Newell Rubbermaid Announces Lump-Sum Offering

Newell Rubbermaid Inc. intends to offer approximately 3,300 former employees who have deferred vested benefits under the company’s defined benefit pension plan a one-time election to receive a lump-sum distribution of the present value of their benefits by the end of 2015.

In an 8-K filing with the Securities and Exchange Commission (SEC), the company said this will reduce the size of its pension plan obligation and related expenses. The benefit obligation associated with these former employees is approximately $120 million, equivalent to about 13% of the company’s benefit obligation.                  

According to the filing, based on the average acceptance rate of similar offers of approximately 50%, Newell Rubbermaid would recognize a one-time, non-cash settlement charge in the fourth quarter. At that participation level, the company would expect to incur a non-cash charge of approximately $35 million during the fourth quarter, but it noted that it will not be able to determine the amount of the fourth quarter charge until the offer is completed.

The Internal Revenue Service (IRS) recently amended regulations that prevent companies from making lump-sum offerings to pension plan beneficiaries who are already receiving regular payments of their benefits, but for beneficiaries whose payments have been deferred, lump-sum offerings can still be made.