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WASHINGTON -- 7-Eleven Inc. will eliminate its medical coverage contribution for retirees and cut its contribution for people on long-term disability, the convenience store chain said in a recent regulatory filing, according to a Dow Jones report.
Dallas-based 7-Eleven, which is now substantially owned by Seven-Eleven Japan Co., said in the report that the company expects to recognize $25 million to $30 million in income during the fourth quarter of 2005 from the move.
Carole Davidson, vice president of investor relations for 7-Eleven, declined to comment beyond what was in the filing, according to the report.
"The modifications were communicated to employees and retirees in early November 2005," the company said in its third-quarter report filed with the Securities and Exchange Commission.
The company said in the report that the modifications to its group insurance plan are effective Jan. 1 next year and will apply to both the post-retirement and post-employment medical provisions of the plan.
The filing said the income from the cuts will have no effect on the company's current-year cash flow.
This month, Seven-Eleven disclosed it successfully completed its $1.2 billion tender-offer bid for 7-Eleven Inc., giving it ownership of 95.4 percent of the company.
Now that Seven-Eleven Japan will hold more than 90 percent of 7-Eleven, it can conduct a so-called short-form merger to buy out the remaining 4.6 percent of shares held by minority shareholders, according to a Dow Jones Newswires report from Tokyo.
In September, the Japanese retailer announced a plan to make 7-Eleven a 100 percent unit to help strengthen the U.S. firm's operations and increase the group's convenience-store chain operations.
Seven-Eleven Japan originally offered to pay $32.50 a share for the 27 percent stake in the U.S.-based company that it didn't already own, but it later raised the purchase price to $37.50 a share.