Under Armour Inc. Annual Report 2014

FY2014 Annual Report · Under Armour Inc.

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T W O T H O U S A N D F O U R T E E N

MapMyFitness

Endomondo

MyFitnessPal

INTRODUCING
UNDER ARMOUR
CONNECTED FITNESS

These four connected systems will track
precise data on your training and nutrition
while providing you with the support and
insightful guidance of the UA global health
and ﬁtness community.

JERMAINE JONES

GISELE BÜNDCHEN

ANDY MURRAY

GONZALO FIERRO // COLO COLO

ROGELIO CHAVEZ // CRUZ AZUL

2014 SHOWCASED THE MOST BALANCED
GROWTH IN UNDER ARMOUR’S HISTORY.

%
4
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7
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9
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1
$

%
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2
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%
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1
2
9
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8
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$

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5
0
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3
3
2
$

%
2
3

0
7
3
4
8
0
3
$

GISELE BÜNDCHEN

MISTY COPELAND

MANTEO MITCHELL

STEPHEN CURRY
VISITS
UA SOHO STORE

%
4
3

5
5
9
3
5
3
$

%
7
2

8
9
0
5
6
2
$

%
8
2

BEIJING

SINGAPORE

SHANGHAI

CHILE

5
9
6
8
0
2
% $
5
4

7
6
7
2
6
1
$

%
2
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5
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1
1
$

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark One)
Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014

or
‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934
For the transition period from

to
Commission File No. 001-33202

UNDER ARMOUR, INC.

(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of
incorporation or organization)

1020 Hull Street
Baltimore, Maryland 21230
(Address of principal executive offices) (Zip Code)

52-1990078
(I.R.S. Employer
Identification No.)

(410) 454-6428
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Class A Common Stock
(Title of each class)

New York Stock Exchange
(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes Í No ‘

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. Yes ‘ No Í

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes Í No ‘

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,

every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this
gg
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files. Yes Í

No ‘

Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 or Regulation S-K (§229.405 of this

chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a

smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer Í
Non-accelerated filer ‘ (Do not check if a smaller reporting company)

Accelerated filer
Smaller reporting company ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No Í
As of June 30, 2014, the last business day of our most recently completed second fiscal quarter, the aggregate market

‘

value of the registrant’s Class A Common Stock held by non-affiliates was $10,314,358,804.

As of January 31, 2015, there were 177,312,580 shares of Class A Common Stock and 36,600,000 shares of Class B

Convertible Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Under Armour, Inc.’s Proxy Statement for the Annual Meeting of Stockholders to be held on April 29, 2015

are incorporated by reference in Part III of this Form 10-K.

[THIS PAGE INTENTIONALLY LEFT BLANK]

UNDER ARMOUR, INC.

ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

PART I.

Item 1. Business

General

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Marketing and Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sales and Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Product Design and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sourcing, Manufacturing and Quality Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inventory Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 2.

Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases

of Equity Securities

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 6.

Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . .

Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . .

Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III.

Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . .
Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV.

Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7
7

48
79

80
80

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ITEM 1.

BUSINESS

General

PART I

Our principal business activities are the development, marketing and distribution of branded performance

apparel, footwear and accessories for men, women and youth. The brand’s moisture-wicking fabrications are
engineered in many designs and styles for wear in nearly every climate to provide a performance alternative to
traditional products. Our products are sold worldwide and are worn by athletes at all levels, from youth to
professional, on playing fields around the globe, as well as by consumers with active lifestyles.

Our net revenues are generated primarily from the wholesale sales of our products to national, regional,
independent and specialty retailers. We also generate net revenue from the sale of our products through our direct
to consumer sales channel, which includes our brand and factory house stores and websites, and from product
licensing. A large majority of our products are sold in North America; however we believe that our products
appeal to athletes and consumers with active lifestyles around the globe. Internationally, our net revenues are
generated from a mix of wholesale sales to retailers and distributors and sales through our direct to consumer
sales channels, and license revenue from sales by our third party licensee. We plan to continue to grow our
business over the long term through increased sales of our apparel, footwear and accessories, expansion of our
wholesale distribution, growth in our direct to consumer sales channel and expansion in international markets.
Virtually all of our products are manufactured by our unaffiliated primary manufacturers operating in
13 countries outside of the United States.

In December 2013, we acquired MapMyFitness, Inc. (“MapMyFitness”), a digital connected fitness

company with users primarily in the U.S., and in January 2015, we acquired Endomondo, ApS. (“Endomondo”) a
digital connected fitness company with over 20 million registered users primarily in Europe and other regions
outside the U.S. In February 2015, we entered into an agreement to acquire MyFitnessPal, Inc. (“MyFitnessPal”),
a digital nutrition and connected fitness company with over 80 million registered users. Combined with the
growth of MapMyFitness, these acquisitions will expand our Connected Fitness Community to include more than
120 million registered users. The acquisition is expected to close in the first quarter of 2015, subject to regulatory
approval. These businesses will form the core of our Connected Fitness business and strategy.

Our Connected Fitness strategy is focused on connecting with our consumers and 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.

We were incorporated as a Maryland corporation in 1996. As used in this report, the terms “we,” “our,”
“us,” “Under Armour” and the “Company” refer to Under Armour, Inc. and its subsidiaries unless the context
indicates otherwise. We have registered trademarks around the globe, including UNDER ARMOUR®,
HEATGEAR®, COLDGEAR®, ALLSEASONGEAR® and the Under Armour UA Logo, and we have applied to
register many other trademarks. This Annual Report on Form 10-K also contains additional trademarks and
tradenames of our Company and our subsidiaries. All trademarks and tradenames appearing in this Annual
Report on Form 10-K are the property of their respective holders.

Products

Our product offerings consist of apparel, footwear and accessories for men, women and youth. We market

our products at multiple price levels and provide consumers with products that we believe are a superior
alternative to traditional athletic products. In 2014, sales of apparel, footwear and accessories represented 74%,
14% and 9% of net revenues, respectively. Licensing arrangements, primarily for the sale of our products, and
other revenue represented the remaining 3% of net revenues. Refer to Note 16 to the Consolidated Financial
Statements for net revenues by product.

Apparel

Our apparel is offered in a variety of styles and fits intended to enhance comfort and mobility, regulate body

temperature and improve performance regardless of weather conditions. Our apparel is engineered to replace
traditional non-performance fabrics in the world of athletics and fitness with performance alternatives designed
and merchandised along gearlines. Our three gearlines are marketed to tell a very simple story about our highly
technical products and extend across the sporting goods, outdoor and active lifestyle markets. We market our
apparel for consumers to choose HEATGEAR® when it is hot, COLDGEAR® when it is cold and
ALLSEASONGEAR® between the extremes. Within each gearline our apparel comes in three primary fit types:
compression (tight fit), fitted (athletic fit) and loose (relaxed).

HEATGEAR® is designed to be worn in warm to hot temperatures under equipment or as a single layer.

While a sweat-soaked traditional non-performance T-shirt can weigh two to three pounds, HEATGEAR® is
engineered with a microfiber blend designed to wick moisture from the body which helps the body stay cool, dry
and light. We offer HEATGEAR® in a variety of tops and bottoms in a broad array of colors and styles for wear
in the gym or outside in warm weather.

COLDGEAR® is designed to wick moisture from the body while circulating body heat from hot spots to

help maintain core body temperature. Our COLDGEAR® apparel provides both dryness and warmth in a single
light layer that can be worn beneath a jersey, uniform, protective gear or ski-vest, and our COLDGEAR®
outerwear products protect the athlete, as well as the coach and the fan from the outside in. Our COLDGEAR®
products generally sell at higher prices than our other gearlines.

ALLSEASONGEAR® is designed to be worn in between extreme temperatures and uses technical fabrics to

keep the wearer cool and dry in warmer temperatures while preventing a chill in cooler temperatures.

Footwear

Our footwear offerings include football, baseball, lacrosse, softball and soccer cleats, slides and

performance training, running, basketball and outdoor footwear. Our footwear is light, breathable and built with
performance attributes for athletes. Our footwear is designed with innovative technologies which provide
stabilization, directional cushioning and moisture management engineered to maximize the athlete’s comfort and
control.

Accessories

Accessories primarily includes the sale of headwear, bags and gloves. Our accessories include

HEATGEAR® and COLDGEAR® technologies and are designed with advanced fabrications to provide the same
level of performance as our other products.

License and Other

We have agreements with our licensees to develop Under Armour apparel and accessories. Our product,

marketing and sales teams are actively involved in all steps of the design process in order to maintain brand
standards and consistency. During 2014, our licensees offered socks, team uniforms, baby and kids’ apparel,
eyewear and inflatable footballs and basketballs that feature performance advantages and functionality similar to
our other product offerings.

We also offer digital fitness platform licenses and subscriptions, along with digital advertising through our
MapMyFitness business. License and other revenues generated from the sale of apparel and accessories and the
use of our MapMyFitness platforms are included in our net revenues.

Marketing and Promotion

We currently focus on marketing and selling our products to consumers primarily for use in athletics,

fitness, training and outdoor activities. We seek to drive consumer demand by building brand equity and
awareness that our products deliver advantages that help athletes perform better.

Sports Marketing

Our marketing and promotion strategy begins with providing and selling our products to high-performing

athletes and teams on the high school, collegiate and professional levels. We execute this strategy through
outfitting agreements, professional and collegiate sponsorships, individual athlete agreements and by providing
and selling our products directly to team equipment managers and to individual athletes. As a result, our products
are seen on the field, giving them exposure to various consumer audiences through the internet, television,
magazines and live at sporting events. This exposure to consumers helps us establish on-field authenticity as
consumers can see our products being worn by high-performing athletes.

We are the official outfitter of athletic teams in several high-profile collegiate conferences. We are an
official supplier of footwear and gloves to the National Football League (“NFL”) and we are the official combine
scouting partner to the NFL with the right to sell combine training apparel. We are the Official Performance
Footwear Supplier of Major League Baseball and a partner with the National Basketball Association (“NBA”)
which allows us to market our NBA athletes in game uniforms in connection with our basketball footwear.

Internationally, we sponsor and sell our products to European and Latin America soccer and rugby teams.
We provide the Tottenham Hotspur Football Club with performance apparel, including training wear and playing
kit for the Club’s First and Academy teams, together with replica product for the Club’s supporters around the
world. We are the official technical kit supplier to the Welsh Rugby Union and have exclusive retail rights on the
replica products. Beginning in 2014, we became the official kit supplier of the Chilean football club, Corporación
Club Social y Deportivo Colo-Colo, along with Cruz Azul Futbol Club, A.C. and Deportivo Toluca F.C. in
Mexico.

We also seek to sponsor events to drive awareness and brand authenticity from a grassroots level. We host
combines, camps and clinics for athletes in many sports at regional sites across the country. These events, along
with the products we make, are designed to help young athletes improve their training methods and their overall
performance. We are also the title sponsor of a collection of high school All-America Games that create
significant on-field product and brand exposure that contributes to our on-field authenticity.

Media

We feature our products in a variety of national digital, broadcast, and print media outlets. We also utilize

social and mobile media to engage consumers and promote conversation around our brand and our products.

Retail Presentation

The primary component of our retail marketing strategy is to increase and brand floor space dedicated to our

products within our major retail accounts. The design and funding of Under Armour concept shops within our
major retail accounts has been a key initiative for securing prime floor space, educating the consumer and
creating an exciting environment for the consumer to experience our brand. Under Armour concept shops
enhance our brand’s presentation within our major retail accounts with a shop-in-shop approach, using dedicated
floor space exclusively for our products, including flooring, lighting, walls, displays and images.

Sales and Distribution

The majority of our sales are generated through wholesale channels, which include national and regional

sporting goods chains, independent and specialty retailers, department store chains, institutional athletic

departments and leagues and teams. In addition, we sell our products to independent distributors in various
countries where we generally do not have direct sales operations and through licensees.

We also sell our products directly to consumers through our own network of brand and factory house stores
in our North America, Latin America and Asia-Pacific operating segments, and through websites globally. These
factory house stores serve an important role in our overall inventory management by allowing us to sell a
significant portion of excess, discontinued and out-of-season products while maintaining the pricing integrity of
our brand in our other distribution channels. Through our brand house stores, consumers experience our brand
first-hand and have broader access to our performance products. In 2014, sales through our wholesale, direct to
consumer and licensing channels represented 67%, 30% and 3% of net revenues, respectively.

We believe the trend toward performance products is global and plan to continue to introduce our products
and simple merchandising story to athletes throughout the world. We are introducing our performance apparel,
footwear and accessories outside of North America in a manner consistent with our past brand-building strategy,
including selling our products directly to teams and individual athletes in these markets, thereby providing us
with product exposure to broad audiences of potential consumers.

Our primary business operates in four geographic segments: (1) North America, comprising the

United States and Canada, (2) Europe, the Middle East and Africa (“EMEA”), (3) Asia-Pacific, and (4) Latin
America. Each of these geographic segments operate predominantly in one industry: the design, development,
marketing and distribution of performance apparel, footwear and accessories. We also operate our
MapMyFitness business as a separate segment. As our international and MapMyFitness operating segments are
currently not material, we combine them into other foreign countries and businesses for reporting purposes. The
following table presents net revenues by segment for each of the years ending December 31, 2014, 2013 and
2012:

2014

% of

Year ended December 31,

2013

% of

2012

% of
Net Revenues

(In thousands)

Net Revenues

Net Revenues Net Revenues

North America
Other foreign countries and

$2,796,390

90.7% $2,193,739

94.1% $1,726,733

94.1%

businesses

287,980

9.3

138,312

5.9

108,188

5.9

Total net revenues

$3,084,370

100.0% $2,332,051

100.0% $1,834,921

100.0%

North America

North America accounted for approximately 91% of our net revenues for 2014. We sell our branded apparel,
footwear and accessories in North America through our wholesale and direct to consumer channels. Net revenues
generated from the sales of our products in the United States were $2,651.1 million, $2,082.5 million and
$1,650.4 million for the years ended December 31, 2014, 2013 and 2012, respectively, and the majority of our
long-lived assets were located in the United States. Our largest customer, Dick’s Sporting Goods, accounted for
14.4% of our net revenues in 2014. No other customers accounted for more than 10% of our net revenues.

Our direct to consumer sales are generated through our brand and factory house stores, along with internet

websites. As of December 31, 2014, we had 125 factory house stores in North America, of which the majority are
located in outlet centers throughout the United States. As of December 31, 2014, we had 5 brand house stores in
North America. Consumers can purchase our products directly from our e-commerce website,
www.underarmour.com.

In addition, we earn licensing revenue in North America based on our licensees’ sale of socks, team

uniforms, baby and kids’ apparel, eyewear and inflatable footballs and basketballs. In order to maintain
consistent quality and performance, we pre-approve all products manufactured and sold by our licensees, and our

quality assurance team strives to ensure that the products meet the same quality and compliance standards as the
products that we sell directly.

We distribute the majority of our products sold to our North American wholesale customers and our brand

and factory house stores from distribution facilities we lease and operate in California and Maryland. In addition,
we distribute our products in North America through third-party logistics providers with primary locations in
Canada, New Jersey and Florida. In some instances, we arrange to have products shipped from the independent
factories that manufacture our products directly to customer-designated facilities.

Other Foreign Countries and Businesses

Approximately 9% of our net revenues were generated outside of North America and through our
MapMyFitness business in 2014. We plan to continue to grow our business over the long term in part through
expansion in international markets. We also plan to expand our MapMyFitness business to reach more users and
continue to develop new services and solutions.

