þ
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ANNUAL 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
|
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52-1990078
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(State or other jurisdiction of
incorporation or organization)
|
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(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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Class A Common Stock
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New York Stock Exchange
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Class C Common Stock
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New York Stock Exchange
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(Title of each class)
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(Name of each exchange on which registered)
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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Emerging growth company
¨
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Item 1.
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Item 1A.
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Item 1B.
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Item 2
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Item 3
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Item 4
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Item 5
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Item 6
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Item 7
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Item 7A.
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Item 8
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Item 9
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Item 9A.
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Item 9B.
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Item 10.
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Item 11
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Item 12
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Item 13.
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Item 14.
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Item 15.
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Item 16
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Form 10-K Summary
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N/A
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ITEM 1.
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BUSINESS
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|
Year ended December 31,
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|||||||||||||||||||
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2017
|
|
2016
|
|
2015
|
|||||||||||||||
(In thousands)
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Net Revenues
|
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% of
Net Revenues
|
|
Net Revenues
|
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% of
Net Revenues
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Net Revenues
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% of
Net Revenues
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|||||||||
North America
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$
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3,802,406
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76.5
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%
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$
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4,005,314
|
|
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83.0
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%
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$
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3,455,737
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87.2
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%
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EMEA
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469,997
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9.4
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330,584
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6.9
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203,109
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5.1
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|||
Asia-Pacific
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433,647
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8.7
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268,607
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5.6
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144,877
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3.7
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|||
Latin America
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181,324
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3.6
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141,793
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2.9
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106,175
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2.7
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|||
Connected Fitness
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89,179
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1.8
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80,447
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1.6
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53,415
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1.3
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|||
Intersegment Eliminations
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—
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—
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(1,410
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)
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—
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—
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—
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|||
Total net revenues
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$
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4,976,553
|
|
|
100.0
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%
|
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$
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4,825,335
|
|
|
100.0
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%
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$
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3,963,313
|
|
|
100.0
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%
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ITEM 1A.
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RISK FACTORS
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•
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changes in general economic or market conditions that could affect overall consumer spending or our industry;
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•
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changes to the financial health of our customers;
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•
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our ability to successfully execute our long-term strategies;
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•
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our ability to successfully execute any restructuring plans and realize expected benefits;
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•
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our ability to effectively drive operational efficiency in our business;
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•
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our ability to manage the increasingly complex operations of our global business;
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•
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our ability to comply with existing trade and other regulations, and the potential impact of new trade and tax regulations on our profitability;
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•
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our ability to effectively develop and launch new, innovative and updated products;
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•
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our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands;
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•
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any disruptions, delays or deficiencies in the design, implementation or application of our new global operating and financial reporting information technology system;
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•
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increased competition causing us to lose market share or reduce the prices of our products or to increase significantly our marketing efforts;
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•
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fluctuations in the costs of our products;
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•
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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;
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•
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our ability to further expand our business globally and to drive brand awareness and consumer acceptance of our products in other countries;
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•
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our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results;
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•
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our ability to successfully manage or realize expected results from acquisitions and other significant investments or capital expenditures;
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•
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risks related to foreign currency exchange rate fluctuations;
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•
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our ability to effectively market and maintain a positive brand image;
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•
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the availability, integration and effective operation of information systems and other technology, as well as any potential interruption of such systems or technology;
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•
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risks related to data security or privacy breaches;
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•
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our ability to raise additional capital required to grow our business on terms acceptable to us;
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•
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our potential exposure to litigation and other proceedings; and
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•
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our ability to attract key talent and retain the services of our senior management and key employees.
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•
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an increase or decrease in consumer demand for our products;
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•
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our failure to accurately forecast consumer acceptance for our new products;
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•
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product introductions by competitors;
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•
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unanticipated changes in general market conditions or other factors, which may result in cancellations of advance orders or a reduction or increase in the rate of reorders or at-once orders placed by retailers;
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•
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the impact on consumer demand due to unseasonable weather conditions;
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•
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weakening of economic conditions or consumer confidence in future economic conditions, which could reduce demand for discretionary items, such as our products; and
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•
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terrorism or acts of war, or the threat thereof, or political or labor instability or unrest which could adversely affect consumer confidence and spending or interrupt production and distribution of product and raw materials.
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•
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quickly adapting to changes in customer requirements or consumer preferences;
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•
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readily taking advantage of acquisition and other opportunities;
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•
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discounting excess inventory that has been written down or written off;
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•
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devoting resources to the marketing and sale of their products, including significant advertising, media placement, partnerships and product endorsement;
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•
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adopting aggressive pricing policies; and
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•
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engaging in lengthy and costly intellectual property and other disputes.
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•
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political or labor unrest, terrorism and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured;
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•
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currency exchange fluctuations;
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•
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the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, trade restrictions and restrictions on the transfer of funds, as well as rules and regulations regarding climate change;
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•
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reduced protection for intellectual property rights in some countries;
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•
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disruptions or delays in shipments; and
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•
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changes in local economic conditions in countries where our manufacturers and suppliers are located.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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ITEM 3.
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LEGAL PROCEEDINGS
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Name
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Age
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Position
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Kevin A. Plank
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45
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Chief Executive Officer and Chairman of the Board
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David E. Bergman
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45
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Chief Financial Officer
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Colin Browne
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54
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Chief Supply Chain Officer
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Kerry D. Chandler
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53
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Chief Human Resources Officer
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Kevin Eskridge
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41
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Chief Product Officer
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Paul Fipps
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45
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Chief Technology Officer
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Patrik Frisk
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55
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President and Chief Operating Officer
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Jason LaRose
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44
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President of North America
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Karl-Heinz Maurath
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56
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Chief Revenue Officer
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John Stanton
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57
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General Counsel and Corporate Secretary
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ITEM 4.
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MINE SAFETY DISCLOSURES
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
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High
|
|
Low
|
||||
2017
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||||
First Quarter (January 1 – March 31)
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$
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31.06
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$
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18.40
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Second Quarter (April 1 – June 30)
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23.46
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|
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18.35
|
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Third Quarter (July 1 – September 30)
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22.37
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|
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15.92
|
|
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Fourth Quarter (October 1 – December 31)
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17.61
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11.40
|
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2016
|
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|
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||||
First Quarter (January 1 – March 31)
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$
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43.42
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|
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$
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31.62
|
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Second Quarter (April 1 – June 30)
|
|
47.95
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|
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35.35
|
|
||
Third Quarter (July 1 – September 30)
|
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44.68
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|
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37.23
|
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Fourth Quarter (October 1 – December 31)
|
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39.20
|
|
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29.00
|
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High
|
|
Low
|
||||
2017
|
|
|
|
|
||||
First Quarter (January 1 – March 31)
|
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$
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27.64
|
|
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$
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17.05
|
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Second Quarter (April 1 – June 30)
|
|
21.81
|
|
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17.21
|
|
||
Third Quarter (July 1 – September 30)
|
|
20.60
|
|
|
14.80
|
|
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Fourth Quarter (October 1 – December 31)
|
|
16.02
|
|
|
10.36
|
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||
2016
|
|
|
|
|
|
|
||
First Quarter (January 1 – March 31)
|
|
—
|
|
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—
|
|
||
Second Quarter (April 1 – June 30)
|
|
46.20
|
|
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31.31
|
|
||
Third Quarter (July 1 – September 30)
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42.94
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|
|
33.16
|
|
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Fourth Quarter (October 1 – December 31)
|
|
34.29
|
|
|
23.51
|
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Plan Category
|
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Class of Common Stock
|
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Number of
securities to be issued upon exercise of outstanding options, warrants and rights (a) |
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Weighted-average
exercise price of outstanding options, warrants and rights (b) |
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Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
||||
Equity compensation plans approved by security holders
|
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Class A
|
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3,240,620
|
|
|
$
|
11.09
|
|
|
10,593,082
|
|
Equity compensation plans approved by security holders
|
|
Class C
|
|
11,270,848
|
|
|
$
|
13.86
|
|
|
16,724,610
|
|
Equity compensation plans not approved by security holders
|
|
Class A
|
|
2,079,385
|
|
|
$
|
4.66
|
|
|
—
|
|
Equity compensation plans not approved by security holders
|
|
Class C
|
|
2,394,352
|
|
|
$
|
4.59
|
|
|
—
|
|
|
12/31/2012
|
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
||||||||||||
Under Armour, Inc.
|
$
|
100.00
|
|
|
$
|
179.97
|
|
|
$
|
279.97
|
|
|
$
|
332.32
|
|
|
$
|
231.84
|
|
|
$
|
115.16
|
|
S&P 500
|
$
|
100.00
|
|
|
$
|
132.39
|
|
|
$
|
150.51
|
|
|
$
|
152.59
|
|
|
$
|
170.84
|
|
|
$
|
208.14
|
|
S&P 500 Apparel, Accessories & Luxury Goods
|
$
|
100.00
|
|
|
$
|
124.93
|
|
|
$
|
126.16
|
|
|
$
|
96.17
|
|
|
$
|
85.31
|
|
|
$
|
102.77
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
|
At December 31,
|
||||||||||||||||||
(In thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Cash and cash equivalents
|
|
$
|
312,483
|
|
|
$
|
250,470
|
|
|
$
|
129,852
|
|
|
$
|
593,175
|
|
|
$
|
347,489
|
|
Working capital (1)
|
|
1,277,304
|
|
|
1,279,337
|
|
|
1,019,953
|
|
|
1,127,772
|
|
|
702,181
|
|
|||||
Inventories
|
|
1,158,548
|
|
|
917,491
|
|
|
783,031
|
|
|
536,714
|
|
|
469,006
|
|
|||||
Total assets
|
|
4,006,367
|
|
|
3,644,331
|
|
|
2,865,970
|
|
|
2,092,428
|
|
|
1,576,369
|
|
|||||
Total debt, including current maturities
|
|
917,046
|
|
|
817,388
|
|
|
666,070
|
|
|
281,546
|
|
|
151,551
|
|
|||||
Total stockholders’ equity
|
|
$
|
2,018,642
|
|
|
$
|
2,030,900
|
|
|
$
|
1,668,222
|
|
|
$
|
1,350,300
|
|
|
$
|
1,053,354
|
|
(1)
|
Working capital is defined as current assets minus current liabilities.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Net revenues
increased
3%
.
|
•
|
Wholesale revenue
decreased
3%
and Direct-to-Consumer revenues
increased
14%
.
|
•
|
Apparel, footwear and accessories revenue
increased
2%
,
3%
and
10%
, respectively.
|
•
|
Revenue in our North America segment
decreased
5%
. Revenue in our Asia-Pacific, EMEA and Latin America segments grew
61%
,
42%
and
28%
, respectively, with
11%
growth in our Connected Fitness segment.
|
•
|
Selling, general and administrative expense
increased
14%
.
|
•
|
Gross margin
decreased
140
basis points.
|
•
|
Up to $105.0 million in cash charges, consisting of up to: $55.0 million in facility and lease terminations and $50.0 million in contract termination and other restructuring charges; and
|
•
|
Up to $25.0 million in non-cash charges comprised of approximately $10.0 million of inventory related charges and approximately $15.0 million of intangibles and other asset related impairments.
