EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2011

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

Defined Contribution Plans

        We maintain several defined contribution plans under Section 401(k) of the Internal Revenue Code (the "Code"), of which the primary plan is The Jones Group Inc. Retirement Plan (the "Jones Plan"). Employees not covered by a collective bargaining agreement and meeting certain other requirements are eligible to participate in the Jones Plan. Under the Jones Plan, participants may elect to have up to 50% of their salary (subject to limitations imposed by the Code) deferred and deposited with a qualified trustee, who in turn invests the money in a variety of investment vehicles as selected by each participant. All employee contributions into the Jones Plan are 100% vested.

        We have elected to make the Jones Plan a "Safe Harbor Plan" under Section 401(k)(12) of the Code. As a result of this election, we make a fully-vested safe harbor matching contribution for all eligible participants amounting to 100% of the first 3% of the participant's salary deferred and 50% of the next 2% of salary deferred, subject to maximums set by the Department of the Treasury. We may, at our sole discretion, contribute additional amounts to all employees on a pro rata basis.

        We contributed approximately $7.7 million, $7.0 million and $7.3 million to our defined contribution plans during 2011, 2010 and 2009, respectively.

Defined Benefit Plans

        We maintain several defined benefit plans, including the Pension Plan for Associates of Nine West Group Inc. (the "Cash Balance Plan") and The Napier Company Retirement Plan for certain associates of Victoria + Co Ltd. (the "Napier Plan"). The Cash Balance Plan expresses retirement benefits as an account balance which increases each year through interest credits, with service credits frozen as of February 15, 1999. All benefits under the Napier Plan are frozen at the amounts earned by the participants as of December 31, 1995. On December 31, 2011, the Napier Plan was merged into the Cash Balance Plan.

        Our funding policy is to contribute at least the minimum amount to meet the funding ratio requirements of the Pension Protection Act. We plan to contribute $6.5 million to the Cash Balance Plan in 2012. The measurement date for all plans is December 31.

Obligations and Funded Status

Year Ended December 31,		2011			2010
(In millions)
Change in benefit obligation
Benefit obligation, beginning of year	$	48.1		$	43.8
Interest cost		2.7			2.7
Actuarial loss - effect of assumption changes		9.9			5.0
Settlements		(2.4	)		-
Benefits paid		(1.5	)		(3.4	)
Benefit obligation, end of year		56.8			48.1
Change in plan assets
Fair value of plan assets, beginning of year		35.6			28.3
Actual return on plan assets		(1.9	)		3.0
Employer contribution		5.2			7.7
Settlements		(2.4	)		-
Benefits paid		(1.5	)		(3.4	)
Fair value of plan assets, end of year		35.0			35.6
Underfunded status at end of year	$	21.8		$	12.5

Amounts Recognized on the Balance Sheet

December 31,		2011		2010
(In millions)
Noncurrent liabilities	$	21.8	$	12.5

Amounts Recognized in Accumulated Other Comprehensive Loss

December 31,		2011		2010
(In millions)
Net loss	$	37.3	$	26.4

Information for Pension Plans with an Accumulated Benefit Obligation inExcess of Plan Assets

December 31,		2011		2010
(In millions)
Projected benefit obligation	$	56.8	$	48.1
Accumulated benefit obligation		56.8		48.1
Fair value of plan assets		35.0		35.6
Market related value of plan assets		35.0		35.6

Components of Net Periodic Benefit Cost and Other Amounts Recognized inOther Comprehensive Income or Loss

Year Ended December 31,		2011			2010
(In millions)
Net Periodic Benefit Cost:
Interest cost	$	2.7		$	2.7
Expected return on plan assets		(2.6	)		(2.2	)
Settlement costs		1.9			-
Amortization of net loss		1.6			1.7
Total net periodic benefit cost		3.6			2.2
Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income or Loss:
Net loss		14.4			4.2
Recognition due to settlement		(1.9	)		-
Amortization of net loss		(1.6	)		(1.7	)
		10.9			2.5
Total recognized in net periodic benefit cost and other comprehensive income or loss	$	14.5		$	4.7

        The estimated net loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2012 is $2.2 million.

Assumptions

	2011	2010
Weighted-average assumptions used to determine:
Benefit obligations at December 31
Discount rate	4.6%	5.6%
Expected long-term return on plan assets	7.0%	7.0%
Net periodic benefit cost for year ended December 31
Discount rate	5.6%	6.1%
Expected long-term return on plan assets	7.0%	7.9%

        Significant assumptions related to the calculation of our obligations include the discount rate used to calculate the present value of benefit obligations to be paid in the future and the expected long-term rate of return on assets. We review these assumptions annually based upon currently available information, including information provided by our actuaries. Based on these reviews, we lowered the discount rate for benefit obligations at December 31, 2011 to 4.6%, as compared with 5.6% in the prior year, based on the Citigroup Above Median AA Spot Rates as of December 31, 2011. At December 31, 2011, an unfavorable quarter-point (0.25%) change in the discount rate would increase our benefit obligation liability by $2.1 million and our 2012 expense by $0.1 million, while a quarter-point change in the expected long-term return on plan asset assumption would increase our 2012 expense by $0.1 million.

