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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 June 30, 2022
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 July 27, 2022, there were 79,000,272 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
June 30, 2022


 
 
  
 
   
 
   
 
   
 
 
   
 
  
   
   
  
 
  
   
 






PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30,
2022
December 31,
2021
June 30,
2021
(in thousands, except par value)(unaudited) (unaudited)
ASSETS   
Current assets:   
Cash and cash equivalents$150,929 $219,499 $262,144 
Short-term investments29,569 44,037 40,513 
Accounts receivable, net of allowances of $13,095, $12,273 and $10,586
31,377 26,546 24,598 
Factor accounts receivable344,716 364,982 254,545 
Inventories306,547 255,213 125,525 
Prepaid expenses and other current assets31,047 20,845 20,549 
Income tax receivable and prepaid income taxes12,225 13,538 15,906 
Total current assets906,410 944,660 743,780 
Note receivable – related party598 794 987 
Property and equipment, net35,004 35,790 38,213 
Operating lease right-of-use asset85,608 85,449 97,222 
Deposits and other4,029 4,180 4,574 
Deferred taxes6,517 4,581 5,415 
Goodwill – net167,959 167,995 168,426 
Intangibles – net107,167 112,093 114,526 
Total Assets$1,313,292 $1,355,542 $1,173,143 
LIABILITIES   
Current liabilities:   
Accounts payable$105,130 $136,766 $91,822 
Accrued expenses219,005 243,163 139,717 
Operating leases – current portion31,074 30,759 33,561 
Income taxes payable14,100 4,522 1,477 
Contingent payment liability – current portion2,000 5,109 3,660 
Accrued incentive compensation8,334 14,871 8,921 
Total current liabilities379,643 435,190 279,158 
Contingent payment liability – long term portion 6,960 4,381 
Operating leases – long-term portion76,023 80,072 92,179 
Deferred tax liabilities3,378 3,378 2,921 
Other liabilities10,930 9,404 11,982 
Total Liabilities469,974 535,004 390,621 
Commitments, contingencies and other (Note N)
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,134,427, 134,029 and 133,817 shares issued, 79,007, 80,557 and 82,156 shares outstanding
8 8 8 
Additional paid-in capital508,063 495,999 481,646 
Retained earnings1,510,651 1,421,067 1,312,827 
Accumulated other comprehensive loss(32,729)(29,544)(25,081)
Treasury stock – 55,420, 53,472 and 51,661 shares at cost
(1,152,459)(1,075,432)(995,065)
Total Steven Madden, Ltd. stockholders’ equity833,534 812,098 774,335 
Noncontrolling interest9,784 8,440 8,187 
Total stockholders’ equity843,318 820,538 782,522 
Total Liabilities and Stockholders’ Equity$1,313,292 $1,355,542 $1,173,143 
See accompanying notes to condensed consolidated financial statements - unaudited.
1




STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(unaudited)
 
Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except per share data)2022202120222021
Net sales$532,680 $394,797 $1,090,024 $753,698 
Commission and licensing fee income2,309 3,097 4,699 5,221 
Total revenue534,989 397,894 1,094,723 758,919 
Cost of sales (exclusive of depreciation and amortization)317,224 227,839 649,060 449,760 
Gross profit217,765 170,055 445,663 309,159 
Operating expenses152,526 121,860 282,528 232,308 
Impairment of fixed assets and lease right-of-use assets 477  1,089 
Income from operations65,239 47,718 163,135 75,762 
Interest and other expense – net(1,291)(777)(1,234)(814)
Income before provision for income taxes63,948 46,941 161,901 74,948 
Provision for income taxes 15,033 9,600 38,393 15,276 
Net income48,915 37,341 123,508 59,672 
Less: net income attributable to noncontrolling interest455 489 535 1,623 
Net income attributable to Steven Madden, Ltd.$48,460 $36,852 $122,973 $58,049 
Basic net income per share$0.63 $0.47 $1.60 $0.74 
Diluted net income per share$0.62 $0.45 $1.55 $0.71 
Basic weighted average common shares outstanding76,556 78,899 76,902 78,968 
Effect of dilutive securities – options/restricted stock2,158 3,162 2,288 3,013 
Diluted weighted average common shares outstanding78,714 82,061 79,190 81,981 
Cash dividends declared per common share$0.21 $0.15 $0.42 $0.30 

