RETIREMENT AND BENEFIT PLANS

The Company has six noncontributory defined benefit pension plans (including a plan acquired as part of the Warnaco acquisition, which is frozen) covering substantially all employees resident in the United States who meet certain age and service requirements. For those vested (after five years of service), the plans provide monthly benefits upon retirement based on career compensation and years of credited service. The Company refers to these six plans as its “Pension Plans.”

The Company also has for certain members of Tommy Hilfiger’s domestic senior management a supplemental executive retirement plan, which is an unfunded non-qualified supplemental defined benefit pension plan. Such plan is frozen and, as a result, participants do not accrue additional benefits. In addition, the Company has a capital accumulation program, which is an unfunded non-qualified supplemental defined benefit plan, covering two current and 15 retired executives as of August 4, 2013. Under the individual participants’ agreements, the participants in this plan will receive a predetermined amount during the 10 years following the attainment of age 65, provided that prior to the termination of employment with the Company, the participant has been in the plan for at least 10 years and has attained age 55. The Company also has for certain employees resident in the United States who meet certain age and service requirements an unfunded non-qualified supplemental defined benefit pension plan, which provides benefits for compensation in excess of Internal Revenue Service earnings limits and requires payments to vested employees upon, or shortly after, employment termination or retirement. The Company refers to these three plans as its “SERP Plans.”

The Company also provides certain postretirement health care and life insurance benefits to certain retirees resident in the United States. Retirees contribute to the cost of this plan, which is unfunded. During 2002, the postretirement plan was amended to eliminate the Company contribution, which partially subsidized benefits, for active participants who, as of January 1, 2003, had not attained age 55 and 10 years of service. As a result of the Company’s acquisition of Warnaco, the Company also provides certain postretirement health care and life insurance benefits to certain Warnaco retirees resident in the United States. Retirees contribute to the cost of this plan, which is unfunded. The Company refers to these two plans as its “Postretirement Plans.”

During the fourth quarter of 2012, the Company changed its method of accounting for actuarial gains and losses for its pension and other postretirement plans. Historically, the Company recognized actuarial gains and losses for its pension and other postretirement obligations and pension plan assets as a component of other comprehensive income in the periods in which they arose. As set forth in the Financial Accounting Standards Board (“FASB”) guidance for pension and other postretirement plans, the Company amortized actuarial gains and losses (to the extent they exceeded a 10% corridor) in future periods over the average remaining service period of active employees or, if substantially all plan participants were inactive, over the average remaining life expectancy of inactive participants, as a component of its net periodic benefit cost. The Company elected in the fourth quarter of 2012 to begin to immediately recognize actuarial gains and losses in its operating results in the year in which they occur. These gains and losses are measured at least annually as of the end of the Company’s fiscal year and, as such, will generally be recognized during the fourth quarter of each year. Additionally, beginning in the fourth quarter of 2012, the Company no longer calculates expected return on plan assets using a permitted averaging technique for market-related value of plan assets but instead uses the fair value of plan assets. The financial data for all prior periods presented has been retrospectively adjusted to reflect the effect of these accounting changes.

Net benefit cost related to the Company’s Pension Plans was recognized in selling, general and administrative expenses as follows:



	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	8/4/13			7/29/12			8/4/13			7/29/12

Service cost, including plan expenses	$	4,823		$	4,011		$	9,420		$	7,865
Interest cost	6,528			4,530			13,067			8,986
Expected return on plan assets	(9,658		)	(5,254		)	(19,528		)	(10,476		)
Amortization of prior service cost	2			1			3			2
Total	$	1,695		$	3,288		$	2,962		$	6,377

Net benefit cost related to the Company’s SERP Plans was recognized in selling, general and administrative expenses as follows:



	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	8/4/13			7/29/12			8/4/13			7/29/12

Service cost, including plan expenses	$	1,119		$	814		$	2,169		$	1,787
Interest cost	953			827			1,810			1,673
Amortization of prior service credit	(17		)	(16		)	(34		)	(33		)
Total	$	2,055		$	1,625		$	3,945		$	3,427

Net benefit cost related to the Company’s Postretirement Plans was recognized in selling, general and administrative expenses as follows:



	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	8/4/13			7/29/12			8/4/13			7/29/12

Service cost, including plan expenses	$	14		$	—		$	40		$	—
Interest cost	207			181			429			399
Amortization of prior service credit	(204		)	(204		)	(408		)	(408		)
Total	$	17		$	(23	)	$	61		$	(9	)

Currently, the Company expects to make contributions of approximately $60,000 to its pension plans in 2013, which includes a $30,000 contribution made during the first quarter of 2013 to fund the pension plan that the Company acquired with the Warnaco acquisition. The Company’s actual contributions may differ from planned contributions due to many factors, including changes in tax and other benefit laws, or significant differences between expected and actual pension asset performance or interest rates.