Delaware
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11-2481903
|
|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
|
|
1450 Broadway, New York, NY
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10018
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer x
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Accelerated filer ¨
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Non - accelerated filer ¨
|
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(Do not check if a smaller reporting company)
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Smaller reporting company ¨
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Page No.
|
||
Part I.
|
Financial Information
|
3
|
Item 1.
|
Financial Statements
|
3
|
Condensed Consolidated Balance Sheets – September 30, 2011 (unaudited) and December 31, 2010
|
3
|
|
Unaudited Condensed Consolidated Income Statements – Three Months and Nine Months Ended September 30, 2011 and 2010
|
4
|
|
Unaudited Condensed Consolidated Statement of Stockholders' Equity – Nine Months Ended September 30, 2011
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5
|
|
Unaudited Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2011 and 2010
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6
|
|
Notes to Unaudited Condensed Consolidated Financial Statements
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8
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
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26
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Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
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31
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Item 4.
|
Controls and Procedures
|
32
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Part II.
|
Other Information
|
32
|
Item 1.
|
Legal Proceedings
|
32
|
Item 1A.
|
Risk Factors
|
32
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Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
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36
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Item 6.
|
Exhibits
|
37
|
Signatures |
38
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September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash (including restricted cash of $13,465 in 2011 and $3,300 in 2010)
|
$ | 235,647 | $ | 121,935 | ||||
Accounts receivable
|
90,430 | 65,507 | ||||||
Deferred income tax assets
|
1,743 | 1,743 | ||||||
Other assets - current
|
23,469 | 36,681 | ||||||
Total Current Assets
|
351,289 | 225,866 | ||||||
Property and equipment:
|
||||||||
Furniture, fixtures and equipment
|
17,615 | 14,894 | ||||||
Less: Accumulated depreciation
|
(6,212 | ) | (4,410 | ) | ||||
11,403 | 10,484 | |||||||
Other Assets:
|
||||||||
Restricted cash
|
7,220 | 15,866 | ||||||
Other assets
|
30,292 | 43,128 | ||||||
Trademarks and other intangibles, net
|
1,493,974 | 1,400,550 | ||||||
Deferred financing costs, net
|
1,381 | 3,119 | ||||||
Investments and joint ventures
|
39,440 | 59,677 | ||||||
Goodwill
|
212,042 | 192,780 | ||||||
1,784,349 | 1,715,120 | |||||||
Total Assets
|
$ | 2,147,041 | $ | 1,951,470 | ||||
Liabilities and Stockholders' Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$ | 31,910 | $ | 43,275 | ||||
Deferred revenue
|
20,058 | 16,305 | ||||||
Current portion of long-term debt
|
321,455 | 36,380 | ||||||
Other liabilities - current
|
5,783 | 4,000 | ||||||
Total current liabilities
|
379,206 | 99,960 | ||||||
Deferred income tax liability
|
162,248 | 138,577 | ||||||
Long-term debt, less current maturities
|
314,147 | 548,007 | ||||||
Deferred revenue
|
6,376 | 11,561 | ||||||
Other liabilities
|
12,858 | 14,451 | ||||||
Total Liabilities
|
874,835 | 812,556 | ||||||
Commitments and contingencies
|
||||||||
Stockholders' Equity
|
||||||||
Common stock, $.001 par value shares authorized 150,000; shares issued 74,859 and 73,930, respectively
|
75 | 74 | ||||||
Additional paid-in capital
|
790,755 | 752,803 | ||||||
Retained earnings
|
393,259 | 294,316 | ||||||
Accumulated other comprehensive loss
|
(483 | ) | - | |||||
Less: Treasury stock – 1,501 and 1,409 shares at cost, respectively
|
(13,443 | ) | (10,831 | ) | ||||
Total Iconix Brand Group, Inc. Stockholders’ Equity
|
1,170,163 | 1,036,362 | ||||||
Non-controlling interest
|
102,043 | 102,552 | ||||||
Total Stockholders’ Equity
|
1,272,206 | 1,138,914 | ||||||
Total Liabilities and Stockholders' Equity
|
$ | 2,147,041 | $ | 1,951,470 |
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Licensing and other revenue
|
$ | 92,683 | $ | 96,887 | $ | 274,332 | $ | 244,604 | ||||||||
Selling, general and administrative expenses
|
33,729 | 42,032 | 97,396 | 90,719 | ||||||||||||
Expenses related to specific litigation
|
- | 33 | 92 | 240 | ||||||||||||
Operating income
|
58,954 | 54,822 | 176,844 | 153,645 | ||||||||||||
Other (income) expenses
|
||||||||||||||||
Interest expense
|
13,380 | 10,665 | 37,141 | 32,366 | ||||||||||||
Interest and other income
|
(564 | ) | (902 | ) | (23,373 | ) | (2,680 | ) | ||||||||
Equity earnings on joint ventures
|
(98 | ) | (25 | ) | (3,236 | ) | (2,242 | ) | ||||||||
Other expenses - net
|
12,718 | 9,738 | 10,532 | 27,444 | ||||||||||||
Income before income taxes
|
46,236 | 45,084 | 166,312 | 126,201 | ||||||||||||
Provision for income taxes
|
15,209 | 13,252 | 55,313 | 40,042 | ||||||||||||
Net income
|
$ | 31,027 | $ | 31,832 | $ | 110,999 | $ | 86,159 | ||||||||
Less: Net income attributable to non-controlling interest
|
$ | 5,059 | $ | 4,423 | $ | 12,056 | $ | 9,435 | ||||||||
Net income attributable to Iconix Brand Group, Inc.
|
$ | 25,968 | $ | 27,409 | $ | 98,943 | $ | 76,724 | ||||||||
Earnings per share:
|
||||||||||||||||
Basic
|
$ | 0.35 | $ | 0.38 | $ | 1.36 | $ | 1.07 | ||||||||
Diluted
|
$ | 0.34 | $ | 0.37 | $ | 1.31 | $ | 1.03 | ||||||||
Weighted average number of common shares outstanding:
|
||||||||||||||||
Basic
|
73,297 | 72,326 | 73,016 | 72,013 | ||||||||||||
Diluted
|
75,746 | 74,920 | 75,520 | 74,632 |
Accumulated
|
||||||||||||||||||||||||||||||||
Additional
|
Other
|
Non-
|
||||||||||||||||||||||||||||||
Common Stock
|
Paid-in
|
Retained
|
Comprehensive
|
Treasury
|
Controlling
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Loss
|
Stock
|
Interest
|
Total
|
|||||||||||||||||||||||||
Balance at January 1, 2011
|
73,930 | $ | 74 | $ | 752,803 | $ | 294,316 | $ | - | $ | (10,831 | ) | $ | 102,552 | $ | 1,138,914 | ||||||||||||||||
Shares issued on exercise of stock options and warrants
|
567 | 1 | 2,351 | - | - | - | - | 2,352 | ||||||||||||||||||||||||
Shares issued on vesting of restricted stock
|
218 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Shares issued for earn-out on acquisition
|
144 | - | 427 | - | - | - | - | 427 | ||||||||||||||||||||||||
Tax benefit of stock option exercises
|
- | - | 3,352 | - | - | - | - | 3,352 | ||||||||||||||||||||||||
Compensation expense in connection with restricted stock and stock options
|
- | - | 7,321 | - | - | - | - | 7,321 | ||||||||||||||||||||||||
Cost of shares repurchased on vesting of restricted stock and exercise of stock options
|
- | - | - | - | - | (2,612 | ) | - | (2,612 | ) | ||||||||||||||||||||||
Equity portion of convertible notes
|
- | - | 33,875 | - | - | - | - | 33,875 | ||||||||||||||||||||||||
Net cost of hedge on convertible notes
|
- | - | (9,374 | ) | - | - | - | - | (9,374 | ) | ||||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||||||
Net income
|
- | - | - | 98,943 | - | - | 12,056 | 110,999 | ||||||||||||||||||||||||
Change in fair value of hedges
|
- | - | - | - | (483 | ) | - | - | (483 | ) | ||||||||||||||||||||||
Total comprehensive income
|
- | - | - | - | - | - | - | 110,516 | ||||||||||||||||||||||||
Distributions to joint ventures
|
- | - | - | - | - | - | (27,495 | ) | (27,495 | ) | ||||||||||||||||||||||
Non-controlling interest of acquired companies
|
- | - | - | - | - | - | 14,930 | 14,930 | ||||||||||||||||||||||||
Balance at September 30, 2011
|
74,859 | $ | 75 | $ | 790,755 | $ | 393,259 | $ | (483 | ) | $ | (13,443 | ) | $ | 102,043 | $ | 1,272,206 |
Nine Months Ended September 30,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 110,999 | $ | 86,159 | ||||
Depreciation of property and equipment
|
1,802 | 972 | ||||||
Amortization of trademarks and other intangibles
|
5,339 | 6,543 | ||||||
Amortization of deferred financing costs
|
3,987 | 1,711 | ||||||
Amortization of convertible note discount
|
15,962 | 11,019 | ||||||
Stock-based compensation expense
|
7,321 | 6,562 | ||||||
Gain on re-measurement of equity investment
|
(21,465 | ) | - | |||||
Provision for doubtful accounts
|
998 | 2,161 | ||||||
Accrued interest on long-term debt
|
385 | - | ||||||
Net earnings on equity investments in joint ventures
|
(3,236 | ) | (2,242 | ) | ||||
Realization of cash flow hedge
|
- | 134 | ||||||
Deferred income taxes
|
21,952 | 10,539 | ||||||
Changes in operating assets and liabilities, net of business acquisitions:
|
||||||||
Accounts receivable
|
(25,611 | ) | (3,524 | ) | ||||
Other assets - current
|
14,022 | (193 | ) | |||||
Other assets
|
15,247 | (6,191 | ) | |||||
Deferred revenue
|
(1,432 | ) | (6,060 | ) | ||||
Accounts payable and accrued expenses
|
(10,534 | ) | 15,371 | |||||
Other long-term liabilities
|
- | 5,711 | ||||||
Net cash provided by operating activities
|
135,736 | 128,672 | ||||||
Cash flows used in investing activities:
|
||||||||
Purchases of property and equipment
|
(2,721 | ) | (691 | ) | ||||
Acquisition of interest in Hardy Way
|
(62,000 | ) | - | |||||
Acquisition of interest in MG Icon
|
- | (4,000 | ) | |||||
Acquisition of Peanuts Worldwide
|
- | (172,054 | ) | |||||
Payment of expenses related to acquisitions
|
- | (1,177 | ) | |||||
Net distributions (to) from equity partners
|
(23,995 | ) | 1,738 | |||||
Earn-out payment on acquisition
|
- | (799 | ) | |||||
Additions to trademarks
|
(263 | ) | (31 | ) | ||||
Net cash used in investing activities
|
(88,979 | ) | (177,014 | ) | ||||
Cash flows used in financing activities:
|
||||||||
Proceeds from long-term debt
|
292,500 | - | ||||||
Proceeds from sale of warrants
|
28,800 | - | ||||||
Purchase of convertible note hedges
|
(58,740 | ) | - | |||||
Deferred financing costs
|
(867 | ) | - | |||||
Proceeds from exercise of stock options and warrants
|
2,352 | 1,006 | ||||||
Shares repurchased on vesting of restricted stock and exercise of stock options
|
(2,612 | ) | (499 | ) | ||||
Payment of long-term debt
|
(202,476 | ) | (72,669 | ) | ||||
Acquisition of interest in MG Icon
|
(4,000 | ) | - | |||||
Non-controlling interest contribution
|
- | 14,826 | ||||||
Excess tax benefit from share-based payment arrangements
|
3,352 | 1,589 | ||||||
Restricted cash - current
|
8,646 | 3,291 | ||||||
Restricted cash – non-current
|
(10,165 | ) | - | |||||
Net cash provided by (used in) financing activities
|
56,790 | (52,456 | ) | |||||
Net increase (decrease) in cash and cash equivalents
|
103,547 | (100,798 | ) | |||||
Cash, beginning of period
|
118,635 | 195,381 | ||||||
Cash, end of period
|
$ | 222,182 | $ | 94,583 | ||||
Balance of restricted cash - current
|
13,465 | 2,872 | ||||||
Total cash including current restricted cash, end of period
|
$ | 235,647 | $ | 97,455 |
Nine Months Ended September 30,
|
||||||||
2011
|
2010
|
|||||||
Cash paid during the period:
|
||||||||
Income taxes
|
$ | 33,564 | $ | 18,920 | ||||
Interest
|
$ | 13,898 | $ | 15,380 |
Nine Months Ended September 30,
|
||||||||
2011
|
2010
|
|||||||
Acquisitions:
|
||||||||
Common stock issued
|
$ | 3,210 | $ | 9,689 |
September 30, 2011
|
December 31, 2010
|
||||||||||||||||||
Estimated
|
Gross
|
Gross
|
|||||||||||||||||
Lives in
|
Carrying
|
Accumulated
|
Carrying
|
Accumulated
|
|||||||||||||||
(000's omitted)
|
Years
|
Amount
|
Amortization
|
Amount
|
Amortization
|
||||||||||||||
Indefinite life trademarks and copyrights
|
Indefinite
|
$ | 1,471,028 | $ | - | $ | 1,373,277 | $ | - | ||||||||||
Definite life trademarks
|
10-15 | 19,591 | 6,260 | 19,579 | 5,169 | ||||||||||||||
Non-compete agreements
|
2-15 | 10,475 | 10,112 | 10,475 | 9,092 | ||||||||||||||
Licensing agreements
|
1-9 | 31,103 | 21,851 | 30,103 | 18,640 | ||||||||||||||
Domain names
|
5 | 570 | 570 | 570 | 553 | ||||||||||||||
$ | 1,532,767 | $ | 38,793 | $ | 1,434,004 | $ | 33,454 |
September 30, 2011
|
Valuation
|
||||||||||||
(000's omitted)
|
Level 1
|
Level 2
|
Level 3
|
Technique
|
|||||||||
Marketable Securities
|
$ | - | $ | - | $ | - |
(A)
|
||||||
Income Statement Hedge
|
$ | - | $ | (483 | ) | $ | - |
(A)
|
|||||
Balance Sheet Hedge
|
$ | - | $ | - | $ | - |
(A)
|
December 31, 2010
|
Valuation
|
||||||||||||
(000's omitted)
|
Level 1
|
Level 2
|
Level 3
|
Technique
|
|||||||||
Marketable Securities
|
$
|
-
|
$
|
-
|
$
|
-
|
(A)
|
Auction Rate Securities (000's omitted)
|
||||||||
Nine Months Ended September 30,
|
||||||||
2011
|
2010
|
|||||||
Balance at beginning of period
|
$
|
-
|
$
|
6,988
|
||||
Additions
|
-
|
-
|
||||||
Gains (losses) reported in earnings
|
-
|
-
|
||||||
Gains (losses) reported in accumulated other comprehensive income
|
-
|
296
|
||||||
Balance at end of period
|
$
|
-
|
$
|
7,284
|
(000's omitted)
|
September 30, 2011
|
December 31, 2010
|
||||||||||||||
Carrying Amount
|
Fair Value
|
Carrying Amount
|
Fair Value
|
|||||||||||||
Long-term debt, including current portion
|
$
|
635,602
|
$
|
685,718
|
$
|
584,387
|
$
|
607,592
|
September 30,
|
December 31,
|
|||||||
(000’s omitted)
|
2011
|
2010
|
||||||
2.50% Convertible Notes
|
$
|
240,343
|
$
|
-
|
||||
1.875% Convertible Notes
|
274,681
|
262,716
|
||||||
Ecko Note
|
69,500
|
80,000
|
||||||
Asset-Backed Notes
|
51,078
|
70,650
|
||||||
Term Loan Facility
|
-
|
171,021
|
||||||
Total
|
$
|
635,602
|
$
|
584,387
|
September 30,
|
||||
(000’s omitted)
|
2011
|
|||
Equity component carrying amount
|
$ | 33,875 | ||
Unamortized discount
|
59,657 | |||
Net debt carrying amount
|
240,343 |
September 30,
|
December 31,
|
|||||||
(000’s omitted)
|
2011
|
2010
|
||||||
Equity component carrying amount
|
$
|
41,309
|
$
|
41,309
|
||||
Unamortized discount
|
12,819
|
24,784
|
||||||
Net debt carrying amount
|
274,681
|
262,716
|
(000’s omitted)
|
Total
|
October 1
through
December 31,
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
|||||||||||||||||||||
2.50% Convertible Notes (1)
|
$
|
240,343
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
240,343
|
||||||||||||||
1.875% Convertible Notes (2)
|
274,681
|
-
|
274,681
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Ecko Note
|
69,500
|
2,500
|
10,000
|
10,000
|
47,000
|
-
|
-
|
|||||||||||||||||||||
Asset-Backed Notes
|
51,078
|
6,809
|
33,468
|
10,801
|
-
|
-
|
-
|
|||||||||||||||||||||
Total
|
$
|
635,602
|
$
|
9,309
|
$
|
318,149
|
$
|
20,801
|
$
|
47,000
|
$
|
-
|
$
|
240,343
|
|
(1)
|
Reflects the net debt carrying amount of the 2.50% Convertible Notes on the unaudited condensed consolidated balance sheet as of September 30, 2011, in accordance with accounting for convertible notes. The principal amount owed to the holders of the Convertible Notes is $300.0 million.
