50 (1.4) Adjusted 44,206.5 (32,486.1) 11,720.4 (10,440.0) 0.0 1,280.4 (475.9) 28.3 832.8 (263.7) 569.1 0.0 569.1 (1.6) 567.5