Administration September 11, 2005

FASB Set to Consider Sweeping Pension Reporting Changes

November 9, 2005 (PLANSPONSOR.com) - The Financial Accounting Standards Board (FASB) is moving closer to its goal of revamping current reporting rules for pensions and other post-retirement benefits with a staff recommendation that companies be required to account for pension plan funding in calculating net worth.
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In material expected to be the topic of board discussion at Thursday’s meeting that was prepared by FASB staff members and posted on the  FASB Web site , the agency said the proposed stem to stern review of pension and post-retirement benefits is not expected to wrap up until the end of next year.

Staff members recommended that the board accomplish the pension reporting revamping in several phases, starting with deciding whether postretirement plans’ funding status should be accounted for in a company’s financial statement.

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During the first stage, staff members recommended the board require that:

  • companies recognize in their balance sheet a net postretirement benefit asset or a net postretirement benefit obligation for each sponsored defined benefit plan equal to the difference between plan assets measured at their fair value and the projected benefit liability (pensions) and accumulated postretirement benefits obligation (other postretirement benefits), measured as of the measurement date. FASB staff members asserted, “That would ensure an employer reports in the balance sheet the economic funded or unfunded status of its defined benefit postretirement plans.”
  • Changes in the fair value of plan assets and the benefit obligation that are not currently required to be recognized in earnings (unrecognized gains and losses) would be reported as credits or charges through other comprehensive income (OCI).
  • an intangible asset related to any unrecognized prior service costs be recognized consistent with the current requirements in Statement 87 when an additional minimum liability is recognized.

According the report, staff members recommend that FASB save the major rulemaking heavy lifting for the second phase of the project. That’s when the agency would “reconsider comprehensively most, if not all, aspects of the existing standards of accounting for postretirement benefits.”

The report said any FASB rule changes should be undertaken in concert with international accounting authorities who are developing new standards for companies around the world (See The Bottom Line: Let It All Hang Out ).

Administration September 10, 2005

Georgetown Steel Gets Bankruptcy Court Reorg OK

October 21, 2004 (PLANSPONSOR.com) - A US Bankruptcy Judge has approved a business reorganization for the bankrupt Georgetown Steel Co. under which the company would begin paying creditors early next year.
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How much remaining creditors will get depends on whether Georgetown Steel receives some money it expects and whether the federal Pension Benefit Guaranty Corp. reduces its $60-million claim for Georgetown’s pension liabilities, said Georgetown lawyer Michael Beal, according to the Myrtle Beach Sun News.The agency claims about a $60 million liability, and Georgetown Steel thinks it should be more like $20 million.

The court approval came exactly a year after the plant shut down and one day short of the anniversary of the date the company filed for Chapter 11 bankruptcy protection.

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Bankruptcy Judge John Waites took note of the anniversary and commended the participants for moving relatively quickly in what is a complicated case. “I think you’ve all done an outstanding job,” Waites said.

Beal, told Waites, “I think we’ve accomplished a lot over the course of the past year.” The major creditor was paid, the plant was sold and many workers who were laid off got a new job under new ownership, Beal said. Also there is $12 million on hand to pay creditors, Beal said. .

Creditors will receive their main payments early in 2005 and possible additional amounts when new money is received, according to the newspaper story. Beal said almost 90% of the creditors also voted for the plan.

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