Stockholders’ Equity and Redeemable Noncontrolling Interests

A reconciliation of common stock outstanding, treasury stock and the total carrying amount of total stockholders’ equity, Guess?, Inc. stockholders’ equity and stockholders’ equity attributable to nonredeemable noncontrolling interests for the fiscal year ended February 3, 2018 and nine months ended November 3, 2018 is as follows (in thousands, except share data):



	Shares				Stockholders’ Equity
	Common Stock		Treasury Stock		Guess?, Inc. Stockholders’ Equity			Nonredeemable Noncontrolling Interests			Total			Redeemable Noncontrolling Interests
Balance at January 28, 2017	84,069,492		56,440,482		$	969,222		$	11,772		$	980,994		$	4,452
Net earnings (loss)	—		—		(7,894		)	3,993			(3,901		)	—
Foreign currency translation adjustment	—		—		91,178			2,238			93,416			187
Loss on derivative financial instruments designated as cash flow hedges, net of income tax of $2,738	—		—		(19,994		)	—			(19,994		)	—
Actuarial valuation loss and related amortization, prior service credit amortization and foreign currency and other adjustments on defined benefit plans, net of income tax of $435	—		—		(1,647		)	—			(1,647		)	—
Issuance of common stock under stock compensation plans, net of tax effect	1,113,713		—		(1,257		)	—			(1,257		)	—
Issuance of stock under Employee Stock Purchase Plan	54,300		(54,300	)	566			—			566			—
Share-based compensation	—		—		18,852			—			18,852			—
Dividends	—		—		(76,048		)	—			(76,048		)	—
Share repurchases	(3,866,387	)	3,866,387		(56,159		)	—			(56,159		)	—
Noncontrolling interest capital contribution	—		—		—			11			11			951
Noncontrolling interest capital distribution	—		—		—			(1,358		)	(1,358		)	—
Balance at February 3, 2018	81,371,118		60,252,569		$	916,819		$	16,656		$	933,475		$	5,590
Cumulative adjustment from adoption of new accounting guidance	—		—		5,829			—			5,829			—
Net earnings (loss)	—		—		(9,133		)	1,064			(8,069		)	—
Foreign currency translation adjustment	—		—		(58,276		)	(994		)	(59,270		)	(786		)
Gain on derivative financial instruments designated as cash flow hedges, net of income tax of ($2,545)	—		—		17,242			—			17,242			—
Actuarial valuation and prior service credit amortization and foreign currency and other adjustments on defined benefit plans, net of income tax of ($89)	—		—		688			—			688			—
Issuance of common stock under stock compensation plans, net of tax effect	718,583		—		4,124			—			4,124			—
Issuance of stock under Employee Stock Purchase Plan	36,632		(36,632	)	613			—			613			—
Share-based compensation	—		—		12,534			—			12,534			—
Dividends	—		—		(55,955		)	—			(55,955		)	—
Share repurchases	(1,118,808	)	1,118,808		(17,587		)	—			(17,587		)	—
Noncontrolling interest capital distribution	—		—		—			(3,069		)	(3,069		)	—
Balance at November 3, 2018	81,007,525		61,334,745		$	816,898		$	13,657		$	830,555		$	4,804

Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss), net of related income taxes, for the three and nine months ended November 3, 2018 and October 28, 2017 are as follows (in thousands):



	Three Months Ended Nov 3, 2018
	Foreign Currency Translation Adjustment			Derivative Financial Instruments Designated as Cash Flow Hedges			Defined Benefit Plans			Total
Balance at August 4, 2018	$	(114,761	)	$	(142	)	$	(11,117	)	$	(126,020	)
Gains (losses) arising during the period	(10,564		)	1,596			37			(8,931		)
Reclassification to net loss for losses realized	—			1,419			124			1,543
Net other comprehensive income (loss)	(10,564		)	3,015			161			(7,388		)
Balance at November 3, 2018	$	(125,325	)	$	2,873		$	(10,956	)	$	(133,408	)



	Nine Months Ended Nov 3, 2018
	Foreign Currency Translation Adjustment			Derivative Financial Instruments Designated as Cash Flow Hedges			Defined Benefit Plans			Total
Balance at February 3, 2018	$	(67,049	)	$	(14,369	)	$	(11,644	)	$	(93,062	)
Gains (losses) arising during the period	(58,276		)	12,175			314			(45,787		)
Reclassification to net loss for losses realized	—			5,067			374			5,441
Net other comprehensive income (loss)	(58,276		)	17,242			688			(40,346		)
Balance at November 3, 2018	$	(125,325	)	$	2,873		$	(10,956	)	$	(133,408	)



	Three Months Ended Oct 28, 2017
	Foreign Currency Translation Adjustment			Derivative Financial Instruments Designated as Cash Flow Hedges			Defined Benefit Plans			Total
Balance at July 29, 2017	$	(103,675	)	$	(8,751	)	$	(8,483	)	$	(120,909	)
Gains (losses) arising during the period	(8,184		)	2,749			97			(5,338		)
Reclassification to net loss for losses realized	—			235			88			323
Net other comprehensive income (loss)	(8,184		)	2,984			185			(5,015		)
Balance at October 28, 2017	$	(111,859	)	$	(5,767	)	$	(8,298	)	$	(125,924	)



