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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
Form 10-Q
______________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File No. 001-33202
______________________________________
ua-20200630_g1.jpg
UNDER ARMOUR, INC.
(Exact name of registrant as specified in its charter)
______________________________________
Maryland 52-1990078
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1020 Hull Street
Baltimore, Maryland 21230
 
(410) 454-6428
(Address of principal executive offices) (Zip Code) (Registrant’s telephone number, including area code)
 ______________________________________
Securities registered pursuant to Section 12(b) of the Act:
Class A Common StockUAANew York Stock Exchange
Class C Common StockUANew York Stock Exchange
(Title of each class)(Trading Symbols)(Name of each exchange on which registered)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of July 31, 2020 there were 188,532,100 shares of Class A Common Stock, 34,450,000 shares of Class B Convertible Common Stock and 231,505,055 Class C Common Stock outstanding.


Table of Contents
UNDER ARMOUR, INC.
June 30, 2020
INDEX TO FORM 10-Q
 
PART I.
Item 1.



Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019

Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 6.



Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

Under Armour, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
(In thousands, except share data)
June 30,
2020
December 31,
2019
June 30,
2019
Assets
Current assets
Cash and cash equivalents$1,079,409  $788,072  $455,726  
Accounts receivable, net568,430  708,714  735,181  
Inventories1,198,509  892,258  965,711  
Prepaid expenses and other current assets242,661  313,165  287,829  
Total current assets3,089,009  2,702,209  2,444,447  
Property and equipment, net702,885  792,148  795,499  
Operating lease right-of-use assets568,010  591,931  606,018  
Goodwill486,868  550,178  548,762  
Intangible assets, net38,748  36,345  39,527  
Deferred income taxes42,589  82,379  129,403  
Other long term assets75,232  88,341  116,252  
Total assets$5,003,341  $4,843,531  $4,679,908  
Liabilities and Stockholders’ Equity
Current liabilities
Revolving credit facility, current$250,000  $  $  
Accounts payable664,288  618,194  607,382  
Accrued expenses266,399  374,694  304,063  
Customer refund liabilities199,016  219,424  241,456  
Operating lease liabilities148,408  125,900  116,219  
Other current liabilities90,503  83,797  63,521  
Total current liabilities1,618,614  1,422,009  1,332,641  
Long term debt, net of current maturities987,949  592,687  591,396  
Operating lease liabilities, non-current892,465  580,635  601,665  
Other long term liabilities80,899  98,113  105,932  
Total liabilities3,579,927  2,693,444  2,631,634  
Commitments and contingencies (See Note 8)
Stockholders’ equity
Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of June 30, 2020, December 31, 2019 and June 30, 2019; 188,460,784 shares issued and outstanding as of June 30, 2020, 188,289,680 shares issued and outstanding as of December 31, 2019, and 188,144,137 shares issued and outstanding as of June 30, 2019.
62  62  62  
Class B Convertible Common Stock, $0.0003 1/3 par value; 34,450,000 shares authorized, issued and outstanding as of June 30, 2020, December 31, 2019 and June 30, 2019.
11  11  11  
Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of June 30, 2020, December 31, 2019 and June 30, 2019; 231,353,704 shares issued and outstanding as of June 30, 2020, 229,027,730 shares issued and outstanding as of December 31, 2019, and 228,652,955 shares issued and outstanding as of June 30, 2019.
77  76  76  
Additional paid-in capital1,044,055  973,717  946,488  
Retained earnings450,750  1,226,986  1,141,129  
Accumulated other comprehensive loss(71,541) (50,765) (39,492) 
Total stockholders’ equity1,423,414  2,150,087  2,048,274  
Total liabilities and stockholders’ equity$5,003,341  $4,843,531  $4,679,908  
See accompanying notes.
1

Table of Contents
Under Armour, Inc. and Subsidiaries
Unaudited Consolidated Statements of Operations
(In thousands, except per share amounts)
 
