Under Armour 2011 Annual Report Download - page 48

credit line of up to $300.0 million, in addition to a $25.0 million term loan facility. The commitment amount
under the revolving credit facility may be increased by an additional $50.0 million, subject to certain conditions
and approvals as set forth in the credit agreement. We incurred and capitalized $1.6 million in deferred financing
costs in connection with the credit facility.
The credit facility may be used for working capital and general corporate purposes and is collateralized by
substantially all of our assets and certain of our domestic subsidiaries (other than trademarks and the land,
buildings and other assets comprising our corporate headquarters) and by a pledge of 65% of the equity interests
of certain of our foreign subsidiaries. Up to $5.0 million of the facility may be used to support letters of credit, of
which none were outstanding as of December 31, 2011. We are required to maintain a certain leverage ratio and
interest coverage ratio as set forth in the credit agreement. As of December 31, 2011, we were in compliance
with these ratios. The credit agreement also provides the lenders with the ability to reduce the borrowing base,
even if we are in compliance with all conditions of the credit agreement, upon a material adverse change to the
business, properties, assets, financial condition or results of operations. The credit agreement 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
credit agreement 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 the credit agreement.
Borrowings under the credit facility bear interest based on the daily balance outstanding at LIBOR (with no
rate floor) plus an applicable margin (varying from 1.25% to 1.75%) or, in certain cases a base rate (based on a
certain lending institution’s Prime Rate or as otherwise specified in the credit agreement, with no rate floor) plus
an applicable margin (varying from 0.25% to 0.75%). The credit facility also carries a commitment fee equal to
the unused borrowings multiplied by an applicable margin (varying from 0.25% to 0.35%). The applicable
margins are calculated quarterly and vary based on our leverage ratio as set forth in the credit agreement.
Upon entering into the credit facility in March 2011, we terminated our prior $200.0 million revolving credit
facility. The prior revolving credit facility was collateralized by substantially all of our assets, other than
trademarks, and included covenants, conditions and other terms similar to our new credit facility.
In May 2011, we borrowed $25.0 million under the term loan facility to finance a portion of the acquisition
of our corporate headquarters. The interest rate on the term loan was 1.5% during the year ended December 31,
2011. The maturity date of the term loan is March 2015, which is the end of the credit facility term. In early
2013, we expect to refinance both the term loan and the loan assumed in the acquisition of our corporate
headquarters. During the three months ended September 30, 2011, we borrowed $30.0 million under the
revolving credit facility to fund seasonal working capital requirements and repaid it during the three months
ended December 31, 2011. The interest rate under the revolving credit facility was 1.5% during the year ended
December 31, 2011, and no balance was outstanding as of December 31, 2011. No balances were outstanding
under the prior revolving credit facility during the year ended December 31, 2010.
Long Term Debt
We have long term debt agreements with various lenders to finance the acquisition 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 credit facility, will be considered an event of default under these agreements. These
agreements require a prepayment fee if we pay outstanding amounts ahead of the scheduled terms. The terms of
the credit facility limit the total amount of additional financing under these agreements to $40.0 million, of which
$21.5 million was available for additional financing as of December 31, 2011. At December 31, 2011 and 2010,
the outstanding principal balance under these agreements was $14.5 million and $15.9 million, respectively.
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