LRO Member Ed Prescott Shares His View On Lucent's Annual Shareholders Meeting.

I made the trek to Wilmington today [2/15/06] to attend subject [Lucent shareholders] meeting and the follow-up meeting of the LRO Board. Two of the shareholder proposals [from LRO members] received a majority of the votes. Both of these shareholder proposals received the strong endorsement of the LRO. It will be interesting to see just what Lucent does with this turn of events. I came away from the days events with the following two main thoughts:

 1. There are still significant questions about the real status of the pension and healthcare trust funds. While we all got a recent letter from Ms. Russo reassuring us that everything was OK, I don't think she is giving us the whole story. LRO members have been doing extensive digging through all the footnotes and SEC filings and have found enough questionable things to make me nervous. For example, Russo states that under the currently effective ERISA rules, the funds are fully funded. But LRO research has turned up a separate report to the SEC that admits a $1.2 billion underfunding of the management pension plan if FASB rules are followed. There is a pension reform move afoot in Congress that could wind up forcing companies to adopt the more stringent FASB accounting rules among other things. Also, use of pension fund credits to hype earnings would no longer be allowed. If these events happen, Lucent could be in big trouble because the resulting pension fund underfunding will have to be made up from operating income!

2. The LRO is doing yeoman work in researching Lucent's financial statements, reports and filings. But much more help is needed. This help can take the form of letters, e-mails and phone calls to our Senators and Congressman. These communications should address the subjects of interest to us and request the legislators assistance in correcting the abuses that we have been subjected to. Equally important is your membership in the LRO. I am impressed with the efforts these volunteers have put forth. But there are expenses that have to be incurred. Mailings are expensive. Legal help on some issues is required. All these things cost money and LRO dues is the only source of revenue. $25/yr. is not a large sum especially when you consider the results of the shareholder proposals at today's meeting. JOIN NOW!

Ed Prescott
Zionsville, PA


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