18. POSTRETIREMENT PLANS

The following summarizes the company’s balance sheet related pension and other postretirement benefit plan accounts at July 14, 2018 compared to accounts at December 30, 2017 (amounts in thousands):

	July 14, 2018		December 30, 2017
Noncurrent asset	$	20,655	$	—
Current liability	$	935	$	935
Noncurrent liability	$	20,065	$	60,107
Accumulated other comprehensive loss, net of tax	$	76,152	$	78,076

Defined Benefit Plans and Nonqualified Plan

The company amended our qualified defined benefit plans in October 2015 to allow pension plan participants not yet receiving benefit payments the option to elect to receive their benefit as a single lump sum payment. This amendment was effective as of January 1, 2016. This change supports our long-term pension risk management strategy.

Settlement accounting, which accelerates recognition of a plan’s unrecognized net gain or loss, is triggered if the lump sums paid during a year exceeds the sum of the plan’s service and interest cost. The company determined it was probable a settlement would occur and paid lump sums that exceeded that threshold during our first quarter of fiscal 2018. The table below presents our recognized settlement loss by quarter (amounts in thousands:

	Settlement charge
First quarter	$	4,668
Second quarter		1,035
For the twenty-eight weeks ended July 14, 2018	$	5,703

Additional settlement charges will be recognized in each of the third and fourth quarters of fiscal 2018. The amount of those charges will depend on the amount settled and the plan’s unrecognized net gain or loss at the end of each quarter.

The company used a measurement date of December 31, 2017 for the defined benefit and postretirement benefit plans described below (excluding Plan No. 1, which has a measurement date of June 30, 2018 due to the settlement). The actuarial gain for Plan No. 1 from December 31, 2017 to June 30, 2018 is primarily due to better than expected asset returns during fiscal 2018, offset by an increase in the discount rate reflected in the re-measurement, which resulted in the decrease to the noncurrent liability in the table above.

The long-term expected rate of return, net of expenses, for the defined benefit plans was 6.4% at the March 31, 2018 re-measurement. When Plan No. 1 was re-measured as of June 30, 2018, the expected return was changed from 6.4% to 5.2% due to re-balancing the plan asset allocation to more debt rather than equities as part of our pension de-risking strategy.

The company voluntarily contributed $10.0 million during our first quarter of fiscal 2018 and an additional $30.0 million during our second quarter of fiscal 2018 to Plan No. 1.

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 Twenty-Eight Weeks Ended
	July 14, 2018			July 15, 2017			July 14, 2018			July 15, 2017
Service cost	$	216		$	174		$	504		$	407
Interest cost		3,123			3,006			6,247			7,013
Expected return on plan assets		(4,678	)		(5,895	)		(10,085	)		(13,754	)
Settlement loss		1,035			—			5,703			—
Amortization of prior service cost		95			89			195			208
Amortization of net loss		1,256			1,469			2,829			3,427
Total net periodic pension cost (income)	$	1,047		$	(1,157	)	$	5,393		$	(2,699	)

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

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 income for the company includes the following components (amounts in thousands):

	For the Twelve Weeks Ended						For the Twenty-Eight Weeks Ended
	July 14, 2018			July 15, 2017			July 14, 2018			July 15, 2017
Service cost	$	66		$	59		$	155		$	138
Interest cost		54			52			127			122
Amortization of prior service credit		(49	)		(49	)		(114	)		(114	)
Amortization of net gain		(99	)		(114	)		(232	)		(268	)
Total net periodic postretirement income	$	(28	)	$	(52	)	$	(64	)	$	(122	)

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

401(k) Retirement Savings Plan

The Flowers Foods, Inc. 401(k) Retirement Savings Plan (“401(k) plan”) covers substantially all the company’s employees who have completed certain service requirements. During the twelve weeks ended July 14, 2018 and July 15, 2017, the total cost and employer contributions were $6.2 million and $6.6 million, respectively. During the twenty-eight weeks ended July 14, 2018 and July 15, 2017 the total cost and employer contributions were $13.5 million and $15.6 million, respectively.

Multi-employer Pension Plan

On August 18, 2017, the union participants of the Bakery and Confectionary Union and Industry International Pension Fund (the “Fund”) at our Lakeland, Florida plant voted to withdraw from the Fund in the most recent collective bargaining agreement. The withdrawal was effective, and the union participants were eligible to participate in the 401(k) plan, on November 1, 2017. During the third quarter of fiscal 2017, the company recorded a liability of $15.2 million related to the withdrawal from the Fund. During the first quarter of fiscal 2018, the company recorded an additional liability of $2.3 million for the final settlement amount of the withdrawal liability. 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. The company began making payments during the first quarter of fiscal 2018. While this is our best estimate of the ultimate cost of the withdrawal from the Fund, additional withdrawal liability may be incurred based on the final fund assessment or in the event of a mass withdrawal, as defined by statute following our complete withdrawal. Transition payments, including related tax payments, were made on November 3, 2017 to, and for the benefit of, union participants as part of the collective bargaining agreement. An additional $3.1 million was recorded for these transition payments. The withdrawal liability charge and the transition payments were recorded in the multi-employer pension plan withdrawal costs line item on our Condensed Consolidated Statements of Operations and are in the DSD Segment. The liability is recorded in other accrued current liabilities on the Condensed Consolidated Balance Sheets. We paid $0.2 million during the first quarter of fiscal 2018 and the balance was paid early in the second quarter of fiscal 2018.