| have enjoyed working on this Under Armour Financial Analysis. Up until now, al of these ratios have been just figures and numbers to look at. While some of the ratios and numbers are more telling than others (debt is clearly worse than income, Net Income tends to be one of the all-important figures as that is what all businesses are trying to do, is to get income). Working with the figures and learning to talk about them and how they are able to help someone know if the company is doing well, and how that would affect the company’s ability to make more money with their investments, is very interesting. Working as an accountant is something that requires a fot of thoughtful thinking. Learning these figures | believe will help me in many aspects. On the ‘clear’ side of things, learning these figures will help me be able to educate investors on what things mean. Knowing these figures will allow me to be more educated when | am talking with the general public, and frankly garner myself more respect in other aspects of knowledge when it comes to people There is another not so obvious side of things that | have just realized as l have thought about ‘hat is involved. | had a friend who worked with PWC auditing financial figures of companies. If! were to choose to go into an auditing field, then a thorough knowledge of the figures that are used is something that is going to be very essential. I mentioned above that Net Income is a key figure, some other ‘key’ figures are Earnings Per Shate, Debt to Equity, Gross profits, etc. As an auditor, if something is not matching up, knowing how these figures are calculated will allow me to know in what sections to look for ‘errors’ whether they be accidental or on purpose. Or in other words, if the Net income seems extremely high for what the other figures are showing, then knowing how that figure is come about will allow me to go to the other sections to see if any of those figures used in the calculation are not correct. Itis sad that this is something that is needed, because we would hope that people would not want to blatantly misrepresent their financial figures, because in the end, itis going to probably catch up with them at some point in time. The reality is though that Enron and Bernie Madoff have taught us that being able to spot, catch and expose errors is something that is all too important in maintaining the integrity of companies and on a whole, the entire stock market.George Knudsen ACCT 2410 UNDER ARMOUR, FINANCIAL ANALYSIS PROJECT Deciding on a company to analyze their financials to see if they would be a worthy investment was not the easiest decision. I was going to do a company that | was familiar with like Coca-Cola, they are a common company that is often talked about and one that Warren Buffet invests in. | was going to choose Disney as that is a company that in the past years | have become much more familiar with because of my wife's affinity for just about everything Disney along with their being well known and so ‘out there’ with a Marvel movie coming out just about every time that I finish taking a breath watching their last movie; not to mention their continuing the Star Wars franchise with the first installment ‘coming this Christmas season. Then, | realized that my decision was becoming clear to me; | realized that | was going to analyze a company that | had been very familiar with since childhood, Ever since | was a child, | have worn sports| apparel. | own multiple sports team apparel with the Nike logo, I rarely go a day that I do not wear Nike socks, and every winter, | pull out my Florida Gators jacket that | have had since, well...1996 or so with the Nike logo on the forefront. | thought that this would be easy as | remember being excited to visit ‘NikeTown' in Las Vegas where they have Nike apparel from wall to wall and floor to floor; going up the escalators and looking around lke it was a museum. Then, just as | was starting to gather the financial data for Nike and was geting excited to do this analysis; looked at the shirt | was wearing. | was ina spot that | thought I would never be in; was watching a University of Utah football game and | was not really paying attention to the game. | was sitting, watching as Utah was bludgeoning the Oregon Ducks running trick plays, and my mind was relaxed as there was absolutely no chance that we could lose having scored 55 points. I had pulled out my laptop to try and advance on some schoolwork, and as | looked down at my shirt, I saw the Utah logo on one side of my polo shirt, and on the other side, | did not see the Nike logo | was used to, | saw what looked like two arcs, one right-side up and the other upside-down, overlapping each other. | recognized this logo as the Under Armour logo. | realized that more and more of my apparel was coming from Under Armour as the University of Utah had a contract with them for their apparel. | also realized that this was the same logo thatadorned the hat and polo shirt of the recent ‘hot’ golfer on the PGA tour, Jordan Spieth as he stralled the famous Augusta, Georgia course in dominant fashion and took the Masters’ Tournament by storm. ‘While | had seen Under Armour products in the past, | had never really purchased many of. them, had just been ‘comfortable’ with Nike products. As I thought more and more though, | realized that | had seen more and more of Under Armour in my life. I realized that while Nike had, and still has Michael Jordan along with the ‘Jordan’ line of apparel, Under Armour has Jordan Spieth in golf, they have NBA champ and possibly the hottest player in basketball