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 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:


	8/1/21						1/31/21						8/2/20
(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	$	18.3	N/A	$	18.3	N/A	$	3.8	N/A	$	3.8	N/A	$	5.8	N/A	$	5.8
Interest rate swap agreements	N/A	—		N/A	—		N/A	—		N/A	—		N/A	—		N/A	—
Total Assets	N/A	$	18.3	N/A	$	18.3	N/A	$	3.8	N/A	$	3.8	N/A	$	5.8	N/A	$	5.8

Liabilities:
Foreign currency forward exchange contracts	N/A	$	4.7	N/A	$	4.7	N/A	$	31.0	N/A	$	31.0	N/A	$	30.0	N/A	$	30.0
Interest rate swap agreements	N/A	2.7		N/A	2.7		N/A	4.7		N/A	4.7		N/A	11.2		N/A	11.2


Total Liabilities	N/A	$	7.4	N/A	$	7.4	N/A	$	35.7	N/A	$	35.7	N/A	$	41.2	N/A	$	41.2

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 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’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 tables show 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 August 1, 2021 and August 2, 2020, 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
8/1/21	Level 1	Level 2	Level 3
Operating lease right-of-use assets	N/A	N/A	$	—	$	—	$	17.8
Property, plant and equipment, net	N/A	N/A	—		—		17.3





8/2/20

Property, plant and equipment, net	N/A	N/A	1.1		1.1		23.2
Goodwill	N/A	N/A	652.6		652.6		879.0
Tradenames	N/A	N/A	48.7		48.7		47.2
Other intangible assets, net	N/A	N/A	—		—		7.3
Investments in unconsolidated affiliates	N/A	N/A	—		—		12.3

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 17, “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 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.

Property, plant and equipment with a carrying amount of $17.1 million was written down to a fair value of $1.1 million during the twenty-six weeks ended August 2, 2020, primarily due to the adverse impacts of the COVID-19 pandemic on the Company’s retail stores with lease terms expiring by the end of fiscal 2021 with no intention of renewal, including temporary store closures and reduced traffic, occupancy and consumer spending trends. 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 sales trends and market participant assumptions.

Property, plant and equipment with a carrying amount of $7.2 million was written down to a fair value of zero during the twenty-six weeks ended August 2, 2020 in connection with the exit from the Heritage Brands Retail business that was substantially completed in the second quarter of 2021. Please see Note 17, “Exit Activity Costs,” for further discussion of the Heritage Brands Retail exit costs. Fair value of the Company’s Heritage Brands Retail business property, plant and equipment was determined based on the estimated discounted future cash flows associated with the assets using sales trends and market participant assumptions.

Goodwill with a carrying amount of $1,531.6 million was written down to a fair value of $652.6 million during the twenty-six weeks ended August 2, 2020. Please see Note 8, “Goodwill and Other Intangible Assets,” for further discussion.

Tradenames with a carrying amount of $95.9 million were written down to a fair value of $48.7 million during the twenty-six weeks ended August 2, 2020. Please see Note 8, “Goodwill and Other Intangible Assets,” for further discussion.

Other intangible assets with a carrying amount of $7.3 million were written down to a fair value of zero during the twenty-six weeks ended August 2, 2020. Please see Note 8, “Goodwill and Other Intangible Assets,” for further discussion.

The Company’s equity method investment in Karl Lagerfeld with a carrying amount of $12.3 million was written down to a fair value of zero during the twenty-six weeks ended August 2, 2020. Please see Note 7, “Investments in Unconsolidated Affiliates,” for further discussion.

The $969.0 million of impairment charges during the twenty-six weeks ended August 2, 2020 were recorded in the Company’s Consolidated Statement of Operations, of which $933.5 million was included in goodwill and other intangible asset impairments, $23.2 million was included in SG&A expenses, and $12.3 million was included in equity in net income (loss) of unconsolidated affiliates. The $969.0 million of impairment charges were recorded to the Company’s segments as follows: $395.8 million in the Calvin Klein International segment, $293.1 million in the Calvin Klein North America segment, $249.6 million in the Heritage Brands Wholesale segment, $11.0 million in the Heritage Brands Retail segment, $4.1 million in the Tommy Hilfiger North America segment, $3.1 million in the Tommy Hilfiger International segment and $12.3 million was recorded in corporate expenses not allocated to any reportable segments.


	8/1/21				1/31/21				8/2/20
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value

Cash and cash equivalents	$	1,152.6	$	1,152.6	$	1,651.4	$	1,651.4	$	1,394.3	$	1,394.3
Short-term borrowings	19.2		19.2		—		—		70.6		70.6

Long-term debt (including portion classified as current)	2,812.2		3,066.2		3,554.8		3,806.8		3,513.1		3,552.3

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.