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net revenues
|
|
$
|
4,976,553
|
|
|
$
|
4,825,335
|
|
|
$
|
3,963,313
|
|
Cost of goods sold
|
|
2,737,830
|
|
|
2,584,724
|
|
|
2,057,766
|
|
|||
Gross profit
|
|
2,238,723
|
|
|
2,240,611
|
|
|
1,905,547
|
|
|||
Selling, general and administrative expenses
|
|
2,086,831
|
|
|
1,823,140
|
|
|
1,497,000
|
|
|||
Restructuring and impairment charges
|
|
124,049
|
|
|
—
|
|
|
—
|
|
|||
Income from operations
|
|
27,843
|
|
|
417,471
|
|
|
408,547
|
|
|||
Interest expense, net
|
|
(34,538
|
)
|
|
(26,434
|
)
|
|
(14,628
|
)
|
|||
Other expense, net
|
|
(3,614
|
)
|
|
(2,755
|
)
|
|
(7,234
|
)
|
|||
Income (loss) before income taxes
|
|
(10,309
|
)
|
|
388,282
|
|
|
386,685
|
|
|||
Provision for income taxes
|
|
37,951
|
|
|
131,303
|
|
|
154,112
|
|
|||
Net income (loss)
|
|
$
|
(48,260
|
)
|
|
$
|
256,979
|
|
|
$
|
232,573
|
|
Adjustment payment to Class C capital stockholders
|
|
$
|
—
|
|
|
$
|
59,000
|
|
|
$
|
—
|
|
Net income (loss) available to all stockholders
|
|
$
|
(48,260
|
)
|
|
$
|
197,979
|
|
|
$
|
232,573
|
|
|
|
Year Ended December 31,
|
|||||||
(As a percentage of net revenues)
|
|
2017
|
|
2016
|
|
2015
|
|||
Net revenues
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
|
55.0
|
|
|
53.6
|
|
|
51.9
|
|
Gross profit
|
|
45.0
|
|
|
46.4
|
|
|
48.1
|
|
Selling, general and administrative expenses
|
|
41.9
|
|
|
37.8
|
|
|
37.8
|
|
Restructuring and impairment charges
|
|
2.5
|
|
|
—
|
|
|
—
|
|
Income from operations
|
|
0.6
|
|
|
8.6
|
|
|
10.3
|
|
Interest expense, net
|
|
(0.7
|
)
|
|
(0.5
|
)
|
|
(0.4
|
)
|
Other expense, net
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
Income (loss) before income taxes
|
|
(0.2
|
)
|
|
8.0
|
|
|
9.7
|
|
Provision for income taxes
|
|
0.8
|
|
|
2.7
|
|
|
3.8
|
|
Net income (loss)
|
|
(1.0
|
)
|
|
5.3
|
|
|
5.9
|
|
Adjustment payment to Class C capital stockholders
|
|
—
|
|
|
1.2
|
|
|
—
|
|
Net income (loss) available to all stockholders
|
|
(1.0
|
)%
|
|
4.1
|
%
|
|
5.9
|
%
|
|
|
Year Ended December 31,
|
|||||||||||||
(In thousands)
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Apparel
|
|
$
|
3,287,121
|
|
|
$
|
3,229,142
|
|
|
$
|
57,979
|
|
|
1.8
|
%
|
Footwear
|
|
1,037,840
|
|
|
1,010,693
|
|
|
27,147
|
|
|
2.7
|
|
|||
Accessories
|
|
445,838
|
|
|
406,614
|
|
|
39,224
|
|
|
9.6
|
|
|||
Total net sales
|
|
4,770,799
|
|
|
4,646,449
|
|
|
124,350
|
|
|
2.7
|
|
|||
License
|
|
116,575
|
|
|
99,849
|
|
|
16,726
|
|
|
16.8
|
|
|||
Connected Fitness
|
|
89,179
|
|
|
80,447
|
|
|
8,732
|
|
|
10.9
|
|
|||
Intersegment Eliminations
|
|
—
|
|
|
(1,410
|
)
|
|
1,410
|
|
|
(100.0
|
)
|
|||
Total net revenues
|
|
$
|
4,976,553
|
|
|
$
|
4,825,335
|
|
|
$
|
151,218
|
|
|
3.1
|
%
|
•
|
Apparel unit sales growth in multiple categories led by men's and women's training and golf; and
|
•
|
Accessories unit sales growth in multiple categories led by men's training; and
|
•
|
Footwear unit sales growth in multiple categories led by running.
|
•
|
an approximate 190 basis point decrease due to inventory management efforts including higher promotions and increased air freight; and
|
•
|
an approximate 20 basis point decrease due to our international business representing a higher percentage of sales;
|
•
|
an approximate 50 basis point increase driven primarily by favorable product input costs; and
|
•
|
an approximate 30 basis point increase driven primarily by favorable channel mix with increased sales in our direct-to-consumer channel.
|
•
|
Marketing costs
increased
$87.6 million
to
$565.1 million
in
2017
from $
477.5 million
in
2016
. This increase was primarily due to increased marketing spend in connection with the growth of our international business and in connection with our collegiate and professional athlete sponsorships. As a percentage of net revenues, marketing costs
increased
to
11.4%
in
2017
from
9.9%
in
2016
.
|
•
|
Other costs
increased
$176.1 million
to
$1,521.7 million
in
2017
from
$1,345.6 million
in
2016
. This increase was primarily driven by higher costs incurred for the continued expansion of our direct to consumer distribution channel and international business. This increase was partially offset by savings from our 2017 restructuring plan. As a percentage of net revenues, other costs increased to
30.6%
in
2017
from
27.9%
in
2016
.
|
|
|
Year Ended December 31,
|
|||||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Apparel
|
|
$
|
3,229,142
|
|
|
$
|
2,801,062
|
|
|
$
|
428,080
|
|
|
15.3
|
%
|
Footwear
|
|
1,010,693
|
|
|
677,744
|
|
|
332,949
|
|
|
49.1
|
|
|||
Accessories
|
|
406,614
|
|
|
346,885
|
|
|
59,729
|
|
|
17.2
|
|
|||
Total net sales
|
|
4,646,449
|
|
|
3,825,691
|
|
|
820,758
|
|
|
21.5
|
|
|||
License revenues
|
|
99,849
|
|
|
84,207
|
|
|
15,642
|
|
|
18.6
|
|
|||
Connected Fitness
|
|
80,447
|
|
|
53,415
|
|
|
27,032
|
|
|
50.6
|
|
|||
Intersegment Eliminations
|
|
(1,410
|
)
|
|
—
|
|
|
(1,410
|
)
|
|
(100.0
|
)
|
|||
Total net revenues
|
|
$
|
4,825,335
|
|
|
$
|
3,963,313
|
|
|
$
|
862,022
|
|
|
21.8
|
%
|
•
|
Apparel unit sales growth in multiple categories led by training, golf and basketball; and
|
•
|
Footwear unit sales growth, led by running and basketball.
|
•
|
approximate 120 basis point decrease due to increased liquidation and discounting;
|
•
|
approximate 70 basis point decrease driven by negative sales mix primarily driven by the continued strength of our accelerated footwear growth; and
|
•
|
approximate 40 basis point decrease due to strengthening of the U.S. dollar negatively impacting our gross margins within our business outside the United States.
|
•
|
approximate 30 basis point increase driven primarily by favorable product input costs in our North America and international businesses; and
|
•
|
approximate 40 basis point increase driven primarily by lower air freight costs.
|
•
|
Marketing costs increased $59.7 million to $477.5 million in 2016 from $417.8 million in 2015. This increase was primarily due to key North American retail marketing campaigns, our investments in sponsorships and increased marketing in connection with the growth of our international business. This increase was offset by lower incentive compensation expense for marketing employees. As a percentage of net revenues, marketing costs decreased to 9.9% in 2016 from 10.5% in 2015.
|
•
|
Other costs increased $266.4 million to $1,345.6 million in 2016 from $1,079.2 million in 2015. 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 for our factory house and brand house stores. Additionally, we incurred $17.0 million in expenses related to the liquidation of The Sports Authority, comprised of $15.2 million in bad debt expense and $1.8 million of in-store fixture impairment. This increase was offset by lower incentive compensation expense. As a percentage of net revenues, other costs increased to 27.9% in 2016 from 27.2% in 2015.
|
|
|
Year Ended December 31,
|
|||||||||||||
(In thousands)
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
$
|
3,802,406
|
|
|
$
|
4,005,314
|
|
|
$
|
(202,908
|
)
|
|
(5.1
|
)%
|
EMEA
|
|
469,997
|
|
|
330,584
|
|
|
139,413
|
|
|
42.2
|
|
|||
Asia-Pacific
|
|
433,647
|
|
|
268,607
|
|
|
165,040
|
|
|
61.4
|
|
|||
Latin America
|
|
181,324
|
|
|
141,793
|
|
|
39,531
|
|
|
27.9
|
|
|||
Connected Fitness
|
|
89,179
|
|
|
80,447
|
|
|
8,732
|
|
|
10.9
|
|
|||
Intersegment Eliminations
|
|
—
|
|
|
(1,410
|
)
|
|
1,410
|
|
|
100.0
|
|
|||
Total net revenues
|
|
$
|
4,976,553
|
|
|
$
|
4,825,335
|
|
|
$
|
151,218
|
|
|
3.1
|
%
|
•
|
Net revenues in our North America operating segment
decreased
$202.9 million
to
$3,802.4 million
in
2017
from
$4,005.3 million
in
2016
primarily due to lower sales in our wholesale channel driven by lower demand.
|
•
|
Net revenues in our EMEA operating segment
increased
$139.4 million
to
$470.0 million
in
2017
from
$330.6 million
in
2016
primarily due to unit sales growth to wholesale partners in Germany and the United Kingdom and our our first full year of sales in Russia.
|
•
|
Net revenues in our Asia-Pacific operating segment
increased
$165.0 million
to
$433.6 million
in
2017
from
$268.6 million
in
2016
primarily due to growth in our direct-to-consumer channel.
|
•
|
Net revenues in our Latin America operating segment
increased
$39.5 million
to
$181.3 million
in
2017
from
$141.8 million
in
2016
primarily due to unit sales growth to wholesale partners and through our direct to consumer channels in Mexico, Chile, and Brazil.
|
•
|
Net revenues in our Connected Fitness operating segment
increased
$8.7 million
to
$89.2 million
in
2017
from
$80.4 million
in
2016
primarily driven by increased subscribers on our fitness applications and higher licensing revenue.
|
|
|
Year Ended December 31,
|
|||||||||||||
(In thousands)
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
$
|
20,179
|
|
|
$
|
408,424
|
|
|
$
|
(388,245
|
)
|
|
(95.1
|
)%
|
EMEA
|
|
17,976
|
|
|
11,420
|
|
|
6,556
|
|
|
57.4
|
|
|||
Asia-Pacific
|
|
82,039
|
|
|
68,338
|
|
|
13,701
|
|
|
20.0
|
|
|||
Latin America
|
|
(37,085
|
)
|
|
(33,891
|
)
|
|
(3,194
|
)
|
|
(9.4
|
)
|
|||
Connected Fitness
|
|
(55,266
|
)
|
|
(36,820
|
)
|
|
(18,446
|
)
|
|
(50.1
|
)
|
|||
Total operating income
|
|
$
|
27,843
|
|
|
$
|
417,471
|
|
|
$
|
(389,628
|
)
|
|
(93.3
|
)%
|
•
|
Operating income in our North America operating segment
decreased
$388.2 million
to
$20.2 million
in
2017
from
$408.4 million
in
2016
primarily due to the decreases in net sales and gross margins discussed above and $63.2 million in restructuring and impairment charges.
|
•
|
Operating income in our EMEA operating segment
increased
$6.6 million
to
$18.0 million
in
2017
from
$11.4 million
in
2016
primarily due to sales growth discussed above, which was partially offset by continued investment in operations.
|
•
|
Operating income in our Asia-Pacific operating segment
increased
$13.7 million
to
$82.0 million
in
2017
from
$68.3 million
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 increased
$3.2 million
to
$37.1 million
in
2017
from
$33.9 million
in
2016
primarily due to $11.5 million in restructuring and impairment charges. This increase in operating loss was offset by sales growth discussed above.
|
•
|
Operating loss in our Connected Fitness segment increased
$18.4 million
to
$55.3 million
in
2017
from
$36.8 million
in
2016
primarily due to $47.8 million in restructuring and impairment charges. This increase in operating loss was offset by sales growth discussed above and savings from our 2017 restructuring plan.
