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.
|
|
|
|
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|
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|
|
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|
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Item 2.
|
||
Item 3.
|
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Item 4.
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||
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PART II.
|
|
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|
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Item 1A.
|
||
Item 6.
|
||
|
|
|
|
June 30,
2016 |
|
December 31,
2015 |
|
June 30,
2015 |
||||||
Assets
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
121,216
|
|
|
$
|
129,852
|
|
|
$
|
149,085
|
|
Accounts receivable, net
|
460,955
|
|
|
433,638
|
|
|
353,406
|
|
|||
Inventories
|
1,086,749
|
|
|
783,031
|
|
|
836,605
|
|
|||
Prepaid expenses and other current assets
|
180,265
|
|
|
152,242
|
|
|
147,281
|
|
|||
Deferred income taxes
|
—
|
|
|
—
|
|
|
71,559
|
|
|||
Total current assets
|
1,849,185
|
|
|
1,498,763
|
|
|
1,557,936
|
|
|||
Property and equipment, net
|
712,873
|
|
|
538,531
|
|
|
430,536
|
|
|||
Goodwill
|
580,301
|
|
|
585,181
|
|
|
591,771
|
|
|||
Intangible assets, net
|
70,689
|
|
|
75,686
|
|
|
83,746
|
|
|||
Deferred income taxes
|
118,053
|
|
|
92,157
|
|
|
32,387
|
|
|||
Other long term assets
|
95,823
|
|
|
75,652
|
|
|
62,533
|
|
|||
Total assets
|
$
|
3,426,924
|
|
|
$
|
2,865,970
|
|
|
$
|
2,758,909
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Revolving credit facility, current
|
$
|
150,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accounts payable
|
332,060
|
|
|
200,460
|
|
|
375,431
|
|
|||
Accrued expenses
|
170,226
|
|
|
192,935
|
|
|
150,824
|
|
|||
Current maturities of long term debt
|
27,000
|
|
|
42,000
|
|
|
42,737
|
|
|||
Other current liabilities
|
30,068
|
|
|
43,415
|
|
|
22,303
|
|
|||
Total current liabilities
|
709,354
|
|
|
478,810
|
|
|
591,295
|
|
|||
Long term debt, net of current maturities
|
838,116
|
|
|
624,070
|
|
|
669,654
|
|
|||
Other long term liabilities
|
108,106
|
|
|
94,868
|
|
|
82,380
|
|
|||
Total liabilities
|
1,655,576
|
|
|
1,197,748
|
|
|
1,343,329
|
|
|||
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 June 30, 2016, December 31, 2015 and June 30, 2015; 183,388,910 shares issued and outstanding as of June 30, 2016, 181,646,468 shares issued and outstanding as of December 31, 2015 and 179,961,526 shares issued and outstanding as of June 30, 2015.
|
62
|
|
|
61
|
|
|
60
|
|
|||
Class B Convertible Common Stock, $0.0003 1/3 par value; 34,450,000 shares authorized, issued and outstanding as of June 30, 2016 and December 31, 2015 and 35,700,000 shares authorized, issued and outstanding as of June 30, 2015.
|
11
|
|
|
11
|
|
|
12
|
|
|||
Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of June 30, 2016, December 31, 2015 and June 30, 2015; 219,454,106 shares issued and outstanding as of June 30, 2016, 216,096,468 shares issued and outstanding as of December 31, 2015 and 215,661,526 shares issued and outstanding as of June 30, 2015.
