In lieu of the pension plan cutback, the communications manufacturer said it will expand its existing defined contribution savings plan to include an additional company contribution. The amendment will affect all of the company’s domestic pension plans covering salaried and hourly employees not covered by collective bargaining agreements, according to a news release.
As a result, pension expenses in fiscal year 2004 are expected to increase by $12 million, instead of the earlier projected $63 million hike. With the move, assuming a 6% discount rate and an 8.75% return on plan assets, the company has now put 2004’s pension expense at $32 million.
The company is also planning to make an additional $200 million contribution to the defined benefit pension plans this calendar year, which were underfunded by about $800 million at June 30, 2003.