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+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,2016-02-26,2015-12-31,2016-02-26T21:34:50.000Z,0001628280-16-011839,shoo-20151231x10k.htm,10-K,11969171,1,0,https://www.sec.gov/Archives/edgar/data/913241/000162828016011839/shoo-20151231x10k.htm,https://www.sec.gov/Archives/edgar/data/913241/000162828016011839/,2015,2015,1

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+ITEM 1 BUSINESS 
+($ in thousands, except share and per share data) 
+Overview 
+Steven Madden, Ltd. and its subsidiaries (collectively, the “Company”, "we", "our", "us", as applicable) design, source, market and sell fashion-forward name brand and private label footwear for women, men and children and name brand and private label fashion handbags and accessories and license some of our trademarks for use in connection with the manufacture, marketing and sale of various products of our licensees. Our products are marketed through our retail stores and our e-commerce websites, as well as better department stores, major department stores, mid-tier department stores, specialty stores, luxury retailers, value priced retailers, national chains, mass merchants and catalog retailers throughout the United States, Canada, Mexico and South Africa. In addition, we have special distribution arrangements for the marketing of our products in Asia, Australia, Europe, India, the Middle East, South and Central America and New Zealand. We offer a broad range of updated styles designed to establish or complement and capitalize on market trends. We have established a reputation for design creativity and our ability to offer quality products in popular styles at affordable prices, delivered in an efficient manner and time frame. 
+Steven Madden, Ltd. was incorporated as a New York corporation on July 9, 1990, reincorporated under the same name in Delaware in November 1998 and completed our initial public offering in December 1993. Shares of Steven Madden, Ltd. common stock, $0.0001 par value per share, currently trade on the NASDAQ Global Select Market under the symbol “SHOO”. Our principal executive offices are located at 52-16 Barnett Avenue, Long Island City, NY 11104. Our telephone number is (718) 446-1800 and our website address is http://www.stevemadden.com. 
+We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports and information with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). These reports, any amendments to such reports, and our proxy statements for our stockholders' meetings are available free of charge, on the "Investor Relations" section of our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. We will provide paper copies of such filings free of charge upon request. The public may read and copy any materials filed by us with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information regarding the operation of the SEC's Public Reference Room is available by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding us, which is available at http://www.sec.gov. 
+We have a Code of Ethics for our Chief Executive Officer and our senior financial officers, as well as a Code of Business Conduct and Ethics specific to directors of the Company and a Code of Business Conduct and Ethics that is applicable to all of 
+1 
+our employees, each of which are attached as exhibits to the 2014 Annual Report on Form 10-K filed with the SEC on February 26, 2015 and posted on our website, http://www.stevemadden.com. We will provide paper copies of these codes free of charge upon request. We intend to disclose on our website any amendments to, or waivers of, these codes that would otherwise be reportable on a current report on Form 8-K. Such disclosure would be posted within four business days following the date of the amendment or waiver. 
+Net sales for 2015 increased 5% to $1,405,239 from $1,334,951 in 2014 . Net income attributable to Steven Madden, Ltd. increased 1% to $112,938 in 2015 compared to $111,880 in 2014 . Diluted earnings per share in 2015 increased to $1.85 per share on 61,142,000 diluted weighted average shares outstanding compared to $1.76 per share on 63,676,000 diluted weighted average shares outstanding in the prior year. 
+Product Distribution Segments 
+Our business is comprised of five distinct segments: Wholesale Footwear, Wholesale Accessories, Retail, First Cost and Licensing. 
+Our Wholesale Footwear segment is comprised of the following brands: Steve Madden Women's®, Madden Girl®, Steve Madden Men's®, Madden®, Dolce Vita®, DV by Dolce Vita®, Mad Love®, Steven by Steve Madden®, Report®, Report Signature®, Superga® (under license), Betsey Johnson®, Steve Madden Kids®, FREEBIRD by Steven®, Stevies®, B Brian Atwood®, Blondo® and includes our International business and certain private label footwear business. Our Wholesale Accessories segment includes Big Buddha®, Betseyville®, Betsey Johnson®, Steve Madden®, Steven by Steve Madden®, Madden Girl®, Cejon®, B Brian Atwood® and Luv Betsey® accessories brands and includes our International business and certain private label accessories business. These trademarks are registered trademarks owned by us or licensed to us by third parties. Steven Madden Retail, Inc., our wholly-owned retail subsidiary, operates Steve Madden, Steven and Superga retail stores along with one multi-branded SHOO by Steve Madden store offering a variety of the Company's brands, domestically and internationally, as well as Steve Madden, Superga, Betsey Johnson and Dolce Vita e-commerce websites. The First Cost segment represents activities of a subsidiary that earns commissions for serving as a buying agent for footwear products under private labels for many of the country's large mass-market merchandisers, shoe chains and other value priced retailers. Our Licensing segment is engaged in the licensing of the Steve Madden®, Steven by Steve Madden®, and Madden Girl® trademarks for use in connection with the manufacture, marketing and sale of outerwear, hosiery, activewear, sleepwear, jewelry, watches, hair accessories, umbrellas, bedding, luggage, and men’s leather accessories. In addition, we license our Betsey Johnson®, Betseyville®, and Dolce Vita® trademarks for use in connection with the manufacture, marketing and sale of women's and children’s apparel, hosiery, swimwear, outerwear, sleepwear, activewear, jewelry, watches, bedding, luggage, stationary, umbrellas, and household goods. 
+Wholesale Footwear Segment 
+Steve Madden Women's. We design, source and market our Steve Madden brand to department stores, specialty stores, luxury retailers, value priced retailers, national chains, mass merchants, online retailers and catalog retailers throughout the United States. The Steve Madden brand has become a leading life-style brand in the fashion conscious marketplace. Steve Madden Women's offers fashion forward footwear designed to appeal to customers (primarily women ages 16 to 35) seeking exciting, new footwear designs at affordable prices. New products for Steve Madden Women's are test marketed at Company-owned retail stores. Typically, within a few days, we can determine if the test product appeals to our customers. This enables us to use our flexible sourcing model to rapidly respond to changing trends and customer preferences, which we believe is essential for success in the fashion industry. 
+Madden Girl. We design, source and market a full collection of directional young women's shoes under the Madden Girl® brand. Madden Girl is geared for young women ages 16 to 23, and is an “opening price point” brand currently sold at major department stores, mid-tier retailers and specialty stores. 
+Steve Madden Men's. We design, source, and market a life style collection of men's footwear for the fashion forward man, ages 18 to 45 years old, under the Steve Madden® brand. Retail channels include major department stores, mid-tier department stores, better specialty stores, online retailers and independent shoe stores throughout the United States. Price points for Steve Madden Men's products range from $70 to $150 at retail. 
+Madden. T he Madden® brand is a streetwear focused collection of footwear geared to meet the trend directions of the 13 to 21 year old fashion consumer. Madden products range from $45 to $85 and are sold to national specialty stores, better department stores, mid-tier department stores, online retailers and independent specialty stores. 
+2 
+Steven. We design, source and market women's fashion footwear under the Steven® trademark through major department and better footwear specialty stores throughout the United States as well as in our retail stores. Priced a tier above the Steve Madden brand, Steven products are designed to appeal principally to fashion conscious women, ages 25 to 45, who shop at department stores and footwear boutiques. 
+Stevies and Steve Madden Kids. Our Stevies and Steve Madden Kids brands are designed, sourced and marketed to appeal to young girls, ages six to 12, and are sold at department stores, specialty stores, online retailers and independent boutiques throughout the United States. 
+Betsey Johnson . On October 5, 2010, the Company acquired the Betsey Johnson® trademark and substantially all other intellectual property of Betsey Johnson LLC. Products branded under the Betsey Johnson shoe brand are distributed through department stores and online retailers. 
+Superga. On February 9, 2011, the Company entered into a license agreement with Basic Properties America Inc. and BasicNet S.p.A., for the use of the Superga® trademark in connection with the marketing and sale of footwear. Founded in Italy in 1911, Superga is recognized for its fashion sneakers in a wide range of colors, fabrics and prints for women, men and children. 
+FREEBIRD by Steven . We design, source, and market a full collection of handcrafted, Goodyear welted boots. The designs are inspired by vintage Americana and created using time-honored craftsmanship. The FREEBIRD by Steven® collection conveys a unique fashion life style that transcends multiple generations. FREEBIRD by Steven products are currently sold, at retail prices ranging from $195 to $450 at major department stores, mid-tier retailers, and specialty boutiques. 
+Report. The Report and Report Signature brands were acquired in our May 2011 acquisition of Topline Corporation ("Topline"). We design, manufacture, market and sell our Report branded products to major department stores, mid-tier department stores and independently-owned boutiques throughout the United States. 
+Mad Love. Formed in April 2011 as a joint venture with the Company, the Mad Love® brand is an exclusive beach-to-the-street life style brand created to appeal to women with a young attitude and active life style and marketed to Target. 
+Dolce Vita. In August 2014, the Company acquired the Dolce Vita® and DV® brands and other intellectual property assets in the acquisition of Dolce Vita Holdings, Inc. The Dolce Vita brand is a contemporary women's footwear brand with price points ranging from $120 to $350. The DV brand, which is designed for younger fashion conscious women, has price points ranging from $60 to $200. Both brands are distributed through department stores and online retailers. 
+Brian Atwood. In March 2014, the Company acquired the Brian Atwood® designer brand and the B Brian Atwood® contemporary brand from Brian Atwood IP Company LLC. Founded in 2011, Brian Atwood is known for luxury shoes manufactured in Italy. 
+Blondo. In January 2015, the Company acquired the intellectual property and related assets of Blondo, a fashion-oriented footwear brand specializing in waterproof leather boots. Founded over 100 years ago, Blondo products are sold to wholesale customers, including better department stores and specialty boutiques in both the United States and Canada. 
+International Division. The International division, utilizing the brands discussed above, markets products to better department stores, major department stores, mid-tier department stores, specialty stores, luxury retailers, value priced retailers, national chains, mass merchants and catalog retailers throughout Canada, Mexico and South Africa. In addition the International division works through special distribution arrangements for the marketing and sales of our products in Asia, Australia, Europe, India, the Middle East, South and Central America and New Zealand. 
+Private label business. We design, source and market private label footwear primarily to mid-tier chains and mass market merchants. In addition, we design, source and market footwear for third party brands, such as Material Girl® and Candies®. 
+Wholesale Accessories Segment 
+Our Wholesale Accessories segment designs, sources and markets name brands (including our Steve Madden®, Steven by Steve Madden®, Madden Girl®, Betsey Johnson®, Betseyville®, Big Buddha®, B Brian Atwood® and Luv Betsey® brands) and private label fashion handbags and accessories to department stores, mass merchants, value priced retailers, online retailers and specialty stores throughout the United States, Canada and Mexico. In addition, we market and sell cold weather accessories, 
+3 
+fashion scarves, wraps and other trend accessories primarily under our Cejon® and Steve Madden® brand names and private labels to department stores and specialty stores. 
+Retail Segment 
+As of December 31, 2015 , we owned and operated 169 retail stores including 123 Steve Madden full price stores, 40 Steve Madden outlet stores, one Steven store, one Superga store, one SHOO by Steve Madden store offering a variety of the Company's brands and four e-commerce websites (Steve Madden, Superga, Betsey Johnson and Dolce Vita). In 2015 , we opened seven new full price stores, eight new outlet stores and closed six stores, including five full price stores in the United States and one full price store in Mexico. Steve Madden stores are located in major shopping malls and in urban street locations across the United States, Canada, Mexico and South Africa. Comparative store sales (sales of those stores, including the e-commerce websites, that were open for all of 2015 and 2014 ) increased 11.2% in fiscal year 2015 from the prior year. The Company excludes new locations from the comparable store base for the first year of operations. Stores that are closed for renovations are removed from the comparable store base. 
+We anticipate that the Retail segment can enhance the Company's overall sales and profitability while increasing recognition for our brands. 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 our two Wholesale segments. We expect to open 17 to 20 new retail stores in 2016 . 
+First Cost Segment 
+The First Cost segment earns commissions for serving as a buying agent for footwear products under private labels for many of the 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 customer specifications. We believe that by operating in the private label, mass merchandising market provides us additional non-branded sales opportunities and leverages our overall sourcing and design capabilities. Currently, our First Cost segment earns commissions serving as a buying agent for the procurement of women's, men's and children's footwear for large retailers, including, Kohl's, K-Mart and Payless. In addition, by leveraging the strength of our Steve Madden brands and product designs, we have been able to partially recover our design, product and development costs from our suppliers. 
+Licensing Segment 
+We license our Steve Madden®, Steven by Steve Madden® and Madden Girl® trademarks for use in connection with the manufacture, marketing and sale of outerwear, hosiery, activewear, sleepwear, jewelry, watches, hair accessories, umbrellas, bedding, luggage, and men’s leather accessories. In addition, the Company licenses the Betsey Johnson®, Betseyville® and Dolce Vita® trademarks for use in connection with the manufacture, marketing and sale of women's and children’s apparel, hosiery, swimwear, outerwear, sleepwear, activewear, jewelry, watches, bedding, luggage, stationary, umbrellas, and household goods. 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 P to our Consolidated Financial Statements included in this Annual Report on Form 10-K 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. Our future success will substantially depend on our ability to continue to anticipate and react swiftly to changing consumer demands. 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 that fit our image, reflect current or anticipated trends and can be manufactured in a timely and cost-effective manner. Most new Steve Madden products are tested in select Steve Madden retail stores. Based on these tests, among other things, management selects the Steve Madden products that are then offered for wholesale and retail distribution nationwide. We believe that our design and testing processes and flexible sourcing models provide the Steve Madden brands with a significant competitive advantage allowing us to mitigate the risk of incurring costs associated with the production and distribution of less desirable designs. 
+4 
+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 use agents and our own sourcing office to source our products from independently-owned manufacturers in China, Mexico, India, Brazil, Indonesia, Vietnam and Italy. We have established relationships with a number of manufacturers and agents in each of these countries. 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 raw materials used in our footwear, which are currently 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 of products on a timely basis, which helps reduce the close out of slow-moving products. 
+The manufacturers of our products are required to meet our quality, human rights, safety and other standard requirements. We are committed to the safety and well-being of the workers throughout our supply chain. 
+Our products are manufactured overseas and a majority of our products filling domestic orders are shipped via ocean freight carriers to ports in California, New Jersey and Texas with the greatest reliance on the California ports. To a lesser extent we rely on air and ground freight carriers for the shipping of products. Once our products arrive in the U.S., we distribute them mainly from four third-party distribution centers, two located in California, one located in Texas and one located in New Jersey and through two Company-operated distribution centers located in New Jersey and Canada. 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. For our international markets, products for our businesses in Canada and Mexico are shipped to ports in the respective countries, and products for our overseas distributors are shipped to freight forwarders in China where the distributor arranges for subsequent shipment. 
+Customers 
+Our wholesale customers consist principally of better department stores, major department stores, mid-tier department stores, national chains, mass merchants, value priced retailers, specialty stores, online retailers and catalog retailers. These customers include, Target, Macy's, Nordstrom, Ross, DSW, Payless, TJ Maxx, Walmart, Kohl's and Burlington Coat Factory. For the year ended December 31, 2015 , Target, Inc. represented 12.2% of net sales and 16.7% of total accounts receivable. The Company did not have any other customers who accounted for more than 10% of total net sales or 10% of total accounts receivable. 
+Distribution Channels 
+United States, Canada, Mexico and South Africa 
+We sell our products principally through department stores, specialty stores, online retailers, luxury retailers, national chains and mass merchants and in our Company-owned retail stores in the United States, Canada, Mexico and South Africa and our e-commerce websites. For the year ended December 31, 2015 , our Retail segment and our two Wholesale segments generated net sales of approximately $240,312 and $1,164,927 , or 17% and 83% of our total net sales, respectively. Each of these distribution channels is described below. 
+Steve Madden, Steve Madden Outlet, Steven and Superga Retail Stores. As of December 31, 2015 , we operated 123 Steve Madden full price stores, 40 Steve Madden outlet stores, one Steven store, one Superga store and four e-commerce websites (Steve Madden, Superga, Betsey Johnson and Dolce Vita). We believe that our retail stores will continue to enhance overall sales, profitability, and our ability to react swiftly to changing consumer trends. Our stores also serve as 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 1,500 to 2,000 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 and Superga 
+5 
+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. The typical outlet store is approximately 2,000 to 2,500 square feet and is located within outlet malls throughout the United States. 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 2,500 doors of 17 department stores throughout the United States, Canada and Mexico. Our major accounts include Macy's, Nordstrom, Dillard's, Belk and Lord & Taylor. 
+We provide merchandising support to our department store customers including, 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 in which to showcase a broader collection of our branded products. 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. 
+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 phasing out styles with weaker sell-throughs, which, in turn, reduces markdown exposure at season's end. 
+National chains and mass merchants. We currently sell to national chains and mass merchants throughout the United States, Canada and Mexico. Our major accounts include Target, Walmart, Kohl's, J.C. Penney and Sears. 
+Specialty Stores/Catalog Sales. We currently sell to specialty store locations throughout the United States, Canada and Mexico. 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 Bloomingdale's and Victoria's Secret. 
+Internet Sales. We operate four Internet e-commerce website stores (Steve Madden, Superga, Betsey Johnson and Dolce Vita) where customers can purchase numerous styles of our Steve Madden Women's, Steven, Madden Men's, FREEBIRD by Steven, Superga, Betsey Johnson and Dolce Vita, as well as selected styles of Madden Girl, footwear and accessory products. We also sell to online retailers throughout the United States and Canada. Our major accounts include Zappos and Amazon. 
+International 
+Our products are available in many countries and territories worldwide via retail selling and distribution agreements. Under the terms of these agreements, the distributors and retailers purchase product from the Company and are generally required to open a minimum number of stores each year and to pay 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. Most of the distributors are required to purchase a minimum number of products within specified periods. The agreements currently in place expire on various dates through February 14, 2031 and include automatic renewals at the distributors' option provided certain conditions are met. These agreements are exclusive in their specific territories, which include Asia, Australia, Europe, India, the Middle East, South and Central America and New Zealand. 
+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, Jessica Simpson, Guess, Ugg and Aldo. Our competitors may have greater financial and other resources than we do. We believe effective advertising and marketing, favorable brand image, fashionable styling, high quality, value and fast manufacturing turnaround are the most important competitive factors and intend to continue to employ these elements in our business. 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. 
+6 
+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 life style 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 websites where customers can purchase Steve Madden Women's, Steven, Madden Men's, FREEBIRD by Steven, Superga, Betsey Johnson and Dolce Vita, as well as selected styles of Madden Girl, footwear and accessory products, as well as view exclusive content, participate in contests and “live chat” with customer service representatives. We also connect with our customers through social media forums including Twitter, Facebook and Instagram. 
+Management Information Systems (MIS) Operations 
+Sophisticated information systems are essential to our ability to maintain our competitive position and to support continued growth. Our wholesale information system is an Enterprise Resource Planning (“ERP”) system. This integrated system supports our wholesale business in the areas of finance and accounting, manufacturing-sourcing, purchase order management, customer order management and inventory control. We completed the implementation of this new ERP system for our wholesale business in 2014. During 2015, we completed the implementation of such ERP system in three of our acquired businesses and are currently in the process of implementing the ERP system for one of our U.S.-based wholesale businesses and its Asia first-cost and sourcing operation as well as our Mexico business. In 2014 we completed the implementation of a new warehouse management system that is utilized by our third-party logistics providers. During 2015 we implemented this warehouse management system in a company-owned warehouse. This warehouse management system interfaces with our ERP system. We have a new business-to-consumer e-commerce software platform that we are currently in the process of implementing as to businesses acquired. We are also currently implementing a point of sale system for our retail stores that is integrated with a retail inventory management/store replenishment system. Complimenting all of these systems are ancillary systems and third-party information processing services including, among others, supply chain, business intelligence/data warehouse, Electronic Data Interchange, credit card processing and payroll. We undertake updates of all of these information management systems on a periodic basis in order to ensure that our functionality is continuously improved. 
+Intellectual Property 
+Trademarks 
+We consider our trademarks to be among our most valuable assets and have registered many of our marks in the United States and 94 other countries and in numerous International Classes. From time to time we adopt new trademarks and new logos and/or stylized versions of our trademarks in connection with the marketing of new product lines. We believe that these 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. What follows is a list of the trademarks we believe are most significant to our business: 
+Steve Madden® 
+Report® 
+Steven by Steve Madden® 
+Report Signature® 
+Steven® 
+R Design® 
+Madden Girl® 
+Brian Atwood® 
+Stevies® 
+B Brian Atwood® 
+Big Buddha® 
+Dolce Vita® 
+Betseyville® 
+DV BY DOLCE VITA® 
+Betsey Johnson® 
+DV® 
+LUV BETSEY plus Kiss Design® 
+Wild Pair® 
+LUV BETSEY by Betsey Johnson Design® 
+MadLove® 
+Blondo® 
+7 
+We act aggressively to register trademarks and we monitor their use in order to protect them against infringement. There can be no assurance, however, that we will be able to effectively obtain rights to our marks throughout all 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 adequately protect our trademarks from unlawful and improper appropriation may have a material adverse effect on our business, financial condition, results of operations and liquidity. 
+Trademark Licensing 
+Our strategy for the continued growth of the Company's business includes expanding the Company's presence beyond footwear and accessories through the selective licensing of our brands. As of December 31, 2015 , we license our Steve Madden®, Steven by Steve Madden®, and Madden Girl® trademarks for use in connection with the manufacture, marketing and sale of outerwear, hosiery, activewear, sleepwear, jewelry, watches, hair accessories, umbrellas, bedding, luggage, and men’s leather accessories. In addition, the Company licenses the Betsey Johnson®, Betseyville®, and Dolce Vita® trademarks for use in connection with the manufacture, marketing and sale of women's and children’s apparel, hosiery, swimwear, outerwear, sleepwear, activewear, jewelry, watches, bedding, luggage, stationary, umbrellas, and household goods. 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. 
+In addition to the licensing of our trademarks, we also license the trademarks of third parties for use in connection with certain of our product lines. Through a license agreement with Basic Properties America Inc. and BasicNet S.p.A we have the right to use the Superga® trademark in connection with the marketing and sale of footwear through December 31, 2022. This licensing agreement requires 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. See Notes A and O to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional disclosure regarding these licensing arrangements. 
+Employees 
+On February 1, 2016 , we employed approximately 3,578 employees, of whom approximately 2,260 work on a full-time basis and approximately 1,318 work on a part-time basis. Most of our part-time employees work in the Retail segment. Approximately 2,437 of our employees are located in the United States, approximately 696 employees are located in Hong Kong and China, approximately 331 employees are located in Canada and approximately 114 employees are located in Mexico. 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, some of our businesses, including our Retail segment, 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 among our 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 approximately $295,000 and $312,000, as of February 1, 2016 and 2015 , 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 products through our open stock program. Accordingly, a comparison of backlog from period to period may not be indicative of eventual shipments. 
+8

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+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 2016 Annual Meeting of Stockholders, and is incorporated herein by reference.

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+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 
+31 
+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, 2015 , of our internal control over financial reporting based on the framework and criteria established in the 2013 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, 2015 , our internal control over financial reporting was effective. 
+Our independent registered public accounting firm, EisnerAmper LLP, has audited the Company's consolidated financial statements and the effectiveness of the Company's internal control over financial reporting as of December 31, 2015 . Their report appears in this Annual Report on Form 10-K. 
+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, 2015 , which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

raw/filings/0000913241/2015/0001628280-16-011839/rpt_disclosure.txt

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+and Related Party Transactions 
+JLM
+Consultants, Inc. Commencing in 2004, the Company engaged JLM Consultants, Inc., a company wholly-owned by John L. Madden,
+who, until his passing in October 2015, had served as a director of the Company for more than 20 years, to provide consulting
+services to the Company with respect to the development of international sales of the Company. Mr. Madden was the brother of Steven
+Madden, the Company’s founder and Creative and Design Chief. The services were provided under a consulting agreement (the
+“JLM Consulting Agreement”) dated February 23, 2012 between the Company and JLM Consultants, Inc. In accordance
+with the terms of the JLM Consulting Agreement, for the 2015 Fiscal Year, JLM Consultants, Inc. received the following compensation
+from the Company for services rendered: (a) a commission equal to 1% of net sales, excluding retail royalty income; (b) a
+commission equal to 10% of retail royalty income; (c) 1% of any commission income to the International division that is not
+recognized in net sales; (d) a monthly draw in the amount of $25,000, which amount is offset against commissions earned;
+(e) a $1,000 per month travel allowance; and (f) monthly reimbursements, in the aggregate amount of $17,168 in the 2015
+Fiscal Year, for health insurance premiums for John L. Madden. Pursuant to this arrangement, JLM Consultants, Inc. received a
+total of $1,372,721 from the Company in the 2015 Fiscal Year. 
+17 
+Pursuant
+to the JLM Consulting Agreement, on January 2, 2013, the Company issued 72,012 restricted shares of the Company’s Common
+Stock (the number of shares indicated having been adjusted for an October 1, 2013 three-for-two stock split effected as a
+stock dividend) to JLM Consultants, Inc. under the Steven Madden, Ltd. 2006 Stock Incentive Plan, as amended (the “2006
+Plan”). The shares vested in twelve substantially equal quarterly installments over a three-year period commencing on April 1,
+2013 and ending on January 1, 2016. 
+Steven
+Madden Employment Agreement. 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 fiscal
+year ended December 31, 2011 will be at the sole discretion of the Company’s Board of Directors. Under the agreement,
+as amended, Mr. Madden’s annual base salary was 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, on February 8, 2012, Mr. Madden was granted 1,463,056 restricted shares
+of Common Stock (the number of shares indicated having been adjusted for an October 1, 2013 three-for-two stock split effected
+as a stock dividend), valued at approximately $40 million, under 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. 
+On
+June 30, 2012, pursuant to an election right granted to him under the agreement, as amended, Mr. Madden notified the Company
+of his election to receive an additional restricted stock award valued at $40 million in consideration of a reduction in
+his annual base salary in years subsequent to 2012. Accordingly, on July 3, 2012, Mr. Madden was issued 1,893,342 restricted
+shares of Common Stock (the number of shares indicated having been adjusted for an October 1, 2013 three-for-two stock split
+effected as a stock dividend) under the 2006 Plan. The restricted Common Stock 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. As a result of his election to receive an additional restricted stock award,
+Mr. Madden’s annual base salary for years subsequent to 2012 has been reduced 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. 
+Mr. Madden
+is also eligible to receive annually, on or about the date of the Company’s annual meeting of stockholders (but not later
+than June 30 th ), 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) 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 750,000 shares of the Company’s Common Stock (the number of shares subject
+to this potential stock option award having been adjusted for an October 1, 2013 three-for-two stock split effected as a
+stock dividend) 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. 
+18 
+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
+the 2015 Fiscal Year, Mr. Madden earned $8,250,000 in base salary and received $200,000 for the payment of an annual life
+insurance premium. Mr. Madden opted to waive his right to the Annual Option for the 2015 Fiscal Year. 
+Loan
+to Steven Madden. 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 hold the underlying shares of Common Stock. The loan is evidenced
+by a secured promissory note executed by Mr. Madden in favor of the Company, the security for which is a security interest in
+a certain securities brokerage account maintained by Mr. Madden with his broker; none of the securities in the securities brokerage
+account are shares of the Company’s Common Stock. There have been successive amendments to the secured promissory note,
+the most recent of which occurred in April 2016, at which time the secured promissory note was amended to substitute the collateral
+securing the secured promissory note from shares of the Company’s Common Stock to the security interest in Mr. Madden’s
+securities brokerage account. Previously, on January 3, 2012, the secured promissory note was amended and restated to extend the
+maturity date of the obligation to December 31, 2023 and eliminate the accrual of interest after December 31, 2011.
+Prior to the January 3, 2012 amendment, the secured promissory note had been accruing interest at the rate of 6% per annum. In
+addition, the secured promissory 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 its security interest in a portion of the securities held in Mr. Madden’s securities brokerage
+account generally correlating to the amount of indebtedness cancelled on such date. As of December 31, 2011, interest in
+the amount of $1,090,000 had accrued on the principal amount of the secured promissory note and, as noted above, interest was
+eliminated after December 31, 2011. On December 31, 2015, the required one-tenth of the principal amount of the secured
+promissory note, together with accrued interest, was written-off by the Company. 
+Steven
+Madden is the brother of John L. Madden, who served as a director of the Company until his passing in October 2015. 
+19 
+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 or she 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. 
+COMPENSATION

raw/filings/0000913241/2021/0001628280-22-004561/filing_metadata.csv

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+0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2022-03-01,2021-12-31,2022-03-01T22:04:08.000Z,0001628280-22-004561,shoo-20211231.htm,10-K,11154647,1,1,https://www.sec.gov/Archives/edgar/data/913241/000162828022004561/shoo-20211231.htm,https://www.sec.gov/Archives/edgar/data/913241/000162828022004561/,2021,2021,1

