Lucent Technologies said that it will record a charge of about $3 billion due to a decline in pension assets, primarily a result of declines in the equity markets. While the plan meets the requirements of ERISA’s funding rules and does not require cash contributions at this time, accounting standards dictate that the charge be taken now, according to the company.
Additionally, the telecommunications-equipment maker said it was going to cut another 10,000 jobs, while it also cautioned that it would report a wider-than-expected loss for the latest quarter. The job cuts, part of a more aggressive restructuring plan, will result in a restructuring charge of about $1 billion.
Based on the current set of plans and actions, Lucent said it expects its employee headcount to reach approximately 35,000 by the end of fiscal 2003. This is a reduction of an additional 10,000 employees from the previously anticipated level of 45,000 employees at the end of calendar year 2002, it said.
Lucent said the restructuring moves will take its quarterly earnings-per-share breakeven revenue level to $2.5 billion. The company had previously set a target range of $2.5 billion to $3 billion.
The company also said it has notified lenders that it will exercise its right to re-purchase certain real-estate properties, for approximately $100 million, under existing lease agreements. These facilities will be sold as part of the restructuring efforts, Lucent said.
The company said it would provide further details on these restructuring actions and their financial impact when it announces earnings on October 23.
The so-called “perfect storm” of three years of declining asset values, looming projected liabilities exacerbated by record low interest rates and an aging workforce is coming together at a particularly sensitive time for US employers. The financial impact of these programs, or more accurately, concerns about the financial impact of these programs has already hit the stock price – and, in some cases, the bottom line at firms such as Delta Air Lines , IBM , GM and Ford .
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