Pension and Postretirement Plans

3 Months Ended

Mar. 31, 2014

General Discussion of Pension and Other Postretirement Benefits [Abstract]

Pension and Other Postretirement Benefits Disclosure

PENSION AND POSTRETIREMENT PLANS

Defined Benefit Plans. The total (benefit) cost arising from the Company’s defined benefit pension plans, including a portion included in discontinued operations, consists of the following components:

	Three Months Ended March 31
(in thousands)	2014			2013
Service cost	$	7,537		$	13,365
Interest cost	13,082			14,291
Expected return on assets	(30,263		)	(26,322		)
Amortization of prior service cost	82			909
Recognized actuarial (gain) loss	(7,038		)	2,147
Net Periodic (Benefit) Cost	(16,600		)	4,390
Early retirement programs expense	4,490			14,258
Total (Benefit) Cost	$	(12,110	)	$	18,648

For the three months ended March 31, 2014 and 2013, the net periodic (benefit) cost for the Company's pension plans, as reported above, includes costs of $0.1 million and $7.1 million, respectively, reported in discontinued operations. The early retirement programs expense for the March 31, 2013 is included in discontinued operations.

In the first quarter of 2014, the Company recorded $4.5 million related to a Separation Incentive Program for certain Corporate employees, which will be funded from the assets of the Company's pension plan.

The Company announced a Voluntary Retirement Incentive Program in February 2013, which was offered to certain employees of the Washington Post newspaper. The total early retirement program expense for this program was $20.4 million. Of this amount, $12.0 million was recorded in the first quarter of 2013 and $8.4 million was recorded in the second quarter of 2013. In addition, the Washington Post newspaper recorded $2.3 million in special separation benefits for a group of employees in the first quarter of 2013. The early retirement program expense and special separation benefits for these programs were funded from the assets of the Company’s pension plan and are included in discontinued operations, net of tax, in 2013.

The total cost arising from the Company’s Supplemental Executive Retirement Plan (SERP), including a portion included in discontinued operations, consists of the following components:

	Three Months Ended March 31
(in thousands)	2014		2013
Service cost	$	373	$	429
Interest cost	1,085		1,023
Amortization of prior service cost	12		14
Recognized actuarial loss	375		711
Net Periodic Cost	$	1,845	$	2,177

For the three months ended March 31, 2014 and 2013, the net periodic cost for the Company's SERP, as reported above, includes costs of $0.1 million and $0.3 million, respectively, reported in discontinued operations.

Defined Benefit Plan Assets. 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. The assets of the Company’s pension plan were allocated as follows:

	As of
	March 31, 2014		December 31, 2013
U.S. equities	59	%	58	%
U.S. fixed income	13	%	12	%
International equities	28	%	30	%
	100	%	100	%

Essentially all of the assets are actively managed by two investment companies. 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. 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. 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 March 31, 2014, the managers can invest no more than 24% of the assets in international stocks, at the time the investment is made, and no less than 10% of the assets could be invested in fixed-income securities. None of the assets is managed internally by the Company.

In determining the expected rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. In addition, the Company may consult with and consider the input of financial and other professionals in developing appropriate return benchmarks.

The Company evaluated its defined benefit pension plan asset portfolio for the existence of significant concentrations (defined as greater than 10% of plan assets) of credit risk as of March 31, 2014. Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country and individual fund. At March 31, 2014 and December 31, 2013, the pension plan held common stock in one investment that exceeded 10% of total plan assets. This investment was valued at $429.1 million and $382.1 million at March 31, 2014 and December 31, 2013, respectively, or approximately 18% and 16%, respectively, of total plan assets. Assets also included $219.5 million and $208.4 million of Berkshire Hathaway common stock at March 31, 2014 and December 31, 2013, respectively. At March 31, 2014 and December 31, 2013, the pension plan held investments in one foreign country that exceeded 10% of total plan assets. These investments were valued at $447.0 million and $398.9 million at March 31, 2014 and December 31, 2013, respectively, or approximately 19% and 17%, respectively, of total plan assets.

Other Postretirement Plans. The total cost (benefit) arising from the Company’s other postretirement plans, including a portion included in discontinued operations, consists of the following components:

	Three Months Ended March 31
(in thousands)	2014			2013
Service cost	$	375		$	727
Interest cost	362			510
Amortization of prior service credit	(196		)	(1,360		)
Recognized actuarial gain	(519		)	(541		)
Net Periodic Cost (Benefit)	22			(664		)
Settlement gain	—			(3,471		)
Total Cost (Benefit)	$	22		$	(4,135	)

For the three months ended March 31, 2013, the net periodic benefit, as reported above, includes a benefit of $0.6 million included in discontinued operations. As part of the sale of The Herald, changes were made with respect to its postretirement medical plan, resulting in a $3.5 millionsettlement gain that is included in discontinued operations, net of tax, for the first quarter of 2013.