in Steph Curry, and they are getting more and more athletes to join their cause (at a price tag of course). | started realizing that Under Armour is doing something special, they were going after some of the younger talent in the world. In golf, they were signing Jordan Spieth who was barely of drinking age when he won the Masters’ Tournament, beating experienced men like Phil Mickelson and Nike’s advertising mogul Tiger Woods. In basketball, Under Armour targeted Steph Curry, who while is a superstar now, he was not the ‘mega-star’ that others like LeBron James and Kevin Durant were at the time he was signed, in fact, he looks like an average guy being as short as he is compared to other basketball players Something made me want to learn more about this company and how itis doing when it is coming into a world that has been dominated by ather competitors like Converse, Reebok, Adidas and the completely dominant Nike. Under Armour is making a mark, and | want to know if this is a company that is worth investing in when the option to invest in other proven commodities like Nike is stil there. The first thing that | wanted to look at is the share price to buy into Under Armour, and then how much it would cost to buy a share of Nike or Adidas, two of Under Armour's biggest competitors. As of October 16, to buy one share of Adidas would be $43.60, one sharare of Nike would cost $129.76, and to buy one share of Under Armour would cast me $100.70. Thinking about things, | do remember seeing Under Armour four years ago when | was working at another job and thinking to myself that they may be a ‘new, hot’ company. Looking at the five-year history, if were to buy a share of Under Armour back then, ! would have been paying less than $25.00 per share, boy did | miss out! The reality is though, things can always gain even more value, they can lose value; so we need to look at if that price is going to go up from here.Through tumultuous times in the past years, | remember reading reports that JCPenney had been struggling through poor times as they were ‘burning through cash’. Having cash is something that is very important because rough times always come, just a few years ago the whole market seemed to be falling apart as the housing market crashed. Any company, no matter how good of a company they were, their stock prices were falling and falling. Bad 1s like this show that there will come times that even the best companies may lose profits because of reasons as simple as, well, customers just don’t have enough cash to withstand some tough times, or they are too leveraged and all their bills come due and they cannot pay them, Looking at Under Armour, in cash alone, they have over $1 billion in Working Capital for the year ending 2014, $1,127,772 thousand to be exact. Without knowing too much about Under Armour beyond that, | could not know if that were enough for their needs, but looking at their Working Capital at the end of 2013 of $702,181 thousand, the increase of working capital of 60.6% in one year seems that they are on the right track. Beyond the ‘raw amount’ of cash, They have a Cash Ratio of 1.41, a Current Ratio of 3.67 and an Acid-Test Ratio of 2.07. Those numbers are 38.5, 74.1 and 58.0 percent higher respectively with the year-end 2013 ratios. | feel confident in the ability of Under Armour to be liquid if they needed to be and to withstand a ‘downturn’ in the market if that were to occur. While Under Armour may be liquid, just having cash does not mean that they are good with what they do with the money or how efficient in general they are, Under Armour had an Inventory Turnover of 3.13 in 2024 and Days Sales in Inventory of 116 days. The industry median Inventory ‘Turnover is 3.01 and median Days Cost of Goods Sold in Inventory is 64.70. Liquidity ‘ as 3 25 2 1s 1 : = 0 current Ratio cash Rato Acid-Test Ration 2013 2018Looking at these numbers, it may look like Under Armour is on par with the industry, it does look like Nike and Adidas are doing much better though as their Inventory Turnover numbers are 7.36 and 6.85 respectively. Under Armour could do a much better job of managing their inventory if they want to be ‘on-par’ with Nike and Adidas. Internally, they have increased their Inventory Turnover and decreased their Days Sales in Inventory by 3.3% (both the same), and so it does appear that they are focusing on improving in this aspect. Under Armour does appear to be doing better in turning over their Accounts Receivables than their Inventory because while they are behind Nike and Adidas when you compare the Inventory Turnover, looking at the Accounts Receivable Turnover, they have a ratio of 12.6 while Nike and Adidas have a ratio of 9.03 and 7.74, Under Armour also improved 4.1% since 2013 on this ratio, so they are only improving on their numbers. We have seen that Under Armour may not be the most efficient, but it does appear that they are efficient enough. It does appear that they are doing a great job of making themselves stable as they have improved their liquidity. While those two parts look good, there does appear to be some concern with their Solvency and Profitability Under Armour has increased it’s debt as their Debt Ratio climbed 9.1% from 0.33 to 0.36 and their Debt to Equity Ratio increased 10% climbing from 0.50 to 0.55. The Times-Interest-Earned Ratio also decreased significantly, decreasing 27.6% from 89.99 to 65.14. Most of this is attributed to an increase in their Income Taxes from 98,663 to 134,168 thousand (73.5%) and then their Interest Expense increasing from 2,933 to 5,335 thousand (55.0%). ‘This