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Note 8 - Pension Plans | 12 Months Ended
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Sep. 26, 2021
Pension Plan [Member] |
Notes to Financial Statements |
Retirement Benefits [Text Block] | 8 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. 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. The net periodic cost (benefit) components of our pension plans are as follows:
(Thousands of Dollars) |  | 2021 |  |  | 2020 |  |  | 2019 |
Service cost for benefits earned during the year |  |  | 2,529 |  |  |  | 1,361 |  |  |  | 36 |
Interest cost on projected benefit obligation |  |  | 7,147 |  |  |  | 7,577 |  |  |  | 6,563 |
Expected return on plan assets |  |  | (18,688 | ) |  |  | (12,986 | ) |  |  | (8,073 | )
Amortization of net loss |  |  | 4,018 |  |  |  | 3,166 |  |  |  | 1,135 |
Amortization of prior service benefit |  |  | (6 | ) |  |  | (6 | ) |  |  | (100 | )
Net periodic pension cost (benefit) |  |  | (5,000 | ) |  |  | (888 | ) |  |  | (439 | )
Changes in benefit obligations and plan assets are as follows:
(Thousands of Dollars) |  | 2021 |  |  | 2020 |
Benefit obligation, beginning of year |  |  | 401,381 |  |  |  | 192,369 |
Business combination |  |  | — |  |  |  | 195,834 |
Service cost |  |  | 2,529 |  |  |  | 1,361 |
Interest cost |  |  | 7,147 |  |  |  | 7,577 |
Actuarial loss (gain) |  |  | (5,413 | ) |  |  | 20,525 |
Benefits paid |  |  | (21,182 | ) |  |  | (16,246 | )
Administrative expenses paid |  |  | (275 | ) |  |  | (39 | )
Benefit obligation, end of year |  |  | 384,187 |  |  |  | 401,381 |
Fair value of plan assets, beginning of year: |  |  | 331,354 |  |  |  | 146,999 |
Business combination |  |  | — |  |  |  | 152,331 |
Actual return on plan assets |  |  | 89,892 |  |  |  | 44,933 |
Benefits paid |  |  | (21,182 | ) |  |  | (16,246 | )
Administrative expenses paid |  |  | (2,599 | ) |  |  | (2,794 | )
Employer contributions |  |  | 965 |  |  |  | 6,131 |
Fair value of plan assets, end of year |  |  | 398,430 |  |  |  | 331,354 |
Funded status |  |  | 14,243 |  |  |  | (70,027 | )
Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:
|  | September 26 |  |  | September 27 |
(Thousands of Dollars) |  | 2021 |  |  | 2020 |
Pension obligations |  |  | 14,243 |  |  |  | (70,027 | )
Accumulated other comprehensive income (loss) (before income taxes) |  |  | 36,965 |  |  |  | (41,344 | )
Amounts recognized in accumulated other comprehensive income (loss) are as follows:
|  | September 26 |  |  | September 27 |
(Thousands of Dollars) |  | 2021 |  |  | 2020 |
Unrecognized net actuarial gain (loss) |  | 36,965 |  |  | (41,344 | )
Unrecognized prior service benefit |  | — |  |  | — |
|  |  | 36,965 |  |  |  | (41,344 | )
We expect to recognize $5,035,000 of unrecognized net actuarial gain, in net periodic pension cost in 2022. The accumulated benefit obligation for the plans total $384,187,000 at September 26, 2021 and $401,381,000 at September 27, 2020. 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 $384,187,000, $384,187,000 and $176,214,000, respectively, at September 26, 2021. Assumptions Weighted-average assumptions used to determine benefit obligations are as follows:
|  | September 26 |  |  | September 27 |
(Percent) |  | 2021 |  |  | 2020 |
Discount rate |  | 2.7 |  |  | 2.8 |
Interest crediting rate |  | 2.5 |  |  | 2.5 |
Weighted-average assumptions used to determine net periodic benefit cost are as follows:
(Percent) |  | 2021 |  |  | 2020 |  |  | 2019 |
Discount rate - service cost |  | 3.0 |  |  | 3.3 |  |  | 4.2 |
Discount rate - interest cost |  | 1.9 |  |  | 2.6 |  |  | 3.9 |
Expected long-term return on plan assets |  | 5.9 |  |  | 6.0 |  |  | 5.5 |
For 2021, the expected long-term return on plan assets is 5.9%. 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. For the year ended September 26, 2021, the most significant driver of the decrease in benefit obligations for the plans was the higher actuarial gains experienced by all plans. The pension plans recognized actuarial gains due to small increases in bond yields that resulted in increases to the discount rates and actual return on assets exceeding expected returns for the year improving the funded status of the plans. For the year ended September 27, 2020, the most significant driver of the increase in benefit obligations were the plans acquired in the Transactions, effectively doubling the company's obligation, and higher actuarial losses experienced by all plans. The pension plans incurred actuarial losses due to a fall in bond yields that resulted in decreases to the discount rates. 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 excluding Buffalo News, is as follows:
