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FAIR VALUE MEASUREMENTS | 6 Months Ended
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Aug. 03, 2014
Notes to Financial Statements [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS FASB guidance for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a three level hierarchy that prioritizes the inputs used to measure fair value. The three levels of the hierarchy are defined as follows: Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 – Observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data. Level 3 – Unobservable inputs reflecting the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability based on the best information available. In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company’s financial assets and liabilities that are required to be remeasured at fair value on a recurring basis:
(In millions) | 8/3/14 |  | 2/2/14 |  | 8/4/13
| Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward exchange contracts | N/A |  | $ | 8.5 |  |  | N/A |  | $ | 8.5 |  |  | N/A |  | $ | 5.8 |  |  | N/A |  | $ | 5.8 |  |  | N/A |  | $ | 2.1 |  |  | N/A |  | $ | 2.1 |
Interest rate contracts | N/A |  | 4.8 |  |  | N/A |  | 4.8 |  |  | N/A |  | 2.2 |  |  | N/A |  | 2.2 |  |  | N/A |  | 4.1 |  |  | N/A |  | 4.1 |
Total Assets | N/A |  | $ | 13.3 |  |  | N/A |  | $ | 13.3 |  |  | N/A |  | $ | 8.0 |  |  | N/A |  | $ | 8.0 |  |  | N/A |  | $ | 6.2 |  |  | N/A |  | $ | 6.2 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward exchange contracts | N/A |  | $ | 2.2 |  |  | N/A |  | $ | 2.2 |  |  | N/A |  | $ | 6.2 |  |  | N/A |  | $ | 6.2 |  |  | N/A |  | $ | 5.1 |  |  | N/A |  | $ | 5.1 |
Interest rate contracts | N/A |  | 7.8 |  |  | N/A |  | 7.8 |  |  | N/A |  | 6.8 |  |  | N/A |  | 6.8 |  |  | N/A |  | 8.1 |  |  | N/A |  | 8.1 |
Contingent purchase price payments related to reacquisition of the perpetual rights to the Tommy Hilfiger trademarks in India | N/A |  | N/A |  | $ | 5.5 |  |  | 5.5 |  |  | N/A |  | N/A |  | $ | 4.2 |  |  | 4.2 |  |  | N/A |  | N/A |  | $ | 6.6 |  |  | 6.6 |
Total Liabilities | N/A |  | $ | 10.0 |  |  | $ | 5.5 |  |  | $ | 15.5 |  |  | N/A |  | $ | 13.0 |  |  | $ | 4.2 |  |  | $ | 17.2 |  |  | N/A |  | $ | 13.2 |  |  | $ | 6.6 |  |  | $ | 19.8 |
The fair value of the foreign currency forward exchange contracts is measured as the total amount of currency to be purchased, multiplied by the difference between (i) the forward rate as of the period end and (ii) the settlement rate specified in each contract. The fair values of the interest rate contracts are based on observable interest rate yield curves and represent the expected discounted cash flows underlying the financial instruments. Pursuant to the agreement governing the reacquisition of the rights in India to the Tommy Hilfiger trademarks, the Company is required to make annual contingent purchase price payments into 2016 (or, under certain circumstances, into 2017) based on a percentage of annual sales in excess of an agreed upon threshold of Tommy Hilfiger products in India. Such payments are subject to a $25.0 million aggregate maximum and are due within 60 days following each one-year period. The Company made annual contingent purchase price payments of $0.4 million and $0.1 million during 2013 and 2012, respectively. The Company is required to remeasure this liability at fair value on a recurring basis and classifies this as a Level 3 measurement. The fair value of such liability was determined using the discounted cash flow method, based on net sales projections for the Tommy Hilfiger apparel and accessories businesses in India, and was discounted using rates of return that account for the relative risks of the estimated future cash flows. Excluding the initial recognition of the liability for the contingent purchase price payments and the payments made to reduce the liability, changes in the fair value are included within selling, general and administrative expenses. The following table presents the change in the Level 3 contingent purchase price payment liability during the twenty-six weeks ended August 3, 2014 and August 4, 2013:
(In millions) | Twenty-Six Weeks Ended
| 8/3/14 |  | 8/4/13
Beginning Balance | $ | 4.2 |  |  | $ | 7.0 |
Payments | — |  |  | — |
Adjustments included in earnings | 1.3 |  |  | (0.4 | )
Ending Balance | $ | 5.5 |  |  | $ | 6.6 |
Additional information with respect to assumptions used to value the contingent purchase price payment liability as of August 3, 2014 is as follows:
Unobservable Inputs |  | Amount
Approximate compounded annual net sales growth rate |  | 38.0 | %
Approximate discount rate |  | 15.0 | %
A five percentage point increase or decrease in the discount rate would change the liability by approximately $0.5 million. A five percentage point increase or decrease in the compounded annual net sales growth rate would change the liability by approximately $0.5 million. There were no transfers between any levels of the fair value hierarchy for any of the Company’s fair value measurements. The following table shows the fair value of the Company’s non-financial assets and liabilities that were required to be remeasured at fair value on a nonrecurring basis (consisting of property, plant and equipment) during the twenty-six weeks ended August 3, 2014, and the total impairments recorded as a result of the remeasurement process:
(In millions) | Fair Value Measurement Using |  | Fair Value As Of Impairment Date |  | Total Impairments
| Level 1 |  | Level 2 |  | Level 3 |  |
August 3, 2014 | N/A |  | N/A |  | $ | — |  |  | $ | — |  |  | $ | 2.3 |
Long-lived assets with a carrying amount of $2.3 million were written down to a fair value of zero during the twenty-six weeks ended August 3, 2014 in connection with the financial performance in certain of the Company’s Tommy Hilfiger retail stores in North America. Fair value was determined based on the estimated future operating results reflecting poor year-to-date performance and current sales trends. The impairment charge was included in selling, general and administrative expenses in the Tommy Hilfiger North America segment. There were no material non-financial assets or liabilities that were required to be remeasured at fair value on a non-recurring basis during the twenty-six weeks ended August 4, 2013. The carrying amounts and the fair values of the Company’s cash and cash equivalents, short-term borrowings and long-term debt as of August 3, 2014, February 2, 2014 and August 4, 2013 were as follows:
(In millions) | 8/3/14 |  | 2/2/14 |  | 8/4/13
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
Cash and cash equivalents | $ | 461.1 |  |  | $ | 461.1 |  |  | $ | 593.2 |  |  | $ | 593.2 |  |  | $ | 628.9 |  |  | $ | 628.9 |
Short-term borrowings | 165.2 |  |  | 165.2 |  |  | 6.8 |  |  | 6.8 |  |  | 3.4 |  |  | 3.4 |
Long-term debt (including portion classified as current) | 3,742.2 |  |  | 3,762.9 |  |  | 3,963.2 |  |  | 4,025.3 |  |  | 4,280.2 |  |  | 4,358.5 |
The fair values of cash and cash equivalents and short-term borrowings approximate their carrying values due to the short-term nature of these instruments. The Company estimates the fair value of its long-term debt using quoted market prices as of the last business day of the applicable quarter. The Company classifies the measurement of its long-term debt as a Level 1 measurement.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13504-108611 + Details
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