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Note 7 - Pension Plans | 12 Months Ended
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Sep. 27, 2020
Pension Plan [Member] |
Notes to Financial Statements |
Retirement Benefits [Text Block] | 7 PENSION PLANS We have several non-contributory defined benefit pension plans that together cover selected employees. Benefits under the plans were generally based on salary and years of service. Effective in 2012 for Legacy Lee (as defined above), substantially all benefits are frozen and only a small amount of additional benefits are being accrued. Our liability and related expense for benefits under the plans are recorded over the service period of employees based upon annual actuarial calculations. Plan funding strategies are influenced by government regulations. Plan assets consist primarily of domestic and foreign corporate equity securities, government and corporate bonds, hedge fund investments, and cash. In connection with the Transactions, we acquired four additional defined pension plans related to Buffalo News. The addition of these four plans significantly increased our benefit obligation in 2020. The net periodic cost (benefit) components of our pension plans are as follows:
(Thousands of Dollars) |  | 2020 |  |  | 2019 |  |  | 2018 |
Service cost for benefits earned during the year |  |  | 1,361 |  |  |  | 36 |  |  |  | 48 |
Interest cost on projected benefit obligation |  |  | 7,577 |  |  |  | 6,563 |  |  |  | 5,754 |
Expected return on plan assets |  |  | (12,986 | ) |  |  | (8,073 | ) |  |  | (7,933 | )
Amortization of net loss |  |  | 3,166 |  |  |  | 1,135 |  |  |  | 2,025 |
Amortization of prior service benefit |  |  | (6 | ) |  |  | (100 | ) |  |  | (136 | )
Net periodic pension cost (benefit) |  |  | (888 | ) |  |  | (439 | ) |  |  | (242 | )
Changes in benefit obligations and plan assets are as follows:
(Thousands of Dollars) |  | 2020 |  |  | 2019 |
Benefit obligation, beginning of year |  |  | 192,369 |  |  |  | 176,531 |
Business combination |  |  | 195,834 |  |  |  | — |
Service cost |  |  | 1,361 |  |  |  | 36 |
Interest cost |  |  | 7,577 |  |  |  | 6,563 |
Actuarial loss (gain) |  |  | 20,525 |  |  |  | 20,687 |
Benefits paid |  |  | (16,246 | ) |  |  | (11,448 | )
Administrative expenses paid |  |  | (39 | ) |  |  | — |
Benefit obligation, end of year |  |  | 401,381 |  |  |  | 192,369 |
Fair value of plan assets, beginning of year: |  |  | 146,999 |  |  |  | 151,255 |
Business combination |  |  | 152,331 |  |  |  | — |
Actual return on plan assets |  |  | 44,933 |  |  |  | 8,705 |
Benefits paid |  |  | (16,246 | ) |  |  | (11,448 | )
Administrative expenses paid |  |  | (2,794 | ) |  |  | (2,163 | )
Employer contributions |  |  | 6,131 |  |  |  | 650 |
Fair value of plan assets, end of year |  |  | 331,354 |  |  |  | 146,999 |
Funded status |  |  | (70,027 | ) |  |  | (45,370 | )
Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:
|  | September 27 |  |  | September 29 |
(Thousands of Dollars) |  | 2020 |  |  | 2019 |
Pension obligations |  |  | (70,027 | ) |  |  | (45,370 | )
Accumulated other comprehensive loss (before income taxes) |  |  | (41,344 | ) |  |  | (53,066 | )
Amounts recognized in accumulated other comprehensive income (loss) are as follows:
|  | September 27 |  |  | September 29 |
(Thousands of Dollars) |  | 2020 |  |  | 2019 |
Unrecognized net actuarial loss |  | (41,344 | ) |  | (53,072 | )
Unrecognized prior service benefit |  | - |  |  | 6 |
|  |  | (41,344 | ) |  |  | (53,066 | )
We expect to recognize $4,018,000 of unrecognized net actuarial loss, in net periodic pension cost in 2021. The accumulated benefit obligation for the plans total $401,381,000 at September 27, 2020 and $192,369,000 at September 29, 2019. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets are $401,381,000, $401,381,000 and $331,354,000, respectively, at September 27, 2020. Assumptions Weighted-average assumptions used to determine benefit obligations are as follows:
|  | September 27 |  |  | September 29 |
(Percent) |  | 2020 |  |  | 2019 |
Discount rate |  | 2.8 |  |  | 3.1 |
Weighted-average assumptions used to determine net periodic benefit cost are as follows:
(Percent) |  | 2020 |  |  | 2019 |  |  | 2018 |
Discount rate - service cost |  | 3.3 |  |  | 4.2 |  |  | 3.7 |
Discount rate - interest cost |  | 2.6 |  |  | 3.9 |  |  | 3.1 |
Expected long-term return on plan assets |  | 6.0 |  |  | 5.5 |  |  | 5.5 |
