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, 2021

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)

(303) 848-7000

(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 share	CROX	The 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 filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging 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 July 15, 2021, Crocs, Inc. had 62,385,533 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 future trends, expectations, and performance of our business;

•our belief that we have sufficient liquidity to fund our business operations during the next twelve months;

•our expectations about the impact of our strategic plans;

•the amount and timing of our capital expenditures; and

•our intent to achieve various Environmental, Social, and Governance initiatives.

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, 2020 and our subsequent filings with the Securities and Exchange Commission. 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.

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Crocs, Inc.

Table of Contents to the Quarterly Report on Form 10-Q

For the Quarterly Period Ended June 30, 2021

 

PART I — Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
PART II — Other Information		39
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 6.	Exhibits	40
Signatures		41

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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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues	$	640,773	$	331,549	$	1,100,871	$	612,709
Cost of sales	245,592		151,616		452,471		298,614
Gross profit	395,181		179,933		648,400		314,095
Selling, general and administrative expenses	199,859		123,338		328,392		236,688
Income from operations	195,322		56,595		320,008		77,407
Foreign currency losses, net	(117)		(687)		(621)		(918)
Interest income	71		49		98		146
Interest expense	(4,712)		(2,170)		(6,344)		(4,091)
Other income, net	2		907		13		928
Income before income taxes	190,566		54,694		313,154		73,472
Income tax expense (benefit)	(128,388)		(1,857)		(104,198)		5,830
Net income	$	318,954	$	56,551	$	417,352	$	67,642
Net income per common share:
Basic	$	5.02	$	0.84	$	6.47	$	1.00
Diluted	$	4.93	$	0.83	$	6.35	$	0.99
Weighted average common shares outstanding:
Basic	63,595		67,416		64,526		67,674
Diluted	64,640		68,038		65,744		68,664

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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	318,954	$	56,551	$	417,352	$	67,642
Other comprehensive income (loss):
Foreign currency translation gains (losses), net	3,442		3,543		(7,186)		(7,823)
Reclassification of foreign currency translation loss to income (1)	—		—		—		(164)
Total comprehensive income	$	322,396	$	60,094	$	410,166	$	59,655

(1) Represents the reclassification of cumulative foreign currency translation adjustment upon liquidation of foreign subsidiaries during the six months ended June 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)

	June 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	197,853	$	135,802
Restricted cash - current	1,469		1,542
Accounts receivable, net of allowances of $22,508 and $21,093, respectively	233,262		149,847
Inventories	209,089		175,121
Income taxes receivable	1,352		1,857
Other receivables	14,438		10,816
Prepaid expenses and other assets	21,052		17,856
Total current assets	678,515		492,841
Property and equipment, net of accumulated depreciation and amortization of $85,351 and $86,305, respectively	76,949		57,467
Intangible assets, net of accumulated amortization of $103,741 and $95,426, respectively	33,731		37,636
Goodwill	1,669		1,719
Deferred tax assets, net	515,667		350,784
Restricted cash	3,857		1,929
Right-of-use assets	175,378		167,421
Other assets	8,036		8,926
Total assets	$	1,493,802	$	1,118,723
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	166,817	$	112,778
Accrued expenses and other liabilities	156,565		126,704
Income taxes payable	11,814		5,038
Current operating lease liabilities	45,726		47,064
Total current liabilities	380,922		291,584
Long-term income taxes payable	200,969		205,974
Long-term borrowings	386,383		180,000
Long-term operating lease liabilities	162,552		146,401
Other liabilities	4,212		4,131
Total liabilities	1,135,038		828,090
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, 105.7 million and 105.0 million issued, 62.4 million and 65.9 million outstanding, respectively	106		105
Treasury stock, at cost, 43.3 million and 39.1 million shares, respectively	(1,078,857)		(688,849)
Additional paid-in capital	530,357		482,385
Retained earnings	970,698		553,346
Accumulated other comprehensive loss	(63,540)		(56,354)
Total stockholders’ equity	358,764		290,633
Total liabilities and stockholders’ equity	$	1,493,802	$	1,118,723

 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 Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2021	65,225	$	106	40,383	$	(783,926)	$	525,289	$	651,744	$	(66,982)	$	326,231
Share-based compensation	—	—		—	—		11,294		—		—		11,294
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units	47	—		10	(1,158)		1		—		—		(1,157)
Repurchases of common stock	(2,890)	—		2,890	(293,773)		(6,227)		—		—		(300,000)
Net income	—	—		—	—		—		318,954		—		318,954
Other comprehensive income	—	—		—	—		—		—		3,442		3,442
Balance at June 30, 2021	62,382	$	106	43,283	$	(1,078,857)	$	530,357	$	970,698	$	(63,540)	$	358,764

