XML 26 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
Retirement Plans
 12 Months Ended
Jan. 31, 2018
Compensation and Retirement Disclosure [Abstract]  
Retirement Plans
Retirement Plans
Pension Plans

The Company maintains three defined benefit pension plans, the Virco Employees Retirement Plan (“Employee Plan”), the Virco Important Performers Retirement Plan (“VIP Plan”) and the Directors Plan. The annual measurement date for all plans for the fiscal years ended January 31, 2018, 2017 and 2016 is January 31. The Company and its subsidiaries cover all employees hired prior to December 31, 2003 under the Employee Plan, which is a qualified noncontributory defined benefit retirement plan. Benefits under the Employee Plan are based on years of service and career average earnings. Benefit accruals under the Employee Plan were frozen effective December 31, 2003. All benefits were fully vested on January 31, 2018 and 2017.
The Company also provides a supplementary retirement plan for certain key employees, the VIP Plan. The VIP Plan provides a benefit up to 50% of average compensation for the last five years in the VIP Plan offset by benefits earned under the Employee Plan. Benefit accruals under the VIP Plan were frozen effective December 31, 2003. The VIP Plan benefits are secured by a life insurance program. Substantially all assets securing the VIP Plan are held in a rabbi trust. These cash surrender values are included in other assets in the consolidated balance sheets. The cash surrender values of the policies securing the VIP Plan were $3,411,000 and $3,367,000 at January 31, 2018 and 2017, respectively. Death benefits payable under life insurance policies held by the Plan were approximately $9,095,000 and $9,189,000 at January 31, 2018 and 2017, respectively. The Company maintains a rabbi trust to hold assets related to the VIP Retirement Plan and a Split Dollar Life Insurance Plan.
In April 2001, the Board of Directors established the Directors Plan, a non-qualified plan for non-employee directors of the Company. Benefit accruals under the Directors Plan were frozen effective December 31, 2003. At January 31, 2018, the Directors Plan did not hold any assets.
Accounting policy regarding pensions requires management to make complex and subjective estimates and assumptions relating to amounts which are inherently uncertain. Three primary economic assumptions influence the reported values of plan liabilities and pension costs. The Company takes the following factors into consideration: discount rate, assumed rate of return and rate of increase in compensation.
The discount rate represents an estimate of the rate of return on a portfolio of high-quality fixed-income securities that would provide cash flows that match the expected benefit payment stream from the plans. When setting the discount rate, the Company utilizes a spot-rate yield curve developed from high-quality bonds currently available which reflects changes in rates that have occurred over the past year. This assumption is sensitive to movements in market rates that have occurred since the preceding valuation date, and therefore, may change from year to year.
Because the Company froze future benefit accruals for all benefit plans, the compensation increase assumption had no impact on pension expense, accumulated benefit obligation or projected benefit obligation for the period ended January 31, 2018 or 2017.
The assumed rate of return on plan assets represents an estimate of long-term returns available to investors who hold a mixture of stocks, bonds, and cash equivalent securities. When setting its expected return on plan asset assumptions, the Company considers long-term rates of return on various asset classes (both historical and forecasted, using data collected from various sources generally regarded as authoritative) in the context of expected long-term average asset allocations for its defined benefit pension plan. The VIP Plan and Directors Plan are executive benefit plans that are not funded and is subject to the Company's creditors. Because this plan is not funded, the assumed rate of return has no impact on pension expense or the funded status of the plan.
The Company maintains a trust for and funds the pension obligations for the Employee Plan. The Board of Directors appoints a Retirement Plan Committee that establishes a policy for investment and funding strategies. Approximately 70% of the trust assets are managed by investment advisors and held in common trust funds with the balance managed by the Retirement Plan Committee. The Retirement Plan Committee has established target asset allocations for its investment advisors, who invest the trust assets in a variety of institutional collective trust funds.
The Company’s investment advisors have developed a funding strategy that moves fund asset allocation from equity and other investments to fixed income instruments designed to mirror the changes in discount rates as the Plan becomes more fully funded. At January 31, 2018 less than 10% of the trust assets were held in these investments. The Retirement Plan Committee receives quarterly reports addressing investment returns, funded status of the plan, and progress on the glidepath to fully funded status from the investment advisors and meets periodically with them to discuss investment performance.
At January 31, 2018 and 2017, the amount of the plan assets invested in bond or short-term investment funds was 4% and 9%, respectively, and the balance of the trust was held in equity funds or investments. The trust does not hold any Company stock.
It is the Company's policy to contribute adequate funds to the trust accounts to cover benefit payments under the VIP Plan and the Directors Plan to maintain the funded status of the Employee Plan at a level which is adequate to avoid significant restrictions to the Employee Plan under the Pension Protection Act of 2006. The Company contributed $1.4 million, $1.4 million, and $1.6 million, to the trust in 2018, 2017, and 2016, respectively. Contributions during fiscal year 2019 will depend upon actual investment results and benefit payments, but are anticipated to be approximately $0.9 million. During 2018, 2017, and 2016, the Company paid approximately $345,000, $536,000 and $591,000 respectively, in benefits per year under the non-qualified plans. It is anticipated that contributions to non-qualified plans will be approximately $345,000 for 2019. At January 31, 2018, accumulated other comprehensive loss of approximately $9.3 million, net of tax, is attributable to the pension plans.
The following tables set forth (in thousands) the funded status of the Company’s pension plans at January 31, 2018, and 2017:
 