|
|
(2)
|
Reflects the net debt carrying amount of the 1.875% Convertible Notes on the unaudited condensed consolidated balance sheet as of September 30, 2011, in accordance with accounting for convertible notes. The principal amount owed to the holders of the Convertible Notes is $287.5 million.
|
Expected Volatility
|
30 - 50 | % | ||
Expected Dividend Yield
|
0 | % | ||
Expected Life (Term)
|
3 - 7 years
|
|||
Risk-Free Interest Rate
|
3.00 - 4.75 | % |
Options
|
Weighted-Average
|
|||||||
Options
|
Exercise Price
|
|||||||
Outstanding at January 1, 2011
|
2,592,535
|
$
|
4.61
|
|||||
Granted
|
15,000
|
22.51
|
||||||
Canceled
|
-
|
-
|
||||||
Exercised
|
(563,385
|
)
|
4.14
|
|||||
Expired/Forfeited
|
-
|
-
|
||||||
Outstanding at September 30, 2011
|
2,044,150
|
$
|
4.87
|
|||||
Exercisable at September 30, 2011
|
2,042,483
|
$
|
4.87
|
Weighted-Average
|
||||||||
Warrants
|
Exercise Price
|
|||||||
Outstanding at January 1, 2011
|
253,900
|
$
|
17.01
|
|||||
Granted
|
-
|
-
|
||||||
Canceled
|
-
|
-
|
||||||
Exercised
|
(3,600
|
)
|
|
8.72
|
||||
Expired/Forfeited
|
-
|
-
|
||||||
Outstanding at September 30, 2011
|
250,300
|
$
|
17.13
|
|||||
Exercisable at September 30, 2011
|
250,300
|
$
|
17.13
|
Weighted-Average
|
||||||||
Shares
|
Grant Date Fair Value
|
|||||||
Non-vested, January 1, 2011
|
1,442,610 | $ | 15.34 | |||||
Granted
|
354,340 | 22.01 | ||||||
Vested
|
(217,619 | ) | 18.76 | |||||
Forfeited/Canceled
|
- | - | ||||||
Non-vested, September 30, 2011
|
1,579,331 | $ | 16.37 |
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
(000's omitted)
|
September 30,
(unaudited)
|
September 30,
(unaudited)
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Basic
|
73,297
|
72,326
|
73,016
|
72,013
|
||||||||||||
Effect of exercise of stock options
|
1,117
|
1,980
|
1,187
|
1,960
|
||||||||||||
Effect of contingent common stock issuance
|
-
|
-
|
48
|
48
|
||||||||||||
Effect of assumed vesting of restricted stock
|
1,332
|
614
|
1,269
|
611
|
||||||||||||
Diluted
|
75,746
|
74,920
|
75,520
|
74,632
|
For the three months ended
|
For the nine months ended
|
|||||||||||||||
(000's omitted)
|
September 30,
(unaudited)
|
September 30,
(unaudited)
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenues by product line:
|
||||||||||||||||
Direct-to-retail license
|
$
|
31,260
|
$
|
35,574
|
$
|
112,414
|
$
|
112,337
|
||||||||
Wholesale license
|
56,005
|
41,784
|
147,670
|
111,725
|
||||||||||||
Entertainment and other
|
5,418
|
19,529
|
14,248
|
20,542
|
||||||||||||
$
|
92,683
|
$
|
96,887
|
$
|
274,332
|
$
|
244,604
|
|||||||||
Revenues by geographic region:
|
||||||||||||||||
United States
|
$
|
79,352
|
$
|
80,990
|
$
|
229,045
|
$
|
218,914
|
||||||||
Other
|
13,331
|
15,897
|
45,287
|
25,690
|
||||||||||||
$
|
92,683
|
$
|
96,887
|
$
|
274,332
|
$
|
244,604
|
|
•
|
could impair our liquidity;
|
|
•
|
could make it more difficult for us to satisfy our other obligations;
|
|
•
|
require us to dedicate a substantial portion of our cash flow to payments on our debt obligations, which reduces the availability of our cash flow to fund working capital, capital expenditures and other corporate requirements;
|
|
•
|
could impede us from obtaining additional financing in the future for working capital, capital expenditures, acquisitions and general corporate purposes;
|
|
impose restrictions on us with respect to the use of our available cash, including in connection with future acquisitions;
|
|
•
|
make us more vulnerable in the event of a downturn in our business prospects and could limit our flexibility to plan for, or react to, changes in our licensing markets; and
|
|
•
|
could place us at a competitive disadvantage when compared to our competitors who have less debt.
|
|
•
|
unanticipated costs associated with the target acquisition;
|
|
•
|
negative effects on reported results of operations from acquisition related charges and amortization of acquired intangibles;
|
|
•
|
diversion of management’s attention from other business concerns;
|
|
•
|
the challenges of maintaining focus on, and continuing to execute, core strategies and business plans as our brand and license portfolio grows and becomes more diversified;
|
|
•
|
adverse effects on existing licensing and joint venture relationships;
|
|
•
|
potential difficulties associated with the retention of key employees, and the assimilation of any other employees, who may be retained by us in connection with or as a result of our acquisitions; and
|
|
•
|
risks of entering new domestic and international markets (whether it be with respect to new licensed product categories or new licensed product distribution channels) or markets in which we have limited prior experience.
|
Month of purchase
|
Total number
of shares
purchased
|
Average
price
paid per share
|
Total number
of
shares
purchased as
part of
publicly
announced
plans or
programs(1)
|
Maximum
number
(or approximate
dollar
value) of
shares
that may yet
be
purchased
under the
plans or
programs
|
||||||||||||
July 1 – July 31
|
-
|
$
|
-
|
$
|
-
|
$
|
71,722,003
|
|||||||||
August 1 – August 31
|
6,949
|
$
|
22.05
|
$
|
-
|
$
|
71,722,003
|
|||||||||
September 30 – September 30
|
-
|
$
|
-
|
$
|
-
|
$
|
71,722,003
|
|||||||||
Total
|
6,949
|
$
|
22.05
|
$
|
-
|
$
|
71,722,003
|
(2)
|
|
(1)
|
On November 3, 2008, the Company announced that the Board of Directors authorized the repurchase of up to $75 million of the Company's common stock over a period ending October 30, 2011, herein referred to as the repurchase plan. This authorization replaces any prior plan or authorization. The repurchase plan does not obligate the Company to repurchase any specific number of shares and may be suspended at any time at management's discretion. Amounts not purchased under the repurchase plan represent shares surrendered to the Company to pay withholding taxes due upon the vesting of restricted stock. On October 27, 2011, the Company announced a new repurchase plan of up to $200 million, which may be suspended or discontinued in management’s discretion. This new repurchase plan replaced the repurchase plan announced on November 3, 2008.
|
|
Represented amount available as of September 30, 2011 for repurchase under the repurchase plan that expired on October 30, 2011.
|
EXHIBIT NO.
|
DESCRIPTION OF EXHIBIT
|
|
Exhibit 31.1
|
Certification of Chief Executive Officer Pursuant To Rule 13a-14 or 15d-14 of The Securities Exchange Act of 1934, As Adopted Pursuant To Section 302 Of The Sarbanes-Oxley Act of 2002
|
|
Exhibit 31.2
|
Certification of Chief Financial Officer Pursuant To Rule 13a-14 or 15d-14 of The Securities Exchange Act of 1934, As Adopted Pursuant To Section 302 Of The Sarbanes-Oxley Act of 2002
|
|
Exhibit 32.1
|
Certification of Chief Executive Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of The Sarbanes-Oxley Act of 2002
|
|
Exhibit 32.2
|
Certification of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of The Sarbanes-Oxley Act of 2002
|
Iconix Brand Group, Inc.
|
|
(Registrant)
|
|
Date: November 4, 2011
|
/s/ Neil Cole
|
Neil Cole
|
|
Chairman of the Board, President
|
|
and Chief Executive Officer
|
|
(on Behalf of the Registrant)
|
|
Date: November 4, 2011
|
/s/ Warren Clamen
|
Warren Clamen
|
|
Executive Vice President
|
|
and Chief Financial Officer
|
/s/ Neil Cole
|
Neil Cole
|
President and Chief Executive Officer
|
/s/ Warren Clamen
|
Warren Clamen
|
Executive Vice President and Chief Financial Officer
|
/s/ Neil Cole
|
Neil Cole
|
President and Chief Executive Officer
|
Date: November 4, 2011
|
/s/ Warren Clamen
|
Warren Clamen
|
Executive Vice President and Chief Financial Officer
|
Date: November 4, 2011
|
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Cash, restricted cash | $ 13,465 | $ 3,300 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000 | 150,000 |
Common stock, shares issued | 74,859 | 73,930 |
Treasury stock, shares | 1,501 | 1,409 |
Condensed Consolidated Income Statements (USD $) In Thousands, except Per Share data | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Licensing and other revenue | $ 92,683 | $ 96,887 | $ 274,332 | $ 244,604 |
Selling, general and administrative expenses | 33,729 | 42,032 | 97,396 | 90,719 |
Expenses related to specific litigation | 33 | 92 | 240 | |
Operating income | 58,954 | 54,822 | 176,844 | 153,645 |
Other (income) expenses | ||||
Interest expense | 13,380 | 10,665 | 37,141 | 32,366 |
Interest and other income | (564) | (902) | (23,373) | (2,680) |
Net earnings on equity investments in joint ventures | (98) | (25) | (3,236) | (2,242) |
Other expenses - net | 12,718 | 9,738 | 10,532 | 27,444 |
Income before income taxes | 46,236 | 45,084 | 166,312 | 126,201 |
Provision for income taxes | 15,209 | 13,252 | 55,313 | 40,042 |
Net income | 31,027 | 31,832 | 110,999 | 86,159 |
Less: Net income attributable to non-controlling interest | 5,059 | 4,423 | 12,056 | 9,435 |
Net income attributable to Iconix Brand Group, Inc. | $ 25,968 | $ 27,409 | $ 98,943 | $ 76,724 |
Earnings per share: | ||||
Basic | $ 0.35 | $ 0.38 | $ 1.36 | $ 1.07 |
Diluted | $ 0.34 | $ 0.37 | $ 1.31 | $ 1.03 |
Weighted average number of common shares outstanding: | ||||
Basic | 73,297 | 72,326 | 73,016 | 72,013 |
Diluted | 75,746 | 74,920 | 75,520 | 74,632 |
Earnings Per Share (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Weighted Average Shares Used in Calculating Basic and Diluted Earnings Per Share | A
reconciliation of weighted average shares used in calculating basic
and diluted earnings per share follows:
|
Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 01, 2011 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | ICON | |
Entity Registrant Name | ICONIX BRAND GROUP, INC. | |
Entity Central Index Key | 0000857737 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 73,645,824 |
Subsequent Event - Additional Information (Detail) (USD $) In Millions, unless otherwise specified | 1 Months Ended | ||
---|---|---|---|
Oct. 26, 2011
Acquisition
Sharper Image | Oct. 27, 2011
Maximum
Stock Repurchase Program | Oct. 27, 2011
Stock Repurchase Program
Year | |
Subsequent Event [Line Items] | |||
Cash paid for purchase of assets | $ 65.7 | ||
Cash deposited in escrow account | 2.0 | ||
Repurchase of common stock authorized value | $ 200 | ||
Period of common stock repurchase, years | 4 | ||
Prior share repurchase program expiration date | Oct. 30, 2011 |
Trademarks and Other Intangibles, Net - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | 1 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | Apr. 26, 2011
Hardy Way | Apr. 30, 2011
Hardy Way
Licensing agreements | Apr. 30, 2011
Hardy Way
Trademarks | Jun. 30, 2010
Peanuts Worldwide | Jun. 30, 2010
Peanuts Worldwide
Licensing agreements | Jun. 30, 2010
Peanuts Worldwide
Trademarks | |
Intangible Assets by Major Class [Line Items] | ||||||||||
Controlling interest | 85.00% | 80.00% | ||||||||
Increase in value of indefinite life trademarks | $ 96,500,000 | $ 153,000,000 | ||||||||
Increase in value of licensing agreements | 1,000,000 | 1,100,000 | ||||||||
Amortization expense for intangible assets | $ 1,700,000 | $ 2,300,000 | $ 5,339,000 | $ 6,543,000 |
Net Revenues by Type of License and Information by Geographic Region (Detail) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Segment Reporting Information [Line Items] | ||||
Licensing and other revenue | $ 92,683 | $ 96,887 | $ 274,332 | $ 244,604 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Licensing and other revenue | 79,352 | 80,990 | 229,045 | 218,914 |
Other | ||||
Segment Reporting Information [Line Items] | ||||
Licensing and other revenue | 13,331 | 15,897 | 45,287 | 25,690 |
Direct-to-retail license | ||||
Segment Reporting Information [Line Items] | ||||
Licensing and other revenue | 31,260 | 35,574 | 112,414 | 112,337 |
Wholesale license | ||||
Segment Reporting Information [Line Items] | ||||
Licensing and other revenue | 56,005 | 41,784 | 147,670 | 111,725 |
Entertainment and other | ||||
Segment Reporting Information [Line Items] | ||||
Licensing and other revenue | $ 5,418 | $ 19,529 | $ 14,248 | $ 20,542 |
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Stockholders' Equity | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity |
6. Stockholders’ Equity
Public Offering
On
June 9, 2009, the Company completed a public offering of common
stock pursuant to a registration statement that had been declared
effective by the Securities and Exchange Commission
(“SEC”). All 10,700,000 shares of common stock
offered by the Company in the final prospectus were sold at $15.00
per share. Net proceeds to the Company from the offering
amounted to approximately $152.8 million.
2009 Equity Incentive Plan
On
August 13, 2009, the Company's stockholders approved the Company's
2009 Equity Incentive Plan ("2009 Plan”). The 2009 Plan
authorizes the granting of common stock options or other
stock-based awards covering up to 3,000,000 shares of the
Company’s common stock. All employees, directors,
consultants and advisors of the Company, including those of
the Company's subsidiaries, are eligible to be granted
non-qualified stock options and other stock-based awards (as
defined) under the 2009 Plan, and employees are also eligible to be
granted incentive stock options (as defined) under the 2009 Plan.
No new awards may be granted under the Plan after August 13,
2019.
Stockholder Rights Plan
In
January 2000, the Company's Board of Directors adopted a
stockholder rights plan. Under the plan, each stockholder
of common stock received a dividend of one right for each
share of the Company's outstanding common stock, entitling the
holder to purchase one thousandth of a share of Series A Junior
Participating Preferred Stock, par value, $0.01 per share of the
Company, at an initial exercise price of $6.00. The rights become
exercisable and will trade separately from the common stock ten
business days after any person or group acquires 15% or more of the
common stock, or ten business days after any person or group
announces a tender offer for 15% or more of the outstanding common
stock. This plan expired by its terms on January 26,
2010.
