DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Feb. 02, 2014

Derivative Instruments and Hedging Activities Disclosure [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. The Company had also entered into an interest rate cap agreement, which expired on September 6, 2012. Please see Note 7, “Debt,” for a further discussion of the Company’s senior secured term loan facilities and these agreements.

The Company records the foreign currency forward exchange contracts and interest rate contracts at fair value in its Consolidated Balance Sheets, and does not net the related assets and liabilities. 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 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, the Company records immediately in earnings changes in the fair value of hedges that are not designated as effective hedging instruments (“undesignated contracts”), including all of the foreign currency forward 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)
	2013		2012		2013		2012
Contracts designated as cash flow hedges:
Foreign currency forward exchange contracts (inventory purchases)	$	4,978	$	4,693	$	6,170	$	13,460
Interest rate contracts	2,189		—		6,821		5,058
Total contracts designated as cash flow hedges	7,167		4,693		12,991		18,518
Undesignated contracts:
Foreign currency forward exchange contracts (intercompany loans)	786		—		53		—
Total undesignated contracts	786		—		53		—
Total	$	7,953	$	4,693	$	13,044	$	18,518

At February 2, 2014, the notional amount outstanding of foreign currency forward exchange contracts for inventory purchases and intercompany loans was approximately $544,000 and $87,000, respectively. Such contracts expire between February 2014 and January 2015 for inventory purchases and between February 2014 and March 2014 for intercompany loans.

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

	Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)						(Loss) Gain Reclassified from AOCI into (Expense) Income  (Effective Portion)
							Location	Amount
	2013			2012				2013			2012
Foreign currency forward exchange contracts (inventory purchases)	$	4,763		$	(7,535	)	Cost of goods sold	$	(1,061	)	$	12,536
Interest rate contracts	(5,879		)	(1,683		)	Interest expense	(6,305		)	(4,532		)
Total	$	(1,116	)	$	(9,218	)		$	(7,366	)	$	8,004

There was no ineffective portion of hedges designated as cash flow hedging instruments during 2013 or 2012.    

A net loss in AOCI on foreign currency forward exchange contracts at February 2, 2014 of $4,490 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 February 2, 2014 of $5,706 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 undesignated contracts:

	Gain (Loss) Recognized in Income
	Location	Amount
		2013			2012
Foreign currency forward exchange contracts (inventory purchases)	Selling, general and administrative expenses	$	150		$	1,211
Foreign currency forward exchange contracts (intercompany loans)	Selling, general and administrative expenses	(1,435		)	157

The Company had no derivative financial instruments with credit risk related contingent features underlying the related contracts as of February 2, 2014.