Add files using upload-large-folder tool

raw/filings/0000913241/2000/0001019056-01-500024/filing_metadata.csv

@@ -0,0 +1,2 @@
+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2001-03-30,2000-12-31,2001-03-30T05:00:00.000Z,0001019056-01-500024,file001.txt,FORM 10-K,271850,0,0,https://www.sec.gov/Archives/edgar/data/913241/000101905601500024/file001.txt,https://www.sec.gov/Archives/edgar/data/913241/000101905601500024/,2000,2000,1

raw/filings/0000913241/2000/0001019056-01-500024/item1.txt

@@ -0,0 +1,928 @@
+Item 1. BUSINESS.
+Steven Madden, Ltd. (together with its subsidiaries, the "Company")
+designs, sources, markets and sells fashion-forward footwear brands for women,
+men and children. The Company distributes products through its retail stores,
+its e-commerce websites, catalogs and department and specialty store locations
+in the United States and Canada. The Company's product line includes core
+products, which are sold year-round, complemented by a broad range of updated
+styles which are designed to establish or capitalize on market trends.
+The Company's business is comprised of three (3) distinct segments. The
+wholesale division includes five (5) brands: Steve Madden(R), David Aaron(R),
+l.e.i.(R), Stevies(TM) and the recently introduced Steve Madden Mens brand.
+Steven Madden Retail, Inc., the Company's wholly owned retail subsidiary,
+operates Steve Madden and David Aaron retail stores as well as the Company's
+outlet stores and e-commerce web sites. The Company's wholly owned private label
+subsidiary, Adesso-Madden, Inc., designs and sources footwear products under
+private labels for many of the country's largest mass merchandisers. The Company
+also licenses its Steve Madden(R) and Stevies(TM) trademarks for several
+accessory and apparel categories.
+Steven Madden, Ltd., was incorporated as a New York corporation on July
+9, 1990 and reincorporated under the same name in Delaware in November 1998. The
+Company was founded and developed by Steven Madden, its principal designer, and
+Chief Executive Officer and former Chairman of the Board, which has established
+a reputation for its creative designs, popular styles and quality products at
+accessible price points. The Company completed its initial public offering in
+December 1993 and its shares of Common Stock currently trade on The Nasdaq
+National Market under the symbol "SHOO".
+RECENT DEVELOPMENTS
+In January 2000, the Company announced the launch of its new
+Stevies(TM) brand which is marketed to girls ages 6 to 12 years old. The new
+footwear line mirrors some of the design concepts and attitudes present in the
+Steve Madden(R) brand and is distributed through moderate and better department
+stores and footwear specialty stores. The Company commenced shipping Stevies'
+products in time for the most recent back-to-school season.
+During the Spring and Summer of 2000, the Company also licensed the
+Stevies(TM) trademark for additional product categories and launched the
+e-commerce website, WWW.STEVIES.COM. In light of the fact that the Company
+believed that licensing opportunities were not being fully exploited, in January
+2001 the Company engaged Jassin O'Rourke Group, LLC, a consulting firm, to
+enhance the Company's licensing efforts. In February 2001, the Company
+terminated existing licensing agreements for jewelry and hair accessories for
+the Steve Madden(R) and Stevies(TM) brands, and sportswear for the Stevies(TM)
+brand. The Company expects that, with the assistance of Jassin O'Rourke, it will
+be successful in improving its licensed product business.
+2
+On October 2, 2000, the Company announced the engagement of Bear
+Stearns & Company as financial advisor to the Company. Bear Stearns was engaged
+to explore strategic alternatives for the Company.
+In November 2000, the Company announced its plans to launch the Steve
+Madden Mens footwear line. The line is managed by the Company's wholesale
+division and is designed and marketed with the signature Steve Madden(R) brand
+name. A preview of the new line debuted at the FFANY Shoe Show in December 2000
+and select styles were shipped to retail customers for the Spring 2001 selling
+season. The full collections were unveiled in February 2001 at the MAGIC and WSA
+Shoe Shows in Las Vegas. The new men's collection is targeted towards stylish
+male consumers between the ages of 20 and 35. The line incorporates similar
+design themes present in the Steve Madden women's footwear collection with
+retail price points ranging from $79-$99 a pair.
+The Company maintains its principal executive offices at 52-16 Barnett
+Avenue, Long Island City, NY 11104, telephone number (718) 446-1800.
+STEVEN MADDEN - WHOLESALE DIVISION
+The wholesale division sources, sells and markets the Company's Steve
+Madden(R) brand to major department stores, better specialty stores, and shoe
+stores throughout the country and Canada. During the last few years the Steve
+Madden(R) product line has become a leading footwear brand in the fashion
+conscious junior marketplace. By the end of 2000, the Steve Madden brand was
+sold in approximately 3,000 doors throughout the country. To serve its customers
+(primarily women ages 16 to 25), the wholesale division creates and markets
+fashion forward footwear designed to appeal to customers seeking exciting, new
+footwear designs at reasonable prices. In November 2000, the wholesale division
+expanded its marketing plan to include a men's footwear line which targets
+fashion conscious men ages 20 to 35.
+As the Company's largest division, the Steve Madden(R) wholesale
+division accounted for $87,977,000 in sales in 2000, or approximately 43% of the
+Company's total revenues. Many of the wholesale division's newly created styles
+are test marketed at the Company's retail stores. Within a few days, the Company
+can determine if a test product appeals to customers. This enables the Company
+to use its flexible sourcing model to rapidly respond to changing preferences
+which the Company believes is essential for success in the fashion footwear
+marketplace.
+DIVA ACQUISITION CORP. - THE DAVID AARON(R) WHOLESALE DIVISION
+Diva Acquisition Corp. ("Diva") designs and markets fashion footwear to
+women under the "David Aaron(R)" trademark through major department stores and
+better footwear specialty stores and two (2) Company owned retail shoe stores
+located in the Soho area of Manhattan and in Paramus, NJ. Priced a tier above
+the Steve Madden(R) brand, Diva's products are designed to appeal principally to
+fashion conscious women, ages 26 to 45, who shop at department stores and
+footwear boutiques. As of December 31, 2000, the David Aaron brand was sold in
+approximately 652 doors across the country. The Company recorded sales from the
+David Aaron(R) brand of $3,616,000 for the year ended December 31, 2000, or
+approximately 1.8% of the Company's total revenues. Revenues from the sale of
+3
+David Aaron footwear decreased by approximately 55% compared to the preceding
+year due to the repositioning and reorganization of the David Aaron brand. The
+Company intentionally planned to reduce its volume in 2000 enabling the David
+Aaron Division to use its two retail stores to test the popularity of new
+products. The Company intends to sell its most successful David Aaron products
+at wholesale beginning in Spring 2001.
+l.e.i. (R) - WHOLESALE DIVISION
+In September, 2000, the Company renewed its license agreement with
+R.S.V. Sport, Inc. pursuant to which the Company continues to have the right to
+use the l.e.i.(R) trademark in connection with the sale and marketing of
+footwear. The l.e.i.(R) trademark is well known for jeanswear in the junior
+marketplace and nationally through department and specialty stores. The
+Company's l.e.i.(R) footwear products were targeted to attract girls ages 6 to
+11 years old and young women ages 12 to 20 years old, a majority of which are
+younger than the typical Steve Madden(R) brand customer. At year end, l.e.i.
+footwear products were sold in major department shores and footwear specialty
+shops (approximately 3,500 doors ) across the country, an increase of 40% over
+the year ending December 31, 1999. The l.e.i. Wholesale Division generated
+revenue of $37,741,000 for the year ended December 31, 2000, or approximately
+18.4% of the Company's total revenues.
+STEVIES INC. - WHOLESALE DIVISION
+In the first quarter, the Company introduced a new brand, Stevies(TM).
+Stevies(TM) is a fashion brand which targets girls ages 6-9 and "tweens" ages
+10-12. The Company's new Stevies Wholesale Division ("Stevies Wholesale")
+commenced shipping to department stores throughout the country in the second
+quarter of 2000. Stevies Wholesale generated revenue of $6,147,000 for the year
+ended December 31, 2000, or approximately 3% of the Company's total revenues.
+Stevies(TM) now sells in over 1,000 doors, including store groups such as
+Nordstroms, Federated Department Stores, May Company stores, Belks, Dillards,
+Limited Too, as well as independent children's stores throughout the country.
+The Stevies(TM) brand ended the year with over 800 Stevies(TM) concept shop
+locations and over 500 Stevies(TM) accessories concept locations which display
+accessories and slippers. The web site for Stevies (TM) at www.stevies.com went
+live in March of 2000 and commenced e-commerce operation in July 2000.
+STEVEN MADDEN RETAIL, INC. - RETAIL DIVISION
+As of December 31, 2000, the Company owned and operated fifty-six (56)
+retail shoe stores under the Steve Madden(R) name, two (2) under the David
+Aaron(R) name, six (6) outlet stores and one (1) Internet store (through the
+www.stevemadden.com, www.stevies.com, and www.stevemaddenmens.com) web sites.
+Most of the Steve Madden stores are located in major shopping malls in
+California, Colorado, District of Columbia, Florida, Georgia, Illinois,
+Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York,
+Ohio, Pennsylvania, Rhode Island, Texas and Virginia. Each of the Steve
+Madden(R) stores has been designed to appeal to young fashion conscious women by
+creating a "nightclub" type atmosphere. The retail stores have been very
+successful for the Company, generating annual sales in excess of $700 per square
+foot. Sales are primarily from the sale of the Company's Steve Madden(R) product
+line. Same store sales increased 10% in 2000 over 1999 sales and total sales for
+4
+the retail division were $70 million compared to $49 million for 1999. Sales
+from the retail division for year ended December 31, 2000 were approximately 34%
+of the Company's total sales.
+The Company believes that the Retail Division will continue to enhance
+overall sales and profits while building equity in the Steve Madden brand. It is
+for these reasons that the Company intends to add approximately ten (10) new
+retail stores during the 2001 calendar year. Additionally, the expansion of the
+Retail Division enables the Company to test and react to new products and
+classifications which strengthens the product development efforts of the Steve
+Madden wholesale division.
+THE ADESSO-MADDEN, INC. - PRIVATE LABEL DIVISION
+In September 1995, the Company incorporated Adesso-Madden, Inc. as a
+wholly owned subsidiary ("A-M"). A-M was formed to serve as a buying agent to
+mass market merchandisers, shoe store chains and other off-price retailers in
+connection with their purchase of private label shoes. As a buying agent, A-M
+arranges with shoe manufacturers in Asia and South America for them to
+manufacture private label shoes to the specifications of its clients. The
+Company believes that by operating in the private label, mass merchandising
+market, the Company is able to maximize additional non-branded sales
+opportunities. This leverages the Company's overall sourcing, design and
+distribution capabilities. Currently, this division serves as a buying agent for
+the procurement of women's footwear for large retailers including J.C. Penny,
+Sears, Mervyn's, Payless, Wal-Mart and Target. A-M receives commissions in
+connection with the purchase of private label shoes by its clients. A-M also
+sources and sells footwear under the Soho Cobbler(R) brand name. The private
+label division generated commission revenue of $3.6 million for the year ended
+December 31, 2000.
+PRODUCTS AND LICENSING
+The Company's products emphasize youthful styling and contemporary
+design and are marketed at moderate to better price points. The Company's
+primary products include Steve Madden(R), l.e.i.(R), Stevies (TM) and David
+Aaron(R) branded footwear, and in 2001, Steve Madden Mens. In addition, the
+Company has a private label shoe operation, Adesso-Madden, Inc., and has also
+entered into strategic licensing agreements for Steve Madden(R) and Stevies
+branded products.
+STEVE MADDEN(R)
+Steve Madden(R) branded products are designed to appeal to style
+conscious consumers in the junior market (ages 16 to 25 years). The Steve
+Madden(R) line emphasizes up-to-date fashion and includes a wide range of
+women's footwear including boots, sneakers, evening shoes, slippers, casual and
+tailored shoes and sandals. Steve Madden(R) brand shoes sell at retail price
+points generally ranging from $48 to $70 for shoes and up to $99 for boots.
+In order to reduce the impact of changes in fashion trends on the Steve
+Madden(R) brand product sales, the Company designs and classifies its product
+line into three categories: Core, Core-plus, and Fashion. The Company's Core
+line is available year round and consists of classic products which have proven
+to be consistent sellers over several seasons. The Core line currently includes
+eight (8) style/color combinations each of which can be reordered using the
+Company's EDI system and shipped to retailers within one to two weeks. This
+5
+results in rapid replenishment of the most popular Steve Madden styles. The
+Company's Core-plus line consists of basic styles whose patterns and colors are
+updated each season to keep pace with changing trends. Finally, the Company's
+Fashion line consists of styles that are designed close to or in season and
+capitalize on the Company's ability to design, test, manufacture and market
+products quickly. Core and Core-plus products account for a majority of Steve
+Madden(R) brand sales.
+STEVE MADDEN MENS
+After announcing the launch of Steve Madden Mens in November 2000, the
+Company's new men's footwear line of products met with enthusiastic responses
+from buyers at tradeshows in November, 2000 and February, 2001. The Steve Madden
+Men's footwear products will be designed to capitalize on the Company's success
+for designing, sourcing and marketing popular fashion forward footwear. Many of
+the men's products will be built in the same spirit as present in the Steve
+Madden women's footwear line. With retail price points ranging from $79 to $99 a
+pair, the Company expects to sell Steve Madden Mens to department store and
+footwear specialty stores throughout the country. In order to enhance sales, the
+Company expects to have at least 50 men's concept shops located in major
+department stores by year end. By using appropriate signs, logos and display
+fixtures, the Company has created concept shops located in department stores,
+specialty stores and independent shoe stores that segregate and distinguish the
+Company's products from other footwear brands.
+DAVID AARON(R)
+The Company acquired the David Aaron(R) brand in 1996, and David
+Aaron(R) products are marketed through the Company's Diva subsidiary. David
+Aaron(R) branded products are designed to appeal to more sophisticated, career
+and fashion oriented consumers (ages 26 to 45 years) in the better market
+segment. David Aaron(R) products are priced at a tier above the Steve Madden(R)
+brand and have retail price points generally ranging from $70 to $85 for shoes
+and up to $150 for boots. Similar to the Steve Madden(R) line, the Company's
+David Aaron(R) line is organized into Core, Core-plus, and Fashion categories
+with Core and Core-plus products accounting for a large majority of David
+Aaron(R) brand sales.
+l.e.i.(R)
+In September 2000, the Company renewed its license agreement with
+R.S.V. Sport, Inc. pursuant to which the Company has the right to use the
+l.e.i.(R)trademark in connection with the sale and marketing of footwear in
+exchange for which the Company is required, among other things, to make periodic
+royalty payments based on its net sales of l.e.i.(R)footwear. The
+l.e.i.(R)trademark is well known for jeanswear in the junior marketplace and
+l.e.i.(R)jeans are sold in department and specialty stores nationwide. The
+Company's l.e.i.(R)footwear products were targeted to attract girls ages 6 to 11
+years old and young women ages 12 to 20 years old, the majority of which are
+younger than the typical Steve Madden(R)brand customer. Despite having only
+started selling l.e.i.(R) products at retail in August, 1998, sales of
+l.e.i.(R)products increased considerably in 1999 and 2000. By December 31, 2000,
+l.e.i. footwear products were sold in approximately 3,500 doors nationwide, an
+increase of approximately 40% over 1999.
+6
+STEVIES(TM)
+Stevies(TM) is a fashion brand which targets girls ages 6-9 and
+"tweens" ages 10-12. The Stevies footwear line mirrors some of the design
+concepts and attitude present in the Steve Madden(R) brand and is distributed
+through moderate and better department stores and footwear specialty stores. The
+Company commenced shipping Stevies' products in time for the most recent
+back-to-school season. By year end Stevies(TM) sold in over 1,200 doors across
+the country, including store groups such as Nordstroms, Federated Department
+Stores, May Company stores, Belk, Dillards, Limited Too, as well as children's
+independent stores throughout the country. In addition, Stevies concept shops
+have been established in approximately 815 department stores, and the Company
+expects approximately 1000 Steve's concept shops to be installed by the end of
+2001.
+LICENSING
+The Company believes that strategic licensing will enhance the Steve
+Madden and Stevies(R) brands, leverage brand equity and increase customer
+loyalty. During 1997, the Company began to license the Steve Madden(R) trademark
+selectively while attempting to maintain strict design, merchandising and
+marketing control over its licensees. In 2000, the Company commenced licensing
+the Stevies trademark shortly after announcing the launch of the Stevies
+footwear brand.
+As of December 31, 2000, the Company licensed the Steve Madden
+trademark for use in connection with the manufacturing, marketing and sale of
+outerwear (including leather sportswear), belts, handbags, sunglasses, hosiery,
+hair accessories and jewelry. Each license agreement requires the licensee to
+pay to the Company a royalty based on net sales, a minimum royalty in the event
+that net sales fail to reach specified targets and a percentage of sales for
+advertising of the Steve Madden(R) brand.
+As of March 15, 2000, the Company and its sportswear licensee, Iron
+Will Group, Inc. executed a Termination Agreement with respect to that certain
+License Agreement dated as of January 1, 1999. Iron Will Group is an affiliate
+of Jordache enterprises. The Termination Agreement required that Iron Will
+terminate its sale and distribution of Steve Madden Sportswear products on or
+before June 15, 2000.
+During 2000, the Company licensed the Stevies trademark for use in
+connection with manufacturing marketing and sale of sportswear; outerwear,
+belts, handbags, sunglasses, hosiery, fashion accessories, jewelry, hair
+accessories. In February 2001, the Company terminated existing licensing
+agreements for jewelry and hair accessories for the Steve Madden(R) and
+Stevies(TM) brands, and sportswear for the Stevies(TM) brand.
+In order to enhance the performance of the Company's licensing
+business, in January 2001 the Company engaged Jassin O'Rourke Group, LLC, a
+consulting firm specializing in marketing, management and licensing for the
+apparel industry.
+7
+DESIGN
+The Company has established a reputation for its creative designs,
+popular styles and quality products at accessible price points. Steve Madden has
+been involved in the footwear industry for over twenty (20) years and is
+responsible for the Company's overall fashion direction, maintaining direct,
+day-to-day supervision of the Company's eleven (11) person product design and
+development team.
+The Company believes that its future success will depend in substantial
+part on its ability to continue to anticipate and react to changing consumer
+demands in a timely manner. To meet this objective, the Company has developed a
+unique design process that allows it to recognize and adapt quickly to changing
+consumer demands. The Company's design team works together to create designs
+which they believe fit the Company's image, reflect current or approaching
+trends and can be manufactured in a timely and cost-effective manner. Once the
+initial design is complete, a prototype is developed, which is reviewed and
+refined prior to the commencement of limited production. Most new Steve Madden
+designs are then tested in the Steve Madden(R) retail stores. Designs that prove
+popular are then scheduled for mass production overseas and wholesale and retail
+distribution nationwide. The Company believes that its unique design and testing
+process and flexible sourcing model is a significant competitive advantage
+allowing the Company to cut mass production lead times and avoid the costly
+production and distribution of unpopular designs.
+PRODUCT SOURCING AND DISTRIBUTION
+The Company sources each of its product lines separately based on the
+individual design, styling and quality specifications of such products. The
+Company does not own or operate any mass manufacturing facilities and sources
+its branded products directly or indirectly through independently owned
+manufacturers in Brazil, China, Italy, Mexico, Spain, Taiwan and the United
+States. The Company has established relationships with a number of manufacturers
+in each country. The Company believes that this sourcing of footwear products
+minimizes its investment and inventory risk, and enables efficient and timely
+introduction of new product designs. Although the Company has not entered into
+any long-term manufacturing or supply contracts, the Company believes that a
+sufficient number of alternative sources exist for the manufacture of its
+products. The principal materials used in the Company's footwear are available
+from any number of sources, both within the United States and in foreign
+countries.
+The Company's design and distribution processes are intended to be
+flexible, allowing the Company to respond to and accommodate changing consumer
+demand. The Company's production staff tracks warehouse inventory on a daily
+basis, monitors sell through data and incorporates input on product demand from
+wholesale customers. The Company can use product feedback to adjust production
+or manufacture new products in as little as five weeks. Constant inventory
+tracking allows the Company to manage inventory on a continuous flow basis with
+the goal of optimizing inventory turns. More specifically, all inventory is
+classified into three categories: Core products, which are sold year round,
+Core-plus products which are in-season styles that are experiencing unusually
+strong sell through, and Fashion products. The Company strives to only have
+reorder inventory in selected Core and Core-plus products that are proven
+best-sellers.
+8
+The Company distributes its products primarily from three (3) third
+party distribution warehouse centers located in California, Michigan and New
+Jersey and its own distribution facility located in Florida. By utilizing
+distribution facilities that specialize in distributing products to certain
+customers (wholesale accounts, Steve Madden retail stores and Internet
+fulfillment), the Company believes that its customers are better served.
+In 1999, the Company expanded its use of electronic data interchange
+("EDI") quick replenishment system to its department store accounts on
+designated Core items and offered EDI to all of its significant wholesale
+accounts. Sales resulting from EDI replenishment remained unchanged during 2000
+compared to 1999. The Company believes that its flexible product introduction
+schedule and perpetual inventory control system are competitive advantages in an
+industry that is subject to high fashion risks.
+CUSTOMERS
+The Company's customers purchasing shoes consist principally of
+department stores and specialty stores, including shoe boutiques. Presently, the
+Company sells approximately sixty two percent (62%) of its products to
+department stores, including Federated Department Stores (Bloomingdales, Bon
+Marche, Burdines, Macy's and Rich's), May Department Stores (Famous Barr,
+Filene's, Foley's, Hecht's, Kaufmann's, Meier & Frank, Lord and Taylor and
+Robinsons May), Dillard's, Dayton-Hudson and Nordstrom; and approximately thirty
+eight percent (38%) to specialty stores, including Journey's, Limited Too and
+Mandees; and catalog retailers, including Victoria's Secret and Fingerhut.
+Federated Department Stores, May Department Stores and Nordstrom presently
+account for approximately twenty one percent (21%), and eighteen percent (18%)
+and eleven percent (11%) of the Company's wholesale sales, respectively.
+DISTRIBUTION CHANNELS
+The Company sells it products principally through its Company-owned
+retail stores, better department stores and specialty shoe stores in the United
+States and abroad. Retail stores and wholesale sales account for approximately
+thirty four percent (34%) and sixty six percent (66%) of total sales,
+respectively. The following paragraphs describe each of these distribution
+channels:
+STEVE MADDEN AND DAVID AARON RETAIL STORES
+As of December 31, 2000, the Company operated fifty six (56)
+Company-owned retail stores under the Steve Madden(R) name and two (2) under the
+David Aaron(R) name. The Company believes that its retail stores will continue
+to enhance overall sales, profitability, and its ability to react to changing
+consumer trends. The design, format and environment of the Steve Madden(R)
+retail stores resemble a nightclub type atmosphere which has become a popular
+destination and gathering place for young women. The David Aaron(R) store has a
+more sophisticated design and format styled to appeal to its more mature target
+audience. These stores are used as a marketing tool which allow the Company to
+strengthen brand recognition and to showcase certain of its full line of branded
+and licensed products. Furthermore, the retail stores provide the Company with a
+venue to test and introduce new products and merchandising strategies.
+Specifically, the Company often tests new designs at its Steve Madden(R) retail
+9
+stores before scheduling them for mass production and wholesale distribution. In
+addition to these test marketing benefits, the Company has been able to leverage
+sales information gathered at Steve Madden(R) retail stores to assist its
+wholesale accounts in order placement and inventory management.
+A typical Steve Madden(R) store is approximately 1,400 to 1,600 square
+feet and is located in malls and street locations which attract the highest
+concentration of the Company's core demographic -- style-conscious young women
+ages 16 to 25 years old. In addition to carefully analyzing mall demographics,
+the Company also sets profitability guidelines for each potential store site.
+Specifically, the Company targets sites at which the demographics fit the
+consumer profile, the positioning of the site is well trafficked and the
+projected fixed annual rent expense does not exceed a specified percentage of
+sales over the life of the lease. By setting these standards, the Company
+believes that each store will contribute to the Company's overall profits both
+in the near- and longer-terms.
+OUTLET STORES
+In May 1998, Shoe Biz, Inc. (formerly known as Steven Madden Outlets,
+Inc.) a wholly owned subsidiary of the Company ("Shoe Biz"), purchased certain
+assets from and assumed certain liabilities of, Daniel Scott, Inc. with respect
+to its Shoe Biz outlet store located in Mineola, New York. In connection with
+the transaction, the Company hired Robert Schmertz, the former President and
+sole stockholder of Daniel Scott, as the President of Shoe Biz. Shoe Biz
+operates the six (6) outlet stores in New Jersey and New York, four (4) of which
+operate under the Shoe Biz name and two (2) of which operate as Steve Madden
+Outlet stores. Shoe Biz sells many product lines, including Steve Madden, David
+Aaron, Stevies and l.e.i.(R) footwear, at significantly lower prices than prices
+typically charged by other "full price" retailers.
+DEPARTMENT STORES
+The Company currently sells to over 2,500 locations of twenty (20)
+better department stores throughout the United States and Canada. The Company's
+top accounts include Federated Department Stores (Bloomingdale's, Bon Marche,
+Burdine's, Macy's and Rich's), May Department Stores (Hecht's, Famous Barr,
+Filene's, Foley's, Kaufmann's, Meier & Frank, Lord and Taylor and Robinson's
+May), Dillard's, Dayton-Hudson and Nordstrom.
+Department store accounts are offered merchandising support which
+includes in-store fixtures and signage, supervision of displays and
+merchandising of the Company's various product lines. An important development
+in the Company's wholesale merchandising effort is the creation of in-store
+concept shops, where a broader collection of the Company's branded products are
+showcased. These in-store concept shops create an environment that is consistent
+with the Company's image and enable the retailer to display and stock a greater
+volume of the Company's products per square foot of retail space. In addition,
+these in-store concept shops encourage longer term commitment by the retailer to
+the Company's products and enhance consumer brand awareness. As of December 31,
+2000, the Steve Madden(R) and Stevies brands were featured in over 1,200 and 815
+in-store concept shops, respectively, in leading department and specialty
+stores.
+In addition to merchandising support, the Company's customer service
+representatives maintain weekly communications with their accounts to guide them
+in placing orders and to assist them in managing inventory, assortment and
+10
+retail sales. The Company leverages its sell-through data gathered at its retail
+stores to assist department stores in allocating their open-to-buy dollars to
+the most popular styles in the product line and to phase out styles with poor
+sales records. In addition to this account order support, the Company has
+implemented an electronic data interchange ("EDI") program which allows top
+accounts rapid size replenishment of eight (8) style/color combinations of
+certain core products within one to two weeks. EDI replenishment of key core
+styles is offered to all of the Company's retail customer accounts.
+INTERNET SALES
+In 2000, the Company updated its web site, www.stevemadden.com, and
+introduced its Stevies web site www.stevies.com in March 2000. Customers can
+purchase numerous styles of the Company's Steve Madden and Stevies footwear,
+accessory and clothing products. As a result of the Company's increased focus on
+e-commerce, sales in 2000 derived from www.stevemadden.com increased 196%
+compared with sales in 1999. For the year ended December 31, 2000, the Company's
+stevemadden.com web site recorded 156.3 million hits, 866,000 unique users and a
+sales conversions rate of approximately 7%. In August 1999, the Company signed
+an agreement with America Online pursuant to which the Company has a significant
+presence in the Shop AOL area of AOL, specifically in the footwear areas.
+As a result of the increased sales activity on the Company's web sites,
+[the Company] entered an agreement with Progressive Distribution in April 2000.
+Under the terms of the Agreement, Progressive Distribution provides
+direct-to-customer and other fulfillment services the Company's web sites
+customers, including validation of customer credit, picking, packing and
+shipment of footwear products to customers of the Company.
+In February 2001, the Company launched the SteveMaddenMens.com web
+site. Already e-commerce enabled, this newest Madden web site allows customers
+to view Steve Madden Mens products three dimensionally simply by moving a
+computer mouse.
+SPECIALTY STORES/CATALOG SALES
+The Company currently sells to specialty store locations throughout the
+United States and Canada. The Company's top specialty store accounts include
+Journey's, Limited Too and Mandees. The Company offers specialty store accounts
+the same merchandising, sell-through and inventory tracking support offered to
+its department store accounts. Sales of the Company's products are also made
+through various catalogs, such as Fingerhut and Victoria's Secret.
+COMPETITION
+The fashionable footwear industry is highly competitive. The Company's
+competitors include specialty shoe companies as well as companies with
+diversified footwear product lines. The recent substantial growth in the sales
+of fashionable footwear has encouraged the entry of many new competitors and
+increased competition from established companies. Most of these competitors,
+including Kenneth Cole, Nine West, DKNY, Skechers, Nike and Guess, may have
+significantly greater financial and other resources than the Company. The
+Company believes effective advertising and marketing, fashionable styling, high
+11
+quality and value are the most important competitive factors and intends to
+continue to employ these elements as it develops its products.
+In 2001, the Company launched the Steve Madden Mens brand which will
+compete with several brands that are more established with greater consumer
+awareness, including Kenneth Cole Reaction, Skechers Collection, Tommy Hilfiger
+and Nautica.
+MARKETING AND SALES
+Prior to 1997, the Company's marketing plans relied heavily on its few
+Steve Madden(R) retail store locations and word-of-mouth referrals. In 1998, the
+Company continued to focus on creating a more integrated brand building program
+to establish Steve Madden as the leading designer of fashion footwear for
+style-conscious young women. As a result, the Company developed a national
+advertising campaign for lifestyle and fashion magazines which was also used in
+regional marketing programs such as radio advertisements, television
+commercials, outdoor media, college event sponsorship and live online chat
+forums. The Company also continues to promote its web sites (WWW.STEVEMADDEN.COM
+and WWW.STEVIES.COM) where consumers can purchase Steve Madden(R) and Stevies
+products and interact with both the Company and other customers.
+In 2000, the Company reinforced the link between Steve Madden footwear
+and the hip young music scene by joining with Atlantic Records, Sam Goody and
+Glamour magazine for the first annual Girl Band Search: a major cross-marketing
+campaign with retail stores and wholesale partners to crown the next hot girl
+band. The Company assisted in marketing this year's winner, Jill Joia, who
+publicized her Steve Madden affiliation on the David Letterman Show, and
+performed the opening act at the launch party for Steve Madden Mens in Las Vegas
+in February 2001. For the second year running, the Company also co-sponsored the
+2000 Music Video Awards.
+The Company also increased the marketing of the Steve Madden brand to
+college students in 2000. The Company targeted universities for a series of
+lively promotions, many of them tied in with musical performances, and the
+Company was one of seven vendors visiting top ten universities in the Glamour
+magazine sponsored "Venus Tour". Other promotional initiatives reached 40
+universities.
+The Company commenced an aggressive marketing campaign for the Stevies
+brand with separate marketing, advertising, promotional events and in-store
+displays targeting the new Stevies customer. In August, 2000, the Company
+initiated a nationwide, three month Stevies Model Search featuring a six-city
+mall tour and in-store promotions with Filene's, Foley, Hecht's, FAO Schwartz
+and Macy's East. Supported by strong advertising and on-line promotions, these
+in-store events featured Stevies fashion shows, Radio Disney personality
+appearances, and performances by such crowd-drawers as the boyband, DreamStreet.
+The 11-year old winner of the model search will be the subject of the 2001 ad
+campaign for consumer and trade publications, and will be featured on the
+Stevies website. As for Steve Madden Mens, the Company supported the brand's
+roll-out with strategic marketing and advertising initiatives.
+In order to service its wholesale accounts, the Company retains a sales
+force of twelve independent sales representatives. These sales representatives
+work on a commission basis and are responsible for placing the Company's
+products with its principal customers, including better department and specialty
+stores. The sales representatives are supported by the Company's Vice President,
+12
+a staff of twelve account executives, four merchandise coordinators and twenty
+five customer service representatives who continually cultivate relationships
+with wholesale customers. This staff assists accounts in merchandising and
+assessing customer preferences and inventory requirements, which ultimately
+serves to increase sales and profitability.
+MANAGEMENT INFORMATION SYSTEMS (MIS) OPERATIONS
+Sophisticated information systems are essential to the Company's
+ability to maintain its competitive position and to support continued growth.
+The Company operates on a dual AS/400 system which provides system support for
+all aspects of its business including manufacturing purchase orders; customer
+purchase orders; order allocations; invoicing; accounts receivable management;
+real time inventory management; quick response replenishment; point-of-sale
+support; and financial and management reporting functions. The Company has a
+PKMS bar coded warehousing system which is integrated with the wholesale system
+in order to provide accurate inventory positions and quick response size
+replenishment for its customers. In addition, the Company has installed an EDI
+system which provides a computer link between the Company and certain wholesale
+customers that enables both the customer and the Company to monitor purchases,
+shipments and invoicing. The EDI system also improves the Company's ability to
+respond to customer inventory requirements on a weekly basis.
+In 2000, a new AS400 computer platform was implemented to support the
+Company's wholesale division, and at the retail division , a new system was
+installed by Applied Digital Solutions, formally STR. This in-store
+point-of-sale system is a fully functional system governing a broad range of
+transactions including layaway, gift certificates, store credit, customer
+profiles, and preferred customer packages. The Company also installed a loss
+prevention system named "Trade Watch", and a retail marketing system, Corema,
+which is fully integrated into the in-store POS system. A new retail inventory
+management system was also installed to support the Company's just-in-time
+inventory flow.
+RECEIVABLES FINANCING; LINE OF CREDIT
+Under the terms of a factoring agreement with Capital Factors, Inc.,
+the Company is permitted to draw down 80% of its invoiced receivables at an
+interest rate of one point below the Prime Rate (as defined). The agreement
+provides that Capital Factors is not required to purchase all the Company's
+receivables and requires that the Company to pay an unused line fee of .25% of
+the average daily unused portion of the maximum amount of the credit line. On
+September 1, 1998, the Company and Capital Factors amended its Factoring
+Agreement to, among other things, provide the Company with a credit line of up
+to $15,000,000, subject to certain limitations. The Company has not recently
+borrowed funds under its credit line with Capital Factors. The agreement with
+Capital Factors was renewed as of December 31, 2000 for an additional one year
+term. Capital Factors maintains a lien on all of the Company's inventory and
+receivables and assumes the credit risk for all assigned accounts approved by
+it.
+TRADEMARKS AND SERVICE MARKS
+The STEVE MADDEN and STEVE MADDEN plus Design trademarks/service marks
+have been registered in numerous International Classes (25 clothing and shoes;
+18 leather goods, such as handbags and wallets; 9 eye wear; 14 jewelry; 3
+cosmetics and perfume; 20 picture frames and furniture; 16, paper goods; 24
+13
+bedding; and, 35 retail store services) in the United States. The Company also
+has trademark registrations in the U.S. for the marks EYESHADOWS BY STEVE MADDEN
+(Int'l Cl. 9 eye wear), ICE TEA (Int'l Cl. 25 clothing), SOHO COBBLER (Int. Cl.
+9; eye wear; and, 25 clothing and shoes), SHOE BIZ By STEVE MADDEN (Int'l Cls.
+25 for shoes and clothing; and, Int'l Cl.
+35 for retail store services)
+The Company further owns registrations for the STEVE MADDEN and STEVE
+MADDEN plus Design trademarks/service marks in various International Classes in
+Argentina, Australia, Brazil, Canada, Chile, China, Colombia, Hong Kong, Israel,
+Italy, Japan, Korea, Mexico, Panama, South Africa, Taiwan, the 15 cooperating
+countries of Europe and the Benelux countries and has pending applications for
+registration for the STEVE MADDEN and STEVE MADDEN plus Design
+trademarks/service marks in Malaysia, Peru, Saudi Arabia, Thailand and
+Venezuela. There can be no assurance, however, that the Company will be able to
+effectively obtain rights to the STEVE MADDEN mark throughout all of the
+countries of the world. Moreover, no assurance can be given that others will not
+assert rights in, or ownership of, trademarks and other proprietary rights of
+the Company or that the Company will be able to successfully resolve such
+conflicts. The failure of the Company to protect such rights from unlawful and
+improper appropriation may have a material adverse effect on the Company's
+business and financial condition.
+Additionally, the Company through its Diva Acquisition Corp. subsidiary
+owns registrations for the DAVID AARON trademark and service mark in various
+International Classes in the United States (Int'l Cl. 25 clothes, shoes; 18
+leather goods, handbags, wallets; and, 35 retail store services), Australia,
+Canada, Hong Kong, Israel, Japan, South Africa, Spain and the 15 cooperating
+countries in Europe. The Company further has pending application for
+registration of the DAVID AARON trademark and service mark in Panama. The
+Company believes that the DAVID AARON trademark has a significant value and is
+important to the marketing of the Company's products.
+The Company through its Stevies, Inc. subsidiary also has several
+pending trademark and service mark applications for registration of the STEVIES
+and STEVIES plus Design marks in various International Classes in the United
+States (Int'l Cl. 25 clothes, shoes, 18 leather goods, handbags, wallets; 9 eye
+wear; 14 jewelry; and, 35 retail store services) and in Canada, Mexico and the
+15 cooperating countries of Europe.
+EMPLOYEES
+At March 9, 2001, the Company employed approximately 1,017 employees,
+of whom approximately 394 work on a full-time basis and approximately 623 work
+on a part-time basis. The management of the Company considers relations with its
+employees to be good.
+RISK FACTORS
+In addition to other information in this Annual Report on Form 10-K,
+the following important factors should be carefully considered in evaluating the
+Company and its business because such factors currently have a significant
+impact on the Company's business, prospects, financial condition and results of
+operations.
+14
+Dependence on Key Personnel. Although the Company has strengthened its
+senior management team, the Company is dependent, in particular, upon the
+services of Steven Madden, its Chief Executive Officer and chief designer, and
+Rhonda Brown, its President. In June 2000, Mr. Madden was indicted in the
+Southern District and Eastern District of New York for his alleged involvement
+in securities fraud and money laundering activities. If Mr. Madden is convicted
+of, or pleads guilty to, these charges (or related offenses), and/or is required
+to devote a substantial portion of his time and attention to the defense of the
+allegations contained in the indictments, the Company may be deprived of his
+services for an extended period of time. In addition, the Securities and
+Exchange Commission filed a complaint against Mr. Madden alleging securities law
+violations and seeking certain remedies against Mr. Madden, including an
+injunction prohibiting him from serving as an officer or director of a public
+company. The action initiated by the Securities and Exchange Commission has been
+stayed pending resolution of the indictments. If Mr. Madden is prohibited from
+serving as an officer or director of the Company, the Company may be deprived of
+certain or all of Mr. Madden's services. If Mr. Madden or Ms. Brown are unable
+to provide services to the Company for whatever reason, the Company's business,
+prospects and financial condition may be adversely affected.
+The Company maintains a key person life insurance policy on Mr. Madden
+with coverage in the amount of $10,000,000; however, the Company does not
+maintain a policy on Ms. Brown. The Company has employment contracts with each
+of Mr. Madden and Ms. Brown that expire on December 31, 2009 and December 31,
+2003, respectively. Under the terms of their respective employment contracts, if
+Mr. Madden or Ms. Brown are terminated for other than cause, death or total
+disability, the Company will be required to pay the remaining salary due under
+the contract, half of which must be paid upon termination. Mr. Madden is also
+entitled during the term of the contract to an annual $50,000 non-accountable
+expense account. In the event of a change in control, Mr. Madden and Ms. Brown
+may choose to continue their employment with the Company or terminate employment
+and receive the remaining salary under their respective contracts.
+Since Mr. Madden and Ms. Brown are involved in many material aspects of
+the Company's business, there can be no assurance that a suitable replacement
+for either Mr. Madden or Ms. Brown could be found if either were unable to
+perform services for the Company. As a consequence, the loss of Mr. Madden, Ms.
+Brown or other key management personnel could have a material adverse effect
+upon the Company's business, results of operations and financial condition. In
+addition, the Company's ability to market its products and to maintain
+profitability will depend, in large part, on its ability to attract and retain
+qualified personnel. Competition for such personnel is intense and there can be
+no assurance that the Company will be able to attract and retain such personnel.
+The inability of the Company to attract and retain such qualified personnel
+would have a material adverse effect on the Company's business, financial
+condition and results of operations.
+Fashion Industry Risks. The success of the Company will depend in
+significant part upon its ability to anticipate and respond to product and
+fashion trends as well as to anticipate, gauge and react to changing consumer
+demands in a timely manner. There can be no assurance that the Company's
+products will correspond to the changes in taste and demand or that the Company
+will be able to successfully market products which respond to such trends. If
+the Company misjudges the market for its products, it may be faced with
+significant excess inventories for some products and missed opportunities with
+others. In addition, misjudgments in merchandise selection could adversely
+affect the Company's image with its customers and weak sales and resulting
+15
+markdown requests from customers could have a material adverse effect on the
+Company's business, financial condition and results of operations.
+The industries in which the Company operates are cyclical, with
+purchases tending to decline during recessionary periods when disposable income
+is low. Purchases of contemporary shoes and accessories tend to decline during
+recessionary periods and also may decline at other times. While the Company has
+fared well in recent years in a difficult retail environment, there can be no
+assurance that the Company will be able to maintain its historical rate of
+growth in revenues and earnings, or remain profitable in the future. A recession
+in the national or regional economies or uncertainties regarding future economic
+prospects, among other things, could affect consumer spending habits and have a
+material adverse effect on the Company's business, financial condition and
+results of operations.
+In recent years, the retail industry has experienced consolidation and
+other ownership changes. In addition, some of the Company's customers have
+operated under the protection of the federal bankruptcy laws. In the future,
+retailers in the United States and in foreign markets may consolidate, undergo
+restructurings or reorganizations, or realign their affiliations, any of which
+could decrease the number of stores that carry the Company's products or
+increase the ownership concentration within the retail industry. While such
+changes in the retail industry to date have not had a material adverse effect on
+the Company's business or financial condition, there can be no assurance as to
+the future effect of any such changes.
+Inventory Management. The Company's ability to manage its inventories
+properly is an important factor in its operations. Inventory shortages can
+adversely affect the timing of shipments to customers and diminish brand
+loyalty. Conversely, excess inventories can result in increased interest costs
+as well as lower gross margins due to the necessity of providing discounts to
+retailers. The inability of the Company to effectively manage its inventory
+would have a material adverse effect on the Company's business, financial
+condition and results of operations.
+Dependence Upon Customers and Risks Related to Extending Credit to
+Customers. The Company's customers purchasing shoes consist principally of
+department stores and specialty stores, including shoe boutiques. Certain of the
+Company's department store customers, including some under common ownership,
+account for significant portions of the Company's wholesale net sales.
+Presently, the Company sells approximately sixty two percent (62%) of its
+products to department stores, including Federated Stores (Bloomingdales,
+Burdines, Macy's and Bullocks), Dillards, Nordstrom, Dayton Hudson and May
+Department Stores (Famous Barr, Filene's, Foley's, Hecht's, Kaufmann's, Meier &
+Frank, Lord and Taylor and Robinson's May) and approximately [thirty eight
+(38%)] percent to specialty stores, including shoe boutiques. The Company's
+largest customers, Federated Stores, May Department Stores, account for
+approximately twenty one percent (21%), eighteen percent (18%) and eleven
+percent (11%) of the Company's wholesale sales, respectively.
+The Company believes that a substantial portion of sales of the
+Company's licensed products by its domestic licensing partners are also made to
+the Company's largest department store customers. The Company generally enters
+into a number of purchase order commitments with its customers for each of its
+lines every season and does not enter into long-term agreements with any of its
+customers. Therefore, a decision by Federated Stores, Nordstrom or any other
+significant customer, whether motivated by competitive conditions, financial
+difficulties or otherwise, to decrease the amount of merchandise purchased from
+16
+the Company or its licensing partners, or to change its manner of doing business
+could have a material adverse effect on the Company's business, financial
+condition and results of operations. The Company sells its products primarily to
+retail stores across the United States and extends credit based on an evaluation
+of each customer's financial condition, usually without requiring collateral.
+While various retailers, including some of the Company's customers, have
+experienced financial difficulties in the past few years which increased the
+risk of extending credit to such retailers, the Company's losses due to bad
+debts have been limited. However, financial difficulties of a customer could
+cause the Company to curtail business with such customer or require the Company
+to assume more credit risk relating to such customer's receivables.
+Pending Litigation. In connection with the indictments filed against
+Mr. Madden in June 2000, certain class action lawsuits were commenced against
+the Company, Mr. Madden, the Company's Chief Executive Officer, Rhonda Brown,
+the Company's President, and Arvind Dharia, the Company's Chief Financial
+Officer. The complaint alleges that the Company and the individual defendants
+issued false and misleading statements and failed to disclose material adverse
+information relating to matters arising from Mr. Madden's indictment. In the
+event that resolution of this action exceeds coverage available under the
+Company's directors and officers insurance policy, the Company's business,
+prospects and financial condition could be materially and adversely affected.
+Impact of Foreign Manufacturers. Substantially all of the Company's
+products are currently sourced outside the United States through arrangements
+with a number of foreign manufacturers in four different countries. During the
+year ended December 31, 2000, approximately [90%] of the Company's products were
+purchased from sources outside the United States, including Mexico, China,
+Brazil, Italy and Spain.
+Risks inherent in foreign operations include work stoppages,
+transportation delays and interruptions, changes in social, political and
+economic conditions which could result in the disruption of trade from the
+countries in which the Company's manufacturers or suppliers are located, the
+imposition of additional regulations relating to imports, the imposition of
+additional duties, taxes and other charges on imports, significant fluctuations
+of the value of the dollar against foreign currencies, or restrictions on the
+transfer of funds, any of which could have a material adverse effect on the
+Company's business, financial condition and results of operations. The Company
+does not believe that any such economic or political conditions will materially
+affect the Company's ability to purchase products, since a variety of materials
+and alternative sources exist. The Company cannot be certain, however, that it
+will be able to identify such alternative sources without delay or without
+greater cost to the Company, if ever. The Company's inability to identify and
+secure alternative sources of supply in this situation would have a material
+adverse effect on the Company's business, financial condition and results of
+operations.
+The Company's imported products are also subject to United States
+customs duties. The United States and the countries in which the Company's
+products are produced or sold may, from time to time, impose new quotas, duties,
+tariffs, or other restrictions, or may adversely adjust prevailing quota, duty
+or tariff levels, any of which could have a material adverse effect on the
+Company's business, financial condition and results of operations.
+Possible Adverse Impact of Unaffiliated Manufacturers' Inability to
+Manufacture in a Timely Manner, to Meet Quality Standards or to Use Acceptable
+Labor Practices. As is common in the footwear industry, the Company contracts
+17
+for the manufacture of a majority of its products to its specifications through
+foreign manufacturers. The Company does not own or operate any manufacturing
+facilities and is therefore dependent upon independent third parties for the
+manufacture of all of its products. The Company's products are manufactured to
+its specifications by both domestic and international manufacturers. The
+inability of a manufacturer to ship orders of the Company's products in a timely
+manner or to meet the Company's quality standards could cause the Company to
+miss the delivery date requirements of its customers for those items, which
+could result in cancellation of orders, refusal to accept deliveries or a
+reduction in purchase prices, any of which could have a material adverse effect
+on the Company's business, financial condition and results of operations.
+Although the Company enters into a number of purchase order commitments
+each season specifying a time frame for delivery, method of payment, design and
+quality specifications and other standard industry provisions, the Company does
+not have long-term contracts with any manufacturer. As a consequence, any of
+these manufacturing relationships may be terminated, by either party, at any
+time. Although the Company believes that other facilities are available for the
+manufacture of the Company's products, both within and outside of the United
+States, there can be no assurance that such facilities would be available to the
+Company on an immediate basis, if at all, or that the costs charged to the
+Company by such manufacturers will not be greater than those presently paid.
+The Company requires its licensing partners and independent
+manufacturers to operate in compliance with applicable laws and regulations.
+While the Company promotes ethical business practices and the Company's staff
+periodically visits and monitors the operations of its independent
+manufacturers, the Company does not control such manufacturers or their labor
+practices. The violation of labor or other laws by an independent manufacturer
+of the Company or by one of the Company's licensing partners, or the divergence
+of an independent manufacturer's or licensing partner's labor practices from
+those generally accepted as ethical in the United States, could have a material
+adverse effect on the Company's business, financial condition and results of
+operations.
+Intense Industry Competition. The fashionable footwear industry is
+highly competitive and barriers to entry are low. The Company's competitors
+include specialty companies as well as companies with diversified product lines.
+The recent substantial growth in the sales of fashionable footwear has
+encouraged the entry of many new competitors and increased competition from
+established companies. Most of these competitors, including Kenneth Cole, Nine
+West, DKNY, Skechers, Nike and Guess, may have significantly greater financial
+and other resources than the Company and there can be no assurance that the
+Company will be able to compete successfully with other fashion footwear
+companies. Increased competition could result in pricing pressures, increased
+marketing expenditures and loss of market share, and could have a material
+adverse effect on the Company's business, financial condition and results of
+operations. The Company believes effective advertising and marketing,
+fashionable styling, high quality and value are the most important competitive
+factors and plans to employ these elements as it develops its products. The
+Company's inability to effectively advertise and market its products could have
+a material adverse effect on the Company's business, financial condition and
+results of operations.
+Expansion of Retail Business. The Company's continued growth depends to
+a significant degree on further developing the Steve Madden(R), David Aaron(R),
+Stevies and l.e.i.(R) brands, creating new product categories and businesses and
+operating Company-owned stores on a profitable basis. The Company plans to open
+18
+approximately ten (10) Steve Madden retail stores in 2001. The Company's recent
+and planned expansion includes the opening of stores in new geographic markets
+as well as strengthening existing markets. New markets have in the past
+presented, and will continue to present, competitive and merchandising
+challenges that are different from those faced by the Company in its existing
+markets. There can be no assurance that the Company will be able to open new
+stores, and if opened, that such new stores will be able to achieve sales and
+profitability levels consistent with existing stores. The Company's retail
+expansion is dependent on a number of factors, including the Company's ability
+to locate and obtain favorable store sites, the performance of the Company's
+wholesale and retail operations, and the ability of the Company to manage such
+expansion and hire and train personnel. Past comparable store sales results may
+not be indicative of future results, and there can be no assurance that the
+Company's comparable store sales results will increase or not decrease in the
+future. In addition, there can be no assurance that the Company's strategies to
+increase other sources of revenue, which may include expansion of its licensing
+activities, will be successful or that the Company's overall sales or
+profitability will increase or not be adversely affected as a result of the
+implementation of such retail strategies.
+The Company's growth has increased and will continue to increase demand
+on the Company's managerial, operational and administrative resources. The
+Company has recently invested significant resources in, among other things, its
+management information systems and hiring and training new personnel. However,
+in order to manage currently anticipated levels of future demand, the Company
+may be required to, among other things, expand its distribution facilities,
+establish relationships with new manufacturers to produce its products, and
+continue to expand and improve its financial, management and operating systems.
+There can be no assurance that the Company will be able to manage future growth
+effectively and a failure to do so could have a material adverse effect on the
+Company's business, financial condition and results of operations.
+Seasonal and Quarterly Fluctuations. The Company's quarterly results
+may fluctuate quarter to quarter as a result of the timing of holidays, weather,
+the timing of larger shipments of footwear, market acceptance of the Company's
+products, the mix, pricing and presentation of the products offered and sold,
+the hiring and training of additional personnel, the timing of inventory write
+downs, the cost of materials, the mix between wholesale and licensing
+businesses, the incurrence of other operating costs and factors beyond the
+Company's control, such as general economic conditions and actions of
+competitors. In addition, the Company expects that its sales and operating
+results may be significantly impacted by (i) the opening of new retail stores,
+(ii) the introduction of new products and (iii) the commencement of the
+Company's new Mens brand. Accordingly, the results of operations in any quarter
+will not necessarily be indicative of the results that may be achieved for a
+full fiscal year or any future quarter.
+Trademark and Service Mark Protection. The Company believes that its
+trademarks/service marks and other proprietary rights are important to its
+success and its competitive position. Accordingly, the Company devotes
+substantial resources to the establishment and protection of its trademarks on a
+worldwide basis. Nevertheless, there can be no assurance that the actions taken
+by the Company to establish and protect its trademarks and other proprietary
+rights will be adequate to prevent imitation of its products by others or to
+prevent others from seeking to block sales of the Company's products as
+violative of the trademarks and proprietary rights of others. Moreover, no
+assurance can be given that others will not assert rights in, or ownership of,
+trademarks and other proprietary rights of the Company or that the Company will
+be able to successfully resolve such conflicts. In addition, the laws of certain
+19
+foreign countries may not protect proprietary rights to the same extent as do
+the laws of the United States. The failure of the Company to establish and then
+protect such proprietary rights from unlawful and improper appropriation could
+have a material adverse impact on the Company's business, financial condition
+and results of operations. See "Business - Trademarks and Service Marks".
+Foreign Currency Fluctuations. The Company generally purchases its
+products in U.S. dollars. However, the Company sources substantially all of its
+products overseas and, as such, the cost of these products may be affected by
+changes in the value of the relevant currencies. Changes in currency exchange
+rates may also affect the relative prices at which the Company and foreign
+competitors sell their products in the same market. There can be no assurance
+that foreign currency fluctuations will not have a material adverse impact on
+the Company's business, financial condition and results of operations.
+Absence of Dividends. The Company anticipates that all of its earnings
+in the foreseeable future will be retained to finance the continued growth and
+expansion of its business and has no current intention to pay cash dividends.
+Outstanding Options. As of March 1, 2001, the Company had outstanding
+options to purchase an aggregate of approximately 2,592,900 shares of Common
+Stock. Holders of such options are likely to exercise them when, in all
+likelihood, the Company could obtain additional capital on terms more favorable
+than those provided by the options. Further, while its options are outstanding,
+they may adversely affect the terms in which the Company could obtain additional
+capital.

