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Postretirement Plans | 12 Months Ended
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Jan. 03, 2015
Postretirement Plans |
Note 19. | Postretirement Plans
The following summarizes the company’s balance sheet related pension and other postretirement benefit plan accounts at January 3, 2015 and December 28, 2013:
|  | As of |
|  | January 3, 2015 |  |  | December 28, 2013 |
|  | (Amounts in thousands) |
Current benefit liability |  | $ | 1,089 |  |  | $ | 1,301 |
Noncurrent benefit liability |  | $ | 93,589 |  |  | $ | 44,226 |
Accumulated other comprehensive loss, net of tax |  | $ | 86,612 |  |  | $ | 51,099 |
In September 2014, the company announced a one-time voluntary lump sum offer to approximately 2,500 former employees in Plan No. 1 and 2 who had not yet started monthly payment of their vested benefits. The offer supports the company’s pension risk management strategy and reduced plan obligations by 10%. Distributions of $48.4 million in lump sums from existing plan assets in December 2014 resulted in a settlement charge of $15.4 million for Plan No. 1 only. No settlement charge was required for Plan No. 2 as distributions of $2.0 million were not in excess of service costs and interest costs for 2014. The company used a measurement date of December 31, 2014 for the defined benefit and postretirement benefit plans described below. We believe that the difference in the fair value of plan assets between the measurement date of December 31, 2014 and our fiscal year end date of January 3, 2015 was not material and that for practical purposes the measurement date of December 31, 2014 was used throughout for preparation of our financial statements. Pension Plans The company has trusteed, noncontributory defined benefit pension plans covering certain current and former employees. Benefits under the company’s largest pension plan are frozen. The company continues to maintain an ongoing 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. The qualified 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”) and the Pension Protection Act of 2006 (“PPA”). The company uses a calendar year end for the measurement date since the plans are based on a calendar year end and because it approximates the company’s fiscal year end. As of December 31, 2014 and December 31, 2013, the assets of the qualified 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. The company expects pension income of approximately $5.8 million for fiscal 2015. The net periodic pension cost (income) for the company’s pension plans includes the following components for fiscal years 2014, 2013 and 2012:
|  | Fiscal 2014 |  |  | Fiscal 2013 |  |  | Fiscal 2012 |
|  | (Amounts in thousands) |
Service cost |  | $ | 640 |  |  | $ | 708 |  |  | $ | 610 |
Interest cost |  |  | 21,427 |  |  |  | 20,089 |  |  |  | 21,670 |
Expected return on plan assets |  |  | (33,817 | ) |  |  | (28,680 | ) |  |  | (26,301 | )
Settlement loss |  |  | 15,387 |  |  |  | — |  |  |  | — |
Amortization of actuarial loss |  |  | 1,925 |  |  |  | 6,177 |  |  |  | 5,085 |
Net periodic pension cost (income) |  |  | 5,562 |  |  |  | (1,706 | ) |  |  | 1,064 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |
Current year actuarial loss (gain) |  |  | 74,510 |  |  |  | (90,706 | ) |  |  | 28,857 |
Settlement loss |  |  | (15,387 | ) |  |  | — |  |  |  | — |
Amortization of actuarial (loss) |  |  | (1,925 | ) |  |  | (6,177 | ) |  |  | (5,085 | )
Total recognized in other comprehensive (loss) income |  |  | 57,198 |  |  |  | (96,883 | ) |  |  | 23,772 |
Total recognized in net periodic benefit cost and other comprehensive loss |  | $ | 62,760 |  |  | $ | (98,589 | ) |  | $ | 24,836 |
