Employee Benefits

6 Months Ended

Jun. 26, 2011

Employee Benefits

Employee Benefits

NOTE 5. EMPLOYEE BENEFITS

Contribution of Cash and Real Property to Qualified Defined Benefit Plan: On May 27, 2011, the Company contributed $163.0 million of cash to its qualified defined benefit pension plan using proceeds from the sale of real property in Miami (see Note 2). The impact of this contribution and other factors affecting the pension plan's funded status and pension expense in 2011 are discussed below.

On January 14, 2011, the Company contributed company-owned real property from seven locations to its qualified defined benefit pension plan. The pension plan obtained independent appraisals of the property, and based on these appraisals the plan recorded the contribution (the fair value of the property) at $49.7 million on January 14, 2011.

The Company entered into leases for the seven contributed properties for 10 years at an annual rent of approximately $4.0 million and expects to continue to use the properties in its newspaper operations at these seven locations. The properties will be managed on behalf of the pension plan by an independent fiduciary, and the terms of the leases were negotiated with the fiduciary.

The contribution and leaseback of the properties were treated as a financing transaction and, accordingly, the Company will continue to depreciate the carrying value of the properties in its financial statements, and no gain or loss has been recognized on the contribution. The Company's pension obligation has been reduced by $49.7 million, and a long-term and short-term financing obligation equaling $45.7 million (in other long-term obligations) and $4.0 million (in other accrued liabilities), respectively, was recorded on the date of the contribution. The financing obligation is reduced by a portion of lease payments made to the pension plan each month and the balance of this obligation at June 26, 2011, was $48.8 million.

The Company does not currently intend to make any additional contributions to its qualified defined pension plan during fiscal 2011.

The Company revalued its qualified defined benefit pension plan as of May 27, 2011, to reflect the significant contributions made to the plan as of that date. In connection with the revaluation of its qualified defined benefit plan, the Company used updated assumptions as of May 27, 2011. The most significant change in plan assumptions was the discount rate, which was determined to be 5.53% as of May 27, 2011, compared to a discount rate of 5.92% at the end of fiscal 2010.

The following table summarizes the funded status for the qualified defined benefit pension plan as of May 27, 2011, and December 26, 2010, respectively (in thousands):

	May 27, 2011			December 26, 2010
Projected benefit obligation	$	(1,607,165	)	$	(1,530,486	)
Fair value of plan assets		1,308,878			1,051,410
Funded status and amount recognized	$	(298,287	)	$	(479,076	)

Retirement Plans Expenses:

All of the Company's defined benefit plans were frozen in March 2009.

The Company sponsors defined benefit pension plans (retirement plans), which cover a majority of its employees hired prior to March 31, 2009. Benefits are based on age, years of service and compensation.

The Company also has a limited number of supplemental retirement plans to provide key employees 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.

The Company also provides for or subsidizes post-retirement health care and certain life insurance benefits for employees and has as a deferred compensation plan (401(k) plan) for its employees, which enables qualified employees to voluntarily defer compensation. The 401(k) plan includes a matching company contribution and a supplemental contribution that is tied to Company performance (as defined in the plan). The Company temporarily suspended its matching contribution to the 401(k) plan in 2009, and it has not yet been reinstated.

The elements of retirement costs for continuing operations are as follows (in thousands):

	Three Months Ended						Six Months Ended
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Service cost	$	1,369		$	1,468		$	2,769		$	2,943
Interest cost		22,688			23,398			46,238			46,898
Expected return on plan assets		(24,538	)		(24,026	)		(48,563	)		(48,076	)
Prior service cost amortization		7			7			7			7
Actuarial loss		1,425			590			2,825			1,115
Net pension expense		951			1,437			3,276			2,887
Net post-retirement benefit		(67	)		(178	)		(117	)		(103	)
Deferred compensation plan expense		—			2,622			—			5,507
Total retirement expenses-net	$	884		$	3,881		$	3,159		$	8,291