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 June 30, 2022Six Months Ended June 30, 2022
(in thousands)Pre-tax amountsTax expenseAfter-tax amountsPre-tax amountsTax expenseAfter-tax amounts
Net income$48,915 $123,508 
Other comprehensive income/(loss):  
      Foreign currency translation adjustment$(5,564)$ (5,564)$(4,433)$ (4,433)
Gain on cash flow hedging derivatives640 (164)476 725 (186)539 
Total other comprehensive loss$(4,924)$(164)(5,088)$(3,708)$(186)(3,894)
Comprehensive income43,827 119,614 
Less: comprehensive income/ (loss) attributable to noncontrolling interests74 (174)
Comprehensive income attributable to Steven Madden, Ltd.$43,753 $119,788 
Three Months Ended June 30, 2021Six Months Ended June 30, 2021
(in thousands)Pre-tax amountsTax benefitAfter-tax amountsPre-tax amountsTax expenseAfter-tax amounts
Net income$37,341 $59,672 
Other comprehensive income:
      Foreign currency translation adjustment$3,887 $ 3,887 $3,585 $ 3,585 
(Loss)/ gain on cash flow hedging derivatives(23)6 (17)815 (209)606 
Total other comprehensive income$3,864 $6 3,870 $4,400 $(209)4,191 
Comprehensive income41,211 63,863 
Less: comprehensive income attributable to noncontrolling interests911 1,731 
Comprehensive income attributable to Steven Madden, Ltd.$40,300 $62,132 

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 - March 31, 202279,869 $8 $502,254 $1,478,806 $(28,022)54,492 $(1,117,831)$8,192 $843,407 
Share repurchases and net settlement of awards under stock plan(928)— — — — 928 (34,628)— (34,628)
Exercise of stock options8 — 140 — — — — — 140 
Issuance of restricted stock, net of forfeitures58 — — — — — — — — 
Stock-based compensation— — 6,170 — — — — — 6,170 
Foreign currency translation adjustment— — — — (5,183)— — (381)(5,564)
Cash flow hedge (net of tax expense of $164)
— — — — 476 — — — 476 
Dividends on common stock ($0.21 per share)
— — — (16,615)— — — — (16,615)
Sale of minority noncontrolling interest of a subsidiary— — (501)— — — — 1,518 1,017 
Net income— — — 48,460 — — — 455 48,915 
Balance - June 30, 202279,007 $8 $508,063 $1,510,651 $(32,729)55,420 $(1,152,459)$9,784 $843,318 
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 
Share repurchases and net settlement of awards under stock plan(1,948)— — — — 1,948 (77,027)— (77,027)
Exercise of stock options18 — 415 — — — — — 415 
Issuance of restricted stock, net of forfeitures380 — — — — — — — — 
Stock-based compensation— — 12,150 — — — — — 12,150 
Foreign currency translation adjustment— — — — (3,724)— — (709)(4,433)
Cash flow hedge (net of tax expense of $186)
— — — — 539 — — — 539 
Dividends on common stock ($0.42 per share)
— — — (33,389)— — — — (33,389)
Sale of minority noncontrolling interest of a subsidiary— — (501)— — — — 1,518 1,017 
Net income— — — 122,973 — — — 535 123,508 
Balance - June 30, 202279,007 $8 $508,063 $1,510,651 $(32,729)55,420 $(1,152,459)$9,784 $843,318 

