7. EMPLOYEE BENEFITS

We have a qualified defined benefit pension plan ("Plan") covering substantially all of our employees who began their employment prior to March 31, 2009. Effective March 31, 2009, the Plan was frozen such that no new participants may enter the Plan and no further benefits will accrue. However, years of service continue to count toward early retirement calculations and vesting of benefits previously earned.

We also have a limited number of supplemental retirement plans to provide key employees hired prior to March 31, 2009, with additional retirement benefits. These plans are funded on a pay-as-you-go basis and the accrued pension obligation is largely included in other long-term obligations. We paid $8.2 million in fiscal year 2012, $7.4 million in fiscal year 2011 and $7.5 million in fiscal year 2010 for these plans.

The following tables provide reconciliations of the pension and post-retirement benefit plans' benefit obligations, fair value of assets and funded status as of December 30, 2012, and December 25, 2011:

	Pension Benefits						Post-retirement Benefits

(in thousands)	2012			2011			2012			2011
Change in Benefit Obligation
Benefit obligation, beginning of year	$	1,763,859		$	1,634,124		$	27,474		$	30,585
Service cost		5,540			5,600			–			–
Interest cost		91,898			92,961			946			1,358
Plan participants' contributions		–			–			817			1,044
Actuarial (gain)/loss		305,952			120,283			(2,400	)		(1,796	)
Gross benefits paid		(89,213	)		(83,660	)		(3,285	)		(3,717	)
Plan amendment		–			–			(7,620	)		–
Administrative expenses		(4,818	)		(5,449	)		–			–

Benefit obligation, end of year	$	2,073,218		$	1,763,859		$	15,932		$	27,474

	Pension Benefits						Post-retirement Benefits

(in thousands)	2012			2011			2012			2011
Change in Plan Assets
Fair value of plan assets, beginning of year	$	1,233,305		$	1,051,410		$	–		$	–
Actual return on plan assets		171,481			50,778			–			–
Employer contribution		48,122			220,227			2,468			2,673
Plan participants' contributions		–			–			817			1,044
Gross benefits paid		(89,213	)		(83,660	)		(3,285	)		(3,717	)
Administrative expenses		(4,818	)		(5,449	)		–			–

Fair value of plan assets, end of year	$	1,358,877		$	1,233,306		$	–		$	–

	Pension Benefits						Post-retirement Benefits

(in thousands)	2012			2011			2012			2011
Funded Status
Fair value of plan assets	$	1,358,877		$	1,233,306		$	–		$	–
Benefit obligations		(2,073,218	)		(1,763,859	)		(15,932	)		(27,474	)

Funded status and amount recognized, end of year	$	(714,341	)	$	(530,553	)	$	(15,932	)	$	(27,474	)

Amounts recognized in the consolidated balance sheets at December 30, 2012 and December 25, 2011 consists of:

	Pension Benefits						Post-retirement Benefits

(in thousands)	2012			2011			2012			2011
Current liability	$	(15,830	)	$	(37,462	)	$	(1,859	)	$	(3,897	)
Noncurrent liability		(698,511	)		(493,091	)		(14,073	)		(23,577	)

	$	(714,341	)	$	(530,553	)	$	(15,932	)	$	(27,474	)

Amounts recognized in accumulated other comprehensive income for the years ended December 30, 2012 and December 25, 2011 consist of:

	Pension Benefits				Post-retirement Benefits

(in thousands)	2012		2011		2012			2011
Net actuarial loss/(gain)	$	815,385	$	585,839	$	(11,380	)	$	(9,634	)
Prior service cost/(credit)		26		41		(14,952	)		(8,618	)

	$	815,411	$	585,880	$	(26,332	)	$	(18,252	)

The elements of retirement and post-retirement costs for continuing operations are as follows:

	Years Ended

(in thousands)	December 30, 2012			December 25, 2011			December 26, 2010
Pension plans:
Service Cost	$	5,540		$	5,600		$	5,885
Interest Cost		91,898			92,961			93,796
Expected return on plan assets		(107,760	)		(104,251	)		(96,151	)
Prior service cost amortization		14			14			14
Actuarial loss		12,687			6,726			2,229

Net pension expense		2,379			1,050			5,773
Net post-retirement benefit (credit) expense		(995	)		(234	)		(205	)
Deferred compensation plan expense (credit)		–			(71	)		10,790

Net retirement expenses	$	1,384		$	745		$	16,358

Our discount rate was determined by matching a portfolio of long-term, non-callable, high quality bonds to the plans' projected cash flows.