|
73
|
|
|
72
|
|
|
72
|
|
|||
Additional paid-in capital
|
787,091
|
|
|
636,558
|
|
|
572,191
|
|
|||
Retained earnings
|
1,029,371
|
|
|
1,076,533
|
|
|
870,640
|
|
|||
Accumulated other comprehensive loss
|
(45,260
|
)
|
|
(45,013
|
)
|
|
(27,395
|
)
|
|||
Total stockholders’ equity
|
1,771,348
|
|
|
1,668,222
|
|
|
1,415,580
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
3,426,924
|
|
|
$
|
2,865,970
|
|
|
$
|
2,758,909
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net revenues
|
$
|
1,000,783
|
|
|
$
|
783,577
|
|
|
$
|
2,048,485
|
|
|
$
|
1,588,518
|
|
Cost of goods sold
|
523,136
|
|
|
404,524
|
|
|
1,090,202
|
|
|
831,801
|
|
||||
Gross profit
|
477,647
|
|
|
379,053
|
|
|
958,283
|
|
|
756,717
|
|
||||
Selling, general and administrative expenses
|
458,269
|
|
|
347,152
|
|
|
904,022
|
|
|
697,149
|
|
||||
Income from operations
|
19,378
|
|
|
31,901
|
|
|
54,261
|
|
|
59,568
|
|
||||
Interest expense, net
|
(5,754
|
)
|
|
(4,262
|
)
|
|
(10,286
|
)
|
|
(6,472
|
)
|
||||
Other income (expense), net
|
(2,955
|
)
|
|
41
|
|
|
(253
|
)
|
|
(1,799
|
)
|
||||
Income before income taxes
|
10,669
|
|
|
27,680
|
|
|
43,722
|
|
|
51,297
|
|
||||
Provision for income taxes
|
4,325
|
|
|
12,914
|
|
|
18,198
|
|
|
24,803
|
|
||||
Net income
|
6,344
|
|
|
14,766
|
|
|
25,524
|
|
|
26,494
|
|
||||
Adjustment payment to Class C capital stockholders
|
59,000
|
|
|
—
|
|
|
59,000
|
|
|
—
|
|
||||
Net income (loss) available to all stockholders
|
$
|
(52,656
|
)
|
|
$
|
14,766
|
|
|
$
|
(33,476
|
)
|
|
$
|
26,494
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net income (loss) per share of Class A and B common stock
|
$
|
(0.12
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.06
|
|
Basic net income per share of Class C common stock
|
$
|
0.15
|
|
|
$
|
0.03
|
|
|
$
|
0.19
|
|
|
$
|
0.06
|
|
Diluted net income (loss) per share of Class A and B common stock
|
$
|
(0.12
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.06
|
|
Diluted net income per share of Class C common stock
|
$
|
0.15
|
|
|
$
|
0.03
|
|
|
$
|
0.19
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding Class A and B common stock
|
|
|
|
|
|
|
|
||||||||
Basic
|
217,711
|
|
|
215,590
|
|
|
217,262
|
|
|
215,146
|
|
||||
Diluted
|
221,376
|
|
|
219,921
|
|
|
221,503
|
|
|
219,721
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding Class C common stock
|
|
|
|
|
|
|
|
||||||||
Basic
|
217,832
|
|
|
215,590
|
|
|
217,323
|
|
|
215,146
|
|
||||
Diluted
|
221,496
|
|
|
219,921
|
|
|
221,563
|
|
|
219,721
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
6,344
|
|
|
$
|
14,766
|
|
|
$
|
25,524
|
|
|
$
|
26,494
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
(3,177
|
)
|
|
603
|
|
|
4,265
|
|
|
(12,226
|
)
|
||||
Unrealized gain (loss) on cash flow hedge, net of tax of $344 and $(127) for the three months ended June 30, 2016 and 2015, respectively, and $(2,423) and $(192) for the six months ended June 30, 2016 and 2015, respectively.