raw/filings/0000913241/2021/0001628280-22-004561/item1.txt

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+ITEM 1. BUSINESS 
+Steven Madden, Ltd. and its subsidiaries design, source and market fashion-forward branded and private label footwear, accessories and apparel for women, men and children. We distribute our products through department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers and independent stores throughout the United States, Canada, Mexico, Europe, South Africa and certain other international markets. In addition, our products are distributed through our retail stores within the United States, Canada, Mexico and South Africa, and our joint ventures in Israel, Taiwan and China, and under special distribution arrangements in certain European countries, the Middle East, South and Central America, and various countries in Asia, in addition to our e-commerce sites. Our product lines include a broad range of contemporary styles designed to establish or capitalize on market trends, complemented by core product offerings. We have established a reputation for design creativity and our ability to offer quality, trend-right products at accessible price points, delivered in an efficient manner and time frame. 
+The following is a description of our business as of December 31, 2021. 
+OUR SEGMENTS 
+Wholesale Footwear 
+Our Wholesale Footwear segment designs, sources and markets our brands and sells our products to department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers and independent stores throughout the United States, Canada, Mexico, Europe, South Africa, and through our joint ventures and international distributor network. Our Wholesale Footwear business consists of fashion-forward footwear for women, men, and children. Our products are designed and marketed for various lifestyles and include dress shoes, boots, booties, fashion sneakers, sandals and casual shoes. The Wholesale Footwear segment primarily consists of the following brands: Steve Madden®, Steven by Steve Madden ® , Madden Girl ® , BB Dakota ® , Dolce Vita ® , DV Dolce Vita ® , Betsey Johnson ® , GREATS ® , Blondo ® , Anne Klein ® , Mad Love ® , Superga, COOL Planet ® and Madden NYC™. This segment also includes our private label footwear business. This segment represented 54.8% of total revenue during 2021. 
+Wholesale Accessories/Apparel 
+Our Wholesale Accessories/Apparel segment designs, sources and markets our brands and sells our products to department stores, mass merchants, off-price retailers, online retailers, specialty retailers and independent stores throughout the United States, Canada, Mexico, Europe, South Africa, and through our joint ventures and international distributor network. Our Wholesale Accessories/Apparel business primarily consists of handbags, apparel, small leather goods, belts, soft accessories, fashion scarves, wraps, gifting and other trend accessories. The Wholesale Accessories/Apparel segment primarily consists of the following brands: Steve Madden ® , BB Dakota ® , Anne Klein ® , Betsey Johnson ® , Cejon ® , Madden NYC™ and Dolce Vita ® . This segment also includes our private label handbag and accessories business. The agreement under which we licensed the Cupcakes & Cashmere ® trademark terminated in April 2021. This segment represented 18.4% of total revenue during 2021. 
+Direct-to-Consumer 
+Our Direct-to-Consumer segment, which was referred to as the Retail segment in previous filings, consists of Steve Madden ® and Superga ® full-price retail stores, Steve Madden ® outlet stores, Steve Madden ® shop-in-shops and directly-operated digital e-commerce websites. Our retail stores are located in regional malls and shopping centers, as well as high streets in major cities across the United States, Canada, Mexico, South Africa, Israel, Taiwan and China. Our stores play an important role in our test-and-react and omnichannel strategy, and also serve as fulfillment and return locations for our e-commerce business. Our stores also serve as a marketing tool that allows us to strengthen global brand recognition and to showcase selected items from our full line of branded and licensed products. In addition to these testing and marketing benefits, we have also been able to leverage sales information gathered at Steve Madden retail stores and our websites to assist our wholesale customers in their order placement and inventory management. We believe that our retail stores, and websites, enhance overall sales and profitability, and our ability to react quickly to changing consumer demands. 
+In 2021, we added eight brick-and-mortar stores and closed five brick-and-mortar stores, and one e-commerce website. As of December 31, 2021, we operated 214 brick-and-mortar retail stores, including 147 Steve Madden full-price stores, 66 Steve Madden outlet stores and one Superga store, as well as six e-commerce websites. In addition, during 2021, we closed one concession in Taiwan and opened one concession in China, ending the year with 17 company-operated concessions in international markets. In fiscal year 2022, we expect to open 10 to 12 new brick-and-mortar retail stores in international markets and close three to six locations globally. 
+3 
+In addition to our stores, our Direct-to-Consumer business offers products online through our Steve Madden e-commerce sites in the United States, Canada, Mexico, Europe, Israel, South Africa and Asia as well as our six e-commerce sites, which include: www.SteveMadden.com, www.DolceVita.com www.betseyjohnson.com, www.Blondo.com, www.GREATS.com and www.Superga-USA.com. 
+This segment represented 26.1% of total revenue during 2021. 
+First Cost 
+Our First Cost segment represents activities of one of our wholly-owned subsidiaries that earns commissions for serving as a buying agent for footwear products under private labels for select national chains, specialty retailers and value-priced retailers. As a buying agent, we utilize our expertise and our relationships with shoe manufacturers to facilitate the production of private label shoes to customer specifications. We believe that operating in the private label market provides us additional non-branded sales opportunities and leverages our overall sourcing and design capabilities. In addition, by leveraging the strength of our Steve Madden brands and product designs, we are able to partially recover our design, product and development costs from our suppliers. 
+Licensing 
+Our Licensing segment is engaged in the licensing of the Steve Madden ® and Madden Girl ® trademarks for use in connection with the manufacturing, marketing and sale of select apparel categories, outerwear, hosiery, jewelry, hair accessories, watches, eyeglasses, sunglasses, umbrellas, bedding, luggage, fragrance and men’s leather accessories. We license the Betsey Johnson ® trademark for use in connection with the manufacturing, marketing and sale of women's and children’s apparel, hosiery, swimwear, slippers, fragrance and beauty, sleepwear, activewear, medical scrubs, jewelry, watches, eyeglasses, sunglasses, bedding and bath, luggage, umbrellas and self-care bath and body products. Most of our license agreements require the licensee to pay us a royalty based on actual net sales, a minimum royalty in the event the specified net sales targets are not achieved and a percentage of sales for advertising the brand. 
+Corporate 
+Our Corporate activities do not constitute a reportable segment and include costs that are not directly attributable to the segments. These costs are primarily related to our corporate executives, corporate finance, corporate social responsibility, legal, human resources, information technology, cybersecurity and other shared costs. 
+For additional information on our segments, refer to Note T – Segment Information in the Notes to our consolidated financial statements included in this Annual Report. 
+OUR BRANDS 
+Steve Madden Women's. We design, source and market a lifestyle collection of women’s fashion-forward footwear and accessories for women ages 16 to 35 under the Steve Madden® brand. Retail channels include department stores, off-price retailers, online retailers, shoe chains, specialty retailers and independent stores worldwide as well as Steve Madden websites across the globe. Retail price points for Steve Madden Women's footwear range from $59 to $199 and accessories range from $39 to $99. 
+Madden Girl. We design, source and market a full collection of directional young women's footwear and accessories under the Madden Girl ® brand. Madden Girl ® is geared towards fashion-forward young women ages 13 to 25 and is an “opening price point” brand. Retail channels include department stores, off-price retailers, shoe chains, online retailers and specialty retailers throughout the United States and select international markets as well as on www.stevemadden.com.. Retail price points for Madden Girl ® footwear range from $39 to $89 and accessories range from $29 to $49. 
+Steve Madden Men's. We design, source and market a lifestyle collection of men's fashion-forward footwear for men, ages 18 to 45 under the Steve Madden ® brand. Retail channels include department stores, off-price retailers, shoe chains, online retailers, specialty retailers and independent stores throughout the United States and select international markets as well as on www.stevemadden.com. Retail price points for Steve Madden Men's products range from $69 to $169. 
+Madden. The Madden ® brand is a collection of casual and business casual footwear designed to meet the ever-evolving needs of the trend-conscious young male consumer, ages 16 to 35. Retail channels include department stores, off-price retailers, shoe chains, online retailers and independent stores throughout the United States. Retail price points for Madden ® products range from $39 to $89. 
+4 
+Steven. We design, source and market women's fashion footwear and accessories under the Steven® trademark. Steven products are designed to appeal to fashion conscious women ages 25 to 45 who grew up wearing Steve Madden footwear and are looking for a shoe with an emphasis on comfort. Retail channels include department stores, off-price retailers, shoe chains, online retailers, specialty retailers and independent stores throughout the United States as well as on www.stevemadden.com. Retail price points for Steven footwear range from $39 to $99 and accessories from $39 to $79. 
+Steve Madden Kids. We design, source and market our Steve Madden Kids ® brand to appeal to toddlers, ages 3 to 6, young girls, ages 6 to 11, and tweens, ages 11 to 14. Retail channels include department stores, online retailers, shoe chains, off-price retailers, specialty retailers and independent stores throughout the United States and in select international markets as well as on www.stevemadden.com. Retail price points for Steve Madden Kids products range from $49 to $99. 
+Betsey Johnson. On October 5, 2010, we acquired the Betsey Johnson ® trademark and substantially all other intellectual property of Betsey Johnson LLC. Betsey Johnson® footwear and accessories are designed for inclusive, punky and fiercely independent women ages 25 to 45. Retail channels include major department stores, off-price retailers, shoe chains, online retailers, specialty retailers and independent stores throughout the United States as well as on www. betseyjohnson.com Retail price points for Betsey Johnson ® footwear range from $79 to $149 and handbags range from $29 to $109. 
+Superga. On February 9, 2011, we entered into a license agreement with Basic Properties America Inc. and BasicNet S.p.A., for the use of the Superga ® trademark in connection with the marketing and sale of footwear. Founded in Italy in 1911, Superga ® is recognized for its fun lifestyle and vulcanized rubber sole sneakers in a wide range of colors, fabrics and prints for women, men and children. Retail channels include department stores, online retailers, shoe chains, off-price retailers, specialty retailers and independent stores as well as on www. superga-usa.com. Retail price points for Superga ® products range from $65 to $129. 
+Mad Love . The Mad Love ® brand is a beach-to-the-street lifestyle brand created to appeal to women with a young attitude and active lifestyle, and marketed exclusively to Target Corporation. As of spring 2021, Mad Love ® has become a sustainable brand, designed and created with the mission to make our earth a better place. Retail price points for Mad Love ® products range from $15 to $25. 
+Dolce Vita. In August 2014, we acquired the Dolce Vita ® and DV ® brands (collectively "Dolce Vita"). Dolce Vita ® is a contemporary women's footwear brand with retail price points ranging from $79 to $225. Our Dolce Vita ® brand products are distributed through department stores, online retailers, shoe chains, off-price retailers, specialty retailers and independent shoe stores throughout the United States. In December 2021, we acquired the Dolce Vita ® handbag line. The DV ® brand is a contemporary women's footwear brand with retail price points ranging from $39 to $99. DV ® products are distributed through major department stores, online retailers, shoe chains, off-price retailers, specialty retailers and independent shoe stores throughout the United States. 
+Blondo. In January 2015, we acquired the intellectual property and related assets of Blondo ® , a 100 year-old footwear brand recognized for its quality water-resistant leather boots, booties, casual shoes and sneakers. Blondo ® products are distributed through department stores, off-price retailers, shoe chains, online retailers, specialty retailers and independent stores throughout the United States and Canada as well as on www.dolcevita.com . Retail price points for Blondo ® products range from $89 to $200. 
+GREATS. In August 2019, we acquired GREATS ® , a Brooklyn-based digitally native footwear brand founded in 2014 which specializes in premium quality, responsibly made sneakers for men and women. GREATS ® products are distributed through department stores, online retailers, specialty retailers and independent stores in the United States as well as on www.greats.com . Retail price points for GREATS ® products range from $119 to $199. 
+Anne Klein. In January 2018, we entered into a license agreement with WHP Global for a license to use the Anne Klein®, AK Sport ® , AK Anne Klein Sport ® and Lion Head Design ® (collectively "Anne Klein ® ") trademarks in connection with the design, marketing and sale of footwear and accessories. The Anne Klein® brand has a rich heritage going back 50 years, and is recognized for its dedication to timeless American classics. Retail channels include department stores, off-price retailers, shoe chains, online retailers, specialty retailers and independent stores throughout the United States and select international markets as well as on www.anneklein.com . Retail price points for Anne Klein® footwear range from $59 to $129 and accessories range from $49 to $99. 
+Madden NYC ™ . The Madden NYC brand is a fashion forward brand marketed exclusively to Walmart, Inc. Retail price points for Madden NYC™ products range from $16 to $22. 
+5 
+BB Dakota Steve Madden. In August 2019, we acquired BB Dakota ® and launched a co-branded apparel collection in Fall 2020. BB Dakota Steve Madden products are distributed through department stores, online retailers and independent stores in the United States and select international markets as well as on stevemadden.com. Retail price points for BB Dakota Steve Madden products range from $39 to $129. In the fourth quarter of 2021, we decided to transition BB Dakota Steve Madden products to the Steve Madden brand. 
+PRODUCT DESIGN AND DEVELOPMENT 
+We have established a reputation for our creative designs, marketing and trend-right products at affordable price points. Our future success will substantially depend on our ability to continue to anticipate and react quickly to changing consumer demands. To meet this objective, we have developed what we believe is an unparalleled design team and process. Our design team strives to create designs that are true to our DNA, reflect current or anticipated trends and can be manufactured in a timely and cost-effective manner. Most new products are tested in select Steve Madden retail stores and on www.stevemadden.com. Based on these tests, among other things, management selects products that are then offered for wholesale and retail distribution worldwide. We believe that our design and testing processes combined with our flexible sourcing model provide our brands with a significant competitive advantage and allows 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 any foreign manufacturing facilities; rather, we use agents and our own sourcing office to source our products from independently owned manufacturers primarily in China and also in Cambodia, Mexico, Brazil, Vietnam, India, Italy and other European nations. We have established relationships with a number of manufacturers and agents in each of these countries. 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 raw materials used in our footwear, which are currently 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. 
+The manufacturers of our products are required to meet quality, human rights, safety and other standard requirements. We are committed to the safety and well-being of the workers throughout our supply chain. 
+Our products are manufactured overseas and most of our products are shipped via ocean freight carriers to ports principally to our third-party distribution facilities in California and to a lesser extent in New Jersey, and via truck from Mexico to our third-party distribution facility in Texas. We rely to a lesser extent on air carriers for the shipping of products. Once our products arrive in the U.S., we distribute them mainly from six third-party distribution centers, four located in California, one located in Texas, and one located in New Jersey. Our products are also distributed through a Company-operated distribution center located in Canada and through our third-party distribution facility in Mexico and Europe. By utilizing distribution facilities specializing in fulfillment for certain wholesale customers and Steve Madden retail stores we believe that our consumers are served more promptly and efficiently. Suppliers of products for our businesses in Canada, Mexico, Europe and South Africa, and our joint ventures in Israel, Taiwan and China ship to ports in the respective countries, and products for our overseas distributors are shipped to freight forwarders primarily in China and Mexico where the distributor arranges for subsequent shipment. See Item 1A “Risk Factors” below for a discussion of the risk of supply chain disruptions. 
+DISTRIBUTION CHANNELS 
+We distribute our products principally through department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains and specialty retailers and independent stores in the United States, Canada, Mexico, Europe and other international markets. In addition, we sell our products in our Company-owned retail stores in the United States, Canada, Mexico and South Africa, under our joint ventures Israel, Taiwan and China, and on our e-commerce websites. For the year ended December 31, 2021, our two Wholesale segments and our Retail segment generated net sales of approximately $1,365,997 and $487,906, or 73% and 26% of our total revenue, respectively. Each of these distribution channels is described below. 
+Department Stores. We currently sell our products to approximately 4,500 doors of 15 department store retailers throughout the United States, Canada, Mexico, Europe and other select international markets. Our major accounts include Nordstrom, Inc., Macy's, Inc., and Dillard's, Inc. We provide merchandising support to our department store customers, including 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 in which we showcase a broader collection of our branded 
+6 
+products. 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. In addition, these in-store concept shops encourage longer term commitment by the retailer to our products and enhance consumer brand awareness. 
+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 also 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 phasing out styles with weaker sell-through, which, in turn, reduces markdown exposure at the end of the season. 
+Off-Price Retailers. We currently sell to off-price retailers throughout the United States, Canada, Mexico, Europe and other select international markets. Our major accounts include The TJX Companies, Inc., Ross Stores, Inc. and Burlington Stores, Inc. 
+Mass Merchants and National Chains. We currently sell to national chains and mass merchants throughout the United States, Canada, Mexico and other select international markets. Our major accounts include Walmart Inc., Target Corporation and Kohl's Corporation. 
+Shoe Chains/Specialty Retailers. We currently sell to shoe chains and specialty retailers throughout the United States, Canada, Mexico, Europe and other select international markets. Our major specialty store accounts include DSW Designer Brands, Famous Footwear and Shoe Carnival. We offer our shoe chain customers similar merchandising, sell-through and inventory tracking support offered to our department store customers. 
+Online Retailers. We currently sell to pure-play online retailers throughout the United States, Canada, Mexico, Europe and other select international markets. Our major accounts include Amazon.com, Inc., Zalando SE and ASOS. 
+E-Commerce Websites. We operate six e-commerce website stores (Steve Madden, Dolce Vita, Betsey Johnson, Blondo, GREATS and Superga,) where customers can purchase a variety of styles of our Steve Madden Women's, Steven, Madden Men's, Dolce Vita, Betsey Johnson, Blondo, GREATS and Superga products and BB Dakota x Steve Madden apparel, as well as select styles of Madden Girl and Steve Madden kids products. For additional information about our digital sales, refer to the above description of our Direct-to-Consumer segment. 
+Steve Madden and Superga Retail Stores. As of December 31, 2021, we operated 147 Steve Madden full-price stores within the United States, Canada, Mexico and South Africa and under our joint ventures in Israel, Taiwan and China. We also operated 66 Steve Madden outlet stores within the United States, Canada and Mexico and under our joint ventures in Israel and Taiwan as well as one Superga store in the United States. For additional information about our stores, refer to the description of our Direct-to- Consumer segment. 
+International Distributors. In addition to the countries and territories mentioned above, our products are available in many other countries and territories worldwide via retail selling and distribution agreements. Under the terms of these agreements, the distributors and retailers purchase product from us and are generally required to open a minimum number of stores each year and to pay 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. Most of the distributors are required to purchase a minimum number of our products within specified periods. The agreements currently in place expire on various dates and include automatic renewals at the distributors' option provided certain conditions are met. These agreements are exclusive in their specific territories, which include certain European countries, the Middle East, South and Central America and various countries in Asia. 
+CUSTOMERS 
+Our wholesale customers consist principally of department stores, mass merchants, off-price retailers, online retailers, shoe chains, national chains, specialty retailers and independent stores. These customers, in no particular order, include: Nordstrom, Macy's, Dillard's, DSW, The TJX Companies, Ross Stores, Burlington Stores, Amazon.com, Walmart, Target and Kohls.. 
+For the year ended December 31, 2021, two customers represented approximately 14.0% and 10.6% of total revenue. At December 31, 2020, two customers were 19.3% and 18.1% of total accounts receivable. The Company did not have any other customers who accounted for more than 10% of total revenue or any other customers who accounted for more than 10% of total accounts receivable. 
+7 
+COMPETITION 
+The fashion industry is highly competitive. We compete with specialty shoe, apparel and accessory companies as well as companies with diversified footwear product lines, such as Aldo, Sam Edelman, Dr. Martens and Vince Camuto. Our competitors may have greater financial and other resources than we do. We believe effective marketing and advertising, favorable brand image, fashionable styling, high quality, value and fast manufacturing turnaround are the most important competitive factors, and we intend to continue to employ these elements in our business. 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 our Company as a leading designer of fashion footwear for style-conscious women, men and children. Principal marketing activities include social media and digital marketing efforts, influencer marketing, public relations, including product and brand placements in lifestyle and fashion magazines and digital outlets, in-store promotions, and events, as well as public and media appearances by our founder and Creative and Design Chief, Steven Madden. We continue to promote our e-commerce websites where customers can purchase Steve Madden ® , Steven ® , Dolce Vita ® , Betsey, Johnson ® , Blondo ® , GREATS ® and Superga ® products and BB Dakota x Steve Madden ® apparel, as well as select styles of Madden Girl ® products. 
+MANAGEMENT INFORMATION SYSTEM (MIS) OPERATIONS 
+Sophisticated information systems are essential to our ability to maintain our competitive position and to support our growth. Our Enterprise Resource Planning (“ERP”) system is an integrated system that supports our wholesale business in the areas of finance and accounting, manufacturing-sourcing, purchase order management, customer order management and inventory control. All of our North American wholesale businesses (other than Canada, which has a separate ERP system) and our Asia first cost and sourcing operations are operated through this ERP system. Our warehouse management system is utilized by the majority of our third-party logistics providers and is fully integrated with our ERP system. A point-of-sale system for our U.S. retail stores is integrated with a retail inventory management/store replenishment system. We have transitioned our e-commerce software to a major cloud-based provider. Complementing all of these systems are ancillary systems and third-party information processing services, including, among others, supply chain, business intelligence/data warehouse, Electronic Data Interchange, credit card processing and payroll. We undertake updates of all of these management information systems on a periodic basis in order to ensure that our functionality is continuously improved. In 2019, we invested $8.2 million in a new data and recovery center, with substantially all of the project completed in 2021. 
+TRADEMARKS 
+Our strategy for the continued growth of our business includes expanding our presence beyond footwear, accessories and apparel through the selective licensing of our brands. We consider our Company-owned trademarks to be among our most valuable assets and have registered many of our marks in the United States and 149 other countries and in numerous International Classes. From time to time, we adopt new trademarks and new logos and/or stylized versions of our trademarks in connection with the marketing of new product lines. We believe that these trademarks have significant value and are important for purposes of identifying our Company, the marketing of our products and the products of our licensees, and distinguishing them from the products of others. 
+Trademarks we believe to be most significant to our business include: Steve Madden ® , Steven ® , Madden Girl ® , MaddenNYC ® , Betsey Johnson ® , LUV BETSEY by Betsey Johnson Design ® , Dolce Vita ® , DV ® , DV Dolce Vita ® , MadLove ® , Blondo ® , Blondo Waterproof plus Heart ® , SM Pass ® , COOL Planet ® , BB Dakota ® and GREATS ® . We license our Steve Madden ® and Madden Girl ® trademarks for use in connection with the manufacture, marketing and sale of select apparel categories, outerwear, hosiery, jewelry, hair accessories, watches, eyeglasses, sunglasses, umbrellas, bedding, luggage, fragrance and men’s leather accessories. We license the Betsey Johnson ® trademark for use in connection with the manufacture, marketing and sale of women's and children’s apparel, hosiery, swimwear, slippers, fragrance and beauty, sleepwear, activewear, medical scrubs, jewelry, watches, eyeglasses, sunglasses, bedding and bath, luggage, umbrellas and medical scrubs, self-care bath and body. 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. 
+In addition to the licensing of our trademarks, we in-license the trademarks of third parties for use in connection with certain of our product lines. Generally, these licensing arrangements require us to make advertising payments to the licensor as 
+8 
+well as royalty payments equal to a percentage of our net sales and/or a minimum royalty and in some cases additional payments in the event that specified net sales targets are not achieved. 
+For additional information on our licensing arrangements, refer to Note B – Summary of Significant Accounting Policies and Note P – Commitments, Contingencies and Other in the Notes to our consolidated financial statements included in this Annual Report. 
+HUMAN CAPITAL RESOURCES 
+As of February 1, 2022, we employed approximately 3,500 employees globally, with approximately 2,100 of these employees located in the United States and 1400 located internationally. Of these employees, approximately 2,400 work full-time and approximately 1,100 work part-time. Most of our part-time employees work in the Direct-to-Consumer segment. None of our employees are represented by a union. Our management considers relations with our employees to be good. We have never experienced a material interruption of our operations due to a labor dispute. 
+Culture 
+Steve Madden is for the bold, expressive and ambitious. Our core values – authenticity, initiative, tenacity, humility and trust are key to our competitive edge and are embedded throughout all levels of our Company. They motivate our growth, inspire our innovation, define our culture and set the standard for all of our actions. 
+• Authenticity: Show up to work as your true self 
+• Initiative: Act upon good ideas quickly and be ready to iterate 
+• Tenacity: Look at problems from all sides and be resourceful 
+• Humility: Think from the perspective of others and always be open to learning 
+• Trust: Build strong relationships with good will and integrity 
+Career Development 
+The fashion landscape is constantly shifting and evolving, which makes it especially important for us to invest in the ongoing career development of our employees. In service of this objective, we constantly seek out, promote and improve upon internal programs and processes that make it possible for employees to reach their full potential. Some examples of this focus include our ongoing professional development relationship with the University of Arizona Global Campus, our tuition reimbursement program, our internal employee learning opportunities, and external conference and workshop offerings around specific industry content as well as leadership, coaching, and management training in general. In addition, in 2021 we launched SM Learning Sessions, a monthly, company-wide training and development program where we invite internal and external content providers to present on various topics. Mentoring, annual performance evaluations and feedback are also key elements of our career development efforts at our Company. 
+Diversity and Inclusion 
+We believe that recruiting, employing and retaining people from all backgrounds, ethnicities, genders, lifestyles and belief systems have been the cornerstones of meeting the needs of our diverse consumer base and building a global business. By embracing a diverse and inclusive workplace, we create an environment that offers all our employees opportunities to succeed. We want all our employees to be as successful as they can be and to reach their full potential no matter who they are, where they are from or what they believe. In the spirit of this core belief, we strive to build an increasingly inclusive culture where all employees feel free to express themselves and have opportunities to grow. Since 2020, we engaged in the following diversity initiatives, among others: 
+• we established a Diversity and Inclusion Council made up of key leaders in our Company to oversee the implementation of our detailed Diversity and Inclusion Strategic Plan; 
+• employees formed two employee resource groups - one for Black employees and allies called Black Sole and one for LGBTQ employees and allies called SM Pride; 
+• we signed the Open to All pledge with other major brands and retailers; 
+• we joined the Black in Fashion Council; 
+• we implemented Company-wide Diversity and Inclusion training; 
+• we joined Hive Diversity and are partnering with Historically Black Colleges and Universities to establish diverse pipelines of talent and expand our recruiting; and 
+• we launched Adaptive Kids footwear, soon to expand to adults. 
+9 
+Wellness 
+We see personal health and fitness of our employees as key to long-term professional success, which is why we offer benefits and programs focused on physical, emotional and financial well-being. These include mindfulness and meditation training, financial wellness seminars, health fairs, discounted gym memberships, free flu shots, paid-time-off to receive COVID-19 vaccination and boosters, on-site COVID testing and on-site discounted food. We also offer an Employee Assistance Program with a range of programs, resources and tools that can help with myriad issues. To help manage work-life balance, we offer a paid membership to Care.com so employees can find childcare, senior care, special needs care and other related services. 
+THE STEVE MADDEN CORPORATE FOUNDATION 
+In December 2021, the Company formed The Steve Madden Corporate Foundation, a donor-advised fund established under Fidelity Charitable and managed by Rockefeller Capital Management. As part of the Company's charitable giving strategy, we made a $1 million contribution at the end of 2021. 
+GOVERNMENT REGULATIONS 
+Our business is subject to various United States federal state, and local and foreign laws and regulations, including environmental, health and safety laws and regulations. In addition, we may incur liability under environmental statutes and regulations with respect to the contamination of sites that we own or operate or previously owned or operated (including contamination caused by prior owners and operators of such sites and neighboring properties, or other persons) and the off-site disposal of hazardous materials. We believe our operations are in compliance with the terms of all applicable laws and regulations and our compliance with these laws and regulations has not had, and is not expected to have, a material effect on our capital expenditures, cash flows, earnings or competitive position. 
+COVID-19 
+The health and safety of our team members is of the highest importance. Our focus on the safety of our team members is evident in our initial and ongoing response to COVID-19 starting back in March 2020. We initially closed down all stores to ensure the safety of our customers and retail associates, and then we added working from home flexibility for our corporate positions that can be accomplished remotely. The Company continues to grant flexible work options through added resources and implementation of a hybrid working environment. We increased cleaning protocols, implemented onsite temperature screening, upgraded our HVAC systems, provided personal protective equipment and related supplies as needed, established new spacing and schedules to maximize social distancing while at work, and have also provided regular communications regarding impacts of COVID-19, including health and safety protocols and procedures. We have also provided our employees with additional paid time off to receive their Covid-19 vaccines and booster, and we are also providing on-site COVID testing. For more information about the impact of COVID-19 on our business, refer to Note D – Impact of the COVID-19 Pandemic in the Notes to our consolidated financial statements included in this Annual Report. 
+SEASONALITY AND OTHER FACTORS 
+Our operating results are subject to some variability due to seasonality and other factors. For example, the highest percentage of our boot sales occur in the fall and winter months (our third and fourth fiscal quarters) and the highest percentage of our sandal sales occur in the spring and summer months (our first and second fiscal quarters). Historically, some of our businesses, including our Retail segment, have experienced holiday retail seasonality. Our diverse range of product offerings, however, provides some mitigation to the impact of seasonal changes in demand for certain items. In addition to seasonal fluctuations, our operating results fluctuate from quarter to quarter as a result of the weather, the timing of holidays and larger shipments of footwear, market acceptance of our products, 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 among our 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. Revenue levels in any period are also impacted by customer decisions to increase or decrease their inventory levels in response to anticipated consumer demand. Our customers may cancel orders, change delivery schedules or change the mix of products ordered with minimal notice to us. 
+BACKLOG 
+We had unfilled wholesale customer orders of approximately 839,381 and $310,198, as of February 1, 2022 and February 1, 2021, 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 products through our open stock program. Accordingly, a comparison of backlog from period to period may not be indicative of eventual shipments. 
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+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 2022 Annual Meeting of Stockholders and is incorporated herein by reference.

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+ITEM 9A. CONTROLS AND PROCEDURES 
+Disclosure Controls and Procedures 
+As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (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 accounting principles generally accepted in the United States of America ("GAAP"). 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 GAAP, 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, 2021, of our internal control over financial reporting based on the framework and criteria established in the 2013 Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation our management has concluded that, as of December 31, 2021, our internal control over financial reporting was effective. 
+Our independent registered public accounting firm, Ernst & Young LLP, has audited our consolidated financial statements and the effectiveness of our internal control over financial reporting as of December 31, 2021. Their attestation report appears in this Annual Report on Form 10-K. 
+34 
+Changes in Internal Control Over Financial Reporting 
+There was no change in our internal control over financial reporting, as 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, 2021, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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+Related Party Transactions 
+Steven
+Madden Employment Agreement. We believe that Steven Madden, our founder and Creative and Design Chief, provides unique and
+significant value in guiding the leadership of our creative process, both in his hands-on work for the Company and his collaboration
+with our designers, product professionals and marketing executives. Mr. Madden is a beneficial owner of more than 5% of the
+outstanding shares of our Common Stock. In addition, the public’s association of Mr. Madden’s name and likeness
+with our branded products is significant, meaningful, and integral to our success and has been, and continues to be, instrumental
+in creating long-term stockholder value. Based upon that belief, we further believe that his continuing involvement with the Company
+is essential, and to this end, we have for many years had an employment agreement with Mr. Madden as described below. 
+Mr. Madden’s
+agreement in its current form dates back to July 1, 2005, as subsequently amended on various occasions, most recently on March
+25, 2019 (the “SM Agreement”). Under the SM Agreement, Mr. Madden has agreed to continue to serve as our Creative
+and Design Chief for a term continuing through December 31, 2026, for a base salary of $7,026,042 per annum together with the
+potential for cash bonuses at the sole discretion of our Board of Directors and an annual life insurance premium reimbursement
+of up to $200,000. Pursuant to the SM Agreement, on February 8, 2012, Mr. Madden was granted 2,194,584 restricted shares
+of Common Stock (as adjusted for our 2018 three-for-two stock split effected as a stock dividend), valued at approximately $40
+million, under our Amended and Restated 2006 Stock Incentive Plan, which is referred to herein as the “2006 Plan.”
+The restricted stock vests 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. On June 30, 2012, as
+allowed under the SM Agreement, Mr. Madden elected to receive an additional restricted stock award valued at approximately
+$40 million in consideration of a reduction in his annual base salary in years after 2012 to the amount reflected above. As a
+consequence, on July 3, 2012, Mr. Madden received 2,840,013 additional restricted shares of Common Stock vesting in six annual
+installments commencing on December 31, 2018 through December 31, 2023, subject to his continued employment with the Company on
+each such vesting date. 
+Under the
+SM Agreement, Mr. Madden is also eligible to receive annually, on or about the date of our annual meeting of stockholders
+(but not later than June 30), an option (the “Annual Option”) to purchase shares of Common Stock equal to the greater
+of (a) 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 or (b) 225,000 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 so granted vests
+quarterly over a one-year period and is exercisable for a period of five years at a price equal to the closing price of our Common
+Stock on the grant date. In addition, pursuant to the SM Agreement, on March 1, 2017, Mr. Madden received a one-time stock
+option grant to purchase 1,125,000 shares of our Common Stock at an exercise price of $24.90 as a result of our having achieved
+for the fiscal year ended December 31, 2016 earnings per share performance criteria set forth in the SM Agreement; such option
+vests in equal annual installments over a five-year period, which commenced on the first anniversary of the grant date. 
+Under the
+SM Agreement, if Mr. Madden dies, his estate would receive a payment equal to his base salary for the 12-month period immediately
+after the date of his death. Further, if Mr. Madden’s employment is terminated due to his total disability (as defined
+in the agreement), “for cause” (as defined in the agreement) or due to Mr. Madden’s resignation, we are
+obligated to pay Mr. Madden the amount of compensation that is accrued and unpaid through the date of termination. If Mr. Madden’s
+employment is terminated for any reason (other than “for cause” or due to his death, total disability or resignation),
+we are obligated to pay Mr. Madden, in installments, the balance of his base salary through the end of the term of the SM
+Agreement. If, during the period commencing 120 days prior to a “change of control” transaction (as defined in the
+SM Agreement) and ending on the first anniversary of a change of control transaction, Mr. Madden’s employment is terminated
+other than for cause or by his resignation for “good reason” (as defined in the SM Agreement), or if Mr. Madden
+resigns within 30 days following a change of control transaction, all unvested options held by Mr. Madden will be accelerated
+and 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. The SM Agreement contains
+other customary provisions, including provisions regarding expense reimbursement, confidentiality, non-solicitation and non-competition. 
+21 
+For the
+2021 Fiscal Year, Mr. Madden earned $7,026,042 in base salary and received $200,000 for the payment of an annual life insurance
+premium. Mr. Madden also received his Annual Option for the 2021 Fiscal Year to purchase 225,000 shares of Common Stock at
+a price per share of $43.83. 
+The most
+recent amendment entered into on March 25, 2019, effected the extension of the term of the SM Agreement for three years through
+December 31, 2026. In consideration of this extension, we have granted to Mr. Madden 200,000 shares of Common Stock, which
+shares are subject to certain restrictions, including that he will not sell, transfer, pledge, hypothecate, assign or otherwise
+dispose of the restricted shares except as set forth under his award agreement. The shares will vest in substantially equal annual
+installments over three years commencing on December 31, 2024, provided that Mr. Madden continues to be employed by the Company
+on each vesting date through December 31, 2026. 
+Loan
+to Steven Madden. On June 25, 2007, we made a loan to Mr. Madden in the amount of $3,000,000 to enable Mr. Madden
+to satisfy a personal tax obligation resulting from the exercise of a stock option that was due to expire. The loan is evidenced
+by a secured promissory note executed by Mr. Madden in our favor, the security for which is a certain securities brokerage
+account maintained by Mr. Madden with his broker; none of the securities in the securities brokerage account are shares of
+Common Stock. There have been successive amendments to the secured promissory note, the most recent of which occurred in April
+2016. At that time the secured promissory note was amended to substitute the collateral securing the secured promissory note from
+shares of our Common Stock to the security interest in Mr. Madden’s securities brokerage account. Previously, on January
+3, 2012, the secured promissory note was amended and restated to extend the maturity date of the obligation to December 31, 2023
+and eliminate the accrual of interest after December 31, 2011. Prior to the January 3, 2012 amendment, the secured promissory
+note had been accruing interest at the rate of 6% per annum. In addition, the secured promissory 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 we have employed Mr. Madden on each
+such December 31. Contemporaneously, on each such December 31, we will release our security interest in a portion of the securities
+held in Mr. Madden’s securities brokerage account generally correlating to the amount of indebtedness cancelled on
+such date. As of December 31, 2011, interest in the amount of $1,090,000 had accrued on the principal amount of the secured promissory
+note and, as noted above, interest was eliminated after December 31, 2011. On December 31, 2021, we released Mr. Madden from
+his obligation to pay the required one-tenth of the original principal amount of the secured promissory note, together with accrued
+interest. 
+Review, Approval or Ratification
+of Transactions with Related Persons 
+Our Conduct
+Codes and Employee Handbook prohibit all conflicts of interest. Under the Conduct Codes, conflicts of interest occur when personal
+or professional interests interfere in any way, or even appear to interfere, with our interests. Our prohibition on conflicts
+of interest under the Conduct Codes includes any related party 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 our best interests. In considering the transaction, the
+Board or committee will consider all relevant factors, including, as applicable, (i) the 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. 
+We have
+multiple processes for reporting conflicts of interest, including related party transactions. Under the Conduct Codes, 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 our executive officers and management personnel quarterly and distributes a questionnaire
+to the members of the Board of Directors annually 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 Codes. 
+22 
+The Board
+of Directors, the Audit Committee and the Disclosure Committee, which consists of management personnel, discuss the related party
+transactions, specifically, and in connection with the regular review processes attendant to our 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 or she 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.

