Postretirement Plans

9 Months Ended

Oct. 08, 2022

Retirement Benefits [Abstract]

Postretirement Plans

16. POSTRETIREMENT PLANS

The following summarizes the company’s Condensed Consolidated Balance Sheets related pension and other postretirement benefit plan accounts at October 8, 2022 compared to accounts at January 1, 2022 (amounts in thousands):

	October 8, 2022			January 1, 2022
Noncurrent benefit asset	$	2,163		$	1,281
Current benefit liability	$	804		$	804
Noncurrent benefit liability	$	6,797		$	7,249
AOCI, net of tax	$	(3,395	)	$	(3,456	)

Defined Benefit Plans and Nonqualified Plan

The company sponsors two pension plans, the Flowers Foods, Inc. Retirement Plan No. 2, and the Tasty Baking Company Supplemental Executive Retirement Plan (“Tasty SERP”). The Tasty SERP is frozen and has only retirees and beneficiaries remaining in the plan.

The company used a measurement date of December 31, 2021 for the defined benefit and postretirement benefit plans described below.

During the third quarter of Fiscal 2022, the company made a voluntary contribution of $1.0 million to Plan No. 2. There were no contributions made by the company to any plan during the forty weeks ended October 9, 2021.

The net periodic pension cost for the company’s plans include the following components (amounts in thousands):

	For the Twelve Weeks Ended						For the Forty Weeks Ended
	October 8, 2022			October 9, 2021			October 8, 2022			October 9, 2021
Service cost	$	274		$	224		$	914		$	747
Interest cost		204			176			680			584
Expected return on plan assets		(432	)		(431	)		(1,441	)		(1,437	)
Amortization of prior service cost		13			13			43			44
Amortization of net loss		107			171			356			571
Total net periodic pension cost	$	166		$	153		$	552		$	509

The components of net periodic benefit cost other than the service cost are included in the other components of net periodic pension and postretirement benefit plans credit line item on our Condensed Consolidated Statements of Income.

Postretirement Benefit Plan

The company provides certain medical and life insurance benefits for eligible retired employees covered under the active medical plans. The plan incorporates an up-front deductible, coinsurance payments and retiree contributions at various premium levels. Eligibility and maximum period of coverage is based on age and length of service.

The net periodic postretirement expense for the company includes the following components (amounts in thousands):

	For the Twelve Weeks Ended						For the Forty Weeks Ended
	October 8, 2022			October 9, 2021			October 8, 2022			October 9, 2021
Service cost	$	50		$	78		$	165		$	259
Interest cost		25			27			85			91
Amortization of prior service credit		(54	)		(1	)		(180	)		(3	)
Amortization of net gain		(41	)		(49	)		(137	)		(162	)
Total net periodic postretirement (credit) cost	$	(20	)	$	55		$	(67	)	$	185

The components of net periodic postretirement benefits cost other than the service cost are included in the other components of net periodic pension and postretirement benefit plans credit line item on our Condensed Consolidated Statements of Income.

401(k) Retirement Savings Plan

The Flowers Foods, Inc. 401(k) Retirement Savings Plan covers substantially all the company’s employees who have completed certain service requirements. The total cost and employer contributions were as follows (amounts in thousands):

	For the Twelve Weeks Ended				For the Forty Weeks Ended
	October 8, 2022		October 9, 2021		October 8, 2022		October 9, 2021
Total cost and employer contributions	$	6,511	$	6,300	$	22,664	$	21,655

Multi-employer Pension Plan

On July 19, 2022, the company announced the closure of the Holsum Bakery in Phoenix, Arizona. The bakery produced bread and bun products and ceased production on October 31, 2022. As a result, the union participants of the IAM National Pension Fund (the “IAM Fund”) at the Phoenix bakery will withdraw from the IAM Fund. The company recorded a liability of $1.3 million for the withdrawal from the IAM Fund. While this is our best estimate of the ultimate cost of the withdrawal from this plan, additional withdrawal liability may be incurred based on the final IAM Fund assessment or in the event of a mass withdrawal, as defined by statute, occurring anytime within the next three years.

On September 22, 2021, the union participants of the Retail, Wholesale and Department Store Union Fund (the “RWDSU Fund”) at our Birmingham, Alabama plant voted to withdraw from the RWDSU Fund in the most recent collective bargaining agreement. The withdrawal became effective, and the union participants were eligible to participate in the 401(k) plan, on December 1, 2021. During the twelve weeks ended October 9, 2021, the company recorded a liability of $2.1 million related to the withdrawal from the RWDSU Fund. The withdrawal liability was computed as the net present value of 20 years of monthly payments derived from the company’s share of unfunded vested benefits. While this is our best estimate of the ultimate cost of the withdrawal from the RWDSU Fund, additional withdrawal liability may be incurred based on the final RWDSU Fund assessment or in the event of a mass withdrawal, as defined by statute, occurring anytime within the next three years following our complete withdrawal. Additionally, the company recorded a liability of $1.2 million related to transition payments, including related tax payments, for the benefit of union participants as part of the collective bargaining agreement. The withdrawal liability charge and the transition payments are recorded in the multi-employer pension plan withdrawal costs line item on our Condensed Consolidated Statements of Income. We made the transition payments in December of Fiscal 2021 and the withdrawal liability payment in the first quarter of Fiscal 2022.