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 - March 31, 202182,692 $8 $485,556 $1,288,322 $(28,529)50,785 $(957,829)$13,240 $800,768 
Share repurchases and net tax settlement of awards under stock plan(876)— — — — 876 (37,236)— (37,236)
Exercise of stock options230 — 5,269 — — — — — 5,269 
Issuance of restricted stock, net of forfeitures110 — — — — — — — — 
Stock-based compensation— — 5,480 — — — — — 5,480 
Foreign currency translation adjustment— — — — 3,465 — — 422 3,887 
Cash flow hedge (net of tax benefit of $6)
— — — — (17)— — — (17)
Dividends on common stock ($0.15 per share)
— — — (12,347)— — — — (12,347)
Distributions to non-controlling interests, net— — — — — — — (1,496)(1,496)
Acquisition of noncontrolling interest— — (14,659)— — — — (4,468)(19,127)
Net income— — — 36,852 — — — 489 37,341 
Balance - June 30, 202182,156 $8 $481,646 $1,312,827 $(25,081)51,661 $(995,065)$8,187 $782,522 
Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive (Loss)Treasury StockNon-Controlling InterestTotal Stockholders' Equity
SharesAmountSharesAmount
Balance - December 31, 202082,616 $8 $478,463 $1,279,550 $(29,164)50,631 $(952,271)$13,783 $790,369 
Share repurchases and net tax settlement of awards under stock plan(1,030)— — — — 1,030 (42,794)— (42,794)
Exercise of stock options295 — 6,823 — — — — — 6,823 
Issuance of restricted stock, net of forfeitures275 — — — — — — —  
Stock-based compensation— — 11,019 — — — — — 11,019 
Foreign currency translation adjustment— — — — 3,477 — — 108 3,585 
Cash flow hedge (net of tax expense of $209)
— — — — 606 — — — 606 
Dividends on common stock ($0.30 per share)
— — — (24,772)— — — (24,772)
Distributions to non-controlling interests, net— — — — — — — (2,859)(2,859)
Acquisition of noncontrolling interest— — (14,659)— — — — (4,468)(19,127)
Net income— — — 58,049 — — — 1,623 59,672 
Balance - June 30, 202182,156 $8 $481,646 $1,312,827 $(25,081)51,661 $(995,065)$8,187 $782,522 

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




STEVEN MADDEN, LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended June 30,
(in thousands)20222021
Cash flows from operating activities:  
Net income$123,508 $59,672 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation12,150 11,019 
Depreciation and amortization10,471 7,993 
Loss on disposal of fixed assets260 303 
Impairment of lease right-of-use asset and fixed assets 1,089 
Deferred taxes(1,936)359 
Accrued interest on note receivable - related party(8)(11)
Notes receivable - related party204 204 
Change in valuation of contingent payment liabilities(4,960)7,834 
Gain on sale of trademark (8,000)
Recovery of receivables, related to the Payless ShoeSource bankruptcy (919)
Changes, net of acquisitions, in:
Accounts receivable(4,564)1,365 
Factor accounts receivable20,589 (1,874)
Inventories(53,222)(24,105)
Prepaid expenses, income tax receivables, prepaid taxes, and other assets(7,676)(2,125)
Accounts payable and accrued expenses(44,197)35,836 
Accrued incentive compensation(6,537)5,048 
Leases and other liabilities(3,457)(1,765)
Payment of contingent consideration(339)— 
Net cash provided by operating activities40,286 91,923 
Cash flows from investing activities: 
Capital expenditures(5,263)(2,782)
(Purchase)/sale of a trademark(2,000)8,000 
Purchases of short-term investments(38,951)(26,574)
Maturity/sale of short-term investments53,803 26,460 
Net cash provided by investing activities7,589 5,104 
Cash flows from financing activities: 
Proceeds from exercise of stock options415 6,823 
Distribution of noncontrolling interest earnings (2,859)
Acquisition of noncontrolling interest (19,127)
Common stock purchased for treasury(77,027)(42,794)
Cash dividends paid on common stock(33,389)(24,772)
Payment of contingent consideration(4,770)— 
Net cash used in financing activities(114,771)(82,729)
Effect of exchange rate changes on cash and cash equivalents(1,674)(18)
Net (decrease)/increase in cash and cash equivalents(68,570)14,280 
Cash and cash equivalents – beginning of period219,499 247,864 
Cash and cash equivalents – end of period$150,929 $262,144 

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

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
June 30, 2022
(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 six months ended June 30, 2022 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, 2021 included in the Annual Report of Steven Madden, Ltd. on Form 10-K filed with the SEC on March 1, 2022.

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 these 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 on trade accounts receivables and factor receivables for future customer chargebacks and markdown allowances, discounts, returns and other miscellaneous compliance-related deductions that relate to the 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 allowance.

Note C – Acquisitions & Sale of Minority Noncontrolling Interest

On April 14, 2021, the Company completed the acquisition of the remaining 49.9% non-controlling interest in its European joint venture in the amount of $16,682. The European joint venture was formed in 2016 and distributes Steve Madden-branded footwear and accessories/apparel to most countries throughout Europe.

On June 28, 2021, the Company completed the acquisition of the remaining 49.9% non-controlling interest in its South African joint venture in the amount of $2,260. The South African joint venture was formed in 2014 and distributes Steve Madden-branded footwear and accessories/apparel throughout South Africa.

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.

