Item 6. Selected Financial Data.(1)

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Item 6. Selected Financial Data.(1)



(Dollars in thousands, except per share data)	2015			2014			2013			2012			2011
RESULTS OF OPERATIONS
Net sales	$	2,020,668		$	2,147,767		$	2,024,130		$	1,954,258		$	1,838,451
Gross profit	904,315			949,315			873,364			803,700			738,673
Selling, general and administrative expenses	479,408			504,419			477,851			444,490			421,703
Gain on sale of business	(18,070		)	—			—			—			—
Restructuring expenses	11,239			13,672			—			32,473			12,314
Asset impairments	—			—			—			198,519			—
Operating income	431,738			431,224			395,513			128,218			304,656
Other (income) expense — net	(2,243		)	(3,111		)	178			(236		)	1,443
Interest expense	41,636			41,895			42,206			42,250			29,332
Provision for income taxes	109,538			113,054			97,914			48,574			80,024
Net income	282,807			279,386			255,215			37,630			193,857
Earnings per share (2)
— basic	$	3.65		$	3.48		$	3.11		$	0.45		$	2.34
— diluted	$	3.62		$	3.45		$	3.09		$	0.45		$	2.32
Weighted average shares outstanding
— basic	77,126			79,715			81,517			82,689			82,145
— diluted	77,972			80,728			82,489			83,641			83,543
Year-end shares outstanding	76,535			78,766			81,196			82,727			83,234
Cash dividends per share	$	1.28		$	1.12		$	0.89		$	0.80		$	0.68
FINANCIAL POSITION
Current assets	$	862,684		$	1,075,791		$	990,953		$	881,865		$	789,161
Current liabilities	309,597			411,968			304,609			291,427			258,278
Current ratio	2.8			2.6			3.3			3.0			3.1
Operating working capital (3)	370,213			366,209			350,881			373,704			396,126
Total assets (4)	$	2,805,443		$	2,903,463		$	2,881,118		$	2,777,821		$	2,827,535
Total borrowings (4)	840,794			859,345			767,417			779,007			800,238
Shareholders’ equity	1,443,291			1,486,451			1,572,989			1,464,998			1,513,135
PERFORMANCE MEASURES AND OTHER DATA
Percent of net sales:
Gross profit	44.8		%	44.2		%	43.1		%	41.1		%	40.2		%
Selling, general and administrative expenses	23.7		%	23.5		%	23.6		%	22.7		%	22.9		%
Operating income	21.4		%	20.1		%	19.5		%	6.6		%	16.6		%
Income before income taxes	19.4		%	18.3		%	17.4		%	4.4		%	14.9		%
Net income	14.0		%	13.0		%	12.6		%	1.9		%	10.5		%
Capital expenditures	$	43,776		$	47,997		$	31,536		$	35,520		$	34,548
Depreciation and amortization	78,120			76,907			79,334			78,312			72,386
Return on average assets (5)	9.9		%	9.7		%	9.0		%	1.3		%	13.7		%
Borrowings as a percent of capitalization (5)	36.8		%	36.6		%	32.8		%	34.7		%	34.6		%
Return on average shareholders’ equity (5)	19.3		%	18.3		%	16.8		%	2.5		%	13.4		%
Employees at year end	6,801			6,712			6,787			6,717			6,814
Record holders at year end	6,760			6,500			6,500			6,700			7,000
NON-GAAP MEASURES (6)
EBITDA	$	512,101		$	511,242		$	474,669		$	206,766		$	375,599
EBITDA margin	25.3		%	23.8		%	23.5		%	10.6		%	20.4		%
Adjusted EBITDA	$	505,270		$	524,914		$	474,669		$	437,758		$	387,913
Adjusted EBITDA margin	25.0		%	24.4		%	23.5		%	22.4		%	21.1		%
Adjusted operating income	$	424,907		$	444,896		$	395,513		$	359,210		$	332,772
Adjusted operating margin	21.0		%	20.7		%	19.5		%	18.4		%	18.1		%
Adjusted net income	$	277,229		$	288,823		$	255,215		$	224,067		$	213,758
Adjusted earnings per share	$	3.55		$	3.57		$	3.09		$	2.68		$	2.56


(1)	For additional detail, see Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data.”


(2)	Calculated by applying the two-class method of allocating earnings to common stock and participating securities as required by ASC 260, Earnings Per Share.


(3)	Operating working capital is defined as inventory plus accounts receivable minus accounts payable.


(4)	In the fourth quarter of fiscal year 2015, the Company adopted Accounting Standards Update 2015-03 regarding simplifying the presentation of debt issuance costs. The update was applied retrospectively to all periods presented in accordance with the provisions of the update. Refer to Note 1 for additional information related to ASU 2015-03 and Note 5 in the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data” for additional information related to the impact on the financials.

