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Note 10 - Employee Benefit Plans | 12 Months Ended
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Sep. 29, 2018
Notes to Financial Statements |
Pension and Other Postretirement Benefits Disclosure [Text Block] | ( 1 0 ) Employee Benefit Plans Retirement plans . We had one defined benefit pension plan, the Insteel Wire Products Company Retirement Income Plan for Hourly Employees, Wilmington, Delaware (the “Delaware Plan”). The Delaware Plan provided benefits for eligible employees based primarily upon years of service and compensation levels. The Delaware Plan was frozen effective September 30, 2008 whereby participants no longer earned additional benefits. During 2016, we terminated the Delaware Plan and settled plan liabilities through either lump sum distributions to plan participants or annuity contracts purchased from a third -party insurance company that provided for the payment of vested benefits to those participants that did not elect the lump sum option. We made contributions totaling $1.9 million to the Delaware Plan during 2016. As a result of the pension termination, unrecognized losses, which previously were recorded in accumulated other comprehensive loss on our consolidated balance sheets, were recognized as expense and a pension plan settlement loss of $2.5 million was recorded on our consolidated statements of operations for the year ended October 1, 2016. The reconciliation of the projected benefit obligation, plan assets, funded status and amounts recognized in our consolidated balance sheets for the Delaware Plan is as follows:
|  | Year Ended |
|  | October 1, |
(In thousands) |  | 2016 |
Change in benefit obligation: |  |  |  |
Benefit obligation at beginning of year |  | $ | 3,463 |
Interest cost |  |  | 147 |
Actuarial loss |  |  | 324 |
Plan settlement |  |  | 290 |
Distributions |  |  | (4,224 | )
Benefit obligation at end of year |  | $ | - |
Change in plan assets: |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 2,201 |
Actual return on plan assets |  |  | 104 |
Employer contributions |  |  | 1,919 |
Plan settlement |  |  | (4,003 | )
Distributions |  |  | (221 | )
Fair value of plan assets at end of year |  | $ | - |
Reconciliation of funded status to net amount recognized: |
Funded status |  | $ | - |
Net amount recognized |  | $ | - |
Amounts recognized on the consolidated balance sheet: |
Accrued benefit liability |  | $ | - |
Accumulated other comprehensive loss (net of tax) |  |  | - |
Net amount recognized |  | $ | - |
Amounts recognized in accumulated other comprehensive loss: |  |  |  |
Unrecognized net loss |  | $ | - |
Net amount recognized |  | $ | - |
Other changes in plan assets and benefit obligations recognized in other comprehensive loss: |  |  |  |
Net loss |  | $ | 685 |
Amortization of net loss |  |  | (76 | )
Settlement loss |  |  | (2,539 | )
Total recognized in other comprehensive income loss |  | $ | (1,930 | )
Net periodic pension cost for the Delaware Plan includes the following components:
|  | Year Ended |
|  | October 1, |
(In thousands) |  | 2016 |
Interest cost |  | $ | 147 |
Expected return on plan assets |  |  | (175 | )
Settlement loss recognized |  |  | 2,539 |
Amortization of net loss |  |  | 76 |
Net periodic pension cost |  | $ | 2,587 |
The assumed discount rate used for the valuation of the Delaware Plan was 3.75% as of October 1, 2016. In establishing the discount rate, we reviewed published market indices of high-quality debt securities, adjusted as appropriate for duration, and high-quality bond yield curves applicable to the expected benefit payments of the Delaware Plan. Supplemental employee retirement plan. We have Retirement Security Agreements (each, a “SERP”) with certain of our employees (each, a “Participant”). Under the SERPs, if the Participant remains in continuous service with us for a period of at least 30 years, we will pay the Participant a supplemental retirement benefit for the 15 -year period following the Participant’s retirement equal to 50% of the Participant’s highest average annual base salary for five consecutive years in the 10 -year period preceding the Participant’s retirement. If the Participant retires prior to the later of age 65 or the completion of 30 years of continuous service with us, but has completed at least 10 years of continuous service, the amount of the Participant’s supplemental retirement benefit will be reduced by 1/360th for each month short of 30 years that the Participant was employed by us. The reconciliation of the projected benefit obligation, plan assets, funded status and amounts recognized for the SERPs in our consolidated balance sheets is as follows:
|  | Year Ended |
|  | September 29, |  |  | September 30, |  |  | October 1, |
(In thousands) |  | 2018 |  |  | 2017 |  |  | 2016 |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 9,389 |  |  | $ | 9,159 |  |  | $ | 7,821 |