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Net revenues$707,640  $1,191,729  $1,637,880  $2,396,451  
Cost of goods sold358,471  637,408  857,727  1,297,343  
Gross profit349,169  554,321  780,153  1,099,108  
Selling, general and administrative expenses479,906  565,803  1,032,607  1,075,331  
Restructuring and impairment charges38,937    475,400    
Income (loss) from operations(169,674) (11,482) (727,854) 23,777  
Interest expense, net(11,336) (5,988) (17,296) (10,226) 
Other expense, net(4,843) (1,128) (3,309) (1,795) 
Income (loss) before income taxes(185,853) (18,598) (748,459) 11,756  
Income tax expense (benefit)(3,137) (5,740) 18,410  2,391  
Loss from equity method investments(179) (4,491) (5,707) (4,237) 
Net income (loss)$(182,895) $(17,349) $(772,576) $5,128  
Basic net income (loss) per share of Class A, B and C common stock$(0.40) $(0.04) $(1.70) $0.01  
Diluted net income (loss) per share of Class A, B and C common stock$(0.40) $(0.04) $(1.70) $0.01  
Weighted average common shares outstanding Class A, B and C common stock
Basic454,121  451,066  453,496  450,411  
Diluted454,121  451,066  453,496  453,717  
See accompanying notes.
2

Table of Contents
Under Armour, Inc. and Subsidiaries
Unaudited Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
 
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Net income (loss)$(182,895) $(17,349) $(772,576) $5,128  
Other comprehensive income (loss):
Foreign currency translation adjustment6,636  1,408  (41,042) 7,398  
Unrealized gain (loss) on cash flow hedge, net of tax benefit (expense) of $2,958 and $552 for the three months ended June 30, 2020 and 2019, respectively, and ($8,477) and $3,152 for the six months ended June 30, 2020 and 2019, respectively.
(8,798) 391  23,746  (8,710) 
Gain (loss) on intra-entity foreign currency transactions874  (1,115) (3,480) 807  
Total other comprehensive income (loss)(1,288) 684  (20,776) (505) 
Comprehensive income (loss)$(184,183) $(16,665) $(793,352) $4,623  
See accompanying notes.
3

Table of Contents
Under Armour, Inc. and Subsidiaries
Unaudited Consolidated Statements of Stockholders' Equity
(In thousands)


Class A
Common Stock
Class B
Convertible
Common Stock
Class C
Common Stock
Additional Paid-in-CapitalRetained
Earnings
Accumulated Other Comprehensive Income (Loss)Total
Equity
SharesAmountSharesAmountSharesAmount
Balance as of March 31, 2019187,980  62  34,450  11  228,489  76  931,352  1,158,482  (40,176) $2,049,807  
Exercise of stock options161  —  —  —  59  —  529  —  —  $529  
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements(5) —  —  —  (6) —  —  (4) —  $(4) 
Issuance of Class A Common Stock, net of forfeitures8  —  —  —  —  —  —  —  —  $—  
Issuance of Class C Common Stock, net of forfeitures—  —  —  —  111    1,473  —  —  $1,473  
Stock-based compensation expense—  —  —  —  —  —  13,134  —  —  $13,134  
Comprehensive income (loss)—  —  —  —  —  —  —  (17,349) 684  $(16,665) 
Balance as of June 30, 2019188,144  62  34,450  11  228,653  76  946,488  1,141,129  (39,492) $2,048,274  
Balance as of December 31, 2018187,710  62  34,450  11  226,422  75  916,628  1,139,082  (38,987) $2,016,871  
Exercise of stock options315  —  —  —  237  —  1,376  —  —  $1,376  
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements(15) —  —  —  (158) —  —  (3,081) —  $(3,081) 
Issuance of Class A Common Stock, net of forfeitures134  —  —  —  —  —  —  —  —  $—  
Issuance of Class C Common Stock, net of forfeitures—  —  —  —  2,152  1  2,859  —  —  $2,860  
Stock-based compensation expense—  —  —  —  —  —  25,625  —  —  $25,625  
Comprehensive income (loss)—  —  —  —  —  —  —  5,128  (505) 4,623  
Balance as of June 30, 2019188,144  62  34,450  11  228,653  76  946,488  1,141,129  (39,492) $2,048,274  
See accompanying notes.














