- Q2 – The statement of cash flows will provide this information. You must calculate thedifferencebetween the two numbers.
- Q4a and 5a – Look at the balance sheet to determine if these accounts increased or decreased.
- Q4b and 5b – Record the journal entry to either increase or decrease A/R and A/P. (Hint: The focus this week is on cash).
- Q4c and 5c – Look at the cash flows from operating activities, more specifically the adjustments for A/R and A/P as well as the journal entries in part b. The indirect method starts with net income (accrual basis) and converts it to cash flows from operating activities. This involves adjusting net income for the differences in the timing of accrual basis net income and cash flows.
- Q6 = Bonus
Page 1 of 2 ACCT 607 Name_____________________ Applied Case 7 (Write-Up 3) Refer to the financial statements included in Under Armour, Inc.’s (NYSE: UAA; Baltimore, MD; hereafter, “Under Armour” or “the Company”) 2020 10-K (PDF available in Toolbox) to answer the following questions. Show work for partial credit. This document is also available online at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1336917/000133691721000009/ua-20201231.htm. 1. Which method, direct or indirect, does the Company use to calculate their cash flows from operating, investing, and financing activities in the Statement of Cash Flows? 2. What is the difference between the Company’s net income (loss) and their net operating cash flows for 2020? 3. (a) In reconciling the Company’s net income to their net operating cash flows, the Company adds back the depreciation and amortization expense for the year, specifically $164,984 (in thousands). What journal entry would the firm have recorded to recognize this depreciation expense? (b) Based on your response to question (3a), why would the firm add back depreciation and amortization expense to net income to work towards calculating their net operating cash flows? 4. (a) In reconciling the Company’s net income to their net operating cash flows, the Company makes a positive adjustment for the change in accounts receivable of 167,614 (in thousands). Did the Company’s accounts receivable balance increase or decrease during the year? https://www.sec.gov/ix?doc=/Archives/edgar/data/1336917/000133691721000009/ua-20201231.htm Page 2 of 2 ACCT 607 Applied Case 7 − Continued (b) Based on your response to question (4a), what journal entry would represent the change in accounts receivable? (c) Based on your response to question (4b), why does the firm make a positive adjustment for the change in accounts receivable? 5. (a) In reconciling the Company’s net income to their net operating cash flows, the Company makes a negative adjustment for the change in accounts payable of 40,673 (in thousands). Did the Company’s accounts payable balance increase or decrease during the year? (b) Based on your response to question (5a), what journal entry would represent the change in accounts payable? (c) Based on your response to question (5b), why would the firm make a negative adjustment for the change in accounts payable? 6. Bonus question: Did the Company pay dividends during 2020? Which section of the Statement of Cash Flows would one look under to confirm this? UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________ Form 10-K ______________________________________________ (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-33202 ______________________________________________ UNDER ARMOUR, INC. (Exact name of registrant as specified in its charter) ______________________________________________ Maryland 52-1990078 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1020 Hull Street Baltimore, Maryland 21230 (410) 454-6428 (Address of principal executive offices) (Zip Code) (Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Class A Common Stock UAA New York Stock Exchange Class C Common Stock UA New York Stock Exchange (Title of each class) (Trading Symbols) (Name of each exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report ☑ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑ As of June 30, 2020, the last business day of our most recently completed second fiscal quarter, the aggregate market value of the registrant’s Class A Common Stock and Class C Common Stock held by non-affiliates was $1,827,569,777 and $2,007,651,870, respectively. As of January 31, 2021, there were 188,619,343 shares of Class A Common Stock, 34,450,000 shares of Class B Convertible Common Stock and 231,983,924 shares of Class C Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of Under Armour, Inc.’s Proxy Statement for the Annual Meeting of Stockholders to be held on May 13, 2021 are incorporated by reference in Part III of this Form 10-K. UNDER ARMOUR, INC. ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS PART I. Forward Looking Statements 1 Item 1. Business General 2 Products 2 Marketing and Promotion 3 Sales and Distribution 4 Product Design and Development 6 Sourcing, Manufacturing and Quality Assurance 6 Inventory Management 6 Intellectual Property 7 Competition 7 Human Capital Management 8 Available Information 10 Information About Our Executive Officers 10 Item 1A. Risk Factors 12 Item 1B. Unresolved Staff Comments 25 Item 2 Properties 26 Item 3 Legal Proceedings 26 Item 4 Mine Safety Disclosures 26 PART II. Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 Item 6 Selected Financial Data 29 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 53 Item 8 Financial Statements and Supplementary Data 55 Item 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 100 Item 9A. Controls and Procedures 100 Item 9B Other Information 103 PART III. Item 10. Directors, Executive Officers and Corporate Governance 102 Item 11 Executive Compensation 102 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 102 Item 13. Certain Relationships and Related Transactions, and Director Independence 102 Item 14. Principal Accountant Fees and Services 102 PART IV. Item 15. Exhibits and Financial Statement Schedules 103 Item 16 Form 10-K Summary N/A SIGNATURES 106 PART I Forward-Looking Statements Some of the statements contained in this Form 10-K constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the impact of the COVID-19 pandemic on our business and results of operations, our plans to reduce our operating expenses, anticipated charges and restructuring costs, projected savings related to our restructuring plans and the timing thereof, the development and introduction of new products, the implementation of our marketing and branding strategies, and the future benefits and opportunities from significant investments. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “outlook,” “potential” or the negative of these terms or other comparable terminology. The forward-looking statements contained in this Form 10-K reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by these forward-looking statements, including, but not limited to, those factors described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors include without limitation: • the impact of the COVID-19 pandemic on our industry and our business, financial condition and results of operations; • changes in general economic or market conditions that could affect overall consumer spending or our industry; • increased competition causing us to lose market share or reduce the prices of our products or to increase significantly our marketing efforts;