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Retirement Plans and Postretirement Costs
 12 Months Ended
Jul. 02, 2023
Retirement Benefits [Abstract]  
Retirement Plans and Postretirement Costs

RETIREMENT PLANS AND POSTRETIREMENT COSTS

We have a noncontributory Supplemental Executive Retirement Plan (“SERP”), which is a nonqualified defined benefit plan. The SERP is funded through a Rabbi Trust with TMI Trust Company. Under the SERP, as amended December 31, 2013, participants received an accrued lump-sum benefit as of December 31, 2013 which was credited to each participant’s account. Subsequent to December 31, 2013, each eligible participant receives a supplemental retirement benefit equal to the foregoing lump-sum benefit, plus an annual benefit accrual equal to 8 percent of the participant’s base salary and cash bonus, plus annual credited interest on the participant’s account balance. All then current participants as of December 31, 2013 are fully vested in their account balances with any new individuals participating in the SERP effective on or after January 1, 2014 being subject to a five year vesting period. The SERP, which is considered a nonqualified defined benefit plan under applicable rules and regulations of the Internal Revenue Code, will continue to be funded through use of a Rabbi Trust to hold investment assets to be used in part to fund any future required lump sum benefit payments to participants. During 2023, SERP benefits of $863,000 were cash settled using Rabbi trust assets. We incurred a related settlement charge to operations of $217,000 pre-tax in 2023 as a result of the requirement to expense a portion of the unrealized actuarial losses due to the settlement of the SERP obligation. The Rabbi Trust assets had a value of $2.6 million at July 2, 2023 and $3.3 million at July 3, 2022, respectively. At July 2, 2023, the Rabbi Trust asset balance was included in Other Long-Term Assets in the accompanying Consolidated Balance Sheets. At July 3, 2022, $863,000 of the Rabbi Trust asset balance was included in Other Current Assets and the remaining balance was included in Other Long-Term Assets in the accompany Consolidated Balance Sheets. Refer to Fair Value of Financial Instruments discussion included in Notes to Financial Statements herein for further discussion of Rabbi Trust assets. The Rabbi Trust assets are excluded from the SERP tables below as they do not qualify as plan assets. The projected benefit obligation under the SERP, which is included in the SERP tables below, was $2.3 million at July 2, 2023 and $3.2 million at July 3, 2022. The SERP has a separately determined accumulated benefit obligation, which is the actuarial present value of benefits based on service rendered and current and past compensation levels. This differs from the projected benefit obligation in that it includes no assumptions about future compensation levels. The accumulated benefit obligation under the SERP was $2.2 million at July 2, 2023 and $2.8 million at July 3, 2022.

We also sponsor a postretirement health care plan for all current and future eligible U.S. retirees hired prior to June 1, 2001. The expected cost of retiree health care benefits is recognized during the years the associates who are covered under the plan render service. Effective January 1, 2010, an amendment to the postretirement health care plan limited the benefit for future eligible retirees to $4,000 per plan year and the benefit is further subject to a maximum five-year coverage period based on the associate’s retirement date and age. The postretirement health care plan is unfunded. Additionally, we sponsor a postretirement life plan for all U.S. salaried retirees who retired prior to October 1, 2001 and all U.S. hourly retirees who were hired prior to June 27, 2005 and retired prior to January 1, 2010. The benefit provides for a death benefit of $8,000, which is increased to $70,000 for disability retirees until reaching the age of 65, in which case the death benefit decreased to $8,000. The postretirement life plan is unfunded. See "Organization and Summary of Significant Accounting Policies" above for additional information regarding certain matters related to recording a liability adjustment for the death benefit owed to eligible participants under the postretirement life plan.

Amounts included in accumulated other comprehensive loss, net of tax, at July 2, 2023, which have not yet been recognized in net periodic benefit cost were as follows (thousands of dollars):

 

 

SERP

 

 

Postretirement

 

Net actuarial loss

 

$

410

 

 

$

756

 

Unrecognized net actuarial losses included in accumulated other comprehensive loss at July 2, 2023 which are expected to be recognized in net periodic benefit cost (credit) in fiscal 2024, net of tax, for the SERP and postretirement plans are as follows (thousands of dollars):

 

 

SERP

 

 

Postretirement

 

Net actuarial loss

 

$

35

 

 

$

150

 

 

The following tables summarize the SERP and postretirement plans’ income and expense, funded status and actuarial assumptions for the years indicated (thousands of dollars). We use a June 30 measurement date for our SERP and postretirement plans.

