Under Armour, Inc. (NYSE:UAA) Q2 2021 Earnings Conference Call August 3, 2021 8:30 AM ET Company Participants Lance Allega - SVP, IR & Corporate Development Patrik Frisk - CEO, President & Executive Director David E. Bergman - CFO Conference Call Participants Erinn Murphy - Piper Jaffray John Kernan - Cowen and Company Jim Duffy - Stifel Nicolaus Brian Nagel - Oppenheimer Matthew Boss - J.P. Morgan Simeon Siguel - BMO Capital Markets Sam Poser - Williams Trading Unidentified Analyst - Citigroup Operator Goo ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the first quarter [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company presents its unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, with detailed explanatory notes [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2021 | December 31, 2020 | March 31, 2020 | |:---|:---|:---|:---| | Total current assets | $3,157,718 | $3,222,975 | $2,868,007 | | Total assets | $4,914,296 | $5,030,628 | $4,837,575 | | Total current liabilities | $1,234,317 | $1,413,276 | $1,691,502 | | Total liabilities | $3,144,097 | $3,354,635 | $3,287,395 | | Total stockholders' equity | $1,770,199 | $1,675,993 | $1,550,180 | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income or loss over specific periods, reflecting operational performance Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | Net revenues | $1,257,195 | $930,240 | | Gross profit | $628,641 | $430,984 | | Income (loss) from operations | $106,890 | $(558,180) | | Net income (loss) | $77,752 | $(589,681) | | Basic net income (loss) per share | $0.17 | $(1.30) | | Diluted net income (loss) per share | $0.17 | $(1.30) | - Net revenues increased by **35.1% YoY**, while the company swung from a significant operating loss to a substantial operating income[7](index=7&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the company's total comprehensive income or loss, including net income and other comprehensive income items, for the reported periods Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | Net income (loss) | $77,752 | $(589,681) | | Foreign currency translation adjustment | $3,318 | $(47,679) | | Unrealized gain on cash flow hedges, net of tax | $8,798 | $32,545 | | Loss on intra-entity foreign currency transactions | $(2,515) | $(4,354) | | Total other comprehensive income (loss) | $9,601 | $(19,488) | | Comprehensive income (loss) | $87,353 | $(609,169) | - The company reported a **comprehensive income of $87.353 million** for Q1 2021, a significant improvement from a comprehensive loss of **$609.169 million** in Q1 2020, primarily driven by the turnaround in net income and positive foreign currency translation adjustments[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity accounts, including retained earnings and accumulated other comprehensive income or loss, over time Condensed Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | Balance as of Dec 31, 2020 | Balance as of March 31, 2021 | |:---|:---|:---|\ | Total Stockholders' Equity | $1,675,993 | $1,770,199 | | Retained Earnings | $673,855 | $747,231 | | Accumulated Other Comprehensive Loss | $(59,185) | $(49,584) | - Total stockholders' equity increased by **$94.206 million** from December 31, 2020, to March 31, 2021, primarily due to comprehensive income of **$87.353 million**[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities, providing insight into liquidity Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | Net cash provided by (used in) operating activities | $(150,588) | $(366,712) | | Net cash used in investing activities | $(7,904) | $(68,841) | | Net cash provided by (used in) financing activities | $(3,443) | $598,952 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(168,835) | $172,160 | | Cash, cash equivalents and restricted cash End of period | $1,359,680 | $968,168 | - Cash flows used in operating activities significantly decreased from **$(366.7) million** in Q1 2020 to **$(150.6) million** in Q1 2021, reflecting improved operational performance, while net cash used in investing activities also decreased substantially[16](index=16&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) This note describes the company's business operations, segment reporting changes, and the basis for preparing its condensed consolidated financial statements - Under Armour, Inc. develops, markets, and distributes branded athletic performance apparel, footwear, and accessories globally, along with digital health and fitness apps[19](index=19&type=chunk) - Effective Q1 2021, the 'Connected Fitness' segment is no longer reported discretely due to the sale of MyFitnessPal and winding down of Endomondo in December 2020, with operating results of the remaining MapMyFitness (MMR) platforms now included in the 'Corporate Other' segment[21](index=21&type=chunk) - The preparation of financial statements involves significant management estimates and judgments, which are increasingly impacted by the evolving COVID-19 pandemic, leading to uncertainty in future financial results[22](index=22&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting policies used in preparing the financial statements, including revenue recognition, cash, and investments Cash, Cash Equivalents and Restricted Cash (in thousands) | Metric | March 31, 2021 | December 31, 2020 | March 31, 2020 | |:---|:---|:---|:---|\ | Cash and cash equivalents | $1,348,737 | $1,517,361 | $959,318 | | Restricted cash | $10,943 | $11,154 | $8,850 | | Total Cash, cash equivalents and restricted cash | $1,359,680 | $1,528,515 | $968,168 | - The Company's revenue recognition policy follows ASC 606, recognizing revenue when performance obligations are satisfied, with specific considerations for wholesale, direct-to-consumer, gift cards, licensing, and digital subscriptions[30](index=30&type=chunk) Customer Refund Liability and Associated Inventory (in thousands) | Metric | March 31, 2021 | December 31, 2020 | March 31, 2020 | |:---|:---|:---|:---|\ | Customer refund liability | $191,979 | $203,399 | $208,172 | | Inventory associated with the reserves | $54,540 | $57,867 | $63,339 | - Contract liabilities, primarily from advance payments for digital subscriptions and royalties, decreased from **$26.7 million** as of December 31, 2020, to **$25.5 million** as of March 31, 2021[33](index=33&type=chunk) - The Company holds equity method investments in Dome Corporation (Japan) and UA Sports (Thailand) Co., Ltd., recognizing its allocable share of their net income/loss[35](index=35&type=chunk) [NOTE 3. RESTRUCTURING AND RELATED IMPAIRMENT CHARGES](index=12&type=section&id=NOTE%203.%20RESTRUCTURING%20AND%20RELATED%20IMPAIRMENT%20CHARGES) This note details the company's restructuring plan, including estimated costs, charges incurred, and the financial impact of impairment activities - The Company's 2020 restructuring plan, approved in Fiscal 2020, aims to rebalance the cost base for improved profitability and cash flow, with estimated costs ranging from **$550 million to $600 million**[37](index=37&type=chunk)[39](index=39&type=chunk) Restructuring and Impairment Charges (in thousands) | Category | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | Total costs recorded in restructuring and impairment | $7,113 | $301,089 | | Total restructuring and impairment charges | $7,113 | $301,089 | | Estimated Remaining to be Incurred | $120,160 | N/A | | Total to be Incurred under plan | $600,000 | N/A | - As of March 31, 2021, **$479.8 million** of charges under the 2020 restructuring plan have been recorded to date, with **$7.1 million** incurred in Q1 2021, significantly lower than **$301.1 million** in Q1 2020[39](index=39&type=chunk) [NOTE 4. LEASES](index=14&type=section&id=NOTE%204.%20LEASES) This note provides information on the company's lease arrangements, including operating lease costs, cash flows, and the maturity schedule of lease liabilities - The Company accounts for operating leases by recognizing right-of-use (ROU) assets and lease liabilities on the balance sheet, based on the present value of future minimum lease payments[45](index=45&type=chunk) Operating and Variable Lease Costs (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | Operating lease costs | $34,935 | $37,872 | | Variable lease costs | $2,920 | $1,986 | Supplemental Cash Flow Information (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | Operating cash outflows from operating leases | $45,909 | $36,547 | | Leased assets obtained in exchange for new operating lease liabilities | $4,074 | $72,963 | Maturity of Lease Liabilities as of March 31, 2021 (in thousands) | Year | Total Lease Payments | |:---|:---|\ | 2021 | $150,290 | | 2022 | $163,805 | | 2023 | $143,554 | | 2024 | $124,776 | | 2025 | $96,576 | | 2026 and thereafter | $467,029 | | **Total lease payments** | **$1,146,030** | | Less: Interest | $183,820 | | **Total present value of lease liabilities** | **$962,210** | [NOTE 5. CREDIT FACILITY AND OTHER LONG TERM DEBT](index=16&type=section&id=NOTE%205.