Return on invested capital (ROIC)

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.

As a company, we define ROIC as follows:

Operating income	Total equity
+ Net rent expense ⁽¹⁾	+ Long-term debt ⁽³⁾
– Depreciation portion of rent expense ⁽¹⁾	+ Capitalized operation leases
= NOPBT (net operating profit before taxes, as adjusted)	– Excess cash
– Tax expense ⁽²⁾	= Adjusted average invested capital
= NOPAT (net operating profit after taxes, as adjusted)

Return on invested capital

($ in millions)	FY 2008	FY 2007	FY 2006

Net operating profit (as adjusted)
Operating income	$2,161	$ 1,999	$ 1,644
+ Net rent expense⁽¹⁾	654	562	464
– Depreciation portion of rent expense⁽¹⁾	(345)	(292)	(242)

= NOPBT (as adjusted)	$ 2,470	$ 2,269	$ 1,866
– Tax expense⁽²⁾	(904)	(801)	(629)

= NOPAT (as adjusted)	$1,566	$1,468	$1,237

Adjusted average invested capital
Total equity	$ 4,445	$ 5,662	$ 4,842
+ Long-term debt⁽³⁾	640	605	551
+ Capitalized operating leases, net of excess cash⁽⁴⁾	2,626	776	321
= Adjusted average invested capital	$7,711	$7,043	$5,714

ROIC	20%	21%	22%

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 2008 (36.6%), FY 2007 (35.3%) and FY 2006 (33.7%) (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

Return on invested capital (ROIC)

As a company, we define ROIC as follows:

Operating income

Total equity

Return on invested capital