is not the greatest number because Under Armour is well above the industry median on the Debt to Equity ratio of 0.04. Under Armour’s ratio of 0.36 is less than Adidas's ratio of 0.40, but well over Nike's ratio of 0.09. While this may not be enough of a red flag to discourage one from investing in Under Armour; these are definitely things that can be worked on by the company to improve,Debt oa 035 03 02s 02 035 oa 0s Debt to Equity Debt Ratio 2013 UA =2014UA 2014 Nike 6 2016 Adidas Under Armour does appear to be a profitable company, although the numbers have been either stagnant or lowered from 2013 to 2014. Part ofthis may be that the market in general has reduced, but, most people would take more comfort if they had some more profitability. The Profit Margin Ratio and Rate of Return on Total Assets have both remained consistent at 0.07 and 0.12 from the previous year. The Asset Turnover Ratio lowered 2.4% from 1.67 to 1.63, and the Rate of Return on Common Stockholder’s Equity stayed the same both years at 0.17. Earnings Per Share went down from 1.54 to 1.29, a 16.2% reduction also. While these numbers may seem to be a little bit alarming, the revenues have been going up overall for the company as are shown in the raw numbers and percentages of the Income of the company. The Net Income of the company alone went up 45.7 million dollars. That isa growth of 28.296 in the year alone. The low numbers on the Earnings Per Share may actually be a product of there being many more shares of the company outstanding, there may be a lot of investors that have seen the ‘market price grow from under $25.00 per share in 2011 up to over $100 in 2015 and they may want ‘a piece of the pie’ While Under Armour does seem to be growing, they are still not close to as big as Adi sor Nike. This should not be alarming though, because it was not even until 1996 when Under Armour founder and CEO, Kevin Plank, came up with the idea to create the products which would contain the Under Armour products.About this time, Nike was in more than full swing as their key spokesman, Michael Jordan was ‘un-retiring’ and was winning his fourth NBA Championship on his second go around with the Chicago Bulls as he was not able to make himself stick in professional baseball. Nike has only grown since then also, but Under Armour was just being born of an idea. Under Armour is still growing at a rapid pace as it ‘was not until the mid-2000's when Under Armour was a product that was close to widely known. Net Income in Millions ‘Nike «Under Armour» Adidas The investment potential for Under Armour is a ‘mix’ of numbers because they are not a company that is fond of paying dividends; in fact, there were no dividends paid out in 2013 or 2014. With that said though, the Price/Earnings Ratio for 2014 is 45.80 and that is up 119.7% since the end of year 2013. While some investors may be upset with a lack of dividends received every quarter, year or however often they expect to get a dividend from their investment; | would be more than happy to own a part of this company just as | am seeing the stock price of the company consistently rising with an upward trend. In fact, from a ‘human’ perspective, one may be able to look at the lack of dividends and believe that the company is taking their profits and investing that more in their employees instead of to their shareholders. Being an employee of a company myself, | am actually very inclined to believe that this isa better way to do business because I firmly believe that a company that takes care of its employees is Boing to perform better. In the case of Under Armour, | believe that the growth in market price may be a product of a better performing company which is a product of better-performing employees, which may be a direct product of a company that respects them and takes care of them,‘After analyzing the company and looking at their financials, | am coming to the conclusion that Under Armour is a company that one would be more than wise to invest in. Looking at the price of a share in Under Armour, there is already a lengthy history showing that not only is their price consistently going up, but itis going up at more than a good rate. Because of the length of time that Under Armour has been in business when compared to their competitor Nike, | only see their company growing more and more. Nike was founded in 1964 while Under Armour was, at best, founded in 1996. That is 32 years of business that Nike has already in their ‘back pocket’ that Under Armour just could not have by now. {As for the specific type of investment, because of the lack of dividends from a share in Under ‘Armour stock, | am inclined to say that it may be better to look to buy into a bond that Under Armour may offer as a debt investment rather than a share in the company. | am going to do the reverse though and ‘be bold’ and say that | believe that while one would be wise to purchase a bond certificate from Under Armour as they are stable enough that | think that investment is safe; | believe that at the rate that Under Armour is growing, there will be more growth in wealth from purchasing their stock. | put the Net Income of Adidas and Nike into a pie chart to show that Under Armour is still relatively small. Having used their products personally and seeing their growth and their popularity, | firmly believe that in a few years, their ‘slice of pie’ with relation to total Net Income of Adidas, Nike and ‘themselves, their slice is only going to grow bigger and bigger. With the shares of Under Armour trading at just over $100 at the moment, I think that itis going to be wise to buy into it because | believe that by the end of the decade, that price is going to be approaching $200, that would be a 100% return on an investment over four years whereas if you bought a bond at say...5%, you would only get a 20% investment. Buy now, and buy before the prices go higher; investing in Under Armour is a worthwhile investment.Appendix A Financial Statements for 2014 and 2013‘Under Armour, Ine, and Subsidiaries Consolidated Balance Sheets thousands, except share data) Assets Current assets ‘Cash and cash equivalents Accounis receivable, net Inventories Prepaid expenses and other current assets Deferred income taxes ‘oval current assets Property and equipment, net Goodwill Intangible assets, net Deferred income taxes Other long term assets Total assets Liabilities and Stockholders’ Equity Current liabilities Revolving credit facility Aveounts payable ‘Accrued expenses (Current maturities of long term debt Other current liabilities ‘Total current liabilities Long term debt, net of current maturities Other long term liabilities Total liabilities ‘Commitments and contingencies (see Note 7) Stockholders’ equity Class A Common Stock, $0,0003 1/3 par value; 400,000,000 shares authorized as of December 31, 2014 and 2013; 177,295,988 shares issued and ‘outstanding as of December 31, 2014 and 171,628,708 shares issued and outstanding as of December 31, 2013. Class B Convertible Common Stock, $0.0003 1/3 par value; 36,600,000, shares authorized, issued and outstanding as of December 31, 2014 and 40,000,000 shares authorized, issued and outstanding as of December 31 2013. Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) ‘Total stockholders’ equity ‘Total liabilities and stockholders’ equity See accompanying notes. 50 December 31, December 3, se Ee S 593,175 $347,489 279,835 209.952 536,714 469,006 87.177 63,987 52498 38.377 1,549,399 1,128,811 305,564 223,952 123,256 122.244 26230 24.097 33,570 31,004 57,064 47,543 095,083 $1,577,741 S = $ 100,000 210,432 165,456 147,681 133,729 28,951 4972 34,563, 173 421,627 426,630 47951 49.806 T4478 524,387 R 508,350 856,687 24,808)Under Armour, Ine, and Subsidiaries Consolidated Statements of Income (fn thousands, except per share amounts) Net revenues Cost of goods sold Gross profit Selling, general and administrative expenses Income from operations Interest expense, net Other expense, net Income before income taxes, Provision for income taxes Net income [Net income available per common share Basic Diuted Weighted average common shares outstan Basie Diluted See accompanying notes SI ear Ended Decernber 31 Bord 203 $3,084,370 $2,332,081 $1,834,921 1,572,164 1,512,206 58.251 s 5 098 3 095 213,227 219,380 1195381 9% 624 1,136,670 879,297 871,572 _ 670,602 265,098 208,695 (6.183) 3) 203,439 61 077 $062 O75 $ O61 210,696 208,686 215.958 212,760Under Armour, Ine. nd Subsidiaries Consolidated Statements of Comprehensive Income (In thousands) Year Ended December Te 30a Net income $208,042 $162,330 $128,778 Other comprehensive income (loss) Foreign curreney translation adjustment (16743) (897) 423 Unrealized gain (loss) on cash flow hedge, net of tax of ($408), $505 and ‘$58 for the years ended Decemiber 31, 2014, 2013 and 2012, (259) 7: (83) Total other comprehensive income (loss) (17,002) (174) 340. Comprehensive income $191,040 $162,156 $129,118 ‘See accompanying notes. 2‘Under Armour, Ine, and Subsidiaries ‘Consolidated Statements of Stockholders’ Equity (In thousands) Clas Acoumatate Clas Convertible sgaiionat ‘Other ‘Common Stack __ Common Stsk mnt _Caplial Raraings S54 45.000 § 14 $268:172 $365,164 S 2028 20 = = RD = “income (Los) Balance as of December 31, 2011 Exercise of stock options Shates withheld in consideration of employee tax abligations relative to stck-hased ‘compensation arrangements OH = ary Issuance of Class A Common Stock, net of forfeitures Tre ee ae oe eee naire Class B Convertible Common Stock converted Class A Common Stock 2400 Stock-based compensation expense reece eeae age eeceaae ee eg pag EES = NNetexcess tnx benefits from sock-hased compensation arrangements Se - = 1610 ‘Comprehensive income Balance as of December 31, 2012 Exercise of stock options ‘Shares withheld in consideration of employee ‘x obligations relative to stock-based ‘compensation arrangements mo = = = 066) Issuance of Class A Common Stock, net of forfeitures 2 = = we = Class B Convertible Common Stock converted ta Class A Common Stock 2000001 Stock-based compensation expense Pee eee ee eae ae = Net excess tax benefits from stock-based compensation arrangements eee eee ee Seed Comprenensive income = 102330 um) Balance as of December 31, 2013, 1B 37248 6s3842 2198 Exercise of stock options a ae ‘Shares withteld in consideration of employee tay obligations relative to stock-based compensation arrangements oe = = = a Issuance of Class A Common Stock, net of forfeitures ms noe a ‘Class B Convertible Commoa Stock converted ‘to Class A Common Stock 3400 1 G40) Stock-based compensation expense a 7 8.778 321.303 493,181 ns i [et excess ax benefits from stack-based ‘compensation arrangements - - —- — wes Comprehensive income (loss) a Balance as of December 31,2014 177,296, (7,002) (14,808) 36600 $12 ‘See accompanying notes. 33 Totst Paldstn” Retained Comprehensive Stockholders? Tul $ 636432 12372 (1.761) 3246 1sis 17670 B98 81692: 1 9 4,669) 3489 17,163 162.156 LOSS 11259 6.197) 12,067 s0g12 36,965 191,010 1,350,300Under Armour, Ine. and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Cash flows from operating activities Net income Adjustments to reconcile nt income to net cash used in operating activities Depreciation and amortization Unrealized foreign curency exchange rat losses (guins) Loss on disposal of property and equipment Stock-based compensation Deferred income taxes ‘Changes in reserves and allowances ‘Changes in operating asses and liabilities, net of eects of acquisitions: “Accounts reseivable Inventories Prepaid expenses and other assets Accounts payable ‘Accrued expenses and other liabilities Tome tines payable and receivable [Net cash provided by operating atvities ‘Cash flows from investing activities Purchases of property and equipment Purchase of business Purchases of other assets ‘Change in loans receivable ‘Change in resricied cash Net cash used in investing activities Cash flows from Financing activities Proceeds from revolving credit facility Payments on revolving credit facility Proceeds from term Ioan Payments on term loan Proceeds from long term debt Payments om long tem debt [Excess tax benefits fro slock-based compensation arrangements Proceeds from exercise of stock options and athe stock issuances Payments of debt financing coste Net cash provided by financing activities fect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents ‘Cash and cash equivalents Beginning of period End of period Non-cash investing and financing activities Increase in accrual for property and equipment Non-cish acquisition of business ‘Other supplemental information Cash paid for income axes Cash paid for interest, net of capitalized interest See accompanying notes. s4 Yeor Endod December 3 o $ 208,082 T0983 11739 261 50.312 7384) 31350 101.057) (84058) 3345) 4.137 28,856 3387 219083 (140,528) 10.924) (860) 2) a (100,000) 280,000 (13.750 (4972) 36,955, 15776 i L713) @3a 245,686 2013 $ 162,330 5049 1905 332 4sise 8.832) 13.945 35.960) 156,900), 190039) 14682 56481 7.483 120.070, 187830) 148.097) 75) (70) 8.102) 110.000) 113) 5.68 341.841 Saa7a89 Ss 3,786 85,570 1508 20 sias.rs 43.082 (246) 524 19.845 2973) 13916, 3.433) 4699) (4.060) 35370 21,966 ‘4siL 199,761 (50,650) 25,000) 50,000 4330) 173868 14716 orn 12297 166.457 75384 Sasa 57739 3306c-and Subsidiaries Consolidated Balance Sheets (in thousands, exept share data) Assets Current assets ‘Cash and cash equivalents ‘Accounts reeeivable, net Inventories repaid expenses and other cusrent assets Deferred income taxes Total current assets Property and equipment, net Goodwill Intangible assets, net Deferred income taxes Other Tong term assets Total assets Liabilities and Stockholders' Equity Current liabilities Revolving credit facility Accounts payable “Accrued expenses ‘Curent maturities of long term debt (Other current liabilities ‘Total current liabilities Long term debi, net of current maturities Other long term liabilities Total liabilities ‘Commitments and contingencies (see Note 7) Stockholders’ equity Class A Common Stock, $0.0003 1/3 par value; 200,000,000 shares authorized 1s of December 31, 2013 and 2012; 85,814,354 shares issued and outstanding 2s of December 31, 2013 and 83,461,106 shares issued and outstanding as of December 31, 2012, (Class B Convertible Common Stock, $0.0003 1/3 par values 20,000,000 sharesauthorized, issued and outstanding as of December 31, 2013 and 21,300,000shares authorized, issued and outstanding as of December 31, 2012. Additional paid-in capital Retained earnings Accumulated other comprehensive income Total stockholders’ equity Total Liabilities and stockholders’ equity See accompanying notes, a8 December 31, ‘ “wn8 347,489 209,952 469,006 63.987 38.377 128.811 223,952 122.244 24.097 31,094 47543 77.741 100.000 165.456 133,729 4972 26,630 47951 49,806 524,387 1 su 053,354 7741 December 3, ETH S 341,841 175524 903,598 180.850 143,689 85,077 94132 14,330 252.228 52.757 35,176 340,161 7 321,338 $1,157,083Under Armour, Ine. and Subsidiaries Consolidated Stater ts of Income (in thousands, exeept per share amounts) Year Ended December 3M. ETE 2 aa Net revenues 392,051 $1,834921 $1,472,684 Cost of goods sold 195,381 955,624 _759,848 Gross profit 1,136,670 879,207 712,836 Selling, general and administrative expenses 1372 _ 670, 550,069, Income from operations 208,695 162,767 Interest expense, net 6.183) G.841) Other expense, net 3) __ 2.068 Income before income taxes 260,993 203,439 156,862 Provision for income taxes 98,663 T4661 __ 59.943 Net income: $§ 162330 ¥ 128778 S_ 96.919 [Net income available per common share Basic S$ 1st $ 123s 094 Diluted S$ 150 $ 121 $ 092 Weighted average common shares outstanding Basic 105,348 104,343 103,140 Diluied 107.979 105,380 105,052 See accompanying notes 49Under Armour, Ine. and Subsidiaries Consolidated Statements of Comprehensive Income (in thousands) ear Ended December 3, 202 _ 201k $162,320 $128.778 $96,919 Net income Other comprehensive income (loss): Foreign currency translation adjustment gy 433) Unrealized gain (loss) on cash flow hedge, net of tax of $ SOS and $ 58 for the year ended December 31, 2013 and 2012, respectively 73 (83) Total other comprehensive income (loss) a7) 3 a) $162,156 $129,118 $96,906 Comprehensive income See accompanying notes 50Under Armour, Ine. and Subsidiaries Consolidated Statements of Stockholders’ Equity in thousands) Gn coment Gemenan Stock. Comm Stoce, “Pte Balance as of Decomber 31,2010 Tis $26 250m S$ SDASTO Exerie of stock options = | RS Stars witibeld in consideration of employe ax hligations relive fo tsk ated conpensition ‘urangemeats ee — seeeee Issuance of Class A Common Stock, et of torfeiures eg eee eon Cas B Convertible Common Stock converted to Clas A Common Stock, 2500 OG = Stacictused compensation expense = isos eters i bene fm occhased compensation arangements See c te arn igis: Comprehensive income eee Balance as of December 3, 2011 soma “27 B50 7 e826 Exerise of stock otis 28 1 — = 23D Shates withheld in consideration of employe tax bligation relative vo stock-based compensation curangensats pee eeeee Issuance of Clas A Common Stock, et forfeitures B= = oH Css B Convertible Common Stck converted to Chass A Common Stock 12m = 42m = Stookebsed compensation expense ae ‘Net xees tx toes fom sok-based compensation arangements ce eee eeRoE ya Comprehensive income Seas Balance as of December 31,2012 wast 38 7 313i Exerise of tock options On is ‘Shares wield in onsiration of employe tax chiigations eae to stock sed eompenston srangements oo serge terete Issuance of Cass A Common Stok, et of foreures Fee eee) Css B Convene Common Stack convent ‘Clas A Common Stock 130 — 300) See ee eee gaa ‘Stocisbased compensation expense S Net excess tax benefits from stck-based ‘compensation arrangements Comprehensive income (oss) Balance as of December 31,2013 Sce accompanying notes sl Accumated ‘Other otal etained Comprehensive Stockholders? Eamings, Tneome (Loss) s2m0at S208 96919 (13) 366,164 2028 ago 28.778 93.181 Eyulty $496,966 12883 76) 2041 18.063 10379 96,906 636,432 371 761) 3247 19,885 11670 129,118Under Armour, ie. and Subsidiaries Consolidated Statements of Cash Flows (In thousands) Cash ows from operating acties Adjustments to reconcile net income to net cash provided by operating ectvities Depreciation and amertization Unrealized foreign currency exchange rate (gins) losses Loss on disposal of property and equipment Stock-hased compensation Gain on bargain purchase of corporate headquarters (excludes transaction costs of 1.9 milion) Defered income taxes ‘Changes in reserves and allowances ‘Changes in operating assets and labiliies, net of effects of acquisions! ‘Accounts receivable Inventories Prepaid expenses and other assets Accounts payable ‘Accrued expenses and other labilies Income taxes payable and receivable Net cath provided by operating activites Cash flows from investing activities Purchases of property and equipment Parehases of busineses, net of cash acquired Prehases of other asets Purchase of lng term investment ‘Change in loans receivable ‘Change in restricted cash [et cash used in investing activites ‘Cash flows from financing activites Proceed frm revolving credit fii Payments on revolving credit Fciiy Proceeds frm term loan Payments on tem fom Proceeds from long term debt Payments on long term debe Excess tx henfits from stock-based compensation arangements Proceeds from exereso of stock options and eer stock issvances Payments of debt Gnancing costs [Net cash proved by financing activities fect of exchange rate changes on eash and cash equivalents Net increase in cash and cash equivalents ‘Cas and cash equivalents Beginning of period End of period ‘Nomeash investing and financing activites Debe assumed und property and equipment seqited in connection with purchase of| ‘corporate headquarters Increase in accrual for property and equipment (Other supplemental information (Cash pid for income taxes (Cash paid for interest, See accompanying notes, 22 oir $ 162330 $128,778 $ 96,919 Susi 43.082 190s 2.458) 332534 B18 sis (18832) (12973) BOS 13916 5.960) (53.433) 36900) 4699 (18089) 4060) 1462 35370 S648] 21965, 7483451 om 199.764 (87820) (50,650) sg097) G75) (1310) yo) cco at (38.103) 100,000 (san) 4320) Trie7 “17868 1509914776 017) 31339 3306 36301 4027 36 8063 6.300) ‘520 5536 3923) (ri4646) 42.633) 17.209 22 4567 T5218 (56,228) ste (1153) (3,862) 651028) (9.436) 30.000 (20.000) 5.00) Sou ais) 1260 Lots 7 5.807 3) Ps86) 203,870 175384 5 s 38.556 157 S610 2.305‘Appendix 8 Ratio Analysis Page 1 - One Page ‘brief’ Analysis Increases or (Decreases) are only shown on Page 1 Page 2 - Numbers used in CalculationsUNDER ARMOUR RATIOS CREATED BY STUDENT Liquidity — 1, Working Capital (In Thousands) = 2013: $702,181 2014:$1,127,772 60.6% 2. Current Ratio=2013:2.65 2014:3.67 38.5% 3. Cash Ratio = 2013: 0.81 2014:1.41 74.1% 4, Acid-Test Ratio =2013:1.31 2014: 2.07 58.0% Efficiency — 1. Inventory Turnover ~ 2013: 3.03, 2014:3.13 3.3% 2. Days Sales in Inventory~2013:120 2014: 116 (3.3%) 3. Gross Profit Percentage ~2013: 48.7% 2014: 49.0% 0.6% 4. 5. Accounts Receivable Turnover Ratio ~ 2013: 12.1, 2014:12.6 4.1% Days Sales in Receivables -2013:30 2014: 29 (3.3%) Solvency ~ 1. Debt Ratio - 2013: 0.33 2014:0.36 9.1% 2. Debt to Equity Ratio~2013:0.50 2014: 0.55 10.0% 3. Times-interest Earned Ratio~2013:89.99 2014:65.14 (27.6%) Profitability — 1. Profit Margin Ratio ~ 2013: 0.07 20u4:0.07 0 2. Rate of Return on Total Assets~2013:0.12 2014:0.12 0 3. Asset Turnover Ratio 2013: 1.67 2014: 1.63 (2.4%) 4. Rate of Return on Common Stockholder’s Equity-2013:0.17 2014:0.17 0 5, Earnings Per Share ~2013:1.54 2014: 1.29 (16.2%) Investment Potential — 1. Price/Earnings Ratio~2013: 20.94 2014: 45.80 119.7% 2. Dividend Yield —0 Either Year 3. Dividend Payout — 0 Either Yearuquiorry: Working Capital : Current Assets ~ Current Liabilities Page 60 2014 Report. 2014(1,549,399K — 421,627K) 2013 (1,128,811K — 426,630K) = 702,181K /127,772K Current Ratio : Total Current Assets / Total Current Liabilities Page 60 2014 Report. 2014(1,549,399K / 421,627K) = 3.6748 2013 (1,128,811K /426,630K) = 2.6458 Cash Ratio : (Cash + Cash Equivalents) / Total Current Liabilities Page 60 2014 Report. 2014 (593,175K / 421,627K) = 1.4069 2013 (347,489K / 426,630K) = 0.8145 Acid-Test Ratio : (Cash + Short-term Investments + Net Current Receivables) / Total Current Liabilites P60 2014 Report. 