Fair Value Measurements

12 Months Ended

Dec. 31, 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 December 31, 2022 (in thousands):


	Fair Value at December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Forward contracts	$	—	$	2,895	$	—	$	2,895



Total	$	—	$	2,895	$	—	$	2,895
Liabilities:
Contingent consideration	$	—	$	—	$	3,630	$	3,630
Forward contracts	—		2,993		—		2,993

Total	$	—	$	2,993	$	3,630	$	6,623

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.

As of December 31, 2022, debt, excluding unamortized debt issuance costs and capital leases, was recorded at cost and had a carrying value of $223.3 million and had a fair value of approximately $163.7 million. The fair value of debt was based on observable market inputs.

Operating lease right-of-use assets with a carrying amount of $5.7 million and property, plant and equipment—net with a carrying amount of $0.8 million related to retail store leasehold improvements, fixturing and shop-in-shops were written down to a fair value of $3.6 million and $0.4 million, respectively, resulting in total pre-tax impairment charges of $2.5 million for fiscal year 2022.

The fair values of operating lease right-of-use ("ROU") assets and fixed assets related to retail stores were determined using Level 3 inputs, including forecasted cash flows and discount rates. Of the $2.5 million impairment expense, $1.3 million, $0.7 million and $0.4 million were recorded in other long-lived asset impairments in the Europe, Americas, and Asia segments, respectively, and $0.1 million was recorded in restructuring charges in the Europe segment.

In fiscal year 2021, operating lease right-of-use assets with a carrying amount of $17.0 million and property, plant and equipment—net with a carrying amount of $3.0 million related to retail store leasehold improvements, fixturing and shop-in-shops were written down to a fair value of $8.7 million and $1.2 million, respectively, resulting in total pre-tax impairment charges of $10.1 million. Of the $10.1 million impairment expense, $3.5 million, $3.5 million and $2.2 million were recorded in other long-lived asset impairments in the Americas, Europe and Asia segments, respectively, and $0.7 million and $0.2 million were recorded in restructuring charges in Europe and the Americas segments, respectively.

The fair value of trade names are measured on a non-recurring basis using Level 3 inputs, including forecasted cash flows, discounts rates and implied royalty rates. No trade name impairment was recorded during fiscal year 2022 or fiscal year 2021.

- 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 + Details