Honeywell expects ongoing expenses related to its $10 billion pension fund to cut 36 cents per share from the company's earnings this year, the company announced Jan. 31. The company also announced it would make a $330 million contribution to the plan.
Kraft Foods' 2003 earnings, meanwhile, could drop 7 cents per share because of higher benefit costs resulting from lower market returns on its $6.4 billion in U.S. pension assets in 2003, its latest earnings report said.
Kraft will continue to use a 9% long-term return assumption but will drop its discount rate assumption to 6.5% from 7% in 2003. Kraft's pension plans are fully funded, and the company does not need to make additional contributions, said Donna Sitkiewicz, spokeswoman.
Also, Kellogg contributed $254 million, after taxes, to its $1.75 billion defined benefit plan last year. The money was allocated to existing managers and asset classes, said Norman Smith, director-benefit finance and risk management
And, AK Steel took a $484 million non-cash charge in the fourth quarter to account for a drop in the value of its $2.4 billion pension plan. The charge of $4.49 per diluted share for the quarter comprises 96% of the company's reported $502 million loss for the year ended Dec. 31, said Alan H. McCoy, spokesman. He blamed poor stock market returns and low interest rates.
Mellon merges bond units
Mellon Financial merged three affiliates into one fixed-income firm. The new company, Standish Mellon Asset Management, is made up of Standish Mellon, Certus Asset Advisors and Mellon Bond Associates. Combined, they have $125 billion under management.
Lazard Asset not on block
Lazard LLC will not sell its lucrative asset management unit, Lazard Asset Management, despite persistent rumors to the contrary, said Norman Eig, managing director, vice-chairman and and co-CEO of Lazard Asset Management.
Harvard faces complaint
Templeton Asset Management, the investment adviser to the Templeton China World Fund and Templeton Dragon Fund, filed a complaint against Harvard Management, which runs the $18 billion Harvard University endowment, claiming securities law violations.
The complaint, filed Jan. 29 in U.S. District Court in Baltimore, claims Harvard made false or misleading statements in soliciting proxies from China fund shareholders, and profited illegally from short-swing trading in the funds' shares. Last year, Harvard sought shareholder approval in separate actions to terminate both funds' management teams. Templeton charged Harvard with using "pressure tactics" to get the closed-end funds to become open-end.
Harvard officials called the allegations "baseless."
Rhode Island terminates 2
The $4.9 billion Rhode Island Employees Retirement System terminated J.P. Morgan Fleming and Provident Investment Counsel. Morgan ran $215 million in active domestic large-cap core equities; Provident, $80 million in active domestic large-cap growth.
During the transition, State Street Global Advisors will run the assets in a core domestic equity index portfolio.
Lend Lease CEO out
David J. Ross, global CEO of Lend Lease, will assume day-to-day control of the company's U.S. division, Lend Lease Real Estate Investments. Mr. Ross replaces Fred Pratt, who is leaving after about two years on the job. A statement said the change was necessary to get the U.S. business "back on track."
Changes at NYSTRS
The $68.2 billion New York State Teachers' Retirement System committed $150 million to CSFB Strategic Partners II, a private equity fund. Funding will come from cash.
The system also hired INVESCO to manage $64.2 million in industrial real estate. Funding will come from Cabot Partners, which switched to a fund structure from an advisory structure.
The fund also rehired, for one year: AllianceBernstein, $345 million in passive international; Bank of Ireland, $480 million in active international; Capital Guardian, $751 million in active international; Iridian, $481 million in active domestic large-cap value; and Montag & Caldwell, $344 million in active domestic large-cap growth. It also rehired BlackRock and Clarion Capital for one year to manage $228 million and $226 million, respectively, in commercial mortgage-backed securities.
Frank Russell gets SIS stake
Frank Russell agreed to buy a 19.9% stake in consultant Strategic Investment Solutions. At the end of two years, each firm will get a vote on whether Frank Russell buys the remaining stake in Strategic. Further terms were not disclosed.
Willamette hires 5
Willamette University hired Harris Associates and K2 to run $5 million each in absolute-return strategies, and INVESCO and HarbourVest to manage $5 million each in private equity, said Jeff Eisenbarth, vice president financial affairs and treasurer. The $186 million endowment also hired Common Sense Investment Management to manage an active domestic equity portfolio, pending contract negotiations. Funding will come from rebalancing. R.V. Kuhns advised.
GM 401(k) offers advice
General Motors hired Financial Engines to provide online investment advice to the 100,000 participants in its $10 billion 401(k) plan for salaried employees, said Chuck Tschampion, managing director of GM's defined contribution plans.
Foundation picks CIO
Brian S. O'Neil was named chief investment officer of the approximately $9 billion Robert Wood Johnson Foundation. He succeeds John Gilliam, who plans to retire. Mr. O'Neil was head of the funds management group at Equitable Life.
Convergent to be sold
City National, a banking and financial services company, will acquire Convergent Capital Management for $49 million, including cash and the assumption of about $7.5 million in debt. Convergent will continue to operate independently.
Old Mutual sells 2 affiliates
Old Mutual has shed two more affiliates - Rice, Hall, James & Associates and Northern Capital Management - both through management buyouts. Terms were not disclosed.