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Retirement Plans | 12 Months Ended
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Jan. 31, 2020
Retirement Benefits [Abstract] |
Retirement Plans | Retirement Plans Pension Plans The Company maintains two defined benefit pension plans, the Virco Employees Retirement Plan (“Employee Plan”), and the Virco Important Performers Retirement Plan (“VIP Plan”). The annual measurement date for both plans is January 31. The Company and its subsidiaries cover all employees hired prior to December 31, 2003 under the Employee Plan, which is a qualified noncontributory defined benefit retirement plan. Benefits under the Employee Plan are based on years of service and career average earnings. Benefit accruals under the Employee Plan were frozen effective December 31, 2003. All benefits were fully vested on January 31, 2020 and 2019. The Company also provides a supplementary retirement plan for certain key employees, the VIP Plan. The VIP Plan provides a benefit up to 50% of average compensation for the last five years in the VIP Plan offset by benefits earned under the Employee Plan. Benefit accruals under the VIP Plan were frozen effective December 31, 2003. Substantially all assets, consisting of life insurance contracts, securing the VIP Plan are held in a rabbi trust. The cash surrender values of the life insurance policies are included in other assets and money market funds in the accompanying consolidated balance sheets. The cash surrender values of the life insurance policies securing the VIP Plan were $3,384,000 and $3,469,000 at January 31, 2020 and 2019, respectively. Death benefits payable under life insurance policies held by the Plan were approximately $8,919,000 and $9,102,000 at January 31, 2020 and 2019, respectively. Accounting policy regarding pensions requires management to make complex and subjective estimates and assumptions relating to amounts which are inherently uncertain. Three primary economic assumptions influence the reported values of plan liabilities and pension costs. The Company takes the following factors into consideration: discount rate, assumed rate of return and rate of increase in compensation. The discount rate represents an estimate of the rate of return on a portfolio of high-quality, fixed-income securities that would provide cash flows that match the expected benefit payment stream from the plans. When setting the discount rate, the Company utilizes a spot-rate yield curve developed from high-quality bonds currently available which reflects changes in rates that have occurred over the past year. This assumption is sensitive to movements in market rates that have occurred since the preceding valuation date, and therefore, may change from year to year. Discount rate ranges for the Employee Plan and the VIP Plan 3.0% - 3.05% and 3.75% - 4.0% at January 31, 2020 and 2019, respectively. Because the Company’s future benefit accruals for both benefit plans were frozen in 2013, the compensation increase assumption had no impact on pension expense, accumulated benefit obligation or projected benefit obligation for the period ended January 31, 2020 or 2019. The assumed rate of return on plan assets represents an estimate of long-term returns available to investors who hold a mixture of stocks, bonds and cash equivalent securities. When setting its expected return on plan asset assumptions, the Company considers long-term rates of return on various asset classes (both historical and forecasted, using data collected from various sources generally regarded as authoritative) in the context of expected long-term average asset allocations for its defined benefit pension plan. The Company maintains a trust for and funds the pension obligations for the Employee Plan. The Board of Directors appoints a Retirement Plan Committee that establishes a policy for investment and funding strategies. Approximately 50% of the trust assets are managed by investment advisors and held in common trust funds with the balance managed by the Retirement Plan Committee. The Retirement Plan Committee has established target asset allocations for its investment advisors, who invest the trust assets in a variety of institutional collective trust funds. The Company’s investment advisors have developed a funding strategy that moves fund asset allocation from equity and other investments to fixed income instruments designed to mirror the changes in discount rates as the Plan becomes more fully funded. At January 31, 2020, approximately 12% of the trust assets were held in these investments. The Retirement Plan Committee receives quarterly reports addressing