Stock Repurchase Program
On
November 3, 2008, the Company announced that its Board of Directors
had authorized the repurchase of up to $75 million of the Company's
common stock over a period of approximately three years (the
“Program”). The Program replaced any prior plan or
authorization. The Program did not obligate the Company to
repurchase any specific number of shares and could be suspended at
any time at management's discretion. During 2009, the Company
repurchased 200,000 shares under the Program for approximately $1.5
million. No shares were repurchased under the Program by the
Company during the Current Nine Months or during 2010. The
Program expired by its terms on October 30,
2011.
Stock Options
The
Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions
including the expected stock price volatility. Because the
Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of
its employee stock options.
The
fair value for these options and warrants for all years was
estimated at the date of grant using a Black-Scholes option-pricing
model with the following weighted-average assumptions:
The
options that the Company granted under its plans
expire at various times, either five, seven or ten years from the
date of grant, depending on the particular grant.
Summaries
of the Company's stock options, warrants (other than warrants
issued related to our 1.875% Convertible Notes and 2.50%
Convertible Notes) and performance related options activity, and
related information for the Current Nine Months are as
follows:
Compensation
expense related to stock option grants for the Current Quarter and
the Prior Year Quarter was zero and $0.1 million,
respectively. Compensation expense related to stock
option grants for both the Current Nine Months and the Prior Year
Nine Months was $0.2 million and $0.1 million,
respectively.
Warrants
All
warrants issued in connection with acquisitions are recorded at
fair market value using the Black-Scholes model and are recorded as
part of purchase accounting. Certain warrants are exercised using
the cashless method.
The
Company values other warrants issued to non-employees at the
commitment date at the fair market value of the instruments issued,
a measure which is more readily available than the fair market
value of services rendered, using the Black-Scholes model. The fair
market value of the instruments issued is expensed over the vesting
period.
Restricted stock
Compensation
cost for restricted stock is measured as the excess, if any, of the
quoted market price of the Company’s stock at the date the
common stock is issued over the amount the employee must pay to
acquire the stock (which is generally zero). The compensation cost,
net of projected forfeitures, is recognized over the period between
the issue date and the date any restrictions lapse, with
compensation cost for grants with a graded vesting schedule
recognized on a straight-line basis over the requisite service
period for each separately vesting portion of the award as if the
award was, in substance, multiple awards. The restrictions do not
affect voting and dividend rights.
The
following tables summarize information about unvested restricted
stock transactions:
Compensation expense related to restricted
stock grants for the Current Quarter and the Prior Year Quarter was
approximately $2.4 million and $1.9 million, respectively.
Compensation expense related to restricted stock grants for the
Current Nine Months and the Prior Year Nine Months was
approximately $7.2 million and $6.5 million,
respectively. An additional amount of $15.9 million is
expected to be expensed evenly over a period of approximately four
years. During the Current Quarter and the Prior Year Quarter, the
Company withheld shares valued at $0.2 million, and $1.7 million,
respectively, of its restricted common stock in connection with net
share settlement of restricted stock grants and option
exercises. During the Current Nine Months and the
Prior Year Nine Months, the Company withheld shares valued at $2.4
million, and $2.2 million, respectively, of its restricted common
stock in connection with net share settlement of restricted stock
grants and option exercises.
Shares Reserved for Issuance
At
September 30, 2011, 335,384 common shares were reserved for
issuance under the 2009 Plan. At September 30,
2011 there were no common shares available for issuance under the
Company’s 2006, 2002, and 2001Stock Plans.
|
Investments and Joint Ventures - Additional Information (Detail) (USD $) | 9 Months Ended | 1 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 1 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | |||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | Dec. 31, 2010 | Sep. 30, 2010 | Nov. 07, 2007
Scion
Artful Dodger | Mar. 31, 2009
Scion
Variable Interest Entity, Not Primary Beneficiary
Cost method of accounting | Sep. 30, 2011
Scion
Variable Interest Entity, Not Primary Beneficiary
Cost method of accounting | Sep. 30, 2010
Scion
Variable Interest Entity, Not Primary Beneficiary
Cost method of accounting | Dec. 31, 2010
Scion
Variable Interest Entity, Not Primary Beneficiary
Cost method of accounting | Sep. 30, 2011
Scion
Cost method of accounting | Dec. 31, 2010
Scion
Cost method of accounting | Mar. 31, 2009
Parent Company
Variable Interest Entity, Not Primary Beneficiary
Cost method of accounting | Sep. 30, 2008
Parent Company
Equity method of accounting | May 31, 2011
Novel
Equity method of accounting | Jul. 31, 2010
Novel
Equity method of accounting | Sep. 30, 2008
Novel
Equity method of accounting | Sep. 30, 2011
Novel
Equity method of accounting | Sep. 30, 2009
Novel
Equity method of accounting | Dec. 29, 2008
Iconix Latin America
Equity method of accounting | Oct. 31, 2009
Licensing agreements
IPH Unltd
Ecko Assets
Year | Oct. 31, 2009
IPH Unltd | Sep. 30, 2011
IPH Unltd | Jul. 27, 2011
IPH Unltd | Dec. 31, 2010
IPH Unltd | Oct. 31, 2009
IPH Unltd
Ecko Assets | Jan. 31, 2011
Iconix Europe
Equity method of accounting | Dec. 31, 2009
Iconix Europe
Equity method of accounting | Dec. 31, 2009
Iconix Europe
Equity method of accounting | Jun. 03, 2010
Peanuts Worldwide
Icon Entertainment LLC | Jun. 03, 2010
Peanuts Worldwide
Beagle Scout LLC | Sep. 30, 2011
Peanuts Worldwide
Beagle Scout LLC
Other assets - current | Sep. 30, 2011
Peanuts Worldwide
Beagle Scout LLC
Other assets - non-current | Apr. 26, 2011
Hardy Way | Apr. 26, 2011
Hardy Way
Equity method of accounting | May 31, 2009
Hardy Way
Equity method of accounting | Sep. 30, 2011
Hardy Way
Equity method of accounting | Sep. 30, 2010
MG Icon | Mar. 31, 2011
MG Icon
Equity method of accounting | Mar. 31, 2010
MG Icon
Equity method of accounting | Sep. 30, 2011
MG Icon
Equity method of accounting | Sep. 30, 2011
MG Icon
Equity method of accounting
Other current liabilities | Sep. 30, 2011
MG Icon
Equity method of accounting
Other liabilities | Sep. 30, 2011
MG Icon
Equity method of accounting
Minimum | Jun. 30, 2010
Peanuts Worldwide | Jun. 03, 2010
Peanuts Worldwide | Jun. 03, 2010
Peanuts Worldwide
Licensing agreements
Year | Sep. 30, 2011
Licensing agreements
Year | |
Schedule of Investments [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||
Percentage of minority interest in subsidiary | 49.00% | 20.00% | ||||||||||||||||||||||||||||||||||||||||||||
Contribution made to investment | $ 2,100,000 | $ 2,000,000 | $ 3,000,000 | $ 4,000,000 | $ 8,000,000 | $ 63,500,000 | $ 141,000,000 | $ 34,000,000 | $ 62,000,000 | |||||||||||||||||||||||||||||||||||||
Percentage of interest in joint venture after transaction | 51.00% | |||||||||||||||||||||||||||||||||||||||||||||
Cash payment for acquisition of assets | 55,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Future contribution to be made to investment year one | 2,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Controlling interest | 16.60% | 100.00% | 80.00% | 85.00% | 85.00% | 50.00% | 50.00% | 80.00% | ||||||||||||||||||||||||||||||||||||||
Cash entitled to be received by sellers upon the achievement of earn-out | 7,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Business acquisition total purchase price | 15,000,000 | 18,000,000 | 17,000,000 | 20,000,000 | ||||||||||||||||||||||||||||||||||||||||||
Prepaid royalties | 7,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Consideration paid to acquire interest in licensees | 1 | |||||||||||||||||||||||||||||||||||||||||||||
Indebtedness of joint venture | 90,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Business acquisition purchase price, cash paid | 172,100,000 | 9,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
Guaranteed minimum royalties, number of years | 2 years | |||||||||||||||||||||||||||||||||||||||||||||
Acquisition of interest in MG Icon | 4,000,000 | 4,000,000 | 4,000,000 | |||||||||||||||||||||||||||||||||||||||||||
Business acquisition purchase price, common stock issued, shares | 588,688 | |||||||||||||||||||||||||||||||||||||||||||||
Business acquisition remaining amount owed to Purim | 12,000,000 | 4,000,000 | 8,000,000 | |||||||||||||||||||||||||||||||||||||||||||
Business acquisition purchase price, common stock issued, value | 8,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Business acquisition additional common stock issued, value | 1,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Cash collateral deposited under the terms of the entity's financing agreements | 4,100,000 | |||||||||||||||||||||||||||||||||||||||||||||
Cash collateral released and distributed to the Scion members | 3,300,000 | |||||||||||||||||||||||||||||||||||||||||||||
Remaining cash collateral, restricted cash | 13,465,000 | 3,300,000 | 2,872,000 | 800,000 | ||||||||||||||||||||||||||||||||||||||||||
Dividend from investment in licensee | 0 | 600,000 | ||||||||||||||||||||||||||||||||||||||||||||
Consolidated assets that are collateral for variable interest entity's obligations | 11,900,000 | 12,600,000 | ||||||||||||||||||||||||||||||||||||||||||||
Committed contribution to joint venture | 5,000,000 | 20,000,000 | 9,000,000 | |||||||||||||||||||||||||||||||||||||||||||
Percentage of interest sold in equity method investment | 50.00% | 50.00% | 50.00% | |||||||||||||||||||||||||||||||||||||||||||
Agreed price for sale of interest in a subsidiary | 6,000,000 | 4,000,000 | 4,000,000 | |||||||||||||||||||||||||||||||||||||||||||
Payment received upon sale interest in subsidiary | 1,000,000 | 1,000,000 | 3,000,000 | |||||||||||||||||||||||||||||||||||||||||||
Remaining receivable from sale of 50% interest in Iconix Latin America | 5,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of interest in subsidiary | 7,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Committed amount receivable period | 30 months | |||||||||||||||||||||||||||||||||||||||||||||
Gain on re-measurement of equity investment | 21,465,000 | 21,500,000 | ||||||||||||||||||||||||||||||||||||||||||||
Goodwill deductible for income tax purposes | 700,000 | 18,800,000 | 17,700,000 | |||||||||||||||||||||||||||||||||||||||||||
Minimum amortization contractual period of licensing contracts | 1 | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||
Maximum amortization contractual period of licensing contracts | 9 | 5 | 9 | |||||||||||||||||||||||||||||||||||||||||||
Consolidated assets that are collateral for variable interest entity's obligations | 185,300,000 | 209,100,000 | ||||||||||||||||||||||||||||||||||||||||||||
Preferred profit distribution | 20,000,000 | |||||||||||||||||||||||||||||||||||||||||||||
Notes loaned to subsidiary | 17,500,000 | 2,200,000 | 13,100,000 | |||||||||||||||||||||||||||||||||||||||||||
Notes receivable, annual interest rate | 6.00% | |||||||||||||||||||||||||||||||||||||||||||||
Notes receivable, minimum principal annual installments | $ 2,200,000 | |||||||||||||||||||||||||||||||||||||||||||||
Notes receivable, maturity date | Jun. 03, 2015 |
Reconciliation of Weighted Average Shares Used in Calculating Basic and Diluted Earnings Per Share (Detail) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Earnings Per Share Disclosure [Line Items] | ||||
Basic | 73,297 | 72,326 | 73,016 | 72,013 |
Effect of exercise of stock options | 1,117 | 1,980 | 1,187 | 1,960 |
Effect of contingent common stock issuance | 48 | 48 | ||
Effect of assumed vesting of restricted stock | 1,332 | 614 | 1,269 | 611 |
Diluted | 75,746 | 74,920 | 75,520 | 74,632 |
Weighted-Average Assumptions of Options and Warrants for All Years (Detail) | 9 Months Ended |
---|---|
Sep. 30, 2011
Year | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected Volatility, minimum | 30.00% |
Expected Volatility, maximum | 50.00% |
Expected Dividend Yield | 0.00% |
Expected Life (Term), minimum | 3 |
Expected Life (Term), maximum | 7 |
Risk-Free Interest Rate, minimum | 3.00% |
Risk-Free Interest Rate, maximum | 4.75% |
Segment and Geographic Data | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Geographic Data |
11. Segment and Geographic
Data
The
Company has one reportable segment, licensing and commission
revenue generated from its brands. The geographic regions consist
of the United States and Other (which principally represents
Canada, Japan and Europe). Long lived assets are substantially all
located in the United States. Revenues attributed to each region
are based on the location in which licensees are
located.
The
net revenues by type of license and information by geographic
region are as follows:
|
Trademarks and Other Intangibles, net | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trademarks and Other Intangibles, net |
2. Trademarks and Other Intangibles, net
Trademarks
and other intangibles, net consist of the following:
In
April 2011, the Company completed a transaction in which Hardy Way
acquired substantially all of the licensing rights to the Ed Hardy
brands and trademarks from its licensee. Also, as part
of this transaction, the Company increased its ownership interest
in Hardy Way to an 85% controlling interest. In
accordance with ASC Topic 810, as of April 2011 the assets and
liabilities and results of operations of Hardy Way have been
consolidated with the Company. As a result of this
transaction, the Company increased its indefinite life trademarks
by $96.5 million and its licensing agreements by $1.0
million. See Note 3 for further explanation of this
transaction.
In
June 2010, the Company completed a transaction in which it acquired
an 80% controlling interest in Peanuts Worldwide, owner of the
Peanuts portfolio of brands and related assets, through its
wholly-owned subsidiary, Icon Entertainment LLC. As a result
of this transaction, the Company increased its indefinite life
trademarks by $153.0 million and its licensing agreements by $1.1
million. See Note 3 for further explanation of this
transaction.
