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Note 11 - Retirement Plans
12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Pension and Other Postretirement Benefits Disclosure [Text Block]

11.

Retirement Plans

 

We sponsor and contribute to defined benefit and defined contribution retirement plans. Our defined benefit pension plan is the Gray Television, Inc. Retirement Plan (the “Gray Pension Plan”). Monthly plan benefits under the Gray Pension Plan are frozen and can no longer increase, and no new participants can be added to the Gray Pension Plan.

 

The Gray Pension Plan’s funding policy is consistent with the funding requirements of existing federal laws and regulations under the Employee Retirement Income Security Act of 1974. The measurement dates used to determine the benefit information for the Gray Pension Plan were December 31, 2019 and 2018, respectively. The following summarizes the Gray Pension Plan’s funded status and amounts recognized on our consolidated balance sheets at December 31, 2019 and 2018, respectively (dollars in millions):

 

   

December 31,

 
   

2019

   

2018

 

Change in projected benefit obligation:

               

Projected benefit obligation at beginning of year

  $ 117     $ 126  

Interest cost

    5       5  

Actuarial loss (gain)

    17       (11 )

Benefits paid

    (4 )     (3 )

Projected benefit obligation at end of year

  $ 135     $ 117  
                 

Change in plan assets:

               

Fair value of pension plan assets at beginning of year

  $ 84     $ 88  

Actual return on plan assets

    14       (4 )

Company contributions

    3       3  

Benefits paid

    (4 )     (3 )

Fair value of pension plan assets at end of year

    97       84  

Funded status of pension plan

  $ (38 )   $ (33 )
                 

Amounts recognized on our balance sheets consist of:

               

Accrued benefit cost

  $ 5     $ 2  

Accumulated other comprehensive loss

    (43 )     (35 )

Net liability recognized

  $ (38 )   $ (33 )

 

Because the Gray Pension Plan is a frozen plan, the projected benefit obligation and the accumulated benefit obligation are the same. The accumulated benefit obligation was $135 million and $117 million at December 31, 2019 and 2018, respectively. The long-term rate of return on assets assumption was chosen from a best estimate range based upon the anticipated long-term returns for asset categories in which the Gray Pension Plan is invested. An estimate of the rate of increase in compensation levels used to calculate the net periodic benefit cost is not required because of the Plan’s frozen status:

 

   

Year Ended December 31,

   
   

2019

   

2018

 

Weighted-average assumptions used to determine net periodic benefit cost for the Gray Pension Plan:

                   

Discount rate

    4.16 %       3.55 %  

Expected long-term rate of return on pension plan assets

    6.50 %       7.00 %  

Estimated rate of increase in compensation levels

    N/A         N/A    

 

   

As of December 31,

   
   

2019

   

2018

 

Weighted-average assumptions used to determine benefit obligations:

                   

Discount rate

    3.14 %       4.16 %  

 

Pension expense is computed using the projected unit credit actuarial cost method. The net periodic pension cost for the Gray Pension Plan includes the following components (in millions):

 

   

Year Ended December 31,

 
   

2019

   

2018

   

2017

 

Components of net periodic pension cost:

                       

Interest cost

    5       5       5  

Expected return on plan assets

    (5 )     (6 )     (6 )

Recognized net actuarial loss

    -       -       1  

Net periodic pension benefit

  $ -     $ (1 )   $ -  

 

For the Gray Pension Plan, the estimated future benefit payments are as follows (in thousands):

 

Years

   

Amount

 
  2020         4  
  2021         4  
  2022         4  
  2023         5  
  2024         5  

2025

- 2029       30  

 

The Gray Pension Plan’s weighted-average asset allocations by asset category were as follows

 

   

As of December 31,

 
   

2019

   

2018

 

Asset category:

           

Insurance general account

  17%     19%  

Cash management accounts

  2%     1%  

Equity accounts

  47%     47%  

Fixed income accounts

  32%     31%  

Real estate accounts

  2%     2%  

Total

  100%     100%  

 