	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2020	67,375	$	105	37,470	$	(587,940)	$	500,197	$	251,576	$	(69,909)	$	94,029
Share-based compensation	—	—		—	—		1,978		—		—		1,978
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units	80	—		—	—		783		—		—		783
Repurchases of common stock	—	—		—	—		—		—		—		—
Net income	—	—		—	—		—		56,551		—		56,551
Other comprehensive income	—	—		—	—		—		—		3,543		3,543
Balance at June 30, 2020	67,455	$	105	37,470	$	(587,940)	$	502,958	$	308,127	$	(66,366)	$	156,884

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 Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	65,856	$	105	39,132	$	(688,849)	$	482,385	$	553,346	$	(56,354)	$	290,633
Share-based compensation	—	—		—	—		19,348		—		—		19,348
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units	528	1		149	(11,620)		236		—		—		(11,383)
Repurchases of common stock	(4,002)	—		4,002	(378,388)		28,388		—		—		(350,000)
Net income	—	—		—	—		—		417,352		—		417,352
Other comprehensive loss	—	—		—	—		—		—		(7,186)		(7,186)
Balance at June 30, 2021	62,382	$	106	43,283	$	(1,078,857)	$	530,357	$	970,698	$	(63,540)	$	358,764

	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2019	68,232	$	104	35,796	$	(546,208)	$	495,903	$	240,485	$	(58,379)	$	131,905
Share-based compensation	—	—		—	—		5,942		—		—		5,942
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units	782	1		115	(2,573)		1,113		—		—		(1,459)
Repurchases of common stock	(1,559)	—		1,559	(39,159)		—		—		—		(39,159)
Net income	—	—		—	—		—		67,642		—		67,642
Other comprehensive loss	—	—		—	—		—		—		(7,987)		(7,987)
Balance at June 30, 2020	67,455	$	105	37,470	$	(587,940)	$	502,958	$	308,127	$	(66,366)	$	156,884

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)

	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net income	$	417,352	$	67,642
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	15,749		13,499
Operating lease cost	29,758		30,213
Inventory donations	641		8,821
Provision for (recovery of) doubtful accounts, net	(2,556)		6,507
Share-based compensation	19,348		5,942
Deferred income taxes	(176,862)		—
Other non-cash items	836		2,029
Changes in operating assets and liabilities:
Accounts receivable	(82,621)		(62,146)
Inventories	(36,099)		11,240
Prepaid expenses and other assets	4,059		1,002
Accounts payable, accrued expenses and other liabilities	75,520		(15,316)
Right-of-use assets and operating lease liabilities	(22,759)		(29,166)
Cash provided by operating activities	242,366		40,267
Cash flows from investing activities:
Purchases of property, equipment, and software	(21,329)		(24,328)
Proceeds from disposal of property and equipment	6		434
Other	—		(116)
Cash used in investing activities	(21,323)		(24,010)
Cash flows from financing activities:
Proceeds from notes issuance	350,000		—
Proceeds from bank borrowings	170,000		150,000
Repayments of bank borrowings	(305,000)		(80,000)
Repurchases of common stock	(350,000)		(39,159)
Repurchases of common stock for tax withholding	(11,619)		(2,573)
Other	(8,725)		609
Cash provided by (used in) financing activities	(155,344)		28,877
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1,793)		(2,360)
Net change in cash, cash equivalents, and restricted cash	63,906		42,774
Cash, cash equivalents, and restricted cash—beginning of period	139,273		112,045
Cash, cash equivalents, and restricted cash—end of period	$	203,179	$	154,819

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 women, men, 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, 2020 (“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 six months ended June 30, 2021, other than with respect to the new accounting pronouncements adopted as described in Note 2 — Recent Accounting Pronouncements.

Reclassifications

We have reclassified certain amounts on the condensed consolidated statements of cash flows, Note 9 — Revenues, and Note 14 — Operating Segments and Geographic Information 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, valuation allowances, 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. To the extent there are differences between these estimates and actual results, our condensed consolidated financial statements may be materially affected.

Condensed Consolidated Statements of Cash Flows - Supplemental Schedule of Non-Cash Investing and Financing Activities

	Six Months Ended June 30,
	2021		2020
	(in thousands)
Accrued purchases of property, equipment, and software	$	6,423	$	6,041

7

2. RECENT ACCOUNTING PRONOUNCEMENTS

New Accounting Pronouncement 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, intra-period income tax expense allocation exceptions, and interim recognition of enactment of tax laws or rate changes. On January 1, 2021, we adopted this guidance. The adoption did not have a material effect on our condensed consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

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 revolving 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 June 30, 2021 are not expected to have a material impact on our condensed consolidated financial statements.

