Under Armour Inc. Annual Report 2020

FY2020 Annual Report · Under Armour Inc.

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And as consumers pivoted their exercise
routines to at-home workouts and outdoor
runs, Under Armour met them with athlete-
led solutions. From our Project Rock
collection, UA HOVR Machina, Phantom
2, and Breakthru footwear offerings to
the Meridian pant, Infinity sports bra, and
award-winning UA Sports Mask – we drove
hard against our innovation agenda in
2020. Additionally, we passed one million
pairs of connected footwear, a significant
milestone in deepening our connection with
consumers.

That said, there is no doubt that last year was
challenging. In 2020, our revenue declined
15 percent to $4.5 billion and – on an
adjusted basis: our gross margin increased
170 basis points to 48.6 percent, our
operating income was $537 thousand, and
our diluted loss per share was $0.26.

Yet even through the challenges and
uncertainty, it is clear that we are on the right
path. Our efforts to pursue a clearly defined
target consumer, rebase our cost structure,
and fundamentally change the way we work
are beginning to yield results. And as we
work towards improving profitability in 2021,
we also believe we are on a measured path
to return to a double-digit operating margin
over the long-term.

Central to our transformation is an evolution
from being a product-led to a purpose-
led organization. We are clear about what
defines us, why we compete and who we
serve. Our purpose is to Empower Those
Who Strive for More, which begins with
our commitment to our target consumer
– the focused performer. Any product or
experience we bring to market must make
athletes better.

Purpose lies at the intersection of our culture
and our relationship with consumers. This
empowers us to support the communities
we serve more meaningfully. The launch of
the Curry Brand is the perfect embodiment
of this in action. In late November, we

ANNUAL REPORT

LETTER FROM THE CEO

MARCH 26, 2021

DEAR SHAREHOLDERS,

This past January marked my first anniversary
as CEO of Under Armour.

As I reflect on my time in the role, I am
appreciative of our 15,000 teammates around
the globe for their teamwork, resiliency and
commitment. They are the heart of the Under
Armour brand. I am also grateful for our board’s
guidance, specifically Executive Chairman and
Brand Chief Kevin Plank, whose passion for
our athletes and business is extraordinary and
makes our partnership a terrific balance.

As we say at Under Armour, The Only Way Is
Through. 2020 was a year that demanded
agility, adaptation, and an unrelenting focus
on changing consumer needs. Amid a global
pandemic, we prioritized our teammates’
health and safety, launched our North
American eCommerce platform, divested
the MyFitnessPal platform, and continued to
execute a comprehensive restructuring effort.

The work we have done over the past
few years positioned us well to meet the
challenges of this unprecedented year with
resilience. We continued to execute against
our strategy with patience and perseverance
and remained true to our commitment to
making athletes better.

2020 ANNUAL REPORT

announced our partnership with Stephen
Curry to deliver a suite of performance
products, including the Curry 8 basketball
shoe – the first footwear to feature our
proprietary, high-traction footwear
cushioning technology: UA Flow. As a
powerful foundation, community impact is
built into the Curry brand’s business model.
Product sales and focused partnerships
are being engineered to help fund youth
sports in under-resourced areas through
equitable access and safe places to play.

Purpose also means greater consistency
in strategic execution while maintaining
our operating principles and enterprise-
wide financial discipline. And earning trust
from you, our shareholders, by delivering
the outcomes that signal our playbook is
working.

Throughout 2020, we worked to rebase our
cost structure to ensure we are positioned
with an appropriate foundation and agility
to scale with future growth. In pursuit of
premium brand-right growth, we have
more sharply focused our voice, utilizing
consumer-centric marketing activations to
elevate industry-leading innovations and
unique experiences across our business.
Greater marketing productivity, along
with the tighter alignment of our supply
and demand planning functions, has also
afforded us greater optionality to maintain
a more consistent profitability trajectory
over the long-term.

Simultaneously, we are hyper-focused
on meeting consumers wherever and
whenever they want to engage with us.
With an emerging omnichannel focus,
we are pursuing a channel-agnostic
approach – an effort made even stronger
by pandemic-accelerated eCommerce
results, which represented nearly half of
our total direct-to-consumer business in
2020. In retail, we are working to deliver
more profitable formats and greater in-
store productivity by reducing promotional
levels and creating a more seamless

2020 ANNUAL REPORT

shopping experience across all consumer
touchpoints.

Deepening our relationship with
consumers also means living up to
increasingly higher brand expectations.
This includes sustainability, which we
believe drives performance innovation.
Across our business practices, as we
strive for proficiency, accountability, and
transparency – we’re dedicated to making
better, resource-efficient products,
leaving a cleaner world wherever our brand
touches the environment, and adding value
to the communities we engage. Earth is our
home field. It’s the only one we’ve got and
we’re going to protect it.

Bringing it all together, we remain
focused on maintaining our discipline
around profitability to drive sustainable
shareholder value over the long term. From
ongoing operating model refinements,
our robust innovation pipeline, and
brand elevating strategies to our tighter
inventory management and a rebased cost
structure, we are working to deliver greater
confidence, consistency and credibility.

At this point in 2021, the global pandemic’s
current state means we’re still operating
with a high level of uncertainty. That
said, I remain appropriately cautious and
confident in our future. We are on the path
to becoming a stronger brand and a better
run company. We are leading with greater
purpose and more assertive discipline.
And we are working hard to continue
earning your trust with our actions and
performance.

Sincerely,

PATRIK FRISK
President &
Chief Executive Officer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________ ______________________________________

(Mark One)

Form 10-K
______________________________________________

☑

☐

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File No. 001-33202
__
__________ ______________________________________

UNDER ARMOUR, INC.

(Exact name of registrant as specified in its charter)
__________ ______________________________________

Maryland
(State or other jurisdiction of
incorporation or organization)
1020 Hull Street

Baltimore, Marylarr

nd 21230

52-1990078
(I.R.S. Employer
Identification No.)

(410) 454-6428

(Address of principal executive offices) (Zip Code)

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Class A Common Stock
Class C Common Stock
(Title of each class)

UAA

(Trading Symbols)

New York Stock Exchange
New York Stock Exchange
(Name of each exchange on which registered)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YesYY þ No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
ff
filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”and
"emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Non-accelerated filer

☑

☐

Accelerated filer

Smaller reporting company

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with

any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its

internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No þ

As of June 30, 2020, the last business day of our most recently completed second fiscal quarter, the aggregate market value of the registrant’s

Class A Common Stock and Class C Common Stock held by non-affiliates was $1,827,569,777 and $2,007,651,870, respectively.

As of January 31, 2021, there were 188,619,343 shares of Class A Common Stock, 34,450,000 shares of Class B Convertible Common Stock

and 231,983,924 shares of Class C Common Stock outstanding.

Portions of Under Armour, Inc.’s Proxy Statement for the Annual Meeting of Stockholders to be held on May 13, 2021

DOCUMENTS INCORPORATED BY REFERENCE

are incorporated by

reference in Part III of this Form 10-K.

UNDER ARMOUR, INC.

ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

PART I.

Forward Looking Statements

Item 1.

Business

General

Products

Marketing and Promotion

Sales and Distribution

Product Design and Development

Sourcing, Manufacturing and Quality Assurance

Inventory Management

Intellectual Property

Competition

Human Capital Management

Available Information

Information About Our Executive Officers

Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2

Properties

Item 3

Item 4

Legal Proceedings

Mine Safety Disclosures

PART II.

Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Item 6

Selected Financial Data

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7
Item 7A Quantitative and Qualitative Disclosures About Market Risk
Item 8
Financial Statements and Supplementary Data

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9
Item 9A Controls and Procedures
Item 9B Other Information

PART III.

Item 10. Directors, Executive Officers and Corporate Governance
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services

PART IV.

Item 15. Exhibits and Financial Statement Schedules
Item 16

Form 10-K Summary

SIGNATURES

100

103

102

103

N/A

106

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PART I

Forward-Looking Statements

Some of the statements contained in this Form 10-K constitute forward-looking statements. Forward-looking
statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and
similar expressions concerning matters that are not historical facts, such as statements regarding our future
financial condition or results of operations, our prospects and strategies for future growth, the impact of the
COVID-19 pandemic on our business and results of operations, our plans to reduce our operating expenses,
anticipated charges and restructuring costs, projected savings related to our restructuring plans and the timing
thereof, the development and introduction of new products, the implementation of our marketing and branding
strategies, and the future benefits and opportunities from significant investments. In many cases, you can identify
forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “outlook,” “potential” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this Form 10-K reflect our current views about future events
and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our
actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we
believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee
future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place
undue reliance on these forward-looking statements. A number of important factors could cause actual results to
differ materially from those indicated by these forward-looking statements, including, but not limited to, those factors
described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations.” These factors include without limitation:

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the impact of the COVID-19 pandemic on our industry and our business, financial condition and results of
operations;
changes in general economic or market conditions that could affect overall consumer spending or our
industry;
increased competition causing us to lose market share or reduce the prices of our products or to increase
significantly our marketing efforts;
fluctuations in the costs of raw materials and commodities we use in our products and our supply chain;
changes to the financial health of our customers;
our ability to successfully execute our long-term strategies;
our ability to effectively drive operational efficiency in our business and successfully execute any
restructuring plans and realize their expected benefits;
our ability to effectively develop and launch new, innovative and updated products;
our ability to accurately forecast consumer shopping preferences and consumer demand for our products
and manage our inventory in response to changing demands;
loss of key customers, suppliers or manufacturers or failure of our suppliers or manufacturers to produce or
deliver our products in a timely or cost-effective manner;
our ability to further expand our business globally and to drive brand awareness and consumer acceptance
of our products in other countries;
our ability to manage the increasingly complex operations of our global business;
our ability to successfully manage or realize expected results from significant transactions and investments;
our ability to effectively market and maintain a positive brand image;
the availability, integration and effective operation of information systems and other technology, as well as
any potential interruption of such systems or technology;
any disruptions, delays or deficiencies in the design, implementation or application of our global operating
and financial reporting information technology system;
our ability to attract key talent and retain the services of our senior management and key employees;
our ability to access capital and financing required to manage our business on terms acceptable to us;
our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results;
risks related to foreign currency exchange rate fluctuations;
our ability to comply with existing trade and other regulations, and the potential impact of new trade, tariff
and tax regulations on our profitability;
risks related to data security or privacy breaches; and
our potential exposure to litigation and other proceedings.

The forward-looking statements contained in this Form 10-K reflect our views and assumptions only as of
the date of this Form 10-K. We undertake no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Throughout this Annual Report on Form 10-K: (i) the term "Fiscal 2021" means our fiscal year beginning on
January 1, 2021 and ending December 31, 2021; (ii) the term “Fiscal 2020” means our fiscal year beginning on
January 1, 2020 and ended December 31,2020; (iii) the term “Fiscal 2019” means our fiscal year beginning on
January 1, 2019 and ended December 31, 2019; and (iv) the term “Fiscal 2018” means our fiscal year beginning on
January 1, 2018 and ended December 31, 2018. Our Consolidated Financial Statements are presented in U.S.
dollars. As used in this report, the terms “we,” “our,” “us,” “Under Armour” and the “Company” refer to Under
Armour, Inc. and its subsidiaries unless the context indicates otherwise.

ITEM 1. BUSINESS

General

Our principal business activities are the development, marketing and distribution of branded performance
apparel, footwear and accessories for men, women and youth. The brand’s performance apparel and footwear are
engineered in many designs and styles for wear in nearly every climate to provide a performance alternative to
traditional products. Our products are sold worldwide and are worn by athletes at all
from youth to
professional, on playing fields around the globe, as well as by consumers with active lifestyles.

levels,

We generate net revenues from the sale of our products globally to national, regional, independent and
specialty wholesalers and distributors. We also generate net revenue from the sale of our products through our
direct-to-consumer sales channel, which includes our brand and factory house stores and e-commerce websites. In
addition, we generate net revenues through product licensing as well as digital fitness subscriptions and digital
advertising on our Connected Fitness applications. A majority of our products are sold in North America; however
we believe that our products appeal to athletes and consumers with active lifestyles around the globe.

We plan to continue to grow our business over the long term through increased sales of our apparel,
footwear and accessories, expansion of our wholesale distribution, growth in our direct-to-consumer sales channel
and expansion in international markets. Our digital strategy is focused on supporting these long term objectives,
emphasizing the connection and engagement with our consumers through multiple digital touch points.

We were incorporated as a Maryland corporation in 1996. We have registered trademarks around the globe,
including UNDER ARMOUR®, HEATGEAR®, COLDGEAR®, UA HOVR™ and the Under Armour UA Logo, and we
have applied to register many other trademarks. This Annual Report on Form 10-K also contains additional
trademarks and tradenames of our Company and our subsidiaries. All trademarks and tradenames appearing in this
Annual Report on Form 10-K are the property of their respective holders.

Products

Our product offerings consist of apparel, footwear and accessories for men, women and youth. We market
our products at multiple price levels and provide consumers with products that we believe are a superior alternative
to traditional athletic products. In Fiscal 2020, sales of apparel, footwear and accessories represented 64%, 21%
and 9% of net revenues, respectively. Licensing arrangements and revenue from our Connected Fitness business
represented the remaining 6% of net revenues. In December 2020, we completed the sale of our MyFitnessPal
platform, which represented the largest business within our Connected Fitness segment, as well as discontinued
our Endomondo platform. We continue to offer digital fitness subscriptions through our MapMyFitness platform,
which includes MapMyRun and MapMyRide. Refer to Note 19 to the Consolidated Financial Statements for net
revenues by product.

Apparel

Our apparel is offered in a variety of styles and fits intended to enhance comfort and mobility, regulate body
is engineered to replace
temperature and improve performance regardless of weather conditions. Our apparel
traditional non-performance fabrics in the world of athletics and fitness with performance alternatives designed and
merchandised with a variety of innovative techniques and product styles. Our highly technical products extend
primarily across the sporting goods, outdoor and active use markets. We market our apparel for consumers to
provide a benefit you never knew you needed, but can't imagine living without, including HEATGEAR® to wear

when it is hot, COLDGEAR® to wear when it is cold, or our RUSH™ or RECOVER™ designed to increase blood
flow. Our apparel comes in three primary fit types: compression (tight fit), fitted (athletic fit) and loose (relaxed).

HEATGEAR® is designed to be worn in warm to hot temperatures under equipment or as a single layer.
While a sweat-soaked traditional non-performance T-shirt can weigh two to three pounds, HEATGEAR® is
engineered with a microfiber blend designed to wick moisture from the body which helps the body stay cool, dry and
light. We offer HEATGEAR® in a variety of tops and bottoms in a broad array of colors and styles for wear in the
gym or outside in warm weather.

COLDGEAR® is designed to wick moisture from the body while circulating body heat from hot spots to help
maintain core body temperature. Our COLDGEAR® apparel provides both dryness and warmth in a single light
layer that can be worn beneath a jersey, uniform, protective gear or ski-vest, and our COLDGEAR® outerwear
products protect the athlete, as well as the coach and the fan from the outside in. Our COLDGEAR® products
generally sell at higher prices than our other product styles.

Footwear

Footwear primarily includes products for running, basketball, cleated sports, slides, training, and outdoor.
Our footwear is light, breathable and built with performance attributes for athletes. Our footwear is designed with
under-foot cushioning technologies including UA HOVR™, UA Micro G®, UA Flow™, and Charged Cushioning®,
engineered to a specific sport with advanced outsole construction.

Accessories

Accessories primarily includes the sale of athletic performance gloves, bags, headwear and sports masks.
Our accessories include HEATGEAR® and COLDGEAR® technologies and are designed with advanced
fabrications to provide the same level of performance as our other products.

Connected Fitness

We offer digital fitness subscriptions, along with digital advertising through our MapMyFitness platform, and
until December 2020 through our MyFitnessPal and Endomondo platforms. As noted above, in December 2020 we
sold our MyFitnessPal platform and discontinued our Endomondo platform. Our MapMyFitness platform includes
applications, such as MapMyRun and MapMyRide.

License

We have agreements with licensees to develop certain Under Armour apparel, accessories and equipment.
In order to maintain consistent quality and performance, our product, marketing, sales and quality assurance teams
are involved in substantially all steps of the design and go to market process in order to maintain brand and
compliance standards and consistency. During 2020, our licensees offered collegiate apparel and accessories, baby
and youth apparel, team uniforms, socks, water bottles, eyewear and other specific hard goods equipment that
feature performance advantages and functionality similar to our other product offerings.

Marketing and Promotion

We currently focus on marketing our products to consumers primarily for use in athletics, fitness, and
training activities, with an emphasis on connecting with our target consumer - the focused performer. We seek to
drive consumer demand by building brand awareness that our products deliver advantages to help athletes perform
better.

Sports Marketing

Our marketing and promotion strategy begins with providing and selling our products to high-performing
athletes and teams at the high school, collegiate and professional levels. We execute this strategy through outfitting
agreements, professional, club, and collegiate sponsorship, individual athlete and influencer agreements and by
providing and selling our products directly to teams and to individual athletes. We also seek to sponsor and host
consumer events to drive awareness and brand authenticity from a grassroots level by hosting combines, camps
and clinics for young athletes in many sports. As a result, our products are seen on the field and on the court, and
by various consumer audiences through the internet, television, magazines and live at sporting events. This
exposure to consumers helps us establish on-field authenticity as consumers can see our products being worn by
high-performing athletes.

We are the official outfitter of athletic teams in several high-profile collegiate conferences as well as multiple
professional sport organizations supporting the athletes on and off the field. We sponsor and sell our products to
international sports teams, which helps to drive brand awareness in various countries and regions around the world.

Media

We feature our products in a variety of national digital, broadcast, and print media outlets. We also utilize
social and mobile media to engage consumers and promote connectivity with our brand and our products while
engaging with our consumer throughout their performance journey. For example, in the first quarter of Fiscal 2020
we launched a new brand campaign, “The Only Way Is Through”, which was introduced during a Performance
Summit with over 180 social media influencers and was re-activated through brand authentic moments across the
calendar year. Additionally, during the initial wave of the COVID-19 pandemic, we transitioned our campaign from
“The Only Way is Through” to "Through This Together" that provided consumers with at home workout solutions
across various digital platforms.

Retail Presentation

The primary goal of our retail marketing strategy is to increase brand floor space dedicated to our products
within our major retail accounts. The design and funding of Under Armour point of sale displays and concept shops
within our major retail accounts has been a key initiative for securing prime floor space, educating the consumer
and creating an exciting environment for the consumer to experience our brand. Under Armour point of sale displays
and concept shops enhance our brand’s presentation within our major retail accounts with a shop-in-shop approach,
using dedicated floor space exclusively for our products, including flooring, lighting, walls, displays and images.

Sales and Distribution

The majority of our sales are generated through wholesale channels, which include national and regional
sporting goods chains, independent and specialty retailers, department store chains, mono-branded Under Armour
retail stores in certain international markets, institutional athletic departments and leagues and teams. In various
countries where we do not have direct sales operations, we sell our products to independent distributors or we
engage licensees to sell our products.

We also sell our products directly to consumers through our own network of brand and factory house stores
and through e-commerce websites globally. Factory house store products are specifically designed for sale in our
factory house stores and serve an important role in our overall
inventory management by allowing us to sell a
portion of excess, discontinued and out-of-season products, while maintaining the pricing integrity of our brand in
our other distribution channels. Through our brand house stores, consumers experience the premium full
expression of our brand while having broader access to our performance products. In Fiscal 2020, sales through our
wholesale, direct-to-consumer, licensing and Connected Fitness channels represented 53%, 41%, 2% and 3% of
net revenues, respectively.

We believe the trend toward performance products is global and plan to continue to introduce our products
and simple merchandising story to athletes throughout the world. We plan to continue to grow our business over the
long term in part through continued expansion in new and established international markets. We are introducing our
performance products and services outside of North America in a manner consistent with our past brand-building
strategy, thereby providing us with product exposure to broad audiences of potential consumers.

Our primary business operates in four geographic segments: (1) North America, comprising the United
States and Canada, (2) Europe, the Middle East and Africa ("EMEA"), (3) Asia-Pacific, and (4) Latin America. Each
of these geographic segments operate predominantly in one industry: the development, marketing and distribution
of branded performance apparel, footwear and accessories. We also operate our Connected Fitness business as a
separate segment. Effective January 1, 2021, following the sale of MyFitnessPal and the winding down of the
Endomondo platform in December 2020, revenues for the remaining MapMyFitness business will be included in
Corporate Other, and Connected Fitness will no longer be a separate reportable segment. Refer to Note 19 to the
Consolidated Financial Statements for net revenues by segment.

Our North America segment accounted for approximately 66% of our net revenues for Fiscal 2020.
Approximately 31% of our net
international segments in Fiscal 2020.
Approximately 3% of our net revenues were generated from our Connected Fitness segment in Fiscal 2020. No
customer accounted for more than 10% of our net revenues in Fiscal 2020. Refer to Note 19 to the Consolidated
Financial Statements for net revenues by segment.

revenues were generated from our

North America

We sell our apparel, footwear and accessories in North America through our wholesale and direct-to-
consumer channels. Net revenues generated from the sales of our products in the United States were $2.7 billion
and $3.4 billion for Fiscal 2020 and 2019, respectively.

Our direct-to-consumer sales are generated through our brand and factory house stores and e-commerce
website. As of December 31, 2020, we had 176 factory house stores in North America primarily located in outlet
centers throughout the United States and Canada. As of December 31, 2020, we had 18 brand house stores in
North America throughout the United States and Canada. Consumers can purchase our products directly from our
e-commerce website, www.underarmour.com.

In addition, we earn licensing revenue in North America based on our licensees’ sale of collegiate apparel

and accessories, as well as sales of other licensed products.

We distribute the majority of our products sold to our North American wholesale customers and our own
retail stores and e-commerce businesses from distribution facilities we lease and operate in California, Maryland
and Tennessee. In addition, we distribute our products in North America through third-party logistics providers with
primary locations in Canada, New Jersey and Florida. In some instances, we arrange to have products shipped
from the factories that manufacture our products directly to customer-designated facilities.

EMEA

We sell our apparel,

footwear and accessories primarily through wholesale customers,

independent
distributors, e-commerce websites, and brand and factory house stores within Europe. We also sell our branded
products to various sports clubs and teams in Europe. We generally distribute our products to our retail customers
and e-commerce consumers in Europe through a third-party logistics provider in the Netherlands as well as a
bonded warehouse in the United Kingdom. We sell our apparel, footwear and accessories through independent
distributors in the Middle East, Africa and Russia.

Asia-Pacific

We sell our apparel, footwear and accessories products in China, South Korea, Australia and India through
stores operated by our distribution and wholesale partners, along with e-commerce websites and brand and factory
house stores we operate. In March 2020, we completed the acquisition of our Southeast Asia distribution partner,
and now have direct sales operations in Singapore, Malaysia and Thailand. We also sell our products to distributors
in New Zealand, Taiwan, Hong Kong and other countries in Southeast Asia where we do not have direct sales
operations. We distribute our products in Asia-Pacific through third-party logistics providers based in Hong Kong,
China, South Korea, Australia and India.

We have a license agreement with Dome Corporation, which produces, markets and sells our branded
apparel, footwear and accessories in Japan. Our branded products are sold in Japan to large sporting goods
retailers, independent specialty stores and professional sports teams, and through licensee-owned retail stores. We
hold an equity method investment in Dome.

Latin America

We sell products through wholesale customers in Mexico, Chile, Argentina and Colombia. We also sell
though e-commerce websites, our own brand houses and factory houses in both Mexico and Chile, while we sell
through wholesale partner stores in Argentina and Colombia. During the fourth quarter of Fiscal 2020, we
determined to change to a distributor model in Chile and have executed an asset sale agreement. We expect to
close this sale in early Fiscal 2021. In certain other Latin America countries we distribute our products through
independent distributors which are sourced primarily through our international distribution hub in Panama. We have
license and distribution agreements with third parties that sells our products in Brazil and other markets within the
region.

Connected Fitness

Thoughout Fiscal 2020, we offered digital fitness subscriptions, along with digital advertising through our
MapMyFitness, MyFitnessPal and Endomondo platforms. Our MapMyFitness platform includes applications, such
as MapMyRun and MapMyRide. We engage this community by developing innovative services and other digital
solutions to impact how athletes and fitness-minded individuals train, perform and live. As noted above,
in
December 2020, we completed the sale of our MyFitnessPal platform, which represented the largest business
within our Connected Fitness segment and discontinued our Endomondo platform.

Product Design and Development

Our products are developed in collaboration with our product development teams and manufactured with
technical fabrications produced by third parties. This approach enables us to select and create superior, technically
advanced materials, curated to our specifications, while focusing our product development efforts on style,
performance and fit.

With a mission to make athletes better, we seek to deliver superior performance in all products. Our
developers proactively identify opportunities to create and improve performance products that meet the evolving
needs of our consumer. We design products with consumer-valued technologies, utilizing color,
texture and
fabrication to enhance our consumers perception and understanding of product use and benefits.

Our product development team works closely with our sports marketing and sales teams as well as
professional and collegiate athletes to identify product trends and determine market needs. For example, these
teams worked closely to identify the opportunity and market for our COLDGEAR® Infrared product, which is a
ceramic print technology on the inside of our garments that provides athletes with lightweight warmth, and UA
HOVR™, a proprietary underfoot cushioning wrapped in a mesh web, equipped with a MapMyRun powered sensor
designed to deliver energy return and real-time coaching.

Sourcing, Manufacturing and Quality Assurance

Many of the specialty fabrics and other raw materials used in our apparel products are technically advanced
products developed by third parties and may be available, in the short term, from a limited number of sources. The
fabric and other raw materials used to manufacture our apparel products are sourced by our contracted
manufacturers from a limited number of suppliers pre-approved by us. In Fiscal 2020, approximately 39% of the
fabric used in our apparel products came from 5 suppliers. These fabric suppliers have primary locations in Taiwan,
China, Malaysia, and Vietnam. The fabrics used by our suppliers and manufacturers are primarily synthetic and
involve raw materials, including petroleum based products that may be subject to price fluctuations and shortages.
We also use cotton in some of our apparel products as a blended fabric. Cotton is a commodity that is subject to
price fluctuations and supply shortages. Additionally, our footwear uses raw materials that are sourced from a
diverse base of third party suppliers. This includes chemicals and petroleum-based components such as rubber that
are also subject to price fluctuations and supply shortages.

Substantially all of our products are manufactured by unaffiliated manufacturers. In Fiscal 2020, our apparel
and accessories products were manufactured by 50 primary contract manufacturers, operating in 18 countries, with
approximately 68% of our apparel and accessories products manufactured in Vietnam, Jordan, Malaysia and China.
Of our 50 primary contract manufacturers, 10 produced approximately 57% of our apparel and accessories
In Fiscal 2020, our footwear products were manufactured by six primary contract manufacturers,
products.
operating primarily in Vietnam,
Indonesia and China. These six primary contract manufacturers produced
substantially all of our footwear products.

All manufacturers across all product divisions are evaluated for quality systems, social compliance and
financial strength by our internal teams prior to being selected and on an ongoing basis. Where appropriate, we
strive to qualify multiple manufacturers for particular product types and fabrications. We also seek out vendors that
can perform multiple manufacturing stages, such as procuring raw materials and providing finished products, which
helps us to control our cost of goods sold. We enter into a variety of agreements with our contract manufacturers,
including non-disclosure and confidentiality agreements, and we require that all of our manufacturers adhere to a
code of conduct regarding quality of manufacturing, working conditions and other social concerns. We do not,
however, have any long term agreements requiring us to utilize any manufacturer, and no manufacturer is required
to produce our products for the long term. We have subsidiaries strategically located near our key partners to
support our manufacturing, quality assurance and sourcing efforts for our products. We also manufacture a limited
number of products, primarily for high-profile athletes and teams, on-premises in our quick turn, Special Make-Up
Shop located at one of our facilities in Maryland.

Inventory Management

Inventory management is important to the financial condition and operating results of our business. We
manage our inventory levels based on existing orders, anticipated sales and the rapid-delivery requirements of our
customers. Our inventory strategy is focused on continuing to meet consumer demand while improving our
inventory efficiency over the long term by putting systems and processes in place to improve our inventory
management. These systems and processes, including our global operating and financial reporting information

technology system, are designed to improve our forecasting and supply planning capabilities. In addition to systems
and processes, key areas of focus that we believe will enhance inventory performance are added discipline around
the purchasing of product, production lead time reduction, and better planning and execution in selling of excess
inventory through our factory house stores and other liquidation channels.

Our practice, and the general practice in the apparel, footwear and accessory industries, is to offer retail
relates to new product
launch shipments, we commence production before receiving

improperly shipped merchandise. As it

customers the right
introductions, which can often require large initial
orders for those products from time to time.

to return defective or

Intellectual Property

We believe we own the material trademarks used in connection with the marketing, distribution and sale of
our products, both domestically and internationally, where our products are currently sold or manufactured. Our
major trademarks include the UA Logo and UNDER ARMOUR®, both of which are registered in the United States,
Canada, Mexico, the European Union, Japan, China and numerous other countries. We also own trademark
registrations for other trademarks including, among others, UA®, ARMOUR®, HEATGEAR®, COLDGEAR®,
PROTECT THIS HOUSE®,
incorporate the term ARMOUR such as
ARMOUR® FLEECE and ARMOUR BRA®. We also own registrations to protect our connected fitness branding
such as MapMyFitness® and associated MapMy marks. We own domain names for our primary trademarks (most
notably underarmour.com and ua.com) and hold copyright registrations for several commercials, as well as for
certain artwork. We intend to continue to strategically register, both domestically and internationally, trademarks and
copyrights we utilize today and those we develop in the future. We will continue to aggressively police our
trademarks and pursue those who infringe, both domestically and internationally.

I WILL®, and many trademarks that

We believe the distinctive trademarks we use in connection with our products are important in building our
brand image and distinguishing our products from those of others. These trademarks are among our most valuable
assets. In addition to our distinctive trademarks, we also place significant value on our trade dress, which is the
overall image and appearance of our products, and we believe our trade dress helps to distinguish our products in
the marketplace.

We traditionally have had limited patent protection on some of the technology, materials and processes
used in the manufacture of our products. In addition, patents are increasingly important with respect to our
innovative products and new businesses and investments. As we continue to expand and drive innovation in our
products, we seek patent protection on products, features and concepts we believe to be strategic and important to
our business. We will continue to file patent applications where we deem appropriate to protect our new products,
innovations and designs that align with our corporate strategy. We expect the number of applications to increase as
our business grows and as we continue to expand our products and innovate.

Competition

In addition, we must compete with others for purchasing decisions, as well as limited floor space at retailers.
We believe we have been successful in this area because of the relationships we have developed and the strong
sales of our products. However, if retailers earn higher margins from our competitors’ products, they may favor the
display and sale of those products.

We believe we have been able to compete successfully because of our brand image and recognition, the
performance and quality of our products and our selective distribution policies. We also believe our focused product
style merchandising story differentiates us from our competition. In the future we expect to compete for consumer
preferences and expect that we may face greater competition on pricing. This may favor larger competitors with
lower production costs per unit that can spread the effect of price discounts across a larger array of products and
across a larger customer base than ours. The purchasing decisions of consumers for our products often reflect

highly subjective preferences that can be influenced by many factors,
sponsorships, product improvements and changing styles.

including advertising, media, product

Human Capital Management

Under Armour is led by its purpose—We Empower Those Who Strive for More—and our teammates, who
bring their different backgrounds, experiences and perspectives, are central to driving our long-term success as an
organization and brand. Consistent with our purpose, we believe that our brand is stronger when our collective team
is fully engaged and working together to support our athletes around the world. We also believe that having an
engaged, diverse and committed workforce not only enhances our culture, it drives our business success, ultimately
helping us to deliver the most innovative products that make athletes better. Our human capital management
strategy is therefore focused on creating an inclusive workplace where our teammates can thrive by attracting,
developing and retaining talent through a competitive total rewards program, numerous development opportunities
and a diverse, inclusive and engaging work environment.

As of December 31, 2020, we had approximately 16,600 teammates worldwide, including approximately
12,000 in our brand and factory house stores and approximately 1,300 at our distribution facilities. Approximately
7,000 of our teammates were full-time. Of our approximately 9,600 part-time teammates, approximately 27% were
seasonal teammates.

Diversity, Equity and Inclusion

Our commitment to diversity, equity and inclusion starts at the top with a highly skilled and diverse Board of
Directors. Our Board of Directors has ongoing oversight of our human capital management strategies and programs
and regularly reviews our progress towards achieving our diversity, equity and inclusion goals.

We have set measurable goals for improving diversity amongst our team, including a commitment to
increase the number of historically underrepresented teammates throughout the levels of leadership within our
organization by 2023. These goals are publicly outlined on our corporate website, where we also publish our
representation statistics annually. We are also committed to continuing to increase representation of women in key
areas of our business particularly in leadership, commercial and technical roles globally. Our annual incentive plan
for all teammates, including executives, incorporates performance measures in furtherance of our diversity, equity
and inclusion goals.

As of December 31, 2020:

•

the race and ethnicity of our teammate population in the United States, including teammates in our brand
and factory house stores and our distribution facilities, was 51% White, 21% Hispanic or Latino, 17% Black
or African American, 6% Asian and 5% other;

the race and ethnicity of our "director" level and above positions in the United States was 78% White, 7%
Hispanic or Latino, 7% Black or African American, 6% Asian and 2% other; and

53% of our global teammates were women, and women represented 37% of our “director” level and above
positions.

In addition to building a more diverse team, we believe fostering an inclusive and ethical culture is key to
our values and who we are as an organization. We believe open lines of communication are critical to fostering this
environment. This starts with “tone at the top” and we emphasize the importance of our Code of Conduct and
encourage our teammates to “speak-up” when they have concerns. We require unconscious bias training for all of
our corporate teammates and our retail and distribution facility leadership, including training focused on promoting
diversity during our new-hire interview process. In Fiscal 2020, we launched a company-wide virtual series to
facilitate meaningful conversations on anti-racism and racial justice issues. For our senior leadership, we require
mandatory training on cultural competency and building inclusive environments. We also invest in professional
development specifically for our historically underrepresented and women teammates to improve retention and
advancement. We currently have nine teammate-led Teammate Resource Groups, which amplify business
initiatives, provide networking opportunities, support community outreach and promote cultural awareness.
In
addition, in Fiscal 2020 we established the Global T.E.A.M. (Teammate Equity and Accountability Movement)
Council, our internal diversity, equity and inclusion council, comprising “director” level and above corporate
teammates focused on fostering a diverse and inclusive work environment across our organization.

Total Rewards

Our total rewards strategy is focused on providing market competitive and internally equitable total rewards
packages that allow us to attract, engage and retain a talented, diverse and inclusive workforce. In determining our

compensation practices, we focus on offering competitive pay that is based on market data with packages that
appropriately reflect roles and geographic locations. We believe in “pay for performance” and seek to design plans
and programs to support a culture of high performance where we reward what is accomplished and how. We are
also committed to achieving pay equity within all teammate populations, and with the assistance of third-party
experts, conduct an annual review of pay equity and market comparison data. When we identify opportunities, we
take prompt actions to close any gaps.

Our total rewards programs, which are outlined on the careers page of our corporate website, are aimed at
the varying health, financial and home-life needs of our teammates. In the United States, where approximately 69%
of our workforce is located,
in addition to market-competitive pay and broad-based bonuses, our full-time
teammates are eligible for healthcare benefits; health savings accounts; flexible spending accounts; retirement
savings plan; paid time off;
family, maternity and paternity leave; adoption assistance; child and adult care
resources; flexible work schedules; short and long term disability; life and accident insurance; tuition assistance;
fitness benefits at on-site gyms or eligible fitness programs; commuter benefits; Under Armour merchandise
discounts; and a Work-Life Assistance Program. We believe in promoting alignment between our teammates and
stockholders. As such, these teammates are also eligible to participate in our Employee Stock Purchase Plan, and
corporate teammates within our “director” level and above positions receive restricted stock unit awards as a key
component of their total compensation package. Outside of the United States, we provide similarly competitive
benefit packages to those of our U.S.-teammates but tailored to market-specific practices and needs.

We believe that giving back to the communities where we live and work is central to our culture. In addition
to competitive time off benefits, our full-time teammates also receive 40 hours of additional paid time off each year
for personal volunteer activities performed during working hours.

Talent Development and Engagement

Our purpose of empowering those who strive for more is embodied in our commitment to helping our
teammates develop their skills, grow their careers and achieve their goals. We believe our investment in these
areas enhances our teammate engagement, improves the efficiency and productivity of our work and ultimately
drives better results for our business. We prioritize and invest in a wide range of training and development
levels, including through both online and instructor-led internal and external
opportunities for teammates at all
programs. All of our teammates have access to an online learning platform and knowledge database, Armour U,
which offers an extensive, regularly updated library of seminars on a variety of topics. We also offer resources to
support individual development planning, including emphasizing development opportunities as part of teammates’
annual goal setting process.

We invest in developing the leadership strength and capabilities of people-leaders at all levels, including
through trainings focused on how to effectively manage, communicate with and drive the performance of teams.
Through our succession planning efforts, we further focus on talent development
for key roles within our
organization.

We believe these efforts keep our teammates engaged and motivated to do their best work. We regularly
collect feedback to better understand and improve our teammate experience and identify opportunities to continually
strengthen our culture.

Health and Safety

In Fiscal 2020,

the COVID-19 pandemic brought unprecedented challenges to our business, our
communities, our athletes and our teammates. As we managed through these challenges, we prioritized the health,
safety and overall well-being of our teammates. We implemented a new COVID-19 sick leave policy, which offers
full-time and part-time teammates in the United States and Canada additional paid sick time if they are unable to
work due to COVID-19 related circumstances, including experiencing COVID-19 related symptoms. At each of our
office, retail store and distribution house locations, we follow applicable local, state and national government
regulations, laws and recommended guidance. At our distribution houses, which have remained open, we have
implemented government-recommended COVID-19 prevention measures,
job areas to
reduce close contact, implementing daily health questioning, enhancing cleaning protocols, requiring face coverings
and social distancing and adding physical distancing barriers and increased hand sanitizing stations. As discussed
in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - COVID-19,” in Fiscal
2020, primarily in the second and third quarters, we closed many of our brand and factory house retail stores due to
the COVID-19 pandemic. As we have reopened certain of our retail stores, in addition to requiring daily teammate
wellness assessments, we have implemented COVID-19 prevention measures at these locations similar to those
described above. With respect to our corporate teammates, many of our corporate offices remain closed (including
our global headquarters) or are open in a limited capacity and the majority of our corporate teammates have shifted

including reworking all

to working remotely. We offer resources for teammates working remotely, which are targeted at optimizing remote
work environments and managing COVID-19 related challenges and address topics such as office ergonomics and
mental and emotional health and well-being.

Available Information

We will make available free of charge on or through our website at https://about.underarmour.com/ our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to
these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") as soon as reasonably practicable after we electronically file these materials with the
Securities and Exchange Commission. We also post on this website our key corporate governance documents,
including our board committee charters, our corporate governance guidelines and our code of conduct and ethics.

Information About Our Executive Officers

Our executive officers are:

Name
Kevin Plank

Patrik Frisk

David Bergman

Colin Browne

Lisa Collier

Alessandro de Pestel

Stephanie Pugliese

Tchernavia Rocker

John Stanton

Age

Position

Executive Chairman and Brand Chief

Chief Executive Officer and President

Chief Financial Officer

Chief Operating Officer

Chief Product Officer

Chief Marketing Officer

President of the Americas

Chief People and Administrative Officer

General Counsel and Corporate Secretary

Kevin Plank has been Executive Chairman and Brand Chief since January 2020. Prior to that, he served as
Chief Executive Officer and Chairman of the Board of Directors from 1996, when he founded our Company, to 2019,
and President from 1996 to July 2008 and August 2010 to July 2017. Mr. Plank also serves on the Board of
Directors of the National Football Foundation and College Hall of Fame, Inc., and is a member of the Board of
Trustees of the University of Maryland College Park Foundation.

Patrik Frisk has been Chief Executive Officer and President and a member of our Board of Directors since
January 2020. Prior to that, he served as President and Chief Operating Officer from July 2017 to December 2019.
Prior to Under Armour, he was Chief Executive Officer of The ALDO Group, a global footwear and accessories
company. Previous to that, he spent more than a decade with VF Corporation where he held numerous leadership
positions including Coalition President of Outdoor Americas (The North Face® and Timberland®), President of the
Timberland® brand, President of Outdoor & Action Sports (EMEA), and Vice President and General Manager of The
North Face®. Before joining VF Corporation, Mr. Frisk ran his own retail business in Scandinavia and held senior
positions with Peak Performance and W.L. Gore & Associates.

David Bergman has been Chief Financial Officer since November 2017. Mr. Bergman joined the Company in
2005 and has served in various Finance and Accounting leadership roles for the Company, including Corporate
Controller from 2006 to October 2014, Vice President of Finance and Corporate Controller from November 2014 to
January 2016, Senior Vice President, Corporate Finance from February 2016 to January 2017, and acting Chief
Financial Officer from February 2017 to November 2017. Prior to joining the Company, Mr. Bergman worked as a
C.P.A. within the audit and assurance practices at Ernst & Young LLP and Arthur Andersen LLP.

Colin Browne has been Chief Operating Officer since February 2020. Prior to that, he served as Chief Supply
Chain Officer from July 2017 to January 2020 and President of Global Sourcing from September 2016 to June
2017. Prior to joining our Company, he served as Vice President and Managing Director for VF Corporation, leading
its sourcing and product supply organization in Asia and Africa from November 2013 to August 2016 and as Vice
President of Footwear Sourcing from November 2011 to October 2013. Prior thereto, Mr. Browne served as
Executive Vice President of Footwear and Accessories for Li and Fung Group LTD from September 2010 to

November 2011 and Chief Executive Officer, Asia for Pentland Brands PLC from April 2006 to January 2010. Mr.
Browne has over 25 years of experience leading sourcing efforts for large brands.

Lisa K. Collier has been Chief Product Officer since April 2020. Prior to joining our Company, Ms. Collier
served as President, Chief Executive Officer and Chairman of NYDJ (Not Your Daughter’s Jeans) from June 2016 to
January 2020. Prior thereto, Ms. Collier served as Executive Vice President and President of Global Dockers Brand
of Levi Strauss & Company from July 2013 to May 2016 and as Chief Transformation Officer from October 2013 to
January 2015. Ms. Collier also served as Senior Vice President of Product Development and Innovation across all
brands from 2012 to 2013, Senior Vice President Global Dockers Merchandising, Licensing, Supply Chain from
2010 to 2012, as Managing Director and General Manager of Levi Strauss Australia and New Zealand from 2007 to
2011, and prior to that in various other leadership roles at Levi Strauss & Company. Ms. Collier served in various
leadership roles at Sunrise Brands (formerly Tarrant Apparel Group) from 1999 to 2003. She also served in various
merchandising positions at The Limited from 1987 to 1999 and started her career in retail and apparel at Hess’s
Department Store.

Alessandro de Pestel has been Chief Marketing Officer since October 2018. Prior to joining our Company, he
served as Executive Vice President of Global Marketing, Communications and Consumer Insights for Tommy
Hilfiger Global
from October 2014 to September 2018 and as Senior Vice President of Marketing and
Communication from January 2007 to September 2014. Prior thereto, Mr. de Pestel served in various leadership
roles in Marketing and Communications at brands such as Calvin Klein, Fila, Omega and Christian Dior from 1999
to 2006.

Stephanie Pugliese has been President of the Americas since June 2020. Prior to that she served as
President of North America from September 2019 to May 2020. Prior to joining our Company, Ms. Pugliese served
as Chief Executive Officer and President of Duluth Trading Company from February 2015 to August 2019, and as
President from February 2012 to August 2019. Prior thereto, Ms. Pugliese served as President and Chief Operating
Officer of Duluth Trading Company from February 2014 to February 2015, Senior Vice President and Chief
Merchandising Officer from July 2010 to February 2012 and as Vice President of Product Development from
November 2008 to July 2010. Ms. Pugliese also served in various leadership roles with Lands’ End, Inc. from 2005
to 2008 and at Ann Inc. from 2000 to 2003.

Tchernavia Rocker has been Chief People and Administrative Officer since June 2020. Prior to that she served
as Chief People and Culture Officer from February 2019 to May 2020. Prior to joining our Company, she served
more than 18 years in Human Resources leadership roles at Harley-Davidson, Inc., most recently as Vice President
and Chief Human Resources Officer from June 2016 through January 2019, as General Manager, Human
Resources from January 2012 through May 2016, and in various other Human Resources leadership positions
since joining the company in 2000. Prior to that, she served in various HR and operations roles at Goodyear Dunlop
North America Tire Inc.

John Stanton has been General Counsel since March 2013, and Corporate Secretary since February 2008.
Prior thereto, he served as Vice President, Corporate Governance and Compliance from October 2007 to February
2013 and Deputy General Counsel from February 2006 to September 2007. Prior to joining our Company, he
served in various legal roles at MBNA Corporation from 1993 to 2005, including as Senior Executive Vice President,
Corporate Governance and Assistant Secretary. He began his legal career at the law firm Venable, LLP.

ITEM 1A. RISK FACTORS

Our results of operations and financial condition could be adversely affected by numerous risks.
You should carefully consider the risk factors detailed below in conjunction with the other information
contained in this Form 10-K. Should any of these risks actually materialize, our business, financial
condition, results of operations and future prospects could be negatively impacted.

Economic and Industry Risks

The COVID-19 pandemic has caused significant disruption in our industry, which has and may continue to
materially impact our business, financial condition and results of operations.

Our business has been and may continue to be materially impacted by the effects of the widespread
outbreak of COVID-19, which was reported to have surfaced first in December 2019 and declared a global
pandemic in March 2020. This pandemic has negatively affected the U.S. and global economies, disrupted global
supply chains and financial markets, and led to significant travel and business restrictions, including mandatory
closures, orders to “shelter-in-place” and restrictions on how businesses operate.

The COVID-19 pandemic materially negatively impacted our business and results of operations in Fiscal
2020, and the extent and duration of ongoing impacts remain uncertain. The pandemic resulted in temporary
closures of our retail stores and the stores of our wholesale customers where our products are sold, reduced
consumer traffic and consumer spending, temporary layoffs of certain employees in our North America retail stores
and distribution centers and incremental operating expenses from adopting preventative health and safety
measures in our stores and distribution centers. These negative impacts to our business may continue through
Fiscal 2021 or later depending on the development of the virus and related responses. Related industries have
been and may continue to be adversely affected, including distribution and logistics and manufacturing and textile
production. Professional, collegiate and amateur sporting leagues, events and activities experienced
postponements or cancellations. We are unable to predict with certainty the near and long-term impacts of the
pandemic on consumer behavior. To the extent the impact of COVID-19 continues or worsens, consumer behavior
may be altered for an extended period, which could impact our sales, cash generated from operations and liquidity
and financial condition.

Additionally, the COVID-19 pandemic and resulting economic disruption has also led to significant volatility
in the capital markets and adversely impacted our stock price. While we took measures throughout Fiscal 2020 to
maintain our operations and preserve and enhance our access to liquidity, our cash generated from operations has
been negatively impacted and future cash flows may be further impacted by the development of the pandemic. If we
are unable to effectively manage our spending in response, our profitability may be negatively impacted. Further,
currently many of our employees in our corporate offices are working remotely. An extended period of remote work
arrangements could strain our business continuity plans, introduce operational risk, including but not limited to
cybersecurity risks, and impair our ability to manage our business. The disruption caused by the pandemic has also
disrupted the operations of our business partners, including our customers, suppliers, and vendors, and the financial
condition of certain of our partners has been significantly impacted. We cannot predict the impact the pandemic will
continue to have on these partners and any material effect on these parties could negatively impact us.

The impact of the COVID-19 pandemic may also exacerbate other risks discussed below, any of which
could have a material effect on us. Though we continue to monitor the COVID-19 pandemic closely, the situation is
changing rapidly, including a resurgence in many countries, and additional impacts may arise that we are not aware
of currently.

During a downturn in the economy, consumer purchases of discretionary items are affected, which could
materially harm our sales, profitability and financial condition and our prospects for growth.

Many of our products may be considered discretionary items for consumers. Many factors impact
discretionary spending, including general economic conditions, unemployment, the availability of consumer credit
and consumer confidence in future economic conditions. Uncertainty in global economic conditions continues,
particularly in light of
the impacts of COVID-19, and trends in consumer discretionary spending remain
unpredictable. The United States and other countries have experienced a significant increase in unemployment and
financial markets remain turbulent. Historically, consumer purchases of discretionary items tend to decline during
recessionary periods when disposable income is lower or during other periods of economic instability or uncertainty,
which may lead to declines in sales and slow our long-term growth expectations. Any near or long-term downturn in

the economies in markets in which we sell our products, particularly in the United States, China or other key
markets, may materially harm our sales, profitability and financial condition and our prospects for growth. In
addition, as pandemic conditions improve and restrictions begin to lift, we are unable to predict whether consumer
preferences for discretionary items will shift and the level of consumer spending within our industry will be
negatively impacted for a period of time. If this were to occur, our sales and prospects for growth may be negatively
impacted.

We operate in highly competitive markets and the size and resources of some of our competitors may allow
them to compete more effectively than we can, resulting in a loss of our market share and a decrease in our
net revenues and gross profit.

The market for performance apparel, footwear and accessories is highly competitive and includes many
new competitors as well as increased competition from established companies expanding their production and
marketing of performance products. Many of our competitors are large apparel and footwear companies with strong
worldwide brand recognition. Due to the fragmented nature of
the industry, we also compete with other
manufacturers, including those specializing in products similar to ours and private label offerings of certain retailers,
including some of our retail customers. Many of our competitors have significant competitive advantages, including
greater financial, distribution, marketing, digital and other resources,
longer operating histories, better brand
recognition among consumers, more experience in global markets, greater ability to invest in technology and the
digital consumer experience and greater economies of scale.
In addition, our competitors have long-term
relationships with our key retail customers that are potentially more important to those customers because of the
significantly larger volume and product mix that our competitors sell to them. As a result, these competitors may be
better equipped than we are to influence consumer preferences or otherwise increase their market share by quickly
adapting to changes in customer requirements or consumer preferences, readily taking advantage of acquisition
and other opportunities, discounting excess inventory that has been written down or written off, devoting resources
to the marketing and sale of their products, including significant advertising, media placement, partnerships and
product endorsement, adopting aggressive pricing policies and engaging in lengthy and costly intellectual property
and other disputes.

In addition, while one of our growth strategies has been to increase floor space for our products in retail
stores and in certain markets expand our distribution to other retailers, retailers have limited resources and floor
space, and we must compete with others to develop relationships with them. Increased competition by existing and
future competitors could result in reductions in floor space in retail locations, reductions in sales or reductions in the
prices of our products, and if retailers have better sell through or earn greater margins from our competitors’
products, they may favor the display and sale of those products. Our inability to compete successfully against our
competitors and maintain our gross margin could have a negative effect on our brand image and a material adverse
effect on our business, financial condition and results of operations.

Our profitability may decline or our growth may be negatively impacted as a result of increasing pressure
on pricing.

Our industry is subject to significant pricing pressure caused by many factors, including intense competition,
consolidation in the retail industry, pressure from retailers to reduce the costs of products and changes in consumer
demand. These factors may cause us to reduce our prices to retailers and consumers or engage in more
promotional activity than we anticipate, which could negatively impact our margins and cause our profitability to
decline if we are unable to offset price reductions with comparable reductions in our operating costs. For example,
in response to the COVID-19 pandemic’s impact on our industry, we and many of our competitors have engaged in,
and may continue to engage in, additional promotional activities focused around e-commerce sales in managing
excess inventory levels. Ongoing and sustained promotional activities could negatively impact our brand image. On
the other hand, if we are unwilling to engage in promotional activity on a scale similar to that of our competitors, for
instance, to protect our premium brand positioning, and unable to simultaneously offset declining promotional
activity with increased sales at premium price points, our ability to achieve short-term growth targets may be
negatively impacted, which could have a material adverse effect on our results of operations and financial condition.

Fluctuations in the cost of raw materials and commodities we use in our products and our supply chain
could negatively affect our operating results.

The fabrics used by our suppliers and manufacturers are made of raw materials including petroleum-based
products and cotton. Significant price fluctuations or shortages in petroleum or other raw materials can materially
adversely affect our cost of goods sold. In addition, certain of our manufacturers are subject to government
regulations related to wage rates, and therefore the labor costs to produce our products may fluctuate. The cost of

transporting our products for distribution and sale is also subject to fluctuation due in large part to the price of oil.
Because most of our products are manufactured abroad, our products must be transported by third parties over
large geographical distances and an increase in the price of oil can significantly increase costs. Manufacturing
delays or unexpected transportation delays can also cause us to rely more heavily on airfreight to achieve timely
delivery to our customers, which significantly increases freight costs. Any of these fluctuations may increase our
cost of products and have an adverse effect on our profit margins, results of operations and financial condition.

Our financial results and ability to grow our business may be negatively impacted by global events beyond
our control.

We operate retail, distribution and warehousing facilities and offices around the world and substantially all of
our manufacturers are located outside of the United States. We are subject to numerous risks and events beyond
our control which could negatively impact consumer spending or the operations of us or our customers or business
partners, and therefore our results of operations, including political or labor unrest, military conflict, terrorism, public
health crises, disease epidemics or pandemics (such as COVID-19), natural disasters, extreme weather conditions
and economic instability resulting in the disruption of trade from foreign countries; the imposition of new laws and
regulations, including those relating to labor conditions, minimum wage, quality and safety standards and disease
epidemics or other public health concerns, as well as rules and regulations regarding climate change; uncertainties
and the ongoing effect of the United Kingdom’s withdrawal from the European Union; changes in trade policy or
actions of foreign or U.S. governmental authorities impacting trade and foreign investment, particularly during
periods of heightened tension between U.S. and foreign governments, including the imposition of new import
limitations, duties, tariffs, anti-dumping penalties, trade restrictions or restrictions on the transfer of funds; and
changes in local economic conditions in countries where our stores, customers, manufacturers and suppliers are
located.

These risks could hamper our ability to sell products, negatively affect the ability of our manufacturers to
produce or deliver our products or procure materials and increase our cost of doing business generally, any of which
could have an adverse effect on our results of operations, profitability, cash flows and financial condition. In the
event that one or more of these factors make it undesirable or impractical for us to conduct business in a particular
country, our business could be adversely affected.

Business and Operational Risks

We derive a substantial portion of our sales from large wholesale customers. If the financial condition of
our customers declines, our financial condition and results of operations could be adversely impacted.

In Fiscal 2020, sales through our wholesale channel represented approximately 53% of our net revenues.
We extend credit to our wholesale customers based on an assessment of a customer’s financial condition, generally
without requiring collateral or getting customer insurance against non-collection. We face increased risk of order
reduction or cancellation when dealing with financially ailing customers or customers struggling with economic
uncertainty. As a result of the COVID-19 pandemic, many of our wholesale customers throughout the world have
had to temporarily close their stores or operate their stores under significant restrictions and continue to experience
reduced consumer traffic and purchasing, which has resulted in lower sales and cancellations of orders of our
products. The financial impact of continued temporary store closures and operating restrictions on many of our
wholesale customers remains uncertain. However, if our wholesale customers continue to experience significant
disruptions, this could result in further reductions or cancellations of orders or late or extended payment terms to us,
which could negatively impact our results of operations.
In addition, during weak economic conditions, customers
may be more cautious with orders or may slow investments necessary to maintain a high quality in-store experience
for consumers, which may result in lower sales of our products. Furthermore, a slowing economy in our key markets
or a continued decline in consumer purchases of sporting goods generally could have an adverse effect on the
financial health of our company.

From time to time certain of our customers have experienced financial difficulties. To the extent one or more
of our customers experience significant financial difficulty, bankruptcy, insolvency or cease operations, this could
have a material adverse effect on our sales, our ability to collect on receivables and our financial condition and
results of operations.

We may not successfully execute our long-term strategies, which may negatively impact our results of
operations.

Our ability to execute on our long-term strategies depends, in part, on successfully executing on strategic
growth initiatives in key areas, such as our international business, footwear and our global direct-to-consumer sales
channel. Our growth in these areas depends on our ability to continue to successfully grow our e-commerce and
mobile application offerings and digital experiences throughout the world, expand our global network of brand and
factory house stores and continue to successfully increase our product offerings and market share in footwear. Our
ability to invest in these growth initiatives on the timeline and at the scale we expect will be negatively impacted if
we continue to experience significant market disruption due to COVID-19 or other significant events, particularly if
our North America business, which represented 66% of our total net revenues in Fiscal 2020, does not grow
sufficiently. In addition, as we expand our global network of brand and factory house stores, if we are unable to
operate our stores profitably, our financial results could be impacted, or we could be required to recognize
impairment charges. For example, during Fiscal 2020, we recognized impairment charges related to a number of
our retail stores as individual store profitability was significantly impacted by the effects of COVID-19. Our long-term
strategy also depends on our ability to successfully drive expansion of our gross margins, manage our cost
structure and drive return on our investments. If we cannot effectively execute our long-term growth strategies while
managing costs effectively, our business could be negatively impacted and we may not achieve our expected
results of operations.

We may not fully realize the expected benefits of our restructuring plans or other operating or cost-saving
initiatives, which may negatively impact our profitability.

Since 2017, we have executed three separate restructuring plans designed to more closely align our
financial resources against the critical priorities of our business and rebalance our cost base to further improve
future profitability and cash flow generation. We have also implemented several changes to our operating model.
We may not achieve the operational improvements and efficiencies that we targeted in our restructuring plans and
operating model changes, which could adversely impact our
results of operations and financial condition.
Implementing any restructuring plan or operating model change presents significant potential risks including, among
others, higher than anticipated implementation costs, management distraction from ongoing business activities,
failure to maintain adequate controls and procedures while executing our restructuring plans and operating model
changes, damage to our reputation and brand image and workforce attrition beyond planned reductions. If we fail to
achieve targeted operating improvements and/or cost reductions, our profitability and results of operations could be
negatively impacted, which may be dilutive to our earnings in the short term.

If we are unable to anticipate consumer preferences, successfully develop and introduce new, innovative
and updated products or engage our consumers, or if consumer preferences shift away from performance
products, our sales, net revenues and profitability may be negatively impacted.

Our success depends on our ability to identify and originate product trends and anticipate and react to
changing consumer demands in a timely manner. All of our products are subject to changing consumer preferences
that shift rapidly and cannot be predicted with certainty. Accordingly, our new products may not receive consumer
acceptance. In addition, long lead times for certain of our products may make it hard for us to respond quickly to
changes in consumer demands. Our ability to adequately react to and address consumer preferences depends in
part upon our continued ability to develop and introduce innovative, high-quality products. Moreover, if consumers
are not convinced performance apparel, footwear and accessories are a better choice than, and worth the additional
cost over, traditional alternatives, sales of performance products may not grow or decline and growth in the industry
In addition, consumers are increasingly focused on the
and our business could be adversely affected.
environmental and social policies of brands, including the sustainability of the products sold. From time to time, we
may also introduce limited run or specialized products that may increase our sales in the near term, but that may fail
to maintain sustained consumer demand. If we are unable to effectively anticipate and respond to consumer
preferences as a result of any of these factors, our brand image could be negatively impacted, and our sales, net
revenues and profitability may be negatively impacted.

Consumer shopping preferences and shifts in distribution channels continue to evolve and could
negatively impact our results of operations or our future growth.

Consumer preferences regarding the shopping experience continue to rapidly evolve. We sell our products
through a variety of channels, including through wholesale customers and distribution partners, as well as our own
direct-to-consumer business consisting of our brand and factory house stores and e-commerce platforms. If we or
our wholesale customers do not provide consumers with an attractive in-store experience, our brand image and

results of operations could be negatively impacted. In addition, as part of our strategy to grow our e-commerce
revenue, we are investing significantly in enhancing our platform capabilities and implementing systems to drive
higher engagement with our consumers, which has become particularly important in light of increased online
shopping due to COVID-19. If we do not successfully execute this strategy or continue to provide an engaging,
reliable and user-friendly digital commerce platform that attracts consumers, our brand image, and results of
operations as well as our opportunities for future growth could be negatively impacted. In addition, we cannot
predict whether and how the COVID-19 pandemic will impact consumer shopping preferences in the long term and
how quickly and effectively we will adapt to those preferences.

A decline in sales to, or the loss of, one or more of our key customers could result in a material loss of net
revenues and negatively impact our prospects for growth.

We generate a significant portion of our wholesale revenues from sales to our largest customers. We
currently do not enter into long-term sales contracts with our key customers, relying instead on our relationships
with these customers and on our position in the marketplace. As a result, we face the risk that these key customers
may not increase their business with us as we expect, or may significantly decrease their business with us or
terminate their relationship with us. The failure to increase or maintain our sales to these customers as much as we
anticipate would have a negative impact on our growth prospects and any decrease or loss of these key customers'
business could result in a material decrease in our net revenues and net income or loss. For example, during Fiscal
2020 certain of our wholesale customers delayed purchases of our products or cancelled previously placed orders
in response to pandemic-related store closures. These risks have materially increased and may persist as the
COVID-19 pandemic continues. In addition, our customers continue to experience ongoing industry consolidation,
particularly in the sports specialty sector. As this consolidation continues, it increases the risk that if any one
customer significantly reduces their purchases of our products, we may be unable to find sufficient alternative
customers to continue to grow our net revenues, or our net revenues may decline materially. In addition, we may
from time to time exit relationships with certain wholesale customers to further drive our premium brand position.
This may negatively impact our net revenues if we are unable to replace those sales with additional sales to our
other customers.

We must successfully manage the increasingly complex operations of our global business, including
continued expansion in certain markets where we have limited brand recognition, or our business and
results of operations may be negatively impacted.

A significant element of our growth strategy depends on our continued expansion outside of North America,
and we have limited brand recognition and operating experience in certain regions. We must continue to
successfully manage the operational difficulties associated with expanding our business to meet
increased
consumer demand throughout the world. We have limited experience with regulatory requirements and market
practices in certain regions outside of North America, and may face difficulties expanding into and successfully
operating in those markets, including differences in regulatory environments, labor and market practices, and
difficulties in keeping abreast of market, business and technical developments and consumers’
tastes and
preferences. We must also continually evaluate the need to expand critical functions in our business, including sales
and marketing, product development and distribution functions, our management information systems and other
processes and technology. We may not manage these efforts cost-effectively or these efforts could increase the
strain on our existing resources. If we experience difficulties in supporting the growth of our business, we could
experience an erosion of our brand image or operational challenges leading to a decrease in net revenues and
results from operations.

Our results of operations could be materially harmed if we are unable to accurately forecast demand for our
products.

forecast

To ensure adequate inventory supply, we must

inventory needs and place orders with our
manufacturers before firm orders are placed by our customers. In addition, a significant portion of our net revenues
may be generated by at-once orders for immediate delivery to customers, particularly during the last two quarters of
the year, which historically has been our peak season. If we fail to accurately forecast customer demand we may
experience excess inventory levels or a shortage of product to deliver to our customers. Excess inventory may
result in inventory write-downs or write-offs or sales at discounted prices or in less preferred distribution channels,
negatively impacting gross margin. On the other hand, if we underestimate the demand for our products, our
manufacturers may not be able to produce products to meet our customer requirements, resulting in delays in the
shipment of our products and our ability to recognize revenue, lost sales, as well as damage to our reputation and
retailer and distributor relationships.

Factors that could affect our ability to accurately forecast demand for our products include: changing
consumer demand for our products; product introductions by competitors; unanticipated changes in general market
or economic conditions or other factors, which may result in cancellations of advance orders or a reduction or
increase in the rate of reorders or at-once orders placed by retailers; the impact on consumer demand due to
unseasonable weather conditions; and terrorism or acts of war, or the threat thereof, political or labor instability or
unrest or public health concerns and disease epidemics, such as the current COVID-19 pandemic.

The difficulty in forecasting demand also makes it difficult to estimate our future results of operations and
financial condition from period to period. A failure to accurately predict the level of demand for our products could
adversely impact our profitability or cause us not to achieve our expected financial results. These risks have
materially increased and may persist with the market disruption caused by COVID-19 and the expected high levels
of inventory across our industry.

We rely on third-party suppliers and manufacturers to provide raw materials for and to produce our
products, and we have limited control over these suppliers and manufacturers and may not be able to
obtain quality products on a timely basis or in sufficient quantity.

Many of the materials used in our products are technically advanced products developed by third parties
and may be available, in the short-term, from a very limited number of sources. Substantially all of our products are
manufactured by unaffiliated manufacturers, and, in Fiscal 2020, 10 manufacturers produced approximately 57% of
our apparel and accessories products, and 6 produced substantially all of our footwear products. We have no long-
term contracts with our suppliers or manufacturing sources, and we compete with other companies for fabrics, raw
materials, production and import quota capacity.

A number of factors may require us to seek alternative or additional suppliers, which we may not be able to
do in a timely or cost-effective manner. We may experience a significant disruption in the supply of fabrics or raw
materials from current sources or, in the event of a disruption, we may be unable to locate alternative materials
suppliers of comparable quality at an acceptable price, or at all. Moreover, our suppliers may not be able to fill our
orders in a timely manner depending on market conditions or increased demand for product. In addition, in Fiscal
2020 certain of our manufacturers experienced significant financial and operational disruption due to COVID-19.
We have historically provided supply chain finance support to certain of our supply chain partners, and the financial
markets supporting supply chain finance programs experienced disruption in 2020, resulting in a temporary
disruption to our program and challenging the cash flow and liquidity of our partners. While we worked with our
partners through the disruption and have re-established a supply chain finance program, if one or more of our
suppliers were to experience significant financial difficulty, bankruptcy, insolvency or cease operations, we may be
required to seek alternative suppliers. In addition, if we lose or need to replace an existing manufacturer or supplier
as a result of adverse economic conditions or other reasons, additional supplies of fabrics or raw materials or
additional manufacturing capacity may not be available when required on terms that are acceptable to us, or at all,
or suppliers or manufacturers may not be able to allocate sufficient capacity to us in order to meet our requirements.
Even if we are able to expand existing or find new manufacturing or fabric sources, we may encounter delays in
production and added costs as a result of the time it takes to train our suppliers and manufacturers on our methods,
products and quality control standards. Any delays, interruption or increased costs in the supply of fabric or
manufacture of our products could have an adverse effect on our ability to meet retail customer and consumer
demand for our products and result in lower net revenues and net income (or higher net loss) both in the short and
long term.

We have occasionally received, and may in the future continue to receive, shipments of product that fail to
conform to our quality control standards. If we are unable to obtain replacement products in a timely manner, we risk
the loss of net revenues resulting from the inability to sell those products and related increased administrative and
shipping costs. In addition, because we do not control our manufacturers, products that fail to meet our standards or
other unauthorized products could end up in the marketplace without our knowledge, which could harm our brand
and our reputation in the marketplace.

Labor or other disruptions at ports or our suppliers or manufacturers may adversely affect our business.

Our business depends on our ability to source and distribute products in a timely manner. As a result, we
rely on the free flow of goods through open and operational ports worldwide and on a consistent basis from our
suppliers and manufacturers. Labor disputes and disruptions at various ports or at our suppliers or manufacturers
could create significant risks for our business, particularly if these disputes result in work slowdowns, decreased
operations, lockouts, strikes or other disruptions during our peak importing or manufacturing seasons. For example,
COVID-19 has resulted in delays and disruptions at ports due to workforce decreases, shipping backlogs and

capacity constraints and other disruptions. This has resulted in slower than planned deliveries of inventory and
delayed sales to customers. If we experience significant delays or disruption in receiving and distributing our
products, this could have an adverse effect on our business, potentially resulting in canceled orders by customers,
unanticipated inventory accumulation or shortages, increased expense (including air freight) to deliver our products
and reduced net revenues and net income or higher net loss.

If we fail to successfully manage or realize expected results from significant transactions or investments, or
if we are required to recognize an impairment of our goodwill, it may have an adverse effect on our results
of operations and financial position.

From time to time, we may engage in acquisition opportunities we believe are complementary to our
business and brand. Integrating acquired businesses can require significant efforts and resources, which could
divert management attention from more profitable business operations. From time to time we have also disposed of
certain assets where we did not think our activities aligned to our operating model. If we fail to successfully integrate
acquired businesses or effectively manage dispositions, we may not realize the financial benefits or other synergies
we anticipated. In addition, in connection with our acquisitions, we may record goodwill or other indefinite-lived
impairment charges in the past, including in Fiscal 2020 with
intangible assets. We have recognized goodwill
respect to our Latin America reporting unit, and our Canada reporting unit, within our North America operating
segment. Additional goodwill impairment charges could have an adverse effect on our results of operations and
financial position. Additionally, from time to time, we may invest in business infrastructure, new businesses and
expansion of existing businesses, such as the expansion of our network of brand and factory house stores and our
distribution facilities, implementing our global operating and financial reporting information technology system,
supporting our digital strategy (including our e-commerce platform), or supporting our corporate infrastructure
(including our global and regional headquarters). These investments require substantial cash investments and
management attention, and infrastructure investments may also divert
funds from other potential business
opportunities. We believe cost effective investments are essential to business growth and profitability. The failure of
any significant investment to provide the returns or synergies we expect could adversely affect our financial results.

The value of our brand and sales of our products could be diminished if we are associated with negative
publicity.

Our business could be adversely impacted if negative publicity regarding our brand, our company or our
business partners diminishes the appeal of our brand to consumers. For example, while we require our suppliers,
manufacturers and licensees of our products to operate their businesses in compliance with applicable laws and
regulations as well as the social and other standards and policies we impose on them, including our code of
conduct, we do not control the conduct of these third parties. A violation, or alleged violation of our policies, labor
laws or other laws could interrupt or otherwise disrupt our sourcing or damage our brand image. Negative publicity
regarding production methods, alleged practices or workplace or related conditions of any of our suppliers,
manufacturers or licensees could adversely affect our reputation and sales and force us to locate alternative
suppliers, manufacturers or licensees. The risk that our business partners may not act in accordance with our
expectations may be exacerbated in markets where our direct sales, supply chain or logistics operations are not as
widespread. In addition, we have sponsorship contracts with a variety of athletes, teams and leagues, and many
athletes and teams use our products. Negative publicity regarding these partners could negatively impact our brand
image and result in diminished loyalty to our brand, regardless of whether such claims are accurate. Furthermore,
social media can potentially accelerate and increase the scope of negative publicity. This could diminish the value of
our proprietary rights or harm our reputation or have a negative effect on our sales and results of operations.

The costs and return on our investments for our sports marketing sponsorships may become more
challenging and this could impact the value of our brand image.

A key element of our marketing strategy has been to create a link in the consumer market between our
products and professional and collegiate athletes. We have developed licensing agreements to be the official
supplier of performance apparel and footwear to a variety of sports teams and leagues at the collegiate and
professional level and sponsorship agreements with athletes. However, as competition in the performance apparel
and footwear industry has increased, the costs associated with athlete sponsorships and official supplier licensing
agreements, including the costs of obtaining and retaining these sponsorships and agreements, have varied and at
times increased greatly. If we are unable to maintain our current association with professional and collegiate
athletes, teams and leagues, or to do so at a reasonable cost, we could lose the on-field authenticity associated
with our products, and we may be required to modify and substantially increase our marketing investments. In
addition, because professional and collegiate athletics and other sporting events have been largely cancelled or
delayed in connection with the COVID-19 pandemic and future plans for these remain uncertain, we may not realize

the expected benefits of these relationships. As a result, our brand image, net revenues, expenses and profitability
could be materially adversely affected.

If we encounter problems with our distribution system, our ability to deliver our products to the market
could be adversely affected.

We rely on a limited number of distribution facilities for our product distribution. Our distribution facilities
utilize computer controlled and automated equipment, which means the operations are complicated and may be
subject to a number of risks related to security or computer viruses or malware, the proper operation of software
and hardware, power interruptions or other system failures.
In addition, because many of our products are
distributed from a limited number of
locations, our operations could also be interrupted by severe weather
conditions, floods, fires or other natural disasters in these locations, as well as labor or other operational difficulties
or interruptions, including public health crises or disease epidemics. For example, the current COVID-19 pandemic
may impede our ability to operate our distribution facilities at full capacity and may similarly impact our third-party
logistics providers. We maintain business interruption insurance, but it may not adequately protect us from the
adverse effects that could be caused by significant disruptions in our distribution facilities or from all types of events
causing such disruptions. Significant disruptions could lead to loss of customers or an erosion of our brand image.
In addition, our distribution capacity is dependent on the timely performance of services by third parties. This
includes the shipping of product
to and from our distribution facilities, as well as partnering with third-party
distribution facilities in certain regions where we do not maintain our own facilities. From time to time, certain of our
partners have experienced disruptions to their operations, including cyber-related disruptions. If we or our partners
encounter such problems, our results of operations, as well as our ability to meet customer expectations, manage
inventory, complete sales and achieve objectives for operating efficiencies could be materially adversely affected.

We rely significantly on information technology and any failure,
technology could harm our ability to effectively operate our business.

inadequacy or interruption of that

Our business and global operations rely on information technology. Our ability to effectively manage and
maintain our inventory and internal reports, and to ship products to customers and invoice them on a timely basis
depends significantly on our enterprise resource planning, warehouse management, and other information systems.
We also heavily rely on information systems to process financial and accounting information for financial reporting
purposes. Any of these information systems could fail or experience a service interruption for a number of reasons,
including computer viruses or malware, programming errors, hacking or other unlawful activities, disasters or our
failure to properly maintain system redundancy or protect, repair, maintain or upgrade our systems, and, although
we maintain business continuity plans, there can be no assurance that our business continuity plans, or those of our
vendors, will effectively resolve the issues in a timely manner or adequately protect us from the adverse effects that
could be caused by significant disruptions in our information systems. The failure of our information systems to
operate effectively or to integrate with other systems, or a breach in security of these systems could cause delays in
product fulfillment and reduced efficiency of our operations, which could negatively impact our financial results. If we
experience any significant disruption to our financial information systems that we are unable to mitigate, our ability
to timely report our financial results could be impacted, which could negatively impact our stock price. We also
communicate electronically throughout the world with our employees and with third parties, such as customers,
suppliers, vendors and consumers. A service interruption or shutdown could have a material adverse impact on our
operating activities. Remediation and repair of any failure, problem or breach of our key information systems could
require significant capital investments.

In addition, we interact with many of our consumers through our e-commerce website and our mobile
applications, and these systems face similar risk of interruption or cyberattack. Consumers increasingly utilize these
services to purchase our products and to engage with our digital community. If we are unable to continue to provide
consumers a user-friendly experience and evolve our platform to satisfy consumer preferences, the growth of our e-
commerce business and our net revenues may be negatively impacted. The performance of our digital business is
its products, applications and services and the underlying technical
dependent on reliable performance of
infrastructure, which incorporate complex software. If this software contains errors, bugs or other vulnerabilities
which impede or halt service, this could result in damage to our reputation and brand, loss of users or loss of
revenue.

We are implementing a global operating and information system, which involves risks and uncertainties
that could adversely affect our business.

Implementation of new information systems, particularly across global operations,

upgrade our systems and processes. The third and final phase of this implementation became operational in April
2020.
involves risks and
uncertainties. Any disruptions, delays, or deficiencies in the design, implementation or application of these systems
could result in increased costs, disruptions in our ability to effectively source, sell or ship our products, delays in the
collection of payment from our customers or adversely affect our ability to timely report our financial results, each of
which could materially adversely affect our business, results of operations, and financial condition.

Our future success is substantially dependent on the continued service of our senior management and
other key employees, and our continued ability to attract and retain highly talented new team members.

Our future success is substantially dependent on the continued service of our senior management,
particularly Kevin A. Plank, our founder, Executive Chairman and Brand Chief, Patrik Frisk, our Chief Executive
Officer and President, other top executives and key employees who have substantial experience and expertise in
our business, including product creation, innovation, sales, marketing, operational and other support personnel. The
loss of the services of our senior management or other key employees could make it more difficult to successfully
operate our business and achieve our business goals and could result in harm to key customer relationships, loss of
key information, expertise or know-how and unanticipated recruitment and training costs.

In addition, to profitably grow our business and manage our operations, we will need to continue to attract,
retain and motivate highly talented management and other employees with a range of skills, backgrounds and
experiences. Competition for employees in our industry is intense and we may experience difficulty in attracting the
personnel necessary to support the growth of our business. If we are unable to attract, assimilate and retain
management and other employees with the necessary skills, we may not be able to grow or successfully operate
our business and achieve our long-term objectives. In addition, we have invested significant time and resources in
building, maintaining and evolving our company culture and our values, which we believe to be critical to our future
success. Failure to maintain and continue to evolve our culture could negatively affect our ability to attract, retain
and motivate our employees and to achieve our long-term objectives.

Financial Risks

Our credit agreement contains financial covenants, and both our credit agreement and debt securities
contain other restrictions on our actions, which could limit our operational flexibility or otherwise adversely
affect our financial condition.

We have, from time to time, financed our liquidity needs in part from borrowings made under our credit
facility and the issuance of debt securities. Our Senior Notes limit our ability to, subject to certain significant
exceptions, incur secured debt and engage in sale leaseback transactions. Our amended credit agreement contains
negative covenants that, subject to significant exceptions limit our ability, among other things to incur additional
indebtedness, make restricted payments, sell or dispose of assets, pledge assets as security, make investments,
loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into transactions with
affiliates. In addition, during specified periods, we must maintain a certain leverage ratio and interest coverage ratio
as defined in the amended credit agreement. Our ability to continue to borrow amounts under our amended credit
agreement is limited by continued compliance with these financial covenants, and in the past we have amended our
credit agreement to provide certain relief from and revisions to our financial covenants for specified future periods
and provide us with sufficient access to liquidity during those periods. During certain quarters, our amended credit
agreement requires us to maintain a specified amount of minimum liquidity. If our cash flows and capital resources
are insufficient to maintain this liquidity level, we may need to take further actions to reduce our expenditures, and
potentially seek alternative sources of liquidity, including but not limited to accessing the capital markets, sale
leaseback transactions or other sales of assets, or other alternative financing measures. Failure to comply with
these operating or financial covenants could result from, among other things, changes in our results of operations or
general economic conditions. These covenants may restrict our ability to engage in transactions that would
otherwise be in our best interests. Failure to comply with any of the covenants under the amended credit agreement
or our Senior Notes could result in a default, which could negatively impact our access to liquidity.

In addition, the amended credit agreement includes a cross default provision whereby an event of default
under certain other debt obligations (including our debt securities) will be considered an event of default under the
amended credit agreement. If an event of default occurs, the commitments of the lenders under the amended credit
agreement may be terminated and the maturity of amounts owed may be accelerated. Our debt securities include a
cross acceleration provision which provides that the acceleration of certain other debt obligations (including our
credit agreement) will be considered an event of default under our debt securities and, subject to certain time and
notice periods, give bondholders the right to accelerate our debt securities.

We may need to raise additional capital to manage and grow our business, and we may not be able to raise
capital on terms acceptable to us or at all.

Managing and growing our business will require significant cash outlays and capital expenditures and
commitments. We have utilized cash on hand and cash generated from operations, accessed our credit facility and
issued debt securities as sources of liquidity. During the first and second quarter of Fiscal 2020, our cash generated
from operations was negatively impacted due to widespread temporary store closures as a result of the COVID-19
pandemic. In response, we amended our credit agreement to provide certain relief from and revisions to our
financial covenants for specified future periods and provide us with sufficient access to liquidity during those
periods.
In May 2020, we issued $500 million of Convertible Senior Notes and utilized the net proceeds to repay
amounts outstanding under our revolving credit facility, thereby increasing our borrowing capacity under that facility.
We also took a number of actions to preserve existing capital, including managing payments to vendors, allowing
extended payment terms to certain customers, reducing capital expenditures and managing inventory levels. As of
December 31, 2020, our cash and cash equivalents totaled $1.5 billion. However, if in future periods our cash on
hand, cash generated from operations and availability under our credit agreement are not sufficient to meet our
cash requirements, we will need to seek additional capital, potentially through debt or equity financing, to fund our
operations and future growth. Our ability to access the credit and capital markets in the future as a source of
liquidity, and the borrowing costs associated with such financing, are dependent upon market conditions and our
credit rating and outlook. Our credit ratings have been downgraded in the past, and we cannot assure that we will
be able to maintain our current ratings, which could increase our cost of borrowing in the future. In addition, equity
financing may be on terms that are dilutive or potentially dilutive to our stockholders, and the prices at which new
investors would be willing to purchase our securities may be lower than the current price per share of our common
stock. The holders of new securities may also have rights, preferences or privileges which are senior to those of
existing holders of common stock. If new sources of financing are required, but are insufficient or unavailable, we
will be required to modify our growth and operating plans based on available funding, if any, which would harm our
ability to grow our business.

In addition, the U.K. Financial Conduct Authority announced in 2017 that it intends to phase out LIBOR by
the end of 2021. Our credit agreement permits us to borrow based on an adjusted LIBOR rate, plus an applicable
margin. While the credit agreement provides for a mechanism for determining an alternative interest rate following
this phase out, uncertainty regarding alternative rates may make borrowing under our credit agreement or
refinancing our other indebtedness more expensive or difficult to achieve on terms we consider favorable.

Our operating results are subject to seasonal and quarterly variations in our net revenues and income from
operations, which could adversely affect the price of our publicly traded common stock.

We have experienced, and expect to continue to experience, seasonal and quarterly variations in our net
revenues and income or loss from operations. These variations are primarily related to the mix of our products sold
during the fall selling season, including our higher price cold weather products, along with a larger proportion of
higher margin direct-to-consumer sales. Our quarterly results may also vary based on the timing of customer orders.
The majority of our net revenues are historically generated during the last two quarters of the calendar year. Our
quarterly results of operations may also fluctuate significantly as a result of a variety of other factors, including,
among other things, the timing of marketing expenses and changes in our product mix. As a result of these
seasonal and quarterly fluctuations, we believe that comparisons of our operating results between different quarters
within a single year are not necessarily meaningful and that these comparisons cannot be relied upon as indicators
of our future performance. Any seasonal or quarterly fluctuations that we report in the future may not match the
expectations of market analysts and investors. This could cause the price of our publicly traded stock to fluctuate
significantly.

Our results of operations are affected by the performance of our equity investments, over which we do not
exercise control.

We maintain certain minority investments, and may in the future invest in additional minority investments,
which we account for under the equity method, and are required to recognize our allocable share of its net income
or loss in our consolidated financial statements. Our results of operations are affected by the performance of these
businesses, over which we do not exercise control, and our net income or loss has been negatively impacted by
losses realized by our Japanese licensee’s business. We are also required to regularly review our investments for
impairment, and an impairment charge may result from the occurrence of adverse events or management decisions
that impact the fair value or estimated future cash flows to be generated from our investments. During Fiscal 2020,
we further impaired our investment in our Japanese licensee and recognized a $7.1 million charge as a result, and
there is currently no carrying value associated with this investment. In addition, to the extent our Japanese licensee

continues to experience challenges in the performance of its business, we may not continue to realize the licensing
revenues from our Japanese licensee in line with its past results, which could negatively impact our net revenues
and results of operations. Furthermore, based on its financial performance, our ability to recover our investment in
the long term may be limited.

