Expert answer:Financial Reporting and analysis

Answer & Explanation:Financial Reporting and Analysis (Steve Madden)Conduct fundamental analyses to estimate intrinsic value of the firm. 
As a part of the valuation process, you need to analyze the companies’ financial statements and examine other sources of information, such as articles, books, accounting pronouncements, and industry literature to gain an understanding of the significant strategy, accounting and financial issues. You can obtain financial statements from the SEC filings (10-K, 10-Q etc.) of your company and its competitors. Besides, you can use a number of online services such as LEXIS/NEXIS-Universe, CEOexpress.com, Dow Jones News/Retrieval Service, Global Disclosure, Zack’s Investment Research, and Fortune 500 to gather information about the company, its industry, competition, and its economic environment in general. 

1. Format: 
A. Table of Contents 
B. Executive Summary 
C. Analyses 
a) Strategy Analyses 
b) Accounting Analyses (and adjustments) 
c) Financial Analyses 
d) Prospective Analyses—Forecasting 
e) Prospective Analyses—Valuation 
D. References and footnotes as appropriate 
E. Appropriate graphs and/or tables 
F. Appendix 
2. Analyses 
First, you need to understand the environment and competitive forces within an industry, which will help evaluating a particular firm’s competitive and corporate strategy. You then assess the quality of reported financial statements, identify potential red-flags and accounting distortions and undo accounting distortion.
Strategy Analyses 
 Identify close competitors and provide explanation for the choices; 
Contents: 
 Introduction: 
 Industry Analyses (i.e., Porter’s Five forces) 
 Competitive Analyses 
 Corporate Strategy Analyses 
 Conclusion 
Accounting Analyses 
 Provide your assumptions, if any, in making accounting adjustments; 
 Prepare standardized financial statements; 
 Provide restated financial statements after making adjustments 
Contents: 
 Introduction 
 Six steps analyses 
o Identify principal accounting policies 
o Assess accounting flexibility 
o Evaluate accounting strategy 
o Identify red flags 
o Accounting distortion 
o Undo those distortions 
 Conclusion 
 Appendix 
o Original financial statements 
o Restated financial statements (i.e., statements that undo distortions) 
o Standardized financial statements
Next, you will employ various tools for financial analyses to evaluate operating efficiency, investing performance and financing strategy. Output from these financial analyses will be used as a basis of prospective analyses. Following are few tips for your financial analysis: 
Financial Analyses 
 Follow the sustainable growth rate framework to organize ratio analyses 
 ROE decomposition should be done 
 Trend analyses (i.e., historical pattern of key ratios) over last 5 years 
 Provide common-sized income statements for 3 years and those of the competitor for 3 years to facilitate intra-company and inter-company comparison (in appendix) 
 Do cash flow analyses and provide your comments on all key issues 
 Highlight any differences in ratios due to adjustment done in your accounting analyses 
Then, you will conduct forecasting to find intrinsic (fundamental) value of your company based on previous steps (i.e., strategy analyses, accounting analyses and financial analyses). Prospective analyses should include the following information: 
Prospective Analyses 
a. Prospective analyses (Forecasting) should provide projected statements/numbers that will provide all essential projected variables so that you can estimate the value of the company based on the valuation models 
b. Provide key forecasting assumptions
c. Prospective Analyses (Valuation) – show the calculation of valuation models (Abnormal earnings, Abnormal ROE and Free cash flows to equity 
d. Provide your comments about the intrinsic value of the stock (on the day of last available 10-K publication) and how the value would differ under more optimistic and pessimistic scenarios. 
3. Appendix 
a. Original financial statements as reported, restated financial statements based on accounting adjustments of distortions, standardized financial statements 
b. Table showing ratios that further amplify our understanding on four components of ROE (NOPAT margin, Operating Asset Turnover, Spread and Financial Leverage) in line with the sustainable growth rate framework
c. Trend analysis – show historical performance (at least past 5 years) of key ratios. 
d. Provide common-sized income statements for 3 years and those of the competitor for 3 years 
e. Forecasting assumptions 
f. Sensitivity analysis: Provide projected numbers (only prospective analysis part) with more optimistic and pessimistic assumption and show how intrinsic value would differ under those scenarios. 
g. Any other supporting information or calculation you think appropriate to support your analyses. SHOO-2014.12.31-10K (Steve Madden).pdf
shoo_2014.12.31_10k__steve_madden_.pdf

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10-K 1 shoo-20141231x10k.htm 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2014
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
o
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 Class
Name of Each Exchange on Which Registered
Common Stock, par value $.0001 per share
The NASDAQ Stock Market LLC
Preferred Stock Purchase Rights
The NASDAQ Stock Market LLC
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act.