investment returns, funded status of the plan and progress on the glidepath to fully funded status from the investment advisors and meets periodically with them to discuss investment performance. At January 31, 2020 and 2019, the amount of the plan assets invested in bond or short-term investment funds was 16% and 16%, respectively, and the balance of the trust was held in equity funds or other investments. The trust does not hold any Company stock. It is the Company's policy to contribute adequate funds to the trust accounts to cover benefit payments under the VIP Plan and to maintain the funded status of the Employee Plan at a level which is adequate to avoid significant restrictions to the Employee Plan under the Pension Protection Act of 2006. Contributions to the Qualified Plan Trust and benefit payments under the VIP Plan totaled $954,000 in fiscal 2020 and $1,080,000 in fiscal 2019. Contributions during fiscal 2021 will depend upon actual investment results and benefit payments but are anticipated to be approximately $0.6 million. At January 31, 2020, accumulated other comprehensive loss of approximately $14.3 million, net of tax, is attributable to the pension plans. The Company does not anticipate making any significant changes to the pension assumptions in the near future. If the Company were to have used different assumptions in the fiscal year ended January 31, 2020, a 1% reduction in investment return would have increased expense by approximately $221,000, a 1% change in the rate of compensation increase would have no impact, and a 1% reduction in the discount rate would have increased expense by $167,000. The following tables set forth (in thousands) the combined funded status of the Company’s pension plans at January 31, 2020 and 2019:
| Combined Employee Retirement Plans |
1/31/2020 |  | 1/31/2019 |
Change in Benefit Obligation
Benefit obligation at beg. of year | $ | 36,299 |  |  | $ | 40,181 |  |
Service cost | — |  |  | — |  |
Interest cost | 1,382 |  |  | 1,459 |  |
Participant contributions | — |  |  | — |  |
Amendments | — |  |  | — |  |
Actuarial losses (gains) | 8,280 |  |  | (2,044 | ) |
Plan settlement | — |  |  | (2,176 | ) |
Benefits paid | (2,669 | ) |  | (1,121 | ) |
Benefit obligation at end of year | $ | 43,292 |  |  | $ | 36,299 |  |
Change in Plan Assets |  |  |  |
Fair value at beg. of year | $ | 23,527 |  |  | $ | 27,259 |  |
Actual return on plan assets | 1,806 |  |  | (1,557 | ) |
Company contributions | 990 |  |  | 1,122 |  |
Settlements | — |  |  | (2,176 | ) |
Benefits paid | (2,669 | ) |  | (1,121 | ) |
Fair value at end of year | $ | 23,654 |  |  | $ | 23,527 |  |
Funded Status |  |  |  |
Unfunded status of the plans | $ | (19,638 | ) |  | $ | (12,772 | ) |
Amounts Recognized in Statement of Financial Position |  |  |  |
Current liabilities | $ | (314 | ) |  | $ | (322 | ) |
Non-current liabilities | (19,324 | ) |  | (12,450 | ) |
Accrued benefit cost | $ | (19,638 | ) |  | $ | (12,772 | ) |
Amounts Recognized in Statement of Financial Position and Operations |  |  |  |
Accrued benefit liability | (19,638 | ) |  | (12,772 | ) |
Accumulated other compensation loss | 15,427 |  |  | 8,319 |  |
Net amount recognized | $ | (4,211 | ) |  | $ | (4,453 | ) |
Items not yet Recognized as a Component of Net Periodic Pension Expense, Included in AOCI |  |  |  |
Unrecognized net actuarial loss | $ | 15,427 |  |  | $ | 8,319 |  |
Unamortized prior service costs | — |  |  | — |  |
Net initial asset recognition | — |  |  | — |  |
| $ | 15,427 |  |  | $ | 8,319 |  |
| Combined Employee Retirement Plans |
1/31/2020 |  | 1/31/2019 |
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Net loss | $ | 7,885 |  |  | $ | 1,039 |  |
Prior service cost | — |  |  | — |  |
Amortization of loss | (776 | ) |  | (1,333 | ) |
Amortization of prior service cost (credit) | — |  |  | — |  |
Amortization of initial asset | — |  |  | — |  |
Total recognized in other comprehensive income (loss) | $ | 7,109 |  |  | $ | (294 | ) |
Items to be Recognized as a Component of Periodic Pension Cost for next fiscal year |  |  |  |
Prior service cost | $ | — |  |  | $ | — |  |
Net actuarial loss | 1,872 |  |  | 706 |  |
| $ | 1,872 |  |  | $ | 706 |  |
Supplemental Data |  |  |  |
Projected benefit obligation | $ | 43,292 |  |  | $ | 36,299 |  |
Accumulated benefit obligation | 43,292 |  |  | 36,299 |  |
Fair value of plan assets | 23,654 |  |  | 23,527 |  |
Components of Net Cost |  |  |  |
Service cost | $ | — |  |  | $ | — |  |
Interest cost | 1,382 |  |  | 1,459 |  |
Expected return on plan assets | (1,432 | ) |  | (1,535 | ) |
Amortization of transition amount | — |  |  | — |  |
