Quarterly report [Sections 13 or 15(d)]

FAIR VALUE MEASUREMENTS

v3.26.1
FAIR VALUE MEASUREMENTS
 6 Months Ended
Jul. 04, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Financial assets and liabilities measured and reported at fair value are classified in a three-level hierarchy that prioritizes the inputs used in the valuation process. Categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs, as follows:
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data.
•Level 3 — Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be the Company's own data and judgments about assumptions that market participants would use in pricing the asset or liability.
Recurring Fair Value Measurements
The following tables present financial assets and financial liabilities that are measured and recorded in the Company's financial statements at fair value on a recurring basis:
Fair Value Measurement Using
(In thousands) Total Fair Value Level 1 Level 2 Level 3
June 2026
Financial assets:
Cash equivalents:
Money market funds $ 150  $ 150  $ —  $ — 
Time deposits 2,942  2,942  —  — 
Foreign currency exchange contracts 21,705  —  21,705  — 
Interest rate swap agreements 3,681  —  3,681  — 
Investment securities 53,506  53,506  —  — 
Financial liabilities:
Foreign currency exchange contracts 6,779  —  6,779  — 
Deferred compensation 57,953  —  57,953  — 
Fair Value Measurement Using
(In thousands) Total Fair Value Level 1 Level 2 Level 3
December 2025
Financial assets:
Cash equivalents:
Money market funds $ 28,850  $ 28,850  $ —  $ — 
Time deposits 2,886  2,886  —  — 
Foreign currency exchange contracts 11,373  —  11,373  — 
Interest rate swap agreements 279  —  279  — 
Investment securities 51,717  51,717  —  — 
Financial liabilities:
Foreign currency exchange contracts 9,896  —  9,896  — 
Deferred compensation 55,222  —  55,222  — 
The Company's cash equivalents include money market funds and short-term time deposits that approximate fair value based on Level 1 measurements. The fair value of derivative financial instruments, which consist of foreign currency exchange contracts and interest rate swap agreements, is determined based on observable market inputs (Level 2), including spot and forward exchange rates for foreign currencies and observable interest rate yield curves for interest rate swap agreements. Investment securities are held in the Company's deferred compensation plans as an economic hedge of the related deferred compensation liabilities and are comprised of mutual funds that are valued based on quoted prices in active markets (Level 1). Liabilities related to the Company's deferred compensation plans are recorded at amounts due to participants, based on the fair value of the participants' selection of hypothetical investments (Level 2).
Additionally, at June 2026 and December 2025, the carrying value of the Company's long-term debt was $1.14 billion compared to a fair value of $1.13 billion. The fair value of long-term debt is a Level 2 estimate based on quoted market prices or values of comparable borrowings.
All other financial assets and financial liabilities are recorded in the Company's financial statements at cost. These other financial assets and financial liabilities include cash held as demand deposits, accounts receivable, short-term borrowings, accounts payable and accrued liabilities. At June 2026 and December 2025, their carrying values approximated fair value due to the short-term nature of these instruments.
Nonrecurring Fair Value Measurements
During the three months ended March 2026, the Company commenced a sale process of the Lee® business which was a triggering event requiring impairment testing of goodwill, the indefinite-lived intangible asset and long-lived assets of the Lee reporting unit. The carrying values of the goodwill and indefinite-lived intangible asset as of March 2026, the testing date, were $79.9 million and $4.7 million, respectively. Management elected to perform a qualitative impairment analysis of both the Lee reporting unit and the intangible asset to determine whether it is more likely than not that the goodwill of the Lee reporting unit or the trademark intangible asset was impaired. Based on the results of testing, no impairment charges were required to be recorded for goodwill, indefinite-lived intangible asset or long-lived assets for the three months ended March 2026 and further quantitative testing was not considered necessary. Refer to Note 2 to the Company's financial statements in this Form 10-Q for additional details regarding the Lee® business.
As of May 2026, the Company performed an impairment assessment of the goodwill and trademarks associated with the Acquisition as required during the annual period following an acquisition. Management performed quantitative impairment assessments of goodwill and indefinite-lived trademarks by comparing the estimated fair value of the reporting unit and the indefinite-lived trademark to their respective carrying amounts.
The fair value of the reporting unit was estimated based on a combination of two valuation methods: an income approach and a market approach. The income approach was based on the present value of projected discounted cash flows for the reporting unit. The discount rate is based on the reporting unit's weighted average cost of capital that takes market participant assumptions into consideration. The market approach was based on the guideline company method, which analyzed market multiples of revenue and earnings before interest, taxes, depreciation and amortization for a group of comparable companies, as well as the similar transaction method. Based on results of the quantitative impairment assessment performed, the fair value of goodwill exceeded the carrying value for the reporting unit.
The Company used the income-based relief-from-royalty method to value the indefinite-lived trademark intangible assets. Under this method, revenues expected to be generated by the trademark are multiplied by a selected royalty rate. The royalty rate is selected based on consideration of (i) royalty rates included in active license agreements, if applicable, (ii) royalty rates received by market participants in the apparel industry, and (iii) the current performance of the reporting unit. The estimated after-tax royalty revenue stream is then discounted to present value using the reporting unit’s weighted average cost of capital adjusted, as appropriate, to factor in the risk of the intangible asset. Based on results of the quantitative impairment assessment performed, the fair value of the indefinite-lived trademarks exceeded their carrying values.
Refer to Note 3 to the Company's financial statements in this Form 10-Q for additional information related to the Acquisition.