GAO Faults Cash-Balance Plans
Employees whose companies switch from traditional pension plans to an increasingly adopted alternative generally lose benefits, the Government Accountability Office found.
GAO auditors examined 31 large company pension plans and 102 smaller ones. They found that when employers switch from defined-benefit pension plans to cash-balance plans, "most workers, regardless of age, would have received greater benefits" under the defined-benefit plans. Also, unless older employees are allowed to remain in the traditional plan, they "experience a greater loss of expected benefits than younger workers," the report says.
Bernanke Hearing Tuesday
The Senate Banking Committee scheduled a confirmation hearing Tuesday on the nomination of Ben S. Bernanke to succeed Alan Greenspan as Federal Reserve chairman.
Bernanke, 51, a former Federal Reserve governor and Princeton University professor, is chairman of the White House's Council of Economic Advisers.
GM Increases Production
General Motors increased vehicle production in October even as sales fell, an indication that it might be preparing for a strike at parts supplier Delphi.
GM said that so far there have been no disruptions in supplies from Delphi and that GM has been assured shipments will continue as Delphi restructures in bankruptcy court.
GM's sales dropped 23 percent in October from a year ago, but the company increased North American production by 8 percent last month, making 174,000 cars and 315,000 trucks. GM plans to run at least 10 of its plants on overtime next week.
Icahn Firm Buys XO Unit
XO Communications, a Reston telephone company controlled by financier Carl C. Icahn, will sell its Internet-access unit to Icahn for $700 million in order to focus on wireless. Icahn's Elk Associates will take over the Web-access business by early next year, XO spokesman Chad Couser said. XO will remain a public company, selling wireless broadband service to businesses and other telecommunications companies in more than 70 major U.S. cities, he said.
Icahn, who owned 61 percent of XO as of April 1, is splitting apart a company he brought out of bankruptcy in 2003. XO, formerly known as Nextlink, was founded by Craig McCaw in 1994. The company's loss in 2004 quadrupled, to $405.5 million, on sales of $1.45 billion.
NexTone Raises $35 Million
NexTone Communications of Gaithersburg raised $35 million in a round of venture funding led by One Equity Partners, the private equity arm of J.P. Morgan Chase. NexTone, which makes software used in Internet voice and data networks, will use the money for expansion.
GE Eases Ousting of Directors
General Electric adopted a provision that makes it easier for shareholders to force out directors in corporate governance disputes. Directors standing for reelection must offer to resign if more than half of shareholders withhold votes, GE said. The board must accept the resignation unless there is a compelling reason. The board also adopted a measure requiring all non-employee directors to hold at least $500,000 in GE stock or deferred stock units. Members have five years to meet the requirement.
Coca-Cola Dumps Vanilla Flavor
Coca-Cola Co. will discontinue Vanilla Coke and Diet Vanilla Coke after slumping sales and will debut diet and regular versions of Black Cherry Vanilla Coke in January. The new flavor is meant to attract consumers who already drink Cherry Coke and Diet Cherry Coke, Atlanta-based Coca-Cola said yesterday. Volumes for Vanilla Coke, launched in 2002, and Diet Vanilla Coke fell 60 percent and 44 percent last year in the United States from peak volumes when the drinks were first offered, Beverage Digest reported.
Toyota Motor said its second-quarter earnings rose 2 percent to $2.6 billion as it increased sales at General Motors and Ford's expense. Revenue rose 10 percent to $42 billion as the automaker sold more vehicles in all of its major markets.
Berkshire Hathaway said third-quarter profit fell 48 percent to $586 million. Losses from hurricanes Katrina and Rita caused the insurance and investment company's lowest quarterly profit in almost four years. Revenue rose 7 percent to $20.53 billion.
Crimmie Mae of Rockville, a company with a portfolio of securities backed by commercial mortgages, earned $5.8 million (36 cents a share) in the third quarter, compared with a loss of $9.3 million (60 cents) a year earlier. The company, which has agreed to be acquired by a subsidiary of Quebec-based Caisse de Depot et Placement, said its liquidity increased 58.5 percent since the beginning of the year, to $71.5 million.
Compiled from staff and news service reports.