Goodyear Announces Changes to U.S. Pension, Retiree Benefit Plans
February 28 2007 - 8:29AM
PR Newswire (US)
AKRON, Ohio, Feb. 28 /PRNewswire-FirstCall/ -- The Goodyear Tire
& Rubber Company today announced a series of changes to its
U.S.-based retail and salaried employee pension and retiree benefit
plans aimed at increasing its global competitiveness while
significantly reducing its cost structure. "These changes allow us
to continue to provide the kind of compensation packages that are
competitive and will attract and retain talented associates," said
Kathleen T. Geier, senior vice president of human resources. "They
are also consistent with our goal of reducing costs in excess of $1
billion by the end of 2008." The changes will be phased in over a
two-year period, with most benefit plan changes effective in 2008
and the most significant pension plan changes in 2009. As a result,
Goodyear expects after-tax savings of $80 million to $90 million in
2007, $100 million to $110 million in 2008, and $80 million to $90
million in 2009 and beyond. The actions are expected to reduce the
company's pension obligation by approximately $100 million and its
obligation for other post retirement benefits by about $525 million
assuming interest rates used to value the obligations remain
similar to those used at Dec. 31, 2006. Goodyear plans to record a
one-time after-tax charge of approximately $65 million related to
these actions in the first quarter of 2007. Benefit plan changes
effective Jan. 1, 2008, include: -- Increasing the amounts that
current and future salaried retirees contribute toward the cost of
their medical benefits, -- Redesigning retiree medical benefit
plans to minimize cost impact on premiums, -- Closing the company's
Medicare supplement plan to new entrants and -- Discontinuing
company-paid life insurance for salaried retirees. The pension
changes include: -- Freezing the current salaried defined benefit
pension plans as of Dec. 31, 2008, -- Replacing the defined benefit
pension plans with enhanced 401(k) savings accounts with varying
levels of company contributions for current associates beginning
Jan. 1, 2009 and -- Introducing company-matching contributions for
the salaried 401(k) savings plan at 50 percent of the first 4
percent of annual pay beginning Jan. 1, 2009. "The changes that
we've made were only made after careful consideration of
alternatives, recognizing that there will be varying levels of
personal impact depending on the circumstances of each associate
and retiree," Geier said. According to Geier, there is a strong
movement on the part of major corporations away from defined
benefit pension plans and toward defined contribution plans.
Additionally, the recently enacted Pension Protection Act is
expected to accelerate the migration away from traditional defined
benefit pensions. Details of the plan changes will be directly
communicated to the affected salaried associates and retirees over
the next several weeks. Moving forward, Goodyear associates will be
able to access online retirement modeling tools and investment
education sessions to assist with pension and benefit decisions,
and to plan for the impact of these changes. Goodyear is one of the
world's largest tire companies. The company manufactures tires,
engineered rubber products and chemicals in more than 90 facilities
in 28 countries around the world. Goodyear employs more than 75,000
people worldwide. Certain information contained in this press
release may constitute forward-looking statements for purposes of
the safe harbor provisions of The Private Securities Litigation
Reform Act of 1995. Actual results may differ materially from those
indicated by such forward-looking statements. There are a variety
of additional factors, many of which are beyond the company's
control, which affect its operations, performance, business
strategy and results and could cause its actual results and
experience to differ materially from the assumptions, expectations
and objectives expressed in any forward- looking statements. These
factors include, but are not limited to: actions and initiatives
taken by both current and potential competitors; increases in the
prices paid for raw materials and energy; the company's ability to
realize anticipated savings and operational benefits from its cost
reduction initiatives, including those expected to be achieved as a
result of the benefit plan changes described above, the company's
master labor contract with the United Steelworkers (USW) and those
related to the closure of certain of the company's manufacturing
facilities; whether or not the various contingencies and
requirements are met for the establishment of the Voluntary
Employee Beneficiary Association (VEBA) to be established to
provide healthcare benefits for current and future USW retirees;
potential adverse consequences of litigation involving the company;
pension plan funding obligations as well as the effects of more
general factors such as changes in general market or economic
conditions or in legislation, regulation or public policy.
Additional factors are discussed in the company's filings with the
Securities and Exchange Commission, including the company's annual
reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K. In addition, any forward-looking statements
represent our estimates only as of today and should not be relied
upon as representing our estimates as of any subsequent date. While
we may elect to update forward-looking statements at some point in
the future, we specifically disclaim any obligation to do so, even
if our estimates change. DATASOURCE: The Goodyear Tire & Rubber
Company CONTACT: The Goodyear Tire & Rubber Company,
http://www.goodyearnewsroom.com/ Web site: http://www.goodyear.com/
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