þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
|
|
52-1990078
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(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
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1020 Hull Street
Baltimore, Maryland 21230
|
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(410) 454-6428
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(Address of principal executive offices) (Zip Code)
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(Registrant’s telephone number, including area code)
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Large accelerated filer
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þ
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Accelerated filer
|
¨
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Non-accelerated filer
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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|
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Emerging growth company
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¨
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PART I.
|
|
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Item 1.
|
|
|
|
|
|
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Item 2.
|
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Item 3.
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Item 4.
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PART II.
|
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Item 1.
|
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Item 1A.
|
||
Item 6.
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||
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March 31,
2017 |
|
December 31,
2016 |
|
March 31,
2016 |
||||||
Assets
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
172,128
|
|
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$
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250,470
|
|
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$
|
157,001
|
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Accounts receivable, net
|
629,235
|
|
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622,685
|
|
|
566,286
|
|
|||
Inventories
|
901,613
|
|
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917,491
|
|
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834,287
|
|
|||
Prepaid expenses and other current assets
|
203,052
|
|
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174,507
|
|
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211,209
|
|
|||
Total current assets
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1,906,028
|
|
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1,965,153
|
|
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1,768,783
|
|
|||
Property and equipment, net
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830,539
|
|
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804,211
|
|
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601,910
|
|
|||
Goodwill
|
571,381
|
|
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563,591
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|
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588,895
|
|
|||
Intangible assets, net
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61,986
|
|
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64,310
|
|
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73,217
|
|
|||
Deferred income taxes
|
121,108
|
|
|
136,862
|
|
|
92,230
|
|
|||
Other long term assets
|
86,118
|
|
|
110,204
|
|
|
93,089
|
|
|||
Total assets
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$
|
3,577,160
|
|
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$
|
3,644,331
|
|
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$
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3,218,124
|
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Liabilities and Stockholders’ Equity
|
|
|
|
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|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Revolving credit facility, current
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$
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50,000
|
|
|
$
|
—
|
|
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$
|
140,000
|
|
Accounts payable
|
294,857
|
|
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409,679
|
|
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184,243
|
|
|||
Accrued expenses
|
217,310
|
|
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208,750
|
|
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224,076
|
|
|||
Current maturities of long term debt
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27,000
|
|
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27,000
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|
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27,000
|
|
|||
Other current liabilities
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38,372
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|
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40,387
|
|
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30,581
|
|
|||
Total current liabilities
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627,539
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685,816
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605,900
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|
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Long term debt, net of current maturities
|
784,052
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790,388
|
|
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217,525
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|
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Revolving credit facility, long term
|
—
|
|
|
—
|
|
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550,000
|
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|||
Other long term liabilities
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145,536
|
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137,227
|
|
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103,382
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|
|||
Total liabilities
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1,557,127
|
|
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1,613,431
|
|
|
1,476,807
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|
|||
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 March 31, 2017, December 31, 2016 and March 31, 2016; 184,667,304 shares issued and outstanding as of March 31, 2017, 183,814,911 shares issued and outstanding as of December 31, 2016, and 183,141,109 shares issued and outstanding as of March 31, 2016.
|
62
|
|
|
61
|
|
|
61
|
|
|||
Class B Convertible Common Stock, $0.0003 1/3 par value; 34,450,000 shares authorized, issued and outstanding as of March 31, 2017, December 31, 2016 and March 31, 2016.
|
11
|
|
|
11
|
|
|
12
|
|
|||
Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of March 31, 2017, December 31, 2016 and March 31, 2016; 221,148,991 shares issued and outstanding as of March 31, 2017, 220,174,048 shares issued and outstanding as of December 31, 2016, and 217,591,109 shares issued and outstanding as of March 31, 2016.