|
|
|
Year Ended December 31,
|
|||||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
$
|
4,005,314
|
|
|
$
|
3,455,737
|
|
|
$
|
549,577
|
|
|
15.9
|
%
|
EMEA
|
|
330,584
|
|
|
203,109
|
|
|
127,475
|
|
|
62.8
|
|
|||
Asia-Pacific
|
|
268,607
|
|
|
144,877
|
|
|
123,730
|
|
|
85.4
|
|
|||
Latin America
|
|
141,793
|
|
|
106,175
|
|
|
35,618
|
|
|
33.5
|
|
|||
Connected Fitness
|
|
80,447
|
|
|
53,415
|
|
|
27,032
|
|
|
50.6
|
|
|||
Intersegment Eliminations
|
|
(1,410
|
)
|
|
—
|
|
|
(1,410
|
)
|
|
(100.0
|
)
|
|||
Total net revenues
|
|
$
|
4,825,335
|
|
|
$
|
3,963,313
|
|
|
$
|
862,022
|
|
|
21.8
|
%
|
•
|
Net revenues in our North America operating segment increased $549.6 million to $4,005.3 million in 2016 from $3,455.7 million in 2015 primarily due to the items discussed above in the Consolidated Results of Operations.
|
•
|
Net revenues in our EMEA operating segment increased $127.5 million to $330.6 million in 2016 from $203.1 million in 2015 primarily due to unit sales growth to wholesale partners in Germany and the United Kingdom.
|
•
|
Net revenues in our Asia-Pacific operating segment increased $123.7 million to $268.6 million in 2016 from $144.9 million in 2015 primarily due to our first e-commerce site in our direct to consumer channel and an increase in mono-branded partner stores which are included in our wholesale channel.
|
•
|
Net revenues in our Latin America operating segment increased $35.6 million to $141.8 million in 2016 from $106.2 million in 2015 primarily due an increase in company operated stores in our direct to consumer channel and partner doors in our wholesale channel.
|
•
|
Net revenues in our Connected Fitness operating segment increased $27.0 million to $80.4 million in 2016 from $53.4 million in 2015 primarily driven by increased advertising and subscribers on our fitness applications.
|
|
|
Year Ended December 31,
|
|||||||||||||
(In thousands)
|
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
North America
|
|
$
|
408,424
|
|
|
$
|
460,961
|
|
|
$
|
(52,537
|
)
|
|
(11.4
|
)%
|
EMEA
|
|
11,420
|
|
|
3,122
|
|
|
8,298
|
|
|
265.8
|
|
|||
Asia-Pacific
|
|
68,338
|
|
|
36,358
|
|
|
31,980
|
|
|
88.0
|
|
|||
Latin America
|
|
(33,891
|
)
|
|
(30,593
|
)
|
|
(3,298
|
)
|
|
10.8
|
|
|||
Connected Fitness
|
|
(36,820
|
)
|
|
(61,301
|
)
|
|
24,481
|
|
|
39.9
|
|
|||
Total operating income
|
|
$
|
417,471
|
|
|
$
|
408,547
|
|
|
$
|
8,924
|
|
|
2.2
|
%
|
•
|
Operating income in our North America operating segment decreased $52.5 million to $408.4 million in 2016 from $461.0 million in 2015 primarily due to decreases in gross margin discussed above in the Consolidated Results of Operations and $17.0 million in expenses related to the liquidation of The Sports Authority, comprised of $15.2 million in bad debt expense and $1.8 million of in-store fixture impairment. In addition, this decrease reflects the movement of $11.1 million in expenses resulting from a strategic shift in headcount supporting our global business from our Connected Fitness operating segment to North America. This decrease is partially offset by the increases in revenue discussed above in the Consolidated Results of Operations.
|
•
|
Operating income in our EMEA operating segment increased $8.3 million to $11.4 million in 2016 from $3.1 million in 2015 primarily due to sales growth discussed above and reductions in incentive compensation. This increase was offset by investments in sports marketing and infrastructure for future growth.
|
•
|
Operating income in our Asia-Pacific operating segment increased $31.9 million to $68.3 million in 2016 from $36.4 million in 2015 primarily due to sales growth discussed above and reductions in incentive compensation. 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 increased $3.3 million to $33.9 million in 2016 from $30.6 million in 2015 primarily due to increased investments to support growth in the region and the economic challenges in Brazil during the period. This increase in operating loss was offset by sales growth discussed above and reductions in incentive compensation.
|
•
|
Operating loss in our Connected Fitness segment decreased $24.5 million to $36.8 million in 2016 from $61.3 million in 2015 primarily driven by sales growth discussed above.
|
|
|
Quarter Ended (unaudited)
|
||||||||||||||||||||||||||||||
(In thousands)
|
|
3/31/2016
|
|
6/30/2016
|
|
9/30/2016
|
|
12/31/2016
|
|
3/31/2017
|
|
6/30/2017
|
|
9/30/2017
|
|
12/31/2017
|
||||||||||||||||
Net revenues
|
|
$
|
1,047,702
|
|
|
$
|
1,000,783
|
|
|
$
|
1,471,573
|
|
|
$
|
1,305,277
|
|
|
$
|
1,117,331
|
|
|
$
|
1,088,245
|
|
|
$
|
1,405,615
|
|
|
$
|
1,365,362
|
|
Gross profit
|
|
480,636
|
|
|
477,647
|
|
|
698,624
|
|
|
583,704
|
|
|
505,423
|
|
|
498,246
|
|
|
645,350
|
|
|
589,704
|
|
||||||||
Marketing SG&A expenses
|
|
122,483
|
|
|
107,835
|
|
|
139,517
|
|
|
107,665
|
|
|
128,336
|
|
|
136,071
|
|
|
143,919
|
|
|
156,800
|
|
||||||||
Other SG&A expenses
|
|
323,270
|
|
|
350,434
|
|
|
359,797
|
|
|
312,139
|
|
|
369,552
|
|
|
363,860
|
|
|
354,254
|
|
|
434,039
|
|
||||||||
Restructuring and impairment charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,100
|
|
|
84,997
|
|
|
35,952
|
|
||||||||
Income (loss) from operations
|
|
$
|
34,883
|
|
|
$
|
19,378
|
|
|
$
|
199,310
|
|
|
$
|
163,900
|
|
|
$
|
7,536
|
|
|
$
|
(4,785
|
)
|
|
$
|
62,180
|
|
|
$
|
(37,088
|
)
|
(As a percentage of annual totals)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net revenues
|
|
21.7
|
%
|
|
20.7
|
%
|
|
30.5
|
%
|
|
27.1
|
%
|
|
22.5
|
%
|
|
21.9
|
%
|
|
28.2
|
%
|
|
27.4
|
%
|
||||||||
Gross profit
|
|
21.5
|
%
|
|
21.3
|
%
|
|
31.2
|
%
|
|
26.1
|
%
|
|
22.6
|
%
|
|
22.3
|
%
|
|
28.8
|
%
|
|
26.3
|
%
|
||||||||
Marketing SG&A expenses
|
|
25.7
|
%
|
|
22.6
|
%
|
|
29.2
|
%
|
|
22.5
|
%
|
|
22.7
|
%
|
|
24.1
|
%
|
|
25.5
|
%
|
|
27.7
|
%
|
||||||||
Other SG&A expenses
|
|
24.0
|
%
|
|
26.0
|
%
|
|
26.7
|
%
|
|
23.2
|
%
|
|
24.3
|
%
|
|
23.9
|
%
|
|
23.3
|
%
|
|
28.5
|
%
|
||||||||
Restructuring and impairment charges
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
2.5
|
%
|
|
68.5
|
%
|
|
29.0
|
%
|
||||||||
Income (loss) from operations
|
|
8.4
|
%
|
|
4.6
|
%
|
|
47.7
|
%
|
|
39.3
|
%
|
|
27.1
|
%
|
|
(17.2
|
)%
|
|
223.3
|
%
|
|
(133.2
|
)%
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
234,063
|
|
|
$
|
364,368
|
|
|
$
|
14,541
|
|
Investing activities
|
|
(282,987
|
)
|
|
(381,139
|
)
|
|
(847,475
|
)
|
|||
Financing activities
|
|
106,759
|
|
|
146,114
|
|
|
381,433
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
4,178
|
|
|
(8,725
|
)
|
|
(11,822
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
62,013
|
|
|
$
|
120,618
|
|
|
$
|
(463,323
|
)
|
•
|
an increase in accounts payable of
$225.0 million
in
2016
as compared to
2015
, primarily due to the timing of inventory payments as well as significant increases in inventory in-transit in the current period, and
|
•
|
a decrease in inventory investments of
$130.5 million
in
2016
as compared to
2015
, primarily due to early deliveries of product to meet key seasonal floor set dates in the prior period, as well as strategic investments in auto-replenishment products in
2015
; partially offset by
|
•
|
a larger increase in accounts receivable of
$58.0 million
in
2016
as compared to
2015
, primarily due to the timing of shipments and a higher proportion of sales to our international customers with longer payment terms compared to the prior year.
|
|
|
Payments Due by Period
|
||||||||||||||||||
(in thousands)
|
|
Total
|
|
Less Than
1 Year
|
|
1 to 3 Years
|
|
3 to 5 Years
|
|
More Than
5 Years
|
||||||||||
Contractual obligations
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long term debt obligations (1)
|
|
$
|
980,585
|
|
|
$
|
51,925
|
|
|
$
|
134,932
|
|
|
$
|
125,478
|
|
|
$
|
668,250
|
|
Lease obligations (2)
|
|
1,489,469
|
|
|
140,257
|
|
|
297,759
|
|
|
279,406
|
|
|
772,047
|
|
|||||
Product purchase obligations (3)
|
|
1,093,665
|
|
|
1,093,665
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Sponsorships and other (4)
|
|
1,170,848
|
|
|
150,428
|
|
|
261,191
|
|
|
241,493
|
|
|
517,736
|
|
|||||
Total
|
|
$
|
4,734,567
|
|
|
$
|
1,436,275
|
|
|
$
|
693,882
|
|
|
$
|
646,377
|
|
|
$
|
1,958,033
|
|
(1)
|
Includes estimated interest payments based on applicable fixed and currently effective floating interest rates as of
December 31, 2017
, timing of scheduled payments, and the term of the debt obligations.
|
(2)
|
Includes the minimum payments for lease obligations. The lease obligations do not include any contingent rent expense we may incur at our brand and factory house stores based on future sales above a specified minimum or payments made for maintenance, insurance and real estate taxes. Contingent rent expense was
$15.5 million
for the year ended
December 31, 2017
.
|
(3)
|
We generally place orders with our manufacturers at least three to four months in advance of expected future sales. The amounts listed for product purchase obligations primarily represent our open production purchase orders with our manufacturers for our apparel, footwear and accessories, including expected inbound freight, duties and other costs. These open purchase orders specify fixed or minimum quantities of products at determinable prices. The product purchase obligations also includes fabric commitments with our suppliers, which secure a portion of our material needs for future seasons. The reported amounts exclude product purchase liabilities included in accounts payable as of
December 31, 2017
.
|
(4)
|
Includes sponsorships with professional teams, professional leagues, colleges and universities, individual athletes, athletic events and other marketing commitments in order to promote our brand. Some of these sponsorship agreements provide for additional performance incentives and product supply obligations. It is not possible to determine how much we will spend on product supply obligations on an annual basis as contracts generally do not stipulate specific cash amounts to be spent on products. The amount of product provided to these sponsorships depends on many factors including general playing conditions, the number of sporting events in which they participate and our decisions regarding product and marketing initiatives. In addition, it is not possible to determine the performance incentive amounts we may be required to pay under these agreements as they are primarily subject to certain performance based and other variables. The amounts listed above are the fixed minimum amounts required to be paid under these sponsorship agreements. Additionally, these amounts include minimum guaranteed royalty payments to endorsers and licensors based upon a predetermined percent of sales of particular products.
|
•
|
Availability of taxable income in the U.S. federal and certain state NOL carryback periods;
|
•
|
U.S. federal NOLs have an indefinite carryforward period, beginning in 2018 pursuant to the Tax Act;
|
•
|
Definite lived tax attributes with relatively long carryforward periods; a majority from 10 to 20 years;
|
•
|
No history of U.S. federal and state tax attributes expiring unused;
|
•
|
Three year cumulative U.S. federal and state pre-tax income;
|
•
|
Relative low values of pre-tax income required to realized deferred tax assets relative to historic income levels;
|
•
|
Restructuring plans being undertaken to improve profitability;
|
•
|
Availability of prudent and feasible tax planning strategies.
|
•
|
Inherent challenges in forecasting future pre-tax earnings which rely on improved profitability from our restructuring efforts;
|
•
|
The continuing challenge of changes in the U.S. consumer retail business environment;
|
•
|
While relatively long, existence of definite lived tax attributes of certain U.S. federal tax credits and state NOLs;
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
(In thousands)
|
|
Year Ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
||||||||
Unrealized foreign currency exchange rate gains (losses)
|
|
$
|
29,246
|
|
|
$
|
(12,627
|
)
|
|
$
|
(33,359
|
)
|
Realized foreign currency exchange rate gains (losses)
|
|
611
|
|
|
(6,906
|
)
|
|
7,643
|
|
|||
Unrealized derivative gains (losses)
|
|
(1,217
|
)
|
|
729
|
|
|
388
|
|
|||
Realized derivative gains (losses)
|
|
(26,537
|
)
|
|
15,192
|
|
|
16,404
|
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
/s/ K
EVIN
A. P
LANK
|
|
Chairman of the Board of Directors and
Chief Executive Officer
|
Kevin A. Plank
|
|
|
|
|
|
/s/ D
AVID
E
.