Actual return on plan assets for fiscal years 2014, 2013, and 2012 was $11.6 million, $73.2 million, and $41.9 million, respectively. Approximately $5.0 million will be amortized from accumulated other comprehensive income into net periodic benefit cost in fiscal 2015 relating to the company’s pension plans. The funded status and the amounts recognized in the Consolidated Balance Sheets for the company’s pension plans are as follows:
|  | January 3, 2015 |  |  | December 28, 2013 |
|  | (Amounts in thousands) |
Change in benefit obligation: |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 463,726 |  |  | $ | 514,636 |
Service cost |  |  | 640 |  |  |  | 708 |
Interest cost |  |  | 21,427 |  |  |  | 20,089 |
Actuarial loss (gain) |  |  | 52,305 |  |  |  | (46,213 | )
Benefits paid |  |  | (27,046 | ) |  |  | (25,494 | )
Settlements |  |  | (48,413 | ) |  |  | — |
Benefit obligation at end of year |  | $ | 462,639 |  |  | $ | 463,726 |
Change in plan assets: |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 428,605 |  |  | $ | 365,671 |
Actual return on plan assets |  |  | 11,613 |  |  |  | 73,174 |
Employer contribution |  |  | 13,435 |  |  |  | 15,254 |
Benefits paid |  |  | (27,046 | ) |  |  | (25,494 | )
Settlements |  |  | (48,413 | ) |  |  | — |
Fair value of plan assets at end of year |  | $ | 378,194 |  |  | $ | 428,605 |
Funded status, end of year: |  |  |  |  |  |  |  |
Fair value of plan assets |  | $ | 378,194 |  |  | $ | 428,605 |
Benefit obligations |  |  | 462,639 |  |  |  | 463,726 |
Unfunded status and amount recognized at end of year |  | $ | (84,445 | ) |  | $ | (35,121 | )
Amounts recognized in the balance sheet: |  |  |  |  |  |  |  |
Current liability |  |  | (409 | ) |  |  | (418 | )
Noncurrent liability |  |  | (84,036 | ) |  |  | (34,703 | )
Amount recognized at end of year |  | $ | (84,445 | ) |  | $ | (35,121 | )
Amounts recognized in accumulated other comprehensive income: |  |  |  |  |  |  |  |
Net actuarial loss before taxes |  | $ | 144,842 |  |  | $ | 87,645 |
Accumulated benefit obligation at end of year |  | $ | 460,931 |  |  | $ | 462,754 |
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation and projected benefit obligation in excess of plan assets were $462.6 million, $460.9 million, and $378.2 million, respectively, at January 3, 2015. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation and projected benefit obligation in excess of plan assets at December 28, 2013 were $463.7 million, $462.8 million, and $428.6 million, respectively. Assumptions used in accounting for the company’s pension plans at each of the respective fiscal years ending are as follows:
|  | Fiscal 2014 |  |  | Fiscal 2013 |  |  | Fiscal 2012 |
Weighted average assumptions used to determine benefit obligations: |  |  |  |  |  |  |  |  |  |  |  |
Measurement date |  |  | 12/31/2014 |  |  |  | 12/31/2013 |  |  |  | 12/31/2012 |
Discount rate |  |  | 4.00 | % |  |  | 4.75 | % |  |  | 4.00 | %
Rate of compensation increase |  |  | 4.00 | % |  |  | 4.00 | % |  |  | 4.00 | %
Weighted average assumptions used to determine net periodic benefit (income)/cost: |  |  |  |  |  |  |  |  |  |  |  |
Measurement date |  |  | 1/1/2014 |  |  |  | 1/1/2013 |  |  |  | 1/1/2012 |
Discount rate |  |  | 4.75 | % |  |  | 4.00 | % |  |  | 4.70 | %
Expected return on plan assets |  |  | 8.00 | % |  |  | 8.00 | % |  |  | 8.00 | %
Rate of compensation increase |  |  | 4.00 | % |  |  | 4.00 | % |  |  | 4.00 | %
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. Based on these factors the expected long-term rate of return assumption for the plans was set at 8.0% for fiscal 2014, as compared with the average annual return on the plan assets over the last 15 years of approximately 7.1% (net of expenses). Plan Assets Effective January 1, 2014, the Finance Committee (“committee”) of the Board of Directors delegated its fiduciary and other responsibilities with respect to the plans to the newly established Investment Committee. 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, 2014 and December 31, 2013, by asset class are as follows (amounts in thousands):
