FAIR VALUES

12 Months Ended

Dec. 31, 2011

FAIR VALUES [Abstract]

FAIR VALUES

FAIR VALUES

        ASC Subtopic 820-10 defines fair value 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. ASC Subtopic 820-10 outlines a valuation framework, creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements, and details the disclosures that are required for items measured at fair value. We currently do not have non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis. We are permitted to choose to measure many financial instruments and certain other items at fair value, although we did not elect the fair value measurement option for any of our financial assets or liabilities.

        We have several financial instruments that must be measured under the fair value standard, including derivatives, the assets and liabilities of The Jones Group Inc. Deferred Compensation Plan (the "Rabbi Trust") and deferred director fees that are valued based on the quoted market price of our common stock. Our financial assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, which are as follows:

• Level 1 - inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date;
• Level 2 - inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs); and
• Level 3 - unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing assets or liabilities based on the best information available.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

        We have certain financial assets and liabilities that are required to be measured at fair value. These include:

• the assets and liabilities of The Jones Group Inc. Deferred Compensation Plan (the "Rabbi Trust"), which represent deferred employee compensation invested in mutual funds and which fall within Level 1 of the fair value hierarchy;
• deferred director fees, which represent phantom units of our common stock that have a fair value based on the market price of our common stock and which fall within Level 1 of the fair value hierarchy;
• foreign currency forward contracts, which have fair values based on observable inputs including foreign exchange forward and spot rates and which fall within Level 2 of the fair value hierarchy;
• interest rate swap and cap contracts, which have fair values based on observable inputs including yield curves and LIBOR rates and which fall within Level 2 of the fair value hierarchy;
• long-term debt that is hedged by interest rate swaps as a fair-value hedge and which falls within Level 2 of the fair value hierarchy; and
• consideration liabilities recorded as a result of the acquisition of Moda and SWH, which have fair values based on our projections of financial results and cash flows for the acquired business and a discount factor based on our weighted average cost of capital, and which fall within Level 3 of the fair value hierarchy.

        In accordance with the fair value hierarchy described above, the following table shows the fair value of our financial assets and liabilities that are required to be measured at fair value on a recurring basis at December 31, 2010 and 2011.

(In millions)	Classification		Total Value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Description
December 31, 2010:
Rabbi Trust assets	Prepaid expenses and other current assets	$	9.1	$	9.1	$	-	$	-
Interest rate cap	Other long-term assets		1.3		-		1.3		-
	Total assets	$	10.4	$	9.1	$	1.3	$	-
Rabbi Trust liabilities	Accrued employee compensation and benefits	$	9.1	$	9.1	$	-	$	-
Canadian Dollar - U.S. Dollar forward contracts	Accrued expenses and other current liabilities		0.5		-		0.5		-
Interest rate swaps	Other long-term liabilities		0.6		-		0.6		-
Deferred director fees	Accrued expenses and other current liabilities		1.2		1.2		-		-
Acquisition consideration	Current portion of acquisition consideration payable		14.1		-		-		14.1
5.125% Senior Notes due 2014	Long-term debt		260.0		-		260.0		-
Acquisition consideration	Acquisition consideration payable, net of current portion		199.8		-		-		199.8
	Total liabilities	$	485.3	$	10.3	$	261.1	$	213.9
December 31, 2011:
Rabbi Trust assets	Prepaid expenses and other current assets	$	7.5	$	7.5	$	-	$	-
Interest rate swaps	Other long-term assets		5.5		-		5.5		-
Interest rate cap	Other long-term assets		0.2		-		0.2		-
Canadian Dollar - U.S. Dollar forward contracts	Prepaid expenses and other current assets		0.1		-		0.1		-
	Total assets	$	13.3	$	7.5	$	5.8	$	-
Rabbi Trust liabilities	Accrued employee compensation and benefits	$	7.5	$	7.5	$	-	$	-
Deferred director fees	Accrued expenses and other current liabilities		0.2		0.2		-		-
Acquisition consideration	Current portion of acquisition consideration payable		192.7		-		-		192.7
5.125% Senior Notes due 2014	Long-term debt		263.0		-		263.0		-
Acquisition consideration	Acquisition consideration payable, net of current portion		17.7		-		-		17.7
	Total liabilities	$	481.1	$	7.7	$	263.0	$	210.4

        The following table presents the changes in Level 3 acquisition consideration liabilities for 2010 and 2011.