3. ACCRUED EXPENSES AND OTHER LIABILITIES

Amounts reported in ‘Accrued expenses and other liabilities’ in the condensed consolidated balance sheets were:

	June 30, 2021		December 31, 2020
	(in thousands)
Accrued compensation and benefits	$	39,240	$	48,870
Professional services	30,514		18,478
Fulfillment, freight, and duties	25,708		17,868
Sales/use and value added taxes payable	19,949		12,480
Return liabilities	11,500		6,906
Royalties payable and deferred revenue	8,369		6,254
Accrued rent and occupancy	7,885		3,818
Other	13,400		12,030
Total accrued expenses and other liabilities	$	156,565	$	126,704

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4. LEASES

Right-of-Use Assets and Operating Lease Liabilities

Amounts reported in the condensed consolidated balance sheets were:

	June 30, 2021		December 31, 2020
	(in thousands)
Assets:
Right-of-use assets	$	175,378	$	167,421
Liabilities:
Current operating lease liabilities	$	45,726	$	47,064
Long-term operating lease liabilities	162,552		146,401
Total operating lease liabilities	$	208,278	$	193,465

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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(in thousands)
Operating lease cost	$	14,926	$	15,219	$	29,758	$	30,213
Short-term lease cost	1,963		1,337		3,404		2,662
Variable lease cost	10,659		4,273		14,307		5,773
Total lease costs	$	27,548	$	20,829	$	47,469	$	38,648

Other information related to leases, including supplemental cash flow information, consists of:

	Six Months Ended June 30,
	2021		2020
	(in thousands)
Cash paid for operating leases	$	31,910	$	23,587
Right-of-use assets obtained in exchange for operating lease liabilities	43,582		27,586

The weighted average remaining lease term and discount rate related to our lease liabilities as of June 30, 2021 were 7.3 years and 3.9%, respectively. As of June 30, 2020, the weighted average remaining lease term and discount rate related to our lease liabilities were 6.3 years and 4.7%, respectively.

9

Maturities

The maturities of our operating lease liabilities were:

	As of June 30, 2021
	(in thousands)
2021 (remainder of year)	$	23,698
2022	46,462
2023	35,576
2024	24,322
2025	18,057
Thereafter	91,823
Total future minimum lease payments	239,938
Less: imputed interest	(31,660)
Total operating lease liabilities	$	208,278

Leases That Have Not Yet Commenced

As of June 30, 2021, we had significant obligations for a lease not yet commenced related to the expansion of our Americas distribution center in Dayton, Ohio. The total contractual commitment related to the lease, with payments expected to begin in the first quarter of 2022 and continue through September 2030, is approximately $31 million.

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’ at June 30, 2021 and December 31, 2020. The fair values of our derivative instruments were an immaterial liability at June 30, 2021 and December 31, 2020. See Note 6 — Derivative Financial Instruments for more information.

The carrying amounts of our cash, cash equivalents, and current 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. In the six months ended June 30, 2021, we completed the issuance and sale of $350.0 million aggregate principal amount of 4.250% Senior Notes (the “Notes”), as defined and described in more detail in Note 7 — Long-Term Borrowings. The Notes are classified as Level 1 of the fair value hierarchy and are reported in our condensed consolidated balance sheet at face value, less unamortized issuance costs. The carrying and fair values of our revolving credit facilities approximate their carrying values at June 30, 2021 and December 31, 2020 based on interest rates currently available to us for similar borrowings. The carrying value and fair value of our borrowing instruments as of June 30, 2021 and December 31, 2020 were:

	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Senior notes issuance	$	350,000	$	357,656	$	—	$	—
Revolving credit facilities	45,000		45,000		180,000		180,000

10

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 six months ended June 30, 2021. Additionally, no impairment expense was recorded in the three or six months ended June 30, 2020.

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 June 30, 2021 or December 31, 2020.

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 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.’

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:

	June 30, 2021				December 31, 2020
	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
	(in thousands)
Forward foreign currency exchange contracts	$	871	$	(1,696)	$	794	$	(1,225)
Netting of counterparty contracts	(871)		871		(794)		794
Foreign currency forward contract derivatives	$	—	$	(825)	$	—	$	(431)

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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.