B
ERGMAN
|
|
Chief Financial Officer
|
David E. Bergman
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
312,483
|
|
|
$
|
250,470
|
|
Accounts receivable, net
|
609,670
|
|
|
622,685
|
|
||
Inventories
|
1,158,548
|
|
|
917,491
|
|
||
Prepaid expenses and other current assets
|
256,978
|
|
|
174,507
|
|
||
Total current assets
|
2,337,679
|
|
|
1,965,153
|
|
||
Property and equipment, net
|
885,774
|
|
|
804,211
|
|
||
Goodwill
|
555,674
|
|
|
563,591
|
|
||
Intangible assets, net
|
46,995
|
|
|
64,310
|
|
||
Deferred income taxes
|
82,801
|
|
|
136,862
|
|
||
Other long term assets
|
97,444
|
|
|
110,204
|
|
||
Total assets
|
$
|
4,006,367
|
|
|
$
|
3,644,331
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Revolving credit facility, current
|
$
|
125,000
|
|
|
$
|
—
|
|
Accounts payable
|
561,108
|
|
|
409,679
|
|
||
Accrued expenses
|
296,841
|
|
|
208,750
|
|
||
Current maturities of long term debt
|
27,000
|
|
|
27,000
|
|
||
Other current liabilities
|
50,426
|
|
|
40,387
|
|
||
Total current liabilities
|
1,060,375
|
|
|
685,816
|
|
||
Long term debt, net of current maturities
|
765,046
|
|
|
790,388
|
|
||
Other long term liabilities
|
162,304
|
|
|
137,227
|
|
||
Total liabilities
|
1,987,725
|
|
|
1,613,431
|
|
||
Commitments and contingencies (see Note 6)
|
|
|
|
|
|
||
Stockholders’ equity
|
|
|
|
||||
Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of December 31, 2017, and 2016; 185,257,423 shares issued and outstanding as of December 31, 2017, and 183,814,911 shares issued and outstanding as of December 31, 2016.
|
61
|
|
|
61
|
|
||
Class B Convertible Common Stock, $0.0003 1/3 par value; 34,450,000 shares authorized, issued and outstanding as of December 31, 2017, and December 31, 2016.
|
11
|
|
|
11
|
|
||
Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of December 31, 2017, and 2016; 222,375,079 shares issued and outstanding as of December 31, 2017, and 220,174,048 shares issued and outstanding as of December 31, 2016.
|
74
|
|
|
73
|
|
||
Additional paid-in capital
|
872,266
|
|
|
823,484
|
|
||
Retained earnings
|
1,184,441
|
|
|
1,259,414
|
|
||
Accumulated other comprehensive loss
|
(38,211
|
)
|
|
(52,143
|
)
|
||
Total stockholders’ equity
|
2,018,642
|
|
|
2,030,900
|
|
||
Total liabilities and stockholders’ equity
|
$
|
4,006,367
|
|
|
$
|
3,644,331
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net revenues
|
$
|
4,976,553
|
|
|
$
|
4,825,335
|
|
|
$
|
3,963,313
|
|
Cost of goods sold
|
2,737,830
|
|
|
2,584,724
|
|
|
2,057,766
|
|
|||
Gross profit
|
2,238,723
|
|
|
2,240,611
|
|
|
1,905,547
|
|
|||
Selling, general and administrative expenses
|
2,086,831
|
|
|
1,823,140
|
|
|
1,497,000
|
|
|||
Restructuring and impairment charges
|
124,049
|
|
|
—
|
|
|
—
|
|
|||
Income from operations
|
27,843
|
|
|
417,471
|
|
|
408,547
|
|
|||
Interest expense, net
|
(34,538
|
)
|
|
(26,434
|
)
|
|
(14,628
|
)
|
|||
Other expense, net
|
(3,614
|
)
|
|
(2,755
|
)
|
|
(7,234
|
)
|
|||
Income (loss) before income taxes
|
(10,309
|
)
|
|
388,282
|
|
|
386,685
|
|
|||
Income tax expense
|
37,951
|
|
|
131,303
|
|
|
154,112
|
|
|||
Net income (loss)
|
(48,260
|
)
|
|
256,979
|
|
|
232,573
|
|
|||
Adjustment payment to Class C capital stockholders
|
—
|
|
|
59,000
|
|
|
—
|
|
|||
Net income (loss) available to all stockholders
|
(48,260
|
)
|
|
197,979
|
|
|
232,573
|
|
|||
|
|
|
|
|
|
||||||
Basic net income (loss) per share of Class A and B common stock
|
$
|
(0.11
|
)
|
|
$
|
0.45
|
|
|
$
|
0.54
|
|
Basic net income (loss) per share of Class C common stock
|
$
|
(0.11
|
)
|
|
$
|
0.72
|
|
|
$
|
0.54
|
|
Diluted net income (loss) per share of Class A and B common stock
|
$
|
(0.11
|
)
|
|
$
|
0.45
|
|
|
$
|
0.53
|
|
Diluted net income (loss) per share of Class C common stock
|
$
|
(0.11
|
)
|
|
$
|
0.71
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding Class A and B common stock
|
|||||||||||
Basic
|
219,254
|
|
|
217,707
|
|
|
215,498
|
|
|||
Diluted
|
219,254
|
|
|
221,944
|
|
|
220,868
|
|
|||
|
|
|
|
|
|
||||||
Weighted average common shares outstanding Class C common stock
|
|||||||||||
Basic
|
221,475
|
|
|
218,623
|
|
|
215,498
|
|
|||
Diluted
|
221,475
|
|
|
222,904
|
|
|
220,868
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss)
|
$
|
(48,260
|
)
|
|
$
|
256,979
|
|
|
$
|
232,573
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
23,357
|
|
|
(13,798
|
)
|
|
(31,816
|
)
|
|||
Unrealized gain (loss) on cash flow hedge, net of tax of $(5,668), $3,346 and $415 for the years ended December 31, 2017, 2016, and 2015 respectively.
|
(16,624
|
)
|
|
9,084
|
|
|
1,611
|
|
|||
Gain (loss) on intra-entity foreign currency transactions
|
7,199
|
|
|
(2,416
|
)
|
|
—
|
|
|||
Total other comprehensive income (loss)
|
13,932
|
|
|
(7,130
|
)
|
|
(30,205
|
)
|
|||
Comprehensive income (loss)
|
$
|
(34,328
|
)
|
|
$
|
249,849
|
|
|
$
|
202,368
|
|
|
Class A
Common Stock |
|
Class B
Convertible Common Stock |
|
Class C
Common Stock |
|
Additional Paid-in-Capital
|
|
Retained
Earnings |
|
Accumulated Other Comprehensive Income (loss)
|
|
Total
Equity |
||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||||
Balance as of December 31, 2014
|
177,296
|
|
|
$
|
59
|
|
|
36,600
|
|
|
$
|
12
|
|
|
213,896
|
|
|
71
|
|
|
$
|
508,279
|
|
|
$
|
856,687
|
|
|
$
|
(14,808
|
)
|
|
$
|
1,350,300
|
|
Exercise of stock options
|
360
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
360
|
|
|
—
|
|
|
2,852
|
|
|
—
|
|
|
—
|
|
|
2,852
|
|
||||||
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements
|
(172
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|
—
|
|
|
(12,727
|
)
|
|
—
|
|
|
(12,727
|
)
|
||||||
Issuance of Class A Common Stock, net of forfeitures
|
1,996
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1,996
|
|
|
1
|
|
|
19,134
|
|
|
—
|
|
|
—
|
|
|
19,136
|
|
||||||
Class B Convertible Common Stock converted to Class A Common Stock
|
2,150
|
|
|
1
|
|
|
(2,150
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60,376
|
|
|
—
|
|
|
—
|
|
|
60,376
|
|
||||||
Net excess tax benefits from stock-based compensation arrangements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45,917
|
|
|
—
|
|
|
—
|
|
|
45,917
|
|
||||||
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
232,573
|
|
|
(30,205
|
)
|
|
202,368
|
|
||||||
Balance as of December 31, 2015
|
181,630
|
|
|
61
|
|
|
34,450
|
|
|
11
|
|
|
216,080
|
|
|
72
|
|
|
636,558
|
|
|
1,076,533
|
|
|
(45,013
|
)
|
|
1,668,222
|
|
||||||
Exercise of stock options
|
792
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
971
|
|
|
—
|
|
|
6,203
|
|
|
—
|
|
|
—
|
|
|
6,203
|
|
||||||
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements
|
(199
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(276
|
)
|
|
—
|
|
|
—
|
|
|
(15,098
|
)
|
|
—
|
|
|
(15,098
|
)
|
||||||
Issuance of Class A Common Stock, net of forfeitures
|
1,592
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,884
|
|
|
—
|
|
|
—
|
|
|
7,884
|
|
||||||
Issuance of Class C Common Stock, net of forfeitures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,852
|
|
|
1
|
|
|
25,834
|
|
|
—
|
|
|
—
|
|
|
25,835
|
|
||||||
Issuance of Class C dividend
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,547
|
|
|
—
|
|
|
56,073
|
|
|
(59,000
|
)
|
|
—
|
|
|
(2,927
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,149
|
|
|
—
|
|
|
—
|
|
|
46,149
|
|
||||||
Net excess tax benefits from stock-based compensation arrangements
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,783
|
|
|
—
|
|
|
—
|
|
|
44,783
|
|
||||||
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
256,979
|
|
|
(7,130
|
)
|
|
249,849
|
|
||||||
Balance as of December 31, 2016
|
183,815
|
|
|
61
|
|
|
34,450
|
|
|
11
|
|
|
220,174
|
|
|
73
|
|
|
823,484
|
|
|
1,259,414
|
|
|
(52,143
|
)
|
|
2,030,900
|
|
|
Class A
Common Stock |
|
Class B
Convertible Common Stock |
|
Class C
Common Stock |
|
Additional Paid-in-Capital
|
|
Retained
Earnings |
|
Accumulated Other Comprehensive Income (loss)
|
|
Total
Equity |
||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||||
Exercise of stock options
|
609
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
556
|
|
|
—
|
|
|
3,664
|
|
|
—
|
|
|
—
|
|
|
3,664
|
|
||||||
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements
|
(65
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(78
|
)
|
|
—
|
|
|
—
|
|
|
(2,781
|
)
|
|
—
|
|
|
(2,781
|
)
|
||||||
Issuance of Class A Common Stock, net of forfeitures
|
898
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of Class C Common Stock, net of forfeitures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,723
|
|
|
1
|
|
|
7,852
|
|
|
—
|
|
|
—
|
|
|
7,853
|
|
||||||
Impact of adoption of accounting standard updates
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,666
|
)
|
|
(23,932
|
)
|
|
—
|
|
|
(26,598
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,932