Amortization
expense for intangible assets for the Current Quarter and the three
months ended September 30, 2010 (“Prior Year Quarter”)
was $1.7 million and $2.3 million, respectively, and $5.3 million
and $6.5 million for the Current Nine Months and the nine months
ended September 30, 2010 (“Prior Year Nine Months”),
respectively. The trademarks of Candie’s, Bongo, Joe Boxer,
Rampage, Mudd, London Fog, Mossimo, Ocean Pacific, Danskin,
Rocawear, Cannon, Royal Velvet, Fieldcrest, Charisma, Starter,
Waverly, Ecko, Zoo York, Peanuts and Ed Hardy have been determined
to have an indefinite useful life and accordingly, consistent with
ASC Topic 350, no amortization has been recorded in the Company's
unaudited condensed consolidated income statements. Instead, each
of these intangible assets are tested for impairment at least
annually on an individual basis as separate single units of
accounting, with any related impairment charge recorded to the
statement of operations at the time of determining such
impairment. Similarly, consistent with ASC Topic 360, there
was no impairment of the definite-lived trademarks.
|
Company's Debt Maturities on Calendar Year Basis (Detail) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 | |||||
---|---|---|---|---|---|---|---|
Debt Instrument [Line Items] | |||||||
Long term debt | $ 635,602 | $ 584,387 | |||||
October 1 through December 31, 2011 | 9,309 | ||||||
2012 | 318,149 | ||||||
2013 | 20,801 | ||||||
2014 | 47,000 | ||||||
2016 | 240,343 | ||||||
2.50% Convertible Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long term debt | 240,343 | [1] | |||||
2016 | 240,343 | [1] | |||||
1.875% Convertible Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long term debt | 274,681 | [2] | 262,716 | ||||
2012 | 274,681 | [2] | |||||
Ecko Note | |||||||
Debt Instrument [Line Items] | |||||||
Long term debt | 69,500 | 80,000 | |||||
October 1 through December 31, 2011 | 2,500 | ||||||
2012 | 10,000 | ||||||
2013 | 10,000 | ||||||
2014 | 47,000 | ||||||
Asset-Backed Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long term debt | 51,078 | 70,650 | |||||
October 1 through December 31, 2011 | 6,809 | ||||||
2012 | 33,468 | ||||||
2013 | $ 10,801 | ||||||
|
Expenses Related to Specific Litigation | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Expenses Related to Specific Litigation |
8. Expenses Related to Specific Litigation
Expenses
related to specific litigation consist of legal expenses and costs
related to the Unzipped litigation (See Note 9). For the Current
Quarter the Company recorded an expense related to specific
litigation of less than $0.1 million, as compared to $0.2 million
in the Prior Year Quarter. For the Current Nine Months
the Company recorded a benefit related to specific litigation of
$0.1 million, as compared to $0.2 million in the Prior Year Nine
Months. See Note 9 for detail on this
litigation.
|
Trademarks and Other Intangibles, net (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trademarks and Other Intangibles, Net | Trademarks
and other intangibles, net consist of the following:
|
Commitments and Contingencies | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Commitments and Contingencies |
9. Commitments and Contingencies
Sweet Sportswear/Unzipped litigation
On
December 10, 2010, the Court entered a final judgment (the
“Judgment”) in connection with the lawsuit filed by the
Company in the Superior Court of California, Los Angeles County
against Unzipped Apparel LLC’s (“Unzipped”)
former manager, supplier and distributor, Sweet Sportswear, LLC,
Azteca Productions International, Inc. Apparel Distribution
Services, LLC, and Hubert Guez, a principal of these entities and
former member of the Company’s board of directors
(collectively referred to as the “Guez
defendants”). In summary, the Judgment against the
Guez defendants was for a combined liability to the Company of
approximately $50 million, exclusive of amounts owed as pre or
post-judgment interest at the annual rate of 10% simple
interest. The Judgment also dismissed all claims brought
by the Guez defendants against the Company, its subsidiaries
(Michael Caruso & Co., Inc. and Unzipped), and its Chairman of
the Board and Chief Executive Officer, Neil Cole. In connection
with the entry of the Judgment, the Company recognized a gross gain
of $26.0 million (gross of attorney’s fees and other related
expenses of $10.3 million), of which $16.7 million was secured by
the Sureties, with the remainder secured by assets owned by the
Guez defendants.
In
February 2011, the Company entered into a settlement agreement with
certain persons (the “Sureties”) that had secured a
portion of the Judgment, pursuant to which the Sureties paid the
Company $13 million in February 2011 and paid an additional $3.7
million in April 2011 in full satisfaction of
their obligations to the Company. The amounts paid by
the Sureties reduced the obligations of certain of the Guez
defendants (ADS and Hubert Guez) under the Judgments.
On
April 26, 2011, the Company entered into an agreement settling a
lawsuit filed by the Company in the Superior Court of California,
Los Angeles County against the Guez defendants, pursuant to which
the Guez Defendants and certain sureties paid the Company an
aggregate of $27.7 million (including an aggregate of $16.7 million
previously paid in February and April 2011) in full satisfaction of
their obligations to the Company (see Note 3).
Normal Course litigation
From
time to time, the Company is also made a party to litigation
incurred in the normal course of business. While any litigation has
an element of uncertainty, the Company believes that the final
outcome of any of these routine matters will not have a material
effect on the Company’s financial position or future
liquidity.
|
Components of Company's Debt (Detail) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 | |||||
---|---|---|---|---|---|---|---|
Debt Instrument [Line Items] | |||||||
Long term debt | $ 635,602 | $ 584,387 | |||||
2.50% Convertible Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long term debt | 240,343 | [1] | |||||
1.875% Convertible Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long term debt | 274,681 | [2] | 262,716 | ||||
Ecko Note | |||||||
Debt Instrument [Line Items] | |||||||
Long term debt | 69,500 | 80,000 | |||||
Asset-Backed Notes | |||||||
Debt Instrument [Line Items] | |||||||
Long term debt | 51,078 | 70,650 | |||||
Term Loan Facility | |||||||
Debt Instrument [Line Items] | |||||||
Long term debt | $ 171,021 | ||||||
|
Earnings Per Share | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
7. Earnings Per Share
Basic
earnings per share includes no dilution and is computed by dividing
net income available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted
earnings per share reflect, in periods in which they have a
dilutive effect, the effect of restricted stock-based awards
and common shares issuable upon exercise of stock options and
warrants. The difference between basic and diluted weighted-average
common shares results from the assumption that all dilutive stock
options outstanding were exercised and all convertible notes have
been converted into common stock.
As
of September 30, 2011, of the total potentially dilutive shares
related to restricted stock-based awards, stock options and
warrants, 0.4 million were anti-dilutive, compared to 1.7 million
as of September 30, 2010.
As
of September 30, 2011, 204,918 of the performance related
restricted stock-based awards issued in connection with the
Company’s employment agreement with its chairman, chief
executive officer and president were anti-dilutive.
Warrants
issued in connection with the Company’s 2.50% Convertible
Notes financing and 1.875% Convertible Notes financing were
anti-dilutive and therefore not included in this calculation.
Portions of the 2.50% Convertible Notes and 1.875% Convertible
Notes that would be subject to conversion to common stock were
anti-dilutive as of September 30, 2011 and therefore not included
in this calculation.
A
reconciliation of weighted average shares used in calculating basic
and diluted earnings per share follows:
|
Investments and Joint Ventures | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Investments and Joint Ventures |
3. Investments and Joint Ventures
Scion
Scion
LLC (“Scion”) is a brand management and licensing
company formed by the Company with Shawn “Jay-Z” Carter
in March 2007 to buy, create and develop brands across a spectrum
of consumer product categories. On November 7, 2007, Scion, through
its wholly-owned subsidiary Artful Holdings LLC, purchased Artful
Dodger, an urban apparel brand for a purchase price of $15.0
million.
At
inception, the Company determined that it would consolidate Scion
since, under ASC Topic 810 “Consolidation”, it is
the primary beneficiary of the variable interest
entity.
In
March 2009, the Company effectively acquired a 16.6% interest in
one of its licensees for $1. The Company has determined that this
entity is a variable interest entity as defined by ASC Topic
810. However, the Company is not the primary
beneficiary. The investment in this entity is accounted for
under the cost method of accounting. As part of the
transaction, the Company and its Scion partner each contributed
approximately $2.1 million to Scion, totaling approximately $4.1
million, which was deposited as cash collateral under the terms of
the entity’s financing agreements. During 2010,
approximately $3.3 million of the collateral was released to Scion
and distributed to the Scion members equally. The remaining $0.8
million of cash collateral, which is owned by Scion, is included as
short-term restricted cash in the Company’s balance
sheet. During the Current Nine Months and Prior Year Nine
Months, the Company received and recognized zero and $0.6 million
in dividends, respectively.
In
December 2007, the FASB issued guidance under ASC Topic 810
regarding non-controlling interests in consolidated financial
statements. This guidance requires the recognition of a
non-controlling interest as equity in the consolidated financial
statements and separate from the parent’s equity. As
such, in accordance with ASC Topic 810, the Company recognizes the
non-controlling interest of Scion as equity in the consolidated
financial statements and separate from the parent’s
equity.
As
of September 30, 2011 and December 31, 2010, the carrying value of
the consolidated assets that are collateral for the variable
interest entity’s obligations total $11.9 million and $12.6
million, respectively, which is comprised of the Artful Dodger
trademark.
Iconix China
In
September 2008, the Company and Novel Fashions Holdings Limited
(“Novel”) formed a joint venture (“Iconix
China”) to develop and market the Company's brands in the
People’s Republic of China, Hong Kong, Macau and Taiwan (the
“China Territory”). Pursuant to the terms of this
transaction, the Company contributed to Iconix China substantially
all rights to its brands in the China Territory and committed to
contribute $5.0 million, and Novel committed to contribute $20
million to Iconix China. Upon closing of the transaction, the
Company contributed $2.0 million and Novel contributed $8.0
million. In September 2009, the parties amended the terms of the
transaction to eliminate the obligation of the Company to make any
additional contributions and to reduce Novel’s remaining
contribution commitment to $9.0 million, $4.0 million of which was
contributed in July 2010, $3.0 million of which was contributed in
May 2011, and the remaining $2.0 million of which is payable on or
prior to June 1, 2012, subject to reduction by mutual agreement of
the parties.
At
inception, the Company determined that, in accordance with ASC
Topic 810, based on the corporate structure, voting rights and
contributions of the Company and Novel, Iconix China is a variable
interest entity and not subject to consolidation, as, under ASC
Topic 810, the Company is not the primary beneficiary of Iconix
China. The Company has recorded its investment under the
equity method of accounting.
Iconix Latin America
In
December 2008, the Company contributed substantially
all rights to its brands in Mexico, Central America, South
America, and the Caribbean (the “Latin America
Territory”) to Iconix Latin America LLC (“Iconix Latin
America”), a then newly formed subsidiary of the
Company. On December 29, 2008, New Brands America LLC
(“New Brands”), an affiliate of the Falic Group,
purchased a 50% interest in Iconix Latin America. In
consideration for its 50% interest in Iconix Latin America, New
Brands agreed to pay $6.0 million to the Company. New Brands
paid $1.0 million upon closing of this transaction and committed to
pay an additional $5.0 million over the 30-month period following
closing. As of September 30, 2011 this obligation was paid in
full.
Based
on the corporate structure, voting rights and contributions of the
Company and New Brands, Iconix Latin America is not subject to
consolidation. This conclusion was based on the
Company’s determination that the entity met the criteria
to be considered a “business,” and therefore was not
subject to consolidation due to the “business scope
exception” of ASC Topic 810. As such, the Company has
recorded its investment under the equity method of
accounting.
Hardy Way
In May 2009, the Company acquired a 50%
interest in Hardy Way LLC (“Hardy Way”), the owner of
the Ed Hardy brands and trademarks, for $17.0 million, comprised of
$9.0 million in cash and 588,688 shares of the Company’s
common stock valued at $8.0 million. In addition, the sellers
of the 50% interest received an additional $1.0 million in shares
of the Company’s common stock pursuant to an earn-out based
on royalties received by Hardy Way for 2009.
On
April 26, 2011, Hardy Way acquired substantially all of the
licensing rights to the Ed Hardy brands and trademarks from its
licensee, Nervous Tattoo, Inc. (“NT”) pursuant to an
Asset Purchase Agreement (the “APA”) by and among Hardy
Way, NT and Audigier Brand Management Group, LLC
(“ABMG,” and together with NT, the
“Sellers”). Immediately prior to the closing
of the transactions contemplated by the APA, the Company
contributed $62.0 million to Hardy Way, thereby increasing the
Company’s ownership interests in Hardy Way from 50% to 85% of
the outstanding membership interests. Hardy Way paid
$55.0 million in cash for the assets described above. In
addition, the Sellers may be entitled to receive up to an
additional $7.0 million in cash pursuant to an earn-out based on
royalties received by Hardy Way through June 30, 2013, which Hardy
Way prepaid to the Sellers in an escrow account which will be
returned to Hardy Way if the threshold for the earn-out is not
met. The Company has accounted for this contingent
consideration in accordance with ASC Topic 805. Further,
as part of this transaction, the Sellers, as a licensee of Hardy
Way for various men’s and women’s apparel categories,
prepaid royalties to Hardy Way in the amount of $7.0 million,
representing guaranteed minimum royalties for two
years.
Also
on April 26, 2011, the Company entered into an agreement settling a
lawsuit filed by the Company against certain affiliates of the
Sellers (specifically, the Guez Defendants (as defined below); see
Note 9).
Prior
to the April 26, 2011 transaction described above, based on the
corporate structure, voting rights and contributions of the Company
and Hardy Way, Hardy Way was not subject to consolidation.
This conclusion was based on the Company’s determination that
the entity met the criteria to be considered a
“business,” and therefore was not subject to
consolidation due to the “business scope exception”
of ASC Topic 810. As such, the Company had recorded its
investment under the equity method of accounting.
In
accordance with ASC Topic 805 “Business Combinations”,
on April 26, 2011 the Company recorded a non-cash pre-tax
re-measurement gain of approximately $21.5 million, representing
the increase in the fair value of its original 50% investment in
Hardy Way as a result of this transaction. The
re-measurement gain is included in interest and other income on the
Company’s unaudited condensed consolidated income
statement. As of the date of this transaction and in
accordance with ASC Topic 810, due to the Company’s 85%
controlling interest, Hardy Way is subject to consolidation with
the Company, which is reflected in the Company’s unaudited
condensed consolidated financial statements as of September 30,
2011.
In
accordance with ASC Topic 810, the Company recognizes the
non-controlling interest of Hardy Way as equity in the consolidated
financial statements and separate from the parent’s
equity.
The
Ed Hardy trademarks have been determined by management to have an
indefinite useful life and accordingly, consistent with ASC Topic
350, no amortization is being recorded in the Company’s
consolidated income statements. The goodwill and trademarks are
subject to a test for impairment on an annual basis. The
$18.8 million of goodwill resulting from this transaction is
deductible for income tax purposes.
IPH Unltd
In
October 2009, the Company consummated, through a newly formed
subsidiary, IPH Unltd LLC (“IPH Unltd”), a transaction
with the sellers of the Ecko portfolio of brands, including Ecko
and Zoo York (the “Ecko Assets”), pursuant to which the
sellers sold and/or contributed the Ecko Assets to IPH Unltd joint
venture in exchange for a 49% membership interest in IPH Unltd and
$63.5 million in cash which had been contributed to IPH Unltd by
the Company. As a result of this transaction, the Company
owns a 51% controlling membership interest in IPH Unltd. In
addition, IPH Unltd borrowed $90.0 million from a third party to
repay certain indebtedness of the sellers.
On
July 27, 2011 the Company, through its newly formed wholly owned
subsidiary ZY Holdings LLC (“ZY Holdings”), acquired
the Zoo York trademark and related assets from IPH Unltd for a net
purchase price of $18.0 million, effectively increasing its
ownership in the Zoo York assets from 51% to 100%.
ASC
Topic 810 affirms that consolidation is appropriate when one entity
has a controlling financial interest in another entity. The Company
owns a 51% membership interest in IPH Unltd compared to the
minority owner’s 49% membership interest. Further, the
Company believes that the voting and veto rights of the minority
shareholder are merely protective in nature and do not provide them
with substantive participating rights in IPH Unltd. As such,
IPH Unltd is subject to consolidation with the Company, which is
reflected in the unaudited condensed consolidated financial
statements.
In
accordance with ASC Topic 810, the Company recognizes the
non-controlling interest of IPH Unltd as equity in the consolidated
financial statements and separate from the parent’s
equity.
The
Ecko and Zoo York trademarks have been determined by management to
have an indefinite useful life and accordingly, consistent with ASC
Topic 350, no amortization is being recorded in the Company’s
unaudited condensed consolidated income statements. The goodwill
and trademarks are subject to a test for impairment on an annual
basis. The $0.7 million of goodwill is deductible for income tax
purposes. The licensing contracts are being amortized on a
straight-line basis over the remaining contractual periods of
approximately 1 to 9 years.
As
of September 30, 2011 and December 31, 2010, the carrying value of
the consolidated assets that are collateral for the variable
interest entity’s obligations total $185.3 million and $209.1
million, which is comprised primarily of trademarks and license
agreements. The assets of the Company are not available
to the variable interest entity's creditors.