2014 (593,175K + 279,838K)/421,627K = 2.0706 2013 (347,489K + 209,952K)/426,630K = 1.3066 EFFICIENCY : Inventory Turover: Cost of Goods Sold / Average Merchandise Inventory 2014 COGS 1,572,164K (14 Inv $36,714, 13" Inv 469,006, Avg inv 502,860 ) = 3.1264 2013 COGS 1,195,381K (13" Inv 469,006, 12’ Inv 319,286, Avg Inv 394,146) = 3.0328 Days’ Sales in Inventory : 365 Days / Inventory Turnover 2014 : 365 / 3.1264= 116.75 2013 : 365 / 3.0328= 120.35, Gross Profit Percentage : Gross Profit / Net Sales Revenue 2014 Gross Profit 1,512,206K / Net Rev 3,084,370K 2013 Gross Profit 1,136,670K / Net Rev 2,332,051 4903 4874 ‘Accounts Receivable Turnover Ratio : Net Credit Sales / Average Net Accounts Receivable 2014 Sales 3,084,370 14’ AR 279,835 13°AR 209,052K Avg AR 244,894K = 12.5947 2013 Sales 2,332,051 13" AR 209,952K 12’AR 175,524K Avg AR 192,738K = 12.0996 Days’ Sales in Receivables : 365 / Accounts Receivable Turnover Ratio 2014: 365 / 12.5947 2013: 365 / 12.099 SOLVENCY Debt Ratio : Total Liabilities / Total Assets P60 2014 (744,783K/2,095,083K) = 0.3555 2013 (524,387K/1,577,741K) = 0.3324 Debt to Equity Ratio : Total Liabilities / Total Equity P60 2014 (744,783K / 1,350,300K) = 0.5516 2013 (524,387K / 1,053,354K) = 0.4978Times-Interest-Earned Ratio : (Net Income + Income Tax Expense + Interest Exp) / Interest Expense 2014 NI208,042K Prov Income Tax (134,168K) Int Exp (5,335K) = 65.1443 2013 NI 162,330K Prov Inc Tax (98,663K) Int Exp (2,933K) = 89.9850 PROFITABILITY: Profit Margin Ratio : Net Income / Net Sales 2014 NI 208,042K Net Sales 2,997,932K = 0.0694 2013 NI 162,330K Net Sales 2,277,073K = 0.0713 Rate of Return on Total Assets : (Net income + Interest Expense} / Average Total Assets 2014 NI 208,042K, int Exp 5,335K, 14” Tot Ass 2,095,083K 13’ Tot Ass 1,577,741K, Avg Tot Ass 1,836,412K = 0.1162 2013 NI 162,330K, Int Exp 2,933K, 13’ Tot Asset 1,577,741K 12 Tot Ass 1,157,083K Avg Tot Ass 41,367,412K = 0.1209 ‘Asset Turnover Ratio : Net Sales / Average Total Assets, 2014 Net Sales 2,997,932K / From Above 1,836,412K = 1.6325, 2013 Net Sales 2,277,073K / From Above 1,367,412K = 1.6652 Rate of Return on Common Stockholders’ Equity : (Net Income — Preferred Dividends) / Avg Common Stockholder’ Equity 2014: 14’ NI208,042K No Div 14” SE 1,350,300K 13° SE 1,053,354K Avg SE 1,201,827K = 0.1731 2013: 13’ NI162,330K No Div 13" SE 1,053,354K, 12’ SE 816,922K Avg SE 935,138K = 0.1736 Earnings Per Share : (Net Income — Preferred Dividends} / Wei Outstanding 2014: NI 208,042K, 2014 Shares (Class A 177,295,988, Class B 40,000,000 ) 2013 Shares (Class A 85,814,354, Class B 20,000,000 Avg = (217,295,988 + 105,814,354) /2 = 161,555,171 = 1.2877 2013: NI 162,330K, 2013 Shares (Class A 85,814,354, Class B 20,000,000) 2012 Shares (Class A 83,461,106, Class B 21,300,000) Avg = (105,814,354 + 104,761,106) / 2= 105,287,730 = 1.5418 ted Average Number of Common Shares INVESTMENT POTENTIAL Price/Earnings Ratio : Market price per share of Common Stock / Earnings Per Share 2014: 10 - $40.98 - 62.40 Avg $51.69, 20, $45.05 - 60.17 Avg. $52.61, 30 $56.79 — 73.42 Avg $65.11 40. $60.00 ~ 72.98 Avg $66.49 ALL Avg $58.98 / 1.2877 = 45.80 2013: 10 $22.16 -25.97 Avg $24.07 2 $25.15 ~ 32.78 Avg $28.97 3Q$29.73 - 40.82 Avg $35.28 4Q,$37.72 — 43.96 Avg $40.84 ALL Avg, $32.29 / 1.5418 = 20.94 Dividend Yield : Annual Dividend Per Share / Market Price Per Share - None Dividend Payout : Annual Dividend Per Share / Earnings Per Share - NoneAppendix C Hoovers’ Cometitive Landscapesanga05 Save chartas: ‘Save asa PDE Save asa PNG ‘Save asa JPG 2014 Key Numbers Annual Sales Employees Market Cap 2014 Profitability Gross Profit Margin Pro-Tax Profit Margin Net Profit Margin Return on Equity Return on Assets Return on Invested Cap 2014 Valuation Price/Sales Ratio Price/Earnings Ratio Price/Book Ratio Price/Cash Flow Ratio Under Armour - Custom Compatve Landscape - Hoover's Under Armour $3.088 10,700 $14.528 Under Armour 48.76% 978% 5.94% 15.91% 8.70% Under Armour 539 86.92 wan ai2ar adidas 47.84% 6.08% 337% 10.72% 4.96% 14.99% adidas 12.08, 1.03 8.45 NIKE 46.21% 14.25% 11.25% 29.08% 17.77% NIKE 27.46 7.40 20.84 adidas 817.678 53,731 87.058 Industry Median 46.18% 0.72% 3.24% 0.33% 0.11% 0.31% NIKE $30,608 56,500 887.198 Market Mediant 39.35% 6.76% 5.68% 5.93% 1.85% 4.98% Market Mediant 167 20.59 198 12,60 thtpufsubscribesnoovers.cem prox lec ed/Hcerpany260\compeltiveandscape hn feam panyld= 1966070000000co8com pelt kd=8283200000000080. 218aorazos 2014 Operations Days of Sales Outstanding Inventory Turnover Days Cost of Goods Sold in Inventory Asset Turnover Net Receivables Turnover Flow Effective Tax Rate Under armour - Custom Compative Landscape - Hoaver's Under Armour 3770 457 156.03 148. 10.99 39.25% adidas NIKE Industry Median Market Mediant 5940 3867 5.12 4922 685 735 3.01 922 45041 9232 64.70 61.96 4121188136 054 774 903 11.94 7.29 32.46% 21.00% 30.87% 30.68% 2014 Financial Under Armour adidas NIKE —_ Industry Median Current Ratio. 