|
1,745
|
|
|
(884
|
)
|
|
(4,512
|
)
|
|
(361
|
)
|
||||
Total other comprehensive income (loss)
|
(1,432
|
)
|
|
(281
|
)
|
|
(247
|
)
|
|
(12,587
|
)
|
||||
Comprehensive income (loss)
|
$
|
4,912
|
|
|
$
|
14,485
|
|
|
$
|
25,277
|
|
|
$
|
13,907
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
25,524
|
|
|
$
|
26,494
|
|
Adjustments to reconcile net income to net cash used in operating activities
|
|
|
|
||||
Depreciation and amortization
|
67,737
|
|
|
46,064
|
|
||
Unrealized foreign currency exchange rate (gains) losses
|
(3,861
|
)
|
|
19,223
|
|
||
Loss on disposal of property and equipment
|
463
|
|
|
260
|
|
||
Stock-based compensation
|
28,623
|
|
|
21,296
|
|
||
Deferred income taxes
|
(23,739
|
)
|
|
(15,539
|
)
|
||
Changes in reserves and allowances
|
53,551
|
|
|
10,710
|
|
||
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
||||
Accounts receivable
|
(74,566
|
)
|
|
(85,104
|
)
|
||
Inventories
|
(296,654
|
)
|
|
(312,745
|
)
|
||
Prepaid expenses and other assets
|
3,786
|
|
|
(21,082
|
)
|
||
Accounts payable
|
145,896
|
|
|
170,131
|
|
||
Accrued expenses and other liabilities
|
(32,518
|
)
|
|
643
|
|
||
Income taxes payable and receivable
|
(42,980
|
)
|
|
(40,264
|
)
|
||
Net cash used in operating activities
|
(148,738
|
)
|
|
(179,913
|
)
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(184,018
|
)
|
|
(165,485
|
)
|
||
Purchases of property and equipment from related parties
|
(70,288
|
)
|
|
—
|
|
||
Purchase of businesses, net of cash acquired
|
—
|
|
|
(539,460
|
)
|
||
Purchases of available-for-sale securities
|
(24,230
|
)
|
|
(41,556
|
)
|
||
Sales of available-for-sale securities
|
30,712
|
|
|
19,405
|
|
||
Purchases of other assets
|
(715
|
)
|
|
(2,321
|
)
|
||
Net cash used in investing activities
|
(248,539
|
)
|
|
(729,417
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from long term debt
|
1,162,474
|
|
|
450,000
|
|
||
Payments on long term debt
|
(807,250
|
)
|
|
(18,461
|
)
|
||
Excess tax benefits from stock-based compensation arrangements
|
37,138
|
|
|
37,672
|
|
||
Proceeds from exercise of stock options and other stock issuances
|
7,600
|
|
|
4,944
|
|
||
Payments of debt financing costs
|
(5,250
|
)
|
|
(947
|
)
|
||
Cash dividends paid
|
(2,927
|
)
|
|
—
|
|
||
Contingent consideration payments for acquisitions
|
(2,424
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
389,361
|
|
|
473,208
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(720
|
)
|
|
(7,968
|
)
|
||
Net decrease in cash and cash equivalents
|
(8,636
|
)
|
|
(444,090
|
)
|
||
Cash and cash equivalents
|
|
|
|
||||
Beginning of period
|
129,852
|
|
|
593,175
|
|
||
End of period
|
$
|
121,216
|
|
|
$
|
149,085
|
|
|
|
|
|
||||
Non-cash investing and financing activities
|
|
|
|
||||
Change in accrual for property and equipment
|
(14,662
|
)
|
|
(5,693
|
)
|
||
Non-cash dividends paid
|
(56,073
|
)
|
|
—
|
|
||
Property and equipment acquired under build-to-suit leases
|
—
|
|
|
5,631
|
|
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.
|
|
|
June 30, 2016
|
|
December 31, 2015
|
|
June 30, 2015
|
|||||||||||||||||||||||||||||
(In thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||||||||
Available-for-sale securities
|
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
|
$
|
6,534
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,151
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative foreign currency contracts (see Note 7)
|
|
—
|
|
|
463
|
|
|
—
|
|
|
—
|
|
|
3,811
|
|
|
—
|
|
|
—
|
|
|
1,396
|
|
|
—
|
|
||||||||
Interest rate swap contracts (see Note 7)
|
|
—
|
|
|
(5,126
|
)
|
|
—
|
|
|
—
|
|
|
(1,486
|
)
|
|
—
|
|
|
—
|
|
|
(1,032
|
)
|
|
—
|
|
||||||||
TOLI policies held by the Rabbi Trust
|
|
—
|
|
|
4,650
|
|
|
—
|
|
|
—
|
|
|
4,456
|
|
|
—
|
|
|
—
|
|
|
4,717
|
|
|
—
|
|
||||||||
