Supplemental Executive Retirement Plan

12 Months Ended

Feb. 02, 2013

Compensation and Retirement Disclosure [Abstract]

Supplemental Executive Retirement Plan

(10) Supplemental Executive Retirement Plan

On August 23, 2005, the Board of Directors of the Company adopted a Supplemental Executive Retirement Plan which became effective January 1, 2006. The SERP provides select employees who satisfy certain eligibility requirements with certain benefits upon retirement, termination of employment, death, disability or a change in control of the Company, in certain prescribed circumstances. Paul Marciano, Chief Executive Officer and Vice Chairman of the Board, is the only active employee participating in the SERP. Maurice Marciano, non-executive Chairman of the Board of Directors, was an active participant in the SERP until his retirement effective on January 28, 2012. Carlos Alberini, the Company’s former President and Chief Operating Officer, was an active participant in the SERP until his departure from the Company on June 1, 2010. Mr. Maurice Marciano and Mr. Alberini will be eligible to receive vested SERP benefits in the future in accordance with the terms of the SERP.

During the year ended January 28, 2012, the Company recorded a SERP curtailment expense of $1.2 million before taxes related to the accelerated amortization of prior service cost resulting from the retirement of Maurice Marciano as an employee and executive officer, effective upon the expiration of his employment agreement on January 28, 2012. Mr. Marciano did not receive or earn any additional SERP-related benefits in connection with his retirement and, as of the date of his retirement, ceased vesting or accruing any additional benefits under the terms of the SERP. During the year endedJanuary 29, 2011, the Company recorded a SERP curtailment expense of $5.8 millionbefore taxes related to the accelerated amortization of prior service cost resulting from the departure of Mr. Alberini from the Company. Mr. Alberini did not receive any termination payments in connection with his departure and, as of the date of his departure, he ceased vesting or accruing any additional benefits under the terms of the SERP. Mr. Marciano's retirement and Mr. Alberini's departure each resulted in a significant reduction in the total expected remaining years of future service of all SERP participants combined, resulting in the pension curtailment during each of the separate periods.

As a non-qualified pension plan, no dedicated funding of the SERP is required; however, the Company has made, and expects to continue to make, periodic payments into insurance policies held in a rabbi trust to fund the expected obligations arising under the non-qualified SERP. The amount of future payments may vary, depending on current estimates of final annual compensation and investment performance of the trust. The cash surrender values of the insurance policies were $47.9 million and $38.4 million as of February 2, 2013 and January 28, 2012, respectively, and were included in other assets in the Company's consolidated balance sheets. As a result of changes in the value of the insurance policy investments, the Company recorded unrealized gains (losses) of $3.4 million, $(0.2) million and $2.7 million in other income and expense during fiscal 2013, fiscal 2012 and fiscal 2011, respectively.

In accordance with authoritative accounting guidance for defined benefit pension and other postretirement plans, an asset for a plan’s overfunded status or a liability for a plan’s underfunded status is recognized in the consolidated balance sheets; plan assets and obligations that determine the plan’s funded status are measured as of the end of the Company’s fiscal year; and changes in the funded status of defined benefit postretirement plans are recognized in the year in which they occur. Such changes are reported in other comprehensive income (loss) and as a separate component of stockholders’ equity.

The components of net periodic pension cost to comprehensive income for fiscal 2013, fiscal 2012 and fiscal 2011 were as follows (in thousands):

	Year Ended			Year Ended			Year Ended
	Feb 2, 2013			Jan 28, 2012			Jan 29, 2011
Service cost	$	—		$	—		$	69
Interest cost	2,392			2,641			2,177
Net amortization of unrecognized prior service cost	620			940			1,195
Net amortization of actuarial losses	3,340			2,048			619
Curtailment expense	—			1,242			5,819
Net periodic defined benefit pension cost	$	6,352		$	6,871		$	9,879
Unrecognized prior service cost charged to comprehensive income	$	620		$	940		$	1,195
Unrecognized net actuarial loss charged to comprehensive income	3,340			2,048			619
Actuarial gains (losses)	3,508			(9,342		)	(8,361		)
Curtailment expense	—			1,242			5,819
Related tax impact	(2,855		)	2,057			251
Total periodic costs and other charges to comprehensive income	$	4,613		$	(3,055	)	$	(477	)

Included in accumulated other comprehensive income (loss), before tax, as of February 2, 2013 and January 28, 2012 were the following amounts that have not yet been recognized in net periodic benefit cost (in thousands):

	Feb 2, 2013		Jan 28, 2012
Unrecognized prior service cost	$	2,742	$	3,363
Unrecognized net actuarial loss	15,832		22,681
Total included in accumulated other comprehensive income (loss)	$	18,574	$	26,044

The following chart summarizes the SERP’s funded status and the amounts recognized in the Company’s consolidated balance sheets (in thousands):

	Feb 2, 2013			Jan 28, 2012
Projected benefit obligation	$	(58,639	)	$	(59,755	)
Plan assets at fair value (1)	—			—
Net liability (included in other long-term liabilities)	$	(58,639	)	$	(59,755	)

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(1) The SERP is a non-qualified pension plan and hence the insurance policies are not considered to be plan assets. Accordingly, the table above does not include the insurance policies with cash surrender values of $47.9 million and $38.4 million at February 2, 2013 and January 28, 2012, respectively.

A reconciliation of the changes in the projected benefit obligation for fiscal 2013 and fiscal 2012 is as follows (in thousands):

	Projected Benefit Obligation
Balance at January 29, 2011	$	47,772
Interest cost	2,641
Actuarial losses	9,342
Balance at January 28, 2012	$	59,755
Interest cost	2,392
Actuarial gains	(3,508		)
Balance at February 2, 2013	$	58,639

The Company assumed a discount rate of 4.0% for each of the years ended February 2, 2013 and January 28, 2012, respectively, as part of the actuarial valuation performed to calculate the projected benefit obligation disclosed above, based on the timing of cash flows expected to be made in the future to the participants, applied to high quality yield curves. Compensation levels utilized in calculating the projected benefit obligation were derived from expected future compensation as outlined in employment contracts in effect at the time. At February 2, 2013, amounts included in comprehensive income (loss) that are expected to be recognized as components of net periodic defined benefit pension cost in fiscal 2014 consist of amortization of prior service costs of $0.6 million and actuarial losses of $1.1 million. Benefits projected to be paid in the next five fiscal years amount to $6.8 million with one-fourth of such payments to be paid in each of the second, third, fourth and fifth years. Aggregate benefits projected to be paid in the following five fiscal years amount to $13.4 million.