raw/filings/0000913241/2000/0001019056-01-500024/item13.txt

@@ -0,0 +1,4 @@
+Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
+Incorporated herein by reference from the Company's definitive proxy
+statement to be filed pursuant to Regulation 14A under the Securities Exchange
+Act of 1934.

raw/filings/0000913241/2000/0001019056-01-500024/rpt_disclosure.txt

@@ -0,0 +1,15 @@
+Certain Relationships and Related Transactions
+In July 2001, the Company entered into a consulting agreement with Peter J.
+Solomon & Company, a financial advisory firm of which Marc Cooper, one of the
+Company's directors, is a managing director. The agreement provides for a fee of
+$150,000 over the one year term of the agreement which expires in June 2002. The
+firm is to provide financial advisory and investment banking services to the
+Company.
+Compensation Committee Report On Executive Compensation
+The Compensation Committee is responsible for reviewing and approving the
+Company's compensation policies and the compensation paid to its executive
+officers, including the Chief Executive Officer and the other named executive
+officers. The Compensation Committee is comprised of Charles A. Koppelman, Peter
+Migliorini and John Madden. Each member of the Compensation Committee was a
+non-employee directors of the Company during 2001, however, Mr. Koppelman
+received a salary and certain other benefits for serving as the Chairman of the

raw/filings/0000913241/2001/0001019056-02-000198/filing_metadata.csv

@@ -0,0 +1,2 @@
+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2002-03-29,2001-12-31,2002-03-29T05:00:00.000Z,0001019056-02-000198,smadden_k.txt,FORM 10-K,246742,0,0,https://www.sec.gov/Archives/edgar/data/913241/000101905602000198/smadden_k.txt,https://www.sec.gov/Archives/edgar/data/913241/000101905602000198/,2001,2001,1