For 2020, the expected long-term return on plan assets is 6.0%. The assumptions related to the expected long-term return on plan assets are developed through an analysis of historical market returns, current market conditions and composition of plan assets. Plan Assets The primary objective of our investment strategy is to satisfy our pension obligations at a reasonable cost. Assets are actively invested to balance real growth of capital through appreciation, reinvestment of dividend and interest income, and safety of invested funds. Our investment policy outlines the governance structure for decision making, sets investment objectives and restrictions and establishes criteria for selecting and evaluating investment managers. The use of derivatives is prohibited, except on a case-by-case basis where the manager has a proven capability, and only to hedge quantifiable risks such as exposure to foreign currencies. An investment committee, consisting of certain of our executives and supported by independent consultants, is responsible for monitoring compliance with the investment policy. Assets are periodically redistributed to maintain the appropriate policy allocation. The weighted-average asset allocation of our pension assets is as follows:
(Percent) |  | Policy Allocation |  |  |  | Actual Allocation |
|  | September 27 |  |  | September 27 |  |  | September 29 |
Asset Class |  | 2020 |  |  | 2020 |  |  | 2019 |
Equity securities |  | 50 |  |  | 48 |  |  | 49 |
Debt securities |  | 35 |  |  | 33 |  |  | 34 |
TIPS |  | 5 |  |  | 5 |  |  | 5 |
Hedge fund investments |  | 10 |  |  | 10 |  |  | 10 |
Cash and cash equivalents |  | — |  |  | 4 |  |  | 2 |
Plan assets include no Company securities. Assets include cash and cash equivalents and receivables from time to time due to the need to reallocate assets within policy guidelines. Buffalo News assets are excluded from the table above as we are still converting their asset allocation from their previous policy to align with Legacy Lee. Buffalo news asset allocation consists of 92% equity securities, 2% debt securities, and 6% of cash and equivalents. As of September 27, 2020 Buffalo News had no policy for asset allocation. Fair Value Measurements The fair value hierarchy of pension assets at September 27, 2020 is as follows:
(Thousands of Dollars) |  | NAV |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Cash and cash equivalents |  | — |  |  | 17,287 |  |  | — |  |  | — |
Domestic equity securities |  | 5,500 |  |  | 151,584 |  |  | 60,333 |  |  | — |
International equity securities |  | — |  |  | 6,893 |  |  | 7,396 |  |  | — |
Emerging equity securities |  | — |  |  | 7,225 |  |  | — |  |  | — |
TIPS |  | — |  |  | 6,967 |  |  | — |  |  | — |
Debt securities |  | — |  |  | 22,253 |  |  | 32,167 |  |  | — |
Hedge fund investments |  | 15,977 |  |  | — |  |  | — |  |  | — |
The fair value hierarchy of pension assets at September 29, 2019 is as follows:
(Thousands of Dollars) |  | NAV |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Cash and cash equivalents |  |  | — |  |  |  | 2,970 |  |  |  | — |  |  |  | — |
Domestic equity securities |  |  | 9,524 |  |  |  | 8,971 |  |  |  | 40,593 |  |  |  | — |
International equity securities |  |  | — |  |  |  | 6,525 |  |  |  | 7,283 |  |  |  | — |
TIPS |  |  | — |  |  |  | 6,918 |  |  |  | — |  |  |  | — |
Debt securities |  |  | — |  |  |  | 26,392 |  |  |  | 24,190 |  |  |  | — |
Hedge fund investments |  |  | 15,733 |  |  |  | — |  |  |  | — |  |  |  | — |
There were no purchases, sales or transfers of assets classified as Level 3 in 2020 or 2019. Pension assets included in the fair value hierarchy at net asset value, or "NAV", include three investments:
| • | U.S. small cap value equity common/collective fund for which fund prices are not publicly available. The balance of this investment is $5,500,000 and $9,524,000 as of September 27, 2020 and September 29, 2019, respectively. We can redeem this fund on a monthly basis.
| • | Global equity long/short common/collective hedge fund-of-funds for which fund prices are established on a monthly basis. The balance of this investment is $7,096,000 and $7,923,000 as of September 27, 2020 and September 29, 2019, respectively. We can redeem up to 90% of our investment in this fund within 90-120 days of notice with the remaining distributed following completion of the audit of the Fund's financial statements for the year.
| • | Global equity long/short common/collective hedge fund-of-funds for which fund prices are established on a monthly basis. The balance of this investment is $8,881,000 and $7,810,000 as of September 27, 2020 and September 29, 2019, respectively. We can redeem up to 50% of our investment in this fund twice per year.
Cash Flows Based on our forecast at September 27, 2020, we expect to make contributions of $3,190,000 to our pension trust in 2021. We anticipate future benefit payments to be paid from the pension trust as follows:
(Thousands of Dollars) |  |  |
2021 |  | 22,881 |
2022 |  | 22,385 |
2023 |  | 22,548 |
2024 |  | 22,630 |
2025 |  | 22,511 |
2026-2030 |  | 109,885 |
Other Plans We are obligated under an unfunded plan to provide fixed retirement payments to certain former employees. The plan is frozen and no additional benefits are being accrued. The accrued liability under the plan is $1,483,000 and $1,667,000 at September 27, 2020 and September 29, 2019, respectively.

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