Under Armour 2010 Annual Report Download - page 46

Download and view the complete annual report

Please find page 46 of the 2010 Under Armour annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

We monitor the financial health and stability of our lenders under the revolving credit and long term debt
facilities, however continuing significant instability in the credit markets could negatively impact lenders and
their ability to perform under their facilities.
Contractual Commitments and Contingencies
We lease warehouse space, office facilities, space for our factory house and specialty stores and certain
equipment under non-cancelable operating and capital leases. The leases expire at various dates through 2021,
excluding extensions at our option, and contain various provisions for rental adjustments. In addition, this table
includes executed lease agreements for factory house stores that we did not yet occupy as of December 31, 2010.
The operating leases generally contain renewal provisions for varying periods of time. Our significant contractual
obligations and commitments as of December 31, 2010 are summarized in the following table:
Payments Due by Period
(in thousands) Total
Less Than
1 Year 1 to 3 Years 3 to 5 Years
More Than
5 Years
Contractual obligations
Long term debt obligations (1) $ 15,942 $ 6,865 $ 6,821 $ 2,256 $ —
Operating lease obligations (2) 95,704 19,528 31,400 24,677 20,099
Product purchase obligations (3) 356,943 356,943 — — —
Sponsorships and other (4) 167,629 43,506 72,015 48,625 3,483
Total $636,218 $426,842 $110,236 $75,558 $23,582
(1) Excludes a total of $1.1 million in interest payments on long term debt obligations.
(2) Includes the minimum payments for operating lease obligations. The operating lease obligations do not
include any contingent rent expense we may incur at our factory house stores based on future sales above a
specified minimum or payments made for maintenance, insurance and real estate taxes.
(3) We generally place orders with our manufacturers at least three to four months in advance of expected
future sales. The amounts listed for product purchase obligations primarily represent our open production
purchase orders for our apparel, footwear and accessories, including expected inbound freight, duties and
other costs. These open purchase orders specify fixed or minimum quantities of products at determinable
prices. The reported amounts exclude product purchase liabilities included in accounts payable as of
December 31, 2010.
(4) Includes footwear promotional rights fees, sponsorships of individual athletes, sports teams and athletic
events and other marketing commitments in order to promote our brand. Some of these sponsorship
agreements provide for additional performance incentives and product supply obligations. It is not possible
to determine how much we will spend on product supply obligations on an annual basis as contracts
generally do not stipulate specific cash amounts to be spent on products. The amount of product provided to
these sponsorships depends on many factors including general playing conditions, the number of sporting
events in which they participate and our decisions regarding product and marketing initiatives. In addition,
the costs to design, develop, source and purchase the products furnished to the endorsers are incurred over a
period of time and are not necessarily tracked separately from similar costs incurred for products sold to
customers. In addition, it is not possible to determine the amounts we may be required to pay under these
agreements as they are primarily subject to certain performance based variables. The amounts listed above
are the fixed minimum amounts required to be paid under these agreements.
The table above excludes a $6.4 million liability for uncertain tax positions, including the related interest
and penalties, recorded in accordance with applicable accounting guidance, as we are unable to reasonably
estimate the timing of settlement. Refer to Note 10 to the Consolidated Financial Statements for a further
discussion of our uncertain tax positions.
38