Iconix Europe
In
December 2009, the Company contributed substantially all rights to
its brands in the European Territory (defined as all member states
and candidate states of the European Union and certain other
European countries) to Iconix Europe LLC, a newly formed
wholly-owned subsidiary of the Company (“Iconix
Europe”). Also in December 2009 and shortly after the
formation of Iconix Europe, an investment group led by The
Licensing Company and Albion Equity Partners LLC purchased a 50%
interest in Iconix Europe through Brand Investments Vehicles Group
3 Limited (“BIV”), to assist the Company in
developing, exploiting, marketing and licensing the Company's
brands in the European Territory. In consideration for its
50% interest in Iconix Europe, BIV agreed to pay $4.0 million, of
which $3.0 million was paid upon closing of this transaction in
December 2009 and the remaining $1.0 million of which was paid in
January 2011. As a result of this transaction, the Company
recognized a gain of approximately $7.0 million for the year ended
December 31, 2009 (“2009”).
At
inception, the Company determined, in accordance with ASC 810,
based on the corporate structure, voting rights and contributions
of the Company and BIV, that Iconix Europe is not a variable
interest entity and not subject to consolidation. The Company
has recorded its investment under the equity method of
accounting.
MG Icon
In
March 2010, the Company acquired a 50% interest in MG Icon, the
owner of the Material Girl brands and trademarks and other rights
associated with the artist, performer and celebrity known as
"Madonna", from Purim LLC (“Purim”) for $20.0 million,
$4.0 million of which was paid at closing and another $4.0 million
of which was paid in March 2011. As of September 30, 2011, of
the remaining $12.0 million owed to Purim, $4.0 million is included
in other current liabilities and $8.0 million is included in other
liabilities. In addition, Purim may be entitled to receive
additional consideration based on certain qualitative
criteria.
At
inception, the Company determined, in accordance with ASC
Topic 810, based on the corporate structure, voting rights and
contributions of the Company and Purim, MG Icon is a variable
interest entity and not subject to consolidation, as, under ASC
Topic 810, the Company is not the primary beneficiary of MG
Icon. The Company has recorded its investment under the
equity method of accounting.
Pursuant
to the terms of the MG Icon operating agreement and subject to
certain conditions, the Company is entitled to recognize a
preferred profit distribution from MG Icon of at least $20.0
million, after which all profits and losses are recognized 50/50 in
accordance with each principal’s membership interest
percentage.
Peanuts Holdings
On
June 3, 2010 (the “Closing Date”), the Company
consummated an interest purchase agreement (the
“Purchase Agreement”) with United Feature Syndicate,
Inc (“UFS”) and The E.W. Scripps Company (the
“Parent”) (Parent and UFS, collectively, the
“Sellers”), pursuant to which it purchased all of the
issued and outstanding interests (“Interests”) of
Peanuts Worldwide LLC, a newly formed Delaware limited liability
company (“Peanuts Worldwide”), to which, prior to the
closing of this acquisition, copyrights and trademarks associated
with the Peanuts characters and certain other
assets were contributed by UFS. On the Closing Date,
the Company also assigned its right to buy all of the Interests to
Peanuts Holdings LLC (“Peanuts Holdings”), a newly
formed Delaware limited liability company and joint venture owned
80% by Icon Entertainment LLC (“IE”), a wholly-owned
subsidiary of the Company, and 20% by Beagle Scout LLC, a
Delaware limited liability company (“Beagle”) owned by
certain Schulz family trusts.
Further,
on the Closing Date, IE and Beagle entered into an operating
agreement with respect to Peanuts Holdings (the “Operating
Agreement”). Pursuant to the Operating Agreement, the
Company, through IE, and Beagle made capital contributions of
$141.0 million and $34.0 million, respectively, in connection with
the acquisition of Peanuts Worldwide. The Interests were then
purchased for $172.1 million in cash, as adjusted for acquired
working capital.
In
connection with the Operating Agreement, the Company through IE,
loaned $17.5 million to Beagle (the “Beagle Note”), the
proceeds of which were used to fund Beagle’s capital
contribution to Peanuts Holdings in connection with the acquisition
of Peanuts Worldwide. The Beagle Note bears interest at 6%
per annum, with minimum principal payable in equal annual
installments of approximately $2.2 million on June 3, with any
remaining unpaid principal balance and accrued interest to be due
on June 3, 2015, the Beagle Note maturity date. The Beagle
Note is secured by the membership interest in Peanuts Holdings
owned by Beagle. As of September 30, 2011, approximately $2.2
million current portion is included in other assets - current in
the unaudited condensed consolidated balance sheet and the $13.1
million long term portion is included in other assets -
non-current.
ASC Topic 810 affirms that consolidation is
appropriate when one entity has a controlling financial interest in
another entity. The Company owns an 80% membership interest in
Peanuts Holdings, compared to the non-controlling owner’s 20%
membership interest. As such, Peanuts Holdings is subject to
consolidation with the Company, which is reflected in the
Company’s financial statements as of September 30,
2011.
In
accordance with ASC Topic 810, the Company recognizes the
non-controlling interest of Peanuts Holdings as equity in the
consolidated financial statements and separate from the
parent’s equity.
The
Peanuts trademarks and copyrights have been determined by
management to have an indefinite useful life and accordingly,
consistent with ASC Topic 350, no amortization is being recorded in
the Company’s consolidated income statements. The goodwill
and trademarks are subject to a test for impairment on an annual
basis. The $17.7 million of goodwill is deductible for income
tax purposes. The licensing agreements are being amortized on
a straight-line basis over the remaining contractual periods of
approximately 1 to 5 years.
|
Summaries of Warrants and Related Information for the Current Quarter (Detail) (Warrant, USD $) | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Warrant | |
Warrants | |
Beginning Balance | 253,900 |
Granted | |
Canceled | |
Exercised | (3,600) |
Expired/Forfeited | |
Ending Balance | 250,300 |
Exercisable at September 30, 2011 | 250,300 |
Weighted-Average Exercise Price | |
Beginning Balance | $ 17.01 |
Granted | |
Canceled | |
Exercised | $ 8.72 |
Expired/Forfeited | |
Ending Balance | $ 17.13 |
Exercisable at September 30, 2011 | $ 17.13 |
Estimated Fair Values of Other Financial Instruments (Detail) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Carrying (Reported) Amount, Fair Value Disclosure | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, including current portion | $ 635,602 | $ 584,387 |
Estimate of Fair Value, Fair Value Disclosure | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, including current portion | $ 685,718 | $ 607,592 |
Fair Value Measurements | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Measurements |
4. Fair Value Measurements
ASC
Topic 820 “Fair Value Measurements”, which the Company
adopted on January 1, 2008, establishes a framework for measuring
fair value and requires expanded disclosures about fair value
measurement. While ASC 820 does not require any new fair value
measurements in its application to other accounting pronouncements,
it does emphasize that a fair value measurement should be
determined based on the assumptions that market participants would
use in pricing the asset or liability. As a basis for considering
market participant assumptions in fair value measurements, ASC 820
established the following fair value hierarchy that distinguishes
between (1) market participant assumptions developed based on
market data obtained from sources independent of the reporting
entity (observable inputs) and (2) the reporting entity's own
assumptions about market participant assumptions developed based on
the best information available in the circumstances (unobservable
inputs):
Level
1: Observable inputs such as quoted prices for identical assets or
liabilities in active markets
Level
2: Other inputs that are observable directly or indirectly, such as
quoted prices for similar assets or liabilities or
market-corroborated inputs
Level
3: Unobservable inputs for which there is little or no market data
and which requires the owner of the assets or liabilities to
develop its own assumptions about how market participants would
price these assets or liabilities
The
valuation techniques that may be used to measure fair value are as
follows:
(A)
Market approach - Uses prices and other relevant information
generated by market transactions involving identical or comparable
assets or liabilities
(B)
Income approach - Uses valuation techniques to convert future
amounts to a single present amount based on current market
expectations about those future amounts, including present value
techniques, option-pricing models and excess earnings
method
(C)
Cost approach - Based on the amount that would currently be
required to replace the service capacity of an asset (replacement
cost)
To
determine the fair value of certain financial instruments, the
Company relies on Level 2 inputs generated by market transactions
of similar instruments where available, and Level 3 inputs using an
income approach when Level 1 and Level 2 inputs are not available.
The Company’s assessment of the significance of a particular
input to the fair value measurement requires judgment and may
affect the valuation of financial assets and financial liabilities
and their placement within the fair value hierarchy. The following
table summarizes the instruments measured at fair value at
September 30, 2011 and December 31, 2010:
Marketable Securities
Marketable
securities, which are accounted for as available-for-sale, are
stated at fair value in accordance with ASC Topic 320
“Investments – Debt and Equity” and consist of
auction rate securities (“ARS”). Temporary changes in
fair market value are recorded as other comprehensive income or
loss, whereas other than temporary markdowns will be realized
through the Company’s Consolidated Income
Statement.
As
of September 30, 2011, the Company held ARS with a face value of
$13.0 million and a fair value of zero. In December
2008, the insurer of the ARS exercised its put option to replace
the underlying securities of the ARS with its preferred securities.
Prior to the second quarter of 2009 the ARS had paid cash dividends
according to their stated terms. During the second
quarter of 2009, the Company received notice from the insurer that
payment of cash dividends ceased as of July 31, 2009 and would be
resumed only if the board of directors of the insurer declared such
cash dividends to be payable at a later date. The insurer’s
board of directors temporarily reinstated dividend payments for the
4-week period from December 23, 2009 to January 15,
2010. No further dividends have been
received. In January 2010, the Company commenced a
lawsuit against the broker-dealer of these ARS alleging, among
other things, fraud, and seeking full recovery of the $13.0 million
face value of the ARS, as well as legal costs and punitive
damages. In November 2010, the insurer filed for
bankruptcy under Chapter 11 of the United States Bankruptcy
Code. These funds will not be available to the Company
unless recovery is realized through the bankruptcy process,
settlement or legal judgment of the action brought against the
broker-dealer. Prior to June 30, 2009, the Company
estimated the fair value of its ARS with a discounted cash flow
model where the Company used the expected rate of cash dividends to
be received. When the cash dividend payments ceased, the
Company changed its methodology for estimating the fair value of
the ARS. Beginning June 30, 2009, the Company estimated
the fair value of its ARS using the present value of the weighted
average of several scenarios of recovery based on
management’s assessment of the probability of each scenario.
The Company considered a variety of factors in its model including:
credit rating of the issuer and insurer, comparable market data (if
available), current macroeconomic market conditions, quality of the
underlying securities, and the probabilities of several levels of
recovery and reinstatement of the cash dividend
payments. As a result of its evaluation and primarily
due to the bankruptcy of the insurer of the ARS, which reduced the
market value of its preferred securities to zero, during 2010 the
Company recorded a pre-tax loss of approximately $13.0 million,
presented as a loss on marketable securities in the other expenses
section of the Consolidated Income Statement, as this write-down
was deemed to be permanent. In previous periods,
all changes to the fair market value of the ARS were deemed
temporary, and as such were recorded in other comprehensive income
in the consolidated balance sheet and statement of
stockholders’ equity and were reversed in
2010. The following table summarizes the activity for
the period:
Hedge Instruments
On
March 26, 2011, the Company purchased hedge instruments from JP
Morgan Chase Bank N.A. (“JPMC”) to mitigate the income
statement risk and cash flow risk of revenue and receivables from
licenses denominated in Japanese Yen. These hedge instruments are
foreign exchange forward contracts that set the foreign exchange
rate from Japanese Yen to U.S. Dollars for the Company’s
forecasted Japanese Yen denominated revenue (“Income
Statement Hedge”) and receivable (“Balance Sheet
Hedge”). Based on management’s assessment, the Income
Statement Hedge qualifies for hedge accounting under ASC Topic 815.
On a quarterly basis, the value of the Income Statement Hedge is
adjusted to reflect its current fair value, with any adjustment
flowing through other comprehensive income. The fair value of this
instrument is obtained by comparing the characteristics of the
Income Statement Hedge with similarly traded instruments, and is
therefore classified as Level 2 in the fair value hierarchy. At
September 30, 2011, the fair value of the Income Statement Hedge
was $0.5 million. The change in the fair value of the Balance Sheet
Hedge is recorded in interest and other income on the unaudited
condensed consolidated income statement. For the Current Quarter
and Current Nine Months, the fair value of the Balance Sheet Hedge
was immaterial.
Financial Instruments
As
of September 30, 2011 and December 31, 2010, the fair values of
cash and cash equivalents, receivables and accounts payable and
accrued expenses approximated their carrying values due to the
short-term nature of these instruments. The fair value of the note
receivable from New Brands (see Note 3) approximates its $2.9
million carrying value; the fair value of the note receivable due
from the purchasers of the Canadian trademark for Joe Boxer
approximates its $4.0 million carrying value; the fair value of the
note payable to Purim LLC (see Note 3) approximates its $12.0
million carrying value; and the fair value of the Beagle Note (see
Note 3) approximates its $15.3 million carrying value. The
estimated fair values of other financial instruments subject to
fair value disclosures, determined based on broker quotes or quoted
market prices or rates for the same or similar instruments, and the
related carrying amounts are as follows:
Financial
instruments expose the Company to counterparty credit risk for
nonperformance and to market risk for changes in interest. The
Company manages exposure to counterparty credit risk through
specific minimum credit standards, diversification of
counterparties and procedures to monitor the amount of credit
exposure. The Company’s financial instrument counterparties
are investment or commercial banks with significant experience with
such instruments.
Non-Financial Assets and Liabilities
On
January 1, 2009, the Company adopted the provisions of ASC Topic
820 with respect to its non-financial assets and liabilities
requiring non-recurring adjustments to fair value using a market
participant approach. The Company uses a discounted cash flow model
with level 3 inputs to measure the fair value of its non-financial
assets and liabilities. The Company also adopted the provisions of
ASC 820 as it relates to purchase accounting for its acquisitions.
The Company has goodwill, which is tested for impairment at least
annually, as required by ASC Topic 350. Further, in accordance with
ASC Topic 350, the Company’s indefinite-lived trademarks are
tested for impairment at least annually, on an individual basis as
separate single units of accounting. Similarly, consistent with ASC
Topic 360 as it relates to accounting for the impairment or
disposal of long-lived assets, the Company assesses whether or not
there is impairment of the Company’s definite-lived
trademarks. There was no impairment, and therefore no write-down,
of any of the Company’s long-lived assets during the Current
Nine Months or Prior Year Nine Months.