|  | Fair value of Pension Plan Assets as of December 31, 2014 |
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 |  | $ | — |  |  | $ | 6,701 |  |  | $ | — |  |  | $ | 6,701 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. companies |  |  | 94,739 |  |  |  | — |  |  |  | — |  |  |  | 94,739 |
International companies |  |  | 2,700 |  |  |  | — |  |  |  | — |  |  |  | 2,700 |
Domestic equity funds(h) |  |  | 63,551 |  |  |  | — |  |  |  | — |  |  |  | 63,551 |
International equity funds(a) |  |  | — |  |  |  | 45,851 |  |  |  | — |  |  |  | 45,851 |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government bonds |  |  | — |  |  |  | 4,664 |  |  |  | — |  |  |  | 4,664 |
U.S. government agency bonds |  |  | — |  |  |  | 874 |  |  |  | — |  |  |  | 874 |
U.S. mortgage backed securities |  |  | — |  |  |  | 2,333 |  |  |  | — |  |  |  | 2,333 |
U.S. corporate bonds |  |  | — |  |  |  | 2,452 |  |  |  | — |  |  |  | 2,452 |
Private equity funds(c) |  |  | — |  |  |  | 14,427 |  |  |  | — |  |  |  | 14,427 |
Real estate funds(d) |  |  | — |  |  |  | — |  |  |  | 14,651 |  |  |  | 14,651 |
Other types of investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Guaranteed insurance contracts(e) |  |  | — |  |  |  | — |  |  |  | 9,450 |  |  |  | 9,450 |
Hedged equity funds(f)(i) |  |  | — |  |  |  | — |  |  |  | 52,420 |  |  |  | 52,420 |
Absolute return funds(c)(j) |  |  | — |  |  |  | — |  |  |  | 63,667 |  |  |  | 63,667 |
Other assets and (liabilities)(g) |  |  | — |  |  |  | — |  |  |  | 184 |  |  |  | 184 |
Accrued (expenses) income(g) |  |  | — |  |  |  | — |  |  |  | (470 | ) |  |  | (470 | )
Total |  | $ | 160,990 |  |  | $ | 77,302 |  |  | $ | 139,902 |  |  | $ | 378,194 |
|  | Fair value of Pension Plan Assets as of December 31, 2013 |
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 |  | $ | — |  |  | $ | 5,668 |  |  | $ | — |  |  | $ | 5,668 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. companies |  |  | 109,017 |  |  |  | — |  |  |  | — |  |  |  | 109,017 |
International companies |  |  | 1,525 |  |  |  | — |  |  |  | — |  |  |  | 1,525 |
Domestic equity funds(h) |  |  | 62,705 |  |  |  | — |  |  |  | — |  |  |  | 62,705 |
International equity funds(a)(h) |  |  | — |  |  |  | 67,925 |  |  |  | — |  |  |  | 67,925 |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic mutual funds(b)(h) |  |  | 20,187 |  |  |  | — |  |  |  | — |  |  |  | 20,187 |
Private equity funds(c) |  |  | — |  |  |  | 20,889 |  |  |  | — |  |  |  | 20,889 |
Real estate(d) |  |  | — |  |  |  | — |  |  |  | 13,298 |  |  |  | 13,298 |
Other types of investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Guaranteed insurance contracts(e) |  |  | — |  |  |  | — |  |  |  | 9,594 |  |  |  | 9,594 |
Hedged equity funds(f) |  |  | — |  |  |  | — |  |  |  | 58,176 |  |  |  | 58,176 |
Absolute return funds(c) |  |  | — |  |  |  | — |  |  |  | 59,727 |  |  |  | 59,727 |
Other assets and liabilities(g) |  |  | — |  |  |  | — |  |  |  | 484 |  |  |  | 484 |
Accrued income(g) |  |  | — |  |  |  | — |  |  |  | (590 | ) |  |  | (590 | )
Total |  | $ | 193,434 |  |  | $ | 94,482 |  |  | $ | 140,689 |  |  | $ | 428,605 |
(a) | This class includes funds with the principal strategy to invest primarily in long positions in international equity securities.
(b) | This class invests primarily in U.S. government issued securities.
(c) | This class invests primarily in absolute return strategy funds.
(d) | This class includes funds that invest primarily in U.S. commercial real estate.
(e) | This class invests primarily guaranteed insurance contracts through various U.S. insurance companies.
