Under Armour 2013 Annual Report Download - page 72

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 the Company’s leverage ratio as set forth in the credit agreement.
During the three months ended December 31, 2013, the Company borrowed $100.0 million under the
revolving credit facility to partially fund the acquisition of MapMyFitness. The interest rate under the revolving
credit facility was 1.5% during the three months ended December 31, 2013. No balance was outstanding under
the revolving credit facility as of December 31, 2012.
Long Term Debt
The Company has 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 the Company’s credit facility, will be considered an event of default under these
agreements. These agreements require a prepayment fee if the Company pays 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 $18.0 million was available for additional financing as of December 31,
2013. At December 31, 2013 and 2012, the outstanding principal balance under these agreements was $4.9
million and $11.9 million, respectively. Currently, advances under these agreements bear interest rates which are
fixed at the time of each advance. The weighted average interest rates on outstanding borrowings were 3.3%,
3.7% and 3.5% for the years ended December 31, 2013, 2012 and 2011, respectively.
In July 2011, in connection with the Company’s acquisition of its corporate headquarters, the Company
assumed a $38.6 million nonrecourse loan secured by a mortgage on the acquired property. The assumed loan had
an original term of approximately 10 years with a scheduled maturity date of March 2013. The loan includes a
balloon payment of $37.3 million due at maturity. The assumed loan is nonrecourse with the lender’s remedies for
non-performance limited to action against the acquired property and certain required reserves and a cash collateral
account, except for nonrecourse carve outs related to fraud, breaches of certain representations, warranties or
covenants, including those related to environmental matters, and other standard carve outs for a loan of this type.
The loan requires certain minimum cash flows and financial results from the property, and if those requirements are
not met, additional reserves may be required. The assumed loan requires prior approval of the lender for certain
matters related to the property, including material leases, changes to property management, transfers of any part of
the property and material alterations to the property. The loan had an interest rate of 6.73%.
In December 2012, the Company repaid the remaining balance of the assumed nonrecourse loan of $37.7
million and entered into a $50.0 million recourse loan collateralized by the land, buildings and tenant
improvements comprising the Company’s corporate headquarters. The loan has a seven year term and maturity
date of December 2019. The loan bears interest at one month LIBOR plus a margin of 1.50%, and allows for
prepayment without penalty. The Company is required to maintain the same leverage ratio and interest coverage
ratio as set forth in the credit facility. As of December 31, 2013, the Company was in compliance with these
ratios. The loan contains a number of restrictions that limit the Company’s ability, among other things, and
subject to certain limited exceptions, to incur additional indebtedness, pledge its assets as a security, guaranty
obligations of third parties, make investments, undergo a merger or consolidation, dispose of assets, or materially
change its line of business. The loan requires prior approval of the lender for certain matters related to the
property, including transfers of any interest in the property. In addition, the loan includes a cross default
provision similar to the cross default provision in the credit facility discussed above. As of December 31, 2013
and 2012, the outstanding balance on the loan was $48.0 million and $50.0 million, respectively. The weighted
average interest rate on the loan was 1.7% for the years ended December 31, 2013 and 2012.
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