	June 30, 2021				December 31, 2020
	Notional		Fair Value		Notional		Fair Value
	(in thousands)
Euro	$	28,296	$	125	$	28,851	$	(82)
Singapore Dollar	40,603		(438)		24,211		457
Indian Rupee	18,574		(461)		18,937		(134)
Japanese Yen	21,074		554		17,447		(240)
British Pound Sterling	11,826		(100)		16,134		(182)
South Korean Won	12,179		114		3,741		(56)
Other currencies	19,753		(619)		9,675		(194)
Total	$	152,305	$	(825)	$	118,996	$	(431)
Latest maturity date	July 2021				January 2021

Amounts reported in ‘Foreign currency 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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(in thousands)
Foreign currency transaction gains (losses)	$	506	$	(327)	$	(345)	$	700
Foreign currency forward exchange contracts losses	(623)		(360)		(276)		(1,618)
Foreign currency losses, net	$	(117)	$	(687)	$	(621)	$	(918)

7. LONG-TERM BORROWINGS

Our borrowings were as follows:

	Maturity	Stated Interest Rate		Effective Interest Rate		June 30, 2021		December 31, 2020
						(in thousands)
Notes issuance of $350.0 million	2029	4.250	%	4.64	%	$	350,000	$	—
Revolving credit facilities						45,000		180,000
Total face value of long-term borrowings						395,000		180,000
Less:
Unamortized issuance costs						8,617		—
Current portion of borrowings						—		—
Total long-term borrowings						$	386,383	$	180,000

Senior Revolving Credit Facility

In July 2019, the Company and certain of our subsidiaries (the “Borrowers”) entered into a Second Amended and Restated Credit Agreement (as amended, the “Credit Agreement”), with the lenders named therein and PNC Bank, National Association, as a lender and administrative agent for the lenders, which provided for a revolving credit facility of $500.0 million, which can be increased by an additional $100.0 million subject to certain conditions (the “Facility”). Borrowings under the Credit Agreement bear interest at a variable rate based on (A) a domestic base rate (defined as the highest of (i) the Federal Funds open rate, plus 0.25%, (ii) the Prime Rate, and (iii) the Daily LIBOR rate, plus 1.00%), plus an applicable margin ranging from 0.25% to 0.875% based on our leverage ratio, or (B) a LIBOR rate, plus an applicable margin ranging from 1.25% to 1.875% based on our leverage ratio. Borrowings under the Credit Agreement are secured by all of the assets of the Borrowers and guaranteed by certain other subsidiaries of the Borrowers.

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The Credit Agreement requires us to maintain a minimum interest coverage ratio of 4.00 to 1.00, and a maximum leverage ratio of (i) 3.50 to 1.00 from the quarter ended December 31, 2020 to the quarter ended December 31, 2021, and (ii) 3.25 to 1.00 from the quarter ended March 31, 2022 and thereafter (subject to adjustment in certain circumstances). The Credit Agreement permits (i) stock repurchases subject to certain restrictions, including after giving effect to such stock repurchases, the maximum leverage ratio does not exceed certain levels; and (ii) certain acquisitions so long as there is borrowing availability under the Credit Agreement of at least $40.0 million. As of June 30, 2021, we were in compliance with all financial covenants under the Credit Agreement.

As of June 30, 2021, the total commitments available from the lenders under the Facility were $500.0 million. At June 30, 2021, we had $45.0 million outstanding borrowings and $0.3 million in outstanding letters of credit under the Facility, which reduces amounts available for borrowing under the Facility. As of June 30, 2021 and December 31, 2020, we had $454.7 million and $319.4 million, respectively, of available borrowing capacity under the Facility.

Asia Revolving Credit Facilities

During the six months ended June 30, 2021, we had two revolving credit facilities in Asia, the revolving credit facility with Citibank (China) Company Limited, Shanghai Branch, which provided up to an equivalent of $5.0 million, and the revolving credit facility with China Merchants Bank Company Limited, Shanghai Branch, which matured in May 2021 and provided up to 30.0 million RMB, or $4.7 million using current exchange rates as of May 2021.

We had no borrowings under our Asia revolving facilities during the six months ended June 30, 2021 and year ended December 31, 2020 or borrowings outstanding at June 30, 2021 and December 31, 2020.

Senior Notes Issuance

On March 12, 2021, the Company completed the issuance and sale of $350.0 million aggregate principal amount of 4.250% Senior Notes due March 15, 2029 (the “Notes”), pursuant to the indenture related thereto (“the Indenture”). Interest on the Notes is payable semi-annually.