(f) | This class invests primarily in hedged equity funds.
(g) | This class includes accrued interest, dividends, and amounts receivable from asset sales and amounts payable for asset purchases.
(h) | There is a pending sale for an asset in this classification.
(i) | Pending sale requests of $14.3 million apply to assets reported in this classification.
(j) | Pending sale requests of $8.0 million apply to assets reported in this classification.
The following tables provide information on the pension plan assets that are reported using significant unobservable inputs in the estimation of fair value (amounts in thousands):
|  | 2014 Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
|  | Real Estate Funds |  |  | Guaranteed Insurance Contracts |  |  | Hedged Equity Funds |  |  | Absolute Return Funds |  |  | Other Assets and Liabilities and Accrued (Expenses) Income |  |  | Totals |
Balance at December 31, 2013 |  | $ | 13,298 |  |  | $ | 9,594 |  |  | $ | 58,176 |  |  | $ | 59,727 |  |  | $ | (106 | ) |  | $ | 140,689 |
Actual return on plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total gains or losses (realized and unrealized) |  |  | 954 |  |  |  | (5 | ) |  |  | 4,280 |  |  |  | 3,940 |  |  |  | — |  |  |  | 9,169 |
Purchases |  |  | — |  |  |  | 440 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 440 |
Issues |  |  | 636 |  |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 641 |
Sales |  |  | (237 | ) |  |  | (584 | ) |  |  | (10,036 | ) |  |  | — |  |  |  | — |  |  |  | (10,857 | )
Settlements |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (180 | ) |  |  | (180 | )
Transfers out of Level 3 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Ending balance at December 31, 2014 |  | $ | 14,651 |  |  | $ | 9,450 |  |  | $ | 52,420 |  |  | $ | 63,667 |  |  | $ | (286 | ) |  | $ | 139,902 |
|  | 2013 Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3) |
|  | Real Estate Funds |  |  | Guaranteed Insurance Contracts |  |  | Hedged Equity Funds |  |  | Absolute Return Funds |  |  | Other Assets and Liabilities and Accrued (Expenses) Income |  |  | Totals |
Balance at December 31, 2012 |  | $ | 11,564 |  |  | $ | 9,534 |  |  | $ | 34,646 |  |  | $ | 41,936 |  |  | $ | (438 | ) |  | $ | 97,242 |
Actual return on plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total gains or losses (realized and unrealized) |  |  | 1,336 |  |  |  | — |  |  |  | 4,652 |  |  |  | 4,791 |  |  |  | — |  |  |  | 10,779 |
Purchases |  |  | — |  |  |  | 443 |  |  |  | 26,500 |  |  |  | 13,000 |  |  |  | — |  |  |  | 39,943 |
Issues |  |  | 558 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 558 |
Sales |  |  | (160 | ) |  |  | (383 | ) |  |  | (7,622 | ) |  |  | — |  |  |  | — |  |  |  | (8,165 | )
Settlements |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 332 |  |  |  | 332 |
Transfers out of Level 3 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Ending balance at December 31, 2013 |  | $ | 13,298 |  |  | $ | 9,594 |  |  | $ | 58,176 |  |  | $ | 59,727 |  |  | $ | (106 | ) |  | $ | 140,689 |
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, 2014 and December 31, 2013, and target asset allocations for fiscal year 2015 are as follows:
|  |  |  |  | Percentage of Plan Assets at the Measurement Date |
Asset Category |  | Target Allocation 2015 |  |
|  | 2014 |  |  | 2013 |
Equity securities |  |  | 40-60 | % |  |  | 55.0 |  |  |  | 56.6 |
Fixed income securities |  |  | 10-40 | % |  |  | 7.1 |  |  |  | 9.6 |
Real estate |  |  | 0-25 | % |  |  | 3.9 |  |  |  | 3.1 |
Other diversifying strategies(1) |  |  | 0-40 | % |  |  | 33.2 |  |  |  | 29.8 |
Short term investments and cash |  |  | 0-25 | % |  |  | 0.8 |  |  |  | 0.9 |
Total |  |  |  |  |  |  | 100.0 | % |  |  | 100.0 | %
(1) | Includes absolute return funds, hedged equity funds, and guaranteed insurance contracts.