Deferred Compensation Plan obligations
|
|
—
|
|
|
(6,474
|
)
|
|
—
|
|
|
—
|
|
|
(5,072
|
)
|
|
—
|
|
|
—
|
|
|
(4,915
|
)
|
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Unrealized foreign currency exchange rate gains (losses)
|
$
|
(7,387
|
)
|
|
$
|
2,193
|
|
|
$
|
3,861
|
|
|
$
|
(19,223
|
)
|
Realized foreign currency exchange rate gains (losses)
|
(138
|
)
|
|
2,516
|
|
|
459
|
|
|
8,857
|
|
||||
Unrealized derivative gains (losses)
|
(1,128
|
)
|
|
(287
|
)
|
|
(917
|
)
|
|
(70
|
)
|
||||
Realized derivative gains (losses)
|
7,145
|
|
|
(4,381
|
)
|
|
(2,841
|
)
|
|
8,637
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands, except per share amounts)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
6,344
|
|
|
$
|
14,766
|
|
|
$
|
25,524
|
|
|
$
|
26,494
|
|
Adjustment payment to Class C capital stockholders
|
59,000
|
|
|
—
|
|
|
59,000
|
|
|
—
|
|
||||
Net income (loss) available to all stockholders
|
(52,656
|
)
|
|
14,766
|
|
|
(33,476
|
)
|
|
26,494
|
|
||||
Denominator
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding Class A and B
|
217,711
|
|
|
215,590
|
|
|
217,262
|
|
|
215,146
|
|
||||
Effect of dilutive securities Class A and B
|
3,665
|
|
|
4,331
|
|
|
4,241
|
|
|
4,575
|
|
||||
Weighted average common shares and dilutive securities outstanding Class A and B
|
221,376
|
|
|
219,921
|
|
|
221,503
|
|
|
219,721
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding Class C
|
217,832
|
|
|
215,590
|
|
|
217,323
|
|
|
215,146
|
|
||||
Effect of dilutive securities Class C
|
3,664
|
|
|
4,331
|
|
|
4,240
|
|
|
4,575
|
|
||||
Weighted average common shares and dilutive securities outstanding Class C
|
221,496
|
|
|
219,921
|
|
|
221,563
|
|
|
219,721
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share Class A and B
|
$
|
(0.12
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.06
|
|
Basic earnings per share Class C
|
$
|
0.15
|
|
|
$
|
0.03
|
|
|
$
|
0.19
|
|
|
$
|
0.06
|
|
Dilutive earnings per share Class A and B
|
$
|
(0.12
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.08
|
)
|
|
$
|
0.06
|
|
Dilutive earnings per share Class C
|
$
|
0.15
|
|
|
$
|
0.03
|
|
|
$
|
0.19
|
|
|
$
|
0.06
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net revenues
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
827,132
|
|
|
$
|
680,776
|
|
|
$
|
1,707,727
|
|
|
$
|
1,381,288
|
|
International
|
150,154
|
|
|
89,239
|
|
|
299,510
|
|
|
185,237
|
|
||||
Connected Fitness
|
23,497
|
|
|
13,562
|
|
|
41,998
|
|
|
21,993
|
|
||||
Intersegment eliminations
|
—
|
|
|
—
|
|
|
(750
|
)
|
|
—
|
|
||||
Total net revenues
|
$
|
1,000,783
|
|
|
$
|
783,577
|
|
|
$
|
2,048,485
|
|
|
$
|
1,588,518
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Operating income (loss)
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
28,149
|
|
|
$
|
52,352
|
|
|
$
|
68,244
|
|
|
$
|
90,721
|
|
International
|
(1,237
|
)
|
|
(4,388
|
)
|
|
10,012
|
|
|
(54
|
)
|
||||
Connected Fitness
|
(7,534
|
)
|
|
(16,063
|
)
|
|
(23,995
|
)
|
|
(31,099
|
)
|
||||
Total operating income
|
19,378
|
|
|
31,901
|
|
|
54,261
|
|
|
59,568
|
|
||||
Interest expense, net
|
(5,754
|
)
|
|
(4,262
|
)
|
|
(10,286
|
)
|
|
(6,472
|
)
|
||||
Other income (expense), net
|
(2,955
|
)
|
|
41
|
|
|
(253
|
)
|
|
(1,799
|
)
|
||||
Income before income taxes
|
$
|
10,669
|
|
|
$
|
27,680
|
|
|
$
|
43,722
|
|
|
$
|
51,297
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Apparel
|
$
|
612,840
|
|
|
$
|
515,252
|
|
|
$
|
1,279,411
|
|
|
$
|
1,070,707
|
|
Footwear
|
242,706
|
|
|
153,619
|
|
|
506,952
|
|
|
314,585
|
|
||||
Accessories
|
100,734
|
|
|
83,040
|
|
|
180,435
|
|
|
146,191
|
|
||||
Total net sales
|
956,280
|
|
|
751,911
|
|
|
1,966,798
|
|
|
1,531,483
|
|
||||
License revenues
|
21,006
|
|
|
18,104
|
|
|
40,439
|
|
|
35,042
|
|
||||
Connected Fitness
