Postretirement Plans

12 Months Ended

Dec. 28, 2024

Retirement Benefits [Abstract]

Postretirement Plans

Note 22. Postretirement Plans

The following summarizes the company’s balance sheet related pension and other postretirement benefit plan accounts at December 28, 2024 and December 30, 2023 (amounts in thousands):

	December 28, 2024			December 30, 2023
Noncurrent benefit asset	$	6,869		$	6,494
Current benefit liability	$	703		$	699
Noncurrent benefit liability	$	5,511		$	5,798
AOCI, net of tax	$	(257	)	$	(342	)

No contributions were made by the company to any plan during Fiscal 2024. The company made contributions of $1.0 million to the Flowers Foods, Inc. Retirement Plan No. 2 (“Plan No. 2”) during Fiscal 2023 and Fiscal 2022.

Pension Plans

The company maintains a trusteed, noncontributory defined benefit pension plan that covers a small number of certain union employees. The benefits in this plan are based on years of service and the employee’s career earnings. This qualified plan is funded at amounts deductible for income tax purposes but not less than the minimum funding required by the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Pension Protection Act of 2006 (“PPA”).

The company recognizes settlement accounting charges, which accelerates recognition of a plan’s unrecognized net gain or loss, when the ongoing lump sum payments from the plan exceed the sum of the plan’s service cost and interest cost. During the fourth quarter of Fiscal 2024, the company determined it was probable a settlement would occur and paid lump sums that exceeded that threshold and, as a result, the company recorded a settlement charge of $0.2 million in the fourth quarter of Fiscal 2024.

The company uses a calendar year end for the measurement date since the plans are based on a calendar year and because it approximates the company’s fiscal year end. As of December 31, 2024 and December 31, 2023, the assets of the qualified plans included certificates of deposit, marketable equity securities, mutual funds, corporate and government debt securities, other diversifying strategies and annuity contracts. The company expects pension cost of approximately $0.4 million for Fiscal 2025.

The net periodic pension cost (income) for the company’s pension plans includes the following components for Fiscal 2024, 2023, and 2022 (amounts in thousands):

	Fiscal 2024			Fiscal 2023			Fiscal 2022
Service cost	$	728		$	682		$	1,188
Interest cost		1,178			1,304			884
Expected return on plan assets		(1,604	)		(1,561	)		(1,874	)
Settlement loss		241			—			—
Amortization:
Prior service cost		57			57			57
Actuarial loss		42			173			461
Net periodic pension cost		642			655			716
Other changes in plan assets and benefit obligations recognized in OCI:
Current year actuarial gain		(720	)		(815	)		(3,049	)
Settlement loss		(241	)		—			—
Amortization of prior service cost		(57	)		(57	)		(57	)
Amortization of actuarial loss		(42	)		(173	)		(461	)
Total recognized in OCI		(1,060	)		(1,045	)		(3,567	)
Total recognized in net periodic benefit and OCI	$	(418	)	$	(390	)	$	(2,851	)

Actual return on plan assets for Fiscal 2024, 2023, and 2022 was $1.8 million, $3.3 million, and $(4.3) million, respectively.

The funded status and the amounts recognized in the Consolidated Balance Sheets for the company’s pension plans are as follows (amounts in thousands):

	December 28, 2024			December 30, 2023
Change in benefit obligation:
Benefit obligation at beginning of year	$	24,826		$	25,169
Service cost		728			682
Interest cost		1,178			1,304
Actuarial (gain) loss		(562	)		953
Benefits paid		(1,514	)		(3,282	)
Settlements		(2,046	)		—
Benefit obligation at end of year	$	22,610		$	24,826
Change in plan assets:
Fair value of plan assets at beginning of year	$	29,404		$	28,090
Actual return on plan assets		1,763			3,328
Employer contribution		249			1,268
Benefits paid		(1,514	)		(3,282	)
Settlements		(2,046	)		—
Fair value of plan assets at end of year	$	27,856		$	29,404
Funded status, end of year:
Fair value of plan assets	$	27,856		$	29,404
Benefit obligations		(22,610	)		(24,826	)
Funded status and amount recognized at end of year	$	5,246		$	4,578
Amounts recognized in the balance sheet:
Noncurrent asset	$	6,869		$	6,494
Current liability		(224	)		(248	)
Noncurrent liability		(1,399	)		(1,668	)
Amount recognized at end of year	$	5,246		$	4,578
Amounts recognized in AOCI:
Net actuarial loss before taxes	$	2,412		$	3,415
Prior service cost before taxes		27			84
Amount recognized at end of year	$	2,439		$	3,499
Accumulated benefit obligation at end of year	$	21,682		$	23,764

The actuarial gain/(loss) on defined benefit obligations of the employer due to experience, including any assumption changes, different from assumed, and the reasons for such (gain)/loss, can be found in the table below for Fiscal 2024, 2023 and 2022 (amounts in thousands).