Yes o No x
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 x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, 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 and post such files).
Yes x No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein,
and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o (do not check if smaller reporting company)
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
The aggregate market value of the common equity held by non-affiliates of the registrant (assuming for these purposes, but without
conceding, that all executive officers and directors are “affiliates” of the registrant) as of June 30, 2014, the last business day of the
registrant’s most recently completed second fiscal quarter, was approximately $2,230,508,000 (based on the closing sale price of the
registrant’s common stock on that date as reported on The NASDAQ Global Select Market).
The number of outstanding shares of the registrant’s common stock as of February 24, 2015 was 63,671,301 shares.
DOCUMENTS INCORPORATED BY REFERENCE:
PART III INCORPORATES CERTAIN INFORMATION BY REFERENCE FROM THE REGISTRANT’S DEFINITIVE
PROXY STATEMENT FOR THE REGISTRANT’S 2015 ANNUAL MEETING OF STOCKHOLDERS.
TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
1
PART I
ITEM 1 BUSINESS
1
ITEM 1A RISK FACTORS
8
ITEM 1B UNRESOLVED STAFF COMMENTS
14
ITEM 2 PROPERTIES
14
ITEM 3 LEGAL PROCEEDINGS
16
ITEM 4 MINE SAFETY DISCLOSURES
16
PART II
ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6 SELECTED FINANCIAL DATA
16
19
ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
21
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
31
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
31
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
31
ITEM 9A CONTROLS AND PROCEDURES
31
ITEM 9B OTHER INFORMATION
32
PART III
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
32
ITEM 11 EXECUTIVE COMPENSATION
32
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
32
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
32
ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES
33
PART IV
ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
33
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements” (as that term is defined in the federal securities
laws), which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forwardlooking statements include statements with regard to future revenue, projected 2015 results, earnings, spending, margins, cash flow,
customer orders, expected timing of shipment of products, inventory levels, future growth or success in specific countries, categories
or market sectors, continued or expected distribution to specific retailers, liquidity, capital resources and market risk, strategies and
objectives and other future events. More generally, forward-looking statements include, without limitation, any statement that may
predict, forecast, indicate or simply state future results, performance or achievements, and can be identified by the use of forward
looking language such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will be,” “will continue,” “will
result,” “could,” “may,” “might,” or any variations of such words with similar meanings. Factors that may affect our results include,
but are not limited to, the risks and uncertainties discussed in Item 1A of this Annual Report on Form 10-K.
Any such forward-looking statements are subject to risks and uncertainties, many of which are beyond our control, which may
influence the accuracy of the statements and the projections upon which the statements are based and could cause our actual results to
differ materially from those projected in forward-looking statements. As such, we strongly caution you that these forward-looking
statements are not guarantees of future performance or events. Our actual results, performance and achievements could differ
materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or
revise any forward-looking statements, whether from new information, future events or otherwise.
PART I
ITEM 1 BUSINESS
($ in thousands, except share and per share data)
Overview
Steven Madden, Ltd. and its subsidiaries (collectively, the “Company”, “we”, “our”, “us”, as applicable) design, source,
market and sell fashion-forward name brand and private label footwear for women, men and children and name brand and private label
fashion handbags and accessories and license some of our trademarks for use in connection with the manufacture, marketing and sale
of various products of our licensees. Our products are marketed through our retail stores and our e-commerce websites, as well as
better department stores, major department stores, mid-tier department stores, specialty stores, luxury retailers, value priced retailers,
national chains, mass merchants and catalog retailers throughout the United States, Canada, Mexico and South Africa. In addition, we
have special distribution arrangements for the marketing of our products in Asia, Australia, Europe, India, the Middle East, South and
Central America and New Zealand. We offer a broad range of updated styles designed to establish or complement and capitalize on
market trends. We have established a reputation for design creativity and our ability to offer quality products in popular styles at
affordable prices, delivered in an efficient manner and time frame.
Steven Madden, Ltd. was incorporated as a New York corporation on July 9, 1990, reincorporated under the same name in
Delaware in November 1998 and completed our initial public offering in December 1993. Shares of Steven Madden, Ltd. common
stock, $.0001 par value per share, currently trade on the NASDAQ Global Select Market under the symbol “SHOO”. Our principal
executive offices are located at 52-16 Barnett Avenue, Long Island City, NY 11104. Our telephone number is (718) 446-1800 and our
website address is http://www.stevemadden.com.
