SPX Announces U.S. Qualified Pension Plan Actions
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Massachusetts Mutual Life Insurance Company Agrees to Assume Pension Payment Obligations for Retirees Voluntary Single Lump Sum Payment Option Planned for Eligible Former Employees - Expected to reduce SPX's U.S. qualified pension obligations by ~$800 million - Pension payments for ~16,000 retirees will be made by Massachusetts Mutual Life Insurance Company and remain unchanged - ~7,500 eligible former employees to be offered a voluntary single lump sum payment option - No change to active employee benefits due to these actionsTweet Send to a Friend
CHARLOTTE, N.C., Nov. 13, 2013 /PRNewswire/ -- SPX Corporation (NYSE: SPW) today announced that it has agreed to transfer its obligations for monthly pension payments for current retirees under the SPX US Pension Plan (the "Plan") to Massachusetts Mutual Life Insurance Company and it also intends to offer a voluntary lump sum payment option to most former SPX employees who are entitled to a future pension benefit from the Plan.
These two actions, when completed, are expected to reduce SPX's U.S. qualified pension obligations by approximately $800 million, or 75%.
Approximately 16,000 retirees will begin receiving their pension payments from Massachusetts Mutual Life Insurance Company, which will take over the monthly pension payments in April 2014. Additionally, the company intends to offer about 7,500 eligible former employees a voluntary single lump sum payment option in lieu of a future pension benefit under the Plan during a designated election period in the first quarter of 2014. Affected Plan participants will soon begin to receive further details about these actions.
"We appreciate the contributions our retirees and former employees have made to the company and we believe these actions will provide continued security and increased flexibility in managing their benefits," said Jeremy Smeltser, Vice President and Chief Financial Officer.
Smeltser continued, "From a company perspective, the $250 million voluntary pension contribution we made to the Plan in the first quarter of this year, and the current economic environment, have put us in position to take these actions, which are not expected to require any additional funding. These actions are both consistent with our strategy to reduce volatility in pension costs and funding requirements and are expected to strengthen our balance sheet and improve our financial flexibility."
In conjunction with these actions, the company also intends to change to mark-to-market accounting for pension and post retiree medical plans. Under this approach, the company will be required to revise prior period financial results to reflect the impact of the change to mark-to-market accounting.
As a result of these actions and the change to mark-to-market accounting, and based on the current economic environment, the company anticipates recording a net, non-cash credit in its fourth quarter 2013 results and plans to exclude this credit from its adjusted earnings per share calculation.
Going forward, annual service costs on the company's remaining pension obligations are expected to remain near the 2013 estimated level and the Plan contributions are expected to be immaterial to the company's annual operating cash flows.
About SPX: Based in Charlotte, North Carolina, SPX Corporation (NYSE: SPW) is a global Fortune 500 multi-industry manufacturing leader with approximately $5 billion in annual revenue, operations in more than 35 countries and over 14,000 employees. The company's highly-specialized, engineered products and technologies are concentrated in flow technology and energy infrastructure. Many of SPX's innovative solutions are playing a role in helping to meet rising global demand for electricity and processed foods and beverages, particularly in emerging markets. The company's products include food processing systems for the food and beverage industry, critical flow components for oil and gas processing, power transformers for utility companies, and cooling systems for power plants. For more information, please visit www.spx.com.
Certain statements in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. Please read these results in conjunction with the company's documents filed with the Securities and Exchange Commission, including the company's annual reports on Form 10-K, and any amendments thereto, and quarterly reports on Form 10-Q. These filings identify important risk factors and other uncertainties that could cause actual results to differ from those contained in the forward-looking statements. Actual results may differ materially from these statements. The words "intends", "plan", "expect," "anticipate," "project", "will" and similar expressions identify forward-looking statements. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. In addition, estimates of future operating results are based on the company's current complement of businesses, which is subject to change. Statements in this press release speak only as of the date of this press release, and SPX disclaims any responsibility to update or revise such statements.
SOURCE SPX Corporation
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