FAIR VALUE MEASUREMENTS

3 Months Ended

Apr. 29, 2012

Notes to Financial Statements [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Financial Accounting Standards Board (“FASB”) guidance for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a three level hierarchy that prioritizes the inputs used to measure fair value. The three levels of the hierarchy are defined as follows:

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 – Observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data.

Level 3 – Unobservable inputs reflecting the Company’s own assumptions about inputs that market participants would use in pricing the asset or liability based on the best information available.

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial assets and liabilities that are required to be remeasured at fair value on a recurring basis:

	April 29, 2012							January 29, 2012							May 1, 2011
	Level 1	Level 2		Level 3		Total		Level 1	Level 2		Level 3		Total		Level 1	Level 2		Level 3	Total
Assets:
Foreign currency forward exchange contracts	N/A	$	9,616	N/A		$	9,616	N/A	$	13,581	N/A		$	13,581	N/A	$	1,813	N/A	$	1,813
Interest rate contracts	N/A	133		N/A		133		N/A	211		N/A		211		N/A	N/A		N/A	N/A
Total Assets	N/A	$	9,749	N/A		$	9,749	N/A	$	13,792	N/A		$	13,792	N/A	$	1,813	N/A	$	1,813
Liabilities:
Foreign currency forward exchange contracts	N/A	$	3,155	N/A		$	3,155	N/A	$	2,855	N/A		$	2,855	N/A	$	42,637	N/A	$	42,637
Interest rate contracts	N/A	6,865		N/A		6,865		N/A	7,907		N/A		7,907		N/A	N/A		N/A	N/A
Contingent purchase price payments related to reacquisition of the perpetual rights to the Tommy Hilfiger trademarks in India	N/A	N/A		9,859		9,859		N/A	N/A		$	9,559	9,559		N/A	N/A		N/A	N/A
Total Liabilities	N/A	$	10,020	$	9,859	$	19,879	N/A	$	10,762	$	9,559	$	20,321	N/A	$	42,637	N/A	$	42,637

The fair value of the foreign currency forward exchange contracts related to inventory purchases is measured as the total amount of currency to be purchased, multiplied by the difference between (i) the forward rate as of the period end and (ii) the settlement rate specified in each contract. The fair values of the interest rate contracts are based on observable interest rate yield curves and represent the expected discounted cash flows underlying the financial instruments.

In relation to the reacquisition of the rights to the Tommy Hilfiger trademarks in India during 2011, the Company is required to make annual contingent purchase price payments based on a percentage of annual sales in excess of an agreed upon threshold of Tommy Hilfiger products in India for a period of five years (or, under certain circumstances, a period of six years) following the acquisition date. Such payments are subject to a $25,000 aggregate maximum over the payment period and are due within 60 days following each one year period. The first one year period commenced on July 1, 2011. The Company is required to remeasure this liability at fair value on a recurring basis and classifies this as a Level 3 measurement. The fair value of such contingent purchase price payments was determined using the discounted cash flow method, based on net sales projections for the Tommy Hilfiger apparel and accessories businesses in India, discounted using rates of return that account for the relative risks of the estimated future cash flows. Excluding the initial recognition of the liability for the contingent purchase price payments, changes in the fair value are included within selling, general and administrative expenses.

The following table presents the change in the Level 3 contingent purchase price payment liability for the thirteen weeks ended April 29, 2012:                

Balance as of January 29, 2012	$	9,559
Payments	—
Adjustments included in earnings	300
Balance as of April 29, 2012	$	9,859

Additional information with respect to assumptions used to value the contingent purchase price payment liability follows:

Unobservable Inputs	Amount
Approximate compounded annual net sales growth rate	36.0	%
Approximate discount rate	20.0	%

A five percentage point decrease in the discount rate would increase the liability by approximately $2,000, while a five percentage point increase in the discount rate would decrease the liability by approximately $1,500.

A five percentage point increase or decrease in the compounded annual net sales growth rate would change the liability by approximately $1,000.

There were no transfers between any levels of the fair value hierarchy for any of the Company’s fair value measurements.

There were no non-financial assets or liabilities that were required to be remeasured at fair value on a non-recurring basis during the thirteen week periods ended April 29, 2012 and May 1, 2011.

The carrying amounts and the fair values of the Company’s cash and cash equivalents, short-term borrowings and long-term debt as of April 29, 2012 and May 1, 2011 were as follows:

	4/29/12				5/1/11
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	238,612	$	238,612	$	294,958	$	294,958
Short-term borrowings	107,393		107,393		12,277		12,277
Long-term debt (including portion classified as current)	1,874,339		1,948,152		2,254,489		2,313,926

The fair values of cash and cash equivalents and short-term borrowings approximate their carrying values due to the short-term nature of these instruments. The Company estimates the fair value of its long-term debt using quoted market prices as of the last business day of the applicable quarter. The Company classifies the measurement of its long-term debt as a Level 1 measurement.