Under Armour 2006 Annual Report Download - page 24

Our senior secured credit facility contains a number of significant restrictions that limit our ability, among
other things, to:
• use our accounts receivable, inventory, trademarks and most of our other assets as security in other
borrowings or transactions;
• pay dividends on stock or redeem or acquire any of our securities;
• sell certain assets;
• make certain investments;
• guaranty certain obligations of third parties;
• undergo a merger or consolidation; and
• engage in any activity materially different from those presently conducted by us.
The facility also provides the lenders with the ability to reduce the valuation of our inventory and
receivables and thereby reduce our ability to borrow under the facility even if we are in compliance with all of
the conditions of the facility. In addition, we are required to comply with certain financial covenants in the event
we fail to maintain a minimum borrowing availability. Failure to comply with these operating or financial
covenants could result from, among other things, changes in our results of operations or general economic
changes. 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 our senior secured credit facility could result in a
default under the facility. This could cause the lenders to accelerate the timing of payments and exercise their
lien on essentially all of our assets, which would have a material adverse effect on our business, operations,
financial condition and liquidity. In addition, because our senior secured credit facility bears interest at variable
interest rates, which we do not anticipate hedging against, increases in interest rates would increase our cost of
borrowing, resulting in a decline in our net income and cash flow.
Risks Related to Our Management
Our future success is substantially dependent on the continued service of our senior management and
other key employees.
Our future success is substantially dependent on the continued service of our senior management and other
key employees, particularly Kevin A. Plank, our founder and Chief Executive Officer. 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.
We also may be unable to retain existing management, technical, sales and client support personnel that are
critical to our success, which could result in harm to key customer relationships, loss of key information,
expertise or know-how and unanticipated recruitment and training costs.
If we are unable to attract and retain new team members, including senior management, we may not be
able to achieve our business objectives.
Our growth has largely been the result of significant contributions by our current senior management and
product design teams. However, to be successful in continuing to grow our business, we will need to continue to
attract, retain and motivate highly talented employees with a range of skills and experience. Competition for
employees in our industry is intense and we have experienced difficulty from time to time in attracting the
personnel necessary to support the growth of our business, and we may experience similar difficulties in the
future. With new additions to our senior management we may develop and implement changes in our product
development, merchandising, marketing and operational strategies. There can be no assurance that we would
successfully assimilate new senior management and make strategic modifications to our past operating policies in
a timely and efficient manner, and if we are unable to attract, assimilate and retain additional senior management
with the necessary skills, we may not be able to grow or successfully operate our business.
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