result in significant increases to participant contributions because expenses have already exceeded the company’s cap limit. The company decided to offer a new option to participants that fea- tured less volatile increases in participant contributions but still results in future increases that will be determined by the future rate of health care inflation. As a result of a significant number  of participants choosing the new option, the company’s benefit  obligation increased by $37.6 million in fiscal 2003. Actuarial gains and losses and any adjustments resulting from plan  amendments are deferred and amortized to expense over  periods ranging from 10-18 years. The annual measurement date used to determine pension and other postretirement benefit amounts is August 1. The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) resulted in a reduction of the company’s accumulated postretirement benefit obligation (APBO) of $41.5  million in fiscal 2004, which represents an actuarial gain that will  be amortized over future service periods. Application of the Act resulted in a decrease of $3.9 million in net periodic postretirement costs for the year. This decrease is made up of a reduction in loss amortization of $2.0 million, reduction in service cost of $0.2 mil- lion, and reduction in interest cost of $1.7 million.  Amounts recognized in the consolidated balance sheets as of October 30, 2004, and October 25, 2003, were as follows: The following is a reconciliation of the beginning and ending bal- ances of the benefit obligation and the fair value of plan assets: The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumu- lated benefit obligations in excess of plan assets were $101.8 mil- lion, $89.5 million, and $1.1 million, respectively, as of October 30, 2004, and $94.4 million, $76.7 million, and $0, respectively, as  of October 25, 2003. Net periodic cost of defined benefit plans included the following: 2004 Annual Report 41 Pension Benefits Other Benefits (In Thousands) 2004 2003 2002  2004 2003 2002  Service cost $ 16,998 $ 12,902 $ 11,696 $ 3,070 $ 2,387 $ 2,277 Interest cost 38,711 35,632 36,898 21,199 22,341 20,976 Expected return on plan assets (40,468) (40,783) (51,451) Amortization of transition obligation (213) 752 803 Amortization of prior service cost 924 977 1,158 5,654 2,418 (351) Recognized actuarial loss 10,058 4,165 1,768 116 2,532 1,409 Early retirement charge 1,858 867 Net Periodic Cost $ 27,868 $ 13,645 $ 872 $30,906 $29,678 $24,311 Pension Benefits Other Benefits (In Thousands) 2004 2003 2004 2003 Change in Benefit  Obligation: Benefit obligation at  beginning of year $614,013 $531,157 $ 363,875 $ 331,130 Benefit obligation –  assumed plans 1,748 Service cost 16,998 12,902 3,070 2,387 Interest cost 38,711 35,632 21,199 22,341 Plan amendment 1,858 3,541 (4,398) 37,625 Actuarial loss (gain) 24,662 63,097 16,717 (3,642) Benefits paid (39,962) (34,064) (28,943) (25,966) Benefit Obligation  at End of Year $656,280 $614,013 $ 371,520 $ 363,875 Pension Benefits Other Benefits (In Thousands) 2004 2003 2004 2003 Prepaid benefit cost $155,239 $142,476 Accrued benefit liability (88,585) (78,109) $(265,478) $(263,515) Intangible asset 145 Accumulated other  comprehensive loss 25,888 21,757 Benefit payments  subsequent to  measurement date 383 778 8,086 7,601 Net Amount Recognized $ 92,925 $ 87,047 $(257,392) $(255,914) Pension Benefits Other Benefits (In Thousands) 2004 2003 2004 2003 Change in Plan Assets: Fair value of plan assets  at beginning of year $522,227 $491,244 Fair value of plan assets –  assumed plans 542 Actual return on plan  assets 80,608 11,727 Employer contributions 34,141 52,778 Benefits paid (39,962) (34,064) Fair Value of Plan Assets at End of Year 597,014 522,227 Funded status (59,266) (91,786) $(371,520) $(363,875) Unrecognized net transition  (asset) liability  (213) Unrecognized actuarial loss 145,434 170,970 37,131 25,795 Unrecognized prior  service cost 6,374 7,298 68,911 74,565 Benefit payments  subsequent to  measurement date 383 778 8,086 7,601 Net Amount Recognized $ 92,925 $ 87,047 $(257,392) $(255,914)