Under Armour 2007 Annual Report Download - page 47

Cash provided by financing activities decreased $44.4 million to $12.6 million in 2006 from $57.0 million
in 2005. This decrease was primarily due to proceeds received from our initial public offering during November
2005. Through this initial public offering, we issued an additional 9.5 million shares of Class A Common Stock
and received $112.7 million in proceeds net of $10.8 million in stock issue costs. Proceeds from our initial public
offering were used to repay a $25.0 million term note, to repay the balance outstanding under the revolving credit
facility of $12.2 million, and to redeem the Series A Preferred Stock for an aggregate of $12.0 million. This
decrease in cash provided by financing activities was partially offset by the $11.3 million excess tax benefits
from stock-based compensation arrangements received in 2006.
Revolving Credit Facility Agreement
In December 2006, we entered into an amended and restated financing agreement with a lending institution.
This financing agreement has a term of five years and provides for a revolving credit line of up to $100.0 million
based on our domestic inventory and accounts receivable balances and may be used for working capital and
general corporate purposes. This financing agreement is collateralized by substantially all of our domestic assets,
other than our trademarks. Up to $10.0 million of the facility may be used to support letters of credit, which if
utilized would reduce the availability under the revolving credit line. As of December 31, 2007, no balance was
outstanding under our revolving credit facility and our availability was $100.0 million based on our domestic
inventory and accounts receivable balances.
The revolving credit facility bears interest based on the daily balance outstanding at our choice of LIBOR
plus an applicable margin (varying from 1.0% to 2.0%) or the JP Morgan Chase Bank prime rate plus an
applicable margin (varying from 0.0% to 0.5%). The applicable margin is calculated quarterly and varies based
on our pricing leverage ratio as defined in the agreement. The revolving credit facility also carries a line of credit
fee varying from 0.1% to 0.5% of the available but unused borrowings.
This financing agreement contains a number of restrictions that limit our ability, among other things, to
pledge our accounts receivable, inventory, trademarks 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.
If net availability under the financing agreement falls below certain thresholds as defined in the agreement,
we would be required to maintain a certain leverage ratio and fixed charge coverage ratio as defined in the
agreement. This financing agreement also provides the lenders with the ability to reduce the available revolving
credit line amount under certain conditions even if we are in compliance with all conditions of the agreement.
We were in compliance with these covenants as of December 31, 2007.
Subordinated Debt and Lease Obligations
In March 2005, we entered into a loan and security agreement with a lending institution to finance the
acquisition of qualifying capital investments. The Company has up to $17.0 million available under this loan and
security agreement. This agreement is collateralized by a first lien on these assets and is otherwise subordinate to
the revolving credit facility. At December 31, 2007, the outstanding principal balance was $13.4 million under
this agreement. The weighted average interest rate on outstanding borrowings was 6.5%, 6.3% and 5.7% for the
years ended December 31, 2007, 2006 and 2005, respectively.
37