EMEA

We sell our apparel, footwear and accessories through retailers and websites and independent distributors in

certain European countries. We sell our branded products to various sports clubs and teams in Europe. We
continue to sell the United Kingdom’s Tottenham Hotspur Football Club replica product for the club’s supporters
around the world.

We generally distribute our products to our retail customers and e-commerce consumers in Europe through a
third-party logistics provider based out of Venlo, The Netherlands. This agreement continues through April 2017.

Asia-Pacific

We sell our apparel, footwear and accessories products in China through seven brand and two factory house

stores we operate, along with stores operated by our distribution partners. We also sell our products to
independent distributors in Australia, New Zealand, Taiwan and Hong Kong where we do not have direct sales
operations. We distribute our products in Asia-Pacific primarily through a third-party logistics provider based out
of Hong Kong.

We have a license agreement with Dome Corporation, which produces, markets and sells our branded

apparel, footwear and accessories in Japan and Korea. We are actively involved with this licensee to develop
variations of our products for the different sizes, sports interests and preferences of Japanese and Korean
consumers. Our branded products are sold in Japan and Korea to large sporting goods retailers, independent
specialty stores and professional sports teams, and through Dome-owned retail stores. We hold a cost-based
minority investment in Dome Corporation.

Latin America

We sell our products in Chile, Mexico and Brazil through wholesale distributors, website operations and two

brand and six factory house stores. In these countries we operate through third-party distribution facilities. In
other Latin American countries we sell our products through independent distributors which are sourced through
our international distribution hubs in Hong Kong, Jordan and the United States. Prior to 2014, we primarily sold
our products in Latin America through an independent distributor in Mexico.

MapMyFitness

In 2013, we began offering digital fitness subscriptions and licenses, along with digital advertising through

our MapMyFitness platform. Our MapMyFitness strategy is focused on connecting with our consumers and

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.

Seasonality

Historically, we have recognized a majority of our net revenues and a significant portion of our income from
operations in the last two quarters of the year, driven primarily by increased sales volume of our products during
the fall selling season, including our higher priced cold weather products, along with a larger proportion of
higher margin direct to consumer sales. The level of our working capital generally reflects the seasonality and
growth in our business. We generally expect inventory, accounts payable and certain accrued expenses to be
higher in the second and third quarters in preparation for the fall selling season.

Product Design and Development

Our products are manufactured with technical fabrications produced by third parties and developed in
collaboration with our product development teams. This approach enables us to select and create superior,
technically advanced fabrics, produced to our specifications, while focusing our product development efforts on
design, fit, climate and product end use.

We seek to regularly upgrade and improve our products with the latest in innovative technology while

broadening our product offerings. Our goal, to deliver superior performance in all our products, provides our
developers and licensees with a clear, overarching direction for the brand and helps them identify new
opportunities 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 as
professional 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 COTTON® products, which are
made from natural cotton but perform like our synthetic products, drying faster and wicking away moisture from
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.

Sourcing, Manufacturing and Quality Assurance

Many of the specialty fabrics and other raw materials used in our products are technically advanced
products developed by third parties and may be available, in the short term, from a limited number of sources.
The 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 65% of the fabric used in our products
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 raw
materials, including petroleum based products that may be subject to price fluctuations and shortages. We also
use cotton in our products, as blended fabric and also in our CHARGED COTTON® line. Cotton is a commodity
that is subject to price fluctuations and supply shortages.

Substantially all of our products are manufactured by unaffiliated manufacturers. In 2014, our products were

manufactured by 29 primary manufacturers, operating in 14 countries, with approximately 65% of our products
manufactured in China, Jordan, Vietnam and Indonesia. Of our 29 primary manufacturing partners, ten produced
approximately 52% of our products.All manufacturers are evaluated for quality systems, social compliance and
financial strength by our quality assurance team prior to being selected and on an ongoing basis. Where

appropriate, we strive to qualify multiple manufacturers for particular product types and fabrications. We also
seek out vendors that can perform multiple manufacturing stages, such as procuring raw materials and providing
finished products, which helps us to control our cost of goods sold. We enter into a variety of agreements with
our manufacturers, including non-disclosure and confidentiality agreements, and we require that all of our
manufacturers adhere to a code of conduct regarding quality of manufacturing and working conditions and other
social concerns. We do not, however, have any long term agreements requiring us to utilize any manufacturer,
and no manufacturer is required to produce our products in the long term. We have subsidiaries in Hong Kong,
Panama, Vietnam and China to support our manufacturing, quality assurance and sourcing efforts for our
products. We also manufacture a limited number of apparel products, primarily for high-profile athletes and
teams, on-premises in our quick turn, Special Make-Up Shop located at one of our distribution facilities in
Maryland.

Inventory Management

Inventory management is important to the financial condition and operating results of our business. We

manage our inventory levels based on existing orders, anticipated sales and the rapid-delivery requirements of
our customers. Our inventory strategy is focused on continuing to meet consumer demand while improving our
inventory efficiency over the long term by putting systems and processes in place to improve our inventory
management. These systems and processes are designed to improve our forecasting and supply planning
capabilities. In addition to systems and processes, key areas of focus that we believe will enhance inventory
performance are added discipline around the purchasing of product, production lead time reduction, and better
planning and execution in selling of excess inventory through our factory house stores and other liquidation
channels.

Our practice, and the general practice in the apparel, footwear and accessory industries, is to offer retail

customers the right to return defective or improperly shipped merchandise. As it relates to new product
introductions, which can often require large initial launch shipments, we commence production before receiving
orders for those products from time to time. This can affect our inventory levels as we build pre-launch
quantities.

Intellectual Property

We believe we own the material trademarks used in connection with the marketing, distribution and sale of
our products, both domestically and internationally, where our products are currently sold or manufactured. Our
major trademarks include the UA Logo and UNDER ARMOUR®, both of which are registered in the
United States, Canada, Mexico, the European Union, Japan, China and numerous other countries. We also own
trademark registrations for other trademarks including, among others, UA®, ARMOUR®, HEATGEAR®,
COLDGEAR®, ALLSEASONGEAR®, PROTECT THIS HOUSE®, I WILL®, and many trademarks that
incorporate the term ARMOUR such as ARMOUR39®, ARMOURBITE®, ARMOURSTORM®, ARMOUR®
FLEECE, and ARMOUR BRA®. We also own domain names for our primary trademarks (most notably
underarmour.com and ua.com) and hold copyright registrations for several commercials, as well as for certain
artwork. We intend to continue to strategically register, both domestically and internationally, trademarks and
copyrights we utilize today and those we develop in the future. We will continue to aggressively police our
trademarks and pursue those who infringe, both domestically and internationally.

We believe the distinctive trademarks we use in connection with our products are important in building our

brand image and distinguishing our products from those of others. These trademarks are among our most
valuable assets. In addition to our distinctive trademarks, we also place significant value on our trade dress,
which is the overall image and appearance of our products, and we believe our trade dress helps to distinguish
our products in the marketplace.

We traditionally have had limited patent protection on much of the technology, materials and processes used
in the manufacture of our products. In addition, patents are increasingly important with respect to our innovative

products and new businesses and investments, particularly in our Connected Fitness business. As we continue to
expand and drive innovation in our products, we expect to seek patent protection on products, features and
concepts we believe to be strategic and important to our business. We will continue to file patent applications
where we deem appropriate to protect our new products, innovations and designs, and we expect the number of
applications to increase as our business grows and as we continue to expand our products and innovate.

Competition

The market for performance apparel, footwear and accessories is highly competitive and includes many new

competitors as well as increased competition from established companies expanding their production and
marketing of performance products. Many of the fabrics and technology used in manufacturing our products are
not unique to us, and we own a limited number of fabric or process patents. Many of our competitors are large
apparel and footwear companies with strong worldwide brand recognition and significantly greater resources
than us, such as Nike and adidas. We also compete with other manufacturers, including those specializing in
outdoor apparel, and private label offerings of certain retailers, including some of our retail customers.

In addition, we must compete with others for purchasing decisions, as well as limited floor space at retailers.
We believe we have been successful in this area because of the relationships we have developed and as a result of
the strong sales of our products. However, if retailers earn higher margins from our competitors’ products, they
may favor the display and sale of those products.

We believe we have been able to compete successfully because of our brand image and recognition, the
performance and quality of our products and our selective distribution policies. We also believe our focused
gearline merchandising story differentiates us from our competition. In the future we expect to compete for
consumer preferences and expect that we may face greater competition on pricing. This may favor larger
competitors with lower production costs per unit that can spread the effect of price discounts across a larger array
of products and across a larger customer base than ours. The purchasing decisions of consumers for our products
often reflect highly subjective preferences that can be influenced by many factors, including advertising, media,
product sponsorships, product improvements and changing styles.

Employees

As of December 31, 2014, we had approximately 10,700 employees, including approximately 7,000 in our

brand and factory house stores and 1,260 at our distribution facilities. Approximately 4,300 of our employees
were full-time. Most of our employees are located in the United States. None of our employees in the
United States are currently covered by a collective bargaining agreement and there are no material collective
bargaining agreements in effect in any of our international locations. We have had no labor-related work
stoppages, and we believe our relations with our employees are good.

Available Information

We will make available free of charge on or through our website at www.underarmour.com our annual

reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably
practicable after we file these materials with the Securities and Exchange Commission. We also post on this
website our key corporate governance documents, including our board committee charters, our corporate
governance guidelines and our code of conduct and ethics.

ITEM 1A. RISK FACTORS

Forward-Looking Statements

Some of the statements contained in this Form 10-K and the documents incorporated herein by reference
constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections,
future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not
historical facts, such as statements regarding our future financial condition or results of operations, our prospects
and strategies for future growth, the development and introduction of new products, and the implementation of
our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such
as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “outlook,”
“potential” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this Form 10-K and the documents incorporated herein by
reference reflect our current views about future events and are subject to risks, uncertainties, assumptions and
changes in circumstances that may cause events or our actual activities or results to differ significantly from
those expressed in any forward-looking statement. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity,
performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking
statements. A number of important factors could cause actual results to differ materially from those indicated by
these forward-looking statements, including, but not limited to, those factors described in “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors
include without limitation:

•

changes in general economic or market conditions that could affect consumer spending and the
financial health of our retail customers;

our ability to effectively manage our growth and a more complex global business;

our ability to successfully manage or realize expected results from acquisitions and other significant
investments;

our ability to effectively develop and launch new, innovative and updated products;

our ability to accurately forecast consumer demand for our products and manage our inventory in
response to changing demands;

increased competition causing us to lose market share or reduce the prices of our products or to
increase significantly our marketing efforts;

fluctuations in the costs of our products;

loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver
our products in a timely or cost-effective manner, including due to port disruptions;

our ability to further expand our business globally and to drive brand awareness and consumer
acceptance of our products in other countries;

our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating
results;

risks related to foreign currency exchange rate fluctuations;

our ability to effectively market and maintain a positive brand image;

our ability to comply with trade and other regulations;

the availability, integration and effective operation of information systems and other technology, as
well as any potential interruption in such systems or technology;

risks related to data security or privacy breaches;

•

our potential exposure to litigation and other proceedings; and

our ability to attract and retain the services of our senior management and key employees.

The forward-looking statements contained in this Form 10-K reflect our views and assumptions only as of

the date of this Form 10-K. We undertake no obligation to update any forward-looking statement to reflect events
or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated
events.

Our results of operations and financial condition could be adversely affected by numerous risks. You
should carefully consider the risk factors detailed below in conjunction with the other information contained
in this Form 10-K. Should any of these risks actually materialize, our business, financial condition and future
prospects could be negatively impacted.

During a downturn in the economy, consumer purchases of discretionary items are affected, which could
materially harm our sales, profitability and financial condition.

Many of our products may be considered discretionary items for consumers. Factors affecting the level of

consumer spending for such discretionary items include general economic conditions, the availability of
consumer credit and consumer confidence in future economic conditions. Uncertainty in global economic
conditions continues, and trends in consumer discretionary spending remain unpredictable. However, consumer
purchases of discretionary items tend to decline during recessionary periods when disposable income is lower or
during other periods of economic instability or uncertainty. A downturn in the economy in markets in which we
sell our products may materially harm our sales, profitability and financial condition.

If the financial condition of our retail customers declines, our financial condition and results of operations
could be adversely impacted.

We extend credit to our customers based on an assessment of a customer’s financial condition, generally

without requiring collateral. We face increased risk of order reduction or cancellation when dealing with
financially ailing customers or customers struggling with economic uncertainty. During weak economic
conditions, retail customers may be more cautious with orders. In addition, a slowing economy in our key
markets or a continued decline in consumer purchases of sporting goods generally could have an adverse effect
on the financial health of our retail customers, which could in turn have an adverse effect on our sales, our ability
to collect on receivables and our financial condition.

A decline in sales to, or the loss of, one or more of our key customers could result in a material loss of net
revenues and negatively impact our prospects for growth.

In 2014, approximately 14.4% of our net revenues were generated from sales to our largest customer. We

currently do not enter into long term sales contracts with this customer or our other key customers, relying
instead on our relationships with these customers and on our position in the marketplace. As a result, we face the
risk that these key customers may not increase their business with us as we expect, or may significantly decrease
their business with us or terminate their relationship with us. The failure to increase our sales to these customers
as much as we anticipate would have a negative impact on our growth prospects and any decrease or loss of these
key customers’ business could result in a material decrease in our net revenues and net income.

If we continue to grow at a rapid pace, we may not be able to effectively manage our growth and the
increased complexity of a global business and as a result our brand image, net revenues and profitability
may decline.

We have expanded our operations rapidly since our inception and our net revenues have increased to
$3,084.4 million in 2014 from $1,063.9 million in 2010. If our operations continue to grow at a rapid pace, we
may experience difficulties in obtaining sufficient raw materials and manufacturing capacity to produce our

products, as well as delays in production and shipments, as our products are subject to risks associated with
overseas sourcing and manufacturing. We could be required to continue to expand our sales and marketing,
product development and distribution functions, to upgrade our management information systems and other
processes and technology, and to obtain more space to support our expanding workforce. This expansion could
increase the strain on these and other resources, and we could experience serious operating difficulties, including
difficulties in hiring, training and managing an increasing number of employees. In addition, as our business
becomes more complex through the introduction of more new products and the expansion of our distribution
channels, including additional brand and factory house stores and expanded distribution in malls and department
stores, and expanded international distribution, these operational strains and other difficulties could increase.
These difficulties could result in the erosion of our brand image and a decrease in net revenues and net income.

If we fail to successfully manage or realize expected results from acquisitions and other significant
investments, it may have a material adverse effect on our results of operations and financial position, as
well as negatively impact the price of our Class A Common Stock.

From time to time we may engage in acquisition opportunities we believe are complementary to our
business and brand. For example, as part of our ongoing business strategy we have engaged in acquisitions to
grow and enhance our Connected Fitness business. In order to successfully execute this strategy, we must
manage the integration of acquired companies and employees successfully. Because our Connected Fitness
business is a relatively new line of business for us, these challenges may be more pronounced. Integrating
acquisitions can also require significant efforts and resources, which could divert management attention from
more profitable business operations.

Failing to successfully integrate acquired entities and businesses or to produce results consistent with
financial models used in the analysis of our acquisitions could potentially result in an impairment of goodwill
and intangible assets, which could have a material adverse effect on our results of operations and financial
position. In addition, we may not be successful in our efforts to continue to grow the number of users, maintain
or increase user engagement or ultimately realize expected revenues from our Connected Fitness community. For
example, we may not successfully increase sales of our apparel, footwear and accessory products to these users.
Any of these developments could have a material adverse effect on our results of operations and financial
position, as well as negatively impact the price of our Class A Common Stock.

