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Retirement Plans | 12 Months Ended
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Jan. 31, 2023
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 as of January 31, 2023 and 2022. 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, equity investments, and cash equivalents, 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 $0.7 million and $3.5 million at January 31, 2023 and 2022, respectively. Death benefits payable under life insurance policies held by the Plan were approximately $1.6 million and $8.8 million at January 31, 2023 and 2022, respectively. Equity investments held in the Rabbi Trust to secure retirement benefits were $4.7 million as of January 31, 2023. Assets held in the Rabbi Trust were included in the other non-current asset of the accompanying consolidated balance sheets. 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 plan settlements. 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 rates for the Employee Plan and the VIP Plan were 4.85% and 3.20% at January 31, 2023 and 2022, respectively. Because the Company’s future benefit accruals for both benefit plans were frozen in 2003, the compensation increase assumption had no impact on pension expense, accumulated benefit obligation or projected benefit obligation for the years ended January 31, 2023 or 2022. 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, 2023, approximately 28% 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, 2023 and 2022, the amount of the plan assets invested in bond or short-term investment funds was 29% and 13%, 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 $0.6 million in fiscal 2023 and $0.7 million in fiscal 2022. Contributions during fiscal 2024 will depend upon actual investment results and benefit payments but are anticipated to be approximately $0.5 million. At January 31, 2023, accumulated other comprehensive loss of approximately $2.4 million, net of tax, is attributable to the pension plans. The following tables set forth (in thousands) the combined funded status of the Company’s pension plans at January 31, 2023 and 2022:
| Combined Employee Retirement Plans |
1/31/2023 |  | 1/31/2022 |
Change in Benefit Obligation
Benefit obligation at beginning of year | $ | 40,586 |  |  | $ | 44,178 |  |
Service cost | — |  |  | — |  |
Interest cost | 1,295 |  |  | 1,113 |  |
Participant contributions | — |  |  | — |  |
Amendments | — |  |  | — |  |
Actuarial losses (gains) | (6,892) |  |  | (2,373) |  |
Plan settlement | — |  |  | — |  |
Benefits paid | (2,004) |  |  | (2,332) |  |
Benefit obligation at end of year | 32,985 |  |  | 40,586 |  |
Change in Plan Assets |  |  |  |
Fair value at beginning of year | 26,429 |  |  | 23,972 |  |
Actual return on plan assets | (1,428) |  |  | 4,099 |  |
Company contributions | 631 |  |  | 690 |  |
Settlements | — |  |  | — |  |
Benefits paid | (2,004) |  |  | (2,332) |  |
Fair value at end of year | 23,628 |  |  | 26,429 |  |
Funded Status |  |  |  |
Unfunded status of the plans | $ | (9,357) |  |  | $ | (14,157) |  |
Amounts Recognized in Statement of Financial Position |  |  |  |
Current liabilities | $ | (324) |  |  | $ | (344) |  |
Non-current liabilities | (9,033) |  |  | (13,813) |  |
Accrued benefit cost | $ | (9,357) |  |  | $ | (14,157) |  |
Amounts Recognized in Statement of Financial Position and Operations |  |  |  |
Accrued benefit liability | $ | (9,357) |  |  | $ | (14,157) |  |
Accumulated other compensation loss | 1,910 |  |  | 6,889 |  |
Net amount recognized | $ | (7,447) |  |  | $ | (7,268) |  |
Items not yet Recognized as a Component of Net Periodic Pension Expense, included in AOCI |  |  |  |
Unrecognized net actuarial loss | $ | 1,910 |  |  | $ | 6,889 |  |
Unamortized prior service costs | — |  |  | — |  |
Net initial asset recognition | — |  |  | — |  |
| $ | 1,910 |  |  | $ | 6,889 |  |
| Combined Employee Retirement Plans |
1/31/2023 |  | 1/31/2022 |
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Net loss | $ | (4,472) |  |  | $ | (5,782) |  |
Prior service cost | — |  |  | — |  |
Amortization of loss | (507) |  |  | (1,774) |  |
Amortization of prior service cost (credit) | — |  |  | — |  |
