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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ____________________ to _____________________
 
Commission File Number: 0-23702 
STEVEN MADDEN, LTD.
(Exact name of registrant as specified in its charter) 
Delaware 13-3588231
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)  

52-16 Barnett Avenue, Long Island City, New York 11104
(Address of principal executive offices) (Zip Code)
(718) 446-1800
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per share
SHOOThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes     No 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes     No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filerEmerging growth company
Non-accelerated filerSmaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     No  

As of November 6, 2023, there were 74,608,209 shares of the registrant’s common stock, $0.0001 par value, outstanding.



STEVEN MADDEN, LTD.
TABLE OF CONTENTS TO QUARTERLY REPORT ON FORM 10-Q
September 30, 2023


 
 
  
 
   
 
   
 
   
 
 
   
 
  
   
   
  
 
  
   
 






PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 30,
2023
December 31,
2022
September 30,
2022
(in thousands, except par value)(unaudited) (unaudited)
ASSETS   
Current assets:   
Cash and cash equivalents$191,804 $274,713 $139,194 
Short-term investments14,641 15,085 9,051 
Accounts receivable, net of allowances of $4,513, $7,721 and $8,636
58,538 37,937 48,601 
Factor accounts receivable342,871 248,228 341,141 
Inventories205,693 228,752 244,315 
Prepaid expenses and other current assets24,334 22,989 25,531 
Income tax receivable and prepaid income taxes15,702 15,853 9,416 
Total current assets853,583 843,557 817,249 
Note receivable – related party100 401 499 
Property and equipment, net44,920 40,664 36,861 
Operating lease right-of-use asset113,058 90,264 90,407 
Deposits and other10,567 12,070 3,655 
Deferred taxes1,570 1,755 6,945 
Goodwill – net168,612 168,085 167,652 
Intangibles – net99,817 101,192 102,967 
Total Assets$1,292,227 $1,257,988 $1,226,235 
LIABILITIES   
Current liabilities:   
Accounts payable$140,623 $130,542 $99,173 
Accrued expenses129,754 138,523 119,650 
Operating leases – current portion36,521 29,499 30,234 
Income taxes payable13,519 9,403 19,161 
Contingent payment liability 1,153 1,153 440 
Accrued incentive compensation10,190 11,788 11,423 
Total current liabilities331,760 320,908 280,081 
Operating leases – long-term portion91,916 79,128 79,906 
Deferred tax liabilities3,923 3,923 3,378 
Other liabilities10,914 10,166 10,930 
Total Liabilities438,513 414,125 374,295 
Commitments, contingencies and other (Note M)
STOCKHOLDERS’ EQUITY   
Preferred stock – $0.0001 par value, 5,000 shares authorized; none issued; Series A Junior Participating preferred stock – $0.0001 par value, 60 shares authorized; none issued
   
Common stock – $0.0001 par value, 245,000 shares authorized,136,430, 134,456 and 134,443 shares issued, 74,610, 76,796 and 77,906 shares outstanding
8 8 8 
Additional paid-in capital579,473 520,441 514,156 
Retained earnings1,659,202 1,571,123 1,555,563 
Accumulated other comprehensive loss(33,428)(35,709)(39,887)
Treasury stock – 61,820, 57,660 and 56,537 shares at cost
(1,368,217)(1,224,310)(1,187,537)
Total Steven Madden, Ltd. stockholders’ equity837,038 831,553 842,303 
Noncontrolling interest16,676 12,310 9,637 
Total stockholders’ equity853,714 843,863 851,940 
Total Liabilities and Stockholders’ Equity$1,292,227 $1,257,988 $1,226,235 

See accompanying notes to condensed consolidated financial statements - unaudited.
1




STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(unaudited)
 