If we are unable to anticipate consumer preferences and successfully develop and introduce new,
innovative and updated products, we may not be able to maintain or increase our net revenues and
profitability.

Our success depends on our ability to identify and originate product trends as well as to anticipate and react

to changing consumer demands in a timely manner. All of our products are subject to changing consumer
preferences that cannot be predicted with certainty. In addition, long lead times for certain of our products may
make it hard for us to quickly respond to changes in consumer demands. Our new products may not receive
consumer acceptance as consumer preferences could shift rapidly to different types of performance or other
sports products or away from these types of products altogether, and our future success depends in part on our
ability to anticipate and respond to these changes. Failure to anticipate and respond in a timely manner to
changing consumer preferences could lead to, among other things, lower sales and excess inventory levels, which
could have a material adverse effect on our financial condition.

Even if we are successful in anticipating consumer preferences, our ability to adequately react to and
address those preferences will in part depend upon our continued ability to develop and introduce innovative,
high-quality products. In addition, if we fail to introduce technical innovation in our products, consumer demand
for our products could decline, and if we experience problems with the quality of our products, we may incur
substantial expense to remedy the problems. The failure to effectively introduce new products and enter into new
product categories that are accepted by consumers could result in a decrease in net revenues and excess inventory
levels, which could have a material adverse effect on our financial condition.

Our results of operations could be materially harmed if we are unable to accurately forecast demand for
our products.

To ensure adequate inventory supply, we must forecast inventory needs and place orders with our
manufacturers before firm orders are placed by our customers. In addition, a significant portion of our net
revenues are generated by at-once orders for immediate delivery to customers, particularly during our historical
peak season, during the last two quarters of the year. If we fail to accurately forecast customer demand we may
experience excess inventory levels or a shortage of product to deliver to our customers.

Factors that could affect our ability to accurately forecast demand for our products include:

•

an increase or decrease in consumer demand for our products;

our failure to accurately forecast consumer acceptance for our new products;

product introductions by competitors;

unanticipated changes in general market conditions or other factors, which may result in cancellations
of advance orders or a reduction or increase in the rate of reorders placed by retailers;

the impact on consumer demand due to unseasonable weather conditions;

• weakening of economic conditions or consumer confidence in future economic conditions, which could

reduce demand for discretionary items, such as our products; and

•

terrorism or acts of war, or the threat thereof, or political or labor instability or unrest which could
adversely affect consumer confidence and spending or interrupt production and distribution of product
and raw materials.

Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale
of excess inventory at discounted prices, which could impair our brand image and have an adverse effect on gross
margin. In addition, if we underestimate the demand for our products, our manufacturers may not be able to produce
products to meet our customer requirements, and this could result in delays in the shipment of our products and our
ability to recognize revenue, as well as damage to our reputation and retailer and distributor relationships.

The difficulty in forecasting demand also makes it difficult to estimate our future results of operations and

financial condition from period to period. A failure to accurately predict the level of demand for our products
could adversely impact our profitability.

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.

We operate in a highly competitive market and the size and resources of some of our competitors may
allow them to compete more effectively than we can, resulting in a loss of our market share and a decrease
in our net revenues and gross profit.

The market for performance apparel, footwear and accessories is highly competitive and includes many new

competitors as well as increased competition from established companies expanding their production and

marketing of performance products. Because we own a limited number of fabric or process patents, our current
and future competitors are able to manufacture and sell products with performance characteristics and
fabrications similar to certain of our products. Many of our competitors are large apparel and footwear
companies with strong worldwide brand recognition. Due to the fragmented nature of the industry, we also
compete with other manufacturers, including those specializing in outdoor apparel and private label offerings of
certain retailers, including some of our retail customers. Many of our competitors have significant competitive
advantages, including greater financial, distribution, marketing and other resources, longer operating histories,
better brand recognition among consumers, more experience in global markets and greater economies of scale. In
addition, our competitors have long term relationships with our key retail customers that are potentially more
important to those customers because of the significantly larger volume and product mix that our competitors sell
to them. As a result, these competitors may be better equipped than we are to influence consumer preferences or
otherwise increase their market share by:

•

quickly adapting to changes in customer requirements;

readily taking advantage of acquisition and other opportunities;

discounting excess inventory that has been written down or written off;

devoting resources to the marketing and sale of their products, including significant advertising, media
placement, partnerships and product endorsement;

adopting aggressive pricing policies; and

engaging in lengthy and costly intellectual property and other disputes.

In addition, while one of our growth strategies is to increase floor space for our products in retail stores and
generally expand our distribution to other retailers, retailers have limited resources and floor space, and we must
compete with others to develop relationships with them. Increased competition by existing and future
competitors could result in reductions in floor space in retail locations, reductions in sales or reductions in the
prices of our products, and if retailers earn greater margins from our competitors’ products, they may favor the
display and sale of those products. Our inability to compete successfully against our competitors and maintain
our gross margin could have a material adverse effect on our business, financial condition and results of
operations.

Our profitability may decline as a result of increasing pressure on margins.

Our industry is subject to significant pricing pressure caused by many factors, including intense
competition, consolidation in the retail industry, pressure from retailers to reduce the costs of products and
changes in consumer demand. These factors may cause us to reduce our prices to retailers and consumers, which
could cause our profitability to decline if we are unable to offset price reductions with comparable reductions in
our operating costs. This could have a material adverse effect on our results of operations and financial condition.

Fluctuations in the cost of products could negatively affect our operating results.

The fabrics used by our suppliers and manufacturers are made of raw materials including petroleum-based

products and cotton. Significant price fluctuations or shortages in petroleum or other raw materials can materially
adversely affect our cost of goods sold. In addition, certain of our manufacturers are subject to government
regulations related to wage rates, and therefore the labor costs to produce our products may fluctuate. The cost of
transporting our products for distribution and sale is also subject to fluctuation due in large part to the price of
oil. Because most of our products are manufactured abroad, our products must be transported by third parties
over large geographical distances and an increase in the price of oil can significantly increase costs.
Manufacturing delays or unexpected transportation delays can also cause us to rely more heavily on airfreight to
achieve timely delivery to our customers, which significantly increases freight costs. Any of these fluctuations
may increase our cost of products and have an adverse effect on our profit margins, results of operations and
financial condition.

We rely on third-party suppliers and manufacturers to provide fabrics for and to produce our products,
and we have limited control over these suppliers and manufacturers and may not be able to obtain quality
products on a timely basis or in sufficient quantity.

Many of the specialty fabrics used in our products are technically advanced textile products developed by
third parties and may be available, in the short-term, from a very limited number of sources. Substantially all of
our products are manufactured by unaffiliated manufacturers, and, in 2014, 10 manufacturers produced
approximately 52% of our products. We have no long term contracts with our suppliers or manufacturing
sources, and we compete with other companies for fabrics, raw materials, production and import quota capacity.

We may experience a significant disruption in the supply of fabrics or raw materials from current sources or,

in the event of a disruption, we may be unable to locate alternative materials suppliers of comparable quality at
an acceptable price, or at all. In addition, our unaffiliated manufacturers may not be able to fill our orders in a
timely manner. If we experience significant increased demand, or we lose or need to replace an existing
manufacturer or supplier as a result of adverse economic conditions or other reasons, additional supplies of
fabrics or raw materials or additional manufacturing capacity may not be available when required on terms that
are acceptable to us, or at all, or suppliers or manufacturers may not be able to allocate sufficient capacity to us in
order to meet our requirements. In addition, even if we are able to expand existing or find new manufacturing or
fabric sources, we may encounter delays in production and added costs as a result of the time it takes to train our
suppliers and manufacturers on our methods, products and quality control standards. Any delays, interruption or
increased costs in the supply of fabric or manufacture of our products could have an adverse effect on our ability
to meet retail customer and consumer demand for our products and result in lower net revenues and net income
both in the short and long term.

We have occasionally received, and may in the future continue to receive, shipments of product that fail to

conform to our quality control standards. In that event, unless we are able to obtain replacement products in a
timely manner, we risk the loss of net revenues resulting from the inability to sell those products and related
increased administrative and shipping costs. In addition, because we do not control our manufacturers, products
that fail to meet our standards or other unauthorized products could end up in the marketplace without our
knowledge, which could harm our brand and our reputation in the marketplace.

Labor disruptions at ports or our suppliers or manufacturers may adversely affect our business.

Our business depends on our ability to source and distribute products in a timely manner. As a result, we

rely on the free flow of goods through open and operational ports worldwide and on a consistent basis from our
suppliers and manufacturers. Labor disputes at various ports or at our suppliers or manufacturers create
significant risks for our business, particularly if these disputes result in work slowdowns, lockouts, strikes or
other disruptions during our peak importing or manufacturing seasons, and could have an adverse effect on our
business, potentially resulting in canceled orders by customers, unanticipated inventory accumulation or
shortages and reduced net revenues and net income.

Our limited operating experience and limited brand recognition in new markets may limit our expansion
strategy and cause our business and growth to suffer.

Our future growth depends in part on our expansion efforts outside of the North America. During the year
ended December 31, 2014, 91% of our net revenues were earned in our North America segment. We have limited
experience 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. International
expansion may place increased demands on our operational, managerial and administrative resources. In
addition, 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 2014, our products were manufactured by 29 primary manufacturers, operating in 14 countries, with
10 manufacturers accounting for approximately 52% of our products. Approximately 65% of our products were
manufactured in China, Jordan, Vietnam and Indonesia. 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, 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.

These risks could negatively affect the ability of our manufacturers to produce or deliver our products or

procure materials, hamper our ability to sell products in international markets and increase our cost of doing
business generally. In the event that one or more of these factors make it undesirable or impractical for us to
conduct business in a particular country, our business could be adversely affected.

In addition, many of our imported products are subject to duties, tariffs or other import limitations that

affect the cost and quantity of various types of goods imported into the United States and other markets. Any
country in which our products are produced or sold may eliminate, adjust or impose new import limitations,
duties, anti-dumping penalties or other charges or restrictions, any of which could have an adverse effect on our
results of operations, cash flows and financial condition.

Our credit facility 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 our credit
facility. The credit agreement contains negative covenants that, subject to significant exceptions limit our ability,
among other things to incur additional indebtedness, make restricted payments, pledge assets as security, make
investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into
transactions with affiliates. In addition, we must maintain a certain leverage ratio and interest coverage ratio as
defined in the credit agreement. Failure to comply with these operating or financial covenants could result from,
among other things, changes in our results of operations or general economic conditions. These covenants may
restrict our ability to engage in transactions that would otherwise be in our best interests. Failure to comply with
any of the covenants under the credit agreement could result in a default. In addition, the credit agreement
includes a cross default provision whereby an event of default under certain other debt obligations will be
considered an event of default under the credit agreement. If an event of default occurs, the commitments of the
lenders under the credit agreement may be terminated and the maturity of amounts owed may be accelerated.

We may need to raise additional capital required to grow our business, and we may not be able to raise
capital on terms acceptable to us or at all.

Growing and operating our business will require significant cash outlays and capital expenditures and

commitments. If cash on hand and cash generated from operations are not sufficient to meet our cash
requirements, we will need to seek additional capital, potentially through debt or equity financing, to fund our
growth. We may not be able to raise needed cash on terms acceptable to us or at all. Financing may be on terms
that are dilutive or potentially dilutive to our stockholders, and the prices at which new investors would be
willing to purchase our securities may be lower than the current price per share of our common stock. The
holders of new securities may also have rights, preferences or privileges which are senior to those of existing
holders of common stock. If new sources of financing are required, but are insufficient or unavailable, we will be
required to modify our growth and operating plans based on available funding, if any, which would harm our
ability to grow our business.

Our operating results are subject to seasonal and quarterly variations in our net revenues and income
from operations, which could adversely affect the price of our Class A Common Stock.

We have experienced, and expect to continue to experience, seasonal and quarterly variations in our net
revenues and income from operations. These variations are primarily related to increased sales volume of our
products during the fall selling season, including our higher price cold weather products, along with a larger
proportion of higher margin direct to consumer sales. The majority of our net revenues were generated during the
last two quarters in each of 2014, 2013 and 2012, respectively.

Our quarterly results of operations may also fluctuate significantly as a result of a variety of other factors,
including, among other things, the timing of marketing expenses and changes in our product mix. Variations in
weather conditions may also have an adverse effect on our quarterly results of operations. For example, warmer
than normal weather conditions throughout the fall or winter may reduce sales of our COLDGEAR® line, leaving
us with excess inventory and operating results below our expectations.

As a result of these seasonal and quarterly fluctuations, we believe that comparisons of our operating results
between different quarters within a single year are not necessarily meaningful and that these comparisons cannot
be relied upon as indicators of our future performance. Any seasonal or quarterly fluctuations that we report in
the future may not match the expectations of market analysts and investors. This could cause the price of our
Class A Common Stock to fluctuate significantly.

Our financial results could be adversely impacted by currency exchange rate fluctuations.

Although we currently generate 86.6% of our consolidated net revenues in the United States, as our
international business grows, our results of operations could be adversely impacted by changes in foreign
currency exchange rates. Revenues and certain expenses in markets outside of the United States are recognized in
local foreign currencies, and we are exposed to potential gains or losses from the translation of those amounts
into U.S. dollars for consolidation into our financial statements. Similarly, we are exposed to gains and losses
resulting from currency exchange rate fluctuations on transactions generated by our foreign subsidiaries in
currencies other than their local currencies. In addition, the business of our independent manufacturers may also
be disrupted by currency exchange rate fluctuations by making their purchases of raw materials more expensive
and more difficult to finance. As a result, foreign currency exchange rate fluctuations may adversely impact our
results of operations.

The value of our brand and sales of our products could be diminished if we are associated with negative
publicity.

We require our suppliers, manufacturers and licensees of our products to operate their businesses in

compliance with the laws and regulations that apply to them as well as the social and other standards and policies

we impose on them, including our code of conduct. We do not control these suppliers, manufacturers or licensees
or their labor practices. A violation or reported (or alleged) violation of our policies, labor laws or other laws by
our suppliers, manufacturers or licensees could interrupt or otherwise disrupt our sourcing or damage our brand
image. Negative publicity regarding production methods, alleged practices or workplace or related conditions of
any of our suppliers, manufacturers or licensees could adversely affect our reputation and sales and force us to
locate alternative suppliers, manufacturers or licensees.

In addition, we have sponsorship contracts with a variety of athletes and feature those athletes in our
advertising and marketing efforts, and many athletes and teams use our products, including those teams or
leagues for which we are an official supplier. Actions taken by athletes, teams or leagues associated with our
products could harm the reputations of those athletes, teams or leagues. As a result, our brand image, net
revenues and profitability could be adversely affected.

Sponsorships and designations as an official supplier may become more expensive and this could impact
the value of our brand image.

A key element of our marketing strategy has been to create a link in the consumer market between our
products and professional and collegiate athletes. We have developed licensing agreements to be the official
supplier of performance apparel and footwear to a variety of sports teams and leagues at the collegiate and
professional level and sponsorship agreements with athletes. However, as competition in the performance apparel
and footwear industry has increased, the costs associated with athlete sponsorships and official supplier licensing
agreements have increased, including the costs associated with obtaining and retaining these sponsorships and
agreements. If we are unable to maintain our current association with professional and collegiate athletes, teams
and leagues, or to do so at a reasonable cost, we could lose the on-field authenticity associated with our products,
and we may be required to modify and substantially increase our marketing investments. As a result, our brand
image, net revenues, expenses and profitability could be materially adversely affected.

