Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-33202 | |
Entity Registrant Name | UNDER ARMOUR, INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 52-1990078 | |
Entity Address, Address Line One | 1020 Hull Street | |
Entity Address, City or Town | Baltimore | |
Entity Address, State or Province | MD | |
Entity Address, Postal Zip Code | 21230 | |
City Area Code | 410 | |
Local Phone Number | 454-6428 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001336917 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Class A Common Stock [Member] | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Class A Common Stock | |
Trading Symbol | UAA | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 188,452,489 | |
Class B Convertible Common Stock [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 34,450,000 | |
Class C Common Stock [Member] | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Class C Common Stock | |
Trading Symbol | UA | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 231,191,334 |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Current assets | |||
Cash and cash equivalents | $ 959,318 | $ 788,072 | $ 288,726 |
Accounts receivable, net | 668,409 | 708,714 | 743,677 |
Inventories | 940,236 | 892,258 | 875,252 |
Prepaid expenses and other current assets | 300,044 | 313,165 | 299,053 |
Total current assets | 2,868,007 | 2,702,209 | 2,206,708 |
Property and equipment, net | 726,568 | 792,148 | 810,470 |
Operating lease, right-of-use assets | 583,418 | 591,931 | 590,984 |
Goodwill | 485,672 | 550,178 | 548,735 |
Intangible assets, net | 40,490 | 36,345 | 40,109 |
Deferred income taxes | 39,576 | 82,379 | 114,705 |
Other long term assets | 93,844 | 88,341 | 124,361 |
Total assets | 4,837,575 | 4,843,531 | 4,436,072 |
Current liabilities | |||
Revolving credit facility, current | 600,000 | 0 | 0 |
Accounts payable | 417,397 | 618,194 | 377,401 |
Accrued expenses | 267,115 | 374,694 | 268,187 |
Customer refund liabilities | 208,172 | 219,424 | 270,612 |
Operating lease liabilities | 129,758 | 125,900 | 107,250 |
Other current liabilities | 69,060 | 83,797 | 70,562 |
Total current liabilities | 1,691,502 | 1,422,009 | 1,094,012 |
Long term debt, net of current maturities | 593,281 | 592,687 | 590,431 |
Operating lease liabilities, non-current | 913,754 | 580,635 | 594,613 |
Other long term liabilities | 88,858 | 98,113 | 107,209 |
Total liabilities | 3,287,395 | 2,693,444 | 2,386,265 |
Commitments and contingencies (See Note 8) | |||
Stockholders’ equity | |||
Additional paid-in capital | 985,831 | 973,717 | 931,352 |
Retained earnings | 634,452 | 1,226,986 | 1,158,482 |
Accumulated other comprehensive loss | (70,253) | (50,765) | (40,176) |
Total stockholders’ equity | 1,550,180 | 2,150,087 | 2,049,807 |
Total liabilities and stockholders’ equity | 4,837,575 | 4,843,531 | 4,436,072 |
Class A Common Stock [Member] | |||
Stockholders’ equity | |||
Common Stock | 62 | 62 | 62 |
Class B Convertible Common Stock [Member] | |||
Stockholders’ equity | |||
Common Stock | 11 | 11 | 11 |
Class C Common Stock [Member] | |||
Stockholders’ equity | |||
Common Stock | $ 77 | $ 76 | $ 76 |
Unaudited Consolidated Balanc_2
Unaudited Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Class A Common Stock [Member] | |||
Common Stock, Par Value (in dollars per share) | $ 0.0003 | $ 0.0003 | $ 0.0003 |
Common Stock, Shares Authorized | 400,000,000 | 400,000,000 | 400,000,000 |
Common Stock, Shares Issued | 188,450,989 | 188,289,680 | 187,979,934 |
Common Stock, Shares Outstanding | 188,450,989 | 188,289,680 | 187,979,934 |
Class B Convertible Common Stock [Member] | |||
Common Stock, Par Value (in dollars per share) | $ 0.0003 | $ 0.0003 | $ 0.0003 |
Common Stock, Shares Authorized | 34,450,000 | 34,450,000 | 34,450,000 |
Common Stock, Shares Issued | 34,450,000 | 34,450,000 | 34,450,000 |
Common Stock, Shares Outstanding | 34,450,000 | 34,450,000 | 34,450,000 |
Class C Common Stock [Member] | |||
Common Stock, Par Value (in dollars per share) | $ 0.0003 | $ 0.0003 | $ 0.0003 |
Common Stock, Shares Authorized | 400,000,000 | 400,000,000 | 400,000,000 |
Common Stock, Shares Issued | 231,150,002 | 229,027,730 | 228,488,635 |
Common Stock, Shares Outstanding | 231,150,002 | 229,027,730 | 228,488,635 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net revenues | $ 930,240 | $ 1,204,722 |
Cost of goods sold | 499,256 | 659,935 |
Gross profit | 430,984 | 544,787 |
Selling, general and administrative expenses | 552,701 | 509,528 |
Restructuring and impairment charges | 436,463 | 0 |
Income (loss) from operations | (558,180) | 35,259 |
Interest expense, net | (5,960) | (4,238) |
Other income (expense), net | 1,534 | (667) |
Income (loss) before income taxes | (562,606) | 30,354 |
Income tax expense | 21,547 | 8,131 |
Income (loss) from equity method investments | (1,400) | 300 |
Net income (loss) | $ (589,681) | $ 22,477 |
Basic net income (loss) per share of Class A, B and C common stock (in dollars per share) | $ (1.30) | $ 0.05 |
Diluted net income (loss) per share of Class A, B and C common stock (in dollars per share) | $ (1.30) | $ 0.05 |
Weighted average common shares outstanding Class A, B and C common stock | ||
Basic (in shares) | 452,871 | 449,749 |
Diluted (in shares) | 452,871 | 453,230 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ (589,681) | $ 22,477 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | (47,679) | 5,990 |
Unrealized gain (loss) on cash flow hedge, net of tax benefit (expense) of $11,435 and $2,600 for the three months ended March 31, 2020 and 2019, respectively | 32,545 | (9,100) |
Gain (loss) on intra-entity foreign currency transactions | (4,354) | 1,921 |
Total other comprehensive income (loss) | (19,488) | (1,189) |
Comprehensive income (loss) | $ (609,169) | $ 21,288 |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Cash flow hedge, tax benefit (expense) | $ 11,435 | $ 2,600 |
Unaudited Consolidated Statem_4
Unaudited Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common StockClass A Common Stock [Member] | Common StockClass B Convertible Common Stock [Member] | Common StockClass C Common Stock [Member] | Additional Paid-in-Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Beginning balance at Dec. 31, 2018 | $ 2,016,871 | $ 62 | $ 11 | $ 75 | $ 916,628 | $ 1,139,082 | $ (38,987) |
Beginning balance (shares) at Dec. 31, 2018 | 187,710 | 34,450 | 226,422 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options | 846 | 846 | |||||
Exercise of stock options (shares) | 154 | 178 | |||||
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements | (3,077) | (3,077) | |||||
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements (shares) | (152) | ||||||
Issuance of common stock, net of forfeitures | 1,388 | $ 1 | 1,387 | ||||
Issuance of common stock, net of forfeitures (shares) | 126 | 2,041 | |||||
Stock-based compensation expense | 12,491 | 12,491 | |||||
Comprehensive income (loss) | 21,288 | 22,477 | (1,189) | ||||
Ending balance at Mar. 31, 2019 | 2,049,807 | $ 62 | $ 11 | $ 76 | 931,352 | 1,158,482 | (40,176) |
Ending balance (shares) at Mar. 31, 2019 | 187,980 | 34,450 | 228,489 | ||||
Beginning balance at Dec. 31, 2019 | 2,150,087 | $ 62 | $ 11 | $ 76 | 973,717 | 1,226,986 | (50,765) |
Beginning balance (shares) at Dec. 31, 2019 | 188,290 | 34,450 | 229,028 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options | 484 | 484 | |||||
Exercise of stock options (shares) | 143 | 131 | |||||
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements | (2,853) | (2,853) | |||||
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements (shares) | (1) | (176) | |||||
Issuance of common stock, net of forfeitures | 1,166 | $ 1 | 1,165 | ||||
Issuance of common stock, net of forfeitures (shares) | 19 | 2,167 | |||||
Stock-based compensation expense | 10,465 | 10,465 | |||||
Comprehensive income (loss) | (609,169) | (589,681) | (19,488) | ||||
Ending balance at Mar. 31, 2020 | $ 1,550,180 | $ 62 | $ 11 | $ 77 | $ 985,831 | $ 634,452 | $ (70,253) |
Ending balance (shares) at Mar. 31, 2020 | 188,451 | 34,450 | 231,150 |
Unaudited Consolidated Statem_5
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities | ||
Net income (loss) | $ (589,681) | $ 22,477 |
Adjustments to reconcile net income (loss) to net cash used in operating activities | ||
Depreciation and amortization | 48,565 | 46,464 |
Unrealized foreign currency exchange rate gain (loss) | 12,976 | (1,725) |
Loss on disposal of property and equipment | 129 | 1,008 |
Impairment charges | 437,517 | 0 |
Amortization of bond premium | 63 | 63 |
Stock-based compensation | 10,465 | 12,493 |
Deferred income taxes | 23,253 | (1,514) |
Changes in reserves and allowances | 10,130 | (9,655) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 27,596 | (87,042) |
Inventories | (59,701) | 156,880 |
Prepaid expenses and other assets | 27,153 | 54,198 |
Other non-current assets | (336,357) | 21,594 |
Accounts payable | (192,651) | (178,428) |
Accrued expenses and other liabilities | 226,315 | (99,505) |
Customer refund liability | (8,334) | (32,168) |
Income taxes payable and receivable | (4,150) | 5,071 |
Net cash used in operating activities | (366,712) | (89,789) |
Cash flows from investing activities | ||
Purchases of property and equipment | (31,498) | (35,911) |
Purchases of other assets | 0 | 0 |
Purchase of businesses | (37,343) | 0 |
Net cash used in investing activities | (68,841) | (35,911) |
Cash flows from financing activities | ||
Proceeds from long term debt and revolving credit facility | 700,000 | 25,000 |
Payments on long term debt and revolving credit facility | (100,000) | (161,250) |
Cash paid for hedge settlement | 0 | (1,566) |
Employee taxes paid for shares withheld for income taxes | (2,732) | (3,077) |
Proceeds from exercise of stock options and other stock issuances | 1,649 | 2,232 |
Payments of debt financing costs | 0 | (3,024) |
Other financing fees | 35 | 50 |
Net cash provided by (used in) financing activities | 598,952 | (141,635) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 8,761 | (569) |
Net increase in (decrease in) cash, cash equivalents and restricted cash | 172,160 | (267,904) |
Cash, cash equivalents and restricted cash | ||
Beginning of period | 796,008 | 566,060 |
End of period | 968,168 | 298,156 |
Non-cash investing and financing activities | ||
Change in accrual for property and equipment | $ (13,081) | $ (8,979) |
Description of the Business
Description of the Business | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business | Description of the BusinessUnder Armour, Inc. and its wholly owned subsidiaries (the "Company") is a developer, marketer and distributor of branded athletic performance apparel, footwear, and accessories. The Company creates products engineered to solve problems and make athletes better, as well as digital health and fitness apps built to connect people and drive performance. The Company's products are made, sold and worn worldwide. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements include the accounts of the Company. Certain information in footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim consolidated financial statements. These consolidated financial statements are presented in U.S. Dollars. In the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair statement of the financial position and results of operations were included. Intercompany balances and transactions were eliminated upon consolidation. The consolidated balance sheet as of December 31, 2019 is derived from the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2019 (the “2019 Form 10-K”), which should be read in conjunction with these unaudited consolidated financial statements. The unaudited results for the three months ended March 31, 2020, are not necessarily indicative of the results to be expected for the year ending December 31, 2020, or any other portions thereof. On March 2, 2020, the Company acquired, on a cash free, debt free basis, 100% of Triple Pte. Ltd. ("Triple"), a distributor of the Company's products in Southeast Asia. The results of operations of this acquisition have been consolidated with those of the Company beginning on March 2, 2020. Refer to Note 4 for a discussion of the acquisition. COVID-19 In March 2020, a novel strain of coronavirus (COVID-19) was declared a global pandemic by the World Health Organization. This pandemic has negatively affected the U.S. and global economies, disrupted global supply chains and financial markets, and led to significant travel and transportation restrictions, including mandatory closures and orders to “shelter-in-place”. During this period, the Company is focused on protecting the health and safety of its teammates, athletes and consumers, working with its customers and suppliers to minimize potential disruptions and supporting the community to address challenges posed by the global pandemic, while managing the Company's business in response to a changing dynamic. The Company's business operations and financial performance for the three months ended March 31, 2020 were materially impacted by COVID-19. These impacts are discussed within these notes to the unaudited consolidated financial statements, including but not limited to discussions related to long-lived asset and goodwill impairment, long term debt, and income taxes. Further, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act) was signed into law in the United States. The CARES Act includes modifications to income tax provisions, among other items. Refer to Note 12 for discussion of modifications to income tax provisions under the CARES Act. There were no other material impacts to the Company under the CARES Act for the three months ended March 31, 2020, however, the Company is continuing to evaluate the provisions of the CARES Act and how certain decisions may impact the Company's financial position, results of operations, and disclosures in future periods. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents. The Company's restricted cash is reserved for payments related to claims for its captive insurance program, which is included in prepaid expenses and other current assets on the Company's unaudited consolidated balance sheets. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited consolidated balance sheets to the unaudited consolidated statements of cash flows. (In thousands) March 31, 2020 December 31, 2019 March 31, 2019 Cash and cash equivalents $ 959,318 $ 788,072 $ 288,726 Restricted cash 8,850 7,936 9,430 Total Cash, cash equivalents and restricted cash $ 968,168 $ 796,008 $ 298,156 Concentration of Credit Risk Financial instruments that subject the Company to significant concentration of credit risk consist primarily of accounts receivable. The majority of the Company’s accounts receivable is due from large wholesale customers. None of the Company's customers accounted for more than 10% of accounts receivable as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively. For the three months ended March 31, 2020 and 2019, no customer accounted for more than 10% of the Company's net revenues. Given the current U.S. and global economic environment and impacts of COVID-19, the Company continuously evaluates the credit risk of the large wholesale customers which make up the majority of the Company's accounts receivable. Refer to the "Credit Losses - Allowance for Doubtful Accounts" for a discussion of the evaluation of credit losses. Sale of Accounts Receivable The Company has agreements with two financial institutions to sell selected accounts receivable on a recurring, non-recourse basis. Under each agreement, the Company may sell up to $140.0 million and $50.0 million, respectively, provided the accounts receivable of certain customers cannot be outstanding simultaneously with both institutions. Our abliity to utilize these agreements, however, may be limited by the credit ratings of our customers. Balances may remain outstanding at any point in time. The Company removes the sold accounts receivable from the unaudited consolidated balance sheets at the time of sale. The Company does not retain any interests in the sold accounts receivable. The Company acts as the collection agent for the outstanding accounts receivable on behalf of the financial institutions. As of March 31, 2020, December 31, 2019 and March 31, 2019, no amounts remained outstanding under these agreements. The funding fee charged by the financial institutions is included in the other income (expense), net line item in the consolidated statement of operations. Credit Losses - Allowance for Doubtful Accounts Credit losses are the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit losses primarily through customer receivables associated with the sales of product within the Company's wholesale, licensing and Connected Fitness channels. Credit is extended to customers based on a credit review. The credit review considers each customer’s financial condition, including review of the customers established credit rating or the Company's assessment of the customer’s creditworthiness based on their financial statements absent a credit rating, local industry practices, and business strategy. A credit limit and terms are established for each customer based on the outcome of this review. The Company actively monitors ongoing credit exposure through review of customer balances against terms and payments against due dates. To mitigate credit risk, the Company may require customers to provide security in the form of