%20CREDIT%20FACILITY%20AND%20OTHER%20LONG%20TERM%20DEBT) This note details the company's credit facilities, convertible senior notes, and other long-term debt, including terms, outstanding amounts, and interest expense - The Company's revolving credit facility was amended in May 2020, reducing commitments from **$1.25 billion to $1.1 billion**, with no outstanding amounts as of March 31, 2021, compared to **$600.0 million** outstanding in Q1 2020[53](index=53&type=chunk) - The credit agreement includes a 'covenant suspension period' through June 30, 2022, during which interest coverage and leverage covenants are suspended, replaced by a minimum liquidity covenant of **$550.0 million** until December 31, 2021, which the Company was in compliance with as of March 31, 2021[53](index=53&type=chunk)[54](index=54&type=chunk) - In May 2020, the Company issued **$500.0 million** aggregate principal amount of 1.50% Convertible Senior Notes due 2024, with net proceeds of **$488.8 million** used to repay revolving credit facility debt and pay capped call transaction costs[55](index=55&type=chunk) Convertible Senior Notes Components (in thousands) | Metric | March 31, 2021 | December 31, 2020 | |:---|:---|:---|\ | Principal | $500,000 | $500,000 | | Net carrying amount (liability component) | $418,300 | $412,468 | | Equity component, net of issuance costs | $71,646 | $88,672 | Convertible Senior Notes Interest Expense (in thousands) | Metric | Three Months Ended March 31, 2021 | |:---|:---|\ | Coupon interest | $1,875 | | Non-cash amortization of debt discount | $5,210 | | Amortization of deferred financing costs | $622 | | **Total Convertible senior notes interest expense** | **$7,707** | - Interest expense, net, increased to **$14.1 million** in Q1 2021 from **$6.0 million** in Q1 2020, primarily due to the interest associated with the 1.50% Convertible Senior Notes[62](index=62&type=chunk) [NOTE 6. COMMITMENTS AND CONTINGENCIES](index=19&type=section&id=NOTE%206.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's legal proceedings, regulatory investigations, and other commitments and contingencies that may impact its financial position - The Company is involved in ongoing securities litigation (Consolidated Securities Action) alleging material misstatements and omissions, with a third amended complaint filed in October 2020, and intends to vigorously defend the lawsuit[64](index=64&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - Multiple state and federal court derivative complaints have been filed against current and former executives and directors, alleging breach of fiduciary duty, unjust enrichment, and corporate waste, among other claims, which the Company believes are without merit[72](index=72&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) - On May 3, 2021, the Company settled with the SEC regarding an investigation into 'pull forward' sales, agreeing to pay a **$9.0 million** civil monetary penalty without admitting or denying findings, with the SEC Staff confirming no enforcement action against management[76](index=76&type=chunk) - The U.S. Department of Justice (DOJ) also had an investigation into similar matters, but the Company has not received requests from the DOJ since Q2 2020 and does not anticipate additional engagement[76](index=76&type=chunk) [NOTE 7. FAIR VALUE MEASUREMENTS](index=23&type=section&id=NOTE%207.%20FAIR%20VALUE%20MEASUREMENTS) This note explains the company's fair value measurements for financial assets and liabilities, categorized by input levels used in valuation techniques - The Company categorizes fair value measurements into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[79](index=79&type=chunk) Financial Assets and Liabilities Measured at Fair Value (in thousands) | Instrument | March 31, 2021 (Level 2) | December 31, 2020 (Level 2) | March 31, 2020 (Level 2) | |:---|:---|:---|:---|\ | Derivative foreign currency contracts | $(13,173) | $(22,122) | $35,971 | | TOLI policies held by the Rabbi Trust | $8,001 | $7,697 | $5,471 | | Deferred Compensation Plan obligations | $(14,641) | $(14,314) | $(10,443) | - The fair value of the Company's Convertible Senior Notes was **$982.9 million** as of March 31, 2021, and its Senior Notes was **$602.2 million**, both estimated using Level 2 inputs[80](index=80&type=chunk) [NOTE 8. RISK MANAGEMENT AND DERIVATIVES](index=24&type=section&id=NOTE%208.%20RISK%20MANAGEMENT%20AND%20DERIVATIVES) This note describes the company's use of derivative instruments to manage market risks from foreign currency and interest rate fluctuations - The Company uses derivative instruments, primarily foreign currency contracts, to manage global market risks from foreign currency and interest rate fluctuations, not for speculative purposes[81](index=81&type=chunk)[82](index=82&type=chunk) Fair Values of Derivative Instruments (in thousands) | Classification | March 31, 2021 | December 31, 2020 | March 31, 2020 | |:---|:---|:---|:---|\ | Total derivative assets designated as hedging instruments | $2,486 | $0 | $39,878 | | Total derivative liabilities designated as hedging instruments | $16,352 | $24,070 | $789 | | Total derivative assets not designated as hedging instruments | $5,114 | $2,384 | $8,582 | | Total derivative liabilities not designated as hedging instruments | $1,087 | $6,464 | $1,740 | - For cash flow hedges, changes in fair value are reported in other comprehensive income (loss) and reclassified to current earnings when the hedged transaction affects earnings, with the aggregate notional value of outstanding cash flow hedges being **$688.9 million** as of March 31, 2021[89](index=89&type=chunk) - Undesignated derivative instruments, primarily foreign exchange forward contracts, are recorded at fair value with changes recognized in other expense, net, and the total notional value of outstanding undesignated derivatives was **$317.7 million** as of March 31, 2021[91](index=91&type=chunk) [NOTE 9. PROVISION FOR INCOME TAXES](index=27&type=section&id=NOTE%209.%20PROVISION%20FOR%20INCOME%20TAXES) This note details the company's income tax provision, effective tax rates, and the impact of valuation allowances on deferred tax assets - The effective tax rate for Q1 2021 was **11.5%**, a significant change from **(3.8)%** in Q1 2020, primarily due to the United States being considered a loss jurisdiction and the non-recurring recording of valuation allowances on certain deferred tax assets in the U.S. and China in Q1 2020[94](index=94&type=chunk) - The Company continues to maintain valuation allowances on its U.S. federal and most U.S. state deferred tax assets, as well as select foreign deferred tax assets, due to the weight of negative evidence regarding their realizability[95](index=95&type=chunk) [NOTE 10. EARNINGS PER SHARE](index=28&type=section&id=NOTE%2010.%20EARNINGS%20PER%20SHARE) This note presents the calculation of basic and diluted earnings per share, reflecting the company's profitability on a per-share basis Earnings Per Share (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | Net income (loss) | $77,752 | $(589,681) | | Weighted average common shares outstanding (Basic) | 456,014 | 452,871 | | Weighted average common shares and dilutive securities outstanding (Diluted) | 459,226 | 452,871 | | Basic net income (loss) per share | $0.17 | $(1.30) | | Diluted net income (loss) per share | $0.17 | $(1.30) | - Diluted EPS improved significantly to **$0.17** in Q1 2021 from **$(1.30)** in Q1 2020, with potentially dilutive securities excluded from Q1 2020 EPS calculation as their effect would have been anti-dilutive due to the net loss position[96](index=96&type=chunk) [NOTE 11. SEGMENT DATA AND DISAGGREGATED REVENUE](index=28&type=section&id=NOTE%2011.