DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Oct. 30, 2011

Notes to Financial Statements [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

The Company entered into foreign currency forward exchange contracts with respect to €1,300,000 during the first quarter of 2010 and €250,000 during the second quarter of 2010 in connection with the acquisition of Tommy Hilfiger to hedge against its exposure to changes in the exchange rate for the Euro, as a portion of the acquisition purchase price was payable in cash and denominated in Euros. Such foreign currency forward exchange contracts were not designated as hedging instruments. The Company settled these foreign currency forward exchange contracts at a loss of $140,490 on May 6, 2010 in connection with the Company’s completion of the Tommy Hilfiger acquisition. Such loss is reflected in Other Loss in the Company’s Consolidated Income Statements.

The Company has exposure to changes in foreign currency exchange rates related to certain anticipated cash flows associated with certain international inventory purchases. To help manage this exposure, the Company periodically uses foreign currency forward exchange contracts.

The Company also has exposure to interest rate volatility related to its senior secured term loan facilities. The Company has entered into an interest rate swap agreement and an interest rate cap agreement to hedge against this exposure. Please see Note 8, “Debt,” for a further discussion of these agreements.

The Company records the foreign currency forward exchange contracts, interest rate swap agreement and interest rate cap agreement (collectively referred to as “cash flow hedges”) at fair value in its Consolidated Balance Sheets. Changes in fair value of cash flow hedges that are designated as effective hedging instruments are deferred in equity as a component of Accumulated Other Comprehensive Income. The cash flows from such hedges are presented in the same category on the Consolidated Statements of Cash Flows as the items being hedged. Any ineffectiveness in such cash flow hedges is immediately recognized in earnings and no contracts were excluded from effectiveness testing. In addition, changes in the fair value of hedges that are not designated as effective hedging instruments are immediately recognized in earnings. The Company does not use derivative financial instruments for trading or speculative purposes.

The following table summarizes the fair value and presentation in the Consolidated Balance Sheets for the Company’s derivative financial instruments:

	Asset Derivatives (Classified in Other Current Assets)				Liability Derivatives (Classified in Accrued Expenses and Other Liabilities)
	10/30/11		10/31/10		10/30/11		10/31/10
Contracts designated as hedges:
Foreign currency forward exchange contracts	$	1,647	$	1,280	$	8,297	$	18,414
Interest rate contracts	281		—		8,106		—
Total contracts designated as hedges	1,928		1,280		16,403		18,414
Undesignated contracts:
Foreign currency forward exchange contracts	77		—		2,324		—
Total undesignated contracts	77		—		2,324		—
Total	$	2,005	$	1,280	$	18,727	$	18,414

At October 30, 2011, the notional amount of foreign currency forward exchange contracts outstanding was approximately $403,000. Such contracts expire between November 2011 and April 2013.

The following table summarizes the effect of the Company’s cash flow hedges designated as hedging instruments:

	Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)						Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Expense (Effective Portion)							Loss Recognized in Income on Derivatives (Ineffective Portion)
							Location	Amount						Location	Amount
Thirteen Weeks Ended	10/30/11			10/31/10				10/30/11			10/31/10				10/30/11		10/31/10
Foreign currency forward exchange contracts	$	1,742		$	(6,003	)	Cost of goods sold	$	(5,846	)	$	2,226		Selling, general and administrative expenses	$	—	$	(124	)
Interest rate contracts	(1,557		)	—			Interest expense	(1,386		)	—				—		—
Total	$	185		$	(6,003	)		$	(7,232	)	$	2,226			$	—	$	(124	)
Thirty-Nine Weeks Ended	10/30/11			10/31/10				10/30/11			10/31/10				10/30/11		10/31/10
Foreign currency forward exchange contracts	$	(21,921	)	$	(11,788	)	Cost of goods sold	$	(30,291	)	$	(1,688	)	Selling, general and administrative expenses	$	—	$	(6,230	)
Interest rate contracts	(10,362		)	—			Interest expense	(2,256		)	—				—		—
Total	$	(32,283	)	$	(11,788	)		$	(32,547	)	$	(1,688	)		$	—	$	(6,230	)

Accumulated Other Comprehensive Loss on foreign currency forward exchange contracts at October 30, 2011 of $5,281 is estimated to be reclassified in the next 12 months in the Consolidated Income Statements to costs of goods sold as the underlying inventory is purchased and sold. In addition, Accumulated Other Comprehensive Loss for interest rate contracts at October 30, 2011 of $4,173 is estimated to be reclassified to interest expense within the next 12 months.

The following table summarizes the effect of the Company’s foreign currency forward exchange contracts for inventory purchases that were not designated as hedging instruments:

	Gain Recognized in Income
	Location	Amount
		10/30/11		10/31/10
Thirteen Weeks Ended	Selling, general and administrative expenses	$	605	$	—
Thirty-Nine Weeks Ended	Selling, general and administrative expenses	863		—

Please refer to Note 11, “Fair Value Measurements,” for disclosures on fair value measurements of the Company’s derivative financial instruments. The Company had no derivative financial instruments with credit risk related contingent features underlying the related contracts as of October 30, 2011.