þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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)
|
Large accelerated filer
|
þ
|
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
|
|
Smaller reporting company
|
¨
|
|
|
|
PART I.
|
|
|
|
|
|
Item 1.
|
|
|
|
Unaudited Consolidated Balance Sheets as of September 30, 2014, December 31, 2013 and September 30, 2013
|
|
|
Unaudited Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2014 and 2013
|
|
|
Unaudited Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2014 and 2013
|
|
|
Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013
|
|
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
PART II.
|
|
|
|
|
|
Item 1A.
|
||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
Item 6.
|
||
|
|
|
|
September 30,
2014 |
|
December 31,
2013 |
|
September 30,
2013 |
||||||
Assets
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
249,469
|
|
|
$
|
347,489
|
|
|
$
|
186,377
|
|
Accounts receivable, net
|
449,221
|
|
|
209,952
|
|
|
353,257
|
|
|||
Inventories
|
637,459
|
|
|
469,006
|
|
|
497,406
|
|
|||
Prepaid expenses and other current assets
|
86,914
|
|
|
63,987
|
|
|
56,064
|
|
|||
Deferred income taxes
|
40,840
|
|
|
38,377
|
|
|
29,811
|
|
|||
Total current assets
|
1,463,903
|
|
|
1,128,811
|
|
|
1,122,915
|
|
|||
Property and equipment, net
|
264,629
|
|
|
223,952
|
|
|
201,603
|
|
|||
Goodwill
|
123,356
|
|
|
122,244
|
|
|
—
|
|
|||
Intangible assets, net
|
28,850
|
|
|
24,097
|
|
|
3,721
|
|
|||
Deferred income taxes
|
47,602
|
|
|
31,094
|
|
|
26,766
|
|
|||
Other long term assets
|
49,770
|
|
|
47,543
|
|
|
41,985
|
|
|||
Total assets
|
$
|
1,978,110
|
|
|
$
|
1,577,741
|
|
|
$
|
1,396,990
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
100,000
|
|
|
$
|
—
|
|
Accounts payable
|
273,687
|
|
|
165,456
|
|
|
184,405
|
|
|||
Accrued expenses
|
143,299
|
|
|
133,729
|
|
|
109,344
|
|
|||
Current maturities of long term debt
|
19,524
|
|
|
4,972
|
|
|
5,034
|
|
|||
Other current liabilities
|
53,969
|
|
|
22,473
|
|
|
34,201
|
|
|||
Total current liabilities
|
490,479
|
|
|
426,630
|
|
|
332,984
|
|
|||
Long term debt, net of current maturities
|
172,124
|
|
|
47,951
|
|
|
49,148
|
|
|||
Other long term liabilities
|
61,366
|
|
|
49,806
|
|
|
48,403
|
|
|||
Total liabilities
|
723,969
|
|
|
524,387
|
|
|
430,535
|
|
|||
Commitments and contingencies (see Note 4)
|
|
|
|
|
|
||||||
Stockholders’ equity
|
|
|
|
|
|
||||||
Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of September 30, 2014, December 31, 2013 and September 30, 2013; 176,021,944 shares issued and outstanding as of September 30, 2014, 171,628,708 shares issued and outstanding as of December 31, 2013 and 170,605,598 shares issued and outstanding as of September 30, 2013
|
59
|
|
|
57
|
|
|
56
|
|
|||
Class B Convertible Common Stock, $0.0003 1/3 par value; 37,675,000 shares authorized, issued and outstanding as of September 30, 2014, 40,000,000 shares authorized, issued and outstanding as of December 31, 2013 and 40,650,000 shares authorized, issued and outstanding as of September 30, 2013
|
13
|
|
|
13
|
|
|
14
|
|
|||
Additional paid-in capital
|
490,578
|
|
|
397,248
|
|
|
373,381
|
|
|||
Retained earnings
|
770,484
|
|
|
653,842
|
|
|
590,582
|
|
|||
