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FAIR VALUE MEASUREMENTS | 6 Months Ended
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Jul. 31, 2022
Notes to Financial Statements [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS In accordance with accounting principles generally accepted in the United States, fair value is defined 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. A three level hierarchy prioritizes the inputs used to measure fair value 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:
| 7/31/22 |  | 1/30/22 |  | 8/1/21
(In millions) | 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 |  | $ | 93.7 |  |  | N/A |  | $ | 93.7 |  |  | N/A |  | $ | 56.3 |  |  | N/A |  | $ | 56.3 |  |  | N/A |  | $ | 18.3 |  |  | N/A |  | $ | 18.3 |
Rabbi trust assets | 0.6 |  |  | 4.5 |  |  | N/A |  | 5.1 |  |  | — |  |  | 0.3 |  |  | N/A |  | 0.3 |  |  | N/A |  | N/A |  | N/A |  | N/A
Total Assets | $ | 0.6 |  |  | $ | 98.2 |  |  | N/A |  | $ | 98.8 |  |  | $ | — |  |  | $ | 56.6 |  |  | N/A |  | $ | 56.6 |  |  | N/A |  | $ | 18.3 |  |  | N/A |  | $ | 18.3 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward exchange contracts | N/A |  | $ | 2.7 |  |  | N/A |  | $ | 2.7 |  |  | N/A |  | $ | 1.7 |  |  | N/A |  | $ | 1.7 |  |  | N/A |  | $ | 4.7 |  |  | N/A |  | $ | 4.7 |
Interest rate swap agreements | N/A |  | — |  |  | N/A |  | — |  |  | N/A |  | — |  |  | N/A |  | — |  |  | N/A |  | 2.7 |  |  | N/A |  | 2.7 |
Total Liabilities | N/A |  | $ | 2.7 |  |  | N/A |  | $ | 2.7 |  |  | N/A |  | $ | 1.7 |  |  | N/A |  | $ | 1.7 |  |  | N/A |  | $ | 7.4 |  |  | N/A |  | $ | 7.4 |
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 value of the Level 1 rabbi trust assets, which consist of investments in mutual funds, is valued at the net asset value of the funds, as determined by the closing price in the active market in which the individual fund is traded. The fair value of the Level 2 rabbi trust assets, which consist of investments in common collective trust funds, is valued at the net asset value of the funds, as determined by the fund family. Funds are redeemable on a daily basis without restriction. The fair value of the interest rate swap agreements is based on observable interest rate yield curves and represents the expected discounted cash flows underlying the financial instruments. The Company established a rabbi trust that, beginning January 1, 2022, holds investments related to the Company’s supplemental savings plan. The rabbi trust assets, which generally mirror the investment elections made by eligible plan participants, were $5.1 million and $0.3 million as of July 31, 2022 and January 30, 2022, respectively, and recorded in the Company’s Consolidated Balance Sheets as follows: $0.1 million and $5.0 million were included in other current assets and other assets, respectively, as of July 31, 2022, and $0.3 million was included in other assets as of January 30, 2022. The corresponding deferred compensation liability was included in accrued expenses and other liabilities in the Company’s Consolidated Balance Sheets as of July 31, 2022 and January 30, 2022. Unrealized losses recognized on the rabbi trust investments were immaterial during the twenty-six weeks ended July 31, 2022. There were no transfers between any levels of the fair value hierarchy for any of the Company’s fair value measurements. The Company’s non-financial assets, which primarily consist of goodwill, other intangible assets, property, plant and equipment, and operating lease right-of-use assets, are not required to be measured at fair value on a recurring basis, and instead are reported at their carrying amount. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying amount may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial assets are assessed for impairment. If the fair value is determined to be lower than the carrying amount, an impairment charge is recorded to write down the asset to its fair value. The following table shows the fair values of the Company’s non-financial assets that were required to be remeasured at fair value on a non-recurring basis during the twenty-six weeks ended July 31, 2022 and August 1, 2021, 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
7/31/22 |  | Level 1 |  | Level 2 |  | Level 3 |  |
Operating lease right-of-use assets |  | N/A |  | N/A |  | $ | — |  |  | $ | — |  |  | $ | 26.4 |
Property, plant and equipment, net |  | N/A |  | N/A |  | — |  |  | — |  |  | 17.2 |
8/1/21 |  |  |  |  |  |  |  |  |  |
Operating lease right-of-use assets |  | N/A |  | N/A |  | — |  |  | — |  |  | 17.8 |
Property, plant and equipment, net |  | N/A |  | N/A |  | — |  |  | — |  |  | 17.3 |
Operating lease right-of-use assets with a carrying amount of $26.4 million and property, plant and equipment with a carrying amount of $17.2 million were written down to a fair value of zero during the twenty-six weeks ended July 31, 2022 in connection with the Company’s decision in the second quarter of 2022 to exit from its Russia business. Please see Note 16, “Exit Activity Costs,” for further discussion of the Russia business exit costs. Fair value of the Company’s operating lease right-of-use assets and property, plant and equipment were determined to be zero in line with the Company’s estimated future cash flows for the Russia business asset group. The $43.6 million of impairment charges during the twenty-six weeks ended July 31, 2022 were included in SG&A expenses in the Company’s Consolidated Statement of Operations and recorded to the Company’s segments as follows: $33.7 million in the Tommy Hilfiger International segment and $9.9 million in the Calvin Klein International segment. Operating lease right-of-use assets with a carrying amount of $17.8 million and property, plant and equipment with a carrying amount of $17.3 million were written down to a fair value of zero during the twenty-six weeks ended August 1, 2021 primarily as a result of actions taken by the Company to reduce its real estate footprint, including reductions in office space. Please see Note 16, “Exit Activity Costs,” for further discussion of these restructuring activities. Fair value of the Company’s operating lease right-of-use assets was determined based on the discounted cash flows of estimated sublease income using market participant assumptions, which considered the short length of the remaining lease term for certain of these assets, and current real estate trends and market conditions. Fair value of the Company’s property, plant and equipment was determined based on the estimated discounted future cash flows associated with the assets using market participant assumptions. The $35.1 million of impairment charges during the twenty-six weeks ended August 1, 2021 were included in SG&A expenses in the Company’s Consolidated Statement of Operations and recorded to the Company’s segments as follows: $1.4 million in the Heritage Brands Wholesale segment and $33.7 million in corporate expenses not allocated to any reportable segments. The carrying amounts and the fair values of the Company’s cash and cash equivalents, short-term borrowings and long-term debt were as follows:
| 7/31/22 |  | 1/30/22 |  | 8/1/21
(In millions) | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
Cash and cash equivalents | $ | 699.3 |  |  | $ | 699.3 |  |  | $ | 1,242.5 |  |  | $ | 1,242.5 |  |  | $ | 1,152.6 |  |  | $ | 1,152.6 |
Short-term borrowings | 12.2 |  |  | 12.2 |  |  | 10.8 |  |  | 10.8 |  |  | 19.2 |  |  | 19.2 |
Long-term debt (including portion classified as current) | 2,193.7 |  |  | 2,210.9 |  |  | 2,352.4 |  |  | 2,522.4 |  |  | 2,812.2 |  |  | 3,066.2 |
The fair values of cash and cash equivalents and short-term borrowings approximate their carrying amounts 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. The carrying amounts of long-term debt reflect the unamortized portions of debt issuance costs and the original issue discounts.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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