Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations

UNITED STATES BUREAU OF THE CENSUS

Economic and Statistics Administration, U.S. Department of Commerce

ADVANCE DATA FROM THE QUARTERLY FINANCIAL REPORT FOR MANUFACTURING, MINING, AND TRADE CORPORATIONS--FOURTH QUARTER 1998

April 1999-------------------Released 10 a.m. (EDT), Monday, April 5, 1999 (CB99-64)
Contact: Ronald H. Lee (301) 457-3343 or Frank Hartman (301) 457-3379.

Note: For order & release information, see the end of this report.

Except where noted, all figures in text and tables are not seasonally adjusted.

Sales and after-tax profits data for all manufacturing are presented in Table 1 on both a seasonally adjusted and an unadjusted basis. Seasonally adjusted historical data for this series, as well as for total durable and total nondurable manufacturing, are presented in Table 3. Data for individual manufacturing industries are not seasonally adjusted.

Beginning with the first quarter of 1998, the reporting forms used by the Quarterly Financial Report Program were updated to conform with changes in accounting principles and to provide more meaningful data to users. As a result, net income before and after tax have been redefined to include minority stockholders` interest. Prior quarter data in the publication and the press release have been restated to reflect this change in definition.

CHART 1:

CHART 2:
[Manufacturing Profits Per Dollar of Sales]
Manufacturing corporations` seasonally adjusted after-tax profits averaged 5.1 cents per dollar of sales for the fourth quarter of 1998, down 1.1 (+\-0.1) cents from the third quarter of 1998. The Commerce Department`s Bureau of the Census also reported that on an unadjusted basis, after-tax profits for the fourth quarter averaged 4.5 cents per dollar of sales, down 1.7 (+\-0.1) cents from the preceding quarter and down 0.9 (+\-0.2) cents from the same quarter in 1997.

For the fourth quarter of 1998, manufacturers` seasonally adjusted after-tax profits were $50.1 billion, down $10.5 (+\-1.4) billion from last quarter. On an unadjusted basis, fourth quarter after-tax profits were $45.5 billion, down $15.5 (+\-1.4) billion from last quarter and down $9.0 (+\-1.6) billion from the same quarter a year ago.

Unadjusted durable manufacturers` after-tax profits for the fourth quarter of 1998 were $28.5 billion, showing no statistically significant change from the third quarter of 1998. The underlying industry categories reported mixed results. Motor vehicles, electrical machinery, and machinery reported increased earnings. Motor vehicles` and machinery`s improvements of $2.9 (+\-0.1) and $0.9 (+\-0.4) billion, respectively, were due primarily to higher operating profits. Electrical machinery`s $1.1 (+\-0.4) billion increase was a result of improved operating profits more than offsetting a decrease in nonrecurring income due to gains from asset sales that were included in last quarter`s income. Fabricated metals and stone, clay, and glass reported declines of $1.3 (+\-0.3) and $1.2 (+\-0.2) billion, respectively. Fabricated metals` decline was due primarily to lower operating profits. Stone, clay, and glass`s decrease was a result of lower operating profits and the inclusion of significant nonrecurring charges in this quarter`s income. Also reporting statistically significant decreases were nonferrous metals, iron and steel, and aircraft.

When compared to the fourth quarter of 1997, unadjusted durable manufacturers` profits also showed no statistically significant change, with the underlying industry categories showing mixed results. Electrical machinery and aircraft reported increases. Electrical machinery`s $1.1 (+\-0.5) billion improvement was due chiefly to a significant decrease in nonrecurring charges. Aircraft`s $0.8 (+\-0.1) billion increase was due principally to higher operating profits. Fabricated metals, iron and steel, motor vehicles, and lumber reported statistically significant decreases in earnings.

Unadjusted nondurable manufacturers` after-tax profits for the fourth quarter of 1998 were $17.0 billion, down $16.3 billion or 48.9 percent (+\-2.4%) when compared to the third quarter of 1998. Most underlying industry categories were down. Petroleum`s $7.8 (+\-0.1) billion drop was due to lower operating profits, the inclusion this quarter of significant nonrecurring charges against income, and a decline in foreign equity earnings. Food and residual chemicals` decreases of $3.7 (+\-0.3) and $2.3 (+\-0.2) billion, respectively, were primarily the result of declines in operating profits and the inclusion this quarter of significant nonrecurring charges against income. Apparel, paper, textiles, and industrial chemicals also reported statistically significant declines. Drugs` $0.9 (+\-0.3) billion increase, the only statistically significant increase for the nondurable group, was due to higher operating profits and dividends from foreign subsidiaries more than offsetting a decline in equity income from foreign subsidiaries.

