Under Armour 2015 Annual Report Download - page 86

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$3.8 million during the three months ended December 31, 2014. During the year ended December 31, 2013, the
Company deemed the achievement of certain operating income targets probable for the awards granted in 2013,
2012 and 2011, and recorded $30.8 million for a portion of these awards, including a cumulative adjustment of
$9.0 million during the three months ended March 31, 2013 and $11.3 million during the three months ended
December 31, 2013. The Company will assess the probability of the achievement of the operating income targets
at the end of each reporting period. If it becomes probable that any remaining performance targets related to
these performance-based restricted stock units will be achieved, a cumulative adjustment will be recorded as if
ratable stock-based compensation expense had been recorded since the grant date. Additional stock based
compensation of up to $3.0 million would have been recorded through December 31, 2015 for all performance-
based restricted stock units had the full achievement of these operating income targets been deemed probable.
Warrants
In 2006, the Company issued fully vested and non-forfeitable warrants to purchase 1.9 million shares of the
Company’s Class A Common Stock to NFL Properties as partial consideration for footwear promotional rights
which were recorded as an intangible asset. With the assistance of an independent third party valuation firm, the
Company assessed the fair value of the warrants using various fair value models. Using these measures, the
Company concluded that the fair value of the warrants was $3.6 million. The warrants have a term of 12 years
from the date of issuance and an exercise price of $9.25 per share, which is the adjusted closing price of the
Company’s Class A Common Stock on the date of issuance. As of December 31, 2015, all outstanding warrants
were exercisable, and no warrants were exercised.
13. Other Employee Benefits
The Company offers a 401(k) Deferred Compensation Plan for the benefit of eligible employees. Employee
contributions are voluntary and subject to Internal Revenue Service limitations. The Company matches a portion
of the participant’s contribution and recorded expense of $7.0 million, $4.9 million and $2.7 million for the years
ended December 31, 2015, 2014 and 2013, respectively. Shares of the Company’s Class A Common Stock are
not an investment option in this plan.
In addition, the Company offers the Under Armour, Inc. Deferred Compensation Plan which allows a select
group of management or highly compensated employees, as approved by the Compensation Committee, to make
an annual base salary and/or bonus deferral for each year. As of December 31, 2015 and 2014, the Deferred
Compensation Plan obligations were $5.1 million and $4.5 million, respectively, and were included in other long
term liabilities on the consolidated balance sheets.
The Company established the Rabbi Trust to fund obligations to participants in the Deferred Compensation
Plan. As of December 31, 2015 and 2014, the assets held in the Rabbi Trust were TOLI policies with cash-
surrender values of $4.5 million and $4.7 million, respectively. These assets are consolidated and are included in
other long term assets on the consolidated balance sheet. Refer to Note 9 for a discussion of the fair value
measurements of the assets held in the Rabbi Trust and the Deferred Compensation Plan obligations.
14. Risk Management and Derivatives
Foreign Currency Risk Management
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 primarily driven by intercompany transactions and inventory purchases denominated
in currencies other than the functional currency of the purchasing entity. From time to time, the Company may
elect to enter into foreign currency contracts to reduce the risk associated with foreign currency exchange rate
fluctuations on intercompany transactions and projected inventory purchases for its international subsidiaries.
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