0001334036-20-000112.txt : 20201027 0001334036-20-000112.hdr.sgml : 20201027 20201027125040 ACCESSION NUMBER: 0001334036-20-000112 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 75 CONFORMED PERIOD OF REPORT: 20200930 FILED AS OF DATE: 20201027 DATE AS OF CHANGE: 20201027 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Crocs, Inc. CENTRAL INDEX KEY: 0001334036 STANDARD INDUSTRIAL CLASSIFICATION: RUBBER & PLASTICS FOOTWEAR [3021] IRS NUMBER: 202164234 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-51754 FILM NUMBER: 201263146 BUSINESS ADDRESS: STREET 1: 13601 VIA VARRA CITY: BROOMFIELD STATE: CO ZIP: 80020 BUSINESS PHONE: 3038487000 MAIL ADDRESS: STREET 1: 13601 VIA VARRA CITY: BROOMFIELD STATE: CO ZIP: 80020 10-Q 1 crox-20200930.htm 10-Q crox-20200930
us-gaap:AccountingStandardsUpdate201602MemberfalseQ320200001334036--12-31Represents the reclassification of cumulative foreign currency translation adjustment upon liquidation of foreign subsidiaries during the nine months ended September 30, 2020.00013340362020-01-012020-09-30xbrli:shares00013340362020-10-20iso4217:USD00013340362020-07-012020-09-3000013340362019-07-012019-09-3000013340362019-01-012019-09-30iso4217:USDxbrli:shares00013340362020-09-3000013340362019-12-310001334036us-gaap:SeriesAPreferredStockMember2019-12-310001334036us-gaap:SeriesAPreferredStockMember2020-09-300001334036us-gaap:CommonStockMember2020-06-300001334036us-gaap:TreasuryStockMember2020-06-300001334036us-gaap:AdditionalPaidInCapitalMember2020-06-300001334036us-gaap:RetainedEarningsMember2020-06-300001334036us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000013340362020-06-300001334036us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001334036us-gaap:CommonStockMember2020-07-012020-09-300001334036us-gaap:TreasuryStockMember2020-07-012020-09-300001334036us-gaap:RetainedEarningsMember2020-07-012020-09-300001334036us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001334036us-gaap:CommonStockMember2020-09-300001334036us-gaap:TreasuryStockMember2020-09-300001334036us-gaap:AdditionalPaidInCapitalMember2020-09-300001334036us-gaap:RetainedEarningsMember2020-09-300001334036us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001334036us-gaap:CommonStockMember2019-06-300001334036us-gaap:TreasuryStockMember2019-06-300001334036us-gaap:AdditionalPaidInCapitalMember2019-06-300001334036us-gaap:RetainedEarningsMember2019-06-300001334036us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-3000013340362019-06-300001334036us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001334036us-gaap:CommonStockMember2019-07-012019-09-300001334036us-gaap:TreasuryStockMember2019-07-012019-09-300001334036us-gaap:RetainedEarningsMember2019-07-012019-09-300001334036us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001334036us-gaap:CommonStockMember2019-09-300001334036us-gaap:TreasuryStockMember2019-09-300001334036us-gaap:AdditionalPaidInCapitalMember2019-09-300001334036us-gaap:RetainedEarningsMember2019-09-300001334036us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-3000013340362019-09-300001334036us-gaap:CommonStockMember2019-12-310001334036us-gaap:TreasuryStockMember2019-12-310001334036us-gaap:AdditionalPaidInCapitalMember2019-12-310001334036us-gaap:RetainedEarningsMember2019-12-310001334036us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001334036us-gaap:AdditionalPaidInCapitalMember2020-01-012020-09-300001334036us-gaap:CommonStockMember2020-01-012020-09-300001334036us-gaap:TreasuryStockMember2020-01-012020-09-300001334036us-gaap:RetainedEarningsMember2020-01-012020-09-300001334036us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300001334036us-gaap:CommonStockMember2018-12-310001334036us-gaap:TreasuryStockMember2018-12-310001334036us-gaap:AdditionalPaidInCapitalMember2018-12-310001334036us-gaap:RetainedEarningsMember2018-12-310001334036us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-3100013340362018-12-310001334036srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2018-12-310001334036srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310001334036us-gaap:AdditionalPaidInCapitalMember2019-01-012019-09-300001334036us-gaap:CommonStockMember2019-01-012019-09-300001334036us-gaap:TreasuryStockMember2019-01-012019-09-300001334036us-gaap:RetainedEarningsMember2019-01-012019-09-300001334036us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-09-3000013340362018-01-012018-12-31crox:affiliate00013340362019-01-012019-12-310001334036crox:BlackstoneCapitalPartnersVILPMembersrt:AffiliatedEntityMember2019-11-030001334036crox:BlackstoneCapitalPartnersVILPMembersrt:AffiliatedEntityMember2019-11-042019-11-040001334036srt:AffiliatedEntityMembercrox:GreggSRibattMember2019-11-042019-11-040001334036crox:LegalCostsForBlackstoneAffiliatesPublicOfferingTransactionMembersrt:AffiliatedEntityMember2019-01-012019-12-310001334036srt:AffiliatedEntityMember2019-07-012019-09-300001334036srt:AffiliatedEntityMember2019-01-012019-09-300001334036crox:LeaseArrangementsExistingatBeginningofPeriodMember2019-01-012019-01-010001334036crox:LeaseArrangementsCommencedDuringthePeriodMember2019-01-012019-09-30xbrli:pureiso4217:EUR0001334036crox:NewDistributionCenterInDordrechtMember2020-09-300001334036us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-09-300001334036us-gaap:EstimateOfFairValueFairValueDisclosureMember2020-09-300001334036us-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310001334036us-gaap:EstimateOfFairValueFairValueDisclosureMember2019-12-310001334036us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-07-012019-09-300001334036us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-01-012019-09-300001334036us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-01-012020-09-300001334036us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-07-012020-09-300001334036us-gaap:FairValueInputsLevel2Member2020-09-300001334036us-gaap:FairValueInputsLevel2Member2019-12-310001334036currency:EUR2020-09-300001334036currency:EUR2019-12-310001334036currency:SGD2020-09-300001334036currency:SGD2019-12-310001334036currency:JPY2020-09-300001334036currency:JPY2019-12-310001334036currency:KRW2020-09-300001334036currency:KRW2019-12-310001334036currency:GBP2020-09-300001334036currency:GBP2019-12-310001334036crox:OtherCurrencyMember2020-09-300001334036crox:OtherCurrencyMember2019-12-310001334036us-gaap:RevolvingCreditFacilityMember2020-09-300001334036us-gaap:RevolvingCreditFacilityMember2019-12-310001334036us-gaap:RevolvingCreditFacilityMembercrox:SeniorRevolvingCreditFacilityMember2020-03-310001334036us-gaap:RevolvingCreditFacilityMembercrox:SeniorRevolvingCreditFacilityMemberus-gaap:FederalFundsEffectiveSwapRateMember2020-01-012020-03-310001334036us-gaap:RevolvingCreditFacilityMembercrox:DailyLondonInterbankOfferedRateMembercrox:SeniorRevolvingCreditFacilityMember2020-01-012020-03-310001334036us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMembersrt:MinimumMembercrox:SeniorRevolvingCreditFacilityMember2020-01-012020-03-310001334036us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMembercrox:SeniorRevolvingCreditFacilityMembersrt:MaximumMember2020-01-012020-03-310001334036us-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberus-gaap:LondonInterbankOfferedRateLIBORMembercrox:SeniorRevolvingCreditFacilityMember2020-01-012020-03-310001334036us-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMembercrox:SeniorRevolvingCreditFacilityMembersrt:MaximumMember2020-01-012020-03-310001334036us-gaap:RevolvingCreditFacilityMembercrox:SeniorRevolvingCreditFacilityMembercrox:DebtInstrumentCovenantPeriodOneMember2020-03-310001334036us-gaap:RevolvingCreditFacilityMembercrox:DebtInstrumentCovenantPeriodTwoMembercrox:SeniorRevolvingCreditFacilityMember2020-03-310001334036us-gaap:RevolvingCreditFacilityMembercrox:SeniorRevolvingCreditFacilityMembercrox:DebtInstrumentCovenantPeriodThreeMember2020-03-310001334036us-gaap:RevolvingCreditFacilityMembercrox:SeniorRevolvingCreditFacilityMember2020-09-300001334036us-gaap:RevolvingCreditFacilityMembercrox:SeniorRevolvingCreditFacilityMember2019-12-31iso4217:CNY0001334036us-gaap:RevolvingCreditFacilityMembercrox:AsiaPacificCMBCRevolvingCreditFacilityMember2020-09-300001334036us-gaap:RevolvingCreditFacilityMembercrox:AsiaPacificCitybankRevolvingCreditFacilityMember2020-09-300001334036us-gaap:RevolvingCreditFacilityMemberus-gaap:PrimeRateMembercrox:AsiaPacificCitybankRevolvingCreditFacilityMember2020-01-012020-06-300001334036us-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMembercrox:AsiaPacificCitybankRevolvingCreditFacilityMember2020-01-012020-06-300001334036us-gaap:RevolvingCreditFacilityMembercrox:AsiaPacificRevolvingCreditFacilityMember2020-09-300001334036us-gaap:RevolvingCreditFacilityMembercrox:AsiaPacificRevolvingCreditFacilityMember2019-12-310001334036us-gaap:RevolvingCreditFacilityMembercrox:AsiaPacificRevolvingCreditFacilityMember2019-01-012019-12-310001334036us-gaap:RevolvingCreditFacilityMembercrox:AsiaPacificRevolvingCreditFacilityMember2020-01-012020-09-300001334036srt:AmericasMembercrox:SalesChannelThroughIntermediaryWholesaleMember2020-07-012020-09-300001334036srt:AsiaPacificMembercrox:SalesChannelThroughIntermediaryWholesaleMember2020-07-012020-09-300001334036us-gaap:EMEAMembercrox:SalesChannelThroughIntermediaryWholesaleMember2020-07-012020-09-300001334036crox:SalesChannelThroughIntermediaryWholesaleMembercrox:OtherGeographicalLocationMember2020-07-012020-09-300001334036crox:SalesChannelThroughIntermediaryWholesaleMember2020-07-012020-09-300001334036srt:AmericasMembercrox:SalesChannelDirectlytoConsumerRetailMember2020-07-012020-09-300001334036srt:AsiaPacificMembercrox:SalesChannelDirectlytoConsumerRetailMember2020-07-012020-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMemberus-gaap:EMEAMember2020-07-012020-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMembercrox:OtherGeographicalLocationMember2020-07-012020-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMember2020-07-012020-09-300001334036srt:AmericasMembercrox:SalesChannelDirectlytoConsumereCommerceMember2020-07-012020-09-300001334036srt:AsiaPacificMembercrox:SalesChannelDirectlytoConsumereCommerceMember2020-07-012020-09-300001334036us-gaap:EMEAMembercrox:SalesChannelDirectlytoConsumereCommerceMember2020-07-012020-09-300001334036crox:OtherGeographicalLocationMembercrox:SalesChannelDirectlytoConsumereCommerceMember2020-07-012020-09-300001334036crox:SalesChannelDirectlytoConsumereCommerceMember2020-07-012020-09-300001334036srt:AmericasMember2020-07-012020-09-300001334036srt:AsiaPacificMember2020-07-012020-09-300001334036us-gaap:EMEAMember2020-07-012020-09-300001334036crox:OtherGeographicalLocationMember2020-07-012020-09-300001334036srt:AmericasMembercrox:SalesChannelThroughIntermediaryWholesaleMember2019-07-012019-09-300001334036srt:AsiaPacificMembercrox:SalesChannelThroughIntermediaryWholesaleMember2019-07-012019-09-300001334036us-gaap:EMEAMembercrox:SalesChannelThroughIntermediaryWholesaleMember2019-07-012019-09-300001334036crox:SalesChannelThroughIntermediaryWholesaleMembercrox:OtherGeographicalLocationMember2019-07-012019-09-300001334036crox:SalesChannelThroughIntermediaryWholesaleMember2019-07-012019-09-300001334036srt:AmericasMembercrox:SalesChannelDirectlytoConsumerRetailMember2019-07-012019-09-300001334036srt:AsiaPacificMembercrox:SalesChannelDirectlytoConsumerRetailMember2019-07-012019-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMemberus-gaap:EMEAMember2019-07-012019-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMembercrox:OtherGeographicalLocationMember2019-07-012019-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMember2019-07-012019-09-300001334036srt:AmericasMembercrox:SalesChannelDirectlytoConsumereCommerceMember2019-07-012019-09-300001334036srt:AsiaPacificMembercrox:SalesChannelDirectlytoConsumereCommerceMember2019-07-012019-09-300001334036us-gaap:EMEAMembercrox:SalesChannelDirectlytoConsumereCommerceMember2019-07-012019-09-300001334036crox:OtherGeographicalLocationMembercrox:SalesChannelDirectlytoConsumereCommerceMember2019-07-012019-09-300001334036crox:SalesChannelDirectlytoConsumereCommerceMember2019-07-012019-09-300001334036srt:AmericasMember2019-07-012019-09-300001334036srt:AsiaPacificMember2019-07-012019-09-300001334036us-gaap:EMEAMember2019-07-012019-09-300001334036crox:OtherGeographicalLocationMember2019-07-012019-09-300001334036srt:AmericasMembercrox:SalesChannelThroughIntermediaryWholesaleMember2020-01-012020-09-300001334036srt:AsiaPacificMembercrox:SalesChannelThroughIntermediaryWholesaleMember2020-01-012020-09-300001334036us-gaap:EMEAMembercrox:SalesChannelThroughIntermediaryWholesaleMember2020-01-012020-09-300001334036crox:SalesChannelThroughIntermediaryWholesaleMembercrox:OtherGeographicalLocationMember2020-01-012020-09-300001334036crox:SalesChannelThroughIntermediaryWholesaleMember2020-01-012020-09-300001334036srt:AmericasMembercrox:SalesChannelDirectlytoConsumerRetailMember2020-01-012020-09-300001334036srt:AsiaPacificMembercrox:SalesChannelDirectlytoConsumerRetailMember2020-01-012020-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMemberus-gaap:EMEAMember2020-01-012020-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMembercrox:OtherGeographicalLocationMember2020-01-012020-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMember2020-01-012020-09-300001334036srt:AmericasMembercrox:SalesChannelDirectlytoConsumereCommerceMember2020-01-012020-09-300001334036srt:AsiaPacificMembercrox:SalesChannelDirectlytoConsumereCommerceMember2020-01-012020-09-300001334036us-gaap:EMEAMembercrox:SalesChannelDirectlytoConsumereCommerceMember2020-01-012020-09-300001334036crox:OtherGeographicalLocationMembercrox:SalesChannelDirectlytoConsumereCommerceMember2020-01-012020-09-300001334036crox:SalesChannelDirectlytoConsumereCommerceMember2020-01-012020-09-300001334036srt:AmericasMember2020-01-012020-09-300001334036srt:AsiaPacificMember2020-01-012020-09-300001334036us-gaap:EMEAMember2020-01-012020-09-300001334036crox:OtherGeographicalLocationMember2020-01-012020-09-300001334036srt:AmericasMembercrox:SalesChannelThroughIntermediaryWholesaleMember2019-01-012019-09-300001334036srt:AsiaPacificMembercrox:SalesChannelThroughIntermediaryWholesaleMember2019-01-012019-09-300001334036us-gaap:EMEAMembercrox:SalesChannelThroughIntermediaryWholesaleMember2019-01-012019-09-300001334036crox:SalesChannelThroughIntermediaryWholesaleMembercrox:OtherGeographicalLocationMember2019-01-012019-09-300001334036crox:SalesChannelThroughIntermediaryWholesaleMember2019-01-012019-09-300001334036srt:AmericasMembercrox:SalesChannelDirectlytoConsumerRetailMember2019-01-012019-09-300001334036srt:AsiaPacificMembercrox:SalesChannelDirectlytoConsumerRetailMember2019-01-012019-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMemberus-gaap:EMEAMember2019-01-012019-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMembercrox:OtherGeographicalLocationMember2019-01-012019-09-300001334036crox:SalesChannelDirectlytoConsumerRetailMember2019-01-012019-09-300001334036srt:AmericasMembercrox:SalesChannelDirectlytoConsumereCommerceMember2019-01-012019-09-300001334036srt:AsiaPacificMembercrox:SalesChannelDirectlytoConsumereCommerceMember2019-01-012019-09-300001334036us-gaap:EMEAMembercrox:SalesChannelDirectlytoConsumereCommerceMember2019-01-012019-09-300001334036crox:OtherGeographicalLocationMembercrox:SalesChannelDirectlytoConsumereCommerceMember2019-01-012019-09-300001334036crox:SalesChannelDirectlytoConsumereCommerceMember2019-01-012019-09-300001334036srt:AmericasMember2019-01-012019-09-300001334036srt:AsiaPacificMember2019-01-012019-09-300001334036us-gaap:EMEAMember2019-01-012019-09-300001334036crox:OtherGeographicalLocationMember2019-01-012019-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelThroughIntermediaryWholesaleMember2020-07-012020-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelThroughIntermediaryWholesaleMember2020-01-012020-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelDirectlytoConsumereCommerceMember2020-01-012020-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelDirectlytoConsumereCommerceMember2020-07-012020-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelThroughIntermediaryWholesaleMember2019-07-012019-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelThroughIntermediaryWholesaleMember2019-01-012019-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelDirectlytoConsumereCommerceMember2019-07-012019-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelDirectlytoConsumereCommerceMember2019-01-012019-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelDirectlytoConsumerRetailMember2020-07-012020-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelDirectlytoConsumerRetailMember2020-01-012020-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelDirectlytoConsumerRetailMember2019-07-012019-09-300001334036crox:ChangeInEstimateOfProductTransfersMembercrox:SalesChannelDirectlytoConsumerRetailMember2019-01-012019-09-300001334036us-gaap:CostOfSalesMember2020-07-012020-09-300001334036us-gaap:CostOfSalesMember2019-07-012019-09-300001334036us-gaap:CostOfSalesMember2020-01-012020-09-300001334036us-gaap:CostOfSalesMember2019-01-012019-09-300001334036us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-07-012020-09-300001334036us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-07-012019-09-300001334036us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-09-300001334036us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-01-012019-09-300001334036crox:StockOptionsandRestrictedStockUnitsMember2020-01-012020-09-300001334036crox:StockOptionsandRestrictedStockUnitsMember2020-07-012020-09-300001334036crox:StockOptionsandRestrictedStockUnitsMember2019-07-012019-09-300001334036crox:StockOptionsandRestrictedStockUnitsMember2019-01-012019-09-30crox:segment0001334036srt:AmericasMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001334036srt:AmericasMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001334036srt:AmericasMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001334036srt:AmericasMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001334036us-gaap:OperatingSegmentsMembersrt:AsiaPacificMember2020-07-012020-09-300001334036us-gaap:OperatingSegmentsMembersrt:AsiaPacificMember2019-07-012019-09-300001334036us-gaap:OperatingSegmentsMembersrt:AsiaPacificMember2020-01-012020-09-300001334036us-gaap:OperatingSegmentsMembersrt:AsiaPacificMember2019-01-012019-09-300001334036us-gaap:OperatingSegmentsMemberus-gaap:EMEAMember2020-07-012020-09-300001334036us-gaap:OperatingSegmentsMemberus-gaap:EMEAMember2019-07-012019-09-300001334036us-gaap:OperatingSegmentsMemberus-gaap:EMEAMember2020-01-012020-09-300001334036us-gaap:OperatingSegmentsMemberus-gaap:EMEAMember2019-01-012019-09-300001334036us-gaap:OperatingSegmentsMember2020-07-012020-09-300001334036us-gaap:OperatingSegmentsMember2019-07-012019-09-300001334036us-gaap:OperatingSegmentsMember2020-01-012020-09-300001334036us-gaap:OperatingSegmentsMember2019-01-012019-09-300001334036us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2020-07-012020-09-300001334036us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2019-07-012019-09-300001334036us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2020-01-012020-09-300001334036us-gaap:OperatingSegmentsMemberus-gaap:AllOtherSegmentsMember2019-01-012019-09-300001334036us-gaap:MaterialReconcilingItemsMember2020-07-012020-09-300001334036us-gaap:MaterialReconcilingItemsMember2019-07-012019-09-300001334036us-gaap:MaterialReconcilingItemsMember2020-01-012020-09-300001334036us-gaap:MaterialReconcilingItemsMember2019-01-012019-09-30iso4217:BRL0001334036crox:BrazilianFederalTaxAuthoritiesMember2015-01-132015-01-130001334036crox:BrazilianFederalTaxAuthoritiesMember2015-02-252015-02-250001334036crox:BrazilianFederalTaxAuthoritiesMember2018-03-222018-03-22