%20SEGMENT%20DATA%20AND%20DISAGGREGATED%20REVENUE) This note provides financial information by operating segment and disaggregated revenue by product category and distribution channel - The Company's operating segments are based on geographic regions: North America, EMEA, Asia-Pacific, and Latin America, with the 'Connected Fitness' segment discontinued and remaining operations (MMR) moved to 'Corporate Other' in Q1 2021[97](index=97&type=chunk) Net Revenues by Segment (in thousands) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | North America | $805,727 | $608,980 | | EMEA | $193,883 | $137,904 | | Asia-Pacific | $210,220 | $95,686 | | Latin America | $48,311 | $53,088 | | Corporate Other | $(946) | $34,582 | | **Total net revenues** | **$1,257,195** | **$930,240** | Operating Income (Loss) by Segment (in thousands) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | North America | $210,562 | $(3,773) | | EMEA | $26,686 | $3,704 | | Asia-Pacific | $46,513 | $(36,841) | | Latin America | $1,457 | $(48,184) | | Corporate Other | $(178,328) | $(473,086) | | **Total operating income (loss)** | **$106,890** | **$(558,180)** | Net Revenues by Product Category (in thousands) | Product Category | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | Apparel | $810,041 | $598,287 | | Footwear | $309,047 | $209,688 | | Accessories | $117,396 | $67,748 | | License revenues | $21,657 | $19,935 | | **Total net revenues** | **$1,257,195** | **$930,240** | Net Revenues by Distribution Channel (in thousands) | Distribution Channel | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | Wholesale | $799,587 | $591,772 | | Direct to Consumer | $436,897 | $283,951 | | License revenues | $21,657 | $19,935 | | **Total net revenues** | **$1,257,195** | **$930,240** | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=31&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the Company's financial condition and results of operations for the three months ended March 31, 2021, compared to the same period in 2020, covering overall performance, strategic initiatives, and detailed financial analysis [FORWARD-LOOKING STATEMENTS](index=31&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section highlights the inherent uncertainties and risks associated with forward-looking statements regarding the company's future performance and strategies - The report contains forward-looking statements regarding future financial condition, growth strategies, COVID-19 impact, operating expense reductions, product development, marketing, and investment benefits, which are subject to risks and uncertainties[106](index=106&type=chunk) - Key risk factors include the ongoing impact of the COVID-19 pandemic, changes in economic conditions, increased competition, fluctuations in raw material costs, customer financial health, and the ability to execute long-term strategies and manage global operations[106](index=106&type=chunk) [OVERVIEW](index=32&type=section&id=OVERVIEW) This section provides a high-level summary of the company's business, strategic focus, and key operational achievements during the quarter - Under Armour is a leading developer, marketer, and distributor of branded athletic performance apparel, footwear, and accessories, with a digital strategy focused on consumer engagement[108](index=108&type=chunk) - In Q1 Fiscal 2021, the Company achieved better-than-expected wholesale and direct-to-consumer sales, driven by strong demand in North America, Asia-Pacific, and EMEA[108](index=108&type=chunk) - Strategic focus includes driving premium brand-right growth, improving profitability, reducing promotional activities, constraining supply, exiting undifferentiated retail, and managing off-price sales[108](index=108&type=chunk) [Quarterly Results](index=32&type=section&id=Quarterly%20Results) This section presents a summary of the company's key financial performance metrics and their year-over-year changes for the quarter Q1 Fiscal 2021 Financial Highlights (YoY Change) | Metric | Change | |:---|:---|\ | Total net revenues | +35.1% | | Wholesale revenue | +35.1% | | Direct-to-consumer revenue | +53.9% | | Apparel revenue | +35.4% | | Footwear revenue | +47.4% | | Accessories revenue | +73.3% | | North America revenue | +32.3% | | EMEA revenue | +40.6% | | Asia-Pacific revenue | +119.7% | | Latin-America revenue | -9.0% | | Corporate Other revenues | -103% | | Gross margin | +370 bps to 50.0% | | Selling, general and administrative expense | -6.9% | | Restructuring and impairment charges | -98.4% to $7.1 million | [COVID-19 Update](index=32&type=section&id=COVID-19%20Update) This section details the ongoing impact of the COVID-19 pandemic on the company's operations, retail closures, and supply chain - The COVID-19 pandemic continues to cause disruption and volatility, with retail store closures persisting in certain locations, particularly in EMEA where approximately **one-third of stores** were closed as of March 31, 2021[110](index=110&type=chunk)[111](index=111&type=chunk) - North America experienced higher-than-expected sales in Q1 2021 due to fewer COVID-19 restrictions, contrasting with ongoing volatility and potential supply chain disruptions globally[111](index=111&type=chunk) - The Company recognized **$1.5 million** in incentives under global legislation, including the CARES Act, in Q1 2021, recorded as a reduction in selling, general and administrative expenses[112](index=112&type=chunk) [Segment Presentation and Marketing](index=33&type=section&id=Segment%20Presentation%20and%20Marketing) This section explains changes in the company's segment reporting structure, specifically the discontinuation of the Connected Fitness segment - Effective January 1, 2021, the Connected Fitness segment is no longer reported discretely; its remaining business (MMR platforms) is now included in Corporate Other, along with unallocated general and administrative expenses and restructuring charges[113](index=113&type=chunk) [Fiscal Year End Change](index=33&type=section&id=Fiscal%20Year%20End%20Change) This section announces the company's decision to change its fiscal year end to align with its business cycle - The Board of Directors authorized a change in the fiscal year end from December 31 to March 31, effective for the fiscal year beginning April 1, 2022, to align with the business cycle[114](index=114&type=chunk) [2020 Restructuring](index=33&type=section&id=2020%20Restructuring) This section outlines the details and financial impact of the company's 2020 restructuring plan, including estimated costs and charges incurred - The 2020 restructuring plan, approved in Fiscal 2020, targets **$550 million to $600 million** in costs, comprising **$219 million** in cash charges (facility/lease, severance, contract termination) and **$381 million** in non-cash charges (impairment of NYC flagship store, intangibles)[114](index=114&type=chunk)[116](index=116&type=chunk) - The Company recorded **$7.1 million** in restructuring and impairment charges in Q1 2021, a significant decrease from **$301.1 million** in Q1 2020, which included substantial goodwill and long-lived asset impairment charges[116](index=116&type=chunk) [GENERAL](index=34&type=section&id=GENERAL) This section defines key components of the company's financial statements, including net revenues, cost of goods sold, and selling, general and administrative expenses - Net revenues include net sales (apparel, footwear, accessories), license revenues, and digital subscriptions/advertising, while cost of goods sold includes product costs, freight, duties, royalties, and inventory write-downs[117](index=117&type=chunk) - Selling, general and administrative expenses are categorized into marketing and other costs, with marketing including sports/brand marketing, media, and retail presentation, and outbound handling costs included in SG&A, not COGS[117](index=117&type=chunk) - Other income (expense), net, primarily consists of unrealized/realized gains/losses on foreign currency derivatives and transactions, and rent expense for the New York City flagship store[117](index=117&type=chunk) [RESULTS OF OPERATIONS](index=35&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a summary of the company's key financial metrics as a percentage of net revenues, illustrating operational efficiency Key Components of Results of Operations (as a percentage of net revenues) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |:---|:---|:---|\ | Net revenues | 100.0% | 100.0% | | Cost of goods sold | 50.0% | 53.7% | | Gross profit | 50.0% | 46.3% | | Selling, general and administrative expenses | 40.9% | 59.4% | | Restructuring and impairment charges | 0.6% | 46.9% | | Income (loss) from operations | 8.5% | (60.0)% | | Net income (loss) | 6.2% | (63.4)% | [CONSOLIDATED RESULTS OF OPERATIONS](index=35&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) This section analyzes the company's overall financial performance, including revenue growth, gross margin, operating expenses, and net income - Total net revenues increased **35.1% to $1.26 billion** in Q1 2021, driven by increased unit sales across all product categories and timing shifts from Q4 2020 to Q1 2021 due to COVID-19[121](index=121&type=chunk)[123](index=123&type=chunk) - Gross margin increased **370 basis points to 50.0%**, primarily due to pricing improvements (lower promotional activity), supply chain benefits, and favorable channel/regional mix, partially offset by the MyFitnessPal sale[123](index=123&type=chunk) - Selling, general and administrative expenses decreased **6.9% to $514.6 million**, mainly due to reduced marketing costs (lower rights fees) and other costs (lower legal expense, depreciation), despite higher incentive compensation[123](index=123&type=chunk) - Income from operations significantly improved by **$665.1 million to $106.9 million**, primarily due to increased revenues and substantially lower restructuring and impairment charges compared to the prior year[123](index=123&type=chunk) - Net interest expense increased by **$8.2 million to $14.1 million**, mainly due to interest on the 1.50% Convertible Senior Notes issued in May 2020[123](index=123&type=chunk) [SEGMENT