|
74
|
|
|
73
|
|
|
73
|
|
|||
Additional paid-in capital
|
835,681
|
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823,484
|
|
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702,972
|
|
|||
Retained earnings
|
1,232,416
|
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1,259,414
|
|
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1,082,027
|
|
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Accumulated other comprehensive loss
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(48,211
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)
|
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(52,143
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)
|
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(43,828
|
)
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|||
Total stockholders’ equity
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2,020,033
|
|
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2,030,900
|
|
|
1,741,317
|
|
|||
Total liabilities and stockholders’ equity
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$
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3,577,160
|
|
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$
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3,644,331
|
|
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$
|
3,218,124
|
|
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Three months ended March 31,
|
||||||
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2017
|
|
2016
|
||||
Net revenues
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$
|
1,117,331
|
|
|
$
|
1,047,702
|
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Cost of goods sold
|
611,908
|
|
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567,066
|
|
||
Gross profit
|
505,423
|
|
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480,636
|
|
||
Selling, general and administrative expenses
|
497,887
|
|
|
445,753
|
|
||
Income from operations
|
7,536
|
|
|
34,883
|
|
||
Interest expense, net
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(7,820
|
)
|
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(4,532
|
)
|
||
Other income, net
|
2,570
|
|
|
2,702
|
|
||
Income before income taxes
|
2,286
|
|
|
33,053
|
|
||
Provision for income taxes
|
4,558
|
|
|
13,873
|
|
||
Net income (loss)
|
$
|
(2,272
|
)
|
|
$
|
19,180
|
|
|
|
|
|
||||
Basic net income (loss) per share of Class A, B and C common stock
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$
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(0.01
|
)
|
|
$
|
0.04
|
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Diluted net income (loss) per share of Class A, B and C common stock
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$
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(0.01
|
)
|
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$
|
0.04
|
|
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|
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|
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Weighted average common shares outstanding Class A, B and C common stock
|
|
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|
||||
Basic
|
439,360
|
|
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433,626
|
|
||
Diluted
|
439,360
|
|
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443,260
|
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Three Months Ended March 31,
|
||||||
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2017
|
|
2016
|
||||
Net income (loss)
|
$
|
(2,272
|
)
|
|
$
|
19,180
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation adjustment
|
9,819
|
|
|
7,442
|
|
||
Unrealized loss on cash flow hedge, net of tax of $(2,399) and $(2,767) for the three months ended March 31, 2017 and 2016.
|
(6,894
|
)
|
|
(6,257
|
)
|
||
Gain on intra-entity foreign currency transactions
|
1,007
|
|
|
—
|
|
||
Total other comprehensive income
|
3,932
|
|
|
1,185
|
|
||
Comprehensive income
|
$
|
1,660
|
|
|
$
|
20,365
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(2,272
|
)
|
|
$
|
19,180
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities
|
|
|
|
||||
Depreciation and amortization
|
41,013
|
|
|
32,021
|
|
||
Unrealized foreign currency exchange rate gains
|
(8,313
|
)
|
|
(11,248
|
)
|
||
Loss on disposal of property and equipment
|
556
|
|
|
384
|
|
||
Amortization of bond premium
|
63
|
|
|
—
|
|
||
Stock-based compensation
|
12,082
|
|
|
14,403
|
|
||
Excess tax benefit (deficiency) from stock-based compensation arrangements
|
(1,258
|
)
|
|
27,058
|
|
||
Deferred income taxes
|
15,905
|
|
|
2,724
|
|
||
Changes in reserves and allowances
|
(21,187
|
)
|
|
12,657
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
21,261
|
|
|
(136,990
|
)
|
||
Inventories
|
19,084
|
|
|
(45,958
|
)
|
||
Prepaid expenses and other assets
|
(7,598
|
)
|
|
(15,351
|
)
|
||
Accounts payable
|
(90,982
|
)
|
|
(976
|
)
|
||
Accrued expenses and other liabilities
|
7,253
|
|
|
22,312
|
|
||
Income taxes payable and receivable
|
(19,169
|
)
|
|
(47,748
|
)
|
||
Net cash used in operating activities
|
(33,562
|
)
|
|
(127,532
|
)
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(91,790
|
)
|
|
(104,573
|
)
|
||
Purchases of available-for-sale securities
|
—
|
|
|
(19,997
|
)
|
||
Sales of available-for-sale securities
|
—
|
|
|
21,414
|
|
||
Net cash used in investing activities
|
(91,790
|
)
|
|
(103,156
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from long term debt and revolving credit facility
|
200,000
|
|
|
415,000
|
|
||
Payments on long term debt and revolving credit facility
|
(156,750
|
)
|
|
(145,500
|
)
|
||
Employee taxes paid for shares withheld for income taxes
|
(2,474
|
)
|
|
(13,685
|
)
|
||
Proceeds from exercise of stock options and other stock issuances
|
2,782
|
|
|
3,954
|
|
||
Payments of debt financing costs
|
—
|
|
|
(1,258
|
)
|
||
Net cash provided by financing activities
|
43,558
|
|
|
258,511
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
3,452
|
|
|
(674
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(78,342
|
)
|
|
27,149
|
|
||
Cash and cash equivalents
|
|
|
|
||||
Beginning of period
|
250,470
|
|
|
129,852
|
|
||
End of period
|
$
|
172,128
|
|
|
$
|
157,001
|
|
|
|
|
|
||||
Non-cash investing and financing activities
|
|
|
|
||||
Change in accrual for property and equipment
|
(25,567
|
)
|
|
(13,814
|
)
|
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.
|
|
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2016
|
||||||||||||||||||||||||||||||
(In thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||||
Available-for-sale securities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,109
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative foreign currency contracts (see Note 7)
|
|
—
|
|
|
5,801
|
|
|
—
|
|
|
—
|
|
|
15,238
|
|
|
—
|
|
|
—
|
|
|
(1,122
|
)
|
|
—
|
|
|||||||||
Interest rate swap contracts (see Note 7)
|
|
—
|
|
|
162
|
|
|
—
|
|
|
—
|
|
|
(420
|
)
|
|
—
|
|
|
—
|
|
|
(4,282
|
)
|
|
—
|
|
|||||||||
TOLI policies held by the Rabbi Trust
|
|
—
|
|
|
5,106
|
|
|
—
|
|
|
—
|
|
|
4,880
|
|
|
—
|
|
|
—
|
|
|
4,568
|
|
|
—
|
|
|||||||||
Deferred Compensation Plan obligations
|
|
—
|
|
|
(8,152
|
)
|
|
—
|
|
|
—
|
|
|
(7,023
|
)
|
|
—
|
|
|
—
|
|
|
(6,084
|
)
|
|
—
|
|
|
Three Months Ended March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Unrealized foreign currency exchange rate gains
|
$
|
8,313
|
|
|
$
|
11,248
|
|
Realized foreign currency exchange rate gains (losses)
|
(272
|
)
|
|
597
|
|
||
Unrealized derivative gains (losses)
|
(704
|
)
|
|
211
|
|
||
Realized derivative losses
|
(6,366
|
)
|
|
(9,986
|
)
|
|
Three Months Ended March 31,
|
||||||
(In thousands, except per share amounts)
|
2017
|
|
2016
|
||||
Numerator
|
|
|
|
||||
Net income (loss)
|
$
|
(2,272
|
)
|
|
$
|
19,180
|
|
Denominator
|
|
|
|
||||
Weighted average common shares outstanding Class A, B, and C
|
439,360
|
|
|
433,626
|
|
||
Effect of dilutive securities Class A , B and C
|
—
|
|
|
9,634
|
|
||
Weighted average common shares and dilutive securities outstanding Class A, B and C
|
439,360
|
|
|
443,260
|
|
||
|
|
|
|
||||
Basic earnings per share Class A, B and C
|
$
|
(0.01
|
)
|
|
$
|
0.04
|
|
Dilutive earnings per share Class A, B and C
|
$
|
(0.01
|
)
|
|
$
|
0.04
|
|
|
Three Months Ended March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Net revenues
|
|
|
|
||||
North America
|
$
|
871,271
|
|
|
$
|
880,595
|
|
EMEA
|
102,855
|
|
|
66,267
|
|
||
Asia-Pacific
|
85,818
|
|
|
53,622
|
|
||
Latin America
|
38,454
|
|
|
29,467
|
|
||
Connected Fitness
|
18,933
|
|
|
18,501
|
|
||
Intersegment eliminations
|
—
|
|
|
(750
|
)
|
||
Total net revenues
|
$
|
1,117,331
|
|
|
$
|
1,047,702
|
|
|
Three Months Ended March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Operating income (loss)
|
|
|
|
||||
North America
|
$
|
3,714
|
|
|
$
|
40,095
|
|
EMEA
|
1,629
|
|
|
2,921
|
|
||
Asia-Pacific
|
19,628
|
|
|
17,335
|
|
||
Latin America
|
(7,859
|
)
|
|
(9,007
|
)
|
||
Connected Fitness
|
(9,576
|
)
|
|
(16,461
|
)
|
||
Total operating income
|
7,536
|
|
|
34,883
|
|
||
Interest expense, net
|
(7,820
|
)
|
|
(4,532
|
)
|
||
Other income, net
|
2,570
|
|
|
2,702
|
|
||
Income before income taxes
|
$
|
2,286
|
|
|
$
|
33,053
|
|
|
Three Months Ended March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Apparel
|
$
|
715,437
|
|
|
$
|
666,571
|
|
Footwear
|
269,659
|
|
|
264,246
|
|
||
Accessories
|
89,097
|
|
|
79,701
|
|
||
Total net sales
|
1,074,193
|
|
|
1,010,518
|
|
||
License revenues
|
24,205
|
|
|
19,433
|
|
||
Connected Fitness
|
18,933
|
|
|
18,501
|
|
||
Intersegment eliminations
|
—
|
|
|
(750
|
)
|
||
Total net revenues
|
$
|
1,117,331
|
|
|
$
|
1,047,702
|
|
•
|
changes in general economic or market conditions that could affect overall consumer spending or our industry;
