Core Earnings

4/14/2003

Questions on Pension Accounting and Pension Interest Costs

•Is there another way to measure pension costs without making earnings volatile?

–As long as one wants a year-by-year measure of the true earnings, the volatility will be there. However, in most years, actual pension gains cover most or all of the interest costs. For analysts who want to make other adjustments, such as using a multi-year moving average, Standard & Poor’s Core Earnings data show pension interest as a separate item. It is easy with Standard & Poor’s data to take this cost out of Standard & Poor’s Core Earnings for each company and each of our indices.

–If the S&P 500 is up 7.8% in 2003, Standard & Poor’s estimates, there will be no pension interest costs charged against Standard & Poor’s Core Earnings for the S&P 500.

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