raw/filings/0000913241/2001/0001019056-02-000198/item1.txt

@@ -0,0 +1,437 @@
+ITEM 1 BUSINESS
+Steven Madden, Ltd. (together with its subsidiaries, the "Company") designs,
+sources, markets and sells fashion-forward footwear brands for women, men and
+children. The Company distributes products through its retail stores, its
+e-commerce web sites, catalogs and department and specialty store locations in
+the United States and Canada. The Company's product line includes core products,
+which are sold year-round, complemented by a broad range of updated styles which
+are designed to establish or capitalize on market trends.
+The Company's business is comprised of three (3) distinct segments
+(wholesale, retail and private label). The wholesale division includes five (5)
+brands: Steve Madden(R), David Aaron(R), l.e.i.(R), Stevies(R) and the Steve
+Madden Mens brand. Steven Madden Retail, Inc., the Company's wholly owned retail
+subsidiary, operates Steve Madden and David Aaron retail stores as well as the
+Company's outlet stores and e-commerce web sites. The Company's wholly owned
+private label subsidiary, Adesso-Madden, Inc., designs and sources footwear
+products under private labels for many of the country's largest mass
+merchandisers. The Company also licenses its Steve Madden(R) and Stevies(R)
+trademarks for several accessory and apparel categories.
+Steven Madden, Ltd., was incorporated as a New York corporation on July 9,
+1990 and reincorporated under the same name in Delaware in November 1998. The
+Company, which has established a reputation for its creative designs, popular
+styles and quality products at accessible price points, was founded and
+developed by Steven Madden, its principal designer, and former Chief Executive
+Officer and Chairman of the Board. The Company completed its initial public
+offering in December 1993 and its shares of Common Stock currently trade on The
+Nasdaq National Market under the symbol "SHOO".
+The Company maintains its principal executive offices at 52-16 Barnett
+Avenue, Long Island City, NY 11104, telephone number (718) 446-1800.
+STEVEN MADDEN - WHOLESALE DIVISION
+The wholesale division sources, sells and markets the Company's Steve
+Madden(R) brand to major department stores, better specialty stores, and shoe
+stores throughout the United States and Canada. During the last few years the
+Steve Madden(R) product line has become a leading footwear brand in the fashion
+conscious junior marketplace. To serve its customers (primarily women ages 16 to
+25), the wholesale division creates and markets fashion forward footwear
+designed to appeal to customers seeking exciting, new footwear designs at
+reasonable prices. In January 2001, the wholesale division expanded to include a
+men's footwear line which targets fashion conscious men ages 20 to 35.
+As the Company's largest division, the Steve Madden(R) wholesale division
+accounted for $92,413,000 in sales in 2001, or approximately 38% of the
+Company's total sales. Many of the wholesale division's newly created styles are
+test marketed at the Company's retail stores. Within a few days, the Company can
+determine if a test product appeals to customers. This enables the Company to
+use its flexible sourcing model to rapidly respond to changing preferences which
+the Company believes is essential for success in the fashion footwear
+marketplace.
+DIVA ACQUISITION CORP. - THE DAVID AARON(R) WHOLESALE DIVISION
+Diva Acquisition Corp. ("Diva") designs and markets fashion footwear to
+women under the "David Aaron(R)" trademark through major department stores and
+better footwear specialty stores and two (2) Company owned retail shoe stores
+located in the Soho area of Manhattan and in Paramus, NJ. Priced a tier above
+the Steve Madden(R) brand, Diva's products are designed to appeal principally to
+fashion conscious women, ages 26 to 45, who shop at department stores and
+footwear boutiques. The Company recorded wholesale sales from the David Aaron(R)
+brand of $7,454,000 for the year ended December 31, 2001, or approximately 3% of
+the Company's total revenues. Revenues from the sale of David Aaron footwear
+increased by approximately 106% compared to the preceding year due to the
+repositioning and reorganization of the David Aaron brand.
+1
+l.e.i. (R) - WHOLESALE DIVISION
+Pursuant to the Company's license agreement with R.S.V. Sport, Inc., the
+Company has the right to use the l.e.i.(R) trademark in connection with the sale
+and marketing of footwear. The l.e.i.(R) trademark is well known for jeanswear
+in the junior marketplace and nationally through department and specialty
+stores. The Company's l.e.i.(R) footwear products are targeted to attract girls
+and young women ages 6 to 20 years old, a majority of which are younger than the
+typical Steve Madden(R) brand customer. The l.e.i. Wholesale Division generated
+revenue of $42,592,000 for the year ended December 31, 2001, or approximately
+17% of the Company's total revenues.
+STEVIES INC. - WHOLESALE DIVISION
+The Company's Stevies Wholesale Division ("Stevies Wholesale") generated
+revenue of $10,984,000 for the year ended December 31, 2001, or approximately 5%
+of the Company's total revenues. Stevies(R) now sells in store groups such as
+Nordstrom, Federated Department Stores, May Department Stores, Belk, Dillard's,
+Limited Too, as well as independent children's stores throughout the country.
+STEVEN MADDEN RETAIL, INC. - RETAIL DIVISION
+As of December 31, 2001, the Company owned and operated sixty-five (65)
+retail shoe stores under the Steve Madden(R) name, two (2) under the David
+Aaron(R) name, five (5) outlet stores and one (1) Internet store (through the
+www.stevemadden.com, www.stevies.com and www.stevemaddenmens.com web sites). In
+2001, the Company opened ten (10) new stores and closed two (2) under-performing
+stores. Most of the Steve Madden stores are located in major shopping malls in
+California, Colorado, District of Columbia, Florida, Georgia, Illinois,
+Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York,
+Ohio, Pennsylvania, Rhode Island, Texas and Virginia. The retail stores have
+been successful for the Company, generating annual sales in excess of $680 per
+square foot. Sales are primarily from the sale of the Company's Steve Madden(R)
+product line. Same store sales decreased 1% in 2001 over 2000 sales and total
+sales for the retail division were $79 million compared to $70 million for 2000.
+Sales from the retail division for the year ended December 31, 2001 were
+approximately 33% of the Company's total sales.
+The Company believes that the Retail Division will continue to enhance
+overall sales and profits while building equity in the Steve Madden brand. It is
+for these reasons that the Company intends to add approximately ten (10) new
+retail stores during the 2002 calendar year. Additionally, the expansion of the
+Retail Division enables the Company to test and react to new products and
+classifications which strengthens the product development efforts of the Steve
+Madden wholesale division.
+THE ADESSO-MADDEN, INC. - PRIVATE LABEL DIVISION
+In September 1995, the Company incorporated Adesso-Madden, Inc. as a wholly
+owned subsidiary ("A-M"). A-M was formed to serve as a buying agent to mass
+market merchandisers, shoe store chains and other off-price retailers in
+connection with their purchase of private label shoes. As a buying agent, A-M
+arranges for shoe manufacturers in Asia and South America to manufacture private
+label shoes to the specifications of its clients. The Company believes that by
+operating in the private label, mass merchandising market, the Company is able
+to maximize additional non-branded sales opportunities. This leverages the
+Company's overall sourcing, design and distribution capabilities. Currently,
+this division serves as a buying agent for the procurement of women's footwear
+for large retailers including Sears, Payless, Wal-Mart and Target. A-M receives
+commissions in connection with the purchase of private label shoes by its
+clients. A-M also sources and sells footwear under the Soho Cobbler(R) brand
+name. The private label division generated commission revenue of $4,200,000
+million for the year ended December 31, 2001.
+LICENSING
+As of December 31, 2001, the Company licensed the Steve Madden trademark for
+use in connection with the manufacturing, marketing and sale of outerwear
+(including leather outerwear), belts, handbags, sunglasses, eyewear and hosiery.
+Each license agreement requires the licensee to pay to the Company a royalty
+based on net sales, a minimum royalty in the event that net sales fail to reach
+specified targets and a percentage of sales for advertising of the Steve
+Madden(R) brand.
+2
+During 2001, the Company licensed the Stevies trademark for use in
+connection with manufacturing, marketing and sale of sportswear, outerwear,
+belts, handbags, sunglasses and hosiery, fashion accessories. In February 2001,
+the Company terminated existing licensing agreements for jewelry and hair
+accessories for the Steve Madden(R) and Stevies(R) brands, and sportswear for
+the Stevies(R) brand.
+DESIGN
+The Company has established a reputation for its creative designs, popular
+styles and quality products at accessible price points. The Company believes
+that its future success will depend in substantial part on its ability to
+continue to anticipate and react to changing consumer demands in a timely
+manner. To meet this objective, the Company has developed a unique design
+process that allows it to recognize and adapt quickly to changing consumer
+demands. The Company's design team works together to create designs which they
+believe fit the Company's image, reflect current or approaching trends and can
+be manufactured in a timely and cost-effective manner. Once the initial design
+is complete, a prototype is developed, which is reviewed and refined prior to
+the commencement of limited production. Most new Steve Madden designs are then
+tested in the Steve Madden(R) retail stores. Designs that prove popular are then
+scheduled for mass production overseas and wholesale and retail distribution
+nationwide. The Company believes that its unique design and testing process and
+flexible sourcing model is a significant competitive advantage allowing the
+Company to cut mass production lead times and avoid the costly production and
+distribution of unpopular designs.
+PRODUCT SOURCING AND DISTRIBUTION
+The Company sources each of its product lines separately based on the
+individual design, styling and quality specifications of such products. The
+Company does not own or operate any mass manufacturing facilities and sources
+its branded products through independently owned manufacturers in Brazil, China,
+Italy, Mexico, Spain, Taiwan and the United States. The Company has established
+relationships with a number of manufacturers in each country. The Company
+believes that this sourcing of footwear products minimizes its investment and
+inventory risk, and enables efficient and timely introduction of new product
+designs. Although the Company has not entered into any long-term manufacturing
+or supply contracts, the Company believes that a sufficient number of
+alternative sources exist for the manufacture of its products. The principal
+materials used in the Company's footwear are available from any number of
+sources, both within the United States and in foreign countries.
+The Company's design and distribution processes are intended to be flexible,
+allowing the Company to respond to and accommodate changing consumer demand. The
+Company's production staff tracks warehouse inventory on a daily basis, monitors
+sell-through data and incorporates input on product demand from wholesale
+customers. The Company can use product feedback to adjust production or
+manufacture new products in as little as five weeks. Constant inventory tracking
+allows the Company to manage inventory on a continuous flow basis with the goal
+of optimizing inventory turns.
+The Company distributes its products from two (2) third party distribution
+warehouse centers located in California and New Jersey and its own distribution
+facility located in Florida. The Company also distributes its Internet shipments
+from a third party fulfillment center located in Michigan. By utilizing
+distribution facilities that specialize in distributing products to certain
+customers (wholesale accounts, Steve Madden retail stores and Internet
+fulfillment), the Company believes that its customers are better served.
+CUSTOMERS
+The Company's customers purchasing shoes consist principally of department
+stores and specialty stores, including shoe boutiques. Presently, the Company
+sells approximately sixty-two percent (62%) of its products at wholesale to
+department stores, including Federated Department Stores (Bloomingdale's, Bon
+Marche, Burdines, Macy's and Rich's), May Department Stores (Famous Barr,
+Filene's, Foley's, Hecht's, Kaufmann's, Meier & Frank, Lord and Taylor and
+Robinsons May), Dillard's, Marshall Field's and Nordstrom; and approximately
+thirty-eight percent (38%) to specialty stores, including Journeys, Limited Too
+and Mandees; and catalog retailers, including Victoria's Secret and Fingerhut.
+For the year ended December 31, 2001, May Department Stores, Federated
+Department Stores and Nordstrom accounted for approximately twenty-one percent
+(21%), eighteen percent (18%) and eleven percent (11%) of the Company's
+wholesale sales, respectively.
+3
+DISTRIBUTION CHANNELS
+The Company sells it products principally through its Company-owned retail
+stores, better department stores and specialty shoe stores in the United States
+and abroad. Retail stores and wholesale sales account for approximately
+thirty-three percent (33%) and sixty-seven percent (67%) of total sales,
+respectively. The following paragraphs describe each of these distribution
+channels:
+STEVE MADDEN AND DAVID AARON RETAIL STORES
+As of December 31, 2001, the Company operated sixty-five (65) Company-owned
+retail stores under the Steve Madden(R) name and two (2) under the David
+Aaron(R) name. The Company believes that its retail stores will continue to
+enhance overall sales, profitability, and its ability to react to changing
+consumer trends. The stores are used as a marketing tool which allows the
+Company to strengthen brand recognition and to showcase selected items from its
+full line of branded and licensed products. Furthermore, the retail stores
+provide the Company with a venue to test and introduce new products and
+merchandising strategies. Specifically, the Company often tests new designs at
+its Steve Madden(R) retail stores before scheduling them for mass production and
+wholesale distribution. In addition to these test marketing benefits, the
+Company has been able to leverage sales information gathered at Steve Madden(R)
+retail stores to assist its wholesale accounts in order placement and inventory
+management.
+A typical Steve Madden(R) store is approximately 1,400 to 1,600 square feet
+and is located in malls and street locations which attract the highest
+concentration of the Company's core demographic -- style-conscious young women
+ages 16 to 25 years old. The David Aaron(R) store has a more sophisticated
+design and format styled to appeal to its more mature target audience. In
+addition to carefully analyzing mall demographics, the Company also sets
+profitability guidelines for each potential store site. Specifically, the
+Company targets sites at which the demographics fit the consumer profile, the
+positioning of the site is well trafficked and the projected fixed annual rent
+expense does not exceed a specified percentage of sales over the life of the
+lease. By setting these standards, the Company believes that each store will
+contribute to the Company's overall profits both in the near- and longer-terms.
+OUTLET STORES
+In May 1998, Shoe Biz, Inc., a wholly owned subsidiary of the Company ("Shoe
+Biz"), purchased certain assets from and assumed certain liabilities of, Daniel
+Scott, Inc. with respect to its Shoe Biz outlet store located in Mineola, New
+York. In connection with the transaction, the Company hired Robert Schmertz, the
+former President and sole stockholder of Daniel Scott, Inc., as the President of
+Shoe Biz. Shoe Biz operates the five (5) outlet stores in New Jersey and New
+York, three (3) of which operate under the Shoe Biz name and two (2) of which
+operate as Steve Madden Outlet stores. Shoe Biz sells many product lines,
+including Steve Madden, David Aaron, Stevies and l.e.i.(R) footwear, at lower
+prices than prices typically charged by other "full price" retailers.
+DEPARTMENT STORES
+The Company currently sells to over 2,500 locations of twenty (20) better
+department stores throughout the United States and Canada. The Company's top
+accounts include Federated Department Stores (Macy's, Bloomingdale's, Bon
+Marche, Burdine's and Rich's), May Department Stores (Filene's, Hecht's, Famous
+Barr, Foley's, Kaufmann's, Meier & Frank, Lord and Taylor and Robinsons May),
+Nordstrom, Dillard's and Marshall Field's.
+Department store accounts are offered merchandising support which includes
+in-store fixtures and signage, supervision of displays and merchandising of the
+Company's various product lines. An important development in the Company's
+wholesale merchandising effort is the creation of in-store concept shops, where
+a broader collection of the Company's branded products are showcased. These
+in-store concept shops create an environment that is consistent with the
+Company's image and enable the retailer to display and stock a greater volume of
+the Company's products per square foot of retail space. In addition, these
+in-store concept shops encourage longer term commitment by the retailer to the
+Company's products and enhance consumer brand awareness.
+In addition to merchandising support, the Company's customer service
+representatives maintain weekly communications with their accounts to guide them
+in placing orders and to assist them in managing inventory,
+4
+assortment and retail sales. The Company leverages its sell-through data
+gathered at its retail stores to assist department stores in allocating their
+open-to-buy dollars to the most popular styles in the product line and to phase
+out styles with weaker sell-throughs.
+SPECIALTY STORES/CATALOG SALES
+The Company currently sells to specialty store locations throughout the
+United States and Canada. The Company's top specialty store accounts include
+Journeys, Limited Too and Mandees. The Company offers its specialty store
+accounts the same merchandising, sell-through and inventory tracking support
+offered to its department store accounts. Sales of the Company's products are
+also made through various catalogs, such as Victoria's Secret.
+INTERNET SALES
+The Company operates three (3) Internet web sites: www.stevemadden.com,
+www.stevies.com and www.stevemaddenmens.com. Customers can purchase numerous
+styles of the Company's Steve Madden and Stevies footwear, accessory and
+clothing products. As a result of the Company's increased focus on e-commerce,
+sales in 2001 derived from its Internet store increased 37% to $4,900,000 from
+$3,500,000 in 2000.
+As a result of the increased sales activity on the Company's web sites, the
+Company entered into an agreement with Progressive Distribution Services in
+April 2000. Under the terms of the Agreement, Progressive Distribution Services
+provides direct-to-customer and other fulfillment services for purchases made on
+the Company's web sites, including validation of customer credit, picking,
+packing and shipment of footwear products to customers of the Company.
+MILLE 21 DISTRIBUTION AGREEMENT
+On January 7, 2002, the Company and Mille 21, Inc. ("Mille 21") entered into
+a written agreement whereby the Company granted Mille 21 the exclusive right to
+develop Steve Madden retail stores and sell Steve Madden products in South
+Korea. Under the terms of the agreement, Mille 21 is obligated to open four (4)
+Steve Madden stores in South Korea in 2002 and is also obligated to purchase
+minimum amounts of Steve Madden products. The Company believes that establishing
+a presence in South Korea is a first step toward expanding into the pacific rim.
+COMPETITION
+The fashion footwear industry is highly competitive. The Company's
+competitors include specialty shoe companies as well as companies with
+diversified footwear product lines. The recent substantial growth in the sales
+of fashion footwear has encouraged the entry of many new competitors and
+increased competition from established companies. Most of these competitors,
+including Kenneth Cole, Nine West, DKNY, Skechers, Nike and Guess, may have
+significantly greater financial and other resources than the Company. The
+Company believes effective advertising and marketing, fashionable styling, high
+quality and value are the most important competitive factors and intends to
+continue to employ these elements as it develops its products.
+In 2001, the Company launched the Steve Madden Mens brand which competes
+with several brands that are more established with greater consumer awareness,
+including Kenneth Cole, Skechers Collection, Tommy Hilfiger and Nautica.
+MARKETING AND SALES
+Prior to 1997, the Company's marketing plans relied heavily on its few Steve
+Madden(R) retail store locations and word-of-mouth referrals. In 1998, the
+Company continued to focus on creating a more integrated brand building program
+to establish Steve Madden as the leading designer of fashion footwear for
+style-conscious young women. As a result, the Company developed a national
+advertising campaign for lifestyle and fashion magazines which was also used in
+regional marketing programs such as radio advertisements, television
+commercials, outdoor media, college event sponsorship and live online chat
+forums. The Company also continues to promote its web sites
+(www.stevemadden.com, www.stevies.com and www.stevemaddenmens.com) where
+consumers can purchase Steve Madden(R), Stevies and Steve Madden Mens products
+and interact with both the Company and other customers.
+5
+The Company also increased the marketing of the Steve Madden brand to
+college students in 2001. The Company targeted universities for a series of
+lively promotions, many of them tied in with musical performances.
+The Company commenced an aggressive marketing campaign for the Stevies brand
+with separate marketing, advertising, promotional events and in-store displays
+targeting the new Stevies customer. As for Steve Madden Mens, the Company
+supported the brand's roll-out with strategic marketing and advertising
+initiatives.
+In order to service its wholesale accounts, the Company retains a sales
+force of fourteen independent sales representatives. These sales representatives
+work on a commission basis and are responsible for placing the Company's
+products with its principal customers, including better department and specialty
+stores. The sales representatives are supported by the Company's senior
+executives, a staff of twelve account executives, two merchandise coordinators
+and twenty five customer service representatives who continually cultivate
+relationships with wholesale customers. This staff assists accounts in
+merchandising and assessing customer preferences and inventory requirements,
+which ultimately serves to increase sales and profitability.
+MANAGEMENT INFORMATION SYSTEMS (MIS) OPERATIONS
+Sophisticated information systems are essential to the Company's ability to
+maintain its competitive position and to support continued growth. The Company
+operates on a dual AS/400 system which provides system support for all aspects
+of its business including manufacturing purchase orders; customer purchase
+orders; order allocations; invoicing; accounts receivable management; real time
+inventory management; quick response replenishment; point-of-sale support; and
+financial and management reporting functions. The Company has a PKMS bar coded
+warehousing system which is integrated with the wholesale system in order to
+provide accurate inventory positions and quick response size replenishment for
+its customers. In addition, the Company has installed an EDI system which
+provides a computer link between the Company and certain wholesale customers
+that enables both the customer and the Company to monitor purchases, shipments
+and invoicing. The EDI system also improves the Company's ability to respond to
+customer inventory requirements on a weekly basis.
+In 2001, a new AS400 computer platform was implemented to support the
+Company's retail division. After the events of September 11, 2001, the Company
+reevaluated and implemented an enhanced business resumption plan. This plan
+insures that all mission critical business systems are available twenty four
+hours a day, seven days a week with a supporting redundant network
+infrastructure in place.
+RECEIVABLES FINANCING; LINE OF CREDIT
+Under the terms of a factoring agreement with Capital Factors, Inc., the
+Company is permitted to draw down 80% of its invoiced receivables at an interest
+rate of two points below the Prime Rate (as defined in such agreement). The
+agreement provides that Capital Factors is not required to purchase all the
+Company's receivables and requires the Company to pay an unused line fee of .25%
+of the average daily unused portion of the maximum amount of the credit line. On
+September 1, 1998, the Company and Capital Factors amended its Factoring
+Agreement to, among other things, provide the Company with a credit line of up
+to $15,000,000, subject to certain limitations. The Company has not recently
+borrowed funds under its credit line with Capital Factors. The agreement with
+Capital Factors was renewed as of December 31, 2001 for an additional one year
+term. Capital Factors maintains a lien on all of the Company's inventory and
+receivables and assumes the credit risk for all assigned accounts approved by
+it.
+TRADEMARKS AND SERVICE MARKS
+The STEVE MADDEN and STEVE MADDEN plus Design trademarks and service marks
+have been registered in numerous International Classes (Int'l Cl. 25 for
+clothing and footwear; Int'l Cl. 18 for leather goods, such as handbags and
+wallets; Int'l Cl. 9 for eyewear; Int'l Cl. 14 for jewelry; Int'l Cl. 3 for
+cosmetics and fragrances; Int'l Cl. 20 for picture frames and furniture; Int'l
+Cl. 16 for paper goods; Int'l Cl. 24 for bedding; and Int'l Cl. 35 for retail
+store services) in the United States. The Company also has trademark
+registrations in the United States for the marks EYESHADOWS BY STEVE MADDEN
+(Int'l Cl. 9 for eyewear), ICE TEA (Int'l Cl. 25 for clothing and footwear),
+SOHO COBBLER (Int'l. Cl. 9 for eyewear; and Int'l Cl. 25 for clothing and
+footwear), and SHOE BIZ By STEVE MADDEN (Int'l Cl. 25 for clothing and footwear;
+and Int'l Cl. 35 for retail store services).
+6
+The Company further owns registrations for the STEVE MADDEN and STEVE MADDEN
+plus Design trademarks and service marks in various International Classes in
+Argentina, Australia, Brazil, Canada, Chile, China, Colombia, Hong Kong, Israel,
+Italy, Japan, Korea, Mexico, Panama, Saudi Arabia, South Africa, Taiwan, the 15
+cooperating countries of Europe and the Benelux countries and has pending
+applications for registration of the STEVE MADDEN and STEVE MADDEN plus Design
+trademarks and service marks in Bahrain, Kuwait, Malaysia, Oman, Peru, Qatar,
+the United Arab Emirates and Venezuela. There can be no assurance, however, that
+the Company will be able to effectively obtain rights to the STEVE MADDEN mark
+throughout all of the countries of the world. Moreover, no assurance can be
+given that others will not assert rights in, or ownership of, trademarks and
+other proprietary rights of the Company or that the Company will be able to
+successfully resolve such conflicts. The failure of the Company to protect such
+rights from unlawful and improper appropriation may have a material adverse
+effect on the Company's business and financial condition.
+Additionally, the Company, through its Diva Acquisition Corp. subsidiary,
+owns registrations for the DAVID AARON trademark and service mark in various
+International Classes in the United States (Int'l Cl. 25 for clothing and
+footwear; Int'l Cl. 18 for leather goods, such as handbags and wallets; and
+Int'l Cl. 35 for retail store services), Australia, Canada, Hong Kong, Israel,
+Japan, South Africa and the 15 cooperating countries in Europe and for its D.
+AARON trademark in Spain. The Company further has a pending application for
+registration of the DAVID AARON trademark and service mark in Panama. The
+Company believes that the DAVID AARON trademark has a significant value and is
+important to the marketing of the Company's products.
+The Company, through its Stevies, Inc. subsidiary, also owns several
+registrations for the STEVIES trademark and service mark in two International
+Classes in the United States (Int'l Cl. 18 for leather goods, such as handbags
+and wallets; and Int'l Cl. 9 for eyewear) and for its STEVIES plus Design mark
+for various goods in Hong Kong and the 15 cooperating countries in Europe.
+Additionally, Stevies, Inc. has several pending trademark and service mark
+applications for registration of the STEVIES and STEVIES plus Design marks in
+various International Classes in the United States (Int'l Cl. 25 for clothing
+and footwear; Int'l Cl. 18 for leather goods, such as handbags and wallets;
+Int'l Cl. 9 for eyewear; Int'l Cl. 14 for jewelry; Int'l Cl. 3 for cosmetics and
+fragrances; Int'l Cl. 16 for paper goods; Int'l Cl. 28 for toys; Int'l Cl. 26
+for hair accessories; and Int'l Cl. 35 for retail store services) and in
+Argentina, Bahrain, Brazil, Canada, China, Colombia, Indonesia, Japan, Korea,
+Kuwait, Malaysia, Mexico, Oman, Panama, Peru, Qatar, Saudi Arabia, South Africa,
+Thailand, Taiwan, the United Arab Emirates and Venezuela. Finally, Stevies, Inc.
+also owns several pending trademark and service mark applications for
+registration of the STEVIES BY STEVE MADDEN mark in various International
+Classes in the United States (Int'l Cl. 25 for clothing and footwear; Int'l Cl.
+14 for jewelry; Int'l Cl. 18 for leather goods, such as handbags and wallets;
+Int'l Cl. 16 for paper goods; Int'l Cl. 3 for cosmetics and fragrances; Int'l
+Cl. 9 for eyewear; Int'l Cl. 26 for hair accessories; Int'l Cl. 28 for toys; and
+Int'l Cl. 35 for retail store services).
+EMPLOYEES
+At March 18, 2002, the Company employed approximately 1,023 employees, of
+whom approximately 313 work on a full-time basis and approximately 710 work on a
+part-time basis. The management of the Company considers relations with its
+employees to be good.

raw/filings/0000913241/2001/0001019056-02-000198/item13.txt

@@ -0,0 +1,4 @@
+ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+Incorporated herein by reference from the Company's definitive proxy
+statement to be filed pursuant to Regulation 14A under the Securities Exchange
+Act of 1934.

raw/filings/0000913241/2001/0001019056-02-000198/rpt_disclosure.txt

@@ -0,0 +1,15 @@
+Certain Relationships and Related Transactions
+In July 2001, the Company entered into a consulting agreement with Peter J.
+Solomon & Company, a financial advisory firm of which Marc Cooper, one of the
+Company's directors, is a managing director. The agreement provides for a fee of
+$150,000 over the one year term of the agreement which expires in June 2002. The
+firm is to provide financial advisory and investment banking services to the
+Company.
+Compensation Committee Report On Executive Compensation
+The Compensation Committee is responsible for reviewing and approving the
+Company's compensation policies and the compensation paid to its executive
+officers, including the Chief Executive Officer and the other named executive
+officers. The Compensation Committee is comprised of Charles A. Koppelman, Peter
+Migliorini and John Madden. Each member of the Compensation Committee was a
+non-employee directors of the Company during 2001, however, Mr. Koppelman
+received a salary and certain other benefits for serving as the Chairman of the

raw/filings/0000913241/2002/0001019056-03-000273/filing_metadata.csv

@@ -0,0 +1,2 @@
+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2003-03-28,2002-12-31,2003-03-28T17:59:40.000Z,0001019056-03-000273,smadden_10k02.txt,FORM 10-K,214473,0,0,https://www.sec.gov/Archives/edgar/data/913241/000101905603000273/smadden_10k02.txt,https://www.sec.gov/Archives/edgar/data/913241/000101905603000273/,2002,2002,1

raw/filings/0000913241/2002/0001019056-03-000273/item1.txt

@@ -0,0 +1,442 @@
+ITEM 1 BUSINESS
+Steven Madden, Ltd. (together with its subsidiaries, the "Company")
+designs, sources, markets and sells fashion-forward footwear brands for women,
+men and children. The Company distributes products through its retail stores,
+its e-commerce web site, catalogs and department and specialty store locations
+in the United States and Canada and through special distribution arrangements in
+Europe and in Central and South America. The Company's product line includes
+core products, which are sold year-round, complemented by a broad range of
+updated styles which are designed to establish or capitalize on market trends.
+The Company's business is comprised of three (3) distinct segments
+(wholesale, retail and private label). The wholesale division includes five (5)
+brands: Steve Madden(R), David Aaron(R), l.e.i.(R), Stevies(R) and the Steve
+Madden Mens brand. Steven Madden Retail, Inc., the Company's wholly-owned retail
+subsidiary, operates Steve Madden and David Aaron retail stores as well as the
+Company's outlet stores and e-commerce web site. The Company's wholly-owned
+private label subsidiary, Adesso-Madden, Inc., designs and sources footwear
+products under private labels for many of the country's largest mass
+merchandisers. The Company also licenses its Steve Madden(R) and Stevies(R)
+trademarks for several accessory and apparel categories.
+Steven Madden, Ltd., was incorporated as a New York corporation on July 9,
+1990 and reincorporated under the same name in Delaware in November 1998. The
+Company has established a reputation for its creative designs, popular styles
+and quality products at accessible price points. The Company completed its
+initial public offering in December 1993 and its shares of Common Stock
+currently trade on The Nasdaq National Market under the symbol "SHOO".
+The Company maintains its principal executive offices at 52-16 Barnett
+Avenue, Long Island City, NY 11104, telephone number (718) 446-1800.
+Wholesale Divisions
+Madden Women's Wholesale
+The Steve Madden(R) Women's Wholesale Division ("Madden Women's
+Wholesale") sources, sells and markets the Company's Steve Madden(R) brand to
+major department stores, better specialty stores, and shoe stores throughout the
+United States and Canada. During the last few years the Steve Madden(R) product
+line has become a leading footwear brand in the fashion conscious junior
+marketplace. To serve its customers (primarily women ages 16 to 25), Madden
+Women's Wholesale creates and markets fashion forward footwear designed to
+appeal to customers seeking exciting, new footwear designs at reasonable prices.
+As the Company's largest division, Madden Women's Wholesale accounted for
+$108,577,000 of net sales in 2002, or approximately 33% of the Company's total
+sales. Many of Madden Women's Wholesale's newly created styles are test marketed
+at the Company's retail stores. Within a few days, the Company can determine if
+a test product appeals to customers. This enables the Company to use its
+flexible sourcing model to rapidly respond to changing preferences which the
+Company believes is essential for success in the fashion footwear marketplace.
+l.e.i.(R) - Wholesale Division
+Pursuant to the Company's license agreement with Jones Investment Company,
+Inc., the Company has the right to use the l.e.i.(R)trademark in connection with
+the sale and marketing of footwear. The l.e.i.(R)trademark is well known for
+jeanswear in the junior marketplace and nationally through department and
+specialty stores. The Company's l.e.i.(R)footwear products are targeted to
+attract girls and young women ages 6 to 20 years old, a majority of which are
+younger than the typical Steve Madden(R)brand customer. The l.e.i. Wholesale
+Division generated net sales of $55,664,000 for the year ended December 31,
+2002, or approximately 17% of the Company's total revenues.
+1
+Madden Men's Wholesale
+The Steve Madden Men's Wholesale Division ("Madden Men's Wholesale")
+markets and sells a full collection of directional young men's shoes to major
+department stores, better specialty stores and independent shoe stores
+throughout the United States. Price points range from $70 to $100, targeted at
+men ages 18 to 44 years old.
+The Madden Men's Wholesale accounted for $45,153,000 of net sales in 2002,
+or approximately 14% of the Company's total sales. Steve Madden Men's, which is
+primarily sourced in China, takes open stock inventory positions in a variety of
+patterns and colors to serve the replenishment programs of its wholesale
+customers.
+Diva Acquisition Corp. - The David Aaron(R) Wholesale Division
+Diva Acquisition Corp. ("Diva") designs and markets fashion footwear to
+women under the "David Aaron(R)" trademark through major department stores and
+better footwear specialty stores and two (2) Company owned retail shoe stores
+located in New York, New York and in Paramus, New Jersey. Priced a tier above
+the Steve Madden(R) brand, Diva's products are designed to appeal principally to
+fashion conscious women, ages 26 to 45, who shop at department stores and
+footwear boutiques. The Company recorded wholesale sales from the David Aaron(R)
+brand of $11,194,000 for the year ended December 31, 2002, or approximately 3%
+of the Company's total net sales. Revenues from the sale of David Aaron footwear
+increased by approximately 50% compared to the preceding year due to the
+repositioning and reorganization of the David Aaron brand.
+Stevies Inc. - Wholesale Division
+The Company's Stevies Wholesale Division ("Stevies Wholesale") generated
+net sales of $13,664,000 for the year ended December 31, 2002, or approximately
+4% of the Company's total net sales. Stevies(R) now sells in store groups such
+as Nordstrom, Federated Department Stores, May Department Stores, Belk,
+Dillard's, Limited Too, as well as independent children's stores throughout the
+country.
+Steven Madden Retail, Inc. - Retail Division
+As of December 31, 2002, the Company owned and operated seventy-two (72)
+retail shoe stores under the Steve Madden(R) name, two (2) under the David
+Aaron(R) name, five (5) outlet stores and one (1) Internet store (through the
+www.stevemadden.com web site). In 2002, the Company elected to consolidate its
+three websites into one for better productivity. In 2002, the Company opened ten
+(10) new stores and closed three (3) under-performing stores. Most of the Steve
+Madden stores are located in major shopping malls in Arizona, California,
+Colorado, Connecticut, District of Columbia, Florida, Georgia, Illinois,
+Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York,
+Ohio, Pennsylvania, Puerto Rico, Rhode Island, Texas, Virginia and Wisconsin.
+The retail stores have been successful for the Company, generating annual sales
+in excess of $716 per square foot. Sales are primarily from the sale of the
+Company's Steve Madden(R) product line. Same store sales increased 6% in 2002
+over 2001 sales and total sales for the retail division were $92,000,000
+compared to $79,000,000 for 2001. Sales from the retail division for the year
+ended December 31, 2002 were approximately 28% of the Company's net sales.
+The Company believes that the Retail Division will continue to enhance
+overall sales and profits while building equity in the Steve Madden brand. It is
+for these reasons that the Company intends to add approximately eight to ten
+(8-10) new retail stores during the 2003 calendar year. Additionally, the
+expansion of the Retail Division enables the Company to test and react to new
+products and classifications which strengthens the product development efforts
+of the Steve Madden wholesale division.
+The Adesso-Madden, Inc. - Private Label Division
+In September 1995, the Company incorporated Adesso-Madden, Inc. as a
+wholly owned subsidiary ("A-M"). A-M was formed to serve as a buying agent to
+mass market merchandisers, shoe store chains and other off-price retailers in
+connection with their purchase of private label shoes. As a buying agent, A-M
+arranges for shoe manufacturers in Asia and South America to manufacture private
+label shoes to the specifications of its clients. The Company believes that by
+operating in the private label, mass merchandising market, the Company is able
+to maximize additional non-branded sales opportunities. This leverages the
+Company's overall sourcing, design and distribution capabilities. Currently,
+this division serves as a buying agent for the procurement of women's, men's and
+2
+children's footwear for large retailers including Sears, Payless, Wal-Mart and
+Target. A-M receives commissions in connection with the purchase of private
+label shoes by its clients. A-M also sources and sells footwear under the Soho
+Cobbler(R) brand name. The private label division generated commission income of
+$4,770,000 for the year ended December 31, 2002.
+Licensing
+As of December 31, 2002, the Company licensed the Steve Madden trademark
+for use in connection with the manufacturing, marketing and sale of outerwear
+(including leather outerwear), belts, handbags, sunglasses, eyewear and hosiery.
+Each license agreement requires the licensee to pay to the Company a royalty
+based on net sales, a minimum royalty in the event that net sales fail to reach
+specified targets and a percentage of sales for advertising of the Steve
+Madden(R) brand.
+During 2002, the Company licensed the Stevies trademark for use in
+connection with manufacturing, marketing and sale of sportswear, outerwear,
+belts, handbags, sunglasses and hosiery, fashion accessories.
+Design
+The Company has established a reputation for its creative designs, popular
+styles and quality products at accessible price points. The Company believes
+that its future success will depend in substantial part on its ability to
+continue to anticipate and react to changing consumer demands in a timely
+manner. To meet this objective, the Company has developed a unique design
+process that allows it to recognize and adapt quickly to changing consumer
+demands. The Company's design team works together to create designs which they
+believe fit the Company's image, reflect current or approaching trends and can
+be manufactured in a timely and cost-effective manner. Once the initial design
+is complete, a prototype is developed, which is reviewed and refined prior to
+the commencement of limited production. Most new Steve Madden designs are then
+tested in the Steve Madden(R) retail stores. Designs that prove popular are then
+scheduled for mass production overseas and wholesale and retail distribution
+nationwide. The Company believes that its unique design and testing process and
+flexible sourcing model is a significant competitive advantage allowing the
+Company to cut mass production lead times and avoid the costly production and
+distribution of unpopular designs.
+Product Sourcing and Distribution
+The Company sources each of its product lines separately based on the
+individual design, styling and quality specifications of such products. The
+Company does not own or operate any mass manufacturing facilities and sources
+its branded products through independently owned manufacturers in Brazil, China,
+Italy, Mexico, Spain, Taiwan and the United States. The Company has established
+relationships with a number of manufacturers in each country. The Company
+believes that this sourcing of footwear products minimizes its investment and
+inventory risk, and enables efficient and timely introduction of new product
+designs. Although the Company has not entered into any long-term manufacturing
+or supply contracts, the Company believes that a sufficient number of
+alternative sources exist for the manufacture of its products. The principal
+materials used in the Company's footwear are available from any number of
+sources, both within the United States and in foreign countries.
+The Company's design and distribution processes are intended to be
+flexible, allowing the Company to respond to and accommodate changing consumer
+demand. The Company's production staff tracks warehouse inventory on a daily
+basis, monitors sell-through data and incorporates input on product demand from
+wholesale customers. The Company can use product feedback to adjust production
+or manufacture new products in as little as five weeks. Constant inventory
+tracking allows the Company to manage inventory on a continuous flow basis with
+the goal of optimizing inventory turns.
+The Company distributes its products from two (2) third party distribution
+warehouse centers located in California and New Jersey and its own distribution
+facility located in Florida. The Company also distributes its Internet shipments
+from a third party fulfillment center located in Michigan. By utilizing
+distribution facilities that specialize in distributing products to certain
+customers (wholesale accounts, Steve Madden retail stores and Internet
+fulfillment), the Company believes that its customers are better served.
+3
+Customers
+The Company's customers purchasing shoes consist principally of department
+stores and specialty stores, including shoe boutiques. Presently, the Company
+sells approximately sixty-three percent (63%) of its products at wholesale to
+department stores, including Federated Department Stores (Bloomingdale's, Bon
+Marche, Burdines, Macy's and Rich's), May Department Stores (Famous Barr,
+Filene's, Foley's, Hecht's, Kaufmann's, Meier & Frank, Lord and Taylor and
+Robinsons May), Dillard's, Marshall Field's and Nordstrom; and approximately
+thirty-four percent (34%) to specialty stores, including Journeys, Limited Too
+and Mandees; and catalog retailers, including Victoria's Secret and Fingerhut.
+For the year ended December 31, 2002, May Department Stores, Federated
+Department Stores and Nordstrom accounted for approximately twenty-two percent
+(22%), seventeen percent (17%) and ten percent (10%) of the Company's wholesale
+sales, respectively.
+Distribution Channels
+The Company sells its products principally through its Company-owned
+retail stores, better department stores and specialty shoe stores in the United
+States and abroad. For the year 2002, retail stores and wholesale sales
+accounted for approximately twenty-eight percent (28%) and seventy-two percent
+(72%) of total sales, respectively. The following paragraphs describe each of
+these distribution channels:
+Steve Madden and David Aaron Retail Stores
+As of December 31, 2002, the Company operated seventy-three (73)
+Company-owned retail stores (including one Internet store) under the Steve
+Madden(R) name and two (2) under the David Aaron(R) name. The Company believes
+that its retail stores will continue to enhance overall sales, profitability,
+and its ability to react to changing consumer trends. The stores are used as a
+marketing tool which allows the Company to strengthen brand recognition and to
+showcase selected items from its full line of branded and licensed products.
+Furthermore, the retail stores provide the Company with a venue to test and
+introduce new products and merchandising strategies. Specifically, the Company
+often tests new designs at its Steve Madden(R) retail stores before scheduling
+them for mass production and wholesale distribution. In addition to these test
+marketing benefits, the Company has been able to leverage sales information
+gathered at Steve Madden(R) retail stores to assist its wholesale accounts in
+order placement and inventory management.
+A typical Steve Madden(R) store is approximately 1,400 to 1,600 square
+feet and is located in malls and street locations which attract the highest
+concentration of the Company's core demographic -- style-conscious young women
+ages 16 to 25 years old. The David Aaron(R) store has a more sophisticated
+design and format styled to appeal to its more mature target audience. In
+addition to carefully analyzing mall demographics, the Company also sets
+profitability guidelines for each potential store site. Specifically, the
+Company targets sites at which the demographics fit the consumer profile, the
+positioning of the site is well trafficked and the projected fixed annual rent
+expense does not exceed a specified percentage of sales over the life of the
+lease. By setting these standards, the Company believes that each store will
+contribute to the Company's overall profits both in the near- and longer-terms.
+Outlet Stores
+Shoe Biz, Inc., a wholly owned subsidiary of the Company ("Shoe Biz"),
+operates five (5) outlet stores in New Jersey and New York, four (4) of which
+operate under the Shoe Biz name and one (1) of which operates as a Steve Madden
+Outlet store. Shoe Biz sells many product lines, including Steve Madden, David
+Aaron, Stevies and l.e.i.(R) footwear, at lower prices than prices typically
+charged by other "full price" retailers.
+Department Stores
+The Company currently sells to over 2,750 locations of twenty-two (22)
+better department stores throughout the United States and Canada. The Company's
+top accounts include Federated Department Stores (Macy's, Bloomingdale's, Bon
+Marche, Burdine's and Rich's), May Department Stores (Filene's, Hecht's, Famous
+Barr, Foley's, Kaufmann's, Meier & Frank, Lord and Taylor and Robinsons May),
+Nordstrom, Dillard's and Marshall Field's.
+4
+Department store accounts are offered merchandising support which includes
+in-store fixtures and signage, supervision of displays and merchandising of the
+Company's various product lines. An important development in the Company's
+wholesale merchandising effort is the creation of in-store concept shops, where
+a broader collection of the Company's branded products are showcased. These
+in-store concept shops create an environment that is consistent with the
+Company's image and enable the retailer to display and stock a greater volume of
+the Company's products per square foot of retail space. In addition, these
+in-store concept shops encourage longer term commitment by the retailer to the
+Company's products and enhance consumer brand awareness.
+In addition to merchandising support, the Company's customer service
+senior account executives maintain weekly communications with their accounts to
+guide them in placing orders and to assist them in managing inventory,
+assortment and retail sales. The Company leverages its sell-through data
+gathered at its retail stores to assist department stores in allocating their
+open-to-buy dollars to the most popular styles in the product line and to phase
+out styles with weaker sell-throughs.
+Specialty Stores/Catalog Sales
+The Company currently sells to specialty store locations throughout the
+United States and Canada. The Company's top specialty store accounts include
+Journeys, Limited Too and Mandees. The Company offers its specialty store
+accounts the same merchandising, sell-through and inventory tracking support
+offered to its department store accounts. Sales of the Company's products are
+also made through various catalogs, such as Victoria's Secret.
+Internet Sales
+The Company operates one (1) Internet web site: www.stevemadden.com.
+Customers can purchase numerous styles of the Company's Steve Madden and Stevies
+footwear, accessory and clothing products. Sales derived from the Company's
+Internet store decreased 2% to $4,800,000 in 2002 from $4,900,000 in 2001.
+Distribution Agreements
+In June 2002, the Company and Dabsan International, S.A. ("Dabsan")
+entered into a written agreement whereby the Company granted Dabsan the
+exclusive right to sell Steve Madden products in certain Central and South
+American countries and the right to develop Steve Madden retail stores in
+certain Central and South American countries. Under the terms of the agreement,
+Dabsan is required to open two (2) Steve Madden stores by October 31, 2004 and
+is also required to purchase minimum amounts of Steve Madden products.
+In February 2003, the Company and F.E.E.T. sas ("FEET") entered into a
+written distribution and license agreement whereby the Company granted FEET the
+exclusive right to sell Steve Madden products in certain European countries with
+a provision that expands the territory covered to include certain additional
+European countries and in North Africa. Under the terms of the agreement, FEET
+is required to purchase minimum amounts of Steve Madden products.
+Competition
+The fashion footwear industry is highly competitive. The Company's
+competitors include specialty shoe companies as well as companies with
+diversified footwear product lines. The recent substantial growth in the sales
+of fashion footwear has encouraged the entry of many new competitors and
+increased competition from established companies. Most of these competitors,
+including Diesel, Kenneth Cole, Nine West, DKNY, Skechers, Nike and Guess, may
+have significantly greater financial and other resources than the Company. The
+Company believes effective advertising and marketing, fashionable styling, high
+quality and value are the most important competitive factors and intends to
+continue to employ these elements as it develops its products.
+In 2001, the Company launched the Steve Madden Mens brand which competes
+with several brands that are more established with greater consumer awareness,
+including Kenneth Cole, Skechers Collection, Tommy Hilfiger and Dr. Martin.
+5
+Marketing and Sales
+Prior to 1997, the Company's marketing plans relied heavily on its few
+Steve Madden(R) retail store locations and word-of-mouth referrals. In 1998, the
+Company continued to focus on creating a more integrated brand building program
+to establish Steve Madden as the leading designer of fashion footwear for
+style-conscious young women. As a result, the Company developed a national
+advertising campaign for lifestyle and fashion magazines which was also used in
+regional marketing programs such as radio advertisements, television
+commercials, outdoor media, college event sponsorship and live online chat
+forums. The Company also continues to promote its web site (www.stevemadden.com)
+where consumers can purchase Steve Madden(R), Stevies and Steve Madden Mens
+products and interact with both the Company and other customers.
+The Company commenced an aggressive marketing campaign for the Stevies
+brand with separate marketing, advertising, promotional events and in-store
+displays targeting the new Stevies customer. As for Steve Madden Mens, the
+Company supported the brand's roll-out with strategic marketing and advertising
+initiatives.
+In order to service its wholesale accounts, the Company retains a sales
+force of sixteen independent sales representatives. These sales representatives
+work on a commission basis and are responsible for placing the Company's
+products with its principal customers, including better department and specialty
+stores. The sales representatives are supported by the Company's senior
+executives, a staff of nine account executives, three merchandise coordinators
+and twenty-six customer service representatives who continually cultivate
+relationships with wholesale customers. This staff assists accounts in
+merchandising and assessing customer preferences and inventory requirements,
+which ultimately serves to increase sales and profitability.
+Management Information Systems (MIS) Operations
+Sophisticated information systems are essential to the Company's ability
+to maintain its competitive position and to support continued growth. The
+Company operates on a dual AS/400 system which provides system support for all
+aspects of its business including manufacturing purchase orders; customer
+purchase orders; order allocations; invoicing; accounts receivable management;
+real time inventory management; quick response replenishment; point-of-sale
+support; and financial and management reporting functions. The Company has a
+PKMS bar coded warehousing system which is integrated with the wholesale system
+in order to provide accurate inventory positions and quick response size
+replenishment for its customers. In addition, the Company has installed an EDI
+system which provides a computer link between the Company and certain wholesale
+customers that enables both the customer and the Company to monitor purchases,
+shipments and invoicing. The EDI system also improves the Company's ability to
+respond to customer inventory requirements on a weekly basis.
+Receivables Financing; Line of Credit
+Under the terms of a factoring agreement with Capital Factors, Inc., the
+Company is permitted to draw down 80% of its invoiced receivables at an interest
+rate of two points below the Prime Rate (as defined in such agreement). The
+agreement provides that Capital Factors is not required to purchase all the
+Company's receivables and requires the Company to pay an unused line fee of .25%
+of the average daily unused portion of the maximum amount of the credit line. On
+September 1, 1998, the Company and Capital Factors amended its Factoring
+Agreement to, among other things, provide the Company with a credit line of up
+to $15,000,000, subject to certain limitations. The Company has not recently
+borrowed funds under its credit line with Capital Factors. The agreement with
+Capital Factors was renewed for the period beginning June 30, 2002 through
+December 31, 2004. Capital Factors maintains a lien on all of the Company's
+inventory and receivables and assumes the credit risk for all assigned accounts
+approved by it.
+Trademarks and Service Marks
+The STEVE MADDEN and STEVE MADDEN plus Design trademarks and service marks
+have been registered in numerous International Classes (Int'l Cl. 25 for
+clothing and footwear; Int'l Cl. 18 for leather goods, such as handbags and
+wallets; Int'l Cl. 9 for eyewear; Int'l Cl. 14 for jewelry; Int'l Cl. 3 for
+cosmetics and fragrances; Int'l Cl. 20 for picture frames and furniture; Int'l
+Cl. 16 for paper goods; Int'l Cl. 24 for bedding; and Int'l Cl. 35 for retail
+store services) in the United States. The Company also has trademark
+registrations in the United States for the marks EYESHADOWS BY STEVE MADDEN
+(Int'l Cl. 9 for eyewear), ICE TEE (Int'l Cl. 25 for clothing and footwear),
+6
+SOHO COBBLER (Int'l. Cl. 9 for eyewear; and Int'l Cl. 25 for clothing and
+footwear), and SHOE BIZ By STEVE MADDEN (Int'l Cl. 25 for clothing and footwear;
+and Int'l Cl. 35 for retail store services). Additionally, the Company has
+several pending trademark and service mark applications the United States for
+various marks, including a stylized "H" Design (Int'l Cl. 25 for clothing and
+footwear); TEST & REACT (Int'l Cl. 42 for services consisting of conducting
+market studies); STEVEN M. (Int'l Class 25 for clothing and footwear); and,
+STEVEN (Int'l Cl. 25 for clothing and footwear).
+The Company further owns registrations for the STEVE MADDEN and STEVE
+MADDEN plus Design trademarks and service marks in various International Classes
+in Argentina, Australia, Brazil, Canada, Chile, China, Colombia, Hong Kong,
+Israel, Italy, Japan, Korea, Mexico, Panama, Saudi Arabia, South Africa, Taiwan,
+the 15 cooperating countries of Europe and the Benelux countries and has pending
+applications for registration of the STEVE MADDEN and STEVE MADDEN plus Design
+trademarks and service marks in Bahrain, Kuwait, Lebanon, Malaysia, Oman, Peru,
+Qatar, Turkey, the United Arab Emirates and Venezuela. There can be no
+assurance, however, that the Company will be able to effectively obtain rights
+to the STEVE MADDEN mark throughout all of the countries of the world. Moreover,
+no assurance can be given that others will not assert rights in, or ownership
+of, trademarks and other proprietary rights of the Company or that the Company
+will be able to successfully resolve such conflicts. The failure of the Company
+to protect such rights from unlawful and improper appropriation may have a
+material adverse effect on the Company's business and financial condition.
+Additionally, the Company, through its Diva Acquisition Corp. subsidiary,
+owns registrations for the DAVID AARON trademark and service mark in various
+International Classes in the United States (Int'l Cl. 25 for clothing and
+footwear; Int'l Cl. 18 for leather goods, such as handbags and wallets; and
+Int'l Cl. 35 for retail store services), Australia, Canada, Hong Kong, Israel,
+Japan, South Africa and the 15 cooperating countries in Europe and for its D.
+AARON trademark in Spain. The Company further has a pending application for
+registration of the DAVID AARON trademark and service mark in Panama. Also, the
+Company has three pending applications for registration of the DAVID AARON
+trademark in International Class 3 for perfume and cosmetics; International
+Class 9 for eyewear; International Class 14 for jewelry; International Class 16
+for paper goods; International Class 18 for bags; International Class 24 for bed
+and bath products; International Class 25 for clothing and footwear and
+International Class 26 hair accessories in Korea. The Company believes that the
+DAVID AARON trademark has a significant value and is important to the marketing
+of the Company's products.
+The Company, through its Stevies, Inc. subsidiary, also owns various
+registrations for the STEVIES and STEVIES plus Design trademark and service mark
+in a number of International Classes in the United States (Int'l Cl. 18 for
+leather goods, such as handbags and wallets; Int'l Cl. 9 for eyewear;
+International Class 35 for retail store services and, International Class 26 for
+hair accessories) and for its STEVIES plus Design mark for various goods in Hong
+Kong, Israel, Mexico, Taiwan and the 15 cooperating countries in Europe.
+Additionally Stevies, Inc. has several pending trademark and service mark
+applications for registration of the STEVIES and STEVIES plus Design marks in
+various International Classes in the United States (Int'l Cl. 25 for clothing
+and footwear; Int'l Cl. 14 for jewelry; Int'l Cl. 28 for toys; Int'l Cl. 26 for
+hair accessories; International Class 16 for paper goods; International Class 3
+for perfume and cosmetics and, International Class 9 for cds) and in Argentina,
+Bahrain, Brazil, Canada, China, Colombia, Indonesia, Japan, Korea, Kuwait,
+Lebanon, Malaysia, Mexico, Oman, Panama, Peru, Qatar, Saudi Arabia, South
+Africa, Thailand, Taiwan, Turkey, the United Arab Emirates and Venezuela.
+Finally, Stevies, Inc. also owns several pending trademark and service mark
+applications for registration of the STEVIES BY STEVE MADDEN mark in various
+International Classes in the United States (Int'l Cl. 25 for clothing and
+footwear; Int'l Cl. 14 for jewelry; Int'l Cl. 18 for leather goods, such as
+handbags and wallets; Int'l Cl. 16 for paper goods; Int'l Cl. 3 for cosmetics
+and fragrances; Int'l Cl. 9 for eyewear; Int'l Cl. 26 for hair accessories;
+Int'l Cl. 28 for toys; and Int'l Cl. 35 for retail store services).
+Employees
+At March 10, 2003, the Company employed approximately 1081 employees, of
+whom approximately 482 work on a full-time basis and approximately 599 work on a
+part-time basis. The management of the Company considers relations with its
+employees to be good.
+7

