RETIREMENT AND BENEFIT PLANS

The Company has five noncontributory defined benefit pension plans 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 also has for certain of such employees 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 six plans as its “pension plans.”

As a result of the Company’s acquisition of Tommy Hilfiger, 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 three current and 17 retired executives. 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 refers to these two 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 benefits for active participants who, as of January 1, 2003, had not attained age 55 and 10 years of service.

Following is a reconciliation of the changes in the projected benefit obligation (pension plans and SERP Plans) and the accumulated benefit obligation (postretirement plan) for each of the last two years:



	Pension Plans						SERP Plans						Postretirement Plan
	2011			2010			2011			2010			2011			2010
Beginning of year	$	319,048		$	283,639		$	30,628		$	15,205		$	17,781		$	22,668
Business acquisitions	—			—			—			15,693			—			—
Service cost	14,138			9,216			98			90			—			—
Interest cost	19,183			17,843			1,810			1,623			1,018			1,090
Benefit payments	(15,405		)	(14,270		)	(2,275		)	(2,045		)	—			—
Benefit payments, net of retiree contributions	—			—			—			—			(1,800		)	(2,122		)
Plan amendments	—			9			—			—			—			—
Medicare subsidy	—			—			—			—			107			114
Actuarial loss (gain)	62,298			22,611			1,921			62			1,141			(3,969		)
End of year	$	399,262		$	319,048		$	32,182		$	30,628		$	18,247		$	17,781

Following is a reconciliation of the fair value of the assets held by the Company’s pension plans and the plans’ funded status for each of the last two years:



	2011			2010
Fair value of plan assets, beginning of year	$	251,810		$	207,883
Actual return, net of plan expenses	9,371			30,438
Benefit payments	(15,405		)	(14,270		)
Company contributions	22,729			27,759
Fair value of plan assets, end of year	$	268,505		$	251,810
Funded status at end of year	$	(130,757	)	$	(67,238	)

Amounts recognized in the Company’s Consolidated Balance Sheets were as follows:



	Pension Plans						SERP Plans						Postretirement Plan
	2011			2010			2011			2010			2011			2010
Current liabilities	$	(4,632	)	$	(3,753	)	$	(2,627	)	$	(2,295	)	$	(2,028	)	$	(2,014	)
Non-current liabilities	(126,125		)	(63,485		)	(29,555		)	(28,333		)	(16,219		)	(15,767		)
Net amount recognized on balance sheet	$	(130,757	)	$	(67,238	)	$	(32,182	)	$	(30,628	)	$	(18,247	)	$	(17,781	)

Pre-tax amounts in AOCI that, as of the end of each applicable fiscal year, had not yet been recognized as components of net benefit cost were as follows:



	Pension Plans						SERP Plans						Postretirement Plan
	2011			2010			2011			2010			2011			2010
Prior service credit	$	319		$	381		$	—		$	—		$	3,072		$	3,889
Net loss	(196,609		)	(131,190		)	(1,982		)	(43		)	(3,124		)	(2,010		)
Total	$	(196,290	)	$	(130,809	)	$	(1,982	)	$	(43	)	$	(52	)	$	1,879

Pre-tax amounts in AOCI as of January 29, 2012 expected to be recognized as components of net benefit cost in 2012 were as follows:



	Pension Plans			SERP Plans		Postretirement Plan
Prior service credit	$	62		$	—	$	817
Net (loss) gain	(16,307		)	—		(160		)
Total	$	(16,245	)	$	—	$	657

The pension plan assets are invested with the objective of being able to meet current and future benefit payment needs, while controlling pension expense volatility and future contributions. Plan assets are diversified among United States equities, international equities, fixed income investments and cash. The strategic target allocation for the majority of the plans as of January 29, 2012 was approximately 45% United States equities, 15% international equities and 40% fixed income investments. Equity securities primarily include investments in large-cap and mid-cap companies located in the United States and abroad. Fixed income securities include corporate bonds of companies from diversified industries, asset and mortgage backed securities, municipal bonds, collective funds and United States treasuries. Actual investment allocations may vary from the Company’s target investment allocations due to prevailing market conditions. The following tables show the fair value of total pension plan assets for each major category as of January 29, 2012 and January 30, 2011:



			Fair Value Measurements at January 29, 2012
Asset Category	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity securities:
U.S. equities⁽¹⁾	$	56,016	$	56,016	$	—	$	—
International equities⁽¹⁾	1,285		1,285		—		—
Global equity mutual fund⁽²⁾	13,297		13,297		—		—
U.S. equity fund⁽³⁾	37,564		37,564		—		—
International equity commingled fund⁽⁴⁾	41,288		—		41,288		—
Fixed income securities:
Government securities⁽⁵⁾	17,922		—		17,922		—
Corporate securities⁽⁵⁾	55,551		—		55,551		—
Short-term investment commingled funds⁽⁶⁾	39,379		—		39,379		—
Total return mutual fund⁽⁷⁾	4,194		4,194		—		—
Subtotal	$	266,496	$	112,356	$	154,140	$	—
Other assets and liabilities⁽⁸⁾	2,009
Total	$	268,505



				Fair Value Measurements at January 30, 2011
Asset Category	Total			Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity securities:
U.S. equities⁽¹⁾	$	53,609		$	53,609	$	—	$	—
International equities⁽¹⁾	2,910			2,910		—		—
Global equity mutual fund⁽²⁾	13,376			13,376		—		—
U.S. equity commingled fund⁽⁹⁾	35,696			—		35,696		—
International equity commingled fund⁽⁴⁾	46,632			—		46,632		—
Fixed income securities:
Government and agency securities⁽⁵⁾	3,610			—		3,610		—
Corporate securities⁽⁵⁾	25,617			—		25,617		—
Asset and mortgage backed securities⁽¹⁰⁾	13,969			—		13,969		—
U.S. bond commingled fund⁽¹¹⁾	16,935			—		16,935		—
Short-term investment commingled funds⁽⁶⁾	36,789			—		36,789		—
Total return mutual fund⁽⁷⁾	4,183			4,183		—		—
Subtotal	$	253,326		$	74,078	$	179,248	$	—
Other assets and liabilities⁽⁸⁾	(1,516		)
Total	$	251,810

⁽¹⁾ Valued at the closing price in the active market in which the individual securities are traded.


⁽²⁾	Valued at the net asset value of the fund, as determined by the closing price in the active market in which the individual fund is traded. This fund invests in a portfolio of U.S. and international equities seeking long-term growth of principal and income.


⁽³⁾	Valued at the closing price in the active market in which this fund is traded. This fund invests in U.S. large cap equities that track the Russell 1000 Index.


⁽⁴⁾	Valued at the net asset value of the fund, as determined by a pricing vendor or the fund family. The Company has the ability to redeem these investments at net asset value within the near term and therefore classifies these investments within Level 2. This fund invests primarily in equities outside the U.S. seeking long-term capital appreciation.


⁽⁵⁾	Valued with bid evaluation pricing that uses a discounted cash flow method. Inputs include actual and comparable trade data, market benchmarks, broker quotes, trading spreads and/or other applicable data.


⁽⁶⁾	Valued at the net asset value of the fund, as determined by a pricing vendor or the fund family. The Company has the ability to redeem these investments at net asset value within the near term and therefore classifies these investments within Level 2. This fund invests in high grade, short-term, money market instruments.


⁽⁷⁾	Valued at the net asset value of the fund, as determined by the closing price in the active market in which the individual fund is traded. This fund invests in both equity securities and fixed income securities seeking a high total return.


⁽⁸⁾	This category includes other pension assets and liabilities such as pending trades and accrued income.


⁽⁹⁾	Valued at the net asset value of the fund, as determined by a pricing vendor or the fund family. The Company has the ability to redeem these investments at net asset value within the near term and therefore classifies these investments within Level 2. This fund invests in U.S. large cap equities that track the S&P 500 Index.


⁽¹⁰⁾	Valued with bid evaluation pricing using a combined market/income approach that includes discounted projected cash flows, comparable trade data, market benchmarks and/or other applicable data.


⁽¹¹⁾	Valued at the net asset value of the fund, as determined by a pricing vendor or the fund family. The Company has the ability to redeem these investments at net asset value within the near term and therefore classifies these investments within Level 2. This fund invests in fixed income securities to track to the Barclays Capital U.S. aggregate bond index.

The Company believes that there are no significant concentrations of risk within its plan assets at January 29, 2012.

