Business Context and Reporting Period
Company: Under Armour, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: March 8, 2019
Event: Entry into a Material Definitive Agreement (Amended and Restated Credit Agreement).
Key Financial Metrics and Liquidity
This filing details a new credit facility rather than reporting operational financial results (revenue, profit, or cash flow). Key liquidity and debt metrics from the agreement include:
- Revolving Credit Facility: $1,250.0 million commitment.
- Incremental Capacity: Up to $300.0 million additional commitment permitted subject to conditions.
- Letters of Credit: Up to $50.0 million available.
- Swingline Loans: Up to $50.0 million available.
- Term: Five years with permitted extensions.
- Currencies: Loans available in U.S. Dollars, Euros, Pounds Sterling, Japanese Yen, and Canadian Dollars.
- Interest Rates: Based on Alternate Base Rate or Adjusted LIBO Rate plus an applicable margin (1.00%–1.25% for LIBO; 0%–0.25% for Base Rate) determined by a leverage ratio pricing grid.
Material Changes Versus Prior Period
The filing reports the amendment and restatement of the Company's existing credit agreement. The filing text does not provide specific comparative financial data (e.g., prior debt balances or interest rates) to quantify the material change in financial position versus the prior period, other than the establishment of the new facility terms.
Guidance, Covenants, and Risks
Covenants and Financial Maintenance:
- Interest Coverage Ratio: Must maintain a ratio of consolidated EBITDA to consolidated interest expense of not less than 3.50 to 1.0.
- Leverage Ratio: Consolidated total indebtedness to consolidated EBITDA must not exceed 3.25 to 1.0.
- Negative Covenants: Limitations on incurring additional indebtedness, making restricted payments, pledging assets, making investments/acquisitions, and undergoing fundamental changes.
- Nonpayment of principal or interest.
- Violation of covenants or material inaccuracy of representations.
- Cross-default to other material indebtedness.
- Bankruptcy, insolvency, or change of control.
Investor Verification Checklist
- Verify the Company's current consolidated total indebtedness and EBITDA to ensure compliance with the 3.25:1.0 leverage covenant.
- Confirm the current interest coverage ratio meets the 3.50:1.0 minimum requirement.
- Review the full text of the Credit Agreement (Exhibit 10.01) for specific definitions of "Consolidated Total Indebtedness" and "Consolidated EBITDA."
- Assess the impact of the new facility on the Company's overall liquidity position and refinancing risk.
- Monitor for any future incremental borrowings up to the $300.0 million permitted increase.