|
23,497
|
|
|
13,562
|
|
|
41,998
|
|
|
21,993
|
|
||||
Intersegment eliminations
|
—
|
|
|
—
|
|
|
(750
|
)
|
|
—
|
|
||||
Total net revenues
|
$
|
1,000,783
|
|
|
$
|
783,577
|
|
|
$
|
2,048,485
|
|
|
$
|
1,588,518
|
|
•
|
changes in general economic or market conditions that could affect consumer spending;
|
•
|
changes to the financial health of our customers;
|
•
|
our ability to effectively manage our growth and a more complex global business;
|
•
|
our ability to successfully manage or realize expected results from acquisitions and other significant investments and capital expenditures;
|
•
|
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, including due to port disruptions;
|
•
|
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;
|
•
|
risks related to foreign currency exchange rate fluctuations;
|
•
|
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 information systems and other technology, as well as any potential interruption in such systems or technology;
|
•
|
risks related to data security or privacy breaches;
|
•
|
our ability to raise additional capital required to grow our business on terms acceptable to us;
|
•
|
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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net revenues
|
$
|
1,000,783
|
|
|
$
|
783,577
|
|
|
$
|
2,048,485
|
|
|
$
|
1,588,518
|
|
Cost of goods sold
|
523,136
|
|
|
404,524
|
|
|
1,090,202
|
|
|
831,801
|
|
||||
Gross profit
|
477,647
|
|
|
379,053
|
|
|
958,283
|
|
|
756,717
|
|
||||
Selling, general and administrative expenses
|
458,269
|
|
|
347,152
|
|
|
904,022
|
|
|
697,149
|
|
||||
Income from operations
|
19,378
|
|
|
31,901
|
|
|
54,261
|
|
|
59,568
|
|
||||
Interest expense, net
|
(5,754
|
)
|
|
(4,262
|
)
|
|
(10,286
|
)
|
|
(6,472
|
)
|
||||
Other income (expense), net
|
(2,955
|
)
|
|
41
|
|
|
(253
|
)
|
|
(1,799
|
)
|
||||
Income before income taxes
|
10,669
|
|
|
27,680
|
|
|
43,722
|
|
|
51,297
|
|
||||
Provision for income taxes
|
4,325
|
|
|
12,914
|
|
|
18,198
|
|
|
24,803
|
|
||||
Net income
|
$
|
6,344
|
|
|
$
|
14,766
|
|
|
$
|
25,524
|
|
|
$
|
26,494
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
(As a percentage of net revenues)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Net revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
52.3
|
%
|
|
51.6
|
%
|
|
53.2
|
%
|
|
52.4
|
%
|
Gross profit
|
47.7
|
%
|
|
48.4
|
%
|
|
46.8
|
%
|
|
47.6
|
%
|
Selling, general and administrative expenses
|
45.8
|
%
|
|
44.3
|
%
|
|
44.2
|
%
|
|
43.9
|
%
|
Income from operations
|
1.9
|
%
|
|
4.1
|
%
|
|
2.6
|
%
|
|
3.7
|
%
|
Interest expense, net
|
(0.5
|
)%
|
|
(0.6
|
)%
|
|
(0.5
|
)%
|
|
(0.4
|
)%
|
Other income (expense), net
|
(0.3
|
)%
|
|
—
|
%
|
|
—
|
%
|
|
(0.1
|
)%
|
Income before income taxes
|
1.1
|
%
|
|
3.5
|
%
|
|
2.1
|
%
|
|
3.2
|
%
|
Provision for income taxes
|
0.5
|
%
|
|
1.6
|
%
|
|
0.9
|
%
|
|
1.5
|
%
|
Net income
|
0.6
|
%
|
|
1.9
|
%
|
|
1.2
|
%
|
|
1.7
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Apparel
|
$
|
612,840
|
|
|
$
|
515,252
|
|
|
$
|
97,588
|
|
|
18.9
|
%
|
Footwear
|
242,706
|
|
|
153,619
|
|
|
89,087
|
|
|
58.0
|
%
|
|||
Accessories
|
100,734
|
|
|
83,040
|
|
|
17,694
|
|
|
21.3
|
%
|
|||
Total net sales
|
956,280
|
|
|
751,911
|
|
|
204,369
|
|
|
27.2
|
%
|
|||
License revenues
|
21,006
|
|
|
18,104
|
|
|
2,902
|
|
|
16.0
|
%
|
|||
Connected Fitness
|
23,497
|
|
|
13,562
|
|
|
9,935
|
|
|
73.3
|
%
|
|||
Intersegment eliminations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||
Total net revenues
|
$
|
1,000,783
|
|
|
$
|
783,577
|
|
|
$
|
217,206
|
|
|
27.7
|
%
|
•
|
Apparel unit sales growth and new offerings in multiple lines led by training and golf; and
|
•
|
Footwear unit sales growth, led by running and basketball and the expansion of our footwear offerings internationally.
