Under Armour 2014 Annual Report Download - page 65

Under Armour, Inc. and Subsidiarie
s
N
otes to the Audited
C
onsolidated Financial
S
tatement
s
1
. Descri
p
tion of the Busines
s
Un
d
er Armour, Inc.
i
sa
d
eve
l
oper, mar
k
eter an
ddi
str
ib
utor o
fb
ran
d
e
d
per
f
ormance appare
l
,
f
ootwear an
d
accessor
i
es. T
h
ese pro
d
ucts are so
ld
wor
ld
w
id
ean
d
worn
by
at
hl
etes at a
ll l
eve
l
s,
f
rom
y
out
h
to pro
f
ess
i
ona
l
o
n
pl
a
yi
n
gfi
e
ld
s aroun
d
t
h
e
gl
o
b
e, as we
ll
as
by
consumers w
i
t
h
act
i
ve
lif
est
yl
es
.
2
.
S
ummary of
S
i
g
nificant Accountin
g
Policies
Basis o
f
Presentatio
n
T
h
e accompan
yi
n
g
conso
lid
ate
dfi
nanc
i
a
l
statements
i
nc
l
u
d
et
h
e accounts o
f
Un
d
er Armour, Inc. an
di
ts
w
h
o
lly
owne
d
su
b
s
idi
ar
i
es (t
h
e “Compan
y
”). A
ll i
ntercompan
yb
a
l
ances an
d
transact
i
ons
h
ave
b
een e
li
m
i
nate
d.
Th
e accompan
yi
n
g
conso
lid
ate
dfi
nanc
i
a
l
statements were prepare
di
n accor
d
ance w
i
t
h
account
i
n
g
pr
i
nc
i
p
l
es
g
enera
lly
accepte
di
nt
h
eUn
i
te
d
States o
f
Amer
i
ca
.
On June 11, 2012 and March 17, 2014 the Board of Directors declared two-for-one stock s
p
lits of the
Company’s Class A and Class B common stock, which were effected in the form of a 100% common stoc
k
dividend distributed on July 9, 2012 and April 14, 2014, respectively. Stockholders’ equity and all references to
share and per share amounts in the accompanying consolidated financial statements have been retroactively
adjusted to reflect these two-for-one stock splits for all periods presented
.
Cash and Cash E
q
uivalent
s
The Compan
y
considers all hi
g
hl
y
liquid investments with an ori
g
inal maturit
y
of three months or less at
date of inception to be cash and cash equivalents. Included in interest expense, net for the
y
ears ende
d
December 31, 2014, 2013 and 2012 was interest income of $192.0 thousand, $23.7 thousand and $25.2 thousand,
r
espectivel
y
, related to cash and cash equivalents.
Concentration o
f
Cre
d
it Ris
k
Fi
nanc
i
a
li
nstruments t
h
at su
bj
ect t
h
e Compan
y
to s
ig
n
ifi
cant concentrat
i
on o
f
cre
di
tr
i
s
k
cons
i
st pr
i
mar
ily
of
accounts rece
i
va
bl
e. T
h
ema
j
or
i
t
y
o
f
t
h
e Compan
y
’s accounts rece
i
va
bl
e
i
s
d
ue
f
rom
l
ar
g
e sport
i
n
gg
oo
d
s
r
eta
il
ers.
C
re
di
t
i
s exten
d
e
db
ase
d
on an e
v
a
l
uat
i
on o
f
t
h
e customer’s
fi
nanc
i
a
l
con
di
t
i
on an
d
co
ll
atera
li
s not
r
equ
i
re
d
.T
h
e Compan
yh
a
d
two customers
i
n Nort
h
Amer
i
ca t
h
at
i
n
di
v
id
ua
lly
accounte
df
or 23.4% an
d
11.1
%
o
f accounts receivable as of December 31, 2014. The Compan
y
’s lar
g
est customer accounted for 14.4%, 16.6%
and 16.6% of net revenues for the
y
ears ended December 31, 2014, 2013 and 2012, respectivel
y
.
Allowance
f
or Doubt
f
ul Accounts
The Company makes ongoing estimates relating to the collectability of accounts receivable and maintains a
n
allowance for estimated losses resulting from the inability of its customers to make required payments. In
determining the amount of the reserve, the Company considers historical levels of credit losses and significant
economic developments within the retail environment that could impact the ability of its customers to pay
o
utstanding balances and makes judgments about the creditworthiness of significant customers based on ongoin
g
credit evaluations. Because the Company cannot predict future changes in the financial stability of its customers
,
actual future losses from uncollectible accounts may differ from estimates. If the financial condition of customer
s
were to deteriorate, resulting in their inability to make payments, a larger reserve might be required. In the event
the Company determines a smaller or larger reserve is appropriate, it would record a benefit or charge to selling,
general and administrative expense in the period in which such a determination was made. As of December 31,
2014 and 2013, the allowance for doubtful accounts was
$
3.7 million and
$
2.9 million, respectively.
55