RESULTS OF OPERATIONS](index=37&type=section&id=SEGMENT%20RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of financial performance across the company's geographic operating segments - North America net revenues increased **32.3% to $805.7 million**, driven by increased wholesale and direct-to-consumer unit sales and timing shifts, with operating income swinging from a loss of **$3.8 million** to an income of **$210.6 million** due to revenue growth, gross margin improvements, and absence of prior year impairment charges[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - EMEA net revenues increased **40.6% to $193.9 million**, primarily from wholesale channels and e-commerce growth, despite retail store closures, and operating income increased significantly to **$26.7 million** from **$3.7 million**[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Asia-Pacific net revenues surged **119.7% to $210.2 million**, driven by increased wholesale unit sales and e-commerce/retail store growth, with operating income improving from a loss of **$36.8 million** to an income of **$46.5 million**, benefiting from revenue growth and absence of prior year impairment charges[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Latin America net revenues decreased **9.0% to $48.3 million**, mainly due to decreased wholesale unit sales, partially offset by e-commerce growth, with operating income improving from a loss of **$48.2 million** to an income of **$1.5 million**, primarily due to the absence of prior year goodwill and long-lived asset impairment charges[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Corporate Other operating loss decreased by **$294.8 million to $178.3 million**, primarily due to the non-recurrence of **$301.1 million** in restructuring and impairment charges and higher legal expenses from Q1 2020, partially offset by higher incentive compensation[131](index=131&type=chunk) [FINANCIAL POSITIONS, CAPITAL RESOURCES AND LIQUIDITY](index=39&type=section&id=FINANCIAL%20POSITIONS,%20CAPITAL%20RESOURCES%20AND%20LIQUIDITY) This section discusses the company's financial health, cash requirements, funding sources, and liquidity position, including debt and credit facilities - The Company's cash requirements are primarily for working capital and capital expenditures, funded by operating cash flows, cash on hand, and credit facilities, with cash and cash equivalents totaling **$1.3 billion** as of March 31, 2021[132](index=132&type=chunk) - Cash flows used in operating activities decreased by **$216.1 million YoY**, primarily due to increased net income and favorable changes in working capital, including a **$355.8 million** change in other non-current assets and a **$108.9 million** increase from inventories[135](index=135&type=chunk) - Cash flows used in investing activities decreased by **$60.9 million YoY**, driven by reduced capital expenditures (**$23.0 million**) and the absence of acquisition-related activity (**$37.3 million**) from the prior year[136](index=136&type=chunk) - Cash flows provided by financing activities decreased by **$602.4 million YoY**, primarily due to the absence of **$600.0 million** in net borrowings under the Revolver in Q1 2020[137](index=137&type=chunk) - The Company's amended revolving credit facility has **$1.1 billion** in commitments, with no amounts outstanding as of March 31, 2021, and includes a minimum liquidity covenant of **$550.0 million** through December 31, 2021, which the Company expects to comply with[138](index=138&type=chunk)[139](index=139&type=chunk) - The 1.50% Convertible Senior Notes (**$500.0 million** principal) and 3.250% Senior Notes (**$600.0 million** principal) are key components of the Company's long-term debt, with specific conversion, redemption, and covenant terms[141](index=141&type=chunk)[142](index=142&type=chunk) [CONTRACTUAL COMMITMENTS AND CONTINGENCIES](index=43&type=section&id=CONTRACTUAL%20COMMITMENTS%20AND%20CONTINGENCIES) This section confirms no significant changes to contractual obligations since the last annual report, apart from normal business course adjustments - There were no significant changes to contractual obligations reported in the Annual Report on Form 10-K for Fiscal 2020, other than borrowings and repayments disclosed in the Capital Resources section and normal course of business changes[143](index=143&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=43&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section highlights the significant management estimates and assumptions used in preparing the financial statements and any recent accounting standard adoptions - The Company's financial statements are prepared under U.S. GAAP, requiring significant management estimates and assumptions that are inherently uncertain, with no significant changes to critical accounting policies occurring in Q1 2021, other than the adoption of recent accounting standards[144](index=144&type=chunk)[145](index=145&type=chunk) [Recently Issued Accounting Standards](index=44&type=section&id=Recently%20Issued%20Accounting%20Standards) This section discusses the company's evaluation of recently issued accounting standards and their potential impact on future financial statements - The Company is evaluating the impact of recently issued accounting standards, including ASU 2020-06 (simplifying convertible instrument accounting) and Topic 848 (reference rate reform), on its financial statements[36](index=36&type=chunk)[146](index=146&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=45&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that there have been no significant changes to the Company's market risk exposure since December 31, 2020, referring readers to the Annual Report on Form 10-K for a detailed discussion - No significant changes to market risk have occurred since December 31, 2020[148](index=148&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=45&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details management's evaluation of the effectiveness of the Company's disclosure controls and procedures and reports on any changes in internal controls over financial reporting [Evaluation of Disclosure Controls and Procedures](index=45&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports management's conclusion on the effectiveness of the company's disclosure controls and procedures - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2021, ensuring timely and accurate reporting of information[149](index=149&type=chunk) [Changes in Internal Controls](index=45&type=section&id=Changes%20in%20Internal%20Controls) This section states that there were no material changes to the company's internal control over financial reporting during the quarter - There have been no material changes to the Company's internal control over financial reporting during the most recent fiscal quarter, and the Company continues to monitor and assess COVID-19 impacts on controls[150](index=150&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes legal proceedings, risk factors, exhibits, and signatures, providing additional disclosures beyond the financial statements [ITEM 1. LEGAL PROCEEDINGS](index=46&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to detailed disclosures on the company's legal proceedings found in the notes to the financial statements - Information on legal proceedings is incorporated by reference from Note 6 to the unaudited condensed consolidated financial statements[152](index=152&type=chunk) [ITEM 1A. RISK FACTORS](index=46&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section directs readers to the annual report for a comprehensive discussion of factors that could adversely affect the company's business - Readers should refer to the 'Risk Factors' section in the Annual Report on Form 10-K for Fiscal 2020 for a discussion of risks and uncertainties[153](index=153&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including certifications and XBRL documents - The report includes various exhibits such as Section 302 and 906 certifications from the CEO and CFO, and XBRL taxonomy extension documents[154](index=154&type=chunk) [SIGNATURES](index=47&type=section&id=SIGNATURES) This section contains the official certification signature for the report by the company's Chief Financial Officer - The report is signed by David E. Bergman, Chief Financial Officer of Under Armour, Inc., on May 7, 2021[156](index=156&type=chunk)

Under Armour, Inc. (NYSE:UAA) Q1 2021 Earnings Conference Call May 4, 2021 8:30 AM ET Company Participants Lance Allega - SVP, IR & Corporate Development Patrik Frisk - CEO, President & Executive Director David Bergman - CFO Conference Call Participants Erinn Murphy - Piper James Duffy - Stifel Randal Konik - Jefferies Paul Trussell - Deutsche Bank Brian Nagel - Oppenheimer John Kernan - Cowen Matthew Boss - JP Morgan Sam Poser - Williams Trading Jay Sole - UBS Operator Ladies and gentlemen, thank you for s ...

