There have been warnings for months about the severity of U.S. corporations' pension underfunding, but this week's round of earnings reports showed just how badly retirement plans will weigh on the companies that operate them.

From the furnaces of United States Steel Corp. (X) to the newsroom of publisher New York Times Co. (NYT), the effects of 2008's crushing market on pension assets was laid out in year-end earnings in recent days.

On Tuesday, U.S. Steel revealed it sees total costs for pension and other benefit plans for 2009 at $360 million, up nearly 60% from 2008. New York Times disclosed Wednesday its pension is underfunded to the tune of $625 million, an amount that it will have to begin paying down in 2010 if markets don't magically reverse course and repair the damage this year.

The pair join a wide range of companies hit by pension problems. On Monday Kimberly-Clark Corp. (KMB) said it won't repurchase stock this year because of a sharp increase in pension costs. For 2009, the company expects pension expense of about $295 million across all company defined benefit plans, an increase of $200 million from 2008. Cash contributions to the plans in 2009 are expected to be about $530 million versus $130 million in the previous year. The maker of Kleenex tissue said the increase in its pension expense in 2009 amounts to about 34 cents a share.

Investors have been expecting food companies to benefit from lower prices for raw materials like grain and oil. But higher pensions costs could dash those hopes.

Hershey Co. (HSY) said Tuesday that higher pension expenses will more than offset the benefits it will see from falling commodity prices. The candy maker is projecting a year-over-year increase in 2009 pension expense of about $70 million, or about 20 cents a share.

In coming weeks, as companies report their earnings, there could be more such warnings. A Credit Suisse analyst on Wednesday cut its 2009 estimates for Kraft Foods Inc. (KFT) and Kellogg Co. (K) on expectations of higher pension expenses. The analyst cut his Kraft estimate to $1.97 a share from $2.00 and the numbers on Kellogg to $3.13 from $3.15 based on new assumptions for pension expense.

The pensions' losses couldn't have come at a worse time. With the worldwide economic slowdown, some companies' operating businesses are already under pressure; New York Times' debt was recently downgraded to junk.

"The economic factors last year were so significant, and so broad-based, that few sectors that have these plans will be unaffected" by pension grief, said Cynthia Mallett, a vice president in MetLife Inc.'s (MET) corporate benefit funding group.

There's no doubt there will be more ahead as companies lift the curtain on their year-end earnings in the days and weeks ahead. The combination of declining asset values and higher interest rates' upward nudge to retirement liabilities is unlikely to leave many companies smugly looking at a fully-funded pension.

While some firms, such as Times Co., will have some breathing space before they have to start making up the funds' shortfalls, many others will have to start pumping cash into their retirement plans in 2009.

Studies that estimated the level of pension underfunding last year all pointed to a similar downturn. Standard & Poor's in late December forecast that S&P 500 company pension funds would be short by $257 billion, easily surpassing the record $219 billion underfunding set in 2002. Mercer said at the beginning of this month that S&P 1500 companies' pensions suffered losses of an estimated $469 billion over 2008, causing an aggregate surplus of $60 billion at the end of 2007 to be replaced by an estimated aggregate deficit of $409 billion at the end of 2008. The study by Mercer also showed that pension expense is likely to increase from $10 billion in 2008 to an estimated $70 billion in 2009.

Earlier this week, pension consultant Watson Wyatt Worldwide Inc. (WW) calculated that globally, pension balance sheets deteriorated by about 29% in 2008 and fund assets in 11 major markets shrank back to below 2005 levels.

While the various forecasts measure different groups of companies, they all hew to the same directional trend, say pension consultants. The initial earnings report revelations in recent weeks indicate the predictions are mostly on target - pension plan underfunding will likely turn out as forecast, no better, no worse, says Alan Glickstein, a senior retirement consultant with Watson Wyatt.

"I don't think there's been any great level of unexpected revelations in the funded status than we had been predicting," said Glickstein. "So far, things seem very consistent with what we forecast, and very sad."

(Anjali Cordeiro and Nat Worden contributed to this report)

-By Lynn Cowan, Dow Jones Newswires; 301-270-0323; lynn.cowan@dowjones.com

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