Note 10 - Retirement and Postretirement Plans

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Note 10: Retirement and Postretirement Plans

Prior to the merger, the Company only had the KRON/IBEW Local 45 Pension Plan which covers the IBEW Local 45 employees of KRON-TV. The Company froze benefit accruals under this plan in 2005. All employees who earned seven full years of vested service as of October 2005 are 100% vested in the pension benefits earned. If an employee had not yet earned seven full years of vested service, he or she is considered partially vested and, provided employment with the Company continues, can continue to earn credit for years of service.

In conjunction with the merger, the Company assumed Legacy Media General’s retirement and post retirement plans as of November 12, 2013. Legacy Media General has a funded, qualified non-contributory defined benefit retirement plan which covers substantially all Legacy Media General employees hired before 2007 and non-contributory unfunded supplemental executive retirement and ERISA excess plans which supplement the coverage available to certain executives. These retirement plans are frozen. Legacy Media General also has a retiree medical savings account plan which reimburses eligible employees who retire for certain medical expenses. In addition, Legacy Media General has an unfunded plan that provides certain health and life insurance benefits to retired employees who were hired prior to 1992.

The Company uses a December 31 measurement date for its retirement and postretirement plans. The Company recognizes the underfunded status of a defined benefit postretirement plan as a liability on its balance sheet. The funded status of a plan represents the difference between the fair value of plan assets and the related plan projected benefit obligation. Changes in the funded status are recognized through comprehensive income in the year in which the changes occur.

Benefit Obligations

The following table provides a reconciliation of the changes in the plans’ benefit obligations for the years ended December 31, 2013, and 2012:

	Pension Benefits						Other Benefits
(In thousands)	2013			2012			2013
Change in benefit obligation:
Benefit obligation at beginning of year	$	14,941		$	13,967		$	-
Merger transaction		473,296			-			24,847
Service cost		170			150			11
Interest cost		3,312			615			134
Participant contributions		-			-			23
Actuarial (gain) loss		(430	)		1,151			(174	)
Benefit payments		(3,060	)		(942	)		(94	)
Benefit obligation at end of year	$	488,229		$	14,941		$	24,747

The accumulated benefit obligation at the end of 2013 and 2012 was $488.2 million and $14.9 million, respectively. The Company’s policy is to fund benefits under the supplemental executive retirement, ERISA Excess and all postretirement benefits plans as claims and premiums are paid. As of December 31, 2013, the benefit obligation related to the supplemental executive retirement and ERISA Excess plans included in the preceding table was approximately $48.4 million.

The Plans’ benefit obligations were determined using the following assumptions:

	Pension Benefits						Other Benefits
	2013			2012			2013
Discount rate		4.65	%		3.85	%		4.40	%
Compensation increase rate		-			-			3.00	%

A 7.7% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2013. This rate was assumed to decrease gradually each year to a rate of 4.5% in 2027 and remain at that level thereafter. These rates have an effect on the amounts reported for the Company’s postretirement obligations. A one-percentage point increase or decrease in the assumed health care trend rates would change the Company’s accumulated postretirement benefit obligation by approximately $250 thousand, and it would change the Company’s net periodic cost by a nominal amount.

Plan Assets

The following table provides a reconciliation of the changes in the fair value of the Plans’ assets for the years ended December 31, 2013, and 2012:

	Pension Benefits						Other Benefits
(In thousands)	2013			2012			2013
Change in plan assets:
Fair value of plan assets at beginning of year	$	8,960		$	8,042		$	-
Merger transaction		326,667			-			-
Actual return on plan assets		13,434			922			-
Employer contributions		6,225			938			71
Participant contributions		-			-			23
Benefit payments		(3,060	)		(942	)		(94	)
Fair value of plan assets at end of year	$	352,226		$	8,960		$	-

Under the fair value hierarchy, the Company’s retirement plan assets fall under Level 1 (quoted prices in active markets) and Level 2 (other observable inputs). The following table provides the fair value by each major category of plan assets at December 31, 2013:

	2013
(In thousands)	Total		Level 1		Level 2
U.S. Small/Mid Cap Equity	$	40,339	$	25,256	$	15,083
U.S. Large Cap Equity		143,209		58,650		84,559
International/Global Equity		68,263		17,054		51,209
Fixed Income		87,266		66,215		21,051
Cash		13,149		13,149		-
Total assets	$	352,226	$	180,324	$	171,902

The following table provides the fair value by each major category of plan assets at December 31, 2012:

	2012
(In thousands)	Total		Level 1		Level 2
Money market funds	$	247	$	247	$	-
Collective funds - fixed		3,281		-		3,281
Collective funds - equity		4,532		-		4,532
Mutual funds - equity		900		900		-
Total assets	$	8,960	$	1,147	$	7,813

The asset allocation for the Company’s funded retirement plans at the end of 2013 and 2012, and the asset allocation range for 2014, by asset category, are as follows:

	Asset allocation Range				Percentage of Plan Assets at Year End
Asset Category	2014				2013			2012
Equity securities		60	-	75%		71	%		60	%
Fixed income securities/cash		25	-	40%		29	%		40	%
Total						100	%		100	%

As the plan sponsor of the funded retirement plans, the Company’s investment strategy is to achieve a rate of return on the plans’ assets that, over the long-term, will fund the plans’ benefit payments and will provide for other required amounts in a manner that satisfies all fiduciary responsibilities. A determinant of the plans’ returns is the asset allocation policy. The Company’s investment policy provides ranges (30-50% U.S. large cap equity, 5-17% U.S. small/mid cap equity, 10-30% international/global equity, 25-45% fixed income and 0-5% cash) for the plans’ long-term asset mix. The Company periodically (at least annually) reviews and rebalances the asset mix if necessary. The Company also reviews the plans’ overall asset allocation to determine the proper balance of securities by market capitalization, value or growth, U.S., international or global or the addition of other asset classes.