Equity securities include 2,030,363 shares and 3,030,363 shares of the company’s common stock in the amount of $39.0 million and $65.1 million (10.2% and 15.1% of total plan assets) as of December 31, 2014 and December 31, 2013, respectively. The plan sold on the open market 1,000,000 shares of the company’s stock during fiscal 2014 for proceeds of $19.1 million. This sale was specifically from plan assets and did not directly impact the company’s Consolidated Financial Statements. 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:
Year |  | Required |  |  | Discretionary |  |  | Total |
|  | (Amounts in thousands) |
2012 |  | $ | 9,430 |  |  | $ | 9,149 |  |  | $ | 18,579 |
2013 |  | $ | 5,416 |  |  | $ | 9,838 |  |  | $ | 15,254 |
2014 |  | $ | 5,070 |  |  | $ | 8,365 |  |  | $ | 13,435 |
All contributions are made in cash. The required contributions made during fiscal 2014 include $4.6 million to qualified plans and $0.4 million in nonqualified pension benefits paid from corporate assets. The discretionary contributions of $8.4 million made to qualified plans during fiscal 2014 were not required to be made by the minimum funding requirements of ERISA, but the company believed, due to its strong cash flow and financial position, this was an appropriate time at which to make the contribution in order to reduce the impact of future contributions. During 2015, the company expects to contribute $10.0 million to our qualified pension plans and expects to pay $0.4 million in nonqualified pension benefits from corporate assets. The expected contributions to qualified pension plans represent the estimated minimum pension contributions required under ERISA and the PPA as well as discretionary contributions. This amount represents estimates that are based on assumptions that are subject to change. In July 2012, the Moving Ahead for Progress Act for the 21 st Century (“MAP-21”) was signed into law allowing pension plan sponsors to use higher interest rates to value plan liabilities and determine funding requirements. This legislation was extended in 2014 via the Highway and Transportation Funding Act (“HATFA”). As a result of both MAP-21 and HATFA, the company is not subject to required contributions for the 2014 or 2015 plan years. Benefit Payments The following are benefits paid under the plans (including settlements) during fiscal years 2014, 2013 and 2012 and expected to be paid from fiscal 2015 through fiscal 2024. 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.
|  | Pension Benefits |
|  | (Amounts in thousands) |
2012 |  | $ | 24,884 |
2013 |  | $ | 25,494 |
2014 |  | $ | 75,459 | *
Estimated Future Payments: |  |  |  |
2015 |  | $ | 26,055 |
2016 |  | $ | 26,310 |
2017 |  | $ | 26,465 |
2018 |  | $ | 26,667 |
2019 |  | $ | 26,729 |
2020 – 2024 |  | $ | 136,232 |
| * | Includes $48.4 million and $2.0 million from Plan No. 1 and Plan No. 2, respectively, associated with the one-time voluntary lump sum offer discussed above.
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 55 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. On August 4, 2008, the company assumed sponsorship of a medical, dental, and life insurance benefits plan for eligible retired employees from the acquisition of ButterKrust. The ButterKrust plan provides coverage to a limited and closed group of participants. Effective January 1, 2014, the company delivers retiree medical and dental benefits for Medicare eligible retirees through a health-care reimbursement account. The company will no longer sponsor a medical plan for Medicare eligible retirees and will no longer file for a Medicare Part D subsidy. These changes were recognized at year-end 2013. The net periodic benefit (income) cost for the company’s postretirement benefit plans includes the following components for fiscal years 2014, 2013 and 2012:
|  | Fiscal 2014 |  |  | Fiscal 2013 |  |  | Fiscal 2012 |
|  | (Amounts in thousands) |
Service cost |  | $ | 377 |  |  | $ | 341 |  |  | $ | 458 |
Interest cost |  |  | 445 |  |  |  | 380 |  |  |  | 605 |
Amortization: |  |  |  |  |  |  |  |  |  |  |  |
Prior service credit |  |  | (469 | ) |  |  | (257 | ) |  |  | (257 | )
Actuarial gain |  |  | (577 | ) |  |  | (799 | ) |  |  | (299 | )
Total net periodic benefit (income) cost |  |  | (224 | ) |  |  | (335 | ) |  |  | 507 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |
Current year actuarial (gain) loss* |  |  | (497 | ) |  |  | 240 |  |  |  | (2,492 | )
Current year prior service credit |  |  | — |  |  |  | (1,110 | ) |  |  | — |
Amortization of actuarial gain |  |  | 577 |  |  |  | 799 |  |  |  | 299 |
Amortization of prior service credit |  |  | 469 |  |  |  | 257 |  |  |  | 257 |
Total recognized in other comprehensive loss |  |  | 549 |  |  |  | 186 |  |  |  | (1,936 | )
Total recognized in net periodic benefit cost and other comprehensive (income) loss |  | $ | 325 |  |  | $ | (149 | ) |  | $ | (1,429 | )
* | Includes (gain) loss related to (higher) lower than expected Medicare Part D subsidy receipts.
