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10-K
ICONIX BRAND GROUP, INC. filed this Form 10-K on 03/28/2019
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Investments in Iconix China

Through our ownership of Iconix China (see above), we have equity interests in the following private companies which are accounted for as equity method investments:

 

Brands Placed

 

Entity

 

Ownership

by Iconix

China

 

 

Carrying

Value of Investment

As of December 31, 2018

 

Candie’s

 

Candies Shanghai Fashion Co., Ltd.

 

 

20

%

 

$

10,529

 

Marc Ecko

 

Shanghai MuXiang Apparel & Accesory

Co. Limited

 

 

15

%

 

 

2,270

 

Material Girl

 

Ningbo Material Girl Fashion Co., Ltd.

 

 

20

%

 

 

2,129

 

Ecko Unltd

 

Ai Xi Enterprise (Shanghai) Co. Limited

 

 

20

%

 

 

10,400

 

 

 

 

 

 

 

 

 

$

25,328

 

 

Other Equity Investments

Historically, given that the Company did not have significant influence over the entities noted below, its investment was recorded under the cost method of accounting.  During the first quarter of FY 2018, the Company adopted ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. As a result of the adoption of the standard, given that these investments do not have readily determinable fair values and the Company does not have significant influence over the entity, the Company assesses these investments for potential impairment on a quarterly basis.  As of December 31, 2018, there were no indicators of impairment for these investments.  See below for further discussion.

Marcy Media Holdings, LLC

In July 2013, the Company purchased a minority interest in Marcy Media Holdings, LLC (“Marcy Media”), resulting in the Company’s indirect ownership of a 5% interest in Roc Nation, LLC for $32 million. At inception, the Company determined, in accordance with ASC 810, based on the corporate structure, voting rights and contributions of the Company that Marcy Media is not a VIE and not subject to consolidation.

Since October 2018, we have been actively engaged in arbitration to obtain access to financial, tax and other business-related information from and in relation to Marcy Media, as well as its controlling shareholders and affiliates, including Marcy Media, LLC, Roc Nation and Shawn Carter (aka Jay-Z). In addition, we are considering alternatives to litigation that would allow us to monetize this investment (including special financing to fund current and/or additional litigation relating to our investment in Marcy Media, the sale of the litigation claim to a third party or an outright sale of our investment in Marcy Media to a third party).  Upon adoption of ASU 2016-01, we determined that the investment in Marcy Media does not have a readily determinable fair value and elected to use the measurement alternative which records the investment at cost, less impairments.  As of December 31, 2018, we performed a qualitative assessment of impairment of the investment in Marcy Media in accordance with ASC 321.  Based upon review of publicly available information, including specific business opportunities and successes of Roc Nation, and other sources, we made the qualitative assessment that our investment in Marcy Media is not impaired.

Complex Media Inc.

In September 2013, the Company purchased convertible preferred shares, on an as-converted basis as of December 31, 2014, equaling an approximate 14.4% minority interest in Complex Media Inc. (“Complex Media”), a multi-media lifestyle company which, among other things, owns Complex magazine and its online counterpart, Complex.com, for $25 million. At inception, the Company determined, in accordance with ASC 810, based on the corporate structure, voting rights and contributions of the Company that Complex Media is not a VIE and not subject to consolidation. As the Company does not have significant influence over Complex Media, its investment has been recorded under the cost method of accounting.  In September 2015, Hearst Communications, Inc. acquired a minority stake in Complex Media effectively reducing the Company’s ownership interest to 11.8%.  

In July 2016, the Company received $35.3 million in connection with the sale of its interest in Complex Media.  An additional $3.7 million is being held in escrow to satisfy specified indemnification claims, with a portion of such escrow expected to be released twelve months following the closing of the transaction and the remainder expected to be released eighteen months following the closing of the transaction, subject to any such claims, at which time, the Company will record the gain within its consolidated statement of operations.  For FY 2016, the Company recognized a gain of $10.2 million as a result of this transaction which has been recorded in Other Income on the Company’s consolidated statement of operations.  

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