Joint Ventures and Investments

9 Months Ended

Sep. 30, 2020

Investments In And Advances To Affiliates Schedule Of Investments [Abstract]

4. Joint Ventures and Investments

Joint Ventures

As of September 30, 2020, the following joint ventures are consolidated with the Company:

Entity Name	Date of Original Formation / Investment	Iconix's Ownership % as of September 30, 2020	Joint Venture Partner	Put / Call Options, as applicable ⁽²⁾
Lee Cooper China ⁽⁶⁾ Limited	June 2018	100%	POS Lee Cooper HK Co. Ltd.		—
Starter China Limited	March 2018	0% ⁽⁴⁾	Photosynthesis Holdings Co. Ltd.		—
Danskin China Limited	October 2016	90% ⁽⁵⁾	Li-Ning (China) Sports Goods Co. Ltd.		—
Umbro China Limited	July 2016	0% ⁽³⁾	Hong Kong MH Umbro International Co. Ltd.		—
US Pony Holdings, LLC	February 2015	75%	Anthony L&S Athletics, LLC		—
Iconix MENA Ltd. ⁽¹⁾	December 2014	55%	Global Brands Group Asia Limited	Put / Call Options
Iconix Israel, LLC ⁽¹⁾	November 2013	50%	MGS		—
Iconix Europe LLC ⁽¹⁾	December 2009	51%	Global Brands Group Asia Limited	Put / Call Options
Iconix Australia ⁽¹⁾	September 2013	55%	Pac Brands USA, Inc.	Put / Call Options
Diamond Icon ⁽¹⁾	March 2013	51%	Albion Agencies Ltd.		—
Buffalo brand joint venture ⁽¹⁾	February 2013	51%	Buffalo International		—
Icon Modern Amusement, LLC ⁽¹⁾	December 2012	51%	Dirty Bird Productions		—
Hardy Way, LLC	May 2009	85%	Donald Edward Hardy		—

⁽¹⁾

The Company determined, in accordance with ASC 810, based on the corporate structure, voting rights and contributions of the Company and its respective joint venture partner, the entity is a variable interest entity (VIE) and, as the Company has been determined to be the primary beneficiary, is subject to consolidation. The Company has consolidated this joint venture within its consolidated financial statements since inception. None of the VIE assets are encumbered by any obligation of the VIE or other entity.

⁽²⁾

A six-month put option window for Iconix MENA Ltd. and for Iconix Europe LLC both commence on April 1, 2021. A put option for Iconix Australia period commences any time after December 30, 2020. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for material terms of the put/call options associated with certain of the Company’s joint ventures.

⁽³⁾

In July 2019, pursuant to the operating agreement, the Company reacquired the remaining 5% ownership interest in Umbro China from MHMC, its joint venture partner, for approximately $1.3 million, which resulted in the Company owning 100% of Umbro China. As described above, the Company completed the sale of Umbro China in July 2020. As a result of this transaction, the Company recognized a gain of $59.6 million, which has been recorded within Operating Income in the Company’s condensed consolidated statement of operations during the Current Quarter.

⁽⁴⁾

As described above, the Company completed the sale of Starter China in September, 2020. As a result of this transaction, the Company recognized a gain of $14.5 million, which has been recorded within Operating Income in the Company’s condensed consolidated statement of operations during the Current Quarter.

⁽⁵⁾	On June 30, 2020, the Company sold a 10% interest in Danskin China Ltd. to Li Ning Sports (Hong Kong) Company Ltd for $1.6 million.

⁽⁶⁾In June 2018, the Company entered into an agreement with POS Lee Cooper HK Co. Ltd. (“PLC”) to sell up to no less than a 50% interest and up to a total of 60% interest in its wholly-owned indirect subsidiary, Lee Cooper China Limited, a newly registered Hong Kong subsidiary of Iconix China (“Lee Cooper China”), and which will hold the Lee Cooper trademarks and related assets in respect of the Greater China territory. PLC’s purchase of the initial 50% equity interest in Lee Cooper China is expected to occur annually over a four-year period commencing within 45 days of October 15, 2020, for cash consideration of approximately $8.2 million. The additional 10% equity interest (for a total equity interest of 60% interest) purchase right of PLC is expected to occur over a two-year period commencing January 15, 2024 for cash consideration equal to the greater of $2.5 million or 2.5 times the royalty received under the respective license agreement in the previous twelve months based on other terms and conditions specified in the share purchase agreement.

Investments

Equity Method Investments

Entity Name	Date of Original Formation / Investment	Partner	Put / Call Options, as applicable
Iconix India joint venture ⁽¹⁾	June 2012	Reliance Brands Ltd.		—
Iconix SE Asia, Ltd. ⁽¹⁾	October 2013	Global Brands Group Asia Limited	Put / Call Options ⁽²⁾
MG Icon ⁽¹⁾	March 2010	Purim LLC		—

⁽¹⁾

⁽²⁾	A six-month put option window for Iconix SE Asia, Ltd commences on March 31, 2021. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for material terms of the put/call options associated with this joint venture.

Additionally, through its ownership of Iconix China Holdings Limited, the Company has equity interests in the following private companies, which are accounted for as equity method investments:

		Ownership by	Value of Investment as of
Brands Placed	Partner	Iconix China	September 30, 2020		December 31, 2019
Candie’s	Candies Shanghai Fashion Co. Ltd. ⁽²⁾	20%	$	2,362	$	10,100
Marc Ecko	Shanghai MuXiang Apparel & Accessory Co. Limited	15%		1,421		2,270
Material Girl	Ningbo Material Girl Fashion Co. Ltd.⁽¹⁾	0%		—		—
Ecko Unltd	Ai Xi Enterprise (Shanghai) Co. Limited ⁽³⁾	20%		—		10,216
			$	3,783	$	22,586

⁽¹⁾

In March 2019, the Company sold its 20% interest in Ningbo Material Girl Fashion Co. Ltd. (“Material Girl China”) to Ningbo Peacebird Fashion & Accessories Co. Ltd. for $3.0 million in cash. Pursuant to the agreement, the sale price is further reduced by the initial cash investment of $0.2 million as well as $0.6 million on brand management expenses incurred since the inception of the Material Girl China entity, to total net proceeds of $2.2 million. Additionally, Purim LLC, our MG Icon partner, is entitled to 33.3% of the net proceeds (or approximately $0.7 million) resulting in the Company’s portion of the net proceeds from the transaction to be approximately $1.5 million. As a result of this transaction, the Company recognized a gain of $0.2 million, which has been recorded within Other Income in the Company’s condensed consolidated statement of operations during FY 2019.

⁽²⁾

As a result of recent losses, primarily due to the effect of COVID-19 on the retail industry, the Company determined that the losses were other than temporary and determined that the fair value of its investment was approximately $2.4 million. Accordingly, the Company recorded an impairment charge of $7.4 million in the Current Quarter.

⁽³⁾	In August 2020, the Company rescinded the trademark rights for the Ecko/Marc Ecko brand in exchange for its equity interest in the joint venture and recorded an impairment charge of $9.7 million in the third quarter of 2020.

Other Equity Investments

In July 2013, the Company purchased a minority interest in Marcy Media Holdings, LLC (“Marcy Media”), resulting in the Company’s indirect ownership of a 5% interest in Roc Nation, LLC for $32 million. In the third quarter of 2019, the Company recorded an impairment charge of $17.0 million on its investment in Marcy Media. During the fourth quarter of 2019, the Company sold its interests in Marcy Media for $15.0 million.