[Part I](index=4&type=section&id=PART%20I) [Forward Looking Statements](index=4&type=section&id=Forward%20Looking%20Statements) This section outlines forward-looking statements concerning future events, results, and strategies, cautioning readers that these statements are subject to numerous risks and uncertainties, and the company disclaims any obligation to update them - Forward-looking statements cover future financial conditions, growth strategies, the impact of COVID-19, restructuring plans, and new product introductions[9](index=9&type=chunk) - Key risk factors that could cause actual results to differ materially include the COVID-19 pandemic, economic changes, competition, raw material costs, supply chain disruptions, and data security breaches[9](index=9&type=chunk) - The company clarifies that it does not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances[11](index=11&type=chunk) [Business](index=5&type=section&id=Item%201.%20Business) Under Armour's primary business is the development, marketing, and distribution of branded performance apparel, footwear, and accessories globally through wholesale and direct-to-consumer channels, with a long-term growth strategy focused on product innovation, DTC expansion, and international growth - The company's principal activities are developing, marketing, and distributing branded performance apparel, footwear, and accessories for men, women, and youth[13](index=13&type=chunk) - Products are sold worldwide through wholesale distributors and a direct-to-consumer channel, which includes brand/factory stores and e-commerce websites[14](index=14&type=chunk) - Long-term growth strategy is based on increasing sales of core products, expanding wholesale distribution, growing the DTC channel, and expanding in international markets[14](index=14&type=chunk) [Products](index=5&type=section&id=Products) The company's product offerings include apparel, footwear, and accessories, which constituted 64%, 21%, and 9% of net revenues in Fiscal 2020 respectively, with its Connected Fitness segment now focusing on the MapMyFitness platform after divesting MyFitnessPal Fiscal 2020 Net Revenue by Product | Product Category | Percentage of Net Revenues (%) | |---------------------|----------------------------| | Apparel | 64 | | Footwear | 21 | | Accessories | 9 | | Licensing & Connected Fitness | 6 | - In December 2020, the company sold its MyFitnessPal platform and discontinued the Endomondo platform, significantly altering its Connected Fitness segment[15](index=15&type=chunk)[19](index=19&type=chunk) - Key product technologies include HEATGEAR®, COLDGEAR®, RUSH™, and RECOVER™ for apparel, and UA HOVR™, UA Micro G®, and Charged Cushioning® for footwear[16](index=16&type=chunk)[17](index=17&type=chunk) [Sales and Distribution](index=7&type=section&id=Sales%20and%20Distribution) In Fiscal 2020, sales were primarily through wholesale channels (53%) and direct-to-consumer (41%), with North America accounting for 66% of net revenues, as the company plans continued international expansion and DTC growth Fiscal 2020 Net Revenue by Channel & Segment | Channel/Segment | Percentage of Net Revenues (%) | |-------------------|----------------------------| | **By Channel** | | | Wholesale | 53 | | Direct-to-Consumer| 41 | | Licensing | 2 | | Connected Fitness | 3 | | **By Segment** | | | North America | 66 | | International | 31 | - As of December 31, 2020, the company operated **176 factory house stores** and **18 brand house stores** in North America[25](index=25&type=chunk) - The company is changing its business model in Chile from direct sales to a distributor model, with the sale expected to close in early Fiscal 2021[28](index=28&type=chunk) [Sourcing, Manufacturing and Quality Assurance](index=9&type=section&id=Sourcing,%20Manufacturing%20and%20Quality%20Assurance) The company relies on unaffiliated manufacturers for substantially all products, with apparel and accessories primarily produced in Vietnam, Jordan, Malaysia, and China, and footwear mainly in Vietnam, Indonesia, and China, sourcing fabric from a limited number of pre-approved suppliers - Substantially all products are made by unaffiliated manufacturers. In Fiscal 2020, **10 primary manufacturers** produced approximately **57% of apparel and accessories**, while **6** produced substantially all footwear[31](index=31&type=chunk) - Approximately **68% of apparel and accessories** were manufactured in Vietnam, Jordan, Malaysia, and China[31](index=31&type=chunk) - The company sources fabric from a limited number of pre-approved suppliers, with about **39% of fabric** coming from just **5 suppliers** in Fiscal 2020[31](index=31&type=chunk) [Human Capital Management](index=11&type=section&id=Human%20Capital%20Management) As of December 31, 2020, Under Armour had approximately 16,600 teammates worldwide, focusing on diversity, equity, and inclusion goals, competitive total rewards, talent development, and teammate health and safety, particularly in response to the COVID-19 pandemic - As of Dec 31, 2020, the company had **~16,600 teammates**, with **~12,000 in retail stores** and **~1,300 in distribution**[37](index=37&type=chunk) U.S. Teammate Diversity (as of Dec 31, 2020) | Category | White (%) | Hispanic/Latino (%) | Black/African American (%) | Asian (%) | Other (%) | |---|---|---|---|---|---| | **Total U.S. Population** | 51 | 21 | 17 | 6 | 5 | | **Director Level & Above** | 78 | 7 | 7 | 6 | 2 | - Globally, **53% of teammates were women**, and women held **37% of director-level and above positions**[38](index=38&type=chunk) - In response to COVID-19, the company implemented enhanced health and safety measures, a new sick leave policy, and shifted most corporate teammates to remote work[41](index=41&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks that could adversely affect the company's business, including the ongoing impact of the COVID-19 pandemic, intense competition, supply chain disruptions, dependence on large wholesale customers, challenges in executing strategies, financial risks from debt covenants, and legal/regulatory risks including SEC and DOJ investigations [Economic and Industry Risks](index=15&type=section&id=Economic%20and%20Industry%20Risks) The company faces significant risks from the COVID-19 pandemic, which has disrupted its industry and consumer spending, intense competition from larger rivals, pricing pressures, and fluctuations in raw material costs - The COVID-19 pandemic has materially impacted business through store closures, reduced consumer spending, and supply chain disruptions, with ongoing uncertainty[55](index=55&type=chunk)[56](index=56&type=chunk) - The market for performance apparel is highly competitive, with large, well-resourced competitors and private label offerings creating significant pressure[60](index=60&type=chunk)[61](index=61&type=chunk) - Profitability may decline due to pricing pressure from intense competition and retailers, potentially forcing price reductions or increased promotional activity[63](index=63&type=chunk)[64](index=64&type=chunk) [Business and Operational Risks](index=17&type=section&id=Business%20and%20Operational%20Risks) A substantial portion of sales comes from large wholesale customers, whose financial decline could adversely impact results, while the company faces risks in executing its long-term strategies, managing inventory, maintaining brand image, and relying on a limited number of third-party suppliers - The company derives a substantial portion of sales from large wholesale customers (**53% of net revenues in 2020**), and their financial health is a key risk[69](index=69&type=chunk)[70](index=70&type=chunk) - Since 2017, the company has executed **three restructuring plans** to improve profitability, but may not fully realize the expected benefits[75](index=75&type=chunk) - The company relies on a limited number of third-party manufacturers, with **10 manufacturers** producing **~57% of apparel/accessories** and **6** producing substantially all footwear in Fiscal 2020[88](index=88&type=chunk) - The implementation of a new global operating and financial information system (SAP FMS) carries risks of disruption and increased costs[103](index=103&type=chunk)[104](index=104&type=chunk) [Legal, Regulatory and Compliance Risks](index=25&type=section&id=Legal,%20Regulatory%20and%20Compliance%20Risks) The company is subject to extensive trade and product regulations globally, faces risks from data security breaches and complex privacy laws, and is involved in ongoing legal proceedings, including a securities class action lawsuit and SEC/DOJ investigations regarding past accounting practices - The company is subject to ongoing legal proceedings, including a securities class action lawsuit regarding prior disclosures and past related party transactions[129](index=129&type=chunk) - In July 2020, the company and two senior executives received 'Wells Notices' from the SEC related to disclosures from Q3 2015 to year-end 2016 regarding the use of 'pull forward' sales[129](index=129&type=chunk) - The company must comply with complex and evolving data privacy regulations such as the EU's GDPR and California's CCPA, with non-compliance posing financial and reputational risks[122](index=122&type=chunk) [Risks Related to our Common Stock](index=28&type=section&id=Risks%20Related%20to%20our%20Common%20Stock) Executive Chairman and Brand Chief, Kevin A. Plank, controls the majority of the voting power of the company's common stock through his ownership of all Class B shares, potentially delaying or preventing a change of control, while trading prices of Class A and Class C common stock may differ and fluctuate - Executive Chairman Kevin Plank controls the majority of voting power through his ownership of all Class B common stock, which has **10 votes per share**[132](index=132&type=chunk) - This concentration of voting control may delay or prevent a change of control and allows Mr. Plank to direct matters submitted to a stockholder vote[132](index=132&type=chunk) [Properties](index=30&type=section&id=Item%202.