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Under Armour settles SEC charges for $9 million
Also: SEC Charges Under Armour Inc. With Disclosure Failures (U.S. Securities and Exchange Commission)
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Source: Associated Press
Under Armour settles SEC charges for $9 million
By ANNE D'INNOCENZIO
May 3, 2021
NEW YORK (AP) — Sportswear company Under Armour has settled with the Securities and Exchange Commission and agreed to pay $9 million in fines related to misleading its revenue growth to investors from the third quarter of 2015 through the fourth quarter of 2016, the agency said Monday.
According to the SEC filing, Under Armour used a “pull forward” sales tactic to pull forward $408 million in revenue in existing orders. The SEC said that the company made positive statements regarding its revenue growth rate and the factors contributing to the revenue growth rate, without disclosing the significant impact on revenue from its use of pull forward tactics.
Under Armour said in a statement that the settlement relates to the company’s disclosures and does not include any allegations from the SEC that sales during these periods did not comply with “generally accepted accounting principles.”
-snip-
By ANNE D'INNOCENZIO
May 3, 2021
NEW YORK (AP) — Sportswear company Under Armour has settled with the Securities and Exchange Commission and agreed to pay $9 million in fines related to misleading its revenue growth to investors from the third quarter of 2015 through the fourth quarter of 2016, the agency said Monday.
According to the SEC filing, Under Armour used a “pull forward” sales tactic to pull forward $408 million in revenue in existing orders. The SEC said that the company made positive statements regarding its revenue growth rate and the factors contributing to the revenue growth rate, without disclosing the significant impact on revenue from its use of pull forward tactics.
Under Armour said in a statement that the settlement relates to the company’s disclosures and does not include any allegations from the SEC that sales during these periods did not comply with “generally accepted accounting principles.”
-snip-
Read more: https://apnews.com/article/business-d4ccc30146466fcbb7ee8fa3882bcf5c
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Source: U.S. Securities and Exchange Commission
SEC Charges Under Armour Inc. With Disclosure Failures
FOR IMMEDIATE RELEASE
2021-78
Washington D.C., May 3, 2021 — The Securities and Exchange Commission today charged sports apparel manufacturer Under Armour Inc. with misleading investors as to the bases of its revenue growth and failing to disclose known uncertainties concerning its future revenue prospects. Under Armour has agreed to pay $9 million to settle the action.
According to the SEC's order, by the second half of 2015, Under Armour's internal revenue and revenue growth forecasts for the third and fourth quarters of 2015 began to indicate shortfalls from analysts' revenue estimates. The order finds, for example, that the company was not meeting internal sales projections for North America, and warm winter weather was negatively impacting sales of Under Armour's higher-priced cold weather apparel. The order further finds that in response, for six consecutive quarters beginning in the third quarter of 2015, Under Armour accelerated, or "pulled forward," a total of $408 million in existing orders that customers had requested be shipped in future quarters. As stated in the order, Under Armour misleadingly attributed its revenue growth during this period to various factors without disclosing to investors material information about the impacts of its pull forward practices. The order finds that Under Armour failed to disclose that its increasing reliance on pull forwards raised significant uncertainty as to whether the company would meet its revenue guidance in future quarters. According to the order, using these undisclosed pull forwards, Under Armour was able to meet analysts' revenue estimates.
"When public companies describe how they achieved financial results, they must not misstate any information that is material to investors," said Kurt Gottschall, Director of the SEC's Denver Regional Office. "By using pull forwards for several consecutive quarters to meet analysts' revenue targets while attributing its revenue growth to other factors, Under Armour created a misleading picture of the drivers of its financial results and concealed known uncertainties concerning its business."
The SEC's order finds that Under Armour violated the antifraud provisions of Section 17(a)(2) and (3) of the Securities Act of 1933, as well as certain reporting provisions of the federal securities laws. Without admitting or denying the findings in the SEC's order, Under Armour agreed to cease and desist from further violations and to pay a $9 million penalty.
The SEC's investigation was conducted by L. James Lyman, Jeffrey Lyons, and Donna Walker, with assistance from Gregory Kasper and Nicholas Heinke of the Trial Unit, and supervised by Ian Karpel, Jason Burt, and Kurt Gottschall.
FOR IMMEDIATE RELEASE
2021-78
Washington D.C., May 3, 2021 — The Securities and Exchange Commission today charged sports apparel manufacturer Under Armour Inc. with misleading investors as to the bases of its revenue growth and failing to disclose known uncertainties concerning its future revenue prospects. Under Armour has agreed to pay $9 million to settle the action.
According to the SEC's order, by the second half of 2015, Under Armour's internal revenue and revenue growth forecasts for the third and fourth quarters of 2015 began to indicate shortfalls from analysts' revenue estimates. The order finds, for example, that the company was not meeting internal sales projections for North America, and warm winter weather was negatively impacting sales of Under Armour's higher-priced cold weather apparel. The order further finds that in response, for six consecutive quarters beginning in the third quarter of 2015, Under Armour accelerated, or "pulled forward," a total of $408 million in existing orders that customers had requested be shipped in future quarters. As stated in the order, Under Armour misleadingly attributed its revenue growth during this period to various factors without disclosing to investors material information about the impacts of its pull forward practices. The order finds that Under Armour failed to disclose that its increasing reliance on pull forwards raised significant uncertainty as to whether the company would meet its revenue guidance in future quarters. According to the order, using these undisclosed pull forwards, Under Armour was able to meet analysts' revenue estimates.
"When public companies describe how they achieved financial results, they must not misstate any information that is material to investors," said Kurt Gottschall, Director of the SEC's Denver Regional Office. "By using pull forwards for several consecutive quarters to meet analysts' revenue targets while attributing its revenue growth to other factors, Under Armour created a misleading picture of the drivers of its financial results and concealed known uncertainties concerning its business."
The SEC's order finds that Under Armour violated the antifraud provisions of Section 17(a)(2) and (3) of the Securities Act of 1933, as well as certain reporting provisions of the federal securities laws. Without admitting or denying the findings in the SEC's order, Under Armour agreed to cease and desist from further violations and to pay a $9 million penalty.
The SEC's investigation was conducted by L. James Lyman, Jeffrey Lyons, and Donna Walker, with assistance from Gregory Kasper and Nicholas Heinke of the Trial Unit, and supervised by Ian Karpel, Jason Burt, and Kurt Gottschall.
https://www.sec.gov/news/press-release/2021-78