|
•
|
changes to the financial health of our customers;
|
•
|
our ability to effectively drive operational efficiency in our business;
|
•
|
our ability to effectively manage our growth and a more complex global business;
|
•
|
our ability to comply with existing trade and other regulations, and the potential impact of new trade and tax regulations on our profitability;
|
•
|
our ability to successfully manage or realize expected results from acquisitions and other significant investments or capital expenditures;
|
•
|
our ability to effectively develop and launch new, innovative and updated products;
|
•
|
fluctuations in the costs of our 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;
|
•
|
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;
|
•
|
the availability, integration and effective operation of information systems and other technology, as well as any potential interruption of such systems or technology, including risks related to the implementation of our new global operating and financial reporting information technology system;
|
•
|
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;
|
•
|
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 key talent and retain the services of senior management and key employees.
|
•
|
Net revenues
increased
6.6%
compared to
2016
.
|
•
|
Wholesale and Direct-to-Consumer revenues
increased
3.8%
and
13.2%
, respectively.
|
•
|
Apparel revenue
increased
7.3%
compared to the prior year, with footwear and accessories revenue increasing
2.0%
and
11.8%
, respectively.
|
•
|
Revenue in our North America segment
decreased
1.1%
. Revenue in our Asia-Pacific, EMEA and Latin America segments
grew
60.0%
,
55.2%
and
30.5%
, respectively, with
2.3%
growth in our Connected Fitness segment.
|
•
|
Selling, general and administrative expense
increased
11.7%
when compared to
2016
.
|
•
|
Gross margin
decreased
70
basis points when compared to
2016
.
|
|
Three Months Ended March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Net revenues
|
$
|
1,117,331
|
|
|
$
|
1,047,702
|
|
Cost of goods sold
|
611,908
|
|
|
567,066
|
|
||
Gross profit
|
505,423
|
|
|
480,636
|
|
||
Selling, general and administrative expenses
|
497,887
|
|
|
445,753
|
|
||
Income from operations
|
7,536
|
|
|
34,883
|
|
||
Interest expense, net
|
(7,820
|
)
|
|
(4,532
|
)
|
||
Other income, net
|
2,570
|
|
|
2,702
|
|
||
Income before income taxes
|
2,286
|
|
|
33,053
|
|
||
Provision for income taxes
|
4,558
|
|
|
13,873
|
|
||
Net income (loss)
|
$
|
(2,272
|
)
|
|
$
|
19,180
|
|
|
Three Months Ended March 31,
|
||||
(As a percentage of net revenues)
|
2017
|
|
2016
|
||
Net revenues
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
54.8
|
%
|
|
54.1
|
%
|
Gross profit
|
45.2
|
%
|
|
45.9
|
%
|
Selling, general and administrative expenses
|
44.6
|
%
|
|
42.5
|
%
|
Income from operations
|
0.7
|
%
|
|
3.4
|
%
|
Interest expense, net
|
(0.7
|
)%
|
|
(0.4
|
)%
|
Other income, net
|
0.2
|
%
|
|
0.2
|
%
|
Income before income taxes
|
0.2
|
%
|
|
3.2
|
%
|
Provision for income taxes
|
0.4
|
%
|
|
1.4
|
%
|
Net income (loss)
|
(0.2
|
)%
|
|
1.8
|
%
|
|
Three Months Ended March 31,
|
|||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Apparel
|
$
|
715,437
|
|
|
$
|
666,571
|
|
|
$
|
48,866
|
|
|
7.3
|
%
|
Footwear
|
269,659
|
|
|
264,246
|
|
|
5,413
|
|
|
2.0
|
%
|
|||
Accessories
|
89,097
|