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2023202220232022
Net sales$549,846 $553,120 $1,454,420 $1,643,144 
Commission and licensing fee income2,886 3,523 7,448 8,222 
Total revenue552,732 556,643 1,461,868 1,651,366 
Cost of sales (exclusive of depreciation and amortization)320,107 327,167 844,281 976,227 
Gross profit232,625 229,476 617,587 675,139 
Operating expenses149,887 150,724 444,298 433,252 
Income from operations82,738 78,752 173,289 241,887 
Interest and other income – net1,922 1,340 5,898 106 
Income before provision for income taxes84,660 80,092 179,187 241,993 
Provision for income taxes 19,552 18,335 42,219 56,728 
Net income65,108 61,757 136,968 185,265 
Less: net income attributable to noncontrolling interest695 460 1,295 995 
Net income attributable to Steven Madden, Ltd.$64,413 $61,297 $135,673 $184,270 
Basic net income per share$0.88 $0.81 $1.84 $2.41 
Diluted net income per share$0.87 $0.79 $1.81 $2.35 
Basic weighted average common shares outstanding72,943 75,598 73,679 76,463 
Effect of dilutive securities – options/restricted stock1,128 1,798 1,238 2,116 
Diluted weighted average common shares outstanding74,071 77,396 74,917 78,579 
Cash dividends declared per common share$0.21 $0.21 $0.63 $0.63 

See accompanying notes to condensed consolidated financial statements - unaudited.
2




STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
 
Three Months Ended September 30, 2023Nine Months Ended September 30, 2023
(in thousands)Pre-tax amountsTax expenseAfter-tax amountsPre-tax amountsTax expenseAfter-tax amounts
Net income$65,108 $136,968 
Other comprehensive income/(loss):  
      Foreign currency translation adjustment$(3,897)$ (3,897)$1,182 $ 1,182 
Loss on cash flow hedging derivatives2,104 (769)1,335 1,087 (398)690 
Total other comprehensive income/(loss)$(1,793)$(769)(2,562)$2,269 $(398)1,872 
Comprehensive income62,546 138,840 
Less: comprehensive income attributable to noncontrolling interests577 886 
Comprehensive income attributable to Steven Madden, Ltd.$61,969 $137,954 
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
(in thousands)Pre-tax amountsTax benefitAfter-tax amountsPre-tax amountsTax expenseAfter-tax amounts
Net income$61,757 $185,265 
Other comprehensive income/(loss):
      Foreign currency translation adjustment$(7,712)$ (7,712)$(12,145)$ (12,145)
(Loss)/gain on cash flow hedging derivatives(148)40 (108)591 (160)431 
Total other comprehensive loss$(7,860)$40 (7,820)$(11,554)$(160)(11,714)
Comprehensive income53,937 173,551 
Less: comprehensive loss attributable to noncontrolling interests(202)(376)
Comprehensive income attributable to Steven Madden, Ltd.$54,139 $173,927 

See accompanying notes to condensed consolidated financial statements - unaudited.
3



STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders' Equity
(unaudited)
(in thousands)
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)Treasury StockNon-Controlling InterestTotal Stockholders' Equity
SharesAmountSharesAmount
Balance - June 30, 202375,303 $8 $533,550 $1,610,487 $(30,984)59,523 $(1,288,545)$17,201 $841,717 
Common stock repurchased and net settlements of restricted stock awards(920)— — — — 920 (31,441)— (31,441)
Exercise of stock options214 — 39,992 — — 1,377 (48,231)— (8,239)
Issuance of restricted stock, net of forfeitures13 — — — — — — — — 
Stock-based compensation— — 5,931 — — — — — 5,931 
Foreign currency translation adjustment— — — — (3,779)— — (118)(3,897)
Cash flow hedge (net of tax expense of $769)
— — — — 1,335 — — — 1,335 
Dividends on common stock ($0.21 per share)
— — — (15,698)— — — — (15,698)
Distributions to noncontrolling interests, net— — — — — — — (1,102)(1,102)
Net income— — — 64,413 — — — 695 65,108 
Balance - September 30, 202374,610 8 579,473 1,659,202 (33,428)61,820 (1,368,217)16,676 853,714 
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)Treasury StockNon-Controlling InterestTotal Stockholders' Equity
SharesAmountSharesAmount
Balance - December 31, 202276,796 $8 $520,441 $1,571,123 $(35,709)57,660 $(1,224,310)$12,310 $843,863 
Common stock repurchased and net settlements of restricted stock awards(2,781)— — — — 2,781 (95,591)— (95,591)
Exercise of stock options248 — 40,863 — — 1,379 (48,316)— (7,453)
Issuance of restricted stock, net of forfeitures347 — — — — — — — — 
Stock-based compensation— — 18,169 — — — — — 18,169 
Foreign currency translation adjustment— — — — 1,591 — — (409)1,182 
Cash flow hedge (net of tax expense of $398)
— — — — 690 — — — 690 
Dividends on common stock ($0.63 per share)
— — — (47,594)— — — — (47,594)
Distributions to noncontrolling interests, net— — — — — — — (1,102)(1,102)
Investment of noncontrolling interest— — — — — — — 4,582 4,582 
Net income— — — 135,673 — — — 1,295 136,968 
Balance - September 30, 202374,610 $8 $579,473 $1,659,202 $(33,428)61,820 $(1,368,217)$16,676 $853,714 

