Over the past three years, as companies watched equities markets crumble, their capitalizations shrivel and interest rates sink to the lowest level in 40 years, those offering defined-benefit plans to their employees had an extra worry: How much damage would be done to their bottom lines by increasingly underfunded pension plans?

No doubt, it would be substantial. In October, Credit Suisse First Boston estimated that of the 360 S&P 500 companies with defined-benefit plans, 320 would be underfunded for 2002, facing collectively a staggering yearend shortfall of $243 billion. As the year ended, the pain inflicted on specific companies became more apparent: General Motors Corp.'s 2002 pension contribution was $4.8 billion; IBM Corp. coughed up $3.95 billion, and Johnson & Johnson contributed $750 million, to name three.

Just as the pension surpluses of the 1990s migrated to companies' bottom lines to boost performances, these payouts to pension plans are coming right off the bottom lines, making an already uninspiring year for earnings that much worse. And given the current economic uncertainty and political jitters, there is no reason to anticipate a brighter picture in 2003. In a recent Deloitte & Touche survey of 80 midsize to large companies, 40% reported that they expect their pension expenses to increase more than 50% this year; another 20% anticipate a hike between 26% and 50%.

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