|
|
79,701
|
|
|
9,396
|
|
|
11.8
|
%
|
|||
Total net sales
|
1,074,193
|
|
|
1,010,518
|
|
|
63,675
|
|
|
6.3
|
%
|
|||
License revenues
|
24,205
|
|
|
19,433
|
|
|
4,772
|
|
|
24.6
|
%
|
|||
Connected Fitness
|
18,933
|
|
|
18,501
|
|
|
432
|
|
|
2.3
|
%
|
|||
Intersegment Eliminations
|
—
|
|
|
(750
|
)
|
|
750
|
|
|
(100.0
|
)%
|
|||
Total net revenues
|
$
|
1,117,331
|
|
|
$
|
1,047,702
|
|
|
$
|
69,629
|
|
|
6.6
|
%
|
•
|
Apparel unit sales growth in multiple categories led by training, golf and team sports;
|
•
|
Footwear unit sales growth led by running, golf and women's training; and
|
•
|
Accessories unit sales growth led by men's training and running.
|
•
|
approximate 160 basis point decrease driven by our inventory management strategies, which we expect to continue for the remainder of the year on a more limited basis;
|
•
|
approximate 20 basis point decrease due to our international business representing a higher percentage of sales, which we expect to continue for the remainder of the year; and
|
•
|
approximate 20 basis point decrease driven by foreign exchange rates, which we expect to continue through the remainder of the year.
|
•
|
approximate 140 basis point increase driven by favorable sales channel mix primarily due to lower liquidations as a percentage of total sales.
|
•
|
Marketing costs
increased
$5.8 million
to
$128.3 million
for the
three months ended March 31, 2017
from
$122.5 million
for the same period in
2016
. This increase was primarily due to increased marketing in connection with the growth of our international business. As a percentage of net revenues, marketing costs
decreased
to
11.5%
for the
three months ended March 31, 2017
from
11.7%
for the same period in
2016
.
|
•
|
Other costs
increased
$46.3 million
to
$369.6 million
for the
three months ended March 31, 2017
from
$323.3 million
for the same period in
2016
. The increase was 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. As a percentage of net revenues, other costs
increased
to
33.1%
for the
three months ended March 31, 2017
from
30.9%
for the same period in
2016
.
|
|
Three Months Ended March 31,
|
|||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
871,271
|
|
|
$
|
880,595
|
|
|
$
|
(9,324
|
)
|
|
(1.1
|
)%
|
EMEA
|
102,855
|
|
|
66,267
|
|
|
36,588
|
|
|
55.2
|
%
|
|||
Asia-Pacific
|
85,818
|
|
|
53,622
|
|
|
32,196
|
|
|
60.0
|
%
|
|||
Latin America
|
38,454
|
|
|
29,467
|
|
|
8,987
|
|
|
30.5
|
%
|
|||
Connected Fitness
|
18,933
|
|
|
18,501
|
|
|
432
|
|
|
2.3
|
%
|
|||
Intersegment eliminations
|
—
|
|
|
(750
|
)
|
|
750
|
|
|
(100.0
|
)%
|
|||
Total net revenues
|
$
|
1,117,331
|
|
|
$
|
1,047,702
|
|
|
$
|
69,629
|
|
|
6.6
|
%
|
•
|
Net revenues in our North America operating segment
decreased
$9.3 million
to
$871.3 million
for the
three months ended March 31, 2017
from
$880.6 million
for the same period in
2016
primarily due to the highly promotional retail environment in the United States and the loss of revenue from wholesale customers that filed for bankruptcy protection which was only partially offset by revenue from new wholesale customers.
|
•
|
Net revenues in our EMEA operating segment
increased
$36.6 million
to
$102.9 million
for the
three months ended March 31, 2017
from
$66.3 million
for the same period in
2016
primarily due to unit sales growth to wholesale partners in Germany and the United Kingdom.