	Nine Months Ended Oct 28, 2017
	Foreign Currency Translation Adjustment			Derivative Financial Instruments Designated as Cash Flow Hedges			Defined Benefit Plans			Total
Balance at January 28, 2017	$	(158,227	)	$	5,400		$	(8,562	)	$	(161,389	)
Gains (losses) arising during the period	46,368			(10,220		)	2			36,150
Reclassification to net loss for (gains) losses realized	—			(947		)	262			(685		)
Net other comprehensive income (loss)	46,368			(11,167		)	264			35,465
Balance at October 28, 2017	$	(111,859	)	$	(5,767	)	$	(8,298	)	$	(125,924	)

Details on reclassifications out of accumulated other comprehensive income (loss) to net loss during the three and nine months ended November 3, 2018 and October 28, 2017 are as follows (in thousands):



	Three Months Ended						Nine Months Ended						Location of (Gain) Loss Reclassified from Accumulated OCI into Loss
	Nov 3, 2018			Oct 28, 2017			Nov 3, 2018			Oct 28, 2017
Derivative financial instruments designated as cash flow hedges:
Foreign exchange currency contracts	$	1,618		$	(81	)	$	5,646		$	(1,360	)	Cost of product sales
Foreign exchange currency contracts	—			337			201			244			Other income (expense)
Interest rate swap	(21		)	57			(60		)	119			Interest expense
Less income tax effect	(178		)	(78		)	(720		)	50			Income tax expense (benefit)
	1,419			235			5,067			(947		)
Defined benefit plans:
Net actuarial loss amortization¹	150			116			453			344			Other income (expense)
Prior service credit amortization¹	(7		)	(7		)	(21		)	(20		)	Other income (expense)
Less income tax effect	(19		)	(21		)	(58		)	(62		)	Income tax expense (benefit)
	124			88			374			262
Total reclassifications during the period	$	1,543		$	323		$	5,441		$	(685	)

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Notes:

These accumulated other comprehensive income (loss) components are included in the computation of net periodic defined benefit pension cost. During the first quarter of fiscal 2019, the Company adopted new authoritative guidance which requires that the non-service components of net periodic defined benefit pension cost be presented outside of loss from operations. The Company adopted this guidance on a retrospective basis and, as a result, reclassified these components from SG&A expenses to other income (expense) for the three and nine months ended October 28, 2017. Refer to Note 13 for further information.

Redeemable Noncontrolling Interests

The Company is party to a put arrangement with respect to the common securities that represent the remaining noncontrolling interest for its majority-owned subsidiary, Guess Brasil Comércio e Distribuição S.A. (“Guess Brazil”), which was established through a majority-owned joint venture during fiscal 2014. The put arrangement for Guess Brazil, representing 40% of the total outstanding equity interest of that subsidiary, may be exercised at the discretion of the noncontrolling interest holder by providing written notice to the Company beginning in the sixth year of the agreement, or sooner in certain limited circumstances, and every third anniversary from the end of the sixth year thereafter subject to certain time restrictions. The redemption value of the Guess Brazil put arrangement is based on a multiple of Guess Brazil’s earnings before interest, taxes, depreciation and amortization subject to certain adjustments and is classified as a redeemable noncontrolling interest outside of permanent equity in the Company’s condensed consolidated balance sheet. The carrying value of the redeemable noncontrolling interest related to Guess Brazil was $1.4 million and $1.6 million as of November 3, 2018 and February 3, 2018, respectively.

The Company is also party to a put arrangement with respect to the common securities that represent the remaining noncontrolling interest for its majority-owned subsidiary, Guess? CIS, LLC (“Guess CIS”), which was established through a majority-owned joint venture during fiscal 2016. The put arrangement for Guess CIS, representing 30% of the total outstanding equity interest of that subsidiary, may be exercised at the discretion of the noncontrolling interest holder by providing written notice to the Company during the period beginning after the fifth anniversary of the agreement through December 31, 2025, or sooner in certain limited circumstances. The redemption value of the Guess CIS put arrangement is based on a multiple of Guess CIS’s earnings before interest, taxes, depreciation and amortization subject to certain adjustments and is classified as a redeemable noncontrolling interest outside of permanent equity in the Company’s condensed consolidated balance sheet. During fiscal 2018, the Company and the noncontrolling interest holder made additional capital contribution totaling $3.2 million, of which $2.2 million was paid by the Company and the remaining amount was paid by the noncontrolling interest holder to retain the same pro-rata interest in Guess CIS. The carrying value of the redeemable noncontrolling interest related to Guess CIS was $3.4 million and $4.0 million as of November 3, 2018 and February 3, 2018, respectively.