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DEFINED BENEFIT PENSION PLAN
 12 Months Ended
Sep. 29, 2024
Retirement Benefits [Abstract]  
DEFINED BENEFIT PENSION PLAN DEFINED BENEFIT PENSION PLAN
During 2022, the Company made several changes to its defined benefit plans. At the beginning of 2022, the Company was the sponsor of seven single-employer defined benefit plans, two of which were frozen to new participants and future benefits. As of September 24, 2023, we are the sponsor of one single-employer defined benefit plan, which provide benefits to certain current and former employees of Lee.
During 2022 we notified certain participants in our defined benefit plans of changes to be made to the plans. The Company froze future benefits and participation for an additional four of the defined benefit plans. The freeze of future benefits resulted in a non-cash curtailment gain of $1.0 million related to the four plans. In connection with the freeze the Company provided certain benefit enhancements that resulted in an increase to our net pension liability and a decrease to accumulated other comprehensive income of $6.1 million. Additionally, the Company merged the six frozen plans into one fully-funded defined benefit plan, the Lee Enterprises Incorporated Pension Plan ("Plan") effective in the second quarter of fiscal 2022.
During September of 2022, as part of a pension de-risking strategy for the Plan, the Company, executed an agreement pursuant to which it transferred to a third-party insurance company (the "Insurer") $85.6 million of the Plan's liabilities in exchange for $81.4 million of Plan assets and recorded a non-cash settlement gain of $4.2 million in Pension and OPEB related benefit (cost) and other, net. Collectively, the transactions are known as the "Annuity Purchase"
During the year ended September 29, 2024, the Company offered a voluntary lump sum payment of future benefits to terminated vested participants in the defined benefit pension plan. The offer was accepted by 522 participants, representing a $22.6 million settlement of related pension plan liability. The Company recognized a non-cash settlement gain of $2.4 million, which is reflected within "Curtailment/Settlement gains" on the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income. Pension plan assets and liabilities were reduced by $22.6 million.
The net periodic (benefit) cost components of our pension plan is as follows:
(Thousands of Dollars)202420232022
Service cost for benefits earned during the year519 488 
Interest cost on projected benefit obligation9,27410,368 7,999 
Expected return on plan assets(9,382)(10,192)(18,261)
Amortization of net (gain) loss(4)10 (3,317)
Amortization of prior service benefit848852 641 
Settlement gain(2,409)— (4,245)
Curtailment gain—— (1,027)
Net periodic pension cost (benefit)(1,668)1,057 (17,722)
Changes in projected benefit obligations (which approximates the accumulated benefit obligation at each period end) and plan assets are as follows:
(Thousands of Dollars)20242023
Benefit obligation, beginning of year199,187 210,806 
Service cost5 19 
Interest cost9,274 10,368 
Actuarial loss (gain)15,703 (9,876)
Benefits paid(13,021)(12,130)
Settlements(22,620)— 
Benefit obligation, end of year188,528 199,187 
Fair value of plan assets, beginning of year:210,031 211,058 
Actual return on plan assets19,957 12,638 
Benefits paid(13,021)(12,130)
Administrative expenses paid(1,155)(1,535)
Settlements(22,620)— 
Fair value of plan assets, end of year193,192 210,031 
Funded status4,664 10,844 
Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:
(Thousands of Dollars)September 29
2024		September 24
2023
Net pension assets4,664 10,844 
Accumulated other comprehensive income (before income taxes)8,804 16,653 
Amounts recognized in accumulated other comprehensive income (loss) are as follows:
(Thousands of Dollars)September 29
2024		September 24
2023
Unrecognized net actuarial gain12,550 21,246 
Unrecognized prior service cost(3,746)(4,593)
8,804 16,653 
We expect to recognize $0.8 million of unrecognized prior service cost in net periodic pension costs in 2025.
Assumptions
Weighted-average assumptions used to determine benefit obligations are as follows:
(Percent)September 29
2024		September 24
2023
Discount rate4.8 5.7 
Interest crediting rate2.5 2.5 
Weighted-average assumptions used to determine net periodic benefit cost are as follows:
(Percent)202420232022
Discount rate - service cost5.8 5.8 5.4 
Discount rate - interest cost5.5 5.7 5.3 
Expected long-term return on plan assets5.0 5.0 5.0 
For 2024, the expected long-term return on Plan assets is 5.0%. 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.
