Annual report pursuant to Section 13 and 15(d)

PENSION AND POSTRETIREMENT BENEFITS

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PENSION AND POSTRETIREMENT BENEFITS
12 Months Ended
Dec. 31, 2013
Pension And Postretirement Benefits  
PENSION AND POSTRETIREMENT BENEFITS

15. PENSION AND POSTRETIREMENT BENEFITS

New Media maintains a legacy pension plan and legacy postretirement medical and life insurance plans which cover qualifying employees of its New Media subsidiaries. The pension plan and postretirement medical and life insurance plans are closed to new participants and the pension plan was amended to freeze all future benefit accruals as of December 31, 2008, except for a select group of union employees whose benefits were frozen during 2009. Also, during 2008 the medical and life insurance benefits for a select group of active employees were frozen and the plan was amended to limit future benefits.

New Media uses the accrued benefit actuarial method and best estimate assumptions to determine pension costs, liabilities and other pension information for defined benefit plans.

 

The following provides information on the pension plan and postretirement medical and life insurance plan as of December 31, 2013 and for the period from November 26, 2013 to December 31, 2013:

               
    Pension   Postretirement  
    Period Ended December 31, 2013   Period Ended December 31, 2013  
Change in projected benefit obligation:              
Benefit obligation at beginning of period   $ 24,651   $ 6,015  
Service cost     48     6  
Interest cost     187     41  
Actuarial loss     (408 )   176  
Benefits and expenses paid     (163 )   (29 )
Participant contributions     —     2  
Employer implicit subsidy fulfilled     —     (5 )
Projected benefit obligation at end of period   $ 24,315   $ 6,206  
Change in plan assets              
Fair value of plan assets at beginning of period   $ 19,981   $ —  
Actual return on plan assets     472     —  
Employer contributions     —     27  
Employer implicit subsidy contribution     —     5  
Participant contributions     —     2  
Employer implicit subsidy fulfilled     —     (5 )
Benefits paid     (123 )   (29 )
Expenses paid     (40 )   —  
Fair value of plan assets at end of period   $ 20,290   $ —  
Reconciliation of funded status              
Benefit obligation at end of period   $ (24,315 ) $ (6,206 )
Fair value of assets at end of period     20,290     —  
Funded status     (4,025 )   (6,206 )
Unrecognized actuarial (gain) loss     (634 )   176  
Net accrued benefit cost   $ (4,659 ) $ (6,030 )
               
    Pension   Postretirement  
    Period Ended December 31, 2013   Period Ended December 31, 2013  
Balance sheet presentation              
Accounts payable, accrued expenses and other liabilities(A)     4,025     6,206  
Accumulated other comprehensive income     634     (176 )
Net accrued benefit cost   $ 4,659   $ 6,030  
Components of net periodic benefit cost              
Service cost   $ 48   $ 6  
Interest cost     187     41  
Expected return on plan assets     (246 )   —  
Net periodic benefit cost   $ (11 ) $ 47  
Other changes in plan assets and benefit obligations recognized in other comprehensive income              
Net actuarial cost   $ (634 ) $ 176  
Total recognized in other comprehensive income   $ (634 ) $ 176  
Comparison of obligations to plan assets              
Projected and accumulated benefit obligation   $ 24,315   $ 6,206  
Fair value of plan assets   $ 20,290   $ —  
   
(A) Reconciliation of total funded status to pension and other postretirement benefit obligations balance (Note 2):
         
Pension   $ 4,025  
Postretirement     6,206  
Other     240  
    $ 10,471  

 

The following assumptions were used to calculate the net periodic benefit cost for New Media’s defined benefit pension and post retirement plans:

               
    Pension   Postretirement  
    Period Ended December 31,
2013
  Period Ended December 31,
2013
 
Weighted average discount rate   5.0 %   4.5 %  
Rate of increase in future compensation levels   0.0 %   0.0 %  
Expected return on assets   8.0 %   0.0 %  
Current year trend   0.0 %   7.8 %  
Ultimate year trend   0.0 %   4.8 %  
Year of ultimate trend   —     2025    

To determine the expected long-term rate of return on pension plan assets, New Media considers the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets, input from the actuaries and investment consultants, and long-term inflation assumptions. The expected allocation of pension plan assets is based on a diversified portfolio consisting of domestic and international equity securities and fixed income securities. This expected return is then applied to the fair value of plan assets. New Media amortizes experience gains and losses, including the effects of changes in actuarial assumptions and plan provisions over a period equal to the average future service of plan participants.

Amortization of prior service costs was calculated using the straight-line method over the average remaining service periods of the employees expected to receive benefits under the plan. The effect of a 1% increase and decrease in health care rates are presented as follows:

         
    Postretirement  
    Period Ended December 31, 2013  
Effect of 1% increase in health care cost trend rates        
Accumulated pension benefit obligation (“APBO”)   $ 6,611  
Dollar change   $ 405  
Percent change     6.5 %
Effect of 1% decrease in health care cost trend rates        
APBO   $ 5,863  
Dollar change   $ (343 )
Percent change     (5.5 %)
         

The fair value of plan assets is measured on a recurring basis using quoted market prices in active markets for identical assets, a Level 1 input. The pension plan’s assets by asset category are as follows:

               
    Period Ended December 31, 2013  
    Amount   Percent  
Equity mutual funds   $ 14,738     72.6 %
Fixed income mutual funds     4,021     19.8 %
Cash and cash equivalents     803     4.0 %
Other     728     3.6 %
Total   $ 20,290     100.0 %

Plan fiduciaries of the George W. Prescott Publishing Company LLC Pension Plan set investment policies and strategies for the pension trust. Objectives include preserving the funded status of the plan and balancing risk against return. The general target allocation is 70% in equity funds and 30% in fixed income funds for the plan’s investments. To accomplish this goal, each plan’s assets are actively managed by outside investment managers with the objective of optimizing long-term return while maintaining a high standard of portfolio quality and proper diversification. New Media monitors the maturities of fixed income securities so that there is sufficient liquidity to meet current benefit payment obligations.

The following benefit payments, which reflect expected future services, as appropriate, are expected to be paid as follows:

               
    Pension   Postretirement  
2014   $ 1,461   $ 412  
2015     1,508     410  
2016     1,536     410  
2017     1,545     379  
2018     1,565     390  
2019-2023     8,126     1,584  
Employer contribution expected to be paid during the year ending December 31, 2014   $ 1,501   $ 412  

The postretirement plans are not funded.

The aggregate amount of net actuarial gain and prior service cost related to New Media’s pension and post retirement plans recognized in other comprehensive income as of December 31, 2013 was $0.5 million.