Accumulated other comprehensive income (loss)
|
(6,993
|
)
|
|
2,194
|
|
|
2,422
|
|
|||
Total stockholders’ equity
|
1,254,141
|
|
|
1,053,354
|
|
|
966,455
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
1,978,110
|
|
|
$
|
1,577,741
|
|
|
$
|
1,396,990
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net revenues
|
$
|
937,908
|
|
|
$
|
723,146
|
|
|
$
|
2,189,169
|
|
|
$
|
1,649,295
|
|
Cost of goods sold
|
472,608
|
|
|
373,011
|
|
|
1,123,227
|
|
|
862,978
|
|
||||
Gross profit
|
465,300
|
|
|
350,135
|
|
|
1,065,942
|
|
|
786,317
|
|
||||
Selling, general and administrative expenses
|
319,194
|
|
|
229,306
|
|
|
858,286
|
|
|
619,686
|
|
||||
Income from operations
|
146,106
|
|
|
120,829
|
|
|
207,656
|
|
|
166,631
|
|
||||
Interest expense, net
|
(1,535
|
)
|
|
(691
|
)
|
|
(3,608
|
)
|
|
(2,127
|
)
|
||||
Other expense, net
|
(3,355
|
)
|
|
(113
|
)
|
|
(3,982
|
)
|
|
(670
|
)
|
||||
Income before income taxes
|
141,216
|
|
|
120,025
|
|
|
200,066
|
|
|
163,834
|
|
||||
Provision for income taxes
|
52,111
|
|
|
47,241
|
|
|
79,733
|
|
|
65,670
|
|
||||
Net income
|
$
|
89,105
|
|
|
$
|
72,784
|
|
|
$
|
120,333
|
|
|
$
|
98,164
|
|
Net income available per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.42
|
|
|
$
|
0.34
|
|
|
$
|
0.56
|
|
|
$
|
0.47
|
|
Diluted
|
$
|
0.41
|
|
|
$
|
0.34
|
|
|
$
|
0.55
|
|
|
$
|
0.46
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
213,522
|
|
|
211,054
|
|
|
213,035
|
|
|
210,458
|
|
||||
Diluted
|
217,982
|
|
|
215,536
|
|
|
217,601
|
|
|
214,852
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income
|
$
|
89,105
|
|
|
$
|
72,784
|
|
|
$
|
120,333
|
|
|
$
|
98,164
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
(8,218
|
)
|
|
2,717
|
|
|
(9,436
|
)
|
|
(385
|
)
|
||||
Unrealized gain (loss) on cash flow hedge, net of tax of $404 and ($37) for the three months ended September 30, 2014 and 2013, respectively, and $39 and $308 for the nine months ended September 30, 2014 and 2013, respectively.
|
771
|
|
|
(65
|
)
|
|
249
|
|
|
439
|
|
||||
Total other comprehensive income (loss)
|
(7,447
|
)
|
|
2,652
|
|
|
(9,187
|
)
|
|
54
|
|
||||
Comprehensive income
|
$
|
81,658
|
|
|
$
|
75,436
|
|
|
$
|
111,146
|
|
|
$
|
98,218
|
|
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
120,333
|
|
|
$
|
98,164
|
|
Adjustments to reconcile net income to net cash used in operating activities
|
|
|
|
||||
Depreciation and amortization
|
52,391
|
|
|
36,052
|
|
||
Unrealized foreign currency exchange rate losses
|
4,881
|
|
|
1,021
|
|
||
Loss on disposal of property and equipment
|
78
|
|
|
598
|
|
||
Stock-based compensation
|
38,965
|
|
|
25,586
|
|
||
Deferred income taxes
|
(19,783
|
)
|
|
(10,691
|
)
|
||
Changes in reserves and allowances
|
10,794
|
|
|
12,007
|
|
||
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
||||
Accounts receivable
|
(248,256
|
)
|
|
(181,100
|
)
|
||
Inventories
|
(176,770
|
)
|
|
(186,276
|
)
|
||
Prepaid expenses and other assets
|
(20,282
|
)
|
|
(7,027
|
)
|
||
Accounts payable
|
118,236
|
|
|
42,344
|
|
||
Accrued expenses and other liabilities
|
20,180
|
|
|
37,404
|
|
||
Income taxes payable and receivable
|
26,737
|
|
|
19,577
|
|
||
Net cash used in operating activities
|
(72,496
|
)
|
|
(112,341
|
)
