Under Armour 2006 Annual Report Download - page 67

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Under Armour, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements—(Continued)
(amounts in thousands, except per share and share amounts)
10. Mandatorily Redeemable Series A Preferred Stock
On September 30, 2003, the Company issued 1,200,000 shares of Series A Preferred Stock for $4,356 in
cash proceeds net of $133 in stock issuance costs. Holders of the Series A Preferred Stock had limited voting
rights and certain protective rights regarding major business decisions of the Company and the payment of
dividends to common stockholders. Holders of the Series A Preferred Stock did have the ability to appoint one
member to the Company’s Board of Directors.
The holders of the Series A Preferred Stock were entitled to receive cumulative preferential dividends at 8%
of the stated redemption value of $10 per share compounded annually if declared by the Board of Directors. The
Series A Preferred Stock was redeemable at the option of the holders in September 2008 at a redemption price of
$10 per share, plus 125% of accrued but unpaid dividends plus 25% of any previously declared dividends that
were not paid within 120 days after the respective year end (the “Redemption Price”). The Series A Preferred
Stock also carried a liquidation preference equal to its stated Redemption Price and could be redeemed by the
Company at any time at the then stated Redemption Price. The amount of the Redemption Price, including
issuance costs, was being accreted to the value of the Series A Preferred Stock each year. For the years ending
December 31, 2005 and 2004, $5,307 and $1,994, respectively, had been accreted to the Redemption Price of the
Series A Preferred Stock during the period.
As required, the Series A Preferred Stock was redeemed at the $10 stated value per share, or $12,000, upon
the initial public offering.
11. Provision for Income Taxes
The components of the provision for income taxes consisted of the following:
Year Ended December 31,
2006 2005 2004
Current
Federal ........................................ $24,083 $12,009 $10,485
State .......................................... 2,630 1,509 630
Other foreign countries ............................ 116 68 —
26,829 13,586 11,115
Deferred
Federal ........................................ (2,656) (573) (2,378)
State .......................................... (3,120) 242 (963)
Other foreign countries ............................ (945) — —
(6,721) (331) (3,341)
Provision for income taxes ......................... $20,108 $13,255 $ 7,774
A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as follows:
Year Ended December 31,
2006 2005 2004
U.S. federal statutory income tax rate ................. 35.0% 35.0% 35.0%
State taxes, net of federal tax impact ................. (1.9) 3.7 (3.2)
Other .......................................... 0.9 1.5 0.5
Effective income tax rate .......................... 34.0% 40.2% 32.3%
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