 

 

 

 

SERP Benefits

 

 

Postretirement Benefits

 

 

 

Years Ended

 

 

Years Ended

 

 

 

July 2, 2023

 

 

July 3, 2022

 

 

July 2, 2023

 

 

July 3, 2022

 

COMPONENTS OF NET PERIODIC BENEFIT
   COST (CREDIT):

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

80

 

 

$

63

 

 

$

10

 

 

$

12

 

Interest cost

 

 

101

 

 

 

53

 

 

 

62

 

 

 

43

 

Plan settlements

 

 

217

 

 

 

—

 

 

 

—

 

 

 

—

 

Amortization of unrecognized net loss

 

 

99

 

 

 

86

 

 

 

243

 

 

 

323

 

Net periodic benefit cost (credit)

 

$

497

 

 

$

202

 

 

$

315

 

 

$

378

 

 

WEIGHTED-AVERAGE ASSUMPTIONS:

 

 

 

 

 

 

 

 

 

 

 

 

Benefit Obligations:

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate (SERP / postretirement life)

 

 

5.07

%

 

 

4.26

%

 

 

5.2

%

 

 

4.57

%

Discount rate (postretirement health)

 

 

 

 

 

 

 

 

5.06

%

 

 

4.23

%

Rate of compensation increases

 

 

4.61

%

 

 

4.0

%

 

n/a

 

 

n/a

 

Net Periodic Benefit Cost:

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate (SERP / postretirement life)

 

 

4.26

%

 

 

2.06

%

 

 

4.57

%

 

 

2.64

%

Discount rate (postretirement health)

 

 

 

 

 

 

 

 

4.23

%

 

 

2.01

%

Rate of compensation increases

 

 

4.0

%

 

 

3.0

%

 

n/a

 

 

n/a

 

CHANGE IN PROJECTED BENEFIT
   OBLIGATION:

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at beginning of year

 

$

3,164

 

 

$

2,797

 

 

$

1,477

 

 

$

1,868

 

Service cost

 

 

80

 

 

 

63

 

 

 

10

 

 

 

12

 

Interest cost

 

 

101

 

 

 

53

 

 

 

62

 

 

 

43

 

Actuarial loss (gain)

 

 

(163

)

 

 

265

 

 

 

(179

)

 

 

(347

)

Plan settlements

 

 

(863

)

 

 

—

 

 

 

—

 

 

 

—

 

Benefits paid

 

 

(14

)

 

 

(14

)

 

 

(74

)

 

 

(99

)

Benefit obligation at end of year

 

$

2,305

 

 

$

3,164

 

 

$

1,296

 

 

$

1,477

 

CHANGE IN PLAN ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of year

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Employer contribution

 

 

877

 

 

 

14

 

 

 

74

 

 

 

99

 

Benefits paid

 

 

(877

)

 

 

(14

)

 

 

(74

)

 

 

(99

)

Fair value of plan assets at end of year

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Funded status – accrued benefit obligations

 

$

(2,305

)

 

$

(3,164

)

 

$

(1,296

)

 

$

(1,477

)

AMOUNTS RECOGNIZED IN CONSOLIDATED
   BALANCE SHEETS:

 

 

 

 

 

 

 

 

 

 

 

 

Accrued payroll and benefits (current liabilities)

 

 

(1,100

)

 

 

(1,905

)

 

 

(140

)

 

 

(148

)

Accrued benefit obligations (long-term liabilities)

 

 

(1,206

)

 

 

(1,259

)

 

 

(1,157

)

 

 

(1,329

)

Net amount recognized

 

$

(2,306

)

 

$

(3,164

)

 

$

(1,297

)

 

$

(1,477

)

CHANGES IN PLAN ASSETS AND BENEFIT
   OBLIGATIONS RECOGNIZED IN OTHER
   COMPREHENSIVE INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

Net periodic benefit cost

 

$

497

 

 

$

202

 

 

$

315

 

 

$

378

 

Net actuarial loss (gain)

 

 

(163

)

 

 

265

 

 

 

(179

)

 

 

(347

)

Settlement cost

 

 

(217

)

 

 

—

 

 

 

—

 

 

 

—

 

Amortization of unrecognized net loss

 

 

(99

)

 

 

(86

)

 

 

(243

)

 

 

(323

)

Total recognized in other comprehensive
   (income) loss, before tax

 

 

(479

)

 

 

179

 

 

 

(422

)

 

 

(670

)

Total recognized in net periodic benefit
   cost and other comprehensive loss,
   before tax

 

$

18

 

 

$

381

 

 

$

(107

)

 

$

(292

)

 

For measurement purposes as it pertains to the estimated postretirement health obligation associated with retirees prior to January 1, 2010, a 5.6 percent annual rate increase in the per capita cost of covered health care benefits was assumed for fiscal 2023; the rate is not applicable thereafter as all eligible retirees will be limited to $4,000 per plan year subject to a maximum five-year coverage period as of June 2024. The health care cost trend assumption has a minimal effect on our postretirement benefit amounts reported.

 

We expect to contribute $1.1 million to our SERP and $140,000 to our postretirement health care and life plans in fiscal 2024. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid during the fiscal years noted below (thousands of dollars):

 

 

SERP
Benefits

 

 

Postretirement
Benefits

 

2024

 

$

1,100

 

 

$

140

 

2025

 

$

14

 

 

$

117

 

2026

 

$

14

 

 

$

92

 

2027

 

$

14

 

 

$

93

 

2028

 

$

17

 

 

$

94

 

2029-2033

 

$

2,492

 

 

$

531

 

All U.S. associates may participate in our 401(k) Plan. We contribute 100 percent up to the first 5 percent of eligible compensation that a participant contributes to the plan. Our contributions to the 401(k) Plan were as follows (thousands of dollars):

 

 

Years Ended

 

 

 

July 2, 2023

 

 

July 3, 2022

 

Company contributions

 

$

1,829

 

 

$

1,964