Under Armour 2005 Annual Report Download - page 7

PART I
ITEM 1. BUSINESS
General
Our principal business activity is the design, development, marketing and distribution of technologically
advanced, branded performance products for men, women and youth. We design and sell a broad offering of
apparel and accessories that utilize a variety of synthetic microfiber fabrications. Our active wear and sports
apparel accessories are designed to wick perspiration away from the skin, help regulate body temperature,
enhance comfort and mobility and improve performance regardless of weather condition.
Our products are offered worldwide in over 8,700 retail stores and can currently be purchased across the
United States, Canada, Japan and the United Kingdom through large national and regional chains of retailers, as
well as smaller, independent and specialty retailers. Our products are worn by professional football, baseball,
basketball, hockey and soccer players, as well as athletes in major collegiate and Olympic sports. Virtually all of
our products are manufactured by unaffiliated manufacturers operating in 19 countries. Most of our products are
manufactured in facilities outside of the United States.
Our revenues are generated primarily from sales to retail stores. We also derive revenue from the sale of our
products directly to athletes and other users through our sports marketing group, to consumers through our retail
outlet stores and through our website and toll-free call center. During 2005, our net revenues grew 37% to $281.1
million from $205.2 million in 2004 and our income from operations increased 41% to $35.9 million in 2005
from $25.4 million in 2004. Our net income increased to $19.7 million in 2005 from $16.3 million in 2004.
We were incorporated in Maryland in 1996 as KP Sports, Inc. In March 2005, we changed our name to
Under Armour, Inc. As used in this report, the terms “we,” “us,” “Under Armour” and the “Company” refer to
Under Armour, Inc. and its subsidiaries unless the context indicates otherwise. We have a number of registered
marks, including Under Armour®, HeatGear®, ColdGear®, AllseasonGear®, LooseGear®and the Under Armour
design mark, and we have applied to register our Protect This House™, Duplicity™and Click Clack™trademarks.
This Annual Report on Form 10-K also contains additional trademarks and tradenames of our and other
companies. All trademark and tradenames appearing in this Annual Report on Form 10-K are the property of
their respective holders.
Products
Our products are engineered to replace cotton in the world of athletics and fitness with performance
alternatives designed and merchandised along gearlines. Our products are offered in a variety of styles and fits
intended to enhance comfort and performance. We offer products for men, women and youth that extend across
the sporting goods, outdoor and active lifestyle markets. For 2005, sales of mens, womens and youth products
represented 67%, 19% and 7% of net revenues, respectively, with the remaining 7% divided equally between
licensing and accessories. Within each gearline our garments come in three fit types: compression (tight fitting),
fitted (athletic cut) and loose (relaxed). We market our products at multiple price levels and seek to provide all
consumers with what we believe to be a superior alternative to cotton and other traditional products.
Our three primary gearlines are marketed to tell a very simple story about our highly technical products. We
market our products for consumers to choose HeatGear when it is hot, ColdGear when it is cold and
AllSeasonGear between the extremes.
HeatGear HeatGear is designed to be worn in warm to hot temperatures under equipment or as a single
layer. Our first compression T-shirt was the original HeatGear product and remains our signature style. While a
sweat- soaked cotton T-shirt can weigh two to three pounds, HeatGear is engineered with a microfiber blend
designed to wick moisture from the body which helps the body stay cool, dry and light. We offer HeatGear in a
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