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, 2020
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 No. 000-51754
_____________________________________________________________
CROCS, INC.
(Exact name of registrant as specified in its charter)
Delaware 20-2164234
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
13601 Via Varra, Broomfield, Colorado 80020
(Address, including zip code, of registrant’s principal executive offices)
(303848-7000
(Registrant’s telephone number, including area code)
_____________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:Trading symbol:Name of each exchange on which registered:
Common Stock, par value $0.001 per shareCROXThe Nasdaq Global Select Market

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 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 filerNon-accelerated filerSmaller reporting companyEmerging growth 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.

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 October 20, 2020, Crocs, Inc. had 67,497,289 shares of its common stock, par value $0.001 per share, outstanding.




Cautionary Note Regarding Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, we may also provide oral or written forward-looking statements in other materials we release to the public. Such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995.

Statements that refer to industry trends, projections of our future financial performance, anticipated trends in our business and other characterizations of future events or circumstances are forward-looking statements. These statements, which express management’s current views concerning future events or results, use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “future,” “intend,” “plan,” “project,” “strive,” and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will,” “would,” and similar expressions or variations. Examples of forward-looking statements include, but are not limited to, statements we make regarding:

our expectations regarding the impact of the novel coronavirus (“COVID-19”) pandemic on our business, financial condition, operating results, capital expenditures, and liquidity;
our expectations regarding future trends, selling, general and administrative cost savings, expectations, and performance of our business;
our belief that we have sufficient liquidity to fund our business operations during the next twelve months; and
our expectations about the impact of our strategic plans.