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(96,596
|
)
|
|
(62,058
|
)
|
||
Purchase of business
|
(10,924
|
)
|
|
—
|
|
||
Purchases of other assets
|
(724
|
)
|
|
(475
|
)
|
||
Change in loans receivable
|
—
|
|
|
(1,700
|
)
|
||
Net cash used in investing activities
|
(108,244
|
)
|
|
(64,233
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Payments on revolving credit facility
|
(100,000
|
)
|
|
—
|
|
||
Proceeds from term loan
|
150,000
|
|
|
—
|
|
||
Payments on long term debt
|
(11,275
|
)
|
|
(4,212
|
)
|
||
Excess tax benefits from stock-based compensation arrangements
|
33,056
|
|
|
13,770
|
|
||
Proceeds from exercise of stock options and other stock issuances
|
14,060
|
|
|
12,727
|
|
||
Payments of debt financing costs
|
(1,714
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
84,127
|
|
|
22,285
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(1,407
|
)
|
|
(1,175
|
)
|
||
Net decrease in cash and cash equivalents
|
(98,020
|
)
|
|
(155,464
|
)
|
||
Cash and cash equivalents
|
|
|
|
||||
Beginning of period
|
347,489
|
|
|
341,841
|
|
||
End of period
|
$
|
249,469
|
|
|
$
|
186,377
|
|
|
|
|
|
||||
Non-cash investing and financing activities
|
|
|
|
||||
Decrease in accrual for property and equipment
|
$
|
(10,601
|
)
|
|
$
|
(6,289
|
)
|
Non-cash acquisition of business
|
11,233
|
|
|
—
|
|
|
Customer
A
|
|
Customer
B
|
|
Customer
C
|
|||
Net revenues
|
|
|
|
|
|
|||
Nine months ended September 30, 2014
|
15.0
|
%
|
|
4.7
|
%
|
|
4.8
|
%
|
Nine months ended September 30, 2013
|
17.2
|
%
|
|
5.5
|
%
|
|
5.2
|
%
|
Accounts receivable
|
|
|
|
|
|
|||
As of September 30, 2014
|
24.7
|
%
|
|
7.1
|
%
|
|
6.2
|
%
|
As of December 31, 2013
|
27.1
|
%
|
|
9.1
|
%
|
|
5.1
|
%
|
As of September 30, 2013
|
27.5
|
%
|
|
8.3
|
%
|
|
5.5
|
%
|
Level 1:
|
Observable inputs such as quoted prices in active markets;
|
|
|
Level 2:
|
Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
|
|
|
Level 3:
|
Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||||
(In thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Derivative foreign currency forward contracts (see Note 7)
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(55
|
)
|
|
$
|
—
|
|
Interest rate swap contracts (see Note 7)
|
|
—
|
|
|
1,182
|
|
|
—
|
|
|
—
|
|
|
835
|
|
|
—
|
|
||||||
TOLI policies held by the Rabbi Trust
|
|
—
|
|
|
4,665
|
|
|
—
|
|
|
—
|
|
|
4,469
|
|
|
—
|
|
||||||
Deferred Compensation Plan obligations
|
|
—
|
|
|
(4,252
|
)
|
|
—
|
|
|
—
|
|
|
(3,112
|
)
|
|
—
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Unrealized foreign currency exchange rate gains (losses)
|
$
|
(4,981
|
)
|
|
$
|
596
|
|
|
$
|
(4,881
|
)
|
|
$
|
(1,021
|
)
|
Realized foreign currency exchange rate gains (losses)
|
81
|
|
|
374
|
|
|
303
|
|
|
168
|
|
||||
Unrealized derivative gains (losses)
|
(134
|
)
|
|
(35
|
)
|
|
(152
|
)
|
|
(61
|
)
|
||||
Realized derivative gains (losses)
|
1,679
|
|
|
(1,048
|
)
|
|
748
|
|
|
244
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands, except per share amounts)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Numerator
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
89,105
|
|
|
$
|
72,784
|
|
|
$
|
120,333
|
|
|
$
|
98,164
|
|
Denominator
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
213,522
