Burnham Holdings, Inc. Announces Union Agreement And Resulting
One-Time Charge To Current Earnings
LANCASTER, Pa., June 19, 2013 /PRNewswire/ -- Burnham
Holdings, Inc. (Pink Sheets: BURCA), the parent company of fourteen
subsidiaries that are leading domestic manufacturers of boilers,
and related HVAC products and accessories (including furnaces,
radiators, and air conditioning systems) for residential,
commercial and industrial applications, announced today a one-time
charge to second quarter 2013 earnings as a result of a new union
agreement at its Bryan Steam, LLC ("Bryan") subsidiary located in
Peru, Indiana.
On Tuesday, June 19th,
Bryan reached a new three-year binding agreement with the
International Brotherhood of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers and Helpers Union ("Union"), representing
Bryan's collective bargaining employees. This new agreement
provides for the withdrawal of Bryan from the
Boilermaker-Blacksmith National Pension Trust (a
multiemployer-defined pension plan ("Multi Plan")) maintained by
the Union. Moving forward, Bryan's employees will participate
in a standard 401(K) defined savings plan. Bryan and its
employees had been a part of this Multi Plan prior to Burnham
Holdings acquiring this subsidiary in 1998 and is a very minor
participant in this very large plan. Under the Pension Protection
Act of 2006, this Multi Plan has been considered "Endangered" and
has been operating under a Funding Improvement Plan since 2010,
which has significantly increased Bryan's contribution costs (see
Note 10 of the Burnham Holdings 2012 Annual Report).
A withdrawal from an under-funded multiemployer-defined pension
plan results in what's called a "withdrawal liability expense,"
which basically is meant to cover unfunded past service
obligations. Current accounting rules require this charge to
be recognized in a company's current year earnings, regardless of
benefit period covered or period over which the liability is
actually paid. Bryan's actual withdrawal liability will be
calculated through a funding formula documented within the Multi
Plan. Although the final withdrawal liability will not be known
until later this year due to calculation and actuarial complexity,
based on our best estimate of this exposure, Bryan will record in
the current quarter a pretax expense of five
million dollars, or approximately $0.71 per common share for this liability.
This non-operational charge, while material to the current year
results, is not material to the balance sheet. This charge
will eliminate all future contributions to the Multi Plan and
should position Bryan to be more cost competitive in the aggressive
commercial market, while also lowering future risk to the Burnham
Holdings shareholders through the elimination of this unknown,
uncontrollable liability.
SOURCE Burnham Holdings, Inc.