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A Pension Benefit Guaranty Corporation PBGC 1200 K Street, N.W., Washington. 0.C. 20005-4026 US.GOYf.,_-r"'(l(HCT 

June 14, 2004 

Re: Case 161249, Memorex Telex Employees 

Pension Plan (the 'Memorex Telex Plan") 

Dear ~----~ 

The Appeals Board has reviewed your appeal of PBGC's July 14, 

2003 revised determination that you are not entitled to a benefit 

under the Memorex Telex Pl.an. As explained below, the Board 

changed PBGC's revised determination by finding that you are 

entitled to a benefit under the Memorex Telex Plan. The .Board's 

decision has the effect of reinstating PBGC' s August 21, 2001 

determination which provided that you cire entitled to a monthly 

benefit of $151.51, payable in the form of a 100% Joint and 

Survivor annuity. 

Benefit Determination, Revised Determination and Appeal 

On August 21, 2001, PBGC sent you a benefit determination 

letter which stated that you are entitled to a monthly benefit of 

$151.51. On July 14, 2003, PBGC sent you a revised benefit 

determination letter which stated: 'After further review of your 

benefit, and new information provided by our actuaries, we have 

determined that you are not entitled to a benefit from the 

Memorex .Pension Plan. Your retirement benefit is the 

responsibility of Raytheon." 

In your October 24, 2003 appeal (which was timely as the 

result of a filing extension), you stated: 'Since I had fifteen 

years of service with Raytheon those 15 years were transferred to 

Telex and I was automatically vested in their pension plan 

" 

You also enclosed an October 20, 2003 letter from Evans 

Cheeseman, Manager, Pension Administration of Raytheon Company. 

In this letter, Mr. Cheeseman stated that you are not vested 

under the Raytheon Company Pension Plan for Salaried Employees 

(•Raytheon Plan") . Mr. Cheeseman explained that you did not earn 

vesting service during the period when you were eligible to join 

the pension plan by making contributions, but declined to do so. 
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Entitlement to a Benefit under the 1985 Amendment 

The Telex Corporation adopted the Amended Pension Plan for · 

Employees of the Company and its Subsidiaries effective 

January 1, 1982 (the • 1902 Plan"). On January 18, 1985, Telex 

adopted the Second Amendment to. the 1982 Plan (the '1985 

Amendment"). Section 5 of the 1985 Amendment states: 

'5. Paragraph 3.3 - Service shall be amended to add the 

following at the end thereof: 

Employees hired as of August 10, 1984, or within 

120 days thereafter, who iJ\\11\ediately prior to such hire 

date were U.S. Employees of Raytheon Company shall have 

their Service period with Raytheon prior to August 10, 

1984 or later date of transfer included, for purposes 

of eligibility, to participate in this Plan (the 19~2 

Plan] in accordance with 3.2 and for vesting purposes, 

in accordance with 3.5." 

Section 3. 5 of the 1982 Plan states: •For purposes of computing 

Vesting, all employment with the Employer shall be counted 

including time when no benefits accrued." 

On August 20, 1984, George L. Bragg (President, Telex 

Computer Products, Inc.) wrote a letter to all 'RDS [Raytheon 

Data Services) Employees Transferring to Telex." In that letter, 

·Mr. Bragg stated: 'Your service time with Raytheon will transfer 

with you for all benefits calculation purposes. For example, a 

t·ransferring RDS employee who was employed by RDS December 6, 

1978, will have a Telex employment date of December 6, 1978." 

On January 10, 1994, Carol Ann Bickers (Senior Benefits 

Analyst, Memorex Telex Plan) sent you a letter informing you that 

you were entitled to a benet'it under the Memorex Telex Plan. The 

Memorex Telex Application for Benefits lists your 'Hire Date" as 

July 21, 1969 {which ·was your hire date with Raytheon), your 

'Join Date" · as August 11, 1984, and your 'Termination" as 

November 10, 1984. The Memorex Telex Benefit Calculation 

Worksheet credited ·you with 15.30685 years of Vesting Service 

(sufficient to become 100% vested under Section 3.5 of the 1982 

Plan) and with 0.24932 years of Benefit Service. 

Your PBGC individual participant file includes records that 

PBGC' s auditors gathered from Memorex Telex and those records 

include a detailed pension worksheet prepared by Raytheon. It is 

evident that Memorex Telex relied on Raytheon's worksheet in 

calculating your benefit under the Memorex Telex Plan {because 

Memorex Telex accepted the precise figure that Raytheon used to 
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account for the portion of your accrued benefit attributable to 

your Raytheon service). At the same time, the Raytheon worksheet 

clearly shows that Raytheon cred.ited you with only 5.0794 years 

of vesting service and, that, as a result, Raytheon did not 

consider you vested under the Raytheon Plan. Thus, the evidence 

available to the Board implies that; when Memorex Telex credited 

you with full vesting service back to your date of hire with 

Raytheon, it was aware that Raytheon itself would not have done 

so. 

