Under Armour 2006 Annual Report Download - page 62

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Under Armour, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements—(Continued)
(amounts in thousands, except per share and share amounts)
Reclassifications
Certain balances in 2005 and 2004 have been reclassified to conform to the current year presentation. These
changes had no impact on previously reported results of operations or stockholders’ equity.
3. Inventories
Inventories consisted of the following:
December 31,
2006 2005
Finished goods .................................................... $83,618 $57,020
Raw materials .................................................... 1,321 1,379
Work-in-process .................................................. 133 95
Subtotal inventories ............................................ 85,072 58,494
Inventories reserve ................................................ (4,041) (4,887)
Total inventories .............................................. $81,031 $53,607
4. Property and Equipment
Property and equipment consisted of the following:
December 31,
2006 2005
Furniture and fixtures ............................................. $17,178 $ 12,262
Office equipment and software ..................................... 11,567 5,290
Plant equipment ................................................. 5,401 4,582
Leasehold improvements .......................................... 6,700 4,058
Construction in progress ........................................... 8,346 4,917
Other .......................................................... 24 24
49,216 31,133
Accumulated depreciation and amortization ........................... (19,293) (10,268)
Property and equipment, net .................................... $29,923 $ 20,865
Construction in progress primarily includes software costs relative to systems not yet placed in use and
in-store fixtures not yet placed in service.
Depreciation and amortization expense related to property and equipment was $9,021, $6,224 and $3,165
for the years ended December 31, 2006, 2005 and 2004, respectively.
5. Intangible Asset, Net
In August 2006, the Company and NFL Properties LLC (“NFL Properties”) entered into a Promotional
Rights Agreement (the “NFL Agreement”) in which the Company became an authorized supplier of footwear to
the National Football League. As partial consideration for the NFL Agreement, which expires in March 2012, the
Company issued to NFL Properties fully vested and non-forfeitable warrants to purchase 480,000 shares of the
Company’s Class A Common Stock. The resulting $8,500 intangible asset was determined based on the fair
value of the warrants as established by an independent third party valuation. The intangible asset is amortized
using the straight-line method over the term of the NFL Agreement.
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