Pension and Postretirement Plans

9 Months Ended

Sep. 30, 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 September 30						Nine Months Ended September 30
(in thousands)	2014			2013			2014			2013
Service cost	$	6,976		$	12,713		$	21,489		$	38,788
Interest cost	12,894			14,242			38,870			42,776
Expected return on assets	(29,877		)	(26,817		)	(90,644		)	(78,606		)
Amortization of prior service cost	83			908			247			2,726
Recognized actuarial (gain) loss	(7,280		)	1,797			(21,599		)	5,741
Net Periodic (Benefit) Cost	(17,204		)	2,843			(51,637		)	11,425
Early retirement programs expense	3,884			—			8,374			22,700
Total (Benefit) Cost	$	(13,320	)	$	2,843		$	(43,263	)	$	34,125

For the nine months ended September 30, 2014, the net periodic benefit for the Company's pension plans, as reported above, includes costs of $0.2 million reported in discontinued operations. For the three and nine months ended September 30, 2013, the net periodic cost for the Company's pension plans, as reported above, includes costs of $5.5 million and $19.4 million, respectively, reported 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. In the third quarter of 2014, the Company recorded $3.9 million related to a Voluntary Retirement Incentive Program (VRIP) for certain Corporate employees, which will be funded from the assets of the Company's pension plan.

The Company announced a VRIP in February 2013, which was offered to certain employees of the Washington Post newspaper. The total early retirement program expense for this program for the nine months ended September 30, 2013 was $20.4 million. 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.

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 September 30				Nine Months Ended September 30
(in thousands)	2014		2013		2014		2013
Service cost	$	373	$	429	$	1,119	$	1,288
Interest cost	1,086		1,023		3,257		3,069
Amortization of prior service cost	12		14		35		41
Recognized actuarial loss	374		711		1,124		2,133
Net Periodic Cost	1,845		2,177		5,535		6,531
Early retirement programs expense	2,422		—		2,422		—
Total Cost	$	4,267	$	2,177	$	7,957	$	6,531

For the nine months ended September 30, 2014, the net periodic cost for the Company's SERP, as reported above, includes costs of $0.2 million reported in discontinued operations. For the three and nine months ended September 30, 2013, the net periodic cost for the Company's SERP, as reported above, includes costs of $0.3 million and $0.9 million, respectively, reported in discontinued operations.

In the third quarter of 2014, the Company recorded a $2.4 million SERP charge related to the VRIP for certain Corporate employees.

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
	September 30, 2014		December 31, 2013
U.S. equities	60	%	58	%
U.S. fixed income	11	%	12	%
International equities	29	%	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 September 30, 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 September 30, 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 September 30, 2014, the pension plan held common stock in two investments that exceeded 10% of total plan assets. At December 31, 2013, the pension plan held common stock in one investment that exceeded 10% of total plan assets. These investments were valued at $669.5 million and $590.6 million at September 30, 2014 and December 31, 2013, respectively, or approximately 29% and 25%, respectively, of total plan assets. At September 30, 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 $434.3 million and $398.9 million at September 30, 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 September 30						Nine Months Ended September 30
(in thousands)	2014			2013			2014			2013
Service cost	$	375		$	728		$	1,125		$	2,183
Interest cost	362			508			1,086			1,525
Amortization of prior service credit	(196		)	(1,306		)	(587		)	(3,972		)
Recognized actuarial gain	(519		)	(504		)	(1,557		)	(1,549		)
Net Periodic Cost (Benefit)	22			(574		)	67			(1,813		)
Settlement gain	—			—			—			(3,471		)
Total Cost (Benefit)	$	22		$	(574	)	$	67		$	(5,284	)

For the three and nine months ended September 30, 2013, the net periodic benefit, as reported above, includes a benefit of $1.5 million and $2.9 million, respectively, 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.