In the Board's view, it is possible that the 1985 Amendment 

means that your vesting service should be determined (1) under 

the provisions of the Memorex Telex Plan as if your date of hire 

with Raytheon were your date of hire with Telex ·(later Memorex 

Telex) or (2) under the provisions of the Raytheon Plan during 

your employment with Raytheon and under the Memorex Telex Plan 

during your employment with Telex. Since it is possible to 

interpret the 1985 Amendment in either way, the Board found that 

it should defer to the interpretation given to the 1985 Amendment 

by the person who was acting in the role of the Plan 

Administrator (Ms. Carol Bickers) at the time when your benefit 

determination was initially made (especially given that this 

determination was made prior to PBGC's termination and 

trusteeship of -the Plan). Thus, the Board found that you are 

entitled to a deferred vested benefit under ·the Memorex Telex 

Plan. 

Raytheon/Telex Purchase and Lease Agreement and PBGC' s Revised 

Determination 

PBGC.revised your benefit determination after learning of an 

April 4, 1985 Supplemental Agreement under a Purchase and Lease 

Agreement between Raytheon Company and the Telex Corporation. A 

May 13, 2003 Raytheon communication quotes 1990 actuarial 

documents, as follows: 

'Pursuant to a Supplemental Agreement dated 

April 4, 1985 that was a part of ·the Purchase and Lease 

Agreement between Raytheon Company and The Telex 

Corporation, a portion of the assets and liabilities of 

the Raytheon Pension Plan was transferred to the Amended 

Pension Plan for Employees of the Telex Corporation and 

Subsidiaries ('Telex Plan"). These assets and 

liabilities were attributable to employees of Raytheon 

Company (or its subsidiaries) who were hired by Telex 

as of August 10, 1984 or within 120 days of such date. 

Also pursuant to the Supplemental Agreement, assets and 

liabilities will be transferred back to the Raytheon 

Pension Plan for such employees who returned directly 
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to Raytheon prior to December 31, 1986. The assets and 

liabilities of such employees will be spun off from the 

Memorex Telex Employees Pension plan ('MT Plan"), 

formerly the Telex Plan, to the Raytheon Pension Plan 

effective October 15, 1990." 

Based on this summary of the Purchase and Lease Agreement, 

the Raytheon Plan Administrator worked with PBGC officials to 

identify those individuals who belonged under the Raytheon Plan 

and those who belonged under the Memorex Telex Plan. You were 

identified as one of the individuals whose pension was the 

responsibility of the Raytheon Plan. Accordingly, PBGC's July 14, 

2003 revised determination informed you that you are not entitled 

to a benefit from the Memorex Telex Plan, because your •retirement 

benefit is the responsibility of Raytheon." 

In reviewing the information provided above, the Board took 

into consideration the following factors: 

(1) Your situation appears to be distinct from that of the other 

individuals affected by the division of pension responsibilities 

pursuant to the Purchase and Lease Agreement, . because Raytheon 

assumed responsibility for your pension but denied that you were 

entitled to one .. 

(2) PBGC does not actually have a copy of the Purchase and Lease 

Agreement [or of the April 4, 1985 Supplemental Agreement). 

Instead, PBGC only has a 2003 communication quoting 1990 actuarial 

summaries of the 1985 Supplemental Agreement. 

(3) Under.the 1.985 Amendment, your entitlement to a benefit is not 

contingent upon the transfer of assets or liabilities to or from· 

the Raytheon Plan. 

For these reasons, the Board found that the summary of the 

Supplement to the Purchase and Lease Agreement taken from 1990 

actuarial documents does not provide a sufficient basis to deny 

your entitlement to a deferred vested benefit under the Memorex 

Telex Plan. 

Impact of the 1994 Memorex Telex Plan 

The Memorex Telex Plan was amended and restated in a document 

which was effective January 1, 1994 and adopted December 22, 1994 

(the '1994 Plan"). The 1994 Plan incorporated a Supplement D and 

provided that its effective date was August 10, 1984. Section 3 

of Supplement D stated that a former Raytheon employee's 'Period 

of Service shall include such Member's service prior to the 
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Transfer Date recognized under the Raytheon Pension Plan for 

purposes of eligibility and vesting." 

Thus, Section 3 of Supplement D implies that you should not 

be given credit for vesting service during that period of your 

employment with Raytheon which Raytheon would not have recognized 

as vesting service. This interpretation would lead to the 

conclusion that you are not entitled to a deferred vested benefit 

under the Memorex'Telex Plan. 

Memorex Telex, however, determined that you were entitled to 

a benefit based on the 1985 Amendment which was adopted on 

January 18, 1985, whereas Supplement D was part of the 1994 Plan 

which was adopted on December 22, 1994. Since you were found 

entitled to a benefit based on a document adopted in 1985, it 

would be difficult to justify denying that entitlement based on 

a document adopted in 1994. Moreover, the Board notes that Memorex 

Telex continued to treat you as a participant entitled to a 

benefit even after the adoption of the 1994 Plan (including 

Supplement D) . Accordingly, the Board found Supplement D to the 

1994 Plan does not provide an adequate basis for overturning 

Memorex Telex's determination that you are entitled to a deferred 

vested benefit. 

Decision 

The Board changed PBGC's July 14, 2003 revised determination 

by ·finding that you are entitled to a benefit under the Memorex 

Telex Plan. The [loard' s decision has the effect of reinstating 

PBGC's August 21, 2001 determination which provided that you are 

entitled to a monthly benefit of $151.51, payable in the form of 

a 100% Joint and Survivor annuitv. If you need other inforrnatinn 

from PBGC, please call our Customer Contact Center at 1-800-400-

7242. 

Sincerely, 

William D. Ellis 

Acting Chair, Appeals Board