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DERIVATIVE FINANCIAL INSTRUMENTS
 3 Months Ended
Apr. 29, 2012
Notes to Financial Statements [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS

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 6, “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 (loss) income (“AOCI”). 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 and Other Assets)
Liability Derivatives (Classified in Accrued Expenses and Other Liabilities)
 
4/29/12
 
5/1/11
 
4/29/12
 
5/1/11
Contracts designated as hedges:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts    
$
9,611

 
$
1,755

 
$
2,816

 
$
42,637

Interest rate contracts
133

 
—

 
6,865

 
—

Total contracts designated as hedges
9,744

 
1,755

 
9,681

 
42,637

Undesignated contracts:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts    
5

 
58

 
339

 
—

Total undesignated contracts
5

 
58

 
339

 
—

Total
$
9,749

 
$
1,813

 
$
10,020

 
$
42,637



At April 29, 2012, the notional amount outstanding of foreign currency forward exchange contracts for inventory purchases was approximately $408,000. Such contracts expire principally between May 2012 and April 2013.

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

 
 
Loss Recognized in Other Comprehensive Income (Effective Portion)
 
Gain (Loss) Reclassified from AOCI into Income (Expense)  (Effective Portion)             
 
 
 
Location
 Amount
 
 
 
 
 
 
 
 
 
 
Thirteen Weeks Ended
 
4/29/12
 
5/1/11
 
 
4/29/12
 
5/1/11
Foreign currency forward exchange contracts    
 
$
(1,676
)
 
$
(24,866
)
 
Cost of goods sold
$
2,624

 
$
(9,599
)
Interest rate contracts    
 
(40
)
 
—

 
Interest expense
(1,082
)
 
—

Total    
 
$
(1,716
)
 
$
(24,866
)
 
 
$
1,542

 
$
(9,599
)


There were no amounts recognized in income related to the ineffective portion of cash flow hedges designated as hedging instruments during the thirteen week periods ended April 29, 2012 and May 1, 2011.

A net gain in AOCI on foreign currency forward exchange contracts at April 29, 2012 of $5,369 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, a net loss in AOCI for interest rate contracts at April 29, 2012 of $3,942 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
 
 
Thirteen Weeks Ended
 
 
4/29/12
 
5/1/11
Selling, general and administrative expenses
 
$
869

 
$
56



The Company had no derivative financial instruments with credit risk related contingent features underlying the related contracts as of April 29, 2012.