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+0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2023-03-01,2022-12-31,2023-03-01T18:37:32.000Z,0001628280-23-005774,shoo-20221231.htm,10-K,13695820,1,1,https://www.sec.gov/Archives/edgar/data/913241/000162828023005774/shoo-20221231.htm,https://www.sec.gov/Archives/edgar/data/913241/000162828023005774/,2022,2022,1

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+ITEM 1. BUSINESS 
+Steven Madden, Ltd. and its subsidiaries design, source, and market fashion-forward branded and private label footwear, accessories and apparel for women, men, and children. We distribute our products in the wholesale channel through department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe, and other international markets through our joint ventures in Israel, South Africa, China, Taiwan, Malaysia, and the Middle East along with special distribution arrangements in certain European countries, North Africa, South and Central America, Australia, and various countries in Asia. In addition, our products are distributed through our direct-to-consumer channel within the United States, Canada, Mexico, and Europe, and our joint ventures in Israel, South Africa, China, Taiwan, and the Middle East. 
+Our product lines include a broad range of contemporary styles designed to establish or capitalize on market trends, complemented by core product offerings. We have established a reputation for design creativity and our ability to offer quality, trend-right products at accessible price points, delivered in an efficient manner and time frame. 
+The following is a description of our business as of December 31, 2022. 
+OUR SEGMENTS 
+Wholesale Footwear 
+Our Wholesale Footwear segment designs, sources, and markets our brands and sells our products to department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe, and through our joint ventures and international distributor network. Our Wholesale Footwear business consists of fashion-forward footwear for women, men, and children. Our products are designed and marketed for various lifestyles and include dress shoes, boots, booties, fashion sneakers, sandals, and casual shoes. The Wholesale Footwear segment primarily consists of the following brands: Steve Madden ® , Dolce Vita ® , Betsey Johnson ® , GREATS ® , Blondo ® , Anne Klein ® , Mad Love ® , and Superga. This segment also includes our private label footwear business. This segment represented 56.3% of total revenue during 2022. 
+Wholesale Accessories/Apparel 
+Our Wholesale Accessories/Apparel segment designs, sources, and markets our brands and sells our products to department stores, mass merchants, off-price retailers, online retailers, specialty retailers, independent stores and clubs throughout the United States, Canada, Mexico, and Europe and through our joint ventures and international distributor network. Our Wholesale Accessories/Apparel business primarily consists of handbags, apparel, small leather goods, belts, soft accessories, fashion scarves, wraps, gifting, and other trend accessories. The Wholesale Accessories/Apparel segment primarily consists of the following brands: Steve Madden ® , Anne Klein ® , Betsey Johnson ® , Cejon ® , and Dolce Vita ® . This segment also includes our private label handbag and accessories business. This segment represented 18.6% of total revenue during 2022. 
+Direct-to-Consumer 
+Our Direct-to-Consumer segment, which was referred to as the Retail segment in previous filings, consists of Steve Madden ® and Dolce Vita ® full-price retail stores, Steve Madden ® outlet stores, and our directly-operated digital e-commerce websites. Our retail stores are located in regional malls and shopping centers, as well as high streets in major cities across the United States, Canada, Mexico, Israel, South Africa, Taiwan, China, and the Middle East. Our stores play an important role in our test-and-react strategy, and also serve as fulfillment and return locations for our e-commerce business. Our stores also serve as a marketing tool that allows us to strengthen global brand recognition and to showcase selected items from our full line of branded and licensed products. In addition to these testing and marketing benefits, we have also been able to leverage sales information gathered at Steve Madden retail stores and our websites to assist our wholesale customers in their order placement and inventory management. We believe that our retail stores and websites enhance overall sales and profitability and our ability to react quickly to changing consumer demands. 
+In 2022, we added 28 brick-and-mortar stores and closed 10 brick-and-mortar stores. As of December 31, 2022, we operated 232 brick-and-mortar retail stores, including 165 Steve Madden full-price stores, 66 Steve Madden outlet stores and one Dolce Vita full-price store. In addition, during 2022, we opened two concessions in Taiwan and one concession in China, ending the year with 20 Company-operated concessions in international markets. 
+3 
+In addition to our stores, our Direct-to-Consumer business offers products online through our e-commerce sites in the United States, Canada, Mexico, Europe, Israel, South Africa and Asia. We operate six branded e-commerce sites, which include: www.stevemadden.com, www.dolcevita.com, www.betseyjohnson.com, www.blondo.com, www.greats.com, and www.superga-usa.com. 
+This segment represented 24.6% of total revenue during 2022. 
+First Cost 
+Our First Cost segment represents commission based activities where the Company serves as a buying agent for footwear products under private labels for select national chains, and value-priced retailers. As a buying agent, we utilize our expertise and our relationships with shoe manufacturers to facilitate the production of private label product to customer specifications. We believe that operating in the private label market leverages our overall sourcing and design capabilities. In addition, by leveraging the strength of our Steve Madden brands and product designs, we are able to partially recover our design and product development costs from our suppliers. 
+Licensing 
+Our Licensing segment is engaged in the licensing of the Steve Madden ® and Betsey Johnson ® trademarks for use in the sale of select apparel, accessory, and home categories as well as various other non-core products. Most of our license agreements require the licensee to pay us a royalty based on actual revenue, a minimum royalty in the event the specified revenue targets are not achieved and a percentage of sales for advertising the brand. 
+Corporate 
+Corporate does not constitute a reportable segment and includes costs not directly attributable to the segments. These costs are primarily related to expenses associated with corporate executives, corporate finance, legal, human resources, information technology, cyber security, corporate social responsibility, and other shared services. 
+For additional information on our segments, refer to Note S – Operating Segment Information in the Notes to our consolidated financial statements included in this Annual Report. 
+OUR BRANDS 
+Steve Madden. We design, source, and market fashion-forward footwear, accessories, and apparel for women, men, and children under the Steve Madden brand. The Steve Madden brand is a leader in the fashion footwear industry with permission from the customer to sell products across most footwear categories including dress shoes, boots, booties, fashion sneakers, and casuals. While the brand appeals to a wide demographic, the core target consumer is 16 to 35 years old. The Steve Madden brand is sold globally, including the U.S., Canada, Mexico, Europe, Asia-Pacific, Africa, and Latin America. 
+Dolce Vita. Dolce Vita ® is a contemporary women's brand known for its effortless style for the modern individual. Dolce Vita is more than just shoes and handbags, it’s about creating a community, supporting underrepresented voices, and responsibly building a brand that we can be proud of with every step. The Dolce Vita brand is sold globally, including the U.S., Canada, Israel, Australia, and Indonesia. We acquired the Dolce Vita ® footwear trademark in August of 2014 and in December 2021, we acquired the remaining intellectual property rights of Dolce Vita including handbags and other accessories. 
+Anne Klein. The Anne Klein ® brand has a rich heritage going back over 50 years and is recognized for its dedication to timeless American classics. Anne Klein footwear and accessories are sold in the U.S., Canada, Mexico, and Israel. We entered into a license agreement with WHP Global for a license to use the Anne Klein ® , AK Sport ® , AK Anne Klein Sport ® , and Lion Head Design ® (collectively "Anne Klein ® ") trademarks in connection with the design, marketing, and sale of footwear and accessories in January of 2018. 
+Blondo. The Blondo ® brand is a 100+ year-old footwear brand recognized for its quality water-resistant leather boots, booties, casual shoes and sneakers. The Blondo brand is primarily sold in the U.S. and Canada. We acquired the intellectual property and related assets of Blondo ® in January of 2015. 
+GREATS. The GREATS ® brand is a Brooklyn-based, digitally native footwear brand founded in 2014 which specializes in premium quality, responsibly made sneakers for men and women. The GREATS ® brand is primarily sold in the U.S. We acquired the GREATS ® brand in August of 2019. 
+4 
+Mad Love . The Mad Love ® brand is a beach-to-the-street lifestyle brand created to appeal to women with a young attitude and active lifestyle, and marketed exclusively to Target Corporation. In spring 2021, Mad Love ® became a sustainable brand, designed and created with the mission to make our earth a better place. 
+Superga. On February 9, 2011, we entered into a license agreement with Basic Properties America Inc. and BasicNet S.p.A., for the use of the Superga ® trademark in connection with the marketing and sale of footwear. The Superga license was terminated as of December 31, 2022. 
+PRODUCT DESIGN AND DEVELOPMENT 
+We have established a reputation for our creative designs, marketing and trend-right products at affordable price points. Our future success will substantially depend on our ability to continue to anticipate and react quickly to changing consumer demands. To meet this objective, we have developed what we believe is an unparalleled design team and process. Our design team strives to create designs that are true to our DNA, reflect current or anticipated trends and can be manufactured in a timely and cost-effective manner. Most new products are tested in select Steve Madden retail stores and on www.stevemadden.com. Based on these tests, among other things, management selects products that are then offered for wholesale and direct-to-consumer distribution worldwide. We believe that our design and testing processes combined with our flexible sourcing model provide our brands with a significant competitive advantage and allow us to mitigate the risk of incurring costs associated with the production and distribution of less desirable designs. 
+MANUFACTURING AND SUPPLY CHAIN 
+We source each of our product lines separately based on the individual design, style and quality specifications of our various brands and product categories. We do not own or operate any foreign manufacturing facilities; rather, we use agents and our own sourcing office to source our products from independently owned manufacturers primarily in China, Cambodia, Mexico, Brazil, Vietnam, India, Italy and other European countries. We have established relationships with a number of manufacturers and agents in each of these countries. 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 raw materials used in our footwear, accessories, and apparel which are currently 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. 
+The suppliers and manufacturers of our products are required to adopt our Supplier Code of Conduct 2.0 which specifies that they comply with all local laws and regulations governing human rights, working conditions, anti-corruption laws, restricted substances, and environmental compliance, including animal welfare and conflicts minerals, before we conduct business with them. We are committed to working with manufacturers, suppliers, vendors, and agents that share our Company’s goal of maintaining socially responsible and sustainable business practices. 
+Our products are manufactured overseas and most of our products are shipped via ocean freight carriers to our third-party distribution facilities in California and to a lesser extent New Jersey, and via truck from Mexico to our third-party distribution facility in Texas. We rely to a lesser extent on air carriers for the shipping of products. Once our products arrive in the U.S., we distribute them mainly from six third-party distribution centers, four located in California, one located in Texas, and one located in New Jersey. Our products are also distributed through a Company-operated distribution center located in Canada and through our third-party distribution facilities in Mexico and Europe. By utilizing distribution facilities specializing in fulfillment for certain wholesale customers and Steve Madden retail stores we believe that our consumers are served more promptly and efficiently. Suppliers of products for our businesses in Canada, Mexico, Europe and our joint ventures in Israel, South Africa, China, Taiwan, Malaysia, and the Middle East ship to the respective countries. Products for our overseas distributors are shipped to freight forwarders primarily in China and Mexico where the distributor arranges for subsequent shipment. See Item 1A “Risk Factors” below for a discussion of the risk of supply chain disruptions. 
+DISTRIBUTION 
+For the year ended December 31, 2022, our Wholesale segment and our Direct-to-Consumer segment generated revenue of approximately $1,589,566 and $521,729, or 74.9% and 24.6% of our total revenue, respectively. Each of these distribution channels is described below. 
+Wholesale. Our products are distributed in our wholesale channel to over 2,000 retailers, including department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe, and other international markets through our joint ventures in Israel, South Africa, China, Taiwan, Malaysia, and the Middle East along with special distribution arrangements in certain 
+5 
+European countries, North Africa, South and Central America, Australia and various countries in Asia. Under the terms of the distribution agreements, the distributors and retailers purchase product from us and are generally required to open a minimum number of stores each year and to pay 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. Most of the distributors are required to purchase a minimum number of our products within specified periods. The agreements currently in place expire on various dates and include automatic renewals at the distributors' option provided certain conditions are met. 
+Our top ten wholesale customers, in no particular order, include: Nordstrom, Macy's, Dillard's, DSW, The TJX Companies, Ross Stores, Burlington Stores, Amazon, Walmart, and Target. 
+For the year ended December 31, 2022, the Company did not have any customers who accounted for more than 10% of total revenue. At December 31, 2022, three customers accounted for 20.6%, 16.2%, and 11.1% of total accounts receivable. The Company did not have any other customers who accounted for more than 10% of total accounts receivable. 
+Direct-to-Consumer. Our Direct-to-Consumer channel consists of Steve Madden ® and Dolce Vita ® full-price retail stores, Steve Madden ® outlet stores, Steve Madden ® shop-in-shops and directly-operated e-commerce websites. Our retail stores are located in regional malls and shopping centers, as well as high streets in major cities across the United States, Canada, Mexico, Israel, South Africa, Taiwan, China, and the Middle East. Through our joint venture partnerships in China and Taiwan, we also have company-operated concessions. 
+As of December 31, 2022, we operated 232 brick-and-mortar retail stores, including one Dolce Vita full-price store and 66 Steve Madden outlet stores, and six e-commerce websites. In addition, we had 20 Company-operated concessions in international markets. Out of the 232 total brick-and-mortar retail stores, 115 were located outside of the U.S. 
+COMPETITION 
+The fashion industry is highly competitive. We compete with numerous domestic and international footwear, apparel, and accessory companies. Our competitors may have greater financial and other resources than we do. We believe effective marketing and advertising, favorable brand image, fashionable styling, high quality, value, and fast manufacturing turnaround are the most important competitive factors, and we intend to continue to employ these elements in our business. 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 
+We have focused on creating a full-funnel marketing strategy that covers all stages of the customer journey, to establish our Company as a leading designer and marketer of fashion footwear, accessories, and apparel for a diverse set of style-conscious consumers. Principal top of funnel marketing activities include digital brand marketing, social media and influencer marketing, experiential events, in-store and online promotions, and public relations focusing primarily on digital product and brand placements, celebrity seeding, as well as public and media appearances by our Founder, Creative and Design Chief, Steve Madden. We foster high value lifetime customer relationships with investments in marketing technology and talent, both in-house and via strategic partnerships with external agencies. We continue to promote our e-commerce websites where customers can purchase Steve Madden ® , Dolce Vita ® , Betsey Johnson ® , Blondo ® , and GREATS ® products. 
+MANAGEMENT INFORMATION SYSTEM (MIS) OPERATIONS 
+Sophisticated information systems are essential to our ability to maintain our competitive position and to support our growth. Our Enterprise Resource Planning (“ERP”) system is an integrated system that supports our wholesale business in the areas of finance and accounting, manufacturing-sourcing, purchase order management, customer order management, and inventory control. All of our North American wholesale businesses (other than Canada, which has a separate ERP system) and our Asia sourcing operations are operated through this ERP system. Our warehouse management system is utilized by the majority of our third-party logistics providers and is fully integrated with our ERP system. A point-of-sale system for our U.S. retail stores is integrated with a retail inventory management/store replenishment system. We have transitioned our e-commerce software to a major cloud-based provider. Complementing all of these systems are ancillary systems and third-party information processing services, including, among others, supply chain, business intelligence/data warehouse, Electronic Data Interchange, credit card processing, and payroll. We undertake updates of all of these management information systems on a periodic basis in order to ensure that our functionality is continuously improved. 
+6 
+INFORMATION SYSTEMS 
+The Company maintains its information technology and security policies, comprised of risk management policies and procedures surrounding the Company’s information systems, cybersecurity practices and protection of confidential information. The Company’s Chief Information Security Officer has ultimate oversight of the Company’s cyber risk management policies and procedures, and chairs quarterly Information Security Steering Committee meetings, which provides cooperation, collaboration, and consensus driven information security guidance to both the Information Technology Department, and the Company as a whole. Additionally, the Board of Directors receives quarterly updates on these topics. As part of the Company’s information security program, all global employees are required to take annual training on information security awareness, including cybersecurity, global data privacy requirements and IT compliance measures. We also conduct periodic third-party assessments to test our cybersecurity controls, including our ecommerce sites, our mobile applications, corporate systems and network security (including Wi-Fi), and store systems, point-of-sale software and network security (including Wi-Fi). Additionally, we maintain network security and cyber liability insurance in order to provide a level of financial protection in the event of certain covered cyber losses and data breaches. 
+TRADEMARKS 
+Our strategy for the continued growth of our business includes expanding our presence beyond footwear, accessories, and apparel through the selective licensing of our brands. We consider our Company-owned trademarks to be among our most valuable assets and have registered many of our marks in the United States and 149 other countries and in numerous International Classes. From time to time, we adopt new trademarks and new logos and/or stylized versions of our trademarks in connection with the marketing of new product lines. We believe that these trademarks have significant value and are important for purposes of identifying our Company, the marketing of our products and the products of our licensees, and distinguishing them from the products of others. 
+Trademarks we believe to be most significant to our business include: Steve Madden ® , Madden Girl ® , Madden NYC ® , Betsey Johnson ® , LUV BETSEY by Betsey Johnson Design ® , Dolce Vita ® , DV ® , DV Dolce Vita ® , MadLove ® , Blondo ® , Blondo Waterproof plus Heart ® , Steven ® , SM Pass ® , and GREATS ® . We license our Steve Madden ® trademark for use in connection with the manufacture, marketing, and sale of women’s outerwear, sleepwear and intimates, hosiery, jewelry, hair accessories, watches, eyeglasses, sunglasses, umbrellas, bedding and bath, luggage, fragrance, children’s apparel, and men’s leather accessories. We license the Betsey Johnson ® trademark for use in connection with the manufacture, marketing, and sale of women's and children’s apparel, hosiery, fragrance and beauty, medical scrubs, jewelry, watches, eyeglasses, sunglasses, stationary, bedding and bath, luggage, umbrellas, and self-care products. 
+In addition to the licensing of our trademarks, we in-license the trademarks of third parties for use in connection with certain of our product lines. Generally, these licensing arrangements require us to make advertising payments to the licensor as well as royalty payments equal to a percentage of our revenue and/or a minimum royalty and in some cases additional payments in the event that specified revenue targets are not achieved. 
+For additional information on our licensing arrangements, refer to Note B – Summary of Significant Accounting Policies and Note O – Commitments, Contingencies and Other in the Notes to our consolidated financial statements included in this Annual Report. 
+HUMAN CAPITAL RESOURCES 
+As of February 1, 2023, we employed approximately 4,000 employees globally, with approximately 2,200 of these employees located in the United States and 1,800 located internationally. Of these employees, approximately 2,800 work full-time and approximately 1,200 work part-time. Most of our part-time employees work in the Direct-to-Consumer segment. None of our employees are represented by a union. Our management considers relations with our employees to be good. We have never experienced a material interruption of our operations due to a labor dispute. 
+Culture 
+Steve Madden is for the bold, expressive, and ambitious. Our core values – authenticity, initiative, tenacity, humility, and trust are key to our competitive edge and are embedded throughout all levels of our Company. They motivate our growth, inspire our innovation, define our culture, and set the standard for all of our actions. 
+• Authenticity: Show up to work as your true self 
+• Initiative: Act upon good ideas quickly and be ready to iterate 
+• Tenacity: Look at problems from all sides and be resourceful 
+7 
+• Humility: Think from the perspective of others and always be open to learning 
+• Trust: Build strong relationships with good will and integrity 
+Career Development 
+The fashion landscape is constantly shifting and evolving, which makes it especially important for us to invest in the ongoing career development of our employees. In service of this objective, we constantly seek out, promote and improve upon internal programs and processes that make it possible for our employees to reach their full potential. Some examples of this focus include our ongoing professional development relationship with the University of Arizona Global Campus, our tuition reimbursement program, our internal employee learning opportunities, and external conference and workshop offerings around specific industry content as well as leadership, coaching, and management training. In addition, in 2021 we launched SM Learning Sessions, a monthly, Company-wide training and development program where we invite internal and external subject matter experts to present on various topics. Mentoring, annual performance evaluations and feedback are also key elements of our career development efforts at our Company. 
+Diversity, Equity, and Inclusion 
+We believe that recruiting, employing, and retaining people from all backgrounds, ethnicities, genders, lifestyles, and belief systems have been the cornerstones of meeting the needs of our diverse consumer base and building a global business. By embracing a diverse and inclusive workplace, we create an environment that offers all our employees opportunities to succeed. We want all our employees to be as successful as they can be and to reach their full potential no matter who they are, where they are from, or what they believe. In the spirit of this core belief, we strive to build an increasingly inclusive culture where all employees feel free to express themselves and have opportunities to grow. A few highlights of our diversity initiatives include: 
+• we established a Diversity and Inclusion Council made up of key leaders in our Company to oversee the implementation of our detailed Diversity, Equity, and Inclusion Strategic Plan; 
+• we added three new members to our Board of Directors, each of whom are people of color and bring new perspectives to the highest level of Company leadership; 
+• our employees formed three employee resource groups – one for Black employees and allies called Black Sole, one for LGBTQ+ employees and allies called SM Pride, and one for Hispanic employees and allies called De La Sole; 
+• we launched “Tune-In Tuesday,” a weekly email of internal job openings to encourage career development and advancement; 
+• we signed the “Open to All” pledge with other major brands and retailers; 
+• we joined the Black in Fashion Council; 
+• we implemented Company-wide diversity and inclusion training; 
+• we joined Hive Diversity as well as contributed $100,000 to Howard University and partnered with the university to establish diverse pipelines of talent and expand our recruiting; and 
+• we launched Adaptive Kids footwear, soon to expand to adults. 
+Wellness 
+We see personal health and fitness of our employees as key to long-term professional success, which is why we offer benefits and programs focused on physical, emotional and financial well-being. These include mindfulness and meditation training, financial wellness seminars, health fairs, discounted gym memberships, free flu shots, paid-time-off to receive COVID-19 vaccination and boosters, on-site COVID testing and on-site discounted food. We also offer an Employee Assistance Program with a range of programs, resources and tools that can help with various issues. To help manage work-life balance, we offer a paid membership to Care.com so employees can find childcare, senior care, special needs care and other related services. 
+Charitable Giving 
+In December 2021, the Company formed The Steve Madden Corporate Foundation, a donor-advised fund established under Fidelity Charitable and managed by Rockefeller Capital Management. As part of the Company's charitable giving strategy, we made a $1 million contribution for each of 2022 and 2021, and we have since launched multiple shop-to-give campaigns across our various Company-owned e-commerce websites. 
+8 
+GOVERNMENT REGULATIONS 
+Our business is subject to various United States federal state, and local and foreign laws and regulations, including environmental, health and safety laws and regulations. In addition, we may incur liability under environmental statutes and regulations with respect to the contamination of sites that we own or operate or previously owned or operated (including contamination caused by prior owners and operators of such sites and neighboring properties, or other persons) and the off-site disposal of hazardous materials. We believe our operations are in compliance with the terms of all applicable laws and regulations and our compliance with these laws and regulations has not had, and is not expected to have, a material effect on our capital expenditures, cash flows, earnings or competitive position. 
+SEASONALITY AND OTHER FACTORS 
+Our operating results are subject to some variability due to seasonality and other factors. For example, the highest percentage of our boot sales occur in the fall and winter months (our third and fourth fiscal quarters) and the highest percentage of our sandal sales occur in the spring and summer months (our first and second fiscal quarters). Historically, some of our businesses, including our Direct-to-Consumer segment, have experienced holiday retail seasonality. Our diverse range of product offerings, however, provides some mitigation to the impact of seasonal changes in demand for certain items. In addition to seasonal fluctuations, our operating results fluctuate from quarter to quarter as a result of the weather, the timing of holidays and larger shipments of footwear, market acceptance of our products, 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 among our wholesale, direct-to-consumer and licensing businesses, the incurrence of other operating costs and factors beyond our control, such as general economic conditions and actions of competitors. Revenue levels in any period are also impacted by customer decisions to increase or decrease their inventory levels in response to anticipated consumer demand. Our customers may cancel orders, change delivery dates or change the mix of products ordered with minimal notice to us. 
+BACKLOG 
+We had unfilled wholesale customer orders of approximately $500,921 and $839,381, as of February 1, 2023 and February 1, 2022, respectively. Our backlog at a particular time is affected by a number of factors, including seasonality, supply chain lead time, timing of market weeks, and wholesale customer purchases of our core products through our open stock program. Accordingly, a comparison of backlog from period to period may not be indicative of eventual shipments. 
+9

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+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 2023 Annual Meeting of Stockholders and is incorporated herein by reference.

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+ITEM 9A. CONTROLS AND PROCEDURES 
+Disclosure Controls and Procedures 
+As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (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 accounting principles generally accepted in the United States of America ("GAAP"). 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 GAAP, 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 all 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, 2022, of our internal control over financial reporting based on the framework and criteria established in the 2013 Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation our management has concluded that, as of December 31, 2022, our internal control over financial reporting was effective. 
+Our independent registered public accounting firm, Ernst & Young LLP, has audited our consolidated financial statements and the effectiveness of our internal control over financial reporting as of December 31, 2022. Their attestation report appears in this Annual Report on Form 10-K. 
+Changes in Internal Control Over Financial Reporting 
+There was no change in our internal control over financial reporting, as 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, 2022, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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raw/filings/0000913241/2023/0001628280-24-008331/rpt_disclosure.txt

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+Certain Relationships and Related Party Transactions 
+Steven Madden Employment
+Agreement. We believe that Steven Madden, our founder and Creative and Design Chief, provides unique and significant value in guiding
+the leadership of our creative process, both in his hands-on work for the Company and his collaboration with our designers, product professionals
+and marketing executives. In addition, the public’s association of Mr. Madden’s name and likeness with our branded products
+is significant, meaningful, and integral to our success and has been, and continues to be, instrumental in creating long- term stockholder
+value. Based upon that belief, we further believe that his continuing involvement with the Company is essential, and to this end, we have
+for many years had an employment agreement with Mr. Madden as described below. 
+Mr. Madden’s agreement
+in its current form dates back to July 1, 2005, as subsequently amended on various occasions, most recently on November 10, 2023 (the
+“SM Agreement”). Under the SM Agreement, Mr. Madden has agreed to continue to serve as our Creative and Design Chief for
+a term continuing through December 31, 2031, for a base salary of $7,026,042 per annum through December 31, 2026, together with the potential
+for cash bonuses at the sole discretion of our Board of Directors and an annual life insurance premium reimbursement of up to $200,000.
+Effective January 1, 2027, Mr. Madden’s base salary will increase to $7,377,374 until December 31, 2028, and effective January
+1, 2029, through the remainder of the term, Mr. Madden’s base salary will be increased to $7,746,211. 
+Under the SM Agreement,
+Mr. Madden is also eligible to receive annually, on or about the date of our annual meeting of stockholders (but not later than June 30),
+an option (the “Annual Option”) to purchase shares of Common Stock equal to the greater of (a) 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 or (b) 225,000 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 so granted vests quarterly over a one-year period and is exercisable for a period
+of five years at a price equal to the closing price of our Common Stock on the grant date. 
+Under the SM Agreement,
+if Mr. Madden dies, his estate would receive a payment equal to his base salary for the 24-month period immediately after the date of
+his death. Further, if Mr. Madden’s employment is terminated due to his total disability (as defined in the agreement), “for
+cause” (as defined in the agreement) or due to Mr. Madden’s resignation, we are obligated to pay Mr. Madden the amount of
+compensation that is accrued and unpaid through the date of termination. If Mr. Madden’s employment is terminated for any reason
+(other than “for cause” or due to his death, total disability or resignation), we are obligated to pay Mr. Madden, in installments,
+the balance of his base salary through the end of the term of the SM Agreement. If, during the period commencing 120 days prior to a “change
+of control” transaction (as defined in the SM Agreement) and ending on the first anniversary of a change of control transaction,
+Mr. Madden’s employment is terminated other than “for cause” (as defined in the SM Agreement) all unvested options held
+by Mr. Madden will be accelerated and vest on the date of termination or resignation, or if the employment termination occurred prior
+to the change of control, on the date of such change of control, 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. The SM Agreement contains other
+customary provisions, including provisions regarding expense reimbursement, confidentiality, non-solicitation and non-competition. 
+For the 2024 Fiscal
+Year, Mr. Madden earned $7,026,042 in base salary and received $200,000 for the payment of an annual life insurance premium. Mr. Madden
+also received his Annual Option for the 2024 Fiscal Year to purchase 225,000 shares of Common Stock at a price per share of $41.30. 
+The most recent
+amendment entered into on November 10, 2023, effected the extension of the term of the SM Agreement for five years through December 31,
+2031. In connection with the extension, we agreed to pay Mr. Madden a base salary of $7,026,042 for the annual periods ending December
+31, 2023, 2024, 2025, and 2026; $7,377,374 for the annual periods ending December 31, 2027 and 2028; and $7,746,211 for the annual periods
+through the remainder of the term. Additionally, on the first business day of January 2024, and then annually on the first business day
+of successive years through 
+20 
+December 31, 2031, Mr. Madden will receive a restricted stock award under our 2019 Incentive Compensation
+Plan for a number of shares of Common Stock valued at (i) $10 million each year for the years ended December 31, 2024, 2025, and 2026,
+and (ii) $9 million each year for the years ended December 31, 2027, 2028, 2029, 2030, and 2031, and each such award will vest in accordance
+with the terms of the amendment. 
+Review, Approval or Ratification
+of Transactions with Related Persons 
+Our Conduct Codes
+and Employee Handbook prohibit all conflicts of interest. Under the Conduct Codes, conflicts of interest occur when personal or professional
+interests interfere in any way, or even appear to interfere, with our interests. Our prohibition on conflicts of interest under the Conduct
+Codes includes any related party 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 our best interests. In considering the transaction, the Board or committee will consider all relevant
+factors, including, as applicable, (i) the 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. 
+We have multiple
+processes for reporting conflicts of interest, including related party transactions. Under the Conduct Codes, 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 our executive officers and management personnel quarterly and distributes a questionnaire to the members of the Board
+of Directors annually 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 Codes. 
+The Board of Directors,
+the Audit Committee and the Disclosure Committee, which consists of management personnel, discuss the related party transactions, specifically,
+and in connection with the regular review processes attendant to our 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, they 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.

