Under Armour 2008 Annual Report Download - page 45

Cash provided by operating activities increased $84.1 million to $69.5 million for the year ended
December 31, 2008 from cash used in operating activities of $14.6 million during the same period in 2007. The
increase in cash provided by operating activities was due to decreased net cash outflows from operating assets
and liabilities of $73.2 million and adjustments to net income for non-cash items which increased $25.3 million
year over year, partially offset by a decrease in net income of $14.3 million. The decrease in net cash outflows
related to changes in operating assets and liabilities period over period was primarily driven by the following:
• a lower investment in inventory of $64.5 million, primarily driven by the operational initiatives put in
place to improve our inventory management; and
• a decrease in accounts receivable during 2008 as compared to an increase in accounts receivable during
2007. This decrease during 2008 was primarily due to improved collection efforts and a lower
percentage growth in net sales during the fourth quarter of 2008 as compared to the same period in the
prior year. During the fourth quarter of 2008, net sales increased by 1.4% as compared to the same
period in 2007 versus an increase of 29.0% during the fourth quarter of 2007 as compared to the same
period in 2006.
The above noted decreases in net cash outflows related to changes in operating assets were partially offset
by a decrease in accrued expenses and other liabilities of $5.3 million in the year ended December 31, 2008 as
compared to an increase of $11.8 million in the same period of 2007 primarily due to lower accruals for
personnel costs in 2008.
Adjustments to net income for non-cash items increased in 2008 as compared to 2007 primarily as a result
of higher depreciation and amortization expense relating to information technology initiatives, branded concept
shops and the improvements to our distribution facilities, unrealized foreign currency exchange rate losses during
2008 as compared to unrealized foreign currency exchange rate gains during 2007, higher stock based
compensation in 2008 and additional reserves for doubtful accounts in 2008.
Cash used in operating activities was $14.6 million for the year ended December 31, 2007 compared to cash
provided by operating activities of $10.7 million during the same period in 2006. The $25.3 million additional
net use of cash in operating activities was due to increased net cash outflows from operating assets and liabilities
of $45.6 million, partially offset by adjustments to net income for non-cash items which increased $6.7 million
and an increase in net income of $13.6 million year over year. The increase in net cash outflows related to
changes in operating assets and liabilities year over year was primarily due to the following:
• a larger increase in inventory levels of $57.5 million, primarily due to our planned strategy for
additional core inventory needed to support the anticipated consumer demand for our products, higher
average cost per unit due to product mix and increased in-transit inventory as a result of increased
sourcing from Asia;
• increased accounts receivable driven by a 29.0% increase in net sales for the three months ended
December 31, 2007 compared to the same period of the prior year; partially offset by
• lower income taxes receivable in 2007 compared to 2006.
Adjustments to net income for non-cash items primarily increased in 2007 as a result of higher depreciation
and amortization expense relating to the expansion of our distribution and corporate facilities and our footwear
promotional rights, higher stock-based compensation expense and increased deferred income tax assets. The
increase in non-cash items was partially offset by increased unrealized foreign currency exchanges rate gains on
transactions.
37