DERIVATIVE FINANCIAL INSTRUMENTS

The Company currently hedges against changes in the Canadian dollar to U.S. dollar exchange rate using forward currency contracts.

Net investment hedges

The Company holds a significant portion of its assets in Canada and during the year ended January 28, 2018, it entered into forward currency contracts designed to hedge a portion of the foreign currency exposure that arises on translation of a Canadian subsidiary into U.S. dollars. These forward currency contracts are designated as net investment hedges. The Company assesses hedge effectiveness based on changes in forward rates. The Company recorded no ineffectiveness from net investment hedges for the year ended January 28, 2018.

Derivatives not designated as hedging instruments

During the year ended January 28, 2018 the Company entered into certain forward currency contracts designed to economically hedge the foreign exchange revaluation gains and losses that are recognized by its Canadian subsidiaries on U.S. dollar denominated monetary assets and liabilities.

Outstanding notional amounts

The Company had foreign exchange forward contracts outstanding with the following notional amounts:



	January 28, 2018		January 29, 2017
	(In thousands)
Derivatives designated as net investment hedges	$	262,000	$	—
Derivatives not designated in a hedging relationship	240,000		—

The forward currency contracts designated as net investment hedges mature on different dates between June 2018 and October 2018.

The forward currency contracts not designated in a hedging relationship mature on different dates between April 2018 and October 2018.

Quantitative disclosures about derivative financial instruments

The fair values of forward currency contracts were as follows:



	January 28, 2018		January 29, 2017
	(In thousands)
Derivatives designated as net investment hedges, recognized within:
Other current liabilities	$	8,771	$	—
Derivatives not designated in a hedging relationship, recognized within:
Other prepaid expenses and other current assets	7,889		—

As of January 28, 2018, there were derivative assets of $6.4 million and derivative liabilities of $7.1 million subject to enforceable netting arrangements.

The pre-tax gains and losses on foreign exchange forward contracts recorded in accumulated other comprehensive income are as follows:



	Fiscal Year Ended
	January 28, 2018			January 29, 2017		January 31, 2016
	(In thousands)
(Losses) gains recognized in foreign currency translation adjustment:
Derivatives designated as net investment hedges	$	(15,974	)	$	—	$	—

No gains or losses have been reclassified from accumulated other comprehensive income into net income for derivative financial instruments in a net investment hedging relationship, as the Company has not sold or liquidated (or substantially liquidated) its hedged subsidiary.

The pre-tax net foreign exchange and derivative gains and losses recorded in the consolidated statement of operations are as follows:



	Fiscal Year Ended
	January 28, 2018			January 29, 2017			January 31, 2016
	(In thousands)
Gains (losses) recognized in selling, general and administrative expenses:
Foreign exchange (losses) gains	$	(6,798	)	$	(8,314	)	$	11,958
Derivatives not designated in a hedging relationship	14,115			—			—
Net foreign exchange and derivative gains (losses)	$	7,317		$	(8,314	)	$	11,958