Stockholders' Equity and Redeemable Noncontrolling Interests

3 Months Ended

Apr. 29, 2017

Stockholders' Equity and Redeemable Noncontrolling Interests [Abstract]

Stockholders' Equity and Redeemable Noncontrolling Interests

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 and redeemable noncontrolling interests for the fiscal year ended January 28, 2017 and three months ended April 29, 2017 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 30, 2016	83,833,937		56,195,000		$	1,018,475		$	12,818		$	1,031,293		$	5,252
Net earnings	—		—		22,761			2,637			25,398			—
Foreign currency translation adjustment	—		—		(575		)	(2,057		)	(2,632		)	818
Loss on derivative financial instruments designated as cash flow hedges, net of income tax of $864	—		—		(1,852		)	—			(1,852		)	—
Other-than-temporary-impairment and unrealized loss on marketable securities, net of income tax of ($6)	—		—		15			—			15			—
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 $21	—		—		(923		)	—			(923		)	—
Issuance of common stock under stock compensation plans, net of tax effect	481,037		—		(3,813		)	—			(3,813		)	—
Issuance of stock under Employee Stock Purchase Plan	44,486		(44,486	)	558			—			558			—
Share-based compensation	—		—		16,908			—			16,908			—
Dividends	—		—		(76,997		)	—			(76,997		)	—
Share repurchases	(289,968	)	289,968		(3,532		)	—			(3,532		)	—
Purchase of redeemable noncontrolling interest	—		—		(1,133		)	1,133			—			(4,445		)
Noncontrolling interest capital contribution	—		—		—			—			—			2,157
Noncontrolling interest capital distribution	—		—		—			(2,759		)	(2,759		)	—
Redeemable noncontrolling interest redemption value adjustment	—		—		(670		)	—			(670		)	670
Balance at January 28, 2017	84,069,492		56,440,482		$	969,222		$	11,772		$	980,994		$	4,452
Net earnings (loss)	—		—		(21,293		)	66			(21,227		)	—
Foreign currency translation adjustment	—		—		11,473			1,362			12,835			182
Loss on derivative financial instruments designated as cash flow hedges, net of income tax of ($237)	—		—		(452		)	—			(452		)	—
Actuarial valuation and prior service credit amortization and foreign currency and other adjustments on defined benefit plans, net of income tax of ($20)	—		—		76			—			76			—
Issuance of common stock under stock compensation plans, net of tax effect	656,945		—		(138		)	—			(138		)	—
Issuance of stock under Employee Stock Purchase Plan	14,467		(14,467	)	133			—			133			—
Share-based compensation	—		—		3,963			—			3,963			—
Dividends	—		—		(19,041		)	—			(19,041		)	—
Share repurchases	(1,485,195	)	1,485,195		(17,827		)	—			(17,827		)	—
Noncontrolling interest capital contribution	—		—		—			11			11			951
Balance at April 29, 2017	83,255,709		57,911,210		$	926,116		$	13,211		$	939,327		$	5,585

Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss), net of related income taxes, for the three months ended April 29, 2017 and April 30, 2016 are as follows (in thousands):

	Three Months Ended Apr 29, 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	11,473			124			(13		)	11,584
Reclassification to net loss for (gains) losses realized	—			(576		)	89			(487		)
Net other comprehensive income (loss)	11,473			(452		)	76			11,097
Balance at April 29, 2017	$	(146,754	)	$	4,948		$	(8,486	)	$	(150,292	)

	Three Months Ended Apr 30, 2016
	Foreign Currency Translation Adjustment			Derivative Financial Instruments Designated as Cash Flow Hedges			Marketable Securities			Defined Benefit Plans			Total
Balance at January 30, 2016	$	(157,652	)	$	7,252		$	(15	)	$	(7,639	)	$	(158,054	)
Gains (losses) arising during the period	42,631			(9,880		)	1			(149		)	32,603
Reclassification to net loss for (gains) losses realized	—			(1,145		)	—			60			(1,085		)
Net other comprehensive income (loss)	42,631			(11,025		)	1			(89		)	31,518
Balance at April 30, 2016	$	(115,021	)	$	(3,773	)	$	(14	)	$	(7,728	)	$	(126,536	)

Details on reclassifications out of accumulated other comprehensive income (loss) to net loss during the three months ended April 29, 2017 and April 30, 2016 are as follows (in thousands):

	Three Months Ended						Location of (Gain) Loss Reclassified from Accumulated OCI into Loss
	Apr 29, 2017			Apr 30, 2016
Derivative financial instruments designated as cash flow hedges:
Foreign exchange currency contracts	$	(618	)	$	(1,435	)	Cost of product sales
Foreign exchange currency contracts	(79		)	(32		)	Other income/expense
Interest rate swap	36			51			Interest expense
Less income tax effect	85			271			Income tax benefit
	(576		)	(1,145		)
Defined benefit plans:
Actuarial loss amortization	117			86			(1)
Prior service credit amortization	(7		)	(7		)	(1)
Less income tax effect	(21		)	(19		)	Income tax benefit
	89			60
Total reclassifications during the period	$	(487	)	$	(1,085	)

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(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic defined benefit pension cost. 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. During fiscal 2017, the Company and the noncontrolling interest holder increased their capital contributions by $1.7 million, of which $1.0 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 Brazil. The carrying value of the redeemable noncontrolling interest related to Guess Brazil was $1.6 million and $1.7 million as of April 29, 2017 and January 28, 2017, respectively.

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? 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 2017, the Company and the noncontrolling interest holder increased their capital contributions by $5.0 million, of which $3.5 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. During the three months ended April 29, 2017, the Company and the noncontrolling interest holder made an 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 $4.0 million and $2.8 million as of April 29, 2017 and January 28, 2017, respectively.

The Company was previously party to a put arrangement in connection with its now wholly-owned subsidiary, Guess Sud SAS (“Guess Sud”). Under the terms of this put arrangement, which represented 40% of the total outstanding interest of that subsidiary, the noncontrolling interest holder had the option to exercise the put arrangement at its discretion by providing written notice to the Company any time after January 30, 2012. The redemption value of the put arrangement was determined based on a method which approximated fair value. During fiscal 2017, the Company acquired the remaining 40% interest in Guess Sud for $4.4 million.