Is there an alternative analysis that Lucent can share with retirees?
A3: As reported, the benefits for Lucent’s U.S. retiree healthcare programs have historically been paid from trusts that the company inherited at its spin-off from AT&T that were established specifically to pay for healthcare — called VEBA trusts — and from the transfer of excess pension assets, not from operating cash. First, not many companies have healthcare trusts to prefund retiree healthcare benefits. Second, Lucent was not required by law to fund these trusts, although AT&T set aside some funds prior to our spin off. Third, these trusts we inherited from AT&T were only partially funded from the beginning and were only intended to help subsidize Lucent’s retiree healthcare costs, but not to pay for them entirely. Finally, we held these trusts and expended their assets solely for the purpose of funding retiree healthcare benefits. The pension transfers, which helped to subsidize retiree healthcare, were permitted by law as long as our pension plans were funded at 125 percent or
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