(Percent) |  | Policy Allocation |  |  | Actual Allocation |
|  | September 26 |  |  | September 26 |  |  | September 27 |
Asset Class |  | 2021 |  |  | 2021 |  |  | 2020 |
Equity securities |  |  | 50 |  |  |  | 50 |  |  |  | 48 |
Debt securities |  |  | 35 |  |  |  | 34 |  |  |  | 33 |
TIPS |  |  | 5 |  |  |  | 4 |  |  |  | 5 |
Hedge fund investments |  |  | 10 |  |  |  | 11 |  |  |  | 10 |
Cash and cash equivalents |  |  | — |  |  |  | 1 |  |  |  | 4 |
The weighted-average asset allocation of Buffalo News pension assets is as follows:
(Percent) |  |  | Policy Allocation |  |  |  | Actual Allocation |  |
|  |  | September 26 |  |  |  | September 26 |  |  |  | September 27 |  |
Asset Class |  |  | 2021 |  |  |  | 2021 |  |  |  | 2020 |  |
Equity securities |  |  | 30 |  |  |  | 31 |  |  |  | 92 |  |
Debt securities |  |  | 70 |  |  |  | 68 |  |  |  | 2 |  |
TIPS |  |  | — |  |  |  | — |  |  |  | — |  |
Hedge fund investments |  |  | — |  |  |  | — |  |  |  | — |  |
Cash and cash equivalents |  |  | — |  |  |  | 1 |  |  |  | 6 |  |
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. As of September 26, 2021 and September 27, 2020, Buffalo News had a different policy for asset allocation than the Company's other plans. Fair Value Measurements The fair value hierarchy of pension assets at September 26, 2021 is as follows:
(Thousands of Dollars) |  | NAV |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Cash and cash equivalents |  |  | — |  |  |  | 4,447 |  |  |  | — |  |  |  | — |
Domestic equity securities |  |  | 7,236 |  |  |  | 78,577 |  |  |  | 42,448 |  |  |  | — |
International equity securities |  |  | — |  |  |  | 9,485 |  |  |  | 9,505 |  |  |  | — |
Emerging equity securities |  |  | — |  |  |  | 8,077 |  |  |  | — |  |  |  | — |
TIPS |  |  | — |  |  |  | 7,280 |  |  |  | — |  |  |  | — |
Debt securities |  |  | — |  |  |  | 181,908 |  |  |  | 32,781 |  |  |  | — |
Hedge fund investments |  |  | 18,758 |  |  |  | — |  |  |  | — |  |  |  | — |
The fair value hierarchy of pension assets at September 27, 2020 was 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 |  |  |  | — |  |  |  | — |  |  |  | — |
There were no purchases, sales or transfers of assets classified as Level 3 in 2021 or 2020. 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 $7,236,000 and $5,500,000 as of September 26, 2021 and September 27, 2020, 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 $8,371,000 and $7,096,000 as of September 26, 2021 and September 27, 2020, 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 $10,387,000 and $8,881,000 as of September 26, 2021 and September 27, 2020, respectively. We can redeem up to 50% of our investment in this fund twice per year.
The activity within Other comprehensive income (loss) for both pension plans and postretirement plans was as follows:
(Thousands of Dollars) |  |  | 2021 |  |  |  | 2020 |  |  |  | 2019 |  |
Comprehensive income (loss), net of taxes: |  |  |  |  |  |  |  |  |  |  |  |  |
Change in unrecognized benefit plan gain (loss) arising during the period, net of taxes $19,148, $4,095, and $7,137, respectively |  |  | 59,663 |  |  |  | 10,329 |  |  |  | (16,880 | ) |
Amortization of items to periodic pension and other post-employment benefit costs during the period, net of taxes $819, $542, and $162, respectively |  |  | 2,574 |  |  |  | (1,265 | ) |  |  | (488 | ) |
Other comprehensive income (loss) recognized in operations, net of taxes |  |  | 62,237 |  |  |  | 9,064 |  |  |  | (17,368 | ) |
Cash Flows Based on our forecast at September 26, 2021, we expect to make contributions of $254,000 to our pension trust in 2022. We anticipate future benefit payments to be paid from the pension trust as follows:
(Thousands of Dollars) |  |  |
2022 |  | 23,161 |
2023 |  | 22,596 |
2024 |  | 22,648 |
2025 |  | 22,552 |
2026 |  | 22,435 |
2027-2031 |  | 108,510 |
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 $996,000 and $1,483,000 at September 26, 2021 and September 27, 2020, respectively.

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