H. Employee Benefit Plans

401

(k) Plan

We have a profit sharing plan pursuant to Section

401

(k) of the Code, whereby participants

may

contribute a percentage of compensation

not

in excess of the maximum allowed under the Code. All employees with

six

months or longer of continuous employment are eligible to participate in the plan. Under the

401

(k) plan, we match

100%

of the

first

and

50%

of the next

of a participant's compensation contributed to the plan. The total contributions under the plan charged to income from operations totaled

$0.4

million for fiscal

2021

and

$0.3

million for fiscal

2020.

We have a “Cafeteria Plan” pursuant to Section

125

of the Code, whereby health care benefits are provided for active employees through insurance companies. Substantially all active full-time employees are eligible for these benefits. We recognize the cost of providing these benefits by expensing the annual premiums, which are based on benefits paid during the year. The premiums expensed to income from operations for these benefits totaled

$1.2

million for the fiscal year ended

June

30,

2021

and

$1.4

million for the fiscal year ended

June 30, 2020.

Deferred Compensation Plan

Effective

July 16, 2020,

the Board of Directors approved and adopted a Non-Qualified Incentive Plan (the “Incentive Plan”). Pursuant to the Incentive Plan, the Human Resources Committee and the Board of Directors

may

make deferred cash payments or other cash awards (“Awards”) to directors, officers, employees and eligible consultants of NAI, (“Participants”). These Awards are made subject to conditions precedent that must be met before NAI is obligated to make the payment. The purpose of the Incentive Plan is to enhance the long-term stockholder value of NAI by providing the Human Resources Committee and the Board of Directors the ability to make deferred cash payments or other cash awards to encourage Participants to serve NAI or to remain in the service of NAI, or to assist NAI to achieve results determined by the Human Resources Committee or the Board of Directors to be in NAI's best interest.

The Incentive Plan authorizes the Human Resources Committee or the Board of Directors to grant to, and administer, unsecured and deferred cash Awards to Participants and to subject each Award to whatever conditions are determined appropriate by the Human Resources Committee or the Board of Directors. The terms of each Award, including the amount and any conditions that must be met to be entitled to payment of the Award are set forth in an Award Agreement between each Participant and NAI. The Incentive Plan provides the Board of Directors with the discretion to set aside assets to fund the Incentive Plan although that has

not

been done to date.

During the year ended

June 30, 2021,

we granted a total of

$1.5

million in deferred cash awards to members of our Board of Directors and certain key members of our management team. Each deferred cash award provides for

three

equal cash payments to the applicable Participant to be paid on the

one

year,

two

year, and

three

year anniversaries of the date of the grant of such Awards, (the “Award Date”); provided on the date of each payment (the “Payment Date”), the Participant has been since Award Date, and continues to be through the Payment Date, a member of our Board of Directors or an employee of NAI. In the event a Participant ceases to be an employee of NAI or a member of our Board of Directors prior to any Payment Date,

further payments shall be made in connection with the Award.

Defined Benefit Pension Plan

We formerly sponsored a defined benefit pension plan, which provides retirement benefits to employees based generally on years of service and compensation during the last

five

years before retirement. Effective

June

21,

1999,

we adopted an amendment to freeze benefit accruals to the participants. Annually, we contribute an amount

not

less than the minimum funding requirements of the Employee Retirement Income Security Act of

1974

nor more than the maximum tax-deductible amount.

