Word: pension
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That may have helped for a while. Blue chips like AT&T, Boeing, IBM and Phillip Morris have seen their bottom lines boosted by pension income, according to a study by the benefits consulting firm Towers Perrin. The study found that in 1999 alone, companies in the Dow Jones industrial average saw their pension funds' income increase more than $1 billion--the same amount that accounted for pension expenses the year before...
...concern now: stock-market woes could be a drag on pension accounts...
...Pension funds may have profited nicely when the equity markets were booming, but now a range of companies are struggling to bolster their pension plans to make up for the markets' swoon. This does not mean your pension is in danger, just that companies may have to scramble to make up for lost profits--a potential matter of concern if you're an investor...
...Pension funds have had such strong returns for years that many firms have not had to contribute to them. Indeed, Mark Lay, a Pittsburgh-based money manager who advises several public and private funds, says some companies started enhancing pension accounts by putting 80%--not the traditional 60%--of their assets into equities...
...early to tell the extent of the damage. "While 2000 looks as if it will produce asset losses rather than gains, many firms use asset smoothing," says Adam Reese, author of the Towers Perrin study. Those calculations can soften the impact of pension expenses on earnings. Moreover, most companies do not readily break down pension-fund costs in their earnings reports. Investors may need to comb through SEC filings like 10Qs and annual reports for indications of how serious the problem...