NOTE 13—BENEFIT PLANS

DEFINED BENEFIT AND CONTRIBUTION PLANS

The Company maintains a non-qualified defined contribution plan (the "Account Plan") for key employees designated by the Board of Directors. The Company's contribution expense for the Account Plan was $0.1 million, $0.3 million and $1.2 million for fiscal 2012, 2011 and 2010, respectively.

The Company has a qualified 401(k) savings plan and a separate savings plan for employees residing in Puerto Rico, which cover all full-time employees who are at least 21 years of age with one or more years of service. The Company contributes the lesser of 50% of the first 6% of a participant's contributions or 3% of the participant's compensation under both savings plans. For fiscal 2012, 2011 and 2010, the Company's contributions were conditional upon the achievement of certain pre-established financial performance goals which were met in fiscal 2010, but not in fiscal 2012 or 2011. The Company's savings plans' contribution expense was $3.0 million in fiscal 2010.

The Company also maintained a defined benefit pension plan (the "Plan") covering full-time employees hired on or before February 1, 1992. As of December 31, 1996, the Company froze the accrued benefits under the Plan and active participants became fully vested. During the third quarter of fiscal 2011, the Company began the process of terminating the Plan. During the fourth quarter of fiscal 2012, in accordance with Internal Revenue Service and Pension Benefit Guaranty Corporation requirements, the Company contributed $14.1 million to fully fund the Plan on a termination basis and recorded a $17.8 million settlement charge. The participants' benefits were converted into a lump sum cash payment or an annuity contract placed with an insurance carrier. The Company used a fiscal year end measurement date for determining the benefit obligation and the fair value of Plan assets. The actuarial computations were made using the "projected unit credit method." Variances between actual experience and assumptions for costs and returns on assets were amortized over the remaining service lives of employees under the Plan.

Pension expense is as follows:

	Year Ended

(dollar amounts in thousands)	February 2, 2013			January 28, 2012			January 29, 2011
Service cost	$	—		$	—		$	—
Interest cost		2,170			2,558			2,561
Expected return on plan assets		(2,658	)		(2,745	)		(2,151	)
Amortization of prior service cost		13			14			14
Recognized actuarial loss		1,896			1,499			1,672

Net Period Pension Cost		1,421			1,326			2,096
Settlement Charge		17,753			—			—

Net Period Pension Cost	$	19,174		$	1,326		$	2,096

The following actuarial assumptions were used to determine benefit obligation and pension expense:

	Year Ended

	February 2, 2013			January 28, 2012			January 29, 2011
Benefit obligation assumptions:
Discount rate		N/A			4.60	%		5.70	%
Rate of compensation increase		N/A			N/A			N/A
Pension expense assumptions:
Discount rate		4.60	%		5.70	%		6.10	%
Expected return on plan assets		6.80	%		6.80	%		6.95	%
Rate of compensation expense		N/A			N/A			N/A

The Company selected the discount rate for the benefit obligation at January 28, 2012 to reflect a rate commensurate with a model bond portfolio with durations that match the expected payment patterns of the plans. To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. This resulted in the selection of a long-term rate of return on assets of 6.80% for fiscal 2012 and fiscal 2011, and 6.95% for fiscal 2010.

The following table sets forth the reconciliation of the benefit obligation, fair value of plan assets and funded status of the Company's defined benefit plans:

	Year ended

(dollar amounts in thousands)	February 2, 2013			January 28, 2012
Change in benefit obligation:
Benefit obligation at beginning of year	$	53,974		$	46,118
Interest cost		2,170			2,558
Actuarial loss		3,621			6,952
Settlements paid		(58,134	)		—
Benefits paid		(1,631	)		(1,654	)

Benefit obligation at end of year	$	—		$	53,974

Change in plan assets:
Fair value of plan assets at beginning of year	$	43,602		$	39,063
Actual return on plan assets (net of expenses)		2,050			3,193
Employer contributions		14,113			3,000
Settlements paid		(58,134	)		—
Benefits paid		(1,631	)		(1,654	)

Fair value of plan assets at end of year	$	—		$	43,602

Unfunded status at fiscal year end	$	—		$	(10,372	)

Net amounts recognized on consolidated balance sheet at fiscal year end
Noncurrent benefit liability (included in other long-term liabilities)	$	—		$	(10,372	)

Net amount recognized at fiscal year end	$	—		$	(10,372	)

Amounts recognized in accumulated other comprehensive income (pre-tax) at fiscal year end
Actuarial loss	$	—		$	15,407
Prior service cost		—			26

Net amount recognized at fiscal year end	$	—		$	15,433

Other comprehensive (income) loss attributable to change in pension liability recognition	$	(15,433	)	$	4,991
Accumulated benefit obligation at fiscal year end	$	—		$	53,974
Other information
Employer contributions expected in fiscal 2013	$	—		$	—
Estimated actuarial loss and prior service cost amortization in fiscal 2013	$	—		$	2,300

Plan Assets and Investment Policy

Investment policies were established in accordance with the Company's Benefits Committee (the "Committee") responsibilities to the participants of the Plan and its beneficiaries, and in accordance with the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The objective of the Plan was to meet current and future benefit payment needs within the constraints of diversification and prudent risk taking. The Plan was diversified across asset classes to achieve an optimal balance between risk and return and between income and growth of assets through capital appreciation. Investment objectives for each asset class were determined based on specific risks and investment opportunities identified. The Company believes that the diversification of its assets minimizes the risk due to concentration of the Plan assets.

