Post-Retirement Plans

9 Months Ended

Oct. 06, 2012

Post-Retirement Plans

13. POST-RETIREMENT PLANS

The following summarizes the company’s balance sheet related pension and other postretirement benefit plan accounts at October 6, 2012 as compared to accounts at December 31, 2011 (amounts in thousands):

	As of
	October 6, 2012		December 31, 2011
Current benefit liability	$	1,335	$	1,335
Noncurrent benefit liability	$	133,831	$	155,263
Accumulated other comprehensive loss	$	94,996	$	97,139

Defined Benefit Plans and Nonqualified Plan

The company has trusteed, noncontributory defined benefit pension plans covering certain employees. The benefits are based on years of service and the employees’ career earnings. The plans are 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”). As of October 6, 2012, the assets of the plans included certificates of deposit, marketable equity securities, mutual funds, corporate and government debt securities, private and public real estate partnerships, other diversifying strategies and annuity contracts. Effective January 1, 2006, the company curtailed the defined benefit plan that covers the majority of its workforce. Benefits under this plan were frozen, and no future benefits will accrue under this plan. The company continues to maintain a plan that covers a small number of certain union employees. During the second quarter of 2012, Congress passed the Moving Ahead for Progress in 21^st Century Act (“MAP-21”), which included pension funding stabilization provisions. The measure, which is designed to stabilize the discount rate used to determine funding requirements from the effects of interest rate volatility, is expected to reduce the company’s minimum required pension contributions in the near-term. The company has contributed $18.1 million to its qualified pension plans during 2012, and is reviewing the potential implications of MAP-21 on its expected contributions for the remainder of the year.

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

	For the Twelve Weeks Ended				For the Forty Weeks Ended
	October 6, 2012		October 8, 2011		October 6, 2012		October 8, 2011
Service cost	$	142	$	110	$	469	$	368
Interest cost		5,001		5,278		16,670		15,500
Expected return on plan assets		(6,070)		(6,291)		(20,232)		(18,421)
Amortization of net loss		1,174		629		3,912		2,096
Total net periodic benefit (income) cost	$	247	$	(274)	$	819	$	(457)

The company also has one smaller defined benefit plans associated with a recent acquisition that will be merged into the Flowers Foods defined benefit plan at year end.

Post-Retirement Benefit Plan

The company provides certain medical and life insurance benefits for eligible retired employees. The medical plan covers eligible retirees 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 benefit cost for the company includes the following components (amounts in thousands):

	For the Twelve Weeks Ended				For the Forty Weeks Ended
	October 6, 2012		October 8, 2011		October 6, 2012		October 8, 2011
Service cost	$	106	$	98	$	352	$	327
Interest cost		140		220		465		614
Amortization of prior service (credit) cost		(59)		(59)		(198)		(198)
Amortization of net (gain) loss		(70)		(11)		(230)		(37)
Total net periodic benefit cost	$	117	$	248	$	389	$	706

401(k) Retirement Savings Plan

The Flowers Foods 401(k) Retirement Savings Plan covers substantially all of the company’s employees who have completed certain service requirements. During the forty weeks ended October 6, 2012 and October 8, 2011, the total cost and employer contributions were $15.6 million and $14.2 million, respectively.

The company acquired Tasty on May 20, 2011, at which time we assumed sponsorship of a 401(k) savings plan. No employer contributions were made to the Tasty 401(k) savings plan during fiscal 2011, subsequent to the acquisition, or during the forty weeks ended October 6, 2012. The Tasty 401(k) Savings Plan will be merged into the Flowers Foods 401(k) Retirement Savings Plan at year end.

The company also assumed sponsorships of the Lepage 401(k) Plan at the time of the Lepage acquisition on July 21, 2012. Employer contributions to the Lepage 401(k) Plan were $0.1 million for the forty weeks ended October 6, 2012. The Lepage 401(k) Plan will be merged into the Flowers Foods 401(k) Retirement Savings Plan upon a detailed review of prior plan operations and administration.