Under Armour 2006 Annual Report Download - page 65

Under Armour, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements—(Continued)
(amounts in thousands, except per share and share amounts)
Rent expense for the years ended December 31, 2006, 2005 and 2004 was $5,389, $3,237 and $1,881,
respectively, under the operating lease agreements.
The following summarizes the Company’s assets under capital lease agreements:
December 31,
2006 2005
Office equipment .......................................... $1,494 $ 1,968
Furniture and fixtures ....................................... 29 2,106
Leasehold improvements .................................... 520 629
Plant equipment ........................................... 1,934 1,949
3,977 6,652
Accumulated depreciation and amortization ..................... (2,292) (2,653)
Property and equipment, net .............................. $1,685 $ 3,999
For the years ended December 31, 2006, 2005 and 2004, $758, $1,397 and $1,195, respectively, of depreciation
and amortization on assets under capital leases have been included in depreciation and amortization expense.
8. Commitments and Contingencies
The Company is, from time to time, involved in routine legal matters incidental to its business. Management
believes that the ultimate resolution of any such current proceedings will not have a material adverse effect on
the Company’s consolidated financial position, results of operations or cash flows.
Certain key executives are party to agreements with the Company that include severance benefits upon
involuntary termination or change in ownership of the Company.
In addition, within the normal course of business, the Company enters into contractual commitments, such
as professional and collegiate sponsorship agreements and official supplier agreements, in order to promote the
Company’s brand and products. These agreements include scheduled sponsorship fee payments or rights fee
payments, along with other purchase or product supply obligations over the terms of the agreements.
9. Stockholders’ Equity
On August 3, 2006, the Company issued fully vested and non-forfeitable warrants to purchase 480,000
shares of the Company’s Class A Common Stock to NFL Properties as partial consideration for footwear
promotional rights which are recorded as an intangible asset (see Note 5). The warrants have a term of 12 years
from the date of issuance and an exercise price of $36.99 per share, which was the closing price on the NASDAQ
Global Market of the Company’s Class A Common Stock on August 2, 2006. None of the warrants may be
exercised until one year from the issue date, at which time 240,000 warrants may be exercised, with the
remaining 240,000 warrants becoming exercisable three years from the issue date. The fair value of the warrants
was determined using an independent third party valuation.
In June 2006, 8,352,639 shares of the Company’s Class A Common Stock were sold by stockholders of the
Company, including certain members of the Company’s management, pursuant to an underwritten public
offering registered on Form S-1. The Company did not receive any proceeds from the sale of the shares sold in
the offering and expenses incurred from the offering were paid by the selling stockholders. In connection with
the offering, 1,950,000 shares of Class B Convertible Common Stock were converted into shares of Class A
Common Stock on a one-for-one basis.
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