Under Armour 2009 Annual Report Download - page 25

Sponsorships and designations as an official supplier may become more expensive and this could impact
the value of our brand image.
A key element of our marketing strategy has been to create a link in the consumer market between our
products and professional and collegiate athletes. We previously gained significant publicity and brand name
recognition from the perceived sponsorships associated with professional and collegiate athletes and sports
programs using our products. The use of our products by athletes and teams was frequently without our paying
compensation or in exchange for our furnishing product at a reduced cost or without charge and without formal
arrangements. We also have licensing agreements to be the official supplier of performance apparel and footwear
to a variety of sports teams and leagues at the collegiate and professional level as well as Olympic teams.
However, as competition in the performance apparel and footwear industry has increased, the costs associated
with athlete sponsorships and official supplier licensing agreements have increased, including the costs
associated with obtaining and retaining these sponsorships and agreements. If we are unable to maintain our
current association with professional and collegiate athletes, teams and leagues, or to do so at a reasonable cost,
we could lose the on-field authenticity associated with our products, and we may be required to modify and
substantially increase our marketing investments. As a result, our brand image, net revenues, expenses and
profitability could be materially adversely affected.
If we encounter problems with our distribution system, our ability to deliver our products to the market
could be adversely affected.
We rely on our two distribution facilities in Glen Burnie, Maryland for the majority of our product
distribution. Our distribution facilities utilize computer controlled and automated equipment, which means the
operations are complicated and may be subject to a number of risks related to security or computer viruses, the
proper operation of software and hardware, power interruptions or other system failures. In addition, because the
majority of our products are distributed from two nearby locations, our operations could also be interrupted by
floods, fires or other natural disasters near our distribution facilities, as well as labor difficulties. We maintain
business interruption insurance, but it may not adequately protect us from the adverse effects that could be
caused by significant disruptions in our distribution facilities, such as the long-term loss of customers or an
erosion of our brand image. In addition, our distribution capacity is dependent on the timely performance of
services by third parties, including the shipping of product to and from our distribution facilities. If we encounter
problems with our distribution facilities, our ability to meet customer expectations, manage inventory, complete
sales and achieve objectives for operating efficiencies could be materially adversely affected.
We rely significantly on information technology and any failure, inadequacy, interruption or security lapse
of that technology could harm our ability to effectively operate our business.
Our ability to effectively manage and maintain our inventory and internal reports, and to ship products to
customers and invoice them on a timely basis depends significantly on our enterprise resource planning,
warehouse management, and other information systems. The failure of these systems to operate effectively or to
integrate with other systems, or a breach in security of these systems could cause delays in product fulfillment
and reduced efficiency of our operations, and it could require significant capital investments to remediate any
such failure, problem or breach.
Our future success is substantially dependent on the continued service of our senior management and
other key employees.
Our future success is substantially dependent on the continued service of our senior management and other
key employees, particularly Kevin A. Plank, our founder and Chief Executive Officer. The loss of the services of
our senior management or other key employees could make it more difficult to successfully operate our business
and achieve our business goals.
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