|
|
|
211,054
|
|
|
213,035
|
|
|
210,458
|
|
||||
Effect of dilutive securities
|
4,460
|
|
|
4,482
|
|
|
4,566
|
|
|
4,394
|
|
||||
Weighted average common shares and dilutive securities outstanding
|
217,982
|
|
|
215,536
|
|
|
217,601
|
|
|
214,852
|
|
||||
Earnings per share - basic
|
$
|
0.42
|
|
|
$
|
0.34
|
|
|
$
|
0.56
|
|
|
$
|
0.47
|
|
Earnings per share - diluted
|
$
|
0.41
|
|
|
$
|
0.34
|
|
|
$
|
0.55
|
|
|
$
|
0.46
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net revenues
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
847,563
|
|
|
$
|
678,894
|
|
|
$
|
1,988,156
|
|
|
$
|
1,548,621
|
|
Other foreign countries and businesses
|
90,345
|
|
|
44,252
|
|
|
201,013
|
|
|
100,674
|
|
||||
Total net revenues
|
$
|
937,908
|
|
|
$
|
723,146
|
|
|
$
|
2,189,169
|
|
|
$
|
1,649,295
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Operating income (loss)
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
146,034
|
|
|
$
|
117,978
|
|
|
$
|
221,411
|
|
|
$
|
168,050
|
|
Other foreign countries and businesses
|
72
|
|
|
2,851
|
|
|
(13,755
|
)
|
|
(1,419
|
)
|
||||
Total operating income
|
146,106
|
|
|
120,829
|
|
|
207,656
|
|
|
166,631
|
|
||||
Interest expense, net
|
(1,535
|
)
|
|
(691
|
)
|
|
(3,608
|
)
|
|
(2,127
|
)
|
||||
Other expense, net
|
(3,355
|
)
|
|
(113
|
)
|
|
(3,982
|
)
|
|
(670
|
)
|
||||
Income before income taxes
|
$
|
141,216
|
|
|
$
|
120,025
|
|
|
$
|
200,066
|
|
|
$
|
163,834
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Apparel
|
$
|
704,557
|
|
|
$
|
560,899
|
|
|
$
|
1,583,834
|
|
|
$
|
1,216,645
|
|
Footwear
|
121,597
|
|
|
81,024
|
|
|
345,177
|
|
|
243,458
|
|
||||
Accessories
|
84,949
|
|
|
64,373
|
|
|
196,434
|
|
|
151,480
|
|
||||
Total net sales
|
911,103
|
|
|
706,296
|
|
|
2,125,445
|
|
|
1,611,583
|
|
||||
License and other revenues
|
26,805
|
|
|
16,850
|
|
|
63,724
|
|
|
37,712
|
|
||||
Total net revenues
|
$
|
937,908
|
|
|
$
|
723,146
|
|
|
$
|
2,189,169
|
|
|
$
|
1,649,295
|
|
•
|
changes in general economic or market conditions that could affect consumer spending and the financial health of our retail customers;
|
•
|
our ability to effectively manage our growth and a more complex global business;
|
•
|
our ability to effectively develop and launch new, innovative and updated products;
|
•
|
our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands;
|
•
|
increased competition causing us to lose market share or reduce the prices of our products or to increase significantly our marketing efforts;
|
•
|
fluctuations in the costs of our products;
|
•
|
loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner;
|
•
|
our ability to further expand our business globally and to drive brand awareness and consumer acceptance of our products in other countries;
|
•
|
our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results;
|
•
|
our ability to effectively market and maintain a positive brand image;
|
•
|
our ability to comply with trade and other regulations;
|
•
|
the availability, integration and effective operation of management information systems and other technology, as well as any potential interruption or security lapse in such systems or technology;
|
•
|
our ability to effectively integrate new businesses and investments into our company;