On December 27, 2021, the Company acquired the rights for Dolce Vita Handbags for the total purchase price of $2,000, which include trademarks and all internet domain name registrations.

Note D – Short-Term Investments

As of June 30, 2022 and December 31, 2021, short-term investments consisted of certificates of deposit and commercial paper. These securities are classified as current based upon their maturities. As of June 30, 2022 and December 31, 2021 short-term investments amounted to $29,569 and $44,037, respectively, and have original maturities less than or equal to one year as of the balance sheet date.

7

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
June 30, 2022
(in thousands except per share data)
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.

The Company’s financial assets and liabilities subject to fair value measurements as of June 30, 2022 and December 31, 2021 were as follows:
 June 30, 2022December 31, 2021
 Fair valueLevel 1Level 2Level 3Fair valueLevel 1Level 2Level 3
Assets:    
Forward contracts1,321 — 1,321 — 494 — 494 — 
Total assets$1,321 $ $1,321 $ $494 $— $494 $— 
Liabilities:    
Contingent consideration $2,000 $ $ $2,000 $6,960 $ $ $6,960 
Forward contracts147  147  46  46  
Total liabilities$2,147 $ $147 $2,000 $7,006 $ $46 $6,960 

Forward contracts are used to manage the risk associated with the volatility of future cash flows (see Note M – 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. The changes in the Company's Level 3 liabilities for the periods ended June 30, 2022 and December 31, 2021 were as follows:

Balance at
January 1, 2022
Adjustments(1)
Transfer out
of Level 3
Balance at
June 30, 2022(2)
Liabilities:
     Contingent consideration$6,960 (4,960) $2,000 
Balance at
January 1, 2021
Adjustments(3)
Transfer out
of Level 3(4)
Balance at
December 31, 2021
Liabilities:
     Contingent consideration$207 11,862 (5,109)$6,960 

(1) In 2022, amount consists of an adjustment of $(4,960) 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) Total contingent consideration liability of $2,000 is classified as current on the Consolidated Balance Sheets at June 30, 2022.
(3) In 2021, amount consists of adjustments of $11,869 and $(7) that were included as an expense in operating expenses, related to the change in valuation of the contingent consideration in connection with the acquisitions of B.B. Dakota, Inc. and GREATS Brand, Inc., respectively.
(4) On December 31, 2021, the transfer out of level 3 amount of $5,109, which was recorded in accrued expenses on the Consolidated Balance Sheets, represented the current portion of our contingent liabilities and was measured at the amount payable based upon actual EBITDA performance for the related performance period. As of June 30, 2022, $5,109 was paid, of which $339 was included as a payment from operating activities and $4,770 was included as a payment from financing activities on the Condensed Consolidated Statement of Cash Flows.
8

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
June 30, 2022
(in thousands except per share data)

At June 30, 2022, the liability for potential contingent consideration was $2,000 in connection with the August 12, 2019 acquisition of B.B. Dakota, Inc. Pursuant to the terms of an earn-out provision contained in the equity purchase agreement, between the Company and the sellers of B.B. Dakota, Inc., earn-out payments are based on EBITDA performance. The fair value of the contingent payments was estimated using the Black-Scholes-Merton option pricing method with a nonlinear payoff structure based on a set of financial metrics of B.B. Dakota, Inc. during the earn-out period, utilizing a discount rate of 11.5%.

At June 30, 2022, the liability for potential contingent consideration was $0 in connection with the August 9, 2019 acquisition of GREATS Brand, Inc. Pursuant to the terms of an earn-out provision contained in the equity purchase agreement, between the Company and the sellers of GREATS Brand, Inc., earn-out payments are based on EBITA performance. The fair value of the contingent payments was estimated using a risk neutral simulation method to model the probability of different financial results of GREATS Brand, Inc. during the earn-out period. However, the EBITA performance is not expected to be met under any of the scenarios.

The fair value of trademarks is measured on a non-recurring basis using Level 3 inputs, including forecasted cash flows, discount rates and implied royalty rates (see Note L – 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 were 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, commercial paper, 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.

9

STEVEN MADDEN, LTD. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial StatementsUnaudited
June 30, 2022
(in thousands except per share data)
Note F – Leases
The Company leases office space, sample production space, warehouses, showrooms, storage units and retail stores are recorded under 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 future 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, "Leases," these variable lease costs are expensed as incurred.

Lease Position
The table below presents the lease-related assets and liabilities recorded on the Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021: