Under Armour 2014 Annual Report Download - page 17

appropriate, we strive to qualify multiple manufacturers for particular product types and fabrications. We als
o
seek out vendors that can perform multiple manufacturing stages, such as procuring raw materials and providin
g
f
inished products, which helps us to control our cost of goods sold. We enter into a variety of agreements wit
h
o
ur manufacturers, including non-disclosure and confidentiality agreements, and we require that all of ou
r
manufacturers adhere to a code of conduct regarding quality of manufacturing and working conditions and othe
r
social concerns. We do not, however, have any long term agreements requiring us to utilize any manufacturer,
and no manufacturer is required to produce our products in the long term. We have subsidiaries in Hong Kong,
Panama, Vietnam and China to support our manufacturing, quality assurance and sourcing efforts for our
p
roducts. We also manufacture a limited number of apparel products, primarily for high-profile athletes an
d
teams, on-
p
remises in our
q
uick turn, S
p
ecial Make-U
p
Sho
p
located at one of our distribution facilities in
Maryland
.
I
nventory
M
anagement
I
nventor
y
mana
g
ement
i
s
i
mportant to t
h
e
fi
nanc
i
a
l
con
di
t
i
on an
d
operat
i
n
g
resu
l
ts o
f
our
b
us
i
ness. W
e
mana
g
e our
i
nventor
yl
eve
l
s
b
ase
d
on ex
i
st
i
n
g
or
d
ers, ant
i
c
i
pate
d
sa
l
es an
d
t
h
e rap
id
-
d
e
li
ver
y
requ
i
rements o
f
o
ur customers. Our
i
nventory strategy
i
s
f
ocuse
d
on cont
i
nu
i
ng to meet consumer
d
eman
d
w
hil
e
i
mprov
i
ng our
i
nventory e
ffi
c
i
ency over t
h
e
l
ong term
b
y putt
i
ng systems an
d
processes
i
np
l
ace to
i
mprove our
i
nventory
management. T
h
ese systems an
d
processes are
d
es
i
gne
d
to
i
mprove our
f
orecast
i
ng an
d
supp
l
yp
l
ann
i
ng
capa
bili
t
i
es. In a
ddi
t
i
on to systems an
d
processes,
k
ey areas o
ff
ocus t
h
at we
b
e
li
eve w
ill
en
h
ance
i
nventor
y
p
er
f
ormance are a
dd
e
ddi
sc
i
p
li
ne aroun
d
t
h
e purc
h
as
i
ng o
f
pro
d
uct, pro
d
uct
i
on
l
ea
d
t
i
me re
d
uct
i
on, an
db
etter
pl
ann
i
ng an
d
execut
i
on
i
nse
lli
ng o
f
excess
i
nventory t
h
roug
h
our
f
actory
h
ouse stores an
d
ot
h
er
li
qu
id
at
i
on
c
h
anne
l
s.
Our practice, and the general practice in the apparel, footwear and accessory industries, is to offer retail
customers the right to return defective or improperly shipped merchandise. As it relates to new product
introductions, which can often require large initial launch shipments, we commence production before receivin
g
o
rders for those products from time to time. This can affect our inventory levels as we build pre-launch
q
uantities.
I
nte
ll
ectua
lP
ropert
y
We
b
e
li
eve we own t
h
e mater
i
a
l
tra
d
emar
k
s use
di
n connect
i
on w
i
t
h
t
h
e mar
k
et
i
ng,
di
str
ib
ut
i
on an
d
sa
l
eo
f
o
ur pro
d
ucts,
b
ot
hd
omest
i
ca
ll
yan
di
nternat
i
ona
ll
y, w
h
ere our pro
d
ucts are current
l
yso
ld
or manu
f
acture
d
. Our
ma
j
or tra
d
emar
k
s
i
nc
l
u
d
et
h
e UA Logo an
d
UNDER ARMOUR
®
,
b
ot
h
o
f
w
hi
c
h
are reg
i
stere
di
nt
h
e
U
n
i
te
d
States, Cana
d
a, Mex
i
co, t
h
e European Un
i
on, Japan, C
hi
na an
d
numerous ot
h
er countr
i
es. We a
l
so ow
n
tra
d
emar
k
reg
i
strat
i
ons
f
or ot
h
er tra
d
emar
k
s
i
nc
l
u
di
ng, among ot
h
ers, U
A
®
,
ARM
O
U
R
®
,
HEAT
G
EAR
®
,
CO
LD
G
EAR
®
,
ALL
S
EA
SO
N
G
EAR
®
,
PR
O
TE
C
T THI
S
H
O
U
S
E
®
, I WILL
®
,an
d
many tra
d
emar
k
st
h
at
i
ncorporate t
h
e term ARMOUR suc
h
as ARMOUR39
®
,
ARM
O
URBIT
E
®
,
ARM
O
UR
S
T
O
RM
®
,
ARM
O
UR
®
FLEECE
,
an
d
ARMOUR BRA
®
.
We a
l
so own
d
oma
i
n names
f
or our pr
i
mary tra
d
emar
k
s (most nota
bly
un
d
erarmour.com an
d
ua.com) an
dh
o
ld
copyr
i
g
h
t reg
i
strat
i
ons
f
or severa
l
commerc
i
a
l
s, as we
ll
as
f
or certa
in
artwor
k
.We
i
nten
d
to cont
i
nue to strateg
i
ca
ll
y reg
i
ster,
b
ot
hd
omest
i
ca
ll
yan
di
nternat
i
ona
ll
y, tra
d
emar
k
san
d
copyr
i
g
h
ts we ut
ili
ze to
d
ay an
d
t
h
ose we
d
eve
l
op
i
nt
h
e
f
uture. We w
ill
cont
i
nue to aggress
i
ve
l
ypo
li
ce our
tra
d
emar
k
san
d
pursue t
h
ose w
h
o
i
n
f
r
i
nge,
b
ot
hd
omest
i
ca
ll
yan
di
nternat
i
ona
ll
y
.
We believe the distinctive trademarks we use in connection with our products are important in building our
brand image and distinguishing our products from those of others. These trademarks are among our most
valuable assets. In addition to our distinctive trademarks, we also place significant value on our trade dress,
which is the overall image and appearance of our products, and we believe our trade dress helps to distinguis
h
o
ur
p
roducts in the market
p
lace.
We traditionall
y
have had limited patent protection on much of the technolo
gy
, materials and processes used
in the manufacture of our products. In addition, patents are increasin
g
l
y
important with respect to our innovativ
e
7