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Benefit Plans
 12 Months Ended
Jan. 28, 2012
Compensation and Employee Benefit Plans [Text Block]

Note 7. Benefit Plans


401(k) Savings Plan


The Company offers a 401(k) Savings Plan to eligible employees meeting certain age and service requirements. This plan permits participants to contribute up to 80% of their salary, including bonuses, up to the maximum allowable by IRS regulations. Participants are immediately vested in their voluntary contributions plus actual earnings thereon. As of March 1, 2011, the Company suspended its matching contribution. Prior to termination of the Company’s matching contribution, participant vesting of the Company’s matching and profit sharing contribution was based on the years of service completed by the participant. Participants are fully vested upon the completion of four years of service. All participant forfeitures of non-vested benefits are used to reduce the Company’s contributions or fees in future years. Total expense related to the Company’s matching contribution was approximately $3,000, $439,000 and $0 in Fiscal 2011, 2010 and 2009, respectively.


Stock Award Plans


The Company has five employee stock award plans, the 1994 Stock Option Plan, the 1998 Stock Option Plan, the 1999 Stock Option Plan and the 2002 Stock Option Plan (the “Old Plans”); and the 2005 Long Term Incentive and Share Award Plan (the “New Plan”). Additionally, the Company has a stock award plan for non-employee directors (the “1990 Plan”). The Company no longer issues stock options under the Old Plans.


Equity awards authorized for issuance under the Old Plans, New Plan and 1990 Plan total 20.6 million. As of January 28, 2012, of the awards authorized for issuance under the Old Plans, New Plan and 1990 Plan, 6.5 million were granted and are outstanding, 5.0 million of which were vested and exercisable. Shares available for future grants of options and other share based awards at January 28, 2012 and January 29, 2011 were 2.2 million and 2.7 million, respectively.


During Fiscal 2008, the Company issued 275,000 restricted stock units. Restricted stock units vest 50% after two years and 50% after three years and will be settled in cash upon vesting. During Fiscal 2011, Fiscal 2010 and Fiscal 2009, the Company recognized $87,000, $128,000 and $75,000, respectively, in expenses related to the grant of restricted stock units.


Total stock-based compensation expense recognized in the Consolidated Statements of Operations for Fiscal 2011, Fiscal 2010 and Fiscal 2009 was $0.3 million, $0.6 million and $2.3 million. For Fiscal 2011, Fiscal 2010 and Fiscal 2009 the related total deferred tax expense was $0. As of January 28, 2012, there was $0.7 million of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over a weighted average period of 2.6 years.


The fair values of the options granted have been estimated at the date of grant using the Black - Scholes option pricing model with the following assumptions:


 

 

 

 

 

 

 

 

 

Stock Option Plan

 

2011

 

2010

 

2009

Dividend yield

 

 

 

0%

 

 

 

 

0%

 

 

 

 

0%

 

Expected volatility

 

 

 

69.9%-75.4%

 

 

 

 

76.4%-81.9%

 

 

 

 

75.6%

 

Risk-free interest rate

 

 

 

1.42%-2.81%

 

 

 

 

1.99%-2.13%

 

 

 

 

3.33%-3.37%

 

Expected option life in years

 

 

 

4.92-6.98

 

 

 

 

4.03-5.45

 

 

 

 

4.98-6.98

 

Weighted average fair value per share of options granted during the year

 

$1.27

 

$1.33

 

$0.69


The following table summarizes information about stock option awards outstanding under the Old Plans, New Plan and 1990 Plan as of January 28, 2012:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise
Price Range

 

Outstanding

 

Exercisable

 

Shares

 

Average
Remaining
Life

 

Weighted
Average
Exercise
Price

 

Average
Intrinsic
Value

 

Shares

 

Weighted
Average
Exercise
Price

 

Aggregate
Intrinsic
Value

$0.98-$2.66

 

 

 

1,332,500

 

 

 

 

8.6

 

 

 

$

 

2.04

 

 

 

$

 

530,335

 

 

 

 

135,000

 

 

 

$

 

1.97

 

 

 

$

 

63,225

 

2.67-5.33

 

 

 

2,143,464

 

 

 

 

2.19

 

 

 

 

4.07

 

 

 

 

—

 

 

 

 

2,143,464

 

 

 