Forward-looking statements are subject to risks, uncertainties, and other factors, which may cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation, those described in the section entitled “Risk Factors” under Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2019, and our subsequent filings with the Securities and Exchange Commission, including those described in the section entitled “Risk Factors” under Item 1A in this report. Caution should be taken not to place undue reliance on any such forward-looking statements. Moreover, such forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
 

i

Crocs, Inc.
Table of Contents to the Quarterly Report on Form 10-Q
For the Quarterly Period Ended September 30, 2020
 
 

ii

PART I — Financial Information
 
ITEM 1. Financial Statements
 
CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
 
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Revenues
$361,736 $312,766 $974,445 $967,614 
Cost of sales
154,967 148,942 453,581 476,796 
Gross profit
206,769 163,824 520,864 490,818 
Selling, general and administrative expenses
134,683 123,940 371,371 370,525 
Income from operations
72,086 39,884 149,493 120,293 
Foreign currency gains (losses), net
(516)585 (1,434)(893)
Interest income
43 167 189 493 
Interest expense
(1,502)(2,505)(5,593)(6,743)
Other income (expense), net
(27)(34)901 (48)
Income before income taxes
70,084 38,097 143,556 113,102 
Income tax expense
8,195 2,421 14,025 13,518 
Net income
$61,889 $35,676 $129,531 $99,584 
Net income per common share:
Basic
$0.92 $0.52 $1.92 $1.40 
Diluted
$0.91 $0.51 $1.89 $1.38 
Weighted average common shares outstanding:
Basic
67,473 69,097 67,606 71,003 
Diluted
68,385 70,176 68,608 72,342 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands)
  
 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
Net income
$61,889 $35,676 $129,531 $99,584 
Other comprehensive income (loss):
  
Foreign currency translation gains (losses), net
4,160 (8,730)(3,663)(8,679)
Reclassification of foreign currency translation loss to income (1)
  (164) 
Total comprehensive income
$66,049 $26,946 $125,704 $90,905 
(1) Represents the reclassification of cumulative foreign currency translation adjustment upon liquidation of foreign subsidiaries during the nine months ended September 30, 2020.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


2

CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and par value amounts)
September 30,
2020
December 31,
2019
ASSETS
  
Current assets:
  
Cash and cash equivalents
$123,562 $108,253 
Accounts receivable, net of allowances of $21,206 and $18,797, respectively
139,474 108,199 
Inventories
174,119 172,028 
Income taxes receivable
8,426 1,341 
Other receivables
9,593 8,711 
Restricted cash - current
1,565 1,500 
Prepaid expenses and other assets
15,570 25,350 
Total current assets
472,309 425,382 
Property and equipment, net of accumulated depreciation and amortization of $86,252 and $79,604, respectively
56,321 47,405 
Intangible assets, net of accumulated amortization of $94,627 and $82,760, respectively
40,147 47,095 
Goodwill
1,649 1,578 
Deferred tax assets, net
23,273 24,747 
Restricted cash
1,810 2,292 
Right-of-use assets
197,402 182,228 
Other assets
9,134 8,075 
Total assets
$802,045 $738,802 
LIABILITIES AND STOCKHOLDERS’ EQUITY
  
Current liabilities:
  
Accounts payable
$119,108 $95,754 
Accrued expenses and other liabilities
100,294 108,677 
Income taxes payable
9,467 4,207 
Current operating lease liabilities
49,741 48,585 
Total current liabilities
278,610 257,223 
Long-term income taxes payable
5,098 4,522 
Long-term borrowings
135,000 205,000 
Long-term operating lease liabilities155,349 140,148 
Other liabilities
1 4 
Total liabilities
574,058 606,897 
Commitments and contingencies
Stockholders’ equity:
  
Preferred stock, par value $0.001 per share, 5.0 million shares authorized including 1.0 million authorized as Series A Convertible Preferred Stock, none outstanding
  
Common stock, par value $0.001 per share, 250.0 million shares authorized, 105.0 million and 104.0 million issued, 67.5 million and 68.2 million outstanding, respectively
105 104 
Treasury stock, at cost, 37.5 million and 35.8 million shares, respectively
(587,983)(546,208)
Additional paid-in capital
508,055 495,903 
Retained earnings
370,016 240,485 
Accumulated other comprehensive loss
(62,206)(58,379)
Total stockholders’ equity
227,987 131,905 
Total liabilities and stockholders’ equity
$802,045 $738,802 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in thousands)

 Common StockTreasury StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
 SharesAmountSharesAmount
Balance at June 30, 2020
67,455 $105 37,470 $(587,940)$502,958 $308,127 $(66,366)$156,884 
Share-based compensation— — — — 4,867 — — 4,867 
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units
35 — 1 (43)230 — — 187 
Repurchases of common stock
— — — — — — —  
Net income
— — — — — 61,889 — 61,889 
Other comprehensive income
— — — — — — 4,160 4,160 
Balance at September 30, 2020
67,490 $105 37,471 $(587,983)$508,055 $370,016 $(62,206)$227,987 

 Common StockTreasury StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
 SharesAmountSharesAmount
Balance at June 30, 2019
69,615 $104 34,350 $(507,193)$488,730 $184,896 $(54,601)$111,936 
Share-based compensation— — — — 3,619 — — 3,619 
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units
30 — 1 (27)50 — — 23 
Repurchases of common stock
(1,042)— 1,042 (25,000)— — — (25,000)
Net income
— — — — — 35,676 — 35,676 
Other comprehensive loss
— — — — — — (8,730)(8,730)
Balance at September 30, 2019
68,603 $104 35,393 $(532,220)$492,399 $220,572 $(63,331)$117,524 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in thousands)

 Common StockTreasury StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
 SharesAmountSharesAmount
Balance at December 31, 2019
68,232 $104 35,796 $(546,208)$495,903 $240,485 $(58,379)$131,905 
Share-based compensation— — — — 10,809 — — 10,809 
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units
817 1 116 (2,616)1,343 — — (1,272)
Repurchases of common stock
(1,559)— 1,559 (39,159)— — — (39,159)
Net income
— — — — — 129,531 — 129,531 
Other comprehensive loss
— — — — — — (3,827)(3,827)
Balance at September 30, 2020
67,490 $105 37,471 $(587,983)$508,055 $370,016 $(62,206)$227,987 

 Common StockTreasury StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
 SharesAmountSharesAmount
Balance at December 31, 2018
73,306 $103 29,656 $(397,491)$481,133 $121,215 $(54,652)$150,308 
Adjustments to beginning retained earnings (1)
— — — — — (227)(227)
Share-based compensation— — — — 11,020 — — 11,020 
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units
984 1 50 (1,254)246 — — (1,007)
Repurchases of common stock
(5,687)— 5,687 (133,475)— — — (133,475)
Net income
— — — — — 99,584 — 99,584 
Other comprehensive loss
— — — — — — (8,679)(8,679)
Balance at September 30, 2019
68,603 $104 35,393 $(532,220)$492,399 $220,572 $(63,331)$117,524 
(1) The decrease to beginning retained earnings in the nine months ended September 30, 2019 is a result of the prior year adoption of new lease accounting standards.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Nine Months Ended September 30,
 20202019
Cash flows from operating activities:
  
Net income
$129,531 $99,584 
Adjustments to reconcile net income to net cash provided by operating activities:
  
Depreciation and amortization
20,251 17,508 
Operating lease cost
45,818 44,776 
Inventory donations
8,873 23 
Provision for doubtful accounts, net
5,720 2,132 
Share-based compensation
10,809 11,020 
Other non-cash items
3,632 (2,843)
Changes in operating assets and liabilities:
 
Accounts receivable
(38,937)(30,619)
Inventories
(14,873)(17,178)
Prepaid expenses and other assets
7,706 (3,501)
Accounts payable, accrued expenses and other liabilities
25,243 1,955 
Operating lease liabilities
(45,133)(49,668)
Cash provided by operating activities
158,640 73,189 
Cash flows from investing activities:
  
Purchases of property, equipment, and software
(33,193)(32,852)
Proceeds from disposal of property and equipment
434 302 
Other
(168) 
Cash used in investing activities
(32,927)(32,550)
Cash flows from financing activities:
  
Proceeds from bank borrowings
150,000 310,000 
Repayments of bank borrowings
(220,000)(245,000)
Dividends—Series A convertible preferred stock (1)
 (2,985)
Repurchases of common stock
(39,159)(133,475)
Other
(1,792)(3,275)
Cash used in financing activities
(110,951)(74,735)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
130 (2,299)
Net change in cash, cash equivalents, and restricted cash
14,892 (36,395)
Cash, cash equivalents, and restricted cash—beginning of period
112,045 127,530 
Cash, cash equivalents, and restricted cash—end of period
$126,937 $91,135 
(1) For the nine months ended September 30, 2019, represents $3.0 million paid to induce conversion of Series A Convertible Preferred Stock to common stock.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

CROCS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise noted in this report, any description of the “Company,” “Crocs,” “we,” “us,” or “our” includes Crocs, Inc. and our consolidated subsidiaries within our reportable operating segments and corporate operations. We are engaged in the design, development, worldwide marketing, distribution, and sale of casual lifestyle footwear and accessories for men, women, and children. We strive to be the global leader in the sale of molded footwear characterized by functionality, comfort, color, and lightweight design.

Our reportable operating segments include: the Americas, operating in North and South America; Asia Pacific, operating throughout Asia, Australia, and New Zealand; and Europe, Middle East, and Africa (“EMEA”), operating throughout Europe, Russia, the Middle East, and Africa. See Note 14 — Operating Segments and Geographic Information for additional information.

The accompanying unaudited condensed consolidated interim financial statements include our accounts and those of our wholly-owned subsidiaries, and reflect all adjustments which are necessary for a fair statement of the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Such unaudited condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

These unaudited condensed consolidated interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019 (“Annual Report”), and have been prepared on a consistent basis with the accounting policies described in Note 1 of the Notes to the Audited Consolidated Financial Statements included in our Annual Report. Our accounting policies did not change during the nine months ended September 30, 2020, other than with respect to the new accounting pronouncements adopted as described in Note 2 — Recent Accounting Pronouncements and the COVID-19-related lease accounting policy election as described in Note 4 — Leases.

Reclassifications

We have reclassified certain amounts on the condensed consolidated statements of cash flows to conform to current period presentation.

Use of Estimates

U.S. GAAP requires us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions used to determine certain amounts that affect the financial statements are reasonable, based on information available at the time they are made. Management believes that the estimates, judgments, and assumptions made when accounting for items and matters such as, but not limited to, the allowance for doubtful accounts, customer rebates, sales returns, impairment assessments and charges, recoverability of long-lived assets, deferred tax assets, uncertain tax positions, income tax expense, share-based compensation expense, the assessment of lower of cost or net realizable value on inventory, useful lives assigned to long-lived assets, and depreciation and amortization, are reasonable based on information available at the time they are made.

Additionally, the full impact of COVID-19 is unknown and cannot be reasonably estimated as of the reporting date. However, we have made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, our condensed consolidated financial statements may be materially affected.

Seasonality of Business

Due to the seasonal nature of our footwear, which is more heavily focused on styles suitable for warm weather, revenues generated during our fourth quarter, when the northern hemisphere is experiencing cooler weather, are typically less than revenues generated during our first three quarters. Our quarterly results of operations may also fluctuate significantly as a result
7

of a variety of other factors, including the timing of new model introductions, general economic conditions, and consumer confidence. Accordingly, results of operations and cash flows for any one quarter are not necessarily indicative of expected results for any other quarter or for any other year.

Transactions with Affiliates

In 2019, we received services from three affiliates of Blackstone Capital Partners VI L.P. (“Blackstone”). Blackstone and certain of its permitted transferees beneficially owned 6,899,027 shares of our common stock until Blackstone sold 6,864,545 shares of common stock held directly by Blackstone and its affiliates in an underwritten public offering on November 4, 2019. The other 34,482 shares of common stock were held by Gregg S. Ribatt, our former Chief Executive Officer and former member of our Board of Directors, which Blackstone may have been deemed to beneficially own, and were sold by Mr. Ribatt in October 2019. We incurred expenses to Blackstone’s legal counsel of $0.3 million in relation to this offering.

Certain Blackstone affiliates provide various services to us, including inventory count services, cybersecurity and consulting, and workforce management services. We incurred expenses for services from these affiliates of $0.3 million and $1.3 million for the three and nine months ended September 30, 2019, respectively. Expenses related to these services are reported in ‘Selling, general and administrative expenses’ in the condensed consolidated statements of operations.

2. RECENT ACCOUNTING PRONOUNCEMENTS
 
New Accounting Pronouncement Adopted

Measurement of Credit Losses

In June 2016, and through subsequent amendments, the Financial Accounting Standards Board (“FASB”) issued guidance that requires the measurement and recognition of expected credit losses for financial assets. This new model replaces the existing “current incurred loss” model with a forward-looking “current expected credit loss” model. On January 1, 2020, we adopted this guidance on a modified retrospective basis. Based on the nature of our financial instruments included within the scope of this standard, which are primarily trade and other receivables, the adoption did not have a material effect on our condensed consolidated financial statements.

Implementation Costs Incurred in Cloud Computing Arrangements

In August 2018, the FASB issued authoritative guidance related to the treatment of implementation costs incurred in a hosting arrangement that is considered a service contract. On January 1, 2020, we adopted this guidance on a prospective basis. The adoption did not have a material effect on our condensed consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

Simplifying Accounting for Income Taxes

In December 2019, the FASB issued new guidance to simplify the accounting for income taxes by removing certain exceptions to the general principles and also simplification of areas such as franchise taxes, step-up in tax basis goodwill, separate entity financial statements and interim recognition of enactment of tax laws or rate changes. The standard will be effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those periods. We do not expect this standard to have a material impact on our condensed consolidated financial statements.

Reference Rate Reform

In March 2020, the FASB issued optional guidance related to reference rate reform, which provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. This guidance is applicable for our borrowing instruments, which use LIBOR as a reference rate, and is available for adoption effective immediately, but is only available through December 31, 2022. We are currently evaluating the potential impact of this standard on our condensed consolidated financial statements.

Other Pronouncements

Other new pronouncements issued but not effective until after September 30, 2020 are not expected to have a material impact on our condensed consolidated financial statements.
8


3. ACCRUED EXPENSES AND OTHER LIABILITIES
 
Amounts reported in ‘Accrued expenses and other liabilities’ in the condensed consolidated balance sheets were:
September 30, 2020December 31, 2019
 (in thousands)
Accrued compensation and benefits$33,476 $42,460 
Fulfillment, freight, and duties17,985 20,110 
Professional services 13,725 13,361 
Accrued rent and occupancy4,954 4,682 
Return liabilities4,935 7,090 
Sales/use and value added taxes payable11,125 6,843 
Royalties payable and deferred revenue3,314 3,740 
Other10,780 10,391 
Total accrued expenses and other liabilities$100,294 $108,677 

4. LEASES

As a result of the COVID-19 pandemic, we received lease concessions from landlords in the form of rent deferrals and rent abatements in the three and nine months ended September 30, 2020. We chose to implement the policy election provided by the FASB in April 2020 to record rent concessions as if no modifications to leases contracts were made, and thus no changes to the lease obligations were recorded in respect to these concessions. As of September 30, 2020, we had outstanding deferred rent of $2.6 million, the majority of which is scheduled to be paid by December 31, 2020. In the three and nine months ended September 30, 2020, we received rent abatements of $0.1 million and $1.4 million, respectively.

Right-of-Use Assets and Operating Lease Liabilities

Amounts reported in the condensed consolidated balance sheets were:
September 30, 2020December 31, 2019
(in thousands)
Assets:
Right-of-use assets$197,402 $182,228 
Liabilities:
Current operating lease liabilities$49,741 $48,585 
Long-term operating lease liabilities155,349 140,148 
Total operating lease liabilities$205,090 $188,733 

Lease Costs and Other Information

Lease-related costs reported within ‘Cost of sales’ and ‘Selling, general and administrative expenses’ in our condensed consolidated statements of operations were:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
(in thousands)
Operating lease cost $15,605 $15,097 $45,818 $44,776 
Short-term lease cost1,274 982 3,936 2,729 
Variable lease cost5,728 6,643 11,502 13,932 
Total lease costs$22,607 $22,722 $61,256 $61,437 

9

Other information related to leases, including supplemental cash flow information, consists of:
Nine Months Ended September 30,
20202019
(in thousands)
Cash paid for operating leases$41,043 $48,569 
Right-of-use assets obtained in exchange for operating lease liabilities (1)
54,218 222,401 
(1) In the nine months ended September 30, 2019, we implemented ASC 842, Leases. The previously reported amount includes $176.1 million for operating leases existing on January 1, 2019 and $46.3 million for operating leases that commenced in the nine months ended September 30, 2019.

The weighted average remaining lease term and discount rate related to our lease liabilities as of September 30, 2020 were 6.7 years and 4.4%, respectively. As of September 30, 2019, the weighted average remaining lease term and discount rate related to our lease liabilities were 6.1 years and 4.8%, respectively.

