Fair Value Measurements

6 Months Ended

Jul. 31, 2020

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

Fair Value Measurements

NOTE 11 – 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, 2020 and 2019 and January 31, 2020 (in thousands):

		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

		Fair Value at January 31, 2020
	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		156		—		—		156
SERP assets - employer	Other non-current assets		988		—		—		988
SERP assets - employee	Other non-current assets		45,256		—		—		45,256
Defined benefit plan assets	Other non-current liabilities		—		—		24,227		24,227
Hedge derivatives	Other current assets		—		347		—		347
Total		$	46,584	$	347	$	24,227	$	71,158
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	45,264	$	—	$	—	$	45,264
Total		$	45,264	$	—	$	—	$	45,264

		Fair Value at July 31, 2019
	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale securities	Other current assets	$	187	$	—	$	—	$	187
Short-term investment	Other current assets		156		—		—		156
SERP assets - employer	Other non-current assets		1,130		—		—		1,130
SERP assets - employee	Other non-current assets		42,298		—		—		42,298
Defined benefit plan assets	Other non-current liabilities		—		—		32,244		32,244
Hedge derivatives	Other current assets		—		140		—		140
Total		$	43,771	$	140	$	32,244	$	76,155
Liabilities:
SERP liabilities - employee	Other non-current liabilities	$	42,298	$	—	$	—	$	42,298
Hedge derivatives	Accrued liabilities		—		71		—		71
Contingent consideration	Other non-current liabilities		—		—		1,900		1,900
Total		$	42,298	$	71	$	1,900	$	44,269

The fair values of the Company’s available-for-sale securities are based on quoted 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 July 31, 2020, January 31, 2020, and July 31, 2019, 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, 2020, January 31, 2020 and July 31, 2019.

The contingent purchase price liability related to the acquisition of MVMT Watches, Inc., owner of the MVMT brand, is considered a Level 3 liability. Based on updated revenue and EBITDA (as defined in the acquisition agreement) performance expectations during the earn-out period for MVMT, the Company remeasured the contingent consideration to zero at January 31, 2020. At July 31, 2019 the Company remeasured the contingent consideration to $1.9 million and, as a result, $13.6 million is included in non-operating income (portion of contingent consideration allocated to purchase price) in the Consolidated Statements of Operations for the three and six months ended July 31, 2019, and $0.5 million and $0.9 million are reflected as a reduction of deferred compensation (portion of contingent consideration allocated to deferred compensation based on future service requirements) within other current assets and other non-current assets, respectively, in the Consolidated Balance Sheets. As the remeasurement is not a direct benefit realized from operating the MVMT business, the Company recorded the change in contingent consideration within non-operating income in the Consolidated Statements of Operations and as such, did not include it in operating income for the Watch and Accessory Brands segment. Refer to Note 19 for Segment and Geographic Information.    

The following tables present the change in the Level 3 contingent purchase price liability during the three and six months ended July 31, 2019:

	Three Months Ended July 31,
(In thousands)	2019
Balance at April 30, 2019	$	16,884
Payments		—
Adjustments included in income before income taxes		(13,627	)
Adjustments to deferred compensation		(1,357	)
Ending Balance	$	1,900

	Six Months Ended July 31,
(In thousands)	2019
Balance at January 31, 2019	$	16,718
Payments		—
Adjustments included in income before income taxes		(13,461	)
Adjustments to deferred compensation		(1,357	)
Ending Balance	$	1,900

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