4



STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Stockholders' Equity
(unaudited)
(in thousands)
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)Treasury StockNon-Controlling InterestTotal Stockholders' Equity
SharesAmountSharesAmount
Balance - June 30, 202279,007 $8 $508,063 $1,510,651 $(32,729)55,420 $(1,152,459)$9,784 $843,318 
Common stock repurchased and net settlements of restricted stock awards(1,117)— — — — 1,117 (35,078)— (35,078)
Issuance of restricted stock, net of forfeitures16 — — — — — — — — 
Stock-based compensation— 6,148 — — — — — 6,148 
Foreign currency translation adjustment— — — — (7,050)— — (662)(7,712)
Cash flow hedge (net of tax benefit of $40)
— — — — (108)— — — (108)
Dividends on common stock ($0.21 per share)
— — — (16,385)— — — — (16,385)
Sale of minority noncontrolling interest of a subsidiary— — (55)— — — — 55  
Net income— — — 61,297 — — — 460 61,757 
Balance - September 30, 202277,906 8 514,156 1,555,563 (39,887)56,537 (1,187,537)9,637 851,940 
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)Treasury StockNon-Controlling InterestTotal Stockholders' Equity
SharesAmountSharesAmount
Balance - December 31, 202180,557 $8 $495,999 $1,421,067 $(29,544)53,472 $(1,075,432)$8,440 $820,538 
Common stock repurchased and net settlements of restricted stock awards(3,065)— — — — 3,065 (112,105)— (112,105)
Exercise of stock options18 — 415 — — — — — 415 
Issuance of restricted stock, net of forfeitures396 — — — — — — — — 
Stock-based compensation— — 18,298 — — — — — 18,298 
Foreign currency translation adjustment— — — — (10,774)— — (1,371)(12,145)
Cash flow hedge (net of tax expense of $160)
— — — — 431 — — — 431 
Dividends on common stock ($0.63 per share)
— — — (49,774)— — — — (49,774)
Sale of minority noncontrolling interest of a subsidiary— — (556)— — — — 1,573 1,017 
Net income— — — 184,270 — — — 995 185,265 
Balance - September 30, 202277,906 8 514,156 1,555,563 (39,887)56,537 (1,187,537)9,637 851,940 

See accompanying notes to condensed consolidated financial statements - unaudited.
5




STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
Nine Months Ended September 30,
(in thousands)20232022
Cash flows from operating activities:  
Net income$136,968 $185,265 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation18,169 18,298 
Depreciation and amortization11,138 15,425 
Loss on disposal of fixed assets204 312 
Impairment of lease right-of-use asset95  
Deferred taxes (2,364)
Accrued interest on note receivable - related party(6)(12)
Notes receivable - related party307 307 
Change in valuation of contingent payment liabilities (6,520)
Other operating activities417  
Changes, net of acquisitions, in:
Accounts receivable(20,601)(25,623)
Factor accounts receivable(93,274)23,841 
Inventories23,541 6,842 
Prepaid expenses, income tax receivables, prepaid taxes, and other assets(264)120 
Accounts payable and accrued expenses4,991 (140,144)
Accrued incentive compensation(1,598)(3,448)
Leases and other liabilities(2,331)(5,213)
Payment of contingent consideration (339)
Net cash provided by operating activities77,756 66,747 
Cash flows from investing activities: 
Capital expenditures(13,899)(10,115)
Purchase of a trademark (2,000)
Purchases of short-term investments(15,979)(38,951)
Maturity/sale of short-term investments16,335 73,726 
Net cash (used in)/provided by investing activities(13,543)22,660 
Cash flows from financing activities: 
Common stock repurchased and net settlements of stock awards(104,215)(112,105)
Proceeds from exercise of stock options1,171 415 
Investment of noncontrolling interest4,582  
Cash dividends paid on common stock(47,594)(49,774)
Payment of contingent consideration (4,770)
Distribution of noncontrolling interest(1,102) 
Net cash used in financing activities(147,158)(166,234)
Effect of exchange rate changes on cash and cash equivalents36 (3,478)
Net decrease in cash and cash equivalents(82,909)(80,305)
Cash and cash equivalents – beginning of period274,713 219,499 
Cash and cash equivalents – end of period$191,804 $139,194 

See accompanying notes to condensed consolidated financial statements - unaudited.
6

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
September 30, 2023
(in thousands except per share data)

Note A – Basis of Reporting

The accompanying unaudited condensed consolidated financial statements of Steven Madden, Ltd. and subsidiaries (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) that are considered necessary for a fair presentation of the financial position of the Company, the results of its operations and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the operating results for the full year. These financial statements should be read in conjunction with the financial statements and related disclosures for the year ended December 31, 2022 included in the Annual Report of Steven Madden, Ltd. on Form 10-K filed with the SEC on March 1, 2023.

Note B – Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Significant areas involving management estimates include variable consideration included in revenue, allowances for bad debts, inventory valuation, valuation of goodwill and intangible assets and impairment of long-lived assets related to retail stores. The Company estimates variable consideration for future customer chargebacks and markdown allowances, discounts, returns and other miscellaneous compliance-related deductions that relate to current-period sales. The Company evaluates anticipated chargebacks by reviewing several performance indicators of its major customers. These performance indicators, which include retailers’ inventory levels, sell-through rates and gross margin levels, are analyzed by management to estimate the amount of the anticipated customer allowances.

Note C – Sale of Minority Noncontrolling Interest

As of April 1, 2022, the Company sold a 49.9% minority non-controlling interest in Steve Madden South Africa Proprietary Limited for $1,017 to a third party to form a joint venture.

Note D – Short-Term Investments

As of September 30, 2023 and December 31, 2022, short-term investments consisted of certificates of deposit. These securities are classified as current based upon their maturities. As of September 30, 2023 and December 31, 2022, short-term investments amounted to $14,641 and $15,085, respectively, and have original maturities less than or equal to one year as of the balance sheet date.

Note E – Fair Value Measurement

The accounting guidance under Accounting Standards Codification 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), requires the Company to make disclosures about the fair value of certain of its assets and liabilities. ASC 820-10 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. ASC 820-10 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. A brief description of those three levels is as follows:
 
Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
Level 3: Significant unobservable inputs.
7

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
September 30, 2023
(in thousands except per share data)

The Company’s financial assets and liabilities subject to fair value measurements as of September 30, 2023 and December 31, 2022 were as follows:
 September 30, 2023December 31, 2022
 Fair valueLevel 1Level 2Level 3Fair valueLevel 1Level 2Level 3
Assets:    
Forward contracts1,418  1,418  916 — 916 — 
Total assets$1,418 $ $1,418 $ $916 $ $916 $ 
Liabilities:    
Forward contracts839  839  1,241  1,241  
Total liabilities$839 $ $839 $ $1,241 $ $1,241 $ 

Forward contracts are used to manage the risk associated with the volatility of future cash flows (see Note L – Derivative Instruments). Fair value of these instruments is based on observable market transactions of spot and forward rates.