%20Properties) The company's principal executive offices are in a mostly owned complex in Baltimore, Maryland, with primary leased distribution facilities totaling approximately 3.5 million square feet in Maryland, Tennessee, and California, and 439 leased brand and factory house stores globally as of year-end 2020 - Principal executive offices are located in Baltimore, Maryland[135](index=135&type=chunk) - The company leases its primary distribution facilities in Sparrows Point, MD, Mount Juliet, TN, and Rialto, CA, totaling approximately **3.5 million square feet**[135](index=135&type=chunk) - As of year-end 2020, the company leased **439 brand and factory house stores** located primarily in the U.S., China, Mexico, Korea, Chile, and Canada[135](index=135&type=chunk) [Legal Proceedings](index=30&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various litigation and other proceedings, with specific details incorporated by reference from Note 10 to the Consolidated Financial Statements - The company is involved in litigation related to commercial disputes, intellectual property, and other business-related claims. Specific details are provided in Note 10 of the financial statements[136](index=136&type=chunk) [Part II](index=31&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Under Armour's Class A (UAA) and Class C (UA) Common Stock are traded on the NYSE, with no cash dividends paid in Fiscal 2020 or 2019, and the company's stock performance significantly underperformed the S&P 500 over the five-year period ending December 31, 2020 - Class A (UAA) and Class C (UA) Common Stock are traded on the New York Stock Exchange[138](index=138&type=chunk) - No cash dividends were paid in Fiscal 2020 or 2019, and the company does not anticipate paying dividends in the foreseeable future[139](index=139&type=chunk) Stock Performance Comparison (Cumulative Total Return) | Company/Index | 12/31/2015 (USD) | 12/31/2020 (USD) | |---|---|---| | Under Armour, Inc. | $100.00 | $41.23 | | S&P 500 | $100.00 | $203.04 | | S&P 500 Apparel, Accessories & Luxury Goods | $100.00 | $99.45 | [Selected Financial Data](index=33&type=section&id=Item%206.%20Selected%20Financial%20Data) This section presents a five-year summary of key financial data, showing Fiscal 2020 net revenues of $4.47 billion and a net loss of $549.2 million, a significant decline from Fiscal 2019, while total assets increased to $5.03 billion and total stockholders' equity decreased to $1.68 billion Selected Financial Data (2019 vs. 2020) | (In thousands USD) | 2020 | 2019 | |---|---|---| | **Income Statement** | | | | Net revenues | $4,474,667 | $5,267,132 | | Gross profit | $2,160,095 | $2,470,533 | | Income (loss) from operations | ($613,438) | $236,770 | | Net income (loss) | ($549,177) | $92,139 | | Diluted net income (loss) per share | ($1.21) | $0.20 | | **Balance Sheet (at year-end)** | | | | Total assets | $5,030,628 | $4,843,531 | | Total debt | $1,003,556 | $592,687 | | Total stockholders' equity | $1,675,993 | $2,150,087 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=35&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The MD&A provides management's perspective on the company's financial performance and condition, highlighting the significant impact of the COVID-19 pandemic on Fiscal 2020, leading to a 15% revenue decrease and a net loss, alongside details on restructuring plans, segment performance, and liquidity management [COVID-19 Impact](index=36&type=section&id=COVID-19) The COVID-19 pandemic materially impacted Fiscal 2020 operations, causing widespread temporary store closures but substantial growth in global e-commerce, prompting the company to take proactive liquidity preservation measures, with ongoing uncertainty for 2021 - The pandemic led to the closure of substantially all brand and factory house stores starting in Q1 2020, with most reopening by Q3, though some re-closed in Q4 based on regional conditions[152](index=152&type=chunk) - While store closures impacted sales, the company experienced significant growth in its global e-commerce business. In Fiscal 2020, e-commerce represented approximately **47% of the total direct-to-consumer business**[154](index=154&type=chunk) - Actions to preserve liquidity included amending the credit agreement, selling **$500 million of 1.50% Convertible Senior Notes**, reducing discretionary spending, and negotiating payment terms with vendors[155](index=155&type=chunk) [2020 Restructuring Plan](index=38&type=section&id=2020%20Restructuring) In 2020, the Board approved a restructuring plan estimated to cost between $550 million and $600 million, designed to rebalance the cost base and improve profitability, including significant cash and non-cash charges, notably a $291 million impairment of the New York City flagship store lease - The 2020 restructuring plan is estimated to total **$550 million to $600 million** in pre-tax charges[157](index=157&type=chunk) 2020 Restructuring Plan Charge Breakdown (Estimated) | Charge Type | Estimated Amount (up to, in millions USD) | |---|---| | **Cash Charges** | **$219** | | - Facility & lease terminations | $61 | | - Employee severance & benefits | $30 | | - Contract termination & other | $128 | | **Non-Cash Charges** | **$381** | | - NYC flagship store impairment | $291 | | - Intangibles & other asset impairments | $90 | - A strategic decision was made to forgo the opening of the New York City flagship store, resulting in a ROU asset impairment of **$290.8 million** in Q1 2020[159](index=159&type=chunk)[280](index=280&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) For Fiscal 2020, net revenues decreased 15% to $4.47 billion from $5.27 billion in 2019, driven by COVID-19 impacts, resulting in an operating loss of $613.4 million despite an improved gross margin of 48.3%, due to substantial restructuring and impairment charges Consolidated Operations (Fiscal 2020 vs. 2019) | (In millions USD) | 2020 | 2019 | % Change | |---|---|---|---| | Net Revenues | $4,474.7 | $5,267.1 | (15.0)% | | Gross Profit | $2,160.1 | $2,470.5 | (12.6)% | | Gross Margin | 48.3% | 46.9% | +140 bps | | SG&A Expenses | $2,171.9 | $2,233.8 | (2.8)% | | Restructuring & Impairment | $601.6 | $0 | N/A | | Income (Loss) from Operations | ($613.4) | $236.8 | (359.1)% | | Net Income (Loss) | ($549.2) | $92.1 | N/A | Net Revenues by Product (Fiscal 2020 vs. 2019) | (In millions USD) | 2020 | 2019 | % Change | |---|---|---|---| | Apparel | $2,882.6 | $3,470.3 | (16.9)% | | Footwear | $934.3 | $1,086.6 | (14.0)% | | Accessories | $414.1 | $416.4 | (0.5)% | [Segment Results of Operations](index=44&type=section&id=Segment%20Results%20of%20Operations) In Fiscal 2020, all geographic segments experienced revenue declines due to COVID-19, with North America's operating income dropping 35.3% and Latin America recording a significant operating loss, while EMEA was the only segment to show an increase in operating income Net Revenues by Segment (Fiscal 2020 vs. 2019) | (In millions USD) | 2020 | 2019 | % Change | |---|---|---|---| | North America | $2,945.0 | $3,658.4 | (19.5)% | | EMEA | $598.3 | $621.1 | (3.7)% | | Asia-Pacific | $628.7 | $636.3 | (1.2)% | | Latin America | $164.8 | $196.1 | (16.0)% | Operating Income (Loss) by Segment (Fiscal 2020 vs. 2019) | (In millions USD) | 2020 | 2019 | |---|---|---| | North America | $474.6 | $733.4 | | EMEA | $60.6 | $53.7 | | Asia-Pacific | $0.0 | $97.6 | | Latin America | ($42.8) | ($3.2) | | Connected Fitness | $17.1 | $17.1 | | Corporate Other | ($1,122.9) | ($662.0) | [Financial Position, Capital Resources and Liquidity](index=46&type=section&id=Financial%20Position,%20Capital%20Resources%20and%20Liquidity) The company ended Fiscal 2020 with $1.5 billion in cash and cash equivalents, a significant increase from 2019, achieved through proactive liquidity management including issuing $500 million in convertible senior notes and amending its credit facility, believing current liquidity is sufficient for the next twelve months Cash Flow Summary (Fiscal 2020 vs. 2019) | (In millions USD) | 2020 | 2019 | |---|---|---| | Net cash from operating activities | $212.9 | $509.0 | | Net cash from (used in) investing activities | $66.3 | ($147.1) | | Net cash from (used in) financing activities | $436.9 | ($137.1) | - In May 2020, the company issued **$500 million of 1.50% convertible senior notes** due 2024 to bolster liquidity and repay amounts on its revolving credit facility[183](index=183&type=chunk)[184](index=184&type=chunk) - The company amended its credit agreement in May 2020 to provide temporary relief from certain financial covenants and ensure access to its **$1.1 billion revolving credit facility**[183](index=183&type=chunk) - As of December 31, 2020, cash and cash equivalents totaled **$1.5 billion**, up from **$788 million** at the end of 2019[179](index=179&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to global market risks, primarily from foreign currency exchange rates and interest rates, using derivative instruments to manage these exposures, and faces credit risk on accounts receivable, but believes its allowance for doubtful accounts is sufficient - The company uses derivative instruments, including foreign currency forward contracts, to manage