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To: James Clarke who wrote (15820)	11/18/2002 2:00:49 PM
From: Bob Rudd	Respond to of 78702

Jim asks<<What do you mean by "smoothed" and "unsmoothed" pension liability on the balance sheet>>Essentially "smoothed" reflects pension assets being valued using an averaging method to determine values, "unsmoothed" reflects using market values this article gets at it: soa.org I suspect the book McSweet is referring to is "The Analysis and Use of Financial Statements" 2nd Ed., Chapter 12. Here's an article on Pension issues that lists companies that might be in for a whack: 10/30/02 WHO'S BEEN PLAYING STUPID PENSION TRICKS? moneycentral.msn.com I put the companies in the article into yahoo lists - Potential shorts: Companies with largest percentage of income from pensions, past 3 years 321%=>50% descending quote.yahoo.com Large companies with the most underfunded pension plans, past three years 9%=>5% descending quote.yahoo.com Smaller firms with most underfunded pension plans, past 3 years 21%=>8% descending quote.yahoo.com

To: James Clarke who wrote (15820)	11/18/2002 2:17:08 PM
From: MCsweet	Respond to of 78702

Certain elements of pension expenses are smoothed (such as deviation between expected and actual returns), such that the true economic reality is not reported on the balance sheet immediately --- it is amortized over a period of several years, with the true exposure held off balance sheet. Hence, pensions are both an income and balance sheet issue. The true pension obligation doesn't filter through the income statement correctly, resulting in pension gains and losses that are not an accurate reflection of reality. You can calculate adjusted income and balance sheet using the pension data in the footnotes. MC