	Amount of (Gain)/Loss on Defined Benefit Obligation			Reasons for (Gain)/Loss
Fiscal 2024	$	(562	)	Gain from increase in general level of interest rates used to measure defined benefit plan obligations (approximately 50 basis points).
Fiscal 2023	$	953		Loss from decrease in general level of interest rates used to measure defined benefit plan obligations (approximately 33 basis points).
Fiscal 2022	$	(9,253	)	Gain from increase in general level of interest rates used to measure defined benefit plan obligations (approximately 260 basis points).

Assumptions used in accounting for the company’s pension plans at each of the respective fiscal years ending are as follows:

	Fiscal 2024			Fiscal 2023			Fiscal 2022
Weighted average assumptions used to determine benefit obligations:
Measurement date	12/31/2024			12/31/2023			12/31/2022
Discount rate		5.81	%		5.32	%		5.65	%
Rate of compensation increase		3.00	%		3.00	%		3.00	%
Weighted average assumptions used to determine net periodic benefit    cost/(income):
Measurement date	1/1/2024			1/1/2023			1/1/2022
Discount rate		5.32	%		5.65	%		3.06	%
Expected return on plan assets		5.90	%		5.90	%		5.90	%
Rate of compensation increase		3.00	%		3.00	%		3.00	%

In developing the expected long-term rate of return on plan assets at each measurement date, the company considers the plan assets’ historical actual returns, targeted asset allocations, and the anticipated future economic environment and long-term performance of individual asset classes, based on the company’s investment strategy. While appropriate consideration is given to recent and historical investment performance, the assumption represents management’s best estimate of the long-term prospective return. Further, pension costs do not include an explicit expense assumption, and therefore the return on assets rate reflects the long-term expected return, net of expenses.

Based on these factors the expected long-term rate of return assumption for Plan No. 2 was set at 5.3% for Fiscal 2025. This rate is net of administrative expenses paid from the trust, assumed to be 1.2% per annum. The average annual return on the plan assets over the last 15 years (while the assets were collectively managed) was approximately 6.9% (net of expenses).

Plan Assets

The investment committee, which consists of certain members of management, establishes investment guidelines and strategies and regularly monitors the performance of the plans’ assets. The investment committee is responsible for executing these strategies and investing the pension assets in accordance with ERISA and fiduciary standards. The investment objective of the pension plans is to preserve the plans’ capital and maximize investment earnings within acceptable levels of risk and volatility. The investment committee meets on a regular basis with its investment advisors to review the performance of the plans’ assets. Based upon performance and other measures and recommendations from its investment advisors, the investment committee rebalances the plans’ assets to the targeted allocation when considered appropriate. The fair values of all of the company pension plan assets at December 31, 2024 and December 31, 2023, by asset class are as follows (amounts in thousands):

	Fair value of Pension Plan Assets as of December 31, 2024
Asset Class	Quoted prices in active markets for identical assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Short term investments and cash	$	214	$	—	$	—	$	214
Common stocks:
International common stocks		2,022		—		—		2,022
U.S. common stocks		4,190		—		—		4,190
Fixed income securities:
U.S. government bonds		—		—		—		—
U.S. government agency bonds		—		—		—		—
U.S. corporate bonds		—		21,430		—		21,430
Pending transactions(*)		—		—		—		—
Accrued (expenses) income(*)		—		—		—		—
Total	$	6,426	$	21,430	$	—	$	27,856

	Fair value of Pension Plan Assets as of December 31, 2023
Asset Class	Quoted prices in active markets for identical assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Short term investments and cash	$	501	$	—	$	—	$	501
Common stocks:
International common stocks		2,401		—		—		2,401
U.S. common stocks		4,425		—		—		4,425
Fixed income securities:
U.S. government bonds		—		—		—		—
U.S. government agency bonds		—		—		—		—
U.S. corporate bonds		22,077		—		—		22,077
Pending transactions(*)		—		—		—		—
Accrued (expenses) income(*)		—		—		—		—
Total	$	29,404	$	—	$	—	$	29,404

(*) This class includes accrued interest, dividends, and amounts receivable from asset sales and amounts payable for asset purchases.

The company’s investment policy includes various guidelines and procedures designed to ensure the plan’s assets are invested in a manner necessary to meet expected future benefits earned by participants. The investment guidelines consider a broad range of economic conditions.

