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Risk Management and Derivatives
6 Months Ended
Aug. 04, 2018
General Discussion of Derivative Instruments and Hedging Activities [Abstract]  
Risk Management And Derivatives
Note 13
Risk Management and Derivatives
 
In the normal course of business, the Company’s financial results are impacted by currency rate movements in foreign currency denominated assets, liabilities and cash flows as it makes a portion of its purchases and sales in local currencies. The Company has established policies and business practices that are intended to mitigate a portion of the effect of these exposures. The Company uses derivative financial instruments, primarily forward contracts, to manage its currency exposures. These derivative financial instruments are viewed as risk management tools and are not used for trading or speculative purposes. Derivatives entered into by the Company are designated as cash flow hedges of forecasted foreign currency transactions. 
 
Derivative financial instruments expose the Company to credit and market risk. The market risk associated with these instruments resulting from currency exchange movements is expected to offset the market risk of the underlying transactions being hedged. The Company does not believe there is a significant risk of loss in the event of non-performance by the counterparties associated with these instruments because these transactions are executed with major international financial institutions and have varying maturities through August 2019. Credit risk is managed through the continuous monitoring of exposures to such counterparties. 
 
The Company’s hedging strategy uses forward contracts as cash flow hedging instruments, which are recorded in the Company's condensed consolidated balance sheets at fair value. The effective portion of gains and losses resulting from changes in the fair value of these hedge instruments are deferred in accumulated other comprehensive loss and reclassified to earnings in the period that the hedged transaction is recognized in earnings.
 
As of August 4, 2018, July 29, 2017 and February 3, 2018, the Company had forward contracts maturing at various dates through August 2019, August 2018 and February 2019, respectively. The contract amounts in the following table represent the net notional amount of all purchase and sale contracts of a foreign currency. 
(U.S. $ equivalent in thousands)
August 4, 2018

July 29, 2017

February 3, 2018

Financial Instruments
 
 
 
Euro
$
14,852

$
14,725

$
21,223

U.S. dollars (purchased by the Company’s Canadian division with Canadian dollars)
15,992

18,110

16,874

Chinese yuan
12,394

11,887

12,058

New Taiwanese dollars
526

567

596

Other currencies
391

444

415

Total financial instruments
$
44,155

$
45,733

$
51,166


 
The classification and fair values of derivative instruments designated as hedging instruments included within the condensed consolidated balance sheets as of August 4, 2018, July 29, 2017 and February 3, 2018 are as follows:

 
Asset Derivatives
 
Liability Derivatives
($ thousands)
Balance Sheet Location
Fair Value

 
Balance Sheet Location
Fair Value

Foreign Exchange Forward Contracts
 

 
 
 

August 4, 2018
Prepaid expenses and other current assets
$
305

 
Other accrued expenses
$
1,380

July 29, 2017
Prepaid expenses and other current assets
918

 
Other accrued expenses
1,083

February 3, 2018
Prepaid expenses and other current assets
1,540

 
Other accrued expenses
542


 
For the thirteen and twenty-six weeks ended August 4, 2018 and July 29, 2017, the effect of derivative instruments in cash flow hedging relationships on the condensed consolidated statements of earnings was as follows:

 
Thirteen Weeks Ended
Thirteen Weeks Ended
($ thousands)
August 4, 2018
July 29, 2017
Foreign Exchange Forward Contracts:
Income Statement Classification (Losses) Gains - Realized
 Loss Recognized in OCL on Derivatives

 (Loss) Gain Reclassified from Accumulated OCL into Earnings

Loss Recognized in OCL on Derivatives

Gain Reclassified from Accumulated OCL into Earnings

 
 
 
 
 
Net sales
$
(17
)
$
(4
)
$
(8
)
$
6

Cost of goods sold
(283
)
28

(55
)
158

Selling and administrative expenses
(730
)
97

(194
)

Interest expense, net


(14
)

 
 
 
 
 
 
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
($ thousands)
August 4, 2018
July 29, 2017
Foreign Exchange Forward Contracts:
Income Statement Classification (Losses) Gains - Realized
Loss Recognized in OCL on Derivatives

(Loss) Gain Reclassified from Accumulated OCL into Earnings

(Loss) Gain Recognized in OCL on Derivatives

Gain (Loss) Reclassified from Accumulated OCL into Earnings

 
 
 
 
 
Net sales
$
(42
)
$
(4
)
$
(40
)
$
24

Cost of goods sold
(684
)
(64
)
737

161

Selling and administrative expenses
(802
)
334

117

(67
)
Interest expense, net


(10
)
(1
)
All gains and losses currently included within accumulated other comprehensive loss associated with the Company’s foreign exchange forward contracts are expected to be reclassified into net earnings within the next 12 months. Additional information related to the Company’s derivative financial instruments are disclosed within Note 14 to the condensed consolidated financial statements.