$262 million in 1990, and earnings per share increased from 1990's $0.50 to $1.08 in 1991. In the first quarter of 1992, the rebound appeared to continue, when earning per share in the first quarter of 1992 were $0.22 compared to $0.10 in the first quarter
of 1991, and first quarter revenues in 1992 were $66.9 million compared to just $65.3 million in the first quarter of 1991. All of the apparent good new was not, however, what it appeared to be. In the context of operations, Stone & Webster, instead of posting and earnings per share increase of $0.52 in 1991 ($1.08 in 1991 compared to $0.50 in 1990), actually posted a one-cent per share loss--from $0.50 in 1990 to $0.49 in 1991.
That result left a $0.53 per share gain to be explain. The explanation was that the $0.53 per share earnings gain was entirely the result of an accounting change. The accounting change was related to the company's funding of employee pension benefits. In 1991, Stone & Webster Engineering Corp. began recognizing income on investments dedicated to the funding of employee retirement benefits. This investment income accounted
for 52 percent of the company's 1991 earnings per share and more than 100 percent of the reported gain in earnings per share. This accounting change did not, in the opinion of this reviewer, lead to improved financial reporting. If fact, if investors did not take the time to scrutinize the company's financial reports, relying instead on summary reports from financial reporting agencies, they might easily have been misled about the nature of the company's financial performance.
An Inventory Valuation Accounting Change At Hewlett-Packard
In the late-1980s, the Hewlett-Packard Corporation implemented the Just-in-Time (JIT) techniques for manufacturing management. The introduction of high-tech into the manufacturing process has, in most instances, been accompanied by significant shift in emphasis in manufacturing m...