guarantees, letters of credit, or prepayment. The Company is also exposed to credit losses through credit card receivables associated with the sales of products within the Company's direct to consumer channel. The allowance for doubtful accounts is based on the Company’s assessment of the collectibility of customer accounts. The Company makes ongoing estimates relating to the collectibility of accounts receivable and records an allowance for estimated losses resulting from the inability of its customers to make required payments. The Company establishes expected credit losses by evaluating historical levels of credit losses, current economic conditions that may affect a customer’s ability to pay, and creditworthiness of significant customers. These inputs are used to determine a range of expected credit losses and an allowance is recorded within the range. Accounts receivable are written off when there is no reasonable expectation of recovery. As of March 31, 2020, and December 31, 2019, the allowance for doubtful accounts was $20.6 million and $15.1 million, respectively. The $5.5 million increase within the reserve is primarily due to the evaluation of certain customer account balances in connection with negative developments regarding their credit that represent a higher risk of credit default. Write-offs and recoveries reducing the reserve were not material for the quarter. The allowance for doubtful accounts was established with information available, including reasonable and supportable estimates of future risk, to the Company as of March 31, 2020. There may be further impacts due to COVID-19. As of March 31, 2019, the allowance for doubtful accounts was $21.0 million. Revenue Recognition The Company recognizes revenue pursuant to Accounting Standards Codification 606 ("ASC 606"). Net revenues consist of net sales of apparel, footwear and accessories, license and Connected Fitness revenue. The Company recognizes revenue when it satisfies its performance obligations by transferring control of promised products or services to its customers, which occurs either at a point in time or over time, depending on when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized considers terms of sale that create variability in the amount of consideration that the Company ultimately expects to be entitled to in exchange for the products or services and is subject to an overall constraint that a significant revenue reversal will not occur in future periods. Sales taxes imposed on the Company’s revenues from product sales are presented on a net basis on the consolidated statements of operations, and therefore do not impact net revenues or costs of goods sold. Revenue transactions associated with the sale of apparel, footwear, and accessories, comprise a single performance obligation, which consists of the sale of products to customers either through wholesale or direct to consumer channels. The Company satisfies the performance obligation and records revenues when transfer of control has passed to the customer, based on the terms of sale. In the Company’s wholesale channel, transfer of control is based upon shipment under free on board shipping point for most goods or upon receipt by the customer depending on the country of the sale and the agreement with the customer. The Company may also ship product directly from its supplier to wholesale customers and recognize revenue when the product is delivered to and accepted by the customer. In the Company’s direct to consumer channel, transfer of control takes place at the point of sale for brand and factory house customers and upon shipment to substantially all e-commerce customers. Payment terms for wholesale transactions are established in accordance with local and industry practices. Payment is generally required within 30 to 60 days of shipment to or receipt by the wholesale customer in the United States, and generally within 60 to 90 days of shipment to or receipt by the wholesale customer internationally. The Company has provided extensions to standard payment terms for certain customers in connection with COVID-19. Payment is generally due at the time of sale for direct to consumer transactions. Gift cards issued to customers by the Company are recorded as contract liabilities until they are redeemed, at which point revenue is recognized. The Company also estimates and recognizes revenue for gift card balances not expected to ever be redeemed ("breakage") to the extent that it does not have a legal obligation to remit the value of such unredeemed gift cards to the relevant jurisdiction as unclaimed or abandoned property. Such estimates are based upon historical redemption trends, with breakage income recognized in proportion to the pattern of actual customer redemptions. Revenue from the Company's licensing arrangements is recognized over time during the period that licensees are provided access to the Company's trademarks and benefit from such access through their sales of licensed products. These arrangements require licensees to pay a sales-based royalty, which for most arrangements may be subject to a contractually guaranteed minimum royalty amount. Payments are generally due quarterly. The Company recognizes revenue for sales-based royalty arrangements (including those for which the royalty exceeds any contractually guaranteed minimum royalty amount) as licensed products are sold by the licensee. If a sales-based royalty is not ultimately expected to exceed a contractually guaranteed minimum royalty amount, the minimum is recognized as revenue over the contractual period. This sales-based output measure of progress and pattern of recognition best represents the value transferred to the licensee over the term of the arrangement, as well as the amount of consideration that the Company is entitled to receive in exchange for providing access to its trademarks. Revenue from Connected Fitness subscriptions is recognized on a gross basis and is recognized over the term of the subscription. The Company receives payments in advance of revenue recognition for subscriptions and these payments are recorded as contract liabilities in the Company's consolidated balance sheet. Related commission cost is included in selling, general and administrative expense in the consolidated statement of operations. Revenue from Connected Fitness digital advertising is recognized as the Company satisfies performance obligations pursuant to customer insertion orders. The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns, markdowns and allowances that have not yet been received by the Company. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to net sales in the period in which it makes such a determination. Provisions for customer specific discounts are based on negotiated arrangements with certain major customers. Reserves for returns, allowances, markdowns and discounts are included within customer refund liability and the value of inventory associated with reserves for sales returns are included within prepaid expenses and other current assets on the consolidated balance sheet. The Company reviews and refines these estimates on at least a quarterly basis. As of March 31, 2020, December 31, 2019 and March 31, 2019, there were $208.2 million, $219.4 million and $270.6 million, respectively, in reserves for returns, allowances, markdowns and discounts within customer refund liability and $63.3 million, $61.1 million and $91.8 million, respectively, as the estimated value of inventory associated with the reserves for sales returns within prepaid expenses and other current assets on the unaudited consolidated balance sheet. Contract Liabilities Contract liabilities are recorded when a customer pays consideration, or the Company has a right to an amount of consideration that is unconditional, before the transfer of a good or service to the customer, and thus represent the Company's obligation to transfer the good or service to the customer at a future date. The Company's contract liabilities primarily consist of payments received in advance of revenue recognition for subscriptions for the Company's Connected Fitness applications and royalty arrangements, included in other current liabilities, and gift cards, included in accrued expenses, on the Company's unaudited consolidated balance sheets. As of March 31, 2020, December 31, 2019, and March 31, 2019, contract liabilities were $58.5 million, $60.4 million and $55.6 million, respectively. For the three months ended March 31, 2020, the Company recognized $20.3 million of revenue that was previously included in contract liabilities as of December 31, 2019. For the three months ended March 31, 2019, the Company recognized $19.2 million of revenue that was previously included in contract liabilities as of December 31, 2018. The change in the contract liabilities balance primarily results from the timing differences between the Company's satisfaction of performance obligations and the customer's payment. Commissions related to subscription revenue are capitalized and recognized over the subscription period. Shipping and Handling Costs The Company charges certain customers shipping and handling fees. These fees are recorded in net revenues. The Company incurs freight costs associated with shipping goods to customers. These costs are recorded as a component of cost of goods sold. The Company also incurs outbound handling costs associated with preparing goods to ship to customers and certain costs to operate the Company’s distribution facilities. These costs are recorded as a component of selling, general and administrative expenses and were $14.9 million and $21.7 million for the three months ended March 31, 2020 and 2019, respectively, Equity Method Investment The Company has a common stock investment of 29.5% in Dome Corporation ("Dome"), the Company's Japanese licensee. The Company accounts for its investment in Dome under the equity method, given it has the ability to exercise significant influence, but not control, over Dome. The Company performed a qualitative assessment of potential impairment indicators for its investment in Dome and determined that indicators of impairment exist due to impacts from COVID-19. The Company performed a valuation of its investment in Dome and determined that the fair value of its investment is less than its carrying value by $3.7 million. The Company determined this decline in value to be other-than-temporary considering Dome's near and long-term financial forecast. As a result, the Company recorded a $3.7 million impairment of the Company's equity method investment in Dome for the three months ended March 31, 2020. The impairment charge was recorded within income (loss) from equity method investment on the unaudited consolidated statements of operations and as a reduction to the invested balance within other long term assets on the unaudited consolidated balance sheets. The Company calculated fair value using the discounted cash flows model, which indicates the fair value of the investment based on the present value of the cash flows that it expects the investment to generate in the future. For the three months ended March 31, 2020 and 2019, the Company recorded the allocable share of Dome’s net loss of $1.4 million and net income of $0.3 million, respectively, within income (loss) from equity method investment on the unaudited consolidated statements of operations and as an adjustment to the invested balance within other long term assets on the unaudited consolidated balance sheets. As of March 31, 2020, there was no carrying value associated with the Company’s equity investment in Dome. As of March 31, 2019, the carrying value of the Company's equity investment in Dome was $53.1 million. In addition to the investment in Dome, the Company has a license agreement with Dome. The Company recorded license revenues from Dome of $6.7 million and $6.5 million for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, December 31, 2019, and March 31, 2019, the Company had $7.0 million, $15.6 million, and $6.5 million, respectively, in licensing receivables outstanding, recorded in the prepaid expenses and other current assets line item within the Company's unaudited consolidated balance sheets. On March 2, 2020, as part of the Company's acquisition of Triple, the Company assumed 49.5% of common stock ownership in UA Sports (Thailand) Co., Ltd. (“UA Sports Thailand”). The Company accounts for its investment in UA Sports Thailand under the equity method, given it has the ability to exercise significant influence, but not control, over UA Sports Thailand. For the three months ended March 31, 2020, the Company recorded the allocable share of UA Sports Thailand’s net loss of $0.4 million within income (loss) from equity method investment on the unaudited consolidated statements of operations and as an adjustment to the invested balance within other long term assets on the unaudited consolidated balance sheets. As of March 31, 2020, the carrying value of the Company’s total investment in UA Sports Thailand was $4.7 million. Refer to Note 4 for discussion of the acquisition. Management Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Further, the full impact of COVID-19 cannot reasonably be estimated. The Company has made appropriate accounting estimates and assumptions based on the facts and circumstances available as of the reporting date. The Company may experience further impacts based on long-term effects on the Company's customers and the countries in which the Company operates. As a result of these uncertainties, actual results could differ from those estimates and assumptions. Recently Adopted Accounting Standards In December 2019, the Financial Accounting Standards Board ("FASB") issued ASU 2019-12 to simplify the accounting for income taxes. The ASU impacts various topic areas within ASC 740, including accounting for taxes under hybrid tax regimes, accounting for increases in goodwill, allocation of tax amounts to separate company financial statements within a group that files a consolidated tax return, intraperiod tax allocation, interim period accounting, and accounting for ownership changes in investments, among other minor codification improvements. The guidance in this ASU becomes effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and may be early adopted. The Company has elected to early adopt this standard as of January 1, 2020. The adoption of this ASU does not have a material impact on the unaudited consolidated financial statements or disclosures for the first quarter 2020. The aspect of this ASU which may have the most significant impact to the Company in future periods is the removal of a limit on the tax benefit recognized on pre-tax losses in interim periods that exceeds the anticipated tax benefit for the full year. |
Restructuring and Related Impai
Restructuring and Related Impairment Charges | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Impairment | Restructuring and Related Impairment ChargesOn March 31, 2020, the Company's Board of Directors approved the previously announced restructuring plan ("2020 Restructuring") designed to rebalance the Company’s cost base to further improve profitability and cash flow generation. This restructuring plan was developed prior to assessing the potential impacts of the COVID-19 pandemic on the Company’s business and the Company continues to evaluate what actions may be necessary related to the pandemic. In connection with the restructuring plan, the Company expects to incur total estimated pre-tax restructuring and related charges in the range of $475 million to $525 million during 2020 primarily consisting of up to approximately: • $175 million of cash restructuring charges, comprised of up to: $55 million in facility and lease termination costs, $25 million in employee severance and benefit costs, and $95 million in contract termination and other restructuring costs; and • $350 million of non-cash charges comprised of an impairment of $290 million related to the Company’s New York City flagship store and $60 million of intangibles and other asset related impairments. The Company recorded $301.1 million of restructuring and related impairment charges as of March 31, 2020, including the right of use asset ("ROU") impairment related to its New York City flagship store. The summary of the costs recorded during the three months ended March 31, 2020, as well as the Company's current estimates of the amount expected to be incurred during the remainder of 2020 in connection with the 2020 restructuring plan is as follows: Restructuring and Related Impairment Charges Recorded Estimated Restructuring and Related Impairment Charges to be Incurred (1) (In thousands) Three Months Ended Nine Months Ending December 31, 2020 Year Ending December 31, 2020 Costs recorded in cost of goods sold: Contract-based royalties $ — $ 11,000 $ 11,000 Total costs recorded in cost of goods sold — 11,000 11,000 Costs recorded in restructuring and related impairment charges: Property and equipment impairment 7,094 36,906 44,000 ROU asset impairment 290,813 — 290,813 Employee related costs — 25,000 25,000 Contract exit costs — 115,000 115,000 Other restructuring costs 3,182 35,818 39,000 Total costs recorded in restructuring and related impairment charges 301,089 212,724 513,813 Total restructuring and related impairment and restructuring related costs $ 301,089 $ 223,724 $ 524,813 (1) Estimated restructuring and related impairment charges to be incurred reflect the high-end of the range of the estimated remaining charges expected to be taken by the Company during 2020 in connection with the restructuring plan. All restructuring and related impairment charges are included in the Company's Corporate Other non-operating segment, of which $297.9 million are North America related for the three months ended March 31, 2020. The lease for the Company's New York City flagship store commenced on March 1, 2020 and an operating lease ROU asset and corresponding operating lease liability of $344.8 million was recorded on the Company's unaudited consolidated balance sheet. As a part of the 2020 Restructuring, the Company made the strategic decision to forgo the opening of its New York City flagship store and the property is actively being marketed for sublease. The Company recognized a ROU asset impairment of $290.8 million for the three months ended March 31, 2020, reducing the carrying value of the lease asset to its estimated fair value. Fair value was estimated using an income-approach based on management's forecast of future cash flows expected to be derived from the property based on current sublease market rent. Rent expense or sublease income related to this lease will be recorded within other income (expense) on the unaudited consolidated statements of operations. These charges require the Company to make certain judgements and estimates regarding the amount and timing of restructuring and related impairment charges or recoveries. The estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, the Company conducts an evaluation of the related liabilities and expenses and revises its assumptions and estimates as appropriate as new or updated information becomes available. A summary of the activity in the restructuring reserve related to the Company's 2020, 2018 and 2017 restructuring plans is as follows: (In thousands) Employee Related Costs Contract Exit Costs Other Restructuring Related Costs Balance at January 1, 2020 $ 462 $ 17,843 $ — Additions charged to expense — — 3,182 Cash payments charged against reserve — (240) — Changes in reserve estimate — — — Balance at March 31, 2020 $ 462 $ 17,603 $ 3,182 |