The plans’ investment policy is reviewed frequently and distributed to the investment managers. Periodically, the Company evaluates each investment manager to determine if that manager has performed satisfactorily when compared to the defined objectives, similarly invested portfolios and specific market indices. The policy contains general guidelines for prohibited transactions such as:

● borrowing of money

● purchase of securities on margin

● short sales

● pledging any securities except loans of securities that are fully-collateralized

● purchase or sale of futures or options for speculation or leverage

Restricted transactions include:

● purchase or sale of commodities, commodity contracts or illiquid interests in real estate or mortgages

● purchase of illiquid securities such as private placements

● use of various futures and options for hedging or for taking limited risks with a portion of the portfolio’s assets

Funded Status

The following table provides a statement of the funded status of the plans at December 31, 2013, and 2012:

	Pension Benefits						Other Benefits
(In thousands)	2013			2012			2013
Amounts recorded in the balance sheet:
Current liabilities	$	(3,373	)	$	-		$	(2,068	)
Noncurrent liabilities		(132,630	)		(5,981	)		(22,679	)
Funded Status	$	(136,003	)	$	(5,981	)	$	(24,747	)

The following table provides a summary of the Company’s accumulated other comprehensive income (loss) related to pension and other benefits prior to any deferred tax effects:

	Pension Benefits			Other Benefits
(In thousands)	Net Actuarial Gain/(Loss)			Net Actuarial Gain
December 31, 2010	$	672		$	-
Actuarial loss		(1,522	)		-
December 31, 2011	$	(850	)	$	-
Actuarial loss		(818	)		-
December 31, 2012	$	(1,668	)	$	-
Actuarial gain		10,389			174
December 31, 2013	$	8,721		$	174

Expected Cash Flows

The following table includes amounts that are expected to be contributed to the plans by the Company. It additionally reflects benefit payments that are made from the plans’ assets as well as those made directly from the Company’s assets, and it includes the participants’ share of the costs, which is funded by participant contributions. The amounts in the table are actuarially determined and reflect the Company’s best estimate given its current knowledge including the impact of recent pension funding relief legislation; actual amounts could be materially different. The Company made a $45 million contribution to the Legacy Media General Retirement Plan in January 2014 (following a $5 million contribution in December 2013) and currently anticipates making a contribution of $1 million to the KRON retirement plan in 2014.

(In thousands)	Pension Benefits		Other Benefits
Employer Contributions
2014 to participant benefits	$	49,439	$	2,068
Expected Benefit Payments
2014		27,357		2,068
2015		27,794		2,040
2016		28,240		2,062
2017		29,044		2,054
2018		29,340		2,053
2019-2023		152,390		9,909

Net Periodic Cost

The following table provides the components of net periodic benefit cost for the Plans for fiscal years 2013, 2012 and 2011:

	Pension Benefits									Other Benefits
(In thousands)	2013			2012			2011			2013
Service cost	$	170		$	150		$	150		$	11
Interest cost		3,312			615			667			134
Expected return on plan assets		(3,509	)		(588	)		(548	)		-
Amortization of net loss		35			-			-			-
Net periodic benefit cost	$	8		$	177		$	269		$	145

The Company anticipates recording an aggregate net periodic benefit of $3.4 million for its pension and other benefits in 2014, as the expected return on plan assets exceeds estimated interest and service costs. The net periodic costs for the Company’s pension and other benefit plans were determined using the following assumptions:

	Pension Benefits									Other Benefits
	2013			2012			2011			2013
Discount rate		4.62	%		4.55	%		5.30	%		4.35	%
Expected return on plan assets		7.50	%		7.50	%		7.50	%		-
Compensation increase rate		-			-			-			3.00	%

The reasonableness of the expected return on the funded retirement plan assets was determined by three separate analyses: 1) review of 10 and 20 years of historical data of portfolios with similar asset allocation characteristics done by a third party, 2) review of the actual portfolio performance over the past three years and 3) projected portfolio performance for 20 and 30 years, assuming the plans’ asset allocation range, performed by a third party.

Defined Contribution Plans

The Company sponsors 401(k) plans covering substantially all Legacy Media General and Young employees. For 2012 and 2011, the Company matched up to a maximum of 4% of an eligible and participating employee’s salary for Young employees. For 2013, the Company matched up to a maximum of 2% and 4% of an eligible and participating employee’s salary for Legacy Media General and Young employees, respectively. Effective January 1, 2014, all eligible and participating employees will receive a company match of up to a maximum of 4% of their compensation. The Company also sponsors a Supplemental 401(k) plan as described in Note 5.

For the year ended December 31, 2013, the Company incurred 401(k) matching contributions of approximately $1.8 million. For each of the years ended December 31, 2012, and 2011, the Company incurred matching contributions of approximately $1.4 million.