Amortization of initial asset | — |  |  | — |  |
Total recognized in other comprehensive loss | $ | (4,979) |  |  | $ | (7,556) |  |
Items to be Recognized as a Component of Periodic Pension Cost for next fiscal year |  |  |  |
Prior service cost | $ | — |  |  | $ | — |  |
Net actuarial loss | 6 |  |  | 536 |  |
| $ | 6 |  |  | $ | 536 |  |
Supplemental Data |  |  |  |
Projected benefit obligation | $ | 32,985 |  |  | $ | 40,586 |  |
Accumulated benefit obligation | $ | 32,985 |  |  | $ | 40,586 |  |
Fair value of plan assets | $ | 23,628 |  |  | $ | 26,429 |  |
Components of Net Cost |  |  |  |
Service cost | $ | — |  |  | $ | — |  |
Interest cost | 1,295 |  |  | 1,113 |  |
Expected return on plan assets | (1,000) |  |  | (690) |  |
Amortization of transition amount | — |  |  | — |  |
Recognized (gain) loss due to settlement | — |  |  | — |  |
Amortization of prior service cost | — |  |  | — |  |
Recognized net actuarial loss | 521 |  |  | 1,774 |  |
Benefit cost | $ | 816 |  |  | $ | 2,197 |  |
Estimated Future Benefit Payments |  |  |  |
FYE 01-31-2024 | $ | 6,234 |  |  |  |
FYE 01-31-2025 | 3,272 |  |  |  |
FYE 01-31-2026 | 2,581 |  |  |  |
FYE 01-31-2027 | 2,449 |  |  |  |
FYE 01-31-2028 | 2,397 |  |  |  |
FYE 01-31-2029 to 2033 | 10,289 |  |  |  |
Total | $ | 27,222 |  |  |  |
Weighted Average Assumptions to Determine Benefit Obligations at Year-End |  |  |  |
Discount rate | 4.85% |  | 3.20% |
Rate of compensation increase | N/A |  | N/A |
Weighted Average Assumptions to Determine Net Periodic Pension Cost |  |  |  |
Discount rate | 3.20% |  | 2.75% - 2.80% |
Expected return on plan assets | 6.00% |  | 6.00% |
Rate of compensation increase | N/A |  | N/A |
The Employee Plan held no Level 2 or 3 investments at January 31, 2023 and 2022. The following table sets for the fair value of the Level 1 investments for the Employee Plan as of January 31, 2023 and 2022 (in thousands): Fair Value Measurements of Plan Assets Employee Plan
| 1/31/2023 |  | 1/31/2022
Level 1 Measurement |  |  |
Common Stock | $ | 9,389 |  |  | $ | 14,094 |
Principal Money Market | 233 |  |  | 523 |
Federated Herme Gove Oblig | 722 |  |  | — |
PNC Govt Money Fund | — |  |  | 204 |
Vanguard INTM Term Investment | 930 |  |  | 394 |
Vanguard LT Investment | 2,382 |  |  | 983 |
Ishares Russell 2000 | 718 |  |  | 1,457 |
Ishares Russell MID-CAP | 738 |  |  | 1,958 |
Ishares Emerging Markets | 748 |  |  | 1,091 |
Ishares MCSI RAFE | 1,857 |  |  | 1,713 |
Ishares S&P Index | 483 |  |  | 781 |
Vanguard INTM Term Treasury | 2,352 |  |  | 404 |
Vanguard LT Treasury | 921 |  |  | 1,036 |
Total Level 1 Investments | $ | 21,473 |  |  | $ | 24,638 |
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 $2.2 million and $1.9 million as of January 31, 2023 and 2022, 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. The plan continues to include Virco stock as one of the investment options. At January 31, 2023 and 2022, the plan held 1,265,586 shares and 1,077,995 shares of the Company’s common stock, respectively. Effective January 1, 2021, the Company initiated an employer match. For the fiscal years ended January 31, 2023 and 2022, the compensation costs incurred for employer match was $1.4 million and $0.9 million, 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 $1.8 million. Cash surrender values of these policies, which are included in other assets in the accompanying consolidated balance sheets, were $1.5 million and $1.4 million at January 31, 2023 and 2022, respectively. Death benefits payable under the policies were approximately $3.0 million at January 31, 2023 and 2022, 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 securing assets held in the rabbi trust were included in the other assets of the accompanying consolidated balance sheets. The following sets forth the Company's change in death benefits payable during the years ended January 31, 2023 and 2022 (in thousands):
| 1/31/2023 |  | 1/31/2022
Liability beginning of year | $ | 1,616 |  |  | $ | 2,034 |
Accretion expense | 27 |  |  | 60 |
Death benefits paid | — |  |  | (478) |
Liability end of year | $ | 1,643 |  |  | $ | 1,616 |

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