The litigation charge refers to Berger v Retirement Income Guarantee Plan (RIGB), a case brought against Xerox’s primary US pension plan for salaried employees. In the suit, the plaintiffs are challenging the method used to calculate lump-sum retirement benefits since 1990, according to a news release.
Even though the pension plan is currently appealing a ruling made in September 2002 by the US District Court for the Southern District of Illinois, the charge reflects the value of the original judgment that the company was required to disclose under current accounting standards.
If the district court ruling is upheld, any final judgment would be paid from the plan’s assets. Should Xerox need to make a cash contribution to compensate for any potential shortfall in the plan related to this litigation, it would not have to begin doing so until 2005.
However, the Stamford, Connecticut-based company’s external counsel have expressed optimism about the prospects of overturning the lower court’s decision following the April 9 oral argument of the plan’s appeal to the the 7th US Circuit Court of Appeals. Excluding the charge, the company said its operational performance in the first quarter exceeded expectations.