EMPLOYEE BENEFIT PLANS

Defined Contribution Plan — We have a 401(k) profit sharing plan (the “Savings Plan”) that allows participation for all eligible employees. The Savings Plan allows us to match employee contributions up to 6% of a participant’s pre-tax deferral of eligible compensation into the plan. On February 27, 2009, the Savings Plan was amended, effective January 1, 2009, to make the matching contributions fully discretionary, and matching contributions were temporarily suspended. Effective July 1, 2011, the matching contributions to the Savings Plan were resumed and allowed us the discretion to match between 50% and 100% of the participant’s contributions up to 6% of a participant’s pre-tax deferrals, based on a calculation of the Company’s annual return-on-assets. Contributions expense for the fiscal years ended November 1, 2015, November 2, 2014 and November 3, 2013 was $5.1 million, $4.0 million and $3.9 million, respectively, for matching contributions to the Savings Plan.

Deferred Compensation Plan — We have an Amended and Restated Deferred Compensation Plan (as amended and restated, the “Deferred Compensation Plan”) that allows our officers and key employees to defer up to 80% of their annual salary and up to 90% of their bonus on a pre-tax basis until a specified date in the future, including at or after retirement. Additionally, the Deferred Compensation Plan allows our directors to defer up to 100% of their annual fees and meeting attendance fees until a specified date in the future, including at or after retirement. The Deferred Compensation Plan also permits us to make contributions on behalf of our key employees who are impacted by the federal tax compensation limits under the NCI 401(k) plan, and to receive a restoration matching amount which, under the current NCI 401(k) terms, mirrors our 401(k) profit sharing plan matching levels based on our Company’s performance. The Deferred Compensation Plan provides for us to make discretionary contributions to employees who have elected to defer compensation under the plan. Deferred Compensation Plan participants will vest in our discretionary contributions ratably over three years from the date of each of our discretionary contributions. As of November 1, 2015 and November 2, 2014, the liability balance of the Deferred Compensation Plan is $5.2 million and $6.1 million, respectively, and is included in accrued compensation and benefits in the consolidated balance sheet. We have not made any discretionary contributions to the Deferred Compensation Plan.

With the Deferred Compensation Plan, a rabbi trust was established to fund the Deferred Compensation Plan and an administrative committee was formed to manage the Deferred Compensation Plan and its assets. The investments in the rabbi trust are $5.9 million and $5.5 million at November 1, 2015 and November 2, 2014, respectively. The rabbi trust investments include debt and equity securities, along with cash equivalents and are accounted for as trading securities.

Defined Benefit Plans — With the acquisition of RCC on April 7, 2006, we assumed a defined benefit plan (the “RCC Pension Plan”). Benefits under the RCC Pension Plan are primarily based on years of service and the employee’s compensation. The RCC Pension Plan is frozen and, therefore, employees do not accrue additional service benefits. Plan assets of the RCC Pension Plan are invested in broadly diversified portfolios of government obligations, mutual funds, stocks, bonds, fixed income securities, master limited partnerships and hedge funds. In accordance with ASC Topic 805, we quantified the projected benefit obligation and fair value of the plan assets of the RCC Pension Plan and recorded the difference between these two amounts as an assumed liability.

As a result of the CENTRIA Acquisition on January 16, 2015, we assumed noncontributory defined benefit plans covering certain hourly employees (the “CENTRIA Benefit Plans”). Benefits under the CENTRIA Benefit Plans are calculated based on fixed amounts for each year of service rendered. CENTRIA has also historically sponsored postretirement medical and life insurance plans that cover certain of its employees and their spouses (the "OPEB Plans"). The contributions to the OPEB Plans by retirees vary from none to 25% of the total premiums paid. Plan assets of the CENTRIA Benefit Plans are invested in broadly diversified portfolios of equity mutual funds, international equity mutual funds, bonds, mortgages and other funds. Currently, our policy is to fund the CENTRIA Benefit Plans as required by minimum funding standards of the Internal Revenue Code. In accordance with ASC Topic 805, we remeasured the projected benefit obligation and fair value of the plan assets of the CENTRIA Benefits Plans and OPEB Plans. The difference between the two amounts was recorded as an assumed liability in the allocation of the purchase price. We used the December 31, 2014 actuarial reports to estimate the fair value of the projected benefit obligation and plan assets. The recognition of the net pension asset or liability in the allocation of the purchase price eliminates any previously unrecognized gain or loss and prior service cost.

