Remington Going out of Business?

[Washington Hunter]

Thu, Sep. 08, 2005



Troubles possible for Remington plant in Lonoke


Associated Press

LONOKE, Ark. - North Carolina-based Remington Arms Co.'s chief executive has sent a letter to the company's 1,000 Lonoke employees saying the company's long-term survival could be in jeopardy because of pension plan problems.

"Our company is facing one of its biggest financial challenges of the past 25 years," chief executive Thomas Millner wrote in a copy of the letter obtained by the Arkansas Democrat-Gazette newspaper of Little Rock.

Millner said the pension plan is receiving low interest rates and returns on its investments. He said the company is meeting its legal obligations regarding the plan. The Remington Arms pension plan covers all non-union employees hired before June 1996 and all union employees hired before September 1997.

The rifle and shotgun company's pension plans had assets of $109.6 million at the end of 2004, according to its annual report filed with the Securities and Exchange Commission. By the end of that year the company had accumulated benefit obligations of $138.9 million, which benefit plan experts say indicates a shortfall of at least $29.3 million.

Charles Rink, manager of the Lonoke plant, said he has heard the shortfall could be more than $48 million. Millner said in his letter that the plan's multi-million dollar future liability could be beyond the company's ability to fund from its earnings.

Remington Arms had a net loss of $3.2 million in 2003 and $4 million last year after combined earnings of more than $53 million the three previous years. It's debt has grown from $157 million in 2000 to $203 million last year.

"The funding requirements of the pension plan have the long-term potential of affecting our survival," Rink said. "That's why we're looking at trying to be proactive and examining all alternatives to help protect what our employees have."

The Madison, N.C.-based company employs 2,400 people nationwide.






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© 2005 AP Wire and wire service sources. All Rights Reserved.
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[Whiskers]

One of the reasons you never participate in a 401 plan administered by the company.

 

[JoseCuervo]

PLEASE everyone. Do not follow Whisker's advice. He is 100% wrong and does not know what he is speaking of.

The article posted by WH was on the Pension at Remington, which is a Defined Benefit Plan, where the company promises to pay you xxxx amount of $$$$ when you retire. This is a complete different animal from a 401k plan. The best case for Remington, if the article is true, would be to file Ch. 11, allow them to duck out of the Pension obligations by making the Government's Pension Gauranty Corporation step in. This is similar to what some other old-line companies have been doing (think Airlines).

A 401K plan is a fund that is paid for by the employee and allows employees to set aside a certain percentage of their income, pre-tax into a Qualified Investment plan, usually adminsitered by a company like Fidelity, Schwab, or many of the other similar companies. Some companies may choose to match a portion of the employees' contributions. Sometimes, those matching portions of the company may vest over a period of time, or they may be the employee's immediately. In any event, the assets contributed in your 401k plan by you are YOURS and they are subject to the quality of the investment choices you make.

A 401k, despite what Whiskers says, is one of the best deals around. You are allowed to contribute pre-tax money, providing an instant 30-40% "return" by not paying taxes. Then, assuming your employer makes a matching contribution, you might get another 50% or so return. And finally, the earnings on the investments are allowed to compound TAX DEFERRED as long as they reamain inside the qualified plan.

As with all investment opportunities, please do your own due dilligence, read up, learn, make yourself educated, but please, don't listen to Whiskers.

 

[Erik in AK]

Jose,
That has to be the single best post you have ever made (under any moniker).

BTW what's your opinion of index funds and do you care to recommend one?

 

[Whiskers]

I didn't say not to go into a 401k! I said do not participate in one administered by the company. They can invest your 401K into there failing business, as alternative financing. Imagine you have a business going broke, your in charge of millions of dollars of 401 monies. You reinvest all that money into your company to try and bail it out. I understand thats what happened to all those folks at ENRON that lost their retirement. Make sure your 401 is administered by an outside source. Since the company I work for doesn't contribute to our 401k I administer my own. You get the tax deduction at the end of the year, instead of weekly. JOSE, read and understand the post before you start criticizing.

 

[FLIPPER]

HAhaha...get him whiskers

 

[Whiskers]

Flipper, it just irratates me. People read half something then decide to jump on someone else. What a DICK.

 

[JoseCuervo]

Whiskers,

Please become educated about a subject before you post. The people at Enron who had problems with their 401k were people who invested their 401k money in Enron stock.

I am not aware of a single company that administers their own 401k, other than perhaps the big financial institutions that are in that business, Fidelity, State Street, Schwab, Harris, etc.. If you know of one, please let me know.

Where do you get the idea of Remington's Pension plan being a 401k, and the underfunded obligations being related to the 401k plan??? A 401k is a defined CONTRIBUTION plan, where the employees know exactly what their contribution will be each year, based on an election they choose. The benefit that comes out of the defined CONTRIBUTION plan is unknown, and dependent upon the returns of the investment choices made. (In the Enron case, people made poor choices, and chose to invest in Enron stock. One should be extremely careful investing in your employer's stock, as you are getting a lot of exposure to a single company's performance with your job and your investments tied to the same company.)

