Postretirement Plans

6 Months Ended

Jul. 17, 2021

Compensation And Retirement Disclosure [Abstract]

Postretirement Plans

17. POSTRETIREMENT PLANS

The following summarizes the company’s condensed balance sheet related pension and other postretirement benefit plan accounts at July 17, 2021 compared to accounts at January 2, 2021 (amounts in thousands):

	July 17, 2021		January 2, 2021
Current liability	$	874	$	874
Noncurrent liability	$	9,693	$	10,049
Accumulated other comprehensive loss, net of tax	$	6,411	$	6,648

Defined Benefit Plans and Nonqualified Plan

On September 28, 2018, the Board of Directors approved a resolution to terminate the Flowers Foods, Inc. Retirement Plan No. 1 (“Plan No. 1”), effective December 31, 2018.  During the first quarter of Fiscal 2020, the company transferred $6.4 million in cash to Plan No. 1 to ensure that sufficient assets were available for lump sum payments and annuity purchases.  The company completed the transfer of all lump sum payments and transferred all remaining benefit obligations related to Plan No. 1 to a highly rated insurance company on March 4, 2020 in order to purchase a group annuity contract which began paying plan benefits on May 1, 2020.  The company also recognized $116.2 million of non-cash pension termination charges, made up of a settlement charge of $111.9 million and a curtailment loss of $4.3 million, in our Condensed Consolidated Statements of Income during the first quarter of Fiscal 2020.  The settlement amount was revised in the third and fourth quarters of Fiscal 2020 resulting in a final settlement and curtailment loss of $108.8 million. There were no settlement charges recorded during the twenty-eight weeks ended July 17, 2021.

The company continues to sponsor two remaining 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, 2020 for the defined benefit and postretirement benefit plans described below.  

There were no contributions made by the company to any plan during the first or second quarter of Fiscal 2021.  The company contributed $1.4 million during the first quarter of Fiscal 2020 to Plan No. 1 in connection with the termination of Plan No. 1, as described above.

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

	For the Twelve Weeks Ended						For the Twenty-Eight Weeks Ended
	July 17, 2021			July 11, 2020			July 17, 2021			July 11, 2020
Service cost	$	224		$	197		$	523		$	462
Interest cost		175			228			408			1,651
Expected return on plan assets		(431	)		(415	)		(1,006	)		(3,104	)
Settlement and curtailment loss		—			—			—			116,207
Amortization of prior service cost		13			13			31			88
Amortization of net loss		171			126			400			1,493
Total net periodic pension cost	$	152		$	149		$	356		$	116,797

The components of net periodic benefit cost other than the service cost are included in the other components of net periodic pension and postretirement benefits (credit) expense 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 Twenty-Eight Weeks Ended
	July 17, 2021			July 11, 2020			July 17, 2021			July 11, 2020
Service cost	$	78		$	65		$	181		$	152
Interest cost		28			46			64			106
Amortization of prior service credit		(1	)		(1	)		(2	)		(2	)
Amortization of net gain		(48	)		(69	)		(113	)		(161	)
Total net periodic postretirement cost	$	57		$	41		$	130		$	95

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 benefits expense line item on our Condensed Consolidated Statements of Income.

401(k) Retirement Savings Plan

The Flowers Foods, Inc. 401(k) Retirement Savings Plan (“Qualified Replacement 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 Twenty-Eight Weeks Ended
	July 17, 2021		July 11, 2020		July 17, 2021		July 11, 2020
Total cost and employer contributions	$	6,219	$	6,593	$	15,355	$	15,222