Under Armour 2010 Annual Report Download - page 21

The difficulty in forecasting demand also makes it difficult to estimate our future results of operations and
financial condition from period to period. A failure to accurately predict the level of demand for our products
could adversely impact our profitability.
Our revolving credit facility provides our lenders with a first-priority lien against substantially all of our
assets and contains financial covenants and other restrictions on our actions, and it could therefore limit
our operational flexibility or otherwise adversely affect our financial condition.
We have, from time to time, financed our liquidity needs in part from borrowings made under a revolving
credit facility. Our revolving credit facility provides for a committed revolving credit line of up to $200.0 million
(based on the value of our qualified domestic accounts receivable and inventory).
The agreement for our revolving credit facility contains a number of 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;
• incur additional indebtedness;
• sell certain assets;
• make certain investments;
• guarantee certain obligations of third parties;
• undergo a merger or consolidation; and
• materially change our line of business.
Our revolving credit facility also provides the lenders with the ability to reduce the borrowing base, even if
we are in compliance with all conditions of the revolving credit facility, upon a material adverse change to our
business, properties, assets, financial condition or results of operations. In addition, we must maintain a certain
leverage ratio and fixed charge coverage ratio as defined in the credit agreement. Failure to comply with these
operating or financial covenants could result from, among other things, changes in our results of operations or
general economic conditions. 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 the credit agreement could
result in a default. 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 borrowings under the revolving credit facility bear 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. There were no amounts outstanding
under our revolving credit facility as of December 31, 2010.
We may need to raise additional capital required to grow our business, and we may not be able to raise
capital on terms acceptable to us or at all.
Growing and operating our business will require significant cash outlays and capital expenditures and
commitments. If cash on hand and cash generated from operations are not sufficient to meet our cash
requirements, we will need to seek additional capital, potentially through debt or equity financings, to fund our
growth. We may not be able to raise needed cash on terms acceptable to us or at all. Financings may be on terms
that are dilutive or potentially dilutive to our stockholders, and the prices at which new investors would be
willing to purchase our securities may be lower than the current price per share of our common stock. The
holders of new securities may also have rights, preferences or privileges which are senior to those of existing
holders of common stock. If new sources of financing are required, but are insufficient or unavailable, we will be
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