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FAIR VALUE MEASUREMENTS
 6 Months Ended
Aug. 05, 2018
Notes to Financial Statements [Abstract]  
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS

In accordance with accounting principles generally accepted in the United States, fair value is defined 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. A three level hierarchy prioritizes the inputs used to measure fair value 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 the 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:
 
8/5/18
 
2/4/18
 
7/30/17
(In millions)
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
 
$
27.5

 
N/A
 
$
27.5

 
N/A
 
$
1.5

 
N/A
 
$
1.5

 
N/A
 
$
4.7

 
N/A
 
$
4.7

Interest rate swap agreements
N/A
 
2.7

 
N/A
 
2.7

 
N/A
 
2.4

 
N/A
 
2.4

 
N/A
 
0.2

 
N/A
 
0.2

Foreign currency option contracts
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
0.1

 
N/A
 
0.1

Total Assets
N/A
 
$
30.2

 
N/A
 
$
30.2

 
N/A
 
$
3.9

 
N/A
 
$
3.9

 
N/A
 
$
5.0

 
N/A
 
$
5.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forward exchange contracts    
N/A
 
$
3.4

 
N/A
 
$
3.4

 
N/A
 
$
67.4

 
N/A
 
$
67.4

 
N/A
 
$
58.2

 
N/A
 
$
58.2

Interest rate swap agreements
N/A
 
0.1

 
N/A
 
0.1

 
N/A
 
0.1

 
N/A
 
0.1

 
N/A
 
2.6

 
N/A
 
2.6

Contingent purchase price payments related to reacquisition of the perpetual rights to the TOMMY HILFIGER trademarks in India    
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
N/A
 
$
1.7

 
1.7

Total Liabilities
N/A
 
$
3.5

 
N/A

$
3.5

 
N/A
 
$
67.5

 
N/A
 
$
67.5

 
N/A
 
$
60.8

 
$
1.7

 
$
62.5



The fair value of the foreign currency forward exchange contracts 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 value of the interest rate swap agreements is based on observable interest rate yield curves and represents the expected discounted cash flows underlying the financial instruments. The fair value of the foreign currency option contracts was estimated based on external valuation models, which used the original strike price, current foreign currency exchange rates, the implied volatility in foreign currency exchange rates and length of time to expiration as inputs.

Pursuant to the agreement governing the reacquisition of the rights in India to the TOMMY HILFIGER trademarks (which the Company entered into in September 2011), the Company was required to make annual contingent purchase price payments, with the final payment made in the third quarter of 2017. The Company was required to remeasure this liability at fair value on a recurring basis and classified this as a Level 3 measurement.

The following table presents the change in the Level 3 contingent purchase price payment liability:
(In millions)
Twenty-Six Weeks Ended
7/30/17
Beginning Balance
$
1.6

Payments
—

Adjustments included in earnings
0.1

Ending Balance
$
1.7


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


The carrying amounts and the fair values of the Company’s cash and cash equivalents, short-term borrowings and long-term debt were as follows:
 
8/5/18
 
2/4/18
 
7/30/17
(In millions)
Carrying Amount
 
Fair
Value
 
Carrying Amount
 
Fair
Value
 
Carrying Amount
 
Fair
Value
 
 

 
 

 
 
 
 
 
 

 
 

Cash and cash equivalents
$
431.1

 
$
431.1

 
$
493.9

 
$
493.9

 
$
559.4

 
$
559.4

Short-term borrowings
85.4

 
85.4

 
19.5

 
19.5

 
18.0

 
18.0

Long-term debt
2,893.5

 
2,955.4

 
3,061.3

 
3,140.9

 
3,185.7

 
3,269.6


The fair values of cash and cash equivalents and short-term borrowings approximate their carrying amounts 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. The carrying amounts of long-term debt reflect the unamortized portions of debt issuance costs and the original issue discounts.