Note

- Retirement plans

Pension plan

The defined benefit plan that covered the hourly rate employees of a non-operating filtration business unit, previously located in Winchester, Virginia, was frozen on

June

30,

2013

per the

third

Amendment to the Plan dated

May 15, 2013.

The accrued benefit of each participant was frozen as of the freeze date, and

further benefits shall accrue with respect to any service or hours of service after the freeze date. The benefits are based on fixed amounts multiplied by years of service of participants. The Company engages outside actuaries to calculate its obligations and costs. The funding policy is to contribute such amounts as are necessary to provide for benefits attributed to service to date. The amounts contributed to the plan are sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of

1974.

Asset allocation

The pension plan holds

securities of Perma-Pipe International Holdings, Inc.;

100%

of the assets are held for benefits under the plan. The fair value of the major categories of the pension plan's investments are presented below. The FASB has established a fair value hierarchy that distinguishes between (

) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (

) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of

three

broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level

) and the lowest priority to unobservable inputs (Level

). The

three

levels of the fair value hierarchy are described below:

Level

- Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level

- Inputs other than quoted prices included within Level

that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are

not

active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level

- Inputs that are both significant to the fair value measurement and unobservable.

(In thousands)	2019		2018
Level 1 market value of plan assets
Equity securities	$	3,139	$	2,991
U.S. bond market		2,134		2,065
Real estate securities		369		368
Subtotal		5,642		5,424
Level 2 significant other observable inputs
Money market fund	$	169	$	121
Subtotal		169		121
Investments measured at net asset value*	$	739	$	634
Total	$	6,550	$	6,179

* Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have

not

been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the reconciliation of benefit obligations, plan assets and funded status of plan.

January 31, 2020

, plan assets were held

64%

in equity,

34%

in debt and

in other. The investment policy is to invest all funds

not

needed to pay benefits and investment expenses for the year, with target asset allocations of approximately

60%

equities,

30%

fixed income and

10%

alternative investments, diversified across a variety of sub-asset classes and investment styles, following a flexible asset allocation approach that will allow the plan to participate in market opportunities as they become available. The expected long-term rate of return on assets is based on historical long-term rates of equity and fixed income investments and the asset mix objective of the funds.

Investment market conditions in

2019

resulted in

$0.7

million actual gain on plan assets as presented below, which decreased the fair value of plan assets at year end. The Company reduced its expected return on plan assets used in determining cost and benefit obligations from

8.0%

7.5%,

based on updated long-term market expectations. The plan's investments are intended to earn long-term returns to fund long-term obligations, and investment portfolios with asset allocations similar to those of the plan's investment policy have attained such returns over several decades. Future contributions that

may

be necessary to maintain funding requirements are

not

expected to materially affect the Company's liquidity.

Reconciliation of benefit obligations, plan assets and funded status of plan (in thousands)	2019			2018
Accumulated benefit obligations
Vested benefits	$	6,959		$	6,258
Accumulated benefits	$	6,959		$	6,258

Change in benefit obligation
Benefit obligation - beginning of year	$	6,258		$	6,658
Interest cost		237			240
Actuarial (gain)/loss		788			(303	)
Benefits paid		(324	)		(337	)
Benefit obligation - end of year	$	6,959		$	6,258

Change in plan assets
Fair value of plan assets - beginning of year	$	6,179		$	6,700
Actual (loss)/gain on plan assets		695			(184	)
Benefits paid		(324	)		(337	)
Fair value of plan assets - end of year	$	6,550		$	6,179

Unfunded status	$	(409	)	$	(80	)

Balance sheet classification
Prepaid expenses and other current assets	$	325		$	343
Other assets		1,679			1,568
Deferred compensation liabilities		(2,413	)		(1,991	)
Net amount recognized	$	(409	)	$	(80	)

Amounts recognized in accumulated other comprehensive loss
Unrecognized actuarial loss	$	2,087		$	1,648
Net amount recognized	$	2,087		$	1,648

Weighted-average assumptions used to determine net cost and benefit obligations	2019			2018
End of year benefit obligation discount rate		2.80	%		3.90	%
Service cost discount rate		3.90	%		3.70	%
Expected return on plan assets		7.50	%		8.00	%

The discount rate was based on a Citigroup pension discount curve of high quality fixed income investments with cash flows matching the plan's expected benefit payments. The Company determines the expected long-term rate of return on plan assets by performing a detailed analysis of historical and expected returns based on the strategic asset allocation approved by the Board of Directors and the underlying return fundamentals of each asset class. The Company's historical experience with the pension fund asset performance is also considered.

Components of net periodic benefit cost (in thousands)	2019			2018
Interest cost	$	237		$	240
Expected return on plan assets		(450	)		(522	)
Recognized actuarial loss		102			64
Net periodic benefit income	$	(111	)	$	(218	)

Amounts recognized in other comprehensive income (in thousands)
Actuarial gain/(loss) on obligation	$	(787	)	$	303
Actual (loss)/gain on plan assets		348			(644	)
Total in other comprehensive income	$	(439	)	$	(341	)

Other comprehensive income is also affected by the tax effect of the valuation allowance recorded on the domestic deferred tax assets.

Cash flows (in thousands)
Expected employer contributions for the fiscal year ending January 31, 2021	$	—
Expected employee contributions for the fiscal year ending January 31, 2021		—
Estimated future plan benefit payments reflecting expected future service for the fiscal year(s) ending January 31,:
2021	$	325
2022		332
2023		332
2024		327
2025		328
2026 - 2030		1,643

401

(k) plan

The domestic employees of the Company participate in the PPIH

401

(k) Employee Savings Plan, which is applicable to all employees except employees covered by collective bargaining agreement benefits. The plan allows employee pretax payroll contributions from

16%

of total compensation. The Company matches

100%

of each participant's payroll deferral contributions up to

of their compensation, plus

50%

of each participant's payroll deferral contributions on the next

of compensation.

Contributions to the

401

(k) plan were

$0.3

million each in years ended

January 31, 2020

and

2019

Multi-employer plans

The Company contributes to a multi-employer plan for certain collective bargaining U.S. employees. The risks of participating in this multi-employer plan are different from a single employer plan in the following aspects:

•

Assets contributed to the multi-employer plans by

one

employer

may

be used to provide benefits to employees of other participating employers.

•

If a participating employer ceases contributing to the plan, the unfunded obligations of the plan

may

be inherited by the remaining participating employers.

•

If the Company chooses to stop participating in the multi-employer plan, the Company

may

be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company has assessed and determined that the multi-employer plans to which it contributes are

not

significant to the Company's consolidated financial statements. The Company does

not

expect to incur a withdrawal liability or expect to significantly increase its contribution over the remainder of the contract period. The Company made contributions to the bargaining unit supported multi-employer pension plans (in thousands):

Funded

Collective

Zone

FIP/RP Status

2019

2018

Surcharge

Bargaining

Plan Name

EIN

Plan #

Status

Pending/Implemented

Contribution

Imposed

Expiration Date

Plumbers & Pipefitters Local 572 Pension Fund

626102837

001

Green

$239

$188

3/31/2022