raw/filings/0000913241/2002/0001019056-03-000273/item13.txt

@@ -0,0 +1,4 @@
+ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+Incorporated herein by reference from the Company's definitive proxy
+statement to be filed pursuant to Regulation 14A under the Securities Exchange
+Act of 1934.

raw/filings/0000913241/2002/0001019056-03-000273/rpt_disclosure.txt

@@ -0,0 +1,8 @@
+Certain Relationships and Related Transactions
+In July 2001, the Company entered into a consulting agreement with Peter J.
+Solomon & Company, a financial advisory firm of which Marc Cooper, one of the
+Company's directors, is a managing director. Under this agreement, the firm
+provided financial advisory and investment banking services to the Company.
+Pursuant to this agreement, the Company paid fees to Peter J. Solomon & Company
+in the amount of $75,000 during 2001 and $150,000 during 2002.
+-16-

raw/filings/0000913241/2006/0001019056-07-000248/filing_metadata.csv

@@ -0,0 +1,2 @@
+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2007-03-09,2006-12-31,2007-03-09T20:58:45.000Z,0001019056-07-000248,smadden_k2006.txt,FORM 10-K,282015,0,0,https://www.sec.gov/Archives/edgar/data/913241/000101905607000248/smadden_k2006.txt,https://www.sec.gov/Archives/edgar/data/913241/000101905607000248/,2006,2006,1

raw/filings/0000913241/2006/0001019056-07-000248/item1.txt

@@ -0,0 +1,534 @@
+ITEM 1 BUSINESS
+Steven Madden, Ltd. (together with its subsidiaries, the "Company")
+designs, sources, markets and retails fashion-forward footwear for women, men
+and children. In addition, the Company designs, sources, markets and retails
+name brand and private label fashion handbags and accessories through its Daniel
+M. Friedman Division. The Company distributes products through its retail
+stores, its e-commerce website, department and specialty stores throughout the
+United States and Canada and through special distribution arrangements in
+Europe, Central and South America, Australia and Indonesia. The Company's
+product line includes a broad range of updated styles which are designed to
+establish or capitalize on market trends, complemented by core products. The
+Company has established a reputation for its creative designs, popular styles
+and quality products at accessible price points.
+The Company's business is comprised of three (3) distinct segments
+(wholesale, retail and first cost divisions). The Wholesale Division includes
+six (6) core brands: Steve Madden(R), Steve Madden Mens, Candie's(R),
+SMNY/Madden Girl, Steven(R) and Stevies(R). In addition, the Daniel M. Friedman
+Wholesale Division, through license agreements, includes the Ellen Tracy, Betsey
+Johnson and Tracy Reese brands. Steven Madden Retail, Inc., the Company's
+wholly-owned retail subsidiary, operates Steve Madden(R) and Steven(R) retail
+stores as well as the Company's e-commerce website. The Company's wholly-owned
+subsidiary, Adesso-Madden, Inc., acts as a buying agent for footwear products
+under private labels for many of the country's large mass merchandisers. The
+Company also licenses its Steve Madden(R) and Steven(R) trademarks for several
+accessory and apparel categories.
+Steven Madden, Ltd. was incorporated as a New York corporation on July
+9, 1990 and reincorporated under the same name in Delaware in November 1998. The
+Company completed its initial public offering in December 1993 and its shares of
+Common Stock currently trade on The NASDAQ Global Market under the symbol
+"SHOO".
+The Company maintains its principal executive offices at 52-16 Barnett
+Avenue, Long Island City, NY 11104, telephone number (718) 446-1800.
+The Company's website is http://www.stevemadden.com. The Company makes
+available, free of charge, on its website its Annual Reports on Form 10-K,
+Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, any amendments to
+such reports filed or furnished pursuant to Section 13(a) or 15(d) of the
+Securities Exchange Act of 1934, as amended (the "Exchange Act"), and its Proxy
+Statement for its Annual Meeting as soon as reasonably practicable after such
+material is electronically filed with, or furnished to, the Securities and
+Exchange Commission (the "Commission"). The Company will provide paper copies of
+such filings free of charge upon request.
+Wholesale Divisions
+Madden Women's Wholesale Division
+The Steve Madden(R) Women's Wholesale Division ("Madden Women's")
+designs, produces, sources and markets the Company's Steve Madden(R) brand to
+major department stores, better specialty stores and independently owned
+boutiques throughout the United States. The Steve Madden(R) brand has become a
+leading life-style brand in the fashion conscious marketplace. To serve its
+customers (primarily women ages 16 to 35), Madden Women's creates and markets
+fashion forward footwear designed to appeal to customers seeking exciting, new
+footwear designs at affordable prices.
+1
+As the Company's largest division, Madden Women's accounted for $150.3
+million of net sales in the year ended December 31, 2006, or approximately 32%
+of the Company's total net sales. Many new products for Madden Women's are test
+marketed at the Company's retail stores. Within a few days, the Company can
+determine if the test product appeals to customers. This enables the Company to
+use its flexible sourcing model to rapidly respond to changing trends which the
+Company believes is essential for success in the fashion arena.
+Madden Mens Wholesale Division
+The Steve Madden Mens Wholesale Division ("Madden Mens") designs,
+produces, sources and markets a full collection of directional men's shoes
+through major department stores, better specialty stores and independent shoe
+stores throughout the United States. Price points range from $70 to $100 at
+retail, targeted at men ages 20 to 40 years old. Madden Mens accounted for $62.6
+million of net sales in the year ended December 31, 2006, or approximately 13%
+of the Company's total net sales. Madden Mens, which is primarily produced in
+China, maintains open stock inventory positions in select patterns to serve the
+replenishment programs of its wholesale customers.
+Candie's Wholesale Division
+Pursuant to the Company's license agreement with Candie's, Inc.,
+("Candie's"), the Company designs, produces, sources and markets Candie's(R)
+branded footwear for women and children worldwide through the Company's Candie's
+Wholesale Division ("Candie's Wholesale"). Candie's Wholesale generated net
+sales of $27.1 million for the year ended December 31, 2006, or approximately 6%
+of the Company's total net sales.
+On December 6, 2004, the license agreement with Candie's was amended to
+reflect Candie's decision to name Kohl's Corporation ("Kohl's") as the exclusive
+provider of a new line of Candie's apparel. Pursuant to the amendment,
+commencing on January 1, 2007, the Company no longer has the exclusive right to
+market Candie's(R) branded footwear and is permitted to sell Candie's(R) branded
+footwear only to Kohl's. Under the terms of the amendment, Candie's has
+guaranteed that the Company will achieve minimum sales levels with Kohl's during
+the term of the agreement, which runs through December 31, 2010. In the event
+such minimum sales levels are not achieved, Candie's is required to compensate
+the Company in an amount based on a percentage of the sales shortfall. For the
+year ended December 31, 2006, the minimum sales level was met.
+SM New York / Madden Girl - Wholesale Division
+The SM New York Wholesale Division ("SMNY/Madden Girl") designs,
+produces, sources and markets a full collection of directional young women's
+shoes. In order to consolidate brand identity, the SMNY(TM) brand will
+transition to "Madden Girl" beginning with the spring 2007 offerings.
+SMNY/Madden Girl is geared for young women ages 13 to 20 and is an "opening
+price point" brand that is currently being sold at department stores, mid-tier
+retailers and specialty stores. SMNY/Madden Girl accounted for $24.5 million of
+net sales in the year ended December 31, 2006 or approximately 5% of the
+Company's total net sales.
+Diva Acquisition Corp. - Steven(R) Wholesale Division
+Diva Acquisition Corp. ("Steven(R)") designs, produces, sources and
+markets women's fashion footwear under the Steven(R) trademark through major
+department and better footwear specialty stores throughout the United States.
+Priced a tier above the Steve Madden(R) brand, Steven(R) products are designed
+to appeal principally to fashion conscious women, ages 26 to 45, who shop at
+department stores and footwear boutiques. Steven(R) generated net sales of $22.1
+million for the year ended December 31, 2006, or approximately 5% of the
+Company's total net sales.
+2
+Stevies - Wholesale Division
+The Company's Stevies(R) Wholesale Division ("Stevies(R)") designs,
+produces, sources and markets footwear for young girls to major department
+stores, such as Federated Department Stores and Belk, better specialty stores
+and independent boutiques throughout the United States. Stevies(R) generated net
+sales of $7.6 million for the year ended December 31, 2006 or approximately 2%
+of the Company's total net sales.
+Daniel Friedman Wholesale Division
+On February 7, 2006, the Company acquired all of the equity interest of
+privately held Daniel M. Friedman and Associates, Inc. The acquisition was
+completed for consideration of $18.7 million, including transaction costs. In
+addition, the purchase agreement provides for certain earn out payments based on
+financial performance through 2010. The Company's Daniel M. Friedman Wholesale
+Division ("Daniel M. Friedman") designs, sources and markets name brand and
+private label fashion handbags and accessories to major department stores, value
+price retailers and better specialty stores throughout the United States. Daniel
+M. Friedman generated net sales of $51.3 million from the date of acquisition
+until December 31, 2006 or approximately 11% of the Company's total net sales.
+Retail Division
+Steven Madden Retail, Inc.
+As of December 31, 2006, the Company owned and operated ninety-three
+(93) retail shoe stores under the Steve Madden(R) name, two (2) under the
+Steven(R) name and one (1) Internet store (through the www.stevemadden.com
+website). In 2006, the Company opened four (4) new stores and closed six (6)
+under-performing stores. Steve Madden stores are located in major shopping malls
+and in street locations across the United States. In 2006, the retail stores
+generated annual sales in excess of $719 per square foot. Sales are primarily
+from the Company's Steve Madden(R) products. Comparative store sales (sales of
+those stores that were open for all of 2006 and 2005) increased 4% in 2006
+compared to 2005. Net sales for the Retail Division were $127.7 million for the
+year ended December 31, 2006, or approximately 27% of the Company's total net
+sales.
+The Company believes that the Retail Division will continue to enhance
+overall sales and profitability while building equity in the Steve Madden brand.
+The Company plans to add eight to ten (8 to 10) new retail stores during 2007.
+The expansion of the Retail Division enables the Company to test and react to
+new products and classifications which, in turn, strengthens the product
+development efforts of the Steve Madden Wholesale Division.
+First Cost Division
+Adesso-Madden, Inc.
+In September 1995, the Company incorporated Adesso-Madden, Inc. as a
+wholly owned subsidiary ("A-M"). A-M was formed to serve as a buying agent to
+mass-market merchants, shoe store chains and other value-priced retailers in
+connection with the procurement of their footwear needs. As a buying agent, A-M
+arranges for shoe manufacturers to produce private label shoes to its customers
+specifications. The Company believes that by operating in the private label,
+mass merchandising market, it is able to maximize additional non-branded sales
+opportunities. This leverages the Company's overall sourcing and design
+capabilities. Currently, this division serves as a buying agent for the
+procurement of women's, men's and children's footwear for large retailers,
+including Target, Wal-Mart, Mervyns, J.C. Penney and Sears. A-M receives buying
+agent's commissions from its customers. In addition, the Company has leveraged
+the strength of its Steve Madden brands and product designs resulting in a
+3
+partial recovery of its design, product and development costs from its
+suppliers. The First Cost Division generated operating income of $11.3 million
+for the year ended December 31, 2006.
+Licensing
+As of December 31, 2006, the Company licensed its Steve Madden(R) and
+Steven(R) trademarks for use in connection with the manufacturing, marketing and
+sale of cold weather accessories, sunglasses, eyewear, watches, dresses and
+girl's apparel. Most of the license agreements require the licensee to pay to
+the Company a royalty based on actual net sales, a minimum royalty in the event
+that specified net sales targets are not achieved and a percentage of sales for
+advertising the brand. Licensing income for the year ended December 31, 2006 was
+$2.9 million.
+Design
+The Company has established a reputation for its creative designs,
+marketing and trendy products at affordable price points. The Company believes
+that its future success will substantially depend on its ability to continue to
+anticipate and react to changing consumer demands in a timely manner. To meet
+this objective, the Company has developed an unparalleled design process that
+allows it to recognize and act quickly to changing consumer demands. The
+Company's design team strives to create designs which it believes fit the
+Company's image, reflect current or future trends and can be manufactured in a
+timely and cost-effective manner. Once the initial design is complete, a
+prototype is developed, which is reviewed and refined prior to the commencement
+of initial production. Most new products are then tested in selected Steve
+Madden(R) retail stores. Designs that prove popular are then offered for
+wholesale and retail distribution nationwide. The Company believes that its
+design and testing process and flexible sourcing model is a significant
+competitive advantage allowing the Company to mitigate the risk of production
+costs and the distribution of less desirable designs.
+Product Sourcing and Distribution
+The Company sources each of its product lines separately based on the
+individual design, styling and quality specifications of the products in such
+product lines. The Company does not own or operate manufacturing facilities;
+rather, it sources its branded products through agents with independently owned
+manufacturers in China, Brazil, Italy, Mexico, Spain, Portugal and the United
+States. The Company has established relationships with a number of manufacturers
+and agents in each of these countries. Although the Company has not entered into
+any long-term manufacturing or supply contracts, the Company believes that a
+sufficient number of alternative sources exist for the manufacture of its
+products. The Company continually monitors the availability of the principal
+materials used in the Company's footwear, which are available from a number of
+sources, both within the United States and in foreign countries. The Company
+tracks inventory flow on a regular basis, monitors sell-through data and
+incorporates input on product demand from wholesale customers. The Company uses
+retailers' feedback to adjust the production or manufacture of new products in
+as little as five weeks, which minimizes the close out of slow moving products.
+The Company distributes its products from three (3) third-party
+distribution warehouse centers located in California and New Jersey. By
+utilizing distribution facilities that specialize in distributing products to
+certain wholesale accounts, Steve Madden(R) retail stores and Internet
+fulfillment, the Company believes that its customers are better served.
+Customers
+The Company's wholesale customers consist principally of department
+stores and specialty stores, including independent boutiques. Approximately 82%
+of its wholesale revenue is generated from department and specialty stores,
+including Federated Department Stores (Macy's and Bloomingdale's) Lord and
+4
+Taylor, Dillard's, Nordstrom, Journeys, Limited Too and Mandees; and catalog
+retailers, including Victoria's Secret and Fingerhut. For the year ended
+December 31, 2006, Federated Department Stores accounted for approximately $60.7
+million, or 17% of the Company's wholesale net sales and 13% of the Company's
+total net sales.
+Distribution Channels
+The Company sells its products principally through its Company-owned
+retail stores and through department stores, specialty stores and discount
+stores in the United States and abroad. For the year ended December 31, 2006,
+net sales from the Company's Retail Division and the Company's Wholesale
+Division accounted for approximately $127.7 million (27%) and $347.5 million
+(73%) of the Company's total net sales, respectively. The following paragraphs
+describe each of these distribution channels.
+Steve Madden and Steven Retail Stores
+As of December 31, 2006, the Company operated ninety-four (94)
+Company-owned retail stores (including one Internet store) under the Steve
+Madden(R) name and two (2) under the Steven(R) name. The Company believes that
+its retail stores will continue to enhance overall sales, profitability, and its
+ability to react to changing consumer trends. The stores are also a marketing
+tool that allows the Company to strengthen brand recognition and to showcase
+selected items from its full line of branded and licensed products. Furthermore,
+the retail stores provide the Company with a venue to test and introduce new
+products and merchandising strategies. Specifically, the Company often tests new
+designs at its Steve Madden(R) retail stores before scheduling them for mass
+production and wholesale distribution. In addition to these test marketing
+benefits, the Company has been able to leverage sales information gathered at
+Steve Madden(R) retail stores to assist its wholesale customers in order
+placement and inventory management.
+A typical Steve Madden(R) store is approximately 1,400 to 1,600 square
+feet and is located in a mall or street location that the Company expects will
+attract the highest concentration of the Company's core demographic,
+style-conscious customer base. The Steven(R) stores have a more sophisticated
+design and format styles to appeal to their more mature target audience. In
+addition to carefully analyzing mall demographics and locations, the Company
+also sets profitability guidelines for each potential store site. Specifically,
+the Company targets well trafficked sites at which the demographics fit the
+Company's consumer profile and seeks new locations where the projected fixed
+annual rent expense stays within Company guidelines. By setting these
+guidelines, the Company seeks to identify stores that will contribute to the
+Company's overall profitability both in the near- and longer-terms.
+Department Stores
+The Company currently sells to over 9,800 doors of 58 department stores
+throughout the United States and Canada. The major accounts include Federated
+Department Stores (Macy's and Bloomingdale's), Lord and Taylor, Nordstrom and
+Dillard's.
+The Company provides merchandising support to its department store
+customers which includes in-store fixtures and signage, supervision of displays
+and merchandising of the Company's various product lines. The Company's
+wholesale merchandising effort includes the creation of in-store concept shops,
+where a broader collection of the Company's branded products are showcased.
+These in-store concept shops create an environment that is consistent with the
+Company's image and enable the retailer to display and sell a greater volume of
+the Company's products per square foot of retail space. In addition, these
+in-store concept shops encourage longer term commitment by the retailer to the
+Company's products and enhance consumer brand awareness.
+5
+In addition to merchandising support, the Company's key account
+executives maintain weekly communications with their accounts to guide them in
+placing orders and to assist them in managing inventory, assortment and retail
+sales. The Company leverages its sell-through data gathered at its retail stores
+to assist department stores in allocating their open-to-buy dollars to the most
+popular styles in the product line and to phase out styles with weaker
+sell-throughs, which minimizes markdown exposure at seasons end.
+Specialty Stores/Catalog Sales
+The Company currently sells to specialty store locations throughout the
+United States. The Company's major specialty store accounts include Journeys,
+Mandees, Famous Footwear and DSW. The Company offers its specialty store
+accounts the same merchandising, sell-through and inventory tracking support
+offered to its department store accounts. Sales of the Company's products are
+also made through various catalogs, such as Victoria's Secret.
+Internet Sales
+The Company operates an Internet website: www.stevemadden.com, where
+customers can purchase numerous styles of the Company's Steve Madden(R),
+Steven(R) and Steve Madden Mens footwear and accessory products.
+Distribution Agreements
+Steve Madden(R) products are available in many countries and
+territories worldwide via several retail selling and distribution agreements.
+Under the terms of the retail selling agreements, the distributors and retailers
+are required to open a minimum number of stores each year and to pay the Company
+a fee for each pair of footwear purchased, and in many cases, an additional
+fixed amount per pair or an additional amount based on a percentage of sales.
+Under the terms of the distribution agreements, the distributor is required to
+purchase certain minimum amounts of Steve Madden(R) shoes. These agreements,
+which expire at various times through December 31, 2012, are exclusive in their
+specific territories which include Canada, Australia, New Zealand, Israel, UAE,
+Bahrain, Qatar, Oman, Indonesia, Mexico, South Africa, Turkey and several
+countries in Central and South America.
+Competition
+The fashion footwear industry is highly competitive. The Company
+competes with specialty shoe companies as well as companies with diversified
+footwear product lines. Many of these competitors, including Diesel, Kenneth
+Cole, Nine West, DKNY, Skechers, Nike and Guess, may have greater financial and
+other resources than the Company. The Company believes effective advertising and
+marketing, fashionable styling, high quality and value are the most important
+competitive factors and intends to continue to employ these elements as it
+develops its products.
+Marketing and Sales
+The Company has focused on creating an integrated brand building
+program to establish Steve Madden as a leading designer of fashion footwear for
+style-conscious young women and men. As a result, the Company developed a
+national advertising campaign for lifestyle and fashion magazines which was also
+used in regional marketing programs such as radio advertisements, television
+commercials, outdoor media, college event sponsorship and live online chat
+forums. The Company also continues to promote its website (www.stevemadden.com)
+where customers can purchase Steve Madden(R), Steven(R) and Steve Madden Mens
+products and interact with the Company.
+6
+Management Information Systems (MIS) Operations
+Sophisticated information systems are essential to the Company's
+ability to maintain its competitive position and to support continued growth.
+The Company operates on a dual AS/400 system which provides system support for
+all aspects of its business including manufacturing purchase orders, customer
+purchase orders, order allocations, invoicing, accounts receivable management,
+real time inventory management, quick response replenishment, point-of-sale
+support, and financial and management reporting functions. The Company has a
+PKMS bar coded warehousing system that is integrated with the wholesale system
+in order to provide accurate inventory positions and quick response size
+replenishment for its customers. In addition, the Company has installed an EDI
+system which provides a computer link between the Company and certain wholesale
+customers that enables both the customer and the Company to monitor purchases,
+shipments and invoicing. The EDI system also improves the Company's ability to
+respond to customer inventory requirements on a weekly basis.
+Receivables Financing; Line of Credit
+On July 1, 2005, the Company entered into a factoring agreement with
+GMAC Commercial Finance LLC ("GMAC"). The agreement, which has no specific
+expiration date and can be terminated by either party with sixty (60) days
+written notice after June 30, 2007, provides the Company with a $25 million
+credit facility with a $15 million sub-limit on direct borrowings. Under the
+terms of the agreement, the Company may request advances from the factor up to
+80% of aggregate receivables purchased by the factor at an interest rate of two
+and one-half percent (2.5%) over the 30 day LIBOR. The Company also pays a fee
+equal to 0.325% of the gross invoice amount of each receivable purchased. Prior
+to July 1, 2005, the Company had a factoring agreement with Capital Factors,
+Inc. The Company sells and assigns a substantial portion of its receivables,
+principally without recourse, to the factor. As of December 31, 2006 and 2005,
+$260,000 and $555,000 of factored receivables, respectively, were sold by the
+Company with recourse. GMAC will maintain a lien on all of the Company's
+receivables and assume the credit risk for all assigned accounts approved by
+them with certain restrictions.
+The Company's Daniel M. Friedman Division has a factoring agreement
+with Wells Fargo Century. Under the terms of the agreement, the Company is
+eligible to draw down 85% of its invoiced receivables at an interest rate equal
+to the prime rate. The Company pays a fee equal to 0.45% of the gross invoice
+amount of each receivable purchased. Wells Fargo Century will maintain a lien on
+all of the Daniel M. Friedman's receivables and assume the credit risk for all
+assigned accounts approved by them with certain restrictions. The expiration
+date on this agreement is June 30, 2007 with automatic one-year renewals
+thereafter.
+Trademarks and Service Marks
+The STEVE MADDEN and/or STEVE MADDEN plus Design trademarks and service
+marks have been registered in numerous International Classes in the United
+States (Int'l Cl. 25 for clothing and footwear; Int'l Cl. 18 for leather goods,
+such as handbags and wallets; Int'l Cl. 9 for eyewear; Int'l Cl. 14 for jewelry;
+Int'l Cl. 3 for cosmetics and fragrances; Int'l Cl. 20 for picture frames and
+furniture; Int'l Cl. 16 for paper goods; Int'l Cl. 24 for bedding; and Int'l Cl.
+35 for retail store services). The Company also has pending trademark
+applications in the United States for the mark STEVE MADDEN and/or STEVE MADDEN
+(design) in numerous international classes (Class 2 for paints, Class 4 for
+candles, Class 6 for key chains and id bracelets, Class 11 for lamps, Class 14
+for jewelry and watches, Class 18 for bags and leather goods, Class 21 for
+housewares, Class 26 for hair accessories, Class 27 for rugs and carpets, Class
+28 for sporting goods, and Class 32 for light beverages).
+7
+The Company also has trademark registrations in the United States for
+the marks EYESHADOWS BY STEVE MADDEN (Int'l Cl. 9 for eyewear), ICE TEE (Int'l
+Cl. 25 for clothing and footwear), SHOE BIZ BY STEVE MADDEN (Int'l Cl. 25 for
+clothing and footwear; and Int'l Cl. 35 for retail store services) STEVEN M.
+(Int'l Class 25 for clothing and footwear); and STEVEN (Int'l Cl. 25 for
+clothing and footwear, Class 3 for cosmetics and fragrances, Class 14 for
+jewelry, Class 18 for leather goods, Class 26 for hair accessories, Class 35 for
+retail store services, and Class 9 for eyewear). The Company also has pending
+applications for STEVEN in various international classes (Class 2 for paints,
+Class 4 for candles, Class 6 for key chains and id bracelets, Class 11 for
+lamps, Class 16 for printed matter, Class 20 for furniture, Class 21 for
+housewares, Class 26 for hair accessories, Class 27 for rugs and carpets, and
+Class 32 for light beverages). The Company also owns a registration for the mark
+SOHO COBBLER and SOHO COBBLER (design) in the U.S. in Class 25 for footwear.
+The Company also has several pending applications in the U.S. for
+MADDEN in a variety of international classes (Class 3 for cosmetics and
+fragrances, Class 9 for watches and CDs, Class 14 for jewelry and watches, Class
+18 for bags, , Class 14 for jewelry, Class 25 for clothing and footwear, and
+Class 28 for toys and sporting goods). The Company also has pending applications
+in the U.S. for STEVEN BY STEVE MADDEN in Classes 18 (bags) and 24 (bedding),
+and for MADDEN BY STEVE MADDEN in Class 2 for paints, Class 3 for perfume and
+cosmetics, Class 4 for candles, Class 6 for key rings and key chains, Class 9
+for eyewear and CDs, Class 11 for lamps, Class 14 for jewelry, Class 16 for
+stationery and notebooks, Class 18 for bags, Class 20 for furniture, Class 21
+for housewares, Class 24 for bedding, Class 25 for clothing and footwear, Class
+26 for hair accessories, Class 27 for carpets and rugs, Class 28 for toys and
+games, Class 32 for light beverages, and Class 35 for retail store services.
+Additionally, the Company has several pending trademark and service
+mark applications in the United States for various marks, including a stylized
+"H" Design (Int'l Cl. 25 for clothing and footwear), STEVE MADDEN LUXE in Class
+14 for jewelry and watches and Class 25 for clothing and footwear. RULE STEVE
+MADDEN (in Class 2 for paints, Class 3 for perfume and cosmetics, Class 4 for
+candles, Class 6 for key rings and key chains, Class 9 for eyewear and CDs,
+Class 11 for lamps, Class 14 for jewelry, Class 16 for stationery and notebooks,
+Class 18 for bags, Class 20 for furniture, Class 21 for housewares, Class 24 for
+bedding, Class 25 for clothing and footwear, Class 26 for hair accessories,
+Class 27 for carpets and rugs, Class 28 for toys and games, Class 32 for light
+beverages, and Class 35 for retail store services), SM NEW YORK (in Class 3 for
+perfume and cosmetics, Class 9 for eyewear and CDs, Class 14 for jewelry, Class
+18 for bags, and Class 25 for clothing and footwear); and SMNY (in Class 3 for
+perfume and cosmetics, Class 9 for eyewear and CDs, Class 14 for jewelry, Class
+18 for bags, and Class 25 for clothing and footwear).
+The Company further owns registrations for the STEVE MADDEN and/or
+STEVE MADDEN plus Design trademarks and service marks in various International
+Classes in Argentina, Australia, Bahrain, Belize, Brazil, Canada, Chile, China,
+Colombia, El Salvador, Guatemala, Hong Kong, Israel, Italy, Japan, Korea,
+Lebanon, Mexico, New Zealand, the Netherlands, Nicaragua, Oman, Panama, the
+Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Taiwan,
+Thailand, Turkey, the United Arab Emirates, Venezuela, the European Union, and
+the Benelux countries and has pending applications for registration of the STEVE
+MADDEN and/or STEVE MADDEN plus Design trademarks and service marks in
+Azerbaijan, Belarus, Canada, China, Costa Rica, Ecuador, Estonia, Georgia,
+Guatemala, Honduras, Indonesia, Kazakhstan, Korea, Kuwait, Kyrgyzstan, Latvia,
+Lithuania, Oman, Paraguay, Peru, Qatar, Tajikistan, Ukraine, the United Arab
+Emirates, and Uzbekistan .
+Additionally, the Company owns registrations for the STEVEN trademark
+and service mark in various International Classes in Australia, Bahrain, Belize,
+China, the Dominican Republic, El Salvador, the European Union, Hong Kong,
+Israel, Lebanon, Japan, New Zealand, Netherland Antilles, the Philippines, Saudi
+Arabia, Thailand, Taiwan, Turkey, and the United Arab Emirates and has pending
+applications for registration of the STEVEN trademark and service mark in China,
+8
+Columbia, Ecuador, the European Union, Guatemala, Indonesia, Israel, Italy,
+Korea, Malaysia, Nicaragua, Oman, Philippines, Qatar, Russia, South Africa,
+Taiwan, Thailand, Turkey, and Taiwan.
+The Company further owns registrations for the "torch stripe" design in
+Class 25 in the European Union and Panama, and has a pending application for the
+"torch stripe" design in Class 25 in China.
+The Company further owns registrations for the mark STEVEN BY STEVE
+MADDEN in various international classes in the European Union and Panama, and
+has pending applications for the mark STEVEN BY STEVE MADDEN in various
+international classes in Canada, China, Israel, and Korea.
+The Company further owns registrations for the mark SM NEW YORK in
+International Class 25 (clothing and footwear) in Belize, the Dominican
+Republic, El Salvador, Netherland Antilles, and New Zealand, and has pending
+applications for registration of the SM NEW YORK mark in International Class 25
+(clothing and footwear) in Australia, Columbia, Costa Rica, Ecuador, Guatemala,
+Nicaragua, Panama, South Africa, and Venezuela.
+Additionally, the Company, through its Diva Acquisition Corp.
+subsidiary, owns registrations for the DAVID AARON trademark and service mark in
+various International Classes in the United States (Int'l Cl. 25 for clothing
+and footwear; Int'l Cl. 18 for leather goods, such as handbags and wallets; and
+Int'l Cl. 35 for retail store services), and in Australia, Canada, the European
+Union, Hong Kong, Japan, Korea, Panama, and South Africa in some or all of
+Classes 3, 18, and 25, and for its D. AARON trademark in Class 25 Spain. Also,
+the Company owns registrations for the DAVID AARON trademark in the United
+States in International Class 3 for perfume and cosmetics; International Class 9
+for eyewear; International Class 14 for jewelry; International Class 16 for
+paper goods; International Class 18 for bags; International Class 24 for bed and
+bath products; International Class 25 for clothing and footwear and
+International Class 26 hair accessories in Korea.
+The Company, through its Stevies, Inc. subsidiary, also owns various
+registrations for the STEVIES and /or STEVIES plus Design trademark and service
+mark in a number of International Classes in the United States (Int'l Cl. 18 for
+leather goods, such as handbags and wallets; Int'l Cl. 9 for eyewear;
+International Class 35 for retail store services; International Class 14 for
+jewelry; International Class 28 for toys; International Class 16 for paper
+goods; International Class 3 for perfume and cosmetics, International Class 9
+for CDs and eyewear, and International Class 26 for hair accessories), and for
+STEVIES BY STEVE MADDEN in Class 14 for jewelry, Class 9 for eyewear, Class 3
+for perfume and cosmetics, Class 28 for toys and games, Class 35 for retail
+services, Class 16 for stationery and notebooks, Class 18 for bags. The
+Company, through its Stevies, Inc. subsidiary, also owns registrations for its
+STEVIES and/or STEVIES plus Design mark for various goods in Argentina, Bahrain,
+Canada, China, Columbia, the European Union, Hong Kong, Israel, Japan, Korea,
+Lebanon, Malaysia, Mexico, Panama, Singapore, Taiwan and the United Arab
+Emirates. Additionally, Stevies, Inc. has several pending trademark and service
+mark applications for registration of the STEVIES and STEVIES plus Design marks
+in various International Classes in Brazil, Indonesia, Korea, Kuwait, Mexico,
+New Zealand, Oman, Peru, Qatar, Saudi Arabia, Singapore, South Africa, Thailand,
+Turkey, the United Arab Emirates and Venezuela. Finally, Stevies, Inc. also owns
+several trademark and service mark registrations of the STEVIES BY STEVE MADDEN
+mark in various International Classes in the United States (Int'l Cl. 25 for
+clothing and footwear; Int'l Cl. 14 for jewelry; Int'l Cl. 18 for leather goods,
+such as handbags and wallets; Int'l Cl. 16 for paper goods; Int'l Cl. 3 for
+cosmetics and fragrances; Int'l Cl. 9 for eyewear; Int'l Cl. 28 for toys; and
+Int'l Cl. 35 for retail store services).
+The Company believes that its trademarks have a significant value and
+are important to the marketing of the Company's products. There can be no
+assurance, however, that the Company will be able to effectively obtain rights
+9
+to its marks throughout all of the countries of the world. Moreover, no
+assurance can be given that others will not assert rights in, or ownership of,
+trademarks and other proprietary rights of the Company or that the Company will
+be able to successfully resolve such conflicts. The failure of the Company to
+protect such rights from unlawful and improper appropriation may have a material
+adverse effect on the Company's business and financial condition.
+Employees
+On February 5, 2007, the Company employed approximately one thousand
+four hundred and ninety-eight (1,498) employees, of whom approximately four
+hundred eighty (480) work on a full-time basis and approximately one thousand
+and eighteen (1,018) work on a part-time basis, most of whom work in the Retail
+Division. The management of the Company considers relations with its employees
+to be good.
+Seasonality
+Historically, the Company's merchandising businesses have experienced
+holiday retail seasonality. In addition to seasonal fluctuations, the Company's
+operating results fluctuate quarter to quarter as a result of the timing of
+holidays, weather, the timing of larger shipments of footwear, market acceptance
+of the Company's products, the mix, pricing and presentation of the products
+offered and sold, the hiring and training of additional personnel, inventory
+write downs for obsolescence, the cost of materials, the product mix between
+wholesale, retail and licensing businesses, the incurrence of other operating
+costs and factors beyond the Company's control, such as general economic
+conditions and actions of competitors.
+Backlog
+The Company had unfilled wholesale customer orders of $97.2 million and
+$88.3 million, as of February 18, 2007 and 2006, respectively. The Company's
+backlog at a particular time is affected by a number of factors, including
+seasonality, timing of market weeks, and wholesale customer purchases of its
+core basic products through the Company's open stock program. Accordingly, a
+comparison of backlog from period to period may not be indicative of eventual
+shipments.

