Income Statement FY 2017 1000 615 385 230 15 140 35 105 2205

Income Statement FY 2017 1000 615 385 230 15 140 35 105 22.05 82.95 Sales COGS Gross Profit S,G&A; Restructuring Charges Interest Expense Taxes (21 %) Operating Income (EBIT) EBT NI Weighted Average Diluted Shares Diluted Earnings Per Share 30 2.77

Solution

Under US GAAP accounting standard, impairment, writeup, write-downs, restructuring costs and gains/losses from disposal of assets/parts of a business are all reported under the combined head of Unusual and Infrequent Items which is a part of income from continuing operations before tax. Of the three unusual and infrequent items mentioned, impairment losses are included under the head of other operating costs/expenses. Restructuring Cost is mentioned separately and Gain from the warehouse sale needs to be included under the head of \"other income\". The normalized income statement would be as given below:

Gross Profit = $ 385 million

LESS: S,G and A = $ 230 million

LESS: Other Operating Cost/Expense (Impairment) =$ 10 million

LESS: Restructuring Costs = $ 15 million

Operating Income (EBIT) = $ 130 million

ADD: Other Income (Gains from Warehouse Sale) = $ 2 million

Income from Continuing Operations = $ 132 million

LESS: Interest Expense = $ 35 million

EBT = $ 97 million

LESS: Taxes (21%) = $ 22.05 million

NI = $ 74.95 million

Weighted Average Diluted Shares = 30 million

Adjusted Diluted EPS = 74.95 / 30 = $ 2.4983