Under Armour 2015 Annual Report Download - page 64

Under Armour, Inc. and Subsidiaries
Notes to the Audited Consolidated Financial Statements
1. Description of the Business
Under Armour, Inc. is a developer, marketer and distributor of branded performance apparel, footwear and
accessories. These products are sold worldwide and worn by athletes at all levels, from youth to professional on
playing fields around the globe, as well as by consumers with active lifestyles. The Under Armour Connected
FitnessTM platform powers the world’s largest digital health and fitness community. The Company uses this
platform to engage its consumers and increase awareness and sales of its products.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Under Armour, Inc. and its
wholly owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated.
The accompanying consolidated financial statements were prepared in accordance with accounting principles
generally accepted in the United States of America.
On March 17, 2014, the Board of Directors declared a two-for-one stock split of the Company’s Class A and
Class B common stock, which was effected in the form of a 100% common stock dividend distributed on
April 14, 2014. Stockholders’ equity and all references to share and per share amounts in the accompanying
consolidated financial statements have been retroactively adjusted to reflect the two-for-one stock split for all
periods presented.
On January 5, 2015, the Company acquired 100% of the outstanding equity of Endomondo ApS
(“Endomondo”), a Denmark-based digital connected fitness company. On March 17, 2015, the Company
acquired 100% of the outstanding equity of MyFitnessPal, Inc. (“MFP”), a digital nutrition and connected fitness
company. Both companies were acquired to expand the Under Armour Connected Fitness community. The
purchase price allocation for each acquisition is reflected in the consolidated balance sheet as of December 31,
2015.
The Company identified a prior period error in the classification of available-for-sale securities (“AFS”) for
the first and second quarters of 2015. The Company concluded that the error was not material to any of its
previously issued financial statements. The Company included purchases and sales of AFS for the first six
months of 2015 of $41.5 million and $19.4 million, respectively, in its cash flows from investing activities for the
six months ended June 30, 2015. Additionally, the Company intends to revise the affected periods when they are
presented on a comparable basis to reflect the correct accounting. The revision will result in a reclassification
from “Cash and cash equivalents” to “Prepaid expenses and other current assets” on the 2015 first and second
quarter balance sheets of $7.1 million and $22.1 million, respectively. Correspondingly, the revision will result in
the presentation of purchases and sales of AFS for the three months ended March 31, 2015 of $10.4 million and
$3.3 million,respectively, in addition to the six months 2015 cash flow activities described above.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at
date of inception to be cash and cash equivalents. Included in interest expense, net for the years ended
December 31, 2015, 2014 and 2013 was interest income of $164.0 thousand, $192.0 thousand and $23.7
thousand, respectively, related to cash and cash equivalents.
Concentration of Credit Risk
Financial instruments that subject the Company to significant concentration of credit risk consist primarily
of accounts receivable. The majority of the Company’s accounts receivable is due from large sporting goods
56