American General has profitable year - Earnings up in all units,
though Y2K accounting muddles quarter
=========================================================
HOUSTON CHRONICLE 1/28/99 - By Pamela Yip, Staff Reporter
American General chalked up strong earnings in 1998, but how the company accounted for the costs associated with resolving its Y2K computer problem confused some analysts.
Net earnings in 1998 soared 41 percent to $764 million, compared with $542 million in 1997. That includes a $288 million after-tax charge associated with Year 2000 compliance costs and settlements of lawsuits that accused American General of using deceptive sales practices to sell life insurance ...
In the fourth quarter, American General's net earnings totaled $1 million, compared with $230 million in the same quarter in 1997. Operating earnings totaled $264 million in the quarter, compared with $219 million in the comparable quarter in 1997. Operating earnings per share in the fourth quarter were $1.02, up 16 percent from the fourth quarter of 1997.
Because American General excluded Y2K costs in its earnings per share calculations, the company "clearly did not beat" analysts earnings estimates, said Charles Hill, director of research at First Call in Boston, which compiles the earnings estimates.
Analysts were calling for American General to earn 96 cents operating earnings per share in the fourth quarter. If American General hadn't separated Y2K costs from its earnings-per-share calculations, it would have had operating earnings of 95 cents per share in the fourth quarter, Hill said.
"I certainly would not take the $1.02 and compare it to 96 and say they beat the estimates," he said. "That would be fallacious. They either met it or missed it by a penny." Hill said he was giving the company the benefit of the doubt because he didn't have the precise figures on which to base his calculations.
"It would appear that they came in at 95 (cents operating earnings per share) vs. expectations of 96," he said. "We don't know how the rounding works out."
American General officials said the company has met or exceeded earnings estimates throughout the year, regardless of how Y2K costs are accounted for.
"We have approached reporting earnings in a way that appropriately reflects our earnings progression," said spokesman John Pluhowski.
Other analysts said they were pleased with American General's earnings
performance and that Y2K costs are a short-term expense and the company is already in the testing phase of its Year 2000 efforts.
=========================================================
OFF TOPIC: I dated past president of American General back in late 80's. On Gold Monitor thread, I came across a press clipping regarding a congressman I dated back in 70's. In 60's I dated a multiple Grammy Award nominee. Throughout 90's I was travelling throughout the world with my wonderful ex-"signigicant other", who since sold his company to one listed on NYSE.
Now I'm in Oregon ... dateless ... pounding the keys ... researching Y2K
HOW BORING!!! Looking forward to spring, when I'll be cutting back on research, and doing some gardening.
Cheryl
|