|
•
|
Net revenues in our Asia-Pacific operating segment
increased
$32.2 million
to
$85.8 million
for the
three months ended March 31, 2017
from
$53.6 million
for the same period in
2016
primarily due to store growth in China and Korea and increased unit sales growth to our distribution partners in Taiwan and Southeast Asia.
|
•
|
Net revenues in our Latin America operating segment
increased
$9.0 million
to
$38.5 million
for the
three months ended March 31, 2017
from
$29.5 million
for the same period in
2016
primarily due to unit sales growth to wholesale partners in Mexico and Chile.
|
•
|
Net revenues in our Connected Fitness operating segment
increased
$0.4 million
to
$18.9 million
from
$18.5 million
for the same period in
2016
primarily driven by an increase in paid subscribers partially offset by a decrease in advertising on our fitness applications.
|
|
Three Months Ended March 31,
|
|||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
$
|
3,714
|
|
|
$
|
40,095
|
|
|
$
|
(36,381
|
)
|
|
(90.7
|
)%
|
EMEA
|
1,629
|
|
|
2,921
|
|
|
(1,292
|
)
|
|
(44.2
|
)%
|
|||
Asia-Pacific
|
19,628
|
|
|
17,335
|
|
|
2,293
|
|
|
13.2
|
%
|
|||
Latin America
|
(7,859
|
)
|
|
(9,007
|
)
|
|
1,148
|
|
|
12.7
|
%
|
|||
Connected Fitness
|
(9,576
|
)
|
|
(16,461
|
)
|
|
6,885
|
|
|
41.8
|
%
|
|||
Total operating income
|
$
|
7,536
|
|
|
$
|
34,883
|
|
|
$
|
(27,347
|
)
|
|
(78.4
|
)%
|
•
|
Operating income in our North America operating segment
decreased
$36.4 million
to
$3.7 million
for the
three months ended March 31, 2017
from
$40.1 million
for the same period in
2016
primarily due to decreases in net sales and gross margin discussed above in the Consolidated Results of Operations and investments in our direct to consumer distribution channel, including increased costs related to retail stores, distribution facilities and our e-commerce business.
|
•
|
Operating income in our EMEA operating segment
decreased
$1.3 million
to
$1.6 million
for the
three months ended March 31, 2017
from
$2.9 million
for the same period in
2016
primarily due to costs related to a distributor termination. This
decrease
was partially offset by sales growth discussed above.
|
•
|
Operating income in our Asia-Pacific operating segment
increased
$2.3 million
to
$19.6 million
for the
three months ended March 31, 2017
from
$17.3 million
for the same period in
2016
primarily due to sales growth discussed above. This increase was offset by investments in our direct-to-consumer business and entry into new territories.
|
•
|
Operating loss in our Latin America operating segment
decreased
$1.1 million
to
$7.9 million
for the
three months ended March 31, 2017
from
$9.0 million
for the same period in
2016
primarily due to sales growth discussed above.
|
•
|
Operating loss in our Connected Fitness segment
decreased
$6.9 million
to
$9.6 million
for the
three months ended March 31, 2017
from
$16.5 million
for the same period in
2016
primarily driven by the movement of expenses resulting from a strategic shift in headcount supporting our global business to our North America segment.
|
|
Three Months Ended March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(33,562
|
)
|
|
$
|
(127,532
|
)
|
Investing activities
|
(91,790
|
)
|
|
(103,156
|
)
|
||
Financing activities
|
43,558
|
|
|
258,511
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
3,452
|
|
|
(674
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
(78,342
|
)
|
|
$
|
27,149
|
|
•
|
an increase in the change in accounts receivable of
$158.3 million
in the current period compared to the prior period, primarily due to the timing of cash collections and a higher proportion of sales to our international customers with longer payment terms in the prior period; partially offset by
|
•
|
a decrease in the change in accounts payable of
$90.0 million
in the current period compared to the prior period, primarily due to the timing of inventory payments.
|
|
UNDER ARMOUR, INC.
