Summary
Williams Companies, Inc. (WMB) filed an 8-K on January 17, 2003, reporting on events as of December 31, 2002, related to its pension plans. The company established a new "Williams Inactive Employee Pension Plan" for retirees and vested former employees, transferring pension assets and liabilities from the existing Williams Pension Plan. This move aimed to address the underfunded status of the original plan. While the new plan for inactive participants is fully funded with an approximate $19 million contribution, the original Williams Pension Plan remained underfunded. The company recorded an approximate $15 million reduction in shareholder equity due to an additional minimum liability requirement for the underfunded original plan. Despite the underfunding, Williams avoided recognizing certain unrecognized net losses that could have increased pension expense, due to lump sum payment thresholds not being met.
Key Highlights
- 1Creation of a new pension plan, the Williams Inactive Employee Pension Plan, for inactive participants (retirees and vested former employees).
- 2Transfer of pension assets and liabilities from the original Williams Pension Plan to the new plan.
- 3Contribution of approximately $19 million to the new plan, fully funding its accumulated benefit obligation.
- 4Recording of an approximate $15 million reduction in shareholder equity due to an additional minimum liability for the underfunded original pension plan.
- 5Avoidance of recognizing certain unrecognized net losses that would have increased pension expense, due to settlement accounting thresholds not being met.
- 6Estimated underfunding of the original Williams Pension Plan by approximately $75 million in accumulated benefit obligations as of December 31, 2002.
- 7Estimated underfunding of the original Williams Pension Plan by approximately $55 million on a current liability basis (77% funded).