Under Armour 2005 Annual Report Download - page 42

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Quantitative and Qualitative Disclosure about Market Risk
Foreign Exchange
We currently generate a small amount of our net revenues in Canada and the United Kingdom. The
reporting currency for our consolidated financial statements is U.S. dollars. To date, net revenues generated
outside of the United States have not been significant. As a result, we have not been impacted materially by
changes in exchange rates and do not expect to be impacted materially for the foreseeable future. However, as
our net revenues generated outside of the United States increase, our results of operations could be adversely
impacted by changes in exchange rates. For example, if we recognize international sales in local foreign
currencies (as we currently do in Canada), as the U.S. dollar strengthens it would have a negative impact on our
international results upon translation of those results into U.S. dollars upon consolidation. We do not currently
hedge foreign currency fluctuations and do not intend to do so for the foreseeable future.
Inflation
Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our
operating results. Although we do not believe that inflation has had a material impact on our financial position or
results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to
maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net
revenues if the selling prices of our products do not increase with these increased costs.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
See “Quantitative and Qualitative Disclosure about Market Risk” under “Management’s Discussion and
Analysis of Financial Conditions and Results of Operations” on page 36 and Item 1A. “Risk Factors” on page 9
of this Form 10-K for information required by this Item.
36