The Company's Level 3 balance consists of contingent consideration related to acquisitions. There were no changes in the Company’s Level 3 liabilities for the period ended September 30, 2023. The changes in the Company's Level 3 liabilities for the period ended December 31, 2022 were as follows:

Balance at
January 1, 2022
Adjustments(1)
Transfer out
of Level 3(2)
Balance at
December 31, 2022
Liabilities:
     Contingent consideration$6,960 (5,807)(1,153)$ 

(1) In 2022, amount consists of an adjustment of $(5,807) that was included as a benefit in operating expenses, related to the change in valuation of the contingent consideration in connection with the acquisition of B.B. Dakota, Inc.
(2) On December 31, 2022, the transfer out of Level 3 amount of $1,153, which was recorded in the current portion of our contingent payment liabilities on the Consolidated Balance Sheets, represented the current portion of our contingent liabilities and was measured at the amount payable based on actual EBITDA performance for the related performance period. At September 30, 2023, the amount of $1,153 was recorded in the current portion of our contingent payment liabilities on the Consolidated Balance Sheets as the amount will be paid in the fourth quarter of this year.

The fair values of trademarks are measured on a non-recurring basis and are determined using Level 3 inputs, including forecasted cash flows, discount rates, and implied royalty rates (see Note K – Goodwill and Intangible Assets). The fair values of lease right-of-use assets and fixed assets related to Company-owned retail stores are measured on a non-recurring basis and are determined using Level 3 inputs, including estimated discounted future cash flows associated with the assets using sales trends, market rents and market participant assumptions (see Note F – Leases).

The carrying value of certain financial instruments such as cash equivalents, certificates of deposit, accounts receivable, factor accounts receivable and accounts payable approximates their fair values due to the short-term nature of their underlying terms. Fair value of the notes receivable held by the Company approximates their carrying value based upon their imputed or actual interest rate, which approximates applicable current market interest rates. Some assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (non-recurring). These assets can include long-lived assets that have been reduced to fair value when impaired. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs.
8

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
September 30, 2023
(in thousands except per share data)
Note F – Leases
The Company leases office space, sample production space, warehouses, showrooms, storage units, and retail stores pursuant to operating leases. The Company’s portfolio of leases is primarily related to real estate. Since most of its leases do not provide a readily determinable implicit rate, the Company estimates its incremental borrowing rate to discount the lease payments based on information available at lease commencement.
Some of the Company’s retail store leases provide for variable lease payments based on sales volumes at the leased location, which are not measurable at the inception of the lease and are therefore not included in the measurement of the right-of-use assets and lease liabilities. Under Topic 842, these variable lease costs are expensed as incurred.
Lease Position
The following table presents the lease-related assets and liabilities recorded on the Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022:
 Classification on the Balance SheetSeptember 30, 2023December 31, 2022
Assets
Noncurrent(1)
Operating lease right-of-use asset$113,058$90,264
Liabilities
CurrentOperating leases – current portion$36,521$29,499
NoncurrentOperating leases – long-term portion91,91679,128
Total operating lease liabilities$128,437$108,627
Weighted-average remaining lease term4.1 years4.6 years
Weighted-average discount rate4.9 %4.4 %
(1) During the three and nine months ended September 30, 2023, the Company recorded a pre-tax impairment charge related to its right-of-use assets of $0 and $95, respectively, recorded in the Wholesale Footwear Segment.