Our financial results could be adversely impacted by currency exchange rate fluctuations.

We generated approximately 31% of our consolidated net revenues outside the United States. As our
international business grows, our results of operations could be adversely impacted by changes in foreign currency
exchange rates. Revenues and certain expenses in markets outside of the United States are recognized in local
foreign currencies, and we are exposed to potential gains or losses from the translation of those amounts into U.S.
dollars for consolidation into our financial statements. Similarly, we are exposed to gains and losses resulting from
currency exchange rate fluctuations on transactions generated by our foreign subsidiaries in currencies other than
their local currencies. In addition, the business of our independent manufacturers may also be disrupted by currency
exchange rate fluctuations by making their purchases of raw materials more expensive and more difficult to finance.
As a result, foreign currency exchange rate fluctuations may adversely impact our results of operations. In addition,
we have previously designated cash flow hedges against certain forecasted transactions. If we determine that such
a transaction is no longer probable to occur in the time period we expected, we are required to de-designated the
hedging relationship and immediately recognize the derivative instrument gain or loss in our earnings. The ongoing
impacts of COVID-19 have caused and may continue to cause uncertainty in forecasted cash flows, which has
resulted and may continue to result in the de-designation of certain hedged transactions.

Legal, Regulatory and Compliance Risks

Our failure to comply with trade and other regulations could lead to investigations or actions by
government regulators and negative publicity.

importation, marketing and sale of our products are subject

to extensive
The labeling, distribution,
regulation by various federal agencies,
including the Federal Trade Commission, Consumer Product Safety
Commission and state attorneys general in the United States, as well as by various other federal, state, provincial,
local and international regulatory authorities in the locations in which our products are distributed or sold. If we fail to
comply with these regulations, we could become subject to significant penalties or claims or be required to recall
products, which could negatively impact our results of operations and disrupt our ability to conduct our business, as
well as damage our brand image with consumers. In addition, the adoption of new regulations or changes in the
interpretation of existing regulations may result in significant unanticipated compliance costs or discontinuation of
product sales and may impair the marketing of our products, resulting in significant loss of net revenues.

Our international operations are also subject to compliance with the U.S. Foreign Corrupt Practices Act, or
FCPA, and other anti-bribery laws applicable to our operations, as well as U.S. sanctions laws. Although we have
policies and procedures to address compliance with the FCPA and similar laws and sanctions requirements, there
can be no assurance that all of our employees, contractors, agents and other partners will not take actions in
violations of our policies or that our procedures will effectively mitigate against such risks. Any such violation could
subject us to sanctions or other penalties that could negatively affect our reputation, business and operating results.

Data security or privacy breaches could damage our reputation, cause us to incur additional expense,
expose us to litigation and adversely affect our business and results of operations.

We collect sensitive and proprietary business information as well as personally identifiable information in
connection with digital marketing, digital commerce, our in-store payment processing systems and our digital
business (including our Connected Fitness business). In particular, in our digital business we collect and store a
variety of information regarding our users, and allow users to share their personal information with each other and
with third parties. We also rely on third parties for the operation of certain of our e-commerce websites, and do not
control these service providers. Hackers and data thieves are increasingly sophisticated and operate large scale
and complex automated attacks. Any breach of our data security or that of our service providers or cyber fraud
incident could result in an unauthorized release or transfer of customer, consumer, vendor, user or employee
information, or the loss of money, valuable business data or cause a disruption in our business. These events could
give rise to unwanted media attention, damage our
reputation, damage our customer, consumer or user
relationships and result in lost sales, fines or lawsuits. We may also be required to expend significant capital and
other resources to protect against or respond to or alleviate problems caused by a security breach, which could
negatively impact our results of operations. Like other companies in our industry, we have in the past experienced,
and we expect to continue to experience, cyberattacks, including phishing, cyber fraud incidents and other attempts

to breach, or gain unauthorized access to, our systems. These attempted attacks have increased as COVID-19 has
progressed and many employees continue to work from home. To date, these attacks have not had a material
impact on our operations, but there can be no assurance that they will not have an impact in the future.

We must also comply with increasingly complex and evolving regulatory standards throughout the world
enacted to protect personal information and other data. Compliance with existing, proposed and forthcoming laws
and regulations can be costly and could negatively impact our profitability. For example, the European Union
adopted the General Data Protection Regulation (“GDPR”), which became effective in May 2018, and California
passed the California Consumer Privacy Act (“CCPA”), which became effective in January 2020. These laws impose
additional obligations on companies regarding the handling of personal data and provide certain individual privacy
rights to persons whose data is stored. In addition, data privacy laws and regulations continue to evolve. For
example, in 2016, the European Union and the United States agreed to a framework for data transferred from the
European Union to the United States, called the Privacy Shield. However, in July 2020 the Privacy Shield was
invalidated by the Court of Justice of the European Union (“CJEU”) and the alternative basis upon which companies
can continue to transfer data remains subject to continued regulatory and judicial scrutiny. As requirements continue
to evolve, it may be costly for us to adjust our operations to comply with new requirements. Failure to comply with
these regulatory standards could result in a violation of data privacy laws and regulations and subject us to legal
proceedings against us by governmental entities or others, imposition of fines by governmental authorities, negative
publicity and damage to our brand image, all of which could have a negative impact on our profitability.

Changes in tax laws and unanticipated tax liabilities could adversely affect our effective income tax rate and
profitability.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective
income tax rate could be adversely affected in the future by a number of factors, including changes in the mix of
earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities,
changes in tax laws and regulations or their interpretations and application, the outcome of income tax audits in
various jurisdictions around the world, and any repatriation of non-U.S. earnings for which we have not previously
provided applicable foreign withholding taxes, certain U.S. state income taxes, or foreign exchange rate impacts.
We are unable to predict what impact future tax reform efforts may have on our results of operations, including as a
result of any changes enacted during the new U.S. presidential administration.

Additionally, we engage in multiple types of intercompany transactions, and our allocation of profits and
losses among us and our subsidiaries through our intercompany transfer pricing arrangements are subject to review
by the Internal Revenue Service and foreign tax authorities. Although we believe we have clearly reflected the
economics of these transactions and the proper documentation is in place, tax authorities may propose and sustain
adjustments that could result
the Organization for
Economic Co-operation and Development and many of the countries in which we do business continue to evaluate
changes to tax laws which could significantly impact the allocation of profits and losses among us and our
subsidiaries and impact our mix of earnings in countries with differing statutory rates.

in changes that may impact our tax provision. Moreover,

We regularly assess all these matters to determine the adequacy of our tax provision, which is subject to

significant judgment.

Failure to protect our intellectual property rights, or our conflict with the rights of others, could damage our
brand, weaken our competitive position and negatively impact our results of operations.

Our success depends in large part on our brand image. We currently rely on a combination of copyright,
trademark, trade dress, patent and unfair competition laws, confidentiality procedures and licensing arrangements
to establish and protect our intellectual property rights. The steps taken by us to protect our proprietary rights may
not be adequate to prevent infringement of our trademarks and proprietary rights by others, including imitation of our
products and misappropriation of our brand. In addition, intellectual property protection may be unavailable or
limited in some jurisdictions. In addition, intellectual property rights in the technology, fabrics and processes used to
manufacture the majority of our products are generally owned or controlled by our suppliers and are generally not
unique to us, and our current and future competitors are able to manufacture and sell products with performance
characteristics and fabrications similar to certain of our products.

From time to time, we have brought claims relating to intellectual property rights of others or have
discovered unauthorized products in the marketplace that are either counterfeit reproductions of our products or
If we fail to protect, maintain and enforce our
unauthorized irregulars that do not meet our quality control standards.
In
intellectual property rights, the value of our brand could decrease and our competitive position may suffer.

addition, from time to time others may seek to enforce infringement claims against us. Successful
infringement
claims against us could result in significant monetary liability or prevent us from selling or providing some of our
products. The resolution of such claims may require us to redesign our products, license rights belonging to third
parties or cease using those rights altogether. Any of these events could harm our business and have a material
adverse effect on our results of operations and financial condition.

We are the subject of a number of ongoing legal proceedings that have resulted in significant expense, and
adverse developments in our ongoing proceedings and/or future legal proceedings could have a material
adverse effect on our business, reputation, financial condition, results of operations or stock price.

intellectual property, employment, securities laws, disclosures,

investigations, arbitration proceedings, audits, regulatory inquiries and similar actions,

We are currently involved in a variety of litigation, investigations and other legal matters and may be subject
to additional
including
tax,
matters related to commercial disputes,
accounting, class action and product liability, as well as trade, regulatory and other claims related to our business
and our industry, which we refer to collectively as legal proceedings. For example, we are subject to an ongoing
securities class action proceeding regarding our prior disclosures (including regarding the use of "pull forward" sales
and the investigations referred to below) and derivative complaints regarding related matters, as well as past related
party transactions, among other proceedings. Refer to Note 10 to our Consolidated Financial Statements of this
Annual Report on Form 10-K for additional information regarding these specific matters. In addition, as previously
disclosed in November 2019, we have been responding to requests for documents and information from the U.S.
Securities and Exchange Commission (“SEC”) and Department of Justice (“DOJ”) beginning with submissions to the
SEC in July 2017, and in July 2020 we and two members of our senior management received “Wells Notices” from
the SEC relating to our disclosures covering the third quarter of 2015 through the period ending December 31,
2016, regarding the use of “pull forward” sales in connection with revenue during those quarters. In the course of
cooperating with the SEC and DOJ requests, we have reviewed our disclosures and we continue to believe they
were appropriate. However, we cannot predict the outcome of any particular proceeding, or whether ongoing
investigations, including the SEC and DOJ investigations, will be resolved favorably or ultimately result in charges or
material damages, fines or other penalties, enforcement actions, bars against serving as an officer or director, or
practicing before the SEC, or civil or criminal proceedings against us or members of our senior management.

Legal proceedings in general, and securities and class action litigation and regulatory investigations in
particular, can be expensive and disruptive. Our insurance may not cover all claims that may be asserted against
us, and we are unable to predict how long the legal proceedings to which we are currently subject will continue. An
unfavorable outcome of any legal proceeding may have an adverse impact on our business, financial condition and
results of operations or our stock price. Any proceeding could negatively impact our reputation among our
customers or our shareholders. Furthermore, publicity surrounding ongoing legal proceedings, even if resolved
favorably for us, could result in additional legal proceedings against us, as well as damage our brand image.

Risks Related to our Common Stock

Kevin Plank, our Executive Chairman and Brand Chief, controls the majority of the voting power of our
common stock.

Our Class A common stock has one vote per share, our Class B common stock has 10 votes per share and
our Class C common stock has no voting rights (except in limited circumstances). Our Executive Chairman and
Brand Chief, Kevin A. Plank, beneficially owns all outstanding shares of Class B common stock. As a result, Mr.
Plank has the majority voting control and is able to direct the election of all of the members of our Board of Directors
and other matters we submit to a vote of our stockholders. Under certain circumstances, the Class B common stock
automatically converts to Class A common stock, which would also result in the conversion of our Class C common
stock into Class A common stock. As specified in our charter,
these circumstances include when Mr. Plank
beneficially owns less than 15.0% of the total number of shares of Class A and Class B common stock outstanding,
if Mr. Plank were to resign as an Approved Executive Officer of the Company (or was otherwise terminated for
cause) or if Mr. Plank sells more than a specified number of any class of our common stock within a one-year
period. This concentration of voting control may have various effects including, but not limited to, delaying or
preventing a change of control or allowing us to take action that the majority of our stockholders do not otherwise
support. In addition, we utilize shares of our Class C common stock to fund employee equity incentive programs
and may do so in connection with future stock-based acquisition transactions, which could prolong the duration of
Mr. Plank’s voting control.

The trading prices for our Class A and Class C common stock may differ and fluctuate from time to time.

The trading prices of our Class A and Class C common stock may differ and fluctuate from time to time in
response to various factors, some of which are beyond our control. These factors may include, among others,
overall performance of the equity markets and the economy as a whole, variations in our quarterly results of
operations or those of our competitors, our ability to meet our published guidance and securities analyst
expectations, or recommendations by securities analysts. In addition, our non-voting Class C common stock has
traded at a discount to our Class A common stock, and there can be no assurance that this will not continue.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

The following includes a summary of the principal properties that we own or lease as of the end of Fiscal

2020.

Our principal executive and administrative offices are located at an office complex in Baltimore, Maryland,
the majority of which we own and a portion of which we lease. For each of our Europe, Latin America and Asia
Pacific headquarters, we lease office space.

We lease our primary distribution facilities, which are located in Sparrows Point, Maryland, Mount Juliet,
Tennessee and Rialto, California. Combined, these facilities represent approximately 3.5 million square feet of
facility space. These leases expire at various dates, with the earliest lease termination date through May 2023. We
believe our distribution facilities and space available through our third-party logistics providers will be adequate to
meet our short term needs.

In addition, as of December 31, 2020, we leased 439 brand and factory house stores located primarily in
the United States, China, Mexico, Korea, Chile, and Canada with lease end dates in 2021 through 2035. We also
lease additional office space for sales, quality assurance and sourcing, marketing, and administrative functions. We
anticipate that we will be able to extend these leases that expire in the near future on satisfactory terms or relocate
to other locations.

ITEM 3.

LEGAL PROCEEDINGS

From time to time, we have been involved in litigation and other proceedings, including matters related to
commercial disputes and intellectual property, as well as trade, regulatory and other claims related to our business.
Refer to Note 10 to our Consolidated Financial Statements for information on certain legal proceedings, which is
incorporated by reference herein.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Under Armour’s Class A Common Stock and Class C Common Stock are traded on the New York Stock
Exchange (“NYSE”) under the symbols “UAA” and "UA", respectively. As of January 31, 2021, there were 1,765
record holders of our Class A Common Stock, 5 record holders of Class B Convertible Common Stock which are
beneficially owned by our Executive Chairman and Brand Chief, Kevin A. Plank, and 1,170 record holders of our
Class C Common Stock.

Our Class A Common Stock was listed on the NYSE under the symbol “UA” until December 6, 2016 and
under the symbol "UAA" since December 7, 2016. Prior to November 18, 2005, there was no public market for our
Class A Common Stock. Our Class C Common Stock was listed on the NYSE under the symbol “UA.C” since its
initial issuance on April 8, 2016 and until December 6, 2016 and under the symbol "UA" since December 7, 2016.

Dividends

No cash dividends were declared or paid during Fiscal 2020 or 2019 on any class of our common stock. We
currently anticipate we will retain any future earnings for use in our business. As a result, we do not anticipate
paying any cash dividends in the foreseeable future. In addition, we may be limited in our ability to pay dividends to
our stockholders under our credit facility. Refer to “Financial Position, Capital Resources and Liquidity” within
Management’s Discussion and Analysis and Note 9 to the Consolidated Financial Statements for a further
discussion of our credit facility.

Stock Compensation Plans

The following table contains certain information regarding our equity compensation plans.

Plan Category

Equity compensation plans
approved by security holders

Equity compensation plans not
approved by security holders

Class of
Common
Stock

Class A

Class C

Class A

Class C

Number of
securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)

Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)

Number of securities
remaining
available for future
issuance under equity
compensation plans
(excluding securities
reflected in column (a))
(c)

1,352,762

10,621,929

91,473

92,119

34.89

18.24

—

12,794,691

26,827,123

—

The number of securities to be issued upon exercise of outstanding options, warrants and rights issued
under equity compensation plans approved by security holders includes 1.4 million Class A and 10.7 million Class C
options, restricted stock units and deferred stock units issued to employees, non-employees and directors of Under
Armour. These restricted stock units and deferred stock units are not included in the weighted average exercise
price calculation above. The number of securities remaining available for future issuance includes 10.1 million
shares of our Class A Common Stock and 24.9 million shares of our Class C Common Stock under our Third
Amended and Restated 2005 Omnibus Long-Term Incentive Plan (“2005 Stock Plan”) and 2.7 million of our Class A
Common Stock and 2.0 million shares of our Class C Common Stock under our Employee Stock Purchase Plans. In
addition to securities issued upon the exercise of stock options, warrants and rights, the 2005 Stock Plan authorizes
the issuance of restricted and unrestricted shares of our Class A and C Common Stock and other equity awards.
Refer to Note 15 to the Consolidated Financial Statements for information required by this Item regarding the
material features of each plan.

The number of securities issued upon exercise of outstanding options, warrants and rights issued under
equity compensation plans not approved by security holders includes 91.5 thousand shares of our Class A Common
Stock and 92.1 thousand shares of our Class C Common Stock issued in connection with the delivery of shares
pursuant to deferred stock units granted to certain of our marketing partners. These deferred stock units are not
included in the weighted average exercise price calculation above. The deferred stock units are issued to certain of
our marketing partners in connection with their entering into endorsement and other marketing services agreements

with us. The terms of each agreement set forth the number of deferred stock units to be granted and the delivery
dates for the shares, which range over a multi-year period, depending on the contract. The deferred stock units are
non-forfeitable.

Stock Performance Graph

The stock performance graph below compares cumulative total return on Under Armour, Inc. Class A
Common Stock to the cumulative total return of the S&P 500 Index and S&P 500 Apparel, Accessories and Luxury
Goods Index from December 31, 2015 through December 31, 2020. The graph assumes an initial investment of
$100 in Under Armour and each index as of December 31, 2015 and reinvestment of any dividends. The
performance shown on the graph below is not intended to forecast or be indicative of possible future performance of
our common stock.

Under Armour, Inc.

S&P 500

S&P 500 Apparel, Accessories &
Luxury Goods

12/31/2015

12/31/2016

12/31/2017

12/31/2018

12/31/2019

12/31/2020

$ 100.00 $

69.76 $

34.65 $

42.43 $

51.87 $

41.23

$ 100.00 $ 111.96 $ 136.40 $ 130.42 $ 171.49 $ 203.04

$ 100.00 $

88.72 $ 106.86 $

90.03 $ 110.94 $

99.45

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data is qualified by reference to, and should be read in conjunction with, the
Consolidated Financial Statements, including the notes thereto, and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” appearing elsewhere in this Annual Report on Form 10-K. The
selected Consolidated Statements of Operations and Balance Sheets data for each of the five fiscal years indicated
below has been derived from our audited Consolidated Financial Statements.

(In thousands, except per share amounts)
Net revenues

Cost of goods sold

Gross profit

2020

2019

2018

2017

2016

$4,474,667 $5,267,132 $5,193,185 $4,989,244 $4,833,338

2,314,572

2,796,599

2,852,714

2,737,830

2,584,724

2,160,095

2,470,533

2,340,471

2,251,414

2,248,614

Selling, general and administrative expenses

2,171,934

2,233,763

2,182,339

2,099,522

1,831,143

Year Ended December 31,

Restructuring and impairment charges

601,599

—

183,149

(25,017)

(33,568)

(9,203)

(67,788)

(20,552)

934

124,049

27,843

—

417,471

(34,538)

(26,434)

(3,614)

(10,309)

37,951

—

(2,755)

388,282

131,303

—

(46,302)

(48,260)

256,979

Income (loss) from operations

Interest expense, net

Other income (expense), net

(613,438)

236,770

(47,259)

(21,240)

168,153

(5,688)

Income (loss) before income taxes

(492,544)

209,842

Income tax expense (benefit)

Income (loss) from equity method investment

Net income (loss)

Adjustment payment to Class C capital

stockholders

Net income (loss) available to all
stockholders

49,387

(7,246)

(549,177)

70,024

(47,679)

92,139

—

59,000

$ (549,177) $

92,139 $ (46,302) $ (48,260) $ 197,979

Net income available per common share

Basic net income (loss) per share of Class A
and B common stock
Basic net income (loss) per share of Class C
common stock
Diluted net income (loss) per share of Class
A and B common stock
Diluted net income (loss) per share of Class
C common stock

(1.21) $

0.20 $

(0.10) $

(0.11) $

0.45

(1.21) $

0.20 $

(0.10) $

(0.11) $

0.72

(1.21) $

0.20 $

(0.10) $

(0.11) $

0.45

(1.21) $

0.20 $

(0.10) $

(0.11) $

0.71

Weighted average common shares outstanding Class A and B common stock

Basic

Diluted

222,927

222,532

223,206

221,001

219,254

217,707

221,944

Weighted average common shares outstanding Class C common stock

Basic

Diluted

231,162

228,431

231,068

224,814

221,475

218,623

222,904

Dividends declared

— $

59,000

(In thousands)
Cash and cash equivalents

Working capital (1)

Inventories

Total assets (2)

At December 31,

2020

2019

2018

2017

2016

$1,517,361 $ 788,072 $ 557,403 $ 312,483 $ 250,470

$1,809,699 $1,280,200 $1,277,651 $1,277,304 $1,279,337

$ 895,974 $ 892,258 $1,019,496 $1,158,548 $ 917,491

$5,030,628 $4,843,531 $4,245,022 $4,006,367 $3,644,331

Total debt, including current maturities

$1,003,556 $ 592,687 $ 728,834 $ 917,046 $ 817,388

Total stockholders’ equity

$1,675,993 $2,150,087 $2,016,871 $2,018,642 $2,030,900

(1) Working capital is defined as current assets minus current liabilities.
(2) As a result of the adoption of ASU 2016-02, Leases (Topic 842), on January 1, 2019, the selected financial data for fiscal year
2019 reflects the recognition of lease assets and liabilities for operating leases with terms of more than twelve months. Prior
period amounts were not adjusted and continue to be reported in accordance with our historic accounting policies.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The information contained in this section should be read in conjunction with our Consolidated Financial
Statements and related notes and the information contained elsewhere in this Form 10-K under the captions “Risk
Factors,” “Selected Financial Data,” and “Business.”

This Annual Report on Form 10-K,

including this Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A"), contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Securities Exchange Act of 1934, as
amended (the Exchange Act), and Section 27A of the U.S. Securities Act of 1933, as amended ("the Securities
Act"), and is subject to the safe harbors created by those sections. All statements other than statements of historical
facts are statements that could be deemed forward-looking statements.

The following MD&A is intended to help readers understand our results of operations and financial
condition, and is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial
Statements and the accompanying Notes to our Consolidated Financial Statements under Part II, Item 8 of this
Annual Report on Form 10-K. All dollar and percentage comparisons made herein refer to the year ended
December 31, 2020 ("Fiscal 2020") compared with the year ended December 31, 2019 ("Fiscal 2019"), unless
otherwise noted. Please refer to Part II, Item 7 of our Annual Report on Form 10-K for Fiscal 2019, filed with the
Securities Exchange Commission ("SEC") on February 26, 2020, for a comparative discussion of our Fiscal 2019
financial results as compared to year ended December 31, 2018 ("Fiscal 2018"). See "Forward-looking statements."

Overview

We are a leading developer, marketer and distributor of branded performance apparel, footwear and
accessories. The brand’s moisture-wicking fabrications are engineered in many different designs and styles for wear
in nearly every climate to provide a performance alternative to traditional products. Our products are sold worldwide
and worn by athletes at all levels, from youth to professional, on playing fields around the globe, as well as by
consumers with active lifestyles. Our digital strategy is focused on engaging with these consumers and increasing
awareness and sales of our products.

We believe that our net revenues have been driven by a growing interest in performance products and the
strength of the Under Armour brand in the marketplace. Our long-term growth strategy is focused on increased
sales of our products through ongoing product innovation, investment in our distribution channels and international
expansion. While we plan to continue to invest in growth, we also plan to improve efficiencies throughout our
business as we seek to gain scale through our operations and return on our investments.

Fiscal 2020 Performance

Financial highlights for Fiscal 2020 as compared to Fiscal 2019 include:

•

Net revenues decreased 15%.

• Wholesale revenues decreased 25% and direct-to-consumer revenues increased 2%, driven by

growth in our e-commerce business.

•

Apparel revenue decreased 17%. Footwear revenue declined 14% and accessories revenue was
relatively flat.

Revenue in our North America segment declined 19%. Revenue in our Asia-Pacific, EMEA and
Latin America segments decreased 1%, 4% and 16%, respectively.

• Gross margin increased 140 basis points.

•

Selling, general and administrative expense decreased 3%.

A large majority of our products are sold in North America; however, we believe our products appeal to
athletes and consumers around the globe. Internationally, our net revenues are generated primarily from a mix of
sales to retailers and distributors in our wholesale channel and sales through our direct-to-consumer channels.

We believe there is an increasing recognition of the health benefits of an active lifestyle. We believe this
trend provides us with an expanding consumer base for our products. We also believe there is a continuing shift in
consumer demand from traditional non-performance products to performance products, which are intended to
provide better performance by wicking perspiration away from the skin, helping to regulate body temperature and

enhancing comfort. We plan to continue to grow our business over the long term through increased sales of our
apparel, footwear and accessories, expansion of our wholesale distribution, growth in our direct-to-consumer sales
channel and expansion in international markets.

Although we believe these trends will facilitate our growth, we also face potential challenges that could limit
our ability to take advantage of these opportunities or negatively impact our financial results, including, among
others, the risk of general economic or market conditions that could affect consumer spending and the financial
health of our retail customers. For example, recent and ongoing developments regarding COVID-19 may negatively
impact our results of operations. Additionally, we may not be able to successfully execute on our long-term
strategies, or successfully manage the increasingly complex operations of our global business effectively. Although
we have implemented restructuring plans in the past and may implement additional plans in the future, we may not
fully realize the expected benefits of these plans or other operating or cost-saving initiatives. In addition, we may not
consistently be able to anticipate consumer preferences and develop new and innovative products that meet
changing preferences in a timely manner. Furthermore, our industry is very competitive, and competition pressures
could cause us to reduce the prices of our products or otherwise affect our profitability. We also rely on third-party
suppliers and manufacturers outside the U.S. to provide fabrics and to produce our products, and disruptions to our
supply chain could harm our business. For a more complete discussion of the risks facing our business, refer to the
“Risk Factors” section included in Item 1A.

COVID-19

During the first quarter of Fiscal 2020, we took action to close substantially all of our brand and factory
house stores based on regional conditions, a majority of which remained closed into the second quarter of Fiscal
2020. By the end of the third quarter of Fiscal 2020, substantially all of our brand and factory house stores were re-
opened. As pandemic conditions worsened globally during the fourth quarter of Fiscal 2020, we again closed certain
stores based on regional conditions, particularly in EMEA and Latin America. The following is a summary of our
owned and operated store closures and their status throughout Fiscal 2020 and as of the end of January 2021:

•

North America: Beginning in mid-March we closed all of our stores in the North America operating segment,
which remained closed through the end of April. We began a progressive re-opening of our stores in May
and more than 85% of our stores were open by the end of June. As of the end of September 2020, all of our
stores were open and approximately 95% of our stores were open as of the end of January 2021.

EMEA: Beginning in mid-March we closed all of our stores in the EMEA operating segment, of which, over
65% remained closed through the end of April. We continued the re-opening of our stores in May and more
than 95% of the stores were open at the end of June. As of the end of September 2020, all of our stores
were open, however, in the fourth quarter we had to close almost 60% of our stores based on regional
conditions. As of the end of January 2021, only 25% of our stores were open.

Asia-Pacific: Stores in China were closed from late-January through early-March, when a slowly
progressive re-opening process started. Stores in the remainder of the Asia-Pacific operating segment were
also closed from time to time based on local conditions. More than 80% of our stores were open by the end
of April, and by the end of June 2020 more than 95% of the stores were open and continued to be open
until the end of September 2020. As of the end of January 2021, approximately 90% of our stores were
open.

Latin America: Beginning in mid-March, we closed all of our stores in the Latin America operating segment,
which remained closed in April and through the end of May. We began a progressive re-opening of stores in
June, and more than 25% of our stores were open by the end of June, and by the end of September 2020
approximately 85% of our stores remained open. However, in the fourth quarter, we had to close certain
stores based on regional conditions, and approximately 55% of our stores were open as of the end of
January 2021.

The discussion above reflects the status of our owned and operated stores through the end of January 2021,
however, depending on the progression of COVID-19, stores in certain regions may close from time to time.

Additionally, throughout this time, many of our wholesale customers also closed their stores or operated
them at limited capacity. As this pandemic progressed, we estimated that, in mid-May, approximately 80% of

locations where our products are sold were closed. By the end of May and throughout June, our owned and partner
doors and those of our wholesale customers began reopening, though they continued to operate at limited capacity
and experienced significantly decreased traffic. By the end of June, we estimated that over 90% of our owned and
partner doors had reopened, and most of our wholesale customers had also reopened their stores. However, in the
fourth quarter our owned and partners doors began to close from time to time based on regional conditions. While
store closures significantly impacted sales throughout Fiscal 2020, since the beginning of the second quarter, we
experienced significant growth in our global e-commerce business. Although e-commerce sales represented a
higher portion of our overall business in Fiscal 2020, sales in this channel have historically represented a small
percentage of our total revenue. For example,
in Fiscal 2020 sales through our direct-to-consumer channel
represented 41% of net revenues, with our e-commerce business representing approximately 47% of the total
direct-to-consumer business.

Our business operations and financial performance in Fiscal 2020 were materially impacted by the
developments discussed above,
including decreases in net revenue and decreases in overall profitability as
compared to the prior year. These developments further required us to recognize certain long-lived asset and
goodwill impairment charges, discussed in further detail below, and record valuation allowances on the majority of
our deferred tax assets and recognize impairment on certain equity method investments.

In addition to the impacts on our sales outlined above, this pandemic has also impacted the operations of
our distribution centers, our third-party logistics providers and our manufacturing and supplier partners, including
through the closure or reduced capacity of facilities and operational changes to accommodate social distancing.
Depending on the progression of COVID-19, we may experience further disruptions or increased operational and
logistics costs throughout our supply chain which could negatively impact our ability to obtain inventory or service
our customers.

As we navigated these unprecedented circumstances, we continued to focus on preserving our liquidity and
managing our cash flows through certain preemptive actions designed to enhance our ability to meet our short-term
liquidity needs, including amending our credit agreement to provide temporary relief from or revisions to certain of
our financial covenants in the near-term, providing us with improved access to liquidity during this time period and
completing a sale of $500 million of Convertible Senior Notes. Additional actions include, among others, reductions
to our discretionary spending and changes to our investment strategies, negotiating payment terms with our
vendors, including revised lease terms with landlords in the form of rent deferrals or rent waivers, reductions in
compensation costs,
layoffs and decreases in incentive
compensation, and limiting certain marketing and capital expenditures. Further, in connection with global legislation,
including the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, we recognized certain incentives
totaling $9.0 million for Fiscal 2020. These incentives were recorded as a reduction of the associated costs which
we incurred within selling, general and administrative expenses in the Consolidated Statements of Operations.

including through temporary reductions in pay,

We do expect the pandemic to continue to have a material impact on our financial condition, results of
operations and cash flows from operations into 2021 as compared to the end of 2020. Specifically, we experienced
timing impacts from COVID-19, related to customer order flow and changes in supply chain timing, which resulted in
more planned spring product deliveries shifting from the fourth quarter of 2020 to early 2021. Further, we could
experience material impacts, in addition to those noted above, including, but not limited to, increased sales-related
reserves, increased charges from allowance for doubtful accounts, charges from adjustments of the carrying
amount of inventory, increased cost of product, costs to alter production plans, changes in the designation of our
hedging instruments, volatility in our effective tax rate and impacts to cash flows from operations due to delays in
cash receipts from customers. The extent of the impact of the COVID-19 pandemic on our operational and financial
performance depends on future developments outside of our control, including the duration and spread of the
pandemic and related actions taken by federal, state and local government officials, and international governments
to prevent disease spread and the pace of vaccination efforts. Given that the current circumstances are dynamic
and highly uncertain, we cannot reasonably estimate the impact of future store closures and shopping behaviors,
including the related impact on store traffic patterns, conversion or overall consumer demand. For a more complete
discussion of the COVID-19 related risks facing our business, refer to the “Risk Factors” section included in Item 1A.

Segment Presentation and Marketing

2020 Restructuring

On March 31, 2020, our Board of Directors approved a restructuring plan ("2020 restructuring plan")
designed to rebalance our cost base to further improve profitability and cash flow generation. We identified further
opportunities and on September 2, 2020, our Board of Directors approved a $75 million increase to the restructuring
plan, resulting in an updated 2020 restructuring plan of approximately $550 million to $600 million of total estimated
pre-tax restructuring and related charges.

The restructuring and related charges primarily consist of up to approximately:

•

$219 million of cash restructuring charges, comprised of up to: $61 million in facility and lease termination
costs, $30 million in employee severance and benefit costs, and $128 million in contract termination and
other restructuring costs; and

$381 million of non-cash charges comprised of an impairment of $291 million related to our New York City
flagship store and $90 million of intangibles and other asset related impairments.

We recorded $472.7 million and $183.1 million of restructuring and related impairment charges for Fiscal
2020 and Fiscal 2018, respectively. There were no restructuring charges incurred during Fiscal 2019. The summary
of the costs recorded during Fiscal 2020 as well as our current estimates of the amount expected to be incurred in
connection with the 2020 restructuring plan is as follows:

Restructuring and
related impairment
charges recorded

Estimated restructuring and related Impairment
charges (1)

Year ended December
31, 2020 (A)

Remaining to be
incurred (B)

Total (A+B)

(In thousands)

Costs recorded in cost of goods sold:

Contract-based royalties

Inventory write-offs

Total costs recorded in cost of goods sold

Costs recorded in restructuring and impairment
charges:

Property and equipment impairment

Intangible asset impairment

Right-of-use asset impairment

Employee related costs

Contract exit costs (2)

Other asset write off

Other restructuring costs

11,608

768

12,376

29,280

4,351

293,495

28,579

79,008

13,074

12,564

—

3,400

8,098

—

1,421

89,992

15,926

8,436

Total costs recorded in restructuring and related
impairment charges

Total restructuring and impairment charges

460,351

472,727 $

123,873

127,273 $

(1) Estimated restructuring and related impairment charges to be incurred reflect the high-end of the range of the estimated
remaining charges expected to be recorded by us in connection with the restructuring plan.

(2) Contract exit costs are primarily comprised of proposed lease exits of certain brand and factory house stores and office
facilities, and proposed marketing and other contract exits.

All restructuring and related impairment charges are included in our Corporate Other non-operating
segment, of which $397.6 million are North America related, $14.4 million are EMEA related, $14.9 million are Latin
America related, $6.8 million are Asia-Pacific related and $4.6 million are Connected Fitness related for Fiscal 2020.

The lease term for our New York City flagship store commenced on March 1, 2020 and an operating lease
right-of-use ("ROU") asset and corresponding operating lease liability of $344.8 million was recorded on our
Consolidated Balance Sheet. In March 2020, as a part of the 2020 restructuring plan, we made the strategic
decision to forgo the opening of our New York City flagship store and the property is actively being marketed for
sublease. Accordingly, in the first quarter of 2020, we recognized a ROU asset impairment of $290.8 million,
reducing the carrying value of the lease asset to its estimated fair value. Fair value was estimated using an income-

11,608

4,168

15,776

37,378

4,351

293,495

30,000

169,000

29,000

21,000

584,224

600,000

approach based on management's forecast of future cash flows expected to be derived from the property based on
current sublease market rent. Rent expense or sublease income related to this lease will be recorded within other
income (expense) on the Consolidated Statements of Operations.

These charges require us to make certain judgements and estimates regarding the amount and timing of
restructuring and related impairment charges or recoveries. The estimated liability could change subsequent to its
recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an
evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate as new
or updated information becomes available.

Long-Lived Asset Impairment

As a result of the impacts of COVID-19, we determined that sufficient indicators existed to trigger the
performance of an interim long-lived asset impairment analysis. We performed undiscounted cash flow analyses on
our long-lived assets, including retail stores at an individual store level. Based on these undiscounted cash flow
analyses, we determined that certain long-lived assets had net carrying values that exceeded their estimated
undiscounted future cash flows. We estimated the fair values of these long-lived assets based on their market rent
assessments or discounted cash flows. We compared these estimated fair values to the net carrying values and
recognized $89.7 million of long-lived asset impairment charges for Fiscal 2020. There were no long-lived asset
impairment charges for Fiscal 2019 and Fiscal 2018. The long-lived impairment charge was recorded within
restructuring and impairment charges on the Consolidated Statements of Operations and as a reduction to the
related asset balances on the Consolidated Balance Sheets. The long-lived asset impairment charges are included
within the Company's operating segments as follows: $47.6 million recorded in North America, $23.0 million
recorded in Asia-Pacific, $13.3 million recorded in Latin America, and $5.8 million recorded in EMEA for Fiscal 2020.

The significant estimates used in the fair value methodology, which are based on Level 3 inputs, include:
management's expectations for future operations and projected cash flows, including net revenue, gross profit and
operating expenses and market conditions, including estimated market rent.

Additionally, we recognized $290.8 million of long-lived asset impairment charges related to our New York
City flagship store, which was recorded in connection with our 2020 restructuring plan for Fiscal 2020. Refer to the
2020 Restructuring section above for a further discussion of the restructuring and related impairment charges.

Goodwill Impairment

As a result of the impacts of COVID-19, we determined that sufficient indicators existed to trigger an interim
goodwill impairment analysis for all of the Company’s reporting units as of March 31, 2020. In the first quarter of
Fiscal 2020, we performed discounted cash flow analyses and determined that the estimated fair values of the Latin
America reporting unit and the Canada reporting unit within the North America operating segment no longer
exceeded its carrying value and resulted in an impairment of goodwill. We recognized goodwill impairment charges
impairment charge was recorded within
of $51.6 million for Fiscal 2020 for these reporting units. The goodwill
restructuring and impairment charges on the Consolidated Statements of Operations and as a reduction to the
goodwill balance on the Consolidated Balance Sheets. There were no triggering events or goodwill
impairment
charges recorded during the remainder of Fiscal 2020. The goodwill
impairment charges are included with our
operating segments as follows: $15.4 million recorded in North America and $36.2 million recorded in Latin America
for Fiscal 2020.

The determination of our reporting units' fair value includes assumptions that are subject to various risks
and uncertainties. The significant estimates used in the discounted cash flow analyses, which are based on Level 3
inputs, include: our weighted average cost of capital, adjusted for the risk attributable to the geographic regions of
the reporting units business, long-term rate of growth and profitability of the reporting units business, working capital
effects, and changes in market conditions, consumer trends or strategy.

Acquisitions and Dispositions

On March 2, 2020, we acquired, on a cash free, debt free basis, 100% of Triple Pte. Ltd. ("Triple"), a
distributor of our products in Southeast Asia. The purchase price for the acquisition was $32.9 million in cash, net of
$8.9 million of cash acquired that was held by Triple at closing and settlement of $5.1 million in pre-existing trade
receivables due from Triple prior to the acquisition. The results of operations of
this acquisition have been
consolidated with our results of operations beginning on March 2, 2020.

On October 28, 2020, we entered into a Stock Purchase Agreement (the “Purchase Agreement”) to sell our
MyFitnessPal platform, and on December 18, 2020, the sale was completed. Pursuant to the Purchase Agreement,
the aggregate sale price for the transaction was $345 million, of which $215 million was payable upon closing. We

received $198.7 million at closing after giving effect to $16 million of purchase price and other adjustments. The sale
includes up to $130 million in earn-out payments, which are based on the achievement of certain revenue targets
over a three-year period. The potential earn-out payments include up to $35 million payable in calendar year 2022,
$45 million payable in calendar year 2023 and $50 million payable in calendar year 2024. We recognized a gain of
approximately $179.3 million, which is included in Other income (expenses), net in our Consolidated Statements of
Operations.

During the fourth quarter of Fiscal 2020, we determined to change to a distributor model in Chile and have

executed an asset sale agreement. We expect to close this sale in early Fiscal 2021.

General

Net revenues comprise net sales, license revenues and Connected Fitness revenues. Net sales comprise
sales from our primary product categories, which are apparel, footwear and accessories. Our license revenues
primarily consist of fees paid to us from licensees in exchange for the use of our trademarks on their products. Our
Connected Fitness revenues consist of digital advertising and subscriptions from our Connected Fitness business.

Cost of goods sold consists primarily of product costs, inbound freight and duty costs, outbound freight
costs, handling costs to make products floor-ready to customer specifications, royalty payments to endorsers based
on a predetermined percentage of sales of selected products and write downs for inventory obsolescence. The
fabrics in many of our products are made primarily of petroleum-based synthetic materials. Therefore our product
costs, as well as our inbound and outbound freight costs, could be affected by long term pricing trends of oil. In
general, as a percentage of net revenues, we expect cost of goods sold associated with our apparel and
accessories to be lower than that of our footwear. A limited portion of cost of goods sold is associated with license
and Connected Fitness revenues.

We include outbound freight costs associated with shipping goods to customers as cost of goods sold;
however, we include the majority of outbound handling costs as a component of selling, general and administrative
expenses. As a result, our gross profit may not be comparable to that of other companies that include outbound
handling costs in their cost of goods sold. Outbound handling costs include costs associated with preparing goods
to ship to customers and certain costs to operate our distribution facilities. These outbound handling costs were
$80.5 million, $81 million and $91.8 million for Fiscal 2020, Fiscal 2019 and Fiscal 2018, respectively.