The Company updated its long-term, strategic asset allocations annually using various analytics to determine the optimal asset mix and consideration of plan liability characteristics, liquidity characteristics, funding requirements, expected rates of return and the distribution of returns. Actual allocations to each asset class vary from target allocations due to periodic investment strategy changes, market value fluctuations, the length of time it takes to fully implement investment allocation positions (such as private equity and real estate), and the timing of benefit payments and contributions. Short term investments and exchange-traded derivatives were used to rebalance the actual asset allocation to the target asset allocation. The asset allocation was monitored and rebalanced on a monthly basis.

The manager of the investments provided advice and recommendations to help the Committee discharge its fiduciary responsibilities in furtherance of the Plan's goals and objectives. The manager had the discretion to allocate assets among funds within each asset class to conform to strategic targets and ranges established by the Committee. The target asset allocation was 50% equity securities and 50% fixed income. The investment policy requires that the asset allocation be maintained within certain ranges. The weighted average asset allocations and asset allocation ranges by asset category were as follows:

Weighted Average Asset Allocations



Total equities	50	%	45 - 55	%
Domestic equities	32	%	28 - 38	%
Non-US equities	18	%	12 - 22	%
Fixed income	50	%	45 - 55	%

The tables below provide the fair values of the Company's pension plan assets at January 28, 2012, by asset category. The tables also identify the level of inputs used to determine the fair value of assets in each category (see Note 16, "Fair Value Measurements" for definition of levels). The significant amount of Level 2 investments in the table relates to investments in pooled funds that contain investments with values based on quoted market prices, but for which the funds are not valued on a quoted market basis, and fixed income securities that are valued using model based pricing services.

	Fair Value at January 28, 2012

(dollar amounts in thousands)			Level 1		Level 2		Level 3
Asset Category			Level 1		Level 2		Level 3
Domestic equities
US Small/Mid Cap Growth	$	1,372	$	—	$	1,372	$	—
US Small/Mid Cap Value		1,335		—		1,335		—
US Large Cap Passive		11,006		—		11,006		—
Non-U.S. equities
Non-US Core Equity		7,962		—		7,962		—
Fixed income
Long Duration		15,598		—		15,598		—
Long Duration Passive		4,995		—		4,995		—
Guaranteed annuity contracts		1,334		—		—		1,334

Total	$	43,602	$	—	$	42,268	$	1,334

Generally, investments are valued based on information in financial publications of general circulation, statistical and valuation services, records of security exchanges, appraisal by qualified persons, transactions and bona fide offers. Money market funds are valued using a market approach based on the quoted market prices of identical instruments. These investments are classified within Level 1 of the fair value hierarchy.

Domestic equities, non-US equities, and both long duration fixed income securities consist of collective trust ("CT") funds. CT funds are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (equity securities and fixed income securities) are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. CT funds are valued at their net asset values that are calculated by the investment manager of the fund and have daily or monthly liquidity. These investments are classified within Level 2 of the fair value hierarchy.

Guaranteed annuity contracts ("GACs") are annuity insurance contracts. GACs are primarily invested in public bonds with some small placement in common stock, private placement bonds and commercial mortgage products. The GACs are valued based on unobservable inputs, as observable inputs are not available, using valuation methodologies to determine fair value. GACs are deemed to be Level 3 investments.

The following table provides a summary of changes in fair value of Level 3 financial assets during fiscal 2012:

(dollar amounts in thousands)	Fair Value

Balance, January 28, 2012	$	1,334
Transfers from other investments		—
Interest income and gains		116
Administrative fees		(72	)
Benefits paid during the period		(1,378	)

Balance, February 2, 2013	$	—

DEFERRED COMPENSATION PLAN

The Company maintains a non-qualified deferred compensation plan that allows its officers and certain other employees to defer up to 20% of their annual salary and 100% of their annual bonus. Additionally, the first 20% of an officer's bonus deferred into the Company's stock is matched by the Company on a one-for-one basis with Company stock that vests and is expensed over three years. The shares required to satisfy distributions of voluntary bonus deferrals and the accompanying match in the Company's stock are issued from its treasury account.

RABBI TRUST

The Company establishes and maintains a deferred liability for the non-qualified deferred compensation plan and the Account Plan. The Company plans to fund this liability by remitting the officers' deferrals to a Rabbi Trust where these deferrals are invested in variable life insurance policies. These assets are included in non-current other assets and are considered to be a Level 2 measure within the fair value hierarchy. Accordingly, all gains and losses on these underlying investments, which are held in the Rabbi Trust to fund the deferred liability, are recognized in the Company's Consolidated Statement of Operations. Under these plans, there were liabilities of $6.7 million at February 2, 2013 and $6.9 million at January 28, 2012, respectively, which are recorded primarily in other long-term liabilities.