Performance measures

We evaluate the performance of our divisions based on orders received, revenues and Operational EBITA.

Operational EBITA represents income from operations excluding:

  • amortization expense on intangibles arising upon acquisitions (acquisition-related amortization),
  • restructuring and restructuring-related expenses,
  • changes in the amount recorded for obligations related to divested businesses occurring after the divestment date (changes in obligations related to divested businesses),
  • changes in estimates relating to opening balance sheets of acquired businesses (changes in pre-acquisition estimates),
  • gains and losses from sale of businesses,
  • acquisition- and divestment-related expenses and integration costs,
  • certain other non-operational items, as well as
  • foreign exchange/commodity timing differences in income from operations consisting of: (a) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (b) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (c) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities).

Certain other non-operational items generally includes: certain regulatory, compliance and legal costs, certain asset write downs/impairments as well as other items which are determined by management on a case-by-case basis.

See “Note 23 Operating segment and geographic data” to our Consolidated Financial Statements for a reconciliation of the total consolidated Operational EBITA to income from continuing operations before taxes.