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10-K
ICONIX BRAND GROUP, INC. filed this Form 10-K on 03/28/2019
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royalty revenue which provides the Company with greater visibility into future cash flows. As of January 1, 2019, the Company had over $405 million of aggregate guaranteed royalty revenue over the terms of its existing contracts excluding renewals.

The Company’s OP DTR license agreement at Walmart was not renewed upon expiration in June 2017. The Company’s Starter DTR license agreement at Walmart was not renewed upon expiration in December 2017. In October 2017, the Company also announced that Starter is now available on Amazon exclusively to Amazon Prime members. Additionally, the Company’s Danskin Now license agreement with Walmart was not renewed upon its expiration in January 2019. The Company’s Mossimo DTR license agreement at Target was not renewed upon expiration in October 2018. The Company’s Material Girl license agreement with Macy’s will not be renewed upon its expiration in January 2020. The Company’s Royal Velvet license agreement with JC Penney was not renewed upon its expiration in January 2019. The Company is actively seeking to place OP, Danskin, Mossimo, Material Girl and Royal Velvet with new or existing licensees. At this time, the Company is uncertain how the terms and conditions of any potential replacement licensing arrangements could affect its future revenues and cash flows.

As discussed in further detail in Note 16 in the Notes to the Consolidated Financial Statements, on December 22, 2017 the United States enacted the Tax Cuts and Jobs Act. The new law, which is also commonly referred to as “U.S. tax reform”, significantly changes U.S. corporate income tax laws by, among other changes, imposing a one-time mandatory tax on previously deferred earnings of foreign subsidiaries, reducing the U.S. corporate income tax rate from 35% to 21% starting on January 1, 2018, creating a territorial tax system which generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries, eliminating or limiting the deduction of certain expenses including interest expense, and requiring a minimum tax on earnings generated by foreign subsidiaries.  

The Company identifies its operating segments according to how business activities are managed and evaluated. The Company has four distinct reportable operating segments: women’s, men’s, home, and international. The four reportable operating segments represent the Company’s activities for which separate financial information is available and which is utilized on a regular basis by the Chief Executive Officer in deciding how to allocate resources and in assessing performance.  Since the Company does not track, manage and analyze its assets by segments, no disclosure of segmented assets is reported.  Additionally, the Company previously owned and operated an Entertainment segment which is included in the Company’s consolidated statement of operations as a discontinued operation for FY 2017.

The Company’s segments consist of the following:

 

Women’s segment – consists of the Company’s women’s brands in the United States.

 

Men’s segment – consists of the Company’s men’s brands in the United States.

 

Home segment – consists of the Company’s home brands in the United States.

 

International segment – consists of the Company’s men’s, women’s and home brands in international markets.

Items not allocated to any segment are allocated to the Corporate level.  Corporate, for segment reporting purposes, includes compensation, benefits and occupancy costs for corporate employees as well as other corporate-related expenses such as: audit, legal, and information technology used in managing our business.

The Company’s Chief Executive Officer has been identified as the Chief Operating Decision Maker.  The Company’s measures of segment profitability are licensing revenue and operating income.  Refer to Note 18 in Notes to Consolidated Financial Statements for further details.  The accounting policies of the Company’s reportable operating segments are the same as those described in Note 1 – Summary of Significant Accounting Policies in Notes to the Consolidated Financial Statements.

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