ITEM 1. FINANCIAL STATEMENTS
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
See accompanying notes to unaudited condensed consolidated financial statements.
SKECHERS U.S.A., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Skechers U.S.A., Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S‑X. In the opinion of management, all normal adjustments and accruals considered necessary to provide a fair statement of the results of operations for the interim periods presented have been included. The December 31, 2020 balance sheet data was derived from audited financial statements; however, the accompanying notes to condensed consolidated financial statements do not include all of the annual disclosures required under GAAP and should be read in conjunction with the Company’s 2020 Annual Report on Form 10-K.
As previously disclosed in the Company’s 2020 Annual Report on Form 10-K, the duration and magnitude of the COVID-19 pandemic remains uncertain. The COVID-19 pandemic has had and may continue to have a significant impact on the Company’s consolidated results of operations, financial position and cash flows.
Noncontrolling Interests
The Company has equity interests in several joint ventures that were established either to exclusively distribute the Company’s products throughout Mexico, Asia and the Middle East or to construct the Company’s domestic distribution facility. These joint ventures are variable interest entities (“VIE”), and the Company is considered the primary beneficiary. This determination is based on the relationships between the Company and the VIE, including management agreements, governance documents and other contractual arrangements. Specifically, the Company has both of the following characteristics: (a) the power to direct the activities of the entity that most significantly impact the entity’s economic performance; and (b) the obligation to absorb losses of the entity that could potentially be significant to the VIE, or the right to receive benefits from the entity that could potentially be significant to the VIE. The assets and liabilities and results of operations of these entities are included in the Company’s condensed consolidated financial statements, even though the Company may not hold a majority equity interest.
In March 2021, the minority interest related to the Hong Kong joint venture was purchased for $10.0 million. Other than the change in the Company’s ownership of the Hong Kong entity, which continues to be included in the Company’s condensed consolidated financial statements, there have been no changes during 2021 in the accounting treatment or characterization of any previously identified variable interest entities. The Company continues to reassess these relationships quarterly. The assets of these joint ventures are restricted, as they are not available for general business use outside the context of such joint ventures. The holders of the liabilities of each joint venture have no recourse to the Company.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value hierarchy as defined by applicable accounting standards prioritizes the use of inputs used in valuation techniques into the following three levels:
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•
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Level 1: Quoted market prices in active markets for identical assets or liabilities.
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•
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Level 2: Other observable market-based inputs or unobservable inputs that are corroborated by market data.
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•
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Level 3: Unobservable inputs that cannot be corroborated by market data that reflect the reporting entity’s own assumptions.
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The Company’s Level 1 investments primarily include money market funds and U.S. Treasury securities; Level 2 investments primarily include corporate notes and bonds, asset-backed securities, U.S. Agency securities, and actively traded mutual funds; and the Company does not currently have any Level 3 assets or liabilities. The Company has one Level 2 derivative instrument which is an interest rate swap related to the refinancing of its U.S. distribution center (see Note 4 – Financial Commitments) classified as other long-term liabilities. The fair value of the interest rate swap was determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipt was based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. Credit valuation adjustments were incorporated to appropriately reflect both the Company’s nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.
The carrying amount of receivables, payables and other amounts arising out of the normal course of business approximates fair value because of the relatively short maturity of such instruments. The carrying amount of the Company’s short-term and long-term borrowings, which are considered Level 2 liabilities, approximates fair value based on current rates and terms available to the Company for similar debt.
8
DERIVATIVE INSTRUMENTS
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage exposure to interest rate movements. To accomplish this objective, the Company uses an interest rate swap as part of its interest rate risk management strategy. The Company’s interest rate swap, designated as a cash flow hedge, involves the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. By utilizing an interest rate swap, the Company is exposed to credit-related losses in the event that the counterparty fails to perform under the terms of the derivative contract. To mitigate this risk, the Company enters into derivative contracts with major financial institutions based upon credit ratings and other factors. The Company continually assesses the creditworthiness of its counterparties. As of March 31, 2021, all counterparties to the interest rate swap had performed in accordance with their contractual obligations.
Recent Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, (“ASU 2019-12”). ASU 2019-12 removes certain exceptions to the general income tax accounting methodology including an exception for the recognition of a deferred tax liability when a foreign subsidiary becomes an equity method investment and an exception for interim periods showing operating losses in excess of anticipated operating losses for the year. The amendment also reduces the complexity surrounding franchise tax recognition; the step up in the tax basis of goodwill in conjunction with business combinations; and the accounting for the effect of changes in tax laws enacted during interim periods. The Company adopted ASU 2019-12 on January 1, 2021, and the adoption did not have a material impact on its condensed consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, as amended and supplemented by subsequent ASUs (collectively, “ASU 2020-04”), which provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. This guidance is applicable for borrowing instruments, which use LIBOR as a reference rate, and is effective immediately, but is only available through December 31, 2022. The Company does not expect the adoption of this ASU to have a material impact on its condensed consolidated financial statements.
(2)
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CASH, CASH EQUIVALENTS, SHORT-TERM AND LONG-TERM INVESTMENTS
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The following tables show the Company’s cash, cash equivalents, short-term and long-term investments by significant investment category:
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As of March 31, 2021
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(in thousands)
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Adjusted Cost
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Fair Value
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Cash and Cash Equivalents
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Short-Term Investments
|
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Long-Term Investments
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Cash
|
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$
|
866,621
|
|
|
$
|
866,621
|
|
|
$
|
866,621
|
|
|
$
|
—
|
|
|
$
|
—
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Level 1
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Money market funds
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417,919
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|
|
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417,919
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|
|
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417,919
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|
|
|
—
|
|
|
|
—
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U.S. Treasury securities
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22,551
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|
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|
22,551
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|
|
|
—
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|
|
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8,362
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|
|
|
14,189
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Total level 1
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440,470
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|
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440,470
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|
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417,919
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|
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8,362
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|
|
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14,189
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Level 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Corporate notes and bonds
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138,507
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|
|
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138,507
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|
|
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—
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|
|
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93,422
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|
|
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45,085
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Asset-backed securities
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25,831
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25,831
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|
|
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—
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|
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2,257
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|
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23,574
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U.S. Agency securities
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1,987
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|
|
|
1,987
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|
|
|
—
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|
|
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1,987
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|
|
|
—
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Mutual funds
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41,531
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|
|
|
41,531
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|
|
|
—
|
|
|
|
—
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|
|
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41,531
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Total level 2
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207,856
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207,856
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|
|
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—
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|
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97,666
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|
|
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110,190
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TOTAL
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$
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1,514,947
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$
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1,514,947
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|
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$
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1,284,540
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|
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$
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106,028
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|
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$
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124,379
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|
9
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As of December 31, 2020
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(in thousands)
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Adjusted Cost
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Fair Value
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|
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Cash and Cash Equivalents
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Short-Term Investments
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Long-Term Investments
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Cash
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$
|
946,961
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|
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$
|
946,961
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|
|
$
|
946,961
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|
|
$
|
—
|
|
|
$
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—
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|
Level 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Money market funds
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|
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423,865
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|
|
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423,865
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423,865
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|
|
|
—
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|
|
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—
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U.S. Treasury securities
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21,146
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|
|
|
21,146
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|
|
|
—
|
|
|
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8,067
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|
|
|
13,079
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Total level 1
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445,011
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445,011
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423,865
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|
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8,067
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|
|
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13,079
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Level 2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Corporate notes and bonds
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117,253
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|
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117,253
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|
|
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—
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|
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83,521
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|
|
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33,732
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Asset-backed securities
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28,253
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|
|
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28,253
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|
|
|
—
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|
|
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5,498
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|
|
|
22,755
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U.S. Agency securities
|
|
|
3,681
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|
|
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3,681
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|
|
|
—
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|
|
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3,681
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|
|
|
—
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Mutual funds
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38,846
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|
|
|
38,846
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|
|
|
—
|
|
|
|
—
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|
|
|
38,846
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|
Total level 2
|
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188,033
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|
|
|
188,033
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|
|
|
—
|
|
|
|
92,700
|
|
|
|
95,333
|
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TOTAL
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$
|
1,580,005
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|
|
$
|
1,580,005
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|
|
$
|
1,370,826
|
|
|
$
|
100,767
|
|
|
$
|
108,412
|
|
The Company’s investments consist of United States (“U.S.”) Treasury securities, corporate notes and bonds, asset-backed securities and U.S. Agency securities, which the Company has the intent and ability to hold to maturity and therefore are classified as held-to-maturity. The Company holds mutual funds in its deferred compensation plan which are classified as trading securities. The Company may sell certain of its investments prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and duration management. The maturities of the Company’s long-term investments are less than two years. The Company minimizes the potential risk of principal loss by investing in highly-rated securities and limiting the amount of credit exposure to any one issuer. Fair values were determined for each individual security in the investment portfolio.
When evaluating an investment for its current expected credit losses, the Company reviews factors such as historical experience with defaults, losses, credit ratings, term, market sector and macroeconomic trends, including current conditions and forecasts to the extent they are reasonable and supportable.
Accrued expenses at March 31, 2021 and December 31, 2020 are summarized as follows:
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As of March 31,
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As of December 31,
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(in thousands)
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|
2021
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|
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2020
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Accrued payroll, taxes, and other
|
|
$
|
71,013
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|
|
$
|
104,004
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Return reserve liability
|
|
|
77,675
|
|
|
|
77,219
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|
Accrued inventory purchases
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|
35,421
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|
|
|
27,489
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|
Accrued expenses
|
|
$
|
184,109
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|
|
$
|
208,712
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|
(4)
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FINANCIAL COMMITMENTS
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The Company had $37.0 million and $38.7 million of outstanding letters of credit as of March 31, 2021 and December 31, 2020, and approximately $1.1 million and $3.3 million in short-term borrowings as of March 31, 2021 and December 31, 2020.
Long-term borrowings were as follows:
|
|
As of March 31,
|
|
|
As of December 31,
|
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(in thousands)
|
|
2021
|
|
|
2020
|
|
Revolving Credit Facility
|
|
$
|
452,500
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|
|
$
|
452,500
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|
HF-T1 Distribution Center Loan
|
|
|
129,505
|
|
|
|
129,505
|
|
HF-T2 Distribution Center Construction Loan
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|
|
36,532
|
|
|
|
22,169
|
|
China Distribution Center Construction Loan
|
|
|
78,302
|
|
|
|
77,501
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|
China Operational Loans
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|
|
80,497
|
|
|
|
48,743
|
|
Other
|
|
|
1,201
|
|
|
|
1,247
|
|
Subtotal
|
|
|
778,537
|
|
|
|
731,665
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|
Less: Current installments
|
|
|
(60,942
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)
|
|
|
(52,250
|
)
|
Total long-term borrowings
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|
$
|
717,595
|
|
|
$
|
679,415
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|
10
Revolving Credit Facility
The weighted-average annual interest rate on borrowings under the 2019 revolving credit facility was approximately 1.37% during the three months ended March 31, 2021. The credit facility was amended during the first quarter to define letters of credit.
The Company is required to maintain a maximum total adjusted net leverage ratio of 3.75:1, except in the event of an acquisition in which case the ratio may be increased at the Company’s election to 4.25:1 for the quarter in which such acquisition occurs and for the next three quarters thereafter.
As of March 31, 2021 and December 31, 2020, the unused credit capacity was $10.5 million and $8.8 million, respectively, on the Company’s 2019 revolving credit facility. The Company was in compliance with the financial covenants under the 2019 credit facility as of March 31, 2021.
HF-T1 Distribution Center Loan
The Company’s joint venture with HF Logistics I, LLC (“HF”), HF Logistics-SKX, LLC (the “JV”), through a wholly-owned subsidiary of the JV (“HF-T1”), entered into a $129.5 million construction loan agreement which matures on March 18, 2025 (the “HF-T1 2020 Loan”) with interest of LIBOR Daily Floating Rate plus a margin of 1.75% per annum.
HF-T1 also entered into an ISDA master agreement (together with the schedule related thereto, the “Swap Agreement”) with Bank of America, N.A. to govern derivative and/or hedging transactions that HF-T1 concurrently entered into with Bank of America, N.A. The Company’s objective in using the Swap Agreement is to stabilize interest expense and manage exposure to interest rate volatility. Pursuant to the Swap Agreement, on August 14, 2015, HF-T1 entered into a confirmation of swap transactions (the “Interest Rate Swap”) as amended (the “Swap Agreement Amendment”) on March 18, 2020 with Bank of America, N.A with a maturity date of March 18, 2025. The Swap Agreement Amendment fixes the effective interest rate on the HF-T1 2020 Loan at 2.55% per annum. The HF-T1 2020 Loan and Swap Agreement Amendment are subject to customary covenants and events of default. Bank of America, N.A. also acts as a lender and syndication agent under the Company’s 2019 Credit Agreement.