Lease Costs

 The following table presents the composition of lease costs during the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Operating lease cost $10,573 $8,620 $30,276 $25,145 
Variable lease cost945 1,774 2,791 5,428 
Less: sublease income66 66 198 257 
Total lease cost$11,452 $10,328 $32,869 $30,316 
9

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
September 30, 2023
(in thousands except per share data)
Other Information
The following table presents supplemental cash and non-cash information related to the Company's operating leases during the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Cash paid for amounts included in the measurement of lease liabilities
     Operating cash flows used for operating leases$11,311 $9,887 $32,704 $29,379 
Noncash transactions
Right-of-use asset obtained in exchange for new operating lease liabilities$6,180 $13,460 $50,769 $28,427 
Right-of-use asset amortization expense(1)
$9,993 $8,411 $27,880 $23,469 

(1) Included in "Leases and other liabilities" in the Consolidated Statement of Cash Flows.

Future Minimum Lease Payments
The following table presents future minimum lease payments for each of the first five years and the total for the remaining years as of September 30, 2023:

2023 (remaining three months)$11,101 
202440,109 
202534,281 
202624,818 
202715,150 
Thereafter16,704 
Total minimum lease payments142,163 
Less: interest13,726 
Total lease liabilities$128,437 
Note G – Share Repurchase Program

The Company's Board of Directors authorized a share repurchase program (the “Share Repurchase Program”), effective as of January 1, 2004. The Share Repurchase Program does not have a fixed expiration or termination date and may be modified or terminated by the Board of Directors at any time. On several occasions, the Board of Directors has increased the amount authorized for repurchase of the Company's common stock. On May 8, 2023, the Board of Directors approved an increase in the Company's share repurchase authorization of approximately $189,900, bringing the total authorization to $250,000. The Share Repurchase Program permits the Company to effect repurchases from time to time through a combination of open market repurchases or in privately negotiated transactions at such prices and times as are determined to be in the best interest of the Company. During the three and nine months ended September 30, 2023, an aggregate of 914 and 2,654 shares of the Company's common stock, excluding net settlements of employee stock awards, were repurchased under the Share Repurchase Program, at a weighted average price per share of $34.01 and $34.26, for an aggregate purchase price of approximately $31,094 and $90,905, respectively. During the three and nine months ended September 30, 2022, an aggregate of 1,112 and 2,950 shares of the Company's common stock, excluding net settlements of employee stock awards, were repurchased under the Share Repurchase Program, at a weighted average price per share of $31.43 and $36.42, for an aggregate purchase price of
10

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
September 30, 2023
(in thousands except per share data)
approximately $34,940 and $107,428, respectively. As of September 30, 2023, approximately $193,676 remained available for future repurchases under the Share Repurchase Program.

The Steven Madden, Ltd. Amended and Restated 2006 Stock Incentive Plan (as further amended, the "2006 Plan"), which expired on April 6, 2019, and the Steven Madden, Ltd. 2019 Incentive Compensation Plan (the "2019 Plan") both provide the Company with the right to deduct or withhold, or require employees to remit to the Company, an amount sufficient to satisfy any applicable tax withholding and/or option cost obligations applicable to stock-based compensation awards. To the extent permitted, employees may elect to satisfy all or part of such withholding obligations by tendering to the Company previously owned shares or by having the Company withhold shares having a fair market value equal to the employee's withholding tax obligation and/or option cost. During the three and nine months ended September 30, 2023, an aggregate of 1,383 and 1,506 shares were withheld in connection with the settlement of vested restricted stock to satisfy tax-withholding requirements and option costs, at an average price per share of $35.14 and $35.19, for an aggregate purchase price of approximately $48,578 and $53,003, respectively. During the three and nine months ended September 30, 2022, an aggregate of 4 and 115 shares were withheld in connection with the settlement of vested restricted stock to satisfy tax-withholding requirements and option costs, at an average price per share of $30.64 and $40.83, for an aggregate purchase price of approximately $138 and $4,676, respectively.

Note H – Net Income Per Share of Common Stock

Basic net income per share is based on the weighted average number of shares of common stock outstanding during the period, which does not include unvested restricted common stock subject to forfeiture of 2,142 shares for the period ended September 30, 2023, compared to 2,964 shares for the period ended September 30, 2022. Diluted net income per share reflects: (a) the potential dilution assuming shares of common stock were issued upon the exercise of outstanding in-the-money options and the assumed proceeds, which are deemed to be the proceeds from the exercise plus compensation cost not yet recognized attributable to future services using the treasury method, were used to purchase shares of the Company’s common stock at the average market price during the period, and (b) the vesting of granted non-vested restricted stock awards for which the assumed proceeds upon vesting are deemed to be the amount of compensation cost not yet recognized attributable to future services using the treasury stock method, to the extent dilutive.