|
Earnings Per Share - Additional Information (Detail) | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011
Performance related restricted stock-based awards | Sep. 30, 2011
2.50% Convertible Notes | May 23, 2011
2.50% Convertible Notes | Sep. 30, 2011
1.875% Convertible Notes | Jun. 20, 2007
1.875% Convertible Notes | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Anti-dilutive shares | 400,000 | 1,700,000 | 204,918 | ||||
Debt instrument, interest rate, stated percentage | 2.50% | 2.50% | 1.875% | 1.875% |
Summary of Financial Instruments Measured at Fair Value (Detail) (USD $) In Thousands | 9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2011 | Dec. 31, 2010 | |
Income Statement Hedge | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Valuation Technique | Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities | |
Income Statement Hedge | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial instruments measured at fair value | (483) | |
Marketable Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Valuation Technique | Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities | Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities |
Balance Sheet Hedge | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Valuation Technique | Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities |
Debt Arrangements - Additional Information (Detail) (USD $) | 9 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 1 Months Ended | 1 Months Ended | 9 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Dec. 31, 2010 | May 23, 2011
2.50% Convertible Notes | Sep. 30, 2011
2.50% Convertible Notes | Sep. 30, 2011
2.50% Convertible Notes | May 17, 2011
2.50% Convertible Notes | May 23, 2011
2.50% Convertible Notes
Maximum | May 23, 2011
2.50% Convertible Notes
Minimum | May 23, 2011
2.50% Convertible Notes
Change of control or other fundamental change | May 23, 2011
2.50% Convertible Notes
Accounting change | May 23, 2011
2.50% Convertible Notes
Call Options Purchased | Sep. 30, 2011
2.50% Convertible Notes
Call Options Purchased | Jun. 20, 2007
1.875% Convertible Notes | Sep. 30, 2011
1.875% Convertible Notes | Sep. 30, 2010
1.875% Convertible Notes | Sep. 30, 2011
1.875% Convertible Notes | Sep. 30, 2010
1.875% Convertible Notes | Dec. 31, 2010
1.875% Convertible Notes | Jun. 14, 2007
1.875% Convertible Notes | Jun. 20, 2007
1.875% Convertible Notes
Maximum | Jun. 20, 2007
1.875% Convertible Notes
Minimum | Jun. 20, 2007
1.875% Convertible Notes
Change of control or other fundamental change | Jun. 20, 2007
1.875% Convertible Notes
Accounting change | Jun. 20, 2007
1.875% Convertible Notes
Call Options Purchased | Sep. 30, 2011
1.875% Convertible Notes
Call Options Purchased | Jun. 20, 2007
1.875% Convertible Notes
Call Options Purchased
Lehman Brothers OTC Derivatives Inc | Jun. 20, 2007
1.875% Convertible Notes
Lehman Brothers OTC Derivatives Inc | Jul. 27, 2011
Ecko Note | Sep. 30, 2011
Ecko Note | Dec. 31, 2010
Ecko Note | Sep. 30, 2011
Asset-Backed Notes | Dec. 31, 2010
Asset-Backed Notes | Sep. 30, 2011
Asset-Backed Notes
Notes 8.45 Percent | Sep. 30, 2011
Asset-Backed Notes
Notes 8.12 Percent | Sep. 30, 2011
Asset-Backed Notes
Notes 8.99 Percent | Jun. 23, 2010
Peanuts Worldwide
Term Loan Facility | May 27, 2011
Term Loan Facility | Mar. 21, 2011
Term Loan Facility | Mar. 17, 2010
Term Loan Facility | Mar. 11, 2008
Term Loan Facility | Sep. 30, 2011
Term Loan Facility | Dec. 31, 2010
Term Loan Facility | Sep. 30, 2011
Term Loan Facility
Rocawear Brand | Mar. 31, 2007
Term Loan Facility
Rocawear Brand | Oct. 03, 2007
Term Loan Facility
Official-Pillowtex LLC | Dec. 17, 2007
Term Loan Facility
Starter Brand | Sep. 30, 2011
Term Loan Facility
Starter Brand | Jun. 23, 2010
Term Loan Facility
Icon Entertainment LLC | Sep. 30, 2011
Term Loan Facility
Euro Dollar Rate | Sep. 30, 2011
Term Loan Facility
Prime Lending Rate | |||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, interest rate, stated percentage | 2.50% | 2.50% | 2.50% | 1.875% | 1.875% | 1.875% | 7.50% | 8.45% | 8.12% | 8.99% | |||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of annual aggregate principal payment | 1.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of credit facility, additional borrowing capacity | $ 63,200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount of long term debt | 300,000,000 | 300,000,000 | 300,000,000 | 287,500,000 | 287,500,000 | 287,500,000 | 90,000,000 | 16,300,000 | 7,200,000 | 27,600,000 | 112,400,000 | 212,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Additional annual payment, percentage of excess cash flow from subsidiaries subject to term loan facility | 50.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of capital stock pledged as collateral | 80.00% | 100.00% | 100.00% | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, maturity date, month and year | 2016-06 | 2012-06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, quarterly payment | 2,500,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net proceeds received from issuance of debt | 292,500,000 | 291,600,000 | 281,100,000 | 272,500,000 | 60,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, payment terms | The 2.50% Convertible Notes bear interest at an annual rate of 2.50%, payable semi-annually in arrears on June 1 and December 1 of each year, beginning December 1, 2011. | The 1.875% Convertible Notes bear interest at an annual rate of 1.875%, payable semi-annually in arrears on June 30 and December 31 of each year, beginning December 31, 2007. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, maturity date | Jun. 30, 2014 | Feb. 22, 2013 | Apr. 30, 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, effective interest rate | 7.25% | 7.85% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, maturity date, upon completion of convertible notes offering | Jan. 02, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument, conversion rate | 32.5169 | 36.2845 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payment of long-term debt | 202,476,000 | 72,669,000 | 3,000,000 | 112,600,000 | 47,200,000 | 15,600,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount of each convertible note | 1,000 | 1,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long term debt | 635,602,000 | 584,387,000 | 240,343,000 | [1] | 240,343,000 | [1] | 274,681,000 | [2] | 274,681,000 | [2] | 262,716,000 | 69,500,000 | 80,000,000 | 51,078,000 | 70,650,000 | 171,021,000 | |||||||||||||||||||||||||||||||||||||||||||
Threshold for the ratio of Consolidated Total Debt to Consolidated EBITDA | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible notes, initial conversion price per share | $ 30.75 | $ 40.6175 | $ 27.56 | $ 42.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long term debt, current | 321,455,000 | 36,380,000 | 10,000,000 | 36,800,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepayments of long-term debt | 60,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of Premiums | 75.00% | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued interest | 200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, restricted cash | 13,465,000 | 2,872,000 | 3,300,000 | 4,000,000 | 2,500,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selling price per share of common stock | $ 23.21 | $ 21.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument covenant compliance | Through the Payoff Date, the Company was in compliance with all material covenants set forth in the Credit Agreement. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserve account established for future principal payment classified as restricted cash, current | 8,500,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted cash, non-current | 7,220,000 | 15,866,000 | 7,200,000 | 15,900,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of closing price of the Company's common stock for at least 20 trading days in the 30 consecutive trading days | 130.00% | 130.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
percentage of product of closing price of the Company's common stock for each day in that period and conversion rate per $1,000 principal amount of the Convertible Notes | 98.00% | 98.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption price percentage per principal amount | 100.00% | 102.00% | 100.00% | 102.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net debt carrying amount | 240,343,000 | 240,343,000 | 274,681,000 | 274,681,000 | 262,716,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non cash additional interest expense on convertible notes | 15,962,000 | 11,019,000 | 2,500,000 | 3,600,000 | 3,900,000 | 3,400,000 | 11,200,000 | 10,300,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash interest expense for convertible notes | 1,900,000 | 2,500,000 | 1,300,000 | 1,300,000 | 4,000,000 | 4,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible notes, common stock option shares | 9,800,000 | 10,400,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payment for the purchased call option | 58,700,000 | 76,300,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred income tax related to convertible notes | 20,600,000 | 19,300,000 | 26,700,000 | 4,200,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sold warrants, shares of common stock | 9,760,000 | 3,600,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sold warrants, shares of common stock strike price per share | 40.6175 | 42.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sold warrants, shares of common stock exercise date | Sep. 01, 2016 | Sep. 28, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sold warrants, shares of common stock expiring date | End of 2016 | End of 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds received from sale of Sold warrants | 28,800,000 | 28,800,000 | 37,500,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments to additional paid in capital due convertible note hedge and warrants | (9,400,000) | (12,100,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of shares purchased under call options plan | 40.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sold warrants, percentage | 40.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate basis | At the Company’s option, at the Eurodollar rate or the prime rate, plus an applicable margin of 2.25% or 1.25%, as the case may be, per annum. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument interest rate, margin | 2.25% | 1.25% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payments to acquire businesses, gross | 204,000,000 | 60,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payment of expenses related to acquisitions | 1,177,000 | 2,100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payments of debt issuance costs | $ 3,900,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Summary of Unvested Restricted Stock (Detail) (Restricted Stock, USD $) | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Restricted Stock | |
Shares | |
Beginning Balance | 1,442,610 |
Granted | 354,340 |
Vested | (217,619) |
Forfeited/Canceled | |
Ending Balance | 1,579,331 |
Weighted-Average Grant Date Fair Value | |
Beginning Balance | $ 15.34 |
Granted | $ 22.01 |
Vested | $ 18.76 |
Forfeited/Canceled | |
Ending Balance | $ 16.37 |
Summary of Auction Rate Securities Activity During the Period (Detail) (Auction Rate Securities, USD $) In Thousands | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | |
Auction Rate Securities | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Balance at beginning of period | $ 6,988 | |
Additions | ||
Gains (losses) reported in earnings | ||
Gains (losses) reported in accumulated other comprehensive income | 296 | |
Balance at end of period | $ 7,284 |
Subsequent Event | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Subsequent Event |
11. Subsequent Event
Sharper Image
On
October 26, 2011, (the “Closing Date”), the Company
entered into an Asset Purchase Agreement (the “Purchase
Agreement”) with Sharper Image Acquisition LLC, a Delaware
limited liability company (“Seller”), pursuant to which
the Company purchased from Seller substantially all of its assets
(the “Purchased Assets”), including the “Sharper
Image” trademark and other intellectual property rights
related to the Sharper Image brand. The Company paid
approximately $65.7 million to the Seller, of which $2.0 million
was deposited into an escrow account to be held for a period of six
months to secure the Seller’s indemnification obligations to
the Company.
Stock Repurchase Program
On
October 27, 2011, the Company announced that its Board of Directors
authorized a program to repurchase up to $200 million of its common
stock over a four year period. This plan replaces the
Company’s prior share repurchase program which expired on
October 30, 2011.
|
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Debt Arrangements |
5. Debt Arrangements
The
Company's net carrying amount of debt is comprised of the
following:
2.50% Convertible Notes
On
May 23, 2011, the Company completed the issuance of $300.0 million
principal amount of the Company's 2.50% convertible senior
subordinated notes due June 2016 (“2.50% Convertible
Notes”) in a private offering to certain institutional
investors. The net proceeds received by the Company from the
offering, excluding the net cost of hedges and sale of warrants
(described below), were approximately $291.6 million.
The
2.50% Convertible Notes bear interest at an annual rate of 2.50%,
payable semi-annually in arrears on June 1 and December 1 of each
year, beginning December 1, 2011. However, the Company recognizes
an effective interest rate of 7.25% on the carrying amount of the
2.50% Convertible Notes. The effective rate is based on the
rate for a similar instrument that does not have a conversion
feature. The 2.50% Convertible Notes will be convertible into
cash and, if applicable, shares of the Company's common stock based
on a conversion rate of 32.5169 shares of the Company's common
stock, subject to customary adjustments, per $1,000 principal
amount of the 2.50% Convertible Notes (which is equal to an initial
conversion price of approximately $30.75 per share) only under the
following circumstances: (1) during any fiscal quarter beginning
after June 30, 2011 (and only during such fiscal quarter), if the
closing price of the Company's common stock for at least 20 trading
days in the 30 consecutive trading days ending on the last trading
day of the immediately preceding fiscal quarter is more than 130%
of the conversion price per share, which is $1,000 divided by the
then applicable conversion rate; (2) during the five business day
period immediately following any five consecutive trading day
period in which the trading price per $1,000 principal amount of
the 2.50% Convertible Notes for each day of that period was less
than 98% of the product of (a) the closing price of the Company's
common stock for each day in that period and (b) the conversion
rate per $1,000 principal amount of the 2.50% Convertible Notes;
(3) if specified distributions to holders of the Company's common
stock are made, as set forth in the indenture governing the 2.50%
Convertible Notes (“2.50% Indenture”); (4) if a
“change of control” or other “fundamental
change,” each as defined in the 2.50% Indenture, occurs; (5)
if the Company chooses to redeem the 2.50% Convertible Notes upon
the occurrence of a “specified accounting change,” as
defined in the 2.50% Indenture; and (6) during the last month prior
to maturity of the 2.50% Convertible Notes. If the holders of the
2.50% Convertible Notes exercise the conversion provisions under
the circumstances set forth, the Company will need to remit the
lower of the principal balance of the 2.50% Convertible Notes or
their conversion value to the holders in cash. As such, the Company
would be required to classify the entire amount outstanding of the
2.50% Convertible Notes as a current liability in the following
quarter. The evaluation of the classification of amounts
outstanding associated with the 2.50% Convertible Notes will occur
every quarter.
Upon
conversion, a holder will receive an amount in cash equal to the
lesser of (a) the principal amount of the 2.50% Convertible Note or
(b) the conversion value, determined in the manner set forth in the
2.50% Indenture. If the conversion value exceeds the principal
amount of the 2.50% Convertible Notes on the conversion date, the
Company will also deliver, at its election, cash or the Company's
common stock or a combination of cash and the Company's common
stock for the conversion value in excess of the principal amount.
In the event of a change of control or other fundamental change,
the holders of the 2.50% Convertible Notes may require the Company
to purchase all or a portion of their 2.50% Convertible Notes at a
purchase price equal to 100% of the principal amount of the 2.50%
Convertible Notes, plus accrued and unpaid interest, if any. If a
specified accounting change occurs, the Company may, at its option,
redeem the 2.50% Convertible Notes in whole for cash, at a price
equal to 102% of the principal amount of the 2.50% Convertible
Notes, plus accrued and unpaid interest, if any. Holders of the
2.50% Convertible Notes who convert their 2.50% Convertible Notes
in connection with a fundamental change or in connection with a
redemption upon the occurrence of a specified accounting change may
be entitled to a make-whole premium in the form of an increase in
the conversion rate.
Pursuant
to guidance issued under ASC Topic 815, the 2.50% Convertible Notes
are accounted for as convertible debt in the accompanying unaudited
condensed consolidated balance sheet and the embedded conversion
option in the 2.50% Convertible Notes has not been accounted for as
a separate derivative. For a discussion of the effects of the 2.50%
Convertible Notes and the 2.50% Convertible Notes Hedges and Sold
Warrants defined and discussed below on earnings per share, see
Note 7.
As
of September 30, 2011, the amount of the 2.50% Convertible Notes
accounted for as a liability was approximately $240.3 million and
is reflected on the unaudited condensed consolidated balance sheet
as follows:
For
the Current Quarter and Current Nine Months, the Company recorded
additional non-cash interest expense of approximately $2.5 million
and $3.6 million, respectively, representing the difference between
the stated interest rate on the 2.50% Convertible Notes and
the rate for a similar instrument that does not have a
conversion feature.
For
the Current Quarter and Current Nine Months, cash interest expense
relating to the 2.50% Convertible Notes was approximately $1.9
million and $2.5 million, respectively.
The
Convertible Notes do not provide for any financial
covenants.
In
connection with the sale of the 2.50% Convertible Notes, the
Company entered into hedges for the 2.50% Convertible Notes
(“2.50% Convertible Note Hedges”) with respect to its
common stock with two entities (the “2.50%
Counterparties”). Pursuant to the agreements governing these
2.50% Convertible Note Hedges, the Company purchased call options
(the “2.50% Purchased Call Options”) from the 2.50%
Counterparties covering up to approximately 9.8 million shares of
the Company's common stock. These 2.50% Convertible Note
Hedges are designed to offset the Company's exposure to potential
dilution upon conversion of the 2.50% Convertible Notes in the
event that the market value per share of the Company's common stock
at the time of exercise is greater than the strike price of the
2.50% Purchased Call Options (which strike price corresponds to the
initial conversion price of the 2.50% Convertible Notes and is
simultaneously subject to certain customary
adjustments). On May 23, 2011, the Company paid an
aggregate amount of approximately $58.7 million of the proceeds
from the sale of the 2.50% Convertible Notes for the 2.50%
Purchased Call Options, of which $20.6 million was included in the
balance of deferred income tax assets at May 23, 2011 and is being
recognized over the term of the 2.50% Convertible
Notes. As of September 30, 2011, the balance of deferred
income tax assets related to this transaction was approximately
$19.3 million.
The
Company also entered into separate warrant transactions with the
2.50% Counterparties whereby the Company, pursuant to the
agreements governing these warrant transactions, sold to the 2.50%
Counterparties warrants (the “2.50% Sold Warrants”) to
acquire up to 9.76 million shares of the Company's common stock at
a strike price of $40.6175 per share of the Company's common stock.
The 2.50% Sold Warrants will become exercisable on September 1,
2016 and will expire by the end of 2016. The Company received
aggregate proceeds of approximately $28.8 million from the sale of
the 2.50% Sold Warrants on May 23, 2011.
