Defined Benefit and Defined Contribution Plans

12 Months Ended

Mar. 26, 2022

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 met eligibility requirements. This plan is closed to new participants. Eligibility and the level of benefits under the plan were 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 2022 and 2021.

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 26, 2022 and March 27, 2021, respectively.

Underfunded Status
(thousands)		2022		2021
Projected benefit obligations	$	20,826	$	22,096
Fair value of plan assets		20,464		21,666
Underfunded status	$	(362)	$	(430)

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 our fiscal year ending March 25, 2023 (“fiscal 2023”) 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
2023	$	1,107
2024		1,125
2025		1,154
2026		1,200
2027		1,234
2028 - 2032		6,464

Cost of Plans

Net Pension Benefits Expense (Income)
(thousands)		2022		2021		2020
Interest cost on projected benefit obligation	$	638	$	692	$	752
Expected return on plan assets		(1,041)		(1,162)		(1,423)
Amortization of unrecognized actuarial loss		501		892		455
Total	$	98	$	422	$	(216)

Assumptions

Benefit Obligation Weighted Average Assumption	2022		2021
Discount rate	3.58	%	3.01	%

Net Periodic Benefit Expense Weighted Average Assumptions	2022		2021		2020
Discount rate	3.01	%	3.34	%	3.72	%
Expected long-term rate of return on plan assets	5.00	%	6.50	%	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)		2022		2021
Benefit obligation at beginning of year	$	22,096	$	21,646
Interest cost		638		692
Actuarial (gain) loss		(1,211)		391
Benefits paid		(697)		(633)
Benefit obligation at end of year (a)	$	20,826	$	22,096

(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)		2022		2021
Fair value of plan assets at beginning of year	$	21,666	$	18,611
Actual (loss) return on plan assets		(505)		3,688
Benefits paid		(697)		(633)
Fair value of plan assets at end of year	$	20,464	$	21,666

Our asset allocation strategy is to conservatively manage the assets 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		2022		2021
Cash and cash equivalents			0.8	%	53.3	%
Fixed income	50.0	%	62.6	%	24.7	%
Equity securities	50.0	%	36.6	%	22.0	%
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 26, 2022		March 27, 2021
Cash equivalents	Level 1	$	158	$	11,542
Equity securities:
U.S. companies	Level 1		5,421		3,372
International companies	Level 1		2,063		1,391
Fixed income:
U.S. corporate bonds	Level 2		12,822		5,361
Total plan assets		$	20,464	$	21,666

(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)		2022		2021
Unamortized net actuarial loss	$	5,981	$	6,147
Amounts in Accumulated Other Comprehensive Loss (a)	$	5,981	$	6,147

(a) $4,494 and $4,619, net of tax, at the end of 2022 and 2021, respectively.

Amounts included in Comprehensive Income

Amounts in Other Comprehensive Income (Loss)
(thousands)		2022		2021		2020
Net actuarial income (loss)	$	166	$	3,027	$	(3,117)
Amounts in Other Comprehensive Income (Loss) (a)	$	166	$	3,027	$	(3,117)

(a) $125, $2,270, and ($2,353), net of tax, during 2022, 2021, and 2020, 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 $2.0 million, $1.6 million, and $1.7 million for 2022, 2021, and 2020, 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 an executive deferred compensation plan (the “Executive Deferred Compensation Plan”) for a broad management group whose participation in our 401(k) plan is limited by statute or regulation. The Executive 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 Executive 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 Executive 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 based on an interest rate or other formula as determined by Monro’s

Compensation Committee. The total liability recorded in our financial statements at March 26, 2022 and March 27, 2021 related to the Executive Deferred Compensation Plan was approximately $1.8 million and $2.1 million, respectively.