Assumptions—Actuarial assumptions used to determine benefit obligations were as follows:



	November 1, 2015						November 2, 2014
	RCC Pension Plan		CENTRIA Benefit Plans		OPEB Plans		RCC Pension
Assumed discount rate	4.20	%	4.10	%	3.75	%	4.15	%

Actuarial assumptions used to determine net periodic benefit income were as follows:



	Fiscal 2015						Fiscal 2014
	RCC Pension Plan		CENTRIA Benefit Plans		OPEB Plans		RCC Pension Plan
Assumed discount rate	4.15	%	3.85	%	3.50	%	4.50	%
Expected rate of return on plan assets	6.30	%	7.75	%	n/a		6.60	%
Health care cost trend rate-initial	n/a		n/a		9.00	%	n/a
Health care cost trend rate-ultimate	n/a		n/a		5.00	%	n/a

The basis used to determine the overall expected long-term asset return assumption for the RCC Pension Plan was a 10-year forecast of expected return based on the target asset allocation for the plan. The expected return for this portfolio over the forecast period is 6.30%, net of investment related expenses, and taking into consideration historical experience, anticipated asset allocations, investment strategies and the views of various investment professionals.

The expected long-term asset return assumption for the CENTRIA Benefits Plans was also determined based on consideration of actual historical returns assuming current asset allocations, consideration of future return prospects for a similar asset allocation and the views of various investment professionals. The expected return is 7.75%.

The health care cost trend rate was assumed at 9% for the first three years beginning in fiscal 2016, 8% for the next four years, 7% for the next five years, 6% for the next six years and 5% per year thereafter.

Funded status—The changes in the projected benefit obligation, plan assets and funded status, and the amounts recognized on our consolidated balance sheets were as follows (in thousands):



Change in projected benefit obligation	November 1, 2015												November 2, 2014
	RCC Pension Plan			CENTRIA Benefit Plans			OPEB Plans			Total
Accumulated benefit obligation	$	44,407		$	13,996		$	7,590		$	65,993		$	48,711
Projected benefit obligation – beginning of fiscal year ⁽¹⁾	$	48,711		$	14,427		$	8,153		$	71,291		$	44,322
Interest cost	1,933			449			218			2,600			1,912
Service cost	—			115			22			137			—
Benefit payments	(3,468		)	(552		)	(663		)	(4,683		)	(3,045		)
Actuarial (gains) losses	(2,769		)	(443		)	(140		)	(3,352		)	5,522
Projected benefit obligation – end of fiscal year	$	44,407		$	13,996		$	7,590		$	65,993		$	48,711


(1)	Fair value as of January 16, 2015 for the CENTRIA Benefit and OPEB Plans.



Change in plan assets	November 1, 2015												November 2, 2014
	RCC Pension Plan			CENTRIA Benefit Plans			OPEB Plans			Total			RCC Pension Plan
Fair value of assets – beginning of fiscal year ⁽¹⁾	$	36,678		$	14,137		$	—		$	50,815		$	37,275
Actual return on plan assets	(1,377		)	378			—			(999		)	1,005
Company contributions	1,020			480			663			2,163			1,443
Benefit payments	(3,468		)	(554		)	(663		)	(4,685		)	(3,045		)
Fair value of assets – end of fiscal year	$	32,854		$	14,441		$	—		$	47,295		$	36,678


(1)	Fair value as of January 16, 2015 for the CENTRIA Benefit and OPEB Plans.



Funded status	November 1, 2015											November 2, 2014
	RCC Pension Plan			CENTRIA Benefit Plans		OPEB Plans			Total			RCC Pension Plan
Fair value of assets	$	32,854		$	14,441	$	—		$	47,295		$	36,678
Benefit obligation	44,407			13,996		7,590			65,993			48,711
Funded status	$	(11,553	)	$	445	$	(7,590	)	$	(18,698	)	$	(12,033	)
Unrecognized actuarial loss (gain)	13,690			22		(140		)	13,572			14,321
Unrecognized prior service cost (credit)	(42		)	—		—			(42		)	(50		)
Prepaid (accrued) benefit cost	$	2,095		$	467	$	(7,730	)	$	(5,168	)	$	2,238

Benefit obligations in excess of fair value of assets of $18.7 million and $12.0 million as of November 1, 2015 and November 2, 2014, respectively, are included in other long-term liabilities in the consolidated balance sheets.

Plan assets—The investment policy is to maximize the expected return for an acceptable level of risk. Our expected long-term rate of return on plan assets is based on a target allocation of assets, which is based on our goal of earning the highest rate of return while maintaining risk at acceptable levels.

