FAIR VALUE MEASUREMENTS

9 Months Ended

Oct. 01, 2022

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

ASC 820, Fair Value Measurement and Disclosures (“ASC 820”), establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.

•Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

•Level 3 — Unobservable inputs based on the Company’s assumptions.

ASC 820 requires the use of observable market data if such data is available without undue cost and effort.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of October 1, 2022 (in thousands):


	Fair Value at October 1, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	—	$	14,589	$	—	$	14,589




Total	$	—	$	14,589	$	—	$	14,589
Liabilities:
Contingent consideration	$	—	$	—	$	2,063	$	2,063
Forward contracts	—		1,290		—		1,290

Total	$	—	$	1,290	$	2,063	$	3,353

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of January 1, 2022 (in thousands):


	Fair Value at January 1, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	—	$	3,452	$	—	$	3,452



Total	$	—	$	3,452	$	—	$	3,452
Liabilities:
Contingent consideration	$	—	$	—	$	1,840	$	1,840
Forward contracts	—		177		—		177

Total	$	—	$	177	$	1,840	$	2,017

The fair values of the Company’s forward contracts are based on published quotations of spot currency rates and forward points, which are converted into implied forward currency rates. See Note 10—Derivatives and Risk Management, for additional disclosures about the forward contracts.

As of October 1, 2022, debt, excluding unamortized debt issuance costs and capital leases, was recorded at cost and had a carrying value of $301.2 million and had a fair value of approximately $236.6 million. The fair value of debt was based on observable market inputs.

During the Year to Date Period, operating lease right-of-use ("ROU") assets with a carrying amount of $3.3 million and property, plant and equipment-net with a carrying value of $0.3 million related to retail store leasehold improvements, fixturing and shop-in-shops were written down to a fair value of $2.3 million and $0.2 million, respectively, resulting in impairment charges of $1.1 million. During the Prior Year YTD Period, ROU assets with carrying amount of $14.0 million and property, plant and equipment-net with a carrying value of $2.5 million related to retail store leasehold improvements, fixturing and shop-in-shops were written down to a fair value of $7.4 million and $1.0 million, respectively, resulting in impairment charges of $8.1 million.

The fair values of operating lease ROU assets and fixed assets related to retail stores were determined using Level 3 inputs, including forecasted cash flows and discount rates. Of the $1.1 million impairment expense in the Year to Date Period, $0.6 million, $0.3 million and $0.2 million was recorded in other long-lived asset impairments in the Americas, Europe and Asia segments, respectively. Of the $8.1 million impairment expense in the Prior Year Quarter, $3.1 million, $2.2 million and $1.0 million was recorded in other long-lived asset impairments in the Americas, Europe and Asia segments, respectively, and $1.8 million was recorded in restructuring charges in the Europe segment.

- 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.

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