DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Nov. 03, 2013

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. In addition, the Company has exposure to changes in foreign currency exchange rates on certain intercompany loans. To help manage these exposures, 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 interest rate swap agreements to hedge against this exposure. Please see Note 9, “Debt,” for a further discussion of the Company’s senior secured term loan facilities and these agreements. The Company had also entered into an interest rate cap agreement, which expired on September 6, 2012.

The Company records the foreign currency forward exchange contracts and interest rate contracts at fair value in its Consolidated Balance Sheets. Changes in fair value of the foreign currency forward exchange contracts associated with certain international inventory purchases and the interest rate contracts (collectively referred to as “cash flow hedges”) that are designated as effective hedging instruments are recorded in equity as a component of accumulated other comprehensive 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 foreign currency forward exchange contracts that are not designated as effective hedging instruments are immediately recognized in earnings, including the changes in fair value of all of the foreign exchange contracts related to intercompany loans which are not of a long-term investment nature. Any gains and losses that are immediately recognized in earnings on such contracts related to intercompany loans are largely offset by the remeasurement of the underlying intercompany loan balances. 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)
	11/3/13		10/28/12		11/3/13		10/28/12
Contracts designated as cash flow hedges:
Foreign currency forward exchange contracts (inventory purchases)	$	1,244	$	3,725	$	9,172	$	2,567
Interest rate contracts	2,314		—		8,190		6,066
Total contracts designated as cash flow hedges	3,558		3,725		17,362		8,633
Undesignated contracts:
Foreign currency forward exchange contracts (inventory purchases)	—		—		56		30
Foreign currency forward exchange contracts (intercompany loans)	881		—		17		90
Total undesignated contracts	881		—		73		120
Total	$	4,439	$	3,725	$	17,435	$	8,753

At November 3, 2013, the notional amount outstanding of foreign currency forward exchange contracts for inventory purchases and intercompany loans was approximately $559,000 and $86,000, respectively. Such contracts expire principally between November 2013 and December 2014 for inventory purchases and between November 2013 and January 2014 for intercompany loans.

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

	(Loss) Gain Recognized in Other Comprehensive (Loss) Income (Effective Portion)						(Loss) Gain Reclassified from AOCI into (Expense) Income (Effective Portion)
							Location	Amount
Thirteen Weeks Ended	11/3/13			10/28/12				11/3/13			10/28/12
Foreign currency forward exchange contracts (inventory purchases)	$	(8,003	)	$	(2,079	)	Cost of goods sold	$	(1,793	)	$	8,294
Interest rate contracts	(3,888		)	(432		)	Interest expense	(1,999		)	(1,095		)
Total	$	(11,891	)	$	(2,511	)		$	(3,792	)	$	7,199
Thirty-Nine Weeks Ended	11/3/13			10/28/12				11/3/13			10/28/12
Foreign currency forward exchange contracts (inventory purchases)	$	2,587		$	2,837		Cost of goods sold	$	1,108		$	11,925
Interest rate contracts	(4,994		)	(1,434		)	Interest expense	(4,176		)	(3,275		)
Total	$	(2,407	)	$	1,403			$	(3,068	)	$	8,650

There was no ineffective portion of hedges designated as cash flow hedging instruments during the thirty-nine weeks endedNovember 3, 2013 and October 28, 2012.

A net loss in AOCI on foreign currency forward exchange contracts at November 3, 2013 of $8,664 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 November 3, 2013 of $6,511 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 that were not designated as cash flow hedges:

	(Loss) Gain Recognized in Income
Thirteen Weeks Ended	Location	11/3/13			10/28/12
Foreign currency forward exchange contracts (inventory purchases)	Selling, general and administrative expenses	$	(214	)	$	504
Foreign currency forward exchange contracts (intercompany loans)	Selling, general and administrative expenses	(1,328		)	574
Thirty-Nine Weeks Ended	Location	11/3/13			10/28/12
Foreign currency forward exchange contracts (inventory purchases)	Selling, general and administrative expenses	$	135		$	1,183
Foreign currency forward exchange contracts (intercompany loans)	Selling, general and administrative expenses	(1,366		)	(650		)

The Company had no derivative financial instruments with credit risk related contingent features underlying the related contracts as of November 3, 2013.