Under Armour 2011 Annual Report Download - page 24

with regulatory environments and market practices outside of North America, and may face difficulties in
expanding to and successfully operating in markets outside of North America. In connection with expansion
efforts outside of North America, we may face cultural and linguistic differences, differences in regulatory
environments, labor practices and market practices and difficulties in keeping abreast of market, business and
technical developments and customers’ tastes and preferences. We may also encounter difficulty expanding into
new markets because of limited brand recognition leading to delayed acceptance of our products. Failure to
develop new markets outside of North America will limit our opportunities for growth.
The operations of many of our manufacturers are subject to additional risks that are beyond our control
and that could harm our business.
In 2011, our products were manufactured by 23 primary manufacturers, operating in 16 countries. Of these,
seven manufactured approximately 45% of our products, at locations in Cambodia, China, Honduras, Indonesia,
Jordan, Mexico, Nicaragua, the Philippines, Vietnam and San Salvador. During 2011, approximately 60% of our
products were manufactured in Asia, 22% in Central and South America, 8% in Mexico and 8% in the Middle
East. As a result of our international manufacturing, we are subject to risks associated with doing business
abroad, including:
• political or labor unrest, terrorism and economic instability resulting in the disruption of trade from
foreign countries in which our products are manufactured;
• currency exchange fluctuations;
• the imposition of new laws and regulations, including those relating to labor conditions, quality and
safety standards, imports, duties, taxes and other charges on imports, trade restrictions and restrictions
on the transfer of funds, as well as rules and regulations regarding climate change;
• reduced protection for intellectual property rights in some countries;
• disruptions or delays in shipments; and
• changes in local economic conditions in countries where our manufacturers and suppliers are located.
Sales of performance products may not continue to grow and this could adversely impact our ability to
grow our business.
We believe continued growth in industry-wide sales of performance apparel, footwear and accessories will
be largely dependent on consumers continuing to transition from traditional alternatives to performance products.
If consumers are not convinced these products are a better choice than traditional alternatives, growth in the
industry and our business could be adversely affected. In addition, because performance products are often more
expensive than traditional alternatives, consumers who are convinced these products provide a better alternative
may still not be convinced they are worth the extra cost. If industry-wide sales of performance products do not
grow, our ability to continue to grow our business and our financial condition and results of operations could be
materially adversely impacted.
Our revolving credit facility provides our lenders with a first-priority lien against substantially all of our
assets and contains financial covenants and other restrictions on our actions, and it could therefore limit
our operational flexibility or otherwise adversely affect our financial condition.
We have, from time to time, financed our liquidity needs in part from borrowings made under a revolving
credit facility. Our revolving credit facility provides for a committed revolving credit line of up to
$300.0 million. The agreement for our revolving credit facility contains a number of restrictions that limit our
ability, among other things, to:
• use our accounts receivable, inventory, trademarks and most of our other assets as security in other
borrowings or transactions;
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