|
•
|
approximate 130 basis point decrease driven by negative sales mix primarily driven by the continued strength of our accelerated footwear and international growth; and
|
•
|
approximate 20 basis point decrease driven by foreign exchange rates, which we expect to continue through the rest of 2016 on a more limited basis.
|
•
|
approximate 50 basis point increase driven primarily by favorable product input costs, which we expect to continue through 2016; and
|
•
|
approximate 30 basis point increase driven primarily by lower freight costs, which we do not expect to continue through the rest of the 2016.
|
•
|
Marketing costs
increased
$18.2 million
to
$107.8 million
for the
three months ended June 30, 2016
from
$89.6 million
for the same period in
2015
. This increase was primarily due to key marketing campaigns and investments in sponsorships. As a percentage of net revenues, marketing costs
decreased
to
10.8%
for the
three months ended June 30, 2016
from
11.4%
for the same period in
2015
.
|
•
|
Other costs
increased
$92.9 million
to
$350.5 million
for the
three months ended June 30, 2016
from
$257.6 million
for the same period in
2015
. This increase was primarily due to $23.2 million in expenses related to the liquidation of The Sports Authority, comprising of $21.4 million in bad debt expense and $1.8 million of in-store fixture impairment. The increase was also driven by higher personnel and other costs incurred for both the continued expansion of our direct to consumer distribution channel, including increased costs related to retail stores, distribution facilities, and our e-commerce business, and strategic initiatives such as product creation, innovation and sport category management. As a percentage of net revenues, other costs
increased
to
35.0%
for the
three months ended June 30, 2016
from
32.9%
for the same period in
2015
.
|
|
Six Months Ended June 30,
|
|||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Apparel
|
$
|
1,279,411
|
|
|
$
|
1,070,707
|
|
|
$
|
208,704
|
|
|
19.5
|
%
|
Footwear
|
506,952
|
|
|
314,585
|
|
|
192,367
|
|
|
61.1
|
%
|
|||
Accessories
|
180,435
|
|
|
146,191
|
|
|
34,244
|
|
|
23.4
|
%
|
|||
Total net sales
|
1,966,798
|
|
|
1,531,483
|
|
|
435,315
|
|
|
28.4
|
%
|
|||
License revenues
|
40,439
|
|
|
35,042
|
|
|
5,397
|
|
|
15.4
|
%
|
|||
Connected Fitness
|
41,998
|
|
|
21,993
|
|
|
20,005
|
|
|
91.0
|
%
|
|||
Intersegment eliminations
|
(750
|
)
|
|
—
|
|
|
(750
|
)
|
|
(100.0
|
)%
|
|||
Total net revenues
|
$
|
2,048,485
|
|
|
$
|
1,588,518
|
|
|
$
|
459,967
|
|
|
29.0
|
%
|
•
|
Apparel unit sales growth and new offerings in multiple lines led by training, golf and running; and
|
•
|
Footwear unit sales growth, led by running and basketball and the expansion of our footwear offerings internationally.
