Employee Benefit Plans

We sponsor two noncontributory defined benefit pension plans as well as two non-qualified Supplemental Executive Retirement Plans ("SERPs"). Both of the defined benefit plans and the SERPs have frozen the accrual of future benefits.

We sponsor a defined contribution plan covering substantially all non-union and certain union employees. We match a portion of employees' voluntary contributions to this plan. In connection with freezing the accrual of service credits under certain of our defined benefit pension plans, we began contributing additional amounts (referred to as transition credits) to certain employees' defined contribution retirement accounts which ended in 2015.

Other union-represented employees are covered by defined benefit pension plans jointly sponsored by us and the union, or by union-sponsored multi-employer plans.

We use a December 31 measurement date for our retirement plans. Retirement plans expense is based on valuations as of the beginning of each year.

The components of the expense consisted of the following:



	For the years ended December 31,
(in thousands)	2016			2015			2014

Service cost	$	—		$	—		$	85
Interest cost	27,359			30,477			25,539
Expected return on plan assets, net of expenses	(18,466		)	(24,320		)	(23,481		)
Amortization of actuarial loss	4,406			4,617			2,861
Curtailment/Settlement losses	—			46,793			—
Total for defined benefit plans	13,299			57,567			5,004
Multi-employer plans	168			180			393
Withdrawal from GCIU multi-employer plan	—			351			4,100
SERPs	1,033			1,107			896
Defined contribution plans	8,265			9,858			11,739
Net periodic benefit cost	22,765			69,063			22,132
Allocated to discontinued operations	—			(482		)	(8,985		)
Net periodic benefit cost - continuing operations	$	22,765		$	68,581		$	13,147

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows:



	For the years ended December 31,
(in thousands)	2016			2015		2014

Current year actuarial gain/(loss)	$	(9,379	)	$	1,026	$	(75,527	)
Amortization of actuarial loss	4,406			4,617		2,861
Curtailment/Settlement losses	—			46,793		—
Total	$	(4,973	)	$	52,436	$	(72,666	)

In addition to the amounts summarized above, amortization of actuarial losses of $0.2 million, $0.2 million and $0.3 million were recorded through other comprehensive income in 2016, 2015 and 2014, respectively, related to our SERPs. We recognized actuarial losses of $1.6 million and $0.6 million in 2016 and 2014, respectively, and an actuarial gain of $2.3 million in 2015, related to our SERPs. A one-time curtailment charge of $1.1 million was recorded in the second quarter of 2015 related to our defined benefit pension plan as a result of the spin-off of our newspaper business.

On August 24, 2015, we offered eligible former employees with vested, deferred pension plan benefits the option to receive their benefits either as a lump-sum distribution or an immediate annuity payment. Approximately 4,300 former Scripps employees were eligible for this offer; former Journal Communications employees were not affected. All distributions were made from existing pension plan assets; company funds were not used to make the lump-sum distributions. The funded status of the plan remained materially unchanged as a result of this offer. The lump-sum payments were made in November 2015, at which time we recorded a non-cash settlement charge of $45.7 million.

Assumptions used in determining the annual retirement plans expense were as follows:



	2016 ⁽¹⁾		2015 ⁽²⁾	2014

Discount rate	4.55	%	4.01%-4.53%	5.08	%
Long-term rate of return on plan assets	4.50%-4.65%		4.10%-6.10%	5.25	%
Increase in compensation levels	N/A		N/A	2.0	%

⁽¹⁾ Ranges presented for long-term rate of return on plan assets for 2016 represent the rates used for Scripps Pension Plan and Journal Communications, Inc. Employees' Pension Plan.

⁽²⁾ Ranges presented for discount rate and long-term rate of return on plan assets for 2015 represent the rates used for various remeasurement periods during the year as well as differing rates used for Scripps Pension Plan and Journal Communications, Inc. Employees' Pension Plan.

The discount rate used to determine our future pension obligations is based on a dedicated bond portfolio approach that includes securities rated Aa or better with maturities matching our expected benefit payments from the plans.

The expected long-term rate of return on plan assets is based upon the weighted-average expected rate of return and capital market forecasts for each asset class employed.

Changes in other key actuarial assumptions affect the determination of the benefit obligations as of the measurement date and the calculation of net periodic benefit costs in subsequent periods. Recent actuarial studies indicate life expectancies are longer and thus increase the total expected benefit payments to plan participants.

Obligations and Funded Status — The defined benefit pension plan obligations and funded status are actuarially valued as of the end of each year. The following table presents information about our employee benefit plan assets and obligations:



	Defined Benefit Plans						SERPs
	For the years ended December 31,
(in thousands)	2016			2015			2016			2015

Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	611,257		$	620,623		$	19,800		$	15,261
Service cost	—			—			—			—
Interest cost	27,359			30,477			910			747
Benefits paid	(33,571		)	(28,670		)	(1,030		)	(1,105		)
Actuarial (gains)/losses	20,490			(46,479		)	1,580			(2,299		)
Curtailments/Settlements	—			(148,006		)	—			—
Journal acquisition	—			183,312			—			10,778
Newspaper divestiture	—			—			—			(3,582		)
Projected benefit obligation at end of year	625,535			611,257			21,260			19,800
Plan assets:
Fair value at beginning of year	407,797			495,047			—			—
Actual return on plan assets	29,577			(21,132		)	—			—
Company contributions	8,656			—			1,030			1,105
Benefits paid	(33,571		)	(28,670		)	(1,030		)	(1,105		)
Curtailments/Settlements	—			(148,006		)	—			—
Journal acquisition	—			110,558			—			—
Fair value at end of year	412,459			407,797			—			—
Funded status	$	(213,076	)	$	(203,460	)	$	(21,260	)	$	(19,800	)
Amounts recognized in Consolidated Balance Sheets:
Current liabilities	$	—		$	—		$	(1,548	)	$	(1,295	)
Noncurrent liabilities	(213,076		)	(203,460		)	(19,712		)	(18,505		)
Total	$	(213,076	)	$	(203,460	)	$	(21,260	)	$	(19,800	)