Our failure to comply with trade and other regulations could lead to investigations or actions by
government regulators and negative publicity.

The labeling, distribution, importation, marketing and sale of our products are subject to extensive
regulation by various federal agencies, including the Federal Trade Commission, Consumer Product Safety
Commission and state attorneys general in the U.S., as well as by various other federal, state, provincial, local
and international regulatory authorities in the locations in which our products are distributed or sold. If we fail to
comply with those regulations, we could become subject to significant penalties or claims or be required to recall
products, which could harm our brand as well as our results of operations or our ability to conduct our business.
In addition, the adoption of new regulations or changes in the interpretation of existing regulations may result in
significant compliance costs or discontinuation of product sales and may impair the marketing of our products,
resulting in significant loss of net revenues.

Our international operations are also subject to compliance with the U.S. Foreign Corrupt Practices Act, or

FCPA, and other anti-bribery laws applicable to our operations. Although we have policies and procedures to
address compliance with the FCPA and similar laws, there can be no assurance that all of our employees, agents
and other partners will not take actions in violations of our policies. Any such violation could subject us to
sanctions or other penalties that could negatively affect our reputation, business and operating results.

If we encounter problems with our distribution system, our ability to deliver our products to the market
could be adversely affected.

We rely on a limited number of distribution facilities for our product distribution. Our distribution facilities
utilize computer controlled and automated equipment, which means the operations are complicated and may be
subject to a number of risks related to security or computer viruses, the proper operation of software and

hardware, power interruptions or other system failures. In addition, because many of our products are distributed
from a limited number of locations , our operations could also be interrupted by floods, fires or other natural
disasters in these locations, as well as labor or other operational difficulties or interruptions. We maintain
business interruption insurance, but it may not adequately protect us from the adverse effects that could be
caused by significant disruptions in our distribution facilities, such as the long term loss of customers or an
erosion of our brand image. In addition, our distribution capacity is dependent on the timely performance of
services by third parties, including the shipping of product to and from our distribution facilities. If we encounter
problems with our distribution facilities, our ability to meet customer expectations, manage inventory, complete
sales and achieve objectives for operating efficiencies could be materially adversely affected.

We rely significantly on information technology and any failure, inadequacy or interruption of that
technology could harm our ability to effectively operate our business.

Our business increasingly relies on information technology. Our ability to effectively manage and maintain
our inventory and internal reports, and to ship products to customers and invoice them on a timely basis depends
significantly on our enterprise resource planning, warehouse management, and other information systems. We
also heavily rely on information systems to process financial and accounting information for financial reporting
purposes. Any of these information systems could fail or experience a service interruption for a number of
reasons, including computer viruses, programming errors, hacking or other unlawful activities, disasters or our
failure to properly maintain system redundancy or protect, repair, maintain or upgrade our systems. The failure of
our information systems to operate effectively or to integrate with other systems, or a breach in security of these
systems could cause delays in product fulfillment and reduced efficiency of our operations, which could
negatively impact our financial results. If we experienced any significant disruption to our financial information
systems that we are unable to mitigate, our ability to timely report our financial results could be impacted, which
could negatively impact our stock price. We also communicate electronically throughout the world with our
employees and with third parties, such as customers, suppliers, vendors and consumers. A service interruption or
shutdown could negatively impact our operating activities. Remediation and repair of any failure, problem or
breach of our key information systems could require significant capital investments.

In addition, the performance of our Connected Fitness business is dependent on reliable performance of its

products, applications and services and the underlying technical infrastructure, which incorporate complex
software. If this software contains errors, bugs or other vulnerabilities which impede or halt service, this could
result in damage to our reputation and brand, loss of users or loss of revenue.

Data security or privacy breaches could damage our reputation, cause us to incur additional expense,
expose us to litigation and adversely affect our business.

We collect sensitive and proprietary business information as well as personally identifiable information in

connection with digital marketing, digital commerce, our in-store payment processing systems and our
Connected Fitness business. In particular, in our Connected Fitness business we collect and store a variety of
information regarding our users, and allow users to share their personal information with each other and with
third parties. Hackers and data thieves are increasingly sophisticated and operate large scale and complex
automated attacks. Any breach of our data security could result in an unauthorized release or transfer of
customer, consumer, user or employee information, or the loss of valuable business data or cause a disruption in
our business. These events could give rise to unwanted media attention, damage our reputation, damage our
customer, consumer or user relationships and result in lost sales, fines or lawsuits. We may also be required to
expend significant capital and other resources to protect against or respond to or alleviate problems caused by a
security breach.

We must also comply with increasingly complex regulatory standards throughout the world enacted to

protect personal information and other data, particularly with respect to our Connected Fitness business.
Compliance with existing and proposed laws and regulations can be costly. In addition, an inability to maintain
compliance with these regulatory standards could subject us to litigation or other regulatory proceedings.

Changes in tax laws and unanticipated tax liabilities could adversely affect our effective income tax rate
and profitability.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective
income tax rate could be adversely affected in the future by a number of factors, including changes in the mix of
earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and
liabilities, changes in tax laws, the outcome of income tax audits in various jurisdictions around the world, and
any repatriation of non-US earnings for which we have not previously provided for U.S. taxes. We regularly
assess all of these matters to determine the adequacy of our tax provision, which is subject to significant
judgment.

Our financial results may be adversely affected if substantial investments in businesses and operations fail
to produce expected returns.

From time to time, we may invest in business infrastructure, new businesses, and expansion of existing
businesses, such as the ongoing expansion of our network of brand and factory house stores and our distribution
facilities, the expansion of our corporate headquarters or investments in our Connected Fitness business. These
investments require substantial cash investments and management attention. We believe cost effective
investments are essential to business growth and profitability. The failure of any significant investment to
provide the returns or synergies we expect could adversely affect our financial results. Infrastructure investments
may also divert funds from other potential business opportunities.

Our future success is substantially dependent on the continued service of our senior management and
other key employees.

Our future success is substantially dependent on the continued service of our senior management and other
key employees, particularly Kevin A. Plank, our founder, Chairman and Chief Executive Officer. The loss of the
services of our senior management or other key employees could make it more difficult to successfully operate
our business and achieve our business goals.

We also may be unable to retain existing management, product creation, sales, marketing, operational and

other support personnel that are critical to our success, which could result in harm to key customer relationships,
loss of key information, expertise or know-how and unanticipated recruitment and training costs.

If we are unable to attract and retain new team members, including senior management, we may not be
able to achieve our business objectives.

Our growth has largely been the result of significant contributions by our current senior management,
product design teams and other key employees. However, to be successful in continuing to grow our business, we
will need to continue to attract, retain and motivate highly talented management and other employees with a
range of skills and experience. Competition for employees in our industry is intense and we have experienced
difficulty from time to time in attracting the personnel necessary to support the growth of our business, and we
may experience similar difficulties in the future. If we are unable to attract, assimilate and retain management
and other employees with the necessary skills, we may not be able to grow or successfully operate our business.

Kevin Plank, our Chairman and Chief Executive Officer controls the majority of the voting power of our
common stock.

Our Class A Common Stock, or Class A Stock, has one vote per share and our Class B Convertible

Common Stock, or Class B Stock, has 10 votes per share. Our Chairman and Chief Executive Officer, Kevin A.
Plank, beneficially owns all outstanding shares of Class B Stock. As a result, Mr. Plank has the majority voting
control and is able to direct the election of all of the members of our Board of Directors and other matters we
submit to a vote of our stockholders. This concentration of voting control may have various effects including, but

not limited to, delaying or preventing a change of control. The Class B Stock automatically converts to Class A
Stock when Mr. Plank beneficially owns less than 15.0% of the total number of shares of Class A and Class B
Stock outstanding. Otherwise the Class B Stock does not convert to Class A Stock until Mr. Plank’s death or
disability. As a result, Mr. Plank can retain his voting control even after he is no longer affiliated with the
Company.

A number of our fabrics and manufacturing technology are not patented and can be imitated by our
competitors.

The intellectual property rights in the technology, fabrics and processes used to manufacture our products
are generally owned or controlled by our suppliers and are generally not unique to us. Our ability to obtain patent
protection for our products is limited and we currently own a limited number of fabric or process patents. As a
result, our current and future competitors are able to manufacture and sell products with performance
characteristics and fabrications similar to certain of our products. Because many of our competitors have
significantly greater financial, distribution, marketing and other resources than we do, they may be able to
manufacture and sell products based on certain of our fabrics and manufacturing technology at lower prices than
we can. If our competitors do sell similar products to ours at lower prices, our net revenues and profitability
could be materially adversely affected.

Our intellectual property rights could potentially conflict with the rights of others and we may be
prevented from selling or providing some of our products.

Our success depends in large part on our brand image. We believe our registered and common law

trademarks have significant value and are important to identifying and differentiating our products from those of
our competitors and creating and sustaining demand for our products. In addition, patents are increasingly
important with respect to our innovative products and new businesses and investments, particularly in our
Connected Fitness business. From time to time, we have received or brought claims relating to intellectual
property rights of others, and we expect such claims will continue or increase, particularly as we expand our
business and the number of products we offer. Any such claim, regardless of its merit, could be expensive and
time consuming to defend or prosecute. Successful infringement claims against us could result in significant
monetary liability or prevent us from selling or providing some of our products. In addition, resolution of claims
may require us to redesign our products, license rights belonging to third parties or cease using those rights
altogether. Any of these events could harm our business and have a material adverse effect on our results of
operations and financial condition.

Our failure to protect our intellectual property rights could diminish the value of our brand, weaken our
competitive position and reduce our net revenues.

We currently rely on a combination of copyright, trademark and trade dress laws, patent laws, unfair
competition laws, confidentiality procedures and licensing arrangements to establish and protect our intellectual
property rights. The steps taken by us to protect our proprietary rights may not be adequate to prevent
infringement of our trademarks and proprietary rights by others, including imitation of our products and
misappropriation of our brand. In addition, intellectual property protection may be unavailable or limited in some
foreign countries where laws or law enforcement practices may not protect our proprietary rights as fully as in
the United States, and it may be more difficult for us to successfully challenge the use of our proprietary rights
by other parties in these countries. If we fail to protect and maintain our intellectual property rights, the value of
our brand could be diminished and our competitive position may suffer.

From time to time, we discover unauthorized products in the marketplace that are either counterfeit

reproductions of our products or unauthorized irregulars that do not meet our quality control standards. If we are
unsuccessful in challenging a third party’s products on the basis of trademark infringement, continued sales of
their products could adversely impact our brand, result in the shift of consumer preferences away from our
products and adversely affect our business.

We have licensed in the past, and expect to license in the future, certain of our proprietary rights, such as

trademarks or copyrighted material, to third parties. These licensees may take actions that diminish the value of
our proprietary rights or harm our reputation.

We are subject to periodic claims and litigation that could result in unexpected expenses and could
ultimately be resolved against us.

From time to time, we are involved in litigation and other proceedings, including matters related to
commercial disputes and intellectual property, as well as trade, regulatory and other claims related to our
business. Any of these proceedings could result in damages, fines or other penalties, divert financial and
management resources and result in significant legal fees. Although we cannot predict the outcome of any
particular proceeding, an unfavorable outcome may have an adverse impact on our business, financial condition
and results of operations. In addition, any proceeding could negatively impact our reputation among our
customers and our brand image.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.

PROPERTIES

The following includes a summary of the principal properties that we own or lease as of December 31,

2014.

Our principal executive and administrative offices are located at an office complex in Baltimore, Maryland,

which includes 400 thousand square feet of office space that we own and 126 thousand square feet that we are
leasing with an option to renew in December 2015. In 2014 we entered into a lease for an additional
130 thousand square feet of office space located near our principal offices in Baltimore in order to expand our
corporate headquarters. The lease has a ten year term beginning in 2016. For our European headquarters, we
lease an office in Amsterdam, the Netherlands, and we maintain an international management office in Panama
as well.

We lease our primary distribution facilities, which are located in Glen Burnie, Maryland and Rialto,
California. Our Glen Burnie facilities include a total of 830 thousand square feet, with options to renew various
portions of the facilities on dates ranging from December 2016 to September 2021. Our Rialto facility is a
1,200 thousand square foot facility with a lease term through May 2023. We believe our distribution facilities
and space available through our third-party logistics providers will be adequate to meet our short term needs. In
late 2015, we expect to begin operations in a new 1,000 thousand square foot leased distribution facility being
developed for us in the Nashville, Tennessee area. We may expand to additional distribution facilities in the
future.

In addition, as of December 31, 2014, we leased 147 brand and factory house stores located in the United
States, Canada, China, Chile and Mexico with lease end dates in 2015 through 2028. We also lease additional
office space for sales, quality assurance and sourcing, marketing, and administrative functions. We anticipate that
we will be able to extend these leases that expire in the near future on satisfactory terms or relocate to other
locations.

ITEM 3.

LEGAL PROCEEDINGS

From time to time, we have been involved in litigation and other proceedings, including matters related to

commercial disputes and intellectual property, as well as trade, regulatory and other claims related to our
business. We believe all current proceedings are routine in nature and incidental to the conduct of our business,
and we believe no such proceedings will have a material adverse effect on our financial condition, results of
operations or cash flows.

EXECUTIVE OFFICERS OF THE REGISTRANT

Our executive officers are:

Name

Age

Position

Kevin A. Plank . . . . . . . . . . . . . . . . .

42 Chairman and Chief Executive Officer

Kerry D. Chandler . . . . . . . . . . . . . . .

50 Chief Human Resources Officer

Brad Dickerson . . . . . . . . . . . . . . . . .

50 Chief Financial Officer

Kip J. Fulks . . . . . . . . . . . . . . . . . . . .

42 Chief Operating Officer

James H. Hardy, Jr. . . . . . . . . . . . . . .

55 Chief Supply Chain Officer

Karl-Heinz Maurath . . . . . . . . . . . . .

Matthew C. Mirchin . . . . . . . . . . . . .

Adam Peake . . . . . . . . . . . . . . . . . . .

President, International

President, North America

Executive Vice President, Global Marketing

Henry B. Stafford . . . . . . . . . . . . . . .

40 Chief Merchandising Officer

Kevin A. Plank has served as our Chief Executive Officer and Chairman of the Board of Directors since

1996. Mr. Plank also serves on the Board of Directors of the National Football Foundation and College Hall of
Fame, Inc. and is a member of the Board of Trustees of the University of Maryland College Park Foundation.

Kerry D. Chandler has been Chief Human Resources Officer since January 2015. Prior to joining our
Company, she served as Global Head of Human Resources for Christie’s International from February 2014 to
November 2014. Prior thereto, Ms. Chandler served as the Executive Vice President of Human Resources for the
National Basketball Association from January 2011 to January 2014 and Senior Vice President of Human
Resources from October 2007 to December 2010. Ms. Chandler also held executive positions in human resources
for the Walt Disney Company, including Senior Vice President of Human Resources for ESPN. Prior to that,
Ms. Chandler also held various senior management positions in Human Resources for IBM, and Motorola, Inc.
and she began her career at the McDonnell Douglas Corporation.

Brad Dickerson has been our Chief Financial Officer since March 2008. Prior to that, he served as Vice
President of Accounting and Finance from February 2006 to February 2008 and Corporate Controller from July
2004 to February 2006. Prior to joining our Company, Mr. Dickerson served as Chief Financial Officer of
Macquarie Aviation North America from January 2003 to July 2004 and in various capacities for Network
Building & Consulting from 1994 to 2003, including Chief Financial Officer from 1998 to 2003.

