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Postretirement Plans | 9 Months Ended
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Oct. 03, 2020
Compensation And Retirement Disclosure [Abstract] |
Postretirement Plans | 17. POSTRETIREMENT PLANS The following summarizes the company’s balance sheet related pension and other postretirement benefit plan accounts at October 3, 2020 compared to accounts at December 28, 2019 (amounts in thousands):
|  | October 3, 2020 |  |  | December 28, 2019 |
Noncurrent asset |  | $ | 2,467 |  |  | $ | - |
Current liability |  | $ | 926 |  |  | $ | 29,380 |
Noncurrent liability |  | $ | 9,009 |  |  | $ | 14,328 |
Accumulated other comprehensive loss, net of tax |  | $ | 4,060 |  |  | $ | 107,678 |
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 third quarter of fiscal 2019, the company offered Plan No. 1 participants the option to receive an annuity purchased from an insurance carrier or a lump sum cash payment. 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 the lump sum payments and annuity purchases. This was made up of a $1.4 million cash contribution and an unsecured, short-term, interest-free loan to Plan No. 1 of $5.0 million. 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, both of which were estimated based on the best information available at the time In the third quarter of fiscal 2020, the company finalized its group annuity contract for Plan No. 1 and received a refund of premium in the amount of $7.1 million, which is reported in the company’s Condensed Consolidated Statements of Income for the third quarter of fiscal 2020. The company reversed the $6.4 million (consisting of $5.0 million loan and $1.4 million contribution) cash transfer made in the first quarter of fiscal 2020 since the cash was no longer needed to sufficiently cover the obligations of the transaction. Based on this updated information, the company has updated its prior estimates of the settlement and curtailment charges. The company recognized $109.1 million of non-cash pension termination charges, made up of a settlement charge of $104.8 million and a curtailment loss of $4.3 million for the forty weeks ended October 3, 2020. Following the full settlement of Plan No. 1 pension obligations by the end of the first quarter of fiscal 2020, the company reports a balance sheet asset of $0.7 million for the plan. This surplus of Plan No. 1 will be used, as prescribed in the applicable regulations, to fund future company contributions to the Qualified Replacement Plan (as defined below). The company expects to transfer this surplus to a suspense account held within a trust for the Qualified Replacement Plan by the end of the fourth quarter of fiscal 2020. The company recognizes settlement accounting charges in years when lump sums paid during that year exceed the sum of the plan’s service and interest costs. Settlement accounting accelerates recognition of a plan’s unrecognized net gain or loss. There were no settlement charges recorded during the forty weeks ended October 5, 2019. The company continues to sponsor two remaining pension plans, the Flowers Foods, Inc. Retirement Plan No. 2 (“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, 2019 for the defined benefit and postretirement benefit plans described below. The company contributed $1.4 million during the first quarter of 2020 to Plan No. 1 in connection with the termination of Plan No. 1, as described above. During the third quarter of fiscal 2020, the company made a voluntary contribution of $7.6 million to Plan No. 2. There were no contributions made by the company to either plan during the first and second quarters of fiscal 2019. The company made a voluntary contribution of $2.5 million to Plan No. 2 and no contributions to Plan No. 1 during the third quarter of fiscal 2019. 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 3, 2020 |  |  | October 5, 2019 |  |  | October 3, 2020 |  |  | October 5, 2019 |
Service cost |  | $ | 195 |  |  | $ | 162 |  |  | $ | 657 |  |  | $ | 541 |
Interest cost |  |  | 229 |  |  |  | 2,753 |  |  |  | 1,880 |  |  |  | 9,177 |
Expected return on plan assets |  |  | (414 | ) |  |  | (3,957 | ) |  |  | (3,518 | ) |  |  | (13,190 | )
Settlement and curtailment (gain) loss |  |  | (7,153 | ) |  |  | — |  |  |  | 109,054 |  |  |  | — |
Amortization of prior service cost |  |  | 13 |  |  |  | 89 |  |  |  | 101 |  |  |  | 297 |
Amortization of net loss |  |  | 126 |  |  |  | 1,637 |  |  |  | 1,619 |  |  |  | 5,460 |
Total net periodic pension cost |  | $ | (7,004 | ) |  | $ | 684 |  |  | $ | 109,793 |  |  | $ | 2,285 |
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 Forty Weeks Ended |
|  | October 3, 2020 |  |  | October 5, 2019 |  |  | October 3, 2020 |  |  | October 5, 2019 |
Service cost |  | $ | 65 |  |  | $ | 65 |  |  | $ | 217 |  |  | $ | 217 |
Interest cost |  |  | 45 |  |  |  | 69 |  |  |  | 151 |  |  |  | 229 |
Amortization of prior service credit |  |  | (1 | ) |  |  | (9 | ) |  |  | (3 | ) |  |  | (32 | )
Amortization of net gain |  |  | (69 | ) |  |  | (63 | ) |  |  | (230 | ) |  |  | (212 | )
Total net periodic postretirement cost |  | $ | 40 |  |  | $ | 62 |  |  | $ | 135 |  |  | $ | 202 |
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 Forty Weeks Ended |
|  | October 3, 2020 |  |  | October 5, 2019 |  |  | October 3, 2020 |  |  | October 5, 2019 |
Total cost and employer contributions |  | $ | 6,355 |  |  | $ | 6,264 |  |  | $ | 21,577 |  |  | $ | 21,137 |

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