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+ITEM 1. BUSINESS 
+Steven Madden, Ltd. and its subsidiaries designs, sources, and markets fashion-forward branded and private label footwear, accessories, and apparel. We distribute our products through the wholesale channel to department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe. Additionally, the Company operates in other international markets through its joint ventures in South Africa, the Middle East, Israel, various countries in Europe, Latin America, and certain countries in Asia, and through special distribution arrangements in various European countries, North Africa, South and Central America, and various countries within the Asia-Pacific region. We also distribute our products through our direct-to-consumer channel, which includes company-operated retail stores and e-commerce websites, in the United States, Canada, Mexico, South Africa, the Middle East, Israel, various countries in Europe, Latin America, and the Asia-Pacific region. 
+Our product offerings include a diverse range of contemporary styles, designed to establish or capitalize on market trends, complemented by core product offerings. We are recognized for our design creativity and ability to deliver trend-right products with high quality at accessible price points, efficiently and within short lead times. 
+The following is a description of our business as of December 31, 2024. 
+OUR SEGMENTS 
+Wholesale Footwear 
+Our Wholesale Footwear segment designs, sources, and markets our brands and sells our products to department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe. Additionally, the Company operates in other international markets through its joint ventures in South Africa, the Middle East, Israel, various countries in Europe, Latin America, and certain countries in Asia, and through special distribution arrangements in various European countries, North Africa, South and Central America, and various countries within the Asia-Pacific region. Our Wholesale Footwear products are designed and marketed for various lifestyles and include dress shoes, boots, booties, fashion sneakers, sandals, and casual shoes. The Wholesale Footwear segment consists of the following brands: Steve Madden, Dolce Vita ® , Betsey Johnson ® , Blondo ® , and Anne Klein ® . This segment also includes our private label footwear business. This segment represented 46.4% of total revenue during 2024. 
+Wholesale Accessories/Apparel 
+Our Wholesale Accessories/Apparel segment designs, sources, and markets our brands and sells our products, primarily consisting of handbags and apparel, to department stores, mass merchants, off-price retailers, online retailers, specialty retailers, independent stores, and clubs throughout the United States, Canada, Mexico, and Europe. Additionally, the Company operates in other international markets through its joint ventures in South Africa, the Middle East, Israel, various countries in Europe, Latin America, and certain countries in Asia, and through special distribution arrangements in various European countries, North Africa, South and Central America, and various countries within the Asia-Pacific region. Our Wholesale Accessories/Apparel business consists of handbags, apparel, small leather goods, belts, soft accessories, fashion scarves, wraps, gifting, and other trend accessories. The Wholesale Accessories/Apparel segment consists of the following brands: Steve Madden, Dolce Vita ® , Betsey Johnson ® , Anne Klein ® , and ATM ® (which was acquired in November 2024). This segment also includes our private label handbag and accessories business. This segment represented 29.0% of total revenue during 2024. 
+Direct-to-Consumer 
+Our Direct-to-Consumer segment engages in the sale of footwear, handbags, apparel, and other accessories through Steve Madden and Dolce Vita full-price retail stores, Steve Madden outlet stores, directly-operated concessions in international markets, and directly-operated e-commerce websites. We operate retail locations in regional malls and shopping centers, as well as high streets in various cities across the United States, Canada, Mexico, South Africa, the Middle East, Israel, Europe, Latin America, and the Asia-Pacific region. Our stores play an important role in our test-and-react strategy, and also serve as fulfillment and return locations for our e-commerce business. Our stores also serve as a marketing tool that allows us to strengthen global brand recognition and to showcase selected items from our full line of branded and licensed products. In addition to these testing and marketing benefits, we have also been able to leverage sales information gathered at Steve Madden retail stores and our websites to assist our wholesale customers in their order placement and inventory management. We believe 
+3 
+that our retail stores and websites enhance overall sales and profitability and our ability to react quickly to changing consumer demands. 
+As of December 31, 2024, we operated 291 brick-and-mortar retail stores, including 218 Steve Madden full-price stores, 68 Steve Madden outlet stores, and five Dolce Vita full-price stores. In addition, we ended the year with 20 concessions in Taiwan, 20 concessions in South Africa, and two concessions in Canada, totaling 42 concessions in international markets. 
+In addition to our brick-and-mortar stores, our Direct-to-Consumer business offers products online through our e-commerce websites in the United States, Canada, Mexico, Europe, and through our joint ventures in international markets. We operate five branded e-commerce websites, which include: www.stevemadden.com, www.dolcevita.com, www.betseyjohnson.com, www.blondo.com and www.atmcollection.com. This segment represented 24.1% of total revenue during 2024. 
+Licensing 
+Our Licensing segment engages in the licensing of the Steve Madden ® and Betsey Johnson ® trademarks for use in the sale of select apparel, accessories, and home categories as well as various other non-core products. Most of our license agreements require the licensee to pay the Company a royalty based on actual revenue, a minimum royalty in the event predetermined revenue targets are not achieved and a percentage of sales for brand advertising. This segment represented 0.5% of total revenue during 2024. 
+Corporate 
+Corporate does not constitute a reportable segment and includes costs not directly attributable to the reportable operating segments. These expenses are primarily related to corporate executives, corporate finance, corporate social responsibility, legal, human resources, information technology, cybersecurity, and other shared services. 
+For additional information on our segments, refer to Note 19 – Operating Segment Information in the Notes to our consolidated financial statements included in this Annual Report. 
+OUR BRANDS 
+Steve Madden. We design, source, and market fashion-forward footwear, accessories, and apparel under the Steve Madden brand. The Steve Madden brand is a leader in the fashion footwear industry with permission from the customer to sell products across most footwear categories including dress shoes, boots, booties, fashion sneakers, and casuals. While the brand appeals to a wide demographic, the core target consumer is 18 to 40 years old. The Steve Madden brand is sold globally, including in the United States, Canada, Mexico, Europe, Africa, the Asia-Pacific region, the Middle East, and South and Central America. 
+Dolce Vita. Dolce Vita ® is a contemporary women's brand known for its effortless style for the modern individual. Dolce Vita ® is more than just shoes and handbags, it’s about creating a community, supporting underrepresented voices, and responsibly building a brand that we can be proud of with every step. The Dolce Vita ® brand is sold globally, including in the United States, Canada, Mexico, Europe, Israel, Australia, and Indonesia. We acquired the Dolce Vita ® footwear trademark in August 2014 and in December 2021, we acquired the remaining intellectual property rights of Dolce Vita ® , handbags and other accessories. 
+Betsey Johnson. The Betsey Johnson ® brand is recognized for its unique and original designs – both pretty and punk, lots of color, and movement and modernity – that embrace girl power at any age. Betsey Johnson ® footwear and accessories are designed for inclusive, punky, and fiercely independent women with a target age of 25 to 45 years old. The Betsey Johnson ® brand is primarily sold in the United States, and in select international markets. We acquired the Betsey Johnson ® trademark and substantially all other intellectual property of Betsey Johnson LLC in October 2010. 
+Blondo. The Blondo ® brand is a 100+ year-old footwear brand recognized for its quality water-resistant leather boots, booties, casual shoes, and sneakers. The Blondo ® brand is primarily sold in the United States and Canada. We acquired the intellectual property and related assets of Blondo ® in January 2015. 
+ATM. In November 2024, we acquired the ATM ® (Anthony Thomas Melillo) brand, an elevated basics apparel brand known for slub jersey cotton t-shirts made primarily in Peru. ATM was founded in 2012. ATM is included within our Wholesale Accessories/Apparel segment, and is primarily sold in the United States. 
+4 
+GREATS . In August 2019, we acquired GREATS ® , a Brooklyn-based digitally native footwear brand specializing in premium quality, responsibly made sneakers for men and women, which was primarily sold via e-commerce. In August 2024, the Company divested of substantially all the assets and liabilities related to the GREATS business. 
+LICENSED BRAND 
+Anne Klein. In January 2018, we entered into a license agreement with WHP Global to use the Anne Klein ® , AK Sport ® , AK Anne Klein Sport ® , and Lion Head Design ® (collectively "Anne Klein ® ") trademarks in connection with the design, marketing, and sale of footwear and accessories products. The Anne Klein ® brand has a rich heritage going back over 50 years and is recognized for its dedication to timeless American classics. Anne Klein ® footwear and accessories are sold in the United States, Canada, Mexico, and Israel. 
+PRODUCT DESIGN AND DEVELOPMENT 
+We have established a reputation for our creative design, marketing, and trend-right products at affordable price points. Our future success will substantially depend on our ability to continue to anticipate and react quickly to changing consumer demands. To meet this objective, we have developed what we believe is an unparalleled design team and process. Our design team strives to create designs that are true to our DNA, reflect current or anticipated trends, and can be manufactured in a timely and cost-effective manner. Most new products are tested in select retail stores and on our e-commerce websites. Based on these tests, among other things, products are selected and then offered for wholesale and direct-to-consumer distribution worldwide. We believe that our design and testing processes combined with our flexible sourcing model provide our brands with a significant competitive advantage and allow us to reduce the risk of incurring significant exit costs associated with the production and distribution of less desirable designs. 
+MANUFACTURING AND SUPPLY CHAIN 
+We source each of our product lines separately based on the individual design, style, and quality specifications of our various brands and product categories. We do not own or operate any foreign manufacturing facilities; rather, we use agents and our own sourcing offices to source our products from independently owned manufacturers in China, Cambodia, Mexico, Vietnam, Brazil, India, Italy, and various other countries. We have established relationships with a number of manufacturers and agents in each of these countries. 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 raw materials used in our footwear, accessories, and apparel which are currently 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 our customers. 
+The suppliers and manufacturers of our products are required to adopt our Supplier Code of Conduct 2.0, which specifies that they comply with all local laws and regulations governing human rights, working conditions, anti-corruption, restricted substances, and environmental compliance, including animal welfare and conflict minerals, before we conduct business with them. We are committed to working with manufacturers, suppliers, vendors, and agents that share our Company’s goal of maintaining socially responsible and sustainable business practices. 
+Our products are manufactured overseas and most of our products are shipped via ocean freight carriers to our third-party distribution facilities in California and to a lesser extent New Jersey, and via ground freight from Mexico to our third-party distribution facility in Texas. We rely to a lesser extent on air carriers for the shipping of products. Once our products arrive in the United States, we distribute them mainly from six third-party distribution centers, including four located in California, one located in Texas, and one located in New Jersey. Our products are also distributed through a Company-operated distribution center located in Canada and through our third-party distribution facilities in Mexico and Europe. By utilizing distribution facilities specializing in fulfillment for wholesale customers, retail stores and e-commerce businesses, we believe that our customers are served in a prompt and efficient manner. Suppliers of products for our businesses in Canada, Mexico, Europe, China and our joint ventures in South Africa, the Middle East, Israel, various countries in Europe, Latin America, and certain countries in Asia, ship directly to the respective countries. Products for our overseas distributors are shipped to freight forwarders primarily in China, Cambodia, and Mexico where the distributor arranges for subsequent shipment. See Item 1A. “Risk Factors” below for a discussion of the risks associated with supply chain disruptions and changes to international trade policies. 
+5 
+DISTRIBUTION 
+For the year ended December 31, 2024, our revenue was primarily generated through two distribution channels: Wholesale and Direct-to-Consumer. Wholesale accounted for approximately $1,722,113, or 75.4% of total revenue, while Direct-to-Consumer accounted for approximately $550,153, or 24.1% of total revenue. Each distribution channel is described below. 
+Wholesale. We distribute product within our Wholesale Footwear and Wholesale Accessories/Apparel segments through a broad network of over 2,000 retailers, including department stores, mass merchants, off-price retailers, shoe chains, online retailers, national chains, specialty retailers, independent stores, and club stores. Our wholesale distribution network spans across the United States, Canada, Mexico, and Europe, as well as various international markets through our joint ventures. We also distribute our product under various distribution agreements in certain international markets. Under the terms of our distribution agreements, the distributors purchase product from us and are generally required to open a minimum number of stores each year and maintain a certain minimum level of sales in the licensed territory. The distribution agreements currently in place expire on various dates and include renewal options provided certain conditions are met. 
+For the year ended December 31, 2024, our top ten wholesale channel customers, in no particular order, included: Nordstrom, Macy's, Dillard's, Designer Brands, The TJX Companies, Ross Stores, Burlington Stores, Amazon, Walmart, and Target. In 2024, the Company had one customer who accounted for more than 10% of total revenue. That customer accounted for 11.8% of total revenue. 
+As of December 31, 2024, there were three customers who each accounted for more than 10% of total accounts receivable. These three customers accounted for 22.3%, 16.3%, and 14.4%, respectively, of total accounts receivable. 
+Direct-to-Consumer. We distribute product within our Direct-to-Consumer segment through Steve Madden and Dolce Vita full-price retail stores, Steve Madden outlet stores, directly-operated concessions in international markets, and directly-operated e-commerce websites. We operate retail locations in regional malls, shopping centers, and high streets in various cities across the United States, Canada, Mexico, South Africa, the Middle East, Israel, Europe, Latin America, and the Asia-Pacific region. We also operate concessions in South Africa, Taiwan, and Canada. 
+As of December 31, 2024, we operated 291 brick-and-mortar retail stores, including five Dolce Vita full-price stores and 68 Steve Madden outlet stores, and five e-commerce websites. In addition, we operated 42 Steve Madden concessions in international markets. Out of the 291 total brick-and-mortar retail stores, 178 stores were located outside of the United States. 
+COMPETITION 
+The fashion industry is highly competitive, with numerous domestic and international companies operating in the footwear, apparel, and accessories markets. Our competitors may have greater financial, operational, and marketing resources, among other advantages, which may allow them to compete more effectively. We believe that brand strength, trend-driven styling, product quality, value proposition, speed-to-market, marketing and distribution, and customer relationships are the key factors driving success in our industry. We remain committed to leveraging these elements to maintain and grow our market position. However, there is no assurance that we will be able to compete successfully against both established and emerging competitors. Increased competition, shifting consumer preferences, and evolving market dynamics could have a material adverse effect on our business, financial condition, and results of operations. For further discussion of related risks, see Item 1A. “Risk Factors.” 
+MARKETING 
+We have focused on creating a full-funnel marketing strategy that covers all stages of the customer journey to establish our Company as a leading designer and marketer of fashion footwear, accessories, and apparel for a diverse set of style-conscious consumers. Principal marketing activities include brand and performance marketing, social media and influencer marketing, experiential events, in-store and online promotions, and public relations focusing on product and brand placements, celebrity seeding, as well as public and media appearances by our Founder and Creative and Design Chief, Steve Madden. We foster high value lifetime customer relationships with investments in marketing technology and talent, both in-house and via strategic partnerships with external agencies. We continue to promote our e-commerce websites where customers can purchase Steve Madden, Dolce Vita ® , Betsey Johnson ® , Blondo ® , and ATM ® products. 
+6 
+MANAGEMENT INFORMATION SYSTEM (MIS) OPERATIONS 
+Effective and sophisticated information systems are essential to maintaining our competitive position and supporting our growth strategy. Our technology infrastructure consists of several integrated systems, as described below, designed to manage key business functions across wholesale, retail, e-commerce, and logistics. 
+• Enterprise Resource Planning (“ERP”) System. Our ERP system is an integrated system that supports our wholesale operations in the areas of finance and accounting, sourcing, purchase order management, customer order management, and inventory control. All of our North American wholesale businesses (other than Canada and Almost Famous, which are each operating under separate ERP systems), our European business, as well as our Asia sourcing operations, are operated through this ERP system. 
+• Warehouse Management System ("WMS"). Our WMS is utilized by the majority of our third-party logistics providers and is fully integrated with our ERP system to streamline inventory distribution processes. 
+• Retail and Point-of-Sale ("POS") Systems. Our retail stores operate on various POS systems that are integrated with our retail inventory management and store replenishment system to optimize in-store operations. 
+• E-commerce Platform. We utilize a direct-to-consumer e-commerce platform that supports our online sales, enabling customers to purchase products through our branded websites. This platform integrates with our ERP system and WMS to manage inventory, process sales, and coordinate fulfillment. We utilize a reputable cloud-based solution to support our growing e-commerce business. 
+• Ancillary Systems and Third-Party Services. Supporting our core systems, we utilize various specialized tools for supply chain management, business intelligence, data warehousing, Electronic Data Interchange, credit card processing, human resources, and payroll. 
+We regularly update and enhance these systems to improve functionality, efficiency, and integration across our business. 
+INFORMATION SYSTEMS 
+The Company maintains its information technology and security policies, comprised of risk management policies and procedures surrounding the Company’s information systems, cybersecurity practices, and protection of confidential information. The Company’s Chief Information Security Officer has ultimate oversight of the Company’s cyber risk management policies and procedures, and chairs quarterly Information Security Steering Committee meetings, which provide cooperation, collaboration, and consensus driven information security guidance to both the Information Technology Department, and the Company as a whole. Our Chief Information Security Officer oversees our cybersecurity risk management and information security programs and provides quarterly status reports to the Information Security Steering Committee and the Audit Committee. As part of the Company's information security program, all global employees are required to complete annual training on information security awareness, including cybersecurity, global data privacy requirements, and information technology compliance measures. Certain roles require additional role-based, specialized cybersecurity training, such as tabletop exercises to ensure proactive preparation and effective coordination in the event of a security incident. The Company continuously performs penetration testing internally for all internal and public facing assets and annual network and application penetration tests are also conducted by a reputable external vendor. The outcomes and findings of the penetration testing are shared with the Information Security Steering Committee and the Audit Committee, as well as any steps the Company has taken to mitigate and remediate any identified risks. Additionally, we maintain network security and cyber liability insurance in order to provide a level of financial protection in the event of certain covered cyber losses and data breaches. 
+TRADEMARKS 
+Our strategy for the continued growth of our business includes expanding our presence beyond footwear, accessories, and apparel through the selective licensing of our brands. We consider our company-owned trademarks to be among our most valuable assets, and have registered many of our trademarks in the United States and 149 other countries and in numerous International Classes. From time to time, we adopt new trademarks and new logos and/or stylized versions of our trademarks in connection with the marketing of new product lines. We believe that these trademarks have significant value and are important for purposes of identifying our Company, the marketing of our products and the products of our licensees, and distinguishing them from the products of others. 
+Trademarks we believe to be most significant to our business include: Steve Madden ® , Madden Girl ® , Madden NYC ® , Betsey Johnson ® , Dolce Vita ® , Blondo ® , and ATM ® . We license our Steve Madden ® and the Betsey Johnson ® trademark for use in connection with the manufacture, marketing, and sale of select apparel, accessories, and home categories as well as various other non-core products. 
+7 
+In addition to the licensing of our trademarks, we in-license the trademarks of third parties for use in connection with some of our product lines. Generally, these licensing arrangements require us to make royalty payments equal to a percentage of our revenue or a minimum royalty as well as maintain a certain level of marketing to support the licensed trademark. 
+For additional information on our licensing arrangements, refer to Note 2 – Summary of Significant Accounting Policies and Note 15 – Commitments, Contingencies, and Other in the notes to our consolidated financial statements included in this Annual Report. 
+HUMAN CAPITAL MANAGEMENT 
+As of February 1, 2025, we employed approximately 4,800 employees globally, with approximately 2,200 of these employees located in the United States and 2,600 located internationally. Of these employees, approximately 3,500 work full-time and approximately 1,300 work part-time. Most of our part-time employees work in the Direct-to-Consumer segment. None of our employees are represented by a union, and we consider our relations with our employees to be good. We have never experienced a material interruption of our operations due to a labor dispute. 
+Culture 
+Steve Madden is for the bold, expressive, and ambitious. Our guiding principles are key to our competitive edge and are embedded throughout all levels of our Company. They motivate our growth, inspire our innovation, define our culture, and set the standard for all of our actions. 
+• First things first. Take care of the fundamentals before anything else. 
+• It starts with trust. Great teams are built upon trust. We build trust through honesty, care for the greater good, and follow-through. 
+• Don’t coast . Celebrate success, but don’t rest on your laurels. Hustle and grind are what set us apart. 
+• Think big and small. Have your eyes on the big picture while obsessing over the details. 
+• The customer is our muse. Study our customers, connect with them directly, and always be open to inspiration. 
+• Place team ownership over personal ego. The company wins when the team has ownership. Don’t let your ego control you. 
+• Everyone can be creative. Creativity is about more than making art. It’s about seeing around corners, working within limitations, and being original. 
+• Progress, not perfection. Act upon good ideas quickly and always be ready to iterate. 
+Career Development 
+In the dynamic world of fashion, it is vital that we support the continuous learning and personal growth of our employees. Our talent development initiatives focus on enhancing internal programs and processes that empower our employees to excel and feel a strong sense of belonging and fulfillment in their roles. Key initiatives include our long-standing professional development relationship with the University of Arizona Global Campus, a comprehensive tuition reimbursement program, leadership and management training, and access to external conferences and workshops that focus on specific industry knowledge. Further, we offer SM Learning Sessions, a company-wide initiative that brings together internal and external experts to share knowledge on diverse topics. This program not only enhances skillsets, but also fosters a collaborative and inclusive environment, encouraging cross-departmental interaction and networking. Furthermore, performance evaluations and constructive feedback mechanisms are integral to our strategy. By investing in employee development, we aim to create a workplace where employees are not only equipped to meet the challenges of the ever-evolving fashion industry but are also deeply engaged and committed to our long-term success. 
+Employee Wellness 
+At Steve Madden, we prioritize the well-being of our employees, which is why we’ve established Wellness Wednesdays as a monthly opportunity for our team to invest in themselves. During these sessions, employees can take a break from their work routines to indulge in rejuvenating activities like meditation sessions, soothing back massages, and nutritious snacks. Additionally, we offer financial wellness seminars, health fairs, discounted gym memberships, and on-site discounted food. We also offer an employee assistance program with a range of programs, resources, and tools that can help with various wellness issues. We collaborate with featured vendors to enhance the experience and provide even more ways for our employees to prioritize their wellness. 
+8 
+Charitable Giving 
+The Company regularly makes charitable donations, primarily through The Steve Madden Corporate Foundation (the “Foundation”), a donor-advised fund established under Fidelity Charitable and managed by Rockefeller Capital Management. The Foundation's charitable giving priorities include: 
+• Industry Innovation: We support equity, sustainability, and accessibility in the fashion industry. Our goal is to empower industry leaders and emerging talents to create a more equitable and sustainable future through strategic projects and collaborations that align with our commitment to progressive change. 
+• Community Impact: We uplift the communities surrounding our offices, stores, and supply chain. Through local partnerships and targeted donations, we address the specific needs of the areas where we operate, fostering stronger, more resilient communities. 
+We contributed $1.3 million and $1.0 million to the Foundation during 2024 and 2023, respectively, and have since launched multiple shop-to-give campaigns across our various company-operated e-commerce websites. Further information on our charitable initiatives can be found on the "Sustainability" section of our website, https://www.stevemadden.com/. 
+GOVERNMENT REGULATIONS 
+Our business is subject to various United States federal, state, local, and foreign laws and regulations, including those related to environmental protection, health, and safety. We may also incur liability under environmental laws and regulations for contamination at sites we currently or previously owned or operated, including contamination caused by prior owners, operators, neighboring properties, or other third parties. Additionally, we may be responsible for the off-site disposal of hazardous materials. We believe we are in compliance with all applicable laws and regulations. To date, compliance requirements have not had, and are not expected to have, a material effect on our capital expenditures, cash flows, earnings, or competitive position. For further discussion of related risks, see Item 1A. “Risk Factors.” 
+SEASONALITY AND OTHER FACTORS 
+Our operating results are influenced by seasonality and other factors that create variability from quarter to quarter. For example, boot sales typically peak in the fall and winter months (third and fourth fiscal quarters), while sandal sales are strongest in the spring and summer months (first and second fiscal quarters). Additionally, our Direct-to-Consumer segment experiences heightened demand during the holiday retail season. Our diverse product portfolio, however, helps to mitigate the impact of seasonal fluctuations in any single product category. 
+Beyond seasonality, several other factors contribute to quarterly fluctuations in our operating results, including weather conditions, timing of holidays and bulk footwear shipments, market acceptance of our products, pricing, product presentation and promotional strategies, our ability to deliver on-trend styles at the right time, fluctuations in personnel needs and operational costs, inventory management, including potential write-downs for obsolescence, fluctuations in material costs and product mix across our wholesale, direct-to-consumer and licensing businesses, and external conditions, such as general macroeconomic trends, consumer confidence and competitor actions. 
+Additionally, the amount of revenue recognized in any period may be impacted by shifts in consumer demand or purchasing behavior. Customers may also cancel orders, modify delivery schedules, or alter product mixes with minimal notice, adding further unpredictability to our financial results. 
+While we actively manage these variables, there is no assurance that we will not be materially impacted by seasonal trends or other external factors. For further discussion of related risks, see Item 1A. “Risk Factors.” 
+BACKLOG 
+We had unfilled wholesale customer orders of approximately $609,453 and $533,609, as of February 3, 2025 and February 3, 2024, respectively. Our backlog at any given time is influenced by factors, including seasonality, supply chain lead times, timing of market weeks, and wholesale customer purchases of core products through our open stock program. Due to these variables, period-to-period comparisons of backlog may not be indicative of future revenue or shipment trends. 
+9

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+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 2025 Annual Meeting of Stockholders and is incorporated herein by reference.

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+ITEM 9A. CONTROLS AND PROCEDURES 
+Disclosure Controls and Procedures 
+As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (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 accounting principles generally accepted in the United States of America ("GAAP"). 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 GAAP, 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 all 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, 2024, of our internal control over financial reporting based on the framework and criteria established in the 2013 Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation our management has concluded that, as of December 31, 2024, our internal control over financial reporting was effective. 
+Our independent registered public accounting firm, Ernst & Young LLP, has audited our consolidated financial statements and the effectiveness of our internal control over financial reporting as of December 31, 2024. Their attestation report appears in this Annual Report on Form 10-K. 
+Changes in Internal Control Over Financial Reporting 
+There was no change in our internal control over financial reporting, as 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, 2024, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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+Note 18 – Note Receivable – Related Party 
+On June 25, 2007, the Company made a loan to Steven Madden, its Founder and Creative and Design Chief and a principal stockholder of the Company, in the amount of $ 3,000 in order for Mr. Madden to satisfy a personal tax obligation resulting from the exercise of stock options that were due to expire and to retain the underlying Company common stock. The loan, as amended, was secured by non-company securities held in Mr. Madden's brokerage account. The Company agreed to forgive a portion of the note for each year of employment as long as Mr. Madden remained an employee of the Company through December 31, 2023. Accordingly, as of such date, the remaining balance of the note was forgiven by the Company, no amounts remained outstanding, and neither the Company nor Mr. Madden have any outstanding obligations under the note. For the years ended December 31, 2023 and 2022 the Company recorded a charge in the amount of $ 409 for each year, respectively, to write-off the required one-tenth of the principal amount of the secured promissory note, which was partially offset by imputed interest income of $ 8 and $ 16 , respectively.

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+Certain Relationships and Related Party Transactions 
+Steven Madden Employment
+Agreement. We believe that Steven Madden, our founder and Creative and Design Chief, provides unique and significant value in guiding
+the leadership of our creative process, both in his hands-on work for the Company and his collaboration with our designers, product professionals
+and marketing executives. In addition, the public’s association of Mr. Madden’s name and likeness with our branded products
+is significant, meaningful, and integral to our success and has been, and continues to be, instrumental in creating long- term stockholder
+value. Based upon that belief, we further believe that his continuing involvement with the Company is essential, and to this end, we have
+for many years had an employment agreement with Mr. Madden as described below. 
+Mr. Madden’s agreement
+in its current form dates back to July 1, 2005, as subsequently amended on various occasions, most recently on November 10, 2023 (the
+“SM Agreement”). Under the SM Agreement, Mr. Madden has agreed to continue to serve as our Creative and Design Chief for
+a term continuing through December 31, 2031, for a base salary of $7,026,042 per annum through December 31, 2026, together with the potential
+for cash bonuses at the sole discretion of our Board of Directors and an annual life insurance premium reimbursement of up to $200,000.
+Effective January 1, 2027, Mr. Madden’s base salary will increase to $7,377,374 until December 31, 2028, and effective January
+1, 2029, through the remainder of the term, Mr. Madden’s base salary will be increased to $7,746,211. 
+Under the SM Agreement,
+Mr. Madden is also eligible to receive annually, on or about the date of our annual meeting of stockholders (but not later than June 30),
+an option (the “Annual Option”) to purchase shares of Common Stock equal to the greater of (a) 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 or (b) 225,000 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 so granted vests quarterly over a one-year period and is exercisable for a period
+of five years at a price equal to the closing price of our Common Stock on the grant date. 
+Under the SM Agreement,
+if Mr. Madden dies, his estate would receive a payment equal to his base salary for the 24-month period immediately after the date of
+his death. Further, if Mr. Madden’s employment is terminated due to his total disability (as defined in the agreement), “for
+cause” (as defined in the agreement) or due to Mr. Madden’s resignation, we are obligated to pay Mr. Madden the amount of
+compensation that is accrued and unpaid through the date of termination. If Mr. Madden’s employment is terminated for any reason
+(other than “for cause” or due to his death, total disability or resignation), we are obligated to pay Mr. Madden, in installments,
+the balance of his base salary through the end of the term of the SM Agreement. If, during the period commencing 120 days prior to a “change
+of control” transaction (as defined in the SM Agreement) and ending on the first anniversary of a change of control transaction,
+Mr. Madden’s employment is terminated other than “for cause” (as defined in the SM Agreement) all unvested options held
+by Mr. Madden will be accelerated and vest on the date of termination or resignation, or if the employment termination occurred prior
+to the change of control, on the date of such change of control, 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. The SM Agreement contains other
+customary provisions, including provisions regarding expense reimbursement, confidentiality, non-solicitation and non-competition. 
+For the 2024 Fiscal
+Year, Mr. Madden earned $7,026,042 in base salary and received $200,000 for the payment of an annual life insurance premium. Mr. Madden
+also received his Annual Option for the 2024 Fiscal Year to purchase 225,000 shares of Common Stock at a price per share of $41.30. 
+The most recent
+amendment entered into on November 10, 2023, effected the extension of the term of the SM Agreement for five years through December 31,
+2031. In connection with the extension, we agreed to pay Mr. Madden a base salary of $7,026,042 for the annual periods ending December
+31, 2023, 2024, 2025, and 2026; $7,377,374 for the annual periods ending December 31, 2027 and 2028; and $7,746,211 for the annual periods
+through the remainder of the term. Additionally, on the first business day of January 2024, and then annually on the first business day
+of successive years through 
+20 
+December 31, 2031, Mr. Madden will receive a restricted stock award under our 2019 Incentive Compensation
+Plan for a number of shares of Common Stock valued at (i) $10 million each year for the years ended December 31, 2024, 2025, and 2026,
+and (ii) $9 million each year for the years ended December 31, 2027, 2028, 2029, 2030, and 2031, and each such award will vest in accordance
+with the terms of the amendment. 
+Review, Approval or Ratification
+of Transactions with Related Persons 
+Our Conduct Codes
+and Employee Handbook prohibit all conflicts of interest. Under the Conduct Codes, conflicts of interest occur when personal or professional
+interests interfere in any way, or even appear to interfere, with our interests. Our prohibition on conflicts of interest under the Conduct
+Codes includes any related party 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 our best interests. In considering the transaction, the Board or committee will consider all relevant
+factors, including, as applicable, (i) the 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. 
+We have multiple
+processes for reporting conflicts of interest, including related party transactions. Under the Conduct Codes, 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 our executive officers and management personnel quarterly and distributes a questionnaire to the members of the Board
+of Directors annually 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 Codes. 
+The Board of Directors,
+the Audit Committee and the Disclosure Committee, which consists of management personnel, discuss the related party transactions, specifically,
+and in connection with the regular review processes attendant to our 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, they 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/0001680247/2018/0001680247-19-000016/filing_metadata.csv

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+Item 1. Business. 
+Our Company 
+We are a growth‑oriented, Midland, Texas‑based oilfield services company providing hydraulic fracturing and other complementary services to leading upstream oil and gas companies engaged in the exploration and production, or E&P, of North American unconventional oil and natural gas resources. Our operations are primarily focused in the Permian Basin, where we have cultivated longstanding customer relationships with some of the region’s most active and well‑capitalized E&P companies. The Permian Basin is widely regarded as the most prolific oil‑producing area in the United States, and we believe we are one of the leading providers of hydraulic fracturing services in the region by hydraulic horsepower, or HHP. During the year ended December 31, 2018 , we purchased and deployed four newbuild hydraulic fracturing units, bringing our total horse power to 905,000 HHP, or 20 deployed fleets. 
+On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property from Pioneer Natural Resources USA, Inc. (“Pioneer”) and Pioneer Natural Resources Pumping Services, LLC (“Pioneer Pumping Services”). Prior to the purchase, the pressure pumping assets exclusively provided integrated pressure pumping services to Pioneer’s completion and production operations. The acquisition cost of the assets was comprised of $110.0 million of cash and 16.6 million shares of our common stock. In connection with the consummation of transaction, we became a strategic long-term service provider to Pioneer, providing pressure pumping and related services for a term of up to 10 years. 
+The pressure pumping assets acquired include eight hydraulic fracturing fleets with a total of 510,000 HHP, four coiled tubing units and an associated equipment maintenance facility. Through this acquisition, we expanded our existing presence in the Permian Basin, and increased our pumping capacity by 56%, to 28 hydraulic fracturing fleets with a total of 1,415,000 HHP, further strengthening our position as one of the largest pure-play provider of integrated well completion services in the Permian Basin. 
+Our modern hydraulic fracturing fleet has been designed to handle the most challenging Permian Basin operating conditions and the region’s increasingly high‑intensity well completions, which are characterized by longer horizontal wellbores, more frac stages per lateral and increasing amounts of proppant per well. 
+In addition to our core hydraulic fracturing operations, we also offer a suite of complementary well completion and production services, including cementing, coiled tubing, flowback services and drilling. We believe these complementary services create operational efficiencies for our customers and allow us to capture a greater portion of their capital spending across the lifecycle of an unconventional well. 
+Our primary business objective is to serve as a strategic long-term partner to our customers. We achieve this objective by providing reliable, high‑quality services that are tailored to our customers’ needs and synchronized with their well development programs. This alignment assists our customers in optimizing the long‑term development of their unconventional resources. Over the past three years, we have leveraged our strong relationships in the Permian Basin to significantly grow our installed HHP capacity and organically build our cementing and coiled tubing lines of business. Consistent with past performance, we believe our substantial market presence will continue to yield a variety of actionable growth opportunities allowing us to expand both our hydraulic fracturing and complementary services going forward. To this end, we intend to continue to differentiate ourselves, consistent with our past practice, by opportunistically deploying new equipment on a long‑term dedicated basis. 
+Our Services 
+We conduct our business through five operating segments: hydraulic fracturing (inclusive of acidizing), cementing, coil tubing, flowback and drilling. For reporting purposes, the hydraulic fracturing and cementing operating segments are aggregated into our one reportable segment: pressure pumping. For additional financial information on our reportable segment, please see Part II - Item 8. Financial Statements and Supplementary Data. 
+2 
+Pressure Pumping 
+Hydraulic Fracturing 
+We primarily provide hydraulic fracturing services to E&P companies in the Permian Basin. These services are intended to optimize hydrocarbon flow paths during the completion phase of horizontal shale wellbores. We have significant expertise in multi‑stage fracturing of horizontal oil‑producing wells in unconventional geological formations. During the year ended December 31, 2018, we continued to organically grow our hydraulic fracturing business to a total of 20 hydraulic fracturing fleets with an aggregate of 905,000 HHP. Following the consummation of our acquisition of pressure pumping assets from Pioneer Pressure Pumping Services, we increased our hydraulic fracturing business to a total 28 fleets, or 1,415,000 HHP. 
+The fracturing process consists of pumping a fracturing fluid into a well at sufficient pressure to fracture the formation. Materials known as proppants, which in our business are comprised primarily of sand, are suspended in the fracturing fluid and are pumped into the fracture to prop it open. The fracturing fluid is designed to “break,” or loosen viscosity, and be forced out of the formation by its pressure, leaving the proppants suspended in the fractures created, thereby increasing the mobility of the hydrocarbons. As a result of the fracturing process, production rates are usually enhanced substantially, thus increasing the rate of return of hydrocarbons for the operator. 
+We own and operate a fleet of mobile hydraulic fracturing units and other auxiliary equipment to perform fracturing services. We also refer to all of our fracturing units, other equipment and vehicles necessary to perform a fracturing job as a “fleet” and the personnel assigned to each fleet as a “crew.” Each hydraulic fracturing unit consist primarily of a high pressure hydraulic pump, diesel engine, transmission and various hoses, valves, tanks and other supporting equipment that are typically mounted to a flatbed trailer. 
+We provide dedicated equipment, personnel and services that are tailored to meet each of our customer’s needs. Each fleet has a designated team of personnel, which allows us to provide responsive and customized services, such as project design, proppant and other consumables procurement, real‑time data provision and post‑completion analysis for each of our jobs. Many of our hydraulic fracturing fleets and associated personnel have continuously worked with the same customer for the past several years promoting deep relationships and a high degree of coordination and visibility into future customer activity levels. Furthermore, in light of our substantial market presence and historically high fleet utilization levels, we have established a variety of entrenched relationships with key equipment, sand and other downhole consumable suppliers, including over 30 sand suppliers utilized in 2018. These strategic relationships ensure ready access to equipment, parts and materials on a timely and economic basis and allow our dedicated procurement logistics team to ensure consistently safe and reliable operations. 
+Cementing 
+We provide cementing services for completion of new wells and remedial work on existing wells. Cementing services use pressure pumping equipment to deliver a slurry of liquid cement that is pumped down a well between the casing and the borehole. Cementing provides isolation between fluid zones behind the casing to minimize potential damage to hydrocarbon bearing formations or the integrity of freshwater aquifers, and provides structural integrity for the casing by securing it to the earth. Cementing is also done when recompleting wells, where one zone is plugged and another is opened. 
+As of December 31, 2018 , we operated a total of 20 cementing units, with 13 units operating in the Permian Basin and 7 units operating in the Uinta‑Piceance Basin. We believe that our cementing segment provides an organic growth opportunity for us to expand our service offerings within our existing customer base. 
+3 
+Other Services 
+Coiled Tubing 
+Coiled tubing services involve injecting coiled tubing into wells to perform various completion well intervention operations. Coiled tubing is a flexible steel pipe with a diameter of typically less than three inches and manufactured in continuous lengths of thousands of feet. It is wound or coiled on a truck‑mounted reel for onshore applications. Due to its small diameter, coiled tubing can be inserted into existing production tubing and used to perform a variety of services to enhance the flow of oil or natural gas. 
+The principal advantages of using coiled tubing include the ability to (i) continue production from the well without interruption, thus reducing the risk of formation damage, (ii) move continuous coiled tubing in and out of a well significantly faster than conventional pipe used with a workover rig, which must be jointed and unjointed, (iii) direct fluids into a wellbore with more precision, allowing for improved stimulation fluid placement, (iv) provide a source of energy to power a downhole motor or manipulate down‑hole tools and (v) enhance access to remote fields due to the smaller size and mobility. 
+As of December 31, 2018 , we had 8 coiled tubing units of various sizes. We believe these units are well suited for the performance requirements of the unconventional resource markets we serve. 
+Flowback Services 
+Our flowback services consist of production testing, solids control, hydrostatic testing and torque services. Flowback involves the process of allowing fluids to flow from the well following a treatment, either in preparation for an impending phase of treatment or to return the well to production. Our flowback equipment consists of manifolds, accumulators, valves, flare stacks and other associated equipment that combine to form up to a total of five well‑testing spreads. We provide flowback services in the Permian Basin and mid‑continent markets. 
+Surface Air Drilling 
+We operated a surface air drilling operation in the Uinta‑Piceance Basin, which offered pre‑set surface air drilling services to target depths of approximately 4,000 feet in areas of fragile geology. Air drilling is a technique in which oil, natural gas, or geothermal wells are drilled by creating a pressure within the well that is lower than the reservoir pressure, which results in increased rates of penetration, reduced formation damage and reduced drilling costs. 
+On August 31, 2018, we divested our surface air drilling operations, included in our "all other" operating segment category in our financial statements, in order to continue to position ourselves as a Permian Basin-focused pressure pumping business because we believe the pressure pumping market in the Permian Basin offers more supportive long-term growth fundamentals. The divestiture of our surface air drilling operations did not qualify for presentation and disclosure as discontinued operations, and accordingly we have recorded the resulting loss on disposal of our surface air drilling of $0.3 million, as part of our loss on disposal of asset in our statement of operations included in this annual report. The divestiture of our surface air drilling operations resulted in a reduction in the number of our current operating segments. The change in the number of our operating segments did not impact our reportable segment information reported in the financial statements included in this annual report. 
+Competitive Strengths 
+Our primary business objective is to serve as a strategic long-term partner for our customers. We achieve this objective by providing reliable, high‑quality services that are tailored to our customers’ needs and synchronized with their well development programs. This alignment assists our customers in optimizing the long‑term development of their unconventional resources. We believe that the following competitive strengths differentiate us from our peers and uniquely position us to achieve our primary business objective. 
+4 
+• 
+Strong market position in the Permian Basin. We believe we are one of the largest hydraulic fracturing provider by HHP in the Permian Basin, which is the most prolific oil producing area in the United States. Our longstanding customer relationships and substantial Permian Basin market presence uniquely position us to continue growing in tandem with the basin’s ongoing development. The Permian Basin is a mature, liquids‑rich basin with well known geology and a large, exploitable resource base that delivers attractive E&P producer economics at or below current commodity prices. As a result of its significant size, coupled with the presence of multiple prospective geologic benches and other favorable characteristics, the Permian Basin has become widely recognized as the most attractive and economic oil resource in North America. 
+Our operational focus has historically been in the Permian Basin’s Midland sub‑basin in support of our customers’ core operations. More recently, however, many of our customers have made sizeable acquisitions in the Delaware Basin, and we have expanded our services into the Delaware Basin to help develop their acreage. Further, we believe that we are uniquely positioned to capture a large addressable growth opportunity as the basin develops. For the foreseeable future, we expect both the Midland Basin and the Delaware Basin to continue to command a disproportionate share of future North American E&P spending. 
+• 
+Hydraulic fracturing is highly levered to increasing drilling activity and completion intensity levels. The combination of an expanding Permian Basin horizontal rig count and more complex well completions has a compounding effect on HHP demand growth. Horizontal drilling has become the default method for E&P operators to most economically extract unconventional resources, and the number of horizontal rigs has increased from 22% of the total Permian Basin rig count in December 2011 to approximately 91% of the Permian Basin rig count at December 31, 2018. As the horizontal rig count has grown, well completion intensity levels have also increased as a result of longer wellbore lateral lengths, more fracturing stages per foot of lateral and increasing amounts of proppant per stage. Furthermore, the ongoing improvement in drilling and completion efficiencies, driven by innovations such as multi‑well pads and zipper fracs, have further increased the demand for HHP. Taken together, these demand drivers have helped contribute to the full utilization of our fleet and have us well positioned to capture future growth opportunities and enhanced pricing for our services. 
+• 
+Deep relationships and operational alignment with high‑quality, Permian Basin‑focused customers. Our deep local roots, operational expertise and commitment to safe and reliable service have allowed us to cultivate longstanding customer relationships with the most active and well‑capitalized Permian Basin operators. Many of our current customers have worked with us since our inception and have integrated our fleet scheduling with their well development programs. This high degree of operational alignment and their continued support have allowed us to maintain relatively high utilization rates over time. As our customers increase activity levels, we expect to continue to leverage these strong relationships to keep our fleet fully utilized and selectively expand our platform in response to specific customer demand. 
+• 
+Standardized fleet of modern, well‑maintained equipment. We have a large, homogenous fleet of modern equipment that is configured to handle the Permian Basin’s most complex, highest‑intensity, hydraulic fracturing jobs. We believe that our fleet design is a key advantage compared to many of our competitors who have fracturing units that are not optimized for Permian Basin conditions. Our fleet is largely standardized across units to facilitate efficient maintenance and repair, reducing equipment downtime and improving labor efficiency. Furthermore, our strong relationships with a variety of key suppliers and vendors provide us with the reliable access to the equipment necessary to support our continued organic growth strategy. 
+• 
+Proven cross‑cycle financial performance. Over the past several years, we have maintained high cross‑cycle fleet utilization rates. Since September 2016 our fleet has consistently recorded a utilization rate of approximately 100%. Our consistent track record of steady growth, coupled with our ability to quickly deploy new HHP on a dedicated and fully utilized basis, has resulted in revenue growth across the industry’s cycles. We believe that we will be able to continue to grow faster than our competitors while preserving attractive EBITDA margins as a result of our differentiated service offerings and a robust backlog of demand for our services. Furthermore, we believe that our philosophy of maintaining modest 
+5 
+financial leverage and a healthy balance sheet has left us more conservatively capitalized than our peers. We expect that improving market fundamentals, our superior execution and our customer‑focused approach should result in strong financial performance. 
+• 
+Seasoned management and operating team. We have a seasoned executive management team, with our senior members contributing more than 100 years of collective industry and financial experience. Members of our management team founded our business and seeded our company with a portion of our original investment capital. We believe their track record of successfully building premier oilfield service companies in the Permian Basin, as well as their deep roots and relationships throughout the West Texas community, provide a meaningful competitive advantage for our business. In addition, our management team has assembled a loyal group of highly‑motivated and talented managers and field personnel, and we have had minimal manager‑level turnover in our core service divisions over the past three years. We employ a balanced decision‑making structure that empowers managerial and field personnel to work directly with customers to develop solutions while leveraging senior management’s oversight. This collaborative approach fosters strong customer links at all levels of the organization and effectively institutionalizes customer relationships beyond the executive suite. 
+Strategy 
+Our strategy is to: 
+• 
+Capture an increasing share of rising demand for hydraulic fracturing services in the Permian Basin. We intend to continue to position ourselves as a Permian Basin‑focused hydraulic fracturing business, as we believe the Permian Basin hydraulic fracturing market offers supportive long‑term growth fundamentals. These fundamentals are characterized by increased demand for our HHP, driven by increasing drilling activity and well completion intensity levels. We are currently operating at approximately 100% utilization, and we believe we are strategically positioned to deploy additional hydraulic fracturing equipment as our customers continue to develop their assets in the Midland Basin and Delaware Basin. 
+• 
+Capitalize on improving efficiency gains. We intend to continue to work with our customers and vendors to improve our operational efficiencies and enhance our margins. We believe that improving our efficiencies will result in greater revenue and enhanced margins as fixed costs are spread over a broader revenue base. 
+• 
+Cross‑sell our complementary services. In addition to our hydraulic fracturing services, we offer a broad range of complementary services in support of our customers’ development activities, including cementing, coiled tubing, flowback services and drilling. These complementary services create operational efficiencies for our customers, and allow us to capture a greater percentage of their capital spending across the lifecycle of an unconventional well. We believe that, as our customers increase spending levels, we are well positioned to continue cross‑selling and growing our complementary service offerings. 
+• 
+Maintain financial stability and flexibility to pursue growth opportunities. Consistent with our historical practices, we plan to continue to maintain a conservative balance sheet, which will allow us to better react to potential changes in industry and market conditions and opportunistically grow our business. In the near term, we intend to continue our past practice of aligning our growth capital expenditures with visible customer demand by strategically deploying new equipment on a long‑term, dedicated basis in response to inbound customer requests. We will also selectively evaluate potential strategic acquisitions that increase our scale and capabilities or diversify our operations. 
+Our Customers 
+Our customers consist primarily of oil and natural gas producers in North America. Our top five customers accounted for approximately 68.7% , 66.0% and 58.0% of our revenue, for the years ended December 31, 2018 , 2017 and 2016 , respectively. For the year ended December 31, 2018 , XTO Energy, Parsley Energy Operations, LLC and 
+6 
+CrownQuest Operating, LLC, accounted for 24.1%, 16.5%, and 12.2%, respectively, of total revenue. No other customer accounted for more than 10% of total revenue for the year ended December 31, 2018 . 
+Competition 
+The markets in which we operate are highly competitive. To be successful, an oilfield services company must provide services that meet the specific needs of oil and natural gas exploration and production companies at competitive prices. Competitive factors impacting sales of our services are price, reputation, technical expertise, service and equipment quality, and health and safety standards. Although we believe our customers consider all of these factors, we believe price is a key factor in E&P companies’ criteria in choosing a service provider. While we seek to price our services competitively, we believe many of our customers elect to work with us based on our deep local roots, operational expertise, equipment’s ability to handle the most complex Permian Basin well completions, and commitment to safety and reliability. 
+We provide our services primarily in the Permian Basin, and we compete against different companies in each service and product line we offer. Our competition includes many large and small oilfield service companies, including the largest integrated oilfield services companies. Our major competitors for hydraulic fracturing services include C&J Energy Services, Halliburton, Patterson‑UTI Energy Inc., RPC, Inc., Schlumberger, Keane Group, Inc., Liberty Oilfield Services, FTS International, Inc., Superior Energy Services and a number of locally oriented businesses. 
+Seasonality 
+Our results of operations have historically reflected seasonal tendencies, generally in the fourth quarter, relating to the conclusion of our customers’ annual capital expenditure budgets, the holidays and inclement winter weather during which we may experience declines in our operating results. 
+Operating Risks and Insurance 
+Our operations are subject to hazards inherent in the oilfield services industry, such as accidents, blowouts, explosions, fires and spills and releases that can cause personal injury or loss of life, damage or destruction of property, equipment, natural resources and the environment and suspension of operations. 
+In addition, claims for loss of oil and natural gas production and damage to formations can occur in the oilfield services industry. If a serious accident were to occur at a location where our equipment and services are being used, it could result in us being named as a defendant in lawsuits asserting large claims. 
+Our business involves the transportation of heavy equipment and materials, and as a result, we may also experience traffic accidents which may result in spills, property damage and personal injury. 
+Despite our efforts to maintain safety standards, we from time to time have suffered accidents in the past and anticipate that we could experience accidents in the future. In addition to the property damage, personal injury and other losses from these accidents, the frequency and severity of these incidents affect our operating costs and insurability and our relationships with customers, employees, regulatory agencies and other parties. Any significant increase in the frequency or severity of these incidents, or the general level of compensation awards, could adversely affect the cost of, or our ability to obtain, workers’ compensation and other forms of insurance, and could have other material adverse effects on our financial condition and results of operations. 
+We maintain commercial general liability, workers’ compensation, business auto, commercial property, umbrella liability, excess liability, and directors and officers insurance policies providing coverages of risks and amounts that we believe to be customary in our industry. Further, we have pollution legal liability coverage for our business entities, which would cover, among other things, third party liability and costs of clean up relating to environmental contamination on our premises while our equipment is in transit and on our customers’ job site. With respect to our hydraulic fracturing operations, coverage would be available under our pollution legal liability policy 
+7 
+for any surface or subsurface environmental clean‑up and liability to third parties arising from any surface or subsurface contamination. We also have certain specific coverages for some of our businesses, including our hydraulic fracturing services. 
+Although we maintain insurance coverage of types and amounts that we believe to be customary in the industry, we are not fully insured against all risks, either because insurance is not available or because of the high premium costs relative to perceived risk. Further, insurance rates have in the past been subject to wide fluctuation and changes in coverage could result in less coverage, increases in cost or higher deductibles and retentions. Liabilities for which we are not insured, or which exceed the policy limits of our applicable insurance, could have a material adverse effect on us. See “Risk Factors” for a description of certain risks associated with our insurance policies. 
+Environmental and Occupational Health and Safety Regulations 
+Our operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection, and occupational health and safety. Numerous federal, state and local governmental agencies issue regulations that often require difficult and costly compliance measures that could carry substantial administrative, civil and criminal penalties and may result in injunctive obligations for non compliance. These laws and regulations may, for example, restrict the types, quantities and concentrations of various substances that can be released into the environment, limit or prohibit construction or drilling activities on certain lands lying within wilderness, wetlands, ecologically or seismically sensitive areas and other protected areas, or require action to prevent or remediate pollution from current or former operations. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the environment. Changes in environmental, health and safety laws and regulations occur frequently, and any changes that result in more stringent and costly requirements could materially adversely affect our operations and financial position. We have not experienced any material adverse effect from compliance with these requirements, however, this trend may not continue in the future. 
+Below is an overview of some of the more significant environmental, health and safety requirements with which we must comply. Our customers’ operations are subject to similar laws and regulations. Any material adverse effect of these laws and regulations on our customers’ operations and financial position may also have an indirect material adverse effect on our operations and financial position. 
+Waste Handling. We handle, transport, store and dispose of wastes that are subject to the Resource Conservation and Recovery Act (“RCRA”) and comparable state laws and regulations, which affect our activities by imposing requirements regarding the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non hazardous wastes. With federal approval, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. Although certain petroleum production wastes are exempt from regulation as hazardous wastes under RCRA, such wastes may constitute “solid wastes” that are subject to the less stringent requirements of non hazardous waste provisions. 
+Administrative, civil and criminal penalties can be imposed for failure to comply with waste handling requirements. Moreover, the EPA or state or local governments may adopt more stringent requirements for the handling of non hazardous wastes or recategorize some non hazardous wastes as hazardous for future regulation. Indeed, legislation has been proposed from time to time in Congress to recategorize certain oil and natural gas exploration, development and production wastes as hazardous wastes. Several environmental organizations have also petitioned the EPA to modify existing regulations to recategorize certain oil and natural gas exploration, development and production wastes as hazardous. Any such changes in these laws and regulations could have a material adverse effect on our capital expenditures and operating expenses. Although we do not believe the current costs of managing our wastes, as presently classified, to be significant, any legislative or regulatory reclassification of oil and natural gas exploration and production wastes could increase our costs to manage and dispose of such wastes. 
+8 
+Remediation of Hazardous Substances. The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) and analogous state laws generally impose liability without regard to fault or legality of the original conduct, on classes of persons who are considered to be responsible for the release of a hazardous substance into the environment. These persons include the current owner or operator of a contaminated facility, a former owner or operator of the facility at the time of contamination and those persons that disposed or arranged for the disposal of the hazardous substance at the facility. Liability for the costs of removing or remediating previously disposed wastes or contamination, damages to natural resources, the costs of conducting certain health studies, amongst other things, is strict and joint and several. In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. In the course of our operations, we use materials that, if released, would be subject to CERCLA and comparable state laws. Therefore, governmental agencies or third parties may seek to hold us responsible under CERCLA and comparable state statutes for all or part of the costs to clean up sites at which such hazardous substances have been released. 
+One of our facilities in Midland, Texas is located within the boundaries of the West County Road 112 federal Superfund site, which site and the associated investigation and cleanup is being managed by EPA Region 6. The site’s soil and groundwater is contaminated with chromium and hexavalent chromium as a result of historic site operations unaffiliated with the Company and unassociated with the Company’s operations. Toxic tort claims also have been asserted as a result of this groundwater contamination against various unaffiliated parties. In 2013, in order to reduce the Company’s risk of incurring any future liabilities in connection with this site, the Company negotiated and obtained a bona fide prospective purchaser (“BFPP”) letter from EPA Region 6 in connection with a reorganization of the facility site ownership and lease. The BFPP letter generally acknowledges and provides that the Company is unaffiliated with any potentially responsible parties or known contamination that is the subject of the Superfund action, the Company agrees to comply with any future land use restrictions that may be imposed in connection with a site remedy (none have been imposed to date), and the Company agrees to cooperate with and provide access and assistance to EPA Region 6 in connection with the remediation. In exchange for these undertakings, the Company will not be subject to any CERCLA action by the EPA. In addition, the Company separately obtained a 10‑year environmental pollution legal liability insurance policy, effective March 4, 2013, with an aggregate limit of $20 million to insure against potential third‑party claims and any known or unknown pre‑existing conditions at the site, including Superfund or toxic tort liabilities. Both prior to and since obtaining the BFPP letter and the insurance policy, no claims have been made or threatened against the Company or any of its affiliated persons or entities with regard to this Superfund site or any related liabilities, and the Company has not incurred any significant expenses in connection with this matter. 
+NORM. In the course of our operations, some of our equipment may be exposed to naturally occurring radioactive materials (“NORM”) associated with oil and gas deposits and, accordingly may result in the generation of wastes and other materials containing NORM. NORM exhibiting levels of radiation in excess of established state standards are subject to special handling and disposal requirements, and any storage vessels, piping and work area affected by NORM may be subject to remediation or restoration requirements. 
+Water Discharges. The Clean Water Act, Safe Drinking Water Act, Oil Pollution Act and analogous state laws and regulations impose restrictions and strict controls regarding the unauthorized discharge of pollutants, including produced waters and other gas and oil wastes, into regulated waters. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or the state. Also, spill prevention, control and countermeasure plan requirements require appropriate containment berms and similar structures to help prevent the contamination of regulated waters. 
+Air Emissions. The Clean Air Act (“CAA”) and comparable state laws and regulations, regulate emissions of various air pollutants through the issuance of permits and the imposition of other emissions control requirements. The EPA has developed, and continues to develop, stringent regulations governing emissions of air pollutants from specified sources. New facilities may be required to obtain permits before work can begin, and existing facilities may be required to obtain additional permits and incur capital costs in order to remain in compliance. These and other laws and regulations may increase the costs of compliance for some facilities where we operate. Obtaining or renewing permits also has the potential to delay the development of oil and natural gas projects. 
+9 
+Climate Change. The EPA has determined that greenhouse gases (“GHGs”) present an endangerment to public health and the environment because such gases contribute to warming of the earth’s atmosphere and other climatic changes. Based on these findings, the EPA has adopted and implemented, and continues to adopt and implement, regulations that restrict emissions of GHGs under existing provisions of the CAA. The EPA also requires the annual reporting of GHG emissions from certain large sources of GHG emissions in the United States, including certain oil and gas production facilities. The U.S. Congress has from time to time considered adopting legislation to reduce emissions of GHGs and almost one‑half of the states have already taken legal measures to reduce emissions of GHGs primarily through the planned development of GHG emission inventories and/or regional GHG cap and trade programs. In December 2015, the United States joined the international community at the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change in Paris, France. The resulting Paris Agreement calls for the parties to undertake “ambitious efforts” to limit the average global temperature, and to conserve and enhance sinks and reservoirs of greenhouse gases. The Paris Agreement entered into force in November 2016. On June 1, 2017, President Trump announced that the United States planned to withdraw from the Paris Agreement and to seek negotiations either to reenter the Paris Agreement on different terms or establish a new framework agreement. The Paris Agreement provides for a four‑year exit process beginning when it took effect in November 2016, which would result in an effective exit date of November 2020. The United States’ adherence to the exit process is uncertain and/or the terms on which the United States may reenter the Paris Agreement or a separately negotiated agreement are unclear at this time. 
+Moreover, climate change may cause more extreme weather conditions and increased volatility in seasonal temperatures. Extreme weather conditions can interfere with our operations and increase our costs, and damage resulting from extreme weather may not be fully insured. 
+Endangered and Threatened Species. Environmental laws such as the Endangered Species Act (“ESA”) and analogous state laws may impact exploration, development and production activities in areas where we operate. The ESA provides broad protection for species of fish, wildlife and plants that are listed as threatened or endangered. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act and various state analogs. The U.S. Fish and Wildlife Service may identify previously unidentified endangered or threatened species or may designate critical habitat and suitable habitat areas that it believes are necessary for survival of a threatened or endangered species, which could cause us or our customers to incur additional costs or become subject to operating restrictions or operating bans in the affected areas. 
+Regulation of Hydraulic Fracturing and Related Activities. Our hydraulic fracturing operations are a significant component of our business. Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons, particularly natural gas, from tight formations, including shales. The process, which involves the injection of water, sand and chemicals under pressure into formations to fracture the surrounding rock and stimulate production, is typically regulated by state oil and natural gas commissions. However, federal agencies have asserted regulatory authority over certain aspects of the process. For example, in May 2014, the EPA issued an Advanced Notice of Proposed Rulemaking seeking comment on the development of regulations under the Toxic Substances Control Act to require companies to disclose information regarding the chemicals used in hydraulic fracturing. Beginning in August 2012, the EPA issued a series of rules under the CAA that establish new emission control requirements for certain oil and natural gas production and natural gas processing operations and associated equipment. After several attempts to delay implementation, in September 2018 the EPA issued a proposal to amend and reduce such requirements. In March 2015, the Bureau of Land Management (“BLM”) finalized a rule governing hydraulic fracturing on federal lands. In June 2016, a federal district court judge in Wyoming struck down the final rule, finding that the BLM lacked congressional authority to promulgate the rule. However, in July 2017, the BLM initiated a rulemaking to rescind the final rule and reinstate the regulations that existed immediately before the published effective date of the rule. In light of the BLM’s proposed rulemaking, in September 2017, the U.S. Court of Appeals for the Tenth Circuit dismissed the appeal and remanded with directions to vacate the lower court’s opinion, leaving the final rule in place. The BLM initiated a rulemaking to rescind the final rule in December 2017. Further, legislation to amend the Safe Drinking Water Act to repeal the exemption for hydraulic fracturing (except when diesel fuels are used) from the definition of “underground injection” and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturing process, have been proposed in recent sessions of Congress. Several 
+10 
+states and local jurisdictions in which we or our customers operate also have adopted or are considering adopting regulations that could restrict or prohibit hydraulic fracturing in certain circumstances, impose more stringent operating standards and/or require the disclosure of the composition of hydraulic fracturing fluids. 
+More recently, federal and state governments have begun investigating whether the disposal of produced water into underground injection wells has caused increased seismic activity in certain areas. In March 2016, the United States Geological Survey identified six states with the most significant hazards from induced seismicity, including Oklahoma, Kansas, Texas, Colorado, New Mexico and Arkansas. The United States Geological Survey also noted the potential for induced seismicity in Ohio and Alabama. In response to concerns regarding induced seismicity, regulators in some states have imposed, or are considering imposing, additional requirements in the permitting of produced water disposal wells or otherwise to assess any relationship between seismicity and the use of such wells. For example, Oklahoma issued new rules for wastewater disposal wells in 2014 that imposed certain permitting and operating restrictions and reporting requirements on disposal wells in proximity to faults and also, from time to time, has developed and implemented plans directing certain wells where seismic incidents have occurred to restrict or suspend disposal well operations. In particular, the Oklahoma Corporation Commission released well completion seismicity guidelines in December 2016 for operators in the SCOOP and STACK that call for hydraulic fracturing operations to be suspended following earthquakes of certain magnitudes in the vicinity. In addition, in February 2017, the Oklahoma Corporation Commission’s Oil and Gas Conservation Division issued an order limiting future increases in the volume of oil and natural gas wastewater injected into the ground in an effort to reduce the number of earthquakes in the state. The Texas Railroad Commission adopted similar rules in 2014. In addition, in December 2016, the EPA released its final report regarding the potential impacts of hydraulic fracturing on drinking water resources, concluding that “water cycle” activities associated with hydraulic fracturing may impact drinking water resources under certain circumstances such as water withdrawals for fracturing in times or areas of low water availability, surface spills during the management of fracturing fluids, chemicals or produced water, injection of fracturing fluids into wells with inadequate mechanical integrity, injection of fracturing fluids directly into groundwater resources, discharge of inadequately treated fracturing wastewater to surface waters, and disposal or storage of fracturing wastewater in unlined pits. The results of these studies could lead federal and state governments and agencies to develop and implement additional regulations. 
+Increased regulation of hydraulic fracturing and related activities (whether as a result of the EPA study results or resulting from other factors) could subject us and our customers to additional permitting and financial assurance requirements, more stringent construction specifications, increased monitoring, reporting and record keeping obligations, and plugging and abandonment requirements. New requirements could result in increased operational costs for us and our customers, and reduce the demand for our services. 
+OSHA Matters. The Occupational Safety and Health Act (“OSHA”) and comparable state statutes regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that information be maintained about hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities and the public. 
+Employees 
+As of December 31, 2018 , we employed 1,579 people. None of our employees are represented by labor unions or subject to collective bargaining agreements. 
+We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s web site at www.sec.gov. You may also read and copy any document we file at the SEC’s public reference room in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information on their public reference room. Our SEC filings are also available to the public on our website at www.propetroservices.com. Please note that information contained on our website, whether currently posted or posted in the future, is not a part of this Annual Report on Form 10-K or the documents incorporated by reference in this Annual Report on Form 10-K. This Annual Report on Form 10-K also contains summaries of the terms of certain agreements that we have entered into that are filed as exhibits to this Annual Report on Form 10-K or other reports that we have filed with the SEC. The descriptions contained in this Annual Report on Form 10-K of 
+11 
+those agreements do not purport to be complete and are subject to, and qualified in their entirety by reference to, the definitive agreements. You may request a copy of the agreements described herein at no cost by writing or telephoning us at the following address: ProPetro Holding Corp., Attention: Investor Relations, P.O. Box 873, Midland, Texas 79702, phone number (432) 688-0012. 
+12

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+Item 13. Certain Relationships and Related Party Transactions, and Director Independence. 
+The information required by this Item concerning certain relationships and related person transactions and director independence is incorporated herein by reference from our definitive Proxy Statement for our 2019 Annual Meeting of Shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days after the end of our last fiscal year.

