Under Armour 2007 Annual Report Download - page 68

carries a line of credit fee equal to the available but unused borrowings which can vary from 0.1% to 0.5%. As of
December 31, 2007, the Company’s availability was $100.0 million based on its domestic inventory and accounts
receivable balances.
This financing agreement contains a number of restrictions that limit the Company’s ability, among other
things, to pledge its accounts receivable, inventory, trademarks and most of its other assets as security in its
borrowings or transactions; pay dividends on stock; redeem or acquire any of its securities; sell certain assets;
make certain investments; guaranty certain obligations of third parties; undergo a merger or consolidation; or
engage in any activity materially different from those presently conducted by the Company.
If net availability under the financing agreement falls below a certain threshold as defined in the agreement,
the Company would be required to maintain a certain leverage ratio and fixed charge coverage ratio as defined in
the agreement. This financing agreement also provides the lenders with the ability to reduce the available
revolving credit line amount under certain conditions even if the Company is in compliance with all conditions of
the agreement. The Company’s net availability as of December 31, 2007 was above the threshold for compliance
with the financial covenants and the Company was in compliance with all covenants as of December 31, 2007.
In September 2005, the Company entered into a second amended and restated financing agreement with a
lending institution that was to terminate in 2010. Under this financing agreement, the Company was required to
maintain prescribed levels of tangible net worth as defined in the agreement and was collateralized by
substantially all of the assets of the Company. The Company paid and recorded $1.1 million in deferred financing
costs as part of the financing agreement which was comprised of both a $25.0 million term note and a $75.0
million revolving credit facility. In November 2005, the Company repaid the $25.0 million term note plus
interest and the balance outstanding under the revolving credit facility of $12.2 million with proceeds from the
initial public offering (see Note 8). The term note portion of the financing agreement was then terminated and as
such the Company expensed $0.3 million of deferred financing costs within interest expense. With the
termination of the term note, the Company’s trademarks and other intellectual property were released as a
component of the collateral. The weighted average interest rate on the term note was 9.4%.
The weighted average interest rate on the revolving credit facilities for the years ended December 31, 2007
and 2005 was 6.3% and 5.5%, respectively. During the year ended December 31, 2006, no balance was
outstanding.
Long Term Debt
In March 2005, the Company entered into a loan and security agreement to finance the acquisition of
qualifying capital investments. The Company has up to $17.0 million available under this loan and security
agreement. This agreement is collateralized by a first lien on these assets and is otherwise subordinate to the
revolving credit facility. At December 31, 2007, the outstanding principal balance was $13.4 million under this
agreement. The weighted average interest rate on outstanding borrowings was 6.5%, 6.3% and 5.7% for the years
ended December 31, 2007, 2006 and 2005, respectively.
In December 2003, the Company entered into a master loan and security agreement that was subordinate to
the revolving credit facilities. Under this agreement the Company borrowed $1.3 million for the purchase of
qualifying furniture and fixtures. The interest rate was 7.0% annually, and principal and interest payments were
due monthly through February 2006. The outstanding principal balance was repaid during February 2006.
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