4

Table of Contents
Under Armour, Inc. and Subsidiaries
Unaudited Consolidated Statements of Stockholders' Equity (continued)
(In thousands)

Class A
Common Stock
Class B
Convertible
Common Stock
Class C
Common Stock
Additional Paid-in-CapitalRetained
Earnings
Accumulated Other Comprehensive Income (Loss)Total
Equity
SharesAmountSharesAmountSharesAmount
Balance as of March 31, 2020188,451  62  34,450  11  231,150  77  985,831  634,452  (70,253) $1,550,180  
Exercise of stock options2  —  —  —  2  —  14  —  —  $14  
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements  —  —  —    —  —  (807) —  $(807) 
Issuance of Class A Common Stock, net of forfeitures8  —  —  —  —  —  —  —  —  $—  
Issuance of Class C Common Stock, net of forfeitures—  —  —  —  202    1,195  —  —  $1,195  
Stock-based compensation expense—  —  —  —  —  —  12,792  —  —  $12,792  
Equity Component value of convertible note issuance, net—  —  —  —  —  —  44,223  —  —  $44,223  
Comprehensive loss—  —  —  —  —  —  —  (182,895) (1,288) (184,183) 
Balance as of June 30, 2020188,461  62  34,450  11  231,354  77  1,044,055  450,750  (71,541) $1,423,414  
Balance as of December 31, 2019188,290  62  34,450  11  229,028  76  973,717  1,226,986  (50,765) $2,150,087  
Exercise of stock options145  —  —  —  133  —  499  —  —  $499  
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements(1) —  —  —  (176) —  —  (3,660) —  $(3,660) 
Issuance of Class A Common Stock, net of forfeitures27  —  —  —  —  —  —  —  —  $—  
Issuance of Class C Common Stock, net of forfeitures—  —  —  —  2,369  1  2,359  —  —  $2,360  
Stock-based compensation expense—  —  —  —  —  —  23,257  —  —  $23,257  
Equity Component value of convertible note issuance, net—  —  —  —  —  —  44,223  —  —  $44,223  
Comprehensive loss—  —  —  —  —  —  —  (772,576) (20,776) (793,352) 
Balance as of June 30, 2020188,461  62  34,450  11  231,354  77  1,044,055  450,750  (71,541) $1,423,414  
See accompanying notes.
5

Table of Contents
Under Armour, Inc. and Subsidiaries`
Unaudited Consolidated Statements of Cash Flows
(In thousands)
 Six Months Ended June 30,
 20202019
Cash flows from operating activities
Net income (loss)$(772,576) $5,128  
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization86,919  93,721  
Unrealized foreign currency exchange rate gain (loss)(1,134) (3,077) 
Loss on disposal of property and equipment825  2,447  
Impairment charges449,090    
Amortization of bond premium1,867  127  
Stock-based compensation23,258  25,635  
Deferred income taxes22,296  (13,890) 
Changes in reserves and allowances19,772  (10,196) 
Changes in operating assets and liabilities:
Accounts receivable126,059  (75,116) 
Inventories(307,430) 62,302  
Prepaid expenses and other assets77,368  64,533  
Other non-current assets(301,523) 12,812  
Accounts payable46,449  57,674  
Accrued expenses and other liabilities230,670  (48,094) 
Customer refund liability(18,630) (60,089) 
Income taxes payable and receivable7,310  (1,210) 
Net cash provided by (used in) operating activities(309,410) 112,707  
Cash flows from investing activities
Purchases of property and equipment(50,862) (77,046) 
Purchases of other assets  (997) 
Purchase of businesses(38,190)   
Net cash used in investing activities(89,052) (