Under Armour 2014 Annual Report Download - page 86

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The Company enters into derivative contracts with major financial institutions with investment grade credi
t
r
atings and is exposed to credit losses in the event of non-performance by these financial institutions. This credit
r
isk is generally limited to the unrealized gains in the foreign currency forward contracts. However, the Compan
y
monitors the credit quality of these financial institutions and considers the risk of counterparty default to be
minimal.
1
5. Related Part
y
Transact
i
on
s
The Company has agreements to license software systems with a software company whose CEO is
a
director of the Company. During the years ended December 31, 2014, 2013 and 2012, the Company pai
d
$
5.2 million,
$
3.7 million and
$
1.9 million, respectively, in licensing fees and related support services to thi
s
company. There were no amounts payable to this related party as of December 31, 2014 and 2013.
The Company has an operating lease agreement with an entity controlled by the Company’s CEO to lease an
aircraft for business purposes. The Company paid
$
1.8 million,
$
1.0 million and
$
0.8 million in lease payment
s
to the entity for its use of the aircraft during the years ended December 31, 2014, 2013 and 2012, respectively.
No amounts were payable to this related party as of December 31, 2014 and 2013. The Company determined th
e
lease payments were at or below fair market lease rates
.
During 2014, the Company entered into a lease agreement with an entity controlled by the Company’s CE
O
to lease office space for business purposes. The lease has a 10 year term beginning in 2016 and lease payment
s
are expected to begin at
$
1.1 million annually with an annual escalation of 2.0% thereafter. The Company
determined the lease payments were at or below fair market lease rates.
1
6. Segment Data and Related Informatio
n
The Company’s operating segments are based on how the Chief Operating Decision Maker (“CODM”
)
makes decisions about allocating resources and assessing performance. As such, the CODM receives discrete
f
inancial information for the Company’s principal business by geographic region based on the Company’
s
strategy to become a global brand. These geographic regions include North America; Latin America; Europe, the
Middle East and Africa (“EMEA”); and Asia-Pacific. Each geographic segment operates exclusively in one
industry: the development, marketing and distribution of branded performance apparel, footwear and accessories.
T
he CODM also receives discrete financial information for the Company’s MapMyFitness business. Due to th
e
insignificance of the EMEA, Latin America, Asia-Pacific and MapMyFitness operating segments, they have bee
n
combined into other foreign countries and businesses for disclosure purposes
.
The net revenues and operating income (loss) associated with the Company’s segments are summarized i
n
the following tables. Net revenues represent sales to external customers for each segment. In addition to net
r
evenues, operating income (loss) is a primary financial measure used by the Company to evaluate performance
o
f each segment. Intercompany balances were eliminated for separate disclosure and the majority of corporat
e
expenses within North America have not been allocated to other foreign countries and businesses
.
Year Ended December 31,
(In t
h
ousan
d
s) 2
0
14 201
3
2
0
12
N
et revenue
s
North America
$
2,796,390
$
2,193,739
$
1,726,73
3
O
ther foreign countries and businesses 287,980 138,312 108,188
Total net revenues $3
,
084
,
370 $2
,
332
,
051 $1
,
834
,
921
7
6