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+Item 9A. Controls and Procedures 
+Evaluation of Disclosure Controls and Procedures 
+We maintain disclosure controls and procedures that are designed to provide reasonable assurance that the information required to be disclosed by us in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. 
+As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer, principal financial officer and principal accounting officer, 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 the end of the period covered by this report. Based upon that evaluation, our principal executive officer, principal financial officer and principal accounting officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2018 . 
+Management’s Report on Internal Control over Financial Reporting 
+Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). See page 48 for Management’s Report on Internal Control Over Financial Reporting. Deloitte & Touche LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2018 , as stated in their report, which is included herein. See page 50 for Report of Independent Registered Public Accounting Firm on its assessment of our internal control over financial reporting. 
+Changes in Internal Control over Financial Reporting 
+No changes in our system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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+Item 1. Business. 
+Our Company 
+We are a growth‑oriented, Midland, Texas‑based oilfield services company providing hydraulic fracturing and other complementary services to leading upstream oil and gas companies engaged in the exploration and production (“E&P”) of North American unconventional oil and natural gas resources. Our operations are primarily focused in the Permian Basin, where we have cultivated longstanding customer relationships with some of the region’s most active and well‑capitalized E&P companies. The Permian Basin is widely regarded as one of the most prolific oil‑producing areas in the United States, and we believe we are one of the leading providers of hydraulic fracturing services in the region by hydraulic horsepower (“HHP”). 
+Changes to our customers’ well design, shale formations, operating conditions and new technology have resulted in continuous changes to the number of pumps that constitute a fleet. As a result of the asymmetric nature of the number of pumps that constitute a fleet across our customer base, which we believe will continue to evolve, we view HHP to also be an appropriate metric to measure our available hydraulic fracturing capacity. At the beginning of the year, our fleet size was 28 conventional hydraulic fracturing fleets. During 2019, we reconfigured our existing fleet size to 24 conventional fleets with the objective of increasing our HHP per fleet, and we subsequently purchased 54,000 HHP of new DuraStim® hydraulic pumps, bringing our total HHP at December 31, 2019 to 1,469,000 HHP. Our total HHP as of December 31, 2019 was comprised of 1,415,000 HHP of conventional HHP and 54,000 HHP of our newly purchased DuraStim® hydraulic fracturing technology. With the continuous evaluation and changes to the number of pumps or HHP that constitute a fleet, we believe that our available fleet capacity could decline as we reconfigure our fleets to increase active HHP and back up HHP based on our customers’ operational needs. 
+In 2019, we entered into a purchase commitment for 108,000 HHP DuraStim® hydraulic fracturing pumps. We believe that one DuraStim® fleet could require between 6 to 9 frac pumps or 36,000 to 54,000 HHP per fleet, depending on the shale formation in which it operates and the customer’s well design. The first DuraStim® hydraulic fracturing pumps were delivered in December 2019 and the remaining DuraStim® hydraulic fracturing pumps are expected to be delivered in 2020. We also have an option to purchase up to three additional DuraStim® fleets in the future through April 2021. We believe the DuraStim® hydraulic fracturing pump technology could represent the future of our industry and is designed to drive down well costs for our customers while improving safety and the useful life of the equipment and reducing environmental impact. The DuraStim® technology is powered by electricity. We purchased two gas turbines to provide electrical power for our DuraStim® fleets. The electrical power sources for future DuraStim® fleets are still being evaluated and could either be supplied by the Company, customers or a third-party supplier. 
+All of our hydraulic fracturing fleets have been designed to handle the most challenging Permian Basin operating conditions and the region’s increasingly high‑intensity well completions, which are characterized by longer horizontal wellbores, more frac stages per lateral and increasing amounts of proppant per well. 
+In addition to our core pressure pumping segment operations, which includes our cementing operations, we also offer a suite of complementary well completion and production services, including coiled tubing and other services. We believe these complementary services create operational efficiencies for our customers and could allow us to capture a greater portion of their capital spending across the lifecycle of a well. 
+Commodity Price and Other Economic Conditions 
+The global public health crisis associated with the COVID-19 pandemic has and is anticipated to continue to have an adverse effect on global economic activity for the immediate future and has resulted in travel restrictions, business closures and the institution of quarantining and other restrictions on movement in many communities. The slowdown in global economic activity attributable to COVID-19 has resulted in a dramatic decline in the demand for energy which directly impacts our industry and the Company. In addition, global crude oil prices experienced a collapse starting in early March 2020 as a direct result of failed negotiations between OPEC and Russia. In response to the global economic slowdown, OPEC had recommended a decrease in production levels in order to accommodate reduced demand. Russia 
+1 
+rejected the recommendation of OPEC as a concession to U.S. producers. After the failure to reach an agreement, Saudi Arabia, a dominant member of OPEC, and other Persian Gulf OPEC members announced intentions to increase production and offer price discounts to buyers in certain geographic regions. 
+As the breadth of the COVID-19 health crisis expanded throughout the month of March 2020 and governmental authorities implemented more restrictive measures to limit person-to-person contact, global economic activity continued to decline commensurately. The associated impact on the energy industry has been adverse and continued to be exacerbated by the unresolved conflict regarding production. In the second week of April 2020, OPEC+ reconvened to discuss the matter of production cuts in light of unprecedented disruption and supply and demand imbalances that expanded since the failed negotiations in early March 2020. Tentative agreements were reached to cut production by up to 10 million barrels of oil per day, or BOPD, with allocations to be made among the OPEC+ participants. Some of these production cuts went into effect in the first half of May 2020, however, commodity prices remain depressed as a result of an increasingly utilized global storage network and near-term demand loss attributable to the COVID-19 health crisis and related economic slowdown. 
+The combined effect of COVID-19 and the energy industry disruptions led to a decline in WTI crude oil prices of approximately 67 percent from the beginning of January 2020, when prices were approximately $62 per barrel, through the end of March 2020, when they were just above $20 per barrel. Overall crude oil price volatility has continued despite apparent agreement among OPEC+ regarding production cuts and as of June 17, 2020, the WTI price for a barrel of crude oil was approximately $38. 
+Despite a significant decline in drilling and completion activity by U.S. producers starting in mid-March 2020, domestic supply continues to exceed demand which has led to significant operational stress with respect to capacity limitations associated with storage, pipeline and refining infrastructure, particularly within the Gulf Coast region. The combined effect of the aforementioned factors is anticipated to have a continuing adverse impact on the industry in general and our operations specifically. 
+In order to mitigate the impact of COVID-19 and the economic effects of the unprecedented decline in economic activity and global energy markets, we undertook several actions since March 2020 in support of the efficient continuity of our operations. These actions are described in greater detail in Part 2, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 
+Our Services 
+We have historically conducted our business through five operating segments: hydraulic fracturing, cementing, coiled tubing, flowback and drilling. For reporting purposes, the hydraulic fracturing and cementing operating segments are aggregated into our one reportable segment: pressure pumping. Our coiled tubing, flowback, and drilling operating segments and corporate administrative expense are aggregated into our “All Other” reportable segment. For additional financial information on our reportable segment, please see reportable segment information in Part II - Item 8. “Financial Statements and Supplementary Data.” 
+Pressure Pumping 
+Hydraulic Fracturing 
+We primarily provide hydraulic fracturing services to E&P companies in the Permian Basin. These services are intended to optimize hydrocarbon flow paths during the completion phase of horizontal shale wellbores. We have significant expertise in multi‑stage fracturing of horizontal oil‑producing wells in unconventional geological formations. We took delivery of 54,000 HHP of new DuraStim® hydraulic fracturing pumps in December 2019, bringing our total fleet capacity to 1,469,000 HHP as of December 31, 2019 . 
+The fracturing process consists of pumping a fracturing fluid into a well at sufficient pressure to fracture the formation. Materials known as proppants, which in our business are comprised primarily of sand, are suspended in the fracturing fluid and are pumped into the fracture to prop it open. The fracturing fluid is designed to “break,” or loosen viscosity, and be forced out of the formation by its pressure, leaving the proppants suspended in the fractures created, thereby increasing the mobility of the hydrocarbons. As a result of the fracturing process, production rates are usually enhanced substantially, thus increasing the rate of return of hydrocarbons for the operator. 
+We own and operate a fleet of mobile hydraulic fracturing units and other auxiliary equipment to perform fracturing services. We also refer to all of our fracturing units, other equipment and vehicles necessary to perform a fracturing job as 
+2 
+a “fleet” and the personnel assigned to each fleet as a “crew.” Our conventional hydraulic fracturing units consist primarily of a high pressure hydraulic pump, diesel engine, transmission and various hoses, valves, tanks and other supporting equipment like blenders, irons and data vans. The new DuraStim® hydraulic fracturing fleet is powered by electricity and the electrical power equipment could either be provided by us or our customers. 
+We provide dedicated equipment, personnel and services that are tailored to meet each of our customer’s needs. Each fleet has a designated team of personnel, which allows us to provide responsive and customized services, such as project design, proppant and other consumables procurement, real‑time data provision and post‑completion analysis for each of our jobs. Many of our hydraulic fracturing fleets and associated personnel have continuously worked with the same customer for the past several years promoting deep relationships and a high degree of coordination and visibility into future customer activity levels. Furthermore, in light of our substantial market presence and historically high fleet utilization levels, we have established a variety of entrenched relationships with key equipment, sand and other downhole consumable suppliers. These strategic relationships ensure ready access to equipment, parts and materials on a timely and economic basis and allow our dedicated procurement logistics team to ensure consistently safe and reliable operations. 
+Cementing 
+We provide cementing services for completion of new wells and remedial work on existing wells. Cementing services use pressure pumping equipment to deliver a slurry of liquid cement that is pumped down a well between the casing and the borehole. Cementing provides isolation between fluid zones behind the casing to minimize potential damage to hydrocarbon bearing formations or the integrity of freshwater aquifers, and provides structural integrity for the casing by securing it to the earth. Cementing is also done when recompleting wells, where one zone is plugged and another is opened. 
+As of December 31, 2019 , we had a total of 25 cementing units. We believe that our cementing segment provides an organic growth opportunity for us to expand our service offerings within our existing customer base. 
+Other Services 
+Coiled Tubing 
+Coiled tubing services involve injecting coiled tubing into wells to perform various completion well intervention operations. Coiled tubing is a flexible steel pipe with a diameter of typically less than three inches and manufactured in continuous lengths of thousands of feet. It is wound or coiled on a truck‑mounted reel for onshore applications. Due to its small diameter, coiled tubing can be inserted into existing production tubing and used to perform a variety of services to enhance the flow of oil or natural gas. 
+The principal advantages of using coiled tubing include the ability to (i) continue production from the well without interruption, thus reducing the risk of formation damage, (ii) move continuous coiled tubing in and out of a well significantly faster than conventional pipe used with a workover rig, which must be jointed and unjointed, (iii) direct fluids into a wellbore with more precision, allowing for improved stimulation fluid placement, (iv) provide a source of energy to power a downhole motor or manipulate down‑hole tools and (v) enhance access to remote fields due to the smaller size and mobility. 
+As of December 31, 2019 , we had a total of 9 coiled tubing units of various sizes. 
+Flowback Services 
+Our flowback services consist of production testing, solids control and hydrostatic testing. Flowback involves the process of allowing fluids to flow from the well following a treatment, either in preparation for an impending phase of treatment or to return the well to production. Our flowback equipment consists of manifolds, accumulators, valves, flare stacks and other associated equipment that combine to form up to a total of five well‑testing spreads. We provide flowback services in the Permian Basin and mid‑continent markets. Our flowback business segment has continued to decline in profitability over the years, and as a result, the Company shut down its flowback operations in 2020 and disposed of the assets. 
+3 
+Drilling 
+Our vertical drilling assets in our drilling segment have been idled since 2016. The Company is considering strategic alternatives for the use of its drilling rigs including exploring options to dispose of the remaining drilling rigs and ancillary assets. If the market for vertical drilling does not improve and the equipment continues to be idled, the estimated fair value for the drilling rigs may decline, thus resulting in future additional impairment charges. 
+Competitive Strengths 
+Our primary business objective is to serve as a strategic long-term partner for our customers. We achieve this objective by providing reliable, high‑quality services that are tailored to our customers’ needs and synchronized with their well development programs. This alignment assists our customers in optimizing the long‑term development of their unconventional resources. We believe that the following competitive strengths differentiate us from our peers and uniquely position us to achieve our primary business objective. 
+• 
+Strong market position in the Permian Basin. We believe we are one of the largest hydraulic fracturing providers by HHP in the Permian Basin, which is one of the most prolific oil producing areas in the United States. Our longstanding customer relationships and substantial Permian Basin market presence uniquely position us to maintain our market position and grow as the basin is developed in the future. The Permian Basin is a mature, liquids‑rich basin with well-known geology and a large, exploitable resource base that delivers attractive E&P producer economics. As a result of its significant size, coupled with the presence of multiple prospective geologic benches and other favorable characteristics, the Permian Basin has become widely recognized as one of the most attractive and economic oil resources in North America. 
+Our operational focus has historically been in the Permian Basin’s Midland sub‑basin in support of our customers’ core operations. More recently, however, many of our customers have made sizeable acquisitions in the Delaware sub-basin, and we have expanded our services into the Delaware sub-basin to help develop their acreage. Further, we believe that we are uniquely positioned to capture a large addressable growth opportunity as the basin develops. For the foreseeable future, we expect both the Midland sub-basin and the Delaware sub-basin to continue to command a disproportionate share of future North American E&P spending. 
+• 
+Deep relationships and operational alignment with high‑quality, Permian Basin‑focused customers. Our deep local roots, operational expertise and commitment to safe and reliable service have allowed us to cultivate longstanding customer relationships with the most active and well‑capitalized Permian Basin operators. Many of our current customers have worked with us since our inception and have integrated our fleet scheduling with their well development programs. We have a long-term partnership agreement with one customer, an E&P company focused in the Permian Basin, to continue to provide pressure pumping and other complementary services for up to 10 years. This relationship differentiates us from our peers. This high degree of operational alignment and partnership with our customers has allowed us to maintain relatively high utilization rates over time compared to our peers. If our customers increase activity levels, we expect to continue to leverage our strong relationships to keep our fleets utilized. 
+• 
+Proven cross‑cycle financial performance. Over the past several years, we have maintained high cross‑cycle fleet utilization rates. From late 2017 through 2018 our fleets were consistently fully utilized. In 2019, following a decline in certain of our customers’ operations in the last quarter of 2019, our fleets utilization decreased slightly, and our utilization has decreased dramatically in 2020 as a result of COVID-19 and related matters. Historically, our consistent track record of steady growth, coupled with our ability to quickly deploy new HHP on a dedicated and fully utilized basis, has resulted in revenue growth across the industry’s cycles. We believe that we will be able to continue to operate more efficiently than our competitors while preserving attractive profitability and cash flows as a result of our differentiated service offerings and wellsite efficiencies. Furthermore, we believe that our philosophy of maintaining modest financial leverage and a healthy balance sheet has left us more conservatively capitalized than most of our peers. We expect that improving market fundamentals, our superior execution and our customer‑focused approach should continue to result in strong financial performance. 
+• 
+Seasoned management and operating team. We have a seasoned executive management team, with our senior members contributing more than 100 years of collective industry and financial experience. We believe their deep roots and relationships throughout the West Texas community, provide a meaningful competitive advantage for our business. In addition, our management team has assembled a loyal group of highly‑motivated and talented managers and field personnel, and we have had minimal manager‑level turnover in our core service divisions 
+4 
+over the past several years. We employ a balanced decision‑making structure that empowers managerial and field personnel to work directly with customers to develop solutions while leveraging senior management’s oversight. This collaborative approach fosters strong customer links at all levels of the organization and effectively institutionalizes customer relationships beyond the executive suite. 
+Strategy 
+Our strategy is to: 
+• 
+Capture an increasing share of demand for hydraulic fracturing services in the Permian Basin. We intend to continue to position ourselves as a Permian Basin‑focused hydraulic fracturing business, as we believe the Permian Basin hydraulic fracturing market offers supportive long‑term growth fundamentals. These fundamentals are characterized by increased demand for our HHP and well completion intensity levels. We have historically operated at a high utilization relative to our peers, and we believe we are strategically positioned to deploy our idle horse-power if overall market condition and demand for pressure pumping services increases. 
+• 
+Capitalize on improving efficiency gains. We intend to continue to work with our customers and vendors to improve our operational efficiencies and enhance our profitability. We believe that improving our efficiencies will result in greater revenue and enhanced profitability as fixed costs are spread over a broader revenue base. 
+• 
+Cross‑sell our complementary services. In addition to our hydraulic fracturing services, we offer a broad range of complementary services in support of our customers’ development activities, including cementing and coiled tubing. These complementary services create operational efficiencies for our customers, and allow us to capture a greater percentage of their capital spending across the lifecycle of an unconventional well. We believe that, if our customers increase spending levels, we are well positioned to continue cross‑selling and growing our complementary service offerings. 
+• 
+Maintain financial stability and flexibility to pursue growth opportunities. Consistent with our historical practices, we plan to continue to maintain a conservative balance sheet, which will allow us to better react to potential changes in industry and market conditions and opportunistically grow our business. In the near term, we intend to continue our past practice of aligning our growth capital expenditures with visible customer demand by strategically deploying new equipment on a dedicated basis in response to inbound customer requests. We will also selectively evaluate potential strategic acquisitions that increase our scale and capabilities or diversify our operations. 
+Our Customers 
+Our customers consist primarily of oil and natural gas producers in North America. Our top five customers accounted for approximately 77.1% , 68.7% and 66.0% of our revenue, for the years ended December 31, 2019 , 2018 and 2017 , respectively. For the year ended December 31, 2019 , Pioneer Natural Resources USA Inc. (“Pioneer”), XTO Energy Inc., CrownQuest Operating, LLC, accounted for 25.5% , 20.9% , and 13.2% , respectively, of total revenue. No other customer accounted for more than 10% of our total revenue for the year ended December 31, 2019 . 
+Competition 
+The markets in which we operate are highly competitive. To be successful, an oilfield services company must provide services that meet the specific needs of oil and natural gas E&P companies at competitive prices. Competitive factors impacting sales of our services are price, reputation, technical expertise, service and equipment quality, and health and safety standards. Although we believe our customers consider all of these factors, we believe price is a key factor in E&P companies’ criteria in choosing a service provider. While we seek to price our services competitively, we believe many of our customers elect to work with us based on our deep local roots, operational expertise, equipment quality, ability to handle the most complex Permian Basin well completions and commitment to safety and reliability. 
+We provide our services primarily in the Permian Basin, and we compete against different companies in each service and product line we offer. Our competition includes many large and small oilfield service companies, including the largest integrated oilfield services companies. Our major competitors for hydraulic fracturing services include Nextier Oilfield Solutions Inc., Halliburton Company, Patterson‑UTI Energy Inc., RPC, Inc., Schlumberger Limited, Liberty Oilfield Services, FTS International, Inc., Superior Energy Services and a number of locally oriented businesses. 
+5 
+Seasonality 
+Our results of operations have historically reflected seasonal tendencies, generally in the fourth quarter, relating to the conclusion of our customers’ annual capital expenditure budgets, the holidays and inclement winter weather during which we may experience declines in our operating results. 
+Operating Risks and Insurance 
+Our operations are subject to hazards inherent in the oilfield services industry, such as accidents, blowouts, explosions, fires and spills and releases that can cause personal injury or loss of life, damage or destruction of property, equipment, natural resources and the environment and suspension of operations. 
+In addition, claims for loss of oil and natural gas production and damage to formations can occur in the oilfield services industry. If a serious accident were to occur at a location where our equipment and services are being used, it could result in us being named as a defendant in lawsuits asserting large claims. 
+Our business involves the transportation of heavy equipment and materials, and as a result, we may also experience traffic accidents which may result in spills, property damage and personal injury. 
+Despite our efforts to maintain safety standards, we have suffered accidents from time to time in the past and anticipate that we could experience accidents in the future. In addition to the property damage, personal injury and other losses from these accidents, the frequency and severity of these incidents affect our operating costs and insurability and our relationships with customers, employees, regulatory agencies and other parties. Any significant increase in the frequency or severity of these incidents, or the general level of compensation awards, could adversely affect the cost of, or our ability to obtain, workers’ compensation and other forms of insurance, and could have other material adverse effects on our financial condition and results of operations. 
+We maintain commercial general liability, workers’ compensation, business auto, commercial property, umbrella liability, excess liability, and directors and officers insurance policies providing coverages of risks and amounts that we believe to be customary in our industry. Further, we have pollution legal liability coverage for our business entities, which would cover, among other things, third party liability and costs of clean up relating to environmental contamination on our premises while our equipment is in transit and on our customers’ job site. With respect to our hydraulic fracturing operations, coverage would be available under our pollution legal liability policy for any surface or subsurface environmental clean‑up and liability to third parties arising from any surface or subsurface contamination. We also have certain specific coverages for some of our businesses, including our hydraulic fracturing services. 
+Although we maintain insurance coverage of types and amounts that we believe to be customary in the industry, we are not fully insured against all risks, either because insurance is not available or because of the high premium costs relative to perceived risk. Further, insurance rates have in the past been subject to wide fluctuation and changes in coverage could result in less coverage, increases in cost or higher deductibles and retentions. Liabilities for which we are not insured, or which exceed the policy limits of our applicable insurance, could have a material adverse effect on us. See “Risk Factors” for a description of certain risks associated with our insurance policies. 
+Environmental and Occupational Health and Safety Regulations 
+Our operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection, and occupational health and safety. Numerous federal, state and local governmental agencies issue regulations that often require difficult and costly compliance measures that could carry substantial administrative, civil and criminal penalties and may result in injunctive obligations for non-compliance. These laws and regulations may, for example, restrict the types, quantities and concentrations of various substances that can be released into the environment, limit or prohibit construction or drilling activities on certain lands lying within wilderness, wetlands, ecologically or seismically sensitive areas and other protected areas, or require action to prevent or remediate pollution from current or former operations. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the environment. Changes in environmental, health and safety laws and regulations occur frequently, and any changes that result in more stringent and costly requirements could materially adversely affect our operations and financial position. We have not experienced any material adverse effect from compliance with these requirements, however, this trend may not continue in the future. 
+6 
+Below is an overview of some of the more significant environmental, health and safety requirements with which we must comply. Our customers’ operations are subject to similar laws and regulations. Any material adverse effect of these laws and regulations on our customers’ operations and financial position may also have an indirect material adverse effect on our operations and financial position. 
+Waste Handling. We handle, transport, store and dispose of wastes that are subject to the Resource Conservation and Recovery Act (“RCRA”) and comparable state laws and regulations, which affect our activities by imposing requirements regarding the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. With federal approval, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. Although certain petroleum production wastes are exempt from regulation as hazardous wastes under RCRA, such wastes may constitute “solid wastes” that are subject to the less stringent requirements of non-hazardous waste provisions. 
+Administrative, civil and criminal penalties can be imposed for failure to comply with waste handling requirements. Moreover, the U.S. Environmental Protection Agency (“EPA”) or state or local governments may adopt more stringent requirements for the handling of non-hazardous wastes or recategorize some non-hazardous wastes as hazardous for future regulation. Indeed, legislation has been proposed from time to time in Congress to recategorize certain oil and natural gas exploration, development and production wastes as hazardous wastes. Several environmental organizations have also petitioned the EPA to modify existing regulations to recategorize certain oil and natural gas exploration, development and production wastes as hazardous. Any such changes in these laws and regulations could have a material adverse effect on our capital expenditures and operating expenses. Although we do not believe the current costs of managing our wastes, as presently classified, to be significant, any legislative or regulatory reclassification of oil and natural gas exploration and production wastes could increase our costs to manage and dispose of such wastes. 
+Remediation of Hazardous Substances. The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) and analogous state laws generally impose liability without regard to fault or legality of the original conduct, on classes of persons who are considered to be responsible for the release of a hazardous substance into the environment. These persons include the current owner or operator of a contaminated facility, a former owner or operator of the facility at the time of contamination and those persons that disposed or arranged for the disposal of the hazardous substance at the facility. Liability for the costs of removing or remediating previously disposed wastes or contamination, damages to natural resources, the costs of conducting certain health studies, amongst other things, is strict and joint and several. In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. In the course of our operations, we use materials that, if released, would be subject to CERCLA and comparable state laws. Therefore, governmental agencies or third parties may seek to hold us responsible under CERCLA and comparable state statutes for all or part of the costs to clean up sites at which such hazardous substances have been released. 
+NORM. In the course of our operations, some of our equipment may be exposed to naturally occurring radioactive materials (“NORM”) associated with oil and gas deposits and, accordingly, may result in the generation of wastes and other materials containing NORM. NORM exhibiting levels of radiation in excess of established state standards are subject to special handling and disposal requirements, and any storage vessels, piping and work area affected by NORM may be subject to remediation or restoration requirements. 
+Water Discharges. The Clean Water Act, Safe Drinking Water Act, Oil Pollution Act and analogous state laws and regulations impose restrictions and strict controls regarding the unauthorized discharge of pollutants, including produced waters and other gas and oil wastes, into regulated waters. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or the state. Also, spill prevention, control and countermeasure plan requirements require appropriate containment berms and similar structures to help prevent the contamination of regulated waters. 
+Air Emissions. The Clean Air Act (“CAA”) and comparable state laws and regulations, regulate emissions of various air pollutants through the issuance of permits and the imposition of other emissions control requirements. The EPA has developed, and continues to develop, stringent regulations governing emissions of air pollutants from specified sources. New facilities may be required to obtain permits before work can begin, and existing facilities may be required to obtain additional permits and incur capital costs in order to remain in compliance. These and other laws and regulations may increase the costs of compliance for some facilities where we operate. Obtaining or renewing permits also has the potential to delay the development of oil and natural gas projects. 
+7 
+Climate Change. In the United States, no comprehensive climate change legislation has been implemented at the federal level. However, following the U.S. Supreme Court finding that greenhouse gases (“GHG”) emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and implement New Source Performance Standards directing the reduction of methane from certain new, modified, or reconstructed facilities in the oil and natural gas sector, and together with the Department of Transportation ("DOT"), implementing GHG emissions limits on vehicles manufactured for operation in the United States. For example, in June 2016, the EPA finalized rules that establish new air emission controls for methane emissions from certain new, modified, or reconstructed equipment and processes in the oil and natural gas source category, including production, processing, transmission, and storage activities, otherwise known as Subpart OOOOa. Following the change in administration, there have been attempts to modify these regulations, and litigation is ongoing. 
+Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. At the international level, there is an agreement, the United Nations-sponsored "Paris Agreement," for nations to limit their GHG emissions through non-binding, individually determined reduction goals every five years after 2020, although the United States has announced its withdrawal from such agreement, effective November 4, 2020. 
+Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, including climate-change-related pledges made by some candidates seeking the office of the President of the United States in 2020. Some of these pledges have included calls to ban hydraulic fracturing, which could adversely impact our operations. Litigation risks are also increasing as a number of cities and other local governments have sought to bring suit against the largest oil and natural gas exploration and production companies in state or federal court, alleging among other things, that such companies created public nuisances by producing fuels that contributed to global warming effects, such as rising sea levels, and therefore are responsible for roadway and infrastructure damages as a result. 
+The adoption and implementation of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand for, oil and natural gas, which could reduce demand for our services and products. 
+Moreover, climate change may cause more extreme weather conditions and increased volatility in seasonal temperatures. Extreme weather conditions can interfere with our operations and increase our costs, and damage resulting from extreme weather may not be fully insured. 
+Endangered and Threatened Species. Environmental laws such as the Endangered Species Act (“ESA”) and analogous state laws may impact exploration, development and production activities in areas where we operate. The ESA provides broad protection for species of fish, wildlife and plants that are listed as threatened or endangered. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act and various state analogs. The U.S. Fish and Wildlife Service (“FWS”) may identify previously unidentified endangered or threatened species or may designate critical habitat and suitable habitat areas that it believes are necessary for survival of a threatened or endangered species. For example, the dunes sagebrush lizard, which is found only in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas (including areas where our customers operate), was a candidate species for listing under the ESA by the FWS for many years. As a result of a recent settlement with the environmental groups, the FWS has agreed to act on a petition to list the dunes sagebrush lizard by June 30, 2020, which would result in a formal one-year review to consider listing the species if the petition is accepted. To the extent any protections are implemented for this or any other species, it could cause us or our customers to incur additional costs or become subject to operating restrictions or operating bans in the affected areas. 
+Regulation of Hydraulic Fracturing and Related Activities. Our hydraulic fracturing operations are a significant component of our business. Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons, particularly natural gas, from tight formations, including shales. The process, which involves the injection of water, sand and chemicals under pressure into formations to fracture the surrounding rock and stimulate production, is typically regulated by state oil and natural gas commissions. However, federal agencies have asserted regulatory authority over certain aspects of the process. For example, the EPA has previously issued a series of rules under 
+8 
+the CAA that establish new emission control requirements for certain oil and natural gas production and natural gas processing operations and associated equipment. There have been several attempts to modify or rescind such regulations and litigation is ongoing. Separately, the Bureau of Land Management (“BLM”) previously finalized a rule governing hydraulic fracturing on federal lands, but in June 2016, a federal district court judge in Wyoming struck down the final rule, finding that the BLM lacked congressional authority to promulgate the rule. While this ruling was initially challenged, in December 2017, the BLM published a rulemaking to rescind the final rule and reinstate the regulations that existed immediately before the published effective date of the rule. Further, legislation to amend the Safe Drinking Water Act to repeal the exemption for hydraulic fracturing (except when diesel fuels are used) from the definition of “underground injection” and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturing process, have previously been proposed in Congress. Several states and local jurisdictions in which we or our customers operate also have adopted or are considering adopting regulations that could restrict or prohibit hydraulic fracturing in certain circumstances, impose more stringent operating standards and/or require the disclosure of the composition of hydraulic fracturing fluids. 
+Federal and state governments have also investigated whether the disposal of produced water into underground injection wells has caused increased seismic activity in certain areas. For example, the United States Geological Survey identified eight states with the most significant hazards from induced seismicity, including Oklahoma, Kansas, Texas, Colorado, New Mexico, Arkansas, Ohio and Alabama. In response to concerns regarding induced seismicity, regulators in some states have imposed, or are considering imposing, additional requirements in the permitting of produced water disposal wells or otherwise to assess any relationship between seismicity and the use of such wells. For example, Oklahoma has issued rules for wastewater disposal wells that impose permitting and operating restrictions and reporting requirements on disposal wells in proximity to faults and also, from time to time, has implemented plans directing certain wells where seismic incidents have occurred to restrict or suspend disposal well operations. In particular, the Oklahoma Corporation Commission’s well completion seismicity guidelines for operators in the SCOOP and STACK require hydraulic fracturing operations to be suspended following earthquakes of certain magnitudes in the vicinity. In addition, the Oklahoma Corporation Commission’s Oil and Gas Conservation Division has previously issued an order limiting future increases in the volume of oil and natural gas wastewater injected into the ground in an effort to reduce the number of earthquakes in the state. The Texas Railroad Commission has adopted similar rules. In addition, in December 2016, the EPA released its final report regarding the potential impacts of hydraulic fracturing on drinking water resources, concluding that “water cycle” activities associated with hydraulic fracturing may impact drinking water resources under certain limited circumstances. However, the EPA has imposed no regulatory limits as a result of this study. 
+Increased regulation of hydraulic fracturing and related activities (whether as a result of the EPA study results or resulting from other factors) could subject us and our customers to additional permitting and financial assurance requirements, more stringent construction specifications, increased monitoring, reporting and record keeping obligations, and plugging and abandonment requirements. New requirements could result in increased operational costs for us and our customers, and reduce the demand for our services. 
+OSHA Matters. The Occupational Safety and Health Act (“OSHA”) and comparable state statutes regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that information be maintained about hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities and the public. 
+Employees 
+As of December 31, 2019 , we employed approximately 2,200 people. None of our employees are represented by labor unions or subject to collective bargaining agreements. 
+Primarily as a result of the significant decline in oil prices and our customers’ rapid response to reduce their drilling and completion activities, we have implemented significant reductions in our workforce since December 31, 2019 . As of June 10, 2020, we had approximately 700 employees. 
+Availability of Filings 
+Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, are made available free of charge on our internet web site at www.propetroservices.com , as soon as reasonably practicable after we have electronically filed the material with, or 
+9 
+furnished it to, the SEC. The SEC maintains an internet site that contains our reports, proxy and information statements and our other SEC filings. The address of that web site is www.sec.gov . Please note that information contained on our website, whether currently posted or posted in the future, is not a part of this Annual Report or the documents incorporated by reference in this Annual Report. 
+10