Weighted average assumptions used for valuing benefit obligations were:

	Pension Benefit Obligations				Post-retirement Obligations

	2012		2011		2012		2011
Discount rate		4.17%		5.32%		3.39%		4.26%

Weighted average assumptions used in calculating expense:

	Pension Benefit Expense						Post-retirement Expense

	December 30, 2012		December 25, 2011		December 26, 2010		December 30, 2012	December 25, 2011		December 26, 2010
Expected long-term return on plan assets		8.25%		8.25%		8.25%	N/A		N/A		N/A
Discount rate		5.31%		5.90%		6.05%	4.26%/3.31% ⁽¹⁾		4.84%		5.09%

⁽¹⁾

4.26% for January 2012 to September 2012; 3.31% for October 2012 to December 2012 due to plan change.

For the post-retirement plans, the medical cost trend rates are expected to decline from 7.5% in 2012 to 5.0% by the year 2018. As of December 30, 2012, a 1% increase in the assumed health care cost trend rate would increase the benefit obligation by $0.6 million and a 1% decrease in the assumed health care cost trend rate would decrease the benefit obligation by $0.6 million. As of December 25, 2011, a 1% increase in the assumed health care cost trend rate would increase the benefit obligation by $1.1 million, and a 1% decrease in the assumed health care cost trend rate would decrease the benefit obligation by $1.0 million.

Contributions and Cash Flows

In January 2011, we contributed owned real property from seven locations to our Plan. The Plan obtained independent appraisals of the property and, based on these appraisals, recorded the contribution at the fair value of $49.7 million. We entered into leases for the seven contributed properties for 10 years and expect to continue to use the seven properties in our newspaper operations. The properties are managed on behalf of the Plan by an independent fiduciary.

The contribution and leaseback of the properties was treated as a financing transaction and, accordingly, we continue to depreciate the carrying value of the properties in our financial statements. No gain or loss has been recognized on the contribution. Our pension obligation was reduced by $49.7 million and a long-term and short-term financing obligation was recorded on the date of the contribution. The financing obligation is reduced by a portion of the lease payments made to the Plan each month. The balance of this obligation at December 30, 2012, was $46.3 million.

In May 2011, we used proceeds from the sale of property in Miami (see Note 3) to contribute $163.0 million to the Plan.

In January 2012, we contributed $40.0 million of cash to the Plan. In January 2013, we contributed $7.5 million of cash to the Plan, which we expect will satisfy all of our required contributions in fiscal year 2013. We do not expect to make any additional contributions to the Plan during fiscal year 2013.

Expected benefit payments to retirees under our retirement and post-retirement plans over the next 10 years are summarized below:

(in thousands)	Retirement Plans ⁽¹⁾		Post-retirement Plans

2013	$	91,119	$	1,859
2014		93,630		1,681
2015		97,071		1,532
2016		100,499		1,427
2017		105,278		1,340
2018-2022		582,046		5,448

Total	$	1,069,643	$	13,287

⁽¹⁾

Largely to be paid from the qualified defined benefit pension plan

Plan Assets

Our investment policies are designed to maximize Plan returns within reasonable and prudent levels of risk, with an investment horizon of greater than 10 years so that interim investment returns and fluctuations are viewed with appropriate perspective. The policy also aims to maintain sufficient liquid assets to provide for the payment of retirement benefits and plan expenses, hence, small portions of the equity and debt investments are held in marketable mutual funds.

Our policy seeks to provide an appropriate level of diversification of assets, as reflected in its target allocations, as well as limits placed on concentrations of equities in specific sectors or industries. It uses a mix of active managers and passive index funds and a mix of separate accounts, mutual funds, common collective trusts and other investment vehicles.

Our assumed long-term return on assets was developed using a weighted average return based upon the Plan's portfolio of assets and expected returns for each asset class, taking into account projected inflation, interest rates and market returns. The assumed return was also reviewed in light of historical and recent returns in total and by asset class.

As of December 30, 2012 and December 25, 2012, the target allocations for the plan assets were 60% equity securities, 28% debt securities, 7% real estate securities and 5% commodities.