We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports and
information with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended, (the “Exchange Act”). These reports, any amendments to such reports, and our proxy statements for our
stockholders’ meetings are available free of charge, on the “Investor Relations” section of our website as soon as reasonably practicable
after such material is electronically filed with, or furnished to, the SEC. We will provide paper copies of such filings free of charge
upon request. The public may read and copy any materials filed by us with the SEC at the SEC’s Public Reference Room at 100 F
Street, NE, Washington, D.C. 20549. Information regarding the operation of the SEC’s Public Reference Room is available by calling
the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements
and other information regarding us, which is available at http://www.sec.gov.
1
We have a Code of Ethics for our Chief Executive Officer and our senior financial officers, as well as a Code of Business
Conduct and Ethics specific to directors of the Company and a Code of Business Conduct and Ethics that is applicable to all of our
employees, each of which are attached as exhibits to this Annual Report on Form 10-K and posted on our website,
http://www.stevemadden.com. We will provide paper copies of these codes free of charge upon request. We intend to disclose on our
website any amendments to, or waivers of, these codes that would otherwise be reportable on a current report on Form 8-K. Such
disclosure would be posted within four business days following the date of the amendment or waiver.
Net sales for 2014 increased 2% to $1,334,951 from $1,314,223 in 2013. Net income attributable to Steven Madden, Ltd.
decreased 15% to $111,880 in 2014 compared to $132,007 in 2013. Diluted earnings per share in 2014 decreased to $1.76 per share on
63,676,000 diluted weighted average shares outstanding compared to $1.98 per share on 66,836,000 diluted weighted average shares
outstanding in the prior year.
Product Distribution Segments
Our business is comprised of five distinct segments: Wholesale Footwear, Wholesale Accessories, Retail, First Cost and
Licensing.
Our Wholesale Footwear segment is comprised of the following brands: Steve Madden Women’s®, Madden Girl®, Steve
Madden Men’s®, Dolce Vita®, DV by Dolce Vita®, Mad Love®, Steven by Steve Madden®, Report®, Report Signature®, Superga®
(under license), Betsey Johnson®, Steve Madden Kids®, FREEBIRD by Steven®, Stevies®, Wild Pair®, Brian Atwood®, B Brian
Atwood® and includes our International business and certain private label footwear business. Our Wholesale Accessories segment
includes Big Buddha®, Betseyville®, Betsey Johnson®, Steve Madden®, Steven®, Cejon® accessories brands and includes our
International business and certain private label accessories business. These trademarks are registered trademarks owned by us or
licensed to us by third parties. Steven Madden Retail, Inc., our wholly-owned retail subsidiary, operates Steve Madden, Steven and
Superga retail stores, domestically and internationally, as well as Steve Madden, Superga, Betsey Johnson and Dolce Vita e-commerce
websites. The First Cost segment represents activities of a subsidiary that earns commissions for serving as a buying agent for
footwear products under private labels for many of the country’s large mass-market merchandisers, shoe chains and other value priced
retailers. Our Licensing segment is engaged in the licensing of the Steve Madden® and Steven by Steve Madden® trademarks for use
in connection with the manufacture, marketing and sale of sunglasses, eyewear, outerwear, bedding, hosiery, women’s fashion apparel,
jewelry, watches and luggage. In addition, we license our Betsey Johnson® and Betseyville® trademarks for use in connection with
the manufacture, marketing and sale of apparel, jewelry, swimwear, eyewear, watches, fragrances and outerwear.
Wholesale Footwear Segment
Steve Madden Women’s. We design, source and market our Steve Madden brand to department stores, specialty stores, luxury
retailers, value priced retailers, national chains, mass merchants, online retailers and catalog retailers throughout the United States and
Canada. The Steve Madden brand has become a leading life-style brand in the fashion conscious marketplace. Steve Madden Women’s
offers fashion forward footwear designed to appeal to customers (primarily women ages 16 to 35) seeking exciting, new footwear
designs at affordable prices. New products for Steve Madden Women’s are test marketed at Company-owned retail stores. Typically,
within a few days, we can determine if the test product appeals to our customers. This enables us to use our flexible sourcing model to
rapidly respond to changing trends and customer preferences, which we believe is essential for success in the fashion industry.
Madden Girl. We design, source and market a full collection of directional young women’s shoes under the Madden Girl®
brand. Madden Girl is geared for young women ages 13 to 20, and is an “opening price point” brand currently sold at major
department stores, mid-tier retailers and specialty stores.
