Under Armour 2010 Annual Report Download - page 45

under the revolving credit facility may be increased by an additional $50.0 million, subject to certain conditions
and approvals under the credit agreement.
The revolving credit facility may be used for working capital and general corporate purposes. It is
collateralized by substantially all of our assets and the assets of our domestic subsidiaries (other than our
trademarks), and by a pledge of 65% of the equity interests of certain of our foreign subsidiaries. Up to $5.0
million of the revolving credit facility may be used to support letters of credit, of which no amounts were
outstanding as of December 31, 2010. We must maintain a certain leverage ratio and fixed charge coverage ratio
as defined in the credit agreement. As of December 31, 2010, we were in compliance with these financial
covenants. The revolving credit facility also provides our lenders with the ability to reduce the borrowing base,
even if we are in compliance with all conditions of the revolving credit facility, upon a material adverse change
to our business, properties, assets, financial condition or results of operations. The revolving credit facility
contains a number of restrictions that limit our ability, among other things, and subject to certain limited
exceptions, to incur additional indebtedness, pledge our assets as security, guaranty obligations of third parties,
make investments, undergo a merger or consolidation, dispose of assets, or materially change our line of
business. In addition, the revolving credit facility includes a cross default provision whereby an event of default
under other debt obligations, as defined in the credit agreement, will be considered an event of default under this
credit agreement.
Borrowings under the revolving credit facility bear interest based on the daily balance outstanding at a
LIBOR rate option (with LIBOR subject to a rate floor of 1.25%) plus an applicable margin (varying from 2.0%
to 2.5%) or, in certain cases at our discretion, a base rate option (based on the prime rate or as otherwise specified
in the credit agreement, with the base rate subject to a rate floor of 2.25%) plus an applicable margin (varying
from 1.0% to 1.5%). The revolving credit facility also carries a commitment fee varying from 0.38% to 0.5% of
the committed line amount less outstanding borrowings and letters of credit. The applicable margins are
calculated quarterly and vary based on our leverage ratio as set forth in the credit agreement.
Prior to entering the revolving credit facility in January 2009, we terminated our prior $100.0 million
revolving credit facility. In conjunction with the termination of the prior revolving credit facility, we repaid the
then outstanding balance of $25.0 million. The prior revolving credit facility was also collateralized by
substantially all of our assets, other than our trademarks, and included covenants, conditions and other terms
similar to our current revolving credit facility.
As of December 31, 2010, borrowings under our $200 million revolving credit facility were limited to
approximately $151.5 million based on our eligible domestic inventory and accounts receivable balances. The
weighted average interest rate on the balances outstanding under the prior revolving credit facility was 1.4% and
3.7% during the years ended December 31, 2009 and 2008. No balances were outstanding under the current
revolving credit facility during the years ended December 31, 2010 and 2009, respectively.
Long Term Debt
We have long term debt agreements with various lenders to finance the acquisition of or lease of qualifying
capital investments. Loans under these agreements are collateralized by a first lien on the related assets acquired.
As these agreements are not committed facilities, each advance is subject to approval by the lenders.
Additionally, these agreements include a cross default provision whereby an event of default under other debt
obligations, including our revolving credit facility, will be considered an event of default under these agreements.
In addition, these agreements require a prepayment fee if we pay outstanding amounts ahead of the scheduled
terms. The terms of our revolving credit facility limit the total amount of additional financing under these
agreements to $35.0 million, of which $22.1 million was remaining as of December 31, 2010. At December 31,
2010 and 2009, the outstanding principal balance under these agreements was $15.9 million and $20.1 million,
respectively. Currently, advances under these agreements bear interest rates which are fixed at the time of each
advance. The weighted average interest rate on outstanding borrowings was 5.3%, 5.9% and 6.1% for the years
ended December 31, 2010, 2009 and 2008, respectively.
37