There is a little more to it than that.
Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $67.3 billion in the third quarter, compared with an increase of
$21.8 billion in the second quarter. Current-production cash flow (net cash flow with inventory
valuation adjustment) -- the internal funds available to corporations for investment -- increased $45.0
billion in the third quarter, compared with an increase of $6.0 billion in the second.
Taxes on corporate income increased $19.3 billion in the third quarter, in contrast to a decrease
of $10.3 billion in the second. Profits after tax with inventory valuation and capital consumption
adjustments increased $48.1 billion in the third quarter, compared with an increase of $31.9 billion in
the second. Dividends increased $11.3 billion compared with an increase of $20.4 billion; currentproduction
undistributed profits increased $36.8 billion, compared with an increase of $11.6 billion.
Domestic profits of financial corporations increased $71.3 billion in the third quarter, in contrast
to a decrease of $39.7 billion in the second. Domestic profits of nonfinancial corporations decreased
$1.0 billion in the third quarter, in contrast to an increase of $27.8 billion in the second. In the third
quarter, real gross value added of nonfinancial corporations decreased, and profits per unit of real value
added increased. The increase in unit profits reflected an increase in unit prices that was partly offset by
increases in both the unit labor and nonlabor costs corporations incurred.
The rest-of-the-world component of profits decreased $2.8 billion in the third quarter, in contrast
to an increase of $33.6 billion in the second. This measure is calculated as (1) receipts by U.S. residents
of earnings from their foreign affiliates plus dividends received by U.S. residents from unaffiliated
foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreign parents plus
dividends paid by U.S. corporations to unaffiliated foreign residents. The third-quarter decrease was
accounted for by a larger increase in payments than in receipts.
Profits before tax increased $106.6 billion in the third quarter, in contrast to a decrease of $16.3
billion in the second. The before-tax measure of profits does not reflect, as does profits from current
production, the capital consumption and inventory valuation adjustments. These adjustments convert
depreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost basis to
the current-cost measures used in the national income and product accounts. The capital consumption
adjustment increased $2.9 billion in the third quarter (from -$202.4 billion to -$199.5 billion), in contrast
to a decrease of $1.7 billion in the second. The inventory valuation adjustment decreased $42.1 billion
(from $16.0 billion to -$26.1 billion), in contrast to an increase of $39.7 billion.
Effective with this release, chained-dollar gross value added of nonfinancial corporate business
was revised beginning with 2009. Chained-dollar gross value added is derived by deflating currentdollar
gross value added by a revised chain-type price index for nonfinancial industries from BEA’s
annual industry accounts released earlier this month.
BEA's national, international, regional, and industry estimates; the Survey of Current Business; and
BEA news releases are available without charge on BEA's Web site at www.bea.gov
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* * *
Next release -- December 20, 2012, at 8:30 A.M. EST for:
Gross Domestic Product: Third Quarter 2012 (Third Estimate)
Corporate Profits: Third Quarter (Revised Estimate)