For the year ended September 29, 2024, the most significant driver of the decrease in benefit obligation was the voluntary lump sum offering. Additionally, the Plan recognized actuarial losses due to decreases in bond yields that resulted in decreases to the discount rate. For the year ended September 24, 2023, the most significant driver of the decrease in benefit obligation was the actual return on assets exceeding expected returns and higher actuarial gains experienced by the Plan. The Plan recognized actuarial gains due to increases in bond yields that resulted in increases to the discount rate.
Plan Assets
The primary objective of our investment strategy is to satisfy our pension obligations at a reasonable cost. Assets are actively invested to achieve a 100% liability hedge (which includes fixed income investments and cash).
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 AllocationPolicy AllocationActual Allocation
Asset ClassSeptember 29
2024		September 24
2023		September 29
2024		September 24
2023
Fixed Income100 — 95 — 
Equity securities— 25 — 25 
Debt securities— 65 — 62 
Hedge fund investments— 10 3 12 
Cash and cash equivalents— — 2 1 
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.
Fair Value Measurements
The fair value hierarchy of pension assets at September 29, 2024 is as follows:
(Thousands of Dollars)NAVLevel 1Level 2Level 3
Cash and cash equivalents— 3,191 — — 
Fixed income securities5,043 — 179,042 — 
Hedge fund investments5,931 — — — 
The fair value hierarchy of pension assets at September 24, 2023 was as follows:
(Thousands of Dollars)NAVLevel 1Level 2Level 3
Cash and cash equivalents—1,937——
Domestic equity securities2,25230,885— —
International equity securities—7,5655,644—
Emerging equity securities—6,263——
Debt securities—78,74052,304—
Hedge fund investments24,441———
There were no purchases, sales or transfers of assets classified as Level 3 in 2024 or 2023. Pension assets that are excluded from the fair value hierarchy and are measured at net asset value or "NAV", include five investments:
•
U.S. small cap value equity common/collective fund for which fund prices are not publicly available. This investment was completely liquidated during 2024, the balance was $2.3 million as of September 24, 2023. 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 investment was completely liquidated during 2024, the balance was $11.7 million as of September 24, 2023. 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 $5.9 million and $12.7 million as of September 29, 2024 and September 24, 2023, respectively. We can redeem up to 50% of our investment in this fund twice per year.
•
Global long common/collective fund for which funds prices are not publicly available. The balance of this investment is $2.5 million as of September 29, 2024. We can redeem this fund on a daily basis.
•
Global long/short common/collective fund for which funds prices are not publicly available. The balance of this investment is $2.5 million as of September 29, 2024. We can redeem this fund on a daily basis.
Accumulated Other Comprehensive Income (Loss)
The following tables summarize the components of, and the changes in, Accumulated other comprehensive income (loss), net of tax:
(Thousand of Dollars)
Pension and postretirement benefit plans
Balance at September 27, 2021$42,187 
Other comprehensive loss before reclassifications$(20,866)
Amounts reclassified from accumulated other comprehensive income (a)(b)
$(4,668)
Net current period other comprehensive income (loss), net of taxes
$(25,534)
Balance at September 25, 2022
$16,653 
Other comprehensive income before reclassifications$10,750 
Amounts reclassified from accumulated other comprehensive income(a)(b)
$(560)
Net current period other comprehensive income (loss), net of taxes
$10,190 
Balance at September 24, 2023
$26,843 
Other comprehensive loss before reclassifications$(3,924)
Amounts reclassified from accumulated other comprehensive income(a)(b)(c)
$(2,999)
Net current period other comprehensive income (loss), net of taxes
$(6,923)
Balance at September 29, 2024
$19,920 
(a) Accumulated other comprehensive income (loss) component represents amortization of actuarial loss and is included in the computation of net periodic benefit cost. See Note 7 - Defined Benefit Pension Plan and Note 8 - Postretirement and Postemployment Benefits.
