Growing Pension Costs Push Xerox to Issue Additional Shares

[Anonymous]

Growing pension costs push Xerox to issue additional shares of stock

To help plug a financial hole in its pension plan, Xerox Corp. is issuing 15.4 million additional shares of stock.

With Xerox trading at roughly $8.50, the shares being issued have a total value of about $130 million.

Xerox’s pension is proving to be a sizable financial burden this year. Xerox Chief Financial Officer Luca Maestri told Wall Street analysts in January that the company expects to end the first quarter, which it is in now, with an operating loss because of bigger-than-expected pension costs this year. The company in that call also said its overall profits for 2012 would be lower than previously estimated because of having to spend $100 million more than previously thought on its pension.

Driving up Xerox’s spending on its pension are the worsening economy in Europe and a declining discount rate — the interest rate used to calculate the present value of future spending.

Xerox put $426 milion into its pension plan in 2011, about $200 million more than it did in 2010. And its pension plan expenses for 2012 will likely be about the same, Maestri said.

The company — the area’s largest publicly traded empoyer, with roughly 6,300 local workers — late last year said it was freezing its U.S. pension plans so that as of as of the start of 2013 there would be no further benefit accruals. Xerox also offers a 401(k).The shares Xerox is issuing will go into a trust that in turn will sell them to the public.

http://www.rbj.net/article.asp?aID=190630
Xerox to issue stock to fund pension plan
Xerox Corp. will issue nearly 15.4 million additional shares of stock to help fund its pension plan, a filing with the Securities and Exchange Commission show.

The stock is valued at $8.46 a share, with a total value of roughly $130 million, the filing states.

The shares Xerox is issuing will go into a trust managed by Evercore Trust Co. N.A., which will then sell them to the public.

Increased pension costs are expected to add to a projected operating loss in Xerox’s first quarter, company leaders said this year.

Shares of Xerox  were trading midday at $8.40, down less than 1 percent from Wednesday’s close of $8.46

[Author]

March 19, 2012 at 8:31 AM