Defined Benefit Plans

Supplemental Executive Retirement Plan

On August 23, 2005, the Board of Directors of the Company adopted a Supplemental Executive Retirement Plan (“SERP”) 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.

In July 2015, the SERP was amended in connection with Paul Marciano’s planned transition from Chief Executive Officer to Executive Chairman of the Board and Chief Creative Officer. The amendment effectively eliminated any future salary progression by finalizing compensation levels for future benefits. Mr. Marciano will continue to be eligible to receive SERP benefits in the future in accordance with the amended terms of the SERP. Subsequent to the amendment, there are no employees considered actively participating under the terms of the SERP.

As a result, the Company included an actuarial gain of $11.4 million before taxes in accumulated other comprehensive income (loss) during the nine months ended October 31, 2015. In addition, the Company also recognized a curtailment gain of $1.7 million before taxes related to the accelerated amortization of the remaining prior service credit during the nine months ended October 31, 2015. The actuarial and curtailment gains were recorded during the three months ended August 1, 2015.

As a non-qualified pension plan, no dedicated funding of the SERP is required; however, the Company has made periodic payments into insurance policies held in a rabbi trust to fund the expected obligations arising under the non-qualified SERP. The amount of any future payments into the insurance policies, if any, may vary depending on investment performance of the trust. The cash surrender values of the insurance policies were $55.1 million and $53.6 million as of October 31, 2015 and January 31, 2015, respectively, and were included in other assets in the Company’s condensed consolidated balance sheets. As a result of changes in the value of the insurance policy investments, the Company recorded unrealized gains (losses) of $(0.8) million and $0.8 million in other income and expense during the three and nine months ended October 31, 2015, respectively, and unrealized gains of $0.8 million and $3.0 million in other income during the three and nine months ended November 1, 2014, respectively. During the nine months ended October 31, 2015, the Company also recorded realized gains of $0.7 million in other income resulting from payout on the insurance policies. The realized gains were recorded during the three months ended May 2, 2015. The projected benefit obligation was $50.7 million and $61.9 million as of October 31, 2015 and January 31, 2015, respectively, and was included in accrued expenses and other long-term liabilities in the Company’s condensed consolidated balance sheets depending on the expected timing of payments. SERP benefit payments of $0.4 million and $1.3 million were made during the three and nine months ended October 31, 2015, respectively. SERP benefit payments of $0.6 million and $0.8 million were made during the three and nine months ended November 1, 2014.

The components of net periodic defined benefit pension cost for the three and nine months ended October 31, 2015 and November 1, 2014 related to the SERP are as follows (in thousands):



	Three Months Ended					Nine Months Ended
	Oct 31, 2015		Nov 1, 2014			Oct 31, 2015			Nov 1, 2014
Interest cost	$	498	$	573		$	1,489		$	1,717
Net amortization of unrecognized prior service credit	—		(58		)	(97		)	(174		)
Net amortization of actuarial losses	11		234			729			703
Curtailment gain	—		—			(1,651		)	—
Net periodic defined benefit pension cost	$	509	$	749		$	470		$	2,246

Swiss Pension Plan

In accordance with local regulations, the Company also maintains a pension plan in Switzerland for certain of its employees. The plan is a government-mandated defined contribution plan that provides employees with a minimum investment return determined annually by the Swiss government, and as such, is treated under pension accounting in accordance with authoritative guidance. Under the plan, both the Company and certain of its employees with annual earnings in excess of government determined amounts are required to make contributions into a fund managed by an independent investment fiduciary. The Company’s contributions must be made in an amount at least equal to the employee’s contribution. Minimum employee contributions are based on the respective employee’s age, salary and gender. As of October 31, 2015 and January 31, 2015, the plan had a projected benefit obligation of CHF14.8 million (US$15.0 million) and CHF13.9 million (US$15.1 million), respectively, and plan assets held at the independent investment fiduciary of CHF12.4 million (US$12.6 million) and CHF11.5 million (US$12.5 million), respectively. The net liability of CHF2.4 million (US$2.4 million) and CHF2.4 million (US$2.6 million) was included in other long-term liabilities in the Company’s condensed consolidated balance sheets as of October 31, 2015 and January 31, 2015, respectively. During the three and nine months ended October 31, 2015, the Company recognized net periodic defined benefit pension cost of CHF0.4 million (US$0.4 million) and CHF1.3 million (US$1.3 million), respectively, resulting from service cost and net amortization of actuarial losses related to the Swiss pension plan.