| DEFINED BENEFIT PENSION PLANS AND OTHER POST RETIREMENT BENEFITS | NOTE 14: DEFINED BENEFIT PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS Defined Benefit Plans —The Company is the sponsor of a single-employer defined benefit plan, the NYDN Pension Plan, which provides benefits to certain current and former employees of the New York Daily News . The NYDN Pension Plan is frozen to any new participants and effective in March 2018 the accrual of new benefits to participants was frozen. Summarized information for the NYDN Pension Plan is provided below (in thousands): December 29, 2019 December 30, 2018 Change in benefit obligations: Projected benefit obligations, beginning of year $ 96,407 $ 106,446 Service cost — 72 Interest cost 3,516 3,272 Actuarial (gain) loss 7,841 (5,442) Benefits paid (19,479) (7,941) Projected benefit obligations, end of year 88,285 96,407 Change in plan assets: Fair value of plan assets, beginning of year 77,177 85,032 Return on plan assets 8,683 (3,832) Employer contributions 2,484 3,918 Benefits paid (19,479) (7,941) Fair value of plan assets, end of year 68,865 77,177 Underfunded status of the plan $ 19,420 $ 19,230 The Company contributed $2.5 million to the NYDN Pension Plan during the year ending December 29, 2019, and expects to contribute $3.2 million during the year ending December 27, 2020. As part of a pension de-risking strategy for the NYDN Pension Plan, the Company offered lump sum settlements to all participants who were current retirees or vested terminated employees and had a monthly annuity of $500 or less. Approximately 34.3% of the total eligible participants accepted the offer. The NYDN Pension Plan paid out $11.8 million in lump sum payments and the Company recorded a settlement charge of $0.5 million. The amounts recognized in the Company’s Consolidated Balance Sheets for the NYDN Pension Plan as of December 29, 2019, and December 30, 2018, consist of (in thousands): December 29, 2019 December 30, 2018 Pension and postretirement benefits payable $ 19,420 $ 19,230 Accumulated other comprehensive loss, net of tax $ 2,334 $ 236 The components of net periodic benefit cost (credit) for the NYDN Pension Plan were as follows (in thousands): Year ended Affected Line Items in the Consolidated Statements of Income December 29, 2019 December 30, 2018 December 31, 2017 Service cost $ — $ 72 $ 142 Compensation Interest cost 3,516 3,272 1,249 Other non-operating income (expense) Expected return on plan assets (4,212) (4,667) (1,602) Other non-operating income (expense) Curtailment gain — — (51) Other non-operating income (expense) Settlement charge 466 — — Other non-operating income (expense) Net periodic benefit cost (credit) $ (230) $ (1,323) $ (262) Pension Assets - The primary investment objective of the NYDN Pension Plan is to ensure, over the long-term life of the plan, an adequate pool of assets to support the benefit obligations to participants, retirees and beneficiaries. A secondary objective of the plan is to achieve a level of investment return consistent with the prudent level of portfolio risk that will minimize the financial effect of the pension plans on the Company. The investments in the pension plans largely consist of low-cost, broad-market index funds to mitigate risks of concentration within market sectors. Each of the funds is diversified across a wide number of securities within its stated asset class. At December 29, 2019, the NYDN Pension Plan investments are in commingled funds which are recorded at fair value as determined by the sponsor of the respective funds primarily based upon closing market quotes of the underlying assets. The following table sets forth by level, within the fair value hierarchy, the NYDN Pension Plan’s assets at fair value as of December 29, 2019 (in thousands): Level 1 Level 2 Level 3 Total Global public equity $ 2,269 $ — $ — $ 2,269 Fixed income 1,769 — — 1,769 Group annuity contract — — 13 13 $ 4,038 $ — $ 13 Investments valued at net asset value: Cash and cash equivalents 755 Global public equity 34,990 Fixed income 14,072 Absolute return 8,986 Real assets 6,006 Pending trades and other receivables 5 Total assets at fair value $ 68,865 The following table sets forth by level, within the fair value hierarchy, the NYDN Pension Plan’s assets at fair value as of December 30, 2018 (in thousands): Level 1 Level 2 Level 3 Total Global public equity $ 19,399 $ — $ — $ 19,399 Fixed income 19,103 — — 19,103 Group annuity contract — — 13 13 $ 38,502 $ — $ 13 Investments valued at net asset value: Cash and cash equivalents 817 Global public equity 19,896 Absolute return 8,474 Real assets 8,993 Pending trades and other receivables 482 Total assets at fair value $ 77,177 For the investments in the NYDN Pension Plan valued at net asset value, there are no unfunded commitments for the year ended December 29, 2019. See the table below for the redemption information: Redemption Frequency