Our selling, general and administrative expenses consist of costs related to marketing, selling, product
innovation and supply chain and corporate services. We consolidate our selling, general and administrative
expenses into two primary categories: marketing and other. The other category is the sum of our selling, product
innovation and supply chain, and corporate services categories. The marketing category consists primarily of sports
and brand marketing, media, and retail presentation. Sports and brand marketing includes professional, club,
collegiate sponsorship,
individual athlete and influencer agreements, and products provided directly to team
equipment managers and to individual athletes. Media includes digital, broadcast and print media outlets, including
social and mobile media. Retail presentation includes sales displays and concept shops and depreciation expense
specific to our in-store fixture programs. Our marketing costs are an important driver of our growth.

Other expense, net consists of unrealized and realized gains and losses on our foreign currency derivative
financial instruments and unrealized and realized gains and losses on adjustments that arise from fluctuations in
foreign currency exchange rates relating to transactions generated by our international subsidiaries.

Results of Operations

The following table sets forth key components of our results of operations for the periods indicated, both in

dollars and as a percentage of net revenues:

(In thousands)
Net revenues

Cost of goods sold

Gross profit

Selling, general and administrative expenses

Restructuring and impairment charges

Income (loss) from operations

Interest expense, net

Other income (expense), net

Income (loss) before income taxes

Income tax expense (benefit)

Income (loss) from equity method investment

Net income (loss)

(As a percentage of net revenues)
Net revenues
Cost of goods sold
Gross profit

Selling, general and administrative expenses
Restructuring and impairment charges
Income (loss) from operations

Interest expense, net
Other income (expense), net

Income (loss) before income taxes

Income tax expense (benefit)
Income (loss) from equity method investment

Net income (loss)

Year Ended December 31,

2020

2019

2018

$ 4,474,667 $ 5,267,132 $ 5,193,185

2,314,572

2,160,095

2,171,934

601,599

(613,438)

(47,259)

168,153

(492,544)

2,796,599

2,470,533

2,233,763

—

236,770

(21,240)

(5,688)

209,842

49,387
(7,246)
(549,177) $

70,024
(47,679)
92,139 $

Year Ended December 31,

2020
100.0 %
51.7
48.3
48.5
13.4
(13.7)
(1.1)
3.8
(11.0)
1.1
(0.2)
(12.3)%

2019
100.0 %
53.1
46.9
42.4
—
4.5
(0.4)
(0.1)
4.0
1.3
(0.9)
1.7 %

2,852,714

2,340,471

2,182,339

183,149

(25,017)

(33,568)

(9,203)

(67,788)

(20,552)

934

(46,302)

2018
100.0 %
54.9
45.1
42.0
3.5
(0.4)
(0.7)
(0.2)
(1.3)
(0.4)
—
(0.9)%

Consolidated Results of Operations

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Net revenues decreased $792.5 million, or 15%, to $4,474.7 million in Fiscal 2020 from $5,267.1 million in

Fiscal 2019. Net revenues by product category are summarized below:

(In thousands)

2020

2019

$ Change

% Change

2018

$ Change

% Change

Year Ended December 31,

$ 2,882,562

$ 3,470,285

(587,723)

(16.9)% $ 3,464,120 $

Apparel

Footwear

Accessories

934,333

414,082

1,086,551

416,354

Net Sales
License revenues

4,230,977

4,973,190

105,779

138,775

(152,218)

(2,272)

(742,213)

(32,996)

(14.0)

(0.5)

(14.9)

(23.8)

1,063,175

422,496

4,949,791

124,785

6,165

23,376

(6,142)

23,399

13,990

0.2 %

2.2

(1.5)

0.5

11.2

Connected
Fitness

Corporate Other
(1)

Total net

revenues

135,813

136,378

(565)

(0.4)

120,357

16,021

13.3

2,098

18,789

(16,691)

(88.8)

(1,748)

20,537

1,174.9

$ 4,474,667

$ 5,267,132

(792,465)

(15.0)% $ 5,193,185 $

73,947

1.4 %

(1) Corporate Other revenues consist of foreign currency hedge gains and losses related to revenues generated by entities
within our geographic operating segments, but managed through our central foreign exchange risk management program.

The decrease in net sales was primarily driven by a unit sales decline in apparel, footwear and accessories
across all categories due to decreased demand, primarily related to impacts of COVID-19 including cancellations of
orders by wholesale customers, closures of brand and factory house stores and lower traffic upon store re-
openings, and a unit sales decrease of off-price sales within our wholesale channel. The decrease was partially
offset by growth in the e-commerce business and sale of specialty products, such as sports masks, within our
accessories category.

License revenues decreased $33 million, or 23.8%, to $105.8 million in Fiscal 2020 from $138.8 million in
Fiscal 2019 driven primarily by lower contractual royalty minimums, decreased revenue from our licensing partners
in North America due to softer demand as a result of impacts of COVID-19. Further, Fiscal 2019 included one-time
settlements with two of our North American partners.

Connected Fitness revenue decreased $0.6 million, or 0.4%, to $135.8 million in Fiscal 2020 from $136.4
million in Fiscal 2019 primarily driven by a decrease in advertising revenue and one-time development fee from a
partner in Fiscal 2019. Additionally, the decrease in revenue is due to the sale of the MyFitnessPal platform during
the fourth quarter of Fiscal 2020.

Gross profit decreased $310.4 million to $2,160.1 million in Fiscal 2020 from $2,470.5 million in Fiscal 2019.
Gross profit as a percentage of net revenues, or gross margin, increased 140 basis points to 48.3% in Fiscal 2020
compared to 46.9% in Fiscal 2019. This increase in gross margin percentage was primarily driven by the following:

•

an approximate 220 basis point increase driven by channel mix, primarily due to a lower percentage of
off-price sales within our wholesale channel which carry a lower gross margin, and a higher percentage
of direct-to-consumer sales, led by e-commerce; and

an approximate 70 basis point increase driven by supply chain initiatives primarily related to product cost
improvements.

The increase was partially offset by an approximate 130 basis point decrease driven by COVID-19 related
pricing and discounting impacts primarily within the direct-to-consumer business, as well as 30 basis points due to
restructuring related expenses.

Selling, general and administrative expenses decreased $61.8 million to $2,171.9 million in Fiscal 2020
from $2,233.8 million in Fiscal 2019. As a percentage of net revenues, selling, general and administrative expenses
increased to 48.5% in Fiscal 2020 from 42.4% in Fiscal 2019. Selling, general and administrative expense was
impacted by the following:

• Marketing costs decreased $28.5 million to $550.4 million in Fiscal 2020 from $578.9 million in Fiscal
2019. This decrease was primarily driven by reduced rights fees for sports marketing assets and
reductions in marketing within our wholesale channel. These decreases were primarily due to impacts of
COVID-19, including event cancellations and store closures. These decreases were partially offset by

increased brand marketing and direct-to-consumer marketing investments. As a percentage of net
revenues, marketing costs increased to 12.3% in Fiscal 2020 from 11.0% in Fiscal 2019.

• Other costs decreased $33.3 million to $1,621.6 million in Fiscal 2020 from $1,654.9 million in Fiscal
2019. This decrease was driven primarily by lower incentive compensation, decreased travel and
entertainment, and lower depreciation mostly due to reductions in capital expenditures. The decreases in
incentive compensation and travel and entertainment were primarily due to impacts of COVID-19. These
decreases were partially offset by higher legal expense, increased third party distribution costs to
support e-commerce revenues, and an increase in allowance for doubtful account reserves due to
negative developments regarding certain customer balances that represent a higher risk of credit default.
As a percentage of net revenues, other costs increased to 36.2% in Fiscal 2020 from 31.4% in Fiscal
2019.

Restructuring and impairment charges were $602 million comprised of $461 million of restructuring and
related impairment charges and $141 million of long-lived asset impairment charges for Fiscal 2020. There were no
restructuring and impairment charges for Fiscal 2019.

Income (loss) from operations decreased $850.2 million, or 359.1%, to a loss of $613.4 million in Fiscal
2020 from income of $236.8 million in Fiscal 2019, primarily driven by the restructuring and impairment charges
and the decrease in net revenues discussed above.

Interest expense, net increased $26 million to $47.3 million in Fiscal 2020 from $21.2 million in Fiscal 2019.
This increase was primarily due to the amortization of the debt discount and interest expense associated with our
Convertible Senior Notes and higher interest expense related to borrowing on our revolving credit facility.

Other income (expense), net increased $173.8 million to an income of $168.2 million in Fiscal 2020 from an
expense of $5.7 million in Fiscal 2019. This increase was primarily due to the gain on sale of MyFitnessPal platform
of $179.3 million and foreign exchange gains, including a gain associated with the de-designation of certain
derivative instruments as a result of the impacts of COVID-19. The increase was partially offset by the rent expense
incurred in connection with our New York City flagship store.

Income tax expense (benefit) decreased $20.6 million to $49.4 million in Fiscal 2020 from $70.0 million in
Fiscal 2019. We recorded 2020 income tax expense on pretax losses, including the impact of recording valuation
allowances for previously recognized deferred tax assets in the United States ("U.S.") and China, and current year
U.S. pre-tax losses not able to be carried back, compared to 2019 income tax expense recorded on pre-tax income.

Loss from equity method investment was $7.2 million in Fiscal 2020 and $47.7 million in Fiscal 2019. This

relates to the impairment of our equity method investment in our Japanese licensee in Fiscal 2019.

Segment Results of Operations

Our operating segments are based on how the Chief Operating Decision Maker (“CODM”) makes decisions
about allocating resources and assessing performance. Our segments are defined by geographic regions, including
North America, EMEA, Asia-Pacific, and Latin America. Connected Fitness is also an operating segment.

We exclude certain corporate costs from our segment profitability measures. We report these costs within
Corporate Other, which is designed to provide increased transparency and comparability of our operating segments
performance. Corporate Other consists largely of general and administrative expenses not allocated to an operating
segment, including expenses associated with centrally managed departments such as global marketing, global
information technology, global supply chain, innovation and other corporate support functions; costs related to our
global assets and global marketing, costs related to our headquarters; restructuring and restructuring related
charges; and certain foreign currency hedge gains and losses. Effective January 1, 2021, following the sale of
MyFitnessPal and the winding down of
the Endomondo platform, revenues for the remaining MapMyFitness
business will be included in Corporate Other. Refer to Note 19 to the Consolidated Financial Statements for net
revenues by segment.

The net revenues and operating income (loss) associated with our segments are summarized in the

following tables.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Net revenues by segment are summarized below:

(In thousands)

North America

EMEA

Asia-Pacific

Latin America

Connected Fitness

Corporate Other (1)

Total net revenues

Year Ended December 31,

2020

2019

$ Change

% Change

$ 2,944,978 $ 3,658,353 $

(713,375)

(19.5)%

598,296

628,657

164,825

135,813

2,098

621,137

636,343

196,132

136,378

18,789

(22,841)

(7,686)

(31,307)

(565)

(16,691)

(3.7)

(1.2)

(16.0)

(.4)

(88.8)

$ 4,474,667 $ 5,267,132 $

(792,465)

(15.0)%

The decrease in total net revenues was driven by the following:

•

Net revenues in our North America operating segment decreased $713.4 million to $2,945.0 million in
Fiscal 2020 from $3,658.4 million in Fiscal 2019. This decrease was primarily due to a decrease of unit
sales within our wholesale and direct-to-consumer channels. Decreases in our wholesale channel were
impacted by cancellations of orders by our wholesale customers due to COVID-19, and decreased unit
sales to off-price customers. Decreases in our direct-to-consumer channel were impacted by closures of
our brand and factory house stores and lower traffic upon store re-openings, partially offset by increased
unit sales through our e-commerce channel.

Net revenues in our EMEA operating segment decreased $22.8 million to $598.3 million in Fiscal 2020
from $621.1 million in Fiscal 2019 primarily due to cancellations of orders by wholesale customers due to
closures of stores, as well as orders that shifted out of the fourth quarter into the first quarter of 2021 due
to timing impacts from COVID-19 related to customer order flow, and changes in supply chain timing.
Decreases in our direct-to-consumer channel were impacted by closures of our brand and factory house
stores and lower traffic upon store re-openings, partially offset by increased unit sales through our e-
commerce channel.

Net revenues in our Asia-Pacific operating segment decreased $7.7 million to $628.7 million in Fiscal
2020 from $636.3 million in Fiscal 2019 primarily due to cancellations of orders by wholesale customers
due to closures of stores, impact of additional returns reserves and markdowns within our wholesale
channel due to COVID-19, as well as orders that shifted out of the fourth quarter into the first quarter of
2021 due to timing impacts from COVID-19 related to customer order flow, and changes in supply chain
timing. This decrease was partially offset by increased unit sales within our direct-to-consumer channel,

led by our e-commerce channel.

•

Net revenues in our Latin America operating segment decreased $31.3 million to $164.8 million in Fiscal
2020 from $196.1 million in Fiscal 2019. This decrease was primarily due to decreased unit sales within
our wholesale and direct-to-consumer channels. Decreases in our wholesale channel were impacted by
cancellations of orders by wholesale customers due to closures of stores as a result of COVID-19.
Decreases in our direct-to-consumer channel were impacted by closures of our brand and factory house
stores as a result of COVID-19, partially offset by increased unit sales through our e-commerce channel.

Net revenues in our Connected Fitness operating segment decreased $0.6 million to $135.8 million in
Fiscal 2020 from $136.4 million in Fiscal 2019 primarily driven by a decrease in advertising revenue and
one-time development fee from a partner in Fiscal 2019. Additionally, the decrease in revenue is due to
the sale of the MyFitnessPal platform during the fourth quarter of Fiscal 2020.

Operating income (loss) by segment is summarized below:

(In thousands)

North America

EMEA

Asia-Pacific

Latin America

Connected Fitness

Corporate Other

Year Ended December 31,

2020

2019

$ Change

% Change

474,584 $

733,442 $

(258,858)

60,592

(42,790)

17,063

53,739

97,641

(3,160)

17,140

6,853

(97,639)

(39,630)

(77)

(1,122,889)

(662,032)

(460,857)

(35.3)%

12.8

(100.0)

(1254.1)

(.4)

(69.6)

Total operating income (loss)

(613,438) $

236,770 $

(850,208)

(359.1)%

The decrease in total operating income was driven by the following:

Operating segments

• Operating income in our North America operating segment decreased $258.9 million to $474.6 million in
Fiscal 2020 from $733.4 million in Fiscal 2019, primarily driven by decreases in net revenues discussed
above, an increase in allowance for doubtful account reserves and higher selling costs in connection with
increased e-commerce sales, partially offset by gross margin benefits due to channel mix,
lower
incentive compensation, decreased wages due to store closures and decreased marketing related
activities.

• Operating income in our EMEA operating segment increased $6.9 million to $60.6 million in Fiscal 2020
from $53.7 million in Fiscal 2019, primarily driven by gross margin benefits due to channel mix with
higher unit sales through our e-commerce, as well as lower off-price sales, partially offset by higher
selling, general and administrative expenses. The selling, general and marketing expense increased
primarily due to increased distribution and selling costs related to increased e-commerce sales, as well
as right of use asset impairment charges. These increases within selling, general and administrative
expenses were partially offset by reduced marketing spend and event sponsorship costs as a result of
COVID-19.

• Operating income in our Asia-Pacific operating segment decreased $97.6 million to $2 thousand in Fiscal
2020 from $97.6 million in Fiscal 2019, primarily driven by a decline in revenue discussed above, as well
as higher returns and promotional activity that negatively impacted gross margins. Additionally, selling,
general and administrative expenses increased due to right of use asset impairments charges, higher
compensation in part due to the Triple acquisition in March of 2020, as well as the Hong Kong office
build-out and increase distribution and selling costs.

• Operating loss in our Latin America operating segment increased $39.6 million to $42.8 million in Fiscal
2020 from $3.2 million in Fiscal 2019, primarily driven by decreases in net revenues discussed above,
partially offset by gross margin benefits due to channel mix and decreased marketing related activities.

• Operating income in our Connected Fitness segment was flat in Fiscal 2020 compared to Fiscal 2019.

Non-operating segment

• Operating loss in our Corporate Other non-operating segment increased $460.9 million to $1,122.9 million
in Fiscal 2020 from $662.0 million in Fiscal 2019, primarily driven by $472.7 million of restructuring and
impairment charges related to the 2020 restructuring plan, partially offset by lower incentive compensation.

Financial Position, Capital Resources and Liquidity

Our cash requirements have principally been for working capital and capital expenditures. We fund our
working capital, primarily inventory, and capital investments from cash flows from operating activities, cash and cash
equivalents on hand, and borrowings available under our credit and long term debt facilities. Our working capital
requirements generally reflect the seasonality in our business as we historically recognize the majority of our net
revenues in the last two quarters of the calendar year. Our capital investments have generally included expanding
our in-store fixture and branded concept shop program, improvements and expansion of our distribution and
corporate facilities,
leasehold improvements to our brand and factory house stores, and investment and
improvements in information technology systems. Our inventory strategy is focused on continuing to meet consumer
demand while improving our inventory efficiency over the long term by putting systems and processes in place to
improve our inventory management. These systems and processes are designed to improve our forecasting and
supply planning capabilities. In addition to systems and processes, key areas of focus that we believe enhance
inventory performance are added discipline around the purchasing of product, production lead time reduction, and
better planning and execution in selling of excess inventory through our factory house stores and other liquidation
channels. In response to the COVID-19 pandemic, however, in Fiscal 2020 we reduced our inventory purchases
and capital expenditures as we managed our liquidity and working capital through this period.

We believe our cash and cash equivalents on hand, cash from operations, our ability to reduce our
expenditures as needed, borrowings available to us under our amended credit agreement, our ability to access the
capital markets, and other financing alternatives are adequate to meet our liquidity needs and capital expenditure
requirements for at least the next twelve months. During the six months ended June 30, 2020, our cash generated
from operations was negatively impacted due to widespread temporary store closures as a result of the COVID-19
pandemic. As of the start of the second quarter, we had borrowed $700 million under our revolving credit facility as a
precautionary measure in order to increase our cash position and preserve liquidity given the uncertainty in global
markets resulting from the COVID-19 outbreak. In May 2020, we issued $500 million of convertible senior notes
through a securities offering and utilized approximately $440 million of the net proceeds from the offering to repay
amounts outstanding under our revolving credit facility. During the third quarter of Fiscal 2020, we repaid the
remaining balance outstanding under our revolving credit facility and no amounts remained outstanding as of
December 31, 2020. In Fiscal 2021, we will continue to monitor and assess impacts of the COVID-19 pandemic on
our business.

Beginning with the third quarter of Fiscal 2020, we are required to maintain a specified amount of
"minimum liquidity" under the terms of our revolving credit facility. Our credit agreement limits our ability to incur
additional
indebtedness. We currently expect to be able to comply with these requirements without pursuing
additional sources of financing to support our liquidity over the next twelve months. However, if the COVID-19
pandemic persists or there are unexpected impacts to our business during this period and we need to raise or
conserve additional cash to fund our operations or satisfy this requirement, we may consider additional alternatives
similar to what we did in Fiscal 2020, including further reducing our expenditures, including reductions to our
discretionary spending and changes to our investment strategies, negotiating payment terms with our customers
and vendors, reductions in compensation costs, including through temporary reductions in pay and layoffs, and
limiting certain marketing and capital expenditures.
liquidity,
including but not limited to accessing the capital markets, sale leaseback transactions or other sales of assets, or
other alternative financing measures. However, instability in, or tightening of the capital markets, could adversely
affect our ability to access the capital markets on terms acceptable to us or at all. Although we believe we have
adequate sources of liquidity over the long term, a prolonged or more severe economic recession or a slow
recovery could adversely affect our business and liquidity.

In addition, we may seek alternative sources of

Refer to our “Risk Factors - Financial Risks” section included in Part I, Item 1A of this Annual Report on

Form 10-K for a further discussion of risks related to our indebtedness.

As discussed in the "Overview", as we navigate these unprecedented circumstances, we are focused on
preserving our liquidity and managing our cash flows through certain preemptive actions designed to enhance our
ability to meet our short-term liquidity needs. These actions include those noted above. In addition, from time to time
we may take action to manage liquidity as of the end of a quarterly period, including our level of indebtedness or

cash on hand. For example, in Fiscal 2020 some of our customers delayed payments in connection with COVID-19
as they managed their own cash balances, and we also delayed payments as well. Furthermore, our revolving
credit agreement includes leverage and minimum liquidity covenants that apply from time to time. We may repay
indebtedness as of the end of a fiscal quarter and reborrow amounts immediately after or take other action to
manage liquidity in connection with these requirements.

As of December 31, 2020, $383.1 million, or approximately 25.2%, of cash and cash equivalents was held
by our foreign subsidiaries. Based on the capital and liquidity needs of our foreign operations, we intend to
indefinitely reinvest these funds outside the United States. In addition, our United States operations do not require
the repatriation of these funds to meet our currently projected liquidity needs. Should we require additional capital in
the United States, we may elect to repatriate indefinitely reinvested foreign funds or raise capital
in the United
States.

The Company will continue to permanently reinvest these earnings, as well as future earnings from our
foreign subsidiaries, to fund international growth and operations. If we were to repatriate indefinitely reinvested
foreign funds, we would be required to accrue and pay certain taxes upon repatriation, including foreign withholding
taxes and certain U.S. state taxes and record foreign exchange rate impacts. Determination of the unrecorded
deferred tax liability that would be incurred if such amounts were repatriated is not practicable.

Cash Flows

The following table presents the major components of net cash flows used in and provided by operating,

investing and financing activities for the periods presented:

(In thousands)
Net cash provided by (used in):

Year Ended December 31,

2020

2019

2018

Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

212,864 $

66,345
436,853
16,445

732,507 $

509,031 $
(147,113)
(137,070)
5,100
229,948 $

628,230
(202,904)
(189,868)
12,467
247,925

Operating Activities

Operating activities consist primarily of net income adjusted for certain non-cash items. Adjustments to net
income for non-cash items include depreciation and amortization, unrealized foreign currency exchange rate gains
and losses, gain on sale of MyFitnessPal platform in Fiscal 2020, losses on disposals of property and equipment,
stock-based compensation, deferred income taxes and changes in reserves and allowances. In addition, operating
cash flows include the effect of changes in operating assets and liabilities, principally inventories, accounts
receivable, income taxes payable and receivable, prepaid expenses and other assets, accounts payable and
accrued expenses.

Cash flows provided by operating activities decreased $296.2 million to $212.9 million in Fiscal 2020 from
$509 million in Fiscal 2019. The decrease was due to net loss in Fiscal 2020 of $549.2 million compared to net
income of $92.1 million in Fiscal 2019. This decrease was offset by increased net cash inflows from operating
assets and liabilities of $75.9 million. The increase in cash inflows related to changes in operating assets and
liabilities period over period was primarily driven by the following:

•

an increase in accounts payable and accrued expenses of $237.4 million in Fiscal 2020 as compared to
Fiscal 2019;

an increase in cash provided by accounts receivable of $213.1 million in Fiscal 2020 as compared to
Fiscal 2019;

an increase in customer refund liabilities and Income taxes payable and receivable of $45.1 million
which was offset by a decrease of $5.7 million in prepaid expenses and other assets in Fiscal 2020 as
compared to Fiscal 2019; and

a decrease in other non-current assets of $279.7 million in Fiscal 2020 as compared to Fiscal 2019.

Investing Activities

Cash provided by investing activities increased $213.5 million to $66.3 million in Fiscal 2020 from cash
used in investing activities of $147.1 million in Fiscal 2019 primarily due to proceeds from the sale of MyFitnessPal
of $198.9 million in the fourth quarter of Fiscal 2020.

Total capital expenditures in Fiscal 2020 decreased by $53.5 million to $92.3 million compared to $145.8

million in Fiscal 2019.

Financing Activities

Cash provided by financing activities increased $573.9 million to $436.9 million in Fiscal 2020 from cash
used in financing activities of $137.1 million in Fiscal 2019. This increase was primarily due to the issuance of $500
million of 1.50% convertible senior notes in Fiscal 2020.

Capital Resources

Credit Facility

On March 8, 2019, we entered into an amended and restated credit agreement by and among the
Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders and arrangers
party thereto (the “credit agreement”). The credit agreement has a term of five years, maturing in March 2024, with
permitted extensions under certain circumstances. In May 2020, we entered into an amendment to the credit
agreement (the “amendment” and, the credit agreement as amended, the “amended credit agreement” or the
“revolving credit facility”), pursuant to which the prior revolving credit commitments were reduced from $1.25 billion
to $1.1 billion of borrowings. From time to time throughout Fiscal 2020, we borrowed funds under this facility as a
precautionary measure in order to increase our cash position and preserve liquidity given the ongoing uncertainty in
global markets resulting from the COVID-19 pandemic. As of the end of Fiscal 2020 and Fiscal 2019, there were no
amounts outstanding under the revolving credit facility.

Except during the covenant suspension period (as defined below), at our request and the lender's consent,
commitments under the amended credit agreement may be increased by up to $300 million in aggregate, subject to
certain conditions as set forth in the amended credit agreement. Incremental borrowings are uncommitted and the
availability thereof will depend on market conditions at the time we seek to incur such borrowings.

Borrowings under the revolving credit facility have maturities of less than one year. Up to $50.0 million of
the facility may be used for the issuance of letters of credit. There were $4.3 million of letters of credit outstanding
as of the end of Fiscal 2020 (Fiscal 2019: $5.0 million).

Our obligations under the amended credit agreement are guaranteed by certain domestic significant
subsidiaries of the Company, subject to customary exceptions (the “subsidiary guarantors”) and primarily secured
by a first-priority security interest in substantially all of the assets of the Company and the subsidiary guarantors,
excluding real property, capital stock in and debt of our subsidiaries holding certain real property and other
customary exceptions.

The amended credit agreement contains negative covenants that, subject to significant exceptions, limit our
ability to, among other things, incur additional secured and unsecured indebtedness, pledge our assets as security,
make investments, loans, advances, guarantees and acquisitions, (including investments in and loans to non-
guarantor subsidiaries), undergo fundamental changes, sell our assets outside the ordinary course of business,
enter into transactions with affiliates and make restricted payments (including a temporary suspension of certain
voluntary restricted payments during the covenant suspension period (as defined below)).

We are also required to comply with specific consolidated leverage and interest coverage ratios during
specified periods. Prior to the amendment, we were required to maintain a ratio of consolidated EBITDA, to
consolidated interest expense of not less than 3.50 to 1.0 (the “interest coverage covenant”), and we were not
permitted to allow the ratio of consolidated total indebtedness to consolidated EBITDA to be greater than 3.25 to 1.0
in the credit agreement. The amended credit agreement
(the “leverage covenant”), as described in more detail
provides for suspensions of and adjustments to the leverage covenant (including definitional changes impacting the
calculation of the ratio) and the interest coverage covenant beginning with the quarter ended June 30, 2020, and
ending on the date on which financial statements for the quarter ended June 30, 2022 are delivered to lenders
under the amended credit agreement (the “covenant suspension period”) as summarized below and described in
more detail in the amended credit agreement:

•

For the fiscal quarter ended June 30, 2020, the interest coverage covenant was suspended and the
leverage covenant required that the ratio of consolidated total indebtedness to consolidated EBITDA be less
than or equal to 4.5 to 1.0.

For the fiscal quarters ending September 30, 2020, December 31, 2020, March 31, 2021 and June 30,
2021, compliance with the interest coverage covenant and the leverage covenant are both suspended.
Beginning on September 30, 2020 through and including December 31, 2021, we must instead maintain
minimum liquidity of $550.0 million (the “liquidity covenant”) (with liquidity being the sum of certain cash and

cash equivalents held by the Company and its subsidiaries and available borrowing capacity under the
amended credit agreement).

•

For the fiscal quarter ending September 30, 2021, the interest coverage covenant is suspended, the
leverage covenant will require that the ratio of consolidated total indebtedness to consolidated EBITDA be
less than or equal to 4.5 to 1.0 and we must comply with the liquidity covenant.

For the fiscal quarter ending December 31, 2021, the interest coverage covenant is suspended, the
leverage covenant will require that the ratio of consolidated total indebtedness to consolidated EBITDA be
less than or equal to 4.0 to 1.0 and we must comply with the liquidity covenant.

Beginning on January 1, 2022, the liquidity covenant is terminated. For the fiscal quarter ending March 31,
2022, the leverage covenant will require that the ratio of consolidated total indebtedness to consolidated
EBITDA be less than or equal to 3.5 to 1.0 and the interest coverage covenant will require that the ratio of
consolidated EBITDA to consolidated interest expense be greater than or equal to 3.5 to 1.0.

As of December 31, 2020, we were in compliance with the applicable covenants.

In addition, the amended credit agreement contains events of default that are customary for a facility of this
nature and includes a cross default provision whereby an event of default under other material indebtedness, as
defined in the amended credit agreement, will be considered an event of default under the amended credit
agreement.

During the covenant suspension period, the applicable margin for loans is 2.00% for adjusted LIBOR loans
and 1.00% for alternate base rate loans. Otherwise, borrowings under the amended credit agreement bear interest
at a rate per annum equal to, at our option, either (a) an alternate base rate, or (b) a rate based on the rates
applicable for deposits in the interbank market for U.S. Dollars or the applicable currency in which the loans are
made (“adjusted LIBOR”), plus in each case an applicable margin. The applicable margin for loans will be adjusted
by reference to a grid (the “pricing grid”) based on the consolidated leverage ratio and ranges between 1.25% to
1.75% for adjusted LIBOR loans and 0.25% to 0.75% for alternate base rate loans. The weighted average interest
rate under the revolving credit
facility borrowings was 2.3% and 3.6% during Fiscal 2020 and Fiscal 2019,
respectively. During the covenant suspension period, the commitment fee rate is 0.40% per annum. Otherwise, we
pay a commitment fee determined in accordance with the pricing grid on the average daily unused amount of the
revolving credit facility and certain fees with respect to letters of credit. As of the end of Fiscal 2020, the commitment
fee was 15 basis points. We incurred and deferred $7.2 million in financing costs in connection with the amended
credit agreement.

1.50% Convertible Senior Notes

In May 2020, we issued $500.0 million aggregate principal amount of 1.50% convertible senior notes due
2024 (the “Convertible Senior Notes”). The Convertible Senior Notes bear interest at the rate of 1.50% per annum,
payable semiannually in arrears on June 1 and December 1 of each year, beginning December 1, 2020. The
Convertible Senior Notes will mature on June 1, 2024, unless earlier converted in accordance with their terms,
redeemed in accordance with their terms or repurchased.

The net proceeds from the offering (including the net proceeds from the exercise of the over-allotment
option) were $488.8 million, after deducting the initial purchasers’ discount and estimated offering expenses paid by
us, of which we used approximately $47.9 million to pay the cost of the capped call transactions described below.
We utilized $439.9 million to repay indebtedness outstanding under our revolving credit facility and pay related fees
and expenses.

In connection with the issuance of the Convertible Senior Notes, we recorded an $11 million net deferred
tax liability and a corresponding reduction in valuation allowance. As a result, there was no net impact to our
deferred income taxes or additional paid in capital on the Consolidated Financial Statements.

The Convertible Senior Notes are not secured and are not guaranteed by any of our subsidiaries. The
indenture governing the Convertible Senior Notes does not contain any financial or operating covenants or
restrictions on the payments of dividends,
indebtedness or the issuance or repurchase of
securities by us or any of our subsidiaries.

the incurrence of

Prior to the close of business on the business day immediately preceding January 1, 2024, the Convertible
Senior Notes will be convertible only upon satisfaction of certain conditions and during certain periods. On or after
January 1, 2024, at any time until the close of business on the second scheduled trading day immediately preceding
the maturity date, holders may convert all or any portion of their Convertible Senior Notes. The initial conversion
rate is 101.8589 shares of our Class C common stock per $1,000 principal amount of Convertible Senior Notes

(equivalent to an initial conversion price of approximately $9.82 per share of Class C common stock), subject to
adjustment if certain events occur.

On or after December 6, 2022, we may redeem for cash all or any part of the Convertible Senior Notes, at
our option, if the last reported sale price of our Class C common stock has been at least 130% of the conversion
price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day
period (including the last trading day of such period) ending on, and including, the trading day immediately
preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the aggregate
principal amount of the Convertible Senior Notes to be redeemed, plus accrued and unpaid interest to, but
excluding, the redemption date.

If we undergo a fundamental change (as defined in the indenture governing the Convertible Senior Notes)
prior to the maturity date, subject to certain conditions, holders may require us to repurchase for cash all or any
portion of their Convertible Senior Notes in principal amounts of $1,000 or an integral multiple thereof at a price
which will be equal to 100% of the aggregate principal amount of the Convertible Senior Notes to be repurchased,
plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Concurrently with the offering of the Convertible Senior Notes, we entered into privately negotiated capped
call transactions with JPMorgan Chase Bank, National Association, HSBC Bank USA, National Association and
Citibank, N.A. (the “option counterparties”). The capped call transactions are expected generally to reduce potential
dilution to our Class C common stock upon any conversion of Convertible Senior Notes and/or offset any cash
payments we are required to make in excess of the aggregate principal amount of converted Convertible Senior
Notes upon any conversion thereof, as the case may be, with such reduction and/or offset subject to a cap based
on an initial cap price of $13.4750 per share of our Class C common stock, subject to certain adjustments under the
terms of the capped call transactions.

The Convertible Senior Notes contain a cash conversion feature, and as a result, we have separated it into
liability and equity components. We valued the liability component based on our borrowing rate for a similar debt
instrument that does not contain a conversion feature. The equity component, which is recognized as a debt
discount, was valued as the difference between the face value of the Convertible Senior Notes and the fair value of
the liability component.

3.250% Senior Notes

In June 2016, we issued $600 million aggregate principal amount of 3.250% senior unsecured notes
due June 15, 2026 (the “Senior Notes”). The proceeds were used to pay down amounts outstanding under the
revolving credit facility. Interest is payable semi-annually on June 15 and December 15 beginning December 15,
2016. Prior to March 15, 2026 (three months prior to the maturity date of the Notes), we may redeem some or all of
the Senior Notes at any time or from time to time at a redemption price equal to the greater of 100% of the principal
amount of the Senior Notes to be redeemed or a "make-whole" amount applicable to such Senior Notes as
described in the indenture governing the Senior Notes, plus accrued and unpaid interest to, but excluding, the
redemption date.

The indenture governing the Senior Notes contains covenants, including limitations that restrict our ability
and the ability of certain of our subsidiaries to create or incur secured indebtedness and enter into sale and
leaseback transactions and our ability to consolidate, merge or transfer all or substantially all of our properties or
assets to another person, in each case subject to material exceptions described in the indenture.

Other Long Term Debt

In December 2012, we entered into a $50 million recourse loan collateralized by the land, buildings and
tenant improvements comprising our corporate headquarters. In July 2018, this loan was repaid in full, without
penalties, using borrowings under our revolving credit facility.

Interest expense, net was $47.3 million, $21.2 million, and $33.6 million for Fiscal 2020, Fiscal 2019 and
Fiscal 2018, respectively. Interest expense includes the amortization of deferred financing costs, bank fees, capital
and built-to-suit lease interest and interest expense under the credit and other long term debt facilities. Amortization
of deferred financing costs was $3.8 million, $2.4 million, and $1.5 million for Fiscal 2020, Fiscal 2019 and Fiscal
2018, respectively.

We monitor the financial health and stability of our lenders under the credit and other long term debt
facilities, however during any period of significant instability in the credit markets lenders could be negatively
impacted in their ability to perform under these facilities.

Contractual Commitments and Contingencies

We lease warehouse space, office facilities, space for our brand and factory house stores and certain
equipment under non-cancelable operating leases. The leases expire at various dates through 2035, excluding
extensions at our option, and include provisions for rental adjustments. In addition, this table includes executed
lease agreements for brand and factory house stores that we did not yet occupy as of the end of Fiscal 2020. The
operating leases generally contain renewal provisions for varying periods of
time. Our significant contractual
obligations and commitments as of the end of Fiscal 2020 as well as significant agreements entered into during the
period after Fiscal 2020 through the date of this report are summarized in the following table:

(in thousands)
Contractual obligations
Long term debt obligations (1)

Operating lease obligations (2)

Product purchase obligations (3)

Sponsorships and other (4)

Total

Payments Due by Period

Total

Less Than
1 Year

1 to 3 Years

3 to 5 Years

More Than
5 Years

$ 1,226,750 $

19,500 $

39,000 $ 539,000 $ 629,250

1,200,324

202,220

308,485

222,258

467,361

1,136,896

—

361,619

106,727

154,544

87,895

12,453

$ 3,925,589 $ 1,465,343 $ 502,029 $ 849,153 $ 1,109,064

(1)

(2)

(3)

(4)

Includes estimated interest payments based on applicable fixed interest rates as of the end of Fiscal 2020,
timing of scheduled payments, and the term of the debt obligations.

Includes the minimum payments for lease obligations. The lease obligations do not include any contingent
rent expense we may incur at our brand and factory house stores based on future sales above a specified
minimum or payments made for maintenance, insurance and real estate taxes. Contingent rent expense
was $9.3 million for Fiscal 2020.

We generally place orders with our manufacturers at least three to four months in advance of expected
future sales. The amounts listed for product purchase obligations primarily represent our open production
purchase orders with our manufacturers for our apparel, footwear and accessories, including expected
inbound freight, duties and other costs. These open purchase orders specify fixed or minimum quantities of
products at determinable prices. The product purchase obligations also includes fabric commitments with
our suppliers, which secure a portion of our material needs for future seasons. The reported amounts
exclude product purchase liabilities included in accounts payable as of the end of Fiscal 2020.

Includes sponsorships with professional teams, professional leagues, colleges and universities, individual
athletes, athletic events and other marketing commitments in order to promote our brand. Some of these
sponsorship agreements provide for additional performance incentives and product supply obligations. It is
not possible to determine how much we will spend on product supply obligations on an annual basis as
contracts generally do not stipulate specific cash amounts to be spent on products. The amount of product
provided to these sponsorships depends on many factors including general playing conditions, the number
of sporting events in which they participate and our decisions regarding product and marketing initiatives.
In addition, it is not possible to determine the performance incentive amounts we may be required to pay
under these agreements as they are primarily subject to certain performance based and other variables.
The amounts listed above are the fixed minimum amounts required to be paid under these sponsorship
agreements. Additionally, these amounts include minimum guaranteed royalty payments to endorsers and
licensors based upon a predetermined percent of sales of particular products.

The future cash installment payments for the one-time transition tax on deemed repatriation of undistributed
earnings of foreign subsidiaries enacted as part of the Tax Act in 2017, will be fully offset by our net operating loss
carryback receivable under the CARES Act and therefore are no longer reflected as a long-term liability as of the
balance sheet date.

The table above excludes a liability of $33.5 million for uncertain tax positions, including the related interest
and penalties, recorded in accord with applicable accounting guidance, as we are unable to reasonable estimate the
timing of settlement. Refer to Note 13 to the Consolidated Financial Statements for a further discussion of our
uncertain tax positions.

Off-Balance Sheet Arrangements

In connection with various contracts and agreements, we have agreed to indemnify counterparties against
certain third party claims relating to the infringement of intellectual property rights and other items. Generally, such
indemnification obligations do not apply in situations in which our counterparties are grossly negligent, engage in
willful misconduct, or act in bad faith. Based on our historical experience and the estimated probability of future loss,
we have determined the fair value of such indemnifications is not material to our financial position or results of
operations.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America. To prepare these financial statements, we must make estimates
and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the
disclosures of contingent assets and liabilities. Actual results could be significantly different from these estimates.
We believe the following discussion addresses the critical accounting policies that are necessary to understand and
evaluate our reported financial results.

Our significant accounting policies are described in Note 2 of the Consolidated Financial Statements. We
consider an accounting policy to be critical if it is important to our financial condition and results of operations and
requires significant judgments and estimates on the part of management in its application. Our estimates are often
based on complex judgments, probabilities and assumptions that management believes to be reasonable, but that
are inherently uncertain and unpredictable.
is also possible that other professionals, applying reasonable
judgment to the same facts and circumstances, could develop and support a range of alternative estimated
amounts.

There were no significant changes to our critical accounting policies during Fiscal 2020. The following
description of our critical accounting policies largely summarize generally accepted accounting principles in the
United States and are meant to provide clarity regarding our existing application of these policies.

Change in Year End

We operate and report with a fiscal year end of December 31. During the first quarter of 2021, we
announced a change in our fiscal year end to March 31 from December 31, effective for the fiscal year beginning
after April 1, 2022. Accordingly, we will report a transition quarter that runs from January 1, 2022 through March 31,
2022. Our next fiscal year will run from April 1, 2022 through March 31, 2023.

Revenue Recognition

We recognize revenue pursuant to Accounting Standards Codification 606 ("ASC 606"). Net revenues
consist of net sales of apparel, footwear and accessories, license and Connected Fitness revenue. We recognize
revenue when we satisfy our performance obligations by transferring control of promised products or services to our
customers, which occurs either at a point in time or over time, depending on when the customer obtains the ability
to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount
of revenue recognized considers terms of sale that create variability in the amount of consideration that we
ultimately expect to be entitled to in exchange for the products or services and is subject to an overall constraint that
a significant revenue reversal will not occur in future periods. Sales taxes imposed on our revenues from product
sales are presented on a net basis within the Consolidated Statements of Operations, and therefore do not impact
net revenues or costs of goods sold.

