From: Hickey, John G (John HR VP Comp & Ben)
Sent: Monday, November 26, 2007 4:27 PM
To: Ken Raschke
Subject: Response to your 11/12/07 letter to me


I am replying to the letter you e-mailed me on Monday, November 12, 2007.  Your  letter included several mis-statements:

1) The estimated impact on the overfunding given to Ed Beltran was "(less than of 1 percent)" not "about of 1 percent" as stated in your letter;

2) The frozen Alcatel Plan was a U.S. plan not a foreign plan and we would not anticipate merging a non-US plan into a US plan; 

3) Your math assumes "about" as opposed to "less than" as stated in #1 above;

4) We are very familiar with the pension rules and the Company's obligation to fund in accordance with them.  We do not know on what basis that you can assert that " the new mortality tables that become mandatory for LRIP on January 1, 2008 will result in PPA funding calculations showing that LRIP is under-funded Any supposition that LRIP is over-funded is a fiction".   While no one can predict the assets and liabilities as of 1/1/08,  we believe this assertion is unreasonable including the estimated effect of the new mortality tables .   

With regard to other specific questions:

1) & 2) See attached Audited Financials associated with the frozen Alcatel Plan;

3) The merged plan remains overfunded  -no contributions related to the LRIP are required;  However, contributions totaling $6,924,525 have been made to LRIP  for the required contributions that were due (post plan merger) related to the frozen Alcatel plan;

4) We followed Section 4044 of ERISA and Section 414(l) of the Internal Revenue Code;

5) The  frozen plan name was Alcatel USA, Inc, Consolidated Retirement Plan and the PN# was 004. We have attached the most recent 5500 (and related forms) for the the frozen Alcatel plan that was merged into the LRIP.   Form 5310A was not required for this transaction. 


John Hickey 


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