Today's Heard on the Street:
"If 2002 was the year of options, the year 2003 will be that of pension-fund accounting," says Kenneth Shea, head of global equity research at S&P, a unit of McGraw-Hill Cos.
On a net-income basis, the big-company S&P 500-stock index earned $26.74 a share for the 12 months ended June 30. But, after adjusting to account for items including both the actual rate of return on pension funds as well as the expensing of stock options, the figure drops to $18.48 a share, which S&P calls "core earnings." Of the difference, pension-fund costs outpace stock-option costs, $6.54 versus $5.21, while some positive items kick in to offset some of the collective bad news.
Using the core earnings method, Anheuser-Busch, for example, would have reported $1.84 a share for the 12 months ending June 30. However, on a net-income basis, Anheuser-Busch reported $2.05 per share. Of the difference 8 cents comes from the expensing of stock options, while 14 cents is attributable to pension-fund costs, nearly double the cost of stock options. |
