Item 2.02 Results of Operations and Financial Condition
On
Non-GAAP Financial Measures
The Company uses free cash flow to measure cash flow generated by operations that is available for dividends, share repurchases, acquisitions and debt repayment. The Company believes this non-GAAP financial measure is useful to investors in evaluating the Company's financial performance and measures the Company's ability to generate cash internally to fund Company initiatives. Free cash flow represents net cash provided by operating activities less additions to plant and equipment. Free cash flow is a measurement that is not the same as net cash flow from operating activities per the statement of cash flows and may not be consistent with similarly titled measures used by other companies. A reconciliation of free cash flow to net cash provided by operating activities is included in the press release furnished as Exhibit 99.1.
The Company uses after-tax return on average invested capital ("ROIC") to
measure the effectiveness of its operations' use of invested capital to generate
profits. ROIC is a non-GAAP financial measure that the Company believes is a
meaningful metric to investors in evaluating the Company's financial performance
and may be different than the method used by other companies to calculate ROIC.
For comparability, the Company excluded the third quarter 2019 discrete tax
benefit of
Item 9.01 Financial Statements and Exhibits (d) Exhibits Exhibit Number Exhibit Description 99.1 Press Release issued byIllinois Tool Works Inc. datedOctober 23 , 2020 (furnished pursuant to Item 2.02). 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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