The Notes rank pari passu in right of payment with all of the Company’s existing and future senior debt, including the Credit Agreement, and are senior in right of payment to any of the Company’s future debt that is, by its term, expressly subordinated in right of payment to the Notes. The Notes are unconditionally guaranteed by each of the Company’s restricted subsidiaries that is a borrower or guarantor under the Credit Agreement and by each of the Company’s wholly-owned restricted subsidiaries that guarantees any debt of the Company or any guarantor under any syndicated credit facility or capital markets debt in an aggregate principal amount in excess of $25.0 million.

The Company will have the option to redeem all or any portion of the Notes, at once or over time, at any time on or after March 15, 2024, at a redemption price equal to 100% of the principal amount thereof, plus a premium declining ratably on an annual basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company will also have the option to redeem some or all of the Notes at any time before March 15, 2024 at a redemption price of 100% of the principal amount of the Notes to be redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, at any time before March 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the Notes at a redemption price of 104.250% of the principal amount of the Notes with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

The Indenture contains covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to incur additional debt or issue certain preferred stock; pay dividends or repurchase or redeem capital stock or make other restricted payments; declare or pay dividends or other payments; incur liens; enter into certain types of transactions with the Company’s affiliates; and consolidate or merge with or into other companies. As of June 30, 2021, we were in compliance with all financial covenants under the Notes.

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8. COMMON STOCK REPURCHASE PROGRAM 

During the three months ended June 30, 2021, we repurchased 2.9 million shares of our common stock at a cost of $300.0 million, including commissions, under a $300.0 million April 2021 accelerated share repurchase arrangement (“ASR”). Under the ASR, a financial institution delivers shares of our common stock during the purchase period in exchange for an up-front payment. The total number of shares ultimately delivered under the ASR, and therefore the average repurchase price paid per share, is determined based on the volume-weighted average price of our common stock during the purchase period. The purchase period for this ASR ended in June 2021. During the six months ended June 30, 2021, we repurchased 4.0 million shares of our common stock at an aggregate cost of $350.0 million, including commissions. This includes 0.5 million shares received in January 2021 at the conclusion of the purchase period for an accelerated share repurchase agreement we entered into in November 2020.

During the three months ended June 30, 2020, we did not repurchase shares of our common stock to preserve maximum liquidity and flexibility as a result of the COVID-19 pandemic. During the six months ended June 30, 2020, we repurchased 1.6 million shares of our common stock at a cost of $39.2 million, including commissions.

In April 2021, the Board of Directors (the “Board”) approved a $712.2 million increase to our share repurchase authorization, after which $1.0 billion remained available for future common stock repurchases. As of June 30, 2021, we had remaining authorization to repurchase approximately $700.0 million of our common stock, subject to restrictions under our Notes and Credit Agreement.

9. REVENUES

Revenues by reportable operating segment and by channel were:

Second Quarter

	Three Months Ended June 30, 2021
	Americas		Asia Pacific		EMEA		Unallocated Corporate and Other		Total
	(in thousands)
Channel:
Wholesale	$	168,069	$	62,268	$	76,981	$	9	$	307,327
Direct-to-consumer (1)	237,611		64,566		31,269		—		333,446
Total revenues	$	405,680	$	126,834	$	108,250	$	9	$	640,773

	Three Months Ended June 30, 2020
	Americas		Asia Pacific		EMEA		Unallocated Corporate and Other		Total
	(in thousands)
Channel:
Wholesale	$	67,428	$	35,282	$	42,166	$	16	$	144,892
Direct-to-consumer (1)	104,156		58,291		24,210		—		186,657
Total revenues	$	171,584	$	93,573	$	66,376	$	16	$	331,549

(1) Direct-to-consumer revenues consist of sales generated through our company-operated retail stores (previously our “Retail” channel) and company-operated e-commerce websites and third-party e-commerce marketplaces (previously our “E-commerce” channel).

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Full Year to Date

	Six Months Ended June 30, 2021
	Americas		Asia Pacific		EMEA		Other Businesses		Total
	(in thousands)
Channel:
Wholesale	$	312,842	$	120,891	$	163,585	$	48	$	597,366
Direct-to-consumer (1)	369,247		88,535		45,723		—		503,505
Total revenues	$	682,089	$	209,426	$	209,308	$	48	$	1,100,871

	Six Months Ended June 30, 2020
	Americas		Asia Pacific		EMEA		Other Businesses		Total
	(in thousands)
Channel:
Wholesale	$	158,233	$	80,863	$	98,877	$	92	$	338,065
Direct-to-consumer (1)