The investment objective is to achieve a consistent total rate of return (income, appreciation, and reinvested funds) that will equal or exceed the actuarial assumption with aversion to significant volatility. The following is the target asset allocation:

 

   

Target Range

 

 

 

Strategic Allocation

   

Lower Limit

   

Upper Limit

 
Asset class:                  

Equities:

                 

Large cap value

  5%     0%     50%  

Large cap blend

  5%     0%     50%  

Large cap growth

  5%     0%     50%  

Mid cap blend

  15%     0%     40%  

Small cap core

  5%     0%     25%  

Foreign large blend

  10%     0%     40%  

Emerging markets

  10%     0%     25%  

Real estate

  5%     0%     20%  

Fixed Income:

                 

U.S. Treasury inflation protected

  5%     0%     25%  

Intermediate term bond

  10%     0%     50%  

Long term government bond

  5%     0%     40%  

High yield bond

  10%     0%     25%  

Emerging markets bond

  10%     0%     20%  

Money market taxable

  0%     0%     100%  

 

Our equity portfolio contains securities of companies necessary to build a diversified portfolio, and that we believe are financially sound. Our fixed income portfolio contains obligations generally rated A or better with no maturity restrictions and an actively managed duration. The cash equivalents strategy uses securities of the highest credit quality.

 

Fair Value of Gray Pension Plan Assets. We calculate the fair value of the Gray Pension Plan’s assets based upon the observable and unobservable net asset value of its underlying investments. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized by the fair value hierarchy proscribed by ASU Topic 820, described in Note 5 “Fair Value Measurement.”

 

The following table presents the fair value of the Gray Pension Plan’s assets and classifies them by level within the fair value hierarchy as of December 31, 2019 and 2018, respectively (in millions):

 

Gray Pension Plan Fair Value Measurements

 

   

As of December 31, 2019

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Assets:

                               

Insurance general account

  $ -     $ 16     $ -     $ 16  

Cash management accounts

    2       -       -       2  

Equity accounts

    46       -       -       46  

Fixed income accounts

    31       -       -       31  

Real estate accounts

    2       -       -       2  

Total

  $ 81     $ 16     $ -     $ 97  

 

   

As of December 31, 2018

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Assets:

                               

Insurance general account

  $ -     $ 17     $ -     $ 17  

Cash management accounts

    1       -       -       1  

Equity accounts

    39       -       -       39  

Fixed income account

    26       -       -       26  

Real estate accounts

    1       -       -       1  

Total

  $ 67     $ 17     $ -     $ 84  

 

Expected Pension Contributions. We expect to contribute a combined total of approximately $3 million to our frozen defined benefit pension plan during the year ending December 31, 2020.

 

Capital Accumulation Plan. The Gray Television, Inc. Capital Accumulation Plan (the “Capital Accumulation Plan”) is a defined contribution plan intended to meet the requirements of Section 401(k) of the Internal Revenue Code. In 2019, employer contributions under the Capital Accumulation Plan include matching cash contributions at a rate of 100% of the first 1% of each employee’s salary deferral, and 50% of the next 5% of each employee’s salary deferral. For the years ended December 31, 2019, 2018 and 2017, our matching contributions to our Capital Accumulation Plan were approximately $11 million, $6 million and $7 million, respectively. We estimate that our matching cash contributions to the Capital Accumulation Plan for year ending December 31, 2020 will be approximately $12 million.

 

In addition, the Company, at its discretion, may make an additional profit-sharing contribution, based on annual Company performance, to those employees who meet certain criteria. For the years ended December 31, 2019, 2018 and 2017, the Company accrued contributions of approximately $5 million, $4 million and $4 million, respectively, as discretionary profit sharing contributions.

 

We may also make matching and discretionary contributions of our common stock under the Capital Accumulation Plan. As of December 31, 2019, we had 1,391,210 shares of common stock reserved for issuance under this plan.