Du Pont Plans $5.28-Billion Charge for ’92

Du Pont Co. said Monday that it will take $5.28 billion in charges against 1992 earnings, mainly because of a new accounting rule on retirement health care benefits.

The Wilmington, Del.-based chemical company said it also plans a reduction in its contributions to health care plans of active and retired workers.

“To my knowledge (the charge) is the biggest hit the company’s ever taken at one time. Every company’s got it. GM will be a lot bigger than this when they do it,” said Earl L. Timmons, Du Pont senior vice president for finance.

Du Pont’s charge for the new retiree rule will be $3.8 billion, or $5.65 per share after taxes, to be taken retroactively for the first quarter of 1992.

The charge is to comply with a new rule that requires companies to record obligations for retirees’ future health benefits during the years those benefits are promised, rather than when the payments are actually made.

Du Pont now pays 89% of health care costs while employees, retirees and survivors of employees pay 11%. The company plans to change that to an 80%-20% split on Jan. 1, 1994. If costs continue to climb, the company plans to implement a 50-50 split with employees, retirees and survivors beginning Jan. 1, 1997, for any increases above 1996 levels.

Bruce W. Karr, Du Pont vice president for integrated health care, said such costs have been increasing 12% in the last four to five years.

The company will take a $200-million charge, or 30 cents per share, for after-tax increases in ongoing retiree health care costs.

The other big charge to earnings announced Monday is $1 billion, or 30 cents per share, against first-quarter 1992 earnings, with the adoption of another new accounting standard for income taxes.

In the fourth quarter, Du Pont said further business restructurings, including a decision not to rebuild a nylon-production facility that burned in Richmond, Va., will trigger a one-time, after-tax charge of $275 million, or 40 cents per share.

Du Pont stock closed at $48.25 on the New York Stock Exchange, up $1.125.