Defined Benefit and Defined Contribution Plans

12 Months Ended

Mar. 27, 2021

Defined Benefit and Defined Contribution Plans [Abstract]

Defined Benefit and Defined Contribution Plans

Note 14 – Defined Benefit and Defined Contribution Plans

Defined Benefit Plan

We have a defined benefit pension plan covering employees who meet eligibility requirements. This plan is closed to new participants. Eligibility and the level of benefits under the plan are primarily dependent on date of hire, age, length of service and compensation. The funding policy for our 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 2021 and 2020.

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 27, 2021 and March 28, 2020, respectively.

Underfunded Status
(thousands)		2021		2020
Projected benefit obligations	$	22,096	$	21,646
Fair value of plan assets		21,666		18,611
Underfunded status	$	(430)	$	(3,035)

Contributions and Estimated Future Benefit Payment

Our obligations to plan participants can be met over time through a combination of company contributions to these plans and earnings on plan assets. There are no required or expected contributions in fiscal 2022 to the plan. However, depending on investment performance and plan funded status, we may elect to make a contribution.

Estimated Future Benefit Payments
(thousands)		Pension Benefits
2022	$	1,065
2023		1,098
2024		1,114
2025		1,147
2026		1,188
2027 - 2031		6,322

Cost of Plans

Net Pension Benefits Expense (Income)
(thousands)		2021		2020		2019
Interest cost on projected benefit obligation	$	692	$	752	$	781
Expected return on plan assets		(1,162)		(1,423)		(1,409)
Amortization of unrecognized actuarial loss		892		455		403
Total	$	422	$	(216)	$	(225)

Assumptions

Benefit Obligation Weighted Average Assumption	2021		2020
Discount rate	3.01	%	3.34	%

Net Periodic Benefit Expense Weighted Average Assumptions	2021		2020		2019
Discount rate	3.34	%	3.72	%	3.89	%
Expected long-term rate of return on plan assets	6.50	%	7.00	%	7.00	%

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

Benefit Obligation

Change in Projected Benefit Obligation
(thousands)		2021		2020
Benefit obligation at beginning of year	$	21,646	$	20,972
Interest cost		692		752
Actuarial loss		391		642
Benefits paid		(633)		(720)
Benefit obligation at end of year (a)	$	22,096	$	21,646

(a) Accumulated benefit obligation-the present value of benefits earned to date assuming no future salary growth-is materially consistent with the projected benefit obligation in each period presented.

Plan Assets

Change in Plan Assets
(thousands)		2021		2020
Fair value of plan assets at beginning of year	$	18,611	$	20,838
Actual return (loss) on plan assets		3,688		(1,507)
Benefits paid		(633)		(720)
Fair value of plan assets at end of year	$	21,666	$	18,611

Our asset allocation strategy 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.

Asset Category	Current Targeted		Actual Allocation
	Allocation		2021		2020
Cash and cash equivalents			53.3	%	4.1	%
Fixed income	50.0	%	24.7	%	37.9	%
Equity securities	50.0	%	22.0	%	58.0	%
Total	100.0	%	100.0	%	100.0	%

The allocation of assets as of March 2021 was weighted heavier in cash and cash equivalents as the Plan’s assets were transferred from its previous custodian to a new custodian late in 2021 by the Plan’s new asset manager. As such, cash and cash equivalent assets were being reinvested into new assets in accordance with our asset allocation strategy late in fiscal 2021 and into 2022.

Fair Value Measurements		Fair Value at
(thousands)	Pricing Category (a)		March 27, 2021		March 28, 2020
Cash equivalents	Level 1	$	11,542	$	761
Equity securities:
U.S. companies	Level 1		3,372		7,383
U.S. companies	Level 2		—		283
International companies	Level 1		1,391		3,137
Fixed income:
U.S. corporate bonds	Level 2		5,361		6,686
International bonds	Level 2		—		361
Total plan assets		$	21,666	$	18,611

(a) Fair value measurements are reported in one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

Amounts included in Shareholders’ Equity

Amounts in Accumulated Other Comprehensive Loss
(thousands)		2021		2020
Unamortized net actuarial loss	$	6,147	$	9,174
Amounts in Accumulated Other Comprehensive Loss (a)	$	6,147	$	9,174

(a) $4,619 and $6,889, net of tax, at the end of 2021 and 2020, respectively.

Amounts included in Comprehensive Income

Amounts in Other Comprehensive Income (Loss)
(thousands)		2021		2020		2019
Net actuarial income (loss)	$	3,027	$	(3,117)	$	(382)
Amounts in Other Comprehensive Income (Loss) (a)	$	3,027	$	(3,117)	$	(382)

(a) $2,270, ($2,353) and ($288), net of tax, during 2021, 2020 and 2019, respectively.

Defined Contribution Plan

Our employees are eligible to participate in a defined contribution 401(k) plan that covers full-time employees who meet the age and service requirements of the plan. The plan is funded by employee and employer contributions. We match 50 percent of the first 6 percent of employee contributions. Employer contributions totaled approximately $1.6 million, $1.7 million and $1.4 million for 2021, 2020 and 2019, respectively. We may also make annual profit sharing contributions to the plan at the discretion of Monro’s Compensation Committee of the Board of Directors.

In addition, we maintain a deferred compensation plan (the “Deferred Compensation Plan”) for a broad management group whose participation in our 401(k) plan is limited by statute or regulation. 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. We credit to the participants’ accounts such amounts as would have been contributed to Monro’s 401(k) plan but for the limitations that are imposed by statute or regulation. 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 27, 2021 and March 28, 2020 related to the Deferred Compensation Plan was approximately $2.1 million and $2.2 million, respectively.