The Interest Rate Swap involves the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of both March 31, 2021 and December 31, 2020, the Interest Rate Swap had an aggregate notional amount of $129.5 million. Under the terms of the Swap Agreement Amendment, the Company will pay a weighted-average fixed rate of 0.795% on the notional amount and receive payments from the counterparty based on the 30-day LIBOR rate, effectively modifying the Company’s exposure to interest rate risk by converting floating-rate debt to a fixed rate of 4.08%.
HF-T2 Distribution Center Construction Loan
The weighted-average annual interest rate on borrowings under the 2020 distribution center construction loan was approximately 2.02% during the three months ended March 31, 2021. The obligations of the JV under this loan are guaranteed by TGD Holdings I, LLC, which is an affiliate of HF.
China Distribution Center Construction Loan
The interest rate at March 31, 2021 was 4.15% and may increase or decrease over the life of the loan, and will be evaluated every 12 months. Beginning in 2021, the principal of the loan will be repaid in semi-annual installments of variable amounts. The obligations of the China distribution center construction loan, entered through the Company’s Taicang Subsidiary are jointly and severally guaranteed by the Company’s China joint venture. As of March 31, 2021, the outstanding balance under this loan included approximately $13.9 million classified as short-term borrowings in the Company’s condensed consolidated balance sheets.
China Operational Loans
The balance of working capital loans was approximately $61.4 million with interest rates ranging from 1.73% to 3.65% per annum as of March 31, 2021. The balance of working capital loans as of December 31, 2020 was approximately $30.1 million with interest rates ranging from 1.75% to 3.92% per annum. The balance of loans related to a corporate office building in Shanghai was approximately $19.1 million and $18.6 million as of March 31, 2021 and December 31, 2020 with interest at 4.28% per annum, for both periods, payable at terms agreed by the lender. As of March 31, 2021, the outstanding balance under this loan included approximately $47.0 million classified as short-term borrowings in the Company’s condensed consolidated balance sheets.
INCENTIVE AWARD PLAN
As of March 31, 2021, there were 5,121,800 shares available for grant as equity awards under the 2017 Incentive Award Plan. In the first quarter of 2021, the Company granted restricted stock with time-based vesting as well as performance-based awards. The performance-based awards include a market condition tied to the Company’s total shareholder return in relation to its peer companies as well as a financial performance condition tied to annual EPS growth. The vesting and ultimate payout of performance awards is determined at the end of the three-year performance period and can vary from zero to 200% based on actual results.
11
The Company issued the following stock-based instruments:
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Three Months Ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
Granted
|
|
|
Weighted-Average Grant-Date Fair Value
|
|
|
Granted
|
|
|
Weighted-Average Grant-Date Fair Value
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|
Restricted stock
|
|
|
406,250
|
|
|
$
|
39.53
|
|
|
|
1,013,500
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|
|
$
|
36.96
|
|
Performance-based restricted stock
|
|
|
108,750
|
|
|
$
|
38.95
|
|
|
|
—
|
|
|
$
|
—
|
|
Market-based restricted stock
|
|
|
108,750
|
|
|
$
|
54.34
|
|
|
|
—
|
|
|
$
|
—
|
|
A summary of the status and changes of the Company’s unvested shares is presented below:
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Shares
|
|
|
Weighted-Average Grant-Date Fair Value
|
|
Unvested at December 31, 2020
|
|
|
3,112,023
|
|
|
$
|
35.06
|
|
Granted
|
|
|
623,750
|
|
|
$
|
42.01
|
|
Vested
|
|
|
(487,550
|
)
|
|
$
|
36.59
|
|
Cancelled
|
|
|
(8,500
|
)
|
|
$
|
37.31
|
|
Unvested at March 31, 2021
|
|
|
3,239,723
|
|
|
$
|
36.16
|
|
The Company determines the fair value of restricted stock awards and any performance-related components based on the closing market price of the Company’s common stock on the date of grant. For share-based awards that have a performance-based vesting requirement, the Company evaluates the probability of achieving the performance criteria throughout the performance period and will adjust stock compensation expense up or down based on its estimated probable outcome. Certain performance-based awards contain market condition components which are valued on the date of grant using a Monte Carlo simulation model.
For the three months ended March 31, 2021 and 2020, the Company recognized $12.0 million and $12.4 million of compensation expense for grants under the 2017 Incentive Award Plan. As of March 31, 2021, the balance of unamortized stock compensation was $92.9 million which is expected to be recognized over a weighted-average period of 2.06 years.