(4)

In the fourth quarter of fiscal year 2015, the Company adopted Accounting Standards Update 2015-03 regarding simplifying the presentation of debt issuance costs. The update was applied retrospectively to all periods presented in accordance with the provisions of the update. Refer to Note 1 for additional information related to ASU 2015-03 and Note 5 in the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data” for additional information related to the impact on the financials.


(5)	Return on average assets is calculated as: Net income / (Current year Total assets + Prior year Total assets) / 2; Borrowings as a percent of capitalization is calculated as: (Long-term borrowings + Short-term borrowings) / (Long-term borrowings + Short-term borrowings + Total shareholders’ equity); Return on average shareholders’ equity is calculated as Net Income / (Current year Total shareholders’ equity + Prior year Total shareholders’ equity) / 2

(5)

Return on average assets is calculated as: Net income / (Current year Total assets + Prior year Total assets) / 2; Borrowings as a percent of capitalization is calculated as: (Long-term borrowings + Short-term borrowings) / (Long-term borrowings + Short-term borrowings + Total shareholders’ equity); Return on average shareholders’ equity is calculated as Net Income / (Current year Total shareholders’ equity + Prior year Total shareholders’ equity) / 2


(6)	Set forth below are reconciliations of Adjusted operating income, Adjusted net income, Adjusted EPS, EBITDA and Adjusted EBITDA to the comparable measures of net income and operating income, as determined in accordance with U.S. GAAP. We have reconciled Adjusted operating income to Operating income; Adjusted net income to Net income; Adjusted EPS to EPS; consolidated EBITDA to net income; and segment EBITDA to segment operating income.

(6)

Set forth below are reconciliations of Adjusted operating income, Adjusted net income, Adjusted EPS, EBITDA and Adjusted EBITDA to the comparable measures of net income and operating income, as determined in accordance with U.S. GAAP. We have reconciled Adjusted operating income to Operating income; Adjusted net income to Net income; Adjusted EPS to EPS; consolidated EBITDA to net income; and segment EBITDA to segment operating income.

Management uses Adjusted operating income, Adjusted net income, and Adjusted EPS as metrics by which to measure performance of the Company since they exclude items that are not reflective of ongoing operations, such as gains on the sale of business and restructuring expenses. Management also supplements its U.S. GAAP financial statements with adjusted information to provide investors with greater insight, transparency, and a more comprehensive understanding of the information used by management in its financial and operational decision making.

EBITDA means earnings before interest, income taxes, depreciation and amortization. Given the acquisitive nature of the Company which results in a higher level of amortization expense at recently acquired businesses, management uses EBITDA as an internal operating metric to provide management with another representation of performance of businesses across our three segments and for enterprise valuation purposes. EBITDA is also used to calculate certain financial covenants, as discussed in Note 5 of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data.” In addition, EBITDA has been adjusted for items that are not reflective of ongoing operations, such as gains on the sale of business and restructuring expenses to arrive at Adjusted EBITDA. Management believes that Adjusted EBITDA is useful as a performance indicator on ongoing operations. We believe that Adjusted EBITDA is also useful to some investors as an indicator of the strength and performance of the Company and its segments’ ongoing business operations and a way to evaluate and compare operating performance and value companies within our industry. The definition of Adjusted EBITDA used here may differ from that used by other companies.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures prepared in accordance with U.S. GAAP, and the financial results prepared in accordance with U.S. GAAP and the reconciliations from these results should be carefully evaluated.



Reconciliations of Consolidated EBITDA

	For the Years Ended December 31,
	2015			2014			2013			2012			2011
	(In thousands)
Net income	$	282,807		$	279,386		$	255,215		$	37,630		$	193,857
+ Provision for income taxes	109,538			113,054			97,914			48,574			80,024
+ Interest expense	41,636			41,895			42,206			42,250			29,332
+ Depreciation and amortization	78,120			76,907			79,334			78,312			72,386
EBITDA	512,101			511,242			474,669			206,766			375,599
+ Restructuring expenses	11,239			13,672			—			32,473			12,314
+ Gain on sale of business	(18,070		)	—			—			—			—
+ Asset impairments	—			—			—			198,519			—
Adjusted EBITDA	$	505,270		$	524,914		$	474,669		$	437,758		$	387,913

Net sales	$	2,020,668		$	2,147,767		$	2,024,130		$	1,954,258		$	1,838,451
EBITDA margin	25.3		%	23.8		%	23.5		%	10.6		%	20.4		%
Adjusted EBITDA margin	25.0		%	24.4		%	23.5		%	22.4		%	21.1		%



