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

To: Freedom Fighter who wrote (69067)	10/13/1999 2:39:00 PM
From: gnuman	Respond to of 132070

Y2K bug turns cars into horseless carriages (Wonder if motorhomes became covered wagons?) <g> Hopefully all bugs will merely be this humorous. washingtonpost.com

To: Freedom Fighter who wrote (69067)	10/13/1999 5:50:00 PM
From: re3	Respond to of 132070

sofa dude, berkie b is holdin' up reasonably well lately <g>

To: Freedom Fighter who wrote (69067)	10/13/1999 5:57:00 PM
From: Alias Shrugged	Read Replies (1) \| Respond to of 132070

Wayne, >>>Is the pension income number that you show the amount that was applied to operating earnings as a result of excess pension returns that were shifted?>>> The pension income numbers shown are the amounts calculated by GE (and their actuaries/auditors?) using methods and procedures prescribed by FASB Statement #87. The pension income amounts calcualted are certainly higher than they would have been if asset returns during 1995 through 1998 were in line with historical averages. I'm not sure what you mean by "excess pension returns that were shifted". >>>If I understand correctly, normally the pension would require progressively larger "expenditures" as the company grows. So even if the pension was contributing nothing to operating earnings, it would be contributing that portion that the company didn't have to put into it. >>> I would agree that "normally the pension would require progressively larger "expenditures" as the company grows" if the company was not prefunding the pension liabilities. But the Company is prefunding, and has a large pot of assets in a qualified trust fund. To the extent the plan is underfunded (pension obligations exceed plan assets), the FAS87 expense rules will force the company to eventually show the underfunding as a libility on the balance sheet. Similarly, if the plan is overfunded (plan assets exceed pension obligations), these excess assets will eventually show up as a prepaid asset on the company's balance sheet. Nothing is "marked to market" immediately; unexpected changes in the assets (eg, asset returns above or below what was expected) or the pension obligations (eg, smaller than expected increase in the pension obligation because no one received a raise this year) are deferred to following periods and are "amortized" over future expense periods. Generally, pension expense/income equals the expected change in the pension liability less the expected change in the trust fund assets, plus amortization of past gains and losses. The asset base is now so large that the expected change in the assets dwarfs the expected change in pension obligations, resulting in pension income. GE is using a number of allowed smoothing techniques in their FAS87 calculations. Without these smoothing techniques, the pension income incurred in 1996, 1997 and 1998 would have been even larger. The point of the article was: although 98 earnings increased 13% over 97, they only did so because 98 pension income increased 200% over 97 pension income; otherwise, operating earnings exclusive of pension income only increased 5% 98 over 97. I commented that, from 94 to 98, operating earnings (with or without pension income) increased about 55% over the period.