Pursuant
to guidance issued under ASC Topic 815 Derivatives and Hedging as
it relates to accounting for derivative financial instruments
indexed to, and potentially settled in, a company’s own
stock, the 2.50% Convertible Note Hedge and the proceeds received
from the issuance of the 2.50% Sold Warrants were recorded as a
charge and an increase, respectively, in additional paid-in capital
in stockholders’ equity as separate equity transactions. As a
result of these transactions, the Company recorded a net reduction
to additional paid-in-capital of $9.4 million in May 2011.
The
Company has evaluated the impact of adopting guidance issued
under ASC Topic 815 regarding embedded features as it relates to
the 2.50% Sold Warrants, and has determined it had no impact
on the Company’s results of operations and financial position
through September 30, 2011, and will have no impact on the
Company’s results of operations and financial position in
future fiscal periods.
As
the 2.50% Convertible Note Hedge transactions and the warrant
transactions were separate transactions entered into by the Company
with the 2.50% Counterparties, they are not part of the terms of
the 2.50% Convertible Notes and will not affect the holders' rights
under the 2.50% Convertible Notes. In addition, holders of the
2.50% Convertible Notes will not have any rights with respect to
the 2.50% Purchased Call Options or the 2.50% Sold
Warrants.
If
the market value per share of the Company's common stock at the
time of conversion of the 2.50% Convertible Notes is above the
strike price of the 2.50% Purchased Call Options, the 2.50%
Purchased Call Options entitle the Company to receive from the
2.50% Counterparties net shares of the Company's common stock, cash
or a combination of shares of the Company's common stock and cash,
depending on the consideration paid on the underlying 2.50%
Convertible Notes, based on the excess of the then current market
price of the Company's common stock over the strike price of the
2.50% Purchased Call Options. Additionally, if the market price of
the Company's common stock at the time of exercise of the 2.50%
Sold Warrants exceeds the strike price of the 2.50% Sold Warrants,
the Company will owe the 2.50% Counterparties net shares of the
Company's common stock or cash, not offset by the 2.50% Purchased
Call Options, in an amount based on the excess of the then current
market price of the Company's common stock over the strike price of
the 2.50% Sold Warrants.
These
transactions will generally have the effect of increasing the
conversion price of the 2.50% Convertible Notes to
$40.6175 per share of the Company's common stock,
representing a 75% percent premium based on the last reported sale
price of the Company’s common stock of $23.21 per share on
May 17, 2011.
Moreover,
in connection with the warrant transactions with the 2.50%
Counterparties, to the extent that the price of the Company’s
common stock exceeds the strike price of the 2.50% Sold Warrants,
the warrant transactions could have a dilutive effect on the
Company’s earnings per share.
1.875% Convertible Notes
On
June 20, 2007, the Company completed the issuance of $287.5 million
principal amount of the Company's 1.875% convertible senior
subordinated notes due June 2012 (“1.875% Convertible
Notes”) in a private offering to certain institutional
investors. The net proceeds received by the Company from the
offering, excluding the net cost of hedges and sale of warrants
(described below) were approximately $281.1 million.
The
1.875% Convertible Notes bear interest at an annual rate of 1.875%,
payable semi-annually in arrears on June 30 and December 31 of each
year, beginning December 31, 2007. However, the Company recognizes
an effective interest rate of 7.85% on the carrying amount of the
1.875% Convertible Notes. The effective rate is based on the
rate for a similar instrument that does not have a conversion
feature. The 1.875% Convertible Notes will be convertible
into cash and, if applicable, shares of the Company's common stock
based on a conversion rate of 36.2845 shares of the Company's
common stock, subject to customary adjustments, per $1,000
principal amount of the 1.875% Convertible Notes (which is equal to
an initial conversion price of approximately $27.56 per share) only
under the following circumstances: (1) during any fiscal quarter
beginning after September 30, 2007 (and only during such fiscal
quarter), if the closing price of the Company's common stock for at
least 20 trading days in the 30 consecutive trading days ending on
the last trading day of the immediately preceding fiscal quarter is
more than 130% of the conversion price per share, which is $1,000
divided by the then applicable conversion rate; (2) during the five
business day period immediately following any five consecutive
trading day period in which the trading price per $1,000 principal
amount of the 1.875% Convertible Notes for each day of that period
was less than 98% of the product of (a) the closing price of the
Company's common stock for each day in that period and (b) the
conversion rate per $1,000 principal amount of the 1.875%
Convertible Notes; (3) if specified distributions to holders of the
Company's common stock are made, as set forth in the indenture
governing the 1.875% Convertible Notes (“1.875%
Indenture”); (4) if a “change of control” or
other “fundamental change,” each as defined in the
1.875% Indenture, occurs; (5) if the Company chooses to redeem the
1.875% Convertible Notes upon the occurrence of a “specified
accounting change,” as defined in the 1.875% Indenture; and
(6) during the last month prior to maturity of the 1.875%
Convertible Notes. If the holders of the 1.875% Convertible Notes
exercise the conversion provisions under the circumstances set
forth, the Company will need to remit the lower of the principal
balance of the 1.875% Convertible Notes or their conversion value
to the holders in cash. As such, the Company would be required to
classify the entire amount outstanding of the 1.875% Convertible
Notes as a current liability in the following quarter. The
evaluation of the classification of amounts outstanding associated
with the 1.875% Convertible Notes will occur every
quarter.
Upon
conversion, a holder will receive an amount in cash equal to the
lesser of (a) the principal amount of the 1.875% Convertible Note
or (b) the conversion value, determined in the manner set forth in
the 1.875% Indenture. If the conversion value exceeds the principal
amount of the 1.875% Convertible Notes on the conversion date, the
Company will also deliver, at its election, cash or the Company's
common stock or a combination of cash and the Company's common
stock for the conversion value in excess of the principal amount.
In the event of a change of control or other fundamental change,
the holders of the 1.875% Convertible Notes may require the Company
to purchase all or a portion of their 1.875% Convertible Notes at a
purchase price equal to 100% of the principal amount of the 1.875%
Convertible Notes, plus accrued and unpaid interest, if any. If a
specified accounting change occurs, the Company may, at its option,
redeem the 1.875% Convertible Notes in whole for cash, at a price
equal to 102% of the principal amount of the 1.875% Convertible
Notes, plus accrued and unpaid interest, if any. Holders of the
1.875% Convertible Notes who convert their 1.875% Convertible Notes
in connection with a fundamental change or in connection with a
redemption upon the occurrence of a specified accounting change may
be entitled to a make-whole premium in the form of an increase in
the conversion rate.
Pursuant
to guidance issued under ASC Topic 815, the 1.875% Convertible
Notes are accounted for as convertible debt in the accompanying
unaudited condensed consolidated balance sheet and the embedded
conversion option in the 1.875% Convertible Notes has not been
accounted for as a separate derivative. For a discussion of the
effects of the 1.875% Convertible Notes and the 1.875% Convertible
Notes Hedges and the 1.875% Sold Warrants defined and discussed
below on earnings per share, see Note 7.
As
of September 30, 2011 and December 31, 2010, the amount of the
1.875% Convertible Notes accounted for as a liability was
approximately $274.7 million and $262.7 million, and is reflected
on the unaudited condensed consolidated balance sheet as
follows:
For
the Current Quarter and Prior Year Quarter, the Company recorded
additional non-cash interest expense of approximately $3.9 million
and $3.4 million, respectively, representing the difference between
the stated interest rate on the 1.875% Convertible Notes and
the rate for a similar instrument that does not have a
conversion feature. For the Current Nine Months and the Prior
Year Nine Months, the Company recorded additional non-cash interest
expense of $11.2 million and $10.3 million,
respectively.
For
both the Current Quarter and the Prior Year Quarter, cash interest
expense relating to the 1.875% Convertible Notes was approximately
$1.3 million. For both the Current Nine Months and the
Prior Year Nine Months, cash interest expense relating to the
1.875% Convertible Notes was approximately $4.0
million.
The
Convertible Notes do not provide for any financial
covenants.
In
connection with the sale of the 1.875% Convertible Notes, the
Company entered into hedges for the 1.875% Convertible Notes
(“1.875% Convertible Note Hedges”) with respect to its
common stock with two entities, one of which was Lehman Brothers
OTC Derivatives Inc. (“Lehman OTC” and together with
the other counterparty, the “1.875% Counterparties”).
Pursuant to the agreements governing these 1.875% Convertible Note
Hedges, the Company purchased call options (the “1.875%
Purchased Call Options”) from the 1.875% Counterparties
covering up to approximately 10.4 million shares of the Company's
common stock of which 40% were purchased from Lehman OTC. These
1.875% Convertible Note Hedges are designed to offset the
Company's exposure to potential dilution upon conversion of the
1.875% Convertible Notes in the event that the market value per
share of the Company's common stock at the time of exercise is
greater than the strike price of the 1.875% Purchased Call Options
(which strike price corresponds to the initial conversion price of
the 1.875% Convertible Notes and is simultaneously subject to
certain customary adjustments). On June 20, 2007, the Company paid
an aggregate amount of approximately $76.3 million of the proceeds
from the sale of the 1.875% Convertible Notes for the 1.875%
Purchased Call Options, of which $26.7 million was included in the
balance of deferred income tax assets at June 30, 2007 and is being
recognized over the term of the 1.875% Convertible Notes. As of
September 30, 2011, the balance of deferred income tax assets
related to this transaction was approximately $4.2
million.
The
Company also entered into separate warrant transactions with the
1.875% Counterparties whereby the Company, pursuant to the
agreements governing these warrant transactions, sold to the 1.875%
Counterparties warrants (the “1.875% Sold Warrants”) to
acquire up to 3.6 million shares of the Company's common stock of
which 40% were sold to Lehman OTC, at a strike price of $42.40 per
share of the Company's common stock. The 1.875% Sold Warrants will
become exercisable on September 28, 2012 and will expire by the end
of 2012. The Company received aggregate proceeds of approximately
$37.5 million from the sale of the 1.875% Sold Warrants on June 20,
2007.
Pursuant
to guidance issued under ASC Topic 815 Derivatives and Hedging as
it relates to accounting for derivative financial instruments
indexed to, and potentially settled in, a company’s own
stock, the 1.875% Convertible Note Hedge and the proceeds received
from the issuance of the 1.875% Sold Warrants were recorded as a
charge and an increase, respectively, in additional paid-in capital
in stockholders’ equity as separate equity transactions. As a
result of these transactions, the Company recorded a net reduction
to additional paid-in-capital of $12.1 million in June
2007.
The
Company has evaluated the impact of adopting guidance issued
under ASC Topic 815 regarding embedded features as it relates to
the 1.875% Sold Warrants, and has determined it had no impact
on the Company’s results of operations and financial position
through September 30, 2011, and will have no impact on the
Company’s results of operations and financial position in
future fiscal periods.
As the 1.875% Convertible Note Hedge
transactions and the warrant transactions were separate
transactions entered into by the Company with the 1.875%
Counterparties, they are not part of the terms of the 1.875%
Convertible Notes and will not affect the holders' rights under the
1.875% Convertible Notes. In addition, holders of the 1.875%
Convertible Notes will not have any rights with respect to the
1.875% Purchased Call Options or the 1.875% Sold
Warrants.
If
the market value per share of the Company's common stock at the
time of conversion of the 1.875% Convertible Notes is above the
strike price of the 1.875% Purchased Call Options, the 1.875%
Purchased Call Options entitle the Company to receive from the
1.875% Counterparties net shares of the Company's common stock,
cash or a combination of shares of the Company's common stock and
cash, depending on the consideration paid on the underlying 1.875%
Convertible Notes, based on the excess of the then current market
price of the Company's common stock over the strike price of the
1.875% Purchased Call Options. Additionally, if the market price of
the Company's common stock at the time of exercise of the 1.875%
Sold Warrants exceeds the strike price of the 1.875% Sold Warrants,
the Company will owe the 1.875% Counterparties net shares of the
Company's common stock or cash, not offset by the 1.875% Purchased
Call Options, in an amount based on the excess of the then current
market price of the Company's common stock over the strike price of
the 1.875% Sold Warrants.
These
transactions will generally have the effect of increasing the
conversion price of the 1.875% Convertible Notes to $42.40 per
share of the Company's common stock, representing a 100% percent
premium based on the last reported sale price of the
Company’s common stock of $21.20 per share on June 14,
2007.
On
September 15, 2008 and October 3, 2008, respectively,
Lehman Brothers Holdings Inc., or Lehman Holdings, and its
subsidiary, Lehman Brothers OTC Derivatives Inc., or Lehman OTC,
filed for protection under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court in the
Southern District of New York, herein referred to as the bankruptcy
court. On September 17, 2009, the Company filed proofs of claim
with the bankruptcy court relating to the Lehman OTC Convertible
Note Hedges. The Company purchased 40% of the 1.875%
Convertible Note Hedges from Lehman OTC, or the Lehman note hedges,
and the Company sold 40% of the warrants to Lehman OTC. Lehman
OTC’s obligations under the Lehman OTC Convertible Note
Hedges are guaranteed by Lehman Holdings. If the Lehman OTC
Convertible Note Hedges are rejected or terminated in connection
with the Lehman OTC bankruptcy, the Company would have a claim
against Lehman OTC and Lehman Holdings, as guarantor, for the
damages and/or close-out values resulting from any such rejection
or termination. While the Company intends to pursue any claim for
damages and/or close-out values resulting from the rejection or
termination of the Lehman OTC Convertible Note Hedges, at this
point in the Lehman bankruptcy cases it is not possible to
determine with accuracy the ultimate recovery, if any, that the
Company may realize on potential claims against Lehman OTC or
Lehman Holdings, as guarantor, resulting from any rejection or
termination of the Lehman OTC Convertible Note Hedges. The Company
also does not know whether Lehman OTC will assume or reject the
Lehman note hedges, and therefore cannot predict whether Lehman OTC
intends to perform its obligations under the Lehman OTC Convertible
Note Hedges. As a result, if Lehman OTC does not perform such
obligations and the price of the Company’s common stock
exceeds the $27.56 conversion price (as adjusted) of the 1.875%
Convertible Notes, the effective conversion price of the 1.875%
Convertible Notes (which is higher than the actual $27.56
conversion price due to these hedges) would be reduced and the
Company’s existing stockholders may experience dilution at
the time or times the 1.875% Convertible Notes are converted. The
extent of any such dilution would depend, among other things, on
the then prevailing market price of our common stock and the number
of shares of common stock then outstanding, but the Company
believes the impact will not be material and will not affect its
income statement presentation. The Company is not otherwise exposed
to counterparty risk related to the Lehman bankruptcies. The
Company currently believes, although there can be no assurance,
that the bankruptcy filings and their potential impact on these
entities will not have a material adverse effect on the
Company’s financial position, results of operations or cash
flows. The Company will continue to monitor the bankruptcy filings
of Lehman Holdings and Lehman OTC.
Moreover,
in connection with the warrant transactions with the 1.875%
Counterparties, to the extent that the price of the Company’s
common stock exceeds the strike price of the 1.875% Sold Warrants,
the warrant transactions could have a dilutive effect on the
Company’s earnings per share.
Ecko Note
In
connection with the Ecko transaction, IPH Unltd issued a promissory
note (“Ecko Note”) to a third party creditor for $90.0
million. IPH Unltd’s obligations under the Ecko Note
are secured by the Ecko portfolio of trademarks and related
intellectual property assets and the Zoo York trademarks and
related intellectual property assets owned by ZY Holdings (see note
2), and are further guaranteed personally by the minority owner of
IPH Unltd, with no recourse to the Company other than the interest
of ZY Holdings in the Zoo York trademarks and related intellectual
property assets. Amounts outstanding under the Ecko Note
bear interest at 7.50% per annum, with minimum principal payable in
equal quarterly installments of $2.5 million, with any remaining
unpaid principal balance and accrued interest to be due on June 30,
2014, the Ecko Note maturity date. The Ecko Note may be
prepaid without penalty, and would be applied to the scheduled
quarterly principal payments in the order of their maturity.
