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Old 03-26-2010, 06:20 PM  
googlegoogle googlegoogle is offline
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Caterpillar and AT&T tax hit - $14 billion dollars.

http://www.businessweek.com/news/2010-03-26/at-t-to-take-1-billion-charge-on-health-care-reform-update1-.html@pjstar.com

AT&T to Book $1 Billion Cost on Health-Care Reform (Update3)

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(Adds health-care bill background in 12th paragraph.)
By Amy Thomson and Ian King
March 26 (Bloomberg) -- AT&T Inc. will book $1 billion in first-quarter costs related to the health-care law signed this week by President Barack Obama, the most of any U.S. company so far.
A change in the tax treatment of Medicare subsidies triggered the non-cash expense, and the company will consider changes to the benefits it offers current and retired workers, Dallas-based AT&T said today in a regulatory filing.
AT&T, the biggest U.S. phone company, joins Caterpillar Inc., AK Steel Holding Corp. and 3M Co. in recording non-cash expenses against earnings as a result of the law. Health-care costs may shave as much as $14 billion from U.S. corporate profits, according to an estimate by benefits consulting firm Towers Watson. AT&T employed about 281,000 people as of the end of January.
“Companies like AT&T, that have large employee bases, are going to have higher health-care costs and, therefore, lower earnings unless they can negotiate something or offer less to their employees,” said Chris Larsen, an analyst at Piper Jaffray & Co. in New York, who rates AT&T shares “overweight” and doesn’t own any himself.
AT&T previously received a tax-free benefit from the government to subsidize health-care costs for retirees, who would otherwise be on a Medicare Part D plan. Under the new bill, AT&T will no longer be able to deduct that subsidy.
“As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree health-care benefits offered by the company,” the carrier said in the filing.
3M Cost
AT&T’s announcement was followed about an hour later by 3M, the St. Paul, Minnesota-based maker of products ranging from Post-It Notes to respiratory masks. 3M said it expects a one-time expense of $85 million to $90 million after tax, or about 12 cents a share, in the first quarter because of the new law, according to a statement. 3M had about 75,000 employees as of Feb. 5.
Michael Coe, a spokesman for the carrier, declined to comment. Peter Thonis, a spokesman for Verizon Communications Inc., which also employs more than 200,000 people, declined to comment.
New York-based Verizon, the second-largest U.S. phone company, told employees in a note after the law was signed that the tax will make the subsidy less valuable to employers like Verizon and so “may have significant implications for both retirees and employers.”
AT&T rose 9 cents to $26.24 at 4 p.m. in New York Stock Exchange composite trading. The shares have fallen 6.4 percent this year.
Union Contracts
AT&T employees represented by the Communications Workers of America union have health benefits locked in via contracts that don’t expire until 2012 and 2013, Candice Johnson, a spokeswoman for the union, said in an interview. About 58 percent of the carrier’s workforce is represented by the union, AT&T said in a filing.
Obama signed the health-care reform policy into law on March 23 after a year of pushing the legislation through Congress without a single Republican vote. The new law will be phased in over several years and gives tens of millions of uninsured Americans health coverage. The bill, projected to cost almost $1 trillion, also calls for new taxes on the highest earners and fees on health-care companies.
Much of the public is still unsure about the plan with four in 10 Americans in favor of it, according to a Bloomberg National Poll. Obama is planning a follow-up campaign to sell the law -- the biggest change to the health system since Medicare was enacted in 1965 -- to the public.
--With reporting by Roger Runningen in Washington and Alex Nussbaum in New York. Editors: Lisa Wolfson, Stephen West
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net; Amy Thomson in New York at athomson6@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net; Julie Alnwick at jalnwick@bloomberg.net

Last edited by googlegoogle; 03-26-2010 at 06:27 PM..
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Old 03-26-2010, 06:42 PM   #2
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Shhh, these are just talking points. Liberals don't like to talk about reality.
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Old 03-26-2010, 07:36 PM   #3
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Old 03-26-2010, 08:37 PM   #4
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I woundn't be surpried is Cat moved across the border. Bye Bye MORE jobs.
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Old 03-26-2010, 08:41 PM   #5
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Its ok. These guys are big corporations, and as such, they suck. /liberals
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Old 03-26-2010, 09:23 PM   #6
btlook1 btlook1 is offline
umm...what do I say here?
 
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Quote:
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I woundn't be surpried is Cat moved across the border. Bye Bye MORE jobs.
Kind of a no brainer on there part...to move to Mexico. That's a lot of jobs gone....thanks obama!
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Old 03-26-2010, 09:25 PM   #7
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Old 03-26-2010, 10:46 PM   #8
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Hey screw AT&T. I hate big corporations because they're all corporationey and they make money and stuff. I don't need text messaging or smart phones to vote for my favorite Idol contestant I'll just.... oh wait...


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Uninformed America.

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Old 03-26-2010, 11:39 PM   #9
Brainiac Brainiac is offline
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I guess it's not surprising that Big Red Chief, Mr. Kotter and Orange have NOTHING to say about this.

Liberals always think you can make things magically appear just by passing a law. Their failure to grasp basic economics and human motivation is surpassed only by their lack of understanding of what made this country great in the first place.
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Old 03-27-2010, 02:36 AM   #10
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I guess it's not surprising that Big Red Chief, Mr. Kotter and Orange have NOTHING to say about this.
I've got plenty to say about this. Don't speak for me, asswipe! I don't live at your beck and call.


