# Crocs, Inc.: Form 10-Q for the period ended Mar 31, 2015

- Company: [Crocs, Inc.](/companies/crox.md) (CIK 1334036)
- Form: 10-Q
- Filed: 2015-05-08
- Accepted by EDGAR: May 8, 2015, 14:28 ET
- Period: 2015-03-31
- Accession: 0001104659-15-036173
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1334036/000110465915036173/a15-7898_110q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1334036/000110465915036173/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2015-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2015-01-01 to 2015-03-31 | $262.2m | us-gaap:SalesRevenueNet |
| Cost of revenue | 3 months, 2015-01-01 to 2015-03-31 | $134.8m | us-gaap:CostOfGoodsSold |
| Gross profit | 3 months, 2015-01-01 to 2015-03-31 | $127.4m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2015-01-01 to 2015-03-31 | $126.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2015-01-01 to 2015-03-31 | −$2.4m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2015-01-01 to 2015-03-31 | $219.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2015-01-01 to 2015-03-31 | $295.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2015-01-01 to 2015-03-31 | −$2.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2015-01-01 to 2015-03-31 | −$0.08 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2015-01-01 to 2015-03-31 | −$0.08 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2015-01-01 to 2015-03-31 | 77,825,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2015-01-01 to 2015-03-31 | −$46.7m | us-gaap:NetCashProvidedByUsedInOperatingActivitiesContinuingOperations |
| Capital expenditure | 3 months, 2015-01-01 to 2015-03-31 | $1.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2015-01-01 to 2015-03-31 | $20.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2015-03-31 | $180.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2015-03-31 | $594.2m | us-gaap:AssetsCurrent |
| Total assets | at 2015-03-31 | $795.2m | us-gaap:Assets |
| Current liabilities | at 2015-03-31 | $193.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2015-03-31 | $216.3m | us-gaap:Liabilities |
| Long-term debt | at 2015-03-31 | $10.3m | us-gaap:LongTermDebt |
| Current portion of debt | at 2015-03-31 | $5.3m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2015-03-31 | $405.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 48,508 characters.

### Business Overview

We are a designer, developer, manufacturer, worldwide marketer and distributor of casual lifestyle footwear, apparel and accessories for men, women and children. We strive to be the global leader in the sale of molded footwear featuring fun, comfort, color and functionality. Our products include footwear and accessories that utilize our proprietary closed cell-resin, called Croslite, as well as casual lifestyle footwear that use a range of materials. Our Croslite material enables us to produce innovative, lightweight, non-marking, and odor-resistant footwear. We currently sell our products in more than 90 countries through domestic and international retailers and distributors and directly to end-user consumers through our company-operated retail stores, outlets, webstores and kiosks.

Since the initial introduction of our popular Beach and Crocs Classic designs, we have expanded our Croslite products to include a variety of new styles and products and have further extended our product reach through the acquisition of brand platforms. Going forward, we are focusing on our core molded footwear heritage, as well as developing innovative new casual lifestyle footwear. By streamlining the product portfolio, reducing non-core product development and exploring strategic alternatives for non-core products and brands, we believe that we can realize our strategy of generating a more powerful consumer connection to our brand and products.

The broad appeal of our footwear has allowed us to market our products to a wide range of distribution channels, including family footwear stores, department stores, sporting goods and traditional footwear retailers as well as a variety of specialty and independent retail channels and via the internet. We intend to drive cohesive global brand positioning from region-to-region and year-to-year to create a more clear and consistent product portfolio and message. This strategy will be accomplished through developing powerful product stories supported with effective and consistent global marketing campaigns. Finally, we intend to increase our working market spend, which we define as funds that put marketing messages in front of consumers.

As a global company, we have significant revenues and costs denominated in currencies other than the U.S. Dollar. Sales in international markets in foreign currencies are expected to continue to represent a substantial portion of our revenues. Likewise, we expect that our subsidiaries with functional currencies other than the U.S. Dollar will continue to represent a substantial portion of our overall gross margin and related expenses. Accordingly, changes in foreign currency exchange rates could materially affect revenues and costs or the comparability of revenues and costs from period to period as a result of the impact of foreign currency translation adjustments.

### Use of Non-GAAP Financial Measures

In addition to financial measures presented on the basis of accounting principles generally accepted in the United States of America (“GAAP”), we present current period “adjusted selling, general and administrative expenses”, which is a non-GAAP financial measure, within this Management’s Discussion and Analysis. Adjusted results exclude the impact of items that management believes affect the comparability or underlying business trends in our consolidated financial statements in the periods presented.

We also present certain information related to our current period results of operations in this Item 2 through “constant currency”, which is a non-GAAP financial measure and which should be viewed as a supplement to our results of operations and presentation of reportable segments under GAAP. Constant currency represents current period results that have been restated using prior year average foreign exchange rates for the comparative period to enhance the visibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations.

Management uses adjusted results to assist in comparing business trends from period to period on a consistent non-GAAP basis in communications with the board of directors (“the Board”), stockholders, analysts and investors concerning our financial performance. We believe that these non-GAAP measures are used by, and are useful to, investors and other users of our financial statements as an additional tool to evaluate our performance. We believe they also provide a useful baseline for analyzing trends in our operations. We do not suggest that investors should consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Please refer to our ‘Results of Operations’ within this section for a reconciliation of adjusted selling, general and administrative expenses to GAAP selling, general and administrative expenses.

### Recent Events

Gregg Ribatt was appointed as our Chief Executive Officer, effective January 28, 2015. In connection with his appointment as Chief Executive Officer, he will also serve as our principal executive officer, succeeding our acting principal executive officer, Andrew Rees. Mr. Rees will continue in his role as President of Crocs.

