The accumulated benefit obligation for the pension plan was $4,801,000 and $4,170,000 at December 31, 2003 and 2002, respectively. The components
of net periodic pension cost for 2003, 2002 and 2001 were as follows (in thousands):
YEAR ENDED DECEMBER 31,
2003 2002 2001
COMPONENTS OF NET PERIODIC PENSION COST:
Service cost $ 214 $ 320 $ 369
Interest cost 298 307 296
Expected return on assets (349) (405) (477)
Prior service cost amortization (37) 7 6
Actuarial loss 128 28 —
Transition amount amortization (44) (44) (44)
Net periodic pension cost $ 210 $ 213 $ 150
Actuarial assumptions used to determine benefit obligations at December 31 were as follows:
2003 2002
Discount rate 6.50% 7.00%
Rate of compensation increase 5.00% 5.00%
Actuarial assumptions used to determine net periodic pension cost were as follows:
YEAR ENDED DECEMBER 31,
2003 2002 2001
Discount rate 7.00% 7.25% 7.25%
Expected long-term return on assets 8.00% 9.00% 9.00%
Rate of compensation increase 5.00% 5.00% 5.00%
The Company’s expected long-term rate of return assumption is based upon the plan’s actual long-term investment results as well as the long-term outlook
for investment returns in the marketplace at the time the assumption is made. The reduction in the Company’s assumption for this expected return rate in
the beginning of 2003 to 8 percent from 9 percent reflected the major downturn in returns on debt and equity investments that occurred in the investment
markets in 2001 and 2002.
The Company’s pension plan assets at December 31, 2003 and 2002 were invested in the following asset categories:
2003 2002
ASSET CATEGORY:
Equity securities 73% 64%
Debt securities 25% 28%
Other 2% 8%
Total 100% 100%
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