Kip J. Fulks has been Chief Operating Officer since September 2011. He currently oversees the Company’s

supply chain operations, information technology, security, product innovation and global footwear. He
previously served as President of Product from October 2013 to November 2014, as Executive Vice President of
Product from January 2011 to August 2011 and Senior Vice President of Outdoor and Innovation from March
2008 to December 2010. He also held various senior management positions in Outdoor, Sourcing, Quality
Assurance and Product Development from 1997 to February 2008.

James H. Hardy, Jr. has been Chief Supply Chain Officer since April 2012. Prior to joining our Company,

he served as Senior Vice President of Operations for Hospira, a leading manufacturer of pharmaceutical products,
from January 2011 to April 2012 and as Corporate Vice President of Supply Chain from October 2009 to
December 2010. Prior thereto, Mr. Hardy served as Senior Vice President of Supply Chain for Dial Corporation
from October 2007 to October 2009, as Executive Vice President of Product Supply for ConAgra Foods, Inc.
from 2005 to 2007 and held various supply chain management leadership positions at The Clorox Company and
The Procter & Gamble Company.

Karl-Heinz Maurath has been President of International since September 2012. Prior to joining our
Company, he served for 22 years in various leadership positions with adidas, including Senior Vice President,
adidas Group Latin America, from 2003 to 2012 with overall responsibility for Latin America including the
Reebok and Taylor Made businesses and Vice President, adidas Nordic, from 2000 to 2003 responsible for its
business in the Nordic region and the Baltic states. Prior thereto, Mr. Maurath served in other management
positions for adidas, including Managing Director of its business in Sweden and Thailand and Area Manger of
sales and marketing for its distributor and licensee businesses in Scandinavia and Latin America. Mr. Maurath, in
his capacity as a former director of a subsidiary of adidas, is currently named as a defendant in a criminal tax
investigation by regulatory authorities in Argentina related to certain tax matters of the adidas subsidiary in 2006.
In November 2013, the court ruled that there were currently no grounds upon which to indict Mr. Maurath.
Although the case remains open pending a final determination, the Company believes that the matter will
ultimately be dismissed. The Company believes this case in no way impacts Mr. Maurath’s integrity or ability to
serve as an executive officer.

Matthew C. Mirchin has been President of North America since December 2014. Prior to that, he served as

Executive Vice President, Global Marketing from October 2013 to November 2014, Senior Vice President,
Global Brand and Sports Marketing from March 2012 to September 2013 and Senior Vice President of Sports
Marketing from January 2010 to February 2012. He also held various senior management positions in Sales from
May 2005 to December 2009. Prior to joining our Company, Mr. Mirchin served as President of Retail and Team
Sports from 2002 to 2005 and President of Team Sports from 2001 to 2002 for Russell Athletic.Prior to joining
Russell Athletic, Mr. Mirchin served in various capacities at the Champion Division of Sara Lee Corporation
from 1994 to 2001 and started his career with the NBA.

Adam Peake has been the Executive Vice President of Global Marketing since December 2014. Prior to that

he served as Senior Vice President of Sales, North America and was the principal executive in charge of
North American Sales from January 2010 to November 2014. He also served as interim Vice President of
Footwear from May 2009 to December 2009 and held various senior management positions in Sales for the
Company from 2002 to 2009.

Henry B. Stafford has been Chief Merchandising Officer since December 2014. He is responsible for the

integration of the Company’s apparel, accessories and merchandizing globally and oversees the Company’s
direct to consumer sales channels. Prior to that, he served as President of North America from October 2013 to
November 2014, Senior Vice President of Apparel, Outdoor & Accessories from September 2011 to September
2013 and as Senior Vice President of Apparel from June 2010 to August 2011. Prior to joining our company, he
worked with American Eagle Outfitters as Senior Vice President and Chief Merchandising Officer of The AE
Brand from April 2007 to May 2010, General Merchandise Manager and Senior Vice President of Men’s and AE
Canadian Division from April 2005 to March 2007 and General Merchandise Manager and Vice President of
Men’s from September 2003 to March 2005. Prior thereto, Mr. Stafford served in a variety of capacities for Old
Navy from 1998 to 2003, including Divisional Merchandising Manager for Men’s Tops from 2001 to 2003, and
served as a buyer for Abercrombie and Fitch from 1996-1998.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Under Armour’s Class A Common Stock is traded on the New York Stock Exchange (“NYSE”) under the

symbol “UA”. As of January 31, 2015, there were 1,151 record holders of our Class A Common Stock and
5 record holders of Class B Convertible Common Stock which are beneficially owned by our Chief Executive
Officer and Chairman of the Board Kevin A. Plank. The following table sets forth by quarter the high and low
sale prices of our Class A Common Stock on the NYSE during 2014 and 2013.

2014

First Quarter (January 1 – March 31)
Second Quarter (April 1 – June 30)
Third Quarter (July 1 – September 30)
Fourth Quarter (October 1 – December 31)

2013

First Quarter (January 1 – March 31)
Second Quarter (April 1 – June 30)
Third Quarter (July 1 – September 30)
Fourth Quarter (October 1 – December 31)

High

Low

$62.40
$60.17
$73.42
$72.98

$40.98
$45.05
$56.79
$60.00

$25.97
$32.78
$40.82
$43.96

$22.16
$25.15
$29.73
$37.72

Stock Split

On June 11, 2012 and March 17, 2014 the Board of Directors declared two-for-one stock splits of the
Company’s Class A and Class B common stock, which were effected in the form of a 100% common stock
dividend distributed on July 9, 2012 and April 14, 2014, respectively. Stockholders’ equity and all references to
share and per share amounts herein and in the accompanying consolidated financial statements have been
retroactively adjusted to reflect each of the two-for-one stock splits for all periods presented.

Dividends

No cash dividends were declared or paid during 2014 or 2013 on any class of our common stock. We
currently anticipate we will retain any future earnings for use in our business. As a result, we do not anticipate
paying any cash dividends in the foreseeable future. In addition, we may be limited in our ability to pay
dividends to our stockholders under our credit facility. Refer to “Financial Position, Capital Resources and
Liquidity” within Management’s Discussion and Analysis and Note 6 to the Consolidated Financial Statements
for further discussion of our credit facility.

Stock Compensation Plans

The following table contains certain information regarding our equity compensation plans.

Plan Category

Equity compensation plans approved by security

holders

Equity compensation plans not approved by

security holders

Number of
securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)

Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)

Number of securities
remaining
available for future
issuance under equity
compensation plans
(excluding securities
reflected in column (a))
(c)

7,840,362

2,017,578

$8.28

$9.25

22,118,204

—

The number of securities to be issued upon exercise of outstanding options, warrants and rights issued under

equity compensation plans approved by security holders includes 5.0 million restricted stock units and deferred
stock units issued to employees, non-employees and directors of Under Armour; these restricted stock units and
deferred stock units are not included in the weighted average exercise price calculation above. The number of
securities remaining available for future issuance includes 19.3 million shares of our Class A Common Stock
under our Amended and Restated 2005 Omnibus Long-Term Incentive Plan (“2005 Stock Plan”) and 2.8 million
shares of our Class A Common Stock under our Employee Stock Purchase Plan. In addition to securities issued
upon the exercise of stock options, warrants and rights, the 2005 Stock Plan authorizes the issuance of restricted
and unrestricted shares of our Class A Common Stock and other equity awards. Refer to Note 12 to the
Consolidated Financial Statements for information required by this Item regarding the material features of each
plan.

The number of securities issued upon exercise of outstanding options, warrants and rights issued under
equity compensation plans not approved by security holders includes 1,920.0 thousand fully vested and non-
forfeitable warrants granted in 2006 to NFL Properties LLC as partial consideration for footwear promotional
rights, and 97.6 thousand shares of our Class A Common Stock issued in connection with the delivery of shares
pursuant to deferred stock units granted to certain of our marketing partners. These deferred stock units are not
included in the weighted average exercise price calculation above.

Refer to Note 12 to the Consolidated Financial Statements for a further discussion on the warrants. The

deferred stock units are issued to certain of our marketing partners in connection with their entering into
endorsement and other marketing services agreements with us. The terms of each agreement set forth the number
of deferred stock units to be granted and the delivery dates for the shares, which range from a 1 to 10 year period,
depending on the contract. The deferred stock units are non-forfeitable.

Stock Performance Graph

The stock performance graph below compares cumulative total return on Under Armour, Inc. Class A
Common Stock to the cumulative total return of the S&P 500 Index and S&P 500 Apparel, Accessories and
Luxury Goods Index from December 31, 2009 through December 31, 2014. The graph assumes an initial
investment of $100 in Under Armour and each index as of December 31, 2009 and reinvestment of any
dividends. The performance shown on the graph below is not intended to forecast or be indicative of possible
future performance of our common stock.

S
R
A
L
L
O
D

1100.00

1000.00

900.00

800.00

700.00

600.00

500.00

400.00

300.00

200.00

100.00

0.00

12/31/2009

12/31/2010

12/31/2011

12/31/2012

12/31/2013

12/31/2014

UNDER ARMOUR, INC.

S&P 500 INDEX

S&P 500 APPAREL, ACCESSORIES & LUXURY GOODS

Under Armour, Inc.
S&P 500
S&P 500 Apparel, Accessories & Luxury

12/31/2009

12/31/2010

12/31/2011

12/31/2012

12/31/2013

12/31/2014

$100.00
$100.00

$201.03
$115.06

$263.20
$117.49

$355.87
$136.30

$640.03
$180.44

$995.60
$205.14

Goods

$100.00

$141.20

$175.60

$180.13

$225.03

$227.25

ITEM 6.

SELECTED FINANCIAL DATA

The following selected financial data is qualified by reference to, and should be read in conjunction with,
the Consolidated Financial Statements, including the notes thereto, and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” included elsewhere in this Form 10-K.

Year Ended December 31,

(In thousands, except per share amounts)

2014

2013

2012

2011

2010

Net revenues
Cost of goods sold

Gross profit

Selling, general and administrative expenses

Income from operations

Interest expense, net
Other expense, net

Income before income taxes

Provision for income taxes

$3,084,370
1,572,164

$2,332,051
1,195,381

$1,834,921
955,624

$1,472,684
759,848

$1,063,927
533,420

1,512,206
1,158,251

1,136,670
871,572

353,955
(5,335)
(6,410)

342,210
134,168

265,098
(2,933)
(1,172)

260,993
98,663

879,297
670,602

208,695
(5,183)
(73)

203,439
74,661

712,836
550,069

162,767
(3,841)
(2,064)

156,862
59,943

530,507
418,152

112,355
(2,258)
(1,178)

108,919
40,442

Net income

$ 208,042

$ 162,330

$ 128,778 $

96,919

68,477

Net income available per common share
Basic
Diluted

Weighted average common shares

outstanding

Basic
Diluted
Dividends declared

$
$

0.98
0.95

$
$

0.77
0.75

$
$

0.62
0.61

$
$

0.47
0.46

$
$

0.34
0.33

213,227
219,380

210,696
215,958

208,686
212,760

206,280
210,104

— $

203,190
205,126
—

At December 31,

(In thousands)

2014

2013

2012

2011

2010

Cash and cash equivalents
Working capital (1)
Inventories
Total assets
Total debt, including current maturities
Total stockholders’ equity

$ 593,175
1,127,772
536,714
2,095,083
284,201
$1,350,300

$ 347,489
702,181
469,006
1,577,741
152,923
$1,053,354

$ 341,841
651,370
319,286
1,157,083
61,889
$ 816,922

$ 175,384
506,056
324,409
919,210
77,724
$ 636,432

$ 203,870
406,703
215,355
675,378
15,942
$ 496,966

(1) Working capital is defined as current assets minus current liabilities.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The information contained in this section should be read in conjunction with our Consolidated Financial

Statements and related notes and the information contained elsewhere in this Form 10-K under the captions
“Risk Factors,” “Selected Financial Data,” and “Business.”

Overview

We are a leading developer, marketer and distributor of branded performance apparel, footwear and
accessories. The brand’s moisture-wicking fabrications are engineered in many different designs and styles for
wear in nearly every climate to provide a performance alternative to traditional products. Our products are sold
worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe, as
well as by consumers with active lifestyles.

Our net revenues grew to $3,084.4 million in 2014 from $1,063.9 million in 2010. We believe that our

growth in net revenues has been driven by a growing interest in performance products and the strength of the
Under Armour brand in the marketplace. We plan to continue to increase our net revenues over the long term by
increased sales of our apparel, footwear and accessories, expansion of our wholesale distribution sales channel,
growth in our direct to consumer sales channel and expansion in international markets. Our direct to consumer
sales channel includes our brand and factory house stores and websites. New offerings for 2014 include
MagZipTM, ArmourVent® apparel, the UA SpeedFormTM Apollo running shoe, and UA ClutchFitTM Drive
basketball shoe.

A large majority of our products are sold in North America; however, we believe our products appeal to
athletes and consumers with active lifestyles around the globe. Internationally, our net revenues are generated
from a mix of wholesale sales to retailers, sales to distributors and sales through our direct to consumer sales
channels in Europe, Latin America, and Asia-Pacific. In addition, a third party licensee sells our products in
Japan and Korea.

Our operating segments include North America; Latin America; Europe, the Middle East and Africa
(“EMEA”); Asia-Pacific; and MapMyFitness. Due to the insignificance of the EMEA, Latin America, Asia and
MapMyFitness operating segments, they have been combined into other foreign countries and businesses for
disclosure purposes.

We believe there is an increasing recognition of the health benefits of an active lifestyle. We believe this

trend provides us with an expanding consumer base for our products. We also believe there is a continuing shift
in consumer demand from traditional non-performance products to performance products, which are intended to
provide better performance by wicking perspiration away from the skin, helping to regulate body temperature
and enhancing comfort. We believe that these shifts in consumer preferences and lifestyles are not unique to the
United States, but are occurring in a number of markets globally, thereby increasing our opportunities to
introduce our performance products to new consumers. We plan to continue to grow our business over the long
term through increased sales of our apparel, footwear and accessories, expansion of our wholesale distribution,
growth in our direct to consumer sales channel and expansion in international markets.

Although we believe these trends will facilitate our growth, we also face potential challenges that could
limit our ability to take advantage of these opportunities, including, among others, the risk of general economic
or market conditions that could affect consumer spending and the financial health of our retail customers. In
addition, we may not be able to effectively manage our growth and a more complex global business. We may not
consistently be able to anticipate consumer preferences and develop new and innovative products that meet
changing preferences in a timely manner. Furthermore, our industry is very competitive, and competition
pressures could cause us to reduce the prices of our products or otherwise affect our profitability. We also rely on

third-party suppliers and manufacturers outside the U.S. to provide fabrics and to produce our products, and
disruptions to our supply chain could harm our business. For a more complete discussion of the risks facing our
business, refer to the “Risk Factors” section included in Item 1A.

General

Net revenues comprise both net sales and license and other revenues. Net sales comprise sales from our

primary product categories, which are apparel, footwear and accessories. Our license and other revenues
primarily consist of fees paid to us by our licensees in exchange for the use of our trademarks on core products of
socks, team uniforms, baby and kids’ apparel, eyewear, inflatable footballs and basketballs, the distribution of
our products in Japan, and revenues associated with our MapMyFitness business.

Cost of goods sold consists primarily of product costs, inbound freight and duty costs, outbound freight
costs, handling costs to make products floor-ready to customer specifications, royalty payments to endorsers
based on a predetermined percentage of sales of selected products and write downs for inventory obsolescence.
The fabrics in many of our products are made primarily of petroleum-based synthetic materials. Therefore our
product costs, as well as our inbound and outbound freight costs, could be affected by long term pricing trends of
oil. In general, as a percentage of net revenues, we expect cost of goods sold associated with our apparel and
accessories to be lower than that of our footwear. A limited portion of cost of goods sold is associated with
license and other revenues, primarily website hosting and other costs related to our MapMyFitness business.

