DuPont has announced that, as of 2013, it will be introducing operating earnings as the basis for reporting results. According to DuPont Executive Vice President and CFO Nicholas C. Fanandakis: “This change, which is better aligned with management’s decision-making process, also allows for better comparison of each business’s operating results to their peer companies’ operating results that have different benefit structures.”
DuPont announced the introduction of operating earnings as the basis for reporting results to provide more transparency to the company’s operational results and pension costs. The company defines operating earnings (non-GAAP) as earnings from continuing operations (GAAP) excluding significant items and non-operating pension and other post-retirement employee benefit (OPEB) costs, which are impacted by changes in interest rates and plan returns. The pension/OPEB service cost component is included in operating earnings as this reflects the ongoing costs of providing post-retirement benefits to the company’s eligible employees.
“We believe this reporting change provides investors with better transparency to operational results by reducing volatility in earnings due to non-operational factors, such as fluctuations in discount rates and return on plan assets,” said DuPont Executive Vice President and CFO Nicholas C. Fanandakis. “This change, which is better aligned with management’s decision-making process, also allows for better comparison of each business’s operating results to their peer companies’ operating results that have different benefit structures.”
DuPont will begin reporting operating earnings in 2013. For the nine-month period ended 30 September 2012, non-operating pension/OPEB costs were approximately USD .36 per share on a continuing operations basis. The company has provided additional information regarding this change in reporting as well as a summary of operating earnings and segment earnings by quarter for 2010, 2011 and third quarter year-to-date 2012 on the DuPont Investor Center website at www.investors.dupont.com.
Management believes that certain non-GAAP measurements are meaningful to investors because they provide insight with respect to ongoing operating results of the company. Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance.