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Fair Value Measurements
 12 Months Ended
Dec. 31, 2011
Fair Value Measurements [Abstract]  
Fair Value Measurements

9. Fair Value Measurements

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 December 31, 2011 (in thousands):

 

     Fair Value at December 31, 2011  
     Level 1      Level 2      Level 3      Total  

Assets:

            

Securities available for sale:

            

Investments in publicly traded equity securities

    $ 155       $ 0       $ 0       $ 155   

Foreign exchange forward contracts

     0         10,614         0         10,614   

Deferred compensation plan assets:

            

Investment in publicly traded mutual funds

      2,897         0         0         2,897   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 3,052       $ 10,614       $ 0       $ 13,666   
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Foreign exchange forward contracts

   $ 0       $ 3,586       $ 0       $ 3,586   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 0       $ 3,586       $ 0       $ 3,586   
  

 

 

     

 

 

     

 

 

     

 

 

  

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, 2011 (in thousands):

 

     Fair Value at January 1, 2011  
     Level 1      Level 2      Level 3      Total  

Assets:

            

Securities available for sale:

            

Investments in bonds

    $ 7,705       $ 0       $ 0       $ 7,705   

Investment in publicly traded equity securities

      1,159         0         0         1,159   

Foreign exchange forward contracts

     0         1,628         0         1,628   

Deferred compensation plan assets:

            

Investment in publicly traded mutual funds

      3,295         0         0         3,295   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 12,159       $ 1,628       $ 0       $ 13,787   
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Foreign exchange forward contracts

   $ 0       $ 10,222       $ 0       $ 10,222   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 0       $ 10,222       $ 0       $ 10,222   
  

 

 

     

 

 

     

 

 

     

 

 

  

The fair values of the Company's securities available for sale and deferred compensation plan assets are based on quoted prices. The deferred compensation plan assets are recorded as intangible and other assets—net. The foreign exchange forward contracts are entered into by the Company's foreign subsidiaries principally to hedge the future payment of intercompany inventory transactions denominated in U.S dollars. The fair values of the Company's foreign exchange forward contracts are based on published quotations of spot currency rates and forwards points, which are converted into implied forward currency rates.

The Company has evaluated its short-term and long-term debt and believes, based on the interest rates, related terms and maturities, that the fair values of such instruments approximate their carrying amounts. As of December 31, 2011 and January 1, 2011, the carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximated their values due to the short-term maturities of these accounts.

 

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2011 (in thousands):

 

     For the Year Ended      Fair Value Measurements Using      Total Gains/  
     December 31, 2011      Level 1      Level 2      Level 3      (Losses)  

Assets:

      

Specific Company—owned stores

    $ 51       $ 0       $ 0       $ 51       $ (957 ) 

In accordance with the provisions of ASC 360, Property, Plant and Equipment, property, plant and equipment-net with a carrying amount of $1.0 million related to Company-owned retail store leasehold improvements, fixturing, computer software and computer hardware was written down to a fair value of $0.1 million, resulting in an impairment charge of $1.0 million for fiscal year 2011. The fair values of the Company-owned retail stores were determined using Level 3 inputs. If undiscounted cash flows estimated to be generated through the operation of Company-owned retail stores are less than the carrying value of the underlying assets, impairment losses are recorded. Impairment expense related to Company-owned retail stores is recorded in selling and distribution expenses within the Direct to consumer segment.

 The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a nonrecurring basis as of January 1, 2011 (in thousands):

 

     For the Year Ended      Fair Value Measurements Using      Total Gains/  
     January 1, 2011      Level 1      Level 2      Level 3      (Losses)  

Assets:

               

Specific Company-owned stores—net

    $ 0       $ 0       $ 0       $ 0       $ (1,848 ) 

Specific Company-owned office—net

      8,863         0         0         8,863         (3,738 ) 

Specific trade names

      438         0         0         438         (1,843 ) 
     

 

 

     

 

 

     

 

 

     

 

 

  

Total

       $ 0       $ 0       $ 9,301       $ (7,429 ) 
     

 

 

     

 

 

     

 

 

     

 

 

  

In fiscal year 2010, property, plant and equipment-net with a carrying amount of $2.1 million related to Company-owned retail store leasehold improvements, fixtures, computer software and computer hardware was deemed not recoverable, resulting in an impairment charge of $1.8 million after estimated insurance proceeds of $0.3 million. Property, plant and equipment- net with a carrying amount of $12.6 million associated with a Company-owned office building was written down to a fair value of $8.9 million, based on a third-party appraisal, resulting in an impairment charge of $3.7 million included in earnings for fiscal year 2010. Both the fair values of the Company-owned retail stores and the Company-owned office building were determined using Level 3 inputs. Impairment expense and associated insurance recoveries related to Company-owned retail stores were recorded in selling and distribution expenses within the Direct to consumer segment. The impairment expense related to the Company-owned office building was recorded in general and administrative expenses within the corporate cost area.