Employee Plan
 
VIP Plan
 
Directors Plan
1/31/2018
 
1/31/2017
 
1/31/2018
 
1/31/2017
 
1/31/2018
 
1/31/2017
Change in Benefit Obligation
 
 
 
 
Benefit obligation at beg. of year
$
31,212

 
$
32,659

 
$
8,292

 
$
8,701

 
$
257

 
$
280

Service cost
—

 
—

 
—

 
—

 
—

 
—

Interest cost
1,217

 
1,184

 
367

 
357

 
9

 
10

Participant contributions
—

 
—

 
—

 
—

 
—

 
—

Amendments
—

 
—

 
—

 
—

 
—

 
—

Actuarial losses (gains)
256

 
(1,125
)
 
656

 
(266
)
 
18

 
3

Plan settlement
—

 
—

 
—

 
—

 
—

 
—

Benefits paid
(1,758
)
 
(1,506
)
 
(309
)
 
(500
)
 
(36
)
 
(36
)
Benefit obligation at end of year
$
30,927

 
$
31,212

 
$
9,006

 
$
8,292

 
$
248

 
$
257

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
Fair value at beg. of year
$
22,911

 
$
19,848

 
$
—

 
$
—

 
$
—

 
$
—

Actual return on plan assets
4,726

 
3,169

 
—

 
—

 
—

 
—

Company contributions
1,380

 
1,400

 
309

 
500

 
36

 
36

Settlements
—

 
—

 
—

 
—

 
—

 
—

Benefits paid
(1,758
)
 
(1,506
)
 
(309
)
 
(500
)
 
(36
)
 
(36
)
Fair value at end of year
$
27,259

 
$
22,911

 
$
—

 
$
—

 
$
—

 
$
—

Funded Status
 
 
 
 
 
 
 
 
 
 
 
Unfunded status of the plan
$
(3,668
)
 
$
(8,301
)
 
$
(9,006
)
 
$
(8,292
)
 
$
(248
)
 
$
(257
)
Amounts Recognized in Statement of Financial Position
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
—

 
—

 
(312
)
 
(278
)
 
(34
)
 
(34
)
Non-current liabilities
(3,668
)
 
(8,301
)
 
(8,694
)
 
(8,014
)
 
(214
)
 
(223
)
Accrued benefit cost
$
(3,668
)
 
$
(8,301
)
 
$
(9,006
)
 
$
(8,292
)
 
$
(248
)
 
