Fair Value Measurement

6 Months Ended

Jul. 02, 2011

Fair Value Measurement [Abstract]

Fair Value Measurement

Note 10—Fair Value Measurement

The Company utilizes the market approach to measure fair value for financial assets and liabilities, which primarily relates to derivative contracts. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company classifies its financial instruments in a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy consists of the following three levels:

Level 1 —	Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2 —	Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.
Level 3 —	Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

Valuation Techniques

The fair value of foreign currency exchange contracts, including forward contracts and zero cost collars, was determined as the net unrealized gains or losses on those contracts, which is the net difference between (i) the U.S. dollars to be received or paid at the contracts’ settlement dates and (ii) the U.S. dollar value of the foreign currency to be sold or purchased at the current forward or spot exchange rate, as applicable. The fair value of these foreign currency exchange contracts is based on quoted prices that include the effects of U.S. and foreign interest rate yield curves and, therefore, meets the definition of Level 2 fair value, as defined above.

The fair value of interest rate caps (see Note 14 of Notes to Consolidated Condensed Financial Statements) was determined using broker quotes, which use discounted cash flows and the then-applicable forward LIBOR rates and, therefore, meets the definition of Level 2 fair value, as defined above.

The fair value of long-lived assets was based on the Company’s best estimates of future cash flows (see Note 1 of Notes to Consolidated Financial Statements — Long-lived Assets in the Company’s Annual Report on Form 10-K for Fiscal 2010).

The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis, as of July 2, 2011, January 1, 2011 and July 3, 2010:

	July 2, 2011						January 1, 2011						July 3, 2010
	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Assets
Foreign currency exchange contracts	$	—	$	419	$	—	$	—	$	834	$	—	$	—	$	5,388	$	—
Interest rate cap		—		14,395		—		—		—		—		—		—		—
Liabilities
Foreign currency exchange contracts	$	—	$	7,465	$	—	$	—	$	3,282	$	—	$	—	$	870	$	—

Cash and cash equivalents, accounts receivable and accounts payable are recorded at carrying value, which approximates fair value. The Company’s CKJEA Notes and other short-term notes, amounts outstanding under the 2008 Credit Agreements and amounts outstanding under the 2011 Term Loan (each as defined below) are also reported at carrying value.

During the Three Months Ended July 2, 2011, the Company recorded an impairment charge for the long-lived assets, consisting of leasehold improvements, furniture and fixtures, of certain retail stores in the Sportswear Group and the Intimate Apparel Group, which were scheduled to close as part of a restructuring plan. At July 2, 2011, those assets, measured on a non-recurring basis, had a fair value of $0 based upon projected future cash flows of those retail stores through the dates of closure. The loss on those assets was $1,140. For assets measured on a non-recurring basis at January 1, 2011 see Note 16 of Notes to Consolidated Financial Statements — Financial Instruments in the Company’s Annual Report on Form 10-K for Fiscal 2010. At July 3, 2010, there were no assets or liabilities measured on a non-recurring basis. See Note 1 of Notes to Consolidated Financial Statements — Long-lived Assets in the Company’s Annual Report on Form 10-K for Fiscal 2010 for a description of the testing of retail stores for impairment.