Under Armour 2014 Annual Report Download - page 76

Othe
r
F
rom 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
.
T
he 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 it
s
consolidated financial
p
osition, results of o
p
erations or cash flows
.
I
n connection with various contracts and agreements, the Company has agreed to indemnify counterparties
against certain third party claims relating to the infringement of intellectual property rights and other items.
G
enerally, such indemnification obligations do not apply in situations in which the counterparties are grossly
negligent, engage in willful misconduct, or act in bad faith. Based on the Company’s historical experience an
d
the estimated probability of future loss, the Company has determined that the fair value of such indemnifications
is not material to its consolidated financial
p
osition or results of o
p
erations
.
8. Stockholders’ E
q
uit
y
The Company’s Class A Common Stock and Class B Convertible Common Stock have an authorize
d
number of shares at December 31, 2014 of 400.0 million shares and 36.6 million shares, respectively, and each
have a
p
ar value of
$
0.0003 1/3
p
er share. Holders of Class A Common Stock and Class B Convertible Commo
n
Stock have identical rights, including liquidation preferences, except that the holders of Class A Common Stoc
k
are entitled to one vote
p
er share and holders of Class B Convertible Common Stock are entitled to 10 votes
p
e
r
share on all matters submitted to a stockholder vote. Class B Convertible Common Stock may only be held by
Kevin Plank, the Company’s founder and Chief Executive Officer, or a related party of Mr. Plank, as defined i
n
the Company’s charter. As a result, Mr. Plank has a majority voting control over the Company. Upon the transfer
o
f shares of Class B Convertible Stock to a person other than Mr. Plank or a related party of Mr. Plank, the shares
automatically convert into shares of Class A Common Stock on a one-for-one basis. In addition, all of the
o
utstanding shares of Class B Convertible Common Stock will automatically convert into shares of Class
A
Common Stock on a one-for-one basis upon the death or disability of Mr. Plank or on the record date for an
y
stockholders’ meeting upon which the shares of Class A Common Stock and Class B Convertible Common Stoc
k
beneficially owned by Mr. Plank is less than 1
5
% of the total shares of Class A Common Stock and Class
B
Convertible Common Stock outstanding. Holders of the Company’s common stock are entitled to receive
dividends when and if authorized and declared out of assets legally available for the payment of dividends
.
During the year ended December 31, 2014, 3.4 million shares of Class B Convertible Common Stock wer
e
converted into shares of Class A Common Stock on a one-for-one basis in connection with stock sales
.
9
.Fa
i
r Value Measurements
F
air value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
o
rderly 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 th
e
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 in
p
uts such as
q
uoted
p
rices in active markets;
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; an
d
Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to
d
evelo
p
its own assum
p
tions
.
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