The table below summarizes the plan's financial instruments for fiscal year 2012 that are carried at fair value on a recurring basis by the fair value hierarchy levels discussed above:

	2012

	Plan Assets
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	1,161	$	–	$	–	$	1,161
Mutual fund		257,398		–		–		257,398
Corporate debt instruments		–		98		–		98
U.S. Government securities		–		107,337		–		107,337
Common collective trusts		–		928,730		–		928,730
Real estate		–		–		51,579		51,579
Other		–		–		6,408		6,408

Total	$	258,559	$	1,036,165	$	57,987		1,352,711

Pending trades								6,166

							$	1,358,877

The table below summarizes changes in the fair value of the plan's Level 3 investment assets held for the year ended December 30, 2012:

(in thousands)	Real Estate			Private Equity			Total

Beginning Balance, December 25, 2011	$	50,530		$	8,899		$	59,429
Purchases, issuances, sales, settlements		–			–			–
Realized gains		3,747			27			3,774
Transfer in or out of level 3		(3,747	)		(3,820	)		(7,567	)
Unrealized gains		1,049			1,302			2,351

Ending Balance, December 30, 2012	$	51,579		$	6,408		$	57,987

The table below summarizes the plan's financial instruments for fiscal year 2011 that are carried at fair value on a recurring basis by the fair value hierarchy levels discussed above:

	2011 Plan Assets

(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	30,816	$	–	$	–	$	30,816
Mutual funds		40,861		–		–		40,861
Corporate stock		211		–		–		211
Corporate debt instruments		–		86,776		–		86,776
U.S. Government securities		–		236,063		–		236,063
Common collective trusts		–		764,983		–		764,983
Mortgage and asset backed securities		–		22,265		–		22,265
Real estate		–		–		50,530		50,530
Other		–		14,418		8,899		23,317

Total	$	71,888	$	1,124,505	$	59,429		1,255,822

Pending trades								(22,516	)

							$	1,233,306

The table below summarizes changes in the fair value of the plan's Level 3 investment assets held for the year ended December 25, 2011:

(in thousands)	Real Estate			Private Equity		Receivable			Total

Beginning Balance, December 26, 2010	$	–		$	7,792	$	28,936		$	36,728
Purchases, issuances, sales, settlements		49,710			–		(28,936	)		20,774
Realized gains		3,472			–		–			3,472
Transfer in or out of level 3		(3,472	)		–		–			(3,472	)
Unrealized gains		820			1,107		–			1,927

Ending Balance, December 25, 2011	$	50,530		$	8,899	$	–		$	59,429

Cash and cash equivalents. The carrying value of these items approximates fair value.

Mutual funds. These investments are publicly traded investments, which are valued using the Net Asset Value (NAV). The NAV of the mutual funds is a quoted price in an active market. The NAV is determined once a day after the closing of the exchange based upon the underlying assets in the fund, less the fund's liabilities, expressed on a per-share basis.

Corporate stock. The fair value of corporate stock is based on the exchange quoted market prices. When quoted prices are not available for identical stock, an industry standard valuation model is used which maximizes observable inputs.

Corporate debt instruments. The fair value of corporate debt instruments is based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar debt instruments, the fair value is based upon an industry valuation model, which maximizes observable inputs.

U.S. Government securities. U.S. government securities primarily consist of investments in U.S. Treasury Bonds, Indexed Linked Bonds and Treasury Inflation Protected Securities. The fair value of U.S. government securities is based on quoted market prices when available or is based on yields currently available on comparable securities or on an industry valuation model, which maximizes observable inputs.

Common collective trusts. These investments are valued based on the NAV of the underlying investments and are provided by the fund issuers. NAV for these funds represent the quoted price in a non-market environment. There are no restrictions on participants' ability to withdraw funds from the common collective trusts.

Mortgage and asset backed securities. Mortgage and asset backed securities are valued using quotes from independent pricing vendors based on recent trading activity and other relevant information, including market interest rate curves, referenced credit spreads, and estimated prepayment rates, where applicable.

Real estate. On January 14, 2011, we contributed Company-owned real property from seven locations to our Plan. The Plan obtained independent appraisals of the property, and based on these appraisals, the Plan recorded the contribution at fair value on January 14, 2011. The properties are leased by us for our newspaper operations. The properties are managed on behalf of the Plan by an independent fiduciary, and the terms of the leases between us and the Plan were negotiated with the fiduciary. The property is valued by independent appraisals conducted under the direction of the independent fiduciary.

Other. Other includes:

- Private equity fund. Private equity funds represent investments in limited partnerships, which invest in start-up or other private companies. Fair value is estimated based on valuations of comparable public companies, recent sales of comparable private and public companies, and discounted cash flow analysis of portfolio companies and is included as a Level 3 investment in the table above.

401(k) Plan

We provide or subsidize certain life insurance benefits for employees. In addition we have separate deferred compensation plans ("401(k) plan") for employees, which enable qualified employees to voluntarily defer compensation. On March 31, 2009, we temporarily suspended our matching contribution to the 401(k) plan. The 401(k) plan, as amended, includes a Company match (once reinstated) and a supplemental contribution that is tied to our performance (as defined in the plan).