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Fair Value Measurement | 6 Months Ended
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Jun. 30, 2020
Fair Value Disclosures [Abstract] |
Fair Value Measurement | Fair Value Measurement The accounting guidance under Accounting Standards Codification 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”) requires the Company to make disclosures about the fair value of certain of its assets and liabilities. ASC 820-10 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. ASC 820-10 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. A brief description of those three levels is as follows: •Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. •Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. •Level 3: Significant unobservable inputs. The Company’s financial assets and liabilities subject to fair value measurements as of June 30, 2020 and December 31, 2019 are as follows:
|  |  |  | June 30, 2020 |  |  |  |
|  |  |  | Fair Value Measurements |  |  |  |
|  | Fair value |  | Level 1 |  | Level 2 |  | Level 3
Assets: |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 192,945 |  |  | $ | 192,945 |  |  | $ | — |  |  | $ | — |
Current marketable securities |  | 38,837 |  |  | 38,837 |  |  | — |  |  | — |
Forward contracts |  | 565 |  |  | — |  |  | 565 |  |  | — |
Total assets |  | $ | 232,347 |  |  | $ | 231,782 |  |  | $ | 565 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |
Contingent consideration |  | $ | 1,829 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,829 |
Total liabilities |  | $ | 1,829 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,829 |
|  |  |  | December 31, 2019 |  |  |  |
|  |  |  | Fair Value Measurements |  |  |  |
|  | Fair value |  | Level 1 |  | Level 2 |  | Level 3
Assets: |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 107,535 |  |  | $ | 107,535 |  |  | $ | — |  |  | $ | — |
Current marketable securities |  | 40,521 |  |  | 40,521 |  |  | — |  |  | — |
Total assets |  | $ | 148,056 |  |  | $ | 148,056 |  |  | $ | — |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |
Contingent consideration |  | $ | 9,124 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,124 |
Forward contracts |  | 495 |  |  | — |  |  | 495 |  |  | — |
Total liabilities |  | $ | 9,619 |  |  | $ | — |  |  | $ | 495 |  |  | $ | 9,124 |
Forward contracts are entered into to manage the risk associated with the volatility of future cash flows (see Note P - Derivative Instruments). Fair value of these instruments is based on observable market transactions of spot and forward rates. The Company's level 3 balance consists of contingent consideration related to acquisitions. The changes in the Company's level 3 liabilities for the periods ended June 30, 2020 and December 31, 2019 are as follows:
| Balance at January 1, |  | Payments |  |  |  | Acquisitions |  | Adjustments (1) |  |  |  | Balance at June 30,
2020 |  |  |  |  |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration | $ | 9,124 |  |  | — |  |  |  |  | — |  |  | (7,295) |  |  |  |  | $ | 1,829 |
| Balance at January 1, |  | Payments |  |  |  | Acquisitions |  | Adjustments (2) |  |  |  | Balance at December 31,
2019 |  |  |  |  |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration | $ | 3,000 |  |  | — |  |  |  |  | 9,124 |  |  | (3,000) |  |  |  |  | $ | 9,124 |
(1) Amount consists of adjustments of $3,930 and $3,365 to the preliminary purchase accounting of B.B. Dakota, Inc. and GREATS Brand, Inc, respectively. The adjustment of $3,930 was a benefit to operating expenses, related to the change in valuation of the contingent consideration in connection with acquisition of B.B. Dakota, Inc. The adjustment of $3,365, comprises an adjustment of $2,684 to the preliminary fair value, recorded during the first quarter 2020 and a benefit of $681 to operating expenses related to the change in valuation of the contingent consideration in connection with the acquisition of GREATS Brand, Inc., recorded during the second quarter of 2020. (2) Amount was a benefit of $3,000 to operating expenses related to the Schwartz and Benjamin acquisition. At June 30, 2020, the liability for potential contingent consideration was $989 in connection with the August 9, 2019 acquisition of GREATS Brand, Inc. Pursuant to the terms of an earn-out provision contained in the equity purchase agreement, between the Company and the sellers of GREATS Brand, Inc., earn-out payments are based on EBITA performance. The fair value of the contingent payments was estimated using the present value of the payments based on management’s projections of the financial results of GREATS Brand, Inc. during the earn-out period, utilizing a discount rate of 11.3%. At June 30, 2020, the liability for potential contingent consideration was $840 in connection with the August 12, 2019 acquisition of B.B. Dakota, Inc. Pursuant to the terms of an earn-out provision contained in the equity purchase agreement, between the Company and the sellers of B.B. Dakota, Inc., earn-out payments are based on EBITDA performance. The fair value of the contingent payments was estimated using the present value of the payments based on management’s projections of the financial results of B.B. Dakota, Inc. during the earn-out period, utilizing a discount rate of 11.8%. The Company recorded a liability for potential contingent consideration in connection with the January 30, 2017 acquisition of Schwartz & Benjamin. The fair value of the contingent payments was estimated using the present value of the payments based on management’s projections of the financial results of Schwartz & Benjamin during the earn-out period. An earn-out payment in the aggregate amount of $7,000 was paid to the sellers of Schwartz & Benjamin in the first quarter of 2018, leaving a remaining balance of $3,000 at December 31, 2018. In the first quarter of 2019, the Company reversed the $3,000 balance, because it did not have to be paid due to the termination of the Kate Spade license agreement held by Schwartz & Benjamin as of December 31, 2019. The fair value of trademarks is measured on a non-recurring basis using Level 3 inputs, including forecasted cash flows, discount rates and implied royalty rates. During the first quarter, Cejon, GREATS and Jocelyn trademarks with an aggregate carrying amount of $40,598 were written down to their fair values of $31,080, resulting in a pre-tax impairment charge of $9,518. Of the $9,518 impairment charge, $9,062 and $456 were recorded in impairment of intangibles in the Wholesale Accessories/apparel and Retail segments, respectively. The fair values of right-of-use lease assets and fixed assets related to Company-owned retail stores were determined using Level 3 inputs, including estimated discounted future cash flows associated with the assets using sales trends and market participant assumptions. During the first quarter, certain right-of-use lease assets with a carrying amount of $60,661 and certain property, plant and equipment with a carrying amount of $12,292 related to retail store fixed assets were written down to a fair value of $43,835 and $297, respectively, resulting in impairment charges of $28,821. During the second quarter, the Company recorded an additional impairment charge of $1,161. The impairment charges were recorded in operating expenses in the Retail segment. The carrying value of certain financial instruments such as cash equivalents, certificate of deposits, accounts receivable, factor accounts receivable and accounts payable approximates their fair values due to the short-term nature of their underlying terms. The fair values of investments in marketable securities available for sale (corporate bonds) are determined by reference to publicly quoted prices in an active market. Fair value of the notes receivable held by the Company approximates their carrying value based upon their imputed or actual interest rate, which approximates applicable current market interest rates. Some assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. These assets can include long-lived assets that have been reduced to fair value when impaired. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs.

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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 http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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