$
(257
)
Amounts Recognized in Statement of Financial Position and Operations
 
 
 
 
 
 
 
 
 
 
 
Accrued benefit liability
$
(3,668
)
 
$
(8,301
)
 
$
(9,006
)
 
$
(8,292
)
 
$
(248
)
 
$
(257
)
Accumulated other comp. loss (gain)
5,749

 
9,567

 
2,863

 
2,447

 
—

 
—

Net amount recognized
$
2,081

 
$
1,266

 
$
(6,143
)
 
$
(5,845
)
 
$
(248
)
 
$
(257
)
Items not yet Recognized as a Component of Net Periodic Pension Expense, Included in AOCI
 
 
 
 
 
 
 
 
 
 
 
Unrecognized net actuarial loss (gain)
$
5,749

 
$
9,567

 
$
2,863

 
$
2,447

 
$
—

 
$
—

Unamortized prior service costs
—

 
—

 
—

 
—

 
—

 
—

Net initial asset recognition
—

 
—

 
—

 
—

 
—

 
—

 
$
5,749

 
$
9,567

 
$
2,863

 
$
2,447

 
$
—

 
$
—






 
Employee Plan
 
VIP Plan
 
Directors Plan
1/31/2018
 
1/31/2017
 
1/31/2018
 
1/31/2017
 
1/31/2018
 
1/31/2017
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
 
 
 
 
Net loss (gain)
$
(3,103
)
 
$
(3,159
)
 
$
656

 
$
(266
)
 
$
—

 
$
3

Prior service cost
—

 
—

 
—

 


 
—

 
—

Amortization of (loss) gain
(715
)
 
(1,162
)
 
(240
)
 
(310
)
 


 
144

Amortization of prior service cost (credit)
—

 
—

 
—

 
—

 
—

 
—

Amortization of initial asset
—

 
—

 
—

 
—

 
—

 
—

Total recognized in other comprehensive (loss) income
$
(3,818
)
 
$
(4,321
)
 
$
416

 
$
(576
)
 
$
—

 
$
147

Items to be Recognized as a Component of Periodic Pension Cost for next fiscal year
 
 
 
 
 
 
 
 
 
 
 
Prior service cost
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Net actuarial loss (gain)
362

 
715

 
330

 
240

 
—

 
—

 
$
362

 
$
715

 
$
330

 
$
240

 
$
—

 
$
—

Supplemental Data
 
 
 
 
 
 
 
 
 
 
 
Projected benefit obligation
$
30,927

 
$
31,212

 
$
9,006

 
$
8,292

 
$
248

 
$
257

Accumulated benefit obligation
30,927

 
31,212

 
9,006

 
8,292

 
248

 
257

Fair value of plan assets
27,259

 
22,911

 
—

 
—

 
—

 
—

Components of Net Cost
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Interest cost
1,217

 
1,184

 
367

 
357

 
9

 
10

Expected return on plan assets
(1,367
)
 
(1,134
)
 
—

 
—

 
—

 
—

Amortization of transition amount
—

 
—

 
—

 
—

 
—

 
—

Recognized (gain) loss due to settlement
—

 
—

 
—

 
—

 
—

 
—

Amortization of prior service cost
—

 
—

 
—

 
—

 
—

 
—

Recognized net actuarial loss
715

 
1,162

 
240

 
310

 
—

 
(144
)
Benefit cost
$
565

 
$
1,212

 
$
607

 
$
667

 
$
9

 
$
(134
)
Estimated Future Benefit Payments
 
 
 
 
 
 
 
 
 
 
 
FYE 01-31-2019
$
5,215

 
 
 
$
312

 
 
 
$
34

 
 
FYE 01-31-2020
2,415

 
 
 
324

 
 
 
32

 
 
FYE 01-31-2021
2,077

 
 
 
316

 
 
 
31

 
 
FYE 01-31-2022
1,897

 
 
 
352

 
 
 
29

 
 
FYE 01-31-2023
1,895

 
 
 
366

 
 
 
27

 
 