When compared to the same quarter in 1997, unadjusted nondurable manufacturers` profits were down $9.0 billion or 34.5 percent (+\-3.1%), with the underlying industry categories showing mixed results. Petroleum`s $10.6 (+\-0.1) billion decline, the largest for the group, was due principally to lower operating profits, the inclusion of significant nonrecurring charges against income this quarter, and a decline in equity income from foreign subsidiaries. Residual of chemicals, drugs, and apparel also reported statistically significant decreases. Printing, industrial chemicals, paper, and food reported statistically significant increases. Printing`s $1.5 (+\-0.6) billion increase was due chiefly to improved operating profits and the inclusion of significant nonrecurring charges against income in the fourth quarter of 1997.

Manufacturers` seasonally adjusted sales for the fourth quarter of 1998 were $986.1 billion, showing no statistically significant change from last quarter. On an unadjusted basis, sales were $1,004.4 billion, up $22.7 billion or 2.3 percent (+\-1.0%) from last quarter, but showing no statistically significant change from the fourth quarter of 1997.

Seasonally adjusted sales at the nondurable level were $440.4 billion, showing no statistically significant change from last quarter. Seasonally adjusted durable manufacturers` sales were $545.6 billion, up $7.3 billion or 1.4 percent (+\-1.4%) from last quarter. Unadjusted sales at the nondurable manufacturing level were $447.3 billion, showing no statistically significant change from last quarter, but down $22.8 billion or 4.8 percent (+\-1.3%) from a year ago. Unadjusted durable manufacturers` sales were $557.1 billion, up $26.2 billion or 4.9 percent (+\-1.4%) when compared to the third quarter of 1998. On a same quarter a year ago basis, durable manufacturers` sales were up $16.2 billion or 3.0 percent (+\-1.4%).

Also included in this release are fourth quarter 1998 data for large mining and wholesale and retail trade corporations.

These advance data, based on quarterly financial reports from about 8,200 corporations, were released today from the Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations Fourth Quarter 1998 (QFR-98-4). The publication includes statements of income and retained earnings, balance sheets, and related financial and operating ratios. The aggregated data are classified by industry and asset size.

EXPLANATORY NOTES:

This quarter`s publication contains data revised due to the reclassification of corporations by industry, and revisions that reflect respondents` corrections of submitted data subsequent to original publication.

The data presented in this report are estimated from a sample survey and therefore are subject to sampling variability as well as nonsampling variability such as response error, nonreporting, and coverage errors. Estimates of sampling variability are presented in the publication. A statement such as "up 2.5 (+\-0.15) cents," appearing in the text, indicates the range (+2.35 to +2.65 cents) in which the actual change is likely to have occurred. The range given for the change is a 90 percent confidence interval that accounts only for sampling variability. If the range had contained zero (0), it would have been uncertain whether there was an increase or decrease; that is, the change would not have been statistically significant. For any comparison cited without a confidence interval, the change is statistically significant. The quarterly publication includes more detailed explanations of confidence intervals and sampling variability, along with additional measures of sampling variability.

AVAILABILITY:

The complete report, Quarterly Financial Report for Manufacturing, Mining and Trade Corporations, is available for download, under "Products: Publication", at <http://www.census.gov/csd/qfr/>.

This press release is available in page image format Download Adobe Acrobat Reader (.pdf). This press release is also available (in text format) on the day of issue through the Department of Commerce`s on-line Economic Bulletin Board (202-482-1986).

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Files are also available on 3.5 inch flexible diskettes from U.S. Department of Commerce, Bureau of the Census (MS1921), P.O. Box 277943, Atlanta, GA 30384-7943 (301-763-INFO(4636)). The annual subscription cost is $84; $66 for the first diskette and $6 for each additional diskette.

Questions regarding this report (or program) should be directed to Ronald H. Lee (301) 457-3343 or Frank Hartman (301) 457-3379.

TABLE 1. PART A--QUARTERLY FINANCIAL REPORT FOR MANUFACTURING CORPORATIONS

                                                   Seasonally Adjusted
                                                 4Q        3Q        4Q    
                                               1998      1998(1)   1997(1) 
Rate of return (after taxes):
 Cents per dollar of sales ................     5.1       6.2       6.0
 Percent on equity (annual rate) ..........      NA        NA        NA    

                                                   (million dollars) 
Sales ..................................... 986,053   983,983   991,984
 Income after income taxes ................  50,126    60,588    59,282
 Dividends paid (cash) ....................      NA        NA        NA

(1) Revised.