financial exposures from foreign currency and interest rate risks[209](index=209&type=chunk) - As of December 31, 2020, the aggregate notional value of outstanding cash flow hedges was **$812.5 million**, with maturities ranging from one to twenty-four months[367](index=367&type=chunk) - The company is exposed to credit risk on accounts receivable but mitigates this through ongoing credit evaluations and believes its allowance for doubtful accounts is sufficient[211](index=211&type=chunk) [Financial Statements and Supplementary Data](index=59&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for the fiscal year ended December 31, 2020, and the unqualified report from PricewaterhouseCoopers LLP, including critical audit matters related to asset impairment and customer return reserves - PricewaterhouseCoopers LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2020[217](index=217&type=chunk) - Critical Audit Matters identified were the impairment analyses for long-lived right-of-use assets and the reserve for customer returns, due to the significant management judgment involved[225](index=225&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) Consolidated Balance Sheet Summary (As of Dec 31) | (In thousands USD) | 2020 | 2019 | |---|---|---| | Total current assets | $3,222,975 | $2,702,209 | | Total assets | $5,030,628 | $4,843,531 | | Total current liabilities | $1,413,276 | $1,422,009 | | Total liabilities | $3,354,635 | $2,693,444 | | Total stockholders' equity | $1,675,993 | $2,150,087 | Consolidated Statement of Operations Summary | (In thousands USD) | 2020 | 2019 | 2018 | |---|---|---|---| | Net revenues | $4,474,667 | $5,267,132 | $5,193,185 | | Gross profit | $2,160,095 | $2,470,533 | $2,340,471 | | Income (loss) from operations | ($613,438) | $236,770 | ($25,017) | | Net income (loss) | ($549,177) | $92,139 | ($46,302) | [Controls and Procedures](index=106&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020, following the final phase of its global SAP FMS implementation in Mexico, with no material changes to internal control over financial reporting despite the shift to remote work due to COVID-19 - Management concluded that disclosure controls and procedures were effective as of December 31, 2020[386](index=386&type=chunk) - The third and final phase of the global SAP FMS implementation became operational in Mexico in April 2020[387](index=387&type=chunk) - No material changes to internal control over financial reporting occurred during the most recent fiscal quarter, despite the shift to remote work due to COVID-19[387](index=387&type=chunk) [Part III](index=108&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=108&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section incorporates by reference information from the company's 2021 Proxy Statement regarding its directors, executive officers, and corporate governance matters, confirming the availability of a written code of ethics on its website - Information regarding directors and corporate governance is incorporated by reference from the 2021 Proxy Statement[390](index=390&type=chunk) - The company has a written code of ethics and business conduct, which is available on its corporate website[391](index=391&type=chunk) [Executive Compensation](index=108&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning the compensation of directors and executives is incorporated by reference from the company's 2021 Proxy Statement - Details on executive and director compensation are incorporated by reference from the 2021 Proxy Statement[392](index=392&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=108&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding the security ownership of management and certain beneficial owners is incorporated by reference from the company's 2021 Proxy Statement, with additional details on equity compensation plans found in Item 5 of this report - Information on security ownership by management and certain beneficial owners is incorporated by reference from the 2021 Proxy Statement[393](index=393&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=108&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information concerning related party transactions and the independence of directors is incorporated by reference from the company's 2021 Proxy Statement - Details on related party transactions and director independence are incorporated by reference from the 2021 Proxy Statement[394](index=394&type=chunk) [Principal Accountant Fees and Services](index=108&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding the fees paid to and services provided by the principal accountant is incorporated by reference from the company's 2021 Proxy Statement - Information regarding principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement[395](index=395&type=chunk) [Part IV](index=109&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=109&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K, including key corporate documents, debt agreements, compensation plans, and Sarbanes-Oxley Act certifications by the CEO and CFO - This section lists all financial statements, schedules, and exhibits filed with the Form 10-K[397](index=397&type=chunk) - Key exhibits filed include the Amended and Restated Credit Agreement (10.01, 10.02), Indentures for Senior and Convertible Notes (4.02, 4.03, 4.04), and various executive and director compensation plans (10.04-10.21)[398](index=398&type=chunk)[400](index=400&type=chunk) - Certifications by the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act are also filed as exhibits[401](index=401&type=chunk)

Under Armour, Inc. (NYSE:UAA) Q4 2020 Earnings Conference Call February 10, 2021 8:30 AM ET Company Participants Lance Allega - SVP, IR & Corporate Development Patrik Frisk - CEO, President & Executive Director David Bergman - CFO Conference Call Participants James Duffy - Stifel, Nicolaus & Company Paul Trussell - Deutsche Bank John Kernan - Cowen and Company Randal Konik - Jefferies Tom Nikic - Wells Fargo Securities Simeon Siegel - BMO Capital Markets Omar Saad - Evercore ISI Robert Drbul - Guggenheim Se ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ Form 10-Q ______________________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-33202 _________________________ ...

Financial Data and Key Metrics Changes - Third quarter revenue was flat at $1.4 billion compared to the prior year, which was better than expected due to higher demand across wholesale and direct-to-consumer (DTC) channels [21][27] - Gross margin decreased by 40 basis points to 47.9%, impacted by COVID-19 related pricing and discounting [24] - Operating income for the third quarter was $59 million, with adjusted operating income at $133 million [26] Business Line Data and Key Metrics Changes - Direct-to-consumer business increased by 17%, driven by strong e-commerce performance [21] - Apparel revenue was down 6%, while footwear revenue was up 19%, and accessories revenue increased by 23% [22] - Women's business showed strength with key innovations like the Infinity bra and Meridian pants [11] Market Data and Key Metrics Changes - North America revenue was down 5%, while EMEA revenue increased by 31%, and Asia Pacific revenue was up 15% [23] - E-commerce saw over 50% growth globally during the quarter [17][18] Company Strategy and Development Direction - The company is transitioning from a product-driven to a purpose-led organization, focusing on empowering athletes [7][8] - Plans to reduce wholesale footprint by 2,000 to 3,000 doors primarily in North America, while still maintaining wholesale as a crucial part of the business [16][30] - Emphasis on a direct consumer-focused approach to enhance brand experience and profitability [9][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing uncertainty due to COVID-19 but expressed confidence in the company's ability to return to profitability [6][4] - The fourth quarter outlook has improved, with expectations of revenue decline in the low teens percentage rate, better than previous estimates [27][29] - Management anticipates challenges in 2021 due to the sale of MyFitnessPal and the exit from certain wholesale distribution [30][31] Other Important Information - The company announced the decision to sell the MyFitnessPal platform, which does not align with its core consumer needs [19][20] - Inventory grew by 17%, ending the quarter at $1.1 billion [26] Q&A Session Summary Question: What categories are expected to drive growth? - Management sees significant opportunities in core team sports and women's business, with strong product performance across various categories [36][42] Question: What is the expected revenue mix between wholesale and DTC? - The company is focusing on a DTC approach, but the mix may not change significantly in the short term due to partner-owned mono-branded stores [39][40] Question: What is the profitability of the e-commerce channel? - E-commerce has shown strong growth, and the company is investing in CRM and loyalty programs to enhance profitability [55][58] Question: What are the expectations for gross margin in the fourth quarter? - Management expects promotional activity levels to be higher than last year, which may pressure gross margins [29][82] Question: How will the exit from undifferentiated wholesale doors impact revenue? - The exit will be gradual and will involve various customer sizes, aiming to ensure the brand is represented appropriately [53][54]

