Employee Benefit Plans

We sponsor noncontributory defined benefit pension plans and non-qualified Supplemental Executive Retirement Plans ("SERPs"). Both the defined benefit plans and the SERPs have frozen the accrual of future benefits.

We sponsor a defined contribution plan covering substantially all non-union and certain union employees. We match a portion of employees' voluntary contributions to this plan.

Other union-represented employees are covered by defined benefit pension plans jointly sponsored by us and the union, or by union-sponsored multi-employer plans.

We use a December 31 measurement date for our retirement plans. Retirement plans expense is based on valuations as of the beginning of each year.

The components of the expense consisted of the following:



	For the years ended December 31,
(in thousands)	2018			2017			2016

Interest cost	$	23,836		$	25,966		$	27,359
Expected return on plan assets, net of expenses	(22,232		)	(17,439		)	(18,466		)
Amortization of actuarial loss	3,527			4,424			4,406
Settlement losses	11,713			—			—
Total for defined benefit plans	16,844			12,951			13,299
Multi-employer plans	190			253			168
SERPs	2,908			1,161			1,033
Defined contribution plan	8,619			9,183			8,265
Net periodic benefit cost	28,561			23,548			22,765
Allocated to discontinued operations	(543		)	(687		)	(652		)
Net periodic benefit cost - continuing operations	$	28,018		$	22,861		$	22,113

In 2018, we recognized a $1.8 million non-cash settlement charge related to lump-sum distributions from our SERP. Settlement charges are recorded when total lump-sum distributions for a plan's year exceed the total projected service cost and interest cost for that plan year.

In November of 2018, we merged $306 million of pension assets and $419 million of pension obligations from our Scripps Pension Plan ("SPP”) into the Journal Communications, Inc. Plan (“JCI Plan”) that we also sponsor. The SPP retained pension assets and pension obligations totaling $9 million. Following the merger, we terminated the SPP and purchased a single premium group annuity contract from an insurance company in the amount of $53.5 million for the terminating SPP participants and certain participants in the newly merged JCI Plan. Upon issuance of the group annuity contract, the insurance company assumed all investment risk associated with the assets that were delivered as the annuity contract premium and assumed the obligation to make future annuity payments to approximately 600 remaining retirees receiving pension benefits in the SPP and approximately 1,500 remaining retirees receiving pension benefits in the newly merged JCI Plan. There was no change to the pension benefits for any plan participants as a result of these transactions and the purchase of the group annuity contract was funded directly by assets of the SPP and JCI Plan. In the fourth quarter of 2018, we recognized a one-time non-cash settlement charge of $11.7 million in connection with these transactions.

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows:



	For the years ended December 31,
(in thousands)	2018			2017		2016

Actuarial gain/(loss)	$	(7,765	)	$	12,205	$	(9,379	)
Amortization of actuarial loss	3,527			4,424		4,406
Prior service cost	(424		)	—		—
Reclassification of actuarial loss related to settlement	11,713			—		—
Total	$	7,051		$	16,629	$	(4,973	)

In addition to the amounts summarized above, amortization of actuarial losses related to our SERPs recognized through other comprehensive income was $0.3 million in 2018 and $0.2 million in both 2017 and 2016, and settlement losses in 2018 totaled $1.8 million. We recognized an actuarial gain for our SERPs of $1.0 million in 2018 and losses of $2.5 million and $1.6 million in 2017 and 2016, respectively.

Assumptions used in determining the annual retirement plans expense were as follows:



	2018 ⁽¹⁾		2017 ⁽²⁾		2016 ⁽²⁾

Discount rate	3.71% - 4.58%		4.26	%	4.55	%
Long-term rate of return on plan assets	5.10	%	4.20%-4.30%		4.50%-4.65%

⁽¹⁾ Range presented for 2018 discount rate represents the rates used for various remeasurement periods during the year as well as differing rates used for Scripps Pension Plan and Journal Communications, Inc. Plan.

⁽²⁾ Ranges presented for long-term rate of return on plan assets for 2017 and 2016 represent the rates used for Scripps Pension Plan and Journal Communications, Inc. Plan.

The discount rate used to determine our future pension obligations is based on a dedicated bond portfolio approach that includes securities rated Aa or better with maturities matching our expected benefit payments from the plans.

The expected long-term rate of return on plan assets is based upon the weighted-average expected rate of return and capital market forecasts for each asset class employed.

Changes in other key actuarial assumptions affect the determination of the benefit obligations as of the measurement date and the calculation of net periodic benefit costs in subsequent periods.

