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Fair Value Measurement
 12 Months Ended
Dec. 31, 2021
Fair Value Disclosures [Abstract]  
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 December 31, 2021 and 2020 were as follows: 
As of December 31, 2021As of December 31, 2020
(in thousands)Fair valueLevel 1Level 2Level 3Fair valueLevel 1Level 2Level 3
Assets:
Forward contracts$494 $— $494 $— $— $— $— $— 
Total assets$494 $— $494 $— $— $— $— $— 
Liabilities:
Contingent consideration$6,960 $— $— $6,960 $207 $— $— $207 
Forward contracts46 — 46 — 997 — 997— 
Total liabilities$7,006 $— $46 $6,960 $1,204 $— $997 $207 
Forward contracts are entered into to manage the risk associated with the volatility of future cash flows (see Note M – 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 years ended December 31, 2021 and 2020 were as follows:
(in thousands)Balance at Beginning of the Year
Adjustments(1)(2)
Transfer out
of Level 3(3)
Balance at End
of the Year(4)
2021:
Liabilities:
Contingent consideration$207 11,862 (5,109)$6,960 
2020:
Liabilities:
Contingent consideration$9,124 (8,917)— $207 
(1) In 2021, amount consists of adjustments of $11,869 and $(7) that were included as an expense in operating expenses, related to the change in valuation of the contingent consideration in connection with the acquisitions of B.B. Dakota, Inc. and GREATS Brand, Inc., respectively.
(2) In 2020, the amount consists of adjustments of $4,570 and $4,347 related to B.B. Dakota, Inc. and GREATS Brand, Inc., respectively. The adjustment of $4,570 was included as a benefit to operating expenses and related to the change in valuation of the contingent consideration in connection with acquisition of B.B. Dakota, Inc. The adjustment of $4,347, comprises an adjustment of $2,684 to the preliminary fair value, recorded during the first quarter 2020, and a benefit of $1,663 included in operating expenses related to the change in valuation of the contingent consideration in connection with the acquisition of GREATS Brand, Inc.
(3) The transfer out of level 3 amount of $5,109, represents the current portion of our contingent liabilities and is measured at the amount payable based upon actual EBITDA performance for the related performance period.
(4) Total contingent consideration liability of $6,960 is classified as noncurrent on the Consolidated Balance Sheets at December 31, 2021.
At December 31, 2021, the liability for potential contingent consideration was $0 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 a risk neutral simulation model to model the probability of different financial results of GREATS Brand, Inc. during the earn-out period, utilizing a discount rate of 9.5%.
At December 31, 2021, the liability for potential contingent consideration was $6,960 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 Black-Scholes-Merton option pricing method with a nonlinear payoff structure based on a set of financial metrics of B.B. Dakota, Inc. during the earn-out period, utilizing a discount rate of 9.5%.
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 (see Note H – Goodwill and Intangible Assets).
The fair values of lease right-of-use assets and fixed assets related to Company-owned retail stores are measured on a non-recurring basis and are determined using Level 3 inputs, including estimated discounted future cash flows associated with the assets using sales trends, market rents and market participant assumptions (see Note G – Property and Equipment and Note N – Leases).
The carrying value of certain financial instruments such as cash equivalents, certificates of deposit, accounts receivable, factor accounts receivable and accounts payable approximates their fair values due to the short-term nature of their underlying terms. 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 (non-recurring). 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.