 

4.07

 

 

 

 

—

 

5.34-8.00

 

 

 

269,200

 

 

 

 

5.16

 

 

 

 

5.56

 

 

 

 

—

 

 

 

 

269,200

 

 

 

 

5.56

 

 

 

 

—

 

8.01-10.67

 

 

 

1,660,752

 

 

 

 

1.25

 

 

 

 

9.17

 

 

 

 

—

 

 

 

 

1,660,752

 

 

 

 

9.17

 

 

 

 

—

 

10.68-13.33

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

13.34-16.00

 

 

 

720,935

 

 

 

 

3.2

 

 

 

 

14.32

 

 

 

 

—

 

 

 

 

720,935

 

 

 

 

14.32

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

6,126,851

 

 

 

 

3.6

 

 

 

$

 

6.28

 

 

 

$

 

530,335

 

 

 

 

4,929,351

 

 

 

$

 

7.31

 

 

 

$

 

63,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value based on the Company’s closing stock price of $2.44 as of January 27, 2012, which would have been received by the award holders had all award holders under the Old Plans, New Plan and 1990 Plan exercised their awards as of that date.


The following table summarizes stock option activity under the Stock Award Plans:


 

 

 

 

 

 

 

 

 

 

 

 

 

Employee and Director Stock Award Plans

 

Number of
Shares Subject
To Option

 

Stock Award
Exercise Price
Range Per Share

 

Weighted
Average
Exercise Price

 

Other
Share
Awards(1)

 

Weighted
Average Grant
Date Value

Balance January 31, 2009

 

 

 

7,944,754

 

 

 

$

 

1.16-$15.25

 

 

 

$

 

8.36

 

 

 

 

503,691

 

 

 

$

 

3.97

 

Granted

 

 

 

17,500

 

 

 

 

0.98

 

 

 

 

0.98

 

 

 

 

330,764

 

 

 

 

0.81

 

Exercised

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(137,693

)

 

 

 

 

4.69

 

Forfeited

 

 

 

(76,925

)

 

 

 

 

2.76-5.50

 

 

 

 

4.93

 

 

 

 

(36,697

)

 

 

 

 

2.18

 

Canceled

 

 

 

(775,654

)

 

 

 

 

3.50-15.25

 

 

 

 

12.64

 

 

 

 

—

 

 

 

 

0.00

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 30, 2010

 

 

 

7,109,675

 

 

 

$

 

0.98-$14.32

 

 

 

$

 

7.91

 

 

 

 

660,065

 

 

 

$

 

2.34

 

Granted

 

 

 

1,000,000

 

 

 

 

1.67-2.11

 

 

 

 

2.07

 

 

 

 

279,898

 

 

 

 

2.22

 

Exercised

 

 

 

—-

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(109,364

)

 

 

 

 

3.03

 

Forfeited

 

 

 

(107,000

)

 

 

 

 

5.32-6.43

 

 

 

 

5.51

 

 

 

 

(357,879

)

 

 

 

 

2.18

 

Canceled

 

 

 

(1,315,617

)

 

 

 

 

3.50-14.32

 

 

 

 

9.32

 

 

 

 

(279,898

)

 

 

 

 

1.53

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 29, 2011

 

 

 

6,687,058

 

 

 

$

 

0.98-$14.32

 

 

 

$

 

6.80

 

 

 

 

192,822

 

 

 

$

 

4.19

 

Granted

 

 

 

310,000

 

 

 

 

1.73-2.31

 

 

 

 

2.02

 

 

 

 

279,898

 

 

 

 

1.63

 

Exercised

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(110,276

)

 

 

 

 

2.57

 

Forfeited

 

 

 

(12,925

)

 

 

 

 

1.16-5.50

 

 

 

 

2.99

 

 

 

 

—

 

 

 

 

0.00

 

Canceled

 

 

 

(857,282

)

 

 

 

 

3.50-14.32

 

 

 

 

8.82

 

 

 

 

—

 

 

 

 

0.00

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 28, 2012

 

 

 

6,126,851

 

 

 

$

 

0.98-$14.32

 

 

 

$

 

6.28

 

 

 

 

362,444

 

 

 

$

 

2.71

 

 

 

 

 

 

 

 

 

 

 

 


 

(1)

 

 

 

Other Share Awards include deferred shares granted to Directors and restricted stock units issued to employees.


