Under Armour 2014 Annual Report Download - page 84

During the year ended December 31, 2014, the Company deemed the achievement of certain operating
income targets probable for the awards granted in 2014, 2013 and 2012, and recorded
$
38.4 million for a portio
n
o
f these awards, including cumulative adjustments of
$
6.6 million during the three months ended March 31, 201
4
and
$
3.8 million during the three months ended September 30, 2014. During the year ended December 31, 2013
,
the Company deemed the achievement of certain operating targets probable for the awards granted in 2013, 201
2
and 2011, and recorded
$
30.8 million for a portion of these awards, including cumulative adjustments o
f
$
9.0 million during the three months ended March 31, 2013 and
$
11.3 million during the three months ended
December 31, 2013. During the year ended December 31, 2012, the Company deemed the achievement of certain
o
perating income targets probable for the awards granted in 2011, and recorded
$
4.1 million for a portion o
f
these awards, including a cumulative adjustment of
$
2.4 million during the three months ended March 31, 2012.
T
he Company will assess the probability of the achievement of the operating income targets at the end of each
r
eporting period. If it becomes probable that the remaining performance targets related to these performance
-
based restricted stock units will be achieved, a cumulative adjustment will be recorded as if ratable stock-base
d
compensation expense had been recorded since the grant date. Additional stock based compensation of up t
o
$
2.7 million would have been recorded through December 31, 2014 for all performance-based restricted stoc
k
units had the full achievement of these operating income targets been deemed probable.
W
arrants
I
n 200
6
, the Compan
y
issued full
y
vested and non-forfeitable warrants to purchase 1.9 million shares of the
Compan
y
’s C
l
ass A Common Stoc
k
to NFL Propert
i
es as part
i
a
l
cons
id
erat
i
on
f
or
f
ootwear promot
i
ona
l
r
igh
ts
w
hi
c
h
were recor
d
e
d
as an
i
ntan
gibl
e asset. W
i
t
h
t
h
e ass
i
stance o
f
an
i
n
d
epen
d
ent t
hi
r
d
part
y
va
l
uat
i
on
fi
rm, t
he
Compan
y
assesse
d
t
h
e
f
a
i
rva
l
ue o
f
t
h
e warrants us
i
n
g
var
i
ous
f
a
i
rva
l
ue mo
d
e
l
s. Us
i
n
g
t
h
ese measures, t
h
e
Compan
y
concluded that the fair value of the warrants was $8.5 million. The warrants have a term of 12
y
ear
s
f
rom the date of issuance and an exercise price of $9.25 per share, which is the ad
j
usted closin
g
price of th
e
Compan
y
’s C
l
ass A Common Stoc
k
on t
h
e
d
ate o
fi
ssuance. As o
f
Decem
b
er 31, 2014, a
ll
outstan
di
n
g
warrants
were exerc
i
sa
bl
e, an
d
no warrants were exerc
i
se
d
.
1
3.
O
ther Em
p
lo
y
ee Bene
fi
t
s
T
h
e Company o
ff
ers a 401(
k
)De
f
erre
d
Compensat
i
on P
l
an
f
or t
h
e
b
ene
fi
to
f
e
li
g
ibl
e emp
l
oyees. Emp
l
oyee
contr
ib
ut
i
ons are vo
l
untary an
d
su
bj
ect to Interna
l
Revenue Serv
i
ce
li
m
i
tat
i
ons. T
h
e Company matc
h
es a port
i
o
n
o
f the participant’s contribution and recorded expense of
$
4.9 million,
$
2.7 million and
$
2.3 million for the year
s
en
d
e
d
Decem
b
er 31, 2014, 2013 an
d
2012, respect
i
ve
l
y. S
h
ares o
f
t
h
e Company’s C
l
ass A Common Stoc
k
ar
e
not an
i
nvestment opt
i
on
i
nt
hi
sp
l
an.
I
na
ddi
t
i
on, t
h
e Compan
y
o
ff
ers t
h
eUn
d
er Armour, Inc. De
f
erre
d
Compensat
i
on P
l
an w
hi
c
h
a
ll
ows a se
l
ect
g
roup o
f
mana
g
ement or
highly
compensate
d
emp
l
o
y
ees, as approve
dby
t
h
e Compensat
i
on Comm
i
ttee, to ma
ke
an annua
lb
ase sa
l
ar
y
an
d
/or
b
onus
d
e
f
erra
lf
or eac
hy
ear. As o
f
Decem
b
er 31, 2014 an
d
2013, t
h
eDe
f
erre
d
Compensation Plan obli
g
ations were $4.5 million and $3.3 million, respectivel
y
, and were included in other lon
g
term
li
a
bili
t
i
es on t
h
e conso
lid
ate
db
a
l
ance s
h
eets
.
The Company established the Rabbi Trust to fund obligations to participants in the Deferred Compensatio
n
Plan. As of December 31, 2014 and 2013, the assets held in the Rabbi Trust were TOLI
p
olicies with cash-
surrender values of
$
4.7 million and
$
4.6 million, respectively. These assets are consolidated and are included in
o
ther long term assets on the consolidated balance sheet. Refer to Note 9 for a discussion of the fair valu
e
measurements of the assets held in the Rabbi Trust and the Deferred Compensation Plan obligations
.
1
4. Risk Management and Derivative
s
F
orei
g
n Currenc
y
Ris
k
Mana
g
ement
The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rate
s
r
elating to transactions generated by its international subsidiaries in currencies other than their local currencies.
7
4