|
•
|
approximately 90 basis points decrease driven primarily by footwear sales mix as our footwear growth continues to outpace the growth of apparel;
|
•
|
approximately 50 basis points decrease driven by foreign exchange rates, which we expect to continue through the rest of 2016 on a more limited basis; and
|
•
|
approximately 50 basis points decrease driven by increased liquidation as a result of our changing inventory management strategy which we expect to continue through the rest of 2016 on a more limited basis.
|
•
|
approximate 60 basis points increase driven by continued product cost margin improvements; and
|
•
|
approximate 50 basis points increase driven primarily by lower freight costs, which we do not expect to continue through the rest of the 2016.
|
•
|
Marketing costs
increased
$33.3 million
to
$230.3 million
for the
six months ended June 30, 2016
from
$197.0 million
for the same period in
2015
. This increase was primarily due to key marketing campaigns, our investments in collegiate sponsorships and increased marketing in connection with the growth of our international business. As a percentage of net revenues, marketing costs
decreased
to
11.2%
for the
six months ended June 30, 2016
from
12.4%
for the same period in
2015
.
|
•
|
Other costs
increased
$173.6 million
to
$673.7 million
for the
six months ended June 30, 2016
from
$500.1 million
for the same period in
2015
. This increase was primarily due to $24.5 million in expenses related to the liquidation of The
|
|
Three Months Ended June 30,
|
|||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
827,132
|
|
|
$
|
680,776
|
|
|
$
|
146,356
|
|
|
21.5
|
%
|
International
|
150,154
|
|
|
89,239
|
|
|
60,915
|
|
|
68.3
|
%
|
|||
Connected Fitness
|
23,497
|
|
|
13,562
|
|
|
9,935
|
|
|
73.3
|
%
|
|||
Intersegment eliminations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||
Total net revenues
|
$
|
1,000,783
|
|
|
$
|
783,577
|
|
|
$
|
217,206
|
|
|
27.7
|
%
|
|
Three Months Ended June 30,
|
|||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
28,149
|
|
|
$
|
52,352
|
|
|
$
|
(24,203
|
)
|
|
(46.2
|
)%
|
International
|
(1,237
|
)
|
|
(4,388
|
)
|
|
3,151
|
|
|
71.8
|
%
|
|||
Connected Fitness
|
(7,534
|
)
|
|
(16,063
|
)
|
|
8,529
|
|
|
53.1
|
%
|
|||
Total operating income
|
$
|
19,378
|
|
|
$
|
31,901
|
|
|
$
|
(12,523
|
)
|
|
(39.3
|
)%
|
|
Six Months Ended June 30,
|
|||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
1,707,727
|
|
|
$
|
1,381,288
|
|
|
$
|
326,439
|
|
|
23.6
|
%
|
International
|
299,510
|
|
|
185,237
|
|
|
114,273
|
|
|
61.7
|
%
|
|||
Connected Fitness
|
41,998
|
|
|
21,993
|
|
|
20,005
|
|
|
91.0
|
%
|
|||
Intersegment eliminations
|
(750
|
)
|
|
—
|
|
|
(750
|
)
|
|
(100.0
|
)%
|
|||
Total net revenues
|
$
|
2,048,485
|
|
|
$
|
1,588,518
|
|
|
$
|
459,967
|
|
|
29.0
|
%
|
|
Six Months Ended June 30,
|
|||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
68,244
|
|
|
$
|
90,721
|
|
|
$
|
(22,477
|
)
|
|
(24.8
|
)%
|
International
|
10,012
|
|
|
(54
|
)
|
|
10,066
|
|
|
18,640.7
|
%
|
|||
Connected Fitness
|
(23,995
|
)
|
|
(31,099
|
)
|
|
7,104
|
|
|
22.8
|
%
|
|||
Total operating income
|
$
|
54,261
|
|
|
$
|
59,568
|
|
|
$
|
(5,307
|
)
|
|
(8.9
|
)%
|
|
Six Months Ended June 30,
|
||||||
(In thousands)
|
2016
|
|
2015
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(148,738
|
)
|
|
$
|
(179,913
|
)
|
Investing activities
|
(248,539
|
)
|
|
(729,417
|
)
|
||
Financing activities
|
389,361
|
|
|
473,208
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(720
|
)
|
|
(7,968
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
(8,636
|
)
|
|
$
|
(444,090
|
)
|
•
|
a larger increase in accrued expenses and other liabilities of
$33.2 million
in the current period compared to the prior period, primarily due to the implementation of our SAP platform in the current period and increased marketing and sponsorship accruals, and
|
•
|
a larger increase in accounts payable of
$24.2 million
in the current period compared to the prior period, due to the timing of inventory payments.
