More Companies Report Health Reform Impact
Reuters reports that Boeing said it would take an income tax charge of $150 million, or 20 cents per share, against first-quarter results. The impact of the change was not factored into the company’s previous forecast. Prudential Financial Inc. said it expects a $100 million charge during the first quarter.
Meanwhile, 3M Co. will record a one-time, noncash charge of up to $90 million, or 12 cents per share. Honeywell International Inc. in January estimated that health care reform would trim its first-quarter earnings 4 cents to 5 cents per share. According to Reuters, a Honeywell spokesman said last week that the company had not updated the earlier cost estimate and would continue to review the legislation.
However, not all big companies are reporting a financial hit. General Electric Co. says it does not expect a “significant material impact” on its first-quarter results.
Also included in the Reuters update:
- Illinois Tool Works Inc. (ITW) said it would take a $22 million charge for the change, lowering its first-quarter earnings per share by 4 cents.
- Valero Energy Corp said it expects to take a charge of $15 million to $20 million in the first quarter due to the new health care legislation, and it expects more tax costs to be calculated later.
- Metals processor Allegheny Technologies Inc. looks for a first-quarter, one-time, noncash charge of about $5 million, or 5 cents per share.
Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees receive subsidies covering 28% of eligible costs, but are allowed to deduct the entire amount they spent on these drug benefits — including the subsidies — from their taxable income. The new bill allows companies to only deduct the 72% they spent on those programs.
AT&T, Deere &Co., Caterpillar Inc., and AK Steel Holding Corp. previously reported they were taking charges related to prescription-drug benefits for retirees (see Companies Begin to Report Healthcare Bill “Bill”).You Might Also Like:
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