|
|
|
—
|
|
|
—
|
|
|
39,932
|
|
||||||
Comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48,260
|
)
|
|
13,932
|
|
|
(34,328
|
)
|
||||||
Balance as of December 31, 2017
|
185,257
|
|
|
61
|
|
|
34,450
|
|
|
11
|
|
|
222,375
|
|
|
74
|
|
|
872,266
|
|
|
1,184,441
|
|
|
(38,211
|
)
|
|
2,018,642
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(48,260
|
)
|
|
$
|
256,979
|
|
|
$
|
232,573
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities
|
|
|
|
|
|
||||||
Depreciation and amortization
|
173,747
|
|
|
144,770
|
|
|
100,940
|
|
|||
Unrealized foreign currency exchange rate loss (gains)
|
(29,247
|
)
|
|
12,627
|
|
|
33,359
|
|
|||
Impairment charges
|
71,378
|
|
|
—
|
|
|
—
|
|
|||
Amortization of bond premium
|
254
|
|
|
—
|
|
|
—
|
|
|||
Loss on disposal of property and equipment
|
2,313
|
|
|
1,580
|
|
|
549
|
|
|||
Stock-based compensation
|
39,932
|
|
|
46,149
|
|
|
60,376
|
|
|||
Excess tax benefit (loss) from stock-based compensation arrangements
|
(75
|
)
|
|
44,783
|
|
|
45,917
|
|
|||
Deferred income taxes
|
55,910
|
|
|
(43,004
|
)
|
|
(4,426
|
)
|
|||
Changes in reserves and allowances
|
108,757
|
|
|
70,188
|
|
|
40,391
|
|
|||
Changes in operating assets and liabilities (net of acquisitions):
|
|
|
|
|
|
||||||
Accounts receivable
|
(79,106
|
)
|
|
(249,853
|
)
|
|
(191,876
|
)
|
|||
Inventories
|
(222,391
|
)
|
|
(148,055
|
)
|
|
(278,524
|
)
|
|||
Prepaid expenses and other assets
|
(55,503
|
)
|
|
(25,284
|
)
|
|
(76,476
|
)
|
|||
Accounts payable
|
145,695
|
|
|
202,446
|
|
|
(22,583
|
)
|
|||
Accrued expenses and other liabilities
|
109,823
|
|
|
67,754
|
|
|
76,854
|
|
|||
Income taxes payable and receivable
|
(39,164
|
)
|
|
(16,712
|
)
|
|
(2,533
|
)
|
|||
Net cash provided by operating activities
|
234,063
|
|
|
364,368
|
|
|
14,541
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(281,339
|
)
|
|
(316,458
|
)
|
|
(298,928
|
)
|
|||
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
|
)
|
|
(103,144
|
)
|
|||
Sales of available-for-sale securities
|
—
|
|
|
30,712
|
|
|
96,610
|
|
|||
Purchases of other assets
|
(1,648
|
)
|
|
(875
|
)
|
|
(2,553
|
)
|
|||
Net cash used in investing activities
|
(282,987
|
)
|
|
(381,139
|
)
|
|
(847,475
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Proceeds from long term debt and revolving credit facility
|
763,000
|
|
|
1,327,601
|
|
|
650,000
|
|
|||
Payments on long term debt and revolving credit facility
|
(665,000
|
)
|
|
(1,170,750
|
)
|
|
(265,202
|
)
|
|||
Employee taxes paid for shares withheld for income taxes
|
(2,781
|
)
|
|
(15,098
|
)
|
|
(12,728
|
)
|
|||
Proceeds from exercise of stock options and other stock issuances
|
11,540
|
|
|
15,485
|
|
|
10,310
|
|
|||
Payments of debt financing costs
|
—
|
|
|
(6,692
|
)
|
|
(947
|
)
|
|||
Cash dividends paid
|
—
|
|
|
(2,927
|
)
|
|
—
|
|
|||
Contingent consideration payments for acquisitions
|
—
|
|
|
(1,505
|
)
|
|
|
|
|||
Net cash provided by financing activities
|
106,759
|
|
|
146,114
|
|
|
381,433
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
4,178
|
|
|
(8,725
|
)
|
|
(11,822
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
62,013
|
|
|
120,618
|
|
|
(463,323
|
)
|
|||
Cash and cash equivalents
|
|
|
|
|
|
||||||
Beginning of period
|
250,470
|
|
|
129,852
|
|
|
593,175
|
|
|||
End of period
|
$
|
312,483
|
|
|
$
|
250,470
|
|
|
$
|
129,852
|
|
|
|
|
|
|
|
||||||
Non-cash investing and financing activities
|
|
|
|
|
|
||||||
Change in accrual for property and equipment
|
$
|
10,580
|
|
|
$
|
16,973
|
|
|
$
|
17,758
|
|
Non-cash dividends
|
—
|
|
|
(56,073
|
)
|
|
|
||||
Property and equipment acquired under build-to-suit leases
|
—
|
|
|
—
|
|
|
5,631
|
|
|||
Other supplemental information
|
|
|
|
|
|
||||||
Cash paid for income taxes
|
36,921
|
|
|
135,959
|
|
|
99,708
|
|
|||
Cash paid for interest, net of capitalized interest
|
29,750
|
|
|
21,412
|
|
|
11,176
|
|
|
|
Year Ended December 31,
|
|
||
(In thousands)
|
|
2017
|
|
||
Costs recorded in cost of goods sold:
|
|
|
|
||
Inventory write-offs (1)
|
|
$
|
5,077
|
|
|
Total costs recorded in cost of goods sold
|
|
5,077
|
|
|
|
|
|
|
|
||
Costs recorded in restructuring and impairment charges:
|
|
|
|
||
Goodwill impairment
|
|
28,647
|
|
|
|
Property and equipment impairment
|
|
30,677
|
|
|
|
Employee related costs
|
|
14,572
|
|
|
|
Intangible asset impairment
|
|
12,054
|
|
|
|
Contract exit costs
|
|
12,029
|
|
|
|
Other restructuring costs
|
|
26,070
|
|
|
|
Total costs recorded in restructuring and impairment charges
|
|
124,049
|
|
|
|
Total restructuring, impairment and restructuring related costs
|
|
$
|
129,126
|
|
|
|
Employee Related costs
|
|
Contract Exit Costs
|
|
Other Restructuring Related Costs
|
||||||
Balance at January 1, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Additions charged to expense
|
14,572
|
|
|
12,029
|
|
|
13,070
|
|
|||
Cash payments charged against reserve
|
(10,017
|
)
|
|
(9,181
|
)
|
|
(10,070
|
)
|
|||
Balance at December 31, 2017
|
$
|
4,555
|
|
|
$
|
2,848
|
|
|
$
|
3,000
|
|
•
|
Up to
$105.0 million
in cash charges, consisting of up to:
$55.0 million
in facility and lease terminations and
$50.0 million
in contract termination and other restructuring charges; and,
|
•
|
Up to
$25.0 million
in non-cash charges comprised of approximately
$10.0 million
of inventory related charges and approximately
$15.0 million
of intangibles and other asset related impairments.
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2017
|
|
2016
|
||||
Leasehold and tenant improvements
|
|
$
|
431,761
|
|
|
$
|
326,617
|
|
Furniture, fixtures and displays
|
|
204,926
|
|
|
168,720
|
|
||
Buildings
|
|
47,625
|
|
|
47,216
|
|
||
Software
|
|
232,660
|
|
|
151,059
|
|
||
Office equipment
|
|
98,802
|
|
|
75,196
|
|
||
Plant equipment
|
|
144,484
|
|
|
124,140
|
|
||
Land
|
|
83,574
|
|
|
83,574
|
|
||
Construction in progress
|
|
148,488
|
|
|
204,362
|
|
||
Other
|
|
20,438
|
|
|
20,383
|
|
||
Subtotal property and equipment
|
|
1,412,758
|
|
|
1,201,267
|
|
||
Accumulated depreciation
|
|
(526,984
|
)
|
|
(397,056
|
)
|
||
Property and equipment, net
|
|
$
|
885,774
|
|
|
$
|
804,211
|
|
|
|
North America
|
|
EMEA
|
|
Asia-Pacific
|
|
Latin America
|
|
Connected Fitness
|
|
Total
|
||||||||||||
Balance as of December 31, 2016
|
|
$
|
317,323
|
|
|
$
|
99,245
|
|
|
$
|
77,586
|
|
|
$
|
42,436
|
|
|
$
|
27,001
|
|
|
$
|
563,591
|
|
Effect of currency translation adjustment
|
|
1,132
|
|
|
11,910
|
|
|
3,737
|
|
|
2,305
|
|
|
1,646
|
|
|
20,730
|
|
||||||
Impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,647
|
)
|
|
(28,647
|
)
|
||||||
Balance as of December 31, 2017
|
|
$
|
318,455
|
|
|
$
|
111,155
|
|
|
$
|
81,323
|
|
|
$
|
44,741
|
|
|
$
|
—
|
|
|
$
|
555,674
|
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||
(In thousands)
|
|
Useful Lives from Date of Acquisitions (in years)
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Impairment
|
|
Net Carrying
Amount |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net Carrying
Amount |
||||||||||||||
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
User base
|
|
10
|
|
$
|
48,561
|
|
|
$
|
(13,499
|
)
|
|
$
|
—
|
|
|
$
|
35,062
|
|
|
$
|
47,653
|
|
|
$
|
(8,733
|
)
|
|
$
|
38,920
|
|
Technology
|
|
5-7
|
|
19,611
|
|
|
(9,524
|
)
|
|
(10,087
|
)
|
|
—
|
|
|
19,612
|
|
|
(8,221
|
)
|
|
11,391
|
|
|||||||
Customer relationships
|
|
2-3
|
|
9,527
|
|
|
(9,527
|
)
|
|
—
|
|
|
—
|
|
|
9,527
|
|
|
(9,527
|
)
|
|
—
|
|
|||||||
Trade name
|
|
4-5
|
|
7,653
|
|
|
(5,686
|
)
|
|
(1,967
|
)
|
|
—
|
|
|
7,653
|
|
|
(4,816
|
)
|
|
2,837
|
|
|||||||
Nutrition database
|
|
10
|
|
4,500
|
|
|
(1,256
|
)
|
|
—
|
|
|
3,244
|
|
|
4,500
|
|
|
(806
|
)
|
|
3,694
|
|
|||||||
Lease-related intangible assets
|
|
1-15
|
|
3,896
|
|
|
(3,232
|
)
|
|
—
|
|
|
664
|
|
|
3,896
|
|
|
(3,075
|
)
|
|
821
|
|
|||||||
Other
|
|
5-10
|
|
1,353
|
|
|
(892
|
)
|
|
—
|
|
|
461
|
|
|
1,373
|
|
|
(666
|
)
|
|
707
|
|
|||||||
Total
|
|
|
|
$
|
95,101
|
|
|
$
|
(43,616
|
)
|
|
$
|
(12,054
|
)
|
|
$
|
39,431
|
|
|
$
|
94,214
|
|
|
$
|
(35,844
|
)
|
|
$
|
58,370
|
|
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
|
7,564
|
|
|
|
|
|
|
5,940
|
|
||||||||||||
Intangible assets, net
|
|
|
|
|
|
|
|
|
|
$
|
46,995
|
|
|
|
|
|
|
$
|
64,310
|
|
(In thousands)
|
|
||
2018
|
$
|
27,000
|
|
2019
|
63,000
|
|
|
2020
|
25,000
|
|
|
2021
|
86,250
|
|
|
2022
|
—
|
|
|
2023 and thereafter
|
600,000
|
|
|
Total scheduled maturities of long term debt
|
$
|
801,250
|
|
|
|
||
Current maturities of long term debt
|
$
|
27,000
|
|
(In thousands)
|
|
||
2018
|
150,428
|
|
|
2019
|
135,165
|
|
|
2020
|
126,026
|
|
|
2021
|
121,710
|
|
|
2022
|
119,783
|
|
|
2023 and thereafter
|
517,736
|
|
|
Total future minimum sponsorship and other payments
|
$
|
1,170,848
|
|
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.