Whiskers, go educate yourself on Defined Contribution plans vs. Defined Benefit plans, and then go look at your stupid statement again. "One of the reasons you never participate in a 401 plan administered by the company."


Erik,
I like index funds, and have always kept a significant portion of my investments in them. The logic behind them is they don't try and beat the market (whichever benchmark they track), but they try and MATCH the market. The result is, instead of some expensive portfolio manager who is paid a whole bunch of money to try and beat the market, the Index Fund is managed by a computer program that buys the basket of stocks of the underlying index and tracks it dilligently. Transaction costs of buying and selling are much lower, research costs are lower, and the computer doesn't need a limo and an Armani suit.

You can look at the performance return of most mutual funds, and they don't over the long term, beat the market, and when you subtract the fees, they have even more difficulty beating the market and the indicies you would measure them against. You willl always find exceptions, but if you are investing over the long term, it is too hard to count on exceptions.

As for specifics, there are many good ones, and if you are at the big Mutual Fund houses, the expense ratios of their index funds are low, so not much of an Issue. The orginal ones were from Vanguard, and the Vanguard 500 is always good.
http://quicktake.morningstar.com/Fund/snapshot.asp?Country=USA&Symbol=VFINX

Fidelity essentially offers their version....
http://quicktake.morningstar.com/Fund/Snapshot.asp?Country=USA&Symbol=FSMKX&pmts=FS2

I like many of the Schwab offerings because of the other services Schwab offers and the conveinence of holding all mutual funds at Charles Schwab & Co.
http://finance.yahoo.com/q/pr?s=SNXFX

(Disclosure: I hold shares in all three of the above mentioned mutual funds.)


ERik,

Also, you can look at some of the ETF's as they are offering an efficient way to get into a large basket of stocks that tracks the index you want. iShares by Barclay's is one of the biggest. http://www.ishares.com/h205.jhtml?investorType=INDIV&c=M3909&group=on_h205&_requestid=34668

As with all investment opportunities, please do your own due dilligence, read up, learn, make yourself educated, but please, don't listen to Whiskers.

 

[Whiskers]

There you go again. A lot of companies administer their own 401k. Millis Transfer, Zimmerman Truck Lines, Cable Entertainment, just a few that I know of from experience. I think if you do a little more searching you will find there are more than a few companies that administer the 401K. I wasn't saying that Remingtons 401K plans were jeporadized. I was making a statement thats why you don't let the companies you work for administer the plan. The investments companies you speak of are reputable companies, and I wouldn't have a problem with any of them administring my account.

 

[JoseCuervo]

Whiskers,

Do you know what the term "adminster" means? Maybe that is where you need the education. How do you use the term "administer"?


Here is Millis Transfer's 401k program. It does not seem to be anything other than a 401K with Mutual Funds offered.
http://www.millistransfer.com/benefits.html

Retirement

The Company Has Available A Plan Which Allow You To Prepare For The Golden Years

A. 401k Saving And Retirement Plan, Which Allows The Individual To Contribute Up To 15% Of His Taxable Wages Toward The Plan. These Monies Are Matched At 20% By The Company, And These Entire Funds Are Invested In One Of Four Mutual Funds.

 

[Nemont]

Whiskers,

I think you are confusing a couple of issues. Even Enron had another company administer their 401K Plan.

The design of Enron's 401K savings plan, he says, contributed substantially to employee losses. Enron limited employees' investment freedom from the start by matching their contributions only with company stock and by preventing employees from selling that stock until age 50.

Just as Enron's problems began to escalate into public view, Enron chose to change administrators of its 401K plan. During the period in which information about the plan's accounts was being transferred from one administrator to another, employees were locked into the 401K decisions that they had already made.

The timing could not have been worse. The decision to change administrators came just before Enron released information about its business that was bound to depress its stock price further.

There's some dispute about the length of the lockdown -- Enron says it lasted from Oct. 29 to Nov. 13; employees claim they couldn't make changes between Oct. 17 and Nov. 19 -- but what's clear is that employees were unable to shift their investments away from Enron stock as its price tumbled ever lower. Specifically, on Nov. 8, when the company restated its earnings from 1997 to 2001, employees who had Enron stock in their retirement accounts could not sell. They had to hold the stock, which was then falling below $9 per share (from a high of $90 in September 2000), until at least Nov. 12, according to Enron, and Nov. 19, according to Hagens and Berman's complaint.

The big question is not who administers the plan but who acts as the Fiduciary and writes the Summary Plan Document (SPD) and who is authorized to complete and sign the annual Form 5500 with the IRS.

It doesn't matter whether a plan is administered internally, which is rare, or by an administrator because the Summary Plan Document set up by the Fiduciary governs the plan. That is why Enron is in trouble they remained the Fiduciary on their plan. They did not do the administration. If you are self administering a 401K, which I have never heard of, you will still be required to do whatever the SPD states.

Nemont

 

[Moosie]

401k SUX my A$$..... buy Realestate

 

[Whiskers]

Jose, when I worked for Millis they administered the funds, and didn't match anything.

 

[JoseCuervo]

Whiskers,
What does the word "adminstered" mean as you use it? My guess is that is where you are confused.