(b) Amounts reclassified from accumulated other comprehensive income (loss) are recorded net of tax impacts of $0.2 million, $0.2 million, $2.0 million for the years ended September 29, 2024, September 24, 2023, and September 25, 2022, respectively.
(c) Amounts reclassified from accumulated other comprehensive income (loss) include a pension settlement gain of $2.4 million for the year ended September 29, 2024. See Note 7 - Defined Benefit Pension Plan.
Cash Flows
Based on our forecast at September 29, 2024, we expect to make no contributions to our pension trust in 2025.
We anticipate future benefit payments to be paid from the pension trust as follows:
(Thousands of Dollars)
202515,591 
202614,523 
202714,405 
202814,262 
202914,096 
2030-203366,122 
Other Plans
We are the plan sponsor for other funded and unfunded defined benefit pension plans that are not considered material. The net benefit obligation for these plans are $0.6 million and $0.6 million at September 29, 2024 and September 24, 2023, respectively.
POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
We provide retiree medical and life insurance benefits under postretirement plans at several of our operating locations. The level and adjustment of participant contributions vary depending on the specific plan. Our liability
and related expense for benefits under the postretirement plans are recorded over the service period of active employees based upon annual actuarial calculations. We accrue postemployment disability benefits when it becomes probable that such benefits will be paid and when sufficient information exists to make reasonable estimates of the amounts to be paid.
During the year ended September 29, 2024, the Company completed the outsourcing of certain printing operations, which ceased postretirement medical benefits for a group of employees. The Company recognized a non-cash curtailment gain of $1.2 million which is reflected within "Curtailment/Settlement gains" on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
The net periodic postretirement benefit cost (benefit) components for our postretirement plans are as follows:
(Thousands of Dollars)202420232022
Service cost for benefits earned during the year50 68 108 
Interest cost on projected benefit obligation596 598 340 
Expected return on plan assets(1,279)(1,182)(1,053)
Amortization of net actuarial gain(1,234)(1,014)(994)
Amortization of prior service benefit(375)(647)(647)
Curtailment gain(1,184)— — 
Net periodic postretirement benefit(3,426)(2,177)(2,246)
Changes in projected benefit obligations (which approximates the accumulated benefit obligation at each period end) and plan assets are as follows:
(Thousands of Dollars)20242023
Benefit obligation, beginning of year11,252 12,287 
Service cost50 68 
Interest cost596 598 
Actuarial (gain) loss1,215 (1,049)
Benefits paid, net of premiums received(1,712)(652)
Liability (gain)/loss due to curtailment(1,184)— 
Benefit obligation, end of year10,217 11,252 
Fair value of plan assets, beginning of year25,809 23,903 
Actual return on plan assets2,615 2,393 
Employer contributions858 165 
Benefits paid, net of premiums and Medicare Part D subsidies received(1,712)(660)
Plan participant contributions— 8 
Fair value of plan assets at measurement date27,570 25,809 
Funded status17,353 14,557 
Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:
(Thousands of Dollars)September 29
2024		September 24
2023
Non-current assets23,300 21,565 
Postretirement benefit obligations(5,947)(7,008)
Accumulated other comprehensive income (before income tax benefit)17,556 19,043 
Amounts recognized in accumulated other comprehensive income (loss) before income tax benefit are as follows:
(Thousands of Dollars)September 29
2024		September 24
2023
Unrecognized net actuarial gain15,548 16,660 
Unrecognized prior service benefit2,008 2,383 
17,556 19,043 
We expect to recognize $1.2 million and $0.3 million of unrecognized net actuarial gain and unrecognized prior service benefit, respectively, in net periodic postretirement benefit in 2025.
Assumptions
Weighted-average assumptions used to determine postretirement benefit obligations are as follows:
(Percent)September 29
2024		September 24
2023
Discount rate4.6 5.6 
Expected long-term return on plan assets5.0 5.0 
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.
Weighted-average assumptions used to determine net periodic benefit cost are as follows:
(Percent)202420232022
Discount rate - service cost5.2 5.9 5.5 
Discount rate - interest cost4.4 5.5 5.1 
Expected long-term return on plan assets5.0 5.0 5.0 
For 2024, the expected long-term return on plan assets is 5.0%. 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.