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net income attributable to Steven Madden, Ltd.$64,413 $61,297 $135,673 $184,270 
Basic net income per share$0.88 $0.81 $1.84 $2.41 
Diluted net income per share$0.87 $0.79 $1.81 $2.35 
Weighted average common shares outstanding:
Basic72,94375,59873,67976,463 
Effect of dilutive securities:
Stock awards and options to purchase shares of common stock1,1281,7981,2382,116
Diluted74,07177,39674,91778,579

11

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
September 30, 2023
(in thousands except per share data)
For the three and nine months ended September 30, 2023, options to purchase approximately 27 and 15 shares of common stock have been excluded from the calculation of diluted net income per share as the result would have been anti-dilutive. For the three and nine months ended September 30, 2022, options to purchase approximately 0 and 25 shares of common stock have been excluded from the calculation of diluted net income per share as the result would have been anti-dilutive. For the three and nine months ended September 30, 2023, 43 and 56 restricted shares were excluded from the calculation of diluted net income per share, as compared to approximately 125 and 39 shares that were excluded from the calculation of diluted net income per share for the three and nine months ended September 30, 2022, as the result would have been anti-dilutive. The Company had contingently issuable performance awards outstanding that did not meet the performance conditions as of September 30, 2023 and 2022 and, therefore, were excluded from the calculation of diluted net income per common share for the three and nine months ended September 30, 2023 and 2022. The maximum number of potentially dilutive shares that could be issued upon vesting for these performance awards was approximately 12 and 12 as of September 30, 2023 and 2022, respectively. These amounts were also excluded from the computation of weighted average potentially dilutive securities.

Note I – Income Taxes

The Company’s provision for income taxes for the three and nine months ended September 30, 2023 and 2022 is based on the estimated annual effective tax rate, plus or minus discrete items. The following table presents the provision for income taxes and the effective tax rates for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Income before provision for income taxes$84,660$80,092$179,187 $241,993 
Income tax expense$19,552$18,335$42,219$56,728 
Effective tax rate23.1%22.9%23.6%23.4%

The difference between the Company’s effective tax rates of 23.1% and 22.9% and 23.6% and 23.4% for the three and nine months ended September 30, 2023 and 2022, respectively, is primarily due to the expected jurisdictional mix of profit and losses from each period.

The Company recognizes interest and penalties, if any, related to uncertain income tax positions in income tax expense. Accrued interest and penalties on unrecognized tax benefits, and interest and penalty expense are immaterial to the consolidated financial statements.

The Company files income tax returns in the U.S. for federal, state, and local purposes, and in certain foreign jurisdictions. The Company's tax years 2019 through 2022 remain open to examination by most taxing authorities.

Note J – Equity-Based Compensation

The following table summarizes the number of shares of common stock authorized for issuance under the 2019 Plan, the number of stock-based awards granted (net of expired or cancelled awards) under the 2019 Plan and the number of shares of common stock available for the grant of stock-based awards under the 2019 Plan:

Common stock authorized11,000
Stock-based awards, including restricted stock and stock options granted, net of expired or cancelled awards(6,341)
Common stock available for grant of stock-based awards as of September 30, 20234,659

In addition, vested and unvested options to purchase 90 shares of common stock and 1,061 shares of unvested restricted stock awarded under the 2006 Plan were outstanding as of September 30, 2023.

12

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
September 30, 2023
(in thousands except per share data)
Total equity-based compensation for the three and nine months ended September 30, 2023 and 2022 is as follows:

 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Restricted stock$5,351 $5,372 $16,150 $15,643 
Stock options579 776 2,019 2,655 
Total$5,930 $6,148 $18,169 $18,298 

Equity-based compensation is included in operating expenses on the Company’s Condensed Consolidated Statements of Income.

