Under Armour 2005 Annual Report Download - page 56

Under Armour, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements—(Continued)
(amounts in thousands, except per share and share amounts)
the Company expensed $265 of deferred financing costs. 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 Company has available borrowings under the revolving credit facility up to $75,000 based on the
Company’s eligible inventory and accounts receivable balances. The revolving credit facility bears interest based
on the monthly average daily balance outstanding at the Company’s choice of either LIBOR plus an applicable
margin (varying from 1.75% to 3.00%) or the JP Morgan Chase Bank prime rate plus an applicable margin
(varying from -0.75% to 0.50%). The applicable margin is calculated quarterly and varies based on certain
Company financial ratios as defined in the agreement. The revolving credit facility also carries a line of credit fee
for available but unused borrowings which can vary from 0.13% to 0.63% also based on certain Company ratios
as defined in the agreement. The Company has the option to increase the borrowings under the revolving credit
facility up to $100,000 if certain conditions are satisfied including the compliance with certain financial
covenants. With proceeds from the initial public offering in November 2005, the Company paid the balance
outstanding under the revolving credit facility which was $12,200. As of December 31, 2005, the Company’s
availability was $74,740 based on to the Company’s eligible inventory and accounts receivable balances. Any
balance on the revolving credit facility must be repaid in full in 2010.
This agreement contains a number of restrictions that limit our ability, among other things, to borrow
money; pledge our accounts receivable, inventory, intellectual property and most of our other assets as security in
our borrowings or transactions; pay dividends on stock; redeem or acquire any of our 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 us.
This agreement also provides the lenders with the ability to reduce the valuation of our inventory and
receivables and thereby reduce our ability to borrow under the revolving credit facility even if we are in
compliance with all conditions of the agreement. In addition, we are required to comply with certain financial
covenants in the event we fail to maintain a minimum borrowing availability of $15,000, which the Company is
in compliance of as of December 31, 2005.
Prior to amending and restating the revolving credit facility in September 2005, the Company was party to a
revolving credit facility that was to expire April 2007. From January 2004 through September 2005, this
agreement was periodically amended to increase the available borrowings based on eligible inventory and
accounts receivable not to exceed $60,000. Interest rates and covenants under these superseded revolving credit
facilities were similar to the interest rates and covenants described above.
The weighted average interest rate on the revolving credit facilities for the years ended December 31, 2005,
2004 and 2003 was 5.5%, 4.0% and 3.8%, respectively.
In March 2005, the Company entered into a loan and security agreement to finance the acquisition of up to
$17,000 of qualifying capital investments. This agreement is collateralized by a first lien on these assets and is
otherwise subordinate to the revolving credit facility. Through December 31, 2005, the Company has financed
$5,796 of furniture and fixtures under this agreement. The weighted average interest rate on borrowings was
5.89% for the year ended December 31, 2005. At December 31, 2005, the outstanding principal balance was
$4,739. Principal payments due for the years ended December 31, 2006, 2007, 2008, 2009 and 2010 are $1,871,
$1,959, $773, $95, and $41, respectively.
50