raw/filings/0000913241/2006/0001019056-07-000248/item13.txt

@@ -0,0 +1,5 @@
+ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
+INDEPENDENCE
+The information required to be furnished pursuant to this item will be set
+forth in the Company's proxy statement for the 2007 Annual Meeting of
+Stockholders, and is incorporated herein by reference.

raw/filings/0000913241/2006/0001019056-07-000248/item9a.txt

@@ -0,0 +1,136 @@
+ITEM 9A CONTROLS AND PROCEDURES
+Disclosure Controls and Procedures
+As required by Rule 13a-15(b) of the Exchange Act, the Company's
+management, including the Company's Chief Executive Officer and Chief Financial
+Officer, has evaluated the effectiveness of its disclosure controls and
+procedures as of the end of the fiscal year covered by this annual report. Based
+on that evaluation, the Chief Executive Officer and Chief Financial Officer have
+concluded that the Company's disclosure controls and procedures (as defined in
+Rule 13a-15(e) under the Exchange Act) were effective as of the end of the
+fiscal year covered by this annual report.
+Management's Annual Report on Internal Control Over Financial Reporting
+Management of Steve Madden, Ltd. is responsible for establishing and maintaining
+adequate internal control over financial reporting (as defined in Rule 13a-15(f)
+of the Securities Exchange Act of 1934).
+The Company's internal control over financial reporting is a process designed to
+provide reasonable assurance regarding the reliability of financial reporting
+and the preparation of financial statements for external purpose in accordance
+with U.S. generally accepted accounting principles. The Company's internal
+control over financial reporting includes those policies and procedures that (1)
+pertain to maintenance of records that, in reasonable detail, accurately and
+fairly reflect the transaction and dispositions of the assets of the company;
+(2) provide reasonable assurance that transactions are recorded as necessary to
+permit preparation of financial statements in accordance with U.S. generally
+accepted accounting principles, and that receipts and expenditures of the
+company are being made only in accordance with authorizations of management and
+directors of the company; and (3) provide reasonable assurance regarding
+prevention or timely detection of unauthorized acquisition, use, or disposition
+of the company's assets that could have a material effect on the financial
+statements.
+Because of its inherent limitations, internal control over financial reporting
+may not prevent or detect misstatements. Also, projections of any evaluation of
+effectiveness to future periods are subject to the risk that controls may become
+inadequate because of changes in conditions, or that the degree of compliance
+with the policies or procedures may deteriorate.
+We acquired Daniel M. Friedman & Associates, Inc. in February 2006. We have
+excluded Daniel M. Friedman & Associates, Inc. from the scope of our annual
+report on internal control over financial reporting as of December 31, 2006.
+These operations represent approximately 11% of our total assets at December 31,
+2006 and approximately 11% and 5% of our revenues and net income for the year
+ended December 31, 2006, respectively.
+Under the supervision of and with the participation of the Chief Executive
+Officer and the Chief Financial Officer, the Company's management conducted an
+assessment of the effectiveness of the Company's internal control over financial
+reporting based on the frame work and criteria established in Internal Control -
+Integrated Framework, issued by the Committee of Sponsoring Organizations of the
+Tradeway Commission. Based on this assessment, the Company's management has
+concluded that, as of December 31, 2006, the Company's internal control over
+financial reporting was effective.
+27
+Attestation Report of the Company's Independent Registered Public Accounting
+Firm
+The Company's Independent Registered Public Accounting Firm, Eisner
+LLP, has audited and issued a report on management's assessment of the Company's
+internal control over financial reporting. The report of Eisner LLP appears
+below.
+To the Board of Directors and Shareholders of
+Steven Madden, Ltd.
+We have audited management's assessment, included in the accompanying
+Management's Annual Report on Internal Control Over Financial Reporting, that
+Steven Madden, Ltd. and subsidiaries (the "Company") maintained effective
+internal control over financial reporting as of December 31, 2006, based on
+criteria established in Internal Control - Integrated Framework issued by the
+Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). The
+Company's management is responsible for maintaining effective internal control
+over financial reporting and for its assessment of the effectiveness of internal
+control over financial reporting. Our responsibility is to express an opinion on
+management's assessment and an opinion on the effectiveness of the Company's
+internal control over financial reporting based on our audit.
+We conducted our audit in accordance with the standards of the Public
+Company Accounting Oversight Board (United States). Those standards require that
+we plan and perform the audit to obtain reasonable assurance about whether
+effective internal control over financial reporting was maintained in all
+material respects. Our audit included obtaining an understanding of internal
+control over financial reporting, evaluating management's assessment, testing
+and evaluating the design and operating effectiveness of internal control, and
+performing such other procedures as we considered necessary in the
+circumstances. We believe that our audit provides a reasonable basis for our
+opinion.
+A company's internal control over financial reporting is a process
+designed to provide reasonable assurance regarding the reliability of financial
+reporting and the preparation of financial statements for external purposes in
+accordance with generally accepted accounting principles. A company's internal
+control over financial reporting includes those policies and procedures that (i)
+pertain to the maintenance of records that, in reasonable detail, accurately and
+fairly reflect the transactions and dispositions of the assets of the company;
+(ii) provide reasonable assurance that transactions are recorded as necessary to
+permit preparation of financial statements in accordance with generally accepted
+accounting principles, and that receipts and expenditures of the company are
+being made only in accordance with authorizations of management and directors of
+the company; and (iii) provide reasonable assurance regarding prevention or
+timely detection of unauthorized acquisition, use, or disposition of the
+company's assets that could have a material effect on the financial statements.
+Because of its inherent limitations, internal control over financial
+reporting may not prevent or detect misstatements. Also, projections of any
+evaluation of effectiveness to future periods are subject to the risk that
+controls may become inadequate because of changes in conditions, or that the
+degree of compliance with the policies or procedures may deteriorate.
+As indicated in the accompanying Management's Annual Report on Internal
+Control over Financial Reporting, management's assessment of the effectiveness
+of internal control over financial reporting as of December 31, 2006 did not
+include the internal controls of Daniel M. Friedman and Associates, Inc. and
+D.M.F. International (collectively, "Daniel M. Friedman") because they were
+acquired by the Company in purchase business combinations during 2006. Daniel M.
+Friedman constituted approximately 11% of total assets and approximately 11% and
+5% of revenues and net income, respectively, of the related consolidated
+financial statement amounts as of and for the year ended December 31, 2006. Our
+audit of internal control over financial reporting of the Company also did not
+include an evaluation of the internal control over financial reporting of Daniel
+M. Friedman.
+In our opinion, management's assessment that the Company maintained
+effective internal control over financial reporting as of December 31, 2006, is
+fairly stated, in all material respects, based on criteria established in
+Internal Control-Integrated Framework issued by the COSO. Also, in our opinion,
+Steven Madden, Ltd. and subsidiaries maintained, in all material respects,
+effective internal control over financial reporting as of December 31, 2006,
+based on criteria established in Internal Control-Integrated Framework issued by
+COSO.
+28
+We also have audited, in accordance with the standards of the Public
+Company Accounting Oversight Board (United States), the consolidated balance
+sheets of Steven Madden, Ltd. and subsidiaries as of December 31, 2006 and 2005,
+and the related consolidated statements of income, changes in stockholders'
+equity, and cash flows for the years in the three-year period ended December
+31,2006, and our report dated March 7, 2007 expressed an unqualified opinion on
+those consolidated financial statements.
+Eisner LLP
+New York, New York
+March 7, 2007
+Changes in Internal Control Over Financial Reporting
+As required by Rule 13a-15(d) under the Exchange Act, the Company's
+management, including the Company's Chief Executive Officer and Chief Financial
+Officer, has evaluated the Company's internal controls over financial reporting
+to determine whether any changes occurred during the fourth quarter of 2006 that
+have materially affected, or are reasonably likely to materially affect, the
+Company's internal control over financial reporting. Based on that evaluation,
+there has been no such material change during the fourth quarter of 2006.

raw/filings/0000913241/2006/0001019056-07-000248/rpt_disclosure.txt

@@ -0,0 +1,138 @@
+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+In July 2001, the Company entered into a consulting agreement with
+Peter J. Solomon & Company, a financial advisory firm of which Marc S. Cooper,
+one of the Company's directors, is a managing director. Under this agreement,
+the firm provides financial advisory and investment banking services to the
+Company. This agreement was amended in March 2004. The amended agreement expired
+on March 31, 2005, but pursuant to its terms has been automatically renewed
+until such time that the Company terminates it. The Company terminated the
+agreement on July 11, 2006. During 2006, the Company retained Peter J. Solomon &
+Company as an advisor in connection with the Company's acquisition of all the
+capital stock of each of Daniel M. Friedman & Associates, Inc. and DMF
+International, Ltd. In February 2006, the Company paid Peter J. Solomon &
+Company an advisory fee in the amount equal to $412,000 for services provided
+and expenses incurred in connection with such acquisition. No other fees were
+paid to Peter J. Solomon & Company in 2006.
+In October 2002, the Company entered into an agreement with Jeffrey
+Birnbaum, one of the Company's directors. Under this agreement, Mr. Birnbaum
+provides consulting services with respect to the designing and manufacturing of
+shoes and general consulting services to the Company, pursuant to which, Mr.
+Birnbaum received a fee of $200,000 in 2006. Mr. Birnbaum has been a partner and
+the Product Development Manager of Dolphin Footwear Company since August 1982.
+Dolphin Footwear Company is one of the Company's largest domestic and foreign
+suppliers. In 2006, the Company paid Dolphin Footwear Company and Ming Well,
+Dolphin's Hong Kong affiliate, approximately $77.7 million for the purchase of
+goods.
+24
+In January 2004, the Company entered into an agreement with John Madden
+and JLM Consultants, a company wholly-owned by John Madden, one of the Company's
+directors, which was amended in 2005. Under this agreement, Mr. Madden provided
+consulting services with respect to the development of international sales of
+the Company. This agreement expired on December 31, 2005 but the parties have
+continued the consulting arrangement under the terms of the expired agreement.
+Under the agreement, JLM Consultants receives a commission equal to 4% on
+International Sales (as defined in the Agreement) up to $6.0 million and 3% on
+International Sales in excess of $6.0 million. The agreement provides for a
+monthly draw in the amount of $20,000 with recourse against such commissions, as
+well as a $1,000 per month travel allowance and $1,700 per month toward health
+insurance premiums. Pursuant to this arrangement, JLM Consultants received a
+total of $478,865 in 2006.
+Effective as of July 1, 2005, the Company amended its employment
+agreement with Steven Madden, pursuant to which Mr. Madden agreed to serve as
+the Company's Creative and Design Chief. The term of Mr. Madden's employment
+under his amended employment agreement commenced July 1, 2005 and ends on June
+30, 2015. The agreement provides for an annual salary of $600,000, with a 7%
+increase of base salary on a compound basis in each of the third, fifth, seventh
+and ninth years of the agreement. The agreement also provides for an annual
+bonus in an amount determined by the Board of Directors, which will be at least
+2% of the Company's EBITDA (the "Annual Bonus"). Additionally, the Company shall
+pay Mr. Madden an annual cash bonus in relation to "new business" (as defined in
+the agreement) in an amount to be determined by the Board of Directors, which
+will be at least (i) 2.5% of new business gross direct revenues and (ii) 10% of
+all license or other fee income above $2,000,000.00 (the "New Business Bonus").
+In addition, Mr. Madden is eligible to receive annually an option grant to
+purchase shares of Common Stock in an amount equal to not less than 100% of the
+largest aggregate amount of options granted to any other continuing full-time
+employee of the Company during the annual period; provided, however, a grant in
+excess of 150% of the options grant to such other continuing full-time employee
+shall require shareholder approval. The agreement provides for, in the event of
+Mr. Madden's death, the payment to Mr. Madden's estate of his base salary for
+the 12-month period immediately subsequent to the date of Mr. Madden's death. In
+the event that Mr. Madden's employment agreement is terminated due to Mr.
+Madden's total disability (as defined in the agreement), "for cause" (as defined
+in the agreement) or due to Mr. Madden's resignation, the Company is obligated
+to pay Mr. Madden the amount of compensation that is accrued and unpaid through
+the date of termination. In the event Mr. Madden's employment agreement is
+terminated for any reason (other than "for cause" or due to his death or total
+disability or due to Mr. Madden's resignation), the Company is obligated to pay
+Mr. Madden, in installments, the balance of his base salary that would have been
+paid by the Company under the agreement for the full term of the agreement. In
+the event that there is a "change of control" (as defined in the agreement)
+transaction, all unvested options to purchase shares of Common Stock held by Mr.
+Madden will vest on the date of termination and Mr. Madden will be entitled to
+receive a lump sum cash payment equal to (1) the amount of compensation that is
+accrued and unpaid through the date of termination, (2) an amount equal to the
+product of (A) the number of years remaining in the term of the agreement (but
+not less than 5) and (B) the sum of (w) the base salary for the 12-month period
+ended on the preceding December 31 (or for the 12-month period ending on
+December 31, 2002, if greater), (x) the amount of the Annual Bonus earned (paid
+or accrued or which should have been paid or accrued) for the 12-month period
+ended on the preceding December 31 (or for the 12-month period ended on December
+31, 2002, if greater), (y) the non-accountable expense allowance provided for
+under the agreement for the 12-month period ended on the preceding December 31,
+and (z) the amount of the New Business Bonus earned (paid or accrued or which
+should have been paid or accrued) for the 12-month period ended on the preceding
+December 31 (or for the 12-month period ending on December 31 during the
+agreement in which Mr. Madden received the greatest New Business Bonus, if
+greater). Mr. Madden's employment agreement contains other customary provisions,
+including provisions regarding expenses reimbursement, confidentiality,
+solicitation and competition. For the fiscal year ending December 31, 2006, Mr.
+Madden
+25
+earned (i) $600,000 in base salary, (ii) $200,000 in non-accountable expense
+allowance, (iii) a bonus of $1,700,060 representing 2% of the Company's earnings
+before interest, tax, depreciation and amortization (iv) a bonus of $2,526,868
+earned based on 2.5% of the Company's new business and (v) a bonus of $92,462
+based on 10% of Royalty/Licensing income over $2,000,000. In addition, Mr.
+Madden was awarded 30,000 shares of restricted stock with a market value of
+$1,081,800 on the date of the award which vests one fourth per year over a four
+year period and 135,000 shares of restricted stock with a market value of
+$3,800,250 on the date of the award which vests one-fifth per year over a five
+year period.
+REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
+The Company's Conduct Code and "Employee Handbook" prohibit all
+conflicts of interest. Under the Conduct Code, conflicts of interest occur when
+private or family interests interfere in any way, or even appear to interfere,
+with the interests of the Company. The Company's prohibition on conflicts of
+interest under the Conduct Code includes any related person transaction.
+Related person transactions must be approved by the Board, or by a
+committee of the Board consisting solely of independent directors, who will
+approve the transaction only if they determine that it is in the best interests
+of the Company. In considering the transaction, the Board or committee will
+consider all relevant factors, including as applicable (i) the Company's
+business rationale for entering into the transaction; (ii) the alternatives to
+entering into a related person transaction; (iii) whether the transaction is on
+terms comparable to those available to third parties or, in the case of
+employment relationships, to employees generally; (iv) the potential for the
+transaction to lead to an actual or apparent conflict of interest and any
+safeguards imposed to prevent such actual or apparent conflicts; and (v) the
+overall fairness of the transaction to the Company.
+The Company has multiple processes for reporting conflicts of
+interests, including related person transactions. Under the Conduct Code, all
+employees are required to report any actual or apparent conflict of interest, or
+potential conflict of interest, to management. The chief financial officer
+quarterly distributes a questionnaire to the Company's executive officers and
+management personnel and annually distributes a questionnaire to the members of
+the Board of Directors requesting certain information regarding, among other
+things, their immediate family members, employment and beneficial ownership
+interests, which information is then reviewed for any conflicts of interest
+under the Conduct Code.
+The Audit Committee, Disclosure Committee and Board of Directors
+discuss the related party transactions and they are reviewed as part of the
+Forms 10-K and 10-Q review process, including related party transaction
+disclosures.
+If a director is involved in the transaction, he will be recused from
+all discussions and decisions about the transaction. The transaction must be
+approved in advance whenever practicable, and if not practicable, must be
+ratified as promptly as practicable.
+26

raw/filings/0000913241/2008/0001019056-09-000306/filing_metadata.csv

@@ -0,0 +1,2 @@
+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2009-03-12,2008-12-31,2009-03-12T19:59:46.000Z,0001019056-09-000306,smadden_10k08.htm,FORM 10-K,1546552,0,0,https://www.sec.gov/Archives/edgar/data/913241/000101905609000306/smadden_10k08.htm,https://www.sec.gov/Archives/edgar/data/913241/000101905609000306/,2008,2008,1

