Under Armour 2012 Annual Report Download - page 39

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support our growth in net revenues and higher personnel costs for the design and sourcing of our
expanding apparel, footwear and accessory lines. As a percentage of net revenues, product innovation
and supply chain costs decreased slightly to 8.6% in 2012 from 8.8% in 2011.
• Corporate services costs increased $16.4 million to $130.7 million in 2012 from $114.3 million in
2011. This increase was primarily attributable to higher corporate personnel cost and information
technology initiatives necessary to support our growth. As a percentage of net revenues, corporate
services costs decreased to 7.1% in 2012 from 7.7% in 2011 primarily due to decreased corporate
personnel costs as a percentage of net revenues in 2012.
Income from operations increased $45.9 million, or 28.2%, to $208.7 million in 2012 from $162.8 million in
2011. Income from operations as a percentage of net revenues increased to 11.4% in 2012 from 11.1% in 2011.
This increase was a result of the items discussed above.
Interest expense, net increased $1.4 million to $5.2 million in 2012 from $3.8 million in 2011. This increase
was primarily due to a full year of interest on the debt related to the acquisition of our corporate headquarters in
2012 as compared to 2011.
Other expense, net decreased $2.0 million to $0.1 million in 2012 from $2.1 million in 2011. This decrease
was due to lower net losses in 2012 on the combined foreign currency exchange rate changes on transactions
denominated in foreign currencies and our foreign currency derivative financial instruments as compared to
2011.
Provision for income taxes increased $14.8 million to $74.7 million in 2012 from $59.9 million in 2011. Our
effective tax rate was 36.7% in 2012 compared to 38.2% in 2011, primarily due to state tax credits received in
2012.
Year Ended December 31, 2011 Compared to Year Ended December 31, 2010
Net revenues increased $408.8 million, or 38.4%, to $1,472.7 million in 2011 from $1,063.9 million in
2010. Net revenues by product category are summarized below:
Year Ended December 31,
(In thousands) 2011 2010 $ Change % Change
Apparel $1,122,031 $ 853,493 $268,538 31.5%
Footwear 181,684 127,175 54,509 42.9
Accessories 132,400 43,882 88,518 201.7
Total net sales 1,436,115 1,024,550 411,565 40.2
License revenues 36,569 39,377 (2,808) (7.1)
Total net revenues $1,472,684 $1,063,927 $408,757 38.4%
Net sales increased $411.5 million, or 40.2%, to $1,436.1 million in 2011 from $1,024.6 million in 2010 as
noted in the table above. The increase in net sales primarily reflects:
• $152.7 million, or 62.2%, increase in direct to consumer sales, which include 26 additional factory house
stores, or a 48% increase, since December 31, 2010, along with the launch of our updated e-commerce
website;
• unit growth driven by increased distribution and new offerings in multiple product categories, most
significantly in our training (including Fleece and our new CHARGED COTTON®product), graphics
(primarily including Tech-Tees), baselayer, running, hunting and golf apparel categories, along with
running and basketball shoes; and
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