Defined Benefit Pension and Other Post Retirement Plans

12 Months Ended

Dec. 31, 2012

Defined Contribution Plans/ Defined Benefit Pension and Other Post Retirement Plans [Abstract]

Defined Benefit Pension and Other Post Retirement Plans

Note 7: Defined Benefit Pension and Other Post Retirement Plans

Some of the Company’s employees participated in The G. B. Dealey Retirement Pension Plan (Pension Plan), which covered employees who elected to continue participation in the plan when it was frozen to new participants in 2000 (for employees other than members of the Providence newspaper guild) and in 2004 (for members of the Providence newspaper guild). The benefits are based on years of service and the average of the employee’s five consecutive years of highest annual compensation earned during the most recently completed ten years of employment. Information regarding Belo’s Pension Plan is included below.

Belo froze benefits under the Pension Plan effective March 31, 2007. As part of the curtailment of the Pension Plan, Belo provides transition benefits to affected Belo employees, including the granting of five years of additional credited service under the Pension Plan and supplemental contributions for a period of up to five years to a defined contribution plan. See Note 6.

In February 2008, the Company spun-off its newspaper businesses and related assets to a separate company, A. H. Belo. Subsequent to the spin-off, Belo retained sponsorship of the Pension Plan. As the sole plan sponsor for the Pension Plan, Belo continued to administer benefits for Belo and A. H. Belo current and former employees. In October 2010, Belo and A. H. Belo agreed to split the Pension Plan into separately-sponsored pension plans effective January 1, 2011. Under the agreement, participant benefit liabilities and assets allocable to approximately 5,100 current and former employees of A. H. Belo and its related newspaper businesses were transferred to two new defined benefit pension plans created, sponsored, and managed by or on behalf of A. H. Belo. Effective January 1, 2011, the new A. H. Belo plans were solely responsible for paying participant benefits for the current and former employees of A. H. Belo, and the Company is no longer responsible for those liabilities. The participant benefit liabilities and assets pertaining to current and former employees of Belo, and its related television businesses, continue to be held by the Pension Plan sponsored and managed by or on behalf of Belo.

For Belo, the January 1, 2011, pension split transaction was treated as a settlement under ASC 715. Under settlement accounting for pensions, the split of the Company’s Pension Plan resulted in the transfer of $238,833 in Pension Plan assets and $339,799 in Pension Plan liabilities to the new plans sponsored by A. H. Belo. This resulted in a reduction in the net unfunded liability of $100,966, which was recorded as a non-cash settlement gain, and recognition of actuarial losses of $129,665 previously recognized in accumulated other comprehensive loss, which was recorded as a non-cash settlement charge. This settlement gain and charge resulted in a net non-cash settlement charge of $28,699. This charge was partially offset by a final net pension contribution reimbursement of $8,233 received from A. H. Belo as discussed below. The combined result of all pension split transactions was a net charge before taxes of $20,466. Additionally, the Company’s 2011 effective tax rate reflects the effect of deferred tax adjustments of $7,143 in pension settlement items.

The reconciliation of the beginning and ending balances of the projected benefit obligation and the fair value of plan assets for the years ended December 31, 2012 and 2011, and the accumulated benefit obligation at December 31, 2012 and 2011, are as follows:

	2012			2011
Funded Status
Projected Benefit Obligation
As of January 1	$	271,134		$	572,097
Pension settlement		–			(339,799	)
Actuarial loss		24,330			34,784
Interest cost		12,498			13,265
Benefits paid		(9,791	)		(9,213	)
As of December 31	$	298,171		$	271,134
Fair Value of Plan Assets
As of January 1	$	158,823		$	380,010
Pension settlement		–			(238,833	)
Actual return (loss) on plan assets		23,323			(298	)
Employer contributions		19,226			27,157
Benefits paid		(9,791	)		(9,213	)
As of December 31	$	191,581		$	158,823
Funded Status as of December 31	$	(106,590	)	$	(112,311	)
Accumulated Benefit Obligation	$	298,171		$	271,134

Amounts recognized in the consolidated balance sheets as of December 31, 2012 and 2011 consist of:

	2012		2011
Short-term pension obligation	$	20,000	$	19,300
Pension obligation		86,590		93,012
Accumulated other comprehensive loss		144,738		133,992

Amounts recognized in accumulated other comprehensive loss as of December 31, 2012 and 2011, include only net actuarial losses.