Approximately $(1.1) million will be amortized from accumulated other comprehensive income into net periodic benefit cost in fiscal year 2015 relating to the company’s postretirement benefit plans. The unfunded status and the amounts recognized in the Consolidated Balance Sheets for the company’s postretirement benefit plans are as follows:
|  | January 3, 2015 |  |  | December 28, 2013 |
|  | (Amounts in thousands) |
Change in benefit obligation: |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 10,406 |  |  | $ | 11,481 |
Service cost |  |  | 377 |  |  |  | 341 |
Interest cost |  |  | 445 |  |  |  | 380 |
Participant contributions |  |  | 192 |  |  |  | 364 |
Actuarial loss (gain) |  |  | (521 | ) |  |  | 214 |
Benefits paid |  |  | (670 | ) |  |  | (1,316 | )
Less federal subsidy on benefits paid |  |  | — |  |  |  | 52 |
Plan amendments |  |  | — |  |  |  | (1,110 | )
Benefit obligation at end of year |  | $ | 10,229 |  |  | $ | 10,406 |
Change in plan assets: |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | — |  |  | $ | — |
Employer contributions |  |  | 478 |  |  |  | 952 |
Participant contributions |  |  | 192 |  |  |  | 364 |
Benefits paid |  |  | (670 | ) |  |  | (1,316 | )
Fair value of plan assets at end of year |  | $ | — |  |  | $ | — |
Funded status, end of year: |  |  |  |  |  |  |  |
Fair value of plan assets |  | $ | — |  |  | $ | — |
Benefit obligations |  |  | 10,229 |  |  |  | 10,406 |
Unfunded status and amount recognized at end of year |  | $ | (10,229 | ) |  | $ | (10,406 | )
Amounts recognized in the balance sheet: |  |  |  |  |  |  |  |
Current liability |  | $ | (680 | ) |  | $ | (883 | )
Noncurrent liability |  |  | (9,549 | ) |  |  | (9,523 | )
Amount recognized at end of year |  | $ | (10,229 | ) |  | $ | (10,406 | )
Amounts recognized in accumulated other comprehensive (loss) income: |  |  |  |  |  |  |  |
Net actuarial (gain) loss before taxes |  | $ | (3,056 | ) |  | $ | (3,135 | )
Prior service (credit) cost before taxes |  |  | (953 | ) |  |  | (1,422 | )
Amounts recognized in accumulated other comprehensive (loss) income |  | $ | (4,009 | ) |  | $ | (4,557 | )
Assumptions used in accounting for the company’s postretirement benefit plans at each of the respective fiscal years ending are as follows:
|  | Fiscal 2014 |  |  | Fiscal 2013 |  |  | Fiscal 2012 |
Weighted average assumptions used to determine benefit obligations: |  |  |  |  |  |  |  |  |  |  |  |
Measurement date |  |  | 12/31/2014 |  |  |  | 12/31/2013 |  |  |  | 12/31/2012 |
Discount rate |  |  | 3.50 | % |  |  | 4.31 | % |  |  | 3.34 | %
Health care cost trend rate used to determine benefit obligations: |  |  |  |  |  |  |  |  |  |  |  |