We include outbound freight costs associated with shipping goods to customers as cost of goods sold;

however, we include the majority of outbound handling costs as a component of selling, general and
administrative expenses. As a result, our gross profit may not be comparable to that of other companies that
include outbound handling costs in their cost of goods sold. Outbound handling costs include costs associated
with preparing goods to ship to customers and certain costs to operate our distribution facilities. These costs were
$55.3 million, $46.1 million and $34.8 million for the years ended December 31, 2014, 2013 and 2012,
respectively.

Our selling, general and administrative expenses consist of costs related to marketing, selling, product
innovation and supply chain and corporate services. Personnel costs are included in these categories based on the
employees’ function. Personnel costs include salaries, benefits, incentives and stock-based compensation related
to our employees. Our marketing costs are an important driver of our growth. Marketing costs consist primarily
of commercials, print ads, league, team, player and event sponsorships and depreciation expense specific to our
in-store fixture program for our concept shops. Selling costs consist primarily of costs relating to sales through
our wholesale channel, commissions paid to third parties and the majority of our direct to consumer sales channel
costs, including the cost of brand and factory house store leases. Product innovation and supply chain costs
include development and innovation costs associated with our apparel, footwear and accessories products and our
MapMyFitness business, along with our sourcing and distribution facility operating costs, and costs relating to
our Hong Kong and Guangzhou, China offices which help support product development, manufacturing, quality
assurance and sourcing efforts. Corporate services primarily consist of corporate facility operating costs and
company-wide administrative expenses.

Other expense, net consists of unrealized and realized gains and losses on our foreign currency derivative

financial instruments and unrealized and realized gains and losses on adjustments that arise from fluctuations in
foreign currency exchange rates relating to transactions generated by our international subsidiaries.

Results of Operations

The following table sets forth key components of our results of operations for the periods indicated, both in

dollars and as a percentage of net revenues:

(In thousands)

Net revenues
Cost of goods sold

Gross profit

Selling, general and administrative expenses

Income from operations

Interest expense, net
Other expense, net

Income before income taxes

Provision for income taxes

Net income

(As a percentage of net revenues)

Net revenues
Cost of goods sold

Gross profit

Selling, general and administrative expenses

Income from operations

Interest expense, net
Other expense, net

Income before income taxes

Provision for income taxes

Net income

Year Ended December 31,
2013

2012

2014

$3,084,370
1,572,164

$2,332,051
1,195,381

$1,834,921
955,624

1,512,206
1,158,251

1,136,670
871,572

353,955
(5,335)
(6,410)

342,210
134,168

265,098
(2,933)
(1,172)

260,993
98,663

879,297
670,602

208,695
(5,183)
(73)

203,439
74,661

$ 208,042

$ 162,330

$ 128,778

Year Ended December 31,

2014

2013

2012

100.0%
51.0

100.0%
51.3

100.0%
52.1

49.0
37.5

11.5
(0.2)
(0.2)

11.1
4.4

48.7
37.3

11.4
(0.1)
(0.1)

11.2
4.2

47.9
36.5

11.4
(0.3)
—

11.1
4.1

6.7%

7.0%

Consolidated Results of Operations

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Net revenues increased $752.3 million, or 32.3%, to $3,084.4 million in 2014 from $2,332.1 million in

2013. Net revenues by product category are summarized below:

(In thousands)

Apparel
Footwear
Accessories

Total net sales

License and other revenues

Total net revenues

Year Ended December 31,

2014

2013

$ Change

% Change

$2,291,520
430,987
275,425

2,997,932
86,438

$1,762,150
298,825
216,098

2,277,073
54,978

$529,370
132,162
59,327

720,859
31,460

30.0%
44.2
27.5

31.7
57.2

$3,084,370

$2,332,051

$752,319

32.3%

Net sales increased $720.8 million, or 31.7%, to $2,997.9 million in 2014 from $2,277.1 million in 2013.

The increase in net sales primarily reflects:

•

$220.5 million, or 31.5%, increase in North America direct to consumer sales driven by a 17% increase
in square footage in our factory house stores, including an 7% increase in new stores, since December
2013, along with continued growth in our e-commerce business;

$128.5 million, or 108.4% increase in net sales in other foreign countries, primarily due to increased
distribution and unit volume growth in our EMEA and Latin America operating segments; and

unit growth driven by increased distribution and new offerings in multiple product categories,
including continued growth of our training, outdoor and golf apparel product lines, along with growth
in footwear due to a broader assortment of running and basketball shoes, including our new UA
SpeedForm™ footwear.

License and other revenues increased $31.4 million, or 57.2%, to $86.4 million in 2014 from $55.0 million

in 2013. This increase in license and other revenues was primarily due to an increase of $18.1 million in revenues
in our MapMyFitness operating segment, along with increased distribution and unit volume growth of our
licensed products.

Gross profit increased $375.5 million to $1,512.2 million in 2014 from $1,136.7 million in 2013. Gross
profit as a percentage of net revenues, or gross margin, increased 30 basis points to 49.0% in 2014 compared to
48.7% in 2013. The increase in gross margin percentage was primarily driven by the following:

•

approximate 20 basis point increase driven primarily by decreased sales mix of excess inventory
through our factory house outlet stores. We expect the favorable factory house outlet store sales mix
impact will continue into 2015;

approximate 20 basis point increase as a result of higher duty costs recorded during the prior year on
certain products imported in previous years. We do not expect this favorable impact to continue during
2015;

The above increases were partially offset by:

•

approximate 10 basis point decrease driven by unfavorable foreign currency exchange rate fluctuations.
We expect the unfavorable impact of foreign exchange rate fluctuations to continue in 2015.

Selling, general and administrative expenses increased $286.7 million to $1,158.3 million in 2014 from
$871.6 million in 2013. As a percentage of net revenues, selling, general and administrative expenses increased
to 37.5% in 2014 from 37.3% in 2013. These changes were primarily attributable to the following:

• Marketing costs increased $86.5 million to $333.0 million in 2014 from $246.5 million in 2013

primarily due to increased global sponsorship of professional teams and athletes. As a percentage of net
revenues, marketing costs increased to 10.8% in 2014 from 10.5% in 2013 primarily due to the items
noted above.

•

Selling costs increased $81.0 million to $320.9 million in 2014 from $239.9 million in 2013. This
increase was primarily due to higher personnel and other costs incurred for the continued expansion of
our direct to consumer distribution channel, including increased investment in our factory house and
brand house store strategies. As a percentage of net revenues, selling costs increased to 10.4% in 2014
from 10.3% in 2013.

Product innovation and supply chain costs increased $82.4 million to $291.6 million in 2014 from
$209.2 million in 2013 primarily due to higher personnel costs to support our growth in net revenues,
along with increased investment in our MapMyFitness business. As a percentage of net revenues,
product innovation and supply chain costs increased to 9.4% in 2014 from 9.0% in 2013 primarily due
to the items noted above.

• Corporate services costs increased $36.8 million to $212.8 million in 2014 from $176.0 million in 2013
primarily due to higher personnel and other administrative costs necessary to support our growth. As a
percentage of net revenues, corporate services costs decreased to 6.9% in 2014 from 7.5% in 2013
primarily due to higher incentive compensation in the prior year.

Income from operations increased $88.9 million, or 33.5%, to $354.0 million in 2014 from $265.1 million in

2013. Income from operations as a percentage of net revenues increased to 11.5% in 2014 from 11.4% in 2013.

Interest expense, net increased $2.4 million to $5.3 million in 2014 from $2.9 million in 2013. This increase

was primarily due to the $150.0 million and $100.0 million term loans we entered into during 2014.

Other expense, net increased $5.2 million to $6.4 million in 2014 from $1.2 million in 2013. This increase

was due to higher net losses in 2014 on the combined foreign currency exchange rate changes on transactions
denominated in foreign currencies and our foreign currency derivative financial instruments as compared to
2013.

Provision for income taxes increased $35.5 million to $134.2 million in 2014 from $98.7 million in 2013.

Our effective tax rate was 39.2% in 2014 compared to 37.8% in 2013. Our effective tax rate for 2014 was higher
than the effective tax rate for 2013 primarily due to increased foreign investments driving a lower proportion of
foreign taxable income in 2014 and state tax credits received in 2013.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

Net revenues increased $497.2 million, or 27.1%, to $2,332.1 million in 2013 from $1,834.9 million in

2012. Net revenues by product category are summarized below:

(In thousands)

Apparel
Footwear
Accessories

Total net sales

License and other revenues

Total net revenues

Year Ended December 31,

2013

2012

$ Change

% Change

$1,762,150
298,825
216,098

2,277,073
54,978

$1,385,350
238,955
165,835

1,790,140
44,781

$376,800
59,870
50,263

486,933
10,197

27.2%
25.1
30.3

27.2
22.8

$2,332,051

$1,834,921

$497,130

27.1%

Net sales increased $487.0 million, or 27.2%, to $2,277.1 million in 2013 from $1,790.1 million in 2012 as

noted in the table above. The increase in net sales primarily reflects:

•

$176.8 million, or 33.2%, increase in direct to consumer sales, which includes 18 additional retail
stores, or a 16.5% growth, since December 31, 2012, and continued growth in our e-commerce
business;

unit growth driven by increased distribution and new offerings in multiple product categories, most
significantly in our training and hunting apparel product categories, including our new UA
HEATGEAR® Sonic and UA COLDGEAR® Infrared product lines along with continued growth in our
UA Storm and Charged Cotton® platforms, and running apparel and footwear, including UA Spine;
and

increased average selling prices driven primarily from our higher priced apparel products, including
our mountain category and women’s UA Studio line.

License and other revenues increased $10.2 million, or 22.8%, to $55.0 million in 2013 from $44.8 million

in 2012. This increase in license and other revenues was primarily a result of increased distribution and continued
unit volume growth by our licensees.

Gross profit increased $257.4 million to $1,136.7 million in 2013 from $879.3 million in 2012. Gross profit
as a percentage of net revenues, or gross margin, increased 80 basis points to 48.7% in 2013 compared to 47.9%
in 2012. The increase in gross margin percentage was primarily driven by the following:

•

approximate 60 basis point increase driven by sales mix. The sales mix impact was primarily driven by
decreased sales mix of excess inventory through our factory house outlet stores at lower prices, along
with a lower proportion of North American wholesale footwear sales.

approximate 50 basis point increase driven by lower North American apparel and accessories product
input costs.

The above increases were partially offset by the below decrease:

•

approximate 20 basis point decrease as a result of higher duty costs on certain products previously
imported, which were identified and reserved for during the third quarter of 2013.

Selling, general and administrative expenses increased $201.0 million to $871.6 million in 2013 from
$670.6 million in 2012. As a percentage of net revenues, selling, general and administrative expenses increased
to 37.3% in 2013 from 36.5% in 2012. These changes were primarily attributable to the following:

• Marketing costs increased $41.1 million to $246.5 million in 2013 from $205.4 million in 2012

primarily due to increased sponsorship of collegiate and professional teams and athletes and marketing
to support our international expansion. As a percentage of net revenues, marketing costs decreased to
10.5% in 2013 from 11.2% in 2012.

•

Selling costs increased $63.9 million to $239.9 million in 2013 from $176.0 million in 2012. This
increase was primarily due to higher personnel and other costs incurred primarily for the continued
expansion of our direct to consumer distribution channel. As a percentage of net revenues, selling costs
increased to 10.3% in 2013 from 9.6% in 2012.

Product innovation and supply chain costs increased $50.7 million to $209.2 million in 2013 from
$158.5 million in 2012 primarily due to higher incentive compensation as well as higher personnel
costs to support our growth in net revenues. As a percentage of net revenues, product innovation and
supply chain costs increased to 9.0% in 2013 from 8.6% in 2012.

• Corporate services costs increased $45.3 million to $176.0 million in 2013 from $130.7 million in
2012. This increase was primarily attributable to higher incentive compensation as well as higher
corporate personnel costs necessary to support our growth. As a percentage of net revenues, corporate
services costs increased to 7.5% in 2013 from 7.1% in 2012.

Income from operations increased $56.4 million, or 27.0%, to $265.1 million in 2013 from $208.7 million in

2012. Income from operations as a percentage of net revenues was unchanged at 11.4% in 2013 and 2012.

Interest expense, net decreased $2.3 million to $2.9 million in 2013 from $5.2 million in 2012. This
decrease was primarily due to the refinancing in December 2012 of the debt assumed in connection with the
acquisition of our corporate headquarters.

Other expense, net increased $1.1 million to $1.2 million in 2013 from $0.1 million in 2012. This increase

was due to higher net losses in 2013 on the combined foreign currency exchange rate changes on transactions
denominated in foreign currencies and our foreign currency derivative financial instruments as compared to
2012.

Provision for income taxes increased $24.0 million to $98.7 million in 2013 from $74.7 million in 2012. Our
effective tax rate was 37.8% in 2013 compared to 36.7% in 2012. Our effective tax rate for 2013 was higher than
the effective tax rate for 2012 primarily due to increased foreign investments driving a lower proportion of
foreign taxable income, along with increased non-deductible expenses, including acquisition related expenses, in
2013.

Segment Results of Operations

The net revenues and operating income (loss) associated with our segments are summarized in the following

tables. The majority of corporate expenses within North America have not been allocated to other foreign
countries and businesses.

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Net revenues by segment are summarized below:

(In thousands)

2014

2013

$ Change

% Change

North America
Other foreign countries and businesses

Total net revenues

$2,796,390
287,980

$2,193,739
138,312

$602,651
149,668

$3,084,370

$2,332,051

$752,319

27.5%
108.2

32.3%

Year Ended December 31,

Net revenues in our North American operating segment increased $602.7 million to $2,796.4 million in

2014 from $2,193.7 million in 2013 primarily due to the items discussed above in the Consolidated Results of
Operations. Net revenues in other foreign countries and businesses increased by $149.7 million to $288.0 million
in 2014 from $138.3 million in 2013 primarily due to continued international expansion and increased unit sales
growth in our EMEA and Latin America operating segments, along with an increase of $18.1 million in revenues
from our MapMyFitness operating segment.

Operating income (loss) by segment is summarized below:

(In thousands)

North America
Other foreign countries and businesses

Total operating income

Year Ended December 31,

2014

2013

$ Change

% Change

$372,347
(18,392)

$271,338
(6,240)

$101,009
(12,152)

$353,955

$265,098

$ 88,857

37.2%
194.7

33.5%

Operating income in our North American operating segment increased $101.0 million to $372.3 million in

2014 from $271.3 million in 2013 primarily due to the items discussed above in the Consolidated Results of
Operations. Operating loss in other foreign countries and businesses increased by $12.2 million to $18.4 million
in 2014 from $6.2 million in 2013. This increase is primarily due to an operating loss in our MapMyFitness
operating segment of $13.1 million.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

Net revenues by segment are summarized below:

(In thousands)

2013

2012

$ Change

% Change

North America
Other foreign countries and businesses

Total net revenues

$2,193,739
138,312

$1,726,733
108,188

$467,006
30,124

$2,332,051

$1,834,921

$497,130

27.0%
27.8

27.1%

Year Ended December 31,

Net revenues in our North American operating segment increased $467.0 million to $2,193.7 million in

2013 from $1,726.7 million in 2012 primarily due to the items discussed above in the Consolidated Results of
Operations. Net revenues in other foreign countries and businesses increased by $30.1 million to $138.3 million
in 2013 from $108.2 million in 2012 primarily due to unit sales growth in our EMEA and Asia operating
segments and to distributors in our Latin American operating segment.

