Employee Retirement and Profit Sharing Plans

12 Months Ended

Mar. 28, 2020

Employee Retirement and Profit Sharing Plans [Abstract]

Employee Retirement and Profit Sharing Plans

NOTE 13 – EMPLOYEE RETIREMENT AND PROFIT SHARING PLANS

We sponsor a noncontributory defined benefit pension plan for Monro employees and the former Kimmel Automotive, Inc. employees. In fiscal 2005, the previously separate Monro and Kimmel pension plans were merged. The merged plan provides benefits to certain full-time employees who were employed with Monro and with Kimmel prior to April 2, 1998 and May 15, 2001, respectively.

Effective as of those dates, each company’s Board of Directors approved plan amendments whereby the benefits of each of the defined benefit plans would be frozen and the plans would be closed to new participants. Prior to these amendments, coverage under the plans began after employees completed one year of service and attained age 21. Benefits under both plans, and now the merged plan, are based primarily on years of service and employees’ pay near retirement. The funding policy for Monro’s merged plan is consistent with the funding requirements of U.S. federal law and regulations. The measurement date used to determine the pension plan measurements disclosed herein is March 31 for both 2020 and 2019.

The underfunded status of Monro’s defined benefit plan is recognized as an Other long-term liability in the Consolidated Balance Sheets as of March 28, 2020 and March 30, 2019, respectively.

The underfunded status of the plan is set forth below:



	Fiscal March
	2020		2019
	(Dollars in thousands)
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	20,838	$	20,629
Actual (loss) return on plan assets		(1,507)		929
Benefits paid		(720)		(720)
Fair value of plan assets at end of year		18,611		20,838
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year		20,972		20,606
Interest cost		752		781
Actuarial loss		642		305
Benefits paid		(720)		(720)
Benefit obligation at end of year		21,646		20,972
Underfunded status of plan	$	(3,035)	$	(134)

The projected and accumulated benefit obligations were equivalent at March 31 for both 2020 and 2019.

Amounts recognized in accumulated other comprehensive loss consist of:



	Year Ended
	Fiscal March
	2020		2019
	(Dollars in thousands)
Unamortized transition obligation	$	—	$	—
Unamortized prior service cost		—		—
Unamortized net loss		9,174		6,057
Total	$	9,174	$	6,057

Changes in plan assets and benefit obligations recognized in other comprehensive loss consist of:



	Year Ended
	Fiscal March
	2020		2019
	(Dollars in thousands)
Net transition obligation	$	—	$	—
Prior service cost		—		—
Net actuarial loss		(3,117)		(382)
Total	$	(3,117)	$	(382)

Pension income included the following components:



	Year Ended Fiscal March
	2020		2019		2018
	(Dollars in thousands)
Interest cost on projected benefit obligation	$	752	$	781	$	796
Expected return on plan assets		(1,423)		(1,409)		(1,416)
Amortization of unrecognized actuarial loss		455		403		336
Net pension income	$	(216)	$	(225)	$	(284)

The weighted-average assumptions used to determine benefit obligations are as follows:

The weighted-average assumptions used to determine net periodic pension costs are as follows:



	Year Ended Fiscal March
	2020		2019		2018
Discount rate	3.72	%	3.89	%	3.98	%
Expected long-term return on assets	7.00	%	7.00	%	7.00	%

The expected long-term rate of return on plan assets is established based upon assumptions related to historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio.

The investment strategy of the plan is to conservatively manage the assets in order to meet the plan’s long-term obligations while maintaining sufficient liquidity to pay current benefits. This is achieved by holding equity investments while investing a portion of assets in long duration bonds to match the long-term nature of the liabilities. Monro’s general target allocation for the plan is approximately 40% fixed income and 60% equity securities.

Monro’s asset allocations, by asset category, for the years ended March are as follows:



	March 28,		March 30,
	2020		2019
Cash and cash equivalents	4.1	%	1.8	%
Fixed income	37.9	%	38.5	%
Equity securities	58.0	%	59.7	%
Total	100.0	%	100.0	%

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following tables provide fair value measurement information for Monro’s major categories of defined benefit plan assets at March 28, 2020 and March 30, 2019, respectively:



	Fair Value Measurements at March 28, 2020 Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Equity securities:
U.S. companies	$	7,666	$	7,383	$	283
International companies		3,137		3,137
Fixed income:
U.S. corporate bonds		6,686				6,686
International bonds		361				361
Cash equivalents		761				761
Total	$	18,611	$	10,520	$	8,091



	Fair Value Measurements at March 30, 2019 Using
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
	(Dollars in thousands)
Equity securities:
U.S. companies	$	9,179	$	8,825	$	354
International companies		3,256		3,256
Fixed income:
U.S. corporate bonds		7,888				7,888
International bonds		138				138
Cash equivalents		377				377
Total	$	20,838	$	12,081	$	8,757

There are no required or expected contributions in fiscal 2021 to the plan.

The following pension benefit payments are expected to be paid:



	Year Ended
	Fiscal March
	(Dollars in thousands)
2021	$	1,072
2022		1,122
2023		1,154
2024		1,158
2025		1,198
2026 - 2030		6,384

We have a 401(k)/Profit Sharing Plan that covers full-time employees who meet the age and service requirements of the plan. We make matching contributions consistent with the provisions of the plan. Charges to expense for our matching contributions for fiscal 2020, 2019 and 2018 amounted to approximately $1.7 million, $1.4 million and $1.0 million, respectively. We may also make annual profit sharing contributions to the plan at the discretion of Monro’s Compensation Committee.

We have a deferred compensation plan (the “Deferred Compensation Plan”) to provide an opportunity for additional tax-deferred savings to a select group of management or highly compensated employees. The Deferred Compensation Plan permits participants to defer all or any portion of the compensation that would otherwise be payable to them for the calendar year. In addition, Monro will credit to the participants’ accounts such amounts as would have been contributed to Monro’s 401(k)/Profit Sharing Plan but for the limitations that are imposed under the Internal Revenue Code based upon the participants’ status as highly compensated employees. We may also make such additional discretionary allocations as are determined by the Compensation Committee. The Deferred Compensation Plan is an unfunded arrangement and the participants or their beneficiaries have an unsecured claim against the general assets of Monro to the extent of their Deferred Compensation Plan benefits. We maintain accounts to reflect the amounts owed to each participant. At least annually, the accounts are credited with earnings or losses calculated on the basis of an interest rate or other formula as determined by Monro’s Compensation Committee. The total liability recorded in our financial statements at March 28, 2020 and March 30, 2019 related to the Deferred Compensation Plan was approximately $2.2 million and $2.0 million, respectively.

Year Ended

Fiscal March

Discount rate