Postretirement Plans

9 Months Ended

Oct. 09, 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 October 9, 2021 compared to accounts at January 2, 2021 (amounts in thousands):

	October 9, 2021		January 2, 2021
Current liability	$	874	$	874
Noncurrent liability	$	9,440	$	10,049
Accumulated other comprehensive loss, net of tax	$	6,310	$	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 forty weeks ended October 9, 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 forty weeks ended October 9, 2021.  During the third quarter of Fiscal 2020, the company made voluntary contribution of $7.6 million to Plan No. 2.

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 9, 2021			October 3, 2020			October 9, 2021			October 3, 2020
Service cost	$	224		$	195		$	747		$	657
Interest cost		176			229			584			1,880
Expected return on plan assets		(431	)		(414	)		(1,437	)		(3,518	)
Settlement and curtailment (gain) loss		—			(7,153	)		—			109,054
Amortization of prior service cost		13			13			44			101
Amortization of net loss		171			126			571			1,619
Total net periodic pension cost	$	153		$	(7,004	)	$	509		$	109,793

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 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 9, 2021			October 3, 2020			October 9, 2021			October 3, 2020
Service cost	$	78		$	65		$	259		$	217
Interest cost		27			45			91			151
Amortization of prior service credit		(1	)		(1	)		(3	)		(3	)
Amortization of net gain		(49	)		(69	)		(162	)		(230	)
Total net periodic postretirement cost	$	55		$	40		$	185		$	135

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 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 9, 2021		October 3, 2020		October 9, 2021		October 3, 2020
Total cost and employer contributions	$	6,300	$	6,355	$	21,655	$	21,577

Multi-employer Pension Plan

On September 22, 2021, the union participants of the Retail, Wholesale and Department Store Union Fund (the “Fund”) at our Birmingham, Alabama plant voted to withdraw from the Fund in the most recent collective bargaining agreement.  The withdrawal will become effective, and the union participants will be 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 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 this 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, 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.  The liability is recorded in other accrued current liabilities on the Condensed Consolidated Balance Sheets.