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+Item 13. Certain Relationships and Related Party Transactions, and Director Independence. 
+Related Party Transactions 
+Corporate Office Building 
+The Company rents its corporate office building and the associated real property from PD Properties, an entity which Dale Redman (our Former Chief executive Officer) has an equity interest. The rent expense on our corporate office building is approximately $0.1 million per year. During the year ended December 31, 2019 , the Company incurred costs of approximately $1.6 million for improvements made to our corporate office building that we rent. In April 2020, the Company acquired the corporate office building and associated real property for approximately $1.5 million . 
+Operations and Maintenance Yards 
+The Company also rents five yards from South Midkiff Partners, LLC, an entity jointly owned by Dale Redman, David Sledge (our Chief Operating Officer), Jeff Smith (our Former Chief Financial Officer), and Spencer Armour (a director) and total annual rent expense for each of the five yards was approximately $0.03 million , $0.03 million , $0.1 million , $0.1 million , and $0.2 million , respectively. The Company also leased a yard from Sledge Ranches, LTD, which David Sledge has an equity interest, and with annual lease expense of approximately $0.11 million . 
+We lease a property adjacent to our corporate headquarters from 4 Industrial Loop Partners, LLC, an entity wholly owned by an affiliate of Bandera Ventures. For the year ended December 31, 2019, we paid approximately $0.4 million under the lease. The lease has a remaining term of approximately four years. Mr. Blackwell, one of our directors, through his approximately 33% interest in Bandera Ventures, may be deemed an indirect beneficiary of this lease. 
+Transportation and Equipment Rental 
+For the year ended December 31, 2019 , the Company incurred costs for transportation services with Double T Aviation, LLC, an entity in which Dale Redman has an equity interest, of approximately $0.2 million . 
+The Company also rented equipment in Elk City, Oklahoma for our flowback operations from PD Properties, an entity which Dale Redman has an equity interest. For the year ended December 31, 2019 , the Company incurred and paid approximately $0.2 million . This rental arrangement was terminated in January 2020. 
+Executive Officer Family Members 
+Jordan Frosch is our Vice President of Sales and Marketing and the son‑in‑law of Dale Redman. Mr. Frosch received total compensation of approximately $469,000 for his services for the year ended December 31, 2019. 
+Samuel D. Sledge is our Chief Strategy and Administrative Officer and the son of David Sledge. Samuel D. Sledge received total compensation of approximately $627,000 for his services for the year ended December 31, 2019. 
+David Sledge, our Chief Operating Officer, has a family relationship with an officer of Gravity Oilfield Services, who is an equipment rental vendor to the Company. The total equipment rental services provided by Gravity Oilfield Services to the Company was approximately $177,000 for the year ended December 31, 2019. 
+Newton III “Trey” Wilson, our General Counsel and Corporate Secretary, has a family relationship with an officer of Concho Resources Inc., who is a customer of the Company. The services provided to Concho Resources Inc. was approximately $527,000 for the year ended December 31, 2019. 
+Morgan Stovall was our former Corporate Controller and the daughter of Jeffrey D. Smith. Ms. Stovall received total compensation of approximately $438,000 for her services during the year ended December 31, 2019. 
+138 
+Pioneer 
+On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property in connection with the Pioneer Pressure Pumping Acquisition. In connection with the consummation of the Pioneer Pressure Pumping Acquisition and effective January 1, 2019, we became a long-term service provider to Pioneer, providing pressure pumping and related services for a term of up to ten years. Revenue from services provided to Pioneer was approximately $524.2 million for the year ended December 31, 2019 . During 2019, the Company reimbursed Pioneer approximately $4.2 million for our portion of the retention bonuses paid to former Pioneer employees that were subsequently employed by the Company in connection with the Pioneer Pressure Pumping Acquisition. 
+Sand Supply Agreement 
+In November 2017, we entered into a five-year extension to an existing and supply agreement to provide Texas-sourced frac sand (“Texas sand”). Texas sand provided under the supply agreement will primarily be sourced from a mine located on land owned by an entity in which Dale Redman owns a 44% noncontrolling equity interest. Accordingly, Mr. Redman may be considered an indirect beneficiary of payments made under the lease between our supplier and the landowner. The supply agreement was negotiated by officers of the Company without the involvement of Mr. Redman, and reviewed and approved by the Audit Committee pursuant to its authority under our Related Party Transaction Policy. In considering the approval of the supply agreement, the Audit Committee retained independent legal and commercial expertise to assist in the evaluation of the agreement’s commercial terms. Following its evaluation, the Audit Committee determined that the pricing and other provisions of the agreement reflected market terms, that the agreement reflected an arm’s length negotiation, and that entry into the agreement was advisable and in the best interests of the Company. For the year ended December 31, 2019 , the Company purchased approximately $44.3 million of Texas sand under the supply agreement, and Mr. Redman was an indirect beneficiary of approximately $1.5 million . 
+Policies and Procedures for Related Party Transactions 
+Any request for us to enter into a transaction with an executive officer, director, principal stockholder or any of such persons’ immediate family members or affiliates, among others, in which the amount involved exceeds $120,000, must first be presented to our Audit Committee for review, consideration and approval. All of our directors and executive officers are required to report to the Audit Committee chair any such related person transaction. In approving or rejecting the proposed agreement, our Audit Committee shall consider the facts and circumstances available and deemed relevant to the Audit Committee, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in arm’s‑length dealings with an unrelated third party, the extent of the related party’s interest in the transaction and the conflicts of interest and corporate opportunity provisions of our certificate of incorporation. If we should discover related person transactions that have not been approved, the Audit Committee will be notified and will determine the appropriate action, including ratification, revision or termination of such transaction. 
+Director Independence 
+The majority of the members of the Board, at any given time, must qualify as “independent” under the rules of the NYSE. 
+Our Board has undertaken a review of the independence of each of our directors and has affirmatively determined that each of Messrs. Best, Blackwell, Douglas, Moore and Ms. Choka are “independent,” as defined by the NYSE rules. Under the NYSE rules, a director can be independent only if (a) the director does not trigger a categorical bar to independence and (b) our Board affirmatively determines that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). 
+Based on information provided by the directors concerning their background, employment and affiliations, our Board has determined that these directors do not have a material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). In making this 
+139 
+determination, our Board considered the current and prior relationships that each of the directors has with us, and all other facts and circumstances our Board deemed relevant in determining independence, including any beneficial ownership of our capital stock by each of the directors. 
+140

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+Item 9A. Controls and Procedures 
+Background 
+In May 2019, the Audit Committee (the “Committee”) of the Board, with assistance of independent outside counsel and accounting advisors, conducted an internal review initially focused on the Company’s disclosure of agreements previously entered into with AFGlobal Corporation for the purchase of Durastim® hydraulic fracturing fleets and effective communications related thereto. The review was later expanded (collectively referred to as the “Expanded Audit Committee Review”) to, among other items, review expense reimbursements, certain transactions involving related parties or potential conflicts of interest, and certain transactions entered into by our former Chief Executive Officer (the “former CEO”). 
+The Expanded Audit Committee Review did not identify any material accounting errors in the consolidated financial statements included in the 2018 Annual Report and the 2019 First Quarter 10-Q. Based on the Expanded Audit Committee Review, current management determined that there were deficiencies in the design and/or operation of internal controls that constituted material weaknesses. Current management determined that the tone from former executive management was insufficient to create the proper environment for effective internal control over financial reporting, which led to the failure of controls in other areas as further described below. 
+Evaluation of Disclosure Controls and Procedures 
+Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2019 and 2018, and March 31, June 30, and September 30, 2019. Previously, based on their prior evaluation, our former Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2018 and March 31, 2019. As a result of the material weaknesses in our internal control over financial reporting described below, our current Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2019 and 2018, and March 31, June 30, and September 30, 2019. Notwithstanding the conclusion by our Principal Executive Officer and Principal Financial Officer that our disclosure controls and procedures as of December 31, 2019 were not effective, and notwithstanding the material weaknesses in our internal control over financial reporting described below, our management has concluded that our consolidated financial statements included in each of (i) this Annual Report on Form 10-K, (ii) the 2018 Annual Report, (iii) the 2019 First Quarter 10-Q (iv) the Quarterly Report on Form 10-Q for the three months ended June 30, 2019 and (v) the Quarterly Report on Form 10-Q for the three months ended September 30, 2019, present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 
+Management’s Report on Internal Control over Financial Reporting 
+The management of ProPetro Holding Corp. is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. ProPetro Holding Corp. maintains a system of internal accounting controls designed to provide reasonable assurance, at a reasonable cost, that assets are safeguarded against loss or unauthorized use and that the financial records are adequate and can be relied upon to produce financial statements in accordance with U.S. GAAP. The internal control system is augmented by written policies and procedures, an internal audit program and the selection and training of qualified personnel. This system includes policies that require adherence to ethical business standards and compliance with all applicable laws and regulations. 
+There are inherent limitations to the effectiveness of any control system. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company will be detected. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. The Company intends to continually improve and refine its internal controls. 
+Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our internal control over financial reporting as of December 31, 2019 and 2018 based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO. Previously, based upon that evaluation by our former Principal Executive Officer and Principal Financial 
+89 
+Officer, we determined that our internal control over financial reporting was effective as of December 31, 2018. However, as discussed above and in light of the results of the Expanded Audit Committee Review, based upon the evaluation under these criteria and upon the existence of the material weaknesses described below, management, with the participation of our current Principal Executive Officer and Principal Financial Officer, determined that we did not maintain effective internal control over financial reporting as of December 31, 2019 and 2018. Due to the existence of the material weaknesses described below, our internal control over financial reporting remained ineffective as of March 31, June 30, and September 30, 2019. 
+A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis. 
+Control Environment 
+We have identified deficiencies in the principles associated with the control environment component of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to the following COSO principles : (i) the organization demonstrates a commitment to integrity and ethical values, (ii) the board of directors demonstrates independence from management and exercises oversight of the development and performance of internal control, (iii) management establishes, with board oversight, structures, reporting lines, and appropriate authorities and responsibilities in pursuit of objectives, (iv) the organization demonstrates a commitment to attract, develop, and retain competent individuals in alignment with objectives, and (v) the organization holds individuals accountable for their internal control related responsibilities in the pursuit of objectives. 
+Our senior management did not establish and promote a control environment with an appropriate tone of compliance and control consciousness throughout the entire Company. The Company did not sufficiently promote, monitor or enforce adherence to its Code of Conduct and Ethics. Additionally, the Expanded Audit Committee Review found that there was a general lack of focus on promoting a culture of compliance within the Company. Results of poor tone at the top included: (i) certain whistleblower allegations were not properly investigated and elevated to the Committee, (ii) the lack of an employee expense review and approval policy, (iii) two instances of non-compliance with the Company’s Insider Trading Policy, and (iv) instances of non-compliance with the Code of Conduct and Ethics policies. 
+This material weakness in the control environment contributed to material weaknesses in the following components of the COSO framework. 
+Information and Communication 
+We have identified deficiencies in the principles associated with the information and communication component of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to the following COSO principles : (i) the organization internally communicates information, including objectives and responsibilities for internal control, necessary to support the functioning of internal control, and (ii) the organization communicates with external parties regarding matters affecting the functioning of internal control. 
+Factors contributing to the material weakness included miscommunication between management and the Board regarding the conditionality of certain contracts that resulted in the non-disclosure of such contract commitments and the impact of such commitments on the Company’s future liquidity. 
+Control Activities 
+We have identified deficiencies in the principles associated with the control activities component of the COSO framework. Specifically, these control deficiencies constitute material weaknesses, either individually or in the aggregate, relating to the following COSO principles : (i) the organization selects and develops control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels and (ii) the organization deploys control activities through policies that establish what is expected and procedures that put policies into action. 
+The Company’s failure to maintain appropriate tone at the top had a pervasive impact, and as such, resulted in a risk that could have impacted virtually all financial statement account balances and disclosures. 
+The COSO component material weaknesses described above contributed to the following material weakness within our system of internal control over financial reporting at the control activity level. 
+90 
+Related Parties 
+We did not maintain controls designed to sufficiently identify, evaluate, and disclose related party transactions. As a result, two related party transactions were entered into that were not identified by the Company’s controls and given consideration of appropriate disclosure. 
+Our independent registered public accounting firm, Deloitte & Touche LLP, has audited the consolidated financial statements as of and for the year ended December 31, 2019, and has also issued their report on the effectiveness of the Company’s internal control over financial reporting, included in this report on pages 53 and 54. 
+Remediation Plan and Status 
+Our remediation efforts are ongoing, and we will continue our initiatives to implement and document policies, procedures, and internal controls. The Board and management have implemented, among other items, the following measures to address the material weaknesses identified: 
+• 
+Appointed new executive officers with extensive public company experience to improve the tone at the top, communication with the Board and compliance with policies within the Company. 
+• 
+Enhanced certain of the Company’s policies, including the Code of Ethics and Conduct, Expense Reimbursement, Travel and Entertainment, and Delegation of Responsibilities and Authority. Additionally, the Company enhanced or implemented control activities to monitor compliance with such policies. 
+• 
+Designed and implemented control activities related to the identification of, approval of, and disclosure of related party transactions. 
+• 
+Designed and implemented control activities related to the identification and approval of potential conflicts of interest. 
+• 
+Designed and implemented control activities related to the evaluation of whistleblower allegations. 
+• 
+Formed a disclosure committee and appointed a Chief Disclosure Officer to provide improved corporate governance related to disclosures the Company provides to the public and other external parties. 
+Our remediation of the identified material weaknesses and strengthening our internal control environment is ongoing and will require a substantial effort. We will test the ongoing design and implementation and operating effectiveness of the new and existing controls in future periods. The material weaknesses cannot be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are designed and operating effectively. Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting in the areas affected by the material weaknesses described above. 
+Changes in Internal Control over Financial Reporting 
+Except as described above, there were no changes in our system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 
+91

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+16. RELATED-PARTY TRANSACTIONS (Continued) 
+At December 31, 2019 and 2018 , the Company had $ 0 and $ 0.01 million in payables to the above related parties, respectively. There were no receivables at December 31, 2019 and 2018 from the above related party transactions. 
+PT Petroleum, LLC 
+Subsequent to the issuance of the consolidated financial statements for the year ended December 31, 2018 we identified the following related party transaction. For the years ended December 31, 2018 and 2017 , the Company provided services to PT Petroleum, LLC, an entity in which a director was an officer, of approximately $ 16.7 million and $ 39.0 million , respectively. 
+Pioneer 
+On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property in connection with the Pioneer Pressure Pumping Acquisition. The acquisition cost of the assets was comprised of approximately $ 110.0 million of cash and 16.6 million shares of our common stock. In connection with the consummation of the Pioneer Pressure Pumping Acquisition and effective January 1, 2019, we became a long-term service provider to Pioneer, providing pressure pumping and related services for a term of up to ten years . Revenue from services provided to Pioneer accounted for approximately $ 524.2 million , $ 76.0 million and $ 36.0 million of our total revenue during the years ended December 31, 2019 , 2018 and 2017 , respectively. During 2019, the Company reimbursed Pioneer approximately $ 4.2 million for our portion of the retention bonuses paid to former Pioneer employees that were subsequently employed by the Company and also Pioneer reimbursed the Company approximately $ 2.5 million for severance payments made on their behalf, in connection with the Pioneer Pressure Pumping Acquisition. As of December 31, 2019 , the total accounts receivable due from Pioneer, including estimated unbilled receivable for services we provided, amounted to $ 61.7 million and the amount due to Pioneer was $ 0 .

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+Item 13. Certain Relationships and Related Party Transactions, and Director Independence. 
+Related Party Transactions 
+Corporate Office Building 
+The Company rents its corporate office building and the associated real property from PD Properties, an entity which Dale Redman (our Former Chief executive Officer) has an equity interest. The rent expense on our corporate office building is approximately $0.1 million per year. During the year ended December 31, 2019 , the Company incurred costs of approximately $1.6 million for improvements made to our corporate office building that we rent. In April 2020, the Company acquired the corporate office building and associated real property for approximately $1.5 million . 
+Operations and Maintenance Yards 
+The Company also rents five yards from South Midkiff Partners, LLC, an entity jointly owned by Dale Redman, David Sledge (our Chief Operating Officer), Jeff Smith (our Former Chief Financial Officer), and Spencer Armour (a director) and total annual rent expense for each of the five yards was approximately $0.03 million , $0.03 million , $0.1 million , $0.1 million , and $0.2 million , respectively. The Company also leased a yard from Sledge Ranches, LTD, which David Sledge has an equity interest, and with annual lease expense of approximately $0.11 million . 
+We lease a property adjacent to our corporate headquarters from 4 Industrial Loop Partners, LLC, an entity wholly owned by an affiliate of Bandera Ventures. For the year ended December 31, 2019, we paid approximately $0.4 million under the lease. The lease has a remaining term of approximately four years. Mr. Blackwell, one of our directors, through his approximately 33% interest in Bandera Ventures, may be deemed an indirect beneficiary of this lease. 
+Transportation and Equipment Rental 
+For the year ended December 31, 2019 , the Company incurred costs for transportation services with Double T Aviation, LLC, an entity in which Dale Redman has an equity interest, of approximately $0.2 million . 
+The Company also rented equipment in Elk City, Oklahoma for our flowback operations from PD Properties, an entity which Dale Redman has an equity interest. For the year ended December 31, 2019 , the Company incurred and paid approximately $0.2 million . This rental arrangement was terminated in January 2020. 
+Executive Officer Family Members 
+Jordan Frosch is our Vice President of Sales and Marketing and the son‑in‑law of Dale Redman. Mr. Frosch received total compensation of approximately $469,000 for his services for the year ended December 31, 2019. 
+Samuel D. Sledge is our Chief Strategy and Administrative Officer and the son of David Sledge. Samuel D. Sledge received total compensation of approximately $627,000 for his services for the year ended December 31, 2019. 
+David Sledge, our Chief Operating Officer, has a family relationship with an officer of Gravity Oilfield Services, who is an equipment rental vendor to the Company. The total equipment rental services provided by Gravity Oilfield Services to the Company was approximately $177,000 for the year ended December 31, 2019. 
+Newton III “Trey” Wilson, our General Counsel and Corporate Secretary, has a family relationship with an officer of Concho Resources Inc., who is a customer of the Company. The services provided to Concho Resources Inc. was approximately $527,000 for the year ended December 31, 2019. 
+Morgan Stovall was our former Corporate Controller and the daughter of Jeffrey D. Smith. Ms. Stovall received total compensation of approximately $438,000 for her services during the year ended December 31, 2019. 
+138 
+Pioneer 
+On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property in connection with the Pioneer Pressure Pumping Acquisition. In connection with the consummation of the Pioneer Pressure Pumping Acquisition and effective January 1, 2019, we became a long-term service provider to Pioneer, providing pressure pumping and related services for a term of up to ten years. Revenue from services provided to Pioneer was approximately $524.2 million for the year ended December 31, 2019 . During 2019, the Company reimbursed Pioneer approximately $4.2 million for our portion of the retention bonuses paid to former Pioneer employees that were subsequently employed by the Company in connection with the Pioneer Pressure Pumping Acquisition. 
+Sand Supply Agreement 
+In November 2017, we entered into a five-year extension to an existing and supply agreement to provide Texas-sourced frac sand (“Texas sand”). Texas sand provided under the supply agreement will primarily be sourced from a mine located on land owned by an entity in which Dale Redman owns a 44% noncontrolling equity interest. Accordingly, Mr. Redman may be considered an indirect beneficiary of payments made under the lease between our supplier and the landowner. The supply agreement was negotiated by officers of the Company without the involvement of Mr. Redman, and reviewed and approved by the Audit Committee pursuant to its authority under our Related Party Transaction Policy. In considering the approval of the supply agreement, the Audit Committee retained independent legal and commercial expertise to assist in the evaluation of the agreement’s commercial terms. Following its evaluation, the Audit Committee determined that the pricing and other provisions of the agreement reflected market terms, that the agreement reflected an arm’s length negotiation, and that entry into the agreement was advisable and in the best interests of the Company. For the year ended December 31, 2019 , the Company purchased approximately $44.3 million of Texas sand under the supply agreement, and Mr. Redman was an indirect beneficiary of approximately $1.5 million . 
+Policies and Procedures for Related Party Transactions 
+Any request for us to enter into a transaction with an executive officer, director, principal stockholder or any of such persons’ immediate family members or affiliates, among others, in which the amount involved exceeds $120,000, must first be presented to our Audit Committee for review, consideration and approval. All of our directors and executive officers are required to report to the Audit Committee chair any such related person transaction. In approving or rejecting the proposed agreement, our Audit Committee shall consider the facts and circumstances available and deemed relevant to the Audit Committee, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in arm’s‑length dealings with an unrelated third party, the extent of the related party’s interest in the transaction and the conflicts of interest and corporate opportunity provisions of our certificate of incorporation. If we should discover related person transactions that have not been approved, the Audit Committee will be notified and will determine the appropriate action, including ratification, revision or termination of such transaction. 
+Director Independence 
+The majority of the members of the Board, at any given time, must qualify as “independent” under the rules of the NYSE. 
+Our Board has undertaken a review of the independence of each of our directors and has affirmatively determined that each of Messrs. Best, Blackwell, Douglas, Moore and Ms. Choka are “independent,” as defined by the NYSE rules. Under the NYSE rules, a director can be independent only if (a) the director does not trigger a categorical bar to independence and (b) our Board affirmatively determines that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). 
+Based on information provided by the directors concerning their background, employment and affiliations, our Board has determined that these directors do not have a material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). In making this 
+139 
+determination, our Board considered the current and prior relationships that each of the directors has with us, and all other facts and circumstances our Board deemed relevant in determining independence, including any beneficial ownership of our capital stock by each of the directors. 
+140