2.63 1.88 289 1.98 Quick Ratio. - 0.92 - 1.09 Leverage Ratio 0.48 0.28 008 = 0.23, Total DebvEquity 051 0.40 009 (0.04 Interest Coverage 36.18 1962 © 19322 12.31 2014 Per Share Data Under Armour adidas. NIKE —_Industry Median Revenue Per Share $15.87 $8462 $3632 $13.19 Dividend Per Share - $065 $0.84 $0.57 Cash Flow Per Share $0.39 $408 $5.36 © $027 Working Capital Por Share $4.48 Si766 $1167 $0.97 Long-Term Debt Per Share $3.12 $942 $1.26 © $0.25 Book Value Per Share $6.56 $3348 $16.10 $1.75 Total Assets Per Share $1281 $7387 $2432 $7.29 2014 Growth Under Armour adidas. NIKE _Industry Median 12-Month Revenue Growth 28.79% 0.29% 7.72% © 1.95% 12-Month Net Income Growthh 20.90% (37.76%) 21.41% (3.42%) 12-Month EPS Growth 21.52% (37.50%) 24.09% (3.05%) 12-Month Dividend Growth - - 16.67% 161% Market Mediant 190 431 057 054 5.92 Market Median’ $10.52 $0.80 $1.38 $178 $6.23 $9.25 $21.90 Market Mediant 567% 7.45% 6.65% 8.79% itp tsubseriber hoover cm bpcoxt se ed/HlcompanySécompetiveLandscape htm! oom panyd= f0660TOO00000008competitok4=828320000000008co, 3810132015 Under Armour = Cusiom Competitive Larescape- Hoover's 36-Month Revenue Growth 28.26% 2.89% 789% 2.18% 4.38% 36-Month Netincome Growth 26.76% (095%) 17.63% 481% 6.69% 36-Month EPS Growth 25.99% (078%) 20.18% 475% 6.03% 36-Month Dividend Growth - = 15.87% 10.06% 8.17% 1 Public companies trading on the New York Stock Exchange, the American Stock Exchange, and the NASDAQ National Market. ©2015 Mergent, Inc, Financial Data provided by wf: Copyright ©2015 Hoover's, Inc. All Rights Reserved, hitpuisscribr hooves com Jbpraxtsloc.eduHlcomparySé0lcempatiiveLandscape Html companyld= 083070000000008com pettarlé=e26s200000C000C0... 44sors2015 Baltimore, MD United States + NYSE UA other stock tickers Under Armour - Balance Shoot - Hoover's HOOVERS ‘ADB COMPANY Under Armour, Inc. Also trades as: German: USR; Mexican: UA; NYSE: UA; NYSE Arca: UA; Lynett Oliver has a B.S. in Communication from The University of Texas. She wrote training materials for Walt Disney World and co-owned a small production company before joining Hoovers in 1998. ‘This company is covered by Lynett Oliver. Balance Sheet View: Annual | Quarterly All amounts in millions of [US Dolla Assets Current Assets cash Net Receivables Inventorios Other Current Assets Total Current Assets Net Fixed Assets Other Noncurrent Assets Total Assets Liat jes Current Liabilities Accounts Payable Short Term Debt Other Current Liabilities Total Current Liabilities Long Term Debt Other Noncurrent Liabilities Total Liabilities hipusubserbar haovers.com Hbproxt lee eciMlcomenyS6abalaneeShaes eam pany= 166070000000 NawsCompanyDuns= 11 STEORSS ene Dec 14 503.18 279.84 536.71 87.18 1,549.40 305.56 57.08 2,095.08 Dec 14 210.43 28.95 34.56 421.63 255.25 67.91 744.78 ‘except per share amounts. Dec 13 347.49 209.98 469.01 63.99 1.12881 223.95 4754 157774 Dec 13, 165.46, 104.97 22.87 426.03 47.95 4981 524,39 Dec 12 341.84 17552 319.28 43.90 903.60 18085 45.55 4,187.08 Dec 12 143.69 9.43 14.33 252.23 52.76 35.18 340.16 Dec tt 17538 13404 324.41 39.64 089.66 159.14 48.99 91921 Dec 11 10053 6.88 6.91 18361 7084 28.33 282.78 Dec 10 203.87 102.03 218.36 19.33 955.85 76.13 18.21 675.98, Dec 10 84.8 6.87 2a7 149.15 9.08 20.19 178.41 2rarya01s Shareholder's Equity Preferred Stock Equity Common Stock Equity Total Equity ‘Shares Outstanding (M) Inc. Financial Hipsubscriber hooves com jtproxt slo. etHcompary/60taanceShees tm ?company l= 1054070c09000008ren sCompanyDun Under Armour - Balance Shast- Hoover's Dec 14 Dec 13, 0.07 04 1,380.30 1,053.35 213.90 211.63 rovided by uss Copyright ©2015 Hoover's, nc. All Rights Reserved. Dec 12 0.04 816.92 209.52 Dec 11 0.02 636.43 206.98 Dec 10 0.02 496.97 204.64 | ISTESESKeriPre 22rori32015 Under armeur- Finacial Summary - Hoover's HOOVERS” ‘ADB COMPANY Under Armour, Inc. Baltimore, MD United States + NYSE UA other stock tickers Also trades as: German: U9R; Mexican: UA; NYSE: UA; NYSE Arca: UA; This company is covered by Lynet Oliver. Lynett Oliver has a B.S. in Communication from The University of Texas. She wrote training materials for Walt Disney World and co-owned a small production company before joining Hoover's in 1998. Basic Financial Information Company Type Public NYSE: UA. Headquarters Fiscal Year-End December Financial Filings SEC 2014 Sales $3.08B 1-Year Sales Growth 32.28% 2014 Not Income $208.04M 1-Year Not income Growth 28.16% Prescreen Score Low Risk Auditor PricewaterhouseCoopers LLP ‘Company Website hito:/yrwnv.underarmour.com ©2015 Mergent, Inc, Financial Data provided by w/t Revenue vs. Net Income hitpeubserbor hooves com borax sleeeauMlcompany 360 inanialSummary Html 2eampany loss07UCOO00DOUENeWsCompanyDune=111S7EGBSE arin. M4ror1g2015 Under Armour - Financial Summary - Hoover's Revenue vs. Cash Flow from Operations Stock Quote Exchange NYSE: UA Latest $1013 (10/13/15 15:02:44 CDT) Change ($) 2.05 Change (%) -1.98% View Detailed Stock Quote & Interactive Stock Chart Compa jon to Industry & Market ‘Company Industry Median Market Median Price/Sales Ratio 539 070 1.87 -ntpzfsubsriber hoover. com ibproxt slcc.eduH/company6ainanciel Summary hm ?eomparslé 1OS607ONCOOWONEAewsCompanyDuns=1TSTBBBSSprin.. 2Hsons2015 Under armour Financial Suenmary - Hoover's Price/Earnings Ratio 86.92 19.06 20.59 Price/Book Ratio 12.71 231 1.96 Price/Cash Flow Ratio 212.17 13.49 12.60 ‘Annual Income Statements Dec 14 Dec 13 Dec 12 Revenue $3.088 $2.38 $1,838 Gross Profit $1518 $1148 $879.30M Operating income $353.96M $266.10M $208.70M Total Net Income $208.04M $162.33M $128.78M Diluted EPS (Net income) $0.95 $0.75 s06t View Detailed income Statemen Ww Detailed Balance Sheet View Detailed Cash Flow Statement Quarterly Income Statements Quarter Ending Jun 15 Mar 15 Dec 14 Revenue $763.58M $804.94M $895.20M Gross Profit $379.05 $377.66M $446 26M Operating Income $31.90M $27 67M $146.30M Total Net Income $1477™ $1173M ser7iM Diluted EPS (Net Income) 30.07 $0.05 $0.40 View Detailed Income Statement Top Competitors Under Armour NIKE Columbia Sportswear adidas Annual Sales $3,088 $30.608 $2,108 $17.678 Employees 10,700 56,500 5,326 53,731 Market Cap 914.528 $87.13B $3.18 $7.058 htpsisubscribar hoovers.com libero sle.eduHlcom pary/360financlal Summary hn ?eompanyld= 1066070000000008nawsCompanyDuns=1116780858prin.. 3