Our return on invested capital calculation represents the rate of return generated by the capital deployed in our business. We use ROIC as an internal measure of how effectively we use the capital invested (borrowed or owned) in our operations.
 
   
  Operating income
+ Net rent expense (1)
– Depreciation portion of rent expense (1)
= NOPBT (net operating profit before taxes, as adjusted)
– Tax expense (2)
= NOPAT (net operating profit after taxes, as adjusted)		 Total equity
+ Long-term debt (3)
+ Capitalized operating leases
– Excess cash
= Adjusted average invested capital
Retun on invested capital
($ in millions) FY 05 FY 06 FY 07
Net operating profit (as adjusted)      
Operating income $1,442 $1,644 $1,999
+ Net rent expense (1) 413 464 562
– Depreciation portion of rent expense (1) (214) (242) (292)
= NOPBT (as adjusted) $1,641 $1,866 $2,269
– Tax expense (2) (579) (629) (801)
= NOPAT (as adjusted) $1,062 $1,237 $1,468
Adjusted average invested capital      
Total equity $3,874 $4,842 $5,662
+ Long-term debt (3) 579 551 605
+ Capitalized operating leases, net of excess cash (4) 849 321 776
= Adjusted average invested capital $5,302 $5,714 $7,043
ROIC 20% 22% 21%


Note: NOPAT (as adjusted) based on continuing operations data
(1) Based on fixed rent associated with leased properties
(2) Tax expense calculated using effective tax rates for FY 2005 (35.3%), FY 2006 (33.7%) and FY 2007 (35.3%)
(3) Long-term debt plus current portion of convertible debt, as applicable
(4) Capitalized operating leases, net of cash and cash equivalents in excess of $300 million