|
|
|
|
|
|
By:
|
/s/ D
AVID
E. B
ERGMAN
|
|
|
David E. Bergman
|
|
|
Chief Financial Officer
|
Section 1
|
Interpretation
|
1.1
|
Purposes
|
(a)
|
to develop a mechanism to compensate Non-Employee Directors for their services to the Company; and
|
(b)
|
to provide a financial incentive that will help the Company to attract and retain highly qualified individuals to serve as Non-Employee Directors of the Company.
|
(a)
|
“Affiliate”
means a subsidiary, division or affiliate of the Company, as determined in accordance with Section 414(b), (c) or (m) of the Code.
|
(b)
|
“Award Agreement”
means an award agreement by and between a Non-Employee Director and the Company, entered into pursuant to the terms of the Omnibus Incentive Plan.
|
(c)
|
“Audit Committee”
means the Audit Committee of the Board of Directors.
|
(d)
|
“Board”
or
“Board of Directors”
means those individuals who serve from time to time as the Board of Directors of the Company.
|
(e)
|
“Change in Control”
has the meaning given to it in the Omnibus Incentive Plan.
|
(f)
|
“Code”
means the United States Internal Revenue Code of 1986, as amended.
|
(g)
|
“Committee”
means the committee of the Board of Directors to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan, initially the Compensation Committee.
|
(h)
|
“Committee Chair”
means the individual who chairs a committee or a sub-committee of the Board to which the Board has delegated authority with respect to certain functions, including the Audit Committee, the Compensation Committee, Corporate Governance Committee and the Finance and Capital Planning Committee and any other committee or sub-committee established by the Board.
|
(i)
|
“Compensation Committee”
means the Compensation Committee of the Board of Directors.
|
(j)
|
“Company”
means Under Armour, Inc., a Maryland corporation, and any successor to all or substantially all of its assets or business.
|
(l)
|
“Deferred Stock Unit”
means an interest credited under the DSU Plan. Each DSU represents the Company’s obligation to issue one share of common stock in accordance with the terms of the DSU Plan.
|
(m)
|
“DSU Plan”
means the Under Armour, Inc. 2006 Non-Employee Directors Deferred Stock Unit Plan, as amended and restated from time to time.
|
(n)
|
“Effective Date”
of the Plan is January 1, 2017.
|
(o)
|
“Finance and Capital Planning Committee”
means the Finance and Capital Planning Committee of the Board of Directors.
|
(p)
|
“
Grant Date
” means the date of an annual shareholder meeting; provided however, that with respect to an Initial Restricted Stock Unit Grant made to a Non-Employee Director in accordance with Section 4.1 below, “Grant Date” means the first day of the month coincident with or next following the date the Non-Employee Director commences Board service.
|
(q)
|
“Initial Restricted Stock Unit Grant”
means an equity grant made under Section 4.1 of this Plan.
|
(r)
|
“Lead Director”
Independent Director appointed by the Board to act as liaison between Directors, CEO and other members of Management.
|
(s)
|
“Corporate Governance Committee”
means the Corporate Governance Committee of the Board of Directors.
|
(t)
|
“Non-Employee Director”
means a member of the Board of Directors who is not an employee of the Company or any Affiliate of the Company.
|
(u)
|
“Omnibus Incentive Plan”
means the Under Armour, Inc. 2005 Omnibus Long-Term Incentive Plan, as amended and restated from time to time.
|
(v)
|
“Plan”
means this Under Armour, Inc. 2017 Non-Employee Director Compensation Plan, as amended and restated from time to time.
|
(w)
|
“Plan Year”
means the twelve month period beginning on January 1 and ending on December 31 of each year.
|
(x)
|
“RSU”
means a restricted stock unit granted under the Omnibus Incentive Plan.
|
(y)
|
“Quarter”
means each Company fiscal calendar quarter, which begins on January 1, April 1, July 1, and October 1 of each year.
|
(z)
|
“Separation from Service” or “Separate from Service”
means a Non-Employee Director ceasing to be a member of the Board for any reason, determined in accordance with Code Section 409A and the guidance issued thereunder, including Proposed Treas. Reg. Section 1.409A-1(h) (or any successor rule or regulation thereto).
|
Section 2
|
Eligibility
|
Section 3
|
Compensation
|
3.1
|
Annual Retainer
|
(a)
|
Subject to the other provisions of this Plan, each Non-Employee Director shall receive an annual retainer of Seventy-Five Thousand Dollars ($75,000) in installments of Eighteen Thousand Seven Hundred Fifty Dollars ($18,750) each Quarter, paid in arrears.
