Risk Management And Derivatives

6 Months Ended

Jul. 30, 2016

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Risk Management And Derivatives

Note 10 Risk Management and Derivatives

In the normal course of business, the Company’s financial results are impacted by currency rate movements in foreign currency denominated assets, liabilities and cash flows as it makes a portion of its purchases and sales in local currencies. The Company has established policies and business practices that are intended to mitigate a portion of the effect of these exposures. The Company uses derivative financial instruments, primarily forward contracts, to manage its currency exposures. These derivative instruments are viewed as risk management tools and are not used for trading or speculative purposes. Derivatives entered into by the Company are designated as cash flow hedges of forecasted foreign currency transactions. 

Derivative financial instruments expose the Company to credit and market risk. The market risk associated with these instruments resulting from currency exchange movements is expected to offset the market risk of the underlying transactions being hedged. The Company does not believe there is a significant risk of loss in the event of non-performance by the counterparties associated with these instruments because these transactions are executed with major international financial institutions and have varying maturities through July 2017. Credit risk is managed through the continuous monitoring of exposures to such counterparties. 

The Company’s hedging strategy uses foreign currency forward contracts as cash flow hedging instruments, which are recorded in the Company's condensed consolidated balance sheets at fair value. The effective portion of gains and losses resulting from changes in the fair value of these hedge instruments are deferred in accumulated other comprehensive (loss) income and reclassified to earnings in the period that the hedged transaction is recognized in earnings.

Hedge ineffectiveness is evaluated using the hypothetical derivative method. The amount of hedge ineffectiveness for the thirteen and twenty-six weeks ended July 30, 2016 and August 1, 2015 was not material. 

As of July 30, 2016, August 1, 2015 and January 30, 2016, the Company had forward contracts maturing at various dates through July 2017, July 2016 and January 2017, respectively. The contract notional amount represents the net amount of all purchase and sale contracts of a foreign currency. 

	Contract Notional Amount
(U.S. $ equivalent in thousands)	July 30, 2016		August 1, 2015		January 30, 2016
Financial Instruments
U.S. dollars (purchased by the Company’s Canadian division with Canadian dollars)	$	17,404	$	19,650	$	14,118
Euro	13,544		18,035		15,499
Chinese yuan	12,477		15,214		14,623
Japanese yen	1,026		1,208		1,159
United Arab Emirates dirham	939		861		930
New Taiwanese dollars	522		537		570
Other currencies	174		235		219
Total financial instruments	$	46,086	$	55,740	$	47,118

The classification and fair values of derivative instruments designated as hedging instruments included within the condensed consolidated balance sheets as of July 30, 2016, August 1, 2015 and January 30, 2016 are as follows:

	Asset Derivatives			Liability Derivatives
($ thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Foreign exchange forward contracts:
July 30, 2016	Prepaid expenses and other current assets	$	365	Other accrued expenses	$	565
August 1, 2015	Prepaid expenses and other current assets	1,166		Other accrued expenses	453
January 30, 2016	Prepaid expenses and other current assets	1,000		Other accrued expenses	846

For the thirteen and twenty-six weeks ended July 30, 2016 and August 1, 2015, the effect of derivative instruments in cash flow hedging relationships on the condensed consolidated statements of earnings was as follows:

	Thirteen Weeks Ended						Thirteen Weeks Ended
($ thousands)	July 30, 2016						August 1, 2015
Foreign exchange forward contracts: Income Statement Classification (Losses) Gains - Realized	(Loss) Gain Recognized in OCI on Derivatives			(Loss) Gain Reclassified from Accumulated OCI into Earnings			Gain Recognized in OCI on Derivatives		Gain Reclassified from Accumulated OCI into Earnings
Net sales	$	(25	)	$	(36	)	$	35	$	59
Cost of goods sold	(472		)	33			733		7
Selling and administrative expenses	(75		)	(187		)	121		43
Interest expense	14			—			8		—

	Twenty-six Weeks Ended						Twenty-six Weeks Ended
($ thousands)	July 30, 2016						August 1, 2015
Foreign exchange forward contracts: Income Statement Classification (Losses) Gains - Realized	Loss Recognized in OCI on Derivatives			(Loss) Gain Reclassified from Accumulated OCI into Earnings			Gain (Loss) Recognized in OCI on Derivatives			Gain (Loss) Reclassified from Accumulated OCI into Earnings
Net sales	$	(189	)	$	(72	)	$	60		$	113
Cost of goods sold	(585		)	116			532			(122		)
Selling and administrative expenses	(24		)	(357		)	33			47
Interest expense	(24		)	—			(14		)	—

All gains and losses currently included within accumulated other comprehensive (loss) income associated with the Company’s foreign exchange forward contracts are expected to be reclassified into net earnings within the next 12 months. Additional information related to the Company’s derivative financial instruments are disclosed within Note 11 to the condensed consolidated financial statements.