RETIREMENT BENEFIT PLANS

12 Months Ended

Feb. 29, 2012

RETIREMENT BENEFIT PLANS [Abstract]

RETIREMENT BENEFIT PLANS

13. RETIREMENT BENEFIT PLANS

Supplemental Executive Retirement Plan

The Company maintains an unfunded Supplemental Executive Retirement Plan (“SERP”) to provide senior management with retirement, disability and death benefits. The SERP's retirement benefits were based upon the participant's average compensation during the three-year period prior to retirement. An amendment to the SERP was executed on November 3, 2009, freezing the benefit level for existing participants as of February 28, 2010 and closing the SERP to new participants.

The following tables summarize changes in the SERP's benefit obligation, the SERP's plan assets and the SERP's components of net periodic benefit costs, including key assumptions. The measurement dates for the SERP's plan assets and obligations were February 29, 2012 and February 28, 2011 (in thousands):

As of February 29 and 28,	2012			2011
Change in projected benefit obligation:
Beginning of year	$	7,681		$	7,411
Interest cost		347			412
Benefit payments		(740	)		(740	)
Actuarial loss		712			598
End of year	$	8,000		$	7,681
Change in plan assets:
Employer contribution	$	740		$	740
Benefits paid		(740	)		(740	)
Fair value of plan assets at end of year	$	-		$	-
Amounts recognized in the statement of financial position:
Current liabilities	$	(655	)	$	(740	)
Non-current liabilities		(7,345	)		(6,941	)
Pension liability at end of year	$	(8,000	)	$	(7,681	)
Amounts recognized in accumulated other comprehensive loss:
Net loss	$	1,320		$	608
Total amount recognized in accumulated other comprehensive income	$	1,320		$	608
Assumptions used in determining actuarial present value of benefit obligations:
Discount rate		3.55	%		4.75	%

For the Years Ended February 29 and 28,	2012			2011			2010
Components of net periodic benefit costs:
Service cost - benefits earned during the year	$	-		$	-		$	311
Interest cost on projected benefit obligation		347			412			443
Net periodic pension expense	$	347		$	412		$	754
Assumptions used to calculate periodic pension cost:
Discount rate		4.75	%		4.75	%		6.75	%
Weighted average rate of compensation increase		-			-			-

The discount rate used in the Plan's measurement is based upon a weighted average of high-quality long-term investment yields during the six-month period preceding the date of measurement.

Although the Plan is unfunded, the Company is the beneficiary of life insurance policies that have been purchased as a method of partially financing benefits. The cash surrender value of these policies was approximately $1.7 million at February 29, 2012 and February 28, 2011.

Annual benefit payments and contributions under this plan are expected to be approximately $0.7 million in fiscal 2013 and approximately $5.0 million cumulatively in fiscal 2014 through fiscal 2022.

The estimated portion of net gains and losses, prior service costs and credits and transition assets and obligations of the plan to be amortized during the next fiscal year is a negligible amount.

Retirement Plan - SMSC Japan

One of the Company's subsidiaries, SMSC Japan, also maintains an unfunded retirement plan, which provides its employees and directors with separation benefits, consistent with customary practices in Japan. Benefits under this defined benefit plan are based upon length of service and compensation factors.

The following tables summarize changes in the plan's benefit obligation, the plan assets and components of net periodic benefit costs, including key assumptions. The measurement dates for the plan assets and obligations were February 29, 2012 and February 28, 2011 (in thousands):

As of February 29 and 28,	2012			2011
Change in projected benefit obligation:
Beginning of year	$	1,746		$	1,550
Service cost - benefits earned during the year		251			244
Interest cost		22			18
Amendments/Settlements/Curtailments		(39	)		-
Actuarial loss		14			-
Benefit payments		(1,529	)		(193	)
Other		-			127
End of year	$	465		$	1,746
Change in plan assets:
Employer contribution	$	1,529		$	193
Benefits paid		(1,529	)		(193	)
Fair value of plan assets at end of year	$	-		$	-
Amounts recognized in the statement of financial position:
Current liabilities	$	-		$	(204	)
Non-current liabilities		(465	)		(1,542	)
Net amounts recognized	$	(465	)	$	(1,746	)
Amounts recognized in accumulated other comprehensive loss:
Net loss	$	7		$	51
Total amount recognized in accumulated other comprehensive income	$	7		$	51
Assumptions used in determining actuarial present value of benefit obligations:
Discount rate		1.20	%		1.25	%
Weighted average rate of compensation increase		4.40	%		3.00	%

For the Years Ended February 29 and 28,	2012			2011			2010
Components of net periodic benefit costs:
Service cost - benefits earned during the year	$	251		$	244		$	138
Interest cost on projected benefit obligation		22			18			14
Settlement loss recognized		19			-			-
Net periodic pension expense	$	292		$	262		$	152
Assumptions used to calculate periodic pension cost:
Discount rate		1.25	%		1.25	%		1.50	%
Weighted average rate of compensation increase		3.00	%		3.00	%		3.00	%

The discount rate used in the Plan's measurement is based upon an average of high-quality long-term investment yields in Japan. The weighted average rate of compensation increase reflects management's current expectations of future compensation trends.

There is no benefit payments expected to be made by the plan in fiscal 2013. The plan as it pertains to non-director employees has been transitioned to a defined contribution plan in fiscal 2012.