Redemption Notice Period Cash and cash equivalents Daily 0 days Global public equity Monthly 16 days Absolute return Quarterly 90 days Real assets Quarterly 30 - 90 days The NYDN Pension Plan’s weighted average target allocation and actual allocations at December 29, 2019, by asset category are as follows: Asset category: Target Allocation 2019 Actual Allocation 2018 Actual Allocation Global public equity 52.0 % 54.2 % 50.9 % Absolute return 12.0 % 13.0 % 11.0 % Fixed income 23.5 % 23.0 % 24.8 % Real assets 10.0 % 8.7 % 11.7 % Cash 2.5 % 1.1 % 1.1 % Other — % — % 0.5 % 100.0 % 100.0 % 100.0 % Global Public Equity - Equity investments that will have a global orientation and may include U.S., international, emerging market and global mandates. Convertible securities may also be a component, as well as absolute return strategies that invest in equities. Absolute Return - Commonly known as “hedge funds,” these controlled market risk strategies seek to exploit inefficiencies in the equity markets that may be outside of the universe of traditional long only public equity managers. Absolute return strategies attempt to generate attractive risk-adjusted returns relative to the total equity market, with lower risk of large drawdown and lower volatility. Fixed Income - The bond portfolio will contribute to the income needs of the Plan. Fixed income generally provides a diversified portfolio with deflation protection during periods of financial duress. Bonds dampen the overall volatility of total Plan results, which is important to help mitigate losses in periods of falling equity markets. Bond markets suffer declines, but they are generally not as severe as those experienced in the equity market. Bond returns are steadier than those of equities because of income received and because bonds have greater precedence in a company’s capital structure. Bonds typically do not fare well in periods of rising inflation. Real Assets - Real Assets are assets that provide investors with a better hedge against loss of purchasing power than equities and fixed income, and moderate long-term growth. Real Assets can include TIPS, private real estate, REITs, commodities, floating rate loans, currencies, Master Limited Partnerships (MLPs), timber, infrastructure and other inflation protection assets. These assets are included to provide protection against inflation, thus preserving the real value of the portfolio over the long term. These assets may exhibit low correlations to other asset classes, thus diversifying the total portfolio. Assumptions - The weighted average assumptions used to determine the NYDN Pension Plan defined benefit obligations are as follows: December 29, 2019 December 30, 2018 Discount rate 3.0 % 4.1 % The weighted average assumptions used to determine the NYDN Pension Plan net periodic benefit cost are as follows: December 29, 2019 December 30, 2018 December 31, 2017 Discount rate 4.1 % 3.6 % 3.5 % Rate of return on assets 5.7 % 5.7 % 5.8 % Rate of compensation increase — % 2.0 % 2.0 % Expected Future Benefit Payments - Benefit payments expected to be paid under the NYDN Pension Plan are summarized below (in thousands): 2020 $ 7,099 2021 6,907 2022 6,731 2023 6,522 2024 6,318 2025-2029 $ 28,029 Postretirement Benefits Other Than Pensions - The Company provides postretirement health care and life insurance benefits to Tribune employees under a number of plans. There is some variation in the provisions of these plans, including different provisions for lifetime maximums, prescription drug coverage and certain other benefits. Obligations and Funded Status - The funded status and the related service costs and comprehensive income has been actuarially determined based on eligible employees and is reflected in these Consolidated Financial Statements. Summarized information for the Company’s other postretirement plans is provided below (in thousands): December 29, 2019 December 30, 2018 Change in benefit obligations: Projected benefit obligations, beginning of year $ 1,032 $ 1,731 Service cost 14 13 Interest cost 38 37 Actuarial gain 34 181 Benefits paid (90) (930) Projected benefit obligations, end of year 1,028 1,032 Change in plan assets: Employer contributions 90 930 Benefits paid (90) (930) Fair value of plan assets, end of year — — Underfunded status of the plans $ (1,028) $ (1,032) During 2017, the Company made the decision to split the post-retirement medical plan into two separate plans, one for union employees and one for non-union employees. Additionally, the non-union medical plan was terminated as of December 31, 2018. The plan split and termination resulted in $5.8 million of prior service cost credit. During the years ended December 30, 2018 and December 31, 2017, $4.1 million and $1.7 million, respectively, was amortized as a credit to net periodic benefit cost (credit) and recorded in other non-operating income in the Consolidated Statement of Income. Amounts