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Derivative Financial Instruments and Risk Management
 6 Months Ended
Aug. 03, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Risk Management
Note 9 
–
 Derivative Financial Instruments and Risk Management
The Company has entered into a cross-currency interest rate swap to manage the interest rate risk and foreign currency exchange risk associated with the floating-rate foreign currency-denominated term loan borrowing by our Danish Subsidiary and an interest rate swap to manage the interest rate risk associated with the variable rate term loan borrowing by the Company. Both swaps have been designated as cash flow hedges of floating-rate borrowings.
The cross-currency interest rate swap agreement utilized by the Company effectively modifies the Company’s exposure to interest rate risk and foreign currency exchange rate risk by converting the Company’s floating-rate debt denominated in U.S. Dollars on our Danish subsidiary’s books to a fixed-rate debt denominated in Danish Kroner for the term of the loan, thus reducing the impact of interest-rate and foreign currency exchange rate changes on future interest expense and principal repayments. This swap involves the receipt of floating rate amounts in U.S. Dollars in exchange for fixed-rate interest payments in Danish Kroner, as well as exchanges of principal at the inception spot rate, over the life of the term loan.
The interest rate swap agreement utilized by the Company on its term loan effectively modifies the Company’s exposure to interest rate risk by converting the Company’s floating-rate debt to fixed-rate debt for the next
five
years, thus reducing the impact of interest-rate changes on future interest expense. This swap involves the receipt of floating rate amounts in U.S. Dollars in exchange for fixed rate payments in U.S. dollars over the life of the term loan.
The following table summarizes the notional amount and fair value of the Company’s derivative instrument:
 
    
August 3, 2019
  
January 31, 2019
 
Cash Flow Hedges
(In thousands)
 
Balance Sheet Classification
 
Outstanding

Notional

Amount
  
Fair
Value of

Liability
  
Outstanding

Notional

Amount
  
Fair
Value of

Liability
 
Cross-currency interest rate swap
 Other Long-
Term Liabilities		 $ 5,400  $ 388  $ 6,329  $ 600 
Interest rate swap
 Other Long-
Term Liabilities/
Other Assets		 $ 9,750  $ (107)  $ 11,250  $ 85 
 
The following table presents the impact of the Company’s derivative instruments in our condensed consolidated financial statements
for the three and six months ended August 
3
,
2019
and July 
28
,
2018
:
 
  
Three Months Ended
 
  
Amount of Gain (Loss)
Recognized in OCI
on Derivative
  
Location of
Gain (Loss)
Reclassified
from Accumulated
OCI into
Income
 
Amount of Gain (Loss)
Reclassified from
Accumulated OCI
into Income
 
Cash Flow Hedge
(In thousands)
 
August 3,
2019
  
July 28,
2018
  
August 3,
2019
  
July 28,
2018
 
Swap contracts
 $(147)  $315  Other Income (Expense) $77  $327 
  
 
 
  
 
 
    
 
 
  
 
 
 
 
  
Six Months Ended
 
  
Amount of Gain (Loss)
Recognized in OCI
on Derivative
  
Location of
Gain (Loss)
Reclassified
from Accumulated
OCI into Income
(Effective Portion)
 
Amount of Gain (Loss)
Reclassified from
Accumulated OCI
into Income
 
Cash Flow Hedge
(In thousands)
 
August 3,
2019
  
July 28,
2018
  
August 3,
2019
  
July 28,
2018
 
Swap contracts
 $2  $698  Other Income (Expense) $262  $583 
  
 
 
  
 
 
    
 
 
  
 
 
 
 
At August 3, 2019, the Company expects to reclassify approximately $0.2 million of net gains on the swap contracts from accumulated other comprehensive loss to earnings during the next 12 months due to changes in foreign exchange rates and the payment of variable interest associated with the floating-rate debt.