As of November 1, 2015 and November 2, 2014, the weighted-average asset allocations by asset category were as follows (in thousands):



Investment Type	November 1, 2015				November 2, 2014
	RCC Pension Plan		CENTRIA Benefit Plans		RCC Pension Plan
Equity securities	33	%	83	%	32	%
Debt securities	42	%	17	%	44	%
Master limited partnerships	6	%	—	%	7	%
Cash and cash equivalents	6	%	—	%	3	%
Real estate	8	%	—	%	8	%
Other	5	%	—	%	6	%
Total	100	%	100	%	100	%

The plans strive to have assets sufficiently diversified so that adverse or unexpected results from one security class will not have an unduly detrimental impact on the entire portfolio. We regularly review our actual asset allocation and the investments are periodically rebalanced to our target allocation when considered appropriate. We have set the target asset allocation for the RCC Pension Plan as follows: 45% US bonds, 13% large cap US equities, 9% foreign equity, 8% master limited partnerships, 8% commodity futures,7% real estate investment trusts, 6% emerging markets and 4% small cap US equities. The CENTRIA Benefit Plans have a target asset allocation of 50%-95% equities and 5%-50% fixed income.

The fair values of the assets at November 1, 2015 and November 2, 2014, by asset category and by levels of fair value, as further defined in “Note 15 — Fair Value of Financial Instruments and Fair Value Measurements,” were as follows (in thousands):



	November 1, 2015
	Level 1				Level 2				Total
	RCC Pension Plan		CENTRIA Benefit Plans		RCC Pension Plan		CENTRIA Benefit Plans		RCC Pension Plan		CENTRIA Benefit Plans
Asset category:
Cash	$	2,146	$	—	$	—	$	—	$	2,146	$	—
Mutual funds:
Growth funds⁽¹⁾	1,689		4,350		—		—		$	1,689	$	4,350
Real estate funds⁽²⁾	2,590		—		—		—		$	2,590	$	—
Commodity linked funds⁽³⁾	1,791		—		—		—		$	1,791	$	—
Equity income funds⁽⁸⁾	—		3,704		—		—		$	—	$	3,704
Index funds⁽⁷⁾	—		1,914		—		43		$	—	$	1,957
International equity funds⁽¹⁾	—		258		—		1,662		$	—	$	1,920
Fixed income funds⁽⁶⁾	—		1,381		—		1,129		$	—	$	2,510
Master limited partnerships⁽⁴⁾	2,023				—				$	2,023	$	—
Government securities⁽⁵⁾	—				7,392				$	7,392	$	—
Corporate bonds⁽⁶⁾	—				6,082				$	6,082	$	—
Common/collective trusts⁽⁷⁾	—				9,141				$	9,141	$	—
Total as of November 1, 2015	$	10,239	$	11,607	$	22,615	$	2,834	$	32,854	$	14,441



	November 2, 2014
	Level 1		Level 2		Total
	RCC Pension Plan		RCC Pension Plan		RCC Pension Plan
Asset category:
Cash	$	1,339	$	—	$	1,339
Mutual funds:
Growth funds⁽¹⁾	2,067		—		2,067
Real estate funds⁽²⁾	2,917		—		2,917
Commodity linked funds⁽³⁾	2,489		—		2,489
Master limited partnerships(4)	2,682		—		2,682
Government securities⁽⁵⁾	—		9,630		9,630
Corporate bonds⁽⁶⁾	—		6,157		6,157
Common/collective trusts⁽⁷⁾	—		9,397		9,397
Total as of November 2, 2014	$	11,494	$	25,184	$	36,678


(1)	The strategy seeks long-term growth of capital. The fund currently invests in common stocks and other securities of companies in countries with developing economies and/or markets.


(2)	The portfolio is constructed of Real Estate Investment Trusts (“REITs”) with the potential to provide strong and consistent earnings growth. Eligible investments for the portfolio include publicly traded equity REITs, Real Estate Operating Companies, homebuilders and commercial REITs. The portfolio invests across various sectors and is geographically diverse to manage potential risk.


(3)	The strategy seeks to replicate a diversified basket of commodity futures consistent with the composition of the Dow Jones UBS Commodity index. The strategy is defined to be a hedge against risking inflation and from time to time will allocate a portion of the portfolio to inflation-protected securities and other fixed income securities.


(4)	These holdings in Master Limited Partnerships (“MLPs”) are publicly traded partnerships which are limited by the U.S. tax code to engaging in certain natural resource and energy businesses such as petroleum and natural gas extraction and transportation. The strategy of MLPs is to earn a relatively stable income from the transportation of oil, gasoline or natural gas.


