Analyzing Business Earnings 89
EXHIBIT 2.35 (Continued)
1995 1996 1997
Deduct
Pretax LIFO liquidation gains
Gains on sales of fixed assets (disposal of assets) 18.3 31.7 18.4
Gains on sales of investments (Varco stock) 44.3
Gains on sales of other assets
Reversals of restructuring charges
Investment write-ups (trading account)
Foreign currency gains 4.1
Litigation revenues
Gains on patent infringement suits
Temporary expense decreases
Temporary revenue increases
Reversals of bad-debt allowances
Other
Other
Other
Subtotal $18.3 $76.0 $22.5
Multiply by
(1 – Combined federal and state tax rate) 58% 58% 58%
Tax-adjusted deductions $10.6 $44.1 $13.1
Deduct
After-tax LIFO liquidation gains
Reductions in deferred tax valuation allowances
Loss carryfor ward benefits—from prior periods 13.1 3.3 4.2
Other nonrecurring tax benefits
(IRS audit agreement) 11.4
Gains on discontinued operations
Extraordinary gains
Gains/cumulative-effect accounting changes
Other
Other
Other
Subtotal $13.1 $3.3 $15.6
Total deductions $23.7 $47.4 $28.7
Sustainable earnings base $97.4 $158.6 $241.3