Acquisition
Acquisition | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition On March 2, 2020, the Company acquired, on a cash free, debt free basis, 100% of Triple Pte. Ltd. ("Triple"), a distributor of the Company's products in Southeast Asia. The purchase price for the acquisition was $32.9 million in cash, net of $8.9 million of cash acquired that was held by Triple at closing and settlement of $5.1 million in pre-existing trade receivables due from Triple prior to the acquisition. The results of operations of this acquisition have been consolidated with those of the Company beginning on March 2, 2020. The Company recognized $0.7 million in acquisition related costs that were expensed during the three months ended March 31, 2020. These costs are included in selling, general and administrative expenses within the unaudited consolidated statement of operations. Pro forma results are not presented, as the acquisition was not considered material to the consolidated Company. |
Property, Plant, and Equipment
Property, Plant, and Equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Long-Lived Asset And Goodwill Impairment | Long-Lived Asset and Goodwill Impairment Long-Lived Asset Impairment As a result of the impacts of COVID-19, the Company determined that sufficient indicators existed to trigger the performance of an interim long-lived asset impairment analysis as of March 31, 2020. Accordingly, the Company performed an undiscounted cash flow analyses on it's long-lived assets, including retail stores at an individual store level. Based on these undiscounted cash flow analyses, the Company determined that certain long-lived assets had net carrying values that exceeded their estimated undiscounted future cash flows. The Company estimates the fair values of these long-lived assets based on their discounted cash flows or market rent assessments. The Company compared these estimated fair values to the net carrying values. As a result, the Company recognized $83.8 million of long-lived asset impairment charges for the three months ended March 31, 2020. The long-lived impairment charge was recorded within restructuring and impairment charges on the unaudited consolidated statements of operations and as a reduction to the related asset balances on the unaudited consolidated balance sheets. The long-lived asset impairment charges are included within the Company's operating segments as follows: $43.4 million recorded in North America, $25.5 million recorded in Asia-Pacific, $12.8 million recorded in Latin America, and $2.1 million recorded in EMEA for the three months ended March 31, 2020. The significant estimates, all of which are considered Level 3 inputs, used in the fair value methodology include: the Company's expectations for future operations and projected cash flows, including net revenue, gross profit and operating expenses and market conditions. Additionally, the Company recognized $290.8 million of long-lived asset impairment charges related to the Company's New York City flagship store, which was recorded in connection with the Company's 2020 Restructuring Plan. Refer to Note 3 for further discussion of the restructuring and related impairment charges. Goodwill Impairment As a result of the impacts of COVID-19, the Company determined that sufficient indicators existed to trigger the performance of an interim goodwill impairment analysis for all of the Company’s reporting units as of March 31, 2020. The Company performed discounted cash flow analyses and determined that the estimated fair values of the Latin America reporting unit and the Canada reporting unit, within the North America operating segment, no longer exceeded its carrying value, resulting in an impairment of goodwill. The Company recognized goodwill impairment charges of $51.6 million for these reporting units for the three months ended March 31, 2020. The goodwill impairment charge was recorded within restructuring and impairment charges on the unaudited consolidated statements of operations and as a reduction to the goodwill balance within goodwill on the unaudited consolidated balance sheets. The determination of the Company’s reporting units' fair value includes assumptions that are subject to various risks and uncertainties. The significant estimates, all of which are considered Level 3 inputs, used in the discounted cash flow analyses include: the Company’s weighted average cost of capital, adjusted for the risk attributable to the geographic regions of the reporting unit's business, long-term rate of growth and profitability of the reporting unit's business, working capital effects, and changes in market conditions, consumer trends or strategy. The fair value of each of the Company's other reporting units substantially exceeded its carrying value with the exception of the EMEA reporting unit. The fair value of the EMEA reporting unit exceeded its carrying value by 16%. Holding all other assumptions used in the fair value measurement of the EMEA reporting unit constant, a reduction in the growth rate of revenue by 1.5 percentage points or a reduction in the growth rate of net income by 2.3 percentage points would eliminate the headroom. No events occurred during the period ended March 31, 2020 that indicated it was more likely than not that goodwill was impaired for this reporting unit. The following table summarizes changes in the carrying amount of the Company’s goodwill by reportable segment as of the periods indicated: (In thousands) North America EMEA Asia-Pacific Latin America Connected Fitness Total Balance as of December 31, 2019 318,288 106,066 79,168 46,656 — 550,178 Effect of currency translation adjustment (1,573) (4,354) 3,422 (10,426) — (12,931) Impairment (15,345) — — (36,230) — (51,575) Balance as of March 31, 2020 $ 301,370 $ 101,712 $ 82,590 $ — $ — $ 485,672 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company enters into operating leases both domestically and internationally, to lease certain warehouse space, office facilities, space for its brand and factory house stores and certain equipment under non-cancelable operating leases. The leases expire at various dates through 2035, excluding extensions at the Company's option, and include provisions for rental adjustments. The Company accounts for a contract as a lease when it has the right to direct the use of the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its right-of-use ("ROU") assets and lease liabilities at the lease commencement date and thereafter if modified. ROU assets represent the Company’s right to control the underlying assets under lease, over the contractual term. ROU assets and lease liabilities are recognized on the consolidated balance sheets based on the present value of future minimum lease payments to be made over the lease term. ROU assets and lease liabilities are established on the consolidated balance sheets for leases with an expected term greater than one year. Short-term lease payments were not material for the quarter ended March 31, 2020. As the rate implicit in the lease is not readily determinable, the Company uses its secured incremental borrowing rate to determine the present value of the lease payments. The Company calculates the incremental borrowing rate based on the current market yield curve and adjusts for foreign currency for international leases. Fixed lease costs are included in the recognition of ROU assets and lease liabilities. Variable lease costs are not included in the measurement of the lease liability. These variable lease payments are recognized in the consolidated statements of operations in the period in which the obligation for those payments is incurred. Variable lease payments primarily consist of payments dependent on sales in brand and factory house stores. The Company has elected to combine lease and non-lease components in the determination of lease costs for its leases. The lease liability includes lease payments related to options to extend or renew the lease term only if the Company is reasonably certain to exercise those options. The Company recognizes lease expense on a straight-line basis over the lease term. Included in selling, general and administrative expenses were operating lease costs of $37.9 million and $37.1 million for the three months ended March 31, 2020 and 2019, respectively, including $2.0 million and $2.2 million in variable lease payments, for the three months ended March 31, 2020 and 2019, respectively, under non-cancelable operating lease agreements. There are no residual value guarantees that exist, and there are no restrictions or covenants imposed by leases. The Company rents or subleases excess office facilities and warehouse space to third parties. Sublease income is not material. Supplemental balance sheet information related to leases was as follows: Three months ended March 31, 2020 Three months ended March 31, 2019 Weighted average remaining lease term (in years) 9.64 7.35 Weighted average discount rate 3.99 4.30 Supplemental cash flow and other information related to leases was as follows: (In thousands) Three months ended March 31, 2020 Three months ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows from operating leases $ 36,547 $ 17,563 Leased assets obtained in exchange for new operating lease liabilities $ 72,963 $ 3,344 Maturities of lease liabilities are as follows: (In thousands) 2020 $ 125,108 2021 169,446 2022 157,176 2023 138,031 2024 121,336 2025 and thereafter 560,783 Total lease payments $ 1,271,880 Less: Interest 228,368 Total present value of lease liabilities (1) $ 1,043,512 (1) Amounts above reflect lease liabilities associated with the Company's New York City flagship store lease, which commenced on March 1, 2020. However, refer to Note 3 for discussion of the impairment of the associated ROU lease asset. |
Long Term Debt
Long Term Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Long Term Debt | Long Term Debt Credit Facility In March 2019, the Company entered into an amended and restated credit agreement by and among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, PNC Bank, National Association, as syndication agent and the other lenders and arrangers party thereto (the "credit agreement"), amending and restating the Company's prior credit agreement. The credit agreement has a term of five years, maturing in March 2024, with permitted extensions under certain circumstances, and provides revolving credit commitments of up to $1.25 billion of borrowings, but no term loan borrowings, which were provided for under the prior credit agreement. During the three months ended March 31, 2020, the Company borrowed up to $700 million under the credit agreement as a precautionary measure in order to increase its cash position and preserve liquidity given the ongoing uncertainty in global markets resulting from the COVID-19 outbreak. As of March 31, 2020, there was $600 million outstanding under the revolving credit facility. As of March 31, 2019, there were no amounts outstanding under the revolving credit facility. In April 2020, the Company borrowed an additional $100 million under the revolving credit facility. At the Company's request and the lender's consent, commitments under the credit agreement may be increased by up to $300.0 million in aggregate, subject to certain conditions as set forth in the credit agreement, as amended. Incremental borrowings are uncommitted and the availability thereof will depend on market conditions at the time the Company seeks to incur such borrowings. Borrowings under the revolving credit facility have maturities of less than one year. Up to $50.0 million of the facility may be used for the issuance of letters of credit. There were $5.0 million, $5.0 million and $4.6 million of letters of credit outstanding as of March 31, 2020, December 31, 2019 and March 31, 2019, respectively. The credit agreement contains negative covenants that limit the Company's ability to engage in certain transactions, as well as financial covenants that require the Company to comply with specific consolidated leverage and interest coverage ratios. As of March 31, 2020, the Company was in compliance with these ratios. The Company is in the final stages of amending it's credit agreement, which the Company expects to execute after the filing of this Quarterly Report on Form 10-Q. The Company expects this amendment to provide relief under our financial covenants for specified future periods and provide the Company with better access to liquidity during those periods. However, based on the potential impact of the COVID-19 pandemic, in the unlikely event that the Company is unable to amend its credit agreement, then in future quarters the Company would need to repay the amounts already borrowed under our credit agreement, and would not be able to access additional borrowings under that agreement. In that event, the Company would need to take actions to further reduce its expenditures, including reductions to discretionary spending and changes to investment strategies, negotiating payment terms with its customers and vendors, reductions in compensation costs, including through temporary reductions in pay and layoffs, and limiting certain marketing expenditures. In addition the Company would seek alternative sources of liquidity, including but not limited to accessing the capital markets, sale leaseback transactions or other sales of assets, or other alternative financing measures. In addition, the credit agreement contains events of default that are customary for a facility of this nature, and includes a cross default provision whereby an event of default under other material indebtedness, as defined in the credit agreement, will be considered an event of default under the credit agreement. Borrowings under the credit agreement bear interest at a rate per annum equal to, at the Company’s option, either (a) an alternate base rate, or (b) a rate based on the rates applicable for deposits in the interbank market for U.S. Dollars or the applicable currency in which the loans are made (“adjusted LIBOR”), plus in each case an applicable margin. The applicable margin for loans will be adjusted by reference to a grid (the “Pricing Grid”) based on the consolidated leverage ratio and ranges between 1.00% to 1.25% for adjusted LIBOR loans and 0.00% to 0.25% for alternate base rate loans. The weighted average interest rate under the revolving credit facility borrowings was 3.2% and 3.6% during the three months ended March 31, 2020 and 2019, respectively. The Company pays a commitment fee on the average daily unused amount of the revolving credit facility and certain fees with respect to letters of credit. As of March 31, 2020, the commitment fee was 15.0 basis points. The Company incurred and deferred $3.4 million in financing costs in connection with the credit agreement. 3.250% Senior Notes In June 2016, the Company issued $600.0 million aggregate principal amount of 3.250% senior unsecured notes due June 15, 2026 (the “Notes”). Interest is payable semi-annually on June 15 and December 15 beginning December 15, 2016. The Company may redeem some or all of the Notes at any time, or from time to time, at redemption prices described in the indenture governing the Notes. The indenture governing the Notes contains negative covenants that limit the Company’s ability to engage in certain transactions and are subject to material exceptions described in the indenture. The Company incurred and deferred $5.3 million in financing costs in connection with the Notes. Interest Expense Interest expense, net, was $6.0 million and $4.2 million for the three months ended March 31, 2020 and 2019, respectively. Interest expense includes the amortization of deferred financing costs, bank fees, capital and built-to-suit lease interest and interest expense under the credit and other long term debt facilities. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesFrom time to time, the Company is involved in litigation and other proceedings, including matters related to commercial and intellectual property disputes, as well as trade, regulatory and other claims related to its business. Other than as described below, the Company believes that all current proceedings are routine in nature and incidental to the conduct of its business, and that the ultimate resolution of any such proceedings will not have a material adverse effect on its consolidated financial position, results of operations or cash flows. In re Under Armour Securities Litigation On March 23, 2017, three separate securities cases previously filed against the Company in the United States District Court for the District of Maryland (the “District Court”) were consolidated under the caption In re Under Armour Securities Litigation , Case No. 17-cv-00388-RDB (the “Consolidated Action”). On August 4, 2017, the lead plaintiff in the Consolidated Action, North East Scotland Pension Fund, joined by named plaintiff Bucks County Employees Retirement Fund, filed a consolidated amended complaint (the “Amended Complaint”) against the Company, the Company’s then-Chief Executive Officer, Kevin Plank, and former Chief Financial Officers Lawrence Molloy and Brad Dickerson. The Amended Complaint alleges violations of Section 10(b) (and Rule 10b-5) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 20(a) control person liability under the Exchange Act against the officers named in the Amended Complaint, claiming that the defendants made material misstatements and omissions regarding, among other things, the Company's growth and consumer demand for certain of the Company's products. The class period identified in the Amended Complaint is September 16, 2015 through January 30, 2017. The Amended Complaint also asserts claims under Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”), in connection with the Company’s public offering of senior unsecured notes in June 2016. The Securities Act claims are asserted against the Company, the Mr. Plank, Mr. Molloy, the Company’s directors who signed the registration statement pursuant to which the offering was made and the underwriters that participated in the offering. The Amended Complaint alleges that the offering materials utilized in connection with the offering contained false and/or misleading statements and omissions regarding, among other things, the Company’s growth and consumer demand for certain of the Company’s products. On November 9, 2017, the Company and the other defendants filed motions to dismiss the Amended Complaint. On September 19, 2018, the District Court dismissed the Securities Act claims with prejudice and the Exchange Act claims without prejudice. The lead plaintiff filed a Second Amended Complaint on November 16, 2018, asserting claims under the Exchange Act and naming the Company and Mr. Plank as the remaining defendants. The remaining defendants filed a motion to dismiss the Second Amended Complaint on January 17, 2019. On August 19, 2019, the District Court dismissed the Second Amended Complaint with prejudice. In September 2019, plaintiffs filed an appeal in the United States Court of Appeals for the Fourth Circuit challenging the decisions by the District Court on September 19, 2018 and August 19, 2019 (the “Appeal”). The Appeal was fully briefed as of January 16, 2020. On November 18, 2019, before briefing on the Appeal was complete, the lead plaintiff filed in the District Court a motion for an indicative ruling under Federal Rule of Civil Procedure 62.1 (the “Rule 62.1 Motion”) seeking relief from the final judgment pursuant to Federal Rule of Civil Procedure 60(b). The Rule 62.1 Motion alleged that purported newly discovered evidence entitled the lead plaintiff to relief from the District Court’s final judgment. On January 22, 2020, the District Court granted the Rule 62.1 motion and indicated that it would grant a motion for relief from the final judgment and provide the lead plaintiff with the opportunity to file a third amended complaint if the Fourth Circuit remands for that purpose. The District Court further stated that it would, upon remand, consolidate the matter with Patel v. Under Armour, Inc. and Waronker v. Under Armour Inc. , described below, and appoint the lead plaintiff of In re Under Armour Securities Litigation as the lead plaintiff over the consolidated cases. The Company continues to believe that the claims are without merit and intends to defend the lawsuit vigorously. However, because of the inherent uncertainty as to the outcome of this proceeding, the Company is unable at this time to estimate the possible impact of this matter. Patel v. Under Armour, Inc. and Waronker v. Under Armour, Inc. On November 6, 2019, a purported shareholder of the Company filed a securities case in the United States District Court for the District of Maryland against the Company and the Company’s then-Chief Executive Officer, Kevin Plank, Chief Financial Officer, David Bergman, and then-Chief Operating Officer, Patrik Frisk, as well as former Chief Financial Officer, Lawrence Molloy (captioned Patel v. Under Armour, Inc ., No 1:19-cv-03209-RDB). The complaint alleges violations of Section 10(b) (and Rule 10b-5) of the Exchange Act, against all defendants, and Section 20(a) control person liability under the Exchange Act against the current and former officers named in the complaint. The complaint claims that the defendants’ disclosures and statements supposedly misrepresented or omitted that the Company was purportedly shifting sales between quarterly periods allegedly to appear healthier and that the Company was under investigation by and cooperating with the United States Department of Justice and the United States Securities and Exchange Commission since July 2017. The class period identified in the complaint is August 3, 2016 through November 1, 2019, inclusive. On December 17, 2019, a purported shareholder of the Company filed a securities case in the United States District Court for the District of Maryland against the Company and Mr. Plank, Mr. Bergman and Mr. Frisk, as well as two former Chief Financial Officers of the Company (captioned Waronker v. Under Armour, Inc. , No. 1:19-cv-03581-RDB). Like the Patel complaint, the Waronker complaint alleges violations of Section 10(b) (and Rule 10b-5) of the Exchange Act, against all defendants, and Section 20(a) control person liability under the Exchange Act against the current and former officers named in the complaint. The complaint claims that the defendants’ disclosures and statements supposedly misrepresented or omitted that the Company was purportedly shifting sales between quarterly periods allegedly to appear healthier and that the Company was under investigation by and cooperating with the United States Department of Justice and the United States Securities and Exchange Commission since July 2017. The class period identified in the complaint is September 16, 2015 through November 1, 2019, inclusive. The Court has not consolidated these cases or appointed a lead plaintiff and the Company has no pending deadline to respond to the complaint in either of these actions. As described above, the Court indicated in a January 22, 2020 decision in the In re Under Armour Securities Litigation case that it anticipated consolidating that matter with these cases and appointing the lead plaintiff in In re Under Armour Securities Litigation as the lead plaintiff over the consolidated cases, in the event that the Fourth Circuit remands the In re Under Armour Securities Litigation case. The Company believes that the claims are without merit and intends to defend the lawsuits vigorously. However, because of the inherent uncertainty as to the outcome of these proceedings, the Company is unable at this time to estimate the possible impact of these matters. Olin Derivative Complaint On December 26, 2019, Dale Olin, a purported shareholder of the Company, filed a shareholder derivative lawsuit in state court in Baltimore, Maryland, captioned Olin v. Under Armour, Inc. , et al. , No. 24-C-19-006850 (Md. Cir. Ct.). The complaint was brought against Mr. Plank, Mr. Bergman and Mr. Frisk, and certain other members of the Company’s Board of Directors and names the Company as a nominal defendant. The complaint alleged that the defendants breached their fiduciary duties between August 2016 and November 2019 by (i) failing to disclose or take appropriate action regarding alleged shifting of sales between quarterly periods to appear healthier, (ii) failing to “adhere to accepted accounting principles regarding revenue recognition, which resulted in materially false and misleading public statements by the Company,” (iii) failing to disclose that the Company was under investigation by and cooperating with the United States Department of Justice and the United States Securities and Exchange Commission, and (iv) exposing the Company to the aforementioned investigations and to a securities fraud class action. Prior to the filing of the derivative complaint in Olin v. Under Armour, Inc. , et al. , the purported stockholder did not make a demand that the Company pursue claims similar to the claims asserted in the complaint. The Company and the defendants filed a motion to dismiss the complaint in the Olin action on March 12, 2020. On March 30, 2020, the plaintiff filed a notice of voluntary dismissal with the court, dismissing its complaint without prejudice. Sagamore Derivative Complaints In April 2018, two purported stockholders filed separate stockholder derivative complaints in the United States District Court for the District of Maryland. These were brought against Mr. Plank and certain other members of the Company’s Board of Directors and named the Company as a nominal defendant. The complaints made allegations related to the Company’s purchase of certain parcels of land from entities controlled by Mr. Plank (through Sagamore Development Company, LLC (“Sagamore”)), as well as other related party transactions. Prior to the filing of these derivative complaints, each of the purported stockholders had sent the Company’s Board of Directors a letter demanding that the Company pursue claims similar to the claims asserted in the derivative complaints. Following an investigation, a majority of disinterested and independent directors of the Company determined that the claims should not be pursued by the Company and informed each of these purported stockholders of that determination. Sagamore purchased the parcels in 2014. Its total investment in the parcels was approximately $72.0 million, which included the initial $35.0 million purchase price for the property, an additional $30.6 million to terminate a lease encumbering the property and approximately $6.4 million of development costs. As previously disclosed, in June 2016, the Company purchased the unencumbered parcels for $70.3 million in order to further expand the Company’s corporate headquarters to accommodate its growth needs. The Company negotiated a purchase price for the parcels that it determined represented the fair market value of the parcels and approximated the cost to the seller to purchase and develop the parcels. In connection with its evaluation of the potential purchase, the Company engaged an independent third-party to appraise the fair market value of the parcels, and the Audit Committee of the Company’s Board of Directors engaged its own independent appraisal firm to assess the parcels. The Audit Committee determined that the terms of the purchase were reasonable and fair, and the transaction was approved by the Audit Committee in accordance with the Company’s policy on transactions with related persons. On March 20, 2019, these cases were consolidated under the caption In re Under Armour, Inc. Shareholder Derivative Litigation and a lead plaintiff was appointed by the court. On May 1, 2019, the lead plaintiff filed a consolidated derivative complaint asserting that Mr. Plank and the director defendants breached their fiduciary duties in connection with the purchase of the parcels and other related party transactions and that Sagamore aided and abetted the alleged breaches of fiduciary duty by the other defendants in connection with Sagamore’s alleged role in the sale of the parcels to the Company. The consolidated complaint also asserted an unjust enrichment claim against Mr. Plank and Sagamore. It sought damages on behalf of the Company and certain corporate governance related actions. The Company and the defendants filed a motion to dismiss the consolidated complaint on July 2, 2019. On March 30, 2020, the court granted the motion and dismissed the consolidated complaint in its entirety. Disclosure-related Derivative Complaints In June and July 2018, three purported stockholder derivative complaints were filed. Two of the complaints were filed in Maryland state court (in cases captioned Kenney v. Plank, et al. (filed June 29, 2018) and Luger v. Plank, et al. (filed July 26, 2018), respectively), and those cases were consolidated on October 19, 2018 under the caption Kenney v. Plank, et. al. The other complaint was filed in the United States District Court for the District of Maryland (in a case captioned Andersen v. Plank et al. (filed July 23, 2018)). The operative complaints in these cases name Mr. Plank, certain other members of the Company’s Board of Directors and certain former Company executives as defendants, and name the Company as a nominal defendant. The operative complaints include allegations similar to those in the In re Under Armour Securities Litigation matter discussed above that challenges, among other things, the Company’s disclosures related to growth and consumer demand for certain of the Company’s products and stock sales by certain individual defendants. The operative complaints in each of these cases assert breach of fiduciary duty and unjust enrichment claims against the individual defendants. The operative complaint in the Kenney matter also makes allegations similar to those in the consolidated complaint in the In re Under Armour, Inc. Shareholder Derivative Litigation matter discussed above regarding the Company’s purchase of parcels from entities controlled by Mr. Plank through Sagamore and asserts a claim of corporate waste against the individual defendants. These complaints seek similar remedies to the remedies sought in the In re Under Armour, Inc. Shareholder Derivative Litigation complaint. The Andersen action was stayed between December 2018 and August 2019 pursuant to a court order. In September 2019, pursuant to an agreement between the parties, the court in the Andersen action entered an order staying that case pending the resolution of the Appeal in In re Under Armour Securities Litigation . On March 29, 2019, the court in the consolidated Kenney action granted the Company’s and the defendants’ motion to stay that case pending the outcome of both the In re Under Armour Securities Litigation and the In re Under Armour, Inc. Shareholder Derivative Litigation matters. Prior to the filing of the derivative complaints in Kenney v. Plank, et al. , Luger v. Plank, et al. , and Andersen v. Plank et al. , each of the purported stockholders had sent the Company’s Board of Directors a letter demanding that the Company pursue claims similar to the claims asserted in the derivative complaints. Following an investigation, a majority of disinterested and independent directors of the Company determined that the claims should not be pursued by the Company and informed each of these purported stockholders of that determination. The Company believes that the claims asserted in the derivative complaints are without merit and intends to defend these matters vigorously. However, because of the inherent uncertainty as to the outcome of these proceedings, the Company is unable at this time to estimate the possible impact of the outcome of these matters. Data Incident In 2018, an unauthorized third party acquired data associated with the Company's Connected Fitness users' accounts for the Company's MyFitnessPal application and website. The Company has faced consumer class action lawsuits associated with this incident and has received inquiries regarding the incident from certain government regulators and agencies. The Company does not currently consider these matters to be material and believes its insurance coverage will provide coverage should any significant expense arise. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value accounting guidance outlines a valuation framework, creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures, and prioritizes the inputs used in measuring fair value as follows: 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. Financial assets (liabilities) measured at fair value on a recurring basis are set forth in the table below: March 31, 2020 December 31, 2019 March 31, 2019 (In thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative foreign currency contracts (see Note 11) $ — $ 35,971 $ — $ — $ (7,151) $ — $ — $ 9,385 $ — TOLI policies held by the Rabbi Trust — 5,471 — — 6,543 — — 5,877 — Deferred Compensation Plan obligations — (10,443) — — (10,839) — — (9,598) — Fair values of the financial assets and liabilities listed above are determined using inputs that use as their basis readily observable market data that are actively quoted and are validated through external sources, including third-party pricing services and brokers. The foreign currency contracts represent unrealized gains and losses on derivative contracts, which is the net difference between the U.S. dollar value to be received or paid at the contracts’ settlement date and the U.S. dollar value of the foreign currency to be sold or purchased at the current market exchange rate. The interest rate swap contracts represent gains and losses on the derivative contracts, which is the net difference between the fixed interest to be paid and variable interest to be received over the term of the contract based on current market rates. The fair value of the trust owned life insurance (“TOLI”) policies held by the Rabbi Trust are based on the cash-surrender value of the life insurance policies, which are invested primarily in mutual funds and a separately managed fixed income fund. These investments are initially made in the same funds and purchased in substantially the same amounts as the selected investments of participants in the Under Armour, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”), which represent the underlying liabilities to participants in the Deferred Compensation Plan. Liabilities under the Deferred Compensation Plan are recorded at amounts due to participants, based on the fair value of participants’ selected investments. As of March 31, 2020 , December 31, 2019, and March 31, 2019, the fair value of the Company's Senior Notes was $551.5 million, $587.5 million and $548.2 million, respectively. The carrying value of the Company's other long term debt approximated its fair value as of March 31, 2020 , December 31, 2019 and March 31, 2019. The fair value of long term debt is estimated based upon quoted prices for similar instruments or quoted prices for identical instruments in inactive markets (Level 2). Some assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. These assets can include long-lived assets and goodwill that have been reduced to fair value when impaired. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | Stock Based CompensationPerformance-Based Equity CompensationThe Company grants a combination of time-based and performance-based restricted stock units and stock options as part of its incentive compensation. Certain senior executives are eligible to receive performance-based awards. The Company did not grant any performance-based restricted stock units or stock options during the three months ended March 31, 2020. During 2019, the Company granted performance-based restricted stock units or stock options with vesting conditions tied to the achievement of revenue and operating income targets for 2019 and 2020. As of March 31, 2020, the Company deemed the achievement of these revenue and operating income targets improbable. As such the Company recorded a reversal of $2.9 million of expense for the performance-based restricted stock units and stock options during the three months ended March 31, 2020. |
Risk Management and Derivatives
Risk Management and Derivatives | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Risk Management and Derivatives | Risk Management and Derivatives The Company is exposed to global market risks, including the effects of changes in foreign currency and interest rates. The Company uses derivative instruments to manage financial exposures that occur in the normal course of business and does not hold or issue derivatives for trading or speculative purposes. The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally documents all relationships between designated hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to forecasted cash flows and assessing, both at inception and on an ongoing basis, the effectiveness of the hedging relationships. The Company's foreign exchange risk management program consists of designated cash flow hedges and undesignated hedges. As of March 31, 2020, the Company has hedge instruments, primarily for U.S. Dollar/Chinese Renminbi, British Pound/U.S. Dollar, U.S. Dollar/Canadian Dollar, Euro/U.S. Dollar, U.S. Dollar/Japanese Yen, and U.S. Dollar/Mexican Peso currency pairs. All derivatives are recognized on the unaudited consolidated balance sheets at fair value and classified based on the instrument’s maturity date. The following table presents the fair values of derivative instruments within the unaudited consolidated balance sheets. Refer to Note 9 for a discussion of the fair value measurements. (In thousands) Balance Sheet Classification March 31, 2020 December 31, 2019 March 31, 2019 Derivatives designated as hedging instruments under ASC 815 Foreign currency contracts Other current assets $ 35,087 $ 4,040 $ 10,185 Foreign currency contracts Other long term assets 4,791 24 273 Interest rate swap contracts Other long term assets — — — Total derivative assets designated as hedging instruments $ 39,878 $ 4,064 $ 10,458 Foreign currency contracts Other current liabilities $ 789 $ 8,772 $ 1,973 Foreign currency contracts Other long term liabilities — $ 2,443 $ 307 Total derivative liabilities designated as hedging instruments $ 789 $ 11,215 $ 2,280 Derivatives not designated as hedging instruments under ASC 815 Foreign currency contracts Other current assets $ 8,582 $ 2,337 $ 4,611 Total derivative assets not designated as hedging instruments $ 8,582 $ 2,337 $ 4,611 Foreign currency contracts Other current liabilities $ 1,740 $ 9,510 $ 840 Total derivative liabilities not designated as hedging instruments $ 1,740 $ 9,510 $ 840 The following table presents the amounts in the unaudited consolidated statements of operations in which the effects of cash flow hedges are recorded and the effects of cash flow hedge activity on these line items. Three months ended March 31, 2020 2019 (In thousands) Total Amount of Gain (Loss) on Cash Flow Hedge Activity Total Amount of Gain (Loss) on Cash Flow Hedge Activity Net revenues $ 930,240 $ 1,788 $ 1,204,722 $ 3,792 Cost of goods sold 499,256 1,117 659,935 740 Interest expense, net (5,960) (9) (4,238) 1,625 Other income (expense), net 1,534 21 (667) 640 The following tables present the amounts affecting the unaudited statements of comprehensive income (loss). (In thousands) Balance as of Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives Amount of gain (loss) reclassified from other comprehensive income (loss) into income Balance as of March 31, 2020 Derivatives designated as cash flow hedges Foreign currency contracts (6,005) 46,876 2,905 37,965 Interest rate swaps (577) — (9) (568) Total designated as cash flow hedges $ (6,582) $ 46,876 $ 2,896 $ 37,397 (In thousands) Balance as of Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives Amount of gain (loss) reclassified from other comprehensive income (loss) into income Balance as of Derivatives designated as cash flow hedges Foreign currency contracts 21,908 (4,971) 5,172 11,766 Interest rate swaps 954 68 1,625 (604) Total designated as cash flow hedges $ 22,862 $ (4,903) $ 6,797 $ 11,162 The following table presents the amounts in the unaudited consolidated statements of operations in which the effects of undesignated derivative instruments are recorded and the effects of fair value hedge activity on these line items. Three months ended March 31, 2020 2019 (In thousands) Total Amount of Gain (Loss) on Fair Value Hedge Activity Total Amount of Gain (Loss) on Fair Value Hedge Activity Other income (expense), net $ 1,534 $ (2,826) $ (667) $ (449) Cash Flow Hedges The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to transactions generated by its international subsidiaries in currencies other than their local currencies. These gains and losses are driven by non-functional currency generated revenue, non-functional currency inventory purchases, investments in U.S. Dollar denominated available-for-sale debt securities, and certain other intercompany transactions. The Company enters into foreign currency contracts to reduce the risk associated with the foreign currency exchange rate fluctuations on these transactions. Certain contracts are designated as cash flow hedges. As of March 31, 2020, December 31, 2019 and March 31, 2019, the aggregate notional value of the Company's outstanding cash flow hedges was $681.5 million, $879.8 million and $507.6 million, respectively, with contract maturities ranging from one The Company may enter into long term debt arrangements with various lenders which bear a range of fixed and variable rates of interest. The nature and amount of the Company's long term debt can be expected to vary as a result of future business requirements, market conditions and other factors. The Company may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations. The interest rate swap contracts are accounted for as cash flow hedges. Refer to Note 7 for a discussion of long term debt. As of March 31, 2020, the Company had no outstanding interest rate swap contracts. For contracts designated as cash flow hedges, the changes in fair value are reported as other comprehensive income (loss) and are recognized in current earnings in the period or periods during which the hedged transaction affects current earnings. Effective hedge results are classified in the unaudited consolidated statements of operations in the same manner as the underlying exposure. The Company evaluated the probability of certain hedged forecasted transactions and determined certain transactions, against which hedges were designated, were no longer probable of occurring by the end of the originally specified time period, as a result of the impacts of COVID-19. The amounts recorded in other income (expense), previously recorded in accumulated other comprehensive income, as a result of the discontinuance of cash flow hedges was not material for the three months ended March 31, 2020. Undesignated Derivative Instruments The Company may elect to enter into foreign exchange forward contracts to mitigate the change in fair value of specific assets and liabilities on the unaudited consolidated balance sheets. These undesignated instruments are recorded at fair value as a derivative asset or liability on the unaudited consolidated balance sheets with their corresponding change in fair value recognized in other expense, net, together with the re-measurement gain or loss from the hedged balance sheet position. As of March 31, 2020, December 31, 2019 and March 31, 2019, the total notional value of the Company's outstanding undesignated derivative instruments was $303.0 million, $304.2 million and $497.4 million, respectively. Credit Risk The Company enters into derivative contracts with major financial institutions with investment grade credit ratings and is exposed to credit losses in the event of non-performance by these financial institutions. This credit risk is generally limited to the unrealized gains in the derivative contracts. However, the Company monitors the credit quality of these financial institutions and considers the risk of counterparty default to be minimal. |
Provision for Income Taxes
Provision for Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes | Provision for Income Taxes Provision for Income Taxes The effective rates for income taxes were (3.8)% and 26.8% for the three months ended March 31, 2020 and 2019, respectively. The change in the Company's effective tax rate was primarily driven by the proportion of earnings subject to tax in the United States as compared to foreign jurisdictions in each period. The effective tax rate for the three months ended March 31, 2020 includes the impact of recording valuation allowances against the majority of incurred and forecasted 2020 losses in the United States, against all 2020 losses incurred and forecasted in China, and discrete items, including the recording of valuation allowances on certain previously recognized deferred tax assets in the United States and China. Cares Act On March 27, 2020 the United States enacted the CARES Act to combat the negative economic impact of the COVID-19 pandemic. The CARES Act includes several provisions aimed at assisting corporate taxpayers, including the allowance of a five-year carryback for net operating losses originating in the 2018, 2019, and 2020 tax years; removal of the taxable income limitation on net operating loss utilization for tax years before 2021; loosening of the interest deduction limitation in the 2019 and 2020 tax years; and correcting the drafting error from the Tax Cuts and Jobs Act related to the tax life for qualified improvement property. In addition, the Company’s effective tax rate for the three months ended March 31, 2020 includes the income tax accounting impacts of the CARES Act. More specifically, the effective tax rate includes a benefit for the portion of forecasted 2020 net operating losses in the United States federal jurisdiction able to be carried back to offset taxable income in the five-year carryback period. This benefit partially offsets the impact of recording valuation allowances against the majority of the Company’s deferred tax assets in the United States federal jurisdiction. Valuation Allowance The Company evaluates on a quarterly basis whether the deferred tax assets are realizable which requires significant judgment. The Company considers all available positive and negative evidence, including historical operating performance and expectations of future operating performance. To the extent the Company believes it is more likely than not that all or some portion of the asset will not be realized, valuation allowances are established against the Company's deferred tax assets, which increase income tax expense in the period when such a determination is made. As noted in the Company's Annual Report on Form 10-K, a significant portion of the Company's deferred tax assets relate to United States federal and state taxing jurisdictions. Realization of these deferred tax assets is dependent on future United States pre-tax earnings. As of December 31, 2019 the Company believed the weight of the positive evidence outweighed the negative evidence regarding the realization of the Company's United States federal deferred tax assets and no valuation allowance was recorded. However, the weight of the negative evidence outweighed the positive evidence regarding the realization of the majority of the Company's United States state deferred tax assets and a valuation allowance was recorded. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share The following represents a reconciliation from basic income (loss) per share to diluted income (loss) per share: Three Months Ended March 31, (In thousands, except per share amounts) 2020 2019 Numerator Net income (loss) $ (589,681) $ 22,477 Denominator Weighted average common shares outstanding Class A, B and C 452,871 449,749 Effect of dilutive securities Class A, B, and C — 3,481 Weighted average common shares and dilutive securities outstanding Class A, B, and C 452,871 453,230 Basic net income (loss) per share of Class A, B and C common stock $ (1.30) $ 0.05 Diluted net income (loss) per share of Class A, B and C common stock $ (1.30) $ 0.05 |
Segment Data and Disaggregated