|
|
UNDER ARMOUR, INC.
|
|
|
|
|
|
By:
|
/s/ L
AWRENCE
P. M
OLLOY
|
|
|
Lawrence P. Molloy
|
|
|
Chief Financial Officer
|
|
UNDER ARMOUR, INC.,
|
|
as a Borrower
|
|
|
|
By:
/s/ Lawrence Molloy
|
|
Name: Lawrence Molloy
|
|
Title: Chief Financial Officer
|
|
|
|
JPMORGAN CHASE BANK, N.A.,
|
|
individually as a Lender, as an Issuing Bank, as the
|
|
Swingline Lender and as Administrative Agent
|
|
|
|
By:
/s/ James A Knight
|
|
Name: James A. Knight
|
|
Title: Executive Director
|
|
|
|
PNC BANK, NATIONAL ASSOCIATION,
|
|
as an Issuing Bank and as a Lender
|
|
|
|
By: /s/ John E. Hehir
|
|
Name: John E. Hehir
|
|
Title: Senior Vice President
|
|
|
|
BANK OF AMERICA, N.A.,
|
|
as a Lender
|
|
|
|
By:
/s/ J. Casey Cosgrove
|
|
Name: J. Casey Cosgrove
|
|
Title: Director
|
|
|
|
SUNTRUST BANK,
|
|
as a Lender
|
|
|
|
By:
/s/ Daniel L. Nichols
|
|
Name: Daniel L. Nichols
|
|
Title: Vice President
|
|
WELLS FARGO BANK, NATIONAL ASSOCIATION,
|
|
as a Lender
|
|
|
|
By:
/s/ Patrick M. Moore
|
|
Name: Patrick M. Moore
|
|
Title: Sr. Vice President
|
|
|
|
HSBC BANK USA, NATIONAL ASSOCIATION,
|
|
as a Lender
|
|
|
|
By:
/s/ John P Treadwell Jr
|
|
Name: John P Treadwell Jr
|
|
Title: SVP
|
|
|
|
BRANCH BANKING & TRUST COMPANY,
|
|
as a Lender
|
|
|
|
By:
/s/ Matthew J. Davis
|
|
Name: Matthew J. Davis
|
|
Title: Senior Vice President
|
|
|
|
MANUFACTURERS AND TRADERS TRUST
|
|
COMPANY,
|
|
as a Lender
|
|
|
|
By:
/s/ Erica S. Cariello
|
|
Name: Erica S. Cariello
|
|
Title: Vice President
|
|
|
|
SUMITOMO MITSUI BANKING CORPORATION,
|
|
as a Lender
|
|
|
|
By:
/s/ James Weinstein
|
|
James Weinstein
|
|
General Manager
|
|
CITIBANK, N.A.,
|
|
as a Lender
|
|
|
|
By:
/s/ Robert J Kane
|
|
Name: Robert J Kane
|
|
Title: Vice President
|
|
|
|
GOLDMAN SACHS BANK USA,
|
|
as a Lender
|
|
|
|
By:
/s/ Jerry Li
|
|
Name: JERRY LI
|
|
Title: AUTHORITY SIGNATORY
|
|
|
|
REGIONS BANK,
|
|
as a Lender
|
|
|
|
By:
/s/ Brand Hosford
|
|
Name: Brand Hosford
|
|
Title: Vice President
|
“4.1
|
Form of Settlement
. DSUs under this Plan shall be distributed in the form of whole shares of Company common stock, in an amount equivalent to that credited to the Plan under Section 3, with fractional shares paid in cash.”
|
|
/s/ K
EVIN
A. P
LANK
|
|
Kevin A. Plank
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
|
/s/ L
AWRENCE
P. M
OLLOY
|
|
Lawrence P. Molloy
|
|
Chief Financial Officer
|
|
/s/ K
EVIN
A. P
LANK
|
|
Kevin A. Plank
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
|
/s/ L
AWRENCE
P. M
OLLOY
|
|
Lawrence P. Molloy
|
|
Chief Financial Officer
|