Revenue transactions associated with the sale of apparel, footwear, and accessories, comprise a single
performance obligation, which consists of the sale of products to customers either through wholesale or direct-to-
consumer channels. We satisfy the performance obligation and record revenues when transfer of control has
passed to the customer, based on the terms of sale. In our wholesale channel, transfer of control is based upon
shipment under free on board shipping point for most goods or upon receipt by the customer depending on the
country of the sale and the agreement with the customer. We may also ship product directly from our supplier to
wholesale customers and recognize revenue when the product is delivered to and accepted by the customer. In our
direct to consumer channel, transfer of control takes place at the point of sale for brand and factory house
customers and upon shipment
terms for wholesale
transactions are established in accordance with local and industry practices. Payment is generally required within
30 to 60 days of shipment to or receipt by the wholesale customer in the United States, and generally within 60 to
90 days of shipment to or receipt by the wholesale customer internationally. Payment is generally due at the time of
sale for direct-to-consumer transactions.

to substantially all e-commerce customers. Payment

Gift cards issued to customers by us are recorded as contract liabilities until they are redeemed, at which
point revenue is recognized. We also estimate and recognize revenue for gift card balances not expected to ever be
redeemed ("breakage") to the extent that we do not have a legal obligation to remit the value of such unredeemed
gift cards to the relevant jurisdiction as unclaimed or abandoned property. Such estimates are based upon historical
redemption trends, with breakage income recognized in proportion to the pattern of actual customer redemptions.

Revenue from our licensing arrangements is recognized over time during the period that licensees are
provided access to our trademarks and benefit from such access through their sales of licensed products. These
arrangements require licensees to pay a sales-based royalty, which for most arrangements may be subject to a
contractually guaranteed minimum royalty amount. Payments are generally due quarterly. We recognize revenue for
sales-based royalty arrangements (including those for which the royalty exceeds any contractually guaranteed
minimum royalty amount) as licensed products are sold by the licensee. If a sales-based royalty is not ultimately
expected to exceed a contractually guaranteed minimum royalty amount, the minimum is recognized as revenue
over the contractual period. This sales-based output measure of progress and pattern of recognition best represents
the value transferred to the licensee over the term of the arrangement, as well as the amount of consideration that
we are entitled to receive in exchange for providing access to our trademarks.

Revenue from Connected Fitness subscriptions is recognized on a gross basis and is recognized over the
term of the subscription. We receive payments in advance of revenue recognition for subscriptions and these
payments are recorded as contract
is
included in selling, general and administrative expense in the Consolidated Statement of Operations. Revenue from
Connected Fitness digital advertising is recognized as we satisfy performance obligations pursuant to customer
insertion orders.

liabilities in our consolidated balance sheet. Related commission cost

We record reductions to revenue at the time of the transaction for estimated customer returns, allowances,
markdowns and discounts. We base these estimates on historical rates of customer returns and allowances as well
as the specific identification of outstanding returns, markdowns and allowances that have not yet been received by
us. The actual amount of customer returns and allowances, which are inherently uncertain, may differ from our
estimates. If we determine that actual or expected returns or allowances are significantly higher or lower than the
reserves we established, we would record a reduction or increase, as appropriate, to net sales in the period in which
we make such a determination. Provisions for customer specific discounts are based on contractual obligations with
certain major customers. Reserves for returns, allowances, markdowns and discounts are included within customer
refund liability and the value of inventory associated with reserves for sales returns are included within prepaid
expenses and other current assets on the consolidated balance sheet. As of the end of Fiscal 2020 and Fiscal 2019,
there were $203.4 million and $219.4 million, respectively, in reserves for returns, allowances, markdowns and
discounts within customer refund liability and $57.9 million and $61.1 million, respectively, as the estimated value of
inventory associated with the reserves for sales returns within prepaid expenses and other current assets on the
consolidated balance sheet. Refer to Note 2 to the Consolidated Financial Statements for a further discussion of
revenue recognition.

Allowance for Doubtful Accounts

We make ongoing estimates relating to the collectability of accounts receivable and maintain an allowance
for estimated losses resulting from the inability of our customers to make required payments. In determining the
amount of the reserve, we consider historical levels of credit losses and significant economic developments within
the retail environment that could impact the ability of our customers to pay outstanding balances and make
judgments about the creditworthiness of significant customers based on ongoing credit evaluations. Because we
cannot predict future changes in the financial stability of our customers, actual future losses from uncollectible
accounts may differ from estimates. If the financial condition of customers were to deteriorate, resulting in their
inability to make payments, a larger reserve might be required. In the event we determine a smaller or larger
reserve is appropriate, we would record a benefit or charge to selling, general and administrative expense in the
period in which such a determination was made. As of the end of Fiscal 2020 and Fiscal 2019, the allowance for
doubtful accounts was $20.4 million and $15.1 million, respectively.

Inventory Valuation and Reserves

Inventories consist primarily of finished goods. Costs of finished goods inventories include all costs incurred
to bring inventory to its current condition, including inbound freight, duties and other costs. We value our inventory
at standard cost which approximates landed cost, using the first-in, first-out method of cost determination. Net
realizable value is estimated based upon assumptions made about future demand and retail market conditions.
If we determine that the estimated net realizable value of our inventory is less than the carrying value of such
inventory, we record a charge to cost of goods sold to reflect the lower of cost or net realizable value. If actual

market conditions are less favorable than those that we projected, further adjustments may be required that would
increase the cost of goods sold in the period in which such a determination was made.

Goodwill, Intangible Assets and Long-Lived Assets

Goodwill and intangible assets are recorded at their estimated fair values at the date of acquisition and are
allocated to the reporting units that are expected to receive the related benefits. Goodwill and indefinite lived
intangible assets are not amortized and are required to be tested for impairment at least annually or sooner
whenever events or changes in circumstances indicate that it is more likely than not that the fair value of the
reporting unit is less than its carrying amount. In conducting an annual impairment test, we first review qualitative
factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying
amount. If factors indicate that is the case, we perform the goodwill impairment test. We compare the fair value of
the reporting unit with its carrying amount. We estimate fair value using the discounted cash flows model, under the
income approach, which indicates the fair value of the reporting unit based on the present value of the cash flows
that we expect the reporting unit to generate in the future. Our significant estimates in the discounted cash flows
model include: our weighted average cost of capital, long-term rate of growth and profitability of the reporting unit's
business, and working capital effects. If the carrying amount of a reporting unit exceeds its fair value, goodwill is
impaired to the extent that the carrying value exceeds the fair value of the reporting unit. We perform our annual
impairment testing in the fourth quarter of each year.

As a result of the impacts of COVID-19, we determined that sufficient indicators existed to trigger an interim
goodwill impairment analysis for all of the Company’s reporting units as of March 31, 2020. During Fiscal 2020, we
recognized goodwill
impairment charges of $51.6 million for the Latin America reporting unit and the Canada
reporting unit, within the North America operating segment. Refer to Note 7 to the Consolidated Financial
Statements for a further discussion of goodwill.

life of

long-lived assets may warrant revision or that

We continually evaluate whether events and circumstances have occurred that indicate the remaining
estimated useful
the remaining balance may not be
recoverable. These factors may include a significant deterioration of operating results, changes in business plans,
or changes in anticipated cash flows. When factors indicate that an asset should be evaluated for possible
impairment, we review long-lived assets to assess recoverability from future operations using undiscounted cash
flows. If future undiscounted cash flows are less than the carrying value, an impairment is recognized in earnings to
the extent that the carrying value exceeds fair value.

Equity Method Investment

In April 2018, we invested ¥4.2 billion or $39.2 million in exchange for an additional 10% common stock
ownership in Dome Corporation ("Dome"), our Japanese licensee. This additional
investment brought our total
investment in Dome's common stock to 29.5%, from 19.5%. We account for our investment in Dome under the
equity method, given that we have the ability to exercise significant
influence, but not control, over Dome.
Investments under the equity method are required to be considered for impairment when events or circumstances
suggest that the carrying amount may not be recoverable. If a qualitative assessment indicates that our investment
in Dome may be impaired, a quantitative assessment is performed. If the quantitative assessment indicates a
decline in value that is determined to be other-than-temporary, an impairment charge would be recognized.

In connection with the preparation of our financial statements for the Fiscal 2019, we performed a
qualitative assessment of potential impairment indicators for our investment in Dome and determined that indicators
of impairment exist. While there was no single event or factor, we considered Dome's future rate of growth and
profitability and strategic objectives. We performed a valuation of our investment in Dome and determined that the
fair value of our investment is less than its carrying value by $39 million. We determined this decline in value to be
other-than-temporary considering the extent to which the market value of our investment is less than the carrying
value, the amount of Dome's indebtedness maturing within a short-term period, and Dome's long-term financial
forecast. As a result, we recorded a $39 million impairment of our equity method investment in Dome in the fourth
quarter of Fiscal 2019. The impairment charge was recorded within income (loss) from equity method investment on
the Consolidated Statements of Operations and as a reduction to the investment balance within other long term
assets on the Consolidated Balance Sheets. We calculate fair value using the discounted cash flows model, which
indicates the fair value of the investment based on the present value of the cash flows that we expect the
investment to generate in the future.

For Fiscal 2020, we recorded the allocable share of Dome's net income of $3.5 million (Fiscal 2019: net loss
of $8.7 million; Fiscal 2018: net income of $1.0 million) within income (loss) from equity method investment on our
Consolidated Statements of Operations, and as an adjustment to the investment balance within other long term
impairment
assets on our Consolidated Balance Sheets. We performed a qualitative assessment of potential

indicators for our investment in Dome and determined that indicators of impairment existed due to impacts from
COVID-19. Accordingly, we performed a valuation of our investment in Dome and determined that the fair value of
our investment was less than its carrying value by $8.6 million. We determined this decline in value to be other-
than-temporary considering Dome's near and long-term financial forecast. Accordingly, our results for Fiscal 2020
include the impact of recording a $8.6 million impairment of our equity method investment in Dome, which reduced
the carrying value to zero. The impairment charge was recorded within income (loss) from equity method
investment on the Consolidated Statements of Operations and as a reduction to the investment balance within other
long term assets on the Consolidated Balance Sheets. We calculated fair value using the discounted cash flows
model, which indicates the fair value of the investment based on the present value of the cash flows that it expects
the investment to generate in the future. As of the end of Fiscal 2020 and Fiscal 2019, the carrying value of our total
investment in Dome was $0 million and $5.1 million, respectively.

In addition to the investment in Dome, we have a license agreement with Dome. We recorded license
revenues from Dome of $40.1 million and $37.8 million for Fiscal 2020 and 2019, respectively. As of the end of
Fiscal 2020, we have $22.9 million (Fiscal 2019: $15.6 million) in licensing receivables outstanding, recorded in the
prepaid expenses and other current assets line item within our Consolidated Balance Sheets. To the extent Dome
continues to experience challenges in the performance of their business, we may not continue to realize the
licensing revenues received from them in line with their past results. Furthermore, based on Dome’s financial
performance, our ability to recover our investment in the long-term may be limited.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and
liabilities are established for temporary differences between the financial reporting basis and the tax basis of our
assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or settled.
Deferred income tax assets are reduced by valuation allowances when necessary. The Company has made the
policy election to record any liability associated with Global Intangible Low Taxed Income (“GILTI”) in the period in
which it is incurred.

Assessing whether deferred tax assets are realizable requires significant

judgment. We consider all
available positive and negative evidence, including historical operating performance and expectations of future
operating performance. The ultimate realization of deferred tax assets is often dependent upon future taxable
income and therefore can be uncertain. To the extent we believe it is more likely than not that all or some portion of
the asset will not be realized, valuation allowances are established against our deferred tax assets, which increase
income tax expense in the period when such a determination is made.

A significant portion of our deferred tax assets relate to U.S.

federal and state taxing jurisdictions.
Realization of
In evaluating the
recoverability of these deferred tax assets as of the end of Fiscal 2020, the Company has considered all available
evidence, both positive and negative, including but not limited to the following:

these deferred tax assets is dependent on future U.S. pre-tax earnings.

Positive

•

No history of U.S. federal and state tax attributes expiring unused.

Restructuring plans undertaken in 2017, 2018, and 2020, which aim to improve future profitability.

Existing sources of taxable income.

Available prudent and feasible tax planning strategies.

Negative

•

Restructuring plan undertaken in Fiscal 2020 resulting in significant charges in pre-tax income,
reducing profitability in the United States.

The negative economic impact and uncertainty resulting from the COVID-19 pandemic.

Cumulative pre-tax losses in recent years in the United States.

Inherent challenges in forecasting future pre-tax earnings which rely, in part, on improved
profitability from our restructuring efforts.

As of the end of Fiscal 2020, we believe that the weight of the negative evidence outweighs the positive
evidence regarding the realization of our U.S. deferred tax assets and have recorded a valuation allowance against
the U.S. deferred tax assets. We will continue to evaluate our ability to realize our net deferred tax assets on a
quarterly basis.

Income taxes include the largest amount of tax benefit for an uncertain tax position that is more likely than
not to be sustained upon audit based on the technical merits of the tax position. Settlements with tax authorities, the
expiration of statutes of limitations for particular tax positions or obtaining new information on particular tax positions
may cause a change to the effective tax rate. We recognize accrued interest and penalties related to unrecognized
tax benefits in the provision for income taxes on the Consolidated Statements of Operations.

Stock-Based Compensation

We account for stock-based compensation in accordance with accounting guidance that requires all stock-
based compensation awards granted to employees and directors to be measured at fair value and recognized as an
expense in the financial statements. As of
the end of Fiscal 2020, we had $67.5 million of unrecognized
compensation expense expected to be recognized over a weighted average period of 2.39 years. This
unrecognized compensation expense does not include any expense related to performance-based restricted stock
units and stock options granted in Fiscal 2019 for which the performance targets were not deemed probable as of
the end of Fiscal 2020. All such performance awards for Fiscal 2019 were forfeited due to the performance targets
not being achieved. We did not grant any performance awards in Fiscal 2020.

The assumptions used in calculating the fair value of stock-based compensation awards represent
management’s best estimates, but the estimates involve inherent uncertainties and the application of management
judgment. In addition, compensation expense for performance-based awards is recorded over the related service
period when achievement of the performance targets is deemed probable, which requires management judgment.
Refer to Note 2 and Note 15 to the Consolidated Financial Statements for a further discussion on stock-based
compensation.

Recently Issued Accounting Standards

Refer to Note 2 to the Consolidated Financial Statements included in this Form 10-K for our assessment of

recently issued accounting standards.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Foreign Currency and Interest Rate Risk

We are exposed to global market risks, including the effects of changes in foreign currency and interest
rates. We use derivative instruments to manage financial exposures that occur in the normal course of business and
do not hold or issue derivatives for trading or speculative purposes.

We may elect to designate certain derivatives as hedging instruments under U.S. GAAP. We formally
document all relationships between designated hedging instruments and hedged items, as well as our risk
management objectives and strategies for undertaking hedged transactions. This process includes linking all
derivatives designated as hedges to forecasted cash flows and assessing, both at inception and on an ongoing
basis, the effectiveness of the hedging relationships.

Our

foreign exchange risk management program consists of designated cash flow hedges and
undesignated hedges. As of the end of Fiscal 2020, we had hedge instruments, primarily for British Pound/U.S.
Dollar, U.S. Dollar/Chinese Renminbi, Euro/U.S. Dollar, U.S. Dollar/Canadian Dollar, U.S. Dollar/Mexican Peso, and
Australian Dollar/U.S. Dollar currency pairs. All derivatives are recognized on the consolidated balance sheets at fair
value and classified based on the instruments maturity dates. The table below provides information about our
foreign currency forward exchange agreements and presents the notional amounts and weighted average exchange
rates by contractual maturity dates:

(In thousands)

2021

2022

2023

2024

On-Balance Sheet Financial Instruments

USD Functional Currency

Fair Value as of Year Ended

2025 and
Thereafter

Total

December 31,
2020

December 31,
2019

EUR

Notional

97,333 $

63,142 $

— $

— $ 160,475 $

(5,565) $

182

Weighted Average
Exchange Rate

1.19

1.21

GBP

Notional

179,180

88,912

Weighted Average
Exchange Rate

JPY

Notional

Weighted Average
Exchange Rate

CNY Functional Currency

1.33

5,448

105.27

1.34

—

1.19

—

268,092

(6,634)

(3,504)

1.34

—

5,448

(126)

198

105.27

USD

Notional

138,350

70,400

—

208,750

(5,414)

531

Weighted Average
Exchange Rate

6.80

6.81

CAD Functional Currency

USD

Notional

86,500

45,600

—

132,100

(3,824)

(2,421)

Weighted Average
Exchange Rate

1.31

MXN Functional Currency

USD

Notional

23,600

14,010

—

37,610

(739)

(2,137)

Weighted Average
Exchange Rate

20.74

21.35

20.97

We currently generate a majority of our consolidated net revenues in the United States, and the reporting
currency for our Consolidated Financial Statements is the U.S. dollar. As our net revenues and expenses generated
outside of the United States increase, our results of operations could be adversely impacted by changes in foreign
currency exchange rates. For example, as we recognize foreign revenues in local foreign currencies and if the U.S.
dollar strengthens, it could have a negative impact on our foreign revenues upon translation of those results into the
U.S. dollar upon consolidation of our financial statements. In addition, we are exposed to gains and losses resulting
from fluctuations in foreign currency exchange rates relating to transactions generated by our international
subsidiaries in currencies other than their local currencies. These gains and losses are driven by non-functional
currency generated revenue, non-functional currency inventory purchases, investments in U.S. Dollar denominated

available-for-sale debt securities, and certain other intercompany transactions. As of the end of Fiscal 2020, the
aggregate notional value of our outstanding cash flow hedges was $812.5 million, with contract maturities ranging
from one to twenty-four months.

In order to maintain liquidity and fund business operations, we may enter into long term debt arrangements
with various lenders which bear a range of fixed and variable rates of interest. The nature and amount of our long
term debt can be expected to vary as a result of future business requirements, market conditions and other factors.
We may elect
to enter into interest rate swap contracts to reduce the impact associated with interest rate
fluctuations from time to time. Our interest rate swap contracts are accounted for as cash flow hedges. As of the end
of Fiscal 2020, as all of our long-term debt bore fixed rate interest rates, we had no outstanding interest rate swap
contracts.

For contracts designated as cash flow hedges,

the changes in fair value are reported as other
comprehensive income and are recognized in current earnings in the period or periods during which the hedged
transaction affects current earnings. One of the criteria for this accounting treatment is the notional value of these
derivative contracts should not be in excess of specifically identified anticipated transactions. By their very nature,
our estimates of
the anticipated transactions may fluctuate over time and may ultimately vary from actual
transactions. When anticipated transaction estimates or actual transaction amounts decline below hedged levels, or
if it is no longer probable a forecasted transaction will occur by the end of the originally specified time period or
within an additional two-month period of time, we are required to reclassify the cumulative change in fair value of the
over-hedged portion of the related hedge contract from Other comprehensive income (loss) to Other expense, net
during the period in which the decrease occurs.

We enter into derivative contracts with major financial institutions with investment grade credit ratings and
are exposed to credit losses in the event of non-performance by these financial
institutions. This credit risk is
generally limited to the unrealized gains in the derivative contracts. However, we monitor the credit quality of these
financial
institutions and consider the risk of counterparty default to be minimal. Although we have entered into
foreign currency contracts to minimize some of the impact of foreign currency exchange rate fluctuations on future
cash flows, we cannot be assured that foreign currency exchange rate fluctuations will not have a material adverse
impact on our financial condition and results of operations.

Credit Risk

We are exposed to credit risk primarily on our accounts receivable. We provide credit to customers in the
ordinary course of business and perform ongoing credit evaluations. We believe that our exposure to concentrations
of credit risk with respect to trade receivables is largely mitigated by our customer base. We believe that our
allowance for doubtful accounts is sufficient to cover customer credit risks as of the end of Fiscal 2020. Refer to
"Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting
Policies and Estimates - Allowance for Doubtful Accounts" for a further discussion on our policies.

Inflation

Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect
our operating results. Although we do not believe that inflation has had a material impact on our financial position or
results of operations in recent periods, a high rate of inflation in the future may have an adverse effect on our ability
to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net
revenues if the selling prices of our products do not increase with these increased costs.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Management on Internal Control Over Financial Reporting

Management

is responsible for establishing and maintaining adequate internal control over financial
reporting for the Company. We conducted an evaluation of the effectiveness of our internal control over financial
reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in 2013. This evaluation included review of the
documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness
of controls and a conclusion on this evaluation. Based on our evaluation, we have concluded that our internal
control over financial reporting was effective as of December 31, 2020.

The effectiveness of our internal control over financial reporting as of December 31, 2020, has been audited
by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which
appears herein.

/s/ PATRIK FRISK

Patrik Frisk

/s/ DAVID E. BERGMAN
David E. Bergman

Dated: February 24, 2021

Chief Executive Officer and President

Chief Financial Officer

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Under Armour, Inc.:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Under Armour, Inc. and its subsidiaries (the
“Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations,
comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended
December 31, 2020, including the related notes and schedule of valuation and qualifying accounts for each of the
three years in the period ended December 31, 2020 listed in the index appearing under Item 15(a)(2) (collectively
referred to as the “consolidated financial statements”). We also have audited the Company's internal control over
financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principles

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it
accounts for leases in 2019 and the manner in which it accounts for revenues from contracts with customers in
2018.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Report of Management on Internal Control Over Financial Reporting. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's
internal control over financial reporting based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in

accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that (i)
relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
taken as a whole, and we are not, by
in any way our opinion on the consolidated financial statements,
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.

Long-Lived Asset Impairment Analyses – Right-of-Use Assets

As described in Notes 3 and 7 of the consolidated financial statements, the Company has long-lived assets which
are primarily comprised of property, plant and equipment, net of $658.7 million and operating right-of-use (ROU)
assets of $536.7 million as of December 31, 2020. As a result of
the impacts of COVID-19, management
determined that sufficient indicators existed to trigger the performance of an interim long-lived asset impairment
analysis. Management performed undiscounted cash flow analyses on its long-lived assets, including retail stores at
an individual store level. Based on these undiscounted cash flow analyses, management determined that certain
long-lived assets had net carrying values that exceeded their estimated undiscounted future cash flows.
Management estimated the fair value of these long-lived assets based on their market rent assessments or
discounted cash flows. Management compared these estimated fair values to the net carrying values. Management
recognized $89.7 million of long-lived asset impairment charges for 2020. Additionally, in March 2020, as a part of
the 2020 restructuring plan, management made the strategic decision to forgo the opening of its New York City
flagship store and the property is actively being marketed for sublease. Accordingly, in the first quarter of 2020,
management recognized a ROU asset impairment of $290.8 million, reducing the carrying value of the lease asset
to its estimated fair value. Fair value was estimated using an income-approach based on management's forecast of
future cash flows expected to be derived from the property based on current sublease market rent.

The principal considerations for our determination that performing procedures relating to the long-lived asset
impairment analyses for right-of-use assets is a critical audit matter are the significant judgment by management
when developing the fair value measurement of the right-of-use assets, which in turn led to a high degree of auditor
judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions
related to the current market and sublease market rents.
involved the use of
professionals with specialized skill and knowledge.

the audit effort

In addition,

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to management’s impairment analyses, including controls over the valuation of the long-lived
assets. These procedures also included, among others, testing management’s process for developing the fair value
estimates; evaluating the appropriateness of the methodology and approach used; testing the completeness and
accuracy of the underlying data used in the impairment analyses; and evaluating the reasonableness of the current
market and sublease market rent significant assumptions. Evaluating management’s assumptions related to the
current market and sublease market rents involved evaluating whether the assumptions used were reasonable and
consistent with external market and industry data. Professionals with specialized skill and knowledge were used to
assist in evaluating the appropriateness of the methodology and approach and reasonableness of the current
market and sublease market rent assumptions.

Reserve for Customer Returns

As described in Note 2 to the consolidated financial statements, the Company recorded $203.4 million as of
December 31, 2020 in reserves for returns, allowances, markdowns and discounts within customer refund liabilities.
Management bases its estimates of the reserve for customer returns on historical rates of customer returns and
allowances as well as the specific identification of outstanding returns, markdowns and allowances that have not yet
been received by the Company.

The principal considerations for our determination that performing procedures relating to the reserve for customer
returns is a critical audit matter are the significant judgment by management in estimating the customer returns
reserve, which in turn led to a high degree of auditor judgment, subjectivity, and effort, in performing procedures and
evaluating management’s significant assumption related to the amount of outstanding returns that have not yet
been received by the Company.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to the estimation of management’s customer returns reserve, including the assumption related to
the outstanding returns that have not yet been received by the Company. These procedures also included, among
others, testing management’s process for developing the customer returns reserve; evaluating the appropriateness
of the method; testing the completeness, accuracy, and relevance of underlying data used in the estimate; and
evaluating the reasonableness of the significant assumption related to the amount of outstanding returns that have
not yet been received by the Company. Evaluating management’s assumption related to outstanding returns that
have not yet been received by the Company involved evaluating whether the assumption used by management was
reasonable considering (i) historical rates of customer returns; (ii) specific identification of outstanding returns; and
(iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
February 24, 2021

We have served as the Company’s auditor since 2003.

Under Armour, Inc. and Subsidiaries

Consolidated Balance Sheets
(In thousands, except share data)

Assets
Current assets

Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other current assets

Total current assets

Property and equipment, net
Operating lease right-of-use assets
Goodwill
Intangible assets, net
Deferred income taxes
Other long-term assets

Total assets
Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable
Accrued expenses
Customer refund liabilities
Operating lease liabilities
Other current liabilities

Total current liabilities

Long term debt
Operating lease liabilities, non-current
Other long-term liabilities

Total liabilities

Commitments and contingencies (see Note 10)
Stockholders’ equity

Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares
authorized as of December 31, 2020 and 2019; 188,603,686 shares issued
and outstanding as of December 31, 2020 (2019: 188,289,680)

Class B Convertible Common Stock, $0.0003 1/3 par value; 34,450,000
shares authorized, issued and outstanding as of December 31, 2020 and
2019.

Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares
authorized as of December 31, 2020 and 2019; 231,953,667 shares issued
and outstanding as of December 31, 2020 (2019: 229,027,730)

Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity

See accompanying notes.

December 31,
2020

December 31,
2019

$ 1,517,361 $
527,340
895,974
282,300
3,222,975
658,678
536,660
502,214
13,295
23,930
72,876

788,072
708,714
892,258
313,165
2,702,209
792,148
591,931
550,178
36,345
82,379
88,341
$ 5,030,628 $ 4,843,531

575,954 $
378,859
203,399
162,561
92,503
1,413,276
1,003,556
839,414
98,389
3,354,635

618,194
374,694
219,424
125,900
83,797
1,422,009
592,687
580,635
98,113
2,693,444

1,061,173
673,855
(59,185)
1,675,993

973,717
1,226,986
(50,765)
2,150,087
$ 5,030,628 $ 4,843,531

Under Armour, Inc. and Subsidiaries

Consolidated Statements of Operations
(In thousands, except per share amounts)

Year Ended December 31,

Net revenues
Cost of goods sold
Gross profit

Selling, general and administrative expenses
Restructuring and impairment charges
Income (loss) from operations

Interest expense, net
Other income (expense), net

Income (loss) before income taxes

Income tax expense (benefit)
Income (loss) from equity method investment

Net income (loss)

Basic net income (loss) per share of Class A, B and C common
stock
Diluted net income (loss) per share of Class A, B and C common
stock

2,314,572
2,160,095
2,171,934
601,599
(613,438)
(47,259)
168,153
(492,544)
49,387
(7,246)
(549,177) $

2020

2018

2019
$ 4,474,667 $ 5,267,132 $ 5,193,185
2,852,714
2,340,471
2,182,339
183,149

2,796,599
2,470,533
2,233,763
—

236,770
(21,240)
(5,688)
209,842
70,024
(47,679)
92,139 $

(25,017)
(33,568)
(9,203)
(67,788)
(20,552)
934
(46,302)

(1.21) $

0.20 $

(0.10)

(1.21) $

0.20 $

(0.10)

454,089
454,089

450,964
454,274

445,815
445,815

Weighted average common shares outstanding Class A, B and
C common stock
Basic
Diluted

See accompanying notes.

Under Armour, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(In thousands)

Net income (loss)
Other comprehensive income (loss):

Foreign currency translation adjustment
Unrealized gain (loss) on cash flow hedge, net of tax benefit (expense)
of $1,791, $7,798, and $(7,936) for the years ended December 31,
2020, 2019, and 2018, respectively.

Gain (loss) on intra-entity foreign currency transactions

Total other comprehensive (loss)
Comprehensive income (loss)

See accompanying notes.

Year Ended December 31,

2020

$ (549,177) $

2019
92,139 $ (46,302)

2018

(5,060)

10,754

(18,535)

(18,075)

(21,646)

22,800

14,715
(8,420)
$ (557,597) $

(5,041)
(886)
(11,778)
(776)
80,361 $ (47,078)

Under Armour, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity
(In thousands)

Class A
Common Stock

Class B
Convertible
Common Stock

Class C
Common Stock

Amount

Balance as of December 31,
2017

Exercise of stock options

185,257

2,084

Shares withheld in consideration
of employee tax obligations
relative to stock-based
compensation arrangements

Issuance of Class A Common
Stock, net of forfeitures

Issuance of Class C Common
Stock, net of forfeitures

Impact of adoption of accounting
standard updates

Stock-based compensation
expense

Comprehensive income (loss)

Balance as of December 31,
2018

Exercise of stock options and
warrants

Shares withheld in consideration
of employee tax obligations
relative to stock-based
compensation arrangements

Issuance of Class A Common
Stock, net of forfeitures

Issuance of Class C Common
Stock, net of forfeitures

Impact of adoption of accounting
standard updates

Stock-based compensation
expense

Comprehensive loss

(23)

392

—

187,710

441

(15)

154

—

Balance as of December 31,
2019

188,290

Exercise of stock options

148

Shares withheld in consideration
of employee tax obligations
relative to stock-based
compensation arrangements

Issuance of Class A Common
Stock, net of forfeitures

Issuance of Class C Common
Stock, net of forfeitures

Stock-based compensation
expense

Equity Component value of
convertible notes issuance, net

Comprehensive income (loss)

Balance as of December 31,
2020

(1)

166

—

Additional
Paid-in-
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income

Total
Equity

872,266

1,184,441

(38,211) $ 2,018,642

6,747

—

(4,168)

(2,564)

—

3,507

41,783

—

6,748

(2,564)

—

(4,167)

3,507

41,783

—

(46,302)

(776)

(47,078)

222,375

2,127

(140)

—

2,060

—

226,422

916,628

$ 1,139,082

(38,987) $ 2,016,871

293

(227)

—

2,540

—

2,101

—

5,370

—

49,618

(4,235)

—

2,101

(4,235)

—

5,371

—

49,618

—

92,139

(11,778)

80,361

229,028

973,717

$ 1,226,986

(50,765) $ 2,150,087

136

(262)

—

3,052

—

517

—

4,225

42,070

40,644

(3,954)

—

517

(3,954)

—

4,226

42,070

40,644

—

(549,177)

(8,420)

(557,597)

—

34,450

—

34,450

—

34,450

—

188,603

34,450

231,954

$ 1,061,173

673,855

(59,185) $ 1,675,993

See accompanying notes.

Under Armour, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
(In thousands)

Cash flows from operating activities

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities

Depreciation and amortization

Unrealized foreign currency exchange rate gain (loss)

Impairment charges

Amortization of bond premium

Gain on sale of MyFitnessPal platform

Loss on disposal of property and equipment

Stock-based compensation

Deferred income taxes

Changes in reserves and allowances

Changes in operating assets and liabilities:

Accounts receivable

Inventories

Prepaid expenses and other assets

Other non-current assets

Accounts payable

Accrued expenses and other liabilities

Customer refund liability

Income taxes payable and receivable

Net cash provided by operating activities

Cash flows from investing activities

Sale of MyFitnessPal platform

Purchase of businesses

Purchases of property and equipment

Sale of property and equipment

Purchase of equity method investment

Purchases of other assets

Net cash (used in) provided by investing activities

Cash flows from financing activities

Proceeds from long term debt and revolving credit facility

Payments on long term debt and revolving credit facility

Purchase of capped call

Employee taxes paid for shares withheld for income taxes

Proceeds from exercise of stock options and other stock issuances

Other financing fees

Payments of debt financing costs

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash

Beginning of period

End of period

Non-cash investing and financing activities

Change in accrual for property and equipment

Other supplemental information

Cash paid (received) for income taxes, net of refunds

Cash paid for interest, net of capitalized interest

See accompanying notes.

Year Ended December 31,

2020

2019

2018

(549,177) $

92,139

(46,302)

164,984

(9,295)

470,543

12,070

(179,318)

3,740

42,070

43,992

10,347

167,614

15,306

18,603

(259,735)

(40,673)

318,532

(19,250)

2,511

212,864

198,916

(40,280)

(92,291)

—

—
66,345

186,425

(2,073)

39,000

254

—

4,640

49,618

38,132

181,768

14,023

9,893

254

—

4,256

41,783

(38,544)

(26,096)

(234,998)

(45,450)

149,519

24,334

19,966

59,458

(18,987)

(80,710)

18,862

509,031

186,834

109,919

(107,855)

—

26,413

134,594

305,141

41,051

628,230

—

(145,802)

(170,385)

—

(1,311)
(147,113)

11,285

(39,207)

(4,597)

(202,904)

1,288,753

25,000

505,000

(800,000)

(162,817)

(695,000)

(47,850)

(3,675)

4,744

100

(5,219)

436,853

16,445

732,507

—

(4,235)

7,472

(2,553)

—
(2,743)

2,580

306

(11)

(137,070)

(189,868)

5,100

229,948

12,467

247,925

796,008

566,060

318,135

$ 1,528,515

796,008

566,060

(13,875) $

(8,084) $

(14,611)

24,443

28,626

23,352

18,031

(16,738)

28,586

Under Armour, Inc. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

1. Description of the Business

Under Armour, Inc. (together with its wholly owned subsidiaries, the "Company") is a developer, marketer
and distributor of branded athletic performance apparel, footwear, and accessories. The Company creates products
engineered to solve problems and make athletes better, as well as digital health and fitness apps built to connect
people and drive performance. The Company's products are made, sold and worn worldwide.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Under Armour, Inc. and its
wholly owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated in
consolidation. The accompanying consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America ("U.S. GAAP").

During the first quarter of 2021, the Company's Board of Directors approved a change in fiscal year end to
March 31 from December 31, effective for the fiscal year beginning after April 1, 2022. Accordingly, the Company’s
2021 fiscal year will end on December 31, 2021, followed by a three-month transition period from January 1, 2022
through March 31, 2022. The Company’s 2023 fiscal year will run from April 1, 2022 through March 31, 2023.

On March 2, 2020, the Company acquired, on a cash free, debt free basis, 100% of Triple Pte. Ltd.
("Triple"), a distributor of the Company's products in Southeast Asia. The results of operations of this acquisition
have been consolidated with those of the Company beginning on March 2, 2020. Refer to Note 5 for a discussion of
the acquisition.

On December 18, 2020, the Company completed the previously announced sale of its MyFitnessPal
platform to an entity affiliated with Francisco Partners Management, L.P. and recognized a gain of approximately
$179.3 million, which is included within Other income (expenses), net in the Consolidated Statements of Operations.
Refer to Note 4 for a discussion of the sale.

During the year ended December 31, 2019 ("Fiscal 2019"), the Company recorded an adjustment related to
prior periods to correct unrecorded consulting expenses incurred primarily in connection with the 2018 restructuring
plan. Selling, general and administrative expenses for Fiscal 2019 includes $5.5 million of expense that was
understated in prior periods. The Company concluded that the error was not material to any prior or interim periods
presented.

During the year ended December 31, 2018 ("Fiscal 2018"), the Company identified an immaterial error in
the presentation of premium subscriptions in its Connected Fitness reporting segment. Subscription revenue was
previously recorded net of any related commission. Beginning in the first quarter of Fiscal 2018, subscription
revenue is recorded on a gross basis and the related commission cost
is included in selling, general and
administrative expense in the Consolidated Statements of Operations. The Company concluded that the error was
not material to any of its previously issued financial statements.

COVID-19

In March 2020, a novel strain of coronavirus (COVID-19) was declared a global pandemic by the World
Health Organization. This pandemic has negatively affected the U.S. and global economies, disrupted global supply
chains and financial markets, and led to significant travel and transportation restrictions, including mandatory
closures and orders to “shelter-in-place”. The Company has been focused on protecting the health and safety of its
teammates, athletes and consumers, working with its customers and suppliers to minimize potential disruptions and
supporting the community to address challenges posed by the global pandemic, while managing the Company's
business in response to a changing dynamic. The Company's business operations and financial performance for the
year ended December 31, 2020 ("Fiscal 2020") were materially impacted by COVID-19. These impacts are
discussed within these notes to the consolidated financial statements, including but not limited to discussions
related to long-lived asset and goodwill impairment, leases, long-term debt, and income taxes.

In response to the pandemic, global

including the Coronavirus Aid, Relief, and Economic
Security ("CARES") Act, was announced. The Company recognized certain incentives totaling $9 million during
Fiscal 2020. The incentives were recorded as a reduction of the associated costs which the Company incurred
within selling, general and administrative expenses in the Consolidated Statements of Operations. Further, the

legislation,

CARES Act includes modification to income tax provisions. Refer to Note 13 for discussion of the impacts of
modifications to income tax provisions under the CARES Act.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less at
date of inception to be cash and cash equivalents. The Company's restricted cash is reserved for payments related
to claims for its captive insurance program, which is included in prepaid expenses and other current assets on the
Company's Consolidated Balance Sheet. The following table provides a reconciliation of cash, cash equivalents and
restricted cash reported within the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows.

Cash and cash equivalents

Restricted cash
Total cash, cash equivalents and restricted cash

Concentration of Credit Risk

December 31, 2020

December 31, 2019

1,517,361 $

11,154
1,528,515 $

788,072

7,936
796,008

Financial instruments that subject the Company to significant concentration of credit risk consist primarily of
accounts receivable. The majority of the Company’s accounts receivable is due from its large wholesale customers.
Credit is extended based on an evaluation of the customer’s financial condition and collateral is not required. None
of the Company's customers accounted for more than 10% of accounts receivable for Fiscal 2020 and Fiscal 2019,
respectively. For Fiscal 2020, Fiscal 2019 and Fiscal 2018, no customer accounted for more than 10% of net
revenues. Given the current global economic environment and impacts of COVID-19, the Company regularly
evaluates the credit risk of its large wholesale customers which make up the majority of the Company's accounts
receivable. Refer to "Credit Losses - Allowance for Doubtful Accounts" for a discussion of the evaluation of credit
losses.

Sale of Accounts Receivable

The Company has an agreement with a financial institution to sell selected accounts receivable on a recurring,
non-recourse basis. Under the agreement, at any time and from time to time the balance of up to $140 million of the
institution. The Company's ability to utilize this
Company's accounts receivable may be sold to the financial
agreement, however, may be limited by the credit ratings of the Company's customers. The Company removes the
sold accounts receivable from the Consolidated Balance Sheets at the time of sale. The Company does not retain
any interests in the sold accounts receivable. The Company acts as the collection agent for the outstanding
accounts receivable on behalf of the financial institution.

For Fiscal 2020 and Fiscal 2019,

there were no amounts outstanding in connection with these
arrangements. The funding fee charged by the financial institutions is included in the other income (expense), net
line item in the Consolidated Statements of Operations.

Credit Losses - Allowance for Doubtful Accounts

Credit losses are the risk of financial

loss to the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. The Company is exposed to credit losses primarily through
customer receivables associated with the sales of product within the Company's wholesale and Connected Fitness
channels, which are recorded in accounts receivable, net on the Company's Consolidated Balance Sheet. The
Company also has other receivables, including receivables from licensing arrangements, which are recorded in
prepaid expenses and other current assets on the Company's Consolidated Balance Sheet.

including the customer's established credit rating or the Company's assessment of

Credit is extended to customers based on a credit review. The credit review considers each customer’s
financial condition,
the
customer’s creditworthiness based on their financial statements absent a credit rating, local industry practices, and
business strategy. A credit limit and terms are established for each customer based on the outcome of this review.
The Company actively monitors ongoing credit exposure through continuous review of customer balances against
terms and payments against due dates. To mitigate credit risk, the Company may require customers to provide
security in the form of guarantees, letters of credit, or prepayment. The Company is also exposed to credit losses
through credit card receivables associated with the sales of products within the Company's direct to consumer
channel.

The allowance for doubtful accounts is based on the Company’s assessment of the collectibility of customer
accounts. The Company makes ongoing estimates relating to the collectibility of accounts receivable and records an
allowance for estimated losses resulting from the inability of its customers to make required payments. The
levels of credit losses, current economic
Company establishes expected credit losses by evaluating historical
conditions that may affect a customer’s ability to pay, and creditworthiness of significant customers. These inputs
are used to determine a range of expected credit losses and an allowance is recorded within the range. Accounts
receivable are written off when there is no reasonable expectation of recovery.

(In thousands)

Allowance for doubtful accounts -
accounts receivable, net

Allowance for doubtful accounts -
prepaid expenses and other current assets (1)

Balance as of
December 31, 2019

Charged to
Costs and
Expenses

Write-Offs
Net of
Recoveries

Balance as of
December 31, 2020

15,083 $

10,456 $

(5,188) $

20,350

— $

7,029 $

— $

7,029

(1) This balance includes an allowance pertaining to a royalty receivable.

As of the end of Fiscal 2019, the allowance for doubtful accounts was $15.1 million.

For Fiscal 2020, the increase in the reserve is primarily due to the evaluation of certain account balances in
connection with negative developments that represent a higher risk of credit default. The allowance for doubtful
accounts was established with information available, including reasonable and supportable estimates of future risk
to the Company as of the end of Fiscal 2020. There may be further impacts due to COVID-19.