Operating income (loss) by segment is summarized below:

(In thousands)

North America
Other foreign countries and businesses

Total operating income

Year Ended December 31,

2013

2012

$ Change

% Change

$271,338
(6,240)

$200,084
8,611

$ 71,254
(14,851)

$265,098

$208,695

$ 56,403

35.6%

(172.5)

27.0%

Operating income in our North American operating segment increased $71.2 million to $271.3 million in

2013 from $200.1 million in 2012 primarily due to the items discussed above in the Consolidated Results of
Operations. Operating income (loss) in other foreign countries and businesses decreased by $14.8 million to
$(6.2) million in 2013 from $8.6 million in 2012 primarily due to our continued investment to support our
international expansion in our EMEA, Asia and Latin American operating segments. Investments in 2013
primarily include the opening of brand and factory house stores in China and offices and distribution facilities in
Brazil and Chile, along with higher personnel costs and incentive compensation.

Seasonality

The following table sets forth certain financial information for the periods indicated. The data is prepared on

the same basis as the audited consolidated financial statements included elsewhere in this Form 10-K. All
recurring, necessary adjustments are reflected in the data below.

Quarter Ended (unaudited)

(In thousands)

Mar 31,
2013

Jun 30,
2013

Sep 30,
2013

Dec 31,
2013

Mar 31,
2014

Jun 30,
2014

Sep 30,
2014

Dec 31,
2014

Net revenues
Gross profit
Marketing SG&A expenses
Other SG&A expenses
Income from operations

$471,608
216,551
62,841
140,218
13,492

$454,541
219,631
48,952
138,369
32,310

$723,146
350,135
74,175
155,131
120,829

$682,756
350,353
60,521
191,365
98,467

$641,607
300,690
87,977
185,857
26,856

$609,654
299,952
70,854
194,404
34,694

$937,908
465,300
99,756
219,438
146,106

$895,201
446,264
74,462
225,503
146,299

(As a percentage of annual totals)
Net revenues
Gross profit
Marketing SG&A expenses
Other SG&A expenses
Income from operations

20.2%
19.1%
25.4%
22.4%
5.1%

19.5%
19.3%
19.9%
22.2%
12.2%

31.0%
30.8%
30.1%
24.8%
45.6%

29.3%
30.8%
24.6%
30.6%
37.1%

20.8%
19.9%
26.4%
22.5%
7.6%

19.8%
19.8%
21.3%
23.6%
9.8%

30.4%
30.8%
29.9%
26.6%
41.3%

29.0%
29.5%
22.4%
27.3%
41.3%

Financial Position, Capital Resources and Liquidity

Our cash requirements have principally been for working capital and capital expenditures. We fund our
working capital, primarily inventory, and capital investments from cash flows from operating activities, cash and
cash equivalents on hand and borrowings available under our credit and long term debt facilities. Our working
capital requirements generally reflect the seasonality and growth in our business as we recognize the majority of
our net revenues in the back half of the year. Our capital investments have included expanding our in-store
fixture and branded concept shop program, improvements and expansion of our distribution and corporate
facilities to support our growth, leasehold improvements to our new brand and factory house stores, and
investment and improvements in information technology systems.

Our inventory strategy is focused on continuing to meet consumer demand while improving our inventory
efficiency over the long term by putting systems and processes in place to improve our inventory management.
These systems and processes are designed to improve our forecasting and supply planning capabilities. In
addition to systems and processes, key areas of focus that we believe will enhance inventory performance are
added discipline around the purchasing of product, production lead time reduction, and better planning and
execution in selling of excess inventory through our factory house stores and other liquidation channels.

In December 2013, we completed our acquisition of MapMyFitness. The purchase price was initially funded

through $50.0 million cash on hand and $100.0 million in debt under our revolving credit facility. In May 2014,
we repaid the $100.0 million with a portion of the $150.0 million proceeds from a term loan under our credit
facility. In January 2015, we completed our acquisition of Endomondo. The purchase price was funded with the
proceeds from our $100.0 million delayed draw term loan, which we drew in November 2014, for general
corporate purposes.

We believe our cash and cash equivalents on hand, cash from operations and borrowings available to us
under our credit and long term debt facilities and other sources of liquidity are adequate to meet our liquidity
needs and capital expenditure requirements for at least the next twelve months. In connection with our pending
acquisition of MyFitnessPal, Inc., we are pursuing an amendment to increase the borrowings available under our
existing $650.0 million credit agreement. We currently anticipate increasing both term loan borrowings and
revolving credit facility commitments under the credit agreement. The acquisition is expected to be funded
through a combination of the increased term loan borrowings, a draw on the increased revolving credit facility
and cash on hand. See “Credit Facility” below. Although we believe we have adequate sources of liquidity over
the long term, an economic recession or a slow recovery could adversely affect our business and liquidity (refer
to the “Risk Factors” section included in Item 1A). In addition, instability in or tightening of the capital markets
could adversely affect our ability to obtain additional capital to grow our business and will affect the cost and
terms of such capital.

At December 31, 2014, approximately 21.8% of our cash was held by our foreign subsidiaries where a
repatriation of those funds to the United States would likely result in an additional tax expense. However, based
on the capital and liquidity needs of our foreign operations, as well as the status of current tax law, we intend to
indefinitely reinvest these funds outside the United States. In addition, our United States operations do not
require the repatriation of these funds to meet our currently projected liquidity needs. Should we require
additional capital in the United States, we may elect to repatriate indefinitely reinvested foreign funds or raise
capital in the United States. If we were to repatriate indefinitely reinvested foreign funds, we would be required
to accrue and pay additional U.S. taxes less applicable foreign tax credits. Determining the tax liability that
would arise if these earnings were repatriated is not practical.

Cash Flows

The following table presents the major components of net cash flows used in and provided by operating,

investing and financing activities for the periods presented:

(In thousands)

Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash and cash

Year Ended December 31,

2014

2013

2012

$ 219,033
(152,312)
182,306

$ 120,070
(238,102)
126,795

$199,761
(46,931)
12,297

equivalents

(3,341)

(3,115)

1,330

Net increase in cash and cash equivalents

$ 245,686

5,648

$166,457

Operating Activities

Operating activities consist primarily of net income adjusted for certain non-cash items. Adjustments to net

income for non-cash items include depreciation and amortization, unrealized foreign currency exchange rate
gains and losses, losses on disposals of property and equipment, stock-based compensation, deferred income
taxes and changes in reserves and allowances. In addition, operating cash flows include the effect of changes in
operating assets and liabilities, principally inventories, accounts receivable, income taxes payable and receivable,
prepaid expenses and other assets, accounts payable and accrued expenses.

Cash provided by operating activities increased $98.9 million to $219.0 million in 2014 from $120.1 million
in 2013. The increase in cash provided by operating activities was due to adjustments to net income for non-cash
items, which increased $57.5 million and an increase in net income of $45.7 million, partially offset by decreased
net cash flows from operating assets and liabilities of $4.3 million year over year.

Adjustments to net income for non-cash items increased in 2014 as compared to 2013 primarily due to
higher depreciation and amortization related to acquired intangible assets and increased capital expenditure,
along with a higher net increase in reserves and allowances in 2014 as compared to 2013.

The decrease in net cash flows related to changes in operating assets and liabilities period over period was

primarily driven by the following:

•

a decrease in inventory investments of $72.2 million due to early deliveries of product and incremental
inventory investments in the prior year.

This decrease was partially offset by:

•

a larger increase in accounts receivable of $65.1 million in 2014 as compared to 2013, primarily due to
a higher proportion of sales to our international customers with longer payment terms compared to the
prior year.

Cash provided by operating activities decreased $79.7 million to $120.1 million in 2013 from

$199.8 million in 2012. The decrease in cash provided by operating activities was due to decreased net cash
flows from operating assets and liabilities of $142.4 million, partially offset by an increase in net income of
$33.6 million and adjustments to net income for non-cash items, which increased $29.1 million year over year.
The increase in net cash flows related to changes in operating assets and liabilities period over period was
primarily driven by the following:

•

an increase in inventory investments of $161.6 million. Inventory grew in 2013 at a rate higher than
revenue growth primarily due to supplier delivery challenges experienced in 2012, early deliveries of

product in 2013 to manage supplier capacity and improve fill rates, along with incremental inventory
investments to support our growing international and direct to consumer businesses.

This increase was partially offset by:

•

a larger increase in accrued expenses and other liabilities of $34.5 million in 2013 as compared to
2012, primarily due to higher accruals for our performance incentive plan as compared to 2012.

Adjustments to net income for non-cash items increased in 2013 as compared to 2012 primarily due to an
increase in stock-based compensation and higher depreciation and amortization in 2013 as compared to 2012.

Investing Activities

Cash used in investing activities decreased $85.8 million to $152.3 million in 2014 from $238.1 million in

2013. This decrease in cash used in investing activities was primarily related to the purchase of MapMyFitness in
the prior year, partially offset by increased capital expenditures to support international expansion and our brand
and factory house strategies in the current year.

Cash used in investing activities increased $191.2 million to $238.1 million in 2013 from $46.9 million in

2012. This increase in cash used in investing activities was primarily related to the purchase of MapMyFitness in
December 2013 and increased capital expenditures to improve and expand our offices and distribution facilities
and support our brand and factory house strategies in 2013.

Total capital expenditures were $145.4 million, $91.6 million and $62.8 million in 2014, 2013 and 2012,

respectively. Capital expenditures for 2015 are expected to be in the range of $280 million to $290 million,
comprised primarily of investments in a new distribution facility in North America, expansion of our corporate
headquarters, retail store buildouts and fixtures.

Financing Activities

Cash provided by financing activities increased $55.5 million to $182.3 million in 2014 from $126.8 million
in 2013. This increase was primarily due to $150.0 million of net borrowings under our credit facility in 2014, as
compared to $100.0 million of borrowings under our revolving credit facility in 2013.

Cash provided by financing activities increased $114.5 million to $126.8 million in 2013 from $12.3 million

in 2012. This increase was primarily due to $100.0 million borrowed under our revolving credit facility to
partially fund the acquisition of MapMyFitness.

Credit Facility

In May 2014 we entered into a new unsecured $650.0 million credit agreement and terminated our prior

$325.0 million revolving credit facility. The credit agreement has a term of five years through May 2019, with
permitted extensions under certain circumstances. The credit agreement provides for a committed revolving
credit facility of $400.0 million, in addition to an aggregate term loan commitment of $250.0 million, consisting
of a $150.0 million term loan, drawn at the closing of the credit agreement, and $100.0 million delayed draw
term loan drawn in November 2014 for general corporate purposes. At our request and the lenders’ consent, the
revolving credit facility or term loans may be increased by up to an additional $150.0 million. Borrowings under
the revolving credit facility may be made in U.S. Dollars, Euros, Pounds Sterling, Japanese Yen and Canadian
Dollars. Up to $50.0 million of the facility may be used to support letters of credit and up to $50.0 million of the
facility may be used to support swingline loans. There were no significant letters of credit and no swingline loans
outstanding as of December 31, 2014. In connection with our pending acquisition of MyFitnessPal, Inc., we are
pursuing an amendment to increase the borrowings available under the credit agreement. We currently anticipate
increasing both term loan borrowings and revolving credit facility commitments under the credit agreement.

The credit agreement contains negative covenants that, subject to significant exceptions, limit our ability to,
among other things, incur additional indebtedness, make restricted payments, pledge our assets as security, make
investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into
transactions with affiliates. We are also required to maintain a ratio of consolidated EBITDA, as defined in the
credit agreement, to consolidated interest expense of not less than 3.50 to 1.00 and we are not permitted to allow
the ratio of consolidated total indebtedness to consolidated EBITDA to be greater than 3.25 to 1.00. As of
December 31, 2014, we were in compliance with these ratios. In addition, the credit agreement contains events of
default that are customary for a facility of this nature, and includes a cross default provision whereby an event of
default under other material indebtedness, as defined in the credit agreement, will be considered an event of
default under the credit agreement.

Borrowings under the credit agreement bear interest at a rate per annum equal to, at our option, either (a) an
alternate base rate, or (b) the adjusted LIBOR rate, plus in each case an applicable margin. The applicable margin
for loans will be adjusted by reference to the Pricing Grid based on the consolidated leverage ratio and ranges
between 1.00% to 1.25% for adjusted LIBOR rate loans and 0.00% to 0.25% for alternate base rate loans. The
interest rate under both term loans was 1.2% during the year ended December 31, 2014. No balance was
outstanding under our revolving credit facility as of December 31, 2014. Additionally, we pay a commitment fee
on the average daily unused amount of the revolving credit facility, a ticking fee on the undrawn amounts under
the delayed draw term loan and certain fees with respect to letters of credit. As of December 31, 2014, the
commitment fee was 12.5 basis points.

We used $100.0 million of the proceeds from the $150.0 million term loan to repay the $100.0 million
outstanding under our revolving credit facility. We incurred and capitalized $1.7 million in deferred financing
costs in connection with the credit facility.

Other 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.
At December 31, 2014, 2013 and 2012, the outstanding principal balance under these agreements was
$2.0 million, $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 3.1%, 3.3% and 3.7% for the years ended December 31, 2014, 2013 and 2012, respectively.

In December 2012, we entered into a $50.0 million recourse loan collateralized by the land, buildings and
tenant improvements comprising our 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 loan includes covenants and events of default substantially consistent with the new credit
agreement discussed above. The loan also requires prior approval of the lender for certain matters related to the
property, including transfers of any interest in the property. As of December 31, 2014, 2013 and 2012, the
outstanding balance on the loan was $46.0 million, $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, 2014, 2013 and 2012.

Interest expense, net was $5.3 million, $2.9 million and $5.2 million for the years ended December 31,

2014, 2013 and 2012, respectively. Interest expense includes the amortization of deferred financing costs and
interest expense under the credit and long term debt facilities.

We monitor the financial health and stability of our lenders under the credit and other long term debt
facilities, however during any period of significant instability in the credit markets lenders could be negatively
impacted in their ability to perform under these facilities.

Acquisitions

MapMyFitness

On December 6, 2013, we acquired 100% of the outstanding equity of MapMyFitness, Inc., a digital
connected fitness platform, for $150.0 million in cash. The purchase price was initially financed through
$100.0 million in debt under our revolving credit facility and cash on hand.

On January 5, 2015, we acquired 100% of the outstanding equity of Endomondo ApS, a Denmark-based
connected fitness company for $85 in cash million, subject to adjustment for working capital. In connection with
this acquisition, we incurred acquisition related expenses of approximately $0.8 million during the year ended
December 31, 2014. These expenses were included in selling, general and administrative expenses on the
consolidated statements of income. The operating results for this acquisition will be included in our consolidated
statements of income from the date of acquisition. We are currently in the process of assessing the fair value of
the assets acquired and liabilities assumed, which is expected to be final during the first quarter of 2015.

On February 3, 2015, we entered into an agreement to acquire MyFitnessPal, Inc (“MyFitnessPal”). The
purchase price for the acquisition will be $475 million in cash, which will be adjusted to reflect our acquisition of
MyFitnessPal at the closing on a debt free basis with MyFitnessPal’s transaction expenses borne by the sellers. In
addition, the aggregate purchase price payable at the closing is subject to an upward adjustment to reflect the
amount of net cash held by MyFitnessPal at closing. The acquisition is currently expected to close during the first
quarter of 2015, subject to the satisfaction of customary closing conditions, including among others, regulatory
approvals, the continuing accuracy of representations and warranties and the execution of noncompetition
agreements by certain key employee stockholders. The acquisition is expected to be funded through a
combination of increased term loan borrowings, a draw on the increased revolving credit facility and cash on
hand.

