From Associated Press, MEMA Industry News
PLANO, TEXAS — Electronic Data Systems Corp. said Tuesday it would offer early retirement incentives to 9,200 U.S. workers, or 17.4 percent of its domestic work force. It will take an estimated $150 million charge in the fourth quarter to cover the costs of the downsizing move.
EDS calculated the charge by assuming that half of the eligible workers will accept the retirement offer. The company said it expected that client business would require filling fewer than half of the openings created by retirements. If so, the company said, it could save about $150 million next year and about $250 million a year starting in 2006.
Plano, Texas-based EDS is struggling to recover from money-losing contracts and a downturn in technology spending. On Monday, the company delayed filing its third-quarter financial results, citing a disagreement with outside auditors over writing down the value of assets.
The company also repeated its previous estimate of 2004 revenue between $20 billion and $21 billion and earnings of 20 cents to 30 cents per share, excluding items such as the retirement-related charges.
The early retirement offer will be made to most employees who will be at least 50 years old and fully vested in the company retirement plan by the end of the year. EDS, a former unit of General Motors Corp., employs 53,000 workers in the United States and maintains a significant presence in Michigan with more than 12,000 employees.
EDS said about $20 million of the charge will be in cash, mostly paid next year to continue health care benefits.
The remainder will be related to increased pension liabilities and accelerated vesting of stock compensation. EDS portrayed the buyouts as part of a work force management program.
The company said it also expects to retrain more than 20,000 programmers in new areas of technology strategy.
Shares of EDS rose 96 cents to close at $20.99 Tuesday.
Copyright 2004 Associated Press. All Rights Reserved.
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