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Why I Won't See "Avatar"

Feb 15

Written by: Jack Ciesielski
2/15/2010 9:00 AM

Plenty of good reasons abound, like digging out the driveway a little more, cleaning up the basement or working on the tax return. You know, stuff that's gotta get done, but a movie would only put off the inevitable task a little longer. And there's another reason: maybe because everybody loves the movie so much, it could only be a letdown if you actually invested the time to see it.

Fortune's Geoff Colvin comes up with a better reason than any other in his January 28 piece: it's flat-out anti-business. From Colvin's article:

"The top-grossing movie in the world, Avatar, is on screens now, and it clearly identifies the most evil force in the universe. It's business.

"There's only one thing the shareholders hate more than bad publicity," says the smarmy manager of an unnamed company's mining operations on the planet Pandora in Avatar, "and that's a bad quarterly report." Slaughtering hundreds of peace-loving Pandorans may generate some nasty press, but he decides to do it anyway -- in the name of profit."

Not that you should care whether or not I go to see "Avatar." I merely wanted to draw your attention to Colvin's article, which is dead-on if you have had to listen to many anti-business harangues and flawed populism from anyone over the last few months. Top-notch stuff.

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Pension & Other Benefit Plans: A Look Ahead

Investors in firms with defined benefit pension plans always face the risk of suddenly being pushed farther back in line when it comes to being served their returns. Variability in plan assets and variability in benefit plan obligations are the reason: poor asset returns coupled with sinking interest rates always spell tough times for defined benefit plan funding. In that regard, this year’s asset returns combined with the Fed’s “Operation Twist” add up to “Operation Agony” for defined benefit pension plans. If trends continue along their current path, firms that may have anticipated moving to more realistic pension accounting - like Honeywell, AT&T and Verizon already have done - might forego that decision. It could be just too painful.

Pensions aren’t the only kind of benefit plan affected by Operation Twist. Other postemployment benefit (OPEB) plans share much the same accounting model as pensions, including the calculation of a projected benefit obligation that similarly incorporates a discount rate - one that will also be affected by Operation Twist. The net OPEB obligations were slightly less than pension obligations at the end of 2010, but also promise to grow in 2011. Investors perceive them as less threatening than pension obligations because they don’t require funding. Strangely, there are a number of firms that are recognizing income from these benefit plans - without ever creating a dime of cash for investors.

A recent edition of The Analyst’s Accounting Observer dissects these issues, and is available only to paid subscribers. A condensed version is available for free upon request. To receive it, send an e-mail to Brenda Rappold at brappold@accountingobserver.com, with “PENSIONS” in the subject line.

For information about subscribing to The Analyst’s Accounting Observer, click here.