Service cost |  |  | 310 |  |  |  | 344 |  |  |  | 263 |
Interest cost |  |  | 345 |  |  |  | 338 |  |  |  | 326 |
Actuarial loss (gain) |  |  | (33 | ) |  |  | (162 | ) |  |  | 1,039 |
Distributions |  |  | (262 | ) |  |  | (290 | ) |  |  | (290 | )
Benefit obligation at end of year |  | $ | 9,749 |  |  | $ | 9,389 |  |  | $ | 9,159 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |
Actual employer contributions |  | $ | 262 |  |  | $ | 290 |  |  | $ | 290 |
Actual distributions |  |  | (262 | ) |  |  | (290 | ) |  |  | (290 | )
Plan assets at fair value at end of year |  | $ | - |  |  | $ | - |  |  | $ | - |
Reconciliation of funded status to net amount recognized: |
Funded status |  | $ | (9,749 | ) |  | $ | (9,389 | ) |  | $ | (9,159 | )
Net amount recognized |  | $ | (9,749 | ) |  | $ | (9,389 | ) |  | $ | (9,159 | )
Amounts recognized in accumulated other comprehensive loss: |  |  |  |  |  |  |  |  |  |  |  |
Unrecognized net loss |  | $ | 1,966 |  |  | $ | 2,149 |  |  | $ | 2,485 |
Net amount recognized |  | $ | 1,966 |  |  | $ | 2,149 |  |  | $ | 2,485 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |
Net loss (gain) |  | $ | (33 | ) |  | $ | (162 | ) |  | $ | 1,039 |
Amortization of net loss |  |  | (150 | ) |  |  | (174 | ) |  |  | (85 | )
Total recognized in other comprehensive income (loss) |  | $ | (183 | ) |  | $ | (336 | ) |  | $ | 954 |
Net periodic pension cost for the SERPs includes the following components:
|  | Year Ended |
|  | September 29, |  |  | September 30, |  |  | October 1, |
(In thousands) |  | 2018 |  |  | 2017 |  |  | 2016 |
Service cost |  | $ | 310 |  |  | $ | 344 |  |  | $ | 263 |
Interest cost |  |  | 345 |  |  |  | 338 |  |  |  | 326 |
Amortization of net loss |  |  | 150 |  |  |  | 174 |  |  |  | 85 |
Net periodic pension cost |  | $ | 805 |  |  | $ | 856 |  |  | $ | 674 |
The estimated net loss that will be amortized from accumulated other comprehensive loss into net periodic pension cost during 2019 is $140,000. The assumptions used in the valuation of the SERPs are as follows:
|  | Measurement Date |
|  | September 29, |  |  | September 30, |  |  | October 1, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
Assumptions at year-end: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 4.00 | % |  |  | 3.75 | % |  |  | 3.75 | %
Rate of increase in compensation levels |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | %
The assumed discount rate is established as of our fiscal year-end measurement date. In establishing the discount rate, we review published market indices of high-quality debt securities, adjusted as appropriate for duration, and high-quality bond yield curves applicable to the expected benefit payments of the SERPs. The SERPs expected rate of increase in compensation levels is based on the anticipated increases in annual compensation. The projected benefit payments under the SERPs are as follows:
Fiscal year(s) |  | In thousands |
2019 |  | $ | 325 |
2020 |  |  | 278 |
2021 |  |  | 278 |
2022 |  |  | 553 |
2023 |  |  | 553 |
2024 - 2028 |  |  | 4,083 |
Retirement savings plan. In 1996, we adopted the Retirement Savings Plan of Insteel Industries, Inc. (the “Plan”) to provide retirement benefits and stock ownership for our employees. The Plan is an amendment and restatement of our Employee Stock Ownership Plan. As allowed under Sections 401 (a) and 401 (k) of the Internal Revenue Code, the Plan provides for tax-deferred salary deductions for eligible employees. The Plan allows for discretionary contributions to be made by us as determined by the Board of Directors, which are allocated among eligible participants based on their compensation relative to the total compensation of all participants . Employees are permitted to contribute up to 75% of their annual compensation to the Plan, limited to a maximum annual amount as set periodically by the Internal Revenue Code. We match employee contributions up to 100% of the first 1% and 50% of the next 5% of eligible compensation that is contributed by employees. Our contributions to the Plan were $1.1 million in 2018 and 2017 and $1.0 million in 2016. Voluntary Employee Beneficiary Associations (“ VEBA ” ) . We have a VEBA which allows both us and our employees to make contributions to pay for medical costs. Our contributions to the VEBA were $5.1 million in 2018, $5.6 million in 2017 and $5.4 million in 2016. We are primarily self-insured for our employee’s healthcare costs, carrying stop-loss insurance coverage for individual claims in excess of $175,000 per benefit plan year. Our self-insurance liabilities are based on the total estimated costs of claims filed and claims incurred but not reported, less amounts paid against such claims. We review current and historical claims data in developing our estimates.

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