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Lawsuit Pricks Xerox Profit
Monday April 21, 12:06 pm ET
By Motley Fool Staff


Pension woes can bite a company in more ways than one, as Xerox (NYSE: XRX - News) is making clear today.

The office equipment maker says it will have to take a first-quarter charge of $183 million to cover the costs of litigation involving its retirement plan. That will have a negative impact on earnings to the tune of $0.25 per share.

The issue involves a court ruling that found Xerox had not paid enough retirement benefits to some former workers. A spokesperson told The Wall Street Journal the lawsuit challenged the way the company has calculated lump-sum benefits since 1990. Although it's appealing the verdict, accounting standards require Xerox to take the charge to cover possible damage payments to plaintiffs.

Investors, however, pushed the stock up 4% today. Why? Many are looking past the pension woes and concentrating instead on news that the company may see stronger growth this year and that first-quarter operational earnings will exceed expectations.
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