Reconciliations of Segment EBITDA

	For the Years Ended December 31,
	2015									2014									2013
	FMT			HST			FSDP			FMT			HST			FSDP			FMT			HST			FSDP
	(In thousands)
Operating income	$	204,506		$	157,948		$	115,745		$	216,886		$	152,999		$	130,494		$	211,256		$	136,707		$	102,730
- Other (income) expense	(840		)	(178		)	(1,453		)	(560		)	(542		)	(990		)	1,789			(508		)	(342		)
+ Depreciation and amortization	27,662			42,827			6,051			26,453			42,478			6,583			27,633			43,496			6,852
EBITDA	233,008			200,953			123,249			243,899			196,019			138,067			237,100			180,711			109,924
+ Restructuring expenses	7,090			3,408			576			6,413			4,912			1,034			—			—			—
Adjusted EBITDA	$	240,098		$	204,361		$	123,825		$	250,312		$	200,931		$	139,101		$	237,100		$	180,711		$	109,924

Net sales	$	860,792		$	738,996		$	423,915		$	899,588		$	752,021		$	502,749		$	871,814		$	714,650		$	445,049
EBITDA margin	27.1		%	27.2		%	29.1		%	27.1		%	26.1		%	27.5		%	27.2		%	25.3		%	24.7		%
Adjusted EBITDA margin	27.9		%	27.7		%	29.2		%	27.8		%	26.7		%	27.7		%	27.2		%	25.3		%	24.7		%



Reconciliations of Consolidated Reported-to-Adjusted Operating Income and Margin

	For the Years Ended December 31,
	2015			2014			2013			2012			2011
	(In thousands)
Operating income	$	431,738		$	431,224		$	395,513		$	128,218		$	304,656
+ Restructuring expenses	11,239			13,672			—			32,473			12,314
+ Gain on sale of business	(18,070		)	—			—			—			—
+ Asset impairments	—			—			—			198,519			—
+ CVI fair value inventory charge	—			—			—			—			15,802
Adjusted operating income	$	424,907		$	444,896		$	395,513		$	359,210		$	332,772

Net sales	$	2,020,668		$	2,147,767		$	2,024,130		$	1,954,258		$	1,838,451

Operating margin	21.4		%	20.1		%	19.5		%	6.6		%	16.6		%
Adjusted operating margin	21.0		%	20.7		%	19.5		%	18.4		%	18.1		%



Reconciliations of Segment Reported-to-Adjusted Operating Income and Margin

	For the Years Ended December 31,
	2015									2014									2013
	FMT			HST			FSDP			FMT			HST			FSDP			FMT			HST			FSDP
	(In thousands)
Operating income	$	204,506		$	157,948		$	115,745		$	216,886		$	152,999		$	130,494		$	211,256		$	136,707		$	102,730
+ Restructuring expenses	7,090			3,408			576			6,413			4,912			1,034			—			—			—
Adjusted operating income	$	211,596		$	161,356		$	116,321		$	223,299		$	157,911		$	131,528		$	211,256		$	136,707		$	102,730

Net sales	$	860,792		$	738,996		$	423,915		$	899,588		$	752,021		$	502,749		$	871,814		$	714,650		$	445,049

Operating margin	23.8		%	21.4		%	27.3		%	24.1		%	20.3		%	26.0		%	24.2		%	19.1		%	23.1		%
Adjusted operating margin	24.6		%	21.8		%	27.4		%	24.8		%	21.0		%	26.2		%	24.2		%	19.1		%	23.1		%



Reconciliations of Reported-to-Adjusted Net Income and EPS

	For the Years Ended December 31,
	2015			2014		2013		2012		2011
	(In thousands)
Net income	$	282,807		$	279,386	$	255,215	$	37,630	$	193,857
+ Restructuring expenses, net of tax	7,653			9,437		—		22,926		8,716
+ Gain on sale of business, net of tax	(13,231		)	—		—		—		—
+ Asset impairments, net of tax	—			—		—		163,511		—
+ CVI fair value inventory charge, net of tax	—			—		—		—		11,185
Adjusted net income	$	277,229		$	288,823	$	255,215	$	224,067	$	213,758

EPS	$	3.62		$	3.45	$	3.09	$	0.45	$	2.32
+ Restructuring expenses, net of tax	0.10			0.12		—		0.27		0.10
+ Gain on sale of business, net of tax	(0.17		)	—		—		—		—
+ Asset impairments, net of tax	—			—		—		1.96		—
+ CVI fair value inventory charge	—			—		—		—		0.14
Adjusted EPS	$	3.55		$	3.57	$	3.09	$	2.68	$	2.56

Diluted weighted average shares	77,972			80,728		82,489		83,641		83,543

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