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DERIVATIVE FINANCIAL INSTRUMENTS
 9 Months Ended
Nov. 01, 2015
Notes to Financial Statements [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS
DERIVATIVE FINANCIAL INSTRUMENTS

The Company has exposure to changes in foreign currency exchange rates related to certain anticipated cash flows principally associated with certain international inventory purchases and certain intercompany transactions. The Company periodically uses foreign currency forward exchange contracts to hedge against a portion of this exposure.

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 and an interest rate cap agreement to hedge against a portion of this exposure. Please see Note 8, “Debt,” for a further discussion of the Company’s 2014 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 that are designated as effective hedging instruments (collectively referred to as “cash flow hedges”) are recorded in equity as a component of accumulated other comprehensive (loss) income (“AOCI”). The cash flows from such hedges are presented in the same category in the Company’s Consolidated Statements of Cash Flows as the items being hedged. No amounts were excluded from effectiveness testing. There was no ineffective portion of cash flow hedges during the thirty-nine weeks ended November 1, 2015 and November 2, 2014. 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 that 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 of the Company’s derivative financial instruments in its Consolidated Balance Sheets:
(In millions)
Asset Derivatives (Classified in Other Current Assets and Other Assets)
Liability Derivatives (Classified in Accrued Expenses and Other Liabilities)
 
11/1/15
 
11/2/14
 
11/1/15
 
11/2/14
Contracts designated as cash flow hedges:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts     (inventory purchases)
$
21.2

 
$
36.3

 
$
3.7

 
$
0.1

Interest rate contracts
0.1

 
2.6

 
18.1

 
9.9

Total contracts designated as cash flow hedges
21.3

 
38.9

 
21.8

 
10.0

Undesignated contracts:
 
 
 
 
 
 
 
Foreign currency forward exchange contracts (principally intercompany transactions)
17.6

 
13.0

 
0.6

 
0.3

Total undesignated contracts
17.6

 
13.0

 
0.6

 
0.3

Total
$
38.9

 
$
51.9

 
$
22.4

 
$
10.3



At November 1, 2015, the notional amount outstanding of foreign currency forward exchange contracts was $894.0 million. Such contracts expire principally between November 2015 and January 2017.

The following table summarizes the effect of the Company’s hedges designated as cash flow hedging instruments:
 
 
(Loss) Gain Recognized in Other Comprehensive (Loss) Income
 
Gain (Loss) Reclassified from AOCI into Income (Expense)       
(In millions)
 
 
Location
Amount
 
 
 
 
 
 
 
 
 
 
Thirteen Weeks Ended
 
11/1/15
 
11/2/14
 
 
11/1/15
 
11/2/14
Foreign currency forward exchange contracts     (inventory purchases)
 
$
(3.2
)
 
$
36.9

 
Cost of goods sold
$
26.8

 
$
2.9

Interest rate contracts    
 
(4.7
)
 
(5.7
)
 
Interest expense
(0.9
)
 
(1.5
)
Total    
 
$
(7.9
)
 
$
31.2

 
 
$
25.9

 
$
1.4

 
 
 
 
 
 
 
 
 
 
Thirty-Nine Weeks Ended
 
11/1/15
 
11/2/14
 
 
11/1/15
 
11/2/14
Foreign currency forward exchange contracts     (inventory purchases)
 
$
20.5

 
$
38.1

 
Cost of goods sold
$
74.9

 
$
(2.6
)
Interest rate contracts
 
(6.2
)
 
(8.0
)
 
Interest expense
(3.1
)
 
(5.1
)
Total
 
$
14.3

 
$
30.1

 
 
$
71.8

 
$
(7.7
)


A net gain in AOCI on foreign currency forward exchange contracts at November 1, 2015 of $44.1 million is estimated to be reclassified in the next 12 months in the Company’s 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 November 1, 2015 of $8.9 million 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:
(In millions)

 
(Loss) Gain Recognized in Income
Thirteen Weeks Ended
 
Location
 
11/1/15
 
11/2/14
Foreign currency forward exchange contracts (principally intercompany transactions)
 
Selling, general and administrative expenses
 
$
(1.6
)
 
$
13.2

 
 
 
 
 
 
 
Thirty-Nine Weeks Ended
 
Location
 
11/1/15
 
11/2/14
Foreign currency forward exchange contracts (principally intercompany transactions)
 
Selling, general and administrative expenses
 
$
2.9

 
$
12.9



The Company had no derivative financial instruments with credit risk-related contingent features underlying the related contracts as of November 1, 2015.