Recognized (gain) loss due to settlement | — |  |  | — |  |
Amortization of prior service cost | — |  |  | — |  |
Recognized net actuarial loss | 776 |  |  | 1,333 |  |
Benefit cost | $ | 726 |  |  | $ | 1,257 |  |
Estimated Future Benefit Payments |  |  |  |
FYE 01-31-2021 | $ | 6,114 |  |  |  |
FYE 01-31-2022 | 2,992 |  |  |  |
FYE 01-31-2023 | 2,641 |  |  |  |
FYE 01-31-2024 | 2,549 |  |  |  |
FYE 01-31-2025 | 3,067 |  |  |  |
FYE 01-31-2026 to 2030 | 11,960 |  |  |  |
Total | $ | 29,323 |  |  |  |
Weighted Average Assumptions to Determine Benefit Obligations at Year-End |  |  |  |
Discount rate | 3.00% - 3.05% |  | 3.75% - 4.0% |
Rate of compensation increase | N/A |  | N/A |
Weighted Average Assumptions to Determine Net Periodic Pension Cost |  |  |  |
Discount rate | 4.10% |  | 4.25% |
Expected return on plan assets | 6.50% |  | 6.50% |
Rate of compensation increase | N/A |  | N/A |
The Employee Plan held no Level 2 or 3 investments at January 31, 2020 and 2019. The following table sets for the fair value of the Level 1 investments for the Employee Plan as of January 31, 2020 and 2019 (in thousands): Fair Value Measurements of Plan Assets Employee Plan
| 1/31/2020 |  | 1/31/2019
Level 1 Measurement |  |  |
Common Stock | 10,080 |  |  | 9,345 |
Principal Money Market | 799 |  |  | — |
PNC Govt Money Fund | 175 |  |  | 630 |
Vanguard INTM Term Investment | 250 |  |  | 283 |
Vanguard LT Investment | 1,161 |  |  | 1,304 |
Ishares Russell 2000 | 1,560 |  |  | 1,672 |
Ishares Russell MID-CAP | 1,850 |  |  | 1,890 |
Ishares Emerging Markets | 1,103 |  |  | 1,130 |
Ishares MCSI RAFE | 1,577 |  |  | 1,534 |
Ishares S&P Index | 2,252 |  |  | 2,895 |
Vanguard INTM Term Treasury | 250 |  |  | 281 |
Vanguard LT Treasury | 1,183 |  |  | 1,279 |
Total Level 1 Investments | $ | 22,240 |  |  | $ | 22,243 |
In addition to the holdings above, the Employee Plan has a holding in a mutual fund investment, Managed Investment Fund. The mutual fund investment is valued using the net asset value (“NAV”) as a practical expedient and is not required to be categorized in the fair value hierarchy table. The total fair value of this investment was $1,414,000 and $1,284,000 as of January 31, 2020 and January 31, 2019, respectively, and is not included in the table above. In relation to this investment, there is no unfunded commitments and the shares can be redeemed on a daily basis with minimal restrictions. Events that may lead to a restriction to transact with the fund is not considered probable. 401(k) Retirement Plan The Company’s retirement plan, which covers all U.S. employees, allows participants to defer from 1% to 75% of their eligible compensation through a 401(k)-retirement program. Through December 31, 2001, the plan included an employee stock ownership component. The plan continues to include Virco stock as one of the investment options. At January 31, 2020 and 2019, the plan held 706,654 shares and 648,565 shares of the Company’s common stock, respectively. Effective January 1, 2018, the Company initiated an employer match. For the fiscal years ended January 31, 2020 and 2019, the compensation costs incurred for employer match was $765,000 and $738,000, respectively. Life Insurance The Company provided post-retirement life insurance to certain retired employees under the Dual Option Life Insurance Plan (the "Plan"). Effective January 2004, the Company terminated this plan for active employees. The Company has purchased split-dollar life insurance on the lives of the remaining covered participants. Death benefits due to participants are approximately $2,250,000. Cash surrender values of these policies, which are included in other assets in the accompanying consolidated balance sheets, were $1,906,000 and $2,098,000 at January 31, 2020 and 2019, respectively. Death benefits payable under the policies were approximately $3,902,000 and $4,256,000 at January 31, 2020 and 2019, respectively. Death benefits received under the Plan in excess of the benefit obligation will be retained in the trust and used to secure and fund benefits payable under the VIP Pension Plan. The Company maintains a rabbi trust to hold assets related to the Dual Option Life Insurance Plan. All assets securing this plan are held in the rabbi trust. The following sets forth the Company's change in death benefits payable during the years ended January 31, 2020 and 2019:
| 1/31/2020 |  | 1/31/2019
Liability beginning of year | $ | 2,037,000 |  |  | $ | 2,088,000 |
Accretion expense | 49,000 |  |  | 49,000 |
Death benefits paid | (100,000 | ) |  | (100,000 | )
Liability end of year | $ | 1,986,000 |  |  | $ | 2,037,000 |

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