### Financial Highlights

During the three months ended March 31, 2015, revenue declined 16.1% compared to the same period in 2014. The decrease in revenue is due to the net impact of (i) $24.4 million, or 7.8%, decrease associated with foreign currency exchange rate adjustments associated with a strong U.S. Dollar, (ii) a $22.1 million, or 7.1% decrease associated with a decrease in the average selling price due to changes in product mix and (iii) a $3.7 million, or 1.2% decrease associated with a declining sales volume. Thus, on a constant currency basis, revenue decreased by $25.9 million, or 8.3%.

For the three months ended March 31, 2015, we had an operating loss of $2.4 million compared to operating income of $16.8 million for the same period in 2014. The decrease in operating income is primarily attributable to the above noted decrease in revenue which was partially offset by (i) a $21.4 million, or 13.7%, decrease in cost of sales (consisting of a $12.2 million decrease due to foreign currency adjustments, a $7.3 million decrease associated with reduced purchase prices and a $1.9 million decrease associated with volume changes) and (ii) a $11.1 million, or 8.1%, decrease in selling, general and administrative (“SG&A”) expenses (consisting of a $5.7 million decrease related to declining administrative costs and a $5.4 million decrease related to foreign currency translation adjustments). SG&A expenses increased 418 basis points, or 9.5% as a percentage of revenue period over period. Gross margin as a percentage of revenue decreased 143 basis point, or 2.9%, period over period.

The following are additional significant developments in our businesses during the three months ended March 31, 2015:

- During the three months ended March 31, 2015, we sold 14.8 million pairs of shoes worldwide, which was a decrease of 1.2% compared to the same period in the prior year. For the three months ended March 31, 2015, delivery of product was negatively impacted by the partial shutdown of the shipping ports in California due to strikes, which we believe negatively impacted our revenue by approximately 3%.
- Selling, general and administrative expenses decreased $11.1 million, or 8.1%, to $126.1 million compared to the same period in 2014.
- We incurred $3.7 million in restructuring charges as a result of our strategic plans for long-term improvement and growth of the business. These charges primarily related to severance costs and lease termination and exit related costs.
- Gross profit decreased $28.9 million, or 18.5%, to $127.4 million and gross margin percentage decreased 143 basis points to 48.6% compared to 50.0% for the same period in 2014. The decline in gross margin percentage is primarily driven by (i) a $24.4 million, or 7.8%, decrease in revenue due to foreign currency translation adjustments, (ii) a $21.4 million, or 13.7% decrease in cost of sales, (iii) a $22.1 million, or 7.1% decrease in revenue due to declining prices.
- We repurchased approximately 1.7 million shares at an average price of $11.60 per share for a total value of $20.0 million, excluding related commission charges.

### Future Outlook

During 2014, we announced strategic plans for long-term improvement and growth of the business. These plans comprised four key initiatives including: (1) streamlining the global product and marketing portfolio, (2) reducing direct investment in smaller geographic markets, (3) creating a more efficient organizational structure by reducing duplicative and excess overhead to reduce costs and enhance the decision making process, and (4) closing or converting approximately 75 to 100 Crocs branded retail stores around the world. As of March 31, 2015, we have closed 29 stores which were identified in the initial restructuring plan and we will continue to execute our strategy during 2015.

Based on these changes, Crocs is better positioned to adapt to changing customer demands and global economic developments. We are focusing on our core molded footwear heritage, as well as developing innovative new casual lifestyle footwear platforms. By streamlining the product portfolio, reducing non-core product development and exploring strategic alternatives for the non-core products and brands, we will create a more powerful consumer connection to the brand.

We are increasing our working market spend, which we define as funds that put marketing messages in front of consumers. During March 2015, we launched our global ad campaign, #FindYourFun, our largest marketing investment in our 12-year history and our first global marketing campaign. Slated to run throughout 2015, ads encourage consumers to #FindYourFun, with imagery featuring Crocs’ iconic clog. It will be seen by consumers in the U.S., U.K., Germany, Japan, China and South Korea. The whimsical imagery incorporates the Crocs clog into some of the world’s most notable landmarks and destinations, including Las Vegas, Times Square and Piccadilly Circus in London, as well as locations in Shanghai and Seoul.

We are refining our business model around the world, prioritizing direct investment in larger-scale geographies to focus our resources on the biggest opportunities, moving away from direct investment in the retail and wholesale businesses in smaller markets and transferring significant commercial responsibilities to distributors and third-party agents. These re-alignments are already underway in Brazil, Taiwan and other markets around the globe. Further, we intend to expand our engagement with leading wholesale accounts in select markets to drive sales growth, optimize product placement and enhance brand reputation.

We have reorganized key business functions to improve efficiency and have eliminated over 200 global positions, the majority of which occurred on July 21, 2014, resulting in reduced structural complexity, size and cost. In addition, we opened our Global Commercial Center in the Boston area in late 2014, which is housing key merchandising, marketing and retail executives. The Boston location was selected in order to attract experienced senior footwear and business development management talent. The Global Commercial Center in Boston will join the Product Creation and Global Shared Services Center in Niwot, Colorado, the cornerstone of support for Crocs’ global business. We intend to strengthen our Regional Commercial Centers in the Netherlands, Singapore and Japan with responsibility for managing Crocs’ global business.