Disclosure of Funded Status

The following table sets forth the defined benefit pension plan's funded status and amount recognized in our consolidated balance sheets at

June

(in thousands):

	2021			2020
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	2,035		$	1,615
Interest cost		39			46
Actuarial loss		(43	)		380
Benefits paid		(211	)		(6	)
Benefit obligation at end of year	$	1,820		$	2,035
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	1,339		$	1,369
Actual return on plan assets		294			(24	)
Employer contributions		7			—
Benefits paid		(211	)		(6	)
Plan expenses		—			—
Fair value of plan assets at end of year	$	1,429		$	1,339
Reconciliation of Funded Status:
Difference between benefit obligation and fair value of plan assets	$	(391	)	$	(696	)
Unrecognized net actuarial loss in accumulated other comprehensive income		626			1,087
Net amount recognized	$	235		$	391

Projected benefit obligation	$	1,820		$	2,035
Accumulated benefit obligation	$	1,820		$	2,035
Fair value of plan assets	$	1,429		$	1,339

The weighted-average discount rate used for determining the projected benefit obligations for the defined benefit pension plan was

2.74%

for the year ended

June 30, 2021

and

2.45%

during the year ended

June

30,

2020.

Net Periodic Benefit Cost

The components included in the defined benefit pension plan's net periodic benefit expense for the fiscal years ended

June

were as follows (in thousands):

	2021			2020
Interest cost	$	39		$	46
Expected return on plan assets		(59	)		(69	)
Recognized actuarial loss		110			50
Settlement loss		73			—
Net periodic benefit expense	$	163		$	27

In the fiscal year ended

June 30, 2021,

we contributed

$7,000

to our defined benefit pension plan. In the fiscal year ended

June 30, 2020,

we did

not

contribute to our defined benefit pension plan.

The following is a summary of changes in plan assets and benefit obligations recognized in other comprehensive income (loss) (in thousands):

	2021			2020
Net (gain) loss	$	(277	)	$	481
Settlement loss		(73	)		—
Amortization of net loss		(110	)		(57	)
Plan expenses		—			—
Total recognized in other comprehensive (loss) income	$	(460	)	$	424
Total recognized in net periodic benefit cost and other comprehensive income	$	(297	)	$	451

The estimated net loss for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is

$34,000.

We do

not

have any transition obligations or prior service costs recorded in accumulated other comprehensive income.

The following benefit payments are expected to be paid (in thousands):

2022	$	787
2023		109
2024		—
2025		323
2026		16
2027-2031		345
Total benefit payments expected to be paid	$	1,580

The weighted-average rates used for the years ended

June

in determining the defined benefit pension plan's net pension costs, were as follows:

	2021			2020
Discount rate		2.74	%		2.45	%
Expected long-term rate of return		6.60	%		6.50	%
Compensation increase rate		N/A			N/A

Our expected rate of return is determined based on a methodology that considers historical returns of multiple classes analyzed to develop a risk free real rate of return and risk premiums for each asset class. The overall rate for each asset class was developed by combining a long-term inflation component, the risk free real rate of return, and the associated risk premium. A weighted average rate was developed based on those overall rates and the target asset allocation of the plan.

Our defined benefit pension plan's weighted average asset allocation at

June

and weighted average target allocation were as follows:

	2021			2020			Target Allocation
Equity securities		62	%		52	%		54	%
Debt securities		25	%		32	%		43	%
Commodities		12	%		12	%		0	%
Cash and money market funds		1	%		4	%		3	%
		100	%		100	%		100	%

The underlying basis of the investment strategy of our defined benefit pension plan is to ensure that pension funds are available to meet the plan's benefit obligations when due. Our investment strategy is a long-term risk controlled approach using diversified investment options with relatively minimal exposure to volatile investment options like derivatives.

The fair values by asset category of our defined benefit pension plan at

June

30,

2021

were as follows (in thousands):

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and money market funds	$	9	$	9	$	—	$	—
Commodities and other	$	172	$	172	$	—	$	—
Equity securities (1)	$	882	$	882	$	—	$	—
Debt securities (2)	$	366	$	366	$	—	$	—
Total	$	1,429	$	1,429	$	—	$	—

(

)

This category is comprised of publicly traded funds, of which

83%

are large-cap funds,

10%

are developed market funds, and

are emerging markets equity funds.

(

)

This category is comprised of publicly traded funds, of which

52%

are U.S. fixed income funds and

48%

are corporate and foreign market fixed income funds.