Basic EPS and diluted EPS are calculated by dividing net earnings by the following: for basic EPS, the weighted-average number of common shares outstanding for the period; and for diluted EPS, the sum of the weighted-average number of both outstanding common shares and potentially dilutive common shares using the treasury stock method.
The calculation of EPS is as follows:
|
|
Three Months Ended March 31,
|
|
(in thousands, except per share data)
|
|
2021
|
|
|
2020
|
|
Net earnings attributable to Skechers U.S.A., Inc.
|
|
$
|
98,573
|
|
|
$
|
49,101
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding, basic
|
|
|
154,818
|
|
|
|
153,555
|
|
Dilutive effect of nonvested shares
|
|
|
1,118
|
|
|
|
1,097
|
|
Weighted-average common shares outstanding, diluted
|
|
|
155,936
|
|
|
|
154,652
|
|
Anti-dilutive common shares excluded above
|
|
|
52,792
|
|
|
|
36,766
|
|
Net earnings attributable to Skechers U.S.A., Inc. per common share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.64
|
|
|
$
|
0.32
|
|
Diluted
|
|
$
|
0.63
|
|
|
$
|
0.32
|
|
12
The tax provisions for the three months ended March 31, 2021 and 2020 were computed using the estimated effective tax rates applicable to each of the domestic and international taxable jurisdictions for the full year. The Company’s tax rate is subject to management’s quarterly review and revision, as necessary. The Company’s provision for income tax expense and effective income tax rate are significantly impacted by the mix of the Company’s domestic and foreign earnings (loss) before income taxes. In the foreign jurisdictions in which the Company has operations, the applicable statutory rates range from 0.0% to 34.0%, which is on average significantly lower than the U.S. federal and state combined statutory rate of approximately 24.5%. The Company’s effective tax rate was 20.2% and 15.3% for the three months ended March 31, 2021 and 2020. The increase primarily reflects the increased profitability in certain higher tax jurisdictions such as China and the United States.
(8)
|
RELATED PARTY TRANSACTIONS
|
The Skechers Foundation (the “Foundation”) is a 501(c)(3) non-profit entity and not a subsidiary or otherwise affiliated with the Company. The Company does not have a financial interest in the Foundation. However, two officers and directors of the Company, Michael Greenberg, the Company’s President, and David Weinberg, the Company’s Chief Operating Officer, are also officers and directors of the Foundation. During the three months ended March 31, 2021 and 2020, the Company made contributions of $500,000 to the Foundation in each period. In March 2021, the Company purchased two properties for $2.7 million, from an entity controlled by its President, Michael Greenberg, to facilitate future expansion of our corporate office buildings in Manhattan Beach, California. The terms of the sale were no less favorable than could be obtained from an unrelated third party.
(9)
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SEGMENT AND GEOGRAPHIC INFORMATION
|
The Company has three reportable segments – Domestic Wholesale, International Wholesale and Direct-to-Consumer. Management evaluates segment performance based primarily on sales and gross margin. All other costs and expenses of the Company are analyzed on an aggregate basis and not allocated to the segments. The following summarizes the Company’s operations by segment and geographic area for the periods indicated:
|
|
Three Months Ended March 31,
|
|
(in thousands)
|
|
2021
|
|
|
2020
|
|
Sales
|
|
|
|
|
|
|
|
|
Domestic Wholesale
|
|
$
|
374,665
|
|
|
$
|
377,962
|
|
International Wholesale
|
|
|
712,175
|
|
|
|
575,199
|
|
Direct-to-Consumer
|
|
|
341,578
|
|
|
|
289,184
|
|
Total
|
|
$
|
1,428,418
|
|
|
$
|
1,242,345
|
|
Gross profit
|
|
|
|
|
|
|
|
|
Domestic Wholesale
|
|
$
|
139,924
|
|
|
$
|
145,277
|
|
International Wholesale
|
|
|
320,781
|
|
|
|
240,475
|
|
Direct-to-Consumer
|
|
|
218,917
|
|
|
|
161,916
|
|
Total
|
|
$
|
679,622
|
|
|
$
|
547,668
|
|
Sales (1)
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
602,117
|
|
|
$
|
555,174
|
|
International
|
|
|
826,301
|
|
|
|
687,171
|
|
Total
|
|
$
|
1,428,418
|
|
|
$
|
1,242,345
|
|
|
(1)
|
During the three months ended March 31, 2021 and 2020, sales in China were $250.6 million and $91.3 million.
|
The Company’s sales to its five largest customers accounted for approximately 9.5% and 11.4% of total sales for the three months ended March 31, 2021 and 2020.
