Under Armour 2007 Annual Report Download - page 26

COLDGEAR®line. The majority of our net revenues were generated during the last two quarters of 2007 and 2006,
respectively.
Our quarterly results of operations may also fluctuate significantly as a result of a variety of other factors,
including, among other things, the timing of the introduction of and advertising for new products and changes in
our product mix. Variations in weather conditions may also have an adverse effect on our quarterly results of
operations. For example, warmer than normal weather conditions throughout the fall or winter may reduce sales
of our COLDGEAR®line, leaving us with excess inventory and operating results below our expectations.
As a result of these seasonal and quarterly fluctuations, we believe that comparisons of our operating results
between different quarters within a single year are not necessarily meaningful and that these comparisons cannot
be relied upon as indicators of our future performance. Any seasonal or quarterly fluctuations that we report in
the future may not match the expectations of market analysts and investors. This could cause the price of our
Class A Common Stock to fluctuate significantly.
Labor disruptions at ports or our suppliers or manufacturers may adversely affect our business.
Our business depends on our ability to source and distribute products in a timely manner. As a result, we
rely on the free flow of goods through open and operational ports worldwide and on a consistent basis from our
suppliers and manufacturers. Labor disputes at various ports, such as those experienced at western U.S. ports in
2002, or at our suppliers or manufacturers, create significant risks for our business, particularly if these disputes
result in work slowdowns, lockouts, strikes or other disruptions during our peak importing or manufacturing
seasons, and could have an adverse effect on our business, potentially resulting in cancelled orders by customers,
unanticipated inventory accumulation or shortages and reduced net revenues and net income.
The value of our brand and sales of our products could be diminished if we are associated with negative
publicity.
We require that our suppliers, independent manufacturers and licensees of our products operate their
businesses in compliance with the laws and regulations that apply to them as well as the social and other
standards and policies we impose on them. We do not control these suppliers, manufacturers or licensees or their
labor practices. A violation of our policies, labor laws or other laws by our suppliers, manufacturers or licensees
could interrupt or otherwise disrupt our sourcing or damage our brand image. Negative publicity regarding the
production methods of any of our suppliers, manufacturers or licensees could adversely affect our reputation and
sales and force us to locate alternative suppliers, manufacturing sources or licensees.
In addition, we have sponsorship contracts with a variety of athletes and feature those athletes in our
advertising and marketing efforts and many athletes and teams use our products, including those teams or leagues
for which we are an official supplier. Actions taken by athletes, teams or leagues associated with our products
that harm the reputations of those athletes, teams or leagues could also harm our brand image and result in a
material decrease in our net revenues and net income, which could have a material adverse effect on our financial
condition and liquidity.
Our international operations and the operations of many of our manufacturers are subject to additional
risks that are beyond our control and that could harm our business.
In 2007, our apparel and footwear products were manufactured by 19 primary manufacturers, operating in
15 countries, seven of which manufactured approximately 55% of our products. These manufacturers are
primarily located in China, Dominican Republic, Honduras and Mexico. In 2007, approximately 53% of our
products were manufactured in Asia, with 25% manufactured in Central and South America and 19%
manufactured in Mexico. In addition, approximately 7% of our 2007 net revenues were generated through
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