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Employee Retirement and Profit Sharing Plans
 12 Months Ended
Mar. 30, 2013
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 attainment of 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 Federal law and regulations. The measurement date used to determine the pension plan measurements disclosed herein is March 31 for both 2013 and 2012.

 

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 30, 2013 and March 31, 2012, respectively.

 

 

 

 

The funded status of the plan is set forth below:

 

  Fiscal March
  2013  2012
   (Dollars in thousands)
Change in Plan Assets:     
Fair value of plan assets at beginning of year$ 17,344 $ 17,274
Actual return on plan assets  1,496   612
Employer contribution 0  0
Benefits paid  (616)   (542)
Fair value of plan assets at end of year  18,224   17,344
      
Change in Projected Benefit Obligation:     
Benefit obligation at beginning of year  17,500   14,551
Interest cost  793   809
Actuarial loss  1,608   2,682
Benefits paid   (616)   (542)
Benefit obligation at end of year  19,285   17,500
Funded status of plan$ (1,061) $ (156)

The projected and accumulated benefit obligations were equivalent at March 31, 2012 and March 30, 2013.

 

Amounts recognized in accumulated other comprehensive loss consist of:

 

  Year Ended
  Fiscal March
  2013  2012
  (Dollars in thousands)
Unamortized transition obligation$0 $0
Unamortized prior service cost 0  0
Unamortized net loss 6,520  5,733
Total$ 6,520 $5,733

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

 

  Year Ended
 Fiscal March
  2013  2012
  (Dollars in thousands)
      
Net transition obligation$0 $0
Prior service cost 0  0
Net actuarial loss   (787)   (3,188)
Total$ (787) $ (3,188)

Pension expense (income) included the following components:

 

  Year Ended Fiscal March
  2013  2012  2011
  (Dollars in thousands)
         
Interest cost on projected benefit obligation$793 $809 $814
Expected return on plan assets (1,192)  (1,189)  (1,094)
Amortization of unrecognized actuarial loss 517  71  201
Net pension expense (income)$118 $(309) $(79)

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

 

 Year Ended
Fiscal March
 20132012
   
Discount rate4.08%4.49%

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

 

 Year Ended Fiscal March
 201320122011
    
Discount rate4.49%5.75%6.14%
Expected long-term return on assets7.00%7.00%7.25%

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 40% fixed income and 60% equity securities.

 

Monro's asset allocations, by asset category, are as follows at the end of each year:

 

 March 30, March 31,
 2013 2012
    
Cash and cash equivalents1.6% 3.2%
Fixed income39.5% 36.7%
Equity securities58.9% 60.1%
Total100.0% 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 table provides fair value measurement information for Monro's major categories of defined benefit plan assets at March 30, 2013 and March 31, 2012, respectively:

 

   Fair Value Measurements at March 30, 2013 Using
  Total  Quoted Prices in Active Markets for Identical Assets  Significant Other Observable Inputs Significant Unobservable Inputs
   (Level 1)  (Level 2) (Level 3)
  (Dollars in thousands)
Equity securities:          
U.S. companies$6,465 $6,465     
International companies 3,590  3,590     
Fixed income:          
U.S. corporate bonds 6,840    $6,840  
International bonds 364     364  
Cash equivalents 288     288  
Commodities 677  677     
Total$18,224 $10,732 $7,492  
           
  Fair Value Measurements at March 31, 2012 Using
     Quoted Prices in Active Markets for Identical Assets  Significant Other Observable Inputs Significant Unobservable Inputs
 Total  (Level 1)  (Level 2) (Level 3)
 (Dollars in thousands)
Equity securities:          
U.S. companies$7,450 $7,450     
International companies 2,972  2,972     
Fixed income:          
U.S. corporate bonds 6,058    $6,058  
International bonds 309     309  
Cash equivalents 555     555  
Total$17,344 $10,422 $6,922  

There are no required or expected contributions in fiscal 2014 to the plan.

The following pension benefit payments are expected to be paid:

 

   Year Ended
  Fiscal March
   (Dollars in thousands)
    
2014 $658
2015  672
2016  712
2017  748
2018  773
2019 - 2023  4,691

We have a 401(k)/Profit Sharing Plan that covers full-time employees who meet the age and service requirements of the plan. The 401(k) salary deferral option was added to the plan during fiscal 2000. The first employee deferral occurred in March 2000. We make matching contributions consistent with the provisions of the plan. Charges to expense for our matching contributions for fiscal 2013, 2012 and 2011 amounted to approximately $615,000, $631,000 and $517,000, 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 30, 2013 and March 31, 2012 related to the Deferred Compensation Plan was $1,179,000 and $1,085,000, respectively.

 

Monro's management bonus plan provides for the payment of annual cash bonus awards to participating employees, as selected by our Board of Directors, based primarily on Monro's attaining pre-tax income targets established by our Board of Directors. During the year ended March 30, 2013, we recorded a benefit of $66,000 related to the management bonus plan due to an over estimate of expense in fiscal 2012, as well as our failure to meet pre-tax earnings targets. During the years ended March 31, 2012 and March 26, 2011, we recorded charges to expense of $1,730,000 and $3,338,000, respectively.