Fair Value Measurements

6 Months Ended

Jul. 31, 2021

Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Abstract]

Fair Value Measurements

NOTE 10 – FAIR VALUE MEASUREMENTS

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. Accounting guidance 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 the quoted prices in active markets, that are observable either directly or indirectly.

Level 3 – Unobservable inputs based on the Company’s assumptions.

The guidance requires the use of observable market data if such data is available without undue cost and effort.

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of July 31, 2021 and 2020 and January 31, 2021 (in thousands):

		Fair Value at July 31, 2021
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	Other current assets	$	218	$	—	$	—	$	218
Short-term investment	Other current assets		167		—		—		167
SERP assets - employer	Other non-current assets		882		—		—		882
SERP assets - employee	Other non-current assets		47,886		—		—		47,886
Defined benefit plan assets	Other non-current liabilities		—		—		28,057		28,057
Hedge derivatives	Other current assets		—		140		—		140
Total		$	49,153	$	140	$	28,057	$	77,350
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	47,886	$	—	$	—	$	47,886
Total		$	47,886	$	—	$	—	$	47,886

		Fair Value at January 31, 2021
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	Other current assets	$	184	$	—	$	—	$	184
Short-term investment	Other current assets		162		—		—		162
SERP assets - employer	Other non-current assets		605		—		—		605
SERP assets - employee	Other non-current assets		46,673		—		—		46,673
Defined benefit plan assets	Other non-current liabilities		—		—		25,837		25,837
Total		$	47,624	$	—	$	25,837	$	73,461
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	46,673	$	—	$	—	$	46,673
Hedge derivatives	Accrued liabilities		—		13		—		13
Total		$	46,673	$	13	$	—	$	46,686

		Fair Value at July 31, 2020
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	Other current assets	$	141	$	—	$	—	$	141
Short-term investment	Other current assets		155		—		—		155
SERP assets - employer	Other non-current assets		935		—		—		935
SERP assets - employee	Other non-current assets		45,043		—		—		45,043
Defined benefit plan assets	Other non-current liabilities		—		—		25,907		25,907
Hedge derivatives	Other current assets		—		228		—		228
Total		$	46,274	$	228	$	25,907	$	72,409
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	45,043	$	—	$	—	$	45,043
Total		$	45,043	$	—	$	—	$	45,043

The fair values of the Company’s available-for-sale securities are based on quoted market prices. The fair value of the short-term investment, which is a guaranteed investment certificate, is based on its purchase price plus one half of a percent calculated annually. The assets related to the Company’s defined contribution supplemental executive retirement plan (“SERP”) consist of both employer (employee unvested) and employee assets which are invested in investment funds with fair values calculated based on quoted market prices. The SERP liability represents the Company’s liability to the employees in the plan for their vested balances. The hedge derivatives are entered into by the Company principally to reduce its exposure to Swiss Franc and Euro exchange rate risks. Fair values of the Company’s hedge derivatives are calculated based on quoted foreign exchange rates and quoted interest rates. The carrying amount of debt approximated fair value as of January 31, 2021, and July 31, 2020, due to the availability and floating rate for similar instruments.

The Company sponsors a defined benefit pension plan in Switzerland. The plan covers certain international employees and is based on years of service and compensation on a career-average pay basis. The assets within the plan are classified as a Level 3 asset within the fair value hierarchy and consist of an investment in pooled assets and include separate employee accounts that are invested in equity securities, debt securities and real estate. The values of the separate accounts invested are based on values provided by the administrator of the funds that cannot be readily derived from or corroborated by observable market data. The value of the assets is part of the funded status of the defined benefit plan and included in other non-current liabilities in the consolidated balance sheets at July 31, 2021, January 31, 2021 and July 31, 2020.

There were no transfers between any levels of the fair value hierarchy for any of the Company’s fair value measurements.

See Note 6 – Goodwill and Intangible Assets for a discussion on the Company’s impairment charges taken in fiscal year 2021 for certain of its nonfinancial assets measured at fair value on a nonrecurring basis due to a change in circumstances that triggered an interim impairment test, and the valuation techniques used to measure the fair value. The most significant unobservable inputs (Level 3) used to estimate the fair values of the Company’s Watch and Accessory Brands unit’s goodwill and MVMT’s intangible assets are discount rates, which was 17.5% for both.