Obligations and Funded Status — The defined benefit pension plan obligations and funded status are actuarially valued as of the end of each year. The following table presents information about our employee benefit plan assets and obligations:



	Defined Benefit Plans						SERPs
	For the years ended December 31,
(in thousands)	2018			2017			2018			2017

Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	654,536		$	625,535		$	23,691		$	21,260
Interest cost	23,836			25,966			746			869
Benefits paid	(33,872		)	(34,997		)	(1,021		)	(948		)
Actuarial (gains)/losses	(46,800		)	38,032			(1,034		)	2,510
Plan Amendments	424			—			—			—
Settlements	(53,543		)	—			(5,397		)	—
Projected benefit obligation at end of year	544,581			654,536			16,985			23,691
Plan assets:
Fair value at beginning of year	464,441			412,459			—			—
Actual return on plan assets	(32,334		)	67,676			—			—
Company contributions	17,199			19,303			6,418			948
Benefits paid	(33,872		)	(34,997		)	(1,021		)	(948		)
Settlements	(53,543		)	—			(5,397		)	—
Fair value at end of year	361,891			464,441			—			—
Funded status	$	(182,690	)	$	(190,095	)	$	(16,985	)	$	(23,691	)
Amounts recognized in Consolidated Balance Sheets:
Current liabilities	$	—		$	—		$	(1,231	)	$	(6,380	)
Noncurrent liabilities	(182,690		)	(190,095		)	(15,754		)	(17,311		)
Total	$	(182,690	)	$	(190,095	)	$	(16,985	)	$	(23,691	)

Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss	$	120,191		$	127,666		$	5,571		$	8,667
Prior service cost	424			—			—			—

In 2019, we expect to recognize amortization of accumulated other comprehensive loss into net periodic benefit costs of $2.5 million (including $0.2 million for our SERPs).

Information for pension plans with an accumulated benefit obligation and projected benefit obligation in excess of plan assets was as follows:



	Defined Benefit Plans				SERPs
	As of December 31,
(in thousands)	2018		2017		2018		2017

Accumulated benefit obligation	$	544,581	$	654,536	$	16,985	$	23,691
Projected benefit obligation	544,581		654,536		16,985		23,691
Fair value of plan assets	361,891		464,441		—		—

Assumptions used to determine the defined benefit pension plans benefit obligations were as follows:



	2018		2017		2016

Weighted average discount rate	4.38	%	3.70	%	4.26	%

In 2019, we expect to contribute $1.2 million to fund SERP benefits and $18.6 million to fund our qualified defined benefit pension plans.

Estimated future benefit payments expected to be paid from the plans for the next ten years are $31.0 million in 2019, $31.7 million in 2020, $32.6 million in 2021, $33.2 million in 2022, $33.9 million in 2023 and a total of $176.6 million for the five years ending 2028.

Plan Assets and Investment Strategy

Our long-term investment strategy for pension assets is to earn a rate of return over time that minimizes future contributions to the plan while reducing the volatility of pension assets relative to pension liabilities. The strategy reflects the fact that we have frozen the accrual of service credits under our plans which cover the majority of employees. We evaluate our asset allocation target ranges for equity, fixed income and other investments annually. We monitor actual asset allocations monthly and adjust as necessary. We control risk through diversification among multiple asset classes, managers and styles. Risk is further monitored at the manager and asset class level by evaluating performance against appropriate benchmarks.

Information related to our pension plan asset allocations by asset category were as follows:



	Target allocation		Percentage of plan assets as of December 31,
	2019		2018		2017

US equity securities	20	%	19	%	21	%
Non-US equity securities	30	%	28	%	29	%
Fixed-income securities	45	%	46	%	44	%
Other	5	%	7	%	6	%
Total	100	%	100	%	100	%

U.S. equity securities include common stocks of large, medium and small capitalization companies, which are predominantly U.S. based. Non-U.S. equity securities include companies domiciled outside of the U.S. and American depository receipts. Fixed-income securities include securities issued or guaranteed by the U.S. government, mortgage backed securities and corporate debt obligations. Other investments include real estate funds.

Under our asset allocation strategy, approximately 45% of plan assets are invested in a portfolio of fixed income securities with a duration approximately that of the projected payment of benefit obligations. The remaining 55% of plan assets are invested in equity securities and other return-seeking assets. The expected long-term rate of return on plan assets is based primarily upon the target asset allocation for plan assets and capital markets forecasts for each asset class employed.

The following table presents our plan assets as of December 31, 2018 and 2017:



	As of December 31,
(in thousands)	2018		2017

Equity securities
Common/collective trust funds	$	168,547	$	234,061
Fixed income
Common/collective trust funds	166,079		204,453
Real estate fund	24,798		23,102
Cash equivalents	2,467		2,825
Fair value of plan assets	$	361,891	$	464,441

Our investments are valued using net asset value as a practical expedient as allowed under U.S. GAAP and therefore are not valued using the fair value hierarchy.

Equity securities-common/collective trust funds and fixed income-common/collective trust funds are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (equity securities and fixed income securities) are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. Common/collective trust funds are typically valued at their net asset values that are calculated by the investment manager or sponsor of the fund and have daily or monthly liquidity.

Real estate fund pertains to an investment in a real estate fund which invests in limited partnerships, limited liability corporations, real estate investment trusts, other funds and insurance company group annuity contracts. The valuations for these holdings are based on property appraisals using cash flow analysis and market transactions. The fund provides for quarterly redemptions with 110 days written notice.