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(In thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
Derivative foreign currency contracts (see Note 8)
|
|
$
|
—
|
|
|
$
|
(6,818
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,238
|
|
|
$
|
—
|
|
Interest rate swap contracts (see Note 8)
|
|
—
|
|
|
1,088
|
|
|
—
|
|
|
—
|
|
|
(420
|
)
|
|
—
|
|
||||||
TOLI policies held by the Rabbi Trust
|
|
—
|
|
|
5,756
|
|
|
—
|
|
|
—
|
|
|
4,880
|
|
|
—
|
|
||||||
Deferred Compensation Plan obligations
|
|
—
|
|
|
(7,971
|
)
|
|
—
|
|
|
—
|
|
|
(7,023
|
)
|
|
—
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Income (loss) before income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
(131,475
|
)
|
|
$
|
251,321
|
|
|
$
|
272,739
|
|
Foreign
|
121,166
|
|
|
136,961
|
|
|
113,946
|
|
|||
Total
|
$
|
(10,309
|
)
|
|
$
|
388,282
|
|
|
$
|
386,685
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2015
|
||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
(46,931
|
)
|
|
$
|
116,637
|
|
|
$
|
102,317
|
|
State
|
(8,336
|
)
|
|
29,989
|
|
|
27,500
|
|
|||
Other foreign countries
|
34,005
|
|
|
32,394
|
|
|
28,336
|
|
|||
|
(21,262
|
)
|
|
179,020
|
|
|
158,153
|
|
|||
Deferred
|
|
|
|
|
|
||||||
Federal
|
51,447
|
|
|
(35,748
|
)
|
|
707
|
|
|||
State
|
12,080
|
|
|
(10,658
|
)
|
|
(5,703
|
)
|
|||
Other foreign countries
|
(4,314
|
)
|
|
(1,311
|
)
|
|
955
|
|
|||
|
59,213
|
|
|
(47,717
|
)
|
|
(4,041
|
)
|
|||
Provision for income taxes
|
$
|
37,951
|
|
|
$
|
131,303
|
|
|
$
|
154,112
|
|
|
Year Ended December 31,
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||||||||
U.S. federal statutory income tax rate
|
$
|
(3,608
|
)
|
35.0
|
%
|
|
$
|
135,899
|
|
35.0
|
%
|
|
$
|
135,340
|
|
35.0
|
%
|
State taxes, net of federal tax impact
|
(9,537
|
)
|
92.5
|
|
|
9,447
|
|
2.4
|
|
|
12,252
|
|
3.2
|
|
|||
Unrecognized tax benefits
|
1,178
|
|
(11.4
|
)
|
|
4,377
|
|
1.1
|
|
|
12,931
|
|
3.4
|
|
|||
Permanent tax benefits/nondeductible expenses
|
2,246
|
|
(21.8
|
)
|
|
(5,177
|
)
|
(1.3
|
)
|
|
8,475
|
|
2.2
|
|
|||
Goodwill impairment
|
8,522
|
|
(82.7
|
)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||
Foreign rate differential
|
(25,563
|
)
|
248.0
|
|
|
(25,768
|
)
|
(6.6
|
)
|
|
(21,262
|
)
|
(5.5
|
)
|
|||
Valuation allowance
|
29,563
|
|
(290.3
|
)
|
|
8,798
|
|
2.3
|
|
|
10,504
|
|
2.7
|
|
|||
Impacts related to Tax Act
|
38,833
|
|
(376.7
|
)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|||
Other
|
(3,683
|
)
|
39.2
|
|
|
3,727
|
|
0.9
|
|
|
(4,128
|
)
|
(1.1
|
)
|
|||
Effective income tax rate
|
$
|
37,951
|
|
(368.2
|
)%
|
|
$
|
131,303
|
|
33.8
|
%
|
|
$
|
154,112
|
|
39.9
|
%
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2017
|
|
2016
|
||||
Deferred tax asset
|
|
|
|
|
||||
Allowance for doubtful accounts and sales return reserves
|
|
$
|
52,745
|
|
|
$
|
53,811
|
|
Foreign net operating loss carry-forwards
|
|
34,542
|
|
|
26,964
|
|
||
Tax basis inventory adjustment
|
|
30,531
|
|
|
25,776
|
|
||
Reserves and accrued liabilities
|
|
20,500
|
|
|
38,819
|
|
||
Stock-based compensation
|
|
19,002
|
|
|
32,910
|
|
||
Deferred rent
|
|
18,735
|
|
|
21,168
|
|
||
U.S. net operating loss carryforward
|
|
13,382
|
|
|
3,032
|
|
||
Foreign tax credit carry-forwards
|
|
11,918
|
|
|
8,664
|
|
||
State tax credits, net of federal impact
|
|
8,555
|
|
|
7,408
|
|
||
Inventory obsolescence reserves
|
|
5,241
|
|
|
15,479
|
|
||
Other
|
|
4,340
|
|
|
3,107
|
|
||
Total deferred tax assets
|
|
219,491
|
|
|
237,138
|
|
||
Less: valuation allowance
|
|
(73,544
|
)
|
|
(37,969
|
)
|
||
Total net deferred tax assets
|
|
145,947
|
|
|
199,169
|
|
||
|
|
|
|
|
||||
Deferred tax liability
|
|
|
|
|
||||
Property, plant and equipment
|
|
(43,924
|
)
|
|
(45,178
|
)
|
||
Prepaid expenses
|
|
(18,336
|
)
|
|
(8,628
|
)
|
||
Intangible assets
|
|
—
|
|
|
(6,815
|
)
|
||
Other
|
|
(1,218
|
)
|
|
(2,506
|
)
|
||
Total deferred tax liabilities
|
|
(63,478
|
)
|
|
(63,127
|
)
|
||
Total deferred tax assets, net
|
|
$
|
82,469
|
|
|
$
|
136,042
|
|
|
|
|
|
|
||||
|
•
|
Availability of taxable income in the U.S. federal and certain state NOL carryback periods;
|
•
|
U.S. federal NOLs have an indefinite carryforward period beginning in 2018, pursuant to the Tax Act.
|
•
|
Definite lived tax attributes with relatively long carryforward periods; a majority from 10 to 20 years;
|
•
|
No history of U.S. federal and state tax attributes expiring unused;
|
•
|
Three year cumulative U.S. federal and state pre-tax income;
|
•
|
Relatively low values of pre-tax income required to realized deferred tax assets relative to historic income levels;
|
•
|
Restructuring plans being undertaken to improve profitability; and
|
•
|
Availability of prudent and feasible tax planning strategies.
|
•
|
Inherent challenges in forecasting future pre-tax earnings which rely on improved profitability from our restructuring efforts;
|
•
|
The continuing challenge of changes in the U.S. consumer retail business environment; and
|
•
|
While relatively long, existence of definite lived tax attributes of certain U.S. federal tax credits and state NOLs.
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Beginning of year
|
|
$
|
64,359
|
|
|
$
|
42,611
|
|
|
$
|
28,353
|
|
Increases as a result of tax positions taken in a prior period
|
|
457
|
|
|
661
|
|
|
203
|
|
|||
Decreases as a result of tax positions taken in a prior period
|
|
(40
|
)
|
|
—
|
|
|
—
|
|
|||
Increases as a result of tax positions taken during the current period
|
|
14,580
|
|
|
26,482
|
|
|
14,382
|
|
|||
Decreases as a result of tax positions taken during the current period
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Decreases as a result of settlements during the current period
|
|
(13,885
|
)
|
|
—
|
|
|
—
|
|
|||
Reductions as a result of a lapse of statute of limitations during the current period
|
|
(13,656
|
)
|
|
(5,395
|
)
|
|
(327
|
)
|
|||
End of year
|
|
$
|
51,815
|
|
|
$
|
64,359
|
|
|
$
|
42,611
|
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands, except per share amounts)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
(48,260
|
)
|
|
$
|
256,979
|
|
|
$
|
232,573
|
|
Adjustment payment to Class C capital stockholders
|
|
—
|
|
|
59,000
|
|
|
—
|
|
|||
Net income (loss) available to all stockholders
|
|
$
|
(48,260
|
)
|
|
$
|
197,979
|
|
|
$
|
232,573
|
|
|
|
|
|
|
|
|
||||||
Denominator - Class A and B shares
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
|
219,254
|
|
|
217,707
|
|
|
215,498
|
|
|||
Effect of dilutive securities
|
|
—
|
|
|
4,237
|
|
|
5,370
|
|
|||
Weighted average common shares and dilutive securities outstanding
|
|
219,254
|
|
|
221,944
|
|
|
220,868
|
|
|||
Earnings per share Class A and B —basic
|
|
$
|
(0.11
|
)
|
|
$
|
0.45
|
|
|
$
|
0.54
|
|
Earnings per share Class A and B—diluted
|
|
$
|
(0.11
|
)
|
|
$
|
0.45
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
||||||
Denominator - Class C shares
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
|
221,475
|
|
|
218,623
|
|
|
215,498
|
|
|||
Effect of dilutive securities
|
|
—
|
|
|
4,281
|
|
|
5,370
|
|
|||
Weighted average common shares and dilutive securities outstanding
|
|
221,475
|
|
|
222,904
|
|
|
220,868
|
|
|||
Earnings (loss) per share Class C — basic
|
|
$
|
(0.11
|
)
|
|
$
|
0.72
|
|
|
$
|
0.54
|
|
Earnings (loss) per share Class C — diluted
|
|
$
|
(0.11
|
)
|
|
$
|
0.71
|
|
|
$
|
0.53
|
|
|
Year Ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Risk-free interest rate
|
2.1
|
%
|
|
1.4
|
%
|
|
1.8
|
%
|
Average expected life in years
|
6.50
|
|
|
6.50
|
|
|
6.00
|
|
Expected volatility
|
39.6
|
%
|
|
39.5
|
%
|
|
44.3
|
%
|
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
(In thousands, except per share amounts)
|
|
Year Ended December 31,
|
|||||||||||||||||||
2017
|
|
2016
|
|
2015
|
|||||||||||||||||
|
|
Number
of Stock
Options
|
|
Weighted
Average
Exercise
Price
|
|
Number
of Stock
Options
|
|
Weighted
Average
Exercise
Price
|
|
Number
of Stock
Options
|
|
Weighted
Average
Exercise
Price
|
|||||||||
Outstanding, beginning of year
|
|
4,265
|
|
|
$
|
9.63
|
|
|
6,008
|
|
|
$
|
7.26
|
|
|
5,622
|
|
|
$
|
4.14
|
|
Granted, at fair market value
|
|
734
|
|
|
19.04
|
|
|
335
|
|
|
36.05
|
|
|
1,158
|
|
|
20.15
|
|
|||
Exercised
|
|
(1,046
|
)
|
|
3.72
|
|
|
(1,763
|
)
|
|
3.52
|
|
|
(720
|
)
|
|
3.96
|
|
|||
Expired
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Forfeited
|
|
(171
|
)
|
|
17.59
|
|
|
(315
|
)
|
|
26.26
|
|
|
(52
|
)
|
|
2.27
|
|
|||
Outstanding, end of year
|
|
3,782
|
|
|
$
|
12.71
|
|
|
4,265
|
|
|
$
|
9.63
|
|
|
6,008
|
|
|
$
|
7.26
|
|
Options exercisable, end of year
|
|
2,512
|
|
|
$
|
5.85
|
|
|
3,385
|
|
|
$
|
4.30
|
|
|
4,892
|
|
|
$
|
4.13
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||||||||
Number of
Underlying
Shares
|
|
Weighted
Average
Exercise
Price Per
Share
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Total
Intrinsic
Value
|
|
Number of
Underlying
Shares
|
|
Weighted
Average
Exercise
Price Per
Share
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
|
Total
Intrinsic
Value
|
||||||||
3,782
|
|
$
|
12.71
|
|
|
4.55
|
|
$
|
22,679
|
|
|
2,512
|
|
$
|
5.85
|
|
|
2.52
|
|
$
|
22,553
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