(5)	These holdings represent fixed-income securities issued and backed by the full faith of the United States government. The strategy is designed to lengthen duration to match the duration of the pension plan liabilities.


(6)	These holdings represent fixed-income securities with varying maturities diversified by issuer, sector and industry. At the time of purchase, the securities must be rated investment grade. This strategy is also taken into consideration with the government bond holdings when matching duration of the liabilities.


(7)	The collective trusts and index funds seek long-term growth of capital and current income through index replication strategies designed to match the holdings of the S&P 400, S&P 500, S&P 600, Russell 2000, MSCI EAFE.


(8)	The investment seeks to provide current income and long-term growth of income and capital. The fund normally invests at least 80% of its net assets, plus any borrowings for investment purposes, in dividend-paying equity securities.

Net periodic benefit cost (income)—The components of the net periodic benefit cost (income) were as follows (in thousands):



	November 1, 2015											November 2, 2014			November 3, 2013
	RCC Pension Plan			CENTRIA Benefit Plans			OPEB Plans		Total			RCC Pension Plan			RCC Pension Plan
Interest cost	$	1,933		$	449		$	218	$	2,600		$	1,912		$	1,703
Service cost	—			115			22		137			—			—
Expected return on assets	(2,204		)	(841		)	—		(3,045		)	(2,369		)	(2,172		)
Amortization of prior service cost	(9		)	—			—		(9		)	(9		)	(9		)
Amortization of loss	1,443			—			—		1,443			507			906
Net periodic benefit cost (income)	$	1,163		$	(277	)	$	240	$	1,126		$	41		$	428

The amounts in accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit income are as follows (in thousands):



	November 1, 2015											November 2, 2014
	RCC Pension Plan			CENTRIA Benefit Plans		OPEB Plans			Total			RCC Pension Plan
Unrecognized actuarial loss (gain)	$	13,690		$	22	$	(140	)	$	13,572		$	14,321
Unrecognized prior service cost	(42		)	—		—			(42		)	(50		)
Total	$	13,648		$	22	$	(140	)	$	13,530		$	14,271

Unrecognized actuary losses (gains), net of income tax, of $(0.4) million and $3.9 million during fiscal 2015 and 2014, respectively, are included in other comprehensive income (loss) in the consolidated statement of comprehensive income (loss).

The changes in plan assets and benefit obligation recognized in other comprehensive income are as follows (in thousands):



	November 1, 2015											November 2, 2014			November 3, 2013
	RCC Pension Plan			CENTRIA Benefit Plans			OPEB Plans		Total			RCC Pension Plan			RCC Pension Plan
Net actuarial gain (loss)	$	(812	)	$	(22	)	$	140	(694		)	$	(6,886	)	$	2,786
Amortization of net actuarial loss	1,443			—			—		1,443			507			906
Amortization of prior service credit	(9		)	—			—		(9		)	(9		)	(9		)
Total recognized in other comprehensive income (loss)	$	622		$	(22	)	$	140	$	740		$	(6,388	)	$	3,683

The estimated amortization for the next fiscal year for amounts reclassified from accumulated other comprehensive income into the consolidated income statement is as follows (in thousands):



	November 1, 2015
	RCC Pension Plan			CENTRIA Benefit Plans		OPEB Plans
Amortization of prior service cost	(9		)	—		—
Amortization of loss	1,169			—		—
Total estimated amortization	$	1,160		$	—	$	—

Actuarial gains and losses are amortized using the corridor method based on 10% of the greater of the projected benefit obligation or the market related value of assets over the average remaining service period of active employees.

We expect to contribute $1.1 million to the RCC Pension Plan and $0.6 million to the CENTRIA Benefit Plans in fiscal 2016. In addition to the CENTRIA Benefit Plans, CENTRIA contributes to a multi-employer plan, Steelworkers Pension Trust. The minimum required annual contribution to this plan is $0.3 million and the current contract expires on June 1, 2016. If we were to withdraw our participation from this multi-employer plan, we would have an estimated complete withdrawal liability in the amount of $0.7 million as of November 1, 2015.

We expect the following benefit payments to be made (in thousands):



Fiscal years ending	RCC Pension Plan		CENTRIA Benefit Plans		OPEB Plans		Total
2016	$	3,163	$	834	$	613	$	4,610
2017	3,242		797		716		4,755
2018	3,172		864		713		4,749
2019	3,106		883		736		4,725
2020	3,173		878		680		4,731
2021 – 2025	15,061		4,410		2,211		21,682