raw/filings/0000913241/2008/0001019056-09-000306/item1.txt

@@ -0,0 +1,165 @@
+ITEM 1 
+BUSINESS 
+Steven Madden, Ltd. (and its subsidiaries) designs, sources, markets and retails fashion-forward footwear for women, men and children. In addition, we design, source, market and retail name brand and private label fashion handbags and accessories through our Daniel M. Friedman Division. We distribute products through our retail stores, our e-commerce website, department and specialty stores throughout the
+United States and through special distribution arrangements in Canada, Europe, Central and South America, Australia and Asia. Our product line includes a broad range of updated styles which are designed to establish or capitalize on market trends, complemented by core products. We have established a reputation for our creative designs, popular styles and quality products at affordable price points. 
+Our business is comprised of three (3) distinct segments (Wholesale, Retail and First Cost). Our Wholesale segment includes ten (10) core divisions: Steve Madden Womens, Steve Madden Mens, Candie’s, Madden Girl, Steve Madden’s Fix, Steven, Stevies,Fabulosity, Elizabeth and James and our accessories division. Our accessories division, through license agreements, includes the Daisy Fuentes, Betsey
+Johnson and Fabulosity accessories brands. Steven Madden Retail, Inc., our wholly owned retail subsidiary, operates Steve Madden and Steven retail stores as well as our e-commerce website. Our wholly owned subsidiary, Adesso-Madden, Inc., acts as a buying agent for footwear products under private labels and licensed brands (such as l.e.i and Candie’s) for many of the country’s large mass merchandisers and mid-tier department stores. We also license our Steve Madden and
+Steven trademarks for several accessory and apparel categories. 
+Steven Madden, Ltd. was incorporated as a New York corporation on July 9, 1990 and reincorporated under the same name in Delaware in November 1998. We completed our initial public offering in December 1993 and our shares of common stock currently trade on The NASDAQ Global Select Market under the symbol “SHOO”. 
+1 
+We maintain our principal executive offices at 52-16 Barnett Avenue, Long Island City, NY 11104 and our telephone number (718) 446-1800. 
+Our website is http://www.stevemadden.com. We file our annual, quarterly and current reports and other information with the Securities and Exchange Commission. We make available, free of charge, on our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, any amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
+Exchange Act of 1934, as amended, and our Proxy Statement for our Annual Meeting as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission. We will provide paper copies of such filings free of charge upon request. The public may read and copy any materials filed by us with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 R Street, NE,
+Washington, DC, 20549. The public may also obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains an Internet site that contains reports, proxy and information statements and other information regarding us, which is available at http://www.sec.gov. 
+See “Item 8 Financial Statements and Supplementary Data” for additional information relating to our operating segments. 
+Wholesale Segment 
+Steve Madden Womens Wholesale Division 
+The Steve Madden Womens Wholesale Division designs, sources and markets our Steve Madden brand to major department stores, better specialty stores and independently owned boutiques throughout the United States. The Steve Madden brand has become a leading life-style brand in the fashion conscious marketplace. To serve our customers (primarily women ages 16 to 35), Madden Womens creates and markets fashion
+forward footwear designed to appeal to customers seeking exciting, new footwear designs at affordable prices. 
+As our largest division, Madden Womens generated net sales of $135.6 million for the year ended December 31, 2008, or approximately 30% of our total net sales. New products for Madden Womens are test marketed at our retail stores. Typically, within a few days, we can determine if the test product appeals to customers. This enables us to use our flexible sourcing model to rapidly respond to changing trends,
+which we believe is essential for success in the fashion arena. 
+Accessories Division 
+Our accessories division designs, sources and markets name brand and private label fashion handbags and accessories to major department stores, value price retailers and better specialty stores throughout the United States. Our accessories division generated net sales of $66.9 million for the year ended December 31, 2008, or approximately 15% of our total net sales. 
+Madden Girl Wholesale Division 
+The Madden Girl Wholesale Division designs, sources and markets a full collection of directional young women’s shoes. Madden Girl is geared for young women ages 13 to 20 and is an “opening price point” brand that is currently being sold at department stores, mid-tier retailers and specialty stores. Madden Girl generated net sales of $48.7 million for the year ended December 31, 2008, or
+approximately 11% of our total net sales. 
+2 
+Steve Madden Mens Wholesale Division 
+The Steve Madden Mens Wholesale Division designs, sources and markets a full collection of directional men’s shoes and fashion forward athletic shoes to major department stores, better specialty stores and independent shoe stores throughout the United States. Price points range from $70 to $100 at retail, targeted at men ages 20 to 40 years old. Madden Mens generated net sales of $38.0 million for the
+year ended December 31, 2008, or approximately 8% of our total net sales. Madden Mens maintains open stock inventory positions in select patterns to serve the replenishment programs of its wholesale customers. 
+Diva Acquisition Corp. – Steven Wholesale Division 
+Diva Acquisition Corp. designs, sources and markets women’s fashion footwear under the Steven trademark through major department and better footwear specialty stores throughout the United States. Priced a tier above the Steve Madden brand, Steven products are designed to appeal principally to fashion conscious women, ages 25 to 45, who shop at department stores and footwear boutiques. Steven generated
+net sales of $18.5 million for the year ended December 31, 2008, or approximately 4% of our total net sales. 
+Candie’s Wholesale Division 
+Pursuant to our license agreement with Candie’s, Inc., we design, source and market Candie’s branded footwear for women and kids through our Candie’s Wholesale Division. Our Candie’s Wholesale Division generated net sales of $14.3 million for the year ended December 31, 2008, or approximately 3% of our total net sales. During the second half of 2008, we transitioned Candie’s
+business to our First Cost segment which resulted in a change of our classification of Candie’s revenues from the net sales line on our Consolidated Statement of Income to the commission income line. 
+On December 6, 2004, the license agreement with Candie’s was amended to reflect Candie’s decision to name Kohl’s Corporation as the exclusive provider of a new line of Candie’s apparel. Pursuant to the amendment, commencing on January 1, 2007, we no longer had the exclusive right to market Candie’s branded footwear and we are permitted to sell Candie’s branded footwear only
+to Kohl’s. Under the terms of the amendment, Candie’s has guaranteed that we will achieve minimum sales levels with Kohl’s during the term of the agreement, which runs through December 31, 2010. In the event such minimum sales levels are not achieved, Candie’s is required to compensate us in an amount based on a percentage of the sales shortfall. For the year ended December 31, 2008, the minimum sales level was met. 
+Stevies Wholesale Division 
+Our Stevies Wholesale Division designs, sources and markets footwear for young girls to department stores, specialty stores and independent boutiques throughout the United States. Stevies generated net sales of $5.0 million for the year ended December 31, 2008, or approximately 1% of our total net sales. 
+Steve Madden’s Fix Wholesale Division 
+We introduced Steve Madden’s Fix in the fourth quarter of 2007. The Fix Division designs, sources and markets a line of fashion-forward athletic sneakers to better department stores, better specialty stores and independently owned boutiques throughout the United States. Fix is targeted at women ages 16 to 35 with average price points that range from $50 to $70 at retail. Fix generated net sales of $3.2
+million for the year ended December 31, 2008, or approximately 1% of our total net sales. 
+3 
+Fabulosity Wholesale Division 
+In July 2008, we entered into a license agreement to design, manufacture and distribute women’s footwear, handbags and belts and related accessories under the Fabulosity brand. Fabulosity is an urban lifestyle brand that targets young women ages 13 to 25. It is marketed through JC Penny with average retail prices ranging from $30 to $65. Fabulosity, which began shipping in December of this year,
+generated net sales of $1.2 million for the year ended December 31, 2008. 
+Elizabeth and James 
+On September 10, 2008, we entered into a license agreement with Dualstar Entertainment Group, LLC, under which we have the right to use the Elizabeth and James trademark in connection with the sale and marketing of footwear. Elizabeth and James, which was created by Mary-Kate and Ashley Olsen, is distributed through luxury retailers to women ages 25 to 36 years with average retail price points from $200 to
+$350 for shoes and from $350 to $500 for boots. We anticipate that we will begin shipping Elizabeth and James product in the second quarter of 2009. 
+Retail Segment 
+Steven Madden Retail, Inc. 
+As of December 31, 2008, we owned and operated ninety-seven (97) retail stores including ninety-two (92) stores under the Steve Madden name and four (4) under the Steven name. In addition, we operate one (1) e-commerce website (through the www.stevemadden.com website). In 2008, we opened three (3) new stores and closed seven (7) underperforming stores. Steve Madden stores are located in major shopping malls
+and in urban street locations across the United States, primarily focused in New York, California and Florida. In 2008, the retail stores generated annual sales in excess of $628 per square foot. Comparative store sales (sales of those stores, including the e-commerce website, that were open for all of 2008 and 2007) were unchanged in 2008 compared to 2007. The Retail segment generated net sales of $125.6 million for the year ended December 31, 2008, or approximately 27% of our total
+net sales. 
+We believe that the Retail segment will continue to enhance overall sales and profitability while building equity in the Steve Madden brand. We plan to add two (2) new retail stores and close approximately ten (10) underperforming stores during 2009. Our Retail stores enable us to test and react to new products and classifications which, in turn, strengthens the product development efforts of the Steve Madden
+Wholesale Division. 
+First Cost Segment 
+Adesso-Madden, Inc. 
+Adesso-Madden, Inc (“A-M”) is our first cost, commission based division. During the second half of 2008, we transitioned our Candie’s business from our Wholesale segment to A-M. This resulted in a decrease in net sales in our Candie’s Wholesale Division and an increase of commission revenue in A-M. In addition, pursuant to a license agreement dated July of 2008 with Jones Investment Co.
+Inc., beginning in the first quarter of 2009, A-M intends to design and market women’s footwear under the l.e.i. brand exclusively to Wal-mart. In addition, A-M serves as a buying agent to mass-market merchants, shoe store chains and other value-priced retailers in connection with the procurement of footwear. As a buying agent, A-M utilizes its expertise and its relationships with shoe manufacturers to facilitate the production of private label shoes to its customers’
+specifications. We believe that by operating in the private label, mass merchandising market, we are able to maximize additional non-branded sales opportunities. This leverages our overall sourcing and design capabilities. Currently, this division serves as a buying agent for the procurement of women’s, men’s and children’s footwear for large retailers, including Target, Wal-Mart, J.C. Penney and Sears. A-M receives buying agent’s commissions from its customers.
+In addition, we have leveraged the strength of our Steve Madden brands and product designs resulting in a partial recovery of our design, product and development costs from our suppliers. The First Cost segment generated operating income of $11.6 million for the year ended December 31, 2008. 
+4 
+Licensing 
+As of December 31, 2008, we licensed our Steve Madden and Steven trademarks for use in connection with the manufacturing, marketing and sale of cold weather accessories, sunglasses, eyewear, outerwear, bedding and hosiery. Most of the license agreements require the licensee to pay us a royalty based on actual net sales, a minimum royalty in the event that specified net sales targets are not achieved and a
+percentage of sales for advertising the brand. Licensing income for the year ended December 31, 2008 was $2.7 million. 
+Design 
+We have established a reputation for our creative designs, marketing and trendy products at affordable price points. We believe that our future success will substantially depend on our ability to continue to anticipate and react to changing consumer demands in a timely manner. To meet this objective, we have developed an unparalleled design process that allows us to recognize and act quickly to changing
+consumer demands. Our design team strives to create designs which it believes fit our image, reflect current or future trends and can be manufactured in a timely and cost-effective manner. Once the initial design is complete, a prototype is developed, primarily in our Long Island City facility, which is reviewed and refined prior to the commencement of initial production. Most new products are then tested in selected Steve Madden retail stores. Based on these tests, among other things,
+management selects the products that are then offered for wholesale and retail distribution nationwide. We believe that our design and testing process and flexible sourcing model is a significant competitive advantage allowing us to mitigate the risk of production costs and the distribution of less desirable designs. 
+Product Sourcing and Distribution 
+We source each of our product lines separately based on the individual design, styling and quality specifications of the products in such product lines. We do not own or operate manufacturing facilities; rather, we source our branded products through agents and our own sourcing office with independently owned manufacturers in China, Mexico, Brazil, Italy, Spain and India. We have established relationships with
+a number of manufacturers and agents in each of these countries. Although we have not entered into any long-term manufacturing or supply contracts, we believe that a sufficient number of alternative sources exist for the manufacture of our products. We continually monitor the availability of the principal materials used in our footwear, which are available from a number of sources in various parts of the world. We track inventory flow on a regular basis, monitor sell-through data and
+incorporate input on product demand from wholesale customers. We use retailers’ feedback to adjust the production or manufacture of new products on a timely basis, which helps reduce the close out of slow-moving products. 
+We distribute our products from three (3) third-party distribution warehouse centers located in California and New Jersey. By utilizing distribution facilities that specialize in distributing products to certain wholesale accounts, Steve Madden retail stores and internet fulfillment, we believe that our customers are better served. 
+5 
+Customers 
+Our wholesale customers consist principally of department stores and specialty stores, including independent boutiques. Approximately 88% of our wholesale revenue is generated from department and specialty stores, including Macy’s, Nordstrom, DSW, Kohl’s, Famous Footwear, and Dillard’s and catalog retailers, including Victoria’s Secret. For the year ended December 31, 2008, Macy’s
+accounted for approximately $45.5 million, or 14% of our wholesale net sales and 10% of our total net sales. 
+Distribution Channels 
+We sell our products principally through department stores, specialty stores and discount stores in the United States and through our company-owned retail stores. For the year ended December 31, 2008, our Retail segment and our Wholesale segment generated net sales of approximately $125.6 million and $331.4 million, or 27% and 73% of our total net sales, respectively. Each of these distribution channels are
+described below. 
+Steve Madden and Steven Retail Stores 
+As of December 31, 2008, we operated ninety-two (92) company-owned retail stores under the Steve Madden name and four (4) under the Steven name and one (1) e-commerce website (through the www.stevemadden.com website). We believe that our retail stores will continue to enhance overall sales, profitability, and our ability to react to changing consumer trends. The stores are also a marketing tool that allows us
+to strengthen brand recognition and to showcase selected items from our full line of branded and licensed products. Furthermore, the retail stores provide us with a venue to test and introduce new products and merchandising strategies. Specifically, we often test new designs at our Steve Madden retail stores before scheduling them for mass production and wholesale distribution. In addition to these test marketing benefits, we have been able to leverage sales information gathered at
+Steve Madden retail stores to assist our wholesale customers in order placement and inventory management. 
+A typical Steve Madden store is approximately 1,400 to 1,600 square feet and is located in a mall or street location that we expect will attract the highest concentration of our core demographic, style-conscious customer base. The Steven stores, which are generally the same size as our Steve Madden stores, have a more sophisticated design and format styled to appeal to their more mature target audience. In
+addition to carefully analyzing mall demographics and locations, we also set profitability guidelines for each potential store site. Specifically, we target well trafficked sites at which the demographics fit our consumer profile and seek new locations where the projected fixed annual rent expense stays within our guidelines. By setting these guidelines, we seek to identify stores that will contribute to our overall profitability both in the near and longer terms. 
+Department Stores 
+We currently sell to over 3,700 doors of 17 department stores throughout the United States. Our major accounts include Macy’s, Nordstrom, Dillard’s and Lord & Taylor. 
+We provide merchandising support to our department store customers which includes in-store fixtures and signage, supervision of displays and merchandising of our various product lines. Our wholesale merchandising effort includes the creation of in-store concept shops, where a broader collection of our branded products are showcased. These in-store concept shops create an environment that is consistent with our
+image and are designed to enable the retailer to display and sell a greater volume of our products per square foot of retail space. In addition, these in-store concept shops encourage longer term commitment by the retailer to our products and enhance consumer brand awareness. 
+6 
+In addition to merchandising support, our key account executives maintain weekly communications with their respective accounts to guide them in placing orders and to assist them in managing inventory, assortment and retail sales. We leverage our sell-through data gathered at our retail stores to assist department stores in allocating their open-to-buy dollars to the most popular styles in the product line and
+to phase out styles with weaker sell-throughs, which reduces markdown exposure at season’s end. 
+Specialty Stores/Catalog Sales 
+We currently sell to specialty store locations throughout the United States. Our major specialty store accounts include DSW, Famous Footwear and Journeys. We offer our specialty store accounts the same merchandising, sell-through and inventory tracking support offered to our department store accounts. Sales of our products are also made through various catalogs, such as Victoria’s Secret. 
+Internet Sales 
+We operate an Internet website, www.stevemadden.com, where customers can purchase numerous styles of our Steve Madden, Steven, Steve Madden Mens and selected styles from Madden Girl, footwear and accessory products. 
+Distribution Agreements 
+Steve Madden products are available in many countries and territories worldwide via several retail selling and distribution agreements. Under the terms of the agreements, the distributors and retailers are required to open a minimum number of stores each year and to pay us a fee for each pair of footwear purchased, and in many cases, an additional sales royalty as a percentage of sales or a predetermined
+amount per unit of sale. Under the terms of the distribution agreements, the distributor is required to purchase certain minimum amounts of Steve Madden shoes. These agreements, which expire at various times through December 31, 2012 with renewal options at the election of the distributors and retailers, are exclusive in their specific territories which include China, Canada, Turkey, Mexico, Australia, Israel, UAE, The United Kingdom, Korea, Morocco, Greece, several countries in
+southeast Asia, including Indonesia and Thailand, Morocco, and several countries in Central and South America. 
+Competition 
+The fashion footwear industry is highly competitive. We compete with specialty shoe companies as well as companies with diversified footwear product lines, such as Nine West, Skechers, Kenneth Cole, Nike, Guess and Jessica Simpson who may have greater financial and other resources than us. We believe effective advertising and marketing, fashionable styling, high quality, value and fast manufacturing turnaround
+are the most important competitive factors and intend to continue to employ these elements as we develop our products. 
+Marketing and Sales 
+We have focused on creating an integrated brand building program to establish Steve Madden as a leading designer of fashion footwear for style-conscious young women and men. Principal marketing activities include product placements in lifestyle and fashion magazines, personal appearances by Creative and Design Chief, Steve Madden, and in-store promotions. In addition, we continue to promote our website
+(www.stevemadden.com) where customers can purchase Steve Madden, Steven, Steve Madden Mens and selected styles from Madden Girl footwear, as well as view exclusive content, participate in contests and “live chat” with customer service representatives. 
+7 
+Management Information Systems (MIS) Operations 
+Sophisticated information systems are essential to our ability to maintain our competitive position and to support continued growth. We operate on a dual AS/400 system which provides system support for all aspects of our business, including manufacturing purchase orders, customer purchase orders, order allocations, invoicing, accounts receivable management, quick response replenishment, point-of-sale support
+and financial and management reporting functions. We have a PKMS bar coded warehousing system that is integrated with the wholesale system in order to provide accurate inventory positions and quick response size replenishment for our customers. In addition, we have installed an EDI system which provides a computer link between us and certain wholesale customers that enables both the customer and us to monitor purchases, shipments and invoicing. The EDI system also improves our ability
+to respond to customer inventory requirements on a weekly basis. 
+Receivables Financing; Line of Credit 
+Under the terms of our factoring agreement with GMAC Commercial Finance LLC, as amended, we may request advances from the factor of up to 85% of aggregate receivables factored by GMAC. The agreement, which has no specific expiration date and can be terminated by us effective on or after June 30, 2009 with sixty (60) days prior written notice, provides us with a $50 million credit facility with a $25 million
+sub-limit for Letters of Credit. The agreement can be terminated by GMAC upon the occurrence, and in certain instances continuance after notice, of certain specified defaults. We also pay a fee that varies depending on the customer of between 0.15% and 0.25% of the gross invoice amount factored with GMAC. Prior to the amendment to the factoring agreement discussed in the next paragraph, we sold a substantial portion of our receivables, principally without recourse, to GMAC. As of
+December 31, 2008 and 2007, $92 and $272 of factored receivables, respectively, were sold by us with recourse. GMAC maintains a lien on all of our receivables to secure our obligations and assumes the credit risk for all purchased accounts approved by them with certain exceptions. 
+In November of 2008, GMAC announced that it did not have enough capital to qualify to become a bank holding company and thereby qualify to access certain government funding sources. GMAC stated that failure to become a bank holding company would have a near-term material adverse effect on its business and its financial position. In light of these statements and the worsening financial climate, we were
+concerned about GMAC’s ability to maintain our cash flow, and if needed, to fund advances. In addition, we were concerned that in a GMAC bankruptcy proceeding, our accounts receivable sold to GMAC under the factoring agreement in effect prior to January 1, 2009, might be deemed an asset of GMAC’s and thus the future cash collections on same would not be available to us. To hedge against these concerns, in November of 2008, we borrowed the maximum amount allowed by the terms
+of the agreement, which had the effect of mitigating, to the extent of the borrowings, the possible financial effect of any GMAC bankruptcy filing. As of December 31, 2008, we had advances payable due to GMAC of $30,168 against gross factored receivables of $44,082. The interest rate on the advances, which has changed from time to time by amendments to the agreement and which is currently a variable rate based on the 30-day London Interbank Offered Rate (LIBOR), averaged 4.2% in 2008.
+We had no advances payable due to GMAC as of December 31, 2007. On January 2, 2009, GMAC announced that it had qualified as a bank holding company and that it received $5 billion from the U.S. Department of Treasury under the Troubled Asset Relief Program. Effective January 1, 2009, the factoring agreement was amended so that we retained title to our factored accounts receivable, which would keep our outstanding receivables from being the property of GMAC subject to administration in a
+future GMAC bankruptcy proceeding, if any. Subsequent to the year end, we began reducing the loan balance with the proceeds from the collections of factored accounts receivable, and as of February 17, 2009, the loan was completely paid off. 
+8 
+Our Daniel M. Friedman Division had a factoring agreement with Wells Fargo Century that expired on June 30, 2007. As of July 1, 2007, Daniel M. Friedman has been incorporated into the GMAC agreement. 
+Trademarks and Service Marks 
+The STEVE MADDEN and/or STEVE MADDEN plus Design trademarks and service marks have been registered in numerous International Classes in the United States (Int’l Cl. 25 for clothing and footwear; Int’l Cl. 18 for leather goods, such as handbags and wallets; Int’l Cl. 9 for eyewear; Int’l Cl. 14 for jewelry; Int’l Cl. 3 for cosmetics and fragrances; Int’l Cl. 20 for picture
+frames; Int’l Cl. 16 for paper goods; and Int’l Cl. 35 for retail store services). We also have pending trademark applications in the United States for the mark STEVE MADDEN and/or STEVE MADDEN plus Design in numerous international classes (Class 9 for CDs and Class 25 for sleepwear). 
+We also have trademark registrations in the United States for the marks EYESHADOWS BY STEVE MADDEN (Int’l Cl. 9 for eyewear), STEVEN M. (Int’l Class 25 for clothing and footwear); STEVEN BY STEVE MADDEN (Int’l Cl. 25 for footwear and Int’l Cl. 18 for small leather goods); NATURAL COMFORT (Int’l Cl. 25 for footwear); STEVE MADDEN LUXE (Int’l Cl. 25 for clothing and footwear);
+STEVEN (Int’l Cl. 3 for cosmetics and fragrances; Int’l Cl. 9 for eyewear; Int’l Cl. 14 for jewelry; Int’l Cl. 18 for bags; Int’l Cl. 25 for clothing and footwear; Int’l Cl. 26 for hair accessories; and Int’l Cl. 35 for retail store services); CIRCLE WITH ASTERISK DESIGN (in Class 25 for clothing and footwear); FIX (in Class 25 for footwear); FIX* (in Class 25 for footwear); STEVE MADDEN’S FIX (in Class 25 for clothing and footwear); and,
+STEVE MADDEN’S FIX AND DESIGN (in Class 25 for clothing and footwear). We also own a registration for the mark SOHO COBBLER plus Design in the U.S. in Class 25 for footwear. 
+We also have several pending applications in the U.S. for MADDEN in international classes (Class 14 for jewelry and watches, Class 18 for bags, and Class 25 for clothing and footwear). We also have pending applications in the U.S. for MADDEN BY STEVE MADDEN in Class 18 for bags. 
+Additionally, we have several pending trademark and service mark applications in the United States for various marks, MADDEN GIRL (in Class 18 for bags and in Class 25 for clothing and footwear); MADDEN GIRLZ (in Class 25 for clothing and footwear); MADDEN BOYZ (in Class 25 for clothing and footwear); MADDEN KIDZ for clothing and footwear); MADDEN NEW YORK (in Class 25 for clothing and footwear); MADDEN ACTIVE
+(in Class 25 for clothing and footwear); MADDEN SPORT (in Class 25 for clothing and footwear); STEVEN BY STEVE MADDEN (in Class 18 for bags and Class 25 for belts); FINA FIRENZE (in Class 18 for bags and in Class 25 for belts and footwear); STEVE MADDEN DESIGN PLUS PEACE LOVE SHOES (in Class 25 for footwear); PEACE LOVE SHOES (STANDARD CHARACTERS) (in Class 25 for footwear); PEACE LOVE SHOES LOGO (in Class 24 for towels and in Class 25 for footwear, clothing and belts); and, STEVE
+MADDEN DESIGN PLUS PEACE LOVE SHOES LOGO PLUS PEACE LOVE SHOES (in Class 25 for footwear). 
+We further own registrations for the STEVE MADDEN and/or STEVE MADDEN plus Design trademarks and service marks in various International Classes in Argentina, Armenia, Aruba, Australia, Azerbaijan, Bahrain, Belize, Brazil, Canada, Chile, China, Colombia, El Salvador, Estonia, Georgia, Guatemala, Hong Kong, Indonesia, Israel, Italy, Japan, Kazakhstan, Korea, Kyrgyzstan, Latvia, Lebanon, Lithuania, Malaysia,
+Mexico, Moldova, Netherland Antilles, New Zealand, the Netherlands, Nicaragua, Norway, Oman, Panama, Paraguay, the Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Taiwan, Thailand, Turkey, Turkmenistan, Ukraine, the United Arab Emirates, Uzbekistan, the European Union, and the Benelux countries and has pending applications for registration of the STEVE MADDEN and/or STEVE MADDEN plus Design trademarks and service marks in Argentina, Aruba, Bahamas, Belarus, Canada,
+China, Costa Rica, Ecuador, Egypt, Guatemala, Honduras, India, Indonesia, Jordan, Korea, Kuwait, Morocco, Oman, Peru, Saudi Arabia, Tajikistan, Turkey, Venezuela, and the United Arab Emirates. 
+9 
+Additionally, we own registrations for the STEVEN trademark and service mark in various International Classes in Australia, Bahrain, Belize, China, the Dominican Republic, El Salvador, the European Union, Hong Kong, Israel, Japan, Kuwait, Lebanon, Malaysia, New Zealand, Netherland Antilles, Norway, Panama, the Philippines, Qatar, Russia, Saudi Arabia, South Africa, Thailand, Taiwan, Turkey, and the United Arab
+Emirates and have pending applications for STEVEN trademark and service mark in Armenia, Azerbaijan, China, Columbia, Costa Rica, Egypt, Guatemala, India, Italy, Jordan, Korea, Malaysia, Nicaragua, Oman, Taiwan, Thailand, and Venezuela. 
+We further own registrations for the “torch stripe” design in Class 25 in the European Union and Panama, and China. 
+We further own registrations for the mark STEVEN BY STEVE MADDEN in various international classes in Aruba, Australia, China, the European Union, Hong Kong, Korea, New Zealand, and Taiwan and have pending applications for the mark STEVEN BY STEVE MADDEN in various international classes in Canada, China, Ecuador, Egypt, India, Israel, Korea, Taiwan, Turkey, Saudi Arabia, and Venezuela. 
+We further own registrations for the mark STEVE MADDEN’S FIX* in international class 25 in the European Union, Mexico, and Turkey and have pending applications for the mark STEVE MADDEN’S FIX* in international class 25 in Canada, China, Morocco, Panama and The United Arab Emirates. 
+We further have pending applications for the mark MADDEN GIRL in international class 25 in Egypt, India, Kuwait, Saudi Arabia and Turkey. 
+We further have pending applications for the mark NATURAL COMFORT in various international classes in Egypt, India, Kuwait, and Saudi Arabia. 
+We further own registrations for the mark SM NEW YORK and/or SM NEW YORK PLUS DESIGN in International Class 25 (clothing and footwear) in Aruba, Australia, Belize, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Hong Kong, Netherland Antilles, Nicaragua, New Zealand, Panama, Taiwan and have pending applications for registration of the SM NEW YORK and/or SM NEW YORK PLUS DESIGN mark in
+International Class 25 (clothing and footwear) in Columbia, Honduras, India, Indonesia, Kuwait, Saudi Arabia, South Africa, and Venezuela. 
+Additionally, we, through our Diva Acquisition Corp. subsidiary, own registrations for the DAVID AARON trademark and service mark in various International Classes in the United States (Int’l Cl. 25 for clothing and footwear; Int’l Cl. 18 for leather goods, such as handbags and wallets), and in Australia, Canada, the European Union, Hong Kong and South Africa in some or all of Classes 3, 18, and 25.
+Also, we own registrations for our DAVID AARON trademark in International Class 3 for perfume and cosmetics; International Class 9 for eyewear; International Class 14 for jewelry; International Class 16 for paper goods; International Class 18 for bags; International Class 24 for bed and bath products; International Class 25 for clothing and footwear and International Class 26 hair accessories in Korea. 
+We, through our Stevies, Inc. subsidiary, also own various registrations for the STEVIES and /or STEVIES plus Design trademark and service mark in a number of International Classes in the United States (Int’l Class 25 for clothing and footwear; Int’l Class 18 for leather goods, such as handbags and wallets; International Class 14 for jewelry; International Class 28 for toys; Int’l Class 16
+for paper goods; Int’l Class 3 for perfume and cosmetics, Int’l Class 9 for CDs and eyewear; and Int’l Cl. 27 for rugs and carpets; and for STEVIES BY STEVE MADDEN in Class 14 for jewelry, Class 9 for eyewear, Class 3 for perfume and cosmetics, Class 25 for clothing and footwear, Class 28 for toys and games, Class 35 for retail services, Class 16 for stationery and notebooks, Class 18 for bags. 
+10 
+Additionally, Stevies, Inc. has pending trademark and service mark applications and/or existing registrations for the STEVIES and STEVIES plus Design marks in various International Classes in Aruba, Argentina, Australia, Bahrain, Brazil, Canada, China, Chile, Colombia, Costa Rica, Dominican Republic, Egypt, El Salvador, European Union, Guatemala, Hong Kong, Honduras, Indonesia, India, Israel, Japan, Korea,
+Kuwait, Lebanon, Malaysia, Mexico, Netherland Antilles, Nicaragua, New Zealand, Oman, Panama, Peru, Qatar, Saudi Arabia, Singapore, South Africa, Taiwan, Thailand, Turkey, the United Arab Emirates and Venezuela. 
+We believe that our trademarks have a significant value and are important to the marketing of our products. There can be no assurance, however, that we will be able to effectively obtain rights to our marks throughout all of the countries of the world. Moreover, no assurance can be given that others will not assert rights in, or ownership of, our trademarks and other proprietary rights of or that we will be
+able to successfully resolve such conflicts. Our failure to protect such rights from unlawful and improper appropriation may have a material adverse effect on our business, financial condition, results of operations and liquidity. 
+Employees 
+On February 5, 2009, we employed approximately one thousand five hundred and ten (1,510) employees, of whom approximately seven hundred forty (740) work on a full-time basis and approximately seven hundred seventy (770) work on a part-time basis, most of whom work in the Retail segment. Our management considers relations with our employees to be good. 
+Seasonality 
+Historically, our merchandising businesses have experienced holiday retail seasonality. In addition to seasonal fluctuations, our operating results fluctuate quarter to quarter as a result of the timing of holidays, weather, the timing of larger shipments of footwear, market acceptance of our products, the mix, pricing and presentation of the products offered and sold, the hiring and training of additional
+personnel, inventory write downs for obsolescence, the cost of materials, the product mix between wholesale, retail and licensing businesses, the incurrence of other operating costs and factors beyond our control, such as general economic conditions and actions of competitors. 
+Backlog 
+We had unfilled wholesale customer orders of $90.5 million and $113.8 million, as of February 21, 2009 and 2008, respectively. Due to the realignment of our Candie’s business from our Wholesale segment to our commission based First Cost segment, there are no Candie’s orders included this year as compared to $10.8 million of Candie’s orders included last year. Our backlog at a particular time
+is affected by a number of factors, including seasonality, timing of market weeks and wholesale customer purchases of our core basic products through our open stock program. Accordingly, a comparison of backlog from period to period may not be indicative of eventual shipments.