Steve Madden Men’s. We design, source, and market a life style collection of men’s footwear for the fashion forward man,
ages 18 to 45 years old, under the Steve Madden® brand. Retail channels include major department stores, mid-tier department stores,
better specialty stores, online retailers and independent shoe stores throughout the United States. Price points for Steve Madden Men’s
products range from $70 to $150 at retail.
Madden. The Madden® brand is a streetwear focused collection of footwear geared to meet the trend directions of the 13 to
21 year old fashion consumer. Madden products range from $45 to $85 and are sold to national specialty stores, better department
stores, mid-tier department stores, online retailers and independent specialty stores.
2
Steven. We design, source and market women’s fashion footwear under the Steven® trademark through major department and
better footwear specialty stores throughout the United States as well as in our retail stores. Priced a tier above the Steve Madden brand,
Steven products are designed to appeal principally to fashion conscious women, ages 25 to 45, who shop at department stores and
footwear boutiques.
Stevies and Steve Madden Kids. Our Stevies and Steve Madden Kids brands are designed, sourced and marketed to appeal to
young girls, ages six to 12, and are sold at department stores, specialty stores, online retailers and independent boutiques throughout
the United States.
Betsey Johnson. On October 5, 2010, the Company acquired the Betsey Johnson® trademark and substantially all other
intellectual property of Betsey Johnson LLC. Products branded under the Betsey Johnson and Betseyville shoe brands are distributed
through department stores such as Nordstrom and Dillard’s and online retailers such as Amazon and Zappos.
Superga. On February 9, 2011, the Company entered into a license agreement with Basic Properties America Inc. and
BasicNet S.p.A., for the use of the Superga® trademark in connection with the marketing and sale of footwear. Founded in Italy in
1911, Superga is recognized for its fashion sneakers in a wide range of colors, fabrics and prints.
FREEBIRD by Steven. We design, source, and market a full collection of handcrafted, Goodyear welted boots. The designs
are inspired by vintage Americana and created using time-honored craftsmanship. The FREEBIRD by Steven® collection conveys a
unique fashion life style that transcends multiple generations. FREEBIRD by Steven products are currently sold, at retail prices
ranging from $195 to $450 at major department stores, mid-tier retailers, and specialty boutiques.
Report. The Report and Report Signature brands were acquired in our May 2011 acquisition of Topline Corporation
(“Topline”). We design, manufacture, market and sell our Report branded products to major department stores, mid-tier department
stores and independently-owned boutiques throughout the United States.
Mad Love. Formed in April 2011 as a joint venture with the Company, the Mad Love® brand is an exclusive beach-to-thestreet life style brand created to appeal to women with a young attitude and active life style and marketed to Target.
Dolce Vita. On August 13, 2014, the Company acquired the Dolce Vita® and DV® brands and other intellectual property
assets in the acquisition of Dolce Vita Holdings, Inc. The Dolce Vita brand is a contemporary women’s footwear brand with price
points ranging from $120 to $350. The DV brand, which is designed for younger fashion conscious women, has price points ranging
from $60 to $200. Both brands are distributed through department stores such as Nordstrom, Bloomingdale’s and Macy’s and online
retailers such as Amazon and Zappos.
Brian Atwood. In March 2014, the Company acquired the Brian Atwood® designer brand and the B Brian Atwood®
contemporary brand from Brian Atwood IP Company LLC. Founded in 2011, Brian Atwood is known for luxury shoes manufactured
in Italy.
International Division. The International Division works through special distribution arrangements for the marketing and
sales of our products in Asia, Australia, Europe, India, the Middle East, South and Central America and New Zealand.
Private label business. We design, source and market private label footwear primarily to mid-tier chains and mass market
merchants. In addition, we design, source and market footwear for third party brands, such as Material Girl® and Candies®.
Wholesale Accessories Segment
Our Wholesale Accessories segment designs, sources and markets name brands (including our Steve Madden®, Steven by
Steve Madden®, Madden Girl®, Betsey Johnson®, Betseyville® and Big Buddha® brands,) and private label fashion handbags and
accessories to department stores, mass merchants, value priced retailers, online retailers and specialty stores throughout the United
States and Canada. In addition, we market and sell cold weather accessories, fashion scarves, wraps and other trend accessories
primarily under our Cejon® and Steve Madden® brand names and private labels to department stores and specialty stores.
3
Retail Segment
As of December 31, 2014, we owned and operated 160 retail stores including 122 Steve Madden full price stores, 32 Steve
Madden outlet stores, one Steven store, one Superga store and four e-commerce websites (Steve Madden, Superga, Betsey John …
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