Under Armour 2014 Annual Report Download - page 16

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increasing awareness and sales of our existing product offerings through our global wholesale and direct to
consumer channels. We plan to engage and grow this community by developing innovative applications, services
and other digital solutions to impact how athletes and fitness-minded individuals train, perform and live.
S
easonalit
y
Historically, we have recognized a majority of our net revenues and a significant portion of our income from
o
perations in the last two quarters of the year, driven primarily by increased sales volume of our products durin
g
the fall selling season, including our higher priced cold weather products, along with a larger proportion o
f
higher margin direct to consumer sales. The level of our working capital generally reflects the seasonality an
d
growth in our business. We generally expect inventory, accounts payable and certain accrued expenses to b
e
higher in the second and third quarters in preparation for the fall selling season
.
Product Des
i
gn and Development
Our products are manufactured with technical fabrications produced by third parties and developed i
n
collaboration with our
p
roduct develo
p
ment teams. This a
pp
roach enables us to select and create su
p
erior
,
technically advanced fabrics, produced to our specifications, while focusing our product development efforts o
n
design, fit, climate and product end use.
We seek to regularly upgrade and improve our products with the latest in innovative technology whil
e
broadening our product offerings. Our goal, to deliver superior performance in all our products, provides ou
r
developers and licensees with a clear, overarching direction for the brand and helps them identify ne
w
o
pportunities to create performance products that meet the changing needs of athletes. We design products with
“visible technology,” utilizing color, texture and fabrication to enhance our customers’ perception and
understanding of product use and benefits
.
Our product development team works closely with our sports marketing and sales teams as well a
s
p
rofessional and collegiate athletes to identify product trends and determine market needs. For example, these
teams worked closely to identify the opportunity and market for our CHARGED COTTO
N
®
p
roducts, which ar
e
made from natural cotton but perform like our synthetic products, drying faster and wicking away moisture fro
m
the body, and our Storm Fleece products with a unique, water-resistant finish that repels water, without stifling
airflow. In 2013, we introduced ColdGear
®
Infrared, a ceramic print technology on the inside of our garments
that provides athletes with lightweight warmth
.
S
ourcing, Manufacturing and Quality Assurance
M
any of the specialty fabrics and other raw materials used in our products are technically advanced
p
roducts developed by third parties and may be available, in the short term, from a limited number of sources.
T
he fabric and other raw materials used to manufacture our products are sourced by our manufacturers from a
limited number of suppliers pre-approved by us. In 2014, approximately 6
5
% of the fabric used in our product
s
came from five suppliers. These fabric suppliers have primary locations in Taiwan, Singapore, Mexico and El
Salvador. The fabrics used by our suppliers and manufacturers are primarily synthetic fabrics and involve ra
w
materials, including petroleum based products that may be subject to price fluctuations and shortages. We also
use cotton in our
p
roducts, as blended fabric and also in our CHARGED COTTON
®
line. Cotton is a commodity
that is subject to price fluctuations and supply shortages
.
S
ubstantially all of our products are manufactured by unaffiliated manufacturers. In 2014, our products wer
e
manufactured by 29 primary manufacturers, operating in 14 countries, with approximately 6
5
% of our products
manufactured in China, Jordan, Vietnam and Indonesia. Of our 29 primary manufacturing partners, ten produce
d
approximately
5
2% of our products.All manufacturers are evaluated for quality systems, social compliance and
f
inancial strength by our quality assurance team prior to being selected and on an ongoing basis. Wher
e
6