Whirlpool Changes Retiree Healthcare Plan to Cut Costs
Jun 12, 2003
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Whirlpool Corporation today announced changes to its U.S. retiree healthcare plans, which become effective January 2004. The changes affect the company's current U.S. retirees and employees. They are a part of the company's ongoing effort to manage increasing healthcare costs and strengthen its competitiveness, while continuing to provide employees with contemporary benefits coverage.
The new plan is based on a Retiree Healthcare Savings Account (RHSA), which will be established for each U.S.-paid employee retiring after Dec. 31, 2003. The RHSA is a notional account designed to provide employees that retire from Whirlpool with a company-funded healthcare savings account for each year of continuous service, beginning at age 40. The account will be reduced each year by paying for 80 percent of the cost of retiree healthcare plans; future retirees will pay the remaining 20 percent of the cost of the healthcare plan.
Current Whirlpool retirees will also have the choice of two new healthcare plans that require contributions and offer more comprehensive and contemporary coverage. They can also elect to stay in a plan similar to their current plan.
In conjunction with the change to the retiree healthcare plans, the company will record a non-cash, after-tax curtailment gain of U.S. $13.5 million, or $0.19 per diluted share, in the second quarter. This one-time gain will be largely offset by an after-tax charge of between $10 million to $12 million, or from $0.14 to $0.17 per diluted share. The one-time charge reflects additional costs related to the 2001 recall of certain microwave oven hood combination products.
The company continues to expect 2003 full-year earnings to be in the range of $5.90 to $6.10 per share, which includes the one-time gain and charge described above.
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