|
•
|
our potential exposure to litigation and other proceedings; and
|
•
|
our ability to attract and retain the services of our senior management and key employees.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net revenues
|
$
|
937,908
|
|
|
$
|
723,146
|
|
|
$
|
2,189,169
|
|
|
$
|
1,649,295
|
|
Cost of goods sold
|
472,608
|
|
|
373,011
|
|
|
1,123,227
|
|
|
862,978
|
|
||||
Gross profit
|
465,300
|
|
|
350,135
|
|
|
1,065,942
|
|
|
786,317
|
|
||||
Selling, general and administrative expenses
|
319,194
|
|
|
229,306
|
|
|
858,286
|
|
|
619,686
|
|
||||
Income from operations
|
146,106
|
|
|
120,829
|
|
|
207,656
|
|
|
166,631
|
|
||||
Interest expense, net
|
(1,535
|
)
|
|
(691
|
)
|
|
(3,608
|
)
|
|
(2,127
|
)
|
||||
Other expense, net
|
(3,355
|
)
|
|
(113
|
)
|
|
(3,982
|
)
|
|
(670
|
)
|
||||
Income before income taxes
|
141,216
|
|
|
120,025
|
|
|
200,066
|
|
|
163,834
|
|
||||
Provision for income taxes
|
52,111
|
|
|
47,241
|
|
|
79,733
|
|
|
65,670
|
|
||||
Net income
|
$
|
89,105
|
|
|
$
|
72,784
|
|
|
$
|
120,333
|
|
|
$
|
98,164
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
(As a percentage of net revenues)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Net revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
50.4
|
%
|
|
51.6
|
%
|
|
51.3
|
%
|
|
52.3
|
%
|
Gross profit
|
49.6
|
%
|
|
48.4
|
%
|
|
48.7
|
%
|
|
47.7
|
%
|
Selling, general and administrative expenses
|
34.0
|
%
|
|
31.7
|
%
|
|
39.2
|
%
|
|
37.6
|
%
|
Income from operations
|
15.6
|
%
|
|
16.7
|
%
|
|
9.5
|
%
|
|
10.1
|
%
|
Interest expense, net
|
(0.2
|
)%
|
|
(0.1
|
)%
|
|
(0.2
|
)%
|
|
(0.2
|
)%
|
Other expense, net
|
(0.3
|
)%
|
|
—
|
%
|
|
(0.2
|
)%
|
|
—
|
%
|
Income before income taxes
|
15.1
|
%
|
|
16.6
|
%
|
|
9.1
|
%
|
|
9.9
|
%
|
Provision for income taxes
|
5.6
|
%
|
|
6.5
|
%
|
|
3.6
|
%
|
|
3.9
|
%
|
Net income
|
9.5
|
%
|
|
10.1
|
%
|
|
5.5
|
%
|
|
6.0
|
%
|
|
Three Months Ended September 30,
|
|||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
Apparel
|
$
|
704,557
|
|
|
$
|
560,899
|
|
|
$
|
143,658
|
|
|
25.6
|
%
|
Footwear
|
121,597
|
|
|
81,024
|
|
|
40,573
|
|
|
50.1
|
%
|
|||
Accessories
|
84,949
|
|
|
64,373
|
|
|
20,576
|
|
|
32.0
|
%
|
|||
Total net sales
|
911,103
|
|
|
706,296
|
|
|
204,807
|
|
|
29.0
|
%
|
|||
License and other revenues
|
26,805
|
|
|
16,850
|
|
|
9,955
|
|
|
59.1
|
%
|
|||
Total net revenues
|
$
|
937,908
|
|
|
$
|
723,146
|
|
|
$
|
214,762
|
|
|
29.7
|
%
|
•
|
$61.9 million, or 34.4%, increase in North America direct to consumer sales driven by an 18% increase in square footage in our factory house stores, including a 9% increase in new stores, since September 2013, along with continued growth in our e-commerce business;
|
•
|
$39.1 million, or 98.2% increase in net sales in other foreign countries, due to increased distribution and unit volume growth in our EMEA and Latin America operating segments;
and
|
•
|
unit growth driven by increased distribution and new offerings in multiple product categories, including continued growth of our training, outdoor and golf apparel product lines, along with
growth in footwear due to a broader assortment of running and basketball shoes, including our new
UA SpeedForm
TM
and ClutchFit
TM
Drive footwear.