Inventories

Inventories consist primarily of finished goods. Costs of finished goods inventories include all costs incurred
to bring inventory to its current condition, including inbound freight, duties and other costs. The Company values its
inventory at standard cost which approximates landed cost, using the first-in, first-out method of cost determination.
Net realizable value is estimated based upon assumptions made about future demand and retail market conditions.
If the Company determines that the estimated net realizable value of its inventory is less than the carrying value of
such inventory, it records a charge to cost of goods sold to reflect the lower of cost or net realizable value. If actual
market conditions are less favorable than those projected by the Company, further adjustments may be required
that would increase the cost of goods sold in the period in which such a determination was made.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and
liabilities are established for temporary differences between the financial reporting basis and the tax basis of the
Company’s assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or
settled. Deferred income tax assets are reduced by valuation allowances when necessary. The Company has made
the policy election to record any liability associated with Global Intangible Low Tax Income (“GILTI”) in the period in
which it is incurred.

Assessing whether deferred tax assets are realizable requires significant

judgment. The Company
considers all available positive and negative evidence, including historical operating performance and expectations
of future operating performance. The ultimate realization of deferred tax assets is often dependent upon future
taxable income and therefore can be uncertain. To the extent the Company believes it is more likely than not that all
or some portion of the asset will not be realized, valuation allowances are established against the Company’s
deferred tax assets, which increase income tax expense in the period when such a determination is made.

Income taxes include the largest amount of tax benefit for an uncertain tax position that is more likely than
not to be sustained upon audit based on the technical merits of the tax position. Settlements with tax authorities, the
expiration of statutes of limitations for particular tax positions or obtaining new information on particular tax positions
may cause a change to the effective tax rate. The Company recognizes accrued interest and penalties related to
unrecognized tax benefits in the provision for income taxes on the Consolidated Statements of Operations.

Goodwill, Intangible Assets and Long-Lived Assets

whenever events or changes in circumstances indicate that it is more likely than not that the fair value of the
reporting unit is less than its carrying amount. In conducting an annual impairment test, the Company first reviews
qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than
its carrying amount. If factors indicate that is the case, the Company performs the goodwill impairment test. The
Company compares the fair value of the reporting unit with its carrying amount. The Company estimates fair value
using the discounted cash flows model, under the income approach, which indicates the fair value of the reporting
unit based on the present value of the cash flows that the Company expects the reporting unit to generate in the
future. The Company's significant estimates in the discounted cash flows model include: the Company's weighted
average cost of capital, long-term rate of growth and profitability of the reporting unit’s business, and working capital
effects. If the carrying amount of a reporting unit exceeds its fair value, goodwill is impaired to the extent that the
carrying value exceeds the fair value of the reporting unit. The Company performs its annual impairment testing in
the fourth quarter of each year.

As a result of the impacts of COVID-19, the Company determined that sufficient indicators existed to trigger
an interim goodwill impairment analysis for all of the Company’s reporting units as of March 31, 2020. During Fiscal
2020, the Company recognized goodwill impairment charges of $51.6 million for the Latin America reporting unit
and the Canada reporting unit, within the North America operating segment. Further, as a result of the impacts of
COVID-19, the Company determined that sufficient indicators existed to trigger the performance of an interim long-
lived asset impairment analysis. As a result, the Company recognized $89.7 million of long-lived asset impairment
charges for Fiscal 2020. Refer to Note 7 to the consolidated financial statements for a further discussion of goodwill.

The Company continually evaluates whether events and circumstances have occurred that indicate the
remaining estimated useful life of long-lived assets may warrant revision or that the remaining balance may not be
recoverable. These factors may include a significant deterioration of operating results, changes in business plans,
or changes in anticipated cash flows. When factors indicate that an asset should be evaluated for possible
the Company reviews long-lived assets to assess recoverability from future operations using
impairment,
undiscounted cash flows. If future undiscounted cash flows are less than the carrying value, an impairment is
recognized in earnings to the extent that the carrying value exceeds fair value.

Accrued Expenses

For Fiscal 2020, accrued expenses primarily included $77.9 million (Fiscal 2019: $118.7 million) and
$45.9 million (Fiscal 2019: $63.2 million) of accrued compensation and benefits, and marketing expenses,
respectively.

Foreign Currency Translation and Transactions

The functional currency for each of the Company’s wholly owned foreign subsidiaries is generally the
applicable local currency. The translation of foreign currencies into U.S. dollars is performed for assets and liabilities
using current foreign currency exchange rates in effect at the balance sheet date and for revenue and expense
accounts using average foreign currency exchange rates during the period. Capital accounts are translated at
historical foreign currency exchange rates. Translation gains and losses are included in stockholders’ equity as a
component of accumulated other comprehensive income. Adjustments that arise from foreign currency exchange
rate changes on transactions, primarily driven by intercompany transactions, denominated in a currency other than
the functional currency are included in other expense, net on the Consolidated Statements of Operations.

Derivatives and Hedging Activities

The Company uses derivative financial instruments in the form of foreign currency and interest rate swap
contracts to minimize the risk associated with foreign currency exchange rate and interest rate fluctuations. The
Company accounts for derivative financial instruments pursuant to applicable accounting guidance. This guidance
establishes accounting and reporting standards for derivative financial instruments and requires all derivatives to be
recognized as either assets or liabilities on the balance sheet and to be measured at fair value. Unrealized
derivative gain positions are recorded as other current assets or other long term assets, and unrealized derivative
loss positions are recorded as other current liabilities or other long term liabilities, depending on the derivative
financial instrument’s maturity date.

For contracts designated as cash flow hedges,

the changes in fair value are reported as other
comprehensive income and are recognized in current earnings in the period or periods during which the hedged
transaction affects current earnings. One of the criteria for this accounting treatment is the notional value of these
derivative contracts should not be in excess of specifically identified anticipated transactions. By their very nature,
the Company's estimates of the anticipated transactions may fluctuate over time and may ultimately vary from
actual transactions. When anticipated transaction estimates or actual transaction amounts decline below hedged
levels, or if it is no longer probable a forecasted transaction will occur by the end of the originally specified time

period or within an additional two-month period of time, the Company is required to reclassify the cumulative change
in fair value of the over-hedged portion of the related hedge contract from Other comprehensive income (loss) to
Other expense, net during the period in which the decrease occurs. The Company does not enter into derivative
financial instruments for speculative or trading purposes.

Revenue Recognition

The Company recognizes revenue pursuant to Accounting Standards Codification 606 ("ASC 606"). Net
revenues consist of net sales of apparel, footwear and accessories, license and Connected Fitness revenue. The
Company recognizes revenue when it satisfies its performance obligations by transferring control of promised
products or services to its customers, which occurs either at a point in time or over time, depending on when the
customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the
products or services. The amount of revenue recognized considers terms of sale that create variability in the
amount of consideration that the Company ultimately expects to be entitled to in exchange for the products or
services and is subject to an overall constraint that a significant revenue reversal will not occur in future periods.
Sales taxes imposed on the Company’s revenues from product sales are presented on a net basis on the
Consolidated Statements of Operations, and therefore do not impact net revenues or costs of goods sold.

Revenue transactions associated with the sale of apparel, footwear, and accessories, comprise a single
performance obligation, which consists of the sale of products to customers either through wholesale or direct-to-
consumer channels. The Company satisfies the performance obligation and records revenues when transfer of
control has passed to the customer, based on the terms of sale. In the Company’s wholesale channel, transfer of
control is based upon shipment under free on board shipping point for most goods or upon receipt by the customer
depending on the country of the sale and the agreement with the customer. The Company may also ship product
directly from its supplier to wholesale customers and recognize revenue when the product is delivered to and
accepted by the customer. In the Company’s direct-to-consumer channel, transfer of control takes place at the point
of sale for brand and factory house customers and upon shipment to substantially all e-commerce customers.
Payment terms for wholesale transactions are established in accordance with local and industry practices. Payment
is generally required within 30 to 60 days of shipment to or receipt by the wholesale customer in the United States,
and generally within 60 to 90 days of shipment to or receipt by the wholesale customer internationally. Payment is
generally due at the time of sale for direct-to-consumer transactions.

Gift cards issued to customers by the Company are recorded as contract liabilities until they are redeemed,
at which point revenue is recognized. The Company also estimates and recognizes revenue for gift card balances
not expected to ever be redeemed ("breakage") to the extent that it does not have a legal obligation to remit the
value of such unredeemed gift cards to the relevant
jurisdiction as unclaimed or abandoned property. Such
estimates are based upon historical redemption trends, with breakage income recognized in proportion to the
pattern of actual customer redemptions

Revenue from the Company's licensing arrangements is recognized over time during the period that
licensees are provided access to the Company's trademarks and benefit from such access through their sales of
licensed products. These arrangements require licensees to pay a sales-based royalty, which for most
arrangements may be subject to a contractually guaranteed minimum royalty amount. Payments are generally due
quarterly. The Company recognizes revenue for sales-based royalty arrangements (including those for which the
royalty exceeds any contractually guaranteed minimum royalty amount) as licensed products are sold by the
licensee. If a sales-based royalty is not ultimately expected to exceed a contractually guaranteed minimum royalty
amount, the minimum is recognized as revenue over the contractual period. This sales-based output measure of
progress and pattern of recognition best represents the value transferred to the licensee over the term of the
arrangement, as well as the amount of consideration that the Company is entitled to receive in exchange for
providing access to its trademarks.

Revenue from Connected Fitness subscriptions is recognized on a gross basis and is recognized over the
term of the subscription. The Company receives payments in advance of revenue recognition for subscriptions and
are recorded as contract liabilities in the Company's Consolidated Balance Sheet. Related commission cost is
included in selling, general and administrative expense in the Consolidated Statements of Operations. Revenue
from Connected Fitness digital advertising is recognized as the Company satisfies performance obligations
pursuant to customer insertion orders.

The Company records reductions to revenue for estimated customer returns, allowances, markdowns and
discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the
specific identification of outstanding returns, markdowns and allowances that have not yet been received by the
Company. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from the
Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly

higher or lower than the reserves it established, it would record a reduction or increase, as appropriate, to net sales
in the period in which it makes such a determination. Provisions for customer specific discounts are based on
negotiated arrangements with certain major customers. Reserves for
returns, allowances, markdowns and
discounts are included within customer refund liability and the value of inventory associated with reserves for sales
returns are included within prepaid expenses and other current assets on the Consolidated Balance Sheet. The
Company reviews and refines these estimates on at least a quarterly basis. For Fiscal 2020 and Fiscal 2019, there
were $203.4 million and $219.4 million, respectively, in reserves for returns, allowances, markdowns and discounts
within customer refund liability and $57.9 million and $61.1 million, respectively, as the estimated value of inventory
associated with the reserves for sales returns within prepaid expenses and other current assets on the Consolidated
Balance Sheet. Refer to Note 19 to the Consolidated Financial Statements for a further discussion of disaggregated
revenues.

Contract Liability

Contract liabilities are recorded when a customer pays consideration, or the Company has a right to an
amount of consideration that is unconditional, before the transfer of a good or service to the customer and thus
represent the Company's obligation to transfer the good or service to the customer at a future date. The Company's
liabilities consist of payments received in advance of revenue recognition for subscriptions for the
contract
Company's Connected Fitness applications, gift cards and royalty arrangements. Contract liabilities are included in
other liabilities on the Company's Consolidated Balance Sheet. For Fiscal 2020 and Fiscal 2019, contract liability
was $26.7 million and $60.4 million, respectively.

For Fiscal 2020, the Company recognized $16.1 million of revenue that was previously included in contract
liability as of the end of Fiscal 2019. For Fiscal 2019, the Company recognized $48.5 million of revenue that was
previously included in contract liability as of the end of Fiscal 2018. The change in the contract liability balance
primarily results from the timing differences between the Company's satisfaction of performance obligations and the
customer's payment. Commissions related to subscription revenue are capitalized and recognized over the
subscription period.

Practical Expedients and Policy Elections

The Company has made a policy election to account for shipping and handling activities that occur after the
customer has obtained control of a good as a fulfillment cost rather than an additional promised service.
Additionally,
to disclose certain information related to unsatisfied performance
obligations for subscriptions for its Connected Fitness applications as they have an original expected length of one
year or less.

the Company has elected not

Advertising Costs

Advertising costs are charged to selling, general and administrative expenses. Advertising production costs
are expensed the first time an advertisement related to such production costs is run. Media (television, print and
radio) placement costs are expensed in the month during which the advertisement appears, and costs related to
event sponsorships are expensed when the event occurs.
In addition, advertising costs include sponsorship
expenses. Accounting for sponsorship payments is based upon specific contract provisions and the payments are
generally expensed uniformly over the term of the contract after recording expense related to specific performance
incentives once they are deemed probable. Advertising expense, including amortization of in-store marketing
fixtures and displays, was $550.4 million, $578.9 million and $543.8 million for Fiscal 2020, Fiscal 2019 and Fiscal
2018, respectively. For Fiscal 2020, prepaid advertising costs were $15.2 million (Fiscal 2019: $26.9 million).

Shipping and Handling Costs

The Company charges certain customers shipping and handling fees. These fees are recorded in net
revenues. The Company includes the majority of outbound handling costs as a component of selling, general and
administrative expenses. Outbound handling costs include costs associated with preparing goods to ship to
customers and certain costs to operate the Company’s distribution facilities. These outbound handling costs,
included within selling, general and administrative expenses, were $80.5 million, $81.0 million and $91.8 million for
Fiscal 2020, Fiscal 2019 and Fiscal 2018, respectively. The Company includes outbound freight costs associated
with shipping goods to customers as a component of cost of goods sold.

Equity Method Investment

The Company has a common stock investment of 29.5% in Dome Corporation ("Dome"), the Company's
Japanese licensee. The Company accounts for its investment in Dome under the equity method, given it has the
ability to exercise significant influence, but not control, over Dome. During Fiscal 2020, the Company recorded its
allocable share of Dome's net income of $3.5 million (Fiscal 2019: net loss of $8.7 million; Fiscal 2018: net income

of $1 million), within income (loss) from equity method investment on the Consolidated Statements of Operations
and as an adjustment to the investment balance within other long term assets on the Consolidated Balance Sheet.

The Company performed a qualitative assessment of potential impairment indicators for its investment in
Dome and determined that indicators of impairment existed due to impacts from COVID-19. Accordingly, the
Company performed a valuation of its investment in Dome and determined that the fair value of its investment was
less than its carrying value by $8.6 million. The Company determined this decline in value to be other-than-
temporary considering Dome's near and long-term financial forecast. Accordingly, the Company's results for Fiscal
2020 include the impact of recording a $8.6 million impairment of the Company's equity method investment in
Dome, which reduced the carrying value to zero.The impairment charge was recorded within income (loss) from
equity method investment on the Consolidated Statements of Operations and as a reduction to the investment
balance within other long term assets on the Consolidated Balance Sheets. The Company calculated fair value
using the discounted cash flows model, which indicates the fair value of the investment based on the present value
of the cash flows that it expects the investment to generate in the future. For Fiscal 2020 there was no carrying
value associated with the Company's equity investment in Dome (Fiscal 2019: $5.1 million).

In addition to the investment in Dome, the Company has a license agreement with Dome. The Company
recorded license revenues from Dome of $40.1 million and $37.8 million for Fiscal 2020 and Fiscal 2019,
respectively. For Fiscal 2020, the Company had $22.9 million (Fiscal 2019: $15.6 million) in licensing receivables
outstanding recorded in the prepaid expenses and other current assets line item within the Company's Consolidated
Balance Sheet.

On March 2, 2020, as part of the Company's acquisition of Triple, the Company assumed 49.5% of common
stock ownership in UA Sports (Thailand) Co., Ltd. (“UA Sports Thailand”). The Company accounts for its investment
in UA Sports Thailand under the equity method, given it has the ability to exercise significant influence, but not
control, over UA Sports Thailand. For Fiscal 2020, the Company recorded the allocable share of UA Sports
Thailand’s net
loss of $1.1 million within income (loss) from equity method investment on the Consolidated
Statements of Operations and as an adjustment to the investment balance within other long term assets on the
Consolidated Balance Sheets. As of the end of Fiscal 2020 , the carrying value of the Company’s total investment in
UA Sports Thailand was $4.5 million. Refer to Note 5 for a discussion of the acquisition.

Earnings per Share

Basic earnings per common share is computed by dividing net income available to common stockholders
for the period by the weighted average number of common shares outstanding during the period. Any stock-based
compensation awards that are determined to be participating securities, which are stock-based compensation
awards that entitle the holders to receive dividends prior to vesting, are included in the calculation of basic earnings
per share using the two class method. Diluted earnings per common share is computed by dividing net income
available to common stockholders for the period by the diluted weighted average common shares outstanding
during the period. Diluted earnings per share reflects the potential dilution from common shares issuable through
stock options, warrants, restricted stock units and other equity awards. Refer to Note 14 for a further discussion of
earnings per share.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with accounting guidance that
requires all stock-based compensation awards granted to employees and directors to be measured at fair value and
recognized as an expense in the financial statements. In addition, this guidance requires that excess tax benefits
related to stock-based compensation awards be reflected as operating cash flows.

The Company uses the Black-Scholes option-pricing model to estimate the fair market value of stock-based
compensation awards. The Company uses the “simplified method” to estimate the expected life of options, as
permitted by accounting guidance. The “simplified method” calculates the expected life of a stock option equal to the
time from grant to the midpoint between the vesting date and contractual term, taking into account all vesting
tranches. The risk free interest rate is based on the yield for the U.S. Treasury bill with a maturity equal to the
expected life of the stock option. Expected volatility is based on the Company's historical average. Compensation
expense is recognized net of forfeitures on a straight-line basis over the total vesting period, which is the implied
requisite service period. Compensation expense for performance-based awards is recorded over the implied
requisite service period when achievement of the performance target is deemed probable.

The Company issues new shares of Class A Common Stock and Class C Common Stock upon exercise of
stock options, grant of restricted stock or share unit conversion. Refer to Note 15 for further details on stock-based
compensation.

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from these estimates.

Further, the full impact of COVID-19 cannot reasonably be estimated. The Company has made appropriate

accounting estimates and assumptions based on the facts and circumstances available as of the reporting date.
The Company may experience further impacts based on long-term effects on the Company's customers and the
countries in which the Company operates. As a result of these uncertainties, actual results could differ from those
estimates and assumptions.

Fair Value of Financial Instruments

The carrying amounts shown for the Company’s cash and cash equivalents, accounts receivable and
accounts payable approximate fair value because of the short term maturity of those instruments. As of the end of
Fiscal 2020, the fair value of the Company's 3.250% Senior Notes were $602.6 million (Fiscal 2019: $587.5 million).
The fair value of the Company's 1.50% Convertible Senior Notes, which was issued in May 2020, was $828.2
million as of the end of Fiscal 2020. The fair value of the Company's other long term debt approximates its carrying
value based on the variable nature of interest rates and current market rates available to the Company. The fair
value of foreign currency contracts is based on the net difference between the U.S. dollars to be received or paid at
the contracts’ settlement date and the U.S. dollar value of the foreign currency to be sold or purchased at the
current exchange rate. The fair value of the interest rate swap contract is based on the net difference between the
fixed interest to be paid and variable interest to be received over the term of the contract based on current market
rates.

Recently Issued Accounting Standards

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update
(ASU) 2020-06. The amendment in this update simplifies the accounting for convertible instruments by reducing the
number of accounting models available for convertible debt instruments and convertible preferred stock. This
update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to
reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method
for calculating diluted earnings per share. The update also requires entities to provide expanded disclosures about
the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial
statements, and information about events, conditions, and circumstances that can affect how to assess the amount
or timing of an entity’s future cash flows related to those instruments. The guidance is effective for interim and
annual periods beginning after December 15, 2021. The Company is currently evaluating this guidance to determine
the impact it may have on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects
of Reference Rate Reform on Financial Reporting. The ASU provides practical expedients and exceptions for
applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if
certain criteria are met. The expedients and exceptions provided by the amendments in this update apply only to
contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”)
or another reference rate expected to be discontinued as a result of reference rate reform. This ASU is currently
effective and upon adoption may be applied prospectively to contract modifications and hedging relationships made
on or before December 31, 2022. The Company is currently evaluating this guidance to determine the impact it may
have on its consolidated financial statements.

Recently Adopted Accounting Standards

In December 2019, the FASB issued ASU 2019-12 to simplify the accounting for income taxes. The ASU
impacts various topic areas within ASC 740, including accounting for taxes under hybrid tax regimes, accounting for
increases in goodwill, allocation of tax amounts to separate company financial statements within a group that files a
consolidated tax return, intra-period tax allocation, interim period accounting, and accounting for ownership changes
in investments, among other minor codification improvements. The guidance in this ASU becomes effective for fiscal
years, and interim periods within those fiscal years, beginning after December 15, 2020 and may be early adopted.
The Company has elected to early adopt this standard as of January 1, 2020. The adoption of this ASU did not have
a material impact on the consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13 - Financial Instruments – Credit Losses: Measurement of
Credit Losses on Financial Instruments. This ASU amended the impairment model to utilize an expected loss
methodology in place of the previously used incurred loss methodology, which results in more timely recognition of
losses. The new standard applies to financial assets measured at amortized cost basis, including receivables that
result from revenue transactions. The Company adopted this ASU on January 1, 2020 and there was no material
impact to the Consolidated Financial Statements as of the date of adoption. Results for reporting periods as of
January 1, 2020 are presented under the new standard, while prior results continue to be reported under the
previous standard.

3. Restructuring and Related Impairment Charges

On March 31, 2020, the Company's Board of Directors approved a restructuring plan ("2020 restructuring
plan") designed to rebalance the Company’s cost base to further improve profitability and cash flow generation. The
Company identified further opportunities and on September 2, 2020, the Company’s Board of Directors approved a
$75 million increase to the restructuring plan, resulting in an updated 2020 restructuring plan of approximately $550
million to $600 million of total estimated pre-tax restructuring and related charges.

The restructuring and related charges primarily consist of up to approximately:

•

$381 million of non-cash charges comprised of an impairment of $291 million related to the Company’s New
York City flagship store and $90 million of intangibles and other asset related impairments.

The Company recorded $472.7 million and $183.1 million of restructuring and related impairment charges
for Fiscal 2020 and Fiscal 2018, respectively. There were no restructuring charges incurred during Fiscal 2019. The
Company previously implemented a restructuring plan in 2018. The summary of the costs recorded during Fiscal
2020 as well as the Company's current estimates of the amount expected to be incurred in connection with the 2020
restructuring plan is as follows:

Restructuring and
related impairment
charges recorded

Estimated restructuring and related Impairment
charges (1)

Year ended December
31, 2020 (A)

Remaining to be
incurred (B)

Total (A+B)

(In thousands)

Costs recorded in cost of goods sold:

Contract-based royalties

Inventory write-offs

Total costs recorded in cost of goods sold

Costs recorded in restructuring and impairment
charges:

Property and equipment impairment

Intangible asset impairment

Right-of-use asset impairment

Employee related costs

Contract exit costs (2)

Other asset write off

Other restructuring costs

11,608

768

12,376

29,280

4,351

293,495

28,579

79,008

13,074

12,564

—

3,400

8,098

—

1,421

89,992

15,926

8,436

Total costs recorded in restructuring and related
impairment charges

Total restructuring and impairment charges

460,351

472,727 $

123,873

127,273 $

(1) Estimated restructuring and related impairment charges to be incurred reflect the high-end of the range of the estimated
remaining charges expected to be recorded by the Company in connection with the restructuring plan.

(2) Contract exit costs are primarily comprised of proposed lease exits of certain brand and factory house stores and office
facilities, and proposed marketing and other contract exits.

11,608

4,168

15,776

37,378

4,351

293,495

30,000

169,000

29,000

21,000

584,224

600,000

The lease term for the Company's New York City flagship store commenced on March 1, 2020 and an
operating lease right-of-use ("ROU") asset and corresponding operating lease liability of $344.8 million was
recorded on the Company's Consolidated Balance Sheet. In March 2020, as a part of the 2020 restructuring plan,
the Company made the strategic decision to forgo the opening of its New York City flagship store and the property is
actively being marketed for sublease. Accordingly, in the first quarter of Fiscal 2020, the Company recognized a
ROU asset impairment of $290.8 million, reducing the carrying value of the lease asset to its estimated fair value.
Fair value was estimated using an income-approach based on management's forecast of
future cash flows
expected to be derived from the property based on current sublease market rent. Rent expense or sublease income
related to this lease will be recorded within other income (expense) on the Consolidated Statements of Operations.

All restructuring and related impairment charges are included in the Company's Corporate Other non-
operating segment, of which $397.6 million are North America related, $14.4 million are EMEA related, $14.9 million
are Latin America related, $6.8 million are Asia-Pacific related and $4.6 million are Connected Fitness related for
Fiscal 2020.

These charges require the Company to make certain judgements and estimates regarding the amount and
timing of restructuring and related impairment charges or recoveries. The estimated liability could change
subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis,
the Company conducts an evaluation of the related liabilities and expenses and revises its assumptions and
estimates as appropriate as new or updated information becomes available.

A summary of the activity in the restructuring reserve related to the Company's 2020 restructuring plan, as

well as prior restructuring plans in 2018 and 2017 is as follows:

(In thousands)

Balance at January 1, 2020

Additions charged to expense

Cash payments charged against reserve

Changes in reserve estimate

Balance at December 31, 2020

Latin America operating model change

Employee Related
Costs

Contract Exit Costs

Other Restructuring
Related Costs

462 $

17,843 $

27,452

(14,584)

(462)

72,747

(28,456)

(492)

12,868 $

61,642 $

—

11,843

(5,745)

—

6,098

During the fourth quarter of Fiscal 2020, the Company determined to change to a distributor model in Chile,
which is expected to be effective in early 2021. The Company determined that as of the end of Fiscal 2020, the
Chile subsidiary met the criteria to be classified as held for sale under Accounting Standard Codification (ASC) 360,
Property, Plant, and Equipment. Included within Total current assets and Total other long term assets on the
Consolidated Balance Sheet as of the end of Fiscal 2020 are inventory with the carrying value of $1.2 million and
property and equipment with the carrying value of $13.6 million, respectively, which represent assets held for sale.

4. Sale of MyFitnessPal

On October 28, 2020, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”)
to sell its MyFitnessPal platform, and on December 18, 2020, the sale was completed. Pursuant to the Purchase
Agreement, the aggregate sale price for the transaction was $345 million, of which $215 million was payable upon
closing. The Company received $198.7 million at closing after giving effect to $16 million of purchase price and
other adjustments. The sale includes up to $130 million in earnout payments, which are based on the achievement
of certain revenue targets over a three-year period. The potential earnout payments include up to $35 million
payable in calendar year 2022, $45 million payable in calendar year 2023 and $50 million payable in calendar year
2024. The Company recognized a gain of approximately $179.3 million, which is included in Other income
(expenses), net in the Consolidated Statements of Operations. The Company made an election to record the
contingent earnout portion of the arrangement when the earnout payments are determined to be realizable in the
future periods. In connection with the sale, we agreed to provide certain transition services to MyFitnessPal for an
expected period up to nine months from the date of sale. The continuing cash flows related to these items are not
expected to be significant.

5. Acquisition

Triple Pte. Ltd.

On March 2, 2020, the Company acquired, on a cash free, debt free basis, 100% of Triple Pte. Ltd.
("Triple"), a distributor of the Company's products in Southeast Asia. The purchase price for the acquisition was
$32.9 million in cash, net of $8.9 million of cash acquired that was held by Triple at closing and settlement of
$5.1 million in pre-existing trade receivables due from Triple prior to the acquisition. The results of operations of this
acquisition have been consolidated with those of the Company beginning on March 2, 2020.

The Company incurred $1.0 million in acquisition related costs that were expensed during Fiscal 2020.
These costs are included in selling, general and administrative expenses within the Consolidated Statements of
Operations. Pro forma results are not presented, as the acquisition was not considered material to the consolidated
Company.

6. Property and Equipment, Net

Property and equipment are stated at cost, including the cost of internal labor for software customized for
internal use, less accumulated depreciation and amortization. Property and equipment is depreciated using the
straight-line method over the estimated useful lives of the assets, as follows:

Furniture, office equipment, software and plant equipment (1)
Site improvements, buildings and building equipment
Leasehold and tenant improvements

Years
3 to 10
10 to 35

Shorter of the remaining lease term
or related asset life

(1) The cost of in-store apparel and footwear fixtures and displays are capitalized, included in furniture, fixtures and displays, and
depreciated over 3 years.

The Company periodically reviews assets’ estimated useful

lives based upon actual experience and
expected future utilization. A change in useful life is treated as a change in accounting estimate and is applied
prospectively.

The Company capitalizes the cost of interest for long term property and equipment projects based on the
Company’s weighted average borrowing rates in place while the projects are in progress. Capitalized interest was
$1.4 million as of the end of Fiscal 2020 (Fiscal 2019: $1.6 million).

Upon retirement or disposition of property and equipment, the cost and accumulated depreciation are
removed from the accounts and any resulting gain or loss is reflected in selling, general and administrative
expenses for that period. Major additions and betterments are capitalized to the asset accounts while maintenance
and repairs, which do not improve or extend the lives of assets, are expensed as incurred.

Property and equipment consisted of the following:

(In thousands)

Leasehold and tenant improvements

Furniture, fixtures and displays

Buildings

Software

Office equipment

Plant equipment

Land

Construction in progress

Other

Subtotal property and equipment

Accumulated depreciation

Property and equipment, net

December 31,

2020

2019

540,847

236,527

48,382

339,756

125,695

130,155

83,626

31,217

6,047

563,061

235,721

52,184

337,577

126,412

144,844

83,626

54,771

4,071

1,542,252

1,602,267

(883,574)

(810,119)

658,678

792,148

Construction in progress primarily includes costs incurred for software systems, leasehold improvements

and in-store fixtures and displays not yet placed in use.

Depreciation expense related to property and equipment was $154.4 million for Fiscal 2020 (Fiscal 2019:

$177.3 million; Fiscal 2018: $173.4 million).

7. Long-Lived Asset and Goodwill Impairment

Long-Lived Asset Impairment

As a result of the impacts of COVID-19, the Company determined that sufficient indicators existed to trigger
the performance of an interim long-lived asset impairment analysis in Fiscal 2020. The Company performed
undiscounted cash flow analyses on its long-lived assets, including retail stores at an individual store level. Based
on these undiscounted cash flow analyses, the Company determined that certain long-lived assets had net carrying
values that exceeded their estimated undiscounted future cash flows. Accordingly, the Company estimated the fair
values of these long-lived assets based on their market rent assessments or discounted cash flows. The Company
compared these estimated fair values to the net carrying values. Accordingly, the Company recognized $89.7 million
of long-lived asset impairment charges for Fiscal 2020. There were no long-lived asset impairment charges in Fiscal
2019 or Fiscal 2018. The long-lived impairment charge was recorded within restructuring and impairment charges
on the Consolidated Statements of Operations and as a reduction to the related asset balances on the Consolidated
Balance Sheets. The long-lived asset impairment charges for Fiscal 2020 are included within the Company's
operating segments as follows: $47.6 million recorded in North America, $23.0 million recorded in Asia-Pacific,
$13.3 million recorded in Latin America, and $5.8 million recorded in EMEA.

The significant estimates used in the fair value methodology, which are based on Level 3 inputs, include:
the Company's expectations for future operations and projected cash flows, including net revenue, gross profit and
operating expenses and market conditions, including estimated market rent.

Additionally, the Company recognized $290.8 million of long-lived asset impairment charges related to the
Company's New York City flagship store, which was recorded in connection with the Company's 2020 restructuring
plan for Fiscal 2020. Refer to Note 3 for a further discussion of the restructuring and related impairment charges.

Goodwill Impairment

As a result of the impacts of COVID-19, the Company determined that sufficient indicators existed to trigger
an interim goodwill impairment analysis for all of the Company’s reporting units as of March 31, 2020. In the first
quarter of 2020, the Company performed discounted cash flow analyses and determined that the estimated fair
values of the Latin America reporting unit and the Canada reporting unit within the North America operating segment
no longer exceeded their carrying value, resulting in a full impairment of the goodwill allocated to their respective
reporting units. The Company recognized goodwill impairment charges of $51.6 million for Fiscal 2020 for these
reporting units within restructuring and impairment charges on the Consolidated Statements of Operation, and as a
reduction to the goodwill balance on the Consolidated Balance Sheets. There were no triggering events or goodwill
impairment charges recorded during the remainder of Fiscal 2020.

The determination of the Company’s reporting units' fair value includes assumptions that are subject to
various risks and uncertainties. The significant estimates used in the discounted cash flow analyses, which are
based on Level 3 inputs, include: the Company’s weighted average cost of capital, adjusted for the risk attributable
to the geographic regions of the reporting unit's business, long-term rate of growth and profitability of the reporting
unit's business, working capital effects, and changes in market conditions, consumer trends or strategy.

The following table summarizes changes in the carrying amount of the Company’s goodwill by reportable

segment as of the periods indicated:

(In thousands)
Balance as of December 31, 2018
Effect of currency translation adjustment

Balance as of December 31, 2019
Effect of currency translation adjustment

Impairment
Balance as of December 31, 2020

North
America
$ 317,500
788
318,288
(1,420)
(15,345)
$ 301,523

EMEA
$ 104,823
1,243
106,066
6,971
—
$ 113,037

Asia-
Pacific
$ 79,410
(242)
79,168
8,486
—
$ 87,654

Latin
America
$ 44,761
1,895
46,656
(10,426)
(36,230)

— $

Connected
Fitness

Total

— $ 546,494
3,684
—
550,178
—
3,611
—
—
(51,575)
— $ 502,214

Intangible Assets, net

The following tables summarize the Company’s intangible assets as of the periods indicated:

(In thousands)

Intangible assets subject to
amortization:

Technology

Customer relationships

User/Nutrition database
Lease-related intangible assets

Other

Total

Indefinite-lived intangible assets

Intangible assets, net

(In thousands)

Intangible assets subject to
amortization:

Technology

Customer relationships

User/Nutrition database

Lease-related intangible assets

Other

Total

Indefinite-lived intangible assets

Intangible assets, net

Useful Lives
from Date of
Acquisitions
(in years)

Gross
Carrying
Amount

Accumulated
Amortization

Impairment

Sale of
Business

Purchase
of Business

Net
Carrying
Amount

December 31, 2020

5-7

2-3
10

1-15
5-10

1,138

(145) $

— $

993

—
46,314

12,896
295
$ 60,643

(1,208)
(23,790)

—
(4,351)

—
(18,173)

8,770
—

7,562
—

(9,180)
(188)

(1,058)
—
(34,510) $ (5,410) $ (18,173) $

—
—

2,658
107
8,770 $ 11,320

1,975

$ 13,295

December 31, 2019

Useful Lives
from Date of
Acquisitions
(in years)

Gross
Carrying
Amount

Accumulated
Amortization

Impairment

Sale of
Business

Purchase
of Business

Net
Carrying
Amount

5-7

2-3

1-15
5-10

2,536

(965) $

— $

— $ 1,571

—

52,727

(25,472)

5,152
1,428
$ 61,843

(2,380)
(1,154)
(29,970) $

—

—
—
— $

—

—
—
— $

—

— 27,255

2,772
—
—
275
— $ 31,871

4,474

$ 36,345

Amortization expense, which is included in selling, general and administrative expenses, was $7.0 million,
$6.1 million and $6.1 million for Fiscal 2020, Fiscal 2019 and Fiscal 2018, respectively. The following is the
estimated amortization expense for the Company’s intangible assets as of the end of Fiscal 2020:

(In thousands)
2021
2022
2023
2024
2025
2026 and thereafter

Amortization expense of intangible assets

8. Leases

2,124
2,020
1,660
1,497
1,497
272

9,070

The Company enters into operating leases both domestically and internationally, to lease certain warehouse
space, office facilities, space for its brand and factory house stores and certain equipment under non-cancelable
operating leases. The leases expire at various dates through 2035, excluding extensions at the Company's option,
and include provisions for rental adjustments.

The Company accounts for a contract as a lease when it has the right to direct the use of the asset for a
period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial

classification and measurement of its ROU assets and lease liabilities at the lease commencement date and
thereafter if modified. ROU assets represent the Company’s right to control the underlying assets under lease, over
the contractual term. ROU assets and lease liabilities are recognized on the Consolidated Balance Sheets based on
the present value of future minimum lease payments to be made over the lease term. ROU assets and lease
liabilities are established on the Consolidated Balance Sheets for leases with an expected term greater than one
year. Short-term lease payments were not material for Fiscal 2020.

As the rate implicit in the Company's lease agreements is not readily determinable, the Company uses its
secured incremental borrowing rate to determine the present value of the lease payments. The Company calculates
the incremental borrowing rate based on the current market yield curve and adjusts for foreign currency for
international leases.

Fixed lease costs are included in the recognition of ROU assets and lease liabilities. Variable lease costs
are not included in the measurement of the lease liability. These variable lease payments are recognized in the
Consolidated Statements of Operations in the period in which the obligation for those payments is incurred. Variable
lease payments primarily consist of payments dependent on sales in brand and factory house stores. The Company
has elected to combine lease and non-lease components in the determination of lease costs for its leases. The
lease liability includes lease payments related to options to extend or renew the lease term only if the Company is
reasonably certain to exercise those options.

The Company recognizes lease expense on a straight-line basis over the lease term. Included in selling,
general and administrative expenses were operating lease costs of $156.7 million for Fiscal 2020 (Fiscal 2019:
$166.4 million; Fiscal 2018: $152.7 million). Included in these amounts were $9.3 million in variable lease payments
under non-cancelable operating lease agreements for Fiscal 2020 (Fiscal 2019: $12.9 million; Fiscal 2018:
$14.2 million).

There are no residual value guarantees that exist, and there are no restrictions or covenants imposed by
leases. The Company rents or subleases excess office facilities and warehouse space to third parties. Sublease
income is not material.

Supplemental balance sheet information related to leases was as follows:

Weighted average remaining lease term (in years)

Weighted average discount rate

Supplemental cash flow and other information related to leases was as follows:

(In thousands)

Cash paid for amounts included in the measurement of lease liabilities

Operating cash outflows from operating leases

Leased assets obtained in exchange for new operating lease liabilities

Year ended December 31,

2020

2019

9.12

3.83 %

6.73

4.26 %

Year ended December 31,

2020

2019

155,990 $

116,811

390,957 $

70,075

Maturities of lease liabilities are as follows:

(In thousands)

2021

2022

2023

2024

2025

2026 and thereafter

Total lease payments

Less: Interest

Total present value of lease liabilities

196,725

163,631

143,868

125,173

97,085

467,361

1,193,843

191,866

1,001,977

As of the end of Fiscal 2020, the Company has additional operating lease obligations that have not yet

commenced of approximately $6.5 million, which are not reflected in the table above.

9. Credit Facility and Other Long Term Debt

Credit Facility

On March 8, 2019, the Company entered into an amended and restated credit agreement by and among
the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders and
arrangers party thereto (the “credit agreement”). The credit agreement has a term of five years, maturing in March
2024, with permitted extensions under certain circumstances.
the Company entered into an
amendment to the credit agreement (the “amendment” and, the credit agreement as amended, the “amended credit
agreement” or the “revolving credit facility”), pursuant to which the prior revolving credit commitments were reduced
from $1.25 billion to $1.1 billion of borrowings. From time to time throughout 2020, the Company borrowed funds
under this facility as a precautionary measure in order to increase the cash position and preserve liquidity given the
ongoing uncertainty in global markets resulting from the COVID-19 pandemic. As of the end of Fiscal 2020 and
Fiscal 2019, there were no amounts outstanding under the revolving credit facility.

In May 2020,

Except during the covenant suspension period (as defined below), at the Company's request and the
lender's consent, commitments under the amended credit agreement may be increased by up to $300 million in
aggregate, subject to certain conditions as set forth in the amended credit agreement. Incremental borrowings are
uncommitted and the availability thereof will depend on market conditions at the time the Company seeks to incur
such borrowings.

Borrowings under the revolving credit facility have maturities of less than one year. Up to $50 million of the
facility may be used for the issuance of letters of credit. There were $4.3 million of letters of credit outstanding as of
then end of Fiscal 2020 (Fiscal 2019: $5.0 million).

The obligations of the Company under the amended credit agreement are guaranteed by certain domestic
significant subsidiaries of the Company, subject to customary exceptions (the “subsidiary guarantors”) and primarily
secured by a first-priority security interest in substantially all of the assets of the Company and the subsidiary
guarantors, excluding real property, capital stock in and debt of the subsidiaries holding certain real property and
other customary exceptions.

The amended credit agreement contains negative covenants that, subject to significant exceptions, limit the
Company's ability to, among other things, incur additional secured and unsecured indebtedness, pledge the assets
as security, make investments, loans, advances, guarantees and acquisitions, (including investments in and loans
the assets outside the ordinary course of
to non-guarantor subsidiaries), undergo fundamental changes, sell
business, enter into transactions with affiliates and make restricted payments (including a temporary suspension of
certain voluntary restricted payments during the covenant suspension period (as defined below)).

The Company is required to comply with specific consolidated leverage and interest coverage ratios during
specified periods. Prior to the amendment, the Company was required to maintain a ratio of consolidated EBITDA,
to consolidated interest expense of not less than 3.50 to 1.0 (the “interest coverage covenant”), and the Company
was not permitted to allow the ratio of consolidated total
indebtedness to consolidated EBITDA to be greater
than 3.25 to 1.0 (the “leverage covenant”), as described in more detail in the credit agreement. The amended credit
agreement provides for suspensions of and adjustments to the leverage covenant (including definitional changes

impacting the calculation of the ratio) and the interest coverage covenant beginning with the quarter ended June 30,
2020, and ending on the date on which financial statements for the quarter ended June 30, 2022 are delivered to
lenders under the amended credit agreement (the “covenant suspension period”) as summarized below and
described in more detail in the amended credit agreement:

•

For the fiscal quarters ending September 30, 2020, December 31, 2020, March 31, 2021 and June 30,
2021, compliance with the interest coverage covenant and the leverage covenant are both suspended.
Beginning on September 30, 2020 through and including December 31, 2021, the Company must instead
maintain minimum liquidity of $550.0 million (the “liquidity covenant”) (with liquidity being the sum of certain
cash and cash equivalents held by the Company and its subsidiaries and available borrowing capacity
under the amended credit agreement).