### Results of Operations

### Comparison of the Three Months Ended March 31, 2015 to 2014

*($ thousands, except per share data and*

| average footwear selling price) | Three Months Ended March 31, 2015 | 2014 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Revenues | $262,193 | $312,429 | $(50,236) | (16.1)% |
| Cost of sales | 134,823 | 156,202 | (21,379) | (13.7) |
| Gross profit | 127,370 | 156,227 | (28,857) | (18.5) |
| Selling, general and administrative expenses | 126,069 | 137,155 | (11,086) | (8.1) |
| Restructuring charges | 3,663 | 2,250 | 1,413 | 62.8 |
| Income (loss) from operations | (2,362) | 16,822 | (19,184) | (114.0) |
| Foreign currency transaction income (loss), net | 494 | (2,768) | 3,262 | (117.8) |
| Interest income | 288 | 477 | (189) | (39.6) |
| Interest expense | (219) | (191) | (28) | 14.7 |
| Other income (expense), net | (331) | 141 | (472) | (334.8) |
| Income (loss) before income taxes | (2,130) | 14,481 | (16,611) | (114.7) |
| Income tax (expense) benefit | (295) | (5,357) | 5,062 | (94.5) |
| Net income (loss) | $(2,425) | $9,124 | $(11,549) | (126.6)% |
| Dividends on Series A convertible preferred shares | (2,833) | (2,133) | (700) | 32.8 |
| Dividend equivalents on Series A convertible preferred shares related to redemption value accretion and beneficial conversion feature | (721) | (618) | (103) | 16.7 |
| Net income (loss) attributable to common stockholders | $(5,979) | $6,373 | $(12,352) | (193.8)% |
| Net income (loss) per common share: |  |  |  |  |
| Basic | $(0.08) | $0.06 | $(0.14) | (233.3)% |
| Diluted | $(0.08) | $0.06 | $(0.14) | (233.3)% |
| Gross margin | 48.6% | 50.0% | (143 )bps | (2.9)% |
| Operating margin | (0.9)% | 5.4% | (629 )bps | (116.7)% |
| Footwear unit sales | 14,802 | 14,981 | (179) | (1.2)% |
| Average footwear selling price | $17.45 | $20.39 | $(2.94) | (14.4)% |

***Revenues.*** During the three months ended March 31, 2015, revenues decreased $50.2 million, or 16.1%, compared to the same period in 2014, primarily due to (i) changes in average foreign currency exchange rates used to translate revenue from our functional currencies to our reporting currency, (ii) $2.94, or 14.4%, decrease in average footwear selling price (consisting of a $1.64 decrease due to the impact of foreign currency changes and a $1.30 decrease due to changes in product mix) and (iii) a decrease of 0.2 million, or 1.2%, in global footwear unit sales. For the three months ended March 31, 2015, delivery of product was negatively impacted by the partial shutdown of the shipping ports in California, which we believe negatively impacted our revenue by approximately 3%.

During the three months ended March 31, 2015, revenues from our wholesale channel decreased $38.7 million, or 17.8%, compared to the same period in 2014, which was driven primarily by lower unit sales in our Americas and Asia segments and lower average selling price in Europe, primarily due to of the impact of foreign currency translation. These decreases were partially offset by a 24.9% increase in unit sales in Europe primarily driven by product volume expansion through new wholesale doors and continued support from existing customers.

During the three months ended March 31, 2015, revenues from our retail channel decreased $9.2 million, or 12.2%, compared to the same period in 2014, which was driven primarily by a 8.3% decrease in the average selling price, primarily attributable to the Europe segment because of the impact of foreign currency translation, and a 3.3% decrease in footwear unit sales, primarily attributable to the Americas segment.

Additionally, we experienced an overall decrease of 5.3% in comparable store sales compared to the prior year period (see below for more information on the calculation of “comparable store sales”). During the three months ended March 31, 2015, we opened 3 and closed 30 company-operated stores.

During the three months ended March 31, 2015, revenues from our internet channel decreased $2.3 million, or 11.9%, compared to the same period in 2014, which was primarily driven by decreased internet sales in our Europe segment and lower average selling prices in all segments due to changes in foreign currency exchange rates and product mix. Our internet sales totaled approximately 6.6% and 6.3% of our consolidated net sales during the three months ended March 31, 2015 and 2014, respectively. We continue to benefit from our online presence through webstores worldwide enabling us to have increased access to our customers in a low cost, attractive manner and providing us with an opportunity to educate them about our products and brand.

The following table summarizes our total revenue by channel for the three months ended March 31, 2015 and 2014 ($ thousands):

| Wholesale: | Three Months Ended March 31, 2015 | 2014 | Change $% |  | Constant Currency Change(1) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Americas | $61,176 | $70,175 | $(8,999) | (12.8)% | $(7,384) | (10.5)% |
| Asia Pacific | 72,497 | 99,044 | (26,547) | (26.8) | (21,468) | (21.7) |
| Europe | 44,653 | 47,780 | (3,127) | (6.5) | 8,663 | 18.1 |
| Other businesses | 225 | 258 | (33) | (12.8) | (3) | (1.2) |
| Total Wholesale | 178,551 | 217,257 | (38,706) | (17.8) | (20,192) | (9.3) |
| Consumer-direct: |  |  |  |  |  |  |
| Retail: |  |  |  |  |  |  |
| Americas | 34,617 | 36,581 | (1,964) | (5.4) | (1,766) | (4.8) |
| Asia Pacific | 23,345 | 28,249 | (4,904) | (17.4) | (3,407) | (12.1) |
| Europe | 8,411 | 10,730 | (2,319) | (21.6) | 444 | 4.1 |
| Total Retail | 66,373 | 75,560 | (9,187) | (12.2) | (4,729) | (6.3) |
| Internet: |  |  |  |  |  |  |
| Americas | 9,976 | 10,364 | (388) | (3.7) | (272) | (2.6) |
| Asia Pacific | 3,933 | 3,622 | 311 | 8.6 | 665 | 18.4 |
| Europe | 3,360 | 5,626 | (2,266) | (40.3) | (1,353) | (24.0) |
| Total Internet | 17,269 | 19,612 | (2,343) | (11.9) | (960) | (4.9) |
| Total revenues: | $262,193 | $312,429 | $(50,236) | (16.1)% | $(25,881) | (8.3)% |

(1) Reflects year over year change as if the current period results were in “constant currency,” which is a non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” above for more information.