The plan asset allocation as of the measurement dates December 31, 2024 and December 31, 2023, and target asset allocations for Fiscal 2025 are as follows for Plan No. 2:

	Target Allocation	Percentage of Plan Assets at the Measurement Date (As percent)
Asset Category	2025	2024		2023
Equity securities	23%		22		23
Fixed income securities	75%		77		75
Short term investments and cash	2%		1		2
Total			100.0		100.0

The objectives of the target allocations are to maintain investment portfolios that diversify risk through prudent asset allocation parameters, achieve asset returns that meet or exceed the plans’ actuarial assumptions, and achieve asset returns that are competitive with like institutions employing similar investment strategies.

Cash Flows

Company contributions to qualified and nonqualified plans are as follows (amounts in thousands):

Year	Required		Discretionary		Total
2024	$	249	$	—	$	249
2023	$	268	$	1,000	$	1,268
2022	$	271	$	1,000	$	1,271

All contributions are made in cash. The required contributions made during Fiscal 2024 include $0.3 million in nonqualified pension benefits paid from corporate assets. During Fiscal 2025, the company expects to pay $0.2 million in nonqualified pension benefits from corporate assets. During Fiscal 2025, the company does not expect to make any cash contributions to Plan No. 2; however, the company may make a discretionary contribution if appropriate based on cash, tax or other considerations. These amounts represent estimates that are based on assumptions that are subject to change.

Benefit Payments

The following are benefits paid under the plans (including settlements) during Fiscal 2024, 2023, and 2022 and expected to be paid from Fiscal 2025 through Fiscal 2034. Estimated future payments include qualified pension benefits that will be paid from the plans’ assets and nonqualified pension benefits that will be paid from corporate assets (amounts in thousands):

Year	Pension Benefits
2022	$	2,440	*
2023	$	3,282	^
2024	$	3,560	+
Estimated Future Payments:
2025	$	3,911
2026	$	1,985
2027	$	1,986
2028	$	1,792
2029	$	1,718
2030-2034	$	7,586

* Includes $0.9 million from Plan No. 2 paid as lump sums.

^ Includes $1.7 million from Plan No. 2 paid as lump sums.

+ Includes $2.0 million from Plan No. 2 paid as lump sums.

Postretirement Benefit Plans

The company sponsors postretirement benefit plans that provide health care and life insurance benefits to retirees who meet certain eligibility requirements. Generally, this includes employees with at least 10 years of service who have reached age 60 and participate in a Flowers retirement plan. Retiree medical coverage is provided for a period of three to five years, depending on the participant’s age and service at retirement. Participant premiums are determined using COBRA premium levels. Retiree life insurance benefits are offered to a closed group of retirees. The company also sponsors a medical, dental, and life insurance benefits plan to a limited and closed group of participants.

The company delivers retiree medical and dental benefits for Medicare eligible retirees through a health-care reimbursement account. The company no longer sponsors a medical plan for Medicare eligible retirees and does not file for a Medicare Part D subsidy.

The unfunded status of the plans was $4.6 million at December 28, 2024 and December 30, 2023.

Multiemployer Plans

The company contributes to a MEPP under the terms of a collective-bargaining agreement that cover various union-represented employees. The risks of participating in this MEPP are different from single-employer plans. Assets contributed to the MEPP by one employer may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. If we choose to stop participating in the MEPP, we may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. None of the contributions to the pension fund was in excess of 5% or more of the total contributions for plan years 2024, 2023, and 2022. There are no contractually required minimum contributions to the plans as of December 28, 2024.

Subsequent to Fiscal 2022, the Western Conference of Teamsters (EIN: 91-6145047) is the company's only remaining MEPP. This is a level green zone status plan. The current collective bargaining agreement expires on February 7, 2027. The company's contributions to the MEPPs were $0.3 million for Fiscal 2024 and 2023, and $0.7 million for Fiscal 2022.

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. During the third quarter of Fiscal 2022, the company recorded a liability of $1.3 million for the withdrawal from the IAM Fund. During the first quarter of Fiscal 2024, the company paid $1.4 million for the withdrawal and recorded additional expense of $0.1 million which is included in the selling, distribution and administrative expenses line item of our Consolidated Statements of Income. 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 up to July 19, 2025.

401(k) Retirement Savings Plans

The Flowers Foods 401(k) Retirement Savings Plan covers substantially all of the company’s employees who have completed certain service requirements. During Fiscal 2024, 2023, and 2022, the total cost and employer contributions were as follows (amounts in thousands):

Contributions by fiscal year	Defined contribution plans expense
Fiscal 2024	$	33,312
Fiscal 2023	$	31,378
Fiscal 2022	$	29,425