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ecurring as for Kimberly-Clark, they remain irregular and unpredictable and should at least be
isolated from core measures of ongoing operating profitability.
For some companies, disclosure of restructuring charges is so prominent that it would be difficult to
miss them. In its 2007 annual report, The Hershey Company reported its restructuring charges in at
least four separate locations:
1. On a separate line item of the income statement (step 1 in the nonrecurring items search
sequence).
2. Within the operating activities section of the statement of cash flows, with the noncash
portion of the charges added back to net earnings or loss (step 2 in the search sequence).
3. In the section of the MD&A dealing with earnings (step 6 in the search sequence).
4. In a separate note to the financial statements on restructuring charges (step 7d in the
search sequence).
Quarterly and Segmental Financial Data
Quarterly and segmental financial disclosures frequently reveal nonrecurring items, sometimes as
footnotes to the schedules to support the assessment of profitability trends by quarter or by segment.
E.I. du Pont de Nemours and Company, for example, reported the effects of a litigation charge and an
asset impairment charge on the 2007 pretax earnings of its Performance Materials segment. 30 Quarterly
financial data of Bristol-Myers Squibb Company included a schedule of items affecting comparability,
such as downsizing charges of $37 million in the first quarter, a $247 million gain on the sale of
property in the third quarter, and its $275 million auction rate securities impairment charge in the
fourth quarter. 31
The last item to consider before we illustrate the collection of information on nonrecurring items
and the development of the sustainable earnings series is other comprehensive income that companies
must disclose in addition to net income.
Earnings Analysis and Other Comprehensive Income
As part of the disclosure of its statement of shareholders‟ equity, the Walt Disney Company included
the table shown in Exhibit 3.22.
Exhibit 3.22 Comprehensive income: The Walt Disney Company, year ended September 29,
2007 (in millions).
Source: The Walt Disney Corporation, annual report, September 2007, Statement of Shareholders‟
Equity.