|
(b)
|
Non-Employee Directors who Separate from Service during a Quarter shall receive a
pro-rata
payment for that Quarter based on the number of days of service as a Board member in the Quarter.
|
(c)
|
A Non-Employee Director may elect to defer all of the value of the Annual Retainer as DSUs under the DSU Plan, in accordance with its terms.
|
3.2
|
Annual Retainer for Lead Director
|
(a)
|
The Lead Directors shall receive an annual retainer of Twenty Five Thousand Dollars ($25,000) in installments of Six Thousand Two Hundred Fifty Dollars ($6,250) each Quarter, paid in arrears.
|
(b)
|
Lead Director may elect to defer all of the value of the Annual Retainer for Lead Director as DSUs under the DSU Plan, in accordance with its terms.
|
3.3
|
Expenses
|
3.4
|
Committee Chairs
|
(a)
|
In addition to fees otherwise paid hereunder, each Committee Chair shall be paid a Committee Chair annual retainer, as follows:
|
Committee Chair
|
Annual Retainer
|
Audit Committee
|
$15,000
|
Compensation Committee
|
$12,500
|
Corporate Governance Committee
|
$10,000
|
Finance and Capital Planning Committee
|
$10,000
|
(b)
|
Whether the Committee Chair of an additional committee or sub-committee established by the Board is entitled to a Committee Chair annual retainer, and the
|
(c)
|
Committee Chair annual retainer fees shall be paid in equal Quarterly payments, in arrears, and subject to the rules set forth at Section 3.1 (b) above.
|
(d)
|
A Non-Employee Director may elect to defer all of the value of the Committee Chair annual retainer as DSUs under the DSU Plan, in accordance with its terms.
|
Section 4
|
Equity Grants
|
4.1
|
Initial Restricted Stock Unit Grant
|
(a)
|
On the Grant Date applicable to Initial Restricted Stock Unit Grants, each new Non-Employee Director shall be granted an RSU with an equivalent value as of the Grant Date of One Hundred Thousand Dollars ($100,000).
|
(b)
|
RSUs will be granted under and pursuant to the terms of the Omnibus Incentive Plan and subject to the terms of an Award Agreement by and between each Non-Employee Director and the Company. Each RSU shall vest 1/3
rd
annually while the Non-Employee Director continues to serve as a Board member, starting with the first anniversary of the Grant Date. Upon vesting, each RSU shall be settled in the form of a DSU, and shall be deferred in accordance with the terms of the DSU Plan. DSU interests shall be settled in the form of Company stock on the date that is six (6) months from the date the Board member incurs a Separation from Service and otherwise in accordance with Section 4 of the DSU Plan.
|
4.2
|
Annual Restricted Stock Unit Grant
|
4.3
|
Rules Applicable to Equity Grants
|
(a)
|
The Board, in its discretion, shall determine whether and to what extent a grant under this Section 4.2 to a Non-Employee Director who begins service as a Board member other than at an annual shareholders meeting shall be prorated for the first year of Board service.
|
Section 5
|
General
|
5.1
|
Successors and Assigns
|
5.2
|
Amendment or Termination of the Plan
|
5.3
|
Limitations on Rights of Non-Employee Directors
|
(a)
|
Any and all of the rights of the Non-Employee Directors respecting payments under the Plan shall not be transferable or assignable other than by will or the laws of descent and distribution, nor shall they be pledged, encumbered or charged, and any attempt to do so shall be void.
|
(b)
|
Any liability of the Company to any Non-Employee Director with respect to receipt of payment under this Plan shall be based solely upon contractual obligations created
|
5.4
|
Compliance with Law
|
5.5
|
Governing Law
|
5.6
|
Administration
|
|
/s/ K
EVIN
A. P
LANK
|
|
Kevin A. Plank
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
|
/s/ D
AVID
E. B
ERGMAN
|
|
David E. Bergman
|
|
Chief Financial Officer
|
|
/s/ K
EVIN
A. P
LANK
|
|
Kevin A. Plank
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
|
/s/ D
AVID
E. B
ERGMAN
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David E. Bergman
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Chief Financial Officer
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