(In millions)		Acquisition of Moda			Acquisition of SWH			Total Acquisition Consideration Payable
Beginning balance, January 1, 2010	$	-		$	-		$	-
Acquisition		18.8			181.8			200.6
Payments		-			(5.7	)		(5.7	)
Total adjustments included in earnings		4.1			14.9			19.0
Balance, December 31, 2010		22.9			191.0			213.9
Payments		-			(15.4	)		(15.4	)
Total adjustments included in earnings		(8.1	)		20.0			11.9
Balance, December 31, 2011	$	14.8		$	195.6		$	210.4

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

        In accordance with the fair value hierarchy described above, the following table shows the fair value of our non-financial assets and liabilities that were measured at fair value on a nonrecurring basis at December 31, 2011, and the total losses recorded as a result of the remeasurement process.

(In millions)				Fair Value Measurements Using
Description		Carrying Value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total losses recorded during year
At December 31, 2010:
Property and equipment	$	-	$	-	$	-	$	-	$	9.0
License agreement		-		-		-		-		2.6
Trademarks		107.2		-		-		107.2		37.6
At December 31, 2011:
Property and equipment	$	1.2	$	-	$	-	$	1.2	$	10.2
Transportation equipment		0.6		0.6		-		-		0.4
Trademarks		75.7		-		-		75.7		31.5

        During 2010 and 2011, property and equipment utilized in our retail operations with a carrying amount of $9.0 million and $11.4 million, respectively, were written down to a fair value of zero and $1.2 million, respectively, primarily as a result of our decision to close underperforming retail locations. These losses were recorded as SG&A expenses in the domestic retail segment. We consider long-term assets utilized in a retail location to be impaired when a pattern of operating losses at the location indicate that future operating losses are probable and that the resulting cash flows will not be sufficient to recover the carrying value of the associated long-term assets.

        During 2011, we determined that certain transportation equipment with a carrying value of $1.0 million had a fair value of $0.6 million based on quoted market prices. The loss of $0.4 million was recorded as SG&A expenses in the licensing, other and eliminations segment.

        During 2010, trademarks with a carrying amount of $144.8 million were written down to a fair value of $107.2 million. During 2011, trademarks with a carrying amount of $107.2 million were written down to a fair value of $75.7 million. During 2010, we wrote off the value of an intangible asset associated with a handbag license with a carrying value of $2.6 million due to the deteriorating financial condition of the licensee. These losses were recorded as SG&A expenses in the licensing, other and eliminations segment. For further information regarding the losses recorded for trademarks and goodwill, see "Goodwill and Other Intangible Assets."

Financial Instruments

        As a result of our global operating and financing activities, we are exposed to changes in interest rates and foreign currency exchange rates which may adversely affect results of operations and financial condition. In seeking to minimize the risks and/or costs associated with such activities, we manage exposure to changes in interest rates and foreign currency exchange rates through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. The instruments eligible for utilization include forward, option, swap and cap agreements. We do not use financial instruments for trading or other speculative purposes. At December 31, 2011, we had the following derivative financial instruments outstanding:

• foreign exchange contracts to exchange Canadian Dollars for a total notional value of US $5.3 million at a weighted average exchange rate of $1.01 maturing through March 2012;
• interest rate swaps to convert our $250 million Senior Notes due 2014 to variable-rate debt; and
• an interest rate cap to limit our exposure to increases in the variable rates of our interest rate swaps.

        At December 31, 2011 and 2010, the fair values of cash and cash equivalents, receivables and accounts payable approximated their carrying values due to the short-term nature of these instruments. The fair value of the note receivable from GRI approximates the $10.0 million carrying value as it is a variable-rate instrument. The estimated fair values of other financial instruments subject to fair value disclosures, determined based on broker quotes or quoted market prices or exchange rates for the same or similar instruments, and the related carrying amounts are as follows:

December 31,	2011				2010
(In millions)	Carrying Amount		Fair Value		Carrying Amount			Fair Value
Long-term debt, including current portion	$	831.5	$	700.8	$	510.0		$	459.4
Interest rate swaps, net asset (liability)		5.5		5.5		(0.6	)		(0.6	)
Interest rate cap, net asset		0.2		0.2		1.3			1.3
Canadian Dollar - U.S. Dollar forward contracts, net asset (liability)		0.1		0.1		(0.5	)		(0.5	)

        Financial instruments expose us to counterparty credit risk for nonperformance and to market risk for changes in interest and currency rates. We manage exposure to counterparty credit risk through specific minimum credit standards and procedures to monitor the amount of credit exposure. Our financial instrument counterparties are substantial investment or commercial banks with significant experience with such instruments.