Contractual Commitments and Contingencies

We lease warehouse space, office facilities, space for our brand and factory house stores and certain
equipment under non-cancelable operating and capital leases. The leases expire at various dates through 2028,
excluding extensions at our option, and contain various provisions for rental adjustments. In addition, this table
includes executed lease agreements for brand and factory house stores that we did not yet occupy as of
December 31, 2014. The operating leases generally contain renewal provisions for varying periods of time. Our
significant contractual obligations and commitments as of December 31, 2014 as well as significant agreements
entered into during the period after December 31, 2014 through the date of this report are summarized in the
following table:

(in thousands)

Contractual obligations
Long term debt obligations (1)
Operating lease obligations (2)
Product purchase obligations (3)
Sponsorships and other (4)

Total

Payments Due by Period

Total

Less Than
1 Year

1 to 3 Years

3 to 5 Years

More Than
5 Years

$ 316,099
472,575
884,101
392,926

35,202
56,452
884,101
90,056

$ 66,122
109,251

—

128,388

$173,176
92,658
—
78,137

$ 41,599
214,214

—
96,345

$2,065,701

$1,065,811

$303,761

$343,971

$352,158

(1)

(2)

Includes estimated interest payments based on applicable fixed and currently effective floating interest rates
as of December 31, 2014, timing of scheduled payments, and the term of the debt obligations.
Includes the minimum payments for operating lease obligations. The operating lease obligations do not
include any contingent rent expense we may incur at our brand and factory house stores based on future

sales above a specified minimum or payments made for maintenance, insurance and real estate taxes.
Contingent rent expense was $11.0 million for the year ended December 31, 2014.

(3) We generally place orders with our manufacturers at least three to four months in advance of expected

(4)

future sales. The amounts listed for product purchase obligations primarily represent our open production
purchase orders with our manufacturers for our apparel, footwear and accessories, including expected
inbound freight, duties and other costs. These open purchase orders specify fixed or minimum quantities of
products at determinable prices. The product purchase obligations also includes fabric commitments with
our suppliers, which secure a portion of our material needs for future seasons. The reported amounts exclude
product purchase liabilities included in accounts payable as of December 31, 2014.
Includes sponsorships with professional teams, professional leagues, colleges and universities, individual
athletes, athletic events and other marketing commitments in order to promote our brand. Some of these
sponsorship agreements provide for additional performance incentives and product supply obligations. It is
not possible to determine how much we will spend on product supply obligations on an annual basis as
contracts generally do not stipulate specific cash amounts to be spent on products. The amount of product
provided to these sponsorships depends on many factors including general playing conditions, the number of
sporting events in which they participate and our decisions regarding product and marketing initiatives. In
addition, it is not possible to determine the performance incentive amounts we may be required to pay under
these agreements as they are primarily subject to certain performance based and other variables. The
amounts listed above are the fixed minimum amounts required to be paid under these agreements.

The table above excludes a liability of $31.3 million for uncertain tax positions, including the related

interest and penalties, recorded in accordance with applicable accounting guidance, as we are unable to
reasonably estimate the timing of settlement. Refer to Note 10 to the Consolidated Financial Statements for a
further discussion of our uncertain tax positions.

Off-Balance Sheet Arrangements

In connection with various contracts and agreements, we have agreed to indemnify counterparties against
certain third party claims relating to the infringement of intellectual property rights and other items. Generally,
such indemnification obligations do not apply in situations in which our counterparties are grossly negligent,
engage in willful misconduct, or act in bad faith. Based on our historical experience and the estimated probability
of future loss, we have determined the fair value of such indemnifications is not material to our financial position
or results of operations.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America. To prepare these financial statements, we must make
estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as
the disclosures of contingent assets and liabilities. Actual results could be significantly different from these
estimates. We believe the following discussion addresses the critical accounting policies that are necessary to
understand and evaluate our reported financial results.

Revenue Recognition

Net revenues consist of both net sales and license and other revenues. Net sales are recognized upon transfer

of ownership, including passage of title to the customer and transfer of risk of loss related to those goods.
Transfer of title and risk of loss are based upon shipment under free on board shipping point for most goods or
upon receipt by the customer depending on the country of the sale and the agreement with the customer. In some
instances, transfer of title and risk of loss take place at the point of sale, for example at our brand and factory
house stores. We may also ship product directly from our supplier to the customer and recognize revenue when
the product is delivered to and accepted by the customer. License and other revenues are primarily recognized

based upon shipment of licensed products sold by our licensees. Sales taxes imposed on our revenues from
product sales are presented on a net basis on the consolidated statements of income and therefore do not impact
net revenues or costs of goods sold.

We record reductions to revenue for estimated customer returns, allowances, markdowns and discounts. We
base our estimates on historical rates of customer returns and allowances as well as the specific identification of
outstanding returns, markdowns and allowances that have not yet been received by us. The actual amount of
customer returns and allowances, which is inherently uncertain, may differ from our estimates. If we determine
that actual or expected returns or allowances are significantly higher or lower than the reserves we established,
we would record a reduction or increase, as appropriate, to net sales in the period in which we make such a
determination. Provisions for customer specific discounts are based on contractual obligations with certain major
customers. Reserves for returns, allowances, markdowns and discounts are recorded as an offset to accounts
receivable as settlements are made through offsets to outstanding customer invoices. As of December 31, 2014
and 2013, there were $68.9 million and $43.8 million, respectively, in reserves for customer returns, allowances,
markdowns and discounts.

Allowance for Doubtful Accounts

We make ongoing estimates relating to the collectability of accounts receivable and maintain an allowance
for estimated losses resulting from the inability of our customers to make required payments. In determining the
amount of the reserve, we consider historical levels of credit losses and significant economic developments
within the retail environment that could impact the ability of our customers to pay outstanding balances and
make judgments about the creditworthiness of significant customers based on ongoing credit evaluations.
Because we cannot predict future changes in the financial stability of our customers, actual future losses from
uncollectible accounts may differ from estimates. If the financial condition of customers were to deteriorate,
resulting in their inability to make payments, a larger reserve might be required. In the event we determine a
smaller or larger reserve is appropriate, we would record a benefit or charge to selling, general and administrative
expense in the period in which such a determination was made. As of December 31, 2014 and 2013, the
allowance for doubtful accounts was $3.7 million and $2.9 million, respectively.

Inventory Valuation and Reserves

We value our inventory at standard cost which approximates landed cost, using the first-in, first-out method

of cost determination. Market value is estimated based upon assumptions made about future demand and retail
market conditions. If we determine that the estimated market value of our inventory is less than the carrying
value of such inventory, we record a charge to cost of goods sold to reflect the lower of cost or market. If actual
market conditions are less favorable than those we projected, further adjustments may be required that would
increase the cost of goods sold in the period in which such a determination was made.

Goodwill, Intangible Assets and Long-Lived Assets

Goodwill and intangible assets are recorded at their estimated fair values at the date of acquisition and are

allocated to the reporting units that are expected to receive the related benefits. Goodwill and indefinite lived
intangible assets are not amortized and are required to be tested for impairment at least annually or sooner
whenever events or changes in circumstances indicate that the assets may be impaired. In conducting an annual
impairment test, we first review qualitative factors to determine whether it is more likely than not that the fair
value of the reporting unit is less than its carrying amount. If factors indicate that is the case, we perform a
quantitative assessment over relevant reporting units, analyzing the expected present value of future cash flows
and quantify the amount of impairment, if any. We perform our annual impairment tests in the fourth quarter of
each fiscal year.

We continually evaluate whether events and circumstances have occurred that indicate the remaining

estimated useful life of long-lived assets may warrant revision or that the remaining balance may not be

recoverable. These factors may include a significant deterioration of operating results, changes in business plans,
or changes in anticipated cash flows. When factors indicate that an asset should be evaluated for possible
impairment, we review long-lived assets to assess recoverability from future operations using undiscounted cash
flows. If future undiscounted cash flows are less than the carrying value, an impairment is recognized in earnings
to the extent that the carrying value exceeds fair value.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and
liabilities are established for temporary differences between the financial reporting basis and the tax basis of our
assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or settled.
Deferred income tax assets are reduced by valuation allowances when necessary.

Assessing whether deferred tax assets are realizable requires significant judgment. We consider all available

positive and negative evidence, including historical operating performance and expectations of future operating
performance. The ultimate realization of deferred tax assets is often dependent upon future taxable income and
therefore can be uncertain. To the extent we believe it is more likely than not that all or some portion of the asset
will not be realized, valuation allowances are established against our deferred tax assets, which increase income
tax expense in the period when such a determination is made.

Income taxes include the largest amount of tax benefit for an uncertain tax position that is more likely than
not to be sustained upon audit based on the technical merits of the tax position. Settlements with tax authorities,
the expiration of statutes of limitations for particular tax positions, or obtaining new information on particular tax
positions may cause a change to the effective tax rate. We recognize accrued interest and penalties related to
unrecognized tax benefits in the provision for income taxes on the consolidated statements of income.

Stock-Based Compensation

We account for stock-based compensation in accordance with accounting guidance that requires all stock-

based compensation awards granted to employees and directors to be measured at fair value and recognized as an
expense in the financial statements. As of December 31, 2014, we had $28.6 million of unrecognized
compensation expense expected to be recognized over a weighted average period of 1.0 year. This unrecognized
compensation expense does not include any expense related to performance-based restricted stock units for
which the performance targets have not been achieved as of December 31, 2014.

The assumptions used in calculating the fair value of stock-based compensation awards represent

management’s best estimates, but the estimates involve inherent uncertainties and the application of management
judgment. In addition, compensation expense for performance-based awards is recorded over the related service
period when achievement of the performance targets are deemed probable, which requires management
judgment. For example, the achievement of certain operating income targets related to the performance-based
restricted stock units granted in 2014 were not deemed probable as of December 31, 2014. Additional stock-
based compensation of up to $2.7 million would have been recorded in 2014 for these performance-based
restricted stock units had the full achievement of all operating targets been deemed probable. As a result, if
factors change and we use different assumptions, our stock-based compensation expense could be materially
different in the future. Refer to Note 2 and Note 12 to the Consolidated Financial Statements for a further
discussion on stock-based compensation.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update

amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or
services. This guidance is effective for annual and interim reporting periods beginning after December 15, 2016,
with early adoption not permitted. We are currently evaluating the standard to determine the impact of its
adoption on our consolidated financial statements.

In January 2015, the FASB issued an Accounting Standards Update which eliminates from GAAP the
concept of extraordinary items and the need to separately classify, present, and disclose extraordinary events and
transactions. This guidance is effective for annual and interim reporting periods beginning after December 15,
2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of
adoption. The adoption of this pronouncement is not expected to impact our consolidated financial statements.

Recently Adopted Accounting Standards

In July 2013, the FASB issued an Accounting Standards Update which requires that an unrecognized tax
benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction
to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with
certain exceptions. This guidance is effective for annual and interim reporting periods beginning after
December 15, 2013. The adoption of this pronouncement did not have a material impact on our consolidated
financial statements.

In February 2013, the FASB issued an Accounting Standards Update which requires companies to present
either in a single note or parenthetically on the face of the financial statements, the effect of significant amounts
reclassified from each component of accumulated other comprehensive income based on its source and the
income statement line items affected by the reclassification. This guidance is effective for annual and interim
reporting periods beginning after December 15, 2012. The adoption of this pronouncement did not have a
material impact on our consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Foreign Currency Risk

We currently generate a majority of our consolidated net revenues in the United States, and the reporting
currency for our consolidated financial statements is the U.S. dollar. As our net revenues and expenses generated
outside of the United States increase, our results of operations could be adversely impacted by changes in foreign
currency exchange rates. For example, as we recognize foreign revenues in local foreign currencies and if the
U.S. dollar strengthens, it could have a negative impact on our foreign revenues upon translation of those results
into the U.S. dollar upon consolidation of our financial statements. In addition, we are exposed to gains and
losses resulting from fluctuations in foreign currency exchange rates on transactions generated by our foreign
subsidiaries in currencies other than their local currencies. These gains and losses are primarily driven by
intercompany transactions and inventory purchases denominated in currencies other than the functional currency
of the purchasing entity. These exposures are included in other expense, net on the consolidated statements of
income.

From time to time, we may elect to use foreign currency forward contracts to reduce the risk from exchange
rate fluctuations primarily on intercompany transactions and projected inventory purchases for our international
subsidiaries. As we expand our international business, we anticipate expanding our current hedging program to
include additional currency pairs and instruments. We do not enter into derivative financial instruments for
speculative or trading purposes.

As of December 31, 2014, the aggregate notional value of our outstanding foreign currency forward

contracts was $123.3 million, which was comprised of Canadian Dollar/U.S. Dollar, Euro/U.S. Dollar, Yen/Euro,
Mexican Peso/Euro and Pound Sterling/Euro currency pairs with contract maturities of one to eleven months.
The foreign currency forward contracts outstanding as of December 31, 2014 have weighted average contractual

forward foreign currency exchange rates of 1.13 CAD per $1.00, €0.83 per $1.00, 145.16 JPY per €1.00, 17.85
MXN per €1.00 and £0.78 per €1.00. The majority of our foreign currency forward contracts are not designated
as cash flow hedges, and accordingly, changes in their fair value are recorded in earnings. During 2014, we
began entering into foreign currency forward contracts designated as cash flow hedges. For foreign currency
forward contracts designated as cash flow hedges, changes in fair value, excluding any ineffective portion, is
recorded in other comprehensive income until net income is affected by the variability in cash flows of the
hedged transaction. The effective portion is generally released to net income after the maturity of the related
derivative and is classified in the same manner as the underlying exposure. During the year ended December 31,
2014, we reclassified $0.4 million from other comprehensive income to cost of goods sold related to foreign
currency forward contracts designated as cash flow hedges. The fair values of the Company’s foreign currency
forward contracts were assets of $806.0 thousand and $12.1 thousand as of December 31, 2014 and 2013,
respectively, and were included in prepaid expenses and other current assets on the consolidated balance sheet.
Refer to Note 9 to the Consolidated Financial Statements for a discussion of the fair value measurements.
Included in other expense, net were the following amounts related to changes in foreign currency exchange rates
and derivative foreign currency forward contracts:

(In thousands)

Year Ended December 31,

2014

2013

2012

Unrealized foreign currency exchange rate gains (losses)
Realized foreign currency exchange rate gains (losses)
Unrealized derivative gains (losses)
Realized derivative gains (losses)

$(11,739)
2,247
1
3,081

$(1,905)
477
13
243

$ 2,464
(182)
675
(3,030)

We enter into foreign currency forward contracts with major financial institutions with investment grade
credit ratings and are exposed to credit losses in the event of non-performance by these financial institutions.
This credit risk is generally limited to the unrealized gains in the foreign currency forward contracts. However,
we monitor the credit quality of these financial institutions and consider the risk of counterparty default to be
minimal. Although we have entered into foreign currency forward contracts to minimize some of the impact of
foreign currency exchange rate fluctuations on future cash flows, we cannot be assured that foreign currency
exchange rate fluctuations will not have a material adverse impact on our financial condition and results of
operations.

Interest Rate Risk

In order to maintain liquidity and fund business operations, we enter into long term debt arrangements with

various