Berkshire Hathaway 2003 Annual Report Download - page 47

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Notes to Consolidated Financial Statements (Continued)
(17) Pension plans
Certain Berkshire subsidiaries individually sponsor defined benefit pension plans covering their employees.
Benefits under the plans are generally based on years of service and compensation, although benefits under certain plans
are based on years of service and fixed benefit rates. Funding policies are generally to contribute amounts required to
meet regulatory requirements plus additional amounts determined by management based on actuarial valuations.
The components of net periodic pension expense for each of the three years ending December 31, 2003 are as
follows (in millions). 2003 2002 2001
Service cost ...................................................................................................................... $ 106 $ 91 $ 72
Interest cost ...................................................................................................................... 182 164 138
Expected return on plan assets.......................................................................................... (159) (147) (137)
Net amortization, deferral and other................................................................................. 5 8 3
Net pension expense......................................................................................................... $ 134 $ 116 $ 76
The increase (decrease) in minimum liabilities included in other comprehensive income for each year are as
follows (in millions). Such amounts do not include Berkshire’ s share of changes in minimum liabilities of
MidAmerican. 2003 2002 2001
$(16) $2 $30
The accumulated benefit obligation is the actuarial present value of benefits earned based on service and
compensation prior to the valuation date. The projected benefit obligation is the actuarial present value of benefits
earned based upon service and compensation prior to the valuation date and includes assumptions regarding future
compensation levels when benefits are based on those amounts. Information regarding accumulated and projected
benefit obligations and plan assets are as follows (in millions). 2003 2002
Projected benefit obligation, beginning of year................................................................ $2,862 $2,376
Service cost ...................................................................................................................... 106 91
Interest cost ...................................................................................................................... 182 164
Benefits paid..................................................................................................................... (150) (165)
Benefit obligations of acquired businesses....................................................................... —318
Actuarial loss and other.................................................................................................... 193 78
Projected benefit obligation, end of year.......................................................................... $3,193 $2,862
Accumulated benefit obligation, end of year.................................................................... $2,675 $2,408
Plan assets at fair value, beginning of year....................................................................... $2,548 $2,215
Employer contributions .................................................................................................... 78 59
Benefits paid..................................................................................................................... (150) (165)
Plan assets of acquired businesses.................................................................................... —231
Actual return on plan assets.............................................................................................. 332 200
Other and expenses........................................................................................................... 11 8
Plan assets at fair value, end of year................................................................................. $2,819 $2,548
Defined benefit pension plan obligations to U.S. employees are funded through assets held in trusts and are not
included as assets in Berkshire’ s Consolidated Financial Statements. Pension obligations under certain non-U.S. plans
and non-qualified U.S. plans are unfunded. As of December 31, 2003 and 2002, total plan assets were invested as
follows: 2003 2002
Fixed maturity investments:
Cash and equivalents..................................................................................................... $ 813 $260
U.S. Government obligations ........................................................................................ 152 46
Mortgage-backed securities........................................................................................... 597 1,349
Corporate obligations .................................................................................................... 451 510
Equity securities ...............................................................................................................764 341
Other................................................................................................................................. 42 42
$2,819 $2,548