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+Item 1. Business. 
+Our Company 
+We are a Midland, Texas‑based oilfield services company providing hydraulic fracturing and other complementary services to leading upstream oil and gas companies engaged in the exploration and production (“E&P”) of North American unconventional oil and natural gas resources. Our operations are primarily focused in the Permian Basin, where we have cultivated longstanding customer relationships with some of the region’s most active and well‑capitalized E&P companies. The Permian Basin is widely regarded as one of the most prolific oil‑producing areas in the United States, and we believe we are one of the leading providers of hydraulic fracturing services in the region by hydraulic horsepower (“HHP”). 
+Changes to our customers’ well design, shale formations, operating conditions and new technology have resulted in continuous changes to the number of pumps that constitute a fleet. As a result of the asymmetric nature of the number of pumps that constitute a fleet across our customer base and competitors, which we believe will continue to evolve, we view HHP to be an appropriate metric to measure our available hydraulic fracturing capacity. Our total available HHP at December 31, 2020 was 1,373,000 HHP (excluding approximately 150,000 HHP we are in the process of permanently retiring), which was comprised of 1,265,000 HHP of conventional Tier II equipment and 108,000 HHP of our new DuraStim® electric powered hydraulic fracturing equipment. In addition, we have committed to purchase 50,000 HHP of Tier IV Dynamic Gas Blending (“DGB”) dual fuel equipment, that is expected to be delivered before the end of the first half of 2021. Our Tier IV DGB equipment could be powered by either diesel or natural gas, an improvement from Tier II conventional equipment that can only be powered with diesel. With the industry transition to lower emissions equipment and changes to the number of pumps or HHP that constitute a fleet, we believe that our available fleet capacity could decline as we reconfigure our fleets to increase active HHP and backup HHP based on our customers’ operational needs or as we retire and replace conventional Tier II equipment. In light of the energy industry transition to lower emissions equipment, the Company made a strategic decision to permanently retire approximately 150,000 HHP of its existing conventional Tier II pressure pumping equipment. 
+In 2019, we entered into a purchase commitment for 108,000 HHP DuraStim® electric powered hydraulic fracturing equipment. Our DuraStim® equipment is still being tested and has only been deployed to our customers’ wellsites on a limited scale. As we continue with our testing of the equipment, the number of DuraStim® pumps that constitute a fleet will depend on a combination of factors, including the ultimate operating performance of DuraStim® pumps following the completion of testing, the particular shale formation where a well is completed, customer service requirements and job design. The Company has set a goal to commercialize its first DuraStim® fleet to our customer wellsites in the second half of 2021. We also have an option to purchase up to an additional 108,000 HHP of DuraStim® hydraulic fracturing equipment in the future through July 31, 2022. We currently have gas turbines to provide electrical power to our DuraStim® fleet. The electrical power sources for future DuraStim® fleets are still being evaluated and could either be supplied by the Company, customers or a third-party supplier. 
+All of our hydraulic fracturing fleets have been designed to handle the most challenging Permian Basin operating conditions and the region’s increasingly high‑intensity well completions, which are characterized by longer horizontal wellbores, more fractured stages, increased number of wells per pad and increasing amounts of proppant per well. 
+In addition to our core pressure pumping segment operations, which consist of our hydraulic fracturing and cementing operations, we also offer a suite of complementary well completion and production services, including coiled tubing and other services. We believe these complementary services create operational efficiencies for our customers and could allow us to capture a greater portion of their capital spending across the lifecycle of a well. 
+Commodity Price and Other Economic Conditions 
+The global public health crisis associated with the COVID-19 pandemic has and is anticipated to continue to have an adverse effect on global economic activity for the immediate future and has resulted in travel restrictions, business closures and the institution of quarantining and other restrictions on movement in many communities. The slowdown in global economic activity attributable to COVID-19 has resulted in a dramatic decline in the demand for energy which directly impacts our industry and the Company. In addition, global crude oil prices experienced a collapse starting in early March 2020 as a direct result of failed negotiations between OPEC and Russia. 
+As the breadth of the COVID-19 health crisis expanded throughout the month of March 2020 and governmental 
+1 
+authorities implemented more restrictive measures to limit person-to-person contact, global economic activity continued to decline commensurately. The associated impact on the energy industry has been adverse and continued to be exacerbated by the depressed demand in the energy sector and uncertainty in global production levels. In response to the global economic slowdown and depressed demand in the oil and gas industry, OPEC+ has made adjustments to production levels with the objective of rebalancing the energy market. After the March 2020 failed negotiations, OPEC+ subsequently agreed to cut production by 7.7 million barrels of oil per day, or BOPD. In January 2021, OPEC+ reconvened to discuss the matter of production cuts in light of unprecedented disruption and supply and demand imbalances. Agreements were reached to gradually increase production by 0.5 million BOPD, starting in January 2021, and adjusting the production reduction from 7.7 million BOPD to 7.2 million BOPD. OPEC+ members have shown compliance with previously agreed upon production levels, and we have seen recovery in crude oil prices from its low point in 2020. 
+The combined effect of COVID-19 and the energy industry disruptions led to a decline in West Texas Intermediate (“WTI”) crude oil prices of approximately 67 percent from the beginning of January 2020, when prices were approximately $62 per barrel, through the end of March 2020, when they were just above $20 per barrel. Overall, with OPEC+ managing production levels and with the development and distribution of COVID-19 vaccines, there has been gradual recovery in crude oil prices from t he low point in March 2020. As of March 3, 2021, the WTI price for a barrel of crude oil was approximately $62, a significant increase from its low point in 2020. However, with the uncertainty in the global market resulting from the COVID-19 pandemic, the r isk that currently developed vaccines may not be successful in preventing the COVID-19 virus or the outbreak of a new virus, the global demand for crude oil could continue to be depressed and crude oil prices could decline. 
+In order to mitigate the impact of COVID-19 and the economic effects of the unprecedented decline in economic activity and global energy markets, we undertook several actions since March 2020 in support of the efficient continuity of our operations. These actions are described in greater detail in Part 2, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 
+Our Services 
+We have historically conducted our business through five operating segments: hydraulic fracturing, cementing, coiled tubing, flowback and drilling. For reporting purposes, the hydraulic fracturing and cementing operating segments are aggregated into one reportable segment—pressure pumping. Our coiled tubing, flowback, and drilling operating segments and corporate administrative expense are aggregated into our “All Other” reportable segment. For additional financial information on our reportable segment, please see reportable segment information in Part II - Item 8. “Financial Statements and Supplementary Data.” 
+Pressure Pumping 
+Hydraulic Fracturing 
+We primarily provide hydraulic fracturing services to E&P companies in the Permian Basin. These services are intended to optimize hydrocarbon flow paths during the completion phase of horizontal shale wellbores. We have significant expertise in multi‑stage fracturing of horizontal oil‑producing wells in unconventional geological formations. Our total available HHP at December 31, 2020 was 1,373,000 HHP (excluding approximately 150,000 HHP we are in the process of permanently retiring), which was comprised of 1,265,000 HHP of conventional Tier II equipment and 108,000 HHP of our new DuraStim® hydraulic fracturing equipment. Our DuraStim® hydraulic fracturing equipment has been tested on a limited scale basis with certain of our customers. The Company has set a goal to commercialize its first DuraStim® fleet to our customers’ wellsites in the second half of 2021. 
+The fracturing process consists of pumping a fracturing fluid into a well at sufficient pressure to fracture the formation. Materials known as proppants, which in our business are comprised primarily of sand, are suspended in the fracturing fluid and are pumped into the fracture to prop it open. The fracturing fluid is designed to “break,” or loosen viscosity, and be forced out of the formation by its pressure, leaving the proppants suspended in the fractures created, thereby increasing the mobility of the hydrocarbons. As a result of the fracturing process, production rates are usually enhanced substantially, thus increasing the rate of return of hydrocarbons for the operator. 
+We own and operate a fleet of mobile hydraulic fracturing units and other auxiliary equipment to perform fracturing services. We also refer to all of our fracturing units, other equipment and vehicles necessary to perform a fracturing job as a “fleet” and the personnel assigned to each fleet as a “crew.” On average, one conventional Tier II hydraulic fracturing 
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+fleet consists of approximately 50,000 HHP, depending on job design and customer demand. Our conventional Tier II hydraulic fracturing units consist primarily of a high pressure hydraulic pump, diesel engine, transmission and various hoses, valves, tanks and other supporting equipment like blenders, irons and datavans. Our DuraStim® hydraulic fracturing fleet can be powered by turbines, generators or similar equipment that could generate electricity. 
+We provide dedicated equipment, personnel and services that are tailored to meet each of our customer’s needs. Each fleet has a designated team of personnel, which allows us to provide responsive and customized services, such as project design, proppant and other consumables procurement, real‑time data provision and post‑completion analysis for each of our jobs. Many of our hydraulic fracturing fleets and associated personnel have worked continuously with the same customer for the past several years promoting deep relationships and a high degree of coordination and visibility into future customer activity levels. Furthermore, in light of our substantial market presence and historically high fleet utilization levels, we have established a variety of trusted relationships with key equipment, sand and other downhole consumable suppliers. These strategic relationships ensure ready access to equipment, parts and materials on a timely and economic basis and allow our dedicated procurement and logistics team to ensure consistently safe and reliable operations. 
+Cementing 
+We provide cementing services for completion of new wells and remedial work on existing wells. Cementing services use pressure pumping equipment to deliver a slurry of liquid cement that is pumped down a well between the casing and the borehole. Cementing provides isolation between fluid zones behind the casing to minimize potential damage to hydrocarbon bearing formations or the integrity of freshwater aquifers, and provides structural integrity for the casing by securing it to the earth. Cementing is also done when re-completing wells, where one zone is plugged and another is opened. 
+We believe that our cementing segment provides an organic growth opportunity for us to expand our service offerings within our existing customer base. 
+Other Services 
+Coiled Tubing 
+Coiled tubing services involve injecting coiled tubing into wells to perform various completion well intervention operations. Coiled tubing is a flexible steel pipe with a diameter of typically less than three inches and manufactured in continuous lengths of thousands of feet. It is wound or coiled on a truck‑mounted reel for onshore applications. Due to its small diameter, coiled tubing can be inserted into existing production tubing and used to perform a variety of services (including drillout of plugs) to enhance the flow of oil or natural gas. 
+The principal advantages of using coiled tubing include the ability to (i) continue production from the well without interruption, thus reducing the risk of formation damage, (ii) move continuous coiled tubing in and out of a well significantly faster than conventional pipe used with a workover rig, which must be jointed and unjointed, (iii) direct fluids into a wellbore with more precision, allowing for improved stimulation fluid placement, (iv) provide a source of energy to power a downhole motor or manipulate downhole tools and (v) enhance access to remote fields due to the smaller size and mobility. 
+Flowback Services 
+Our flowback services consisted of production testing, solids control and hydrostatic testing. Flowback involves the process of allowing fluids to flow from the well following a treatment, either in preparation for an impending phase of treatment or to return the well to production. Our flowback equipment consisted of manifolds, accumulators, valves, flare stacks and other associated equipment that combine to form up to a total of five well‑testing spreads. Historically, we provided flowback services in the Permian Basin and Mid‑Continent markets. In March 2020, the Company shut down its flowback operations and disposed of all the assets. 
+Drilling 
+Our vertical drilling assets in our drilling segment have been idled since 2016, and in September 2020, the Company shut down its drilling operations and disposed of all of its drilling rigs and ancillary assets. 
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+Our Customers 
+Our customers consist primarily of oil and natural gas producers in North America. Our top five customers accounted for approximately 86.5%, 77.1% and 68.7% of our revenue, for the years ended December 31, 2020, 2019 and 2018, respectively. For the year ended December 31, 2020, Pioneer Natural Resources USA Inc. (“Pioneer”) and XTO Energy Inc. accounted for 42.5% and 20.3%, respectively, of total revenue. No other customer accounted for more than 10% of our total revenue for the year ended December 31, 2020. 
+Competition 
+The markets in which we operate are highly competitive. To be successful, an oilfield services company must provide services that meet the specific needs of oil and natural gas E&P companies at competitive prices. Competitive factors impacting sales of our services are price, reputation, technical expertise, emissions profile, service and equipment design and quality, and health and safety standards. Although we believe our customers consider all of these factors, we believe price is a key factor in E&P companies’ criteria in choosing a service provider. However, we have recently observed the energy industry and our customers shift to lower emissions equipment, which we believe will be an increasingly important factor in an E&P company’s selection of a service provider. While we seek to price our services competitively, we believe many of our customers elect to work with us based on our operational efficiencies, productivity, equipment quality, commitment to safety and the ability of our people to handle the most complex Permian Basin well completions. 
+We provide our services primarily in the Permian Basin, and we compete against different companies in each service and product line we offer. Our competition includes many large and small oilfield service companies, including the largest integrated oilfield services companies. Our major competitors for hydraulic fracturing services include Halliburton Company, Liberty Oilfield Services Inc., Nextier Oilfield Solutions Inc., Patterson‑UTI Energy Inc., RPC, Inc., and FTS International, Inc. and a number of private and locally-oriented businesses. 
+Seasonality 
+Our results of operations have historically reflected seasonal tendencies, generally in the fourth quarter, relating to the conclusion of our customers’ annual capital expenditure budgets, the holidays and inclement winter weather during which we may experience declines in our operating results. 
+Operating Risks and Insurance 
+Our operations are subject to hazards inherent in the oilfield services industry, such as accidents, blowouts, explosions, fires and spills and releases that can cause personal injury or loss of life, damage or destruction of property, equipment, natural resources and the environment and suspension of operations. 
+In addition, claims for loss of oil and natural gas production and damage to formations can occur in the oilfield services industry. If a serious accident were to occur at a location where our equipment and services are being used, it could result in us being named as a defendant in lawsuits asserting large claims. 
+Our business involves the transportation of heavy equipment and materials, and as a result, we may also experience traffic accidents which may result in spills, property damage and personal injury. 
+Despite our efforts to maintain safety standards, we have suffered accidents from time to time in the past and anticipate that we could experience accidents in the future. In addition to the property damage, personal injury and other losses from these accidents, the frequency and severity of these incidents affect our operating costs and insurability and our relationships with customers, employees, regulatory agencies and other parties. Any significant increase in the frequency or severity of these incidents, or the general level of compensation awards, could adversely affect the cost of, or our ability to obtain, workers’ compensation and other forms of insurance, and could have other material adverse effects on our financial condition and results of operations. 
+We maintain commercial general liability, workers’ compensation, business automobile, commercial property, umbrella liability, excess liability, and directors and officers insurance policies providing coverages of risks and amounts that we believe to be customary in our industry. Further, we have pollution legal liability coverage for our business entities, which would cover, among other things, third party liability and costs of clean up relating to environmental contamination on our premises while our equipment is in transit and on our customers’ job site. With respect to our 
+4 
+hydraulic fracturing operations, coverage would be available under our pollution legal liability policy for any surface or subsurface environmental clean‑up and liability to third parties arising from any surface or subsurface contamination. We also have certain specific coverages for some of our businesses, including our hydraulic fracturing services. 
+We maintain director and officer insurance; however, our insurance coverage is subject to certain exclusions (including, for example, any required SEC disgorgement or penalties) and we are responsible for meeting certain deductibles under the policies. Moreover, we cannot assure you that our insurance coverage will adequately protect us from claims made in the Logan Lawsuit, the Shareholder Derivative Lawsuit, the SEC investigation or any future claims. 
+Although we maintain insurance coverage of types and amounts that we believe to be customary in the industry, we are not fully insured against all risks, either because insurance is not available or because of the high premium costs relative to perceived risk. Further, insurance rates have in the past been subject to wide fluctuation and changes in coverage could result in less coverage, increases in cost or higher deductibles and retentions. Liabilities for which we are not insured, or which exceed the policy limits of our applicable insurance, could have a material adverse effect on us. See “Risk Factors” for a description of certain risks associated with our insurance policies. 
+Environmental and Occupational Health and Safety Regulations 
+Our operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection, and occupational health and safety. Numerous federal, state and local governmental agencies issue regulations that often require difficult and costly compliance measures that could carry substantial administrative, civil and criminal penalties and may result in injunctive obligations for non-compliance. These laws and regulations may, for example, restrict the types, quantities and concentrations of various substances that can be released into the environment, limit or prohibit construction or drilling activities on certain lands lying within wilderness, wetlands, ecologically or seismically sensitive areas and other protected areas, or require action to prevent or remediate pollution from current or former operations. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the environment. Changes in environmental, health and safety laws and regulations occur frequently, and any changes that result in more stringent and costly requirements could materially adversely affect our operations and financial position. For example, following the election of President Biden and Democratic control in both houses of Congress, it is possible that our operations may be subject to greater environmental, health and safety restrictions, particularly with regards to hydraulic fracturing, permitting and greenhouse gases (“GHG”) emissions. We have not experienced any material adverse effect from compliance with current requirements; however, this trend may not continue in the future. 
+Below is an overview of some of the more significant environmental, health and safety requirements with which we must comply. Our customers’ operations are subject to similar laws and regulations. Any material adverse effect of these laws and regulations on our customers’ operations and financial position may also have an indirect material adverse effect on our operations and financial position. 
+Waste Handling. We handle, transport, store and dispose of wastes that are subject to the Resource Conservation and Recovery Act (“RCRA”) and comparable state laws and regulations, which affect our activities by imposing requirements regarding the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. With federal approval, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. Although certain petroleum production wastes are exempt from regulation as hazardous wastes under RCRA, such wastes may constitute “solid wastes” that are subject to the less stringent requirements of non-hazardous waste provisions. 
+Administrative, civil and criminal penalties can be imposed for failure to comply with waste handling requirements. Moreover, the U.S. Environmental Protection Agency (“EPA”) or state or local governments may adopt more stringent requirements for the handling of non-hazardous wastes or recategorize some non-hazardous wastes as hazardous for future regulation. Indeed, legislation has been proposed from time to time in Congress to recategorize certain oil and natural gas exploration, development and production wastes as hazardous wastes. Several environmental organizations have also petitioned the EPA to modify existing regulations to recategorize certain oil and natural gas exploration, development and production wastes as hazardous. Any such changes in these laws and regulations could have a material adverse effect on our capital expenditures and operating expenses. Although we do not believe the current costs of managing our wastes, as presently classified, to be significant, any legislative or regulatory reclassification of oil and natural gas exploration and production wastes could increase our costs to manage and dispose of such wastes. 
+5 
+Remediation of Hazardous Substances. The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) and analogous state laws generally impose liability without regard to fault or legality of the original conduct, on classes of persons who are considered to be responsible for the release of a hazardous substance into the environment. These persons include the current owner or operator of a contaminated facility, a former owner or operator of the facility at the time of contamination and those persons that disposed or arranged for the disposal of the hazardous substance at the facility. Liability for the costs of removing or remediating previously disposed wastes or contamination, damages to natural resources, the costs of conducting certain health studies, amongst other things, is strict and joint and several. In the course of our operations, we use materials that, if released, would be subject to CERCLA and comparable state laws. Therefore, governmental agencies or third parties may seek to hold us responsible under CERCLA and comparable state statutes for all or part of the costs to clean up sites at which such hazardous substances have been released. 
+NORM. In the course of our operations, some of our equipment may be exposed to naturally occurring radioactive materials (“NORM”) associated with oil and gas deposits and, accordingly, may result in the generation of wastes and other materials containing NORM. NORM exhibiting levels of radiation in excess of established state standards are subject to special handling and disposal requirements, and any storage vessels, piping and work area affected by NORM may be subject to remediation or restoration requirements. 
+Water Discharges. The Clean Water Act, Safe Drinking Water Act, Oil Pollution Act and analogous state laws and regulations impose restrictions and strict controls regarding the unauthorized discharge of pollutants, including produced waters and other gas and oil wastes, into regulated waters. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or the state. Also, spill prevention, control and countermeasure plan requirements require appropriate containment berms and similar structures to help prevent the contamination of regulated waters. 
+Air Emissions. The Clean Air Act (“CAA”) and comparable state laws and regulations, regulate emissions of various air pollutants through the issuance of permits and the imposition of other emissions control requirements. The EPA has developed, and continues to develop, stringent regulations governing emissions of air pollutants from specified sources. New facilities may be required to obtain permits before work can begin, and existing facilities may be required to obtain additional permits and incur capital costs in order to remain in compliance. These and other laws and regulations may increase the costs of compliance for some facilities where we operate. Obtaining or renewing permits also has the potential to delay the development of oil and natural gas projects. 
+Climate Change. In the United States, no comprehensive climate change legislation has been implemented at the federal level. However, following the U.S. Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, implement New Source Performance Standards directing the reduction of certain pollutant from certain new, modified, or reconstructed facilities in the oil and natural gas sector, and together with the Department of Transportation ("DOT"), implementing GHG emissions limits on vehicles manufactured for operation in the United States. For example, in June 2016, the EPA finalized rules that establish new air emission controls for methane emissions from certain new, modified, or reconstructed equipment and processes in the oil and natural gas source category, including production, processing, transmission, and storage activities, otherwise known as Subpart OOOOa. The EPA finalized amendments to the 2016 standards in September 2020 that removed the transmission and storage segment from the oil and natural gas source category and rescinded the methane-specific requirements for production and processing facilities. However, several lawsuits have been filed challenging these amendments, and President Biden has called for the issuance of regulations that would suspend, revise or rescind the September 2020 rule and the introduction of new or more stringent emissions standards for new, modified and existing oil and gas facilities. 
+Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas such as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. At the international level, there is an agreement, the United Nations-sponsored “Paris Agreement,” that requires nations to submit non-binding emissions reduction targets every five years after 2020. Although the United States had previously withdrawn from the Paris Agreement, President Biden has signed executive orders on his first day in office recommitting the United States to the agreement and calling for the federal government to begin formulating the United States’ nationally determined emissions reduction targets under the agreement. However, the impacts of these executive orders, and the terms of any legislation or regulation to implement the United States’ commitment under the Paris Agreement, are unclear at this time. 
+6 
+Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, including climate-change-related pledges made by certain candidates for public office. On January 27, 2021, President Biden issued an executive order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil fuel industry and an increased emphasis on climate-related risk across government agencies and economic sectors. The executive order also suspends the issuance of new leases for oil and gas development on federal land; for more information, see our regulatory disclosure titled “Regulation of Hydraulic Fracturing and Related Activities.” Other actions that the Biden Administration may take include the imposition of more restrictive requirements for the development of pipeline infrastructure or liquefied natural gas export facilities or more restrictive GHG emissions limitations for oil and gas facilities. Litigation risks are also increasing as a number of cities and other local governments have sought to bring suit against the largest oil and natural gas companies in state or federal court, alleging among other things, that such companies created public nuisances by producing fuels that contributed to climate change or that such companies have been aware of the adverse effects of climate change but failed to adequately disclose those impacts to their investors or customers. 
+The adoption and implementation of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand for, oil and natural gas, which could reduce demand for our services and products. 
+Moreover, climate change may cause more extreme weather conditions and increased volatility in seasonal temperatures. Extreme weather conditions can interfere with our operations and increase our costs, and damage resulting from extreme weather may not be fully insured. 
+Endangered and Threatened Species. Environmental laws such as the Endangered Species Act (“ESA”) and analogous state laws may impact exploration, development and production activities in areas where we operate. The ESA provides broad protection for species of fish, wildlife and plants that are listed as threatened or endangered. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act and various state analogs. The U.S. Fish and Wildlife Service (“FWS”) may identify previously unidentified endangered or threatened species or may designate critical habitat and suitable habitat areas that it believes are necessary for survival of a threatened or endangered species. For example, the dunes sagebrush lizard, which is found only in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas (including areas where our customers operate), was a candidate species for listing under the ESA by the FWS for many years. As a result of a recent settlement with the environmental groups, the FWS, in July 2020, acted on a petition to list the dunes sagebrush lizard finding sufficient information to warrant a formal one-year review to consider listing the species. While the listing review is ongoing, FWS has also solicited comments on a proposed conservation agreement that would implement certain protective practices for the species and authorize incidental take of the species resulting from certain covered activities, including exploration and development of oil and gas fields. However, to the extent any protections are implemented for this or any other species, it could cause us or our customers to incur additional costs or become subject to operating restrictions or operating bans in the affected areas. 
+Regulation of Hydraulic Fracturing and Related Activities. Our hydraulic fracturing operations are a significant component of our business. Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons, particularly natural gas, from tight formations, including shales. The process, which involves the injection of water, sand and chemicals under pressure into formations to fracture the surrounding rock and stimulate production, is typically regulated by state oil and natural gas commissions. However, federal agencies have asserted regulatory authority over certain aspects of the process. For example, the EPA has previously issued a series of rules under the CAA that establish new emission control requirements for certain oil and natural gas production and natural gas processing operations and associated equipment. Separately, the Bureau of Land Management (“BLM”) previously finalized a rule governing hydraulic fracturing on federal lands, but in June 2016, a federal district court judge in Wyoming struck down the final rule, finding that the BLM lacked congressional authority to promulgate the rule. While this ruling was initially challenged, in December 2017, the BLM published a rulemaking to rescind the final rule and reinstate the regulations that existed immediately before the published effective date of the rule. Although several of these rulemakings have been rescinded or modified, new or more stringent regulations may be promulgated by the Biden administration. For example, on January 20, the Biden Administration’s Department of the Interior (“DOI”) issued an order that temporarily suspended the issuance of any fossil fuel authorizations, including leases and permits, for a period of 60 days, and President Biden subsequently issued a longer suspension on the issuance of new oil and gas leases on federal land, pending a review of current practices. Although the orders do not limit existing operations under valid leases, any restrictions for new or existing production activities on federal land could adversely impact our customers’ operations, and consequently demand for our services. Further, legislation to amend the Safe Drinking Water Act to repeal the 
+7 
+exemption for hydraulic fracturing (except when diesel fuels are used) from the definition of “underground injection” and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturing process, have previously been proposed in Congress. Several states and local jurisdictions in which we or our customers operate also have adopted or are considering adopting regulations that could restrict or prohibit hydraulic fracturing in certain circumstances, impose more stringent operating standards and/or require the disclosure of the composition of hydraulic fracturing fluids. 
+Federal and state governments have also investigated whether the disposal of produced water into underground injection wells has caused increased seismic activity in certain areas. In response to concerns regarding induced seismicity, regulators in some states have imposed, or are considering imposing, additional requirements in the permitting of produced water disposal wells or otherwise to assess any relationship between seismicity and the use of such wells. For example, Oklahoma has issued rules for wastewater disposal wells that impose permitting and operating restrictions and reporting requirements on disposal wells in proximity to faults and also, from time to time, has implemented plans directing certain wells where seismic incidents have occurred to restrict or suspend disposal well operations. In particular, the Oklahoma Corporation Commission’s well completion seismicity guidelines for operators in the SCOOP and STACK require hydraulic fracturing operations to be suspended following earthquakes of certain magnitudes in the vicinity. In addition, the Oklahoma Corporation Commission’s Oil and Gas Conservation Division has previously issued an order limiting future increases in the volume of oil and natural gas wastewater injected into the ground in an effort to reduce the number of earthquakes in the state. The Texas Railroad Commission has adopted similar rules. 
+Increased regulation of hydraulic fracturing and related activities could subject us and our customers to additional permitting and financial assurance requirements, more stringent construction specifications, increased monitoring, reporting and record keeping obligations, and plugging and abandonment requirements. New requirements could result in increased operational costs for us and our customers, and reduce the demand for our services. 
+OSHA Matters. The Occupational Safety and Health Act (“OSHA”) and comparable state statutes regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that information be maintained about hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities and the public. 
+Human Capital 
+Our employees are our key asset. Our primary human capital management objectives are to effectively engage, develop, retain and reward our employees. As of December 31, 2020, we employed approximately 1,100 people, none of which are unionized. Of the total population over 80% of our headcount worked for our pressure pumping segment. Our employees are a key component of our ability to attract and retain customers as a result of their operational excellence in the field. 
+Some examples of significant programs and initiatives that are focused to attract, develop and retain our diverse workforce include: 
+• Diversity and inclusion. We believe that in order to attract and retain talent with the skill sets and expertise required to maximize our operational efficiencies across all levels in the Company, it is in our best interest to attempt to recruit and develop a diverse team and create a culture that is inclusive and provides equal opportunities for hiring and advancement for all employees and prospective employees. Some examples of this effort include; 
+◦ a commitment to conducting business in a manner that respects all human rights in compliance within the requirements of applicable laws; 
+◦ efforts to promote and encourage respect for human rights and fundamental freedoms for all without distinctions of any kind such as race, color, sex, language, religion, political or other opinions; 
+◦ working in partnership with personnel, business parties and other parties directly linked to our operations that share our commitment to these same principles; 
+◦ efforts in our employment practices, including through our code of conduct, our equal employment opportunity employer policy, and our anti-harassment policy; and 
+8 
+◦ to make it possible for grievances regarding health and safety to be addressed early and remediated directly, in confidence and without fear of retaliation; the Company provides an anonymous whistleblower hotline that is promoted internally and accessible from our intranet and internet. 
+• Training and Safety. We offer in-depth, role-appropriate safety training upon hiring and as part of the continuous development of our employees. The safety of our employees, our customers, and the communities in which we operate is paramount. We track and evaluate safety incidents at wellsites and offices, and if an accident does occur, we take actions to mitigate similar incidents from reoccurring in the future. The Company incentivizes employees to focus on conducting operations in accordance with our strict safety standards and encourages employees to immediately report any breach of safety protocol. Twenty percent of our executive officers’ annual target bonuses under the 2020 annual incentive program were based upon the Company’s achievement of certain safety goals, including a target total recordable incident rate of less than one. 
+• Health and Wellness. Our employee benefit offerings are designed to meet the varied and evolving needs of a diverse workforce across the Company and we believe are consistent with those provided by our peer companies with which we compete for talent. The Company provides employees with the ability to participate in health and welfare plans, including medical, dental, life, accidental death and dismemberment and short-term and long-term disability insurance plans. In 2020, we made the following adjustments to address the COVID-19 pandemic; 
+◦ instituted a remote work environment to the extent feasible to help protect our workforce from exposure to COVID-19 by limiting physical contact as much as possible; 
+◦ limited visitors to our offices and other work locations and encouraged all employees and visitors to wear masks at our offices and other work locations; and 
+◦ provided coverage for COVID-19 testing and vaccination under the Company’s medical plan at no cost to our employees. 
+Availability of Filings 
+Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are made available free of charge on our internet web site at www.propetroservices.com, as soon as reasonably practicable after we have electronically filed the material with, or furnished it to, the SEC. The SEC maintains an internet site that contains our reports, proxy and information statements and our other SEC filings. The address of that web site is www.sec.gov. Please note that information contained on our website, whether currently posted or posted in the future, is not a part of this Annual Report or the documents incorporated by reference in this Annual Report. 
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+Item 13. Certain Relationships and Related Party Transactions, and Director Independence. 
+This information is incorporated by reference to the Company’s Proxy Statement for its 2021 Annual Meeting of Stockholders, which is expected to be filed before the end of April 2021. 
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+Item 9A. Controls and Procedures 
+Evaluation of Disclosure Controls and Procedures 
+We maintain disclosure controls and procedures that are designed to provide reasonable assurance that the information required to be disclosed by us in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. 
+As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, 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 the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2020. 
+Management’s Report on Internal Control over Financial Reporting 
+The management of ProPetro Holding Corp. is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. ProPetro Holding Corp. maintains a system of internal accounting controls designed to provide reasonable assurance, at a reasonable cost, that assets are safeguarded against loss or unauthorized use and that the financial records are adequate and can be relied upon to produce financial statements in accordance with U.S. GAAP. The internal control system is augmented by written policies and procedures, an internal audit program and the selection and training of qualified personnel. This system includes policies that require adherence to ethical business standards and compliance with all applicable laws and regulations. 
+There are inherent limitations to the effectiveness of any control system. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company will be detected. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. The Company intends to continually improve and refine its internal controls. 
+Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our internal control over financial reporting as of December 31, 2020 based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management believes that ProPetro Holding Corp. maintained effective internal control over financial reporting as of December 31, 2020. The independent registered public accounting firm, Deloitte & Touche LLP, has audited the consolidated financial statements as of and for the year ended December 31, 2020, and has also issued their report on the effectiveness of the Company’s internal control over financial reporting, included in this report on page 53. 
+Changes in Internal Control over Financial Reporting 
+There were no changes in our system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 
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+13. RELATED-PARTY TRANSACTIONS (Continued) 
+PT Petroleum, LLC 
+For the year ended December 31, 2018, the Company provided services to PT Petroleum, LLC, an entity in which a director was an officer, of approximately $ 16.7 million. 
+Pioneer 
+On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property from Pioneer in connection with the Pioneer Pressure Pumping Acquisition. Pioneer received 16.6 million shares of our common stock and approximately $ 110.0 million in cash. In July 2019, we terminated our crew camp facility lease entered into with Pioneer in connection with the Pioneer Pressure Pumping Acquisition, and the total crew camp facility lease payments to Pioneer in 2019 were approximately $ 0.1 million. 
+Revenue from services provided to Pioneer (including idle fees) accounted for approximately $ 335.4 million, $ 524.2 million and $ 76.0 million of our total revenue during the years ended December 31, 2020, 2019 and 2018, respectively. 
+In connection with the Pioneer Pressure Pumping Acquisition, the Company agreed to reimburse Pioneer for our portion of the retention bonuses paid to former Pioneer employees that were subsequently employed by the Company. During years ended December 31, 2020 and 2019, the Company fully reimbursed Pioneer approximately $ 2.7 million and $ 4.2 million for our portion of the retention bonuses paid to former Pioneer employees that were subsequently employed by the Company. During the year ended December 31, 2019, Pioneer fully reimbursed the Company approximately $ 2.5 million for severance payments made on their behalf, in connection with the Pioneer Pressure Pumping Acquisition. 
+As of December 31, 2020, the total accounts receivable due from Pioneer, including estimated unbilled receivable for services (including idle fees) we provided, amounted to $ 41.7 million and the amount due to Pioneer was $ 0 . As of December 31, 2019, the balance due from Pioneer for services (including idle fees) we provided amounted to approximately $ 61.7 million and the amount due to Pioneer was $ 0 .

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+Certain Relationships and Related Party Transactions 
+Related Party Transactions 
+Corporate Office Building 
+The Company rented its corporate office building and the associated real property from PD Properties, an entity in which Dale Redman (our Former Chief Executive Officer) has an equity interest. The rent expense on our corporate office building was approximately $0.1 million per year. In April 2020, the Company acquired the corporate office building and associated real property for approximately $1.5 million. 
+Operations and Maintenance Yards 
+The Company also rents five yards from South Midkiff Partners, LLC, an entity jointly owned by Dale Redman, David Sledge (our Former Chief Operating Officer), Jeff Smith (our former executive officer), and Spencer Armour (a director) and total annual rent expense for each of the five yards was approximately $0.03 million, $0.03 million, $0.1 million, $0.1 million, and $0.2 million, respectively. The Company also leased a drilling yard from Sledge Ranches, LTD, in which David Sledge has an equity interest, and the lease expense during the year ended December 31, 2020 was approximately $0.11 million. In November 2020, we terminated the drilling yard lease. 
+We lease a property adjacent to our corporate headquarters from 4 Industrial Loop Partners, LLC, an entity wholly owned by an affiliate of Bandera Ventures. We paid approximately $0.4 million under the lease for the year ended December 31, 2020. The lease has a remaining term of approximately three years. Mr. Blackwell, one of our former directors, through his approximately 33% interest in Bandera Ventures, may be deemed an indirect beneficiary of this lease. 
+Transportation and Equipment Rental 
+Adam Muñoz, our Chief Operating Officer, has a family relationship with an officer of Pro Pump Inc., an entity that provides equipment maintenance and repair services to the Company. The Company incurred approximately $1.2 million for the year ended December 31, 2020 for equipment maintenance and repair services from Pro Pump Inc. 
+Adam Muñoz, our Chief Operating Officer, also has a family relationship with an employee of J&M Burns Transportation, an entity that provides transportation services to the Company. The employee receives a portion of his compensation from J&M Burns Transportation based on the amount of services sold by him to customers, including the Company. The Company incurred approximately $17.0 million in expense for the year ended December 31, 2020 for services provided to the Company by J&M Burns Transportation. 
+Executive Officer Family Members 
+Oscar J. Dominguez is our Vice President of Frac Technical Services and the father-in-law of Adam Muñoz. Mr. Dominguez received total compensation of approximately $896,000 for his services for the year ended December 31, 2020 (including $787,000 cash compensation and $109,000 non-cash equity compensation). 
+Oscar M. Dominguez is our Vice President of Frac Operations and the brother-in-law of Adam Muñoz. Mr. Dominguez received total compensation of approximately $1,000,000 for his services for the year ended December 31, 2020 (including $981,000 cash compensation and $109,000 non-cash equity compensation). 
+Roger Dominguez is our Acid Logistics Manager and the brother-in-law of Adam Muñoz. Mr. Dominguez received total compensation of approximately $209,000 for his services for the year ended December 31, 2020 (including $204,000 cash compensation and $5,000 non-cash equity compensation). 
+67 
+Jordan Frosch was our Vice President of Sales and Marketing until October 26, 2020 and the son-in-law of Dale Redman. Mr. Frosch received total compensation of approximately $225,000 for his services for the year ended December 31, 2020 (including $206,000 cash compensation and $19,000 non-cash equity compensation). 
+Samuel D. Sledge is our Chief Strategy and Administrative Officer and the son of David Sledge, our former Chief Operating Officer. Samuel D. Sledge received total compensation of approximately $565,000 for his services for the year ended December 31, 2020 (including $550,000 cash compensation and $15,000 non-cash equity compensation). 
+Pioneer 
+On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property in connection with the Pioneer Pressure Pumping Acquisition. In connection with the consummation of the Pioneer Pressure Pumping Acquisition and effective January 1, 2019, we became a long-term service provider to Pioneer, providing pressure pumping and related services for a term of up to 10 years. Revenue from services provided to Pioneer (including idle fees) accounted for approximately $335.4 million during the year ended December 31, 2020. In connection with the Pioneer Pressure Pumping Acquisition, the Company agreed to reimburse Pioneer for our portion of the retention bonuses paid to former Pioneer employees that were subsequently employed by the Company. During year ended December 31, 2020, the Company fully reimbursed Pioneer approximately $2.7 million for our portion of the retention bonuses paid to former Pioneer employees that were subsequently employed by the Company. 
+Sand Supply Agreement 
+In November 2017, we entered into a five-year extension to an existing sand supply agreement to provide Texas-sourced frac sand (“Texas sand”). Texas sand provided under the supply agreement will primarily be sourced from a mine located on land owned by entity in which Dale Redman owns a 44% noncontrolling equity interest. Accordingly, Mr. Redman may be considered an indirect beneficiary of payments made under the lease between our supplier and the landowner. The supply agreement was negotiated by officers of the Company without the involvement of Mr. Redman and reviewed and approved by the Audit Committee pursuant to its authority under our Related Party Transaction Policy. In considering the approval of the supply agreement, the Audit Committee retained independent legal and commercial expertise to assist in the evaluation of the agreement’s commercial terms. Following its evaluation, the Audit Committee determined that the pricing and other provisions of the agreement reflected market terms, that the agreement reflected an arm’s length negotiation, and that entry into the agreement was advisable and in the best interests of the Company. For the year ended December 31, 2020, the Company purchased approximately $11.8 million of Texas sand under the supply agreement, and Mr. Redman was an indirect beneficiary of approximately $0.4 million in estimated royalty payments. 
+Policies and Procedures for Related Party Transactions 
+Any request for us to enter into a transaction with an executive officer, director, principal stockholder or any of such persons’ immediate family members or affiliates, among others, in which the amount involved exceeds $120,000, must first be presented to our Audit Committee for review, consideration and approval. All of our directors and executive officers are required to report to the Audit Committee chair any such related person transaction. In approving or rejecting the proposed agreement, our Audit Committee shall consider the facts and circumstances available and deemed relevant to the Audit Committee, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in arm’s-length dealings with an unrelated third party, the extent of the related party’s interest in the transaction and the conflicts of interest and corporate opportunity provisions of our certificate of incorporation. If we should discover related person transactions that have not been approved, the Audit Committee will be notified and will determine the appropriate action, including ratification, revision or termination of such transaction.