In 2011 and 2010, all of the Company’s pension plans, including the Company’s unfunded supplemental pension plans, had projected and accumulated benefit obligations in excess of plan assets. The balances were as follows:



	2011		2010
Number of plans with projected benefit obligations in excess of plan assets	6		6
Aggregate projected benefit obligation	$	399,262	$	319,048
Aggregate fair value of related plan assets	$	268,505	$	251,810

Number of plans with accumulated benefit obligations in excess of plan assets	6		6
Aggregate accumulated benefit obligation	$	366,744	$	298,618
Aggregate fair value of related plan assets	$	268,505	$	251,810

The components of net benefit cost and other pre-tax amounts recognized in other comprehensive income (loss) in each of the last three years were as follows:



Net Benefit Cost Recognized in Selling, General and Administrative Expenses

	Pension Plans									SERP Plans									Postretirement Plan
	2011			2010			2009			2011			2010			2009			2011			2010			2009
Service cost, including plan expenses	$	14,528		$	9,516		$	7,637		$	98		$	90		$	70		$	—		$	—		$	—
Interest cost	19,183			17,843			16,937			1,810			1,623			958			1,018			1,090			1,459
Amortization of net loss (gain)	9,240			7,580			2,325			(18		)	(8		)	(39		)	27			—			258
Expected return on plan assets	(22,123		)	(19,970		)	(20,028		)	—			—			—			—			—			—
Amortization of prior service credit	(62		)	(62		)	(30		)	—			—			—			(817		)	(817		)	(817		)
Curtailment loss	—			—			13			—			—			—			—			—			—
Total	$	20,766		$	14,907		$	6,854		$	1,890		$	1,705		$	989		$	228		$	273		$	900



Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss)

	Pension Plans									SERP Plans						Postretirement Plan
	2011			2010			2009			2011		2010		2009		2011			2010			2009
Actuarial loss (gain)	$	74,659		$	11,844		$	12,207		$	1,921	$	62	$	1,809	$	1,141		$	(3,969	)	$	1,666
Prior service cost	—			9			—			—		—		—		—			—			—
Amortization of prior service credit	62			62			16			—		—		—		817			817			817
Amortization of net (loss) gain	(9,240		)	(7,580		)	(2,325		)	18		8		39		(27		)	—			(258		)
Loss (gain) recognized in other comprehensive income (loss)	$	65,481		$	4,335		$	9,898		$	1,939	$	70	$	1,848	$	1,931		$	(3,152	)	$	2,225

Currently, the Company expects to make contributions of approximately $25,000 to its pension plans in 2012. The expected benefit payments associated with the Company’s pension plans and SERP Plans, and expected benefit payments, net of retiree contributions, associated with the Company’s postretirement plan are as follows:



			Postretirement Plan
	Pension Plans	SERP Plans	Excluding Medicare Subsidy Receipts	Expected Medicare Subsidy Receipts
2012	18,406	2,627	2,028	105
2013	18,419	2,684	1,930	100
2014	17,348	2,879	1,855	95
2015	18,736	2,702	1,756	89
2016	19,514	2,701	1,621	82
2017-2021	122,981	11,492	6,683	307

The medical health care cost trend rate assumed for 2012 is 6.46% and is assumed to decrease by approximately 0.15% per year through 2022. Thereafter, the rate assumed is 5.0%. If the assumed health care cost trend rate increased or decreased by 1%, the aggregate effect on the service and interest cost components of the net postretirement benefit cost for 2011 and on the accumulated postretirement benefit obligation at January 29, 2012 would be as follows:



	1% Increase		1% Decrease
Impact on service and interest cost	$	62	$	(56	)
Impact on year-end accumulated postretirement benefit obligation	$	1,168	$	(1,055	)

Significant weighted average rate assumptions used in determining the projected and accumulated benefit obligations at the end of each year and benefit cost in the following year were as follows:



	2011		2010		2009
Discount rate	5.06	%	6.09	%	6.35	%
Rate of increase in compensation levels (applies to pension plans only)	4.31	%	4.30	%	4.29	%
Long-term rate of return on assets (applies to pension plans only)	7.75	%	8.25	%	8.25	%

To develop the expected weighted average long-term rate of return on assets assumption, the Company considered the historical level of the risk premium associated with the asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.

The Company has savings and retirement plans and a supplemental savings plan for the benefit of its eligible employees who elect to participate. The Company matches a portion of employee contributions to the plans. The Company also has a defined contribution plan for certain employees associated with certain businesses acquired in the Tommy Hilfiger acquisition, whereby the Company pays a percentage of the contribution for the employee. The Company’s contributions to these plans were $12,664 in 2011, $9,898 in 2010 and $6,195 in 2009.