Employee Benefits

12 Months Ended

Apr. 25, 2020

Employee Retirement and Welfare Plans

The table below summarizes the total costs associated with our employee retirement and welfare plans.



	Fiscal Year Ended
	(52 weeks)		(52 weeks)		(52 weeks)
(Amounts in thousands)	4/25/20		4/27/19		4/28/18
401(k) Retirement Plan	$	9,380	$	9,128	$	7,093
Performance Compensation Retirement Plan	1,115		3,084		1,347
Deferred Compensation Plan	719		284		360
Non-Qualified Defined Benefit Retirement Plan (1)	796		805		845
Net Periodic Pension Cost (2)	—		35,998		4,205


(1)	Primarily related to interest cost.


(2)	Refer below for breakdown of net periodic pension cost.

401(k) Retirement Plan. Voluntary 401(k) retirement plans are offered to eligible employees within certain U.S. operating units. For most operating units, we make matching contributions based on specific formulas. On January 1, 2019, we increased our matching contributions for eligible employees which resulted in an additional expense of $1.7 million in fiscal 2019. As a result of the increased matching contributions, supplemental contributions awarded to eligible employees based on achievement of operating performance targets during fiscal 2019 and 2018 were discontinued. Additionally, on March 29, 2020, we announced a temporary freeze on 401(k) matching contributions as part of our COVID-19 action plan.

Performance Compensation Retirement Plan. A performance compensation retirement plan ("PCRP") is maintained for eligible highly compensated employees. The company contributions to the plan are based on achievement of performance targets. Employees vest in these contributions if they achieve certain age and years of service with the Company, and can elect to receive benefit payments over a period ranging between five to twenty years after they leave the Company. Further information related to the plan is as follows:



(Amounts in thousands)	4/25/20		4/27/19
Short-term obligation included in other current liabilities	$	638	$	530
Long-term obligation included in other long-term liabilities	12,492		12,023

Executive Deferred Compensation Plan. We maintain an executive deferred compensation plan for eligible highly compensated employees. An element of this plan allows contributions for eligible highly compensated employees. Further information related to the plan is as follows:



(Amounts in thousands)	4/25/20		4/27/19
Plan obligation included in other long-term liabilities	$	22,282	$	23,854
Cash surrender value on life insurance contracts included in other long-term assets (1)	34,562		34,308
Mutual funds held by plan included in other current assets (2)	76		189


(1)	Life insurance contracts are related to the Executive Deferred Compensation Plan and the PCRP.


(2)	Mutual funds are considered trading securities.

Non-Qualified Defined Benefit Retirement Plan. We maintain a non-qualified defined benefit retirement plan for certain former salaried employees. We hold available-for-sale marketable securities to fund future obligations of this plan in a Rabbi trust (refer to Note 8, Investments, and Note 20, Fair Value Measurements, for additional information on these investments). We are not required to fund the non-qualified defined benefit retirement plan in fiscal 2021; however, we have the discretion to make contributions to the Rabbi trust. Further information related to the plan is as follows:



(Amounts in thousands)	4/25/20			4/27/19
Plan obligation included in long-term liabilities	$	16,846		$	15,549
Discount rate used to determine obligation	2.8		%	3.9		%



	Fiscal Year Ended
	(52 weeks)		(52 weeks)		(52 weeks)
(Amounts in thousands)	4/25/20		4/27/19		4/28/18
Actuarial loss recognized in AOCI	$	218	$	190	$	222
Benefit payments (1)	1,091		1,091		1,091


(1)	Benefit payments are scheduled to be between $1.0 million and $1.1 million annually for the next 10 years.

Defined Benefit Pension Plan. During the fourth quarter of fiscal 2019, we terminated our defined benefit pension plan for eligible factory hourly employees in our La-Z-Boy operating unit. In connection with the plan termination, we settled all future obligations under the plan through a combination of lump-sum payments to eligible participants who elected to receive them, and the transfer of any remaining benefit obligations under the plan to a highly rated insurance company.

As a result of these actions, we recognized a non-cash pre-tax pension termination charge of $32.7 million during the fourth quarter of fiscal 2019. During the second quarter of fiscal 2020, we received a pre-tax refund of $1.9 million from the insurance company, representing an overpayment of the expected benefit obligations that were settled during the fourth quarter of fiscal 2019. Both the initial charge and the refund were recorded as pension termination refund (charge) in our consolidated statement of income.

There were no net periodic pension costs associated with the terminated pension plan in the fiscal year ended April 25, 2020. For the fiscal years ended April 27, 2019 and April 28, 2018, net periodic pension costs were as follows:



	Fiscal Year Ended
	(52 weeks)			(52 weeks)
(Amounts in thousands)	4/27/19			4/28/18
Service cost	$	851		$	1,316
Interest cost	4,464			4,587
Expected return on plan assets	(4,544		)	(4,818		)
Net amortization	2,556			3,120
Pension termination charge	32,671			—
Net periodic pension cost	$	35,998		$	4,205

The components of net periodic pension cost other than the service cost were included in other expense, net in our consolidated statement of income. Service cost was recorded in cost of sales in our consolidated statement of income.

Employee Vacation Policy Changes

We enacted changes to our employee vacation policies that became effective on January 1, 2019. Our new vacation policies enhanced the amount of vacation time earned by our employees. Additionally, under these vacation policies, our salaried and office hourly employees now accrue vacation in the current calendar year for use in the current calendar year, and any vacation time earned but not used will be forfeited at the end of each calendar year. These changes reduced our salaried and office hourly employee vacation liability and resulted in a one-time non-cash gain of $5.1 million in our consolidated statement of income during fiscal 2019. Of the total $5.1 million gain recorded, $1.3 million was recorded in cost of sales with the remainder recorded in SG&A expense. Our factory hourly employee vacation policies were only changed to enhance the amount of vacation time earned by our employees, with no change to accrual methodologies, and resulted in $1.1 million incremental expense in fiscal 2019, recorded in cost of sales.