Segment Data and Disaggregated Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Data and Related Information | Segment Data and Disaggregated RevenueThe Company’s operating segments are based on how the Chief Operating Decision Maker (“CODM”) makes decisions about allocating resources and assessing performance. As such, the CODM receives discrete financial information for the Company's principal business by geographic region based on the Company’s strategy to become a global brand. These geographic regions include North America, Europe, the Middle East and Africa (“EMEA”), Asia-Pacific, and Latin America. Each geographic segment operates exclusively in one industry: the development, marketing and distribution of branded performance apparel, footwear and accessories. The CODM also receives discrete financial information for the Company's Connected Fitness segment. Total expenditures for additions to long-lived assets are not disclosed as this information is not regularly provided to the CODM. The Company excludes certain corporate costs from its segment profitability measures. The Company reports costs within Corporate Other, which is designed to provide increased transparency and comparability of the Company's operating segments' performance. Corporate Other consists largely of general and administrative expenses not allocated to an operating segment, including expenses associated with centrally managed departments such as global marketing, global IT, global supply chain, innovation and other corporate support functions; costs related to the Company's global assets and global marketing, costs related to the Company’s headquarters; restructuring and restructuring related charges; and certain foreign currency hedge gains and losses. The net revenues and operating income (loss) associated with the Company's segments are summarized in the following tables. Net revenues represent sales to external customers for each segment. Intercompany balances were eliminated for separate disclosure. Three Months Ended March 31, (In thousands) 2020 2019 Net revenues North America $ 608,980 $ 843,249 EMEA 137,904 134,104 Asia-Pacific 95,686 144,285 Latin America 53,088 49,188 Connected Fitness 32,794 30,104 Corporate Other (1) 1,788 3,792 Total net revenues $ 930,240 $ 1,204,722 (1) Corporate Other revenues consist of foreign currency hedge gains and losses related to revenues generated by entities within the Company's operating segments, but managed through the Company's central foreign exchange risk management program. Three Months Ended March 31, (In thousands) 2020 2019 Operating income (loss) North America $ (3,773) $ 160,273 EMEA 3,704 12,218 Asia-Pacific (36,841) 19,803 Latin America (48,184) (359) Connected Fitness 3,700 1,069 Corporate Other (476,786) (157,745) Total operating income (loss) (558,180) 35,259 Interest expense, net (5,960) (4,238) Other income (expense), net 1,534 (667) Income (loss) before income taxes $ (562,606) $ 30,354 Net revenues by product category are as follows: Three Months Ended March 31, (In thousands) 2020 2019 Apparel $ 598,287 $ 774,630 Footwear 209,688 292,547 Accessories 67,748 81,992 Net Sales 875,723 1,149,169 License revenues 19,935 21,657 Connected Fitness 32,794 30,104 Corporate Other (1) 1,788 3,792 Total net revenues $ 930,240 $ 1,204,722 (1) Corporate Other revenues consist of foreign currency hedge gains and losses related to revenues generated by entities within the Company's operating segments, but managed through the Company's central foreign exchange risk management program. Net revenues by distribution channel are as follows: Three Months Ended March 31, (In thousands) 2020 2019 Wholesale $ 591,772 $ 817,931 Direct to Consumer 283,951 331,238 Net Sales 875,723 1,149,169 License revenues 19,935 21,657 Connected Fitness 32,794 30,104 Corporate Other (1) 1,788 3,792 Total net revenues $ 930,240 $ 1,204,722 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements include the accounts of the Company. Certain information in footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim consolidated financial statements. These consolidated financial statements are presented in U.S. Dollars. In the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair statement of the financial position and results of operations were included. Intercompany balances and transactions were eliminated upon consolidation. The consolidated balance sheet as of December 31, 2019 is derived from the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2019 (the “2019 Form 10-K”), which should be read in conjunction with these unaudited consolidated financial statements. The unaudited results for the three months ended March 31, 2020, are not necessarily indicative of the results to be expected for the year ending December 31, 2020, or any other portions thereof. On March 2, 2020, the Company acquired, on a cash free, debt free basis, 100% of Triple Pte. Ltd. ("Triple"), a distributor of the Company's products in Southeast Asia. The results of operations of this acquisition have been consolidated with those of the Company beginning on March 2, 2020. Refer to Note 4 for a discussion of the acquisition. COVID-19 In March 2020, a novel strain of coronavirus (COVID-19) was declared a global pandemic by the World Health Organization. This pandemic has negatively affected the U.S. and global economies, disrupted global supply chains and financial markets, and led to significant travel and transportation restrictions, including mandatory closures and orders to “shelter-in-place”. During this period, the Company is focused on protecting the health and safety of its teammates, athletes and consumers, working with its customers and suppliers to minimize potential disruptions and supporting the community to address challenges posed by the global pandemic, while managing the Company's business in response to a changing dynamic. The Company's business operations and financial performance for the three months ended March 31, 2020 were materially impacted by COVID-19. These impacts are discussed within these notes to the unaudited consolidated financial statements, including but not limited to discussions related to long-lived asset and goodwill impairment, long term debt, and income taxes. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted CashThe Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents. The Company's restricted cash is reserved for payments related to claims for its captive insurance program, which is included in prepaid expenses and other current assets on the Company's unaudited consolidated balance sheets. |
Concentration of Credit Risk | Concentration of Credit RiskFinancial instruments that subject the Company to significant concentration of credit risk consist primarily of accounts receivable. The majority of the Company’s accounts receivable is due from large wholesale customers. |
Sale of Accounts Receivable | Sale of Accounts Receivable The Company has agreements with two financial institutions to sell selected accounts receivable on a recurring, non-recourse basis. Under each agreement, the Company may sell up to $140.0 million and $50.0 million, respectively, provided the accounts receivable of certain customers cannot be outstanding simultaneously with both institutions. Our abliity to utilize these agreements, however, may be limited by the credit ratings of our customers. Balances may remain outstanding at any point in time. The Company removes the sold accounts receivable from the unaudited consolidated balance sheets at the time of sale. The Company does not retain any interests in the sold accounts receivable. The Company acts as the collection agent for the outstanding accounts receivable on behalf of the financial institutions. As of March 31, 2020, December 31, 2019 and March 31, 2019, no amounts remained outstanding under these agreements. The funding fee charged by the financial institutions is included in the other income (expense), net line item in the consolidated statement of operations. |
Credit Losses - Allowance for Doubtful Accounts | Credit Losses - Allowance for Doubtful Accounts Credit losses are the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit losses primarily through customer receivables associated with the sales of product within the Company's wholesale, licensing and Connected Fitness channels. Credit is extended to customers based on a credit review. The credit review considers each customer’s financial condition, including review of the customers established credit rating or the Company's assessment of the customer’s creditworthiness based on their financial statements absent a credit rating, local industry practices, and business strategy. A credit limit and terms are established for each customer based on the outcome of this review. The Company actively monitors ongoing credit exposure through review of customer balances against terms and payments against due dates. To mitigate credit risk, the Company may require customers to provide security in the form of guarantees, letters of credit, or prepayment. The Company is also exposed to credit losses through credit card receivables associated with the sales of products within the Company's direct to consumer channel. The allowance for doubtful accounts is based on the Company’s assessment of the collectibility of customer accounts. The Company makes ongoing estimates relating to the collectibility of accounts receivable and records an allowance for estimated losses resulting from the inability of its customers to make required payments. The Company establishes expected credit losses by evaluating historical levels of credit losses, current economic conditions that may affect a customer’s ability to pay, and creditworthiness of significant customers. These inputs are used to determine a range of expected credit losses and an allowance is recorded within the range. Accounts receivable are written off when there is no reasonable expectation of recovery. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue pursuant to Accounting Standards Codification 606 ("ASC 606"). Net revenues consist of net sales of apparel, footwear and accessories, license and Connected Fitness revenue. The Company recognizes revenue when it satisfies its performance obligations by transferring control of promised products or services to its customers, which occurs either at a point in time or over time, depending on when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized considers terms of sale that create variability in the amount of consideration that the Company ultimately expects to be entitled to in exchange for the products or services and is subject to an overall constraint that a significant revenue reversal will not occur in future periods. Sales taxes imposed on the Company’s revenues from product sales are presented on a net basis on the consolidated statements of operations, and therefore do not impact net revenues or costs of goods sold. Revenue transactions associated with the sale of apparel, footwear, and accessories, comprise a single performance obligation, which consists of the sale of products to customers either through wholesale or direct to consumer channels. The Company satisfies the performance obligation and records revenues when transfer of control has passed to the customer, based on the terms of sale. In the Company’s wholesale channel, transfer of control is based upon shipment under free on board shipping point for most goods or upon receipt by the customer depending on the country of the sale and the agreement with the customer. The Company may also ship product directly from its supplier to wholesale customers and recognize revenue when the product is delivered to and accepted by the customer. In the Company’s direct to consumer channel, transfer of control takes place at the point of sale for brand and factory house customers and upon shipment to substantially all e-commerce customers. Payment terms for wholesale transactions are established in accordance with local and industry practices. Payment is generally required within 30 to 60 days of shipment to or receipt by the wholesale customer in the United States, and generally within 60 to 90 days of shipment to or receipt by the wholesale customer internationally. The Company has provided extensions to standard payment terms for certain customers in connection with COVID-19. Payment is generally due at the time of sale for direct to consumer transactions. Gift cards issued to customers by the Company are recorded as contract liabilities until they are redeemed, at which point revenue is recognized. The Company also estimates and recognizes revenue for gift card balances not expected to ever be redeemed ("breakage") to the extent that it does not have a legal obligation to remit the value of such unredeemed gift cards to the relevant jurisdiction as unclaimed or abandoned property. Such estimates are based upon historical redemption trends, with breakage income recognized in proportion to the pattern of actual customer redemptions. Revenue from the Company's licensing arrangements is recognized over time during the period that licensees are provided access to the Company's trademarks and benefit from such access through their sales of licensed products. These arrangements require licensees to pay a sales-based royalty, which for most arrangements may be subject to a contractually guaranteed minimum royalty amount. Payments are generally due quarterly. The Company recognizes revenue for sales-based royalty arrangements (including those for which the royalty exceeds any contractually guaranteed minimum royalty amount) as licensed products are sold by the licensee. If a sales-based royalty is not ultimately expected to exceed a contractually guaranteed minimum royalty amount, the minimum is recognized as revenue over the contractual period. This sales-based output measure of progress and pattern of recognition best represents the value transferred to the licensee over the term of the arrangement, as well as the amount of consideration that the Company is entitled to receive in exchange for providing access to its trademarks. Revenue from Connected Fitness subscriptions is recognized on a gross basis and is recognized over the term of the subscription. The Company receives payments in advance of revenue recognition for subscriptions and these payments are recorded as contract liabilities in the Company's consolidated balance sheet. Related commission cost is included in selling, general and administrative expense in the consolidated statement of operations. Revenue from Connected Fitness digital advertising is recognized as the Company satisfies performance obligations pursuant to customer insertion orders. The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns, markdowns and allowances that have not yet been received by the Company. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to net sales in the period in which it makes such a determination. Provisions for customer specific discounts are based on negotiated arrangements with certain major customers. Reserves for returns, allowances, markdowns and discounts are included within customer refund liability and the value of inventory associated with reserves for sales returns are included within prepaid expenses and other current assets on the consolidated balance sheet. The Company reviews and refines these estimates on at least a quarterly basis. As of March 31, 2020, December 31, 2019 and March 31, 2019, there were $208.2 million, $219.4 million and $270.6 million, respectively, in reserves for returns, allowances, markdowns and discounts within customer refund liability and $63.3 million, $61.1 million and $91.8 million, respectively, as the estimated value of inventory associated with the reserves for sales returns within prepaid expenses and other current assets on the unaudited consolidated balance sheet. Contract Liabilities Contract liabilities are recorded when a customer pays consideration, or the Company has a right to an amount of consideration that is unconditional, before the transfer of a good or service to the customer, and thus represent the Company's obligation to transfer the good or service to the customer at a future date. The Company's contract liabilities primarily consist of payments received in advance of revenue recognition for subscriptions for the Company's Connected Fitness applications and royalty arrangements, included in other current liabilities, and gift cards, included in accrued expenses, on the Company's unaudited consolidated balance sheets. As of March 31, 2020, December 31, 2019, and March 31, 2019, contract liabilities were $58.5 million, $60.4 million and $55.6 million, respectively. For the three months ended March 31, 2020, the Company recognized $20.3 million of revenue that was previously included in contract liabilities as of December 31, 2019. For the three months ended March 31, 2019, the Company recognized $19.2 million of revenue that was previously included in contract liabilities as of December 31, 2018. The change in the contract liabilities balance primarily results from the timing differences between the Company's satisfaction of performance obligations and the customer's payment. Commissions related to subscription revenue are capitalized and recognized over the subscription period. Shipping and Handling Costs The Company charges certain customers shipping and handling fees. These fees are recorded in net revenues. The Company incurs freight costs associated with shipping goods to customers. These costs are recorded as a component of cost of goods sold. |
Equity Method Investment | Equity Method Investment The Company has a common stock investment of 29.5% in Dome Corporation ("Dome"), the Company's Japanese licensee. The Company accounts for its investment in Dome under the equity method, given it has the ability to exercise significant influence, but not control, over Dome. The Company performed a qualitative assessment of potential impairment indicators for its investment in Dome and determined that indicators of impairment exist due to impacts from COVID-19. The Company performed a valuation of its investment in Dome and determined that the fair value of its investment is less than its carrying value by $3.7 million. The Company determined this decline in value to be other-than-temporary considering Dome's near and long-term financial forecast. As a result, the Company recorded a $3.7 million impairment of the Company's equity method investment in Dome for the three months ended March 31, 2020. The impairment charge was recorded within income (loss) from equity method investment on the unaudited consolidated statements of operations and as a reduction to the invested balance within other long term assets on the unaudited consolidated balance sheets. The Company calculated fair value using the discounted cash flows model, which indicates the fair value of the investment based on the present value of the cash flows that it expects the investment to generate in the future. For the three months ended March 31, 2020 and 2019, the Company recorded the allocable share of Dome’s net loss of $1.4 million and net income of $0.3 million, respectively, within income (loss) from equity method investment on the unaudited consolidated statements of operations and as an adjustment to the invested balance within other long term assets on the unaudited consolidated balance sheets. As of March 31, 2020, there was no carrying value associated with the Company’s equity investment in Dome. As of March 31, 2019, the carrying value of the Company's equity investment in Dome was $53.1 million. In addition to the investment in Dome, the Company has a license agreement with Dome. The Company recorded license revenues from Dome of $6.7 million and $6.5 million for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, December 31, 2019, and March 31, 2019, the Company had $7.0 million, $15.6 million, and $6.5 million, respectively, in licensing receivables outstanding, recorded in the prepaid expenses and other current assets line item within the Company's unaudited consolidated balance sheets. |