During Fiscal 2011, 2010 and 2009, the Company recognized expenses of approximately $13,000, $74,000 and $103,000, respectively, for deferred shares issued to non-employee directors at an exercise price below the closing stock price on the date of grant.


Defined Benefit Plans


The Company maintains a non-qualified Supplemental Executive Retirement Plan (“SERP”) for certain Executive Officers of the Company. The SERP, which is unfunded, provides eligible executives defined pension benefits that supplement benefits under other retirement arrangements. The annual benefit amount is based on salary and bonus at the time of retirement and number of years of service.


The Company provides the Board of Directors with a noncontributory, unfunded retirement plan (“Director Retirement Plan”) that pays a retired director an annual retirement benefit equal to 60% of the annual retainer at the time of retirement plus a 3% annual increase through the final payment. Payments begin at age 62 or retirement, whichever is later, and continue for 10 years or the life of the director and his or her spouse, whichever period is shorter. Partial vesting in the retirement plan begins after six years of continuous service. Participants become fully vested after 12 years of continuous service on the Board. After June 1, 2003, new directors were not covered by the Director Retirement Plan. Directors who were not yet vested in their retirement benefits as of June 1, 2003 had the present value of benefits already accrued as of the effective date converted to Deferred Shares under the 1990 Plan. Directors that were fully or partially vested in their retirement benefits were given a one-time election to continue to participate in the current retirement program or convert the present value of benefits already accrued to Deferred Shares under the 1990 Plan as of the effective date.


For Fiscal 2011, Fiscal 2010 and Fiscal 2009, net periodic benefit cost recognized under both plans totaled approximately $0.7 million, $0.4 million, and $1.0 million, respectively. The accrued pension liability for both plans was approximately $16.0 million and $12.9 million at January 28, 2012 and January 29, 2011, respectively, and is recorded within other long term liabilities. The accumulated benefit obligation for both plans was approximately $15.7 million and $10.8 million as of January 28, 2012 and January 29, 2011, respectively.


The following is a summary of the Company’s defined benefit pension plans as of the most recent actuarial calculations:


Obligation and Funded Status:


 

 

 

 

 

 

 

January 28,
2012

 

January 29,
2011

 

 

($ in thousands)

Change in Projected Benefit Obligation:

 

 

 

 

Benefit obligation at beginning of year

 

 

$

 

12,855

 

 

 

$

 

11,400

 

Service cost

 

 

 

147

 

 

 

 

133

 

Interest cost

 

 

 

671

 

 

 

 

653

 

Actuarial (gain)/loss

 

 

 

2,468

 

 

 

 

761

 

Benefits paid

 

 

 

(120

)

 

 

 

 

(92

)

 

 

 

 

 

 

Projected Benefit obligation at end of year

 

 

$

 

16,021

 

 

 

$

 

12,855

 

 

 

 

 

 

Fair value of plan assets at end of year

 

 

$

 

—

 

 

 

$

 

—

 

 

 

 

 

 

Reconciliation of Funded Status:

 

 

 

 

Funded status

 

 

 

($16,021

)

 

 

 

 

($12,855

)

 

Unrecognized prior service cost

 

 

 

1,605

 

 

 

 

1,947

 

Unrecognized net actuarial gain

 

 

 

(547

)

 

 

 

 

(3,462

)

 

 

 

 

 

 

Accrued benefit cost

 

 

 

(14,963

)

 

 

 

 

(14,370

)

 

Decrease (increase) in liability

 

 

 

1,058

 

 

 

 

1,515

 

 

 

 

 

 

Accrued pension liability

 

 

 

($16,021

)

 

 

 

 

($12,855

)

 

 

 

 

 

 


Amounts recognized in the Consolidated Balance Sheets consist of:


 

 

 

 

 

 

 

January 28,
2012

 

January 29,
2011

 

 

($ in thousands)

Accrued pension liability

 

 

 

($16,021

)

 

 

 

 

($12,855

)

 

Add: Accumulated other comprehensive income/(loss)

 

 

 

1,058

 

 

 

 

(1,515

)

 

Add: Deferred tax asset

 

 

 

1,099

 

 

 

 

1,099

 

 

 

 

 

 

Net amount recognized

 