The table below illustrates the overall change in the number of our company-operated retail locations by type of store and reportable operating segment as of March 31, 2015 and December 31, 2014:

| Company-operated retail locations: Type: | December 31, 2014 | Opened | Closed | March 31, 2015 |
| --- | ---: | ---: | ---: | ---: |
| Kiosk/Store in Store | 100 | 1 | (8) | 93 |
| Retail Stores | 311 | 1 | (18) | 294 |
| Outlet Stores | 174 | 1 | (4) | 171 |
| Total | 585 | 3 | (30) | 558 |
| Operating segment: |  |  |  |  |
| Americas | 210 | — | (9) | 201 |
| Asia Pacific | 258 | 2 | (15) | 245 |
| Europe | 117 | 1 | (6) | 112 |
| Total | 585 | 3 | (30) | 558 |

During the three months ended March 31, 2015, we entered into an agreement to acquire nine retail locations in Wuhan, China. These stores will be reflected in our retail location counts as of June 30, 2015.

The table below sets forth our comparable store sales by reportable operating segment for the three months ended March 31, 2015 and 2014:

| Comparable store sales (1) | Constant Currency Three Months Ended March 31, 2015(2) | Constant Currency Three Months Ended March 31, 2014(2) |
| --- | ---: | ---: |
| Americas | (5.8)% | (5.0)% |
| Asia Pacific | (9.4) | 3.3 |
| Europe | 5.7 | 0.6 |
| Global | (5.3)% | (1.5)% |

(1) Comparable store status is determined on a monthly basis. Comparable store sales begin in the thirteenth month of a store’s operation. Stores in which selling square footage has changed more than 15% as a result of a remodel, expansion or reduction are excluded until the thirteenth month in which they have comparable prior year sales. Temporarily closed stores are excluded from the comparable store sales calculation during the month of closure. Location closures in excess of three months are excluded until the thirteenth month post re-opening. Comparable store sales exclude the impact of our internet channel revenues and are calculated on a currency neutral basis using historical quarterly average currency rates.

(2) Reflects quarter over quarter change as if the current period results were in “constant currency,” which is a non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” above for more information.

***Impact on Revenues due to Foreign Exchange Rate Fluctuations.*** Changes in average foreign currency exchange rates used to translate revenue from our functional currencies to our reporting currency during the three months ended March 31, 2015 resulted in a $24.4 million decrease in revenue compared to the same period in 2014.

***Gross profit.*** During the three months ended March 31, 2015, gross profit decreased $28.9 million, or 18.5%, compared to the same period in 2014, which was primarily attributable to the 16.1% decrease in revenue. Cost of sales decreased $21.4 million, or 13.7%, excluding restructuring. Gross margin percentage decreased 143 basis points compared to the same period in 2014.

***Impact on Gross Profit due to Foreign Exchange Rate Fluctuations.*** Changes in average foreign currency exchange rates used to translate revenue and costs of sales from our functional currencies to our reporting currency during the three months ended March 31, 2015 decreased our gross profit by $12.2 million, or 7.8%, compared to the same period in 2014.

***Selling, General and Administrative Expenses.*** SG&A expenses decreased $11.1 million, or 8.1%, during the three months ended March 31, 2015 compared to the same period in 2014. This decrease was predominately due to the impact of foreign currency translation adjustments to expenses from our functional currencies to our reporting currency during the three months ended March 31, 2015. As a percentage of revenue, SG&A expenses increased 418 basis points to 48.1% from 43.9% during the three months ended March 31, 2015 compared to the same period in 2014.

In addition to these fluctuations, we have identified certain selling, general and administrative expenses that affect the comparability or underlying business trends in our consolidated financial statements. The following table summarizes these expenses as well as details the additional drivers of the increase above by reconciling our GAAP selling, general and administrative expenses to non-GAAP selling, general and administrative expenses:

| SG&A expenses and restructuring charges reconciliation: | Three Months Ended March 31, 2015 ($ thousands) | 2014 |
| --- | ---: | ---: |
| GAAP SG&A and restructuring charges | $129,732 | $139,405 |
| Restructuring charges (1) | (3,663) | (2,250) |
| New ERP implementation (1) | (5,648) | (2,375) |
| Reorganization charges (2) | (1,399) | (2,192) |
| Legal settlement (3) | — | (1,289) |
| Non-GAAP selling, general and administrative expenses | $119,022 | $131,299 |

(1) This represents operating expenses related to the implementation of our new enterprise resource planning (“ERP”) system and the add-back of accelerated depreciation and amortization on tangible and intangible items related to our current ERP system and supporting platforms that will no longer be utilized once the implementation of a new ERP is complete.

(2) This relates to bonuses, consulting fees and other expenses related to recent restructuring activities and our investment agreement with Blackstone.

(3) This represents certain legal contingency accruals and/or legal settlement expenses.

***Impact on Selling, General, and Administrative Expenses due to Foreign Exchange Rate Fluctuations.*** Changes in average foreign currency exchange rates used to translate expenses from our functional currencies to our reporting currency during the three months ended March 31, 2015, positively impacted, or decreased, selling, general and administrative expenses by approximately $5.4 million compared to the same period in 2014.

***Restructuring Charges.*** We recorded $3.7 million in restructuring charges during the three months ended March 31, 2015. These restructuring charges arose primarily as a result of our strategic plans for long-term improvement and growth of the business. Restructuring charges for the three months ended March 31, 2015 consisted of:

- $2.1 million in severance costs;
- $1.4 million in contract termination costs primarily related to the early termination of operating leases and sponsorship agreements; and
- $0.2 million in other restructuring charges.

***Foreign Currency Transaction Gain (Loss), Net.*** The line item entitled foreign currency transaction losses, net is comprised of foreign currency gains and losses from the re-measurement and settlement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments. During the three months ended March 31, 2015, net gain on foreign currency transactions was $0.5 million, compared to a $2.8 million net loss for the same period in 2014.

***Income tax expense.*** During the three months ended March 31, 2015, we recognized income tax expense of $0.3 million compared to of $5.4 million for the same period in 2014. Our effective tax rate decreased primarily due to the release of certain unrecognized tax benefits as the result of settling our audits with the Canada Revenue Agency and the Internal Revenue Service. Our effective tax rate for the three months ended March 31, 2015 differs from the federal U.S. statutory rate primarily because of the release of certain unrecognized tax benefits as well as differences between income tax rates between U.S. and foreign jurisdictions.