Maturities

The maturities of our operating lease liabilities were:
As of
September 30, 2020
(in thousands)
2020 (remainder of year)$11,178 
202154,715 
202240,136 
202330,501 
202420,327 
Thereafter82,117 
Total future minimum lease payments238,974 
Less: imputed interest(33,884)
Total operating lease liabilities$205,090 

Leases Commencements

In the third quarter of 2020, the lease for a new distribution center adjacent to our existing facility in Dayton, Ohio commenced, the impact of which is included in the above lease disclosures.

Leases That Have Not Yet Commenced

As of September 30, 2020, we had significant obligations for a lease not yet commenced related to our new EMEA distribution center. In the fourth quarter of 2019, we entered into a lease for a new distribution center in Dordrecht, the Netherlands, which is expected to replace our existing distribution center in Rotterdam by the end of 2021. In the three months ended September 30, 2020, we entered into an addendum to the lease, which provides for additional space at the new distribution center. The total contractual commitment related to the amended lease, with payments expected to begin in the second quarter of 2021 and continuing through December 2030, is approximately €30 million, or $35 million, with expected total capital investments of approximately €20 million, or $23 million, through 2021.

5. FAIR VALUE MEASUREMENTS
 
Recurring Fair Value Measurements
 
All of our derivative instruments are classified as Level 2 of the fair value hierarchy and are reported in the condensed consolidated balance sheets within ‘Accrued expenses and other liabilities’ and ‘Prepaid expenses and other assets’ at September 30, 2020 and December 31, 2019, respectively. The fair values of our derivative instruments were an immaterial liability and asset at September 30, 2020 and December 31, 2019, respectively. See Note 6 — Derivative Financial Instruments for more information.
10


The carrying amounts of our cash, cash equivalents, and restricted cash, accounts receivable, accounts payable, and current accrued expenses and other liabilities approximate their fair value as recorded due to the short-term maturity of these instruments.

Our borrowing instruments are recorded at their carrying values in the condensed consolidated balance sheets, which may differ from their respective fair values. The fair values of our outstanding borrowings approximate their carrying values at September 30, 2020 and December 31, 2019, based on interest rates currently available to us for similar borrowings, and were:
September 30, 2020December 31, 2019
Carrying ValueFair ValueCarrying ValueFair Value
(in thousands)
Borrowings$135,000 $135,000 $205,000 $205,000 

Non-Financial Assets and Liabilities

Our non-financial assets, which primarily consist of property and equipment, right-of-use assets, goodwill, and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value. The fair values of these assets are determined based on Level 3 measurements, including estimates of the amount and timing of future cash flows based upon historical experience, expected market conditions, and management’s plans. Impairment expense is reported in ‘Selling, general and administrative expenses’ in our condensed consolidated statements of operations. We did not record impairment expense in the three and nine months ended September 30, 2020 or 2019.

During the three and nine months ended September 30, 2020, we recorded inventory donations of $0.1 million and $10.0 million, respectively, at fair value within ‘Selling, general and administrative expenses’ in our condensed consolidated statements of operations. We did not record material inventory donations in the three or nine months ended September 30, 2019.

6. DERIVATIVE FINANCIAL INSTRUMENTS
 
We transact business in various foreign countries and are therefore exposed to foreign currency exchange rate risk that impacts the reported U.S. Dollar amounts of revenues, expenses, and certain foreign currency monetary assets and liabilities. In order to manage exposure to fluctuations in foreign currency and to reduce the volatility in earnings caused by fluctuations in foreign exchange rates, we may enter into forward contracts to buy and sell foreign currency. By policy, we do not enter into these contracts for trading purposes or speculation.

Counterparty default risk is considered low because the forward contracts that we enter into are over-the-counter instruments transacted with highly-rated financial institutions. We were not required to and did not post collateral as of September 30, 2020 or December 31, 2019.

Our derivative instruments are recorded at fair value as a derivative asset or liability in the condensed consolidated balance sheets. We report derivative instruments with the same counterparty on a net basis when a master netting arrangement is in place. Changes in fair value are recognized within ‘Foreign currency gains (losses), net’ in the condensed consolidated statements of operations. For the condensed consolidated statements of cash flows, we classify cash flows from derivative instruments at settlement in the same category as the cash flows from the related hedged items within ‘Cash provided by operating activities.’

11

Results of Derivative Activities

The fair values of derivative assets and liabilities, net, all of which are classified as Level 2, reported within either ‘Accrued expenses and other liabilities’ or ‘Prepaid expenses and other assets’ in the condensed consolidated balance sheets, were:
September 30, 2020December 31, 2019
Derivative AssetsDerivative LiabilitiesDerivative AssetsDerivative Liabilities
(in thousands)
Forward foreign currency exchange contracts$625 $(664)$535 $(424)
Netting of counterparty contracts(625)625 (424)424 
  Foreign currency forward contract derivatives$ $(39)$111 $ 

The notional amounts of outstanding foreign currency forward exchange contracts presented below report the total U.S. Dollar equivalent position and the net contract fair values for each foreign currency position.
September 30, 2020December 31, 2019
NotionalFair ValueNotionalFair Value
(in thousands)
Euro$35,258 $52 $46,757 $36 
Singapore Dollar40,448 20 31,255 344 
Japanese Yen16,786 11 11,823 63 
South Korean Won23,117 (38)10,328 (82)
British Pound Sterling7,305 64 9,155 (104)
Other currencies27,548 (148)24,969 (146)
Total$150,462 $(39)$134,287 $111 
Latest maturity dateOctober 2020January 2020

Amounts reported in ‘Foreign currency gains (losses), net’ in the condensed consolidated statements of operations include both realized and unrealized gains (losses) from foreign currency transactions and derivative contracts and were:
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (in thousands)
Foreign currency transaction gains (losses)
$(477)$1,743 $223 $835 
Foreign currency forward exchange contracts losses
(39)(1,158)(1,657)(