Under Armour 2008 Annual Report Download - page 16

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Inventory management is important to the financial condition and operating results of our business. We
manage our inventory levels based on any existing orders, anticipated sales and the rapid-delivery requirements
of our customers. Our inventory strategy is focused on continuing to meet consumer demand while improving
our inventory efficiency over the long term by putting systems and procedures in place to improve our inventory
management. We expect to achieve this by being in stock in core product offerings, which includes products that
we plan to have available for sale over the next twelve months and beyond at full price. In addition, we expect to
achieve our inventory strategy by ordering our seasonal products based on current bookings, shipping seasonal
product at the start of the shipping window in order to maximize the productivity of our floor sets and
earmarking any seasonal excess for our retail outlet stores.
Our practice, and the general practice in the apparel and footwear industries, is to offer retail customers the
right to return defective or improperly shipped merchandise. Because of long lead-times for design and
production of our products, from time to time we commence production of new products before receiving orders
for those products. This affects our inventory levels for new products.
Intellectual Property
We believe we own the internally developed material trademarks used in connection with the marketing,
distribution and sale of all our products, both domestically and internationally, where our products are currently
sold or manufactured. Our major trademarks include the UA Logo and UNDER ARMOUR®, both of which are
registered in the United States, the European Union, Japan, Taiwan, China, Australia, New Zealand, South Africa
and Canada, among other places. We also own trademark registrations for HEATGEAR®, COLDGEAR®,
ALLSEASONGEAR®, ARMOUR®, PROTECT THIS HOUSE®, THE ADVANTAGE IS UNDENIABLE®,
DUPLICITY®, MPZ®, CLICK-CLACK®and I THINK YOU HEAR US COMING®. In addition, we have
applied to register numerous other trademarks including: CARTILAGE™, BOOM-BOOM TAP™, THE
FUTURE IS OURS™ and ATHLETES RUN.™. We also own internally developed domain names for our
primary trademarks and hold copyrights for our Good-Bye Girl™ and Protect this House®commercials. We
intend to continue to strategically register, both domestically and internationally, trademarks and copyrights we
utilize today and those we develop in the future. We will continue to aggressively police our trademarks and
pursue those who infringe, both domestically and internationally.
We believe that the distinctive trademarks that we use in connection with our products are important in
building our brand image and distinguishing our products from those of others. These trademarks are among our
most valuable assets. In addition to our distinctive trademarks, we also place significant value on our trade dress,
which is the overall image and appearance of our products, and we believe that our trade dress helps to
distinguish our products in the marketplace.
The intellectual property rights in the technology, fabrics and processes used to manufacture our products
generally are owned or controlled by our suppliers. As a result, our ability to obtain patent protection for our
products is limited and we currently do not own any issued fabric or process patents. We focus our efforts on
obtaining patent protection for what we believe to be strategic, new product applications in the marketplace. We
have filed and will continue to file patent applications in connection with certain of our products that we believe
offer a unique utility or function. In 2007, we were issued a utility patent for our DUPLICITY®Sports Bra and
several design patents for our footwear. We will continue to file patent applications where we deem appropriate
to protect our inventions and designs, and we expect the number of applications to grow as our business grows
and as we continue to innovate in a range of product categories.
Competition
The market for performance athletic apparel and footwear is highly competitive and includes many new
competitors as well as increased competition from established companies expanding their production and
marketing of performance products. The fabrics and technology used in manufacturing our products are generally
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