|
•
|
approximate 90 basis point increase as a result of higher duty costs recorded during the prior year period on certain products imported in previous periods. We do not expect this favorable impact to continue during the remainder of 2014; and
|
•
|
approximate 70 basis point increase driven primarily by decreased sales mix of excess inventory through our factory house outlet stores. We expect the favorable factory house outlet store sales mix impact will continue through the remainder of 2014, but on a more limited basis.
|
•
|
approximate 40 basis point decrease driven by increased liquidation sales of excess apparel and footwear during the third quarter. We expect this unfavorable liquidation sales impact will continue through the remainder of 2014, but on a more limited basis.
|
•
|
Marketing costs
increased
$25.6 million
to
$99.8 million
for the
three months ended September 30, 2014
from
$74.2 million
for the same period in
2013
primarily due to increased sponsorship of collegiate and professional teams and athletes. As a percentage of net revenues, marketing costs
increased
to
10.6%
for the
three months ended September 30, 2014
from
10.3%
for the same period in
2013
primarily due to increased sponsorships in other foreign countries.
|
•
|
Selling costs
increased
$24.2 million
to
$83.1 million
for the
three months ended September 30, 2014
from
$58.9 million
for the same period in
2013
. This increase was primarily due to higher personnel and other costs incurred for the continued expansion of our direct to consumer distribution channel, including increased investment in our factory house and brand house store strategies. As a percentage of net revenues, selling costs
increased
to
8.9%
for the
three months ended September 30, 2014
from
8.1%
for the same period in
2013
primarily due to the items noted above.
|
•
|
Product innovation and supply chain costs
increased
$27.1 million
to
$80.0 million
for the
three months ended September 30, 2014
from
$52.9 million
for the same period in
2013
primarily due to higher personnel costs to support our growth in net revenues, along with costs related to our MapMyFitness business. As a percentage of net revenues, product innovation and supply chain costs
increased
to
8.5%
for the
three months ended September 30, 2014
compared to
7.3%
for the same period in
2013
primarily due to the items noted above.
|
•
|
Corporate services costs
increased
$13.0 million
to
$56.3 million
for the
three months ended September 30, 2014
from
$43.3 million
for the same period in
2013
. This increase was primarily attributable to higher incentive compensation and other personnel costs necessary to support our growth. As a percentage of net revenues, corporate services costs remained unchanged at
6.0%
for the
three months ended September 30, 2014
and
2013
.