The following summarizes the Company’s assets by segment and geographic area for the periods indicated:
(in thousands)
|
|
As of
March 31, 2021
|
|
|
As of
December 31, 2020
|
|
Identifiable assets
|
|
|
|
|
|
|
|
|
Domestic Wholesale
|
|
$
|
1,971,630
|
|
|
$
|
1,945,681
|
|
International Wholesale
|
|
|
2,616,429
|
|
|
|
2,436,568
|
|
Direct-to-Consumer
|
|
|
1,397,507
|
|
|
|
1,430,120
|
|
Total
|
|
$
|
5,985,566
|
|
|
$
|
5,812,369
|
|
13
|
|
Three Months Ended March 31,
|
|
(in thousands)
|
|
2021
|
|
|
2020
|
|
Additions to property, plant and equipment
|
|
|
|
|
|
|
|
|
Domestic Wholesale
|
|
$
|
64,121
|
|
|
$
|
11,818
|
|
International Wholesale
|
|
|
10,813
|
|
|
|
44,900
|
|
Direct-to-Consumer
|
|
|
9,303
|
|
|
|
18,169
|
|
Total
|
|
$
|
84,237
|
|
|
$
|
74,887
|
|
(in thousands)
|
|
As of
March 31, 2021
|
|
|
As of
December 31, 2020
|
|
Property, plant and equipment, net (1)
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
588,542
|
|
|
$
|
535,648
|
|
International
|
|
|
403,970
|
|
|
|
399,793
|
|
Total
|
|
$
|
992,512
|
|
|
$
|
935,441
|
|
|
(1)
|
Property, plant and equipment, net in China was $245.4 million and $241.6 million at March 31, 2021 and December 31, 2020.
|
Assets located outside the U.S. consist primarily of cash, accounts receivable, inventory, property, plant and equipment, and other assets. Net assets held outside the U.S. were $3.7 billion and $3.1 billion at March 31, 2021 and December 31, 2020, respectively.
The Company performs regular evaluations concerning the ability of customers to satisfy their obligations and provides for estimated doubtful accounts. Domestic accounts receivable generally do not require collateral. Foreign accounts receivable are generally collateralized by letters of credit. The Company’s credit losses charged to expense for the three months ended March 31, 2021 and 2020 were $6.3 million and $1.5 million.
The Company’s accounts receivables, excluding the allowance for bad debts, sales returns and chargebacks, in different geographic areas are summarized as follows:
(in thousands)
|
|
As of
March 31, 2021
|
|
|
As of
December 31, 2020
|
|
Domestic Accounts Receivable
|
|
$
|
314,131
|
|
|
$
|
230,546
|
|
Foreign Accounts Receivable
|
|
|
532,173
|
|
|
|
437,816
|
|
For the periods presented below, the Company’s top five manufacturers produced, as a percentage of total production, the following:
|
|
Three Months Ended March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Manufacturer #1
|
|
|
18.6
|
%
|
|
|
24.9
|
%
|
Manufacturer #2
|
|
|
5.0
|
%
|
|
|
7.5
|
%
|
Manufacturer #3
|
|
|
4.8
|
%
|
|
|
6.7
|
%
|
Manufacturer #4
|
|
|
4.8
|
%
|
|
|
3.9
|
%
|
Manufacturer #5
|
|
|
4.3
|
%
|
|
|
3.7
|
%
|
|
|
|
37.5
|
%
|
|
|
46.7
|
%
|
(10)
|
COMMITMENTS AND CONTINGENCIES
|
In accordance with GAAP, the Company records a liability in its condensed consolidated financial statements for loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. Estimates of probable losses resulting from litigation and governmental proceedings are inherently difficult to predict, particularly when the matters are in the procedural stages or with unspecified or indeterminate claims for damages, potential penalties, or fines. Accordingly, the Company cannot determine the final amount, if any, of its liability beyond the amount accrued in the condensed consolidated financial statements as of March 31, 2021, nor is it possible to estimate what litigation-related costs will be in the future; however, the Company believes that the likelihood that claims related to litigation would result in a material loss to the Company, either individually or in the aggregate, is remote.
14