| 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 February 3, 2018 and three months ended May 5, 2018 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 28, 2017 | 84,069,492 |
| | 56,440,482 |
| | $ | 969,222 |
| | $ | 11,772 |
| | $ | 980,994 |
| | $ | 4,452 |
| Net earnings (loss) | — |
| | — |
| | (7,894 | ) | | 3,993 |
| | (3,901 | ) | | — |
| Foreign currency translation adjustment | — |
| | — |
| | 91,178 |
| | 2,238 |
| | 93,416 |
| | 187 |
| Loss on derivative financial instruments designated as cash flow hedges, net of income tax of $2,738 | — |
| | — |
| | (19,994 | ) | | — |
| | (19,994 | ) | | — |
| 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 $435 | — |
| | — |
| | (1,647 | ) | | — |
| | (1,647 | ) | | — |
| Issuance of common stock under stock compensation plans, net of tax effect | 1,113,713 |
| | — |
| | (1,257 | ) | | — |
| | (1,257 | ) | | — |
| Issuance of stock under Employee Stock Purchase Plan | 54,300 |
| | (54,300 | ) | | 566 |
| | — |
| | 566 |
| | — |
| Share-based compensation | — |
| | — |
| | 18,852 |
| | — |
| | 18,852 |
| | — |
| Dividends | — |
| | — |
| | (76,048 | ) | | — |
| | (76,048 | ) | | — |
| Share repurchases | (3,866,387 | ) | | 3,866,387 |
| | (56,159 | ) | | — |
| | (56,159 | ) | | — |
| Noncontrolling interest capital contribution | — |
| | — |
| | — |
| | 11 |
| | 11 |
| | 951 |
| Noncontrolling interest capital distribution | — |
| | — |
| | — |
| | (1,358 | ) | | (1,358 | ) | | — |
| Balance at February 3, 2018 | 81,371,118 |
| | 60,252,569 |
| | $ | 916,819 |
| | $ | 16,656 |
| | $ | 933,475 |
| | $ | 5,590 |
| Cumulative adjustment from adoption of new accounting guidance | — |
| | — |
| | 5,829 |
| | — |
| | 5,829 |
| | — |
| Net earnings (loss) | — |
| | — |
| | (21,221 | ) | | 234 |
| | (20,987 | ) | | — |
| Foreign currency translation adjustment | — |
| | — |
| | (24,248 | ) | | (324 | ) | | (24,572 | ) | | (519 | ) | Gain on derivative financial instruments designated as cash flow hedges, net of income tax of ($1,287) | — |
| | — |
| | 8,084 |
| | — |
| | 8,084 |
| | — |
| Actuarial valuation and prior service credit amortization and foreign currency and other adjustments on defined benefit plans, net of income tax of ($52) | — |
| | — |
| | 436 |
| | — |
| | 436 |
| | — |
| Issuance of common stock under stock compensation plans, net of tax effect | 689,341 |
| | — |
| | 3,890 |
| | — |
| | 3,890 |
| | — |
| Issuance of stock under Employee Stock Purchase Plan | 15,313 |
| | (15,313 | ) | | 230 |
| | — |
| | 230 |
| | — |
| Share-based compensation | — |
| | — |
| | 3,958 |
| | — |
| | 3,958 |
| | — |
| Dividends | — |
| | — |
| | (18,499 | ) | | — |
| | (18,499 | ) | | — |
| Share repurchases | (1,118,808 | ) | | 1,118,808 |
| | (17,587 | ) | | — |
| | (17,587 | ) | | — |
| Balance at May 5, 2018 | 80,956,964 |
| | 61,356,064 |
| | $ | 857,691 |
| | $ | 16,566 |
| | $ | 874,257 |
| | $ | 5,071 |
|
Accumulated Other Comprehensive Income (Loss) The changes in accumulated other comprehensive income (loss), net of related income taxes, for the three months ended May 5, 2018 and April 29, 2017 are as follows (in thousands): | | | | | | | | | | | | | | | | | | Three Months Ended May 5, 2018 | | Foreign Currency Translation Adjustment | | Derivative Financial Instruments Designated as Cash Flow Hedges | | Defined Benefit Plans | | Total | Balance at February 3, 2018 | $ | (67,049 | ) | | $ | (14,369 | ) | | $ | (11,644 | ) | | $ | (93,062 | ) | Gains (losses) arising during the period | (24,248 | ) | | 6,468 |
| | 311 |
| | (17,469 | ) | Reclassification to net loss for losses realized | — |
| | 1,616 |
| | 125 |
| | 1,741 |
| Net other comprehensive income (loss) | (24,248 | ) | | 8,084 |
| | 436 |
| | (15,728 | ) | Balance at May 5, 2018 | $ | (91,297 | ) | | $ | (6,285 | ) | | $ | (11,208 | ) | | $ | (108,790 | ) |
| | | | | | | | | | | | | | | | | | 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 | ) |
Details on reclassifications out of accumulated other comprehensive income (loss) to net loss during the three months ended May 5, 2018 and April 29, 2017 are as follows (in thousands): | | | | | | | | | | | | Three Months Ended | | Location of (Gain) Loss Reclassified from Accumulated OCI into Loss | | May 5, 2018 | | Apr 29, 2017 | | Derivative financial instruments designated as cash flow hedges: | | | | | | Foreign exchange currency contracts | $ | 1,686 |
| | $ | (618 | ) | | Cost of product sales | Foreign exchange currency contracts | 201 |
| | (79 | ) | | Other income/expense | Interest rate swap | (8 | ) | | 36 |
| | Interest expense | Less income tax effect | (263 | ) | | 85 |
| | Income tax expense | | 1,616 |
| | (576 | ) | | | Defined benefit plans: | | | | | | Net actuarial loss amortization (1) | 152 |
| | 117 |
| | Other income/expense | Prior service credit amortization (1) | (7 | ) | | (7 | ) | | Other income/expense | Less income tax effect | (20 | ) | | (21 | ) | | Income tax expense | | 125 |
| | 89 |
| | | Total reclassifications during the period | $ | 1,741 |
| | $ | (487 | ) | | |
| | (1) | These accumulated other comprehensive income (loss) components are included in the computation of net periodic defined benefit pension cost. During the first quarter of fiscal 2019, the Company adopted new authoritative guidance which requires that the non-service components of net periodic defined benefit pension cost be presented outside of earnings (loss) from operations. The Company adopted this guidance on a retrospective basis and, as a result, reclassified these components from SG&A expenses to other income (expense) for the three months ended April 29, 2017. 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. The carrying value of the redeemable noncontrolling interest related to Guess Brazil was $1.5 million and $1.6 million as of May 5, 2018 and February 3, 2018, respectively. The Company is also 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 2018, the Company and the noncontrolling interest holder made 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 $3.6 million and $4.0 million as of May 5, 2018 and February 3, 2018, respectively. |