Estimated Future Benefit Payments

Year Ending December 31,
(In millions)
2012	$	2.0
2013		2.2
2014		2.2
2015		2.4
2016		2.4
2017 through 2021		15.5
	$	26.7

Plan Assets

        Our overall investment strategy is to diversify investments across types of investments and investment managers. The primary objectives are to achieve a rate of return sufficient to meet current and future plan cash requirements and to emphasize long-term growth of principal while avoiding excessive risk and maintaining fund liquidity. Permitted investment vehicles include investment-grade fixed income securities, domestic and foreign equity securities, mutual funds, guaranteed insurance contracts and real estate, while speculative and derivative investment vehicles, short selling and margin transactions are generally prohibited. The investment managers have full discretion to manage their portion of the investments subject to the objectives and policies of the respective plans. The performance of the investment managers is reviewed on a regular basis. At December 31, 2011, the weighted-average target allocation percentages for fund investments were 35% fixed income securities, 28% domestic equity securities, 27% international equity securities, 5% real estate and 5% cash and cash equivalents.

        To determine the overall expected long-term rate-of-return-on-assets assumption, we add an expected inflation rate to the expected long-term real returns of our various asset classes, taking into account expected volatility and correlation between the returns of the asset classes as follows: for equities and real estate, a historical average arithmetic real return; for government fixed-income securities, current yields on inflation-indexed bonds; and for corporate fixed-income securities, the yield on government fixed-income securities plus a blend of current and historical credit spreads.

        The fair values of our pension plan assets at December 31, 2011 and 2010 by asset class are presented in the following table. All fair values are based on quoted prices in active markets for identical assets (Level 1 in the fair value hierarchy).

(In millions)		2011		2010
Asset Class
Cash and equivalents	$	2.5	$	2.7
Equity securities:
U.S. companies (a)		14.6		13.3
International companies (b)		4.9		7.0
Real estate (c)		0.6		1.4
Fixed income (d)		12.4		11.2
Total	$	35.0	$	35.6

(a)	This class consists of both index and actively managed mutual funds that invest in large and mid-cap U.S. common stocks.
(b)	This class consists of both index and actively managed mutual funds that invest in large and emerging market international common stocks.
(c)	This class consists of actively managed mutual funds that invest in real estate investment trusts.
(d)	This class consists of managed mutual funds that invest in high-grade corporate, government and mortgage backed securities.

Other Plans

        We also maintain the Nine West Group Inc. Supplemental Executive Retirement Plan, the Nine West Group Inc. Postretirement Executive Life Plan, the Nine West Group, Inc. Postretirement Medical Plan and the Nine West Group Inc. Long Term Disabled Postemployment Benefit Plan, all of which are frozen and none of which have a material effect on our results of operations or on our financial position. These plans, which are unfunded, were underfunded by $4.7 million at December 31, 2011. Of this amount, $0.3 million is reported under accrued expenses and other current liabilities and $4.4 million is reported under other noncurrent liabilities.

        We also maintain The Jones Group Inc. Deferred Compensation Plan, a non-qualified defined contribution plan for certain management and other highly compensated employees (the "Rabbi Trust"). Under the plan, participants may elect have up to 90% of their salary and annual bonus deferred and deposited with a qualified trustee, who in turn invests the money in a variety of investment vehicles as selected by each participant. The assets of the Rabbi Trust, consisting of primarily debt and equity securities, are recorded at current market prices (Level 1 in the fair value hierarchy). The trust assets are available to satisfy claims of our general creditors in the event of bankruptcy. The trust's assets, included in prepaid expenses and other current assets, and the corresponding deferred compensation liability, included in accrued employee compensation and benefits, were $7.5 million and $9.1 million at December 31, 2011 and 2010, respectively. This plan has no effect on our results of operations.

Multiemployer Pension Plans

        We participate in several multiemployer defined benefit plans under terms of collective-bargaining agreements that cover certain union-represented employees, none of which are significant. We contributed $0.2 million, $0.3 million and $0.3 million to our multiemployer plans in 2011, 2010 and 2009, respectively. The risks of participating in these multiemployer plans differ from our other defined benefit plans in the following respects:

• assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers;
• if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and
• if we choose to stop participating in a multiemployer plan, we may be required to contribute an amount to that plan based on the underfunded status of the plan (referred to as a withdrawal liability).

        We participate in a multi-employer defined benefit plan that covers union employees at a distribution center that has been closed. As a result of closing this facility, in March 2009 we paid a partial withdrawal liability payment of $2.4 million. Should any of the other participating companies in this plan also cease participation, we may become liable for a full withdrawal liability payment. We do not believe any resulting liability will be material.