RETIREMENT PLANS

The Company has a qualified defined contribution retirement plan (the “401(k) Plan”) under which eligible employees of the Company and its participating subsidiaries may make Elective Deferral Contributions up to the limitations set forth in Section 402(g) of the Internal Revenue Code. The Company generally makes a 25% or 50% Employer Matching Contribution, as determined by the Board of Directors, based on a participant’s Elective Deferral Contribution up to 6% of the participant’s Compensation for the Elective Deferral Contribution period. The Employer Matching Contribution may be contributed to the 401(k) Plan in the form of the Company’s common stock or cash, as determined by the Company. The Company’s match of a portion of a participant’s contribution is invested in Company common stock and is based on the fair value of the shares as of the date of contribution. The 401(k) Plan also provides that the Company may contribute to the 401(k) Plan additional amounts in its common stock or cash at the discretion of the Board of Directors. Employee contributions cannot be invested in Company common stock.

Participants receive 100% vesting of employee contributions and cash dividends received on Company common stock. Vesting in Company contributions is based on a participant’s number of years of vesting service. Contributions to the 401(k) Plan charged to income in fiscal 2013 and fiscal 2012 totaled $3.2 million and $3.0 million, respectively, and were made through the issuance of new shares of Company common stock and the use of forfeited shares within the 401(k) Plan. Contributions to the 401(k) Plan charged to income in fiscal 2011 was less than $.1 million and was made with the use of forfeited shares within the 401(k) Plan.

In connection with the acquisition of Reinhold (see Note 2, Acquisitions), the Company assumed Reinhold's frozen qualified defined benefit pension plan (the "Plan"). The Plan's benefits are based on employee compensation and years of service. However, since the Plan was closed to new participants effective December 31, 2004, the accrued benefit for Plan participants was fixed as of the date of acquisition and therefore the Plan's accumulated benefit obligation is equal to the projected benefit obligation. The acquired projected benefit obligation and plan assets were recorded at fair value as of the acquisition date.

Changes in the Plan's projected benefit obligation and plan assets since the acquisition are as follows (in thousands):



Change in projected benefit obligation:
Acquired projected benefit obligation		$14,539
Actuarial gain	(1,165		)
Interest cost	236
Benefits paid	(397		)
Projected benefit obligation as of October 31, 2013		$13,213

Change in plan assets:
Acquired plan assets		$11,674
Actual return on plan assets	120
Benefits paid	(397		)
Fair value of plan assets as of October 31, 2013		$11,397

Funded status as of October 31, 2013		($1,816	)

The $1.8 million difference between the projected benefit obligation and fair value of plan assets as of October 31, 2013 was included in other long-term liabilities within the Company's Consolidated Balance Sheet. Additionally, the Plan experienced a $1.0 million net actuarial gain during fiscal 2013 that was recognized in other comprehensive income (where it is reported net of $.4 million of tax) and represents the total balance in accumulated other comprehensive income that has yet to be recognized as a component of net periodic pension income as of October 31, 2013. The Company does not expect to recognize any of the amount within accumulated other comprehensive income as of October 31, 2013 as a component of net periodic pension income during fiscal 2014.

Weighted average assumptions used to determine the projected benefit obligation as of October 31, 2013 and net benefit income for the year ended October 31, 2013 are as follows:



	Projected Benefit Obligation		Net Benefit Income
Discount rate	4.79	%	3.99	%
Expected return on plan assets	N/A		6.75	%

The discount rate was determined using the results of a bond yield curve model based on a portfolio of high-quality bonds matching expected Plan benefit payments. The expected return on plan assets was based upon the current and expected target asset allocation and investment return estimates for the Plan's equity and fixed income securities. In establishing this assumption, the Company considers many factors including both the historical rate of return and projected inflation-adjusted real rate of return on the Plan's various asset classes and the expected working lifetime for Plan participants.

Components of net pension income since the acquisition within the Company's fiscal 2013 Statement of Operations are as follows (in thousands):



Expected return on plan assets		$320
Interest cost	236
Net pension income		$84

The Company has not made any contributions to the Plan since the acquisition and anticipates making contributions of $.1 million during fiscal 2014. Estimated future benefit payments to be made during each of the next five fiscal years and in aggregate during the succeeding five fiscal years are as follows (in thousands):



Year ending October 31,
2014		$964
2015	937
2016	919
2017	905
2018	873
2019-2023	4,313

The following table sets forth by level within the fair value hierarchy, the fair value of the Plan's assets as of October 31, 2013 (in thousands):



	As of October 31, 2013
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Fixed income securities		$9,060		$—		$—		$9,060
Equity securities	2,212		—		—		2,212
Money market funds and cash	125		—		—		125
		$11,397		$—		$—		$11,397

Fixed income securities consist of investments in mutual funds. Equity securities consist of investments in common stocks and mutual funds.

The Plan's actual and targeted asset allocations by asset category as of October 31, 2013 were as follows:



	As of October 31, 2013
	Actual Allocation		Target Allocation
Fixed income securities	80	%	80	%
Equity securities	19	%	20	%
Money market funds and cash	1	%	—	%
Total	100	%	100	%

The Company is currently evaluating the Plan's asset allocation policy which was established prior to the acquisition. The Company's objective is to maximize long-term investment return while maintaining an acceptable level of risk that is accomplished through broad diversification of the Plan's assets.