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Reconciliation of NI to OCF Fiscal year (amounts before analysis adjustments) (1) Projected (us dollars in millions) L08 M m M L12 E Income from...

Explain (1)positive reconciling items that do not appear to be sustainable sources of OCF, (2)the level and trend of the company's cumulative ratio of OCF to NI before D&A and (3) the trend of the company's average AR collection period, inventory "days," DPO, and net operating cycle, emphasizing their implications for the company's earnings quality.aaa.jpg

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Reconciliation of NI to OCF Fiscal year (amounts before analysis adjustments) (1) Projected
(us dollars in millions) L08 M m M L12 E Income from contin.oper., incl. noncontrol. interests $ 2,037 $ 2,397 $ 2,313 $ 2,554 $ 2,631 $ (360) Reconciling items (amounts before analysis adjustments): Depreciation and amortization (D&A) 348 351 376 421 425 500
NI before D&A 2,385 2,748 2,689 2,975 3,056 140
Stock-based compensation expense 100 117 121 122 120 -
Gain before tax on sale of non-core product lines - (5) (50) (207) - Gain (loss) on debt restruct/early extinguish - - - . .
Gain (loss) on disposal of invest sec's AFS - - - - - Gain (loss) on disposal of PP&E - - - . . Venuzuela hyperinflation transition charge - - 271 - -
'"ESQQ'GQBS‘EHEEEJEJHG; """"""""""""""""""""""""""""""" & E37"""""('i§')"""""""‘Eé'"""'"""1'65 """"""""" E 5"" """""""""" ." " Changes in NWC: #DlV/O! AR, net (70) 57 40 (130) 19 Inventories (1 35) 44 (1 0) (1 30) (21 ) [Not used] - — - - - Other noncurrent assets and liabilities (47) 136 135 54 30 AP and other accruals 125 294 (65) 199 (5) Voluntary benefit plan contribution - (73) (35) (178) (101) [Not used] - - - - - DIT liabilities—current (6) (23) 29 88 63
Other, net - - - - - -
OCF (as reported in company‘s SCFs) $ 2,302 $ 3,277 $ 3,211 $ 2,896 $ 3,196 #DlV/O!
Ratio of OCF to NI before D&A 1.0 1.2 1.2 1.0 1.0 #DlVIO!
Cumulative ratio of OCF to NI before D&A 1.0 1.1 1.1 1.1 1.1 #DIVIO!
Average AR collection period (days sales outstanding: 38 38 37 35 35 #DlV/0!
Average days to sell inventory 64 69 69 64 68 #DlV/O!
Average days purchase in AP and accrued liab. (DPO 78 86 92 84 87 #DlV/OI
Net operating cycle (days) 24 21 15 15 16 #DlV/O!

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