### Presentation of Reportable Segments

During 2014, we had four reportable operating segments based on the geographic nature of our operations: Americas, Asia Pacific, Japan and Europe. We also had an “Other businesses” category which aggregates insignificant operating segments that do not meet the reportable segment threshold including our manufacturing operations located in Mexico, Italy and Asia. The composition of our reportable operating segments is consistent with that used by our chief operating decision maker, (“CODM”) to evaluate performance and allocate resources.

Subsequent to December 31, 2014, our internal reports reviewed by the CODM began consolidating Japan into the Asia Pacific segment. This change was to align our internal reporting to our new strategic model and management structure, as Japan and Asia Pacific are now managed and analyzed as one operating segment by management and the CODM. Accordingly, we now have three reportable segments for 2015 as well as our “Other Businesses” category.

Each of our reportable operating segments derives its revenues from the sale of footwear, apparel and accessories to external customers as well as intersegment sales. Revenues of the “Other businesses” category are primarily made up of intersegment sales. The remaining revenues for the “Other businesses” represent non-footwear product sales to external customers. Intersegment sales are not included in the measurement of segment operating income or regularly reviewed by the CODM and are eliminated when deriving total consolidated revenues.

Segment performance is evaluated based on segment results without allocating corporate expenses, or indirect general, administrative and other expenses. Segment profits or losses include adjustments to eliminate intersegment sales. As such, reconciling items for segment operating income represent unallocated corporate and other expenses as well as intersegment eliminations. Our CODM evaluates the performance of our segments based on gross margin and direct operating profit excluding unallocated amounts.

### Comparison of the Three Months Ended March 31, 2015 and 2014 by Segment

The following table sets forth information related to our reportable operating business segments for the three months ended March 31, 2015 and 2014 ($ thousands):

|  | Three Months Ended March 31, 2015 | 2014 | Change $% |  | Constant Currency Change (4) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Americas | $105,769 | $117,120 | $(11,351) | (9.7)% | $(9,422) | (8.0)% |
| Asia Pacific | 99,775 | 130,915 | (31,140) | (23.8) | (24,210) | (18.5) |
| Europe | 56,424 | 64,136 | (7,712) | (12.0) | 7,754 | 12.1 |
| Total segment revenues | 261,968 | 312,171 | (50,203) | (16.1) | (25,878) | (8.3) |
| Other businesses | 225 | 258 | (33) | (12.8) | (3) | (1.2) |
| Total consolidated revenues | 262,193 | 312,429 | (50,236) | (16.1) | (25,881) | (8.3) |
| Operating income (loss): |  |  |  |  |  |  |
| Americas | 15,378 | 13,437 | 1,941 | 14.4 | 2,239 | 16.7 |
| Asia Pacific | 17,335 | 34,145 | (16,810) | (49.2) | (16,301) | (47.7) |
| Europe | 8,238 | 7,539 | 699 | 9.3 | 2,698 | 35.8 |
| Total segment operating income | 40,951 | 55,121 | (14,170) | (25.7) | (11,364) | (20.6) |
| Other businesses(1) | (5,403) | (3,756) | (1,647) | 43.8 | (2,987) | 79.5 |
| Intersegment eliminations | — | 15 | (15) | (100.0) | (15) | (100.0) |
| Unallocated corporate and other(2) | (37,910) | (34,558) | (3,352) | 9.7 | (4,553) | 13.2 |
| Total consolidated operating income (loss)(3) | (2,362) | 16,822 | (19,184) | (114.0) | $(18,919) | (112.5)% |
| Foreign currency transaction income (loss), net | 494 | (2,768) | 3,262 | (117.8) |  |  |
| Interest income | 288 | 477 | (189) | (39.6) |  |  |
| Interest expense | (219) | (191) | (28) | 14.7 |  |  |
| Other income (loss), net | (331) | 141 | (472) | (334.8) |  |  |
| Income (loss) before income taxes | $(2,130) | $14,481 | $(16,611) | (114.7)% |  |  |

(1) During the three months ended March 31, 2015, operating losses of Other businesses increased $1.6 million compared to 2014, primarily due to a $2.0 million decrease in gross margin offset by a $0.4 million decrease in selling, general and administrative expenses.

(2) Includes a corporate component consisting primarily of corporate support and administrative functions, costs associated with share-based compensation, research and development, brand marketing, legal, depreciation on corporate and other assets not allocated to operating segments and costs of the same nature of certain corporate holding companies. For the three months ended March 31, 2015, ‘Unallocated corporate and other’ operating losses increased $3.4 million compared to the same period in 2014, primarily due to an $4.6 million increase in selling, general and administrative expenses primarily due to $5.6 million related to our ERP implementation, offset by lower non-retail professional expenses.

(3) Please refer to our Results of Operations to reconcile total consolidated operating income to net income as segment information does not have an effect on values below total consolidated operating income.

(4) Reflects year over year change as if the current period results were in “constant currency,” which is a non-GAAP financial measure. See “Use of Non-GAAP Financial Measures” above for more information.

***Americas Operating Segment.*** During the three months ended March 31, 2015, revenues from our Americas segment decreased $11.4 million, or 9.7%, compared to the same period in 2014 primarily due to a 13.8% decrease in footwear units sold and a $1.9 million unfavorable impact from foreign currency fluctuations driven by weakening of the Brazilian Real against the U.S. Dollar. During the three months ended March 31, 2015, revenue declines for the region were realized primarily in the wholesale channel which decreased $9.0 million, or 12.8%, and in the retail channel which decreased $2.0 million, or 5.4%, compared to the same period in 2014. The decrease in wholesale channel revenue was predominately driven by a decrease of 16.0% in footwear units sold and a 3.6% decrease in the average selling price primarily due to changes in product mix. The decrease in retail channel revenue was predominately driven by a decrease of 8.9% in footwear units sold, partially offset by an increase of 3.0% in average footwear selling price.