 

 

($13,864

)

 

 

 

 

($13,271

)

 

 

 

 

 

 


Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive (Income) Loss:


 

 

 

 

 

 

 

Net Periodic Benefit Cost:

 

Fiscal Year

 

2011

 

2010

 

2009

 

 

($ in thousands)

Service cost

 

 

$

 

147

 

 

 

$

 

133

 

 

 

$

 

195

 

Interest cost

 

 

 

671

 

 

 

 

653

 

 

 

 

802

 

Amortization of prior service cost

 

 

 

342

 

 

 

 

342

 

 

 

 

342

 

Amortization of net (gain) loss

 

 

 

(448

)

 

 

 

 

(683

)

 

 

 

 

(346

)

 

 

 

 

 

 

 

 

Net periodic benefit cost

 

 

$

 

712

 

 

 

$

 

445

 

 

 

$

 

993

 

 

 

 

 

 

 

 


Other Changes in Benefit Obligations Recognized in Other Comprehensive (Income) Loss:


 

 

 

 

 

Net prior service (cost)/credit recognized as a component of net periodic benefit cost

 

 

 

($342

)

 

 

 

 

($342

)

 

Net actuarial gain recognized as a component of net periodic benefit cost

 

 

 

448

 

 

 

 

683

 

Net actuarial (gain) loss arising during the period

 

 

 

2,467

 

 

 

 

761

 

 

 

 

 

 

 

 

 

 

2,573

 

 

 

 

1,102

 

Income tax effect

 

 

 

—

 

 

 

 

—

 

 

 

 

 

 

Total recognized in other comprehensive (income) loss

 

 

$

 

2,573

 

 

 

$

 

1,102

 

 

 

 

 

 

Total recognized in net periodic benefit cost and other comprehensive (income) loss

 

 

 

($3,285

)

 

 

 

 

($1,547

)

 

 

 

 

 

 


The pre-tax components of accumulated other comprehensive income, which have not yet been recognized as components of net periodic benefit cost as of January 28, 2012 and January 29, 2011 are summarized below.


 

 

 

 

 

 

 

January 28,
2012

 

January 29,
2011

 

 

($ in thousands)

Net unrecognized actuarial gain

 

 

 

($547

)

 

 

 

 

($3,462

)

 

Net unrecognized prior service cost

 

 

 

1,605

 

 

 

 

1,947

 

 

 

 

 

 

Accumulated other comprehensive income

 

 

$

 

1,058

 

 

 

 

($1,515

)

 

 

 

 

 

 


In Fiscal 2012, approximately $342,000 of net unrecognized prior service cost and approximately $1,500 of the net unrecognized actuarial gain, recorded as components of accumulated other comprehensive loss at January 28, 2012, will be recognized as components of net periodic benefit cost.


Assumptions:


 

 

 

 

 

 

 

Fiscal Year

 

2011

 

2010

Weighted-average assumptions used to determine benefit obligation:

 

 

 

 

Discount rate

 

4.00%

 

5.25%

Salary increase rate

 

4.00%

 

4.00%

Measurement date

 

Jan 28, 2012

 

Jan. 29, 2011


 

 

 

 

 

 

 

 

 

Fiscal Year

 

2011

 

2010

 

2009

Weighted-average assumptions used to determine net periodic benefit cost:

 

 

 

 

 

 

Discount rate

 

 

 

5.25

%

 

 

 

 

5.75

%

 

 

 

 

5.75

%

 

Salary increase rate

 

 

 

4.00

%

 

 

 

 

4.00

%

 

 

 

 

4.00

%

 


The discount rate is based on the rates implicit in high-quality fixed-income investments currently available as of the measurement date. The Citigroup Pension Discount Curve (CPDC) rates are intended to represent the spot rates implied by the high quality corporate bond market in the U.S. The projected benefit payments attributed to the projected benefit obligation have been discounted using the CPDC mid-year rates and the discount rate is the single constant rate that produces the same total present value.


The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


 

 

 

Year

 

Pension Benefits

 

 

($ in thousands)

2012

 

 

$

 

151

 

2013

 

 

 

226

 

2014

 

 

 

1,043

 

2015

 

 

 

1,036

 

2016

 

 

 

1,025

 

2017 and thereafter

 

 

 

5,647