Question is what are the current and future effects of pension plans
on financial statements in regards to the current stock market?  A
brief explanation of the general situation with an example or two will
be fine.  Also, any references to places where more detailed
information could be found would be extremely helpful.

Greetings wpanicdx, 


Traditional pension plans are currently under-funded. The price of
funding these pension plans are expected to offset corporate profits
for the next 10 years. Presently, twenty-five of the thirty companies
in the Dow Jones Index maintain defined-benefit plans. With
defined-benefit pension plans, if investment in a pension plan fails
to meet projected expectations, the company becomes obligated to
account for the difference in its financial statements.  For example,
during the late 90’s, the thriving bull market produced numerous
double digit returns on pension plan assets, generating very large
surpluses for many companies. These companies reported these overages
in their financial statements as "operating incomes". However, in the
present stock market conditions, these pension plans will no longer be
a source of reported income as they are significantly under funded.
For instance, General Motors General Motors owes approximately $15.5
billion to its pension plan, which is equal to one half of the value
of the entire company. It lost 3% on its pension investments in the
2002 fiscal year, and will thus be expected to inject over nine
billion dollars into its pension fund over the next five years. This
will change its financial statements and subsequently, its position in
the stock market will be affected.

Overall, companies will have to contribute more to their pensions as a
stalling point for earnings. This is because, in the past, overly
optimistic pension plans have boosted earnings at many companies.
However, most companies will not revise their pension plans before
December of 2002. The delays are expected cast a significant cloud on
all earnings and the stock market for months to come.

The impact of pension plans on financial statements, concerning the
stock market can be seen in the following example. During the fiscal
year of 2000, pretax earnings were lifted by an average of 12% at
virtually one-third of all companies with pension benefits listed in
Standard & Poor's 500-stock index. Thus, income from defined-benefit
pension plans became a significant source of profits for many
companies during a bull market. However, it must be noted that if
stock market losses persist, this trend will have a reverse effect.


As requested, here are some links that explain further:

An analysis of how pension funds are used to alter financial
statements
http://att.nac.net/fineprint012902.htm

Pension Plans-how to read about them in the fine print of financial
statements
http://libsnap.dom.edu/Reserves/GSB612Harrington_7.htm

How pension plans affect a companies performance in the stock market
(please scroll down to the last half of the article)
http://finance.sympatico.ca/news/stories/cp/J111407AU.html

The SEC decisions regarding the treatment of pension plans in
financial statements
http://www.businessweek.com/magazine/content/02_30/b3793709.htm


Hope this helps!