Initial rate |  |  | 8.00 | % |  |  | 8.50 | % |  |  | 8.00 | %
Ultimate rate |  |  | 5.00 | % |  |  | 5.00 | % |  |  | 5.00 | %
Year trend reaches the ultimate rate |  |  | 2021 |  |  |  | 2021 |  |  |  | 2019 |
Weighted average assumptions used to determine net periodic cost: |  |  |  |  |  |  |  |  |  |  |  |
Measurement date |  |  | 1/1/2014 |  |  |  | 1/1/2013 |  |  |  | 1/1/2012 |
Discount rate |  |  | 4.31 | % |  |  | 3.34 | % |  |  | 4.35 | %
Health care cost trend rate used to determine net periodic cost: |  |  |  |  |  |  |  |  |  |  |  |
Initial rate |  |  | 8.50 | % |  |  | 8.00 | % |  |  | 8.50 | %
Ultimate rate |  |  | 5.00 | % |  |  | 5.00 | % |  |  | 5.00 | %
Year trend reaches the ultimate rate |  |  | 2021 |  |  |  | 2019 |  |  |  | 2019 |
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects for fiscal years 2014, 2013, and 2012:
|  | One-Percentage-Point Decrease |  |  | One-Percentage-Point Increase |
|  | For the Year Ended |  |  | For the Year Ended |
|  | Fiscal 2014 |  |  | Fiscal 2013 |  |  | Fiscal 2012 |  |  | Fiscal 2014 |  |  | Fiscal 2013 |  |  | Fiscal 2012 |
|  | (Amounts in thousands) |
Effect on total of service and interest cost |  | $ | (60 | ) |  | $ | (64 | ) |  | $ | (100 | ) |  | $ | 68 |  |  | $ | 73 |  |  | $ | 115 |
Effect on postretirement benefit obligation |  | $ | (558 | ) |  | $ | (485 | ) |  | $ | (667 | ) |  | $ | 629 |  |  | $ | 542 |  |  | $ | 744 |
Cash Flows Company contributions to postretirement plans are as follows (amounts in thousands):
Year |  | Employer Net Contribution |
2012 |  | $ | 958 |
2013 |  | $ | 900 |
2014 |  | $ | 478 |
2015(Expected) |  | $ | 691 |
The table above reflects only the company’s share of the benefit cost. The company contributions shown are net of income from federal subsidy payments received pursuant to the MMA. MMA subsidy payments, which reduce the company’s cost for the plans, are shown separately in the benefits table below. Of the $0.7 million expected funding for postretirement benefit plans during 2015, the entire amount will be required to pay for benefits. Contributions by participants to postretirement benefits were $0.2 million, $0.4 million, and $0.4 million for fiscal years 2014, 2013, and 2012, respectively. Benefit Payments The following are benefits paid by the company during fiscal years 2014, 2013 and 2012 and expected to be paid from fiscal 2015 through fiscal 2024. All benefits are expected to be paid from the company’s assets. The expected benefits show the company’s cost without regard to income from federal subsidy payments received pursuant to the MMA. Expected MMA subsidy payments, which reduce the company’s cost for the plans, are shown separately.