recognized in Tribune’s Consolidated Balance Sheets for other postretirement plans consisted of (in thousands): December 29, 2019 December 30, 2018 Liabilities: Employee compensation and benefits $ (74) $ (112) Pension and postretirement benefits payable (954) (920) Total liabilities $ (1,028) $ (1,032) Accumulated other comprehensive income: Unrecognized prior service credit (cost), net of tax $ (112) $ (344) Unrecognized net actuarial gains (losses), net of tax 70 45 Total accumulated other comprehensive income $ (42) $ (299) The components of net periodic benefit cost (credit) for the Company’s other postretirement plans were as follows (in thousands): Year ended Affected Line Items in the Consolidated Statements of Income December 29, 2019 December 30, 2018 December 31, 2017 Service cost $ 14 $ 13 $ 11 Compensation Interest cost 38 37 189 Other non-operating income (expense) Amortization of (gain) loss 1 (2,621) (553) Other non-operating income (expense) Amortization of prior service credits (328) (10,534) (2,745) Other non-operating income (expense) Net periodic benefit cost (credit) $ (275) $ (13,105) $ (3,098) Assumptions - The weighted average assumptions used to determine other postretirement benefit obligations are as follows: December 29, 2019 December 30, 2018 Discount rate 3.13 % 4.23 % The weighted average assumptions used to determine net periodic benefit cost are as follows: December 29, 2019 December 30, 2018 December 31, 2017 Discount rate 4.23 % 2.47 % 3.23 % For purposes of measuring postretirement health care costs for the year ended December 29, 2019, Tribune assumed a 7.5% annual rate of increase in the per capita cost of covered health care benefits. The rate was assumed to decrease to 7.2% in 2020 and decrease gradually to 4.5% for 2029 and remain at that level thereafter. For purposes of measuring postretirement health care obligations at December 29, 2019, Tribune assumed a 7.5% annual rate of increase in the per capita cost of covered health care benefits. The rate was assumed to decrease gradually to 4.5% for 2030 and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. As of December 29, 2019, a 1% change in assumed health care cost trend rates would have an immaterial effect on Tribune’s postretirement benefits service and interest cost and the following effect on Tribune’s projected benefit obligation (in thousands): 1% Increase 1% Decrease Projected benefit obligation $ 37 $ 34 Expected Future Benefit Payments - Benefit payments expected to be paid under other postretirement benefit plans are summarized below (in thousands): 2020 $ 75 2021 78 2022 83 2023 85 2024 79 2025-2029 $ 434 Employees’ Defined Contribution Plan —The Company sponsors defined contribution plans that were established effective June 13, 2014. The defined contribution plans cover substantially all full-time employees of the Company. Participants may elect to contribute a portion of their pretax compensation as provided by the plans and Internal Revenue Service (“IRS”) regulations. The maximum pretax contribution an employee can make is 100% of his or her annual eligible compensation (less required withholdings and deductions) up to the statutory limit which was $19,000 for 2019. The Company matches contributions to its defined contribution plan at a rate of 100% of salary deferrals for the first 2% of compensation and 50% of salary deferrals that exceed 2% of compensation up to 6% of compensation for each participating employee. The Company’s contributions to its defined contribution plans totaled $7.5 million, $8.1 million and $8.5 million in the years ended December 29, 2019, December 30, 2018, and December 31, 2017, respectively. Multiemployer Pension Plans —The Company’s participation in multiemployer pension plans at December 29, 2019, December 30, 2018, and December 31, 2017, is outlined in the table below. Unless otherwise noted, the most recent Pension Protection Act (“PPA”) Zone Status available in 2019 and 2018 is for the plan’s year-end at December 30, 2018 and December 31, 2017, respectively. The PPA Zone Status is based on information that Tribune received from the plan and is certified by the plan’s actuary. Among other factors, plans in the Critical and Declining Zone are typically projected to have a funding deficiency as defined in the Internal Revenue Code (“IRC”) within four years and projected to become insolvent within 20 years; plans in the Critical Zone are typically projected to have a funding deficiency as defined in IRC within four years (but not projected to become insolvent within 20 years), plans in the Endangered Zone are less than 80% funded (but not the Critical or Critical and Declining zones), and plans in the Healthy Zone are at least 80% funded (as determined in accordance with the PPA). The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. (in thousands) EIN/Pension Plan Number PPA Zone Status FIP/RP Status Pending/ Implemented