As of the end of Fiscal 2020, the Company was in compliance with the applicable covenants.

During the covenant suspension period, the applicable margin for loans is 2.00% for adjusted LIBOR loans
and 1.00% for alternate base rate loans. Otherwise, borrowings under the amended credit agreement bear interest
at a rate per annum equal to, at the Company's option, either (a) an alternate base rate, or (b) a rate based on the
rates applicable for deposits in the interbank market for U.S. Dollars or the applicable currency in which the loans
are made (“adjusted LIBOR”), plus in each case an applicable margin. The applicable margin for loans will be
adjusted by reference to a grid (the “pricing grid”) based on the consolidated leverage ratio and ranges between
1.25% to 1.75% for adjusted LIBOR loans and 0.25% to 0.75% for alternate base rate loans. The weighted average
interest rate under the revolving credit facility borrowings was 2.3% and 3.6% during Fiscal 2020 and Fiscal 2019,
respectively. During the covenant suspension period, the commitment fee rate is 0.40% per annum. Otherwise, the
Company pays a commitment fee determined in accordance with the pricing grid on the average daily unused
amount of the revolving credit facility and certain fees with respect to letters of credit. As of the end of Fiscal 2020,
the commitment fee was 15 basis points. The Company incurred and deferred $7.2 million in financing costs in
connection with the amended credit agreement.

1.50% Convertible Senior Notes

In May 2020, the Company issued $500 million aggregate principal amount of 1.50% convertible senior
notes due 2024 (the “Convertible Senior Notes”). The Convertible Senior Notes bear interest at the rate of 1.50%
per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning December 1, 2020.
The Convertible Senior Notes will mature on June 1, 2024, unless earlier converted in accordance with their terms,
redeemed in accordance with their terms or repurchased.

The net proceeds from the offering (including the net proceeds from the exercise of the over-allotment
option) was $488.8 million, after deducting the initial purchasers’ discount and estimated offering expenses paid by
the Company, of which the Company used $47.9 million to pay the cost of the capped call transactions described
below. The Company utilized $439.9 million to repay indebtedness outstanding under its revolving credit facility and
pay related fees and expenses.

The Convertible Senior Notes are not secured and are not guaranteed by any of

the Company’s
subsidiaries. The indenture governing the Convertible Senior Notes does not contain any financial or operating

covenants or restrictions on the payments of dividends,
repurchase of securities by the Company or any of its subsidiaries.

the incurrence of

indebtedness or the issuance or

The Convertible Senior Notes are convertible into cash, shares of the Company’s Class C common stock or
a combination of cash and shares of Class C common stock, at the Company’s election as described further below.
The initial conversion rate is 101.8589 shares of the Company’s Class C common stock per $1,000 principal
amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $9.82 per share of
Class C common stock), subject to adjustment if certain events occur. Prior to the close of business on the business
day immediately preceding January 1, 2024, the Convertible Senior Notes will be convertible only upon satisfaction
of one or more of the following conditions:

•

during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and
only during such calendar quarter), if the last reported sale price of the Company’s Class C common stock
for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days
ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than
or equal to 130% of the conversion price on each applicable trading day;

during the five business day period after any five consecutive trading day period (the “measurement
period”) in which the trading price per $1,000 principal amount of Convertible Senior Notes for each trading
day of the measurement period was less than 98% of the product of the last reported sale price of the
Company’s Class C common stock and the conversion rate on each such trading day;

upon the occurrence of specified corporate events or distributions on the Company’s Class C common
stock; or

if the Company calls any Convertible Senior Notes for redemption prior to the close of business on the
business day immediately preceding January 1, 2024.

On or after January 1, 2024 until the close of business on the second scheduled trading day immediately
preceding the maturity date, holders may convert all or any portion of their Convertible Senior Notes at the
conversion rate at any time irrespective of the foregoing conditions.

On or after December 6, 2022, the Company may redeem for cash all or any part of the Convertible Senior
Notes, at its option, if the last reported sale price of the Company’s Class C common stock has been at least 130%
of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30
consecutive trading day period (including the last trading day of such period) ending on, and including, the trading
day immediately preceding the date on which the Company provides notice of redemption at a redemption price
equal to 100% of the aggregate principal amount of the Convertible Senior Notes to be redeemed, plus accrued and
unpaid interest to, but excluding, the redemption date.

If the Company undergoes a fundamental change (as defined in the indenture governing the Convertible
Senior Notes) prior to the maturity date, subject to certain conditions, holders may require the Company to
repurchase for cash all or any portion of their Convertible Senior Notes in principal amounts of $1,000 or an integral
multiple thereof at a price which will be equal to 100% of the aggregate principal amount of the Convertible Senior
Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase
date.

the Convertible Senior Notes,

Concurrently with the offering of

the Company entered into privately
negotiated capped call transactions with JPMorgan Chase Bank, National Association, HSBC Bank USA, National
Association and Citibank, N.A. (the “option counterparties”). The capped call transactions are expected generally to
reduce potential dilution to the Company’s Class C common stock upon any conversion of Convertible Senior Notes
and/or offset any cash payments the Company is required to make in excess of the aggregate principal amount of
converted Convertible Senior Notes upon any conversion thereof, as the case may be, with such reduction and/or
offset subject to a cap based on the cap price. The cap price of the capped call transactions is initially $13.4750 per
share of the Company’s Class C common stock, representing a premium of 75% above the last reported sale price
of the Company’s Class C common stock on May 21, 2020, and is subject to certain adjustments under the terms of
the capped call transactions.

The Convertible Senior Notes contain a cash conversion feature, and as a result, the Company has
separated its carrying value into liability and equity components. The Company valued the liability component based
on its borrowing rate for a similar debt instrument that does not contain a conversion feature. The equity component,
which is recognized as a debt discount, was valued as the difference between the face value of the Convertible
Senior Notes and the fair value of the liability component.

In connection with the Convertible Senior Notes issuance, the Company incurred deferred financing costs of
$12.3 million, primarily related to fees paid to the initial purchasers of the offering, as well as legal and accounting
fees. These costs were allocated on a pro rata basis, with $10.0 million allocated to the debt component and
$2.2 million allocated to the equity component.

The debt discount and the debt portion of the deferred financing costs are being amortized to interest

expense over the term of the Convertible Senior Notes using an effective interest rate of 6.8%.

The Convertible Senior Notes consist of the following components:

(In thousands)

Liability component

Principal

Unamortized debt discount

Unamortized issuance costs

Net carrying amount

Equity component, net of issuance costs

Year ended December 31,

2020

500,000

(79,031)

(8,501)

412,468

88,672

Interest expense related to the Convertible Senior Notes consists of the following components:

(In thousands)

Coupon interest

Non-cash amortization of debt discount

Amortization of deferred financing costs

Convertible senior notes interest expense

Year ended December 31,

2020

4,375

11,816

1,451

17,642

In connection with the issuance of the Convertible Senior Notes, the Company recorded an $11 million net
deferred tax liability and a corresponding reduction in valuation allowance. As a result, there was no net impact to
the Company’s deferred income taxes or additional paid in capital on the Consolidated Balance Sheet.

3.250% Senior Notes

In June 2016, the Company issued $600 million aggregate principal amount of 3.250% senior unsecured
notes due June 15, 2026 (the “Senior Notes”). Interest is payable semi-annually on June 15 and December 15
beginning December 15, 2016. The Company may redeem some or all of the Senior Notes at any time, or from time
to time, at redemption prices described in the indenture governing the Senior Notes. The indenture governing the
Senior Notes contains negative covenants that limit the Company’s ability to engage in certain transactions and are
subject to material exceptions described in the indenture. The Company incurred and deferred $5.4 million in
financing costs in connection with the Senior Notes.

Other Long Term Debt

In December 2012, the Company entered into a $50 million recourse loan collateralized by the land,
buildings and tenant improvements comprising its corporate headquarters. In July 2018, this loan was paid in full,
without penalties, using borrowings under the Company's revolving credit facility.

The following are the scheduled maturities of long term debt as of the end of Fiscal 2020:

(In thousands)
2021
2022
2023
2024
2025
2026 and thereafter

Total scheduled maturities of long term debt

Current maturities of long term debt

—
—
—
500,000
—
600,000
1,100,000

—

Interest expense, net was $47.3 million, $21.2 million, and $33.6 million for Fiscal 2020, 2019 and 2018,
respectively. Interest expense includes the amortization of deferred financing costs, bank fees, capital and built-to-
suit lease interest and interest expense under the credit and other long term debt facilities. Amortization of deferred
financing costs was $3.8 million, $2.4 million, and $1.5 million for Fiscal 2020, Fiscal 2019 and Fiscal 2018,
respectively.

The Company monitors the financial health and stability of its lenders under the credit and other long term
debt facilities, however during any period of significant instability in the credit markets lenders could be negatively
impacted in their ability to perform under these facilities.

10. Commitments and Contingencies

Sports Marketing and Other Commitments

Within the normal course of business, the Company enters into contractual commitments in order to
promote the Company’s brand and products. These commitments include sponsorship agreements with teams and
levels, official supplier agreements, athletic event sponsorships and
athletes on the collegiate and professional
other marketing commitments. The following is a schedule of the Company’s future minimum payments under its
sponsorship and other marketing agreements as of December 31, 2020, as well as significant sponsorship and
other marketing agreements entered into during the period after December 31, 2020 through the date of this report:

(In thousands)
2021
2022
2023
2024
2025
2026 and thereafter

Total future minimum sponsorship and other payments

106,727
85,090
69,454
55,525
32,370
12,453
361,619

The amounts listed above are the minimum compensation obligations and guaranteed royalty fees required
to be paid under the Company’s sponsorship and other marketing agreements. The amounts listed above do not
include additional performance incentives and product supply obligations provided under certain agreements. It is
not possible to determine how much the Company will spend on product supply obligations on an annual basis as
contracts generally do not stipulate specific cash amounts to be spent on products. The amount of product provided
to the sponsorships depends on many factors including general playing conditions, the number of sporting events in
which they participate and the Company’s decisions regarding product and marketing initiatives. In addition, the
costs to design, develop, source and purchase the products furnished to the endorsers are incurred over a period of
time and are not necessarily tracked separately from similar costs incurred for products sold to customers.

Other

In connection with various contracts and agreements, the Company has agreed to indemnify counterparties
against certain third party claims relating to the infringement of
intellectual property rights and other items.
Generally, such indemnification obligations do not apply in situations in which the counterparties are grossly
negligent, engage in willful misconduct, or act in bad faith. Based on the Company’s historical experience and the
estimated probability of future loss, the Company has determined that the fair value of such indemnifications is not
material to its consolidated financial position or results of operations.

From time to time, the Company is involved in litigation and other proceedings, including matters related to
commercial and intellectual property disputes, as well as trade, regulatory and other claims related to its business.
Other than as described below, the Company believes that all current proceedings are routine in nature and
incidental to the conduct of its business, and that the ultimate resolution of any such proceedings will not have a
material adverse effect on its consolidated financial position, results of operations or cash flows.

In re Under Armour Securities Litigation

On March 23, 2017, three separate securities cases previously filed against the Company in the United
States District Court for the District of Maryland (the “District Court”) were consolidated under the caption In re
Under Armour Securities Litigation, Case No. 17-cv-00388-RDB (the “Consolidated Securities Action”). On August 4,
2017, the lead plaintiff in the Consolidated Securities Action, Aberdeen City Council as Administrating Authority for
the North East Scotland Pension Fund (“Aberdeen”), joined by named plaintiff Bucks County Employees Retirement
Fund (“Bucks County”), filed a consolidated amended complaint (the “Amended Complaint”) against the Company,
the Company’s then-Chief Executive Officer, Kevin Plank, and former Chief Financial Officers Lawrence Molloy and
Brad Dickerson. The Amended Complaint alleged violations of Section 10(b) (and Rule 10b-5) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and Section 20(a) control person liability under the
Exchange Act against the officers named in the Amended Complaint, claiming that the defendants made material
misstatements and omissions regarding, among other things, the Company's growth and consumer demand for
certain of the Company's products. The class period identified in the Amended Complaint is September 16, 2015
through January 30, 2017. The Amended Complaint also asserted claims under Sections 11 and 15 of the Securities
Act of 1933, as amended (the “Securities Act”),
in connection with the Company’s public offering of senior
unsecured notes in June 2016. The Securities Act claims were asserted against the Company, Mr. Plank, Mr.
Molloy, the Company’s directors who signed the registration statement pursuant to which the offering was made and
the underwriters that participated in the offering. The Amended Complaint alleged that the offering materials utilized
in connection with the offering contained false and/or misleading statements and omissions regarding, among other
things, the Company’s growth and consumer demand for certain of the Company’s products.

On November 9, 2017, the Company and the other defendants filed motions to dismiss the Amended
Complaint. On September 19, 2018, the District Court dismissed the Securities Act claims with prejudice and the
Exchange Act claims without prejudice. Lead plaintiff Aberdeen,
joined by named plaintiff Monroe County
Employees’ Retirement Fund (“Monroe”), filed a Second Amended Complaint on November 16, 2018, asserting
claims under the Exchange Act and naming the Company and Mr. Plank as the remaining defendants. The
remaining defendants filed a motion to dismiss the Second Amended Complaint on January 17, 2019. On August
19, 2019, the District Court dismissed the Second Amended Complaint with prejudice.

In September 2019, plaintiffs Aberdeen and Bucks County filed an appeal in the United States Court of
Appeals for the Fourth Circuit challenging the decisions by the District Court on September 19, 2018 and August 19,
2019 (the “Appeal”). The Appeal was fully briefed as of January 16, 2020.

On November 6 and December 17, 2019, two purported shareholders of the Company filed putative
securities class actions in the District Court against the Company and certain of its current and former executives
(captioned Patel v. Under Armour, Inc., No. 1:19-cv-03209-RDB (“Patel”), and Waronker v. Under Armour, Inc., No.
1:19-cv-03581-RDB (“Waronker”), respectively). The complaints in Patel and Waronker alleged violations of Section
10(b) (and Rule 10b-5) of the Exchange Act, against all defendants, and Section 20(a) control person liability under
the Exchange Act against the current and former officers named in the complaints. The complaints claimed that the
defendants’ disclosures and statements supposedly misrepresented or omitted that the Company was purportedly
shifting sales between quarterly periods allegedly to appear healthier and that the Company was under investigation
by and cooperating with the United States Department of Justice (“DOJ”) and the United States Securities and
Exchange Commission (“SEC”) since July 2017.

On November 18, 2019, Aberdeen, the lead plaintiff in the Consolidated Securities Action, filed in the District
Court a motion for an indicative ruling under Federal Rule of Civil Procedure 62.1 (the “Rule 62.1 Motion”) seeking
relief from the final judgment pursuant to Federal Rule of Civil Procedure 60(b). The Rule 62.1 Motion alleged that
purported newly discovered evidence entitled Aberdeen to relief from the District Court’s final judgment. Aberdeen
also filed motions seeking (i) to consolidate the Patel and Waronker cases with the Consolidated Securities Action,
and (ii) to be appointed lead plaintiff over the consolidated cases.

On January 22, 2020, the District Court granted Aberdeen’s Rule 62.1 motion and indicated that it would
grant a motion for relief from the final judgment and provide Aberdeen with the opportunity to file a third amended

complaint if the Fourth Circuit remanded for that purpose. The District Court further stated that it would, upon
remand, consolidate the Patel and Waronker cases with the Consolidated Securities Action and appoint Aberdeen
as the lead plaintiff over the consolidated cases.

On August 13, 2020, the Fourth Circuit remanded the Appeal to the District Court for the limited purpose of
allowing the District Court to rule on Aberdeen’s motion seeking relief from the final judgment pursuant to Federal
Rule of Civil Procedure 60(b). On September 14, 2020, the District Court issued an order granting that relief. The
District Court’s order also consolidated the Patel and Waronker cases into the Consolidated Securities Action and
appointed Aberdeen as lead plaintiff over the Consolidated Securities Action.

On October 14, 2020, Aberdeen, along with named plaintiffs Monroe and KBC Asset Management NV, filed
a third amended complaint (the “TAC”) in the Consolidated Securities Action, asserting claims under Sections 10(b)
and 20(a) of the Exchange Act against the Company and Mr. Plank and under Section 20A of the Exchange Act
against Mr. Plank. The TAC alleges that the defendants supposedly concealed purportedly declining consumer
demand for certain of the Company's products between the third quarter of 2015 and the fourth quarter of 2016 by
making allegedly false and misleading statements regarding the Company’s performance and future prospects and
by engaging in undisclosed and allegedly improper sales and accounting practices, including shifting sales between
quarterly periods allegedly to appear healthier. The TAC also alleges that the defendants purportedly failed to
disclose that the Company was under investigation by and cooperating with DOJ and the SEC since July 2017. The
class period identified in the TAC is September 16, 2015 through November 1, 2019.

On December 4, 2020, the Company and Mr. Plank filed a motion to dismiss the TAC for failure to state a

claim. Briefing on the motion to dismiss is expected to be completed in March 2021.

The Company continues to believe that the claims asserted in the Consolidated Securities Action are
without merit and intends to defend the lawsuit vigorously. However, because of the inherent uncertainty as to the
outcome of this proceeding, the Company is unable at this time to estimate the possible impact of this matter.

State Court Derivative Complaints

In June and July 2018, two purported stockholder derivative complaints were filed in Maryland state court
(in cases captioned Kenney v. Plank, et al. (filed June 29, 2018) and Luger v. Plank, et al. (filed July 26, 2018),
respectively). The cases were consolidated on October 19, 2018 under the caption Kenney v. Plank, et. al. The
consolidated complaint in the Kenney matter names Mr. Plank, certain other current and former members of the
Company’s Board of Directors, certain former Company executives, and Sagamore Development Company, LLC
(“Sagamore”) as defendants, and names the Company as a nominal defendant. The consolidated complaint asserts
breach of fiduciary duty, unjust enrichment, and corporate waste claims against the individual defendants and
asserts a claim against Sagamore for aiding and abetting certain of the alleged breaches of fiduciary duty. The
consolidated complaint seeks damages on behalf of the Company and certain corporate governance related
actions.

things,

The consolidated complaint

includes allegations similar to those in the Amended Complaint

in the
Consolidated Securities Action matter discussed above, challenging, among other
the Company’s
disclosures related to growth and consumer demand for certain of the Company’s products, as well as stock sales
by certain individual defendants. The consolidated complaint also makes allegations related to the Company’s
purchase of certain parcels of land from entities controlled by Mr. Plank (through Sagamore). Sagamore purchased
the parcels in 2014. Its total investment in the parcels was approximately $72.0 million, which included the initial
$35.0 million purchase price for the property, an additional $30.6 million to terminate a lease encumbering the
property and approximately $6.4 million of development costs. As previously disclosed, in June 2016, the Company
purchased the unencumbered parcels for $70.3 million in order to further expand the Company’s corporate
headquarters to accommodate its growth needs. The Company negotiated a purchase price for the parcels that it
determined represented the fair market value of the parcels and approximated the cost to the seller to purchase and
develop the parcels.
the Company engaged an
independent third-party to appraise the fair market value of the parcels, and the Audit Committee of the Company’s
Board of Directors engaged its own independent appraisal firm to assess the parcels. The Audit Committee
determined that the terms of the purchase were reasonable and fair, and the transaction was approved by the Audit
Committee in accordance with the Company’s policy on transactions with related persons.

In connection with its evaluation of

the potential purchase,

On March 29, 2019,

in the consolidated Kenney action granted the Company’s and the
defendants’ motion to stay that case pending the outcome of both the Consolidated Securities Action and an earlier-
filed derivative action asserting similar claims relating to the Company’s purchase of parcels in Port Covington

the court

(which action has since been dismissed in its entirety). The court ordered stay in the consolidated Kenney action
remains in effect at this time.

Prior to the filing of the derivative complaints in Kenney v. Plank, et al. and Luger v. Plank, et al., both of the
purported stockholders had sent the Company’s Board of Directors a letter demanding that the Company pursue
claims similar to the claims asserted in the derivative complaints. Following an investigation, a majority of
disinterested and independent directors of the Company determined that the claims should not be pursued by the
Company and informed both of these purported stockholders of that determination.

Between August 11, 2020 and October 21, 2020,

three additional purported shareholder derivative
complaints were filed in Maryland state court (in cases captioned Cordell v. Plank, et al. (filed August 11, 2020),
Klein v. Plank, et al. (filed October 2, 2020), and Salo v. Plank, et al. (filed October 21, 2020), respectively).

The complaints in these cases name Mr. Plank, certain other current and former members of

the
Company’s Board of Directors, and certain current and former Company executives as defendants, and name the
Company as a nominal defendant. The complaints in these actions assert allegations similar to those in the TAC
filed in the Consolidated Securities Action matter discussed above,
including allegations challenging (i) the
Company’s disclosures related to growth and consumer demand for certain of the Company’s products; (ii) the
Company’s practice of shifting sales between quarterly periods supposedly to appear healthier and its purported
failure to disclose that practice; (iii) the Company’s internal controls with respect to revenue recognition and
inventory management; (iv) the Company’s supposed failure to timely disclose investigations by the SEC and DOJ;
(v) the compensation paid to the Company’s directors and executives while the alleged wrongdoing was occurring;
and/or (vi) stock sales by certain individual defendants. The complaints assert breach of fiduciary duty, unjust
enrichment, and corporate waste claims against the individual defendants. These complaints seek damages on
behalf of the Company and certain corporate governance related actions.

Prior to the filing of the derivative complaints in these three actions, none of the purported stockholders

made a demand that the Company’s Board of Directors pursue the claims asserted in the complaints.

The Company believes that the claims asserted in the derivative complaints filed in Maryland state court are
without merit and intends to defend these matters vigorously. However, because of the inherent uncertainty as to
the outcome of these proceedings, the Company is unable at this time to estimate the possible impact of the
outcome of these matters.

Federal Court Derivative Complaints

In July 2018, a stockholder derivative complaint was filed in the United States District Court for the District
of Maryland, in a case captioned Andersen v. Plank, et al. The complaint in the Andersen matter names Mr. Plank,
certain other current and former members of the Company’s Board of Directors and certain former Company
executives as defendants, and names the Company as a nominal defendant. The complaint asserts breach of
fiduciary duty and unjust enrichment claims against the individual defendants, and seeks damages on behalf of the
Company and certain corporate governance related actions. The complaint includes allegations similar to those in
the Amended Complaint in the Consolidated Securities Action matter discussed above, challenging, among other
things, the Company’s disclosures related to growth and consumer demand for certain of the Company’s products
and stock sales by certain individual defendants.

The Andersen action was stayed from December 2018 to August 2019 and again from September 2019 to
September 2020 (the “2019 Stay Order”). Pursuant to a series of court ordered stipulations, the terms of the 2019
Stay Order remained in effect through and including January 19, 2021. The stay expired on January 19, 2021.

Prior to the filing of the complaint in the Andersen action, the plaintiff had sent the Company’s Board of
Directors a letter demanding that the Company pursue claims similar to the claims asserted in the complaint.
Following an investigation, a majority of disinterested and independent directors of the Company determined that
the claims should not be pursued by the Company and informed the plaintiff of that determination. During the
pendency of the Andersen action, the plaintiff sent the Company’s Board of Directors a second letter demanding
that the Company pursue claims similar to the claims asserted in the TAC in the Consolidated Securities Action.
Following an investigation, a majority of disinterested and independent directors of the Company determined that
the claims should not be pursued by the Company and informed the plaintiff of that determination.

In September 2020, two additional derivative complaints were filed in the United States District Court for the
District of Maryland (in cases captioned Olin v. Plank, et al. (filed September 1, 2020), and Smith v. Plank, et al.
(filed September 8, 2020), respectively). Prior to the filing of the derivative complaints in these two actions, neither
of the purported stockholders made a demand that the Company’s Board of Directors pursue the claims asserted in
the complaints. On November 20, 2020, another derivative complaint was filed in the United States District Court for

the District of Maryland, in a case captioned Viskovich v. Plank, et al. Prior to filing his derivative complaint, the
plaintiff in the Viskovich matter made a demand that the Company’s Board of Directors pursue the claims asserted
in the complaint but filed suit before the Board had responded to the demand.

The complaints in the Olin, Smith, and Viskovich cases name Mr. Plank, certain other current and former
members of the Company’s Board of Directors, and certain current and former Company executives as defendants,
and name the Company as a nominal defendant. The complaints in these actions assert allegations similar to those
in the TAC filed in the Consolidated Securities Action matter discussed above, including allegations challenging (i)
the Company’s disclosures related to growth and consumer demand for certain of the Company’s products; (ii) the
Company’s practice of shifting sales between quarterly periods supposedly to appear healthier and its purported
failure to disclose that practice; (iii) the Company’s internal controls with respect to revenue recognition and
inventory management; (iv) the Company’s supposed failure to timely disclose investigations by the SEC and DOJ;
and/or (v) the compensation paid to the Company’s directors and executives while the alleged wrongdoing was
occurring. The complaints assert breach of
fiduciary duty, unjust enrichment, gross mismanagement, and/or
corporate waste claims against the individual defendants. The Viskovich complaint also asserts a contribution claim
against certain defendants under the federal securities laws. These complaints seek damages on behalf of the
Company and certain corporate governance related actions.

On January 27, 2021, the court entered an order consolidating for all purposes the Andersen, Olin, Smith
and Viskovich actions into a single action under the caption Andersen v. Plank, et al. (the “Federal Court Derivative
Action”).

The Company believes that the claims asserted in the Federal Court Derivative Action are without merit and
intends to defend this matter vigorously. However, because of the inherent uncertainty as to the outcome of this
proceeding, the Company is unable at this time to estimate the possible impact of the outcome of this matter.

Wells Notices

In addition to the Company’s material pending legal proceedings, as previously disclosed, in July 2020, the
Company, as well as Kevin Plank and David Bergman (together, the “Executives”), received “Wells Notices” from
the SEC relating to the Company’s disclosures covering the third quarter of 2015 through the period ending
December 31, 2016, regarding the use of “pull forward” sales in connection with revenue during those quarters. The
Wells Notices informed the Company that the SEC Staff has made a preliminary determination to recommend that
the SEC file an enforcement action against the Company and each of the Executives that would allege certain
violations of the Securities Act and the Securities Exchange Act and certain rules promulgated thereunder. The
Wells Notices delivered to the Executives also reference potential charges related to the Executives’ participation in
the Company’s violations, as well as control person liability under the Exchange Act.

The potential relief to be sought referenced in the Wells Notices included an injunction, a cease-and-desist
order, disgorgement, prejudgment interest, and civil monetary penalties, as well as, in the case of the Executives, a
bar from serving as an officer or director of a public company. A Wells Notice is neither a formal charge of
wrongdoing nor a final determination that the recipient has violated any law, and to date no legal proceedings have
been brought against the Company or the Executives with respect to this matter. The Company and the Executives
maintain that their actions were appropriate and are pursuing the Wells Notice process, and also are engaging in a
dialogue with the SEC Staff to work toward a resolution of this matter.

11. Stockholders’ Equity

The Company’s Class A Common Stock and Class B Convertible Common Stock have an authorized
number of 400.0 million shares and 34.5 million shares, respectively, and each have a par value of $0.0003 1/3 per
share as of December 31, 2020. Holders of Class A Common Stock and Class B Convertible Common Stock have
identical rights, including liquidation preferences, except that the holders of Class A Common Stock are entitled to
one vote per share and holders of Class B Convertible Common Stock are entitled to 10 votes per share on all
matters submitted to a stockholder vote. Class B Convertible Common Stock may only be held by Kevin Plank, the
Company’s founder, Executive Chairman and Brand Chief, or a related party of Mr. Plank, as defined in the
Company’s charter. As a result, Mr. Plank has a majority voting control over the Company. Upon the transfer of
shares of Class B Convertible Stock to a person other than Mr. Plank or a related party of Mr. Plank, the shares
automatically convert
the
into shares of Class A Common Stock on a one-for-one basis.
outstanding shares of Class B Convertible Common Stock will automatically convert into shares of Class A Common
Stock on a one-for-one basis upon the death or disability of Mr. Plank or on the record date for any stockholders’
meeting upon which the shares of Class A Common Stock and Class B Convertible Common Stock beneficially
owned by Mr. Plank is less than 15% of the total shares of Class A Common Stock and Class B Convertible

In addition, all of

Common Stock outstanding or upon the other events specified in the Class C Articles Supplementary to the
Company's charter as documented below. Holders of
the Company’s common stock are entitled to receive
dividends when and if authorized and declared out of assets legally available for the payment of dividends.

The Company's Class C Common Stock has an authorized number of of 400.0 million shares and have a
par value of $0.0003 1/3 per share as of December 31, 2020. The terms of the Class C common stock are
substantially identical to those of the Company's Class A common stock, except that the Class C common stock has
no voting rights (except in limited circumstances), will automatically convert into Class A common stock under
certain circumstances and includes provisions intended to ensure equal treatment of Class C common stock and
Class B common stock in certain corporate transactions, such as mergers, consolidations, statutory share
exchanges, conversions or negotiated tender offers, and including consideration incidental to these transactions.

12. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date (an exit price). The fair value accounting
guidance outlines a valuation framework, creates a fair value hierarchy in order to increase the consistency and
comparability of fair value measurements and the related disclosures, and prioritizes the inputs used in measuring
fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2:

Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to

develop its own assumptions.

Financial assets and (liabilities) measured at fair value are set forth in the table below:

(In thousands)
Derivative foreign currency contracts (see Note 17)

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

$ — $ (22,122) $ — $ — $(7,151) $ —

Interest rate swap contracts (see Note 17)

$ —

— $ — $ —

— $ —

TOLI policies held by the Rabbi Trust

$ — $

7,697 $ — $ — $ 6,543 $ —

Deferred Compensation Plan obligations

$ — $ (14,314) $ — $ — $(10,839 $ —

December 31, 2020

December 31, 2019

Fair values of the financial assets and liabilities listed above are determined using inputs that use as their
basis readily observable market data that are actively quoted and are validated through external sources, including
third-party pricing services and brokers. The Company purchases marketable securities that are designated as
available-for-sale. The foreign currency contracts represent gains and losses on derivative contracts, which is the
net difference between the U.S. dollar value to be received or paid at the contracts’ settlement date and the U.S.
dollar value of the foreign currency to be sold or purchased at the current market exchange rate. The interest rate
swap contracts represent gains and losses on the derivative contracts, which is the net difference between the fixed
interest to be paid and variable interest to be received over the term of the contract based on current market rates.
The fair value of the trust owned life insurance (“TOLI”) policies held by the Rabbi Trust is based on the cash-
surrender value of the life insurance policies, which are invested primarily in mutual funds and a separately
managed fixed income fund. These investments are initially made in the same funds and purchased in substantially
the same amounts as the selected investments of participants in the Under Armour, Inc. Deferred Compensation
Plan (the “Deferred Compensation Plan”), which represent the underlying liabilities to participants in the Deferred
Compensation Plan. Liabilities under the Deferred Compensation Plan are recorded at amounts due to participants,
based on the fair value of participants’ selected investments.

As of the end of December 31, 2020, the fair value of the Company's Convertible Senior Notes was $828.2
million. As of December 31, 2020 and December 31, 2019, the fair value of the Company's Senior Notes was
$602.6 million and $587.5 million, respectively. The carrying value of
the Company's other long term debt
approximated its fair value as of the end of Fiscal 2020 and Fiscal 2019. The fair value of long term debt is
estimated based upon quoted prices for similar instruments or quoted prices for identical instruments in inactive
markets (Level 2).

Some assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments
only in certain circumstances. These assets can include long-lived assets and goodwill that have been reduced to

fair value when impaired. Assets that are written down to fair value when impaired are not subsequently adjusted to
fair value unless further impairment occurs.

13. Provision for Income Taxes

Income (loss) before income taxes is as follows:

(In thousands)
Income (loss) before income taxes

United States
Foreign

Total

Year Ended December 31,

2020

2019

2018

(478,465) $
(14,079)
(492,544) $

81,122 $

128,720
209,842 $

(121,396)
53,608
(67,788)

The components of the income tax expense (benefit) consisted of the following:

(In thousands)
Current

Federal

State

Foreign

Deferred

Federal

State

Foreign

Year Ended December 31,

2020

2019

2018

(30,047)

7,232

(15,005)

16,720

(13,293)

50,620

587

11,473

62,680

771

21,952

29,955

12,750

25,508

1,811

40,069

3,253

34,975

23,223

(27,808)

(6,202)

(9,765)

(43,775)

(20,552)

Income tax expense (benefit)

49,387

70,024

A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:

Year Ended December 31,

2020

2019

2018

U.S. federal statutory income tax rate

$(103,434) 21.0 % $

44,067

21.0 % $ (14,235)

21.0 %

State taxes, net of federal tax impact

(29,341)

6.0 %

4,620

2.2 %

(6,715)

9.9 %

Unrecognized tax benefits

2,260

(0.5)%

(2,031)

(1.0)%

(7,598)

11.2 %

Permanent tax benefits - MyFitnessPal Sale
Other permanent tax benefits/nondeductible
Intercompany asset sale
Foreign rate differential
Valuation allowance
Impacts related to Tax Act
Other
Effective income tax rate

15,993
—
(972)

(118,321) 24.0 %
(3.2)%
— %
0.2 %
302,575 (61.4)%
2.8 %
(13,987)
1.1 %
(5,386)

$ 49,387 (10.0)% $

—

— %

—

— %

328
—
(10,494)
30,137
—
3,397
70,024

0.2 %
5,609
— % (18,834)
(5.0)% (12,294)
33,058
14.4 %
1,536
— %
(1,079)
1.6 %
33.4 % $ (20,552)

(8.2)%
27.8 %
18.1 %
(48.8)%
(2.3)%
1.6 %
30.3 %

On March 27, 2020, the CARES Act, which provides relief to taxpayers affected by COVID-19, was signed
into law. The CARES Act provides numerous tax provisions and other stimulus measures, including provisions for
the deferral of the employer share of payroll tax payments, modifications to the net interest deduction limitations,
carryback of net operating losses generated in Fiscal 2018, Fiscal 2019 and Fiscal 2020 tax years, alternative
minimum tax credit refunds, and technical corrections to tax depreciation methods for qualified improvement
property.

The provision with the most significant impact on the Company relates to the carryback of the federal net
operating losses. The Company has recorded a benefit to income tax expense of approximately $35 million for
current year net operating losses to be carried back under the CARES Act, including $13.9 million benefit for years
with a statutory rate of 35% compared to the current statutory rate of 21%.

The Company recorded 2020 income tax expense on pretax losses, including the impact of recording
valuation allowances for previously recognized deferred tax assets in the U.S. and China and current year U.S. pre-
tax losses not able to be carried back, compared to 2019 income tax expense recorded on pre-tax income.

Deferred tax assets and liabilities consisted of the following:

(In thousands)
Deferred tax assets
Operating lease liabilities

U.S. Federal and State Capital Loss

Foreign net operating loss carry-forwards

Reserves and accrued liabilities

Intangible assets
U.S. state net operating loss

Inventory

Allowance for doubtful accounts and sales return reserves

Stock-based compensation
Foreign tax credits

Tax credits
Deductions limited by income

Other

Total deferred tax assets

Less: valuation allowance

Total net deferred tax assets

Deferred tax liabilities

Right-of-use asset

Convertible debt instruments
Prepaid expenses
Property, plant and equipment

Other

Total deferred tax liabilities

Total deferred tax assets, net

December 31,

2020

2019

257,233 $

140,673

69,332

51,040

50,226

31,965

28,343

28,079

19,864

12,447

10,023

8,775

7,509

3,303

—

31,524

25,676

20,041

24,124

32,209

23,257

14,828

11,807

7,480

714

4,835

578,139

337,168

(388,432)

(101,997)

189,707 $

235,171

(136,308) $
(9,878)
(9,443)

(8,107)

(4,780)

(118,917)
—
(15,862)

(16,956)

(1,717)

(168,516)

(153,452)

21,191 $

81,719

All deferred tax assets and liabilities are classified as non-current on the Consolidated Balance Sheets as of
December 31, 2020 and December 31, 2019. In evaluating its ability to realize the net deferred tax assets, the
Company considered all available positive and negative evidence, including its past operating results and the
forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning
strategies. The assumptions utilized in determining future taxable income require significant judgment and actual
operating results in future years could differ from the Company's current assumptions, judgments and estimates.

A significant portion of

federal and state taxing
jurisdictions. Realization of these deferred tax assets is dependent on future U.S. pre-tax earnings. In evaluating the
recoverability of these deferred tax assets at December 31, 2020, the Company has considered all available
evidence, both positive and negative, including but not limited to the following:

the Company’s deferred tax assets relate to U.S.

Positive

•

No history of U.S. federal and state tax attributes expiring unused.

Restructuring plans undertaken in 2017, 2018, and 2020, which aim to improve future profitability.

•

Existing sources of taxable income

Available prudent and feasible tax planning strategies.

Negative

•

Restructuring plan undertaken in 2020 resulting in significant charges in pre-tax income, reducing
profitability in the United States.

The negative economic impact and uncertainty resulting from the COVID-19 pandemic.

Cumulative pre-tax losses in recent years in the United States.

Inherent challenges in forecasting future pre-tax earnings which rely, in part, on improved
profitability from our restructuring efforts.

As of the end of Fiscal 2020, the Company believes that the weight of the negative evidence outweighs the
positive evidence regarding the realization of the United States deferred tax assets and have recorded a valuation
allowance of $308.2 million against the U.S. deferred tax assets, excluding certain state tax credits. The Company
will continue to evaluate its ability to realize its net deferred tax assets on a quarterly basis.

As of the end of Fiscal 2020, the Company had $28.3 million in deferred tax assets associated with
$473.3 million in state net operating loss carryforwards and $8.8 million in deferred tax assets associated with tax
credits, the majority of which are definite lived. Certain of the definite lived state net operating losses and state tax
credits will begin to expire within one to five years, and the majority will begin to expire within five to twenty years.
The Company had $69.3 million in deferred tax assets associated with federal and state capital loss carryforwards
totaling $125.1 million as of December 31, 2020, which, if unused, will expire in five years.

As of

the end of Fiscal 2020,

the Company had $51 million in deferred tax assets associated with
approximately $231.3 million in foreign net operating loss carryforwards and $10 million in deferred tax assets
associated with foreign tax credit carryforwards. While the majority of the foreign net operating loss carryforwards
and foreign tax credit carryforwards have an indefinite carryforward period, certain are definite lived, with the
majority to expire within 5 to 12 years. Additionally, as of December 31, 2020, the Company is not able to forecast
the utilization of a majority of the deferred tax assets associated with foreign net operating loss carryforwards,
foreign tax credit carryforwards and certain other foreign deferred tax assets and has recorded a valuation
allowance of $80.2 million against these foreign deferred tax assets.

As of the end of Fiscal 2020, approximately $383.1 million of cash and cash equivalents was held by the
Company's non-U.S. subsidiaries whose cumulative undistributed earnings total $644.2 million. The Tax Act
imposed U.S. federal tax on all post-1986 foreign unrepatriated earnings accumulated through December 31, 2017.
The portion of these earnings not subject to U.S. federal income tax as part of the one-time transition tax should, in
general, not be subject to U.S. federal
income tax. The Company will continue to permanently reinvest these
earnings, as well as future earnings from its foreign subsidiaries, to fund international growth and operations. If the
Company was to repatriate indefinitely reinvested foreign funds, it would still be required to accrue and pay certain
taxes upon repatriation,
including foreign withholding taxes and certain U.S. state taxes and record foreign
exchange rate impacts. Determination of the unrecorded deferred tax liability that would be incurred if such amounts
were repatriated is not practicable.

As of the end of Fiscal 2020 and Fiscal 2019, the total

liability for unrecognized tax benefits, including
related interest and penalties, was approximately $46.9 million and $44.3 million, respectively. The following table
represents a reconciliation of the Company's total unrecognized tax benefits balances, excluding interest and
penalties, for Fiscal 2020, Fiscal 2019 and Fiscal 2018.

(In thousands)
Beginning of year

Increases as a result of tax positions taken in a prior period

Decreases as a result of tax positions taken in a prior period

Increases as a result of tax positions taken during the current
period
Decreases as a result of settlements during the current period

Reductions as a result of a lapse of statute of limitations during the
current period
Reductions as a result of divestiture
End of year

Year Ended December 31,

2020

2019

2018

41,194 $

55,855 $

1,738

(2,309)

2,142

(1,500)

—
(951)

1,545

(11,005)

1,158

(6,359)

—
—

51,815

1,978

(1,600)

12,802

—

(9,140)
—

40,314 $

41,194 $

55,855

As of the end of Fiscal 2020, $31.7 million of unrecognized tax benefits, excluding interest and penalties,

would impact the Company's effective tax rate if recognized.

As of the end of Fiscal 2020, Fiscal 2019 and Fiscal 2018, the liability for unrecognized tax benefits
included $4.3 million, $3.1 million, and $4.2 million, respectively, for the accrual of interest and penalties. For each
of Fiscal 2020, Fiscal 2019 and Fiscal 2018, the Company recorded $1.2 million, $2.0 million, and $1.9 million,
respectively, for the accrual of interest and penalties in its Consolidated Statements of Operations. The Company
recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes on
the Consolidated Statements of Operations.