As for AT&T - screw them. Why the hell should they get a free ride on OUR BACKS?

I'm guessing you folks don't know what this cost they're booking actually is.
Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits — including the subsidies — from their taxable income.

The new law allows companies to only deduct the 72 percent they spent.
http://www.startribune.com/business/89280147.html
DAMNATION! Only being able to deduct the money you ACTUALLY spent! How's a poor trillion dollar corporation going to get by?!

Hypocrites who've posted about the evils of gov't. subsidies line up below.
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Old 03-27-2010, 02:53 AM   #11
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Originally Posted by orange View Post
I've got plenty to say about this. Don't speak for me, asswipe! I don't live at your beck and call.


As for AT&T - screw them. Why the hell should they get a free ride on OUR BACKS?

I'm guessing you folks don't know what this cost they're booking actually is.
Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits — including the subsidies — from their taxable income.

The new law allows companies to only deduct the 72 percent they spent.
http://www.startribune.com/business/89280147.html
DAMNATION! Only being able to deduct the money you ACTUALLY spent! How's a poor trillion dollar corporation going to get by?!

Hypocrites who've posted about the evils of gov't. subsidies line up below.
But the difference will be made by the employees and the consumer...
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Old 03-27-2010, 03:26 AM   #12
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You know, googlegoogle, those numbers didn't make any sense to me so I did what no one else here ever does - I clicked your link. It reroutes to: http://www.pjstar.com/business/x1447...cost-estimates . Funny but the whole story is completely different now.

By PAUL GORDON (pgordon@pjstar.com)
Journal Star
Posted Mar 26, 2010 @ 04:23 PM
Last update Mar 26, 2010 @ 09:35 PM


PEORIA — Caterpillar Inc. and other large companies are being criticized by the Obama administration for reporting now that they will take millions of dollars in hits to their earnings because of one portion of the new health care legislation.

Caterpillar and Deere were accused of being “premature and irresponsible” by U.S. Secretary of Commerce Gary Locke for saying a change to Medicare Part D laws would hurt their earnings in the present quarter.

Those companies are also being questioned about the amounts they are claiming — amounts that seem to get larger with every company that makes a report to the U.S. Securities and Exchange Commission about taking a one-time charge as a result of the legislation.

Caterpillar started it all by saying it would take a $100 million hit on its first quarter earnings. Deere & Co. followed with a report it would lose $150 million to its fiscal second quarter earnings.

The largest estimated hit yet, $1 billion, was announced Friday by AT&T.

At issue is what kind of hit corporate America will take because it is losing a tax deduction from Medicare Part D. Before, companies were paid subsidies of $1,330 a year, tax-free, for every retiree for whom it provided a prescription drug plan. Then, that amount could be deducted from the company’s taxes.

The new law still provides the subsidy tax free, but companies will no longer be able to deduct it from taxes.

Also on Friday the Wall Street Journal said in a published report that it calculates Caterpillar’s loss would be more like $7 million, based on the fact Caterpillar told the SEC it expected to receive about $20 million annually from the tax deduction and the 35 percent corporate tax rate that would now be applied to that deduction amount.

But Caterpillar on Friday defended itself, reiterating its belief it must, under accepted accounting rules and regulations, record any one-time tax charge in the quarter in which the legislation causing that charge is signed.

The $100 million, said Caterpillar spokesman Jim Dugan, “is our calculation of what that change in Medicare Part D will mean to the company.”

Dugan was pressed for further explanation of how the calculation was made, including whether the $100 million was an estimate of what the change will cost Caterpillar in perpetuity since it can only be charged once.

He said further details will be included in Caterpillar’s first quarter earnings report, which will be released April 26.

On the time of the filing, Dugan said, “We felt it was very appropriate and prudent to file the disclosure with the SEC immediately. We tend to take a conservative approach to SEC filings.”

Dugan declined to comment on the statement of Commerce Secretary Locke, which he made in a live interview Thursday on CNBC.

He also declined to say anything more about a telephone call made Thursday from the White House to Vice Chairman Doug Oberhelman, which Oberhelman revealed while speaking to the Morton Rotary Club later on Thursday.

While he acknowledged the call was regarding the health care legislation, Oberhelman would not say from it it came or what was said. He did describe the call as “productive.”

Paul Gordon can be reached at 686-3288 or pgordon@pjstar.com


Copyright 2010 pjstar.com. Some rights reserved

Last edited by orange; 03-27-2010 at 03:36 AM..
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Old 03-27-2010, 03:28 AM   #13
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To reiterate:

Caterpillar started it all by saying it would take a $100 million hit on its first quarter earnings.

Wall Street Journal said in a published report that it calculates Caterpillar’s loss would be more like $7 million.


Quite a spread, there. SOMEONE'S lying.


... And if they're taking that deduction in perpetuity, then they better not be cutting those benefits in the future. Right?
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Old 03-27-2010, 03:38 AM   #14
'Hamas' Jenkins 'Hamas' Jenkins is offline
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Quote:
Originally Posted by orange View Post
To reiterate:

Caterpillar started it all by saying it would take a $100 million hit on its first quarter earnings.

Wall Street Journal said in a published report that it calculates Caterpillar’s loss would be more like $7 million.


Quite a spread, there. SOMEONE'S lying.


... And if they're taking that deduction in perpetuity, then they better not be cutting those benefits in the future. Right?
killshot.
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Old 03-27-2010, 03:42 AM   #15
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killshot.
this.
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