(In thousands, except per share amounts)
|
|
Number
of
Restricted
Shares
|
|
Weighted
Average
Grant Date Fair Value
|
|
Number
of
Restricted
Shares
|
|
Weighted
Average
Fair Value
|
|
Number
of
Restricted
Shares
|
|
Weighted
Average
Fair Value
|
|||||||||
Outstanding, beginning of year
|
|
6,771
|
|
|
$
|
19.68
|
|
|
6,760
|
|
|
$
|
23.23
|
|
|
9,020
|
|
|
$
|
15.21
|
|
Granted
|
|
7,630
|
|
|
18.84
|
|
|
4,002
|
|
|
35.20
|
|
|
2,030
|
|
|
38.36
|
|
|||
Forfeited
|
|
(2,290
|
)
|
|
28.71
|
|
|
(935
|
)
|
|
30.35
|
|
|
(652
|
)
|
|
24.29
|
|
|||
Vested
|
|
(2,188
|
)
|
|
24.78
|
|
|
(3,056
|
)
|
|
16.25
|
|
|
(3,638
|
)
|
|
11.61
|
|
|||
Outstanding, end of year
|
|
9,923
|
|
|
24.41
|
|
|
6,771
|
|
|
19.68
|
|
|
6,760
|
|
|
23.23
|
|
(In thousands)
|
|
Year Ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
||||||||
Unrealized foreign currency exchange rate gains (losses)
|
|
$
|
29,246
|
|
|
$
|
(12,627
|
)
|
|
$
|
(33,359
|
)
|
Realized foreign currency exchange rate gains (losses)
|
|
611
|
|
|
(6,906
|
)
|
|
7,643
|
|
|||
Unrealized derivative gains (losses)
|
|
(1,217
|
)
|
|
729
|
|
|
388
|
|
|||
Realized derivative gains (losses)
|
|
(26,537
|
)
|
|
15,192
|
|
|
16,404
|
|
(In thousands)
|
|
Year Ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
||||||||
Net revenues
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
3,802,406
|
|
|
$
|
4,005,314
|
|
|
$
|
3,455,737
|
|
EMEA
|
|
469,997
|
|
|
330,584
|
|
|
203,109
|
|
|||
Asia-Pacific
|
|
433,647
|
|
|
268,607
|
|
|
144,877
|
|
|||
Latin America
|
|
181,324
|
|
|
141,793
|
|
|
106,175
|
|
|||
Connected Fitness
|
|
89,179
|
|
|
80,447
|
|
|
53,415
|
|
|||
Intersegment Eliminations
|
|
—
|
|
|
(1,410
|
)
|
|
—
|
|
|||
Total net revenues
|
|
$
|
4,976,553
|
|
|
$
|
4,825,335
|
|
|
$
|
3,963,313
|
|
(In thousands)
|
|
Year Ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
||||||||
Operating income (loss)
|
|
|
|
|
|
|
||||||
North America
|
|
$
|
20,179
|
|
|
$
|
408,424
|
|
|
$
|
460,961
|
|
EMEA
|
|
17,976
|
|
|
11,420
|
|
|
3,122
|
|
|||
Asia-Pacific
|
|
82,039
|
|
|
68,338
|
|
|
36,358
|
|
|||
Latin America
|
|
(37,085
|
)
|
|
(33,891
|
)
|
|
(30,593
|
)
|
|||
Connected Fitness
|
|
(55,266
|
)
|
|
(36,820
|
)
|
|
(61,301
|
)
|
|||
Total operating income
|
|
27,843
|
|
|
417,471
|
|
|
408,547
|
|
|||
Interest expense, net
|
|
(34,538
|
)
|
|
(26,434
|
)
|
|
(14,628
|
)
|
|||
Other expense, net
|
|
(3,614
|
)
|
|
(2,755
|
)
|
|
(7,234
|
)
|
|||
Income (loss) before income taxes
|
|
$
|
(10,309
|
)
|
|
$
|
388,282
|
|
|
$
|
386,685
|
|
(In thousands)
|
|
Costs Incurred During the Year Ended December 31, 2017 (1)
|
|
Costs to be Incurred During the Year Ending December 31, 2018
|
||||
Costs recorded in restructuring and impairment charges:
|
|
|
|
|
||||
North America
|
|
$
|
63,170
|
|
|
$
|
109,000
|
|
EMEA
|
|
1,525
|
|
|
6,000
|
|
||
Asia-Pacific
|
|
38
|
|
|
—
|
|
||
Latin America
|
|
11,506
|
|
|
18,000
|
|
||
Connected Fitness
|
|
47,810
|
|
|
—
|
|
||
Total costs recorded in restructuring and impairment charges
|
|
$
|
124,049
|
|
|
$
|
133,000
|
|
(In thousands)
|
|
Year Ended December 31,
|
|||||||
2017
|
|
2016
|
|
||||||
Long-lived assets
|
|
|
|
|
|
||||
United States
|
|
$
|
763,477
|
|
|
$
|
728,841
|
|
|
Canada
|
|
14,077
|
|
|
11,126
|
|
|
||
Total North America
|
|
777,554
|
|
|
739,967
|
|
|
||
Other foreign countries
|
|
108,220
|
|
|
64,244
|
|
|
||
Total long lived assets
|
|
$
|
885,774
|
|
|
$
|
804,211
|
|
|
(In thousands)
|
|
Year Ended December 31,
|
||||||||||
2017
|
|
2016
|
|
2015
|
||||||||
Apparel
|
|
$
|
3,287,121
|
|
|
$
|
3,229,142
|
|
|
$
|
2,801,062
|
|
Footwear
|
|
1,037,840
|
|
|
1,010,693
|
|
|
677,744
|
|
|||
Accessories
|
|
445,838
|
|
|
406,614
|
|
|
346,885
|
|
|||
Total net sales
|
|
4,770,799
|
|
|
4,646,449
|
|
|
3,825,691
|
|
|||
Licensing revenues
|
|
116,575
|
|
|
99,849
|
|
|
84,207
|
|
|||
Connected Fitness
|
|
89,179
|
|
|
80,447
|
|
|
53,415
|
|
|||
Intersegment Eliminations
|
|
—
|
|
|
(1,410
|
)
|
|
—
|
|
|||
Total net revenues
|
|
$
|
4,976,553
|
|
|
$
|
4,825,335
|
|
|
$
|
3,963,313
|
|
(In thousands)
|
|
Quarter Ended (unaudited)
|
|
Year Ended
December 31,
|
||||||||||||||||
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
|||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
|
$
|
1,117,331
|
|
|
$
|
1,088,245
|
|
|
$
|
1,405,615
|
|
|
$
|
1,365,362
|
|
|
$
|
4,976,553
|
|
Gross profit
|
|
505,423
|
|
|
498,246
|
|
|
645,350
|
|
|
589,704
|
|
|
2,238,723
|
|
|||||
Income (loss) from operations
|
|
7,536
|
|
|
(4,785
|
)
|
|
62,180
|
|
|
(37,088
|
)
|
|
27,843
|
|
|||||
Net income (loss)
|
|
(2,272
|
)
|
|
(12,308
|
)
|
|
54,242
|
|
|
(87,922
|
)
|
|
(48,260
|
)
|
|||||
Net income (loss) available to all stockholders
|
|
$
|
(2,272
|
)
|
|
$
|
(12,308
|
)
|
|
$
|
54,242
|
|
|
$
|
(87,922
|
)
|
|
$
|
(48,260
|
)
|
Basic net income (loss) per share of Class A and B common stock
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
0.12
|
|
|
$
|
(0.20
|
)
|
|
$
|
(0.11
|
)
|
Basic net income (loss) per share of Class C common stock
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
0.12
|
|
|
$
|
(0.20
|
)
|
|
$
|
(0.11
|
)
|
Diluted net income (loss) per share of Class A and B common stock
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
0.12
|
|
|
$
|
(0.20
|
)
|
|
$
|
(0.11
|
)
|
Diluted net income (loss) per share of Class C common stock
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
0.12
|
|
|
$
|
(0.20
|
)
|
|
$
|
(0.11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
|
$
|
1,047,702
|
|
|
$
|
1,000,783
|
|
|
$
|
1,471,573
|
|
|
$
|
1,305,277
|
|
|
$
|
4,825,335
|
|
Gross profit
|
|
480,636
|
|
|
477,647
|
|
|
698,624
|
|
|
583,704
|
|
|
2,240,611
|
|
|||||
Income from operations
|
|
34,883
|
|
|
19,378
|
|
|
199,310
|
|
|
163,900
|
|
|
417,471
|
|
|||||
Net income
|
|
19,180
|
|
|
6,344
|
|
|
128,225
|
|
|
103,230
|
|
|
256,979
|
|
|||||
Adjustment payment to Class C
capital stockholders |
|
—
|
|
|
59,000
|
|
|
—
|
|
|
—
|
|
|
59,000
|
|
|||||
Net income (loss) available to all stockholders
|
|
19,180
|
|
|
(52,656
|
)
|
|
128,225
|
|
|
103,230
|
|
|
197,979
|
|
|||||
Basic net income (loss) per share of Class A and B common stock
|
|
$
|
0.04
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.29
|
|
|
$
|
0.24
|
|
|
$
|
0.45
|
|
Basic net income (loss) per share of Class C common stock
|
|
$
|
0.04
|
|
|
$
|
0.15
|
|
|
$
|
0.29
|
|
|
$
|
0.24
|
|
|
$
|
0.72
|
|
Diluted net income (loss) per share of Class A and B common stock
|
|
$
|
0.04
|
|
|
$
|
(0.12
|
)
|
|
$
|
0.29
|
|
|
$
|
0.23
|
|
|
$
|
0.45
|
|
Diluted net income (loss) per share of Class C common stock
|
|
$
|
0.04
|
|
|
$
|
0.15
|
|
|
$
|
0.29
|
|
|
$
|
0.23
|
|
|
$
|
0.71
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
1. Financial Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2. Financial Statement Schedule
|
|
|
|
3. Exhibits
|
|
Exhibit
No.
|
|
|
|
|
|
|
Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.01 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2016).
|
|
|
|
|
|
Articles Supplementary setting forth the terms of the Class C Common Stock, dated June 15, 2015 (incorporated by reference to Appendix F to the Preliminary Proxy Statement filed by the Company on June 15, 2015).
|
|
|
|
|
|
Third Amended and Restated By-Laws (incorporated by reference to Exhibit 3.01 of the Company’s Current Report on Form 8-K filed June 27, 2017).
|
|
|
|
|
|
Warrant Agreement between the Company and NFL Properties LLC dated as of August 3, 2006 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed August 7, 2006).
|
|
|
|
|
|
Indenture, dated as of June 13, 2016, between the Company and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on June 13, 2016).
|
|
|
|
|
|
First Supplemental Indenture, dated as of June 13, 2016, relating to the 3.250% Senior Notes due 2026, between the Company and Wilmington Trust, National Association, as trustee, and the Form of 3.250% Senior Notes due 2026 (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on June 13, 2016).
|
|
|
|
|
|
Terms of Settlement of
In re: Under Armour Shareholder Litigation
, Case No, 24-C-15-00324 (incorporated by reference from Exhibit 4.2 of the Company's Registration Statement on Form 8-A filed on March 21, 2016).
|
|
|
|
|
|
Credit Agreement, dated May 29, 2014, by and among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, PNC Bank, National Association, as Syndication Agent, Bank of America, N.A. SunTrust Bank and Wells Fargo Bank, National Association as Co-Documentation Agents and the other lenders and arrangers party thereto (the “Credit Agreement”) (incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed June 2, 2014).
|
|
|
|
|
|
Amendment No. 1 to the Credit Agreement, dated as of March 17, 2015 (incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed March 17, 2015).
|
|
|
|
|
|
Amendment No. 2 to the Credit Agreement, dated as of January 22, 2016 (incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed January 22, 2016).
|
|
|
|
|
|
Amendment No. 3 to the Credit Agreement, dated as of June 7, 2016 (incorporated by reference to Exhibit 10.01 of the Company’s Quarterly Report on Form 10-Q filed on August 3, 2016).
|
|
|
|
|
|
Amendment No. 4 to the Credit Agreement, dated as of February 22, 2018.