raw/filings/0000913241/2008/0001019056-09-000306/item13.txt

@@ -0,0 +1,4 @@
+ITEM 13 
+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 
+The information required to be furnished pursuant to this item will be set forth in our proxy statement for the 2009 Annual Meeting of Stockholders, and is incorporated herein by reference. 
+34

raw/filings/0000913241/2008/0001019056-09-000306/item9a.txt

@@ -0,0 +1,36 @@
+ITEM 9A 
+CONTROLS AND PROCEDURES 
+Disclosure Controls and Procedures 
+As required by Rule 13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal year covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the
+Exchange Act) were effective as of the end of the fiscal year covered by this Annual Report on Form 10-K. 
+Management’s Annual Report on Internal Control Over Financial Reporting 
+Management of Steven Madden, Ltd. is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). 
+Our internal control over financial reporting is a process designed by, or under the supervision of, our principal executive officer and principal financial officer, and effected by the board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control
+over financial reporting includes those policies and procedures that (1) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with
+authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. 
+Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 
+With the participation of the Chief Executive Officer and the Chief Financial Officer, our management conducted an evaluation of the effectiveness as of the end of our fiscal year ended December 31, 2008, of our internal control over financial reporting based on the framework and criteria established in Internal Control–Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation our management has
+concluded that, as of December 31, 2008, our internal control over financial reporting was effective. 
+32 
+The independent registered public accounting firm that audited the financial statements included in this Annual Report on Form 10-K has issued an attestation report on our internal control over financial reporting. 
+Attestation Report of our Independent Registered Public Accounting Firm 
+Our Independent Registered Public Accounting Firm, Eisner LLP, has audited and issued a report on our internal control over financial reporting. The report of Eisner LLP appears below. 
+To the Board of Directors and Stockholders 
+Steven Madden, Ltd. 
+We have audited Steven Madden, Ltd. and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
+the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. 
+We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
+testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 
+A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
+accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
+prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 
+Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 
+In our opinion, Steven Madden, Ltd. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control - Integrated Framework issued by COSO. 
+33 
+We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Steven Madden, Ltd. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2008, and our report dated March 10, 2009 expressed an
+unqualified opinion on those consolidated financial statements and included an explanatory paragraph regarding the adoption of the provisions of Financial Accounting Standards Board Interpretation No. 48 “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109”, effective January 1, 2007. 
+/s/ Eisner LLP 
+New York, New York 
+March 10, 2009 
+Changes in Internal Control Over Financial Reporting 
+There was no change in our internal control over financial reporting, identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the Exchange Act, that occurred during the fiscal quarter ended December 31, 2008, has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

raw/filings/0000913241/2008/0001019056-09-000306/rpt_disclosure.txt

@@ -0,0 +1,12 @@
+Certain Relationships and Related Party Transactions 
+In January 2004, the Company entered into an agreement with John L. Madden, one of the Company’s directors, and JLM Consultants, a company wholly-owned by John L. Madden. Under this agreement, which was amended in 2005, Mr. Madden agreed to provide consulting services to the Company with respect to the development of international sales of the Company. This agreement expired by its terms on December 31, 2005, but Mr. Madden continues to provide consulting services and the Company continues to make payments to JLM Consultants consistent with those that would have been required under the expired consulting agreement. In accordance with the foregoing, for the 2009 Fiscal Year, JLM Consultants received the following from the Company: (a) a commission equal to 2.5% on international sales, (b) a monthly draw in the amount of $25,000 with recourse against such commissions, (c) a $1,000 per month travel allowance and (d) $2,812 per month toward health insurance premiums for health insurance coverage for John L. Madden. Pursuant to this arrangement, JLM Consultants received a total of $759,180 from the Company in the 2009 Fiscal Year. 
+12 
+Effective as of July 1, 2005, the Company amended and restated its employment agreement with Steven Madden, pursuant to which Mr. Madden agreed to serve as the Company’s Creative and Design Chief. The term of Mr. Madden’s employment under his employment agreement commenced on July 1, 2005 and, in accordance with a December 14, 2009 amendment thereto, will end on December 31, 2019. The agreement provides for an annual salary of $600,000, with a 7% increase of base salary on a compound basis in each of the third, fifth, seventh and ninth years of the agreement. Mr. Madden also receives an annual $200,000 non-accountable expense allowance. The agreement provides for an annual cash bonus in an amount determined by the Board of Directors, which will be at least 2% of the Company’s EBITDA (the “Annual Bonus”). Additionally, the Company agreed to pay Mr. Madden an annual cash bonus in relation to “new business” (as defined in the agreement) in an amount to be determined by the Board of Directors, but which is at least (i) 2.5% of new business gross direct revenues plus (ii) 10% of all license or other fee income above $2,000,000 (the “New Business Bonus”). In addition, Mr. Madden is eligible to receive annually, on or about the date of the Company’s annual meeting of stockholders, an option grant (the “Annual Option”) to purchase a number of shares of Common Stock, with such number to be equal to not less than 100% of the largest aggregate number of shares of Common Stock available upon the exercise of an option or options granted to any other continuing full-time employee of the Company during the preceding twelve-month period; provided, however, that a grant to Mr. Madden in excess of 150% of the number of shares of Common Stock available upon the exercise of an option or options granted to such other continuing full-time employee shall require stockholder approval. Any Annual Option received by Mr. Madden will vest quarterly over a one-year period following the grant date and will be exercisable, at a price equal to the closing price of the Company’s Common Stock on the grant date, for a period of five years following the date of the grant. In the event of Mr. Madden’s death, the agreement provides for the payment to Mr. Madden’s estate of his base salary for the 12-month period immediately subsequent to the date of Mr. Madden’s death. In the event that Mr. Madden’s employment agreement is terminated due to Mr. Madden’s total disability (as defined in the agreement), “for cause” (as defined in the agreement) or due to Mr. Madden’s resignation, the Company is obligated to pay Mr. Madden the amount of compensation that is accrued and unpaid through the date of termination. In the event Mr. Madden’s employment agreement is terminated for any reason (other than “for cause” or due to his death, total disability or resignation), the Company is obligated to pay Mr. Madden, in installments, the balance of his base salary that would have been paid by the Company under the agreement for the full term of the agreement. If, during the period commencing 120 days prior to a “change of control” (as defined in the employment agreement) transaction and ending on the first anniversary of a change of control transaction, Mr. Madden’s employment is terminated by the Company other than for cause or by the resignation of Mr. Madden for “good reason” (as defined in the employment agreement), or if Mr. Madden resigns for good reason or without good reason within 30 days following a change of control transaction, all unvested options to purchase shares of Common Stock held by Mr. Madden will vest on the date of termination or resignation and Mr. Madden will be entitled to receive a lump sum cash payment equal to (1) the amount of compensation that is accrued and unpaid through the date of termination, (2) an amount equal to the product of (A) the number of years remaining in the term of the agreement (but not less than 5), and (B) the sum of (w) the base salary for the 12-month period ended on the preceding December 31 (or for the 12-month period ending on December 31, 2002, if greater), (x) the amount of the Annual Bonus earned (paid or accrued or which should have been paid or accrued) for the 12-month period ended on the preceding December 31 (or for the 12-month period ended on December 31, 2002, if greater), (y) the non-accountable expense allowance provided for under the agreement for the 12-month period ended on the preceding December 31, and (z) the amount of the New Business Bonus earned (paid or accrued or which should have been paid or accrued) for the 12-month period ended on the preceding December 31 (or for the 12-month period ending on December 31 during the agreement in which Mr. Madden received the greatest New Business Bonus, if greater). Mr. Madden’s employment agreement contains other customary provisions, including provisions regarding expense reimbursement, confidentiality, solicitation and competition. For Fiscal Year 2009, Mr. Madden earned (i) $664,470 in base salary; (ii) $200,000 in non-accountable expense allowance; (iii) a bonus of $1,752,665, representing 2% of the Company’s earnings before interest, tax, depreciation and amortization; (iv) a bonus of $3,995,600, earned based on 2.5% of the Company’s new business; and (v) a bonus of $100,101, based on 10% of Royalty/Licensing income over $2,000,000. 
+On June 25, 2007, the Company made a loan to Steven Madden, its Creative and Design Chief and a principal stockholder of the Company, in the amount of $3,000,000, in order for Mr. Madden to exercise an option, which was due to expire, and hold the underlying Common Stock. Mr. Madden executed a promissory note in favor of the Company, which is secured by a pledge of 510,000 shares of the Company’s Common Stock beneficially owned by Mr. Madden. There have been successive amendments to the note, the most recent of which occurred on April 6, 2009, at which time the note was amended and restated to (i) extend the maturity date to the earlier of the date that Mr. Madden ceases to be employed by the Company and June 30, 2015 (the “Maturity Date”), and (ii) reflect the rate of interest as 8% per annum for the period from June 25, 2007 until April 6, 2010, and 6% per annum for the period from April 7, 2010 until the Maturity Date. As of December 31, 2009, interest in the amount of $568,000 has accrued on the note. Mr. Madden is the brother of John L. Madden, who has been a director of the Company since the Company’s inception in 1990. 
+Review, Approval or Ratification of Transactions with Related Persons 
+The Company’s written Conduct Code and Employee Handbook prohibit all conflicts of interest. Under the Conduct Code, conflicts of interest occur when private or family interests interfere in any way, or even appear to interfere, with the interests of the Company. The Company’s prohibition on conflicts of interest under the Conduct Code includes any related person transaction. 
+13 
+Related person transactions must be approved by the Board, or by a committee of the Board consisting solely of independent directors, who will approve the transaction only if they determine that it is in the best interests of the Company. In considering the transaction, the Board or committee will consider all relevant factors, including as applicable (i) the Company’s business rationale for entering into the transaction; (ii) the alternatives to entering into a related person transaction; (iii) whether the transaction is on terms comparable to those available to third parties or, in the case of employment relationships, to employees generally; (iv) the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and (v) the overall fairness of the transaction to the Company. 
+The Company has multiple processes for reporting conflicts of interests, including related person transactions. Under the Conduct Code, all employees are required to report any actual or apparent conflict of interest, or potential conflict of interest, to management. The Chief Financial Officer distributes a questionnaire to the Company’s executive officers and management personnel on a quarterly basis and distributes a questionnaire to the members of the Board of Directors on an annual basis requesting certain information regarding, among other things, their immediate family members, employment and beneficial ownership interests, which information is then reviewed for any conflicts of interest under the Conduct Code. 
+The Board of Directors, the Audit Committee and the Disclosure Committee, which is comprised of management personnel, discuss the related party transactions, specifically, and in connection with the regular review processes attendant to the Company’s periodic filings, including related party transaction disclosures. 
+If a director is a party to or in some manner involved in a transaction involving the Company, he will be recused from all discussions and decisions about the transaction. The transaction must be approved in advance whenever practicable, and if not practicable, must be ratified as promptly as practicable.

raw/filings/0000913241/2009/0001019056-10-000302/filing_metadata.csv

@@ -0,0 +1,2 @@
+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2010-03-12,2009-12-31,2010-03-12T20:03:31.000Z,0001019056-10-000302,smadden_10k09.htm,FORM 10-K,2407451,0,0,https://www.sec.gov/Archives/edgar/data/913241/000101905610000302/smadden_10k09.htm,https://www.sec.gov/Archives/edgar/data/913241/000101905610000302/,2009,2009,1

raw/filings/0000913241/2009/0001019056-10-000302/item13.txt

@@ -0,0 +1,8 @@
+ITEM 13 
+CERTAIN
+RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
+INDEPENDENCE 
+The
+information required to be furnished pursuant to this Item will be set forth in
+our proxy statement for the 2010 Annual Meeting of Stockholders, and is
+incorporated herein by reference.

raw/filings/0000913241/2009/0001019056-10-000302/item9a.txt

@@ -0,0 +1,139 @@
+ITEM 9A 
+CONTROLS
+AND PROCEDURES 
+Disclosure
+Controls and Procedures 
+As
+required by Rule 13a-15(b) of the Exchange Act, our management, including our
+Chief Executive Officer and Chief Financial Officer, has evaluated the
+effectiveness of our disclosure controls and procedures as of the end of the
+fiscal year covered by this Annual Report on Form 10-K. Based on that
+evaluation, the Chief Executive Officer and Chief Financial Officer have
+concluded that our disclosure controls and procedures (as defined in Rule
+13a-15(e) under the Exchange Act) were effective as of the end of the fiscal
+year covered by this Annual Report on Form 10-K. 
+Management’s
+Annual Report on Internal Control Over Financial Reporting 
+Management
+of Steven Madden, Ltd. is responsible for establishing and maintaining adequate
+internal control over financial reporting (as defined in Rule 13a-15(f) of the
+Exchange Act). 
+Our
+internal control over financial reporting is a process designed by, or under the
+supervision of, our principal executive officer and principal financial officer,
+and effected by the board of directors, management, and other personnel, to
+provide reasonable assurance regarding the reliability of financial reporting
+and the preparation of financial statements for external purposes in accordance
+with U.S. generally accepted accounting principles. Our internal control over
+financial reporting includes those policies and procedures that (1) pertain to
+maintenance of records that, in reasonable detail, accurately and fairly reflect
+the transactions and dispositions of our assets; (2) provide reasonable
+assurance that transactions are recorded as necessary to permit preparation of
+financial statements in accordance with U.S. generally accepted accounting
+principles, and that our receipts and expenditures are being made only in
+accordance with authorizations of our management and directors; and (3) provide
+reasonable assurance regarding prevention or timely detection of unauthorized
+acquisition, use, or disposition of our assets that could have a material effect
+on the financial statements. 
+Because
+of its inherent limitations, internal control over financial reporting may not
+prevent or detect misstatements. Also, projections of any evaluation of
+effectiveness to future periods are subject to the risk that controls may become
+inadequate because of changes in conditions, or that the degree of compliance
+with the policies or procedures may deteriorate. 
+With the
+participation of the Chief Executive Officer and the Chief Financial Officer,
+our management conducted an evaluation of the effectiveness as of the end of our
+fiscal year ended December 31, 2009, of our internal control over financial
+reporting based on the framework and criteria established in Internal
+Control–Integrated Framework, issued by the Committee of Sponsoring
+Organizations of the Treadway Commission. Based on this evaluation our
+management has concluded that, as of December 31, 2009, our internal control
+over financial reporting was effective. 
+The
+independent registered public accounting firm that audited the financial
+statements included in this Annual Report on Form 10-K has issued an attestation
+report on our internal control over financial reporting. 
+28 
+Attestation
+Report of our Independent Registered Public Accounting Firm 
+Our
+Independent Registered Public Accounting Firm, Eisner LLP, has audited and
+issued a report on our internal control over financial reporting. The report of
+Eisner LLP appears below. 
+To the
+Board of Directors and Stockholders 
+Steven
+Madden, Ltd. and subsidiaries 
+We have
+audited Steven Madden, Ltd. and subsidiaries’ (the “Company”) internal control
+over financial reporting as of December 31, 2009, based on criteria established
+in Internal Control - Integrated Framework issued by the Committee of Sponsoring
+Organizations of the Treadway Commission (“COSO”). The Company’s management is
+responsible for maintaining effective internal control over financial reporting
+and for its assessment of the effectiveness of internal control over financial
+reporting, included in the accompanying Management’s Annual Report on Internal
+Control over Financial Reporting. Our responsibility is to express an opinion on
+the Company’s internal control over financial reporting based on our
+audit. 
+We
+conducted our audit in accordance with the standards of the Public Company
+Accounting Oversight Board (United States). Those standards require that we plan
+and perform the audit to obtain reasonable assurance about whether effective
+internal control over financial reporting was maintained in all material
+respects. Our audit included obtaining an understanding of internal control over
+financial reporting, assessing the risk that a material weakness exists, and
+testing and evaluating the design and operating effectiveness of internal
+control based on the assessed risk. Our audit also included performing such
+other procedures as we considered necessary in the circumstances. We believe
+that our audit provides a reasonable basis for our opinion. 
+A
+company’s internal control over financial reporting is a process designed to
+provide reasonable assurance regarding the reliability of financial reporting
+and the preparation of financial statements for external purposes in accordance
+with generally accepted accounting principles. A company’s internal control over
+financial reporting includes those policies and procedures that (i) pertain to
+the maintenance of records that, in reasonable detail, accurately and fairly
+reflect the transactions and dispositions of the assets of the company; (ii)
+provide reasonable assurance that transactions are recorded as necessary to
+permit preparation of financial statements in accordance with generally accepted
+accounting principles, and that receipts and expenditures of the company are
+being made only in accordance with authorizations of management and directors of
+the company; and (iii) provide reasonable assurance regarding prevention or
+timely detection of unauthorized acquisition, use, or disposition of the
+company’s assets that could have a material effect on the financial
+statements. 
+Because
+of its inherent limitations, internal control over financial reporting may not
+prevent or detect misstatements. Also, projections of any evaluation of
+effectiveness to future periods are subject to the risk that controls may become
+inadequate because of changes in conditions, or that the degree of compliance
+with the policies or procedures may deteriorate. 
+In our
+opinion, Steven Madden, Ltd. and subsidiaries maintained, in all material
+respects, effective internal control over financial reporting as of December 31,
+2009, based on criteria established in Internal Control - Integrated Framework
+issued by COSO. 
+We also
+have audited, in accordance with the standards of the Public Company Accounting
+Oversight Board (United States), the consolidated balance sheets of Steven
+Madden, Ltd. and subsidiaries as of December 31, 2009 and 2008, and the related
+consolidated statements of income, changes in stockholders’ equity and cash
+flows for each of the years in the three-year period ended December 31, 2009,
+and our report dated March 11, 2010 expressed an unqualified opinion on those
+consolidated financial statements and included an explanatory paragraph
+regarding the adoption of the provisions of the accounting guidance relating to
+the uncertainty in income taxes, effective January 1, 2007. 
+/S/ Eisner LLP 
+New York, New York 
+March 11,
+2010 
+29 
+Changes
+in Internal Control Over Financial Reporting 
+There was
+no change in our internal control over financial reporting, identified in
+connection with the evaluation required by paragraph (d) of Rule 13a-15 of the
+Exchange Act, that occurred during the fiscal quarter ended December 31, 2009,
+which has materially affected, or is reasonably likely to materially affect, our
+internal control over financial reporting.

raw/filings/0000913241/2009/0001019056-10-000302/rpt_disclosure.txt

@@ -0,0 +1,17 @@
+Certain Relationships and Related Party Transactions 
+In January 2004, the Company entered into an agreement with John L. Madden, one of the Company’s directors, and JLM Consultants, a company wholly-owned by John L. Madden. Under this agreement, which was amended in 2005, Mr. Madden agreed to provide consulting services to the Company with respect to the development of international sales of the Company. This agreement expired by its terms on December 31, 2005, but Mr. Madden continues to provide consulting services and the Company continues to make payments to JLM Consultants consistent with those that would have been required under the expired consulting agreement. In accordance with the foregoing, for the 2010 Fiscal Year, JLM Consultants received the following from the Company: (a) a commission equal to 2.5% on international sales, (b) a monthly draw in the amount of $25,000 with recourse against such commissions, (c) a $1,000 per month travel allowance and (d) $2,812 per month toward health insurance premiums for health insurance coverage for John L. Madden. Pursuant to this arrangement, JLM Consultants received a total of $1,005,540 from the Company in the 2010 Fiscal Year. 
+12 
+Effective as of July 1, 2005, the Company amended and restated its employment agreement with Steven Madden, pursuant to which Mr. Madden agreed to serve as the Company’s Creative and Design Chief. The term of Mr. Madden’s employment under his employment agreement commenced on July 1, 2005 and, in accordance with a December 14, 2009 amendment thereto, will end on December 31, 2019. The agreement provides for an annual salary of $600,000, with a 7% increase of base salary on a compound basis in each of the third, fifth, seventh and ninth years of the agreement. Mr. Madden also receives an annual $200,000 non-accountable expense allowance. The agreement provides for an annual cash bonus in an amount determined by the Board of Directors, which will be at least 2% of the Company’s EBITDA (the “Annual Bonus”). Additionally, the Company agreed to pay Mr. Madden an annual cash bonus in relation to “new business” (as defined in the agreement) in an amount to be determined by the Board of Directors, but which is at least (i) 2.5% of new business gross direct revenues plus (ii) 10% of all license or other fee income above $2,000,000 (the “New Business Bonus”). 
+Mr. Madden is also eligible to receive annually, on or about the date of the Company’s annual meeting of stockholders, an option grant (the “Annual Option”) to purchase a number of shares of Common Stock, with such number to be equal to not less than 100% of the largest aggregate number of shares of Common Stock available upon the exercise of an option or options granted to any other continuing full-time employee of the Company during the preceding twelve-month period; provided, however, that a grant to Mr. Madden in excess of 150% of the number of shares of Common Stock available upon the exercise of an option or options granted to such other continuing full-time employee shall require stockholder approval. Any Annual Option received by Mr. Madden will vest quarterly over a one-year period following the grant date and will be exercisable, at a price equal to the closing price of the Company’s Common Stock on the grant date, for a period of five years following the date of the grant. In the event of Mr. Madden’s death, the agreement provides for the payment to Mr. Madden’s estate of his base salary for the 12-month period immediately subsequent to the date of Mr. Madden’s death. 
+In the event that Mr. Madden’s employment agreement is terminated due to Mr. Madden’s total disability (as defined in the agreement), “for cause” (as defined in the agreement) or due to Mr. Madden’s resignation, the Company is obligated to pay Mr. Madden the amount of compensation that is accrued and unpaid through the date of termination. In the event Mr. Madden’s employment agreement is terminated for any reason (other than “for cause” or due to his death, total disability or resignation), the Company is obligated to pay Mr. Madden, in installments, the balance of his base salary that would have been paid by the Company under the agreement for the full term of the agreement. If, during the period commencing 120 days prior to a “change of control” (as defined in the employment agreement) transaction and ending on the first anniversary of a change of control transaction, Mr. Madden’s employment is terminated by the Company other than for cause or by the resignation of Mr. Madden for “good reason” (as defined in the employment agreement), or if Mr. Madden resigns for good reason or without good reason within 30 days following a change of control transaction, all unvested options to purchase shares of Common Stock held by Mr. Madden will vest on the date of termination or resignation and Mr. Madden will be entitled to receive a lump sum cash payment equal to (1) the amount of compensation that is accrued and unpaid through the date of termination, (2) an amount equal to the product of (A) the number of years remaining in the term of the agreement (but not less than 5), and (B) the sum of (w) the base salary for the 12-month period ended on the preceding December 31 (or for the 12-month period ending on December 31, 2002, if greater), (x) the amount of the Annual Bonus earned (paid or accrued or which should have been paid or accrued) for the 12-month period ended on the preceding December 31 (or for the 12-month period ended on December 31, 2002, if greater), (y) the non-accountable expense allowance provided for under the agreement for the 12-month period ended on the preceding December 31, and (z) the amount of the New Business Bonus earned (paid or accrued or which should have been paid or accrued) for the 12-month period ended on the preceding December 31 (or for the 12-month period ending on December 31 during the agreement in which Mr. Madden received the greatest New Business Bonus, if greater). Mr. Madden’s employment agreement contains other customary provisions, including provisions regarding expense reimbursement, confidentiality, solicitation and competition. 
+13 
+For 2010 Fiscal Year, Mr. Madden earned (i) $686,940 in base salary; (ii) $200,000 in non-accountable expense allowance; (iii) a bonus of $2,608,819, representing 2% of the Company’s earnings before interest, tax, depreciation and amortization; (iv) a bonus of $5,627,484, earned based on 2.5% of the Company’s new business; and (v) a bonus of $368,088, based on 10% of Royalty/Licensing income over $2,000,000. As an Annual Option, on May 28, 2010, Mr. Madden received an option to purchase 75,000 shares of Common Stock, pursuant to the Company’s 2006 Stock Incentive Plan, as amended (the “2006 Plan”), at an exercise price of $34.49 per share. The option vests in equal installments of 18,750 shares on each of August 28, 2010, November 28, 2010, February 28, 2011 and May 28, 2011. 
+On January 11, 2010, Mr. Madden received a grant of 54,600 shares of the Company’s Common Stock, subject to certain restrictions (such number of shares is adjusted for an April 30, 2010 three-for-two stock split effected as a stock dividend), under the Company’s 2006 Plan. The restricted Common Stock will vest on the third anniversary of the grant date, January 11, 2013. 
+On June 25, 2007, the Company made a loan to Steven Madden, its Creative and Design Chief and a principal stockholder of the Company, in the amount of $3,000,000, in order for Mr. Madden to exercise a stock option, which was due to expire, and hold the underlying Common Stock. Mr. Madden executed a promissory note in favor of the Company, which is secured by a pledge of 210,000 shares of the Company’s Common Stock beneficially owned by Mr. Madden. There have been successive amendments to the note, the most recent of which occurred on April 6, 2009, at which time the note was amended and restated to (i) extend the maturity date to the earlier of the date that Mr. Madden ceases to be employed by the Company and June 30, 2015 (the “Maturity Date”), and (ii) reflect the rate of interest as 8% per annum for the period from June 25, 2007 until April 6, 2010, and 6% per annum for the period from April 7, 2010 until the Maturity Date. As of December 31, 2010, interest in the amount of $849,186 has accrued on the note. Mr. Madden is the brother of John L. Madden, who has been a director of the Company since the Company’s inception in 1990. 
+Review, Approval or Ratification of Transactions with Related Persons 
+The Company’s written Conduct Code and Employee Handbook prohibit all conflicts of interest. Under the Conduct Code, conflicts of interest occur when private or family interests interfere in any way, or even appear to interfere, with the interests of the Company. The Company’s prohibition on conflicts of interest under the Conduct Code includes any related person transaction. 
+Related person transactions must be approved by the Board, or by a committee of the Board consisting solely of independent directors, who will approve the transaction only if they determine that it is in the best interests of the Company. In considering the transaction, the Board or committee will consider all relevant factors, including, as applicable, (i) the Company’s business rationale for entering into the transaction; (ii) the alternatives to entering into a related person transaction; (iii) whether the transaction is on terms comparable to those available to third parties or, in the case of employment relationships, to employees generally; (iv) the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and (v) the overall fairness of the transaction to the Company. 
+The Company has multiple processes for reporting conflicts of interests, including related person transactions. Under the Conduct Code, all employees are required to report any actual or apparent conflict of interest, or potential conflict of interest, to management. The Chief Financial Officer distributes a questionnaire to the Company’s executive officers and management personnel on a quarterly basis and distributes a questionnaire to the members of the Board of Directors on an annual basis requesting certain information regarding, among other things, their immediate family members, employment and beneficial ownership interests, which information is then reviewed for any conflicts of interest under the Conduct Code. 
+The Board of Directors, the Audit Committee and the Disclosure Committee, which is comprised of management personnel, discuss the related party transactions, specifically, and in connection with the regular review processes attendant to the Company’s periodic filings, including related party transaction disclosures. 
+14 
+If a director is a party to or in some manner involved in a transaction involving the Company, he will be recused from all discussions and decisions about the transaction. The transaction must be approved in advance whenever practicable, and if not practicable, must be ratified as promptly as practicable.

raw/filings/0000913241/2010/0001019056-11-000275/filing_metadata.csv

@@ -0,0 +1,2 @@
+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2011-02-28,2010-12-31,2011-02-28T17:44:30.000Z,0001019056-11-000275,smadden_10k10.htm,FORM 10-K,2333324,0,0,https://www.sec.gov/Archives/edgar/data/913241/000101905611000275/smadden_10k10.htm,https://www.sec.gov/Archives/edgar/data/913241/000101905611000275/,2010,2010,1