Assumed health care cost trend rates are as follows:
(Percent)September 29
2024		September 24
2023
Health care cost trend rates18.9 3.9 
Rate to which the cost trend rate is assumed to decline (the “Ultimate Trend Rate”)4.5 4.5 
Year in which the rate reaches the Ultimate Trend Rate20342033
Administrative costs related to indemnity plans are assumed to increase at the health care cost trend rates noted above.
For the year ended September 29, 2024, the most significant driver of the decrease in benefit obligations for the plans was the curtailment, see above for details. For the year ended September 24, 2023, the most significant driver of the decrease in benefit obligations for the plans was the higher actual return on assets compared to
expectations. The plans also recognized actuarial gains due to increases in bond yields that resulted in increases to the discount rates.
Plan Assets
Assets of the retiree medical plan are invested in a master trust. The master trust also pays benefits of active employee medical plans for the same union employees. The fair value of master trust assets allocated to the active employee medical plans at September 29, 2024 and September 24, 2023 is $0.5 million and $0.4 million, respectively, which are included within the tables below.
The primary objective of our investment strategy is to satisfy our postretirement obligations at a reasonable cost. Assets are actively invested to balance real growth of capital through appreciation and 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 strictly 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 postretirement assets is as follows:
(Percent)Policy AllocationActual Allocation
Asset ClassSeptember 29 2024September 24
2023		September 29
2024		September 24
2023
Equity securities25 20 25 20 
Debt securities— 70 — 68 
Fixed income securities75 — 73 — 
Hedge fund investment— 10 — 12 
Cash and cash equivalents— — 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.
Fair Value Measurements
The fair value hierarchy of postretirement assets at September 29, 2024 is as follows:
(Thousands of Dollars)NAVLevel 1Level 2Level 3
Cash and cash equivalents— 436 — — 
Equity securities— 6,983 — — 
Fixed income securities— 20,392 — — 
Hedge fund investment236 — — — 
The fair value hierarchy of postretirement assets at September 24, 2023 is as follows:
(Thousands of Dollars)NAVLevel 1Level 2Level 3
Cash and cash equivalents— 93 — — 
Domestic equity securities870 2,303 — — 
Emerging equity securities— 535 — — 
International equity securities— 814 600 — 
Debt securities— 17,615 — — 
Hedge fund investment2,979 — — — 
There were no purchases, sales or transfers of assets classified as Level 3 in 2024 or 2023. Postretirement assets that are excluded from the fair value hierarchy and are measured at net asset value or "NAV", include two investments:
•
U.S. small cap value equity common/collective fund for which fund prices are not publicly available. The balance of this investment is $— and $0.9 million as of September 29, 2024 and September 24, 2023, 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 $0.2 million and $3.0 million as of September 29, 2024 and September 24, 2023, 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.
Cash Flows
Based on our forecast at September 29, 2024, we do not expect to contribute to our postretirement plans in 2025.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Modernization Act”) introduced a prescription drug benefit under Medicare (“Medicare Part D”) and a federal subsidy to sponsors of retiree health care benefit plans (“Subsidy”) that provide a benefit at least actuarially equivalent (as that term is defined in the Modernization Act) to Medicare Part D. We concluded we qualify for the Subsidy under the Modernization Act since the prescription drug benefits provided under our postretirement health care plans generally require lower premiums from covered retirees and have lower deductibles than the benefits provided in Medicare Part D and, accordingly, are actuarially equivalent to or better than, the benefits provided under the Modernization Act.
We anticipate future benefit payments to be paid either with future contributions to the plan or directly from plan assets, as follows:
(Thousands of Dollars)Gross
Payments
Less
Medicare
Part D
Subsidy
Net
Payments
2025853 — 853 
2026891 — 891 
2027909 — 909 
2028898 — 898 
2029881 — 881 
2030-20333,990 — 3,990 
Postemployment Plan
Our postemployment benefit obligation, which represents certain disability benefits, was $1.6 million at September 29, 2024 and $1.6 million at September 24, 2023.