P8-50. Analyzing Stockholders Equity Including AOCI and Convertible Securities

Under Armour reported the following stockholders equity section of the balance sheet for the fiscal year ended December 31, 2018.

Under Armour reports additional information related to the three classes of stock in its 10-K.

Required

a. Complete the following table to determine the % ownership and voting power for each class of stock.

b. Class B Convertible Common Stock can be converted on a 1-for-1 basis into Class A stock. Explain the balance sheet effect if all outstanding shares were converted. What repercussions would this have for the CEO, Kevin Plank?

c. In June 2015, the company created nonvoting Class C common stock and issued Class C shares primarily for employee share-based compensation plans. Explain the incentives such compensation plans create. Why would Under Armour create another class of stock for this purpose?

d. During the year, foreign currency translation losses increased by $23,576 and unrealized losses on cash flow hedges (derivatives) decreased by $22,800. Use this information to reconcile the accumulated other comprehensive loss account. What can you conclude about changes in $US against currencies of countries where Under Armour has subsidiaries?

2018 2017 $ 62 $ 61 11 11 Stockholders' Equity ($ 000s) Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of December 31, 2018 and 2017; 187,710,319 shares issued and outstanding as of December 31, 2018 and 185,257,423 shares issued and outstanding as of December 31, 2017.... Class B Convertible Common Stock, $0.0003 1/3 par value; 34,450,000 shares authorized, issued and outstanding as of December 31, 2018 and 2017... Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of December 31, 2018 and 2017; 226,421,963 shares issued and outstanding as of December 31, 2018, and 222,375,079 shares issued and outstanding as of December 31, 2017.. Additional paid-in capital.. Retained earnings Accumulated other comprehensive loss Total stockholders' equity. 75 916,628 1,139,082 (38,987) $2,016,871 74 872,266 1,184,441 (38,211) $2,018,642 Under Armour's Class A Common Stock and Class C Common Stock are traded on the New York Stock Exchange under the symbols UAA and UA, respectively. As of January 31, 2019, there were 1,628 record holders of our Class A Common Stock, 6 record holders of Class B Convert- ible Common Stock which are beneficially owned by our Chief Executive Officer and Chairman of the Board Kevin A. Plank, and 1,216 record holders of our Class C 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). Class A Class B Class C Total Shares authorized Shares issued and outstanding .. Proportion of ownership of Under Armour Shareholders of record..... Votes per share .. Total votes ... Proportion of voting rights... 100% NA NA 100% 2018 2017 $ 62 $ 61 11 11 Stockholders' Equity ($ 000s) Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of December 31, 2018 and 2017; 187,710,319 shares issued and outstanding as of December 31, 2018 and 185,257,423 shares issued and outstanding as of December 31, 2017.... Class B Convertible Common Stock, $0.0003 1/3 par value; 34,450,000 shares authorized, issued and outstanding as of December 31, 2018 and 2017... Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of December 31, 2018 and 2017; 226,421,963 shares issued and outstanding as of December 31, 2018, and 222,375,079 shares issued and outstanding as of December 31, 2017.. Additional paid-in capital.. Retained earnings Accumulated other comprehensive loss Total stockholders' equity. 75 916,628 1,139,082 (38,987) $2,016,871 74 872,266 1,184,441 (38,211) $2,018,642 Under Armour's Class A Common Stock and Class C Common Stock are traded on the New York Stock Exchange under the symbols UAA and UA, respectively. As of January 31, 2019, there were 1,628 record holders of our Class A Common Stock, 6 record holders of Class B Convert- ible Common Stock which are beneficially owned by our Chief Executive Officer and Chairman of the Board Kevin A. Plank, and 1,216 record holders of our Class C 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). Class A Class B Class C Total Shares authorized Shares issued and outstanding .. Proportion of ownership of Under Armour Shareholders of record..... Votes per share .. Total votes ... Proportion of voting rights... 100% NA NA 100%