Unrecognized net actuarial loss recognized in accumulated other comprehensive loss	$	144,294		$	139,321		$	6,342		$	4,924

In 2017, for our defined benefit pension plans, we expect to recognize amortization of actuarial loss from accumulated other comprehensive loss into net periodic benefit costs of $4.5 million (including $0.2 million for our SERPs).

Information for pension plans with an accumulated benefit obligation and projected benefit obligation in excess of plan assets was as follows:



	Defined Benefit Plans				SERPs
	As of December 31,
(in thousands)	2016		2015		2016		2015

Accumulated benefit obligation	$	625,535	$	611,257	$	21,260	$	19,800
Projected benefit obligation	625,535		611,257		21,260		19,800
Fair value of plan assets	412,459		407,797		—		—

Assumptions used to determine the defined benefit pension plans benefit obligations were as follows:



	2016		2015		2014

Weighted average discount rate	4.26	%	4.55	%	4.23	%
Increase in compensation levels	N/A		N/A		N/A

In 2017, we expect to contribute $1.6 million to fund SERP benefits and $17.5 million to fund our qualified defined benefit pension plans.

Estimated future benefit payments expected to be paid from the plans for the next ten years are $34.7 million in 2017, $35.4 million in 2018, $35.7 million in 2019, $36.6 million in 2020, $37.5 million in 2021 and a total of $194 million for the five years ending 2026.

Plan Assets and Investment Strategy

Our long-term investment strategy for pension assets is to earn a rate of return over time that minimizes future contributions to the plan while reducing the volatility of pension assets relative to pension liabilities. The strategy reflects the fact that we have frozen the accrual of service credits under our plans covering the majority of employees. We evaluate our asset allocation target ranges for equity, fixed income and other investments annually. We monitor actual asset allocations monthly and adjust as necessary. We control risk through diversification among multiple asset classes, managers and styles. Risk is further monitored at the manager and asset class level by evaluating performance against appropriate benchmarks.

Information related to our pension plan asset allocations by asset category were as follows:



	Target allocation		Percentage of plan assets as of December 31,
	2017		2016		2015

US equity securities	20	%	20	%	14	%
Non-US equity securities	30	%	30	%	21	%
Fixed-income securities	45	%	44	%	58	%
Other	5	%	6	%	7	%
Total	100	%	100	%	100	%

U.S. equity securities include common stocks of large, medium and small capitalization companies, which are predominantly U.S. based. Non-U.S. equity securities include companies domiciled outside of the U.S. and American depository receipts. Fixed-income securities include securities issued or guaranteed by the U.S. government, mortgage backed securities and corporate debt obligations. Other investments include real estate funds.

By the end of 2016, we had fully transitioned to a new asset allocation strategy in which approximately 45% of plan assets are invested in a portfolio of fixed income securities with a duration approximately that of the projected payment of benefit obligations. The remaining 55% of plan assets are invested in equity securities and other return-seeking assets. The expected long-term rate of return on plan assets is based primarily upon the target asset allocation for plan assets and capital markets forecasts for each asset class employed.

The following tables present our plan assets using the fair value hierarchy as of December 31, 2016 and 2015:



	December 31, 2016
(in thousands)	Total		Level 1		Level 2		Level 3

Equity securities
Common/collective trust funds	$	204,084	$	—	$	204,084	$	—
Fixed income
Common/collective trust funds	184,000		—		184,000		—
Real estate fund	21,646		—		—		21,646
Cash equivalents	2,729		2,729		—		—
Fair value of plan assets	$	412,459	$	2,729	$	388,084	$	21,646



	December 31, 2015
(in thousands)	Total		Level 1		Level 2		Level 3

Equity securities
Common/collective trust funds	$	146,314	$	—	$	146,314	$	—
Fixed income
Common/collective trust funds	234,923		—		234,923		—
Real estate fund	14,670		—		—		14,670
Cash equivalents	11,890		11,890		—		—
Fair value of plan assets	$	407,797	$	11,890	$	381,237	$	14,670

Equity securities-common/collective trust funds and fixed income-common/collective trust funds are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (equity securities and fixed income securities) are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. Common/collective trust funds are typically valued at their net asset values that are calculated by the investment manager or sponsor of the fund and have daily or monthly liquidity.

Real estate pertains to an investment in a real estate fund which invests in limited partnerships, limited liability corporations, real estate investment trusts, other funds and insurance company group annuity contracts. The valuations for these holdings are based on property appraisals using cash flow analysis and market transactions.

The following table presents a reconciliation of Level 3 assets held during 2016 and 2015:



(in thousands)	Real Estate Fund

As of December 31, 2014	$	21,661
Journal acquisition	4,802
Unrealized gains/(losses)	2,761
Sales	(14,554		)
As of December 31, 2015	14,670
Purchases	5,400
Unrealized gains/(losses)	1,576
As of December 31, 2016	$	21,646