raw/filings/0000913241/2010/0001019056-11-000275/item1.txt

@@ -0,0 +1,103 @@
+ITEM 1 
+BUSINESS 
+Overview 
+Steven Madden, Ltd. and its subsidiaries (collectively, the “Company”) design, source, market and sell fashion-forward footwear for women, men and children. In addition, we design, source, market and sell name brand and private label fashion handbags and accessories. We distribute products through our retail stores, our e-commerce website, department stores, specialty stores, luxury retailers, national chains and mass merchants throughout the United States and through special distribution arrangements in Asia, Canada, Europe, the Middle East, Mexico, Australia, Central and South America and India. Our product line consists of a broad range of updated styles designed to establish or capitalize on market trends, complemented by core products. We have established a reputation for design creativity and offering popular styles and quality products at affordable price points. 
+Fiscal year 2010 was a record year for the Company. Our consolidated net sales for 2010 increased to a record $635.4 million from $503.6 million achieved in 2009. Our gross margin increased in fiscal year 2010 to 43.4%, 50 basis points greater than the 42.9% achieved in 2009. Net income increased 51% in 2010 to a record $75.7 million from $50.1 million in 2009. Diluted earnings per share for the year ended December 31, 2010 increased 47% to a record $2.68 per share on 28,295,000 diluted weighted average shares outstanding compared to $1.82 per share on 27,485,000 diluted weighted average shares outstanding in 2009. Net cash provided by operating activities increased to a record $86.9 million in 2010 compared to $64.3 million in 2009. 
+On January 7, 2010, the Company expanded its licensing activities by entering into an agreement to license the Steve Madden® and Steven by Steve Madden® trademarks for the design, manufacture and worldwide distribution of women’s fashion jewelry. The new women’s fashion jewelry line, which initially shipped in the third quarter 2010, joins our existing licenses for women’s fashion apparel, cold weather accessories, sunglasses, eyewear, outerwear, bedding and hosiery offerings. Our goal is to evolve Steve Madden® into a global lifestyle brand and expand the Company’s presence beyond footwear and accessories. We believe this new jewelry line marks a very logical extension of the Company’s brands. 
+1 
+In fiscal 2010, we also expanded our brand portfolio through two transactions. On February 10, 2010, we acquired all of the outstanding shares of stock of privately held Big Buddha, Inc. (“Big Buddha”) from its sole stockholder (“Seller”). Founded in 2003, Big Buddha designs and markets fashion-forward handbags to specialty retailers and better department stores. We believe that Big Buddha is a strategic fit for our Company. The acquisition was completed for consideration of $11.1 million in cash, net of cash acquired, plus contingent payments pursuant to an earn-out agreement with the Seller, who continues to manage the business as an employee of the Company. See Note B to our Consolidated Financial Statements for additional information relating to the Big Buddha acquisition. 
+On October 5, 2010, pursuant to a Restructuring Agreement between the Company and Betsey Johnson LLC (“Betsey Johnson”), the Company acquired all right, title and interest in substantially all of the intellectual property of Betsey Johnson, including, among other things, the Betsey Johnson® and Betseyville® trademarks, and certain intellectual property licenses and other contracts, including the right to receive royalties and other income with respect thereto (the “Betsey Johnson Assets”). Management believes that Betsey Johnson® is a well recognized brand that offers meaningful growth opportunity for our business. Prior to its entry into the Restructuring Agreement, Betsey Johnson had licensed to the Company the right to use the Betsey Johnson® and Betseyville® trademarks in connection with the sale and marketing of handbags, small leather goods, belts and umbrellas. The acquisition of the Betsey Johnson Assets was the culmination of a series of transactions that began in August 2010. First, in August 2010, the Company purchased from various members of a loan syndicate their respective participations in a term loan to Betsey Johnson in the aggregate outstanding principal amount of $48.750 million (the “Loan”) made by the syndicate lenders to Betsey Johnson. The Company paid the syndicate lenders an aggregate purchase price of $29.217 million, including transaction costs, for their participations in the Loan. The Loan was secured by a first priority security interest in substantially all of the assets of Betsey Johnson and was in default on the date of purchase. On October 5, 2010, the Company entered into the Restructuring Agreement with Betsey Johnson, pursuant to which, in consideration of the elimination of all amounts owed with respect to the Loan, the Company acquired the Betsey Johnson Assets. The Company made a new secured term loan to Betsey Johnson on October 5, 2010 in the principal amount of $3 million, which accrues interest at the rate of 8% per annum and becomes due on December 31, 2015. The new term loan is secured by a first priority security interest in substantially all of the remaining properties and assets of Betsey Johnson. See Notes B and F to our Consolidated Financial Statements for additional information relating to the Loan, the new term loan to Betsey Johnson, and the acquisition of the Betsey Johnson Assets. 
+On March 24, 2010, the Board of Directors declared a 3-for-2 stock split of the Company’s outstanding shares of common stock, effected in the form of a stock dividend on the Company’s outstanding common stock. Stockholders of record at the close of business on April 20, 2010 received one additional share of Steven Madden Ltd. common stock for every two shares of common stock owned on this date. The additional shares were distributed on May 3, 2010. All share and per share data provided herein gives effect to this stock split, applied retroactively. 
+Steven Madden, Ltd. was incorporated as a New York corporation on July 9, 1990 and reincorporated under the same name in Delaware in November 1998. We completed our initial public offering in December 1993 and our shares of common stock, $.0001 par value per share, currently trade on the NASDAQ Global Select Market under the symbol “SHOO”. 
+We maintain our principal executive offices at 52-16 Barnett Avenue, Long Island City, NY 11104 and our telephone number is (718) 446-1800. 
+Our website is http://www.stevemadden.com. We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports and information with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). We make these reports, any amendments to such reports, and our proxy statements for our stockholders’ meetings available free of charge, on our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. We will provide paper copies of such filings free of charge upon request. The public may read and copy any materials filed by us with the SEC at the SEC’s Public Reference Room at 100 R Street, NE, Washington, D.C. 20549. The public may also obtain information on the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding us, which is available at http://www.sec.gov. 
+2 
+Product Distribution Segments 
+Our business is comprised of five distinct segments (Wholesale Footwear, Wholesale Accessories, Retail, First Cost and Licensing). See Note O to our Consolidated Financial Statements for additional information relating to our five operating segments. 
+Our Wholesale Footwear segment is comprised of the following brands: Steve Madden Women’s, Madden Girl, Steve Madden Men’s, Steven, l.e.i. (under license), Elizabeth and James (under license), Stevies, Big Buddha Shoes, Madden and includes our International business. Our Wholesale Accessories segment includes Big Buddha, Betseyville, Betsey Johnson, Steve Madden, Steven by Steve Madden and, through license agreements, Daisy Fuentes® and Olsenboye® accessories brands. Steven Madden Retail, Inc., our wholly owned retail subsidiary, operates Steve Madden and Steven retail stores as well as our e-commerce website. There are also three stores licensed to a third party. The First Cost segment represents activities of a subsidiary that earns commissions for serving as a buying agent for footwear products under private labels and licensed brands (such as Candie’s® and Olsenboye®) for many of the country’s large mass-market merchandisers, shoe chains and other off-price retailers. In the Licensing segment, the Company licenses its Steve Madden® and Steven by Steve Madden® marks for use in connection with the manufacture, marketing and sale of cold weather accessories, sunglasses, eyewear, outerwear, bedding, hosiery, women’s fashion apparel and jewelry. We license our Big Buddha brand for use in connection with the manufacture, marketing and sale of sunglasses and cold weather accessories. In addition, we license our recently acquired Betsey Johnson® and Betseyville® marks for use in connection with the manufacture, marketing and sale of apparel, jewelry, lingerie, swimwear, eyewear, watches and outerwear. 
+Wholesale Footwear Segment 
+Steve Madden Women’s. We design, source and market our Steve Madden brand to major department stores, mid-tier department stores, better specialty stores and independently owned boutiques throughout the United States. The Steve Madden brand has become a leading life-style brand in the fashion conscious marketplace. To serve our customers (primarily women ages 16 to 35), Steve Madden Women’s creates and markets fashion forward footwear designed to appeal to customers seeking exciting, new footwear designs at affordable prices. New products for Steve Madden Women’s are test marketed at Company-owned retail stores. Typically, within a few days, we can determine if the test product appeals to our customers. This enables us to use our flexible sourcing model to rapidly respond to changing trends and customer preferences, which we believe is essential for success in the fashion industry. 
+Madden Girl. We design, source and market a full collection of directional young women’s shoes under the Madden Girl brand. Madden Girl is geared for young women ages 13 to 20, and is an “opening price point” brand currently sold at major department stores, mid-tier retailers and specialty stores. 
+Steve Madden Men’s. We design, source and market a full collection of directional men’s shoes and fashion forward athletic shoes under the Steve Madden Men’s brand to major department stores, mid-tier department stores, better specialty stores and independent shoe stores throughout the United States as well as in our retail stores. Price points for Steve Madden Men’s products range from $70 to $100 at retail, targeted at men ages 20 to 40 years old. Steve Madden Men’s maintains open stock inventory positions in select patterns to serve the replenishment programs of its wholesale customers. 
+Steven. We design, source and market women’s fashion footwear under the Steven® trademark through major department and better footwear specialty stores throughout the United States as well as in our retail stores. Priced a tier above the Steve Madden brand, Steven products are designed to appeal principally to fashion conscious women, ages 25 to 45, who shop at department stores and footwear boutiques. 
+3 
+l.e.i. On July 1, 2008, we entered into a license agreement with Jones Investment Co. Inc., under which we have the right to use the l.e.i. trademark in connection with the sale and marketing of footwear exclusively to Wal-Mart. 
+Elizabeth and James. On September 10, 2008, we entered into a license agreement with Dualstar Entertainment Group, LLC, under which we have the right to use the Elizabeth and James® trademark in connection with the sale and marketing of footwear. The Elizabeth and James brand, which was created by Mary-Kate and Ashley Olsen, is distributed through luxury retailers to women ages 25 to 36 years with average retail price points from $200 to $350 for shoes and from $350 to $500 for boots. 
+Stevies and Steve Madden Kids. Our Stevies and Steve Madden Kids brands are designed, sourced and marketed for young girls, ages six to twelve, via department stores, specialty stores and independent boutiques throughout the United States. 
+Big Buddha Shoes . On February 10, 2010, we acquired all of the outstanding shares of stock of privately held Big Buddha from its sole stockholder. Our new Big Buddha Shoe brand, which began shipping in the third quarter of 2010, is currently sold at department stores and specialty stores. 
+Madden. Our new Madden brand, which began shipping in the first quarter of 2010, includes a full collection of men’s shoes. Madden is an “opening price point” brand that is currently sold at major department stores, mid-tier retailers and specialty stores. 
+International Division. Prior to 2009, our international business (the “International Division”) operated under the “first cost” model and, thus, the revenues derived from our international business were included in Commissions and Licensing Fees in the Consolidated Statements of Income of our Financial Statements. In order to improve operating efficiencies, and to give our international partners better visibility in the process, as of January 2009, we have changed the operating model for our International Division to the “wholesale” model. Our International Division ships products to Asia, Canada, Europe, the Middle East, Mexico, Australia, Central and South America and India. 
+Wholesale Accessories Segment 
+Our Wholesale Accessories segment designs, sources and markets name brand (including Daisy Fuentes® and Olsenboye® each under license and our Steve Madden®, Steven by Steve Madden®, Betsey Johnson®, Bettseyville® and Big Buddha®, brands) and private label fashion handbags and accessories to major department stores, mid-tier department stores, value price retailers and independent stores throughout the United States. 
+Retail Segment 
+As of December 31, 2010, the Company, through our wholly owned subsidiary Steven Madden Retail, Inc., owned and operated 84 retail stores including 79 stores under the Steve Madden name, three under the Steven name, one outlet store and our e-commerce website (at www.stevemadden.com). In 2010, we opened three new stores, closed eight under-performing stores and remodeled five existing stores. Steve Madden stores are located in major shopping malls and in urban street locations across the United States, primarily in New York, California and Florida. In 2010, our retail stores generated annual sales in excess of $742 per square foot compared to $640 per square foot generated in 2009. Comparative store sales (sales of those stores, including the e-commerce website, that were open for all of 2010 and 2009) increased 12.7% in fiscal year 2010 compared to fiscal year 2009. 
+We believe that the Retail segment will continue to enhance overall sales and profitability while increasing recognition for the Steve Madden brand. Additionally, our retail stores enable us to evaluate the appeal of new products and designs to our customers and respond accordingly, which, in turn, strengthens the product development efforts of the Steve Madden Wholesale segments. We expect to open between six and nine new retail stores and close between three and five under-performing stores during 2011. 
+4 
+First Cost Segment 
+The First Cost segment represents activities of a wholly-owned subsidiary of the Company that earns commissions for serving as a buying agent for footwear products under private labels and licensed brands (such as Candie’s® and Olsenboye®) for many of the country’s large mass-market merchandisers, shoe chains and other mid-tier retailers. As a buying agent, we utilize our expertise and our relationships with shoe manufacturers to facilitate the production of private label shoes to our customers’ specifications. We believe that by operating in the private label, mass merchandising market, we are able to maximize additional non-branded sales opportunities. This leverages our overall sourcing and design capabilities. Currently, our First Cost segment serves as a buying agent for the procurement of women’s, men’s and children’s footwear for large retailers, including Kohl’s, J.C. Penney and Sears. The First Cost segment receives buying agent’s commissions from its customers. In addition, we have leveraged the strength of our Steve Madden brands and product designs resulting in a partial recovery of our design, product and development costs from our suppliers. 
+Licensing Segment 
+We license our Steve Madden® and Steven by Steve Madden® trademarks for use in connection with the manufacture, marketing and sale of cold weather accessories, sunglasses, eyewear, outerwear, bedding, hosiery, women’s fashion apparel and jewelry. We license our Big Buddha® brand for use in connection with the manufacture, marketing and sale of sunglasses and cold weather accessories. In addition, we license the Betsey Johnson® and Betseyville® trademarks for use in connection with the manufacture, marketing and sale of apparel, jewelry, lingerie, swimwear, eyewear, watches and outerwear. Most of our license agreements require the licensee to pay us a royalty based on actual net sales, a minimum royalty in the event that specified net sales targets are not achieved and a percentage of sales for advertising the brand. 
+See Note O to our Consolidated Financial Statements for additional information relating to our five operating segments. 
+Product Design and Development 
+We have established a reputation for our creative designs, marketing and trendy products at affordable price points. We believe that our future success will substantially depend on our ability to continue to anticipate and react to changing consumer demands in a timely manner. To meet this objective, we have developed what we believe is an unparalleled design process that allows us to recognize and respond quickly to changing consumer demands. Our design team strives to create designs which it believes fit our image, reflect current or future trends and can be manufactured in a timely and cost-effective manner. Once the initial design is complete, a prototype is developed, usually in our Long Island City facility, which is evaluated and refined prior to the commencement of initial production. Most new products are then tested in selected Steve Madden retail stores. Based on these tests, among other things, management selects the products that are then offered for wholesale and retail distribution nationwide. We believe that our design and testing process and flexible sourcing models provide us with a significant competitive advantage allowing us to mitigate the risk of incurring costs associated with the production and distribution of less desirable designs. 
+Product Sourcing and Distribution 
+We source each of our product lines separately based on the individual design, style and quality specifications of the products in such product lines. We do not own or operate manufacturing facilities; rather, we source our products through agents and our own sourcing office with independently owned manufacturers in China, Mexico, Brazil, India, The Netherlands, Korea and Italy. We have established relationships with a number of manufacturers and agents in each of these countries. Although we have not entered into any long-term manufacturing or supply contracts, we believe that a sufficient number of alternative sources exist for the manufacture of our products. We continually monitor the availability of the principal materials used in our footwear, which are available from a number of sources in various parts of the world. We track inventory flow on a regular basis, monitor sell-through data and incorporate input on product demand from wholesale customers. We use retailers’ feedback to adjust the production or manufacture of new products on a timely basis, which helps reduce the close out of slow-moving products. 
+5 
+We distribute our products from three third-party distribution warehouse centers, two located in California and one located in New Jersey. By utilizing distribution facilities specializing in distribution fulfillment to effect distribution to certain wholesale accounts, Steve Madden retail stores and Internet customers, we believe that our customers are served more promptly and efficiently. 
+Customers 
+Our wholesale customers consist principally of better department stores, mid-tier department stores, specialty stores, including independent boutiques, and catalog retailers. These customers, which include DSW, Macy’s, Nordstrom, Dillard’s, Famous Footwear and Lord & Taylor, generate approximately 73% of our wholesale revenue. For the year ended December 31, 2010, DSW accounted for approximately 12% of our wholesale net sales and 10% of our total net sales. 
+Distribution Channels 
+United States 
+We sell our products principally through department stores, specialty stores, luxury retailers, national chains and mass merchants and through our Company-owned retail stores. For the year ended December 31, 2010, our Retail segment and our two Wholesale segments generated net sales of approximately $134.3 million and $466.3 million, or 22% and 78% of our total domestic net sales, respectively. Each of these distribution channels is described below. 
+Steve Madden and Steven Retail Stores. As of December 31, 2010, we operated 79 company-owned retail stores under the Steve Madden name, three under the Steven name, one outlet store and our e-commerce website (at www.stevemadden.com). We believe that our retail stores will continue to enhance overall sales, profitability, and our ability to react to changing consumer trends. Our stores are also a marketing tool that allows us to strengthen brand recognition and to showcase selected items from our full line of branded and licensed products. Furthermore, our retail stores provide us with venues through which to test and introduce new products, designs and merchandising strategies. Specifically, we often test new designs at our Steve Madden retail stores before scheduling them for mass production and wholesale distribution. In addition to these test marketing benefits, we have been able to leverage sales information gathered at Steve Madden retail stores to assist our wholesale customers in order placement and inventory management. 
+A typical Steve Madden store is approximately 1,400 to 1,600 square feet and is located in a mall or street location that we expect will attract the highest concentration of our core demographic, style-conscious customer base. The Steven stores, which are generally the same size as our Steve Madden stores, have a more sophisticated design and format styled to appeal to a more mature target audience. In addition to carefully analyzing mall demographics and locations, we set profitability guidelines for each potential store site. Specifically, we target well trafficked sites at which the demographics fit our consumer profile and seek new locations where the projected fixed annual rent expense stays within our guidelines. By setting these guidelines, we seek to identify stores that will contribute to our overall profitability both in the near and longer terms. 
+Department Stores. We currently sell to over 2,600 doors of 15 department stores throughout the United States. Our major accounts include Macy’s, Nordstrom, Dillard’s and Lord & Taylor. 
+We provide merchandising support to our department store customers which includes in-store fixtures and signage, supervision of displays and merchandising of our various product lines. Our wholesale merchandising effort includes the creation of in-store concept shops, where a broader collection of our branded products are showcased. These in-store concept shops create an environment that is consistent with our image and are designed to enable the retailer to display and sell a greater volume of our products per square foot of retail space. In addition, these in-store concept shops encourage longer term commitment by the retailer to our products and enhance consumer brand awareness. 
+6 
+In addition to merchandising support, our key account executives maintain weekly communications with their respective accounts to guide them in placing orders and to assist them in managing inventory, assortment and retail sales. We leverage our sell-through data gathered at our retail stores to assist department stores in allocating their open-to-buy dollars to the most popular styles in the product line and to phase out styles with weaker sell-throughs, which reduces markdown exposure at season’s end. 
+Specialty Stores/Catalog Sales. We currently sell to specialty store locations throughout the United States. Our major specialty store accounts include DSW, Famous Footwear and Journeys. We offer our specialty store accounts the same merchandising, sell-through and inventory tracking support offered to our department store accounts. Sales of our products are also made through various catalogs, such as Victoria’s Secret. 
+Internet Sales. We operate an Internet website, www.stevemadden.com, where customers can purchase numerous styles of our Steve Madden Women’s, Steven and Madden Men’s as well as selected styles of Madden Girl, footwear and accessory products. 
+International 
+Our products are available in many countries and territories worldwide via several retail selling and distribution agreements. Under the terms of the various agreements, the distributors and retailers are generally required to open a minimum number of stores each year and to pay us a fee for each pair of footwear purchased and an additional sales royalty as a percentage of sales or a predetermined amount per unit of sale. Distributors are required to purchase a specified minimum number of products within specified periods. The agreements we have in place expire at various times through December 31, 2031 and include automatic renewals at the distributors’ option if certain conditions are met. These agreements are exclusive in their specific territories, which include Asia, Canada, Europe, the Middle East, Mexico, Australia, Central and South America and India. 
+Competition 
+The fashion industry is highly competitive. We compete with specialty shoe and accessory companies as well as companies with diversified footwear product lines, such as Nine West, Skechers, Kenneth Cole, Nike, Guess and Jessica Simpson. Our competitors may have greater financial and other resources than we do. We believe effective advertising and marketing, fashionable styling, high quality, value and fast manufacturing turnaround are the most important competitive factors and intend to continue to employ these elements as we develop our products. However, we cannot be certain that we will be able to compete successfully against our current and future competitors, or that competitive pressures will not have a material adverse effect on our business, financial condition and results of operations. 
+Marketing and Sales 
+We have focused on creating an integrated brand building program to establish Steve Madden as a leading designer of fashion footwear for style-conscious young women and men. Principal marketing activities include product placements in lifestyle and fashion magazines, personal appearances by our founder and Creative and Design Chief, Steve Madden, and in-store promotions. We continue to promote our e-commerce website (www.stevemadden.com) where customers can purchase products under the brands Steve Madden, Steven, Steve Madden Men’s and selected styles of Madden Girl footwear, as well as view exclusive content, participate in contests and “live chat” with customer service representatives. 
+7 
+Management Information Systems (MIS) Operations 
+Sophisticated information systems are essential to our ability to maintain our competitive position and to support continued growth. We operate on a dual AS/400 system which provides system support for all aspects of our business, including manufacturing purchase orders, customer purchase orders, order allocations, invoicing, accounts receivable management, quick response replenishment, point-of-sale support and financial and management reporting functions. We have a PKMS bar coded warehousing system that is integrated with the wholesale system in order to provide accurate inventory positions and quick response size replenishment for our customers. In addition, we have installed an electronic data interchange (“EDI”) system which provides a computer link between us and certain wholesale customers that enables both the customer and us to monitor purchases, shipments and invoicing. The EDI system also improves our ability to respond to customer inventory requirements on a weekly basis. 
+Intellectual Property 
+Trademarks 
+We own numerous trademarks, including, among others: 
+· 
+Steve Madden® 
+· 
+Madden Girl® 
+· 
+Steven® 
+· 
+Steven by Steve Madden® 
+· 
+Stevies® 
+· 
+Big Buddha® 
+· 
+Betsey Johnson® 
+· 
+Betseyville® 
+· 
+PEACE LOVE SHOES® (logo and various trademarks) 
+We consider each of the above marks to be among our most valuable assets and have registered these marks in numerous countries and in numerous International Classes. From time to time we adopt new trademarks in connection with the marketing of new product lines. We believe that our trademarks have significant value and are important for purposes of identifying the Company, the marketing of our products and the products of our licensees, distinguishing them from the products of others. We act aggressively to register and vigorously to protect our trademarks against infringement. There can be no assurance, however, that we will be able to effectively obtain rights to our marks throughout all of the countries of the world. Moreover, no assurance can be given that others will not assert rights in or ownership of, our marks and other proprietary rights or that we will be able to resolve any such conflicts successfully. Our failure to protect such rights from unlawful and improper appropriation may have a material adverse effect on our business, financial condition, results of operations and liquidity. 
+Trademark Licensing 
+We believe that expanding the Company’s presence beyond footwear and accessories is a logical extension of the Company’s brands. As of December 31, 2010, we license our Steve Madden® and Steven by Steve Madden® trademarks for use in connection with the manufacture, marketing and sale of cold weather accessories, sunglasses, eyewear, outerwear, bedding, hosiery, women’s fashion apparel and jewelry. We license our Big Buddha brand for use in connection with the manufacture, marketing and sale of sunglasses and cold weather accessories. In addition, we license the Betsey Johnson® and Betseyville® trademarks for use in connection with the manufacture, marketing and sale of apparel, jewelry, lingerie, swimwear, eyewear, watches and outerwear. 
+8 
+In connection with our October 5, 2010 acquisition of substantially all of the intellectual property of Betsey Johnson LLC, the Company entered into intellectual property license agreements with Betsey Johnson LLC, pursuant to which the Company granted Betsey Johnson LLC a limited, exclusive license and right to use the Betsey Johnson Ò and Betsey Johnson Collection TM trademarks with respect to specified items of women’s apparel sold in retail stores owned and operated by Betsey Johnson, LLC in the United States, London, England and Canada, in wholesale sales in the United States and in certain other jurisdictions outside the United States, as well as a right and license to sell, via Betsey Johnson LLC’s e-commerce websites and in Betsey Johnson-branded retail stores located in Canada, London, England and the United States, products featuring designs created by the Company or manufactured under license to third parties by the Company. Under these license arrangements, the Company is entitled to royalty payments based on net sales and certain guaranteed minimum royalty payments. The agreement under which we license the Betsey Johnson® and Betsey Johnson Collection™ marks to Betsey Johnson is due to expire on August 30, 2013 and will be automatically extended for successive four-year periods if certain conditions are met. The agreement under which Betsey Johnson was granted a right and license to sell product featuring designs created by the Company or manufactured under license to third parties by the Company is due to expire on October 5, 2011 and will be subject to automatic extensions for successive one year periods if certain condition are met. 
+Most of our out-going license agreements require the licensee to pay us a royalty based on actual net sales, a minimum royalty in the event that specified net sales targets are not achieved and a percentage of sales for advertising the brand. See Notes A12 and N4 to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional disclosure regarding these licensing arrangements. 
+In addition to out-licenses of our trademarks, we also license from third parties marks used in connection with certain of our product lines. We have licenses from Dualstar Entertainment Group, LLC under which the Company has the right to use the Olsenboye® trademark in connection with the sale and marketing of footwear and accessories and the Elizabeth and James® trademark in connection with the sale and marketing of footwear. The term of these licenses expire on December 31, 2011 and March 31, 2012, respectively. In addition, we hold licenses from Jones Investment Co. Inc. under which the Company has the right to use the GLO Jeans® trademark in connection with the sale and marketing of women’s footwear exclusively to K-Mart and the l.e.i.® trademark in connection with the marketing and sale of women’s footwear exclusively to Wal-Mart. The term of the licenses from Jones Investment Co, Inc. expire on December 31, 2012 and December 31, 2011, respectively. We also hold a license from Dafu Licensing, Inc. to design, manufacture and distribute handbags and belts and related accessories under the DF Daisy Fuentes® and the Daisy Fuentes® brands. The term of our license with Dafu Licensing, Inc. expires on December 31, 2012. Substantially all of these licensing agreements require us to make royalty and advertising payments to the licensor equal to a percentage of our net sales or a minimum royalty and advertising payment in the event that specified net sales targets are not achieved. 
+Employees 
+On February 1, 2011, we employed approximately 1,440 employees, of whom approximately 780 work on a full-time basis and approximately 660 work on a part-time basis, with most of the part-time employees being employed in the Retail segment. All of our employees are located in the United States with the exception of approximately 30 employees located in Hong Kong and China who perform quality control and administrative duties. None of our employees are represented by a union. Our management considers relations with our employees to be good. The Company has never experienced a material interruption of its operations due to a labor dispute. 
+Seasonality 
+Historically, our merchandising businesses have experienced holiday retail seasonality. In addition to seasonal fluctuations, our operating results fluctuate from quarter to quarter as a result of the timing of holidays, weather, the timing of larger shipments of footwear, market acceptance of our products, product mix, pricing and presentation of the products offered and sold, the hiring and training of additional personnel, inventory write downs for obsolescence, the cost of materials, the product mix between wholesale, retail and licensing businesses, the incurrence of other operating costs and factors beyond our control, such as general economic conditions and actions of competitors. 
+9 
+Backlog 
+We had unfilled wholesale customer orders of $161.8 million and $132.6 million, as of February 1, 2011 and 2010, respectively. Our backlog at a particular time is affected by a number of factors, including seasonality, timing of market weeks and wholesale customer purchases of our core basic products through our open stock program. Accordingly, a comparison of backlog from period to period may not be indicative of eventual shipments.

raw/filings/0000913241/2010/0001019056-11-000275/item13.txt

@@ -0,0 +1,3 @@
+ITEM 13 
+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 
+The information required to be furnished pursuant to this Item will be set forth in our proxy statement for the 2011 Annual Meeting of Stockholders, and is incorporated herein by reference.

raw/filings/0000913241/2010/0001019056-11-000275/item9a.txt

@@ -0,0 +1,27 @@
+ITEM 9A 
+CONTROLS AND PROCEDURES 
+Disclosure Controls and Procedures 
+As required by Rule 13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal year covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of the end of the fiscal year covered by this Annual Report on Form 10-K. 
+Management’s Annual Report on Internal Control Over Financial Reporting 
+Management of Steven Madden, Ltd. is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). 
+Our internal control over financial reporting is a process designed by, or under the supervision of, our principal executive officer and principal financial officer, and effected by the board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (1) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. 
+Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 
+With the participation of the Chief Executive Officer and the Chief Financial Officer, our management conducted an evaluation of the effectiveness, as of the end of our fiscal year ended December 31, 2010, of our internal control over financial reporting based on the framework and criteria established in Internal Control–Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation our management has concluded that, as of December 31, 2010, our internal control over financial reporting was effective. 
+30 
+The independent registered public accounting firm that audited the financial statements included in this Annual Report on Form 10-K has issued an attestation report on our internal control over financial reporting. 
+Attestation Report of our Independent Registered Public Accounting Firm 
+Our Independent Registered Public Accounting Firm, EisnerAmper LLP, has audited and issued a report on our internal control over financial reporting. The report of EisnerAmper LLP appears below. 
+To the Board of Directors and Stockholders 
+Steven Madden, Ltd. and subsidiaries 
+We have audited Steven Madden, Ltd. and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. 
+We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 
+A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 
+Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 
+In our opinion, Steven Madden, Ltd. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control - Integrated Framework issued by COSO. 
+31 
+We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Steven Madden, Ltd. and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2010, and our report dated February 28, 2011 expressed an unqualified opinion thereon. 
+/S/ EisnerAmper LLP 
+New York, New York 
+February 28, 2011 
+Changes in Internal Control Over Financial Reporting 
+There was no change in our internal control over financial reporting, identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the Exchange Act, that occurred during the fiscal quarter ended December 31, 2010, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

raw/filings/0000913241/2010/0001019056-11-000275/rpt_disclosure.txt

@@ -0,0 +1,125 @@
+Certain Relationships and Related Party Transactions 
+In January 2004, the Company entered into an agreement with John L. Madden,
+one of the Company’s directors, and JLM Consultants, a company wholly-owned by John L. Madden. Under this agreement,
+which was amended in 2005, Mr. Madden agreed to provide consulting services to the Company with respect to the development of international
+sales of the Company. This agreement expired by its terms on December 31, 2005, but Mr. Madden continues to provide
+consulting services and the Company continues to make payments to JLM Consultants consistent with those that would have been required
+under the expired consulting agreement. In accordance with the foregoing, for the 2011 Fiscal Year, JLM Consultants
+received the following from the Company: (a) a commission equal to 2.5% on international sales, (b) a monthly draw in
+the amount of $25,000 with recourse against such commissions, (c) a $1,000 per month travel allowance and (d) $3,859.46 per month
+toward health insurance premiums for health insurance coverage for John L. Madden. Pursuant to this arrangement, JLM
+Consultants received a total of $1,552,227.31 from the Company in the 2011 Fiscal Year. 
+Effective as of July 1, 2005, the Company amended and restated its employment
+agreement with the Company’s founder and Creative and Design Chief, Steven Madden, pursuant to which Mr. Madden agreed to
+continue to serve as the Company’s Creative and Design Chief. The term of Mr. Madden’s employment under
+his employment agreement commenced on July 1, 2005 and, in accordance with the amendment of the agreement effective December 31,
+2011, will end on December 31, 2023. Prior to this recent amendment, the agreement had provided for an annual salary
+of $600,000, with a 7% increase of base salary on a compound basis in each of the third, fifth, seventh and ninth years of the
+agreement. The agreement had also provided for an annual cash bonus in an amount equal to at least 2% of the Company’s
+EBITDA (the “Annual Bonus”) and an annual cash bonus in relation to “new business” (as defined in the agreement)
+in an amount equal to at least (i) 2.5% of new business gross direct revenues plus (ii) 10% of all license or other fee income
+above $2,000,000 (the “New Business Bonus”). The agreement, as amended, increases Mr. Madden’s annual
+base salary but eliminates the Annual Bonus and the New Business Bonus and provides that all cash bonuses subsequent to the 2011
+Fiscal Year will be at the sole discretion of the Company’s Board of Directors. Under the agreement, as amended,
+Mr. Madden’s annual base salary is fixed at $5,416,667 in 2012, $7,416,667 in 2013, $9,666,667 in 2014, $11,916,667 in 2015
+and $10,697,917 in 2016 and in each year thereafter through the end of the term of employment. In addition, the amended agreement
+entitles Mr. Madden to an annual life insurance premium reimbursement of up to $200,000. The amendment also eliminates
+an annual non-accountable expense allowance of $200,000 that had been previously provided to Mr. Madden under the agreement. 
+Pursuant to the amended agreement, as amended, on February 8, 2012,
+Mr. Madden was granted 975,371 restricted shares of Common Stock, valued at approximately $40 million, pursuant to the Company’s
+2006 Stock Incentive Plan, as amended (the “2006 Plan”). The restricted Common Stock will vest in equal
+annual installments over seven years commencing on December 31, 2017 through December 31, 2023, subject to Mr. Madden’s continued
+employment with the Company on each such vesting date. Further, under the agreement, as amended, Mr. Madden has the
+right, exercisable on certain specified dates in fiscal year 2012 only, to elect to further amend the agreement to receive an additional
+restricted stock award for a number of shares of Common Stock valued at $40,000,000 in consideration of a reduction in his annual
+base salary in years subsequent to 2012 as follows: $4,000,000 in 2013, $6,125,000 in 2014, $8,250,000 in 2015 and $7,026,042 in
+2016 and in each year thereafter through the end of the term of employment. In the event that Mr. Madden elects to receive
+an additional restricted stock award, the additional restricted shares of Common Stock issued to Mr. Madden will vest in equal
+annual installments over six years commencing on December 31, 2018 through December 31, 2023, subject to Mr. Madden’s continued
+employment with the Company on each such vesting date. Mr. Madden’s right to receive an additional restricted
+stock award is subject to the availability of shares under the 2006 Plan, or any other plan designated by the Board of Directors
+and approved by the Company’s stockholders. 
+Mr. Madden is also eligible to receive annually, on or about the date
+of the Company’s annual meeting of stockholders, an option grant (the “Annual Option”) to purchase a number of
+shares of Common Stock, with such number to be equal to the greater of (a) not less than 100% of the largest aggregate number of
+shares of Common Stock available upon the exercise of an option or options granted to any other continuing full-time employee of
+the Company during the preceding twelve-month period and (b) 100,000 shares of Common Stock; provided, however, that a grant to
+Mr. Madden in excess of 150% of the number of shares of Common Stock subject to options granted to such other continuing full-time
+employee would require stockholder approval. Any Annual Option granted to Mr. Madden would vest quarterly over a one-year
+period following the grant date and would be exercisable at a price equal to the closing price of the Company’s Common Stock
+on the grant date for a period of five years following the grant date. In addition to the Annual Option, the agreement,
+as amended, provides for a potential additional one-time stock option grant to purchase 500,000 shares of the Company’s
+Common Stock (the number of option shares to be subject to adjustment in the event of a future change in capital structure of the
+Company resulting from a stock split, reverse stock split or other transaction or event having similar effect) in the event that
+the Company achieves earnings per share, on a fully-diluted basis, equal to $3.00 in any fiscal year ending December 31, 2015 or
+after. If granted, the option would vest in equal annual installments of 20% over a five-year period and be exercisable
+for a period of seven years at a price equal to the closing price of the Company’s Common Stock on the date immediately preceding
+the grant date. 
+14 
+Table of Contents 
+In the event of Mr. Madden’s death, his employment agreement provides
+for the payment to Mr. Madden’s estate of his base salary for the 12-month period immediately subsequent to the date of his
+death. Further, in the event that Mr. Madden’s employment agreement is terminated due to Mr. Madden’s total
+disability (as defined in the agreement), “for cause” (as defined in the agreement) or due to Mr. Madden’s resignation,
+the Company is obligated to pay Mr. Madden the amount of compensation that is accrued and unpaid through the date of termination.
+In the event Mr. Madden’s employment agreement is terminated for any reason (other than “for cause” or due to
+his death, total disability or resignation), the Company is obligated to pay Mr. Madden, in installments, the balance of his base
+salary that would have been paid by the Company under the agreement for the full term of the agreement. If, during the
+period commencing 120 days prior to a “change of control” (as defined in the employment agreement) transaction and
+ending on the first anniversary of a change of control transaction, Mr. Madden’s employment is terminated by the Company
+other than for cause or by the resignation of Mr. Madden for “good reason” (as defined in the employment agreement),
+or if Mr. Madden resigns for good reason or without good reason within 30 days following a change of control transaction, all unvested
+options to purchase shares of Common Stock held by Mr. Madden will vest on the date of termination or resignation and Mr. Madden
+will be entitled to receive a lump sum cash payment equal to the amount of compensation that is accrued and unpaid through the
+date of termination plus $35 million. Mr. Madden’s employment agreement contains other customary provisions, including
+provisions regarding expense reimbursement, confidentiality, solicitation and competition. 
+For 2011 Fiscal Year, Mr. Madden earned (i) $709,133 in base salary;
+(ii) $200,000 in non-accountable expense allowance; (iii) a bonus of $2,984,665, representing 2% of the Company’s earnings
+before interest, tax, depreciation and amortization; (iv) a bonus of $7,252,094, earned based on 2.5% of the Company’s new
+business; and (v) a bonus of $748,823, based on 10% of Royalty/Licensing income over $2,000,000. As an Annual Option,
+on June 2, 2011, Mr. Madden was granted an option to purchase 150,000 shares of Common Stock, under the 2006 Plan having
+an exercise price of $35.62 per share. The option vests in equal installments of 37,500 shares on each of August
+27, 2011, November 27, 2011, February 27, 2012 and May 27, 2012. 
+On June 25, 2007, the Company made a loan to Steven Madden, its Creative
+and Design Chief and a principal stockholder of the Company, in the amount of $3,000,000, in order for Mr. Madden to satisfy a
+personal tax obligation resulting from the exercise of a stock option which was due to expire and to hold the underlying shares
+of Common Stock. Mr. Madden executed a promissory note in favor of the Company, which is secured by a pledge of 315,000
+shares of the Company’s Common Stock beneficially owned by Mr. Madden. There have been successive amendments to
+the note, the most recent of which occurred on January 3, 2012, at which time the note was amended and restated to extend the maturity
+date of the obligation to December 31, 2023 and eliminate accrual of interest after December 31, 2011; prior to the most recent
+amendment, the note had been accruing interest at the rate of 6% per annum. In addition, the amended and restated note
+provides that, commencing on December 31, 2014 and annually on each December 31 thereafter through the maturity date, one-tenth
+of the principal amount thereof, together with accrued interest, will be cancelled by the Company provided that Mr. Madden continues
+to be employed by the Company on each such December 31. Contemporaneously, the Company will release a number of pledged
+shares of Common Stock from the pledge generally correlating to the amount of indebtedness cancelled on such date. As
+of December 31, 2011, interest in the amount of $1,090,000 has accrued on the principal amount of the note. 
+Steven Madden is the brother of John L. Madden, who has been a director
+of the Company since the Company’s inception in 1990. 
+15 
+Table of Contents 
+Review, Approval or Ratification of Transactions with Related Persons 
+The Company’s written Conduct Code and Employee Handbook prohibit
+all conflicts of interest. Under the Conduct Code, conflicts of interest occur when private or family interests interfere
+in any way, or even appear to interfere, with the interests of the Company. The Company’s prohibition on conflicts
+of interest under the Conduct Code includes any related person transaction. 
+Related person transactions must be approved by the Board, or by a committee
+of the Board consisting solely of independent directors, who will approve the transaction only if they determine that it is in
+the best interests of the Company. In considering the transaction, the Board or committee will consider all relevant
+factors, including, as applicable, (i) the Company’s business rationale for entering into the transaction; (ii) the alternatives
+to entering into a related person transaction; (iii) whether the transaction is on terms comparable to those available to third
+parties or, in the case of employment relationships, to employees generally; (iv) the potential for the transaction to lead to
+an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts; and (v) the
+overall fairness of the transaction to the Company. 
+The Company has multiple processes for reporting conflicts of interests,
+including related person transactions. Under the Conduct Code, all employees are required to report any actual or apparent
+conflict of interest, or potential conflict of interest, to management. The Chief Financial Officer distributes a questionnaire
+to the Company’s executive officers and management personnel on a quarterly basis and distributes a questionnaire to the
+members of the Board of Directors on an annual basis requesting certain information regarding, among other things, their immediate
+family members, employment and beneficial ownership interests, which information is then reviewed for any conflicts of interest
+under the Conduct Code. 
+The Board of Directors, the Audit Committee and the Disclosure Committee,
+which is comprised of management personnel, discuss the related party transactions, specifically, and in connection with the regular
+review processes attendant to the Company’s periodic filings, including related party transaction disclosures. 
+If a director is a party to or in some manner involved in a transaction
+involving the Company, he will be recused from all discussions and decisions about the transaction. The transaction must be approved
+in advance whenever practicable, and if not practicable, must be ratified as promptly as practicable.