During the three months ended March 31, 2015, segment operating income increased $1.9 million, or 14.4%, compared to the same period in 2014 primarily related to:

(i) a decrease of $3.0 million, or 7.4%, in selling, general and administrative expenses as a result lower employee compensation related expenses and lower professional fees, offset by higher marketing expenses; and

(ii) a partial offset from a slight decrease in segment gross margins of $0.6 million, or 1.2%, primarily related to lower revenues.

***Asia Pacific Operating Segment.*** During the three months ended March 31, 2015, revenues from our Asia Pacific segment decreased $31.1 million, or 23.8%, compared to the same period in 2014 primarily due to a 9.0% decrease in footwear units sold and a 14.1% decrease in average footwear selling price. Asia’s revenues were also impacted by a $6.9 million unfavorable impact from foreign currency fluctuations. During the three months ended March 31, 2015, revenue declines for the region were realized primarily in the wholesale channel which decreased $26.5 million, or 26.8%, and in the retail channel which decreased $4.9 million, or 17.4%, compared to the same period in 2014. The decrease in wholesale channel revenue was predominately driven by a decrease of 9.6% in footwear units sold and a 15.0% decrease in the average selling price, period over period. Partially offsetting these decreases was an increase of 8.6%, in the internet channel revenues.

During the three months ended March 31, 2015, segment operating income decreased $16.8 million, or 49.2%, compared to the same period in 2014 primarily related to:

(i) a decrease in segment gross margins of $20.2 million, or 27.5%, primarily related to the decrease in revenue;

(ii) $1.8 million in restructuring charges related to severance and store closure costs; and

(iii) a partial offset from a decrease of $5.2 million, or 13.2%, in selling, general and administrative expenses due lower employee compensation expenses, lower rent and occupancy related expenses and lower marketing expenses.

***Europe Operating Segment.*** During the three months ended March 31, 2015, revenues from our Europe segment decreased $7.7 million, or 12.0%, compared to the same period in 2014 primarily due to a $15.5 million unfavorable impact from foreign currency fluctuations, primarily related to the weakening of the Euro against the U.S. Dollar, which drove a 42.4% decrease in average footwear unit selling price. This decrease was offset by an increase of 22.8% in footwear units sold. The wholesale channel revenues decreased $3.1 million, or 6.5%, due a drop in average footwear selling price offset by an increase in units sold.

Our direct-to-consumer channel revenues decreased $2.3 million, or 21.6%, primarily due to a decrease in average footwear unit selling price, partially offset by a 5.7% increase in comparable store sales. During the three months ended March 31, 2015, segment operating income increased $0.7 million, or 9.3%, compared to the same period in 2014 primarily related to:

(i) a decrease of 7.1 million, or 29.5%, in selling, general and administrative expenses primarily related to due lower employee compensation expenses, rent and occupancy related expenses and professional service fees;

(ii) offset by the decrease in revenues.

### Liquidity and Capital Resources

### Cash Flows and Working Capital

During the three months ended March 31, 2015, cash and cash equivalents decreased $86.8 million, or 32.5%, to $180.7 million compared to $267.5 million at December 31, 2014. The primary driver of this decrease was (i) lower gross receipts from revenues; (ii) the repurchase of $20.0 million of our common stock, including related commission charges, during the three months ended March 31, 2015 associated with Board authorized repurchases under our publicly-announced repurchase plan; (iii) strategic reinvestments into the business; (iv) dividend payments of $2.8 million on our Series A convertible preferred stock, which was recorded as dividends payable and prepaid dividends as of March 31, 2015; and (v) debt payments, including principal and interest, of $1.4 million related to long-term bank borrowings.

Cash used by operations was $46.7 million for the three months ended March 31, 2015 compared $62.7 million used by operations during the same period in 2014. This decrease was primarily driven by the change in working capital accounts period over period which accounted for $24.3 million of the improvement. This was offset by $8.2 million less cash provided from our net operations recorded in the statement of operations for the three months ended March 31, 2015 compared to the same period in 2014.

### Working Capital

Accounts receivable and inventory balances increased $72.9 million and $13.7 million, respectively from December 31, 2014 to March 31, 2015, due to the seasonality nature of our operations, specifically our highest revenues are recorded during the quarter ended June. Accounts payable increased $38.5 million as of March 31, 2015 compared to December 31, 2014. As a result of the January 2015 implementation of our new ERP system, we accelerated payments of our outstanding payables in late 2014 to accommodate the transition. Therefore, the increase in 2015 is due to the normal course of business, as our business cycles have returned to normal.

We anticipate our cash flows from operations will be sufficient to meet the ongoing needs of our business for the next twelve months. In order to provide additional liquidity in the future and to help support our strategic goals, we have a revolving credit facility with a syndicate of lenders, including PNC Bank, National Association (“PNC”) as lead lender, which currently provides us with up to $100.0 million in borrowing capacity and matures in December 2017 (see *Revolving Credit Facility* below). Additional future financing may be necessary and there can be no assurance that, if needed, we will be able to secure additional debt or equity financing on terms acceptable to us or at all.

### Stock Repurchase Plan Authorizations

We continue to evaluate options to maximize the returns on our cash and to maintain an appropriate capital structure, including, among other alternatives, repurchases of our common stock.

On December 26, 2013, the Board approved the repurchase of up to $350.0 million of our common stock, subject to certain restrictions on repurchases under our revolving credit facility. The number, price, structure and timing of the repurchases will be at our sole discretion and future repurchases will be evaluated by us depending on market conditions, liquidity needs and other factors. Share repurchases may be made in the open market or in privately negotiated transactions. The repurchase authorization does not have an expiration date and does not oblige us to acquire any particular amount of our common stock. The Board may suspend, modify or terminate the repurchase program at any time without prior notice.

During the three months ended March 31, 2015, we repurchased 1.7 million shares at an average price of $11.60 per share for an aggregate price of approximately $20.0 million excluding related commission charges, under a publicly-announced repurchase plan.