Management Estimates | Management Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. |
Recently Issued Accounting Standards/Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In December 2019, the Financial Accounting Standards Board ("FASB") issued ASU 2019-12 to simplify the accounting for income taxes. The ASU impacts various topic areas within ASC 740, including accounting for taxes under hybrid tax regimes, accounting for increases in goodwill, allocation of tax amounts to separate company financial statements within a group that files a consolidated tax return, intraperiod tax allocation, interim period accounting, and accounting for ownership changes in investments, among other minor codification improvements. The guidance in this ASU becomes effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and may be early adopted. The Company has elected to early adopt this standard as of January 1, 2020. The adoption of this ASU does not have a material impact on the unaudited consolidated financial statements or disclosures for the first quarter 2020. The aspect of this ASU which may have the most significant impact to the Company in future periods is the removal of a limit on the tax benefit recognized on pre-tax losses in interim periods that exceeds the anticipated tax benefit for the full year. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited consolidated balance sheets to the unaudited consolidated statements of cash flows. (In thousands) March 31, 2020 December 31, 2019 March 31, 2019 Cash and cash equivalents $ 959,318 $ 788,072 $ 288,726 Restricted cash 8,850 7,936 9,430 Total Cash, cash equivalents and restricted cash $ 968,168 $ 796,008 $ 298,156 |
Restructuring and Related Imp_2
Restructuring and Related Impairment Charges (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The summary of the costs recorded during the three months ended March 31, 2020, as well as the Company's current estimates of the amount expected to be incurred during the remainder of 2020 in connection with the 2020 restructuring plan is as follows: Restructuring and Related Impairment Charges Recorded Estimated Restructuring and Related Impairment Charges to be Incurred (1) (In thousands) Three Months Ended Nine Months Ending December 31, 2020 Year Ending December 31, 2020 Costs recorded in cost of goods sold: Contract-based royalties $ — $ 11,000 $ 11,000 Total costs recorded in cost of goods sold — 11,000 11,000 Costs recorded in restructuring and related impairment charges: Property and equipment impairment 7,094 36,906 44,000 ROU asset impairment 290,813 — 290,813 Employee related costs — 25,000 25,000 Contract exit costs — 115,000 115,000 Other restructuring costs 3,182 35,818 39,000 Total costs recorded in restructuring and related impairment charges 301,089 212,724 513,813 Total restructuring and related impairment and restructuring related costs $ 301,089 $ 223,724 $ 524,813 (1) Estimated restructuring and related impairment charges to be incurred reflect the high-end of the range of the estimated remaining charges expected to be taken by the Company during 2020 in connection with the restructuring plan. |
Summary of Activity in the Restructuring Reserve | A summary of the activity in the restructuring reserve related to the Company's 2020, 2018 and 2017 restructuring plans is as follows: (In thousands) Employee Related Costs Contract Exit Costs Other Restructuring Related Costs Balance at January 1, 2020 $ 462 $ 17,843 $ — Additions charged to expense — — 3,182 Cash payments charged against reserve — (240) — Changes in reserve estimate — — — Balance at March 31, 2020 $ 462 $ 17,603 $ 3,182 |
Long - Lived Asset and Goodwill
Long - Lived Asset and Goodwill Impairment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Changes in Goodwill by Segment | The following table summarizes changes in the carrying amount of the Company’s goodwill by reportable segment as of the periods indicated: (In thousands) North America EMEA Asia-Pacific Latin America Connected Fitness Total Balance as of December 31, 2019 318,288 106,066 79,168 46,656 — 550,178 Effect of currency translation adjustment (1,573) (4,354) 3,422 (10,426) — (12,931) Impairment (15,345) — — (36,230) — (51,575) Balance as of March 31, 2020 $ 301,370 $ 101,712 $ 82,590 $ — $ — $ 485,672 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Lease costs | Supplemental balance sheet information related to leases was as follows: Three months ended March 31, 2020 Three months ended March 31, 2019 Weighted average remaining lease term (in years) 9.64 7.35 Weighted average discount rate 3.99 4.30 Supplemental cash flow and other information related to leases was as follows: (In thousands) Three months ended March 31, 2020 Three months ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash outflows from operating leases $ 36,547 $ 17,563 Leased assets obtained in exchange for new operating lease liabilities $ 72,963 $ 3,344 |
Operating lease liability maturity | Maturities of lease liabilities are as follows: (In thousands) 2020 $ 125,108 2021 169,446 2022 157,176 2023 138,031 2024 121,336 2025 and thereafter 560,783 Total lease payments $ 1,271,880 Less: Interest 228,368 Total present value of lease liabilities (1) $ 1,043,512 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and (Liabilities) Measured at Fair Value | Financial assets (liabilities) measured at fair value on a recurring basis are set forth in the table below: March 31, 2020 December 31, 2019 March 31, 2019 (In thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Derivative foreign currency contracts (see Note 11) $ — $ 35,971 $ — $ — $ (7,151) $ — $ — $ 9,385 $ — TOLI policies held by the Rabbi Trust — 5,471 — — 6,543 — — 5,877 — Deferred Compensation Plan obligations — (10,443) — — (10,839) — — (9,598) — |
Risk Management and Derivativ_2
Risk Management and Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives Balance Sheet Location | The following table presents the fair values of derivative instruments within the unaudited consolidated balance sheets. Refer to Note 9 for a discussion of the fair value measurements. (In thousands) Balance Sheet Classification March 31, 2020 December 31, 2019 March 31, 2019 Derivatives designated as hedging instruments under ASC 815 Foreign currency contracts Other current assets $ 35,087 $ 4,040 $ 10,185 Foreign currency contracts Other long term assets 4,791 24 273 Interest rate swap contracts Other long term assets — — — Total derivative assets designated as hedging instruments $ 39,878 $ 4,064 $ 10,458 Foreign currency contracts Other current liabilities $ 789 $ 8,772 $ 1,973 Foreign currency contracts Other long term liabilities — $ 2,443 $ 307 Total derivative liabilities designated as hedging instruments $ 789 $ 11,215 $ 2,280 Derivatives not designated as hedging instruments under ASC 815 Foreign currency contracts Other current assets $ 8,582 $ 2,337 $ 4,611 Total derivative assets not designated as hedging instruments $ 8,582 $ 2,337 $ 4,611 Foreign currency contracts Other current liabilities $ 1,740 $ 9,510 $ 840 Total derivative liabilities not designated as hedging instruments $ 1,740 $ 9,510 $ 840 |
Effects of Cash Flow Hedges | The following table presents the amounts in the unaudited consolidated statements of operations in which the effects of cash flow hedges are recorded and the effects of cash flow hedge activity on these line items. Three months ended March 31, 2020 2019 (In thousands) Total Amount of Gain (Loss) on Cash Flow Hedge Activity Total Amount of Gain (Loss) on Cash Flow Hedge Activity Net revenues $ 930,240 $ 1,788 $ 1,204,722 $ 3,792 Cost of goods sold 499,256 1,117 659,935 740 Interest expense, net (5,960) (9) (4,238) 1,625 Other income (expense), net 1,534 21 (667) 640 |
Cash Flows in AOCI | The following tables present the amounts affecting the unaudited statements of comprehensive income (loss). (In thousands) Balance as of Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives Amount of gain (loss) reclassified from other comprehensive income (loss) into income Balance as of March 31, 2020 Derivatives designated as cash flow hedges Foreign currency contracts (6,005) 46,876 2,905 37,965 Interest rate swaps (577) — (9) (568) Total designated as cash flow hedges $ (6,582) $ 46,876 $ 2,896 $ 37,397 (In thousands) Balance as of Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives Amount of gain (loss) reclassified from other comprehensive income (loss) into income Balance as of Derivatives designated as cash flow hedges Foreign currency contracts 21,908 (4,971) 5,172 11,766 Interest rate swaps 954 68 1,625 (604) Total designated as cash flow hedges $ 22,862 $ (4,903) $ 6,797 $ 11,162 |
Schedule of Fair Value Hedging Activity | The following table presents the amounts in the unaudited consolidated statements of operations in which the effects of undesignated derivative instruments are recorded and the effects of fair value hedge activity on these line items. Three months ended March 31, 2020 2019 (In thousands) Total Amount of Gain (Loss) on Fair Value Hedge Activity Total Amount of Gain (Loss) on Fair Value Hedge Activity Other income (expense), net $ 1,534 $ (2,826) $ (667) $ (449) |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic Earnings per Share to Diluted Earnings per Share | The following represents a reconciliation from basic income (loss) per share to diluted income (loss) per share: Three Months Ended March 31, (In thousands, except per share amounts) 2020 2019 Numerator Net income (loss) $ (589,681) $ 22,477 Denominator Weighted average common shares outstanding Class A, B and C 452,871 449,749 Effect of dilutive securities Class A, B, and C — 3,481 Weighted average common shares and dilutive securities outstanding Class A, B, and C 452,871 453,230 Basic net income (loss) per share of Class A, B and C common stock $ (1.30) $ 0.05 Diluted net income (loss) per share of Class A, B and C common stock $ (1.30) $ 0.05 |
Segment Data and Disaggregate_2
Segment Data and Disaggregated Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Reconciliation of Revenue from Segments to Consolidated | The net revenues and operating income (loss) associated with the Company's segments are summarized in the following tables. Net revenues represent sales to external customers for each segment. Intercompany balances were eliminated for separate disclosure. Three Months Ended March 31, (In thousands) 2020 2019 Net revenues North America $ 608,980 $ 843,249 EMEA 137,904 134,104 Asia-Pacific 95,686 144,285 Latin America 53,088 49,188 Connected Fitness 32,794 30,104 Corporate Other (1) 1,788 3,792 Total net revenues $ 930,240 $ 1,204,722 (1) Corporate Other revenues consist of foreign currency hedge gains and losses related to revenues generated by entities within the Company's operating segments, but managed through the Company's central foreign exchange risk management program. |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | Three Months Ended March 31, (In thousands) 2020 2019 Operating income (loss) North America $ (3,773) $ 160,273 EMEA 3,704 12,218 Asia-Pacific (36,841) 19,803 Latin America (48,184) (359) Connected Fitness 3,700 1,069 Corporate Other (476,786) (157,745) Total operating income (loss) (558,180) 35,259 Interest expense, net (5,960) (4,238) Other income (expense), net 1,534 (667) Income (loss) before income taxes $ (562,606) $ 30,354 |
Net Revenues by Product Category | Net revenues by product category are as follows: Three Months Ended March 31, (In thousands) 2020 2019 Apparel $ 598,287 $ 774,630 Footwear 209,688 292,547 Accessories 67,748 81,992 Net Sales 875,723 1,149,169 License revenues 19,935 21,657 Connected Fitness 32,794 30,104 Corporate Other (1) 1,788 3,792 Total net revenues $ 930,240 $ 1,204,722 (1) Corporate Other revenues consist of foreign currency hedge gains and losses related to revenues generated by entities within the Company's operating segments, but managed through the Company's central foreign exchange risk management program. Net revenues by distribution channel are as follows: Three Months Ended March 31, (In thousands) 2020 2019 Wholesale $ 591,772 $ 817,931 Direct to Consumer 283,951 331,238 Net Sales 875,723 1,149,169 License revenues 19,935 21,657 Connected Fitness 32,794 30,104 Corporate Other (1) 1,788 3,792 Total net revenues $ 930,240 $ 1,204,722 (1) Corporate Other revenues consist of foreign currency hedge gains and losses related to revenues generated by entities within the Company's operating segments, but managed through the Company's central foreign exchange risk management program. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | Mar. 02, 2020 |
Triple Pte. Ltd | |
Business Acquisition [Line Items] | |
Percentage of ownership interests acquired | 100.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 959,318 | $ 788,072 | $ 288,726 | |
Restricted cash | 8,850 | 7,936 | 9,430 | |
Total Cash, cash equivalents and restricted cash | $ 968,168 | $ 796,008 | $ 298,156 | $ 566,060 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Accounts Receivable and Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Allowance for doubtful accounts receivable | $ 20,600 | $ 15,100 | $ 21,000 |
Allowance for doubt increase | 5,500 | ||
Accounts Receivable Agreement 1 | |||
Property, Plant and Equipment [Line Items] | |||
Maximum amount available to be sold under agreement | 140,000 | ||
Accounts Receivable Agreement 2 | |||
Property, Plant and Equipment [Line Items] | |||
Maximum amount available to be sold under agreement | $ 50,000 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Revenue Recognition/Advertising Costs/Equity Method Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Mar. 02, 2020 | Apr. 30, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Contract liability | $ 58,500 | $ 55,600 | $ 60,400 | ||
Revenue recognized | 20,300 | 19,200 | |||
Shipping and handling costs | 14,900 | 21,700 | |||
Income (loss) from equity method investments | (1,400) | 300 | |||
Net revenues | 930,240 | 1,204,722 | |||
Licensing Receivable | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Accounts receivable, net | 7,000 | 6,500 | 15,600 | ||
Dome Corporation | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Ownership percentage | 29.50% | ||||
Net assets exceeding investment value | (3,700) | ||||
Impairment charge | 3,700 | ||||
Income (loss) from equity method investments | (5,528) | 254 | |||
Investment | 0 | 53,100 | |||
Dome Corporation | License | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Net revenues | 6,700 | 6,500 | |||
UA Sports (Thailand) Co., Ltd | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Ownership percentage | 49.50% | ||||
Income (loss) from equity method investments | (400) | ||||
Investment | 4,700 | ||||
Customer Refund Liability | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reserves for customer returns allowances markdowns and discounts | 208,200 | 270,600 | $ 219,400 | ||
Prepaid Expenses and Other Current Assets | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reserves for customer returns allowances markdowns and discounts | $ 63,300 | $ 91,800 |
Restructuring and Related Imp_3
Restructuring and Related Impairment Charges - 2020 restructuring Plan (Details) - 2020 Restructuring Plan - Forecast $ in Millions | Dec. 31, 2020USD ($) |
Cash Restructuring Charges | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring costs | $ 175 |
Facilities and Lease Terminations | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring costs | 55 |
Employee Related Costs | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring costs | 25 |
Contract Termination And Other Restructuring | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring costs | 95 |
Non-Cash Charges | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring costs | 350 |
Long-Lived Asset Impairment | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring costs | 290 |
Intangible and Other Asset Impairment | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring costs | 60 |
Minimum | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring costs | 475 |
Maximum | |
Restructuring Cost and Reserve [Line Items] | |
Expected restructuring costs | $ 525 |
Restructuring and Related Imp_4
Restructuring and Related Impairment Charges - Summary of Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Restructuring Cost and Reserve [Line Items] | |||||
Total costs recorded in restructuring and impairment charges | $ 436,463 | $ 0 | |||
Operating lease, right-of-use assets | 583,418 | $ 590,984 | $ 591,931 | ||
Operating lease liabilities | 1,043,512 | ||||
New York Flagship Store | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Operating lease, right-of-use assets | 344,800 | ||||
Operating lease liabilities | 344,800 | ||||