|  | Postretirement Benefits |
|  | (Amounts in thousands) |
|  | Employer Gross Contribution |  |  | MMA Subsidy (Income) |
2012 |  | $ | 1,010 |  |  | $ | (52 | )
2013 |  | $ | 952 |  |  | $ | (52 | )
2014 |  | $ | 478 |  |  | $ | — |
Estimated Future Payments: |  |  |  |  |  |  |  |
2015 |  | $ | 691 |  |  | $ | — |
2016 |  | $ | 795 |  |  | $ | — |
2017 |  | $ | 931 |  |  | $ | — |
2018 |  | $ | 978 |  |  | $ | — |
2019 |  | $ | 944 |  |  | $ | — |
2020 – 2024 |  | $ | 4,203 |  |  | $ | — |
Multiemployer Plans In September 2011, the FASB issued guidance for disclosures of multiemployer pension and other postretirement benefit plans. The guidance requires an employer to provide additional quantitative and qualitative disclosures for these plans. The disclosures provide users with more detailed information about an employer’s participation in multiemployer pension plans. We adopted this guidance during 2011 and applied the requirements retrospectively for all periods presented. The required disclosures are presented in the table below. The company contributes to various multiemployer pension plans. Benefits provided under the multiemployer pension plans are generally based on years of service and employee age. Expense under these plans was $2.1 million for fiscal 2014, $1.9 million for fiscal 2013, and $1.7 million for fiscal 2012. The company contributes to several multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover various union-represented employees. The risks of participating in these multiemployer plans are different from single-employer plans. Assets contributed to the multiemployer plan 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 some of these multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. None of the contributions to the pension funds was in excess of 5% or more of the total contributions for plan years 2014, 2013, and 2012. There are no contractually required minimum contributions to the plans as of January 3, 2015. The company’s participation in these multiemployer plans for fiscal 2014 is outlined in the table below. The EIN/Pension Plan Number column provides the Employer Identification Number (“EIN”) and the three-digit plan number, if applicable. Unless otherwise noted, the most recent PPA zone status available in 2014 and 2013 is for the plan’s year-end at December 31, 2014 and 2013, respectively. The zone status is based on information that the company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The FIP/RP Status Pending/Implemented column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. The last column lists the expiration date(s) of the collective-bargaining agreements to which the plans are subject. Finally, there have been no significant changes that affect the comparability of contributions. In December 2014, the Consolidated and Further Continuing Appropriations Act of 2015 (the “2015 Appropriations Act”) was signed into law and materially amended the PPA funding rules. In general, the PPA funding rules were made more flexible in order to make more manageable the steps necessary for multi-employer plans to become or remain economically viable in the future. While in previous years we have been informed that several of the multi-employer pension plans to which our subsidiaries contribute have been labeled with a “critical” or “endangered” status as defined by the PPA, the changes made by the 2015 Appropriations Act will materially impact, on a going forward basis, these prior funding status assessments. In any event, it is unclear at this time what impact, if any, the 2015 Appropriations Act will have on our future obligations to the multi-employer pension plans in which we participate.
Pension Fund |  | EIN |  |  |  |  |  | Pension Protection Act Zone Status |  |  | FIP/RP Status Pending/Implemented |  |  | Contributions (Amounts in thousands) |  |  | Surcharge Imposed |  |  | Expiration Date of Collective Bargaining Agreement |
|  | Pension Plan No. |  |  | 2014 |  |  | 2013 |  |  |  | 2014 ($) |  |  | 2013 ($) |  |  | 2012 ($) |  |  |
IAM National Pension Fund |  |  | 51-6031295 |  |  |  | 002 |  |  |  | Green |  |  |  | Green |  |  |  | No |  |  |  | 99 |  |  |  | 104 |  |  |  | 101 |  |  |  | No |  |  |  | 5/1/2016 |
Retail, Wholesale and Department Store International Union and Industry Pension Fund |  |  | 63-0708442 |  |  |  | 001 |  |  |  | Green |  |  |  | Green |  |  |  | No |  |  |  | 132 |  |  |  | 130 |  |  |  | 115 |  |  |  | No |  |  |  | 8/12/2017 |
Western Conference of Teamsters Pension Trust |  |  | 91-6145047 |  |  |  | 001 |  |  |  | Green |  |  |  | Green |  |  |  | No |  |  |  | 260 |  |  |  | 252 |  |  |  | 283 |  |  |  | No |  |  |  | 2/4/2017 |
BC&T International Pension Fund |  |  | 52-6118572 |  |  |  | 001 |  |  |  | Red |  |  |  | Red |  |  |  | Yes |  |  |  | 1,077 |  |  |  | 939 |  |  |  | 797 |  |  |  | Yes |  |  |  | 10/31/2015 |
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 years 2014, 2013, and 2012, the total cost and employer contributions were $26.2 million, $23.0 million, and $20.3 million, respectively. The company acquired Lepage in fiscal 2012, at which time we assumed sponsorship of the Lepage 401(k) Plan. This plan was merged into the Flowers Foods 401(k) Retirement Savings Plan on January 1, 2014. During fiscal 2013 and fiscal 2012, the total cost and employer contributions were $0.5 million for the Lepage 401(k) Plan.

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