Tribune Contributions Surcharge Imposed Expiration Dates of Collective Bargaining Agreements Pension Fund 2019 2018 2019 2018 2017 Teamsters Local Union No. 727 Pension Fund 36-6012397 Healthy N/A N/A $ 12,595 $ — $ — No June 14, 2021 Chicago Newspaper Publishers Drivers Union Pension Plan (1) 36-6019539 N/A Critical and declining Implemented — 3,568 3,607 Yes N/A GCIU—Employer Retirement Benefit Plan 91-6024903 Critical and declining Critical and declining Implemented 664 637 781 Yes May 31, 2017 to April 30, 2018 (2) Truck Drivers and Helpers Local No. 355 Pension Plan 52-6043608 Healthy Healthy Implemented 165 152 134 Yes January 1, 2018 to December 31, 2022 (3) Newspaper and Mail Deliverers’ - Publishers’ Pension Fund 13-6122251 Healthy Healthy N/A 475 787 259 No November 15, 2024 Pressmen’s Publishers’ Pension Fund 13-6121627 Healthy Healthy N/A 440 430 134 No July 11, 2020 Paper Handlers’ - Publishers' Pension Fund 13-6104795 Critical and declining Critical and declining Implemented 46 53 19 Yes July 11, 2020 IAM National Pension Fund, National Pension Plan 51-6031295 Critical Healthy Implemented 554 428 458 Yes March 31, 2020 CWA/ITU Negotiated Pension Plan 13-6212879 Critical and declining Critical and declining Implemented 169 252 135 No March 31, 2017 to July 31, 2017 (4) Pension Hospitalization & Benefit Plan of the Electrical Industry - Pension Trust Account 13-6123601 Healthy Healthy N/A 303 428 146 No April 30, 2020 $ 15,411 $ 6,735 $ 5,673 (1) The previous Chicago Newspaper Publishers Drivers’ Union Pension Plan merged into the Teamsters Local Union No. 727 Pension Fund effective August 1, 2019. All contributions to both plans are presented under the Teamsters Plan. (2) Tribune is party to two collective bargaining agreements that require contributions to the GCIU—Employer Retirement Benefit Plan, one of which expired May 31, 2017 and the other April 30, 2018. The parties are operating under the terms of these agreements while the terms of successor collective bargaining agreements are negotiated. (3) The collective bargaining agreement expired on June 14, 2016. The parties are operating under the terms of this agreement while the terms of a successor collective bargaining agreement are negotiated. (4) The Company is party to two collective bargaining agreements requiring contributions to this plan, New York Mailers Union No. 6 which expired March 31, 2017 and New York Typographical Union (Control Room) which expired July 31, 2017. The parties are operating under the terms of these agreements while the terms of successor collective bargaining agreements are negotiated. For the plan year ended December 30, 2018, the Chicago Tribune Company was listed in the GCIU Employer Retirement Benefit Plan’s (“GCIU Plan”) Form 5500 as contributing more than five percent of the total contributions to the plan, Daily News L.P. was listed in the Newspaper and Mail Deliverer’s Publishers’ Pension Fund’s Form 5500 as contributing more than five percent of the total contributions to the plan for the plan year ended March 31, 2018. The New York Daily News was listed in the Pressman’s Publishers Pension Fund and the Paper Handlers’ Publishers’ Pension Fund Form 5500s as contributing more than five percent of the total contributions to the plans for the plans’ year ended March 31, 2018. The Company did not provide more than five percent of the total contributions for any of the other multiemployer pension plans in which it participated in those years. At the date the financial statements were issued, Forms 5500s were not available for the plan years ending in 2019. On March 31, 2010, the Chicago Newspaper Publishers Drivers’ Union Pension Plan (“Drivers’ Plan”) was certified by its actuary to be in critical status for the plan year beginning January 1, 2010. As a result, the trustees of the Drivers’ Plan were required to adopt and implement a rehabilitation plan as of January 1, 2011, designed to enable the Drivers’ Plan to cease being in critical status within the period of time stipulated by the IRC. The terms of the rehabilitation plan adopted by the trustees required Tribune to make increased contributions beginning on January 1, 2011, through December 31, 2025, and the trustees of the Drivers’ Plan projected that it would emerge from critical status on January 1, 2026. As of its 2017 plan year, the actuary for the Drivers’ Plan certified the plan to be in critical and declining status with projected insolvency in 2026. During 2018, the Board of Trustees of the Drivers’ Plan agreed to a plan merger with the Teamsters Local Union No. 727 Pension Fund (“Teamsters Fund”), a plan with a healthy status. On December 13, 2018, the Drivers’ Plan adopted an amendment to its prior rehabilitation plan where the Company will make future payments of $68.4 million paid over seven years, beginning in April of 2019 through June of 2025. The merger with the Teamsters Plan became