NEW YORK, Dec 7 (Reuters) - Credit Suisse calculates that 128 companies in the Standard & Poor's 500 index, including Northrop Grumman Corp and Goodyear Tire and Rubber Co, could face a pension-related hit to earnings in 2009, Barron's said on Sunday.
S&P 500 companies collectively face a pension deficit of at least $200 billion due to the stock market rout, according to the Credit Suisse analysis, Barron's reported.
According to Barron's, the global bear market is colliding with the U.S. Pension Protection Act of 2006, which bolstered pension funding requirements starting in 2008, creating the likelihood that some of the largest U.S. companies will need to pour more money into their pensions to the point that it could hurt next year's profits.
The act requires companies that have underfunded pension plans to pay additional premiums. It also closed loopholes that previously allowed underfunded plans to skip pension payments.
Using Credit Suisse data, Barron's estimated that defense contractor Northrop Grumman's pensions will be 85 percent funded in 2008, which will cost $1.74 per share. In 2008, Goodyear Tire's pensions will be 69 percent funded, costing $1.17 per share, according to Barron's.
But defense contractor General Dynamics Corp, whose pension obligations Barron's predicts will cost the company 60 cents per share next year, said pension costs will have a minimal impact on its earnings since it can pass most of such costs onto the government, Barron's reported.
Other S&P 500 companies that could face an earnings hit related to pension costs in 2009 according to Barron's include Ryder System Inc, PPG Industries Inc, Ashland Inc , Eastman Chemical Co, Allegheny Technologies Inc, FirstEnergy Corp, and J.C. Penney Co Inc .
(Reporting by Helen Chernikoff; Editing by Leslie Adler) Keywords: PENSIONS/SP500 (helen.chernikoff@thomsonreuters.com; +1 646 223 6127; Reuters Messaging: helen.chernikoff.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
S&P 500 companies collectively face a pension deficit of at least $200 billion due to the stock market rout, according to the Credit Suisse analysis, Barron's reported.
According to Barron's, the global bear market is colliding with the U.S. Pension Protection Act of 2006, which bolstered pension funding requirements starting in 2008, creating the likelihood that some of the largest U.S. companies will need to pour more money into their pensions to the point that it could hurt next year's profits.
The act requires companies that have underfunded pension plans to pay additional premiums. It also closed loopholes that previously allowed underfunded plans to skip pension payments.
Using Credit Suisse data, Barron's estimated that defense contractor Northrop Grumman's pensions will be 85 percent funded in 2008, which will cost $1.74 per share. In 2008, Goodyear Tire's pensions will be 69 percent funded, costing $1.17 per share, according to Barron's.
But defense contractor General Dynamics Corp, whose pension obligations Barron's predicts will cost the company 60 cents per share next year, said pension costs will have a minimal impact on its earnings since it can pass most of such costs onto the government, Barron's reported.
Other S&P 500 companies that could face an earnings hit related to pension costs in 2009 according to Barron's include Ryder System Inc, PPG Industries Inc, Ashland Inc , Eastman Chemical Co, Allegheny Technologies Inc, FirstEnergy Corp, and J.C. Penney Co Inc .
(Reporting by Helen Chernikoff; Editing by Leslie Adler) Keywords: PENSIONS/SP500 (helen.chernikoff@thomsonreuters.com; +1 646 223 6127; Reuters Messaging: helen.chernikoff.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.