|
|
|
|
|
|
Under Armour, Inc. Executive Incentive Plan (incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed on May 6, 2013).*
|
|
|
|
|
|
Under Armour, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) (incorporated by reference to Exhibit 10.15 of the Company’s 2007 Form 10-K).*
|
|
|
|
|
|
Amendment One to the Deferred Compensation Plan (incorporated by reference to Exhibit 10.14 of the Company’s 2010 Form 10-K).*
|
|
|
|
|
|
Amendment Two to the Deferred Compensation Plan (incorporated by reference to Exhibit 10.03 of the Company’s 2016 Form 10-K).*
|
|
|
|
|
|
Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.04 of the Company’s 2016 Form 10-K).*
|
|
|
|
|
|
Under Armour, Inc. Second Amended and Restated 2005 Omnibus Long-Term Incentive Plan, as amended (the "2005 Plan") (incorporated by reference to Exhibit 4.5 of the Company’s Registration Statement on Form S-8 (Registration No. 333-210844) filed on April 20, 2016).*
|
|
|
|
|
|
Form of Non-Qualified Stock Option Grant Agreement under the 2005 Plan between the Company and Kevin Plank.*
|
|
|
|
|
|
Form of Non-Qualified Stock Option Grant Agreement under the 2005 Plan between the Company and Kevin Plank (incorporated by reference to Exhibit 10.06 of the Company’s 2016 Form 10-K).*
|
|
|
|
|
Exhibit
No. |
|
|
|
Form of Restricted Stock Unit Grant Agreement under the 2005 Plan.*
|
|
|
|
|
|
Form of Restricted Stock Unit Grant Agreement under the 2005 Plan (incorporated by reference to Exhibit 10.07 of the Company’s 2016 Form 10-K).*
|
|
|
|
|
|
Form of Performance-Based Stock Option Grant Agreement under the 2005 Plan between the Company and Kevin Plank.*
|
|
|
|
|
|
Form of Performance-Based Stock Option Grant Agreement under the 2005 Plan (incorporated by reference to Exhibit 10.08 of the Company’s 2016 Form 10-K).*
|
|
|
|
|
|
Form of Performance-Based Stock Option Grant Agreement under the 2005 Plan (incorporated by reference to Exhibit 10.09 of the Company’s 2014 Form 10-K).*
|
|
|
|
|
|
Form of Performance-Based Restricted Stock Unit Grant Agreement under the 2005 Plan.*
|
|
|
|
|
|
Form of Performance-Based Restricted Stock Unit Grant Agreement under the 2005 Plan (incorporated by reference to Exhibit 10.09 of the Company’s 2016 Form 10-K).*
|
|
|
|
|
|
Form of Performance-Based Restricted Stock Unit Grant Agreement under the 2005 Plan (incorporated by reference to Exhibit 10.11 of the Company’s 2014 Form 10-K).*
|
|
|
|
|
|
Form of Performance-Based Restricted Stock Unit Grant Agreement under the 2005 Plan (incorporated by reference to Exhibit 10.12 of the Company’s 2013 Form 10-K).*
|
|
|
|
|
|
Supplement to Restricted Stock Unit Grant Agreements (incorporated by reference to Exhibit 10.01 of the Company’s Form 10-Q for the quarterly period ended September 30, 2014).*
|
|
|
|
|
|
Form of Performance-Based Restricted Stock Unit Grant Agreement for International Employees under the 2005 Plan (incorporated by reference to Exhibit 10.12 of the Company’s 2014 Form 10-K).*
|
|
|
|
|
|
Form of Performance-Based Restricted Stock Unit Grant Agreement for International Employees under the 2005 Plan (incorporated by reference to Exhibit 10.13 of the Company’s 2013 Form 10-K).*
|
|
|
|
|
|
Form of Employee Confidentiality, Non-Competition and Non-Solicitation Agreement by and between certain executives and the Company (incorporated by reference to Exhibit 10.11 of the Company’s 2016 Form 10-K).*
|
|
|
|
|
|
Under Armour, Inc. 2017 Non-Employee Director Compensation Plan (the “Director Compensation Plan”) (incorporated by reference to Exhibit 10.01 of the Company's Form 10-Q for the quarterly period ended March 31, 2017).*
|
|
|
|
|
|
Form of Initial Restricted Stock Unit Grant under the Director Compensation Plan (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed June 6, 2006).*
|
|
|
|
|
|
Form of Annual Stock Option Award under the Director Compensation Plan (incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed June 6, 2006).*
|
|
|
|
|
|
Form of Annual Restricted Stock Unit Grant under the Director Compensation Plan (incorporated by reference to Exhibit 10.6 of the Company’s Form 10-Q for the quarterly period ended June 30, 2011).*
|
|
|
|
|
|
Under Armour, Inc. 2006 Non-Employee Director Deferred Stock Unit Plan (the “Director DSU Plan”) (incorporated by reference to Exhibit 10.02 of the Company’s Form 10-Q for the quarterly period ended March 31, 2010).*
|
|
|
|
|
|
Amendment One to the Director DSU Plan (incorporated by reference to Exhibit 10.23 of the Company’s 2010 Form 10-K).*
|
|
|
|
|
|
Amendment Two to the Director DSU Plan (incorporated by reference to Exhibit 10.02 of the Company’s Form 10-Q for the quarterly period ended June 30, 2016).*
|
|
|
|
|
|
Confidentiality, Non-Competition and Non-Solicitation Agreement, dated June 15, 2015, between the Company and Kevin Plank (the “Plank Non-Compete Agreement”) (incorporated by reference to Appendix E to the Preliminary Proxy Statement filed by Under Armour, Inc. on June 15, 2015).
|
|
|
|
|
|
First Amendment to the Plank Non-Compete Agreement, dated April 7, 2016 (incorporated by reference to Exhibit 10.03 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016).
|
|
|
|
|
|
Statement re: computation of ratio of earnings to fixed charges.
|
|
|
|
|
|
List of Subsidiaries.
|
|
|
|
|
Exhibit
No.
|
|
|
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Consent of PricewaterhouseCoopers LLP.
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Section 302 Chief Executive Officer Certification.
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Section 302 Chief Financial Officer Certification.
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Section 906 Chief Executive Officer Certification.
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Section 906 Chief Financial Officer Certification.
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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*
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Management contract or a compensatory plan or arrangement required to be filed as an Exhibit pursuant to Item 15(b) of Form 10-K.
|
|
UNDER ARMOUR, INC.
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||
|
|
|
|
|
By:
|
|
/s/ K
EVIN
A. P
LANK
|
|
|
|
Kevin A. Plank
|
|
|
|
Chairman of the Board of Directors and Chief Executive Officer
|
/s/ K
EVIN
A. P
LANK
|
|
Chairman of the Board of Directors and Chief Executive Officer (principal executive officer)
|
Kevin A. Plank
|
|
|
|
|
|
/s/ D
AVID
E. B
ERGMAN
|
|
Chief Financial Officer (principal accounting and financial officer)
|
David E. Bergman
|
|
|
|
|
|
/s/ G
EORGE
W. B
ODENHEIMER
|
|
Director
|
George W. Bodenheimer
|
|
|
|
|
|
/s/ D
OUGLAS
E. C
OLTHARP
|
|
Director
|
Douglas E. Coltharp
|
|
|
|
|
|
/s/ J
ERRI
L. D
E
V
ARD
|
|
Director
|
Jerri L. DeVard
|
|
|
|
|
|
/s/ K
AREN
W. K
ATZ
|
|
Director
|
Karen W. Katz
|
|
|
|
|
|
/s/ A.B. K
RONGARD
|
|
Director
|
A.B. Krongard
|
|
|
|
|
|
/s/ W
ILLIAM
R. M
C
D
ERMOTT
|
|
Director
|
William R. McDermott
|
|
|
|
|
|
/s/ E
RIC
T. O
LSON
|
|
Director
|
Eric T. Olson
|
|
|
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|
|
/s/ H
ARVEY
L. S
ANDERS
|
|
Director
|
Harvey L. Sanders
|
|
|
Description
|
|
Balance at
Beginning
of Year
|
|
Charged to
Costs and
Expenses
|
|
Write-Offs
Net of
Recoveries
|
|
Balance at
End of
Year
|
||||||||
Allowance for doubtful accounts
|
|
|
|
|
|
|
|
|
||||||||
For the year ended December 31, 2017
|
|
$
|
11,341
|
|
|
$
|
9,520
|
|
|
$
|
(1,149
|
)
|
|
$
|
19,712
|
|
For the year ended December 31, 2016
|
|
5,930
|
|
|
23,575
|
|
|
(18,164
|
)
|
|
11,341
|
|
||||
For the year ended December 31, 2015
|
|
3,693
|
|
|
2,951
|
|
|
(714
|
)
|
|
5,930
|
|
||||
Sales returns and allowances
|
|
|
|
|
|
|
|
|
||||||||
For the year ended December 31, 2017
|
|
$
|
121,286
|
|
|
$
|
285,474
|
|
|
$
|
(215,966
|
)
|
|
$
|
190,794
|
|
For the year ended December 31, 2016
|
|
72,615
|
|
|
179,445
|
|
|
(130,774
|
)
|
|
121,286
|
|
||||
For the year ended December 31, 2015
|
|
52,973
|
|
|
145,828
|
|
|
(126,186
|
)
|
|
72,615
|
|
||||
Deferred tax asset valuation allowance
|
|
|
|
|
|
|
|
|
||||||||
For the year ended December 31, 2017
|
|
$
|
37,969
|
|
|
$
|
40,282
|
|
|
$
|
(4,707
|
)
|
|
$
|
73,544
|
|
For the year ended December 31, 2016
|
|
24,043
|
|
|
13,951
|
|
|
(25
|
)
|
|
37,969
|
|
||||
For the year ended December 31, 2015
|
|
15,550
|
|
|
8,493
|
|
|
—
|
|
|
24,043
|
|
(a)
|
withholding from the Grantee’s wages or other cash compensation paid to the Grantee by the Company; or
|
(b)
|
withholding from proceeds of the sale of shares of Class C Stock acquired upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization without further consent); or
|
(c)
|
withholding in shares of Class C Stock to be issued upon settlement of the Restricted Stock Units; or
|
(d)
|
by any other method deemed by the Company to comply with applicable laws.
|
(a)
|
withholding from the Grantee’s wages or other cash compensation paid to the Grantee by the Company; or
|
(b)
|
withholding from proceeds of the sale of shares of Class C Stock acquired upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization without further consent); or
|
(c)
|
withholding in shares of Class C Stock to be issued upon settlement of the Restricted Stock Units; or
|
(d)
|
by any other method deemed by the Company to comply with applicable laws.
|
Computation of Ratio of Earnings to Fixed Charges
|
||||||||||||||||||||
(In thousands)
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Income (loss) before taxes
|
|
$
|
(10,309
|
)
|
|
$
|
388,282
|
|
|
$
|
386,685
|
|
|
$
|
342,210
|
|
|
$
|
260,993
|
|
Fixed charges, less capitalized interest
|
|
80,167
|
|
|
61,998
|
|
|
42,328
|
|
|
25,340
|
|
|
16,861
|
|
|||||
Amortization of capitalized interest
|
|
181
|
|
|
96
|
|
|
318
|
|
|
—
|
|
|
200
|
|
|||||
Total earnings
|
|
70,039
|
|
|
450,376
|
|
|
429,331
|
|
|
367,550
|
|
|
278,054
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expensed and capitalized
|
|
33,429
|
|
|
25,726
|
|
|
14,655
|
|
|
5,527
|
|
|
3,026
|
|
|||||
Estimate of interest within rental expense (1)
|
|
47,274
|
|
|
37,164
|
|
|
28,585
|
|
|
19,812
|
|
|
13,905
|
|
|||||
Total fixed charges
|
|
$
|
80,703
|
|
|
$
|
62,890
|
|
|
$
|
43,240
|
|
|
$
|
25,339
|
|
|
$
|
16,931
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to fixed charges (2)
|
|
—
|
|
|
7.2
|
|
|
9.9
|
|
|
14.5
|
|
|
16.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(1) Represents one third of rental expenses which is considered representative of the interest factor of operating leases.
(2) In 2017, our earnings were insufficient to cover our fixed charges by approximately $10.7 million.
|
Subsidiaries
|
|
Incorporation
|
Under Armour Europe B.V.
|
|
The Netherlands
|
Under Armour Retail, Inc.
|
|
Maryland
|
UA Global Sourcing Ltd.
|
|
Hong Kong
|
UA International Holdings C.V.
|
|
The Netherlands
|
UA Sourcing CBT
|
|
Hong Kong
|
UA Connected Fitness, Inc.
|
|
Delaware
|
|
/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
|
|
David E. Bergman
|
|
Chief Financial Officer
|