effective on August 1, 2019, after approval by the Pension Benefit Guaranty Corporation (“PBGC”). In addition to the committed future payments under the amended rehabilitation plan, the Company’s funding obligation will be subject to change based on a number of factors, including the outcome of collective bargaining with the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations. In 2009, the GCIU Plan was certified by its actuary to be in critical status (within the meaning of section 432 of the IRC) as of its plan year beginning January 1, 2009. As a result, the trustees of the GCIU Plan implemented a rehabilitation plan on November 1, 2009, and amended it in May 2012 to cease the plan’s critical status within the period of time stipulated by the IRC. However, the GCIU Plan was unable to adopt a rehabilitation plan that would enable the GCIU Plan to emerge from critical status and avoid insolvency using reasonable assumptions. Therefore, the GCIU Plan adopted a rehabilitation plan that reflects reasonable measures to forestall insolvency. As of its 2019 plan year, the GCIU Plan has been certified by its actuary to be in critical and declining status with projected insolvency in 2030. As of December 29, 2019, assuming Tribune’s contributions from January 1, 2020, through the projected insolvency date of 2030, it is estimated that Tribune’s contributions to the plan will total $6.4 million, based on the actuarial assumptions utilized to develop the rehabilitation plan and assuming Tribune’s staffing levels as of December 29, 2019, remain unchanged. The funding obligation is subject to change based on a number of factors, including the outcome of collective bargaining with the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations. In 2010, the CWA/ITU Negotiated Pension Plan was certified by its actuary to be in critical status (within the meaning of section 432 of the IRC) as of its plan year beginning January 1, 2010. As a result, the trustees of the CWA/ITU Negotiated Pension Plan implemented a rehabilitation plan on March 8, 2010. However, the CWA/ITU Negotiated Pension Plan was unable to adopt a rehabilitation plan that would enable the CWA/ITU Negotiated Pension Plan to emerge from critical status and avoid insolvency using reasonable assumptions. Therefore, the CWA/ITU Negotiated Pension Plan adopted a rehabilitation plan that reflects reasonable measures to forestall insolvency. As of its 2019 plan year, the CWA/ITU Negotiated Pension Plan has been certified by its actuary to be in critical and declining status with projected insolvency in 2028. As of December 29, 2019, assuming Tribune’s contributions from January 1, 2020 through the projected insolvency date of 2028, it is estimated that Tribune’s contributions to the plan will total $2.0 million, based on the actuarial assumptions utilized to develop the rehabilitation plan and assuming Tribune’s staffing levels as of December 29, 2019, remain unchanged. The funding obligation is subject to change based on a number of factors, including the outcome of collective bargaining with the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations. In 2016, the Paper Handlers’ - Publishers’ Pension Fund was certified by its actuary to be in critical status (within the meaning of section 432 of the IRC) as of its plan year beginning January 1, 2010. As a result, the trustees of the Paper Handlers’ - Publishers’ Pension Fund implemented a rehabilitation plan on February 25, 2016. As of its 2019-2020 plan year, the Paper Handlers’ - Publishers’ Pension Fund has been certified by its actuary to be in critical and declining status with projected insolvency in the 2024-2025 plan year. As of December 29, 2019, assuming Tribune’s contributions from January 1, 2020 through the projected insolvency date of 2033, it is estimated that Tribune’s contributions to the plan will total $0.7 million, based on the actuarial assumptions utilized to develop the rehabilitation plan and assuming Tribune’s staffing levels as of December 29, 2019, remain unchanged. The funding obligation is subject to change based on a number of factors, including the outcome of collective bargaining with the unions, actual returns on plan assets as compared to assumed returns, actions taken by trustees who manage the plan, changes in the number of plan participants, changes in the rate used for discounting future benefit obligations, as well as changes in legislation or regulations impacting funding and payment obligations. In 2019, the IAM National Pension Fund was certified by its actuary to be in critical status (within the meaning of section 432 of the IRC) as of its plan year beginning January 1, 2019. As a result, the trustees of the IAM National Pension Fund implemented a rehabilitation plan on April 17, 2019. The Rehabilitation Plan is designed to allow the plan to exit critical status within the period of time stipulated by the IRC. |