Belo’s pension costs and obligations are calculated using various actuarial assumptions and methodologies as prescribed under ASC 715. To assist in developing these assumptions and methodologies, Belo uses the services of an independent consulting firm. To determine the benefit obligations, the assumptions the Company uses include, but are not limited to, the selection of the discount rate. In determining the discount rate assumption, the Company used a measurement date of December 31, 2012, and constructed a portfolio of bonds to match the benefit payment stream that is projected to be paid from the Company’s Pension Plan. The discount rate used to determine benefit obligations for the Pension Plan as of December 31, 2012 and 2011, was 4.10 percent and 4.69 percent, respectively.

To compute the Company’s net periodic benefit cost in the year ended December 31, 2012, the Company uses actuarial assumptions that include a discount rate and an expected long-term rate of return on plan assets. The discount rate applied in this calculation is the rate used in computing the benefit obligation as of the end of the preceding year. The expected long-term rate of return on plan assets assumption is based on the weighted average expected long-term returns for the target allocation of plan assets as of the measurement date, the end of the year, and was developed through analysis of historical market returns, current market conditions and the Pension Plan assets’ past experience. Although the Company believes that the assumptions used are appropriate, differences between assumed and actual experience may affect the Company’s operating results.

Weighted average assumptions used to determine net periodic benefit cost for years ended December 31, 2012, 2011 and 2010 are as follows:

	2012			2011			2010
Discount rate		4.69	%		5.89	%		6.18	%
Expected long-term rate of return on assets		8.00	%		8.00	%		8.50	%

The net periodic pension cost includes the following components for the years ended December 31, 2012 and 2011, subsequent to the Pension Plan split, and for the year ended December 31, 2010, prior to the Pension Plan split when the Company was the sole plan sponsor:

	2012			2011			2010
Interest cost on projected benefit obligation	$	12,498		$	13,265		$	32,829
Expected return on plan assets		(13,618	)		(11,865	)		(32,015	)
Amortization of net loss		3,878			2,725			4,568
Net periodic pension cost		2,758			4,125			5,382
Settlement charge		–			28,699			–
Net periodic pension cost after settlement charge	$	2,758		$	32,824		$	5,382

As the Pension Plan is frozen, all participants are inactive. Accordingly, the Company is amortizing gains or losses over the average remaining life expectancy of inactive participants. The estimated net actuarial loss for the Pension Plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2013 is approximately $4,500.

The expected benefit payments, net of administrative expenses, under the plan are as follows:

2013	$	11,886
2014		12,676
2015		13,542
2016		14,472
2017		15,397

Belo’s funding policy is to contribute annually to the Pension Plan amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws, but not in excess of the maximum tax-deductible contribution. During 2012, the Company made contributions totaling $19,226 to the Pension Plan related to the 2012 and 2011 plan years. During 2011, the Company made contributions totaling $27,157 to the Pension Plan related to the 2010 and 2011 plan years and A. H. Belo reimbursed the Company $8,233 of this amount related to contributions for the 2010 plan year. A. H. Belo has no further obligation to reimburse the Company for any contributions after the 2010 plan year. During 2010, the Company made contributions totaling $14,287 to the Pension Plan for the 2009 and 2010 plan years and A. H. Belo reimbursed the Company $8,572 of this amount. The Company currently expects to make contributions totaling $20,000 to the Pension Plan in 2013. No plan assets are expected to be returned to the Company during the year ending December 31, 2013.

The primary investment objective of the Pension Plan is to ensure, over the long-term life of the plan, an adequate pool of assets to support the benefit obligations to participants, retirees and beneficiaries. A secondary objective of the plan is to achieve a level of investment return consistent with a prudent level of portfolio risk that will minimize the financial effect of the Pension Plan on the Company. There is no significant concentration of holdings in any company, industry or international country. Pension Plan assets do not include any Belo common stock.

The Pension Plan weighted-average target allocation and actual asset allocations at December 31, 2012 and 2011 by asset category are as follows:

Asset category	Target Allocation			Actual
				2012			2011
Domestic equity investments		40.0	%		38.6	%		39.6	%
Fixed income investments		30.0	%		28.4	%		29.7	%
International equity investments		20.0	%		22.6	%		19.5	%
Opportunistic investments		10.0	%		10.0	%		11.2	%
Cash		–			0.4	%		–
Total		100.0	%		100.0	%		100.0	%

Domestic and international equity investments include common stock. Opportunistic investments include real estate investment trusts, high yield bonds and emerging market debt. Fixed income investments include corporate obligations and U.S. government and agency obligations.

The Pension Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term, and that such changes could materially affect the net assets available for benefits. The fair value of Pension Plan assets is included in Note 8.

Belo also sponsors post-retirement benefit plans for certain employees. Expense for these plans recognized in 2012, 2011 and 2010 was $94, $121, and $76, respectively.