Kroger Announces Agreement with UFCW to Merge Four Pension Plans into New Fund; Expects to Increase 2012 EPS by $0.04-0.06
The Kroger Co. (NYSE: KR) today announced that four of the UFCW/multi-employer pension funds to which the company contributes will merge into a new fund effective January 1, 2012. This new arrangement is expected to reduce Kroger's annual pension contribution expense and will secure the pension benefits of more than 65,000 Kroger associates.
Pending market conditions, favorable discussions with the rating agencies and the approval of three remaining UFCW locals, Kroger expects to contribute approximately $650 million to the new fund in January 2012. As a result, the company would incur a charge to earnings for the fourth quarter of 2011 of approximately $0.73 per share. On an after-tax basis, approximately $413 million would be needed to make this contribution. The exact effect on net earnings per diluted share will depend on the actual amount contributed.
The new pension arrangement will result in a reduced fiscal year 2012 pension expense, and increase fiscal year 2012 net earnings by $0.04 to $0.06 per diluted share. This increase was not contemplated in the guidance for fiscal year 2012 earnings per share growth of 8% to 10% that Kroger provided on December 1. Absent this agreement, contributions and the related expense would have continued to grow in 2012 and beyond.
