Pottery Barn 2012 Annual Report Download - page 69

was $14,637,000, $9,614,000 and $15,736,000, respectively, and the tax benefit associated with such exercises
totaled $21,477,000, $15,078,000 and $24,762,000, respectively.
Note I: Williams-Sonoma, Inc. 401(k) Plan and Other Employee Benefits
We have a defined contribution retirement plan, the Williams-Sonoma, Inc. 401(k) Plan (the “401(k) Plan”),
which is intended to be qualified under Internal Revenue Code Sections 401(a), 401(k), 401(m) and 4975(e)(7).
The 401(k) Plan permits eligible employees to make salary deferral contributions up to 75% of their eligible
compensation each pay period (7% for highly-compensated employees). Employees designate the funds in which
their contributions are invested. Each participant may choose to have his or her salary deferral contributions and
earnings thereon invested in one or more investment funds, including our company stock fund.
Our matching contribution is equal to 50% of each participant’s salary deferral contribution, taking into account
only those contributions that do not exceed 6% of the participant’s eligible pay for the pay period. Each
participant’s matching contribution is earned on a semi-annual basis with respect to eligible salary deferrals for
those employees that are employed with the company on June 30th or December 31st of the year in which the
deferrals are made. Each associate must complete one year of service prior to receiving company matching
contributions. For the first five years of the participant’s employment, all matching contributions vest at the rate
of 20% per year of service, measuring service from the participant’s hire date. Thereafter, all matching
contributions vest immediately.
The 401(k) Plan consists of two parts: a profit sharing plan portion and a stock bonus plan/employee stock
ownership plan (the “ESOP”). The ESOP portion is the portion that is invested in the Williams-Sonoma, Inc.
Stock Fund. The profit sharing and ESOP components of the 401(k) Plan are considered a single plan under Code
section 414(l). Our contributions to the plan were $5,517,000, $4,862,000 and $4,247,000 in fiscal 2012, fiscal
2011 and fiscal 2010, respectively.
We also have a nonqualified executive deferred compensation plan that provides supplemental retirement income
benefits for a select group of management and other certain highly compensated employees. In January 2010 all
employee salary and bonus deferrals into the plan were suspended, however, beginning January 2013 salary and
bonus deferrals were reinstated into the plan for all eligible employees. We have an unsecured obligation to pay
in the future the value of the deferred compensation adjusted to reflect the performance, whether positive or
negative, of selected investment measurement options, chosen by each participant, during the deferral period. As
of February 3, 2013 and January 29, 2012, $12,148,000 and $12,150,000, respectively, is included in other long-
term obligations. Additionally, we have purchased life insurance policies on certain participants to potentially
offset these unsecured obligations. The cash surrender value of these policies was $14,137,000 and $12,684,000
as of February 3, 2013 and January 29, 2012, respectively, and is included in other assets, net.
Note J: Commitments and Contingencies
We are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. These
disputes, which are not currently material, are increasing in number as our business expands and our company
grows larger. Litigation is inherently unpredictable. Any claims against us, whether meritorious or not, could be
time consuming, result in costly litigation, require significant amounts of management time and result in the
diversion of significant operational resources. The results of these lawsuits, claims and proceedings cannot be
predicted with certainty. However, we believe that the ultimate resolution of these current matters will not have a
material adverse effect on our consolidated financial statements taken as a whole.
We are party to a variety of contractual agreements under which we may be obligated to indemnify the other
party for certain matters. These contracts primarily relate to our commercial contracts, operating leases,
trademarks, intellectual property, financial agreements and various other agreements. Under these contracts, we
may provide certain routine indemnifications relating to representations and warranties or personal injury
matters. The terms of these indemnifications range in duration and may not be explicitly defined. Historically, we
have not made significant payments for these indemnifications. We believe that if we were to incur a loss in any
of these matters, the loss would not have a material effect on our financial condition or results of operations.
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Form 10-K