As of March 31, 2015, subject to certain restrictions on repurchases under our revolving credit facility, we had $182.1 million remaining under the repurchase authorizations.

### Revolving Credit Facility

On September 25, 2009, we entered into a Revolving Credit and Security Agreement (the “Credit Agreement”) with the lenders named therein and PNC Bank, National Association (“PNC”), as a lender and administrative agent for the lenders.

On April 2, 2015, we entered into the Sixth Amendment to Amended and Restated Credit Agreement (the “Sixth Amendment”), pursuant to which certain terms of the Credit Agreement were amended. The Sixth Amendment primarily amended certain definitions of the financial covenants to become more favorable to us including (i) setting the minimum fixed charge coverage ratio to 1.00 to 1.00 through December 31, 2015, 1.15 to 1.00 through March 31, 2016 and 1.25 to 1.00 for each quarter thereafter, (ii) setting the Leverage Ratio to 4.00 to 1.00 through March 31, 2016 and 3.75 to 1.00 for each quarter thereafter and (iii) reducing our global cash requirement from $100 million to $50 million.

The Credit Agreement enables us to borrow up to $100.0 million, with the ability to increase commitments to up to $125.0 million subject to certain conditions, and is currently set to mature on December 16, 2017. The Credit Agreement is available for working capital, capital expenditures, permitted acquisitions, reimbursement of drawings under letters of credit, and permitted dividends, distributions, purchases, redemptions and retirements of equity interests. Borrowings under the Credit Agreement are secured by all of our assets including all receivables, equipment, general intangibles, inventory, investment property, subsidiary stock and intellectual property. Borrowings under the Credit Agreement bear interest at a variable rate. For domestic rate loans, the interest rate is equal to the highest of (i) the daily federal funds open rate as quoted by ICAP North America, Inc. plus 0.5%, (ii) PNC’s prime rate and (iii) a daily LIBOR rate plus 1.0%, in each case there is an additional margin ranging from 0.25% to 1.00% based on certain conditions. For LIBOR rate loans, the interest rate is equal to a LIBOR rate plus a margin ranging from 1.25% to 2.00% based on certain conditions. The Credit Agreement requires monthly interest payments with respect to domestic rate loans and at the end of each interest period with respect to LIBOR rate loans. The Credit Agreement further provides for a limit on the issuance of letters of credit to a maximum of $20.0 million. The Credit Agreement contains provisions requiring us to maintain compliance with certain restrictive and financial covenants.

As of March 31, 2015 and December 31, 2014, we had no outstanding borrowings under the Credit Agreement. As of March 31, 2015 and December 31, 2014, we had issued and outstanding letters of credit of $1.7 million and $1.8 million, respectively, which were reserved against the borrowing base under the terms of the Credit Agreement. As of March 31, 2015, we were in compliance with all restrictive financial and other covenants under the Credit Agreement.

### Long-term Bank Borrowings

On December 10, 2012, we entered into a Master Installment Payment Agreement (“Master IPA”) with PNC in which PNC will finance the Company’s purchase of software and services, which may include but are not limited to third-party costs to design, install and implement software systems, and associated hardware described in the schedules defined within the Master IPA. This agreement was entered into to finance the recent implementation of a new enterprise resource planning (“ERP”) system which began in October 2012 and was substantially completed in early 2015. The terms of the agreement consist of variable interest rates and payment terms based on amounts borrowed and timing of activity throughout the implementation of the ERP system.

As of March 31, 2015 and December 31, 2014, we had $10.3 million and $11.6 million, respectively, of long-term debt outstanding under five separate notes payable, of which $5.3 million represents current installments for both periods. As of March 31, 2015, the notes bear interest rates ranging from 2.45% to 2.79% and maturities ranging from September 2016 to September 2017. As this debt arrangement relates solely to the construction and implementation of an ERP system for use by the entity, interest expense was capitalized to the condensed consolidated balance sheets until the assets were placed into service on January 1, 2015. During the three months ended March 31, 2015, no interest was capitalized. During the three months ended March 31, 2014, we capitalized $0.1 million in interest expense related to this debt arrangement to the condensed consolidated balance sheets. Interest rates and payment terms are subject to changes as further financing occurs under the Master IPA.

### Capital Assets

During the three months ended March 31, 2015, net capital assets acquired, inclusive of intangible assets, were $6.5 million compared to $15.3 million during the same period in 2014. The decrease is primarily due to decreased capital spending related to our ERP implementation, as the implementation phase has ended.

### Repatriation of Cash

As we are a global business, we have cash balances which are located in various countries and are denominated in various currencies. Fluctuations in foreign currency exchange rates impact our results of operations and cash positions. Future fluctuations in foreign currencies may have a material impact on our cash flows and capital resources. Cash balances held in foreign countries may have additional restrictions and covenants associated with them which could adversely impact our liquidity and our ability to timely access and transfer cash balances between entities.

We generally consider unremitted earnings of subsidiaries operating outside of the U.S. to be indefinitely reinvested; however, our Board has approved a foreign cash repatriation strategy. As part of this strategy, we repatriated approximately $25.0 million during the three months ended March 31, 2015 without a tax impact. Further cash repatriation will depend on future cash requirements in the U.S. We maintain approximately $65.8 million of foreign earnings for which tax has previously been provided, and which has not been repatriated at this time.

Most of the cash balances held outside of the U.S. could be repatriated to the U.S., but under current law, would be subject to U.S. federal and state income taxes less applicable foreign tax credits. In some countries, repatriation of certain foreign balances is restricted by local laws and could have adverse tax consequences if we were to move the cash to another country. Certain countries have monetary laws which may limit our ability to utilize cash resources in those countries for operations in other countries. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. or other countries and could adversely affect our liquidity. As of March 31, 2015, we held $165.1 million of our total $180.7 million in cash in international locations. This cash is primarily used for the ongoing operations of the business in the locations in which the cash is held. Of the $165.1 million, $2.2 million could potentially be restricted, as described above. If the remaining $162.9 million were to be immediately repatriated to the U.S., we would be required to incur approximately $19.0 million in taxes that were not previously provided for in our consolidated statement of operations.

### Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements as of March 31, 2015.

### Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a detailed discussion of our critical accounting policies, please refer to our annual report on Form 10-K for the year ended December 31, 2014 filed with the SEC on April 2, 2015. Our critical accounting policies and estimates did not change materially during the three months ended March 31, 2015.

***Recent Accounting Pronouncements.*** See Note 1—Organization and Summary of Significant Accounting Policies in the accompanying notes to the condensed consolidated financial statements for recently adopted and issued accounting pronouncements.

## Market risk

As filed, 5,636 characters.

### Interest Rate Risk

We centrally manage our debt and investment portfolios considering investment opportunities and risks, tax consequences and overall financing strategies. Our exposure to market risk includes interest rate fluctuations in connection with our revolving credit facility and certain financial instruments. In addition to the revolving credit facility, we have incurred short- and long-term indebtedness related to the implementation of our ERP system. Borrowings under these debt instruments bear fixed interest rates and therefore, do not have the potential for market risk.

Borrowings under the revolving credit facility bear interest at a variable rate. For domestic rate loans, the interest rate is equal to the highest of (i) the daily federal funds open rate as quoted by ICAP North America, Inc. plus 0.5%, (ii) PNC’s prime rate and (iii) a daily LIBOR rate plus 1.0%, in each case there is an additional margin ranging from 0.25% to 1.00% based on certain conditions. For LIBOR rate loans, the interest rate is equal to a LIBOR rate plus a margin ranging from 1.25% to 2.00% based on certain conditions. Borrowings under the revolving credit facility are therefore subject to risk based upon prevailing market interest rates. Interest rates fluctuate as a result of many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control. As of March 31, 2015 and December 31, 2014, there were no borrowings under the revolving credit facility.

We additionally hold cash equivalents including certificate of deposits, time deposits and money market funds. Interest income generated from these cash equivalents will fluctuate with the general level of interest rates. As of March 31, 2015, we held $13.0 million in cash equivalents subject to variable interest rates. If the prevailing market interest rates relative to these investments increased or decreased by 10% during the three months ended March 31, 2015, interest income would have increased or decreased by a negligible amount.

### Foreign Currency Exchange Risk

As a global company, we have significant revenues and costs denominated in currencies other than the U.S. Dollar. We pay the majority of expenses attributable to our foreign operations in the functional currency of the country in which such operations are conducted and pay the majority of our overseas third-party manufacturers in U.S. Dollars. Our ability to sell our products in foreign markets and the U.S. Dollar value of the sales made in foreign currencies can be significantly influenced by foreign currency fluctuations. Fluctuations in the value of foreign currencies relative to the U.S. Dollar could result in downward price pressure for our products and increase losses from currency exchange rates. An increase or decrease of 1% in value of the U.S. Dollar relative to foreign currencies would have increased or decreased loss before taxes for the three months ended March 31, 2015 by approximately $0.9 million. The volatility of the applicable exchange rates is dependent on many factors that cannot be forecasted with reliable accuracy. In the event our foreign sales and purchases increase and are denominated in currencies other than the U.S. Dollar, our operating results may be affected by fluctuations in the exchange rate of currencies we receive for such sales. See Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for a discussion of the impact of foreign exchange rate variances experienced for the three months ended March 31, 2015 and 2014.

We transact business in various foreign countries and are therefore exposed to foreign currency exchange rate risk inherent in revenues, costs, and monetary assets and liabilities denominated in non-functional currencies. We have entered into foreign currency exchange forward contracts and currency swap derivative instruments to selectively protect against volatility in the value of non-functional currency denominated monetary assets and liabilities, and of future cash flows caused by changes in foreign currency exchange rates.

The following table summarizes the notional amounts of the outstanding foreign currency exchange contracts as of March 31, 2015 and December 31, 2014. The notional amounts of the derivative financial instruments shown below are denominated in their U.S. Dollar equivalents and represent the amount of all contracts of the foreign currency specified. These notional values do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the foreign currency exchange risks.

| Foreign currency exchange forward contracts by currency: | As of March 31, 2015 ($ thousands) | As of December 31, 2014 |
| --- | ---: | ---: |
| Japanese Yen | $93,301 | $44,533 |
| Singapore Dollar | 59,843 | 61,887 |
| Euro | 26,924 | 134,755 |
| South Korean Won | 25,223 | 14,590 |
| British Pound Sterling | 20,931 | 17,230 |
| Mexican Peso | 12,923 | 13,180 |
| South African Rand | 7,023 | 4,355 |
| Australian Dollar | 5,747 | 7,913 |
| Indian Rupee | 4,919 | 3,356 |
| Chinese Yuan Renminbi | 4,352 | 5,376 |
| Canadian Dollar | 3,474 | 3,005 |
| Russian Ruble | 2,876 | 1,838 |
| New Taiwan Dollar | 2,494 | 3,229 |
| Hong Kong Dollar | 1,892 | 814 |
| Swedish Krona | 1,572 | 1,918 |
| Brazilian Real | 1,005 | — |
| New Zealand Dollar | 709 | 743 |
| Norwegian Krone | — | 917 |
| Total notional value, net | $275,208 | $319,639 |
| Latest maturity date | April 2015 | January 2015 |

## Controls and procedures

As filed, 1,519 characters.

### Evaluation of Disclosure Controls and Procedures

Under the supervision of and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, 2015 (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the Evaluation Date, our disclosure controls and procedures were effective, such that the information relating to us, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

### Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting during the three months ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than certain changes and improvements to our processes and procedures resulting from our implementation of our new ERP system.

## Risk factors

As filed, 137 characters.

There have been no material changes to the risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2014.

Filed May 8, 2015.
Source: SEC EDGAR, the filing index for accession 0001104659-15-036173. Last ingested by Listed: Nov 6, 2026, 18:01 ET. No prices; not investment advice.