2020 Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Contract-based royalties | 0 | ||||
Property and equipment impairment | 7,094 | ||||
ROU asset impairment | 290,813 | ||||
Employee related costs | 0 | ||||
Contract exit costs | 0 | ||||
Other restructuring related costs | 3,182 | ||||
Total costs recorded in restructuring and impairment charges | 301,089 | ||||
Total restructuring and related impairment and restructuring related costs | 301,089 | ||||
2020 Restructuring Plan | Corporate Other | North America | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total costs recorded in restructuring and impairment charges | $ 297,900 | ||||
2020 Restructuring Plan | Forecast | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Contract-based royalties | $ 11,000 | $ 11,000 | |||
Property and equipment impairment | 36,906 | 44,000 | |||
ROU asset impairment | 0 | 290,813 | |||
Employee related costs | 25,000 | 25,000 | |||
Contract exit costs | 115,000 | 115,000 | |||
Other restructuring related costs | 35,818 | 39,000 | |||
Total costs recorded in restructuring and impairment charges | 212,724 | 513,813 | |||
Total restructuring and related impairment and restructuring related costs | $ 223,724 | $ 524,813 |
Restructuring and Related Imp_5
Restructuring and Related Impairment Charges - Restructuring Reserve (Details) - Restructuring Plan, 2020, 2018 and 2017 $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Employee Related Costs | |
Restructuring Reserve [Roll Forward] | |
Balance beginning | $ 462 |
Additions charged to expense | 0 |
Cash payments charged against reserve | 0 |
Changes in reserve estimate | 0 |
Balance ending | 462 |
Contract Exit Costs | |
Restructuring Reserve [Roll Forward] | |
Balance beginning | 17,843 |
Additions charged to expense | 0 |
Cash payments charged against reserve | (240) |
Changes in reserve estimate | 0 |
Balance ending | 17,603 |
Other Restructuring Related Costs | |
Restructuring Reserve [Roll Forward] | |
Balance beginning | 0 |
Additions charged to expense | 3,182 |
Cash payments charged against reserve | 0 |
Changes in reserve estimate | 0 |
Balance ending | $ 3,182 |
Acquisition (Details)
Acquisition (Details) - USD ($) $ in Millions | Mar. 02, 2020 | Mar. 31, 2020 |
Business Acquisition [Line Items] | ||
Acquisition related costs | $ 0.7 | |
Triple Pte. Ltd | ||
Business Acquisition [Line Items] | ||
Percentage of ownership interests acquired | 100.00% | |
Purchase price | $ 32.9 | |
Cash acquired | 8.9 | |
Settlement of pre-existing trade receivables | $ 5.1 |
Long - Lived Asset and Goodwi_2
Long - Lived Asset and Goodwill Impairment - (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Impaired Long-Lived Assets Held and Used [Line Items] | |
Impairment of long-lived assets | $ 83,800 |
Goodwill impairment | $ 51,575 |
Percentage of fair value in excess of carrying amount | 16.00% |
Long-term Revenue Growth Rate | |
Impaired Long-Lived Assets Held and Used [Line Items] | |
Change in input that would eliminate fair value in excess of carrying amount | 150.00% |
Long-term Income Growth Rate | |
Impaired Long-Lived Assets Held and Used [Line Items] | |
Change in input that would eliminate fair value in excess of carrying amount | 230.00% |
New York Flagship Store | 2020 Restructuring Plan | |
Impaired Long-Lived Assets Held and Used [Line Items] | |
Impairment of long-lived assets | $ 290,800 |
North America | |
Impaired Long-Lived Assets Held and Used [Line Items] | |
Impairment of long-lived assets | 43,400 |
Goodwill impairment | 15,345 |
Asia-Pacific | |
Impaired Long-Lived Assets Held and Used [Line Items] | |
Impairment of long-lived assets | 25,500 |
Goodwill impairment | 0 |
Latin America | |
Impaired Long-Lived Assets Held and Used [Line Items] | |
Impairment of long-lived assets | 12,800 |
Goodwill impairment | 36,230 |
EMEA | |
Impaired Long-Lived Assets Held and Used [Line Items] | |
Impairment of long-lived assets | 2,100 |
Goodwill impairment | $ 0 |
Long- Lived Asset and Goodwill
Long- Lived Asset and Goodwill Impairment - Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | $ 550,178 |
Effect of currency translation adjustment | (12,931) |
Impairment | (51,575) |
Goodwill, Ending Balance | 485,672 |
North America | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 318,288 |
Effect of currency translation adjustment | (1,573) |
Impairment | (15,345) |
Goodwill, Ending Balance | 301,370 |
EMEA | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 106,066 |
Effect of currency translation adjustment | (4,354) |
Impairment | 0 |
Goodwill, Ending Balance | 101,712 |
Asia-Pacific | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 79,168 |
Effect of currency translation adjustment | 3,422 |
Impairment | 0 |
Goodwill, Ending Balance | 82,590 |
Latin America | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 46,656 |
Effect of currency translation adjustment | (10,426) |
Impairment | (36,230) |
Goodwill, Ending Balance | 0 |
Connected Fitness | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 0 |
Effect of currency translation adjustment | 0 |
Impairment | 0 |
Goodwill, Ending Balance | $ 0 |
Leases - Leases Costs (Details)
Leases - Leases Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Operating lease costs | $ 37,900 | $ 37,100 |
Variable lease payments | $ 2,000 | $ 2,200 |
Weighted average remaining lease term (in years) | 9 years 7 months 20 days | 7 years 4 months 6 days |
Weighted average discount rate | 399.00% | 430.00% |
Operating cash outflows from operating leases | $ 36,547 | $ 17,563 |
Leased assets obtained in exchange for new operating lease liabilities | 72,963 | $ 3,344 |
Leases not yet commenced | $ 9,200 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 125,108 |
2021 | 169,446 |
2022 | 157,176 |
2023 | 138,031 |
2024 | 121,336 |
2025 and thereafter | 560,783 |
Total lease payments | 1,271,880 |
Less: Interest | 228,368 |
Total present value of lease liabilities | $ 1,043,512 |
Long Term Debt - Credit Facilit
Long Term Debt - Credit Facility (Details) - USD ($) | Mar. 08, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
London Interbank Offered Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 1.00% | |||
London Interbank Offered Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 1.25% | |||
Prime Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 0.00% | |||
Prime Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 0.25% | |||
Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 300,000,000 | |||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Credit agreement, term | 5 years | |||
Maximum borrowing capacity | $ 1,250,000,000 | |||
Proceeds from credit facility | 700,000,000 | |||
Long-term debt | $ 600,000,000 | $ 0 | ||
Weighted average interest rate | 3.20% | 3.60% | ||
Commitment fee percentage | 0.15% | |||
Debt financing costs | $ 3,400,000 | |||
Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 0 | |||
Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 50,000,000 | |||
Letters of credit outstanding | $ 5,000,000 | $ 4,600,000 | $ 5,000,000 |
Long Term Debt - Senior Notes a
Long Term Debt - Senior Notes and Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2016 | Jun. 30, 2016 | |
Debt Instrument [Line Items] | ||||
Senior notes | $ 600,000 | |||
Interest expense, net | $ (5,960) | $ (4,238) | ||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Stated percentage | 3.25% | 3.25% | ||
Debt financing costs | $ 5,300 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 2 Months Ended | 3 Months Ended | 12 Months Ended | |||
Jul. 31, 2018plaintiff | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2019USD ($) | Mar. 23, 2017case | |
Loss Contingencies [Line Items] | ||||||
Investment in parcels | $ 726,568 | $ 810,470 | $ 792,148 | |||
Purchases of land | $ 31,498 | $ 35,911 | ||||
Land | ||||||
Loss Contingencies [Line Items] | ||||||
Purchases of land | $ 70,300 | |||||
Land | Sagamore | ||||||
Loss Contingencies [Line Items] | ||||||
Investment in parcels | 72,000 | |||||
Purchases of land | 35,000 | |||||
Payment for lease termination | 30,600 | |||||
Development costs | $ 6,400 | |||||
Under Armour Securities Litigation, Case No. 17-cv-00388-RDB | Pending Litigation | ||||||
Loss Contingencies [Line Items] | ||||||
Pending claims | case | 3 | |||||
Derivative Complaints | ||||||
Loss Contingencies [Line Items] | ||||||
Number of plaintiffs | plaintiff | 3 |
Fair Value Measurements (Financ
Fair Value Measurements (Financial Assets And (Liabilities) Measured At Fair Value) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
TOLI policies held by the Rabbi Trust | $ 0 | $ 0 | $ 0 |
Deferred Compensation Plan obligations | 0 | 0 | 0 |
Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
TOLI policies held by the Rabbi Trust | 5,471 | 6,543 | 5,877 |
Deferred Compensation Plan obligations | (10,443) | (10,839) | (9,598) |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
TOLI policies held by the Rabbi Trust | 0 | 0 | 0 |
Deferred Compensation Plan obligations | 0 | 0 | 0 |
Foreign Currency Contract | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative assets (liabilities) | 0 | 0 | 0 |
Foreign Currency Contract | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative assets (liabilities) | 35,971 | (7,151) | 9,385 |
Foreign Currency Contract | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative assets (liabilities) | $ 0 | $ 0 | $ 0 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Senior Notes | |||
Debt Instrument [Line Items] | |||
Senior Notes | $ 551.5 | $ 587.5 | $ 548.2 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Certain Senior Executives | Performance-based equity | 2005 Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Reversal of compensation expense | $ 2.9 |
Risk Management and Derivativ_3
Risk Management and Derivatives - Balance Sheet Location (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Derivative assets | $ 39,878 | $ 4,064 | $ 10,458 |
Derivative liabilities | 789 | 11,215 | 2,280 |
Designated as Hedging Instrument | Foreign Currency Contract | Other Current Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative assets | 35,087 | 4,040 | 10,185 |
Designated as Hedging Instrument | Foreign Currency Contract | Other Long Term Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative assets | 4,791 | 24 | 273 |
Designated as Hedging Instrument | Foreign Currency Contract | Other Current Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative liabilities | 789 | 8,772 | 1,973 |
Designated as Hedging Instrument | Foreign Currency Contract | Other Long Term Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative liabilities | 0 | 2,443 | 307 |
Designated as Hedging Instrument | Interest Rate Swap | Other Long Term Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative assets | 0 | 0 | 0 |
Not Designated as Hedging Instrument | |||
Derivatives, Fair Value [Line Items] | |||
Derivative assets | 8,582 | 2,337 | 4,611 |
Derivative liabilities | 1,740 | 9,510 | 840 |
Not Designated as Hedging Instrument | Foreign Currency Contract | Other Current Assets | |||
Derivatives, Fair Value [Line Items] | |||
Derivative assets | 8,582 | 2,337 | 4,611 |
Not Designated as Hedging Instrument | Foreign Currency Contract | Other Current Liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative liabilities | $ 1,740 | $ 9,510 | $ 840 |
Risk Management and Derivativ_4
Risk Management and Derivatives - Hedging Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net revenues | $ 930,240 | $ 1,204,722 |
Cost of goods sold | 499,256 | 659,935 |
Interest expense, net | (5,960) | (4,238) |
Other income (expense), net | 1,534 | (667) |
Net revenues | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) on Cash Flow Hedge Activity | 1,788 | 3,792 |
Cost of goods sold | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) on Cash Flow Hedge Activity | 1,117 | 740 |
Interest expense, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) on Cash Flow Hedge Activity | (9) | 1,625 |
Other income (expense), net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain (Loss) on Cash Flow Hedge Activity | $ 21 | $ 640 |
Risk Management and Derivativ_5
Risk Management and Derivatives - Derivative Other Comprehensive Income Rollforward (Details) - Cash Flow Hedges - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative Asset (Liability) Rollforward [Roll Forward] | ||
Derivative assets (liabilities), beginning | $ (6,582) | $ 22,862 |
Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives | 46,876 | (4,903) |
Amount of gain (loss) reclassified from other comprehensive income (loss) into income | 2,896 | 6,797 |
Derivative assets (liabilities), ending | 37,397 | 11,162 |
Foreign Currency Contract | ||
Derivative Asset (Liability) Rollforward [Roll Forward] | ||
Derivative assets (liabilities), beginning | (6,005) | 21,908 |
Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives | 46,876 | (4,971) |
Amount of gain (loss) reclassified from other comprehensive income (loss) into income | 2,905 | 5,172 |
Derivative assets (liabilities), ending | 37,965 | 11,766 |
Interest Rate Swap | ||
Derivative Asset (Liability) Rollforward [Roll Forward] | ||
Derivative assets (liabilities), beginning | (577) | 954 |
Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives | 0 | 68 |
Amount of gain (loss) reclassified from other comprehensive income (loss) into income | (9) | 1,625 |
Derivative assets (liabilities), ending | $ (568) | $ (604) |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities - Effects of Undesignated Derivatives and Fair Value Hedge Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative [Line Items] | ||
Other income (expense), net | $ 1,534 | $ (667) |
Other income (expense), net | ||
Derivative [Line Items] | ||
Amount of Gain (Loss) on Fair Value Hedge Activity | $ (2,826) | $ (449) |
Risk Management and Derivativ_6
Risk Management and Derivatives (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | |
Derivative [Line Items] | |||
Minimum maturity | 1 month | ||
Maximum maturity | 24 months | ||
Not Designated as Hedging Instrument | Foreign Currency Contract | |||
Derivative [Line Items] | |||
Notional amount | $ 303 | $ 304.2 | $ 497.4 |
Cash Flow Hedges | Foreign Currency Contract | |||
Derivative [Line Items] | |||
Notional amount | $ 681.5 | $ 879.8 | $ 507.6 |
Provision for Income Taxes (Det
Provision for Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | (3.80%) | 26.80% |
Earnings per Share (Schedule Of
Earnings per Share (Schedule Of Reconciliation Of Basic Earnings Per Share To Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ (589,681) | $ 22,477 |
Weighted average common shares outstanding Class A, B and C (in shares) | 452,871,000 | 449,749,000 |
Effect of dilutive securities Class A, B, and C (in shares) | 0 | 3,481,000 |
Weighted average common shares and dilutive securities outstanding Class A, B, and C (in shares) | 452,871,000 | 453,230,000 |
Basic net income (loss) per share of Class A, B and C common stock (in dollars per share) | $ (1.30) | $ 0.05 |
Diluted net income (loss) per share of Class A, B and C common stock (in dollars per share) | $ (1.30) | $ 0.05 |
Antidilutive securities | 0 | 4,100,000 |
Segment Data and Disaggregate_3
Segment Data and Disaggregated Revenue - Geographic Distribution Of The Company's Net Revenues And Operating Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Net revenues | $ 930,240 | $ 1,204,722 |
Total operating income (loss) | (558,180) | 35,259 |
Interest expense, net | (5,960) | (4,238) |
Other income (expense), net | 1,534 | (667) |
Income (loss) before income taxes | (562,606) | 30,354 |
North America | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 608,980 | 843,249 |
Total operating income (loss) | (3,773) | 160,273 |
EMEA | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 137,904 | 134,104 |
Total operating income (loss) | 3,704 | 12,218 |
Asia-Pacific | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 95,686 | 144,285 |
Total operating income (loss) | (36,841) | 19,803 |
Latin America | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 53,088 | 49,188 |
Total operating income (loss) | (48,184) | (359) |
Connected Fitness | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 32,794 | 30,104 |
Total operating income (loss) | 3,700 | 1,069 |
Corporate Other | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 1,788 | 3,792 |
Total operating income (loss) | $ (476,786) | $ (157,745) |
Segment Data and Disaggregate_4
Segment Data and Disaggregated Revenue - Net Revenues By Product Category and Distribution Channel (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Net revenues | $ 930,240 | $ 1,204,722 |
Connected Fitness | ||
Segment Reporting Information [Line Items] | ||
Revenues | 32,794 | 30,104 |
Net revenues | 32,794 | 30,104 |
Corporate Other | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 1,788 | 3,792 |
Wholesale | ||
Segment Reporting Information [Line Items] | ||
Revenues | 591,772 | 817,931 |
Direct to Consumer | ||
Segment Reporting Information [Line Items] | ||
Revenues | 283,951 | 331,238 |
Apparel | ||
Segment Reporting Information [Line Items] | ||
Revenues | 598,287 | 774,630 |
Footwear | ||
Segment Reporting Information [Line Items] | ||
Revenues | 209,688 | 292,547 |
Accessories | ||
Segment Reporting Information [Line Items] | ||
Revenues | 67,748 | 81,992 |
Product | ||
Segment Reporting Information [Line Items] | ||
Revenues | 875,723 | 1,149,169 |
License | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 19,935 | $ 21,657 |