Under Armour 2006 Annual Report Download - page 9

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, footwear and 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 globally in approximately 12,000 retail stores and can currently be purchased
across the United States, Canada, Japan and Europe through large national and regional chains of retailers, as
well as smaller, independent and specialty retailers. Our products are worn by professional football, baseball,
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 direct to athletes and also direct to consumers through our retail outlet stores, website, toll-free call
center and through our sports marketing group. During 2006, our net revenues grew approximately 53% to
$430.7 million from $281.1 million in 2005 and our income from operations increased approximately 60% to
$57.3 million in 2006 from $35.9 million in 2005. Our net income increased to $39.0 million in 2006 from $19.7
million in 2005.
We were incorporated as a Maryland corporation in 1996. 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™, I Think You Hear Us Coming™and Click Clack™trademarks. This Annual Report on Form
10-K also contains additional trademarks and tradenames of our Company 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. In 2006, sales of men’s, women’s, and youth apparel
products and footwear products represented approximately 60%, 20%, 7% and 6% of net revenues, respectively,
with the remaining 7% divided equally between license revenues and the sale of 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 apparel 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
variety of tops and bottoms in a broad array of colors and styles for wear in the gym or outside in warm weather,
making it our top-selling year-round gearline. Compression fit HeatGear®, which is designed to reduce muscle
fatigue, is particularly popular for training sessions and competition.
1