6:00 p.m. Dec. 8

GUILD BULLETIN

Guild Members:

This afternoon’s Company “Bargaining Bulletin” contains a number of distortions. This will help set the record straight.

Is the Guild pension adequately funded?

Yes. As of June 1 it was 92 percent funded under the new pension law’s assumptions, which is considered healthy. (Under the previous law its assets available for benefits was 117 percent of liabilities.) Because market conditions fluctuate, pension assets gain value during some periods and lose during others. Since June the stock market has rebounded, and the shortfall is likely to be substantially smaller in the next accounting. It is far from certain that the Company will have to make the substantial additional contributions to the fund that it complains about. Any future obligations could be dramatically reduced if the fund were merged into a multi-employer plan. While the Guild is willing to consider this, it is not willing to leave all decisions solely in the company’s hands.

Has the fund had poor investment performance?

No. The Company has illustrated this claim by choosing a period – 2002 through 2005 – that includes a severe drop in the stock market. For the year ended Sept. 30, the return was 7.68 percent – just shy of the 8 percent in the plan’s long-term projections. For the two years ending Sept 30, the fund returned 8.8 percent a year. For the past four years it averaged 11.19 percent a year. For the past 5 years it averaged 6.76 percent. For the past 16 years, 9.71 percent.

Have Guild pension trustees resisted Company efforts to change investing strategy?

No. Guild trustees have worked collaboratively with management trustees to refine the strategy as times have changed. If the trustees were to split evenly over strategy, the issue would be resolved by an arbitrator. The arbitrator would, by law, have to resolve the dispute according to what he or she believes to be in the best interest of beneficiaries of the pension fund.

Have the pension trustees hurt the fund by raising benefits in the past?

No. Benefits have been raised only on occasions when the fund ran such large surpluses that the company stood to lose the tax deduction on its contributions. Company trustees approved these benefit increases.

Has the Guild created financial problems for the company?

No. The new owners knew this was a union company when they bought it. They knew the Guild had a pension plan, good health benefits and a traditional seniority system. Prior to the purchase, they did not approach the unions to discuss givebacks. If the Company does have financial difficulties, a large part of the problem is the owners’ decision to pay too much for the company and to borrow too much at very high interest rates. The owners apparently failed to take the basic precaution of setting aside an emergency reserve.

If the Company has a financial problem, does it have alternatives to slashing employee benefits?

Yes. It can attempt to renegotiate its loans. It can get the owners to contribute more money to pay down the high-interest debt. Or it can recruit new partners to raise funds and pay down debt. Reducing debt payments would give the Company breathing room until the advertising market improves. The Company could thus avoid cost cutting that is likely to throw the business into a death spiral.

-- Your bargaining committee