Washington Post 2008 Annual Report Download - page 86

retirement benefits and other benefits. The Company recorded
pre-tax charges of $49.8 million in connection with this program.
Overall, 198 employees accepted voluntary early retirement offers
under these two programs.
The following table sets forth obligation, asset and funding
information for the Company’s defined benefit pension plans at
December 28, 2008 and December 30, 2007:
Pension Plans SERP
(in thousands) 2008 2007 2008 2007
Change in Benefit
Obligation
Benefit obligation at
beginning of
year .......... $ 840,170 $ 802,791 $ 57,462 $ 54,382
Service cost ....... 27,169 28,115 1,404 1,542
Interest cost ....... 52,986 47,201 4,141 3,213
Amendments ...... 105,174 (179) 5,903 —
Actuarial loss ...... 61,139 2,310 7,304 53
Benefits paid and
other .......... (79,361) (40,068) (6,627) (1,728)
Benefit obligation at
end of year ..... $1,007,277 $ 840,170 $ 69,587 $ 57,462
Change in Plan Assets
Fair value of assets at
beginning of
year .......... $1,874,959 $1,778,083 $—$—
Actual (loss) return on
plan assets ...... (468,269) 136,944 ——
Employer
contributions and
other .......... ——6,627 1,728
Benefits paid and
other .......... (79,361) (40,068) (6,627) (1,728)
Fair value of assets
at end of year ... $1,327,329 $1,874,959 $—$—
Funded status ..... $ 320,052 $1,034,789 $(69,587) $(57,462)
The accumulated benefit obligation for the Company’s pension
plans at December 28, 2008 and December 30, 2007, was
$917.3 million and $756.7 million, respectively. The accumulated
benefit obligation for the Company’s SERP at December 28, 2008
and December 30, 2007 was $57.8 million and $44.6 million,
respectively. The amounts recognized in the Company’s
Consolidated Balance Sheets for its defined benefit pension plans
at December 28, 2008 and December 30, 2007 are as follows:
Pension Plans SERP
(in thousands) 2008 2007 2008 2007
Non-current asset . . . $346,325 $1,034,789 $—$—
Current liability .... ——(3,545) (1,738)
Non-current
liability ........ (26,273) —(66,042) (55,724)
Recognized asset
(liability) ....... $320,052 $1,034,789 $(69,587) $(57,462)
Key assumptions utilized for determining the benefit obligation at
December 28, 2008 and December 30, 2007 are as follows:
Pension Plans SERP
2008 2007 2008 2007
Discount rate ................ 5.75% 6.0% 6.0% 6.0%
Rate of compensation increase . . . 4.0% 4.0% 4.0% 4.0%
The Company made no contributions to its pension plans in 2008,
2007 and 2006, and the Company does not expect to make any
contributions in 2009. The Company made contributions to its SERP
of $6.6 million, $1.7 million and $1.1 million for the years ended
December 28, 2008, December 30, 2007 and December 31,
2006, respectively, as the plan is unfunded and the Company
covers benefit payments. The Company makes contributions to the
SERP based on actual benefit payments.
At December 28, 2008, future estimated benefit payments,
excluding charges for early retirement programs, are as follows:
(in millions) Pension Plans SERP
2009 ............................ $ 60.4 $ 3.7
2010 ............................ $ 51.3 $ 3.8
2011 ............................ $ 52.9 $ 3.9
2012 ............................ $ 54.6 $ 4.6
2013 ............................ $ 56.6 $ 4.7
2014–2018 ....................... $323.5 $27.0
The Company’s defined benefit pension obligations are funded by
a portfolio made up of a relatively small number of stocks and high-
quality fixed-income securities that are held by a third-party trustee.
As of December 31, 2008 and December 31, 2007, the assets of
the Company’s pension plans were allocated as follows:
Pension Plan Asset Allocations
December 31,
2008 December 31, 2007
U.S. equities ................. 73% 86%
U.S. fixed income ............. 22% 12%
International equities ........... 5% 2%
Total ...................... 100% 100%
Essentially all of the assets are actively managed by two investment
companies. Both of these managers may invest in a combination of
equity and fixed income securities and cash. The managers are not
permitted to invest in securities of the Company or in alternative
investments. Included in the assets they manage are $267.2 million
and $459.1 million of Berkshire Hathaway Class A and Class B
common stock at December 31, 2008 and December 31, 2007,
respectively. None of the assets is managed internally by the
Company.
The goal of the investment managers is to produce moderate long-
term growth in the value of these assets, while protecting them
against large decreases in value. The investment managers cannot
invest more than 20% of the assets at the time of purchase in the
stock of Berkshire Hathaway or more than 10% of the assets in the
securities of any other single issuer, except for obligations of the
U.S. Government, without receiving prior approval by the Plan
administrator. As of December 31, 2008, up to 13% of the assets
could be invested in international stocks, and no less than 9% of the
assets could be invested in fixed-income securities.
74 THE WASHINGTON POST COMPANY