Stock Options
 
Cash proceeds and intrinsic values related to total stock options exercised during the three and nine months ended September 30, 2023 and 2022 are as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Proceeds from stock options exercised$371 $ $1,171 $415 
Intrinsic value of stock options exercised$15,731 $ $16,089 $295 

During the three and nine months ended September 30, 2023, options to purchase 57 shares vested with a weighted average exercise price of $30.72 and options to purchase 206 shares vested with a weighted average exercise price of $34.95 vested, respectively. During the three and nine months ended September 30, 2022, options to purchase 58 shares vested with a weighted average exercise price of $35.89 and options to purchase approximately 436 shares vested with a weighted average exercise price of $32.29. As of September 30, 2023, there were unvested options relating to 250 shares of common stock outstanding with a total of $1,888 of unrecognized compensation cost and an average vesting period of 1.4 years.

The Company uses the Black-Scholes-Merton option-pricing model to estimate the fair value of options granted, which requires several assumptions. The expected term of the options represents the estimated period of time until exercise and is based on the historical experience of similar awards. Expected volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The dividend yield is based on the Company's annualized dividend per share amount divided by the Company's stock price. The following weighted average assumptions were used for stock options granted during the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,
 20232022
Volatility
40.6% to 48.1%
 42.5% to 51.1%
Risk free interest rate
3.7% to 4.0%
1.2% to 3.0%
Expected life in years
3.0 to 5.0
3.0 to 5.0
Dividend yield2.5%2.1%
Weighted average fair value$10.95$13.42



13

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
September 30, 2023
(in thousands except per share data)
Activity relating to stock options granted under the Company’s plans during the nine months ended September 30, 2023 was as follows:
 Number of SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
Outstanding at January 1, 20232,766$29.82   
Granted23530.72   
Exercised(1,627)25.11   
Forfeited(2)46.28   
Expired(229)36.01 
Outstanding at September 30, 20231,143$35.43 3.4 years$833 
Exercisable at September 30, 2023893$35.99 3.1 years$610 
Activity relating to stock options granted under the Company’s plans during the nine months ended September 30, 2022 was as follows:
 Number of SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
Outstanding at January 1, 20222,531$29.06   
Granted26637.04   
Exercised(18)23.72   
Outstanding at September 30, 20222,779$29.86 2.3 years$2,613 
Exercisable at September 30, 20222,488$28.94 2.0 years$2,595 
Restricted Stock
 The following table summarizes restricted stock activity during the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,
 20232022
 Number of SharesWeighted Average Fair Value at Grant DateNumber of SharesWeighted Average Fair Value at Grant Date
Outstanding at January 1,2,111$28.45 2,849$23.80 
Granted38433.23 42140.58 
Vested(316)34.74 (281)32.54 
Forfeited(37)37.82 (25)35.61 
Outstanding at September 30,2,142$28.22 2,964$25.26 

As of September 30, 2023, the Company had $38,806 of total unrecognized compensation cost related to restricted stock awards granted under the 2019 Plan and the 2006 Plan. This cost is expected to be recognized over a weighted average period of 3.1 years. The Company determines the fair value of its restricted stock awards based on the market price of its common stock on the date of grant.
14

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
September 30, 2023
(in thousands except per share data)

Note K – Goodwill and Intangible Assets

The following is a summary of the carrying amount of goodwill by reporting unit as of September 30, 2023:
Wholesale  Net Carrying  Amount
 FootwearAccessories/ Apparel
Direct-to-Consumer
Balance at January 1, 2023$90,173 $62,688 $15,224 $168,085 
Translation230  297 527 
Balance at September 30, 2023$90,403 $62,688 $15,521 $168,612 

The following table details identifiable intangible assets as of September 30, 2023:
 Estimated LivesCost BasisAccumulated Amortization
Impairment & Other(1)
Net Carrying Amount
Trade names
110 years
$18,695 $(16,075)$(2,620)$