94 | Allegion Investor Day Adjustments to Revenue & Net Earnings 1. Adjustments to net revenues for the year ended December 31, 2013 and 2012 reflect the impact of a change in order flow through the Company's consolidated joint venture in Asia resulting from a revised joint venture operating agreement signed in late 2013. Previously, the consolidated joint venture acted as a pass-through to the end customer. Going forward, products are shipped direct to the end customer with the joint venture receiving a royalty in an amount that approximates the lost margin. The consolidated joint venture will no longer recognize the revenue and cost of goods sold on these products. The change is not expected to have a material impact on operating income or on cash flows in future periods. 2. Adjustments to operating income for the year ended December 31, 2013 consist of $5.9 million of costs incurred as part of the spin-off from Ingersoll Rand, $5.8 million of restructuring charges, a $137.6 million goodwill impairment charge and a $21.5 million gain on a property sale in China. Adjustments to operating income for the year ended December 31, 2012 include $8.2 million of restructuring charges and other expenses. 3. Adjustments to the provision for income taxes for the year ended December 31, 2013 consist of $4.7 million of tax expense related to the items excluded from operating income discussed above and a benefit of $44.8 million of discrete adjustments consisting of $31.5 million of expense related to valuation allowances on deferred tax assets that are no longer expected to be utilized and $13.3 million of net tax expense resulting primarily from transactions occurring to effect the spin-off from Ingersoll Rand. Adjustments to the provision for income taxes for the year ended December 31, 2012 consist of $2.5 million of tax expense related to the items excluded from operating income discussed above. 4. Adjustments to non-controlling interest for the year ended December 31, 2013 consist of the portion of adjustments described in (2) and (3) above that are not attributable to Allegion plc shareholders. Year ended December 31, 2013 Year ended December 31, 2012 Reported Spin-off related and other charges Adjusted (non-GAAP) Reported Spin-off related and other charges Adjusted (non-GAAP) Net revenues $ 2,093.5 $ (52.0) (1) $ 2,041.5 $ 2,046.6 $ (78.0) (1) $ 1,968.6 Operating income 235.8 127.8 (2) 363.6 368.6 8.2 (2) 376.8 Operating margin 11.3 % 17.8 % 18.0 % 19.1 % Earnings before income taxes 218.5 127.8 346.3 363.9 8.2 372.1 Provision for income taxes 174.2 (40.1 ) (3) 134.1 135.9 2.5 (3) 138.4 Earnings from continuing operations 44.3 167.9 212.2 228.0 5.7 233.7 Non-controlling interest 12.5 (5.3 ) (4) 7.2 5.7 — (4) 5.7 Net earnings from continuing operations attributable to Allegion plc $ 31.8 $ 173.2 $ 205.0 $ 222.3 $ 5.7 $ 228.0 Diluted earnings per ordinary share attributable to Allegion plc shareholders: $ 0.33 $ 1.80 $ 2.13 $ 2.32 $ 0.06 $ 2.38 Tax Rate 79.7 % 38.7 % 37.3 % 37.2 % | 