Revenue Performance - Net revenues decreased by 40.6% in Q2 2020 compared to the prior year period[103] - Wholesale revenue decreased by 57.7%, while direct-to-consumer revenue decreased by 13.0%[103] - Revenue from apparel, footwear, and accessories decreased by 42.4%, 34.8%, and 47.2% respectively[104] - Revenue in North America, Asia-Pacific, Latin America, and EMEA segments decreased by 44.9%, 20.0%, 71.9%, and 38.7% respectively[104] - Net revenues decreased by $484.1 million, or 40.6%, to $707.6 million for the three months ended June 30, 2020, compared to $1,191.7 million for the same period in 2019[115] - Net revenues for the six months ended June 30, 2020 decreased by $758.6 million, or 31.7%, to $1,637.9 million from $2,396.5 million during the same period in 2019[118] - Net revenues in the EMEA segment decreased by $56.2 million, or 38.7%, to $89.1 million for the three months ended June 30, 2020, from $145.3 million for the same period in 2019[125] - North America segment's net revenues decreased by $600.8 million to $1.1 billion for the six months ended June 30, 2020, a decline of 36.2% from $1.7 billion in 2019[129] - Asia-Pacific segment reported a decrease in net revenues of $79.4 million, totaling $219.0 million for the six months ended June 30, 2020, down 26.6% from $298.4 million in 2019[129] - Latin America segment's net revenues decreased by $24.7 million to $64.2 million for the six months ended June 30, 2020, reflecting a decline of 27.8%[129] Financial Losses and Charges - Restructuring and impairment charges totaled $38.9 million for Q2 2020[104] - The company recorded $340.0 million of restructuring and related impairment charges for the six months ended June 30, 2020[106] - Total costs recorded in restructuring and related impairment charges amounted to $38.9 million for the three months ended June 30, 2020, and $340.0 million for the six months ended June 30, 2020[107] - The company recognized $83.8 million of long-lived asset impairment charges for the six months ended June 30, 2020, with $43.4 million recorded in North America and $25.5 million in Asia-Pacific[109] - Goodwill impairment charges of $51.6 million were recognized for the six months ended June 30, 2020, with $15.4 million in North America and $36.2 million in Latin America[110] - Loss from operations increased by $158.2 million to $169.7 million for the three months ended June 30, 2020, compared to a loss of $11.5 million for the same period in 2019[118] - Net income loss was $182.9 million for the three months ended June 30, 2020, compared to a loss of $17.3 million for the same period in 2019[116] - Total operating loss for the six months ended June 30, 2020, was $727.9 million, a significant increase of $751.6 million compared to an operating income of $23.8 million in the same period in 2019, reflecting a change of 3,161.2%[131] - Corporate Other non-operating segment's operating loss increased by $328.7 million to $663.4 million for the six months ended June 30, 2020, compared to $334.7 million for the same period in 2019[132] Cost Management - Gross margin increased by 280 basis points[104] - Selling, general and administrative expenses decreased by 15.2%[104] - Selling, general and administrative expenses decreased by $85.9 million, or 15.2%, to $479.9 million for the three months ended June 30, 2020[117] - Selling, general and administrative expenses decreased by $42.6 million, or 4.0%, to $1,032.6 million for the six months ended June 30, 2020, from $1,075.3 million for the same period in 2019[121] - The company expects to achieve approximately $40 million to $60 million in pre-tax savings from the restructuring plan in 2020[105] Cash Flow and Financing - Cash used in operating activities increased by $422.1 million to $(309.4) million for the six months ended June 30, 2020, compared to $112.7 million for the same period in 2019[136] - Cash used in investing activities increased by $11.0 million to $89.1 million for the six months ended June 30, 2020, primarily due to the acquisition of Triple, a distributor in Southeast Asia[137] - Cash provided by financing activities increased by $825.4 million to $686.2 million for the six months ended June 30, 2020, primarily due to the issuance of Convertible Senior Notes[138] - The company borrowed $700 million under its revolving credit facility as a precautionary measure to increase cash position and preserve liquidity due to COVID-19[134] - The amended credit agreement provides revolving credit commitments of up to $1.1 billion, with $250 million outstanding as of June 30, 2020[139] - The company issued $500.0 million aggregate principal amount of 1.50% convertible senior notes due 2024, with net proceeds of $488.8 million[143] - The initial conversion rate for the Convertible Senior Notes is 101.8589 shares per $1,000 principal amount, equivalent to an initial conversion price of approximately $9.82 per share[143] Interest and Taxation - Interest expense, net increased by $5.3 million to $11.3 million for the three months ended June 30, 2020[118] - Interest expense for Q2 2020 was $11.3 million, up from $6.0 million in Q2 2019, representing an increase of 88.3%[146] - For the first half of 2020, interest expense totaled $17.3 million, compared to $10.2 million in the same period of 2019, indicating a 69.6% increase[146] - The effective tax rate for the six months ended June 30, 2020, was (2.5)%, compared to 20.3% for the same period in 2019[122] Acquisitions and Impairments - The company acquired 100% of Triple Pte. Ltd. for $32.9 million in cash on March 2, 2020, consolidating its results from that date[111] - The company recorded a ROU asset impairment of $290.8 million related to its New York City flagship store for the six months ended June 30, 2020[109] - The lease term for the New York City flagship store commenced on March 1, 2020, with an operating lease ROU asset and liability of $344.8 million recorded[107] Market and Risk Management - The company’s financial statements are prepared in accordance with U.S. GAAP, requiring estimates that could significantly differ from actual results[148] - No significant changes to critical accounting policies were reported during the first half of 2020[149] - There have been no significant changes to market risk exposure since December 31, 2019[151]

Financial Data and Key Metrics Changes - Revenue decreased by 41% to $708 million, which was better than the anticipated decline of 50% to 60% [23] - Direct-to-consumer (DTC) revenue was down 13%, while wholesale revenue declined by 58% [23] - Gross margin improved by 280 basis points to 49.3%, driven by a favorable channel mix and increased DTC sales [25] - SG&A expenses declined by 15% to $480 million due to reduced marketing spend and cost-cutting initiatives [26] - The company recorded a net loss of $183 million or $0.40 diluted loss per share [27] Business Line Data and Key Metrics Changes - Apparel revenue was down 42%, footwear down 35%, and accessories down 47% [24] - The Connected Fitness business saw a 3% increase, driven by subscription growth [25] Market Data and Key Metrics Changes - North America revenue decreased by 45%, EMEA by 39%, Asia-Pacific by 20%, and Latin America by 72% [24] - Most retail locations in North America and EMEA have reopened, while Latin America had less than 50% open by the end of June [24] Company Strategy and Development Direction - The company is focused on rebuilding the brand through increased consumer engagement and a D2C-first approach [9][17] - There is an emphasis on digital transformation and streamlining operations to enhance efficiency [14][16] - The company aims to maintain its premium brand positioning while managing inventory prudently [12][13] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the significant impact of COVID-19 on business operations and consumer behavior [6][22] - There is uncertainty regarding consumer demand and shopping behaviors in the near term, with expectations of a highly promotional environment [29][30] - The company is planning for a revenue decline of 20% to 25% in the back half of the year, with a larger decline anticipated in Q4 [31] Other Important Information - The company has delivered over 5 million masks and 4 million gowns to hospitals, leveraging its expertise in PPE to create the UA SPORTSMASK for athletes [20][53] - The company ended the quarter with $1.1 billion in cash and cash equivalents, maintaining liquidity despite a significant revenue decline [33] Q&A Session Summary Question: What is the receptiveness of wholesale partners to new products given their inventory situation? - Management expressed confidence in the innovation pipeline and the ability to execute go-to-market strategies, which should instill confidence in wholesale partners [36] Question: How is the company balancing marketing spend and its impact on brand? - Management emphasized the importance of supporting athletes and adapting marketing strategies to be more effective and informed [41][45] Question: What are the plans for the off-price channel in the back half of the year? - Management indicated a cautious approach to off-price sales, expecting a more back-half weighted liquidation due to previous inventory management [58] Question: How does the company view the DTC business and its historical performance? - Management highlighted a focus on consumer centricity and improving DTC capabilities, with optimism for future growth [63] Question: What are the expectations for international profitability moving forward? - Management remains committed to international growth and profitability, viewing 2020 as an abnormal year due to COVID-19 impacts [75]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________ Form 10-Q ______________________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-33202 _____________________________ ...