|
|
Nine Months Ended September 30,
|
|||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
Apparel
|
$
|
1,583,834
|
|
|
$
|
1,216,645
|
|
|
$
|
367,189
|
|
|
30.2
|
%
|
Footwear
|
345,177
|
|
|
243,458
|
|
|
101,719
|
|
|
41.8
|
%
|
|||
Accessories
|
196,434
|
|
|
151,480
|
|
|
44,954
|
|
|
29.7
|
%
|
|||
Total net sales
|
2,125,445
|
|
|
1,611,583
|
|
|
513,862
|
|
|
31.9
|
%
|
|||
License and other revenues
|
63,724
|
|
|
37,712
|
|
|
26,012
|
|
|
69.0
|
%
|
|||
Total net revenues
|
$
|
2,189,169
|
|
|
$
|
1,649,295
|
|
|
$
|
539,874
|
|
|
32.7
|
%
|
•
|
$152.5 million, or 34.8%, increase in North America direct to consumer sales driven by an 18% increase in square footage in our factory house stores, including a 9% increase in new stores, since September 2013, along with continued growth in our e-commerce business;
|
•
|
$81.4 million, or 90.5% increase in net sales in other foreign countries, due to increased distribution and unit volume growth in our EMEA and Asia-Pacific operating segments;
and
|
•
|
unit growth driven by increased distribution and new offerings in multiple product categories, including continued growth of our training, outdoor and golf apparel product lines, along with
growth in footwear due to a broader assortment of running and basketball shoes, including our new
UA SpeedForm
TM
and ClutchFit
TM
Drive footwear.
|
•
|
approximate 40 basis point increase driven primarily by decreased sales mix of excess inventory through our factory house outlet stores. We expect the favorable factory house outlet store sales mix impact will continue through the remainder of 2014, but on a more limited basis;
|
•
|
approximate 40 basis point increase as a result of higher duty costs recorded during the prior year period on certain products imported in previous periods. We do not expect this favorable impact to continue during the remainder of 2014; and
|
•
|
approximate 20 basis point increase driven by lower outbound freight to our customers. We do not expect this year over year favorability will continue through the remainder of 2014.
|
•
|
Marketing costs
increased
$72.3 million
to
$258.3 million
for the
nine months ended September 30, 2014
from
$186.0 million
for the same period in
2013
primarily due to increased sponsorship of collegiate and professional teams and athletes. As a percentage of net revenues, marketing costs
increased
to
11.8%
for the
nine months ended September 30, 2014
from
11.3%
for the same period in
2013
primarily due to increased media spend in North America and sponsorships in other foreign countries.
|
•
|
Selling costs
increased
$61.4 million
to
$222.3 million
for the
nine months ended September 30, 2014
from
$160.9 million
for the same period in
2013
.
This increase was primarily due to higher personnel and other costs incurred for the continued expansion of our direct to consumer distribution channel, including increased investment in our factory house and brand house store strategies.
As a percentage of net revenues, selling costs
increased
to
10.2%
for the
nine months ended September 30, 2014
from
9.8%
for the same period in
2013
primarily due to the items noted above.
|
•
|
Product innovation and supply chain costs
increased
$68.8 million
to
$217.0 million
for the
nine months ended September 30, 2014
from
$148.2 million
for the same period in
2013
primarily due to higher personnel costs to support our growth in net revenues, along with costs related to our MapMyFitness business. As a percentage of net revenues, product innovation and supply chain costs
increased
to
9.9%
for the
nine months ended September 30, 2014
compared to
9.0%
for the same period in
2013
primarily due to the items noted above.
|
•
|
Corporate services costs
increased
$36.1 million
to
$160.7 million
for the
nine months ended September 30, 2014
from
$124.6 million
for the same period in
2013
primarily due to higher personnel and other administrative costs necessary to support our growth. As a percentage of net revenues, corporate services costs
decreased
to
7.3%
for the
nine months ended September 30, 2014
compared to
7.5%
for the same period in
2013
.
