Fair Value Measurement

3 Months Ended

Mar. 31, 2012

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 include derivative contracts. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company uses the income approach to measure fair value of the Interest Rate Cap Agreement (see Note 14 of Notes to Consolidated Condensed Financial Statements). 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 forward contracts 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 the Interest Rate Cap Agreement (as defined below) was determined using broker quotes, which use discounted cash flows, an income approach, 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 and, therefore, meets the definition of Level 3 fair value, as defined above.

The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis, as of March 31, 2012, December 31, 2011 and April 2, 2011:

	March 31, 2012						December 31, 2011						April 2, 2011
	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Assets
Foreign currency exchange contracts	$	—	$	1,287	$	—	$	—	$	5,587	$	—	$	—	$	376	$	—
Interest rate cap		—		6,047		—		—		6,276		—		—		—		—
Liabilities
Foreign currency exchange contracts	$	—	$	1,148	$	—	$	—	$	532	$	—	$	—	$	7,133	$	—

During the Three Months Ended March 31, 2012, the Company recorded non-cash impairment charges totaling $1,002 related to the long-lived assets, consisting of leasehold improvements and furniture and fixtures, of certain retail stores in the Sportswear Group, including its CK/Calvin Klein “bridge” business, which were scheduled to close as part of a restructuring plan (see Note 5 of Notes to Consolidated Condensed Financial Statements – Restructuring Expenses and Other Exit Costs). As of March 31, 2012, those assets, measured on a non-recurring basis, had a fair value of $210, based upon projected future cash flows of those retail stores through the expected dates of closure. There were no assets or liabilities measured on a non-recurring basis for the Three Months Ended April 2, 2011. See Note 1 of Notes to Consolidated Financial Statements – Nature of Operations and Summary of Significant Accounting Policies – Long-Lived Assets in the Company’s Annual Report on Form 10-K for Fiscal 2011 for a description of the testing of retail stores for impairment.