On July 27, 2011, in connection with the Company’s
purchase of the Zoo York trademark and related assets (see note 2),
IPH Unltd paid $3.0 million in principal to the holder of the Ecko
Note. As of September 30, 2011, the total principal
balance of the Ecko Note is $69.5 million, of which $10.0 million
is included in the current portion of long-term debt on the
unaudited condensed consolidated balance sheet.
Asset-Backed Notes
The financing for certain of the Company's
acquisitions has been accomplished through private placements by
its subsidiary, IP Holdings LLC ("IP
Holdings") of asset-backed notes ("Asset-Backed
Notes") secured by intellectual property assets (trade names,
trademarks, license agreements and payments and proceeds with
respect thereto relating to the Candie’s, Bongo, Joe Boxer,
Rampage, Mudd and London Fog brands) of IP Holdings. As of
September 30, 2011, the balance of the Asset-Backed Notes was $51.1
million, $36.8 million of which is included in the current portion
of long-term debt on the unaudited condensed consolidated balance
sheet.
Cash
on hand in the bank account of IP Holdings is restricted at any
point in time up to the amount of the next debt principal and
interest payment required under the Asset-Backed Notes.
Accordingly, $4.0 million and $2.5 million as of September 30, 2011
and December 31, 2010, respectively, are included as restricted
cash within the Company's current assets on the unaudited condensed
consolidated balance sheets. Further, in connection with IP
Holdings' issuance of Asset-Backed Notes, a reserve account has
been established and the funds on deposit in such account will be
applied to future principal payments with respect to the
Asset-Backed Notes. Accordingly, as of September 30, 2011
approximately $8.5 million has been classified as current and is
included in restricted cash in the Company’s current assets
on the unaudited condensed consolidated balance
sheets. Further, as of September 30, 2011 and December
31, 2010, approximately $7.2 million and $15.9 million has been
classified as non-current and disclosed as restricted cash within
other assets on the Company's unaudited condensed consolidated
balance sheets.
Interest
rates and terms on the outstanding principal amount of the
Asset-Backed Notes as of September 30, 2011 are as follows: $16.3
million principal amount bears interest at a fixed interest rate of
8.45%, $7.2 million principal amount bears interest at a fixed rate
of 8.12%, and $27.6 million principal amount bears interest at a
fixed rate of 8.99%. The Asset-Backed Notes have no financial
covenants by which the Company or its subsidiaries need comply. The
aggregate principal amount of the Asset-Backed Notes is required to
be fully paid by February 22, 2013.
Neither
the Company nor any of its subsidiaries (other than IP Holdings) is
obligated to make any payment with respect to the Asset-Backed
Notes, and the assets of the Company and its subsidiaries (other
than IP Holdings) are not available to IP Holdings' creditors. The
assets of IP Holdings are not available to the creditors of the
Company or its subsidiaries (other than IP Holdings).
Term Loan Facility
In
connection with the acquisition of the Rocawear brand, in March
2007, the Company entered into a $212.5 million credit agreement
with Lehman Brothers Inc., as lead arranger and bookrunner,
and Lehman Commercial Paper Inc. (“LCPI”), as
syndication agent and administrative agent (the “Credit
Agreement” or “Term Loan Facility”). At the time,
the Company pledged to LCPI, for the benefit of the lenders under
the Term Loan Facility (the “Lenders”), 100% of the
capital stock owned by the Company in its subsidiaries, OP Holdings
and Management Corporation, a Delaware corporation
(“OPHM”), and Studio Holdings and Management
Corporation, a Delaware corporation (“SHM”). The
Company's obligations under the Credit Agreement are guaranteed by
each of OPHM and SHM, as well as by two of its other subsidiaries,
OP Holdings LLC, a Delaware limited liability company (“OP
Holdings”), and Studio IP Holdings LLC, a Delaware limited
liability company ("Studio IP Holdings").
On
October 3, 2007, in connection with the acquisition of
Official-Pillowtex LLC, a Delaware limited liability company
(“Official-Pillowtex”), with the proceeds of the 1.875%
Convertible Notes, the Company pledged to LCPI, for the benefit of
the Lenders, 100% of the capital stock owned by the Company in
Mossimo, Inc., a Delaware corporation (“MI”), and
Pillowtex Holdings and Management Corporation, a Delaware
corporation (“PHM”), each of which guaranteed the
Company’s obligations under the Credit Agreement.
Simultaneously with the acquisition of Official-Pillowtex, each of
Mossimo Holdings LLC, a Delaware limited liability company
(“Mossimo Holdings”), and Official-Pillowtex guaranteed
the Company’s obligations under the Credit Agreement.
On September 10, 2008, PHM was converted into a Delaware
limited liability company, Pillowtex Holdings and Management LLC
(“PHMLLC”), and the Company’s membership interest
in PHMLLC was pledged to LCPI in place of the capital stock of
PHM.
On
July 26, 2007, the Company purchased a hedge instrument to mitigate
the cash flow risk of rising interest rates on the Term Loan
Facility. This hedge instrument expired by its terms in July
2010. See Note 4.
On
December 17, 2007, in connection with the acquisition of the
Starter brand, the Company borrowed an additional $63.2 million
pursuant to the Term Loan Facility (the “Additional
Borrowing”). The net proceeds received by the Company from
the Additional Borrowing were $60 million.
On
February 24, 2010, Barclays Bank PLC (“Barclays”) was
appointed as successor Administrative Agent under the Credit
Agreement.
On
June 23, 2010, in connection with the acquisition of Peanuts
Worldwide (see Note 3), the Company pledged to Barclays, for the
benefit of the Lenders, its 100% membership interest in IE.
On such date, IE became a guarantor of the Company’s
obligations under the Credit Agreement, and IE pledged to Barclays,
for the benefit of the Lenders, its 80% membership interest in
Peanuts Holdings.
The guarantees under the Term Loan Facility
were secured by a pledge to Barclays, for the benefit of the
Lenders, of, among other things, the Ocean Pacific/OP, Danskin,
Rocawear, Mossimo, Cannon, Royal Velvet, Fieldcrest, Charisma,
Starter and Waverly trademarks and related intellectual property
assets, license agreements and proceeds therefrom, as well as the
Company’s 80% interest in Peanuts Holdings. Amounts
outstanding under the Term Loan Facility bore interest, at the
Company’s option, at the Eurodollar rate or the prime rate,
plus an applicable margin of 2.25% or 1.25%, as the case may be,
per annum. The Credit Agreement provided that the Company is
required to repay the outstanding term loan in equal quarterly
installments in annual aggregate amounts equal to 1.00% of the
aggregate principal amount of the loans outstanding, subject to
adjustment for prepayments, in addition to an annual payment equal
to 50% of the excess cash flow from the subsidiaries subject to the
Term Loan Facility, as described in the Credit Agreement, with any
remaining unpaid principal balance to be due on April 30, 2013 (the
“Loan Maturity Date”). Upon completion of the 1.875%
Convertible Notes offering, the Loan Maturity Date was accelerated
to January 2, 2012. The Term Loan Facility provided that it could
be prepaid, without penalty, at any time. On March 11, 2008, the
Company paid to LCPI, for the benefit of the Lenders, $15.6
million, representing 50% of the excess cash flow from the
subsidiaries subject to the Term Loan Facility for 2007. As a
result of such payment, the Company was no longer required to pay
the quarterly installments described above. The Term Loan Facility
required the Company to repay the principal amount of the term loan
outstanding in an amount equal to 50% of the excess cash flow of
the subsidiaries subject to the Term Loan Facility for the most
recently completed fiscal year unless the Company met certain
criteria specified by a financial covenant defined in the Credit
Agreement (see below). On March 17, 2010, the Company paid to
Barclays, for the benefit of the Lenders, $47.2 million,
representing 50% of the excess cash flow from the subsidiaries
subject to the Term Loan Facility for the year ended December 31,
2009. The Company was not required to make a payment on the
excess cash flow from the subsidiaries subject to the Term Loan
Facility as the ratio of Consolidated Total Debt (as defined by the
Credit Agreement) to Consolidated EBITDA (as defined by the Credit
Agreement) was below 2.5 to 1.0 as of December 31, 2010, thereby
eliminating the requirement that the Company remit 50% of the
excess cash flow from the subsidiaries subject to the Term Loan
Facility for 2010. However, on March 21, 2011, the Company
made an optional prepayment of principal in the amount of $60.0
million. On May 27, 2011 (the “Payoff
Date”), approximately $112.6 million was paid to Barclays for
the benefit of the Lenders, representing the Company’s full
satisfaction of all obligations under the Term Loan Facility,
including the outstanding principal of $112.4 million and accrued
interest of $0.2 million due to the Lenders as of the Payoff Date.
Through the Payoff Date, the Company was in compliance with all
material covenants set forth in the Credit Agreement.
The
$272.5 million in proceeds from the Term Loan Facility were used by
the Company as follows: $204.0 million was used to pay the cash
portion of the initial consideration for the acquisition of the
Rocawear brand; $2.1 million was used to pay the costs associated
with the Rocawear acquisition; $60 million was used to pay the
consideration for the acquisition of the Starter brand; and $3.9
million was used to pay costs associated with the Term Loan
Facility. The costs of $3.9 million relating to the Term Loan
Facility had been deferred and were amortized over the life of the
loan, using the effective interest method; the remaining
unamortized balance was fully amortized on the Payoff Date. Prior
to the Payoff Date, the subsidiaries subject to the Term Loan
Facility were Studio IP Holdings, SHM, OP Holdings, OPHM, Mossimo
Holdings, MI, Official-Pillowtex, PHMLLC and IE
(collectively, the “Term Loan Facility Subsidiaries”).
Prior to the Payoff Date, the Term Loan Facility Subsidiaries,
directly or indirectly, owned the following trademarks, excluding
certain territories covered by the Iconix China, Iconix Latin
America and Iconix Europe joint ventures (see Note 3): Danskin,
Rocawear, Starter, Ocean Pacific/OP, Mossimo, Cannon, Royal Velvet,
Fieldcrest, Charisma and Waverly.
Debt Maturities
As
of September 30, 2011, the Company’s debt maturities on a
calendar year basis are as follows:
|
Debt Arrangements (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Company's Debt | The
Company's net carrying amount of debt is comprised of the
following:
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Company's Debt Maturities on Calendar Year Basis | As
of September 30, 2011, the Company’s debt maturities on a
calendar year basis are as follows:
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2.50% Convertible Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Convertible Notes Reflected on Unaudited Condensed Consolidated Balance Sheet | As
of September 30, 2011, the amount of the 2.50% Convertible Notes
accounted for as a liability was approximately $240.3 million and
is reflected on the unaudited condensed consolidated balance sheet
as follows:
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1.875% Convertible Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Convertible Notes Reflected on Unaudited Condensed Consolidated Balance Sheet | As
of September 30, 2011 and December 31, 2010, the amount of the
1.875% Convertible Notes accounted for as a liability was
approximately $274.7 million and $262.7 million, and is reflected
on the unaudited condensed consolidated balance sheet as
follows:
|
Summaries of Options Activity, and Related Information for the Current Quarter (Detail) (USD $) | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Options | |
Outstanding at January 1, 2011 | 2,592,535 |
Granted | 15,000 |
Canceled | |
Exercised | (563,385) |
Expired/Forfeited | |
Outstanding at September 30, 2011 | 2,044,150 |
Exercisable at September 30, 2011 | 2,042,483 |
Weighted-Average Exercise Price | |
Outstanding at January 1, 2011 | $ 4.61 |
Granted | $ 22.51 |
Canceled | |
Exercised | $ 4.14 |
Expired/Forfeited | |
Outstanding at September 30, 2011 | $ 4.87 |
Exercisable at September 30, 2011 | $ 4.87 |
Fair Value Measurements - Additional Information (Detail) (USD $) In Millions | 12 Months Ended | ||
---|---|---|---|
Dec. 31, 2010 | Sep. 30, 2011 | Jan. 31, 2010 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Face value of auction rate securities | $ 13.0 | ||
Fair value of auction rate securities | 0 | ||
Amount that the company seeking in a lawsuit against broker-dealer of auction rate securities | 13.0 | ||
Pre-tax loss on marketable securities | 13.0 | ||
Fair value of the Income Statement Hedge | 0.5 | ||
New Brands | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of the note receivable | 2.9 | ||
Purim LLC | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of the note payable | 12.0 | ||
Beagle Note | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of the note receivable | 15.3 | ||
Joe Boxer | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of the note receivable | $ 4.0 |
Stockholders' Equity (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Assumptions of Options and Warrants for All Years | The
fair value for these options and warrants for all years was
estimated at the date of grant using a Black-Scholes option-pricing
model with the following weighted-average assumptions:
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Summaries of Options Activity, and Related Information for the Current Quarter | Summaries
of the Company's stock options, warrants (other than warrants
issued related to our 1.875% Convertible Notes and 2.50%
Convertible Notes) and performance related options activity, and
related information for the Current Nine Months are as
follows:
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Summaries of Warrants and Related Information for the Current Quarter |
Warrants
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Unvested Restricted Stock | The
following tables summarize information about unvested restricted
stock transactions:
|
Expenses Related to Specific Litigation - Additional Information (Detail) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Loss Contingencies [Line Items] | ||||
Expenses related to specific litigation | $ (33) | $ (92) | $ (240) | |
Unzipped Litigation | ||||
Loss Contingencies [Line Items] | ||||
Expenses related to specific litigation | $ 100 | $ 200 | $ 100 | $ 200 |
Segment and Geographic Data (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Revenues by Type of License and Information by Geographic Region | The
net revenues by type of license and information by geographic
region are as follows:
|
Basis of Presentation | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Basis of Presentation |
1. Basis of Presentation
The
accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management of Iconix Brand
Group, Inc. (the "Company", “we”, “us”, or
“our”), all adjustments (consisting primarily of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months
(“Current Quarter”) and nine months (“Current
Nine Months”) ended September 30, 2011 are not necessarily
indicative of the results that may be expected for a full fiscal
year.
Certain
prior period amounts have been reclassified to conform to the
current period’s presentation.
For
further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2010
(“2010”).
|
Related Party Transactions | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Related Party Transactions |
10. Related Party Transactions
The Candie’s Foundation
The
Candie's Foundation, a charitable foundation founded by Neil Cole
for the purpose of raising national awareness about the
consequences of teenage pregnancy, owed the Company $1.1 million
and $0.9 million at September 30, 2011 and December 31, 2010,
respectively. The Candie's Foundation intends to pay-off
the entire borrowing from the Company during 2011, although
additional advances will be made as and when
necessary.
Travel
The
Company recorded expenses of approximately $35,000 and zero in the
Current Quarter and Prior Year Quarter, respectively, and $114,000
and $100,000 in the Current Nine Months and Prior Year Nine Months,
respectively, for the hire and use of aircraft solely for business
purposes owned by a company in which the Company’s
chairman, chief executive officer and president is the sole
owner. Management believes that all transactions were
made on terms and conditions no less favorable than those available
in the marketplace from unrelated parties.
|
Details of Convertible Notes Reflected on Unaudited Condensed Consolidated Balance Sheet (Detail) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
2.50% Convertible Notes | ||
Debt Instrument [Line Items] | ||
Equity component carrying amount | $ 33,875 | |
Unamortized discount | 59,657 | |
Net debt carrying amount | 240,343 | |
1.875% Convertible Notes | ||
Debt Instrument [Line Items] | ||
Equity component carrying amount | 41,309 | 41,309 |
Unamortized discount | 12,819 | 24,784 |
Net debt carrying amount | $ 274,681 | $ 262,716 |
Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Instruments Measured at Fair Value | The
following table summarizes the instruments measured at fair value
at September 30, 2011 and December 31, 2010:
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Auction Rate Securities Activity During the Period | The
following table summarizes the activity for the
period:
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Values of Other Financial Instruments | The
estimated fair values of other financial instruments subject to
fair value disclosures, determined based on broker quotes or quoted
market prices or rates for the same or similar instruments, and the
related carrying amounts are as follows:
|
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