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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (68887)	10/10/1999 10:12:00 AM
From: Bill F.	Respond to of 132070

les-this is just another example of how the stock market IS the economy.can you imagine what corporate profitability would be if high tech companies actually paid people because stocks weren`t levitating thereby making options no good?the stock market has become so large at 14 trillion plus or minus that it has distorted everything.

To: Les H who wrote (68887)	10/10/1999 1:49:00 PM
From: Skeeter Bug	Read Replies (2) \| Respond to of 132070

>>GE, which has been reporting 13% earnings growth. He notes that 8% of that growth has been due to excess income generated from GE's pension plan. << les, does this mean 8% is pension related and 5% is business related or 1.04% (13% * 0.08) is pension related and 11.96 is business related? tia...

To: Les H who wrote (68887)	10/10/1999 5:45:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 132070

Les, since the pension fund surpluses are directly related to the bull market, the reverse effect will apply in a bear market...thus the bull market has sown the seeds for a severe bear market some time in the future, from the mindless index funds to the accounting gimmickry and the vast corporate debt pile used to buy back inflated stocks. hb

To: Les H who wrote (68887)	10/11/1999 11:34:00 AM
From: Alias Shrugged	Read Replies (1) \| Respond to of 132070

Hi Les I took a look at the pension footnotes in GE's 1998 and 1997 annual reports. Things looked pretty standard to me. GE shares a "problem" with many other large, old-line corporations: pension trust funds exceed the pension obligation, and this "overfunding" is growing dramatically (due primarily to the bull market). The accounting rules force the company to eventually show the overfundiung as an asset of the company (in the same way that underfunding would show up as a liability on the company's balance sheet). "Regular" Pension Income ($000,000) for 1995, 1996, 1997 and 1998 was 697, 709, 743 and 1,016. An extraordinary charge (probably resulting from an early retirement window) of 412 in 1997 lowered the income amount from 743 to 331. I would estimate that Fiscal 1999 Pension Income would be $1,300 (assuming no extraordinary charges). 1998 1997 1996 Trust Assets 43447 38742 33686 Pension Oblig. 27572 25874 23251 Overfunding 15875 12868 10435 Recog. on Bal Sh 7752 6574 6112 48.8% 51.1% 58.6% The overfunding has grown from roughly 10 billion to 16 billion; 7.752 billion of this overfunding has been recorded on the company's balance sheet via recognizing pension income on the p+l statement. A final point. Pension income is driven by (among other factors) expected return on assets. GE is using a 9.5% expected return rate. So, in a year where assets return 25% instead of 9.5%, the amount recorded as pension income only reflects the expected 9.5% rate, with the remaining asset gains (diff betw. 25 and 9.5) remaining off the balance sheet to be recognized in the future. Oh, as I'm sure you know, these are all non-cash transactions. Assets are never transferred from the trust fund to the company, so the pension asset which is eventually built up on the company's balance sheet is really kind of a weird animal. I would be happy to answer questions from anyone sick enough to express interest. -gggg-