FYE 01-31-2024 to 2028
9,325

 
 
 
2,191

 
 
 
70

 
 
Total
$
22,824

 
 
 
$
3,861

 
 
 
$
223

 
 
Weighted Average Assumptions to Determine Benefit Obligations at
Year-End
 
 
 
 
 
 
 
 
 
 
 
Discount rate
3.75
%
 
4.25
%
 
4.00
%
 
4.50
%
 
3.75
%
 
4.25
%
Rate of compensation increase
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A

Weighted Average Assumptions to Determine Net Periodic Pension Cost
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.25
%
 
4.00
%
 
4.25
%
 
4.25
%
 
4.25
%
 
4.00
%
Expected return on plan assets
6.50
%
 
6.50
%
 
N/A

 
N/A

 
N/A

 
N/A

Rate of compensation increase
N/A

 
N/A

 
N/A

 
N/A

 
N/A

 
N/A


Fair Value Measurements of Plan Assets
Employee Plan
 
 
1/31/2018
 
1/31/2017
Level 1 Measurement
 
 
 
Cash & Cash Equivalents
$
—

 
$
—

Common Stock
9,701

 
7,379

Total Level 1
$
9,701

 
$
7,379

Level 2 Measurement
 
 
 
PNC Govt Money Fund
$
1,030

 
$
856

Vanguard Total Bond
—

 
1,144

Ishares Credit Bond ETF
340

 
172

Vanguard INTM Term Investment
702

 
346

Vanguard LT Investment
1,973

 
—

Ishares Russell 2000
2,047

 
1,771

Ishares Russell MID-CAP
2,129

 
1,817

Ishares Emerging Markets
1,338

 
1,110

Ishares MCSI RAFE
1,838

 
1,553

Ishares S&P Index
4,825

 
—

Vanguard REIT
—

 
913

Blackrock S&P Index
—

 
4,643

Managed Investment Fund
1,336

 
1,207

Total Level 2
$
17,558

 
$
15,532

Level 3 Measurement
 
 
 
None
N/A

 
N/A


401(k) Retirement Plan

The Company’s retirement plan, which covers all U.S. employees, allows participants to defer from 1% to 75% of their eligible compensation through a 401(k) retirement program. Through December 31, 2001, the plan included an employee stock ownership component. The plan continues to include Virco stock as one of the investment options. At January 31, 2018 and 2017, the plan held 564,375 shares and 587,084 shares of Virco stock, respectively. For the fiscal year ended January 31, 2018, the Company made a small contribution to employees enrolled in the Plan in connection with an auto enrollment program and initiated a Company match effective January 1, 2018. For the fiscal years ended January 31, 2018, the compensation costs incurred for employer match was $44,000. There was no employer match for fiscal year 2017 and 2016.
Life Insurance

The Company provided post-retirement life insurance to certain retired employees under the Dual Option Life Insurance Plan. Effective January 2004, the Company terminated this plan for active employees. The Company has purchased split-dollar life insurance on the lives of the covered participants. Death benefits due to participants are approximately $2,450,000. Cash surrender values of these policies, which are included in other assets in the consolidated balance sheets, were $2,092,000 and $2,231,000 at January 31, 2018 and 2017, respectively. Death benefits payable under the policies were approximately $4,486,000 and $4,748,000 at January 31, 2018 and 2017, respectively. Death benefits received under the Plan in excess of the benefit obligation will be retained in the trust and used to secure and fund benefits payable under the VIP Pension Plan. The Company maintains a rabbi trust to hold assets related to the Dual Option Life Insurance Plan. All assets securing this plan are held in the rabbi trust.
The following sets forth the Company's change in death benefits payable during the years ended January 31, 2018 and 2017:
 
1/31/2018
 
1/31/2017
Liability beginning of year
$
2,184,000

 
$
2,166,000

Accretion expense
54,000

 
68,000

Death benefits paid
(150,000
)
 
(50,000
)
Liability end of year
$
2,088,000

 
$
2,184,000