|
|
Three Months Ended September 30,
|
|||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
847,563
|
|
|
$
|
678,894
|
|
|
$
|
168,669
|
|
|
24.8
|
%
|
Other foreign countries and businesses
|
90,345
|
|
|
44,252
|
|
|
46,093
|
|
|
104.2
|
%
|
|||
Total net revenues
|
$
|
937,908
|
|
|
$
|
723,146
|
|
|
$
|
214,762
|
|
|
29.7
|
%
|
|
Three Months Ended September 30,
|
|||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
146,034
|
|
|
$
|
117,978
|
|
|
$
|
28,056
|
|
|
23.8
|
%
|
Other foreign countries and businesses
|
72
|
|
|
2,851
|
|
|
(2,779
|
)
|
|
(97.5
|
)%
|
|||
Total operating income
|
$
|
146,106
|
|
|
$
|
120,829
|
|
|
$
|
25,277
|
|
|
20.9
|
%
|
|
Nine Months Ended September 30,
|
|||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
1,988,156
|
|
|
$
|
1,548,621
|
|
|
$
|
439,535
|
|
|
28.4
|
%
|
Other foreign countries and businesses
|
201,013
|
|
|
100,674
|
|
|
100,339
|
|
|
99.7
|
%
|
|||
Total net revenues
|
$
|
2,189,169
|
|
|
$
|
1,649,295
|
|
|
$
|
539,874
|
|
|
32.7
|
%
|
|
Nine Months Ended September 30,
|
|||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
221,411
|
|
|
$
|
168,050
|
|
|
$
|
53,361
|
|
|
31.8
|
%
|
Other foreign countries and businesses
|
(13,755
|
)
|
|
(1,419
|
)
|
|
(12,336
|
)
|
|
(869.3
|
)%
|
|||
Total operating income
|
$
|
207,656
|
|
|
$
|
166,631
|
|
|
$
|
41,025
|
|
|
24.6
|
%
|
|
Nine Months Ended September 30,
|
||||||
(In thousands)
|
2014
|
|
2013
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(72,496
|
)
|
|
$
|
(112,341
|
)
|
Investing activities
|
(108,244
|
)
|
|
(64,233
|
)
|
||
Financing activities
|
84,127
|
|
|
22,285
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(1,407
|
)
|
|
(1,175
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(98,020
|
)
|
|
$
|
(155,464
|
)
|
•
|
a larger increase in accounts receivable of
$67.2 million
in the current period as compared to the prior period primarily due to a
31.9%
increase in net sales during the first nine months of
2014
; and
|
•
|
a smaller decrease in accrued expenses and other liabilities of
$17.2 million
in the current period compared to the prior period, primarily due to a larger increase in accrual for our performance incentive plan in the prior period; partially offset by
|
•
|
a larger increase in accounts payable of
$75.9 million
in the current period as compared to the prior period, due to the timing of payments.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Unrealized foreign currency exchange rate gains (losses)
|
$
|
(4,981
|
)
|
|
$
|
596
|
|
|
$
|
(4,881
|
)
|
|
$
|
(1,021
|
)
|
Realized foreign currency exchange rate gains (losses)
|
81
|
|
|
374
|
|
|
303
|
|
|
168
|
|
||||
Unrealized derivative gains (losses)
|
(134
|
)
|
|
(35
|
)
|
|
(152
|
)
|
|
(61
|
)
|
||||
Realized derivative gains (losses)
|
1,679
|
|
|
(1,048
|
)
|
|
748
|
|
|
244
|
|
|
UNDER ARMOUR, INC.
|
|
|
|
|
|
By:
|
/s/ B
RAD
D
ICKERSON
|
|
|
Brad Dickerson
|
|
|
Chief Financial Officer
|
(1)
|
The following sentence of Section 5 is deleted in its entirety:
“On the first business day after each vesting date, the Company shall deliver to Grantee the shares of stock to which the Restricted Stock Units relate.”
|
(2)
|
The following sentence is added in place of the sentence referred to in clause (1) above: “
Unless otherwise specified in Section 5A, on the first business day after each vesting date, the Company shall deliver to Grantee the shares of stock to which the Restricted Stock Units relate.”
|
6.
|
Change in Control
.
|
|
/s/ K
EVIN
A. P
LANK
|
|
Kevin A. Plank
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
|
/s/ B
RAD
D
ICKERSON
|
|
Brad Dickerson
|
|
Chief Financial Officer
|
|
/s/ K
EVIN
A. P
LANK
|
|
Kevin A. Plank
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
|
/s/ B
RAD
D
ICKERSON
|
|
Brad Dickerson
|
|
Chief Financial Officer
|