The Company files income tax returns in the U.S.

jurisdiction and various state and foreign
jurisdictions. The Company is currently under audit by the U.S. Internal Revenue Service for the years 2015 through
2017. The majority of the Company's other returns for years before 2015 are no longer subject to U.S. federal, state
and local or foreign income tax examinations by tax authorities.

federal

The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change
based on future events including, but not limited to, the settlements of ongoing tax audits and assessments and the
limitations. Although the outcomes and timing of such events are highly
expiration of applicable statutes of
uncertain, the Company does not anticipate that the balance of gross unrecognized tax benefits, excluding interest
and penalties, will change significantly during the next twelve months. However, changes in the occurrence,
expected outcomes, and timing of such events could cause the Company's current estimate to change materially in
the future.

14. Earnings (Loss) per Share

The calculation of earnings (loss) per share for common stock shown below excludes the income
attributable to outstanding restricted stock awards from the numerator and excludes the impact of these awards
from the denominator. The following is a reconciliation of basic earnings (loss) per share to diluted earnings (loss)
per share:

(In thousands, except per share amounts)
Numerator
Net income (loss)

Year Ended December 31,

2020

2019

2018

(549,177) $

92,139 $

(46,302)

Denominator
Weighted average common shares outstanding Class A, B and C

Effect of dilutive securities Class A, B and C
Weighted average common shares and dilutive securities
outstanding Class A, B and C

454,089
—

450,964
3,310

445,815
—

454,089

454,274

445,815

Basic net income (loss) per share of Class A, B and C common
stock
Diluted net income (loss) per share of Class A, B and C common
stock

(1.21) $

0.20 $

(0.10)

(1.21) $

0.20 $

(0.10)

Effects of potentially dilutive securities are presented only in periods in which they are dilutive. Stock
options, and restricted stock units representing 6.4 million, 1.8 million and 3.3 million shares of Class A and C
common stock outstanding for Fiscal 2020, Fiscal 2019 and Fiscal 2018, respectively, were excluded from the
computation of diluted earnings per share because their effect would be anti-dilutive. Due to the Company being in
a net loss position for Fiscal 2020 and Fiscal 2018, there were no stock options or restricted stock units included in
the computation of diluted earnings per share, as their effect would have been anti-dilutive.

15. Stock-Based Compensation

Stock Compensation Plans

The Under Armour,

Inc. Third Amended and Restated 2005 Omnibus Long-Term Incentive Plan as
amended (the “2005 Plan”) provides for the issuance of stock options, restricted stock, restricted stock units and
other equity awards to officers, directors, key employees and other persons. Stock options and restricted stock and
restricted stock unit awards under the 2005 Plan generally vest ratably over a two to five year period. The

contractual term for stock options is generally 10 years from the date of grant. The Company generally receives a
tax deduction for any ordinary income recognized by a participant in respect to an award under the 2005 Plan. The
2005 Plan terminates in 2025. As of the end of Fiscal 2020, 10.1 million Class A shares and 24.9 million Class C
shares are available for future grants of awards under the 2005 Plan.

Total stock-based compensation expense for Fiscal 2020, Fiscal 2019 and Fiscal 2018 was $42.1 million ,
$49.6 million and $41.8 million, respectively. The related tax benefits, excluding consideration of valuation
allowances, were $9.0 million, $11.8 million, and $10.0 million for Fiscal 2020, Fiscal 2019, and Fiscal 2018,
respectively. The valuation allowances associated with these benefits were $9.0 million, $2.7 million, and $1.1
million for Fiscal 2020, Fiscal 2019, and Fiscal 2018, respectively. As of the end of Fiscal 2020, the Company had
$67.5 million of unrecognized compensation expense expected to be recognized over a weighted average period of
2.39 years. This unrecognized compensation expense does not include any expense related to performance-based
restricted stock units and stock options for which the performance targets have not been deemed probable as of the
end of Fiscal 2020 and Fiscal 2018. Refer to “Stock Options” and “Restricted Stock and Restricted Stock Units”
below for further information on these awards.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (the “ESPP”) allows for the purchase of Class A Common
Stock and Class C Common Stock by all eligible employees at a 15% discount from fair market value subject to
certain limits as defined in the ESPP. As of the end of Fiscal 2020, 2.7 million Class A shares and 2.0 million Class C
shares are available for future purchases under the ESPP. During Fiscal 2020, Fiscal 2019 and Fiscal 2018, 482.9
thousand, 329.1 thousand and 393.8 thousand Class C shares were purchased under the ESPP, respectively.

Non-Employee Director Compensation Plan and Deferred Stock Unit Plan

The Company’s Non-Employee Director Compensation Plan (the “Director Compensation Plan”) provides
for cash compensation and equity awards to non-employee directors of the Company under the 2005 Plan. Non-
employee directors have the option to defer the value of their annual cash retainers as deferred stock units in
accordance with the Under Armour, Inc. Non-Employee Deferred Stock Unit Plan (the “DSU Plan”). Each new non-
employee director receives an award of restricted stock units upon the initial election to the Board of Directors, with
the units covering stock valued at $100 thousand on the grant date and vesting in three equal annual installments.
In addition, each non-employee director receives, following each annual stockholders’ meeting, a grant under the
2005 Plan of restricted stock units covering stock valued at $150 thousand on the grant date. Each award vests
100% on the date of the next annual stockholders’ meeting following the grant date.

The receipt of the shares otherwise deliverable upon vesting of the restricted stock units automatically
defers into deferred stock units under the DSU Plan. Under the DSU Plan each deferred stock unit represents the
Company’s obligation to issue one share of the Company’s Class A or Class C Common Stock with the shares
delivered six months following the termination of the director’s service.

Stock Options

The weighted average fair value of a stock option granted for Fiscal 2020, Fiscal 2019 and Fiscal 2018 was
$6.61, $8.70 and $6.91, respectively. The fair value of each stock option granted is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rate
Average expected life in years
Expected volatility
Expected dividend yield

Year Ended December 31,

2020

2019

2018

1.5 %
6.25
43.1 %
— %

2.5 %
6.50
41.0 %
— %

2.8 %
6.50
40.4 %
— %

A summary of the Company’s stock options as of the end of Fiscal 2020, Fiscal 2019 and Fiscal 2018, and

changes during the years then ended is presented below:

(In thousands, except per share amounts)

2020

2019

2018

Year Ended December 31,

Outstanding, beginning of year

Granted, at fair market value

Exercised

Expired

Forfeited

Number
of Stock
Options

Weighted
Average
Exercise
Price

Number
of Stock
Options

Weighted
Average
Exercise
Price

Number
of Stock
Options

Weighted
Average
Exercise
Price

1,969 $

16.61

2,732 $

12.98

3,782 $

12.71

303

(410)

—

15.13

3.54

—

460

(733)

—

19.39

3.41

—

579

(1,262)

—

15.41

5.53

—

(490)

19.04

(367)

35.55

Outstanding, end of year

1,862 $

19.31

1,969 $

16.61

2,732 $

12.98

Options exercisable, end of year

766 $

22.41

913 $

15.45

1,366 $

7.70

Included in the table above are 0.2 million and 0.3 million performance-based stock options awarded to the
Company’s Executive Chairman and Brand Chief under the 2005 Plan for Fiscal 2019 and Fiscal 2018, respectively.
There were no performance-based stock options awarded during Fiscal 2020. The performance-based stock
options awarded in Fiscal 2019 have weighted average fair values of $8.70 and have vesting that is tied to the
achievement of certain combined annual operating income targets.

The intrinsic value of stock options exercised during Fiscal 2020, Fiscal 2019 and Fiscal 2018 was

$4.5 million, $12.4 million and $15.2 million, respectively.

For Fiscal 2020, Fiscal 2019 and Fiscal 2018 income tax benefits related to stock options exercised,
excluding consideration of valuation allowances were $1.2 million, $2.7 million, and $3.5 million, respectively. The
valuation allowances associated with these benefits were $0.3 million, $0.7 million, and $0.5 million for Fiscal 2020,
Fiscal 2019 and Fiscal 2018, respectively.

The following table summarizes information about stock options outstanding and exercisable as of the end

of Fiscal 2020:

(In thousands, except per share amounts)

Options Outstanding

Weighted
Average
Exercise
Price Per
Share

Weighted
Average
Remaining
Contractual
Life (Years)

Number of
Underlying
Shares

Total
Intrinsic
Value

Number of
Underlying
Shares

Options Exercisable

Weighted
Average
Exercise
Price Per
Share

Weighted
Average
Remaining
Contractual
Life (Years)

Total
Intrinsic
Value

1,862 $

19.31

7.18 $

186

766 $

22.41

6.02 $

186

Restricted Stock and Restricted Stock Units

A summary of the Company’s restricted stock and restricted stock units as of the end of Fiscal 2020, Fiscal

2019 and Fiscal 2018, and changes during the years then ended is presented below:

(In thousands, except per share amounts)
Outstanding, beginning of year
Granted
Forfeited
Vested

Year Ended December 31,

2020

2019

2018

Number
of
Restricted
Shares

Weighted
Average
Grant Date
Fair Value

Number
of
Restricted
Shares

Weighted
Average
Fair Value

Number
of
Restricted
Shares

Weighted
Average
Fair Value

6,661 $
4,572
(2,217)
(2,742)

18.02
13.09
16.68
17.86

8,284 $
3,501
(2,760)
(2,364)

18.03
19.32
18.56
20.24

9,923 $
5,165
(4,745)
(2,059)

24.41
15.57
27.43
24.95

Outstanding, end of year

6,274 $

15.52

6,661 $

18.02

8,284 $

18.03

Included in the table above are 0.6 million and 0.8 million performance-based restricted stock units awarded
to certain executives and key employees under the 2005 Plan during Fiscal 2019 and Fiscal 2018, respectively.

There were no performance-based restricted stock units awarded during Fiscal 2020. The performance-based
restricted stock units awarded in Fiscal 2019 and Fiscal 2018 have weighted average grant date fair values of
$19.39, and $15.60, respectively, and have vesting that is tied to the achievement of certain combined annual
revenue and operating income targets.

During Fiscal 2019, the Company granted performance-based restricted stock units or stock options with
vesting conditions tied to the achievement of revenue and operating income targets for 2019 and 2020. During
Fiscal 2019, the Company deemed the achievement of these revenue and operating income targets improbable,
accordingly, a reversal of expense of $2.9 million and $1.5 million were recorded for the performance-based
restricted stock units and stock options for Fiscal 2020 and Fiscal 2019, respectively.

Warrants

The Company issued fully vested and non-forfeitable warrants to purchase 1.92 million shares of the
Company's Class A Common Stock and 1.93 million shares of the Company’s Class C Common Stock to NFL
Properties as partial consideration for footwear promotional rights which were recorded as an intangible asset in
2006. The warrants had a term of 12 years from the date of issuance and an exercise price of $4.66 per Class A
share and $4.56 per Class C share. In August 2018, all of the warrants were exercised on a net exercise basis.

16. Other Employee Benefits

The Company offers a 401(k) Deferred Compensation Plan for the benefit of eligible employees. Employee
contributions are voluntary and subject to Internal Revenue Service limitations. The Company matches a portion of
the participant’s contribution and recorded expense of $5.4 million, $7.5 million and $9.9 million for Fiscal 2020,
Fiscal 2019 and Fiscal 2018, respectively. During Fiscal 2020,
the Company temporarily suspended 401(k)
matching contributions for approximately five months as part of the Company's capital preservation efforts in
response to COVID-19. Shares of the Company’s Class A Common Stock and Class C common stock are not
investment options in this plan.

In addition, the Company offers the Under Armour, Inc. Deferred Compensation Plan which allows a select
group of management or highly compensated employees, as approved by the Compensation Committee, to make
an annual base salary and/or bonus deferral for each year. As of the end of Fiscal 2020 and Fiscal 2019, the
Deferred Compensation Plan obligations were $14.3 million and $10.8 million, respectively, and were included in
other long term liabilities on the Consolidated Balance Sheets.

The Company established a Rabbi Trust to fund obligations to participants in the Deferred Compensation
Plan. As of the end of Fiscal 2020 and Fiscal 2019, the assets held in the Rabbi Trust were TOLI policies with cash-
surrender values of $7.7 million and $6.5 million, respectively. These assets are consolidated and are included in
other long term assets on the Consolidated Balance Sheet. Refer to Note 12 for a discussion of the fair value
measurements of the assets held in the Rabbi Trust and the Deferred Compensation Plan obligations.

17. Risk Management and Derivatives

Foreign Currency Risk Management

The Company is exposed to global market risks, including the effects of changes in foreign currency and
interest rates. The Company uses derivative instruments to manage financial exposures that occur in the normal
course of business and does not hold or issue derivatives for trading or speculative purposes.

The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The
Company formally documents all relationships between designated hedging instruments and hedged items, as well
as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking
all derivatives designated as hedges to forecasted cash flows and assessing, both at inception and on an ongoing
basis, the effectiveness of the hedging relationships.

The Company's foreign exchange risk management program consists of designated cash flow hedges and
undesignated hedges. As of the end of Fiscal 2020, the Company has hedge instruments, primarily for British
Pound/U.S. Dollar, U.S. Dollar/Chinese Renminbi, Euro/U.S. Dollar, U.S. Dollar/Canadian Dollar, U.S. Dollar/
Mexican Peso, and Australian Dollar/U.S. Dollar currency pairs. All derivatives are recognized on the Consolidated
Balance Sheets at fair value and classified based on the instrument’s maturity date.

(In thousands)

Balance Sheet Classification

December 31, 2020

December 31, 2019

Derivatives designated as hedging instruments under ASC 815

Foreign currency contracts

Interest rate swap contracts

Other current assets

Other long term assets

Total derivative assets designated as hedging instruments

Foreign currency contracts

Other current liabilities

Other long term liabilities

Total derivative liabilities designated as hedging instruments

Derivatives not designated as hedging instruments under ASC 815

Foreign currency contracts

Other current assets

Total derivative assets not designated as hedging instruments

Foreign currency contracts

Other current liabilities

Total derivative liabilities not designated as hedging instruments

— $

4,040

—

— $

4,064

17,601

6,469

24,070

2,384

6,464

8,772

2,443

11,215

2,337

9,510

The following table presents the amounts in the Consolidated Statements of Operations in which the effects of cash
flow hedges are recorded and the effects of cash flow hedge activity on these line items.

2020

2019

2018

Year Ended December 31,

Amount of
Gain (Loss) on
Cash Flow
Hedge Activity

Total

4,474,667 $

2,314,572 $

(47,259) $

168,153 $

2,098

9,516

(36) $

5,267,132 $

18,789

2,796,599 $

(21,240) $

(5,688) $

4,703

1,598

871

5,193,185 $

2,852,714 $

(33,568) $

(9,203) $

(1,748)

(1,279)

386

1,537

(In thousands)

Net revenues

Cost of goods sold

Interest expense, net

Other expense, net

The following tables present the amounts affecting the Statements of Comprehensive Income (Loss).

(In thousands)

Balance as of
December 31, 2019

Amount of gain (loss)
recognized in other
comprehensive
income (loss) on
derivatives

Amount of gain (loss)
reclassified from other
comprehensive
income (loss) into
income

Balance as of
December 31, 2020

Derivatives designated as cash flow hedges

Foreign currency contracts

Interest rate swaps

Total designated as cash flow hedges

(6,005) $

(577)

(6,582) $

(8,336) $

—

(8,336) $

11,567 $

(36)

11,531 $

(25,908)

(541)

(26,449)

(In thousands)

Balance as of
December 31, 2018

Amount of gain (loss)
recognized in other
comprehensive
income (loss) on
derivatives

Amount of gain (loss)
reclassified from
other comprehensive
income (loss) into
income

Balance as of
December 31, 2019

Derivatives designated as cash flow hedges

Foreign currency contracts

Interest rate swaps

Total designated as cash flow hedges

21,908 $

954

22,862 $

(3,550) $

(3,483) $

24,363 $

1,598

25,961 $

(6,005)

(577)

(6,582)

(In thousands)

Balance as of
December 31, 2017

Amount of gain (loss)
recognized in other
comprehensive
income (loss) on
derivatives

Amount of gain (loss)
reclassified from
other comprehensive
income (loss) into
income

Balance as of
December 31, 2018

Derivatives designated as cash flow hedges

Foreign currency contracts

Interest rate swaps

Total designated as cash flow hedges

(8,312) $

438

(7,874) $

28,730 $

902

29,632 $

(1,490) $

386

(1,104) $

21,908

954

22,862

The following table presents the amounts in the Consolidated Statements of Operations in which the effects of
undesignated derivative instruments are recorded and the effects of fair value hedge activity on these line items.

2020

2019

2018

Year ended December 31,

Amount of Gain
(Loss) on Fair
Value Hedge
Activity

Total

168,153 $

(2,173) $

(5,688) $

(6,141) $

(9,203) $

(13,688)

(In thousands)

Other expense, net

Cash Flow Hedges

The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates
relating to transactions generated by its international subsidiaries in currencies other than their local currencies.
These gains and losses are driven by non-functional currency generated revenue, non-functional currency inventory
purchases,
investments in U.S. Dollar denominated available-for-sale debt securities, and certain other
intercompany transactions. The Company enters into foreign currency contracts to reduce the risk associated with
the foreign currency exchange rate fluctuations on these transactions. Certain contracts are designated as cash
flow hedges. As of the end of Fiscal 2020, the aggregate notional value of the Company's outstanding cash flow
hedges was $812.5 million, with contract maturities ranging from one to twenty-four months.

The Company may enter into long term debt arrangements with various lenders which bear a range of fixed
and variable rates of interest. The nature and amount of the Company's long term debt can be expected to vary as a
result of future business requirements, market conditions and other factors. The Company may elect to enter into
interest rate swap contracts to reduce the impact associated with interest rate fluctuations. The interest rate swap
contracts are accounted for as cash flow hedges. Refer to Note 9 for a discussion of long term debt. As of the end of
Fiscal 2020, the Company had no outstanding interest rate swap contracts.

For contracts designated as cash flow hedges,

the changes in fair value are reported as other
comprehensive income (loss) and are recognized in current earnings in the period or periods during which the
hedged transaction affects current earnings. Effective hedge results are classified in the Consolidated Statements of
Operations in the same manner as the underlying exposure.

Undesignated Derivative Instruments

The Company may elect to enter into foreign exchange forward contracts to mitigate the change in fair
value of specific assets and liabilities on the Consolidated Balance Sheets. These undesignated instruments are
recorded at fair value as a derivative asset or liability on the Consolidated Balance Sheets with their corresponding
change in fair value recognized in other expense, net, together with the re-measurement gain or loss from the
hedged balance sheet position. As of the end of Fiscal 2020, the total notional value of the Company's outstanding
undesignated derivative instruments was $313.1 million.

Credit Risk

The Company enters into derivative contracts with major financial institutions with investment grade credit
ratings and is exposed to credit losses in the event of non-performance by these financial institutions. This credit
risk is generally limited to the unrealized gains in the derivative contracts. However, the Company monitors the
credit quality of these financial institutions and considers the risk of counterparty default to be minimal.

18. Related Party Transactions

The Company has an operating lease agreement with an entity controlled by the Company’s Executive
Chairman and Brand Chief to lease an aircraft for business purposes. The Company paid $2.0 million in lease
payments to the entity for its use of the aircraft during each of Fiscal 2020, Fiscal 2019 and Fiscal 2018. No
amounts were payable to this related party as of the end of Fiscal 2020 and Fiscal 2019. The Company determined
the lease payments were at fair market lease rates.

In June 2016,

the Company purchased parcels of

land from an entity controlled by the Company's
Executive Chairman and Brand Chief,
to be utilized to expand the Company’s corporate headquarters to
accommodate its growth needs. The purchase price for these parcels totaled $70.3 million. The Company
determined that the purchase price for the land represented the fair market value of the parcels and approximated
the cost to the seller to purchase and develop the parcels, including costs related to the termination of a lease
encumbering the parcels.

In connection with the purchase of these parcels, in September 2016, the parties entered into an agreement
pursuant to which the parties will share the burden of any special taxes arising due to infrastructure projects in the
surrounding area. The allocation to the Company is based on the expected benefits to the Company’s parcels from
these projects. No obligations were owed by either party under this agreement as of the end of Fiscal 2020.

19. Segment Data and Disaggregated Revenue

The Company’s operating segments are based on how the Chief Operating Decision Maker (“CODM”)
makes decisions about allocating resources and assessing performance. As such, the CODM receives discrete
financial information for the Company's principal business by geographic region based on the Company’s strategy
to become a global brand. These geographic regions include North America, Europe, the Middle East and Africa
(“EMEA”), Asia-Pacific, and Latin America. Each geographic segment operates exclusively in one industry: the
development, marketing and distribution of branded performance apparel, footwear and accessories. The CODM
also receives discrete financial information for the Company's Connected Fitness business. Total expenditures for
additions to long-lived assets are not disclosed as this information is not regularly provided to the CODM. As a result
of the change in the operating model in Chile, there will be no impact on segment reporting and Latin America will
continue to be disclosed as a separate reportable segment, based on reporting to CODM for Fiscal 2021.

Corporate Other consists largely of general and administrative expenses not allocated to an operating
segment, including expenses associated with centrally managed departments such as global marketing, global IT,
global supply chain, innovation and other corporate support functions; costs related to the Company's global assets
and global marketing, costs related to the Company’s headquarters; restructuring and restructuring related charges;
and certain foreign currency hedge gains and losses. Effective January 1, 2021, following the sale of MyFitnessPal
and the winding down of the Endomondo platform, revenues for the remaining MapMyFitness platform will be
included in Corporate Other.

Segment Data

The net revenues and operating income (loss) associated with the Company's segments are summarized in
the following tables. Net revenues represent sales to external customers for each segment. Intercompany balances
were eliminated for separate disclosure.

(In thousands)
Net revenues

North America

EMEA

Asia-Pacific

Latin America

Connected Fitness

Corporate Other (1)

Total net revenues

Year Ended December 31,

2020

2019

2018

2,944,978

3,658,353

3,735,293

598,296

628,657

164,825

135,813

2,098

621,137

636,343

196,132

136,378

18,789

591,057

557,431

190,795

120,357

(1,748)

4,474,667

5,267,132

5,193,185

(1) Corporate Other revenues consist of foreign currency hedge gains and losses related to revenues generated by entities
within the Company's operating segments, but managed through the Company's central foreign exchange risk management
program.

Net revenues in the United States were $2,720.3 million, $3,394.4 million, and $3,464 million for Fiscal

2020, Fiscal 2019 and Fiscal 2018, respectively.

(In thousands)
Operating income (loss)

North America

EMEA

Asia-Pacific

Latin America

Connected Fitness

Corporate Other

Total operating income (loss)

Interest expense, net

Other income (expense), net

Year Ended December 31,

2020

2019

2018

474,584

733,442

718,195

60,592

(42,790)

17,063

53,739

97,641

(3,160)

17,140

30,388

103,527

(16,879)

5,948

(1,122,889)

(662,032)

(866,196)

(613,438)

236,770

(47,259)

168,153

(21,240) $

(5,688) $

(25,017)

(33,568)

(9,203)

Income (loss) before income taxes

(492,544) $

209,842

(67,788)

The operating income (loss) information for Corporate Other presented above includes the impact of all
restructuring and impairment related charges related to the Company's 2020 and 2018 restructuring plans. These
unallocated charges are as follows:

(In thousands)

Unallocated restructuring, impairment and restructuring related charges

North America related

EMEA related

Asia-Pacific related

Latin America related

Connected Fitness related

Corporate Other related

Year Ended December 31,

2020

2018

397,616

14,388

6,771

14,915

4,694

21,967

115,687

34,699

27,107

1,505

24,950

Total unallocated restructuring, impairment and restructuring related charges

460,351

203,949

There were no restructuring charges incurred during Fiscal 2019.

Long-lived assets are primarily composed of Property and Equipment, net and ROU assets. The Company's

long-lived assets by geographic area were as follows:

(In thousands)
Long-lived assets
United States

Canada

Total North America

Other foreign countries

Total long-lived assets

Disaggregation of Revenue

Year Ended December 31,

2020

2019

896,789

1,051,089

23,122

919,911

275,427

23,268

1,074,357

309,722

1,195,338

1,384,079

The following tables disaggregate the Company's net revenues into categories that depict how the nature,
amount, timing, and uncertainty of net revenues and cash flows are affected by economic factors for the fiscal
periods presented.

Net revenues by product category are as follows:

(In thousands)

Apparel

Footwear

Accessories

Net Sales

License revenues

Connected Fitness

Corporate Other (1)

Total net revenues

Year Ended December 31,

2020

2019

2018

2,882,562

3,470,285

934,333

414,082

4,230,977

105,779

135,813

2,098

1,086,551

416,354

4,973,190

138,775

136,378

18,789

3,464,120

1,063,175

422,496

4,949,791

124,785

120,357

(1,748)

4,474,667

5,267,132

5,193,185

Net revenues by distribution channel are as follows:

(In thousands)

Wholesale

Direct-to-Consumer

Net Sales

License revenues

Connected Fitness

Corporate Other (1)

Year Ended December 31,

2020

2019

2018

2,383,353

3,167,625

1,847,624

4,230,977

105,779

135,813

2,098

1,805,565

4,973,190

138,775

136,378

18,789

3,141,983

1,807,808

4,949,791

124,785

120,357

(1,748)

Total Net Revenues

4,474,667

5,267,132

5,193,185

20. Unaudited Quarterly Financial Data

(In thousands)

2020

Net revenues
Gross profit
Income (loss) from operations
Net income (loss)
Basic net income (loss) per share of Class A, B
and C common stock

Diluted net income (loss) per share of Class A,
B and C common stock

Quarter Ended (unaudited)

March 31,

June 30,

September 30,

December 31,

Year Ended
December 31,

930,240
430,984
(558,180)
(589,681) $

707,640
349,169
(169,674)
(182,896) $

$ 1,433,021
686,320
58,570
38,946

$ 1,403,766
693,622
55,846
184,454

$ 4,474,667
2,160,095
(613,438)
(549,177)

(1.30) $

(0.40) $

(1.30) $

(0.40) $

0.09

0.41

0.40

(1.21)

2019

Net revenues
Gross profit
Income (loss) from operations
Net income (loss)

$ 1,204,722
544,787
35,259
22,477

$ 1,191,729
554,321
(11,482)
(17,349) $

$ 1,429,456
689,898
138,920
102,315

$ 1,441,225
681,527
74,073
(15,304) $

$ 5,267,132
2,470,533
236,770
92,139

Basic net income (loss) per share of Class A, B
and C common stock

Diluted net income (loss) per share of Class A,
B and C common stock

0.05

(0.04) $

0.23

(0.03) $

0.20

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Our management has evaluated, under the supervision and with the participation of our Chief Executive
Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective in
information required to be disclosed in our Exchange Act reports is (1) recorded, processed,
ensuring that
summarized and reported in a timely manner and (2) accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure. The Company’s internal control over financial reporting as of December 31, 2020 has been
audited by PricewaterhouseCoopers LLP, as stated in their report which appears herein.

Changes in Internal Controls

In 2015, we began the process of implementing a global operating and financial reporting information
technology system, SAP Fashion Management Solution ("FMS"), as part of a multi-year plan to integrate and
upgrade our systems and processes. The first phase of this implementation became operational in July 2017, in our
North America, EMEA, and Connected Fitness operations. The second phase of this implementation became
operational in April of 2019 in China and South Korea. The third and final phase of this implementation became
operational in April of 2020 in Mexico. We believe the implementation of this system and related changes to internal
internal controls over financial reporting. We also expect to continue to see
controls will enhance our overall
enhancements to our global systems, which will then continue to strengthen our internal controls over financial
reporting by automating select manual processes and standardizing business processes and reporting across our
organization. We believe that our robust assessment provides effective global coverage for key control activities that
risks related to the
reporting conclusion. For a discussion of
support our
implementation of the information technology system, see our Risk Factors in Part I, Item 1A.

internal controls over

financial

We have assessed the impact on changes to our internal controls over financial reporting, and conclude
that there have been no changes in our internal control over financial reporting, as defined in Exchange Act Rules
13a-15(f) and 15d-15(f), during the most recent fiscal quarter that have materially affected, or that are reasonably
likely to materially affect our internal controls over financial reporting. We have not experienced any material impact
to our internal controls over financial reporting despite the fact that a significant number of our employees are
working remotely due to the COVID-19 pandemic. We continue to monitor and assess impacts of the COVID-19
pandemic on our controls in order to minimize the impact on the design and operating effectiveness of our controls.

100

ITEM 9B. OTHER INFORMATION

None.

101

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item regarding directors is incorporated herein by reference from the 2021
Proxy Statement, under the headings “Election of Directors,” “Corporate Governance and Related Matters: Audit
Committee” and “Delinquent Section 16(a) Reports.” Information required by this Item regarding executive officers is
included under “Executive Officers” in Part 1 of this Form 10-K.

Code of Ethics

We have a written code of ethics and business conduct in place that applies to all our employees, including
our principal executive officer, principal financial officer, and principal accounting officer and controller. A copy of our
code of ethics and business conduct is available on our website: https://about.underarmour.com/investor-relations/
governance. We are required to disclose any change to, or waiver from, our code of ethics and business policy for
our senior financial officers. We intend to use our website as a method of disseminating this disclosure as permitted
by applicable SEC rules.

ITEM 11.

INFORMATION ABOUT OUR EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference herein from the 2021 Proxy Statement
under the headings “Corporate Governance and Related Matters - Compensation of Directors,” and “Executive
Compensation.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated by reference herein from the 2021 Proxy Statement
under the heading “Security Ownership of Management and Certain Beneficial Owners of Shares.” Also refer to
Item 5 of this Annual Report on Form 10-K, “Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

The information required by this Item is incorporated by reference herein from the 2021 Proxy Statement
under the heading “Transactions with Related Persons" and “Corporate Governance and Related Matters—
Independence of Directors.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated by reference herein from the 2021 Proxy Statement

under the heading “Independent Auditors.”

102

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a. The following documents are filed as part of this Form 10-K:

1. Financial Statements:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2020 and 2019

Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2020, 2019 and 2018

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2020, 2019 and 2018

Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018

Notes to the Audited Consolidated Financial Statements

2. Financial Statement Schedule

Schedule II—Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable or the required information is shown in the

consolidated financial statements or notes thereto.

3. Exhibits

The following exhibits are incorporated by reference or filed herewith. References to any Form 10-K of the
Company below are to the Annual Report on Form 10-K for the related fiscal year. For example, references to the
Company’s 2019 Form 10-K are to the Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2019.

Exhibit
No.

3.01

3.02

3.03

4.01

4.02

4.03

4.04

Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.01 of the Company’s
Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2020).

Articles Supplementary setting forth the terms of the Class C Common Stock, dated June 15, 2015 (incorporated
by reference to Appendix F to the Preliminary Proxy Statement filed by the Company on June 15, 2015).

Amended and Restated Bylaws of Under Armour, Inc. (incorporated by reference to Exhibit
3.01 of the Company’s Current Report on Form 8-K filed on February 10, 2021).

Description of the Company’s Securities Registered Pursuant to Section 12 of the Exchange Act.

Indenture, dated as of June 13, 2016, between the Company and Wilmington Trust, National Association, as
trustee (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on June 13,
2016).

First Supplemental Indenture, dated as of June 13, 2016, relating to the 3.250% Senior Notes due 2026, between
the Company and Wilmington Trust, National Association, as trustee, and the Form of 3.250% Senior Notes due
2026 (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on June 13,
2016).

Indenture, dated as of May 27, 2020, relating to the Company’s 1.50% Convertible Senior Notes due 2024,
between the Company and Wilmington Trust, National Association, as Trustee and the Form of 1.50% Convertible
Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K
filed on May 28, 2020).

10.01

Credit Agreement, dated March 8, 2019, by and among Under Armour, Inc., as borrower, JPMorgan Chase Bank,
N.A., as administrative agent, PNC Bank, National Association, as syndication agent and the other lenders and
arrangers party thereto (incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K
filed March 8, 2019).

103

Exhibit
No.

10.02

10.03

10.04

10.05

10.06

10.07

10.08

10.09

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

21.01

23.01

31.01

Amendment No. 1, dated May 12, 2020, to the Amended and Restated Credit Agreement, dated March 8, 2019,
by and among Under Armour, Inc., as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the
other lenders and arrangers party thereto (incorporated by reference to Exhibit 10.01 of the Company’s Current
Report on Form 8-K filed on May 12, 2020).

Form of Capped Call Confirmation (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on
Form 8-K filed on May 28, 2020).

Under Armour, Inc. Amended and Restated Executive Incentive Compensation Plan (incorporated by reference to
Exhibit 10.01 of the Company's Quarterly Report on Form 10-Q filed for the quarterly period ending September
30, 2020).*

Under Armour, Inc. Amended and Restated Deferred Compensation Plan (incorporated by reference to Exhibit
10.10 of the Company’s 2018 Form 10-K).*

Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.04 of the Company’s
2016 Form 10-K).*

Under Armour, Inc. Third Amended and Restated 2005 Omnibus Long-Term Incentive Plan (the “2005 Plan”)
(incorporated by reference to Exhibit 10.01 of the Company’s Quarterly Report on Form 10-Q filed on August 1,
2019).*

Form of Non-Qualified Stock Option Grant Agreement under the 2005 Plan between the Company and Kevin
Plank (incorporated by reference to Exhibit 10.06 of the Company’s 2019 Form 10-K).*

Form of Non-Qualified Stock Option Grant Agreement under the 2005 Plan between the Company and Kevin
Plank (incorporated by reference to Exhibit 10.13 of the Company’s 2018 Form 10-K).*

Form of Restricted Stock Unit Grant Agreement under the 2005 Plan (incorporated by reference to Exhibit 10.08
of the Company’s 2019 Form 10-K).*

Form of Restricted Stock Unit Grant Agreement under the 2005 Plan (incorporated by reference to Exhibit 10.14
of the Company's 2017 Form 10-K).*

Form of Performance-Based Stock Option Grant Agreement under the 2005 Plan (incorporated by reference to
Exhibit 10.16 of the Company’s 2017 Form 10-K).*

Form of Performance-Based Restricted Stock Unit Agreement under the 2005 Plan (incorporated by reference to
Exhibit 10.19 of the Company’s 2017 Form 10-K).*

Form of Employee Confidentiality, Non-Competition and Non-Solicitation Agreement by and between certain
executives of the Company (incorporated by reference to Exhibit 10.11 of the Company’s 2016 Form 10-K).*

Under Armour, Inc. 2021 Non-Employee Director Compensation Plan (the “Director Compensation Plan”).

Form of Initial Restricted Stock Unit Grant under the Director Compensation Plan (incorporated by reference to
Exhibit 10.1 of the Current Report on Form 8-K filed June 6, 2006).*

Form of Annual Restricted Stock Unit Grant under the Director Compensation Plan (incorporated by reference to
Exhibit 10.6 of the Company’s Form 10-Q for the quarterly period ended June 30, 2011).*

Under Armour, Inc. 2006 Non-Employee Director Deferred Stock Unit Plan (the “Director DSU Plan”)
(incorporated by reference to Exhibit 10.02 of the Company’s Form 10-Q for the quarterly period ended March 31,
2010).*

Amendment One to the Director DSU Plan (incorporated by reference to Exhibit 10.23 of the Company’s 2010
Form 10-K).*

Amendment Two to the Director DSU Plan (incorporated by reference to Exhibit 10.02 of the Company’s Form 10-
Q for the quarterly period ended June 30, 2016).*

Amendment Three to the Director DSU Plan (incorporated by reference to Exhibit 10.22 of the Company’s 2019
Form 10-K).*

Employee Confidentiality, Non-Competition and Non-Solicitation Agreement by and between Patrik Frisk and the
Company (incorporated by reference to Exhibit 10.01 of the Company’s Form 10-Q for the quarterly period ended
March 31, 2018).*

Confidentiality, Non-Competition and Non-Solicitation Agreement, dated June 15, 2015, between the Company
and Kevin Plank (the “Plank Non-Compete Agreement”) (incorporated by reference to Appendix E to the
Preliminary Proxy Statement filed by Under Armour, Inc. on June 15, 2015).

First Amendment to the Plank Non-Compete Agreement, dated April 7, 2016 (incorporated by reference to Exhibit
10.03 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016).

List of Subsidiaries.

Consent of PricewaterhouseCoopers LLP.

Section 302 Chief Executive Officer Certification.

104

Exhibit
No.

31.02

32.01

32.02

101.INS

Section 302 Chief Financial Officer Certification.

Section 906 Chief Executive Officer Certification.

Section 906 Chief Financial Officer Certification.

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

___________

Management contract or a compensatory plan or arrangement required to be filed as an Exhibit pursuant to Item 15(b)
of Form 10-K.

105

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has

duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

UNDER ARMOUR, INC.

By:

/s/ PATRIK FRISK
Patrik Frisk
Chief Executive Officer and President

Dated: February 24, 2021

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following

persons on behalf of the registrant and in the capacities and on the date indicated.

/s/ PATRIK FRISK

Patrik Frisk

/s/ DAVID E. BERGMAN
David E. Bergman

/s/ ADITYA MAHESHWARI
Aditya Maheshwari

/s/ KEVIN A. PLANK
Kevin A. Plank

/s/ GEORGE W. BODENHEIMER
George W. Bodenheimer

/s/ DOUGLAS E. COLTHARP
Douglas E. Coltharp

/s/ JERRI L. DEVARD
Jerri L. DeVard

/s/ MOHAMED A. EL-ERIAN
Mohamed A. El-Erian

/s/ KAREN W. KATZ
Karen W. Katz

/s/ WESTLEY MOORE
Westley Moore

/s/ ERIC T. OLSON
Eric T. Olson

/s/ HARVEY L. SANDERS
Harvey L. Sanders

Dated: February 24, 2021

Chief Executive Officer, President and Director (principal executive
officer)

Chief Financial Officer (principal financial officer)

Controller and Chief Accounting Officer (principal accounting officer)

Executive Chairman and Brand Chief

Director

106

Schedule II

Valuation and Qualifying Accounts

(In thousands)

Description

Allowance for doubtful accounts
For the year ended December 31, 2020
For the year ended December 31, 2019
For the year ended December 31, 2018
Sales returns and allowances
For the year ended December 31, 2020
For the year ended December 31, 2019
For the year ended December 31, 2018
Deferred tax asset valuation allowance
For the year ended December 31, 2020
For the year ended December 31, 2019
For the year ended December 31, 2018

Balance at
Beginning
of Year

Charged to
Costs and
Expenses

Write-Offs
Net of
Recoveries

Balance at
End of
Year

15,082 $
22,224
19,712

10,456 $
(4,066)
23,534

(5,188) $
(3,076)
(21,022)

98,652 $

136,734
190,794

(431,253) $
180,124
247,939

426,780 $
(218,206)
(301,999)

101,997 $

291,887 $

72,710
73,544

31,926
21,221

(5,453) $
(2,639)
(22,055)

20,350
15,082
22,224

94,179
98,652
136,734

388,431
101,997
72,710

107

[THIS PAGE INTENTIONALLY LEFT BLANK]

KEY
FINANCIALS

NET REVENUE BY
PRODUCT CATEGORY
(PERCENT OF 2020 TOTAL)

NET REVENUE BY
REGION

(PERCENT OF 2020 TOTAL)

13%

14%

NET REVENUE BY
CHANNEL

(PERCENT OF 2020 TOTAL)

41%

53%

21%

Apparel
Footwear

Accessories

65%

66%

Licensing

Connected Fitness

North America

Latin America

Asia Pacific

Europe, Middle East
& Africa

Connected Fitness

Wholesale

Licensing

Direct-to-Consumer

Connected Fitness

NET REVENUE
$ IN MILLIONS

$5,193

$5,267

$4,833

$4,989

$4,475

INCOME FROM
OPERATIONS
$ IN MILLIONS

$417

$237

$179

$157

TOTAL DOOR
COUNT

245

200

114

140

181

179

188

194

169

2016

2017

2018

2019

2020

2016

2017*

2018*

2019

2020*

2016

2017

2018

2019

2020

*Adjusted Basis ($ in millions): Excludes $614, $204 and
$129 of restructuring and impairment impacts in 2020,
2018 & 2017 respectively; GAAP Basis ($ in millions):
($613), ($25) and $28 for 2020, 2018 & 2017 respectively

North America

International

2020 ANNUAL REPORT

BOARD OF
DIRECTORS

KEVIN A. PLANK
Executive Chairman and
Brand Chief

MOHAMED A. EL-ERIAN
Former Chief Executive Officer and
Co-Chief Investment Officer of
PIMCO

PATRIK FRISK
President and Chief
Executive Officer

KAREN W. KATZ
Former President and Chief
Executive Officer, Nieman
Marcus Group LTD LLC

GEORGE W.
BODENHEIMER
Former President of ESPN, Inc.
and ABC Sports

WES MOORE
Chief Executive Officer of the
Robin Hood Foundation

DOUGLAS E. COLTHARP
Executive Vice President and Chief
Financial Officer, Encompass Health
Corporation

ERIC T. OLSON
Admiral U.S. Navy (Retired)
and Former Commander, U.S.
Special Operations Command

JERRI L. DEVARD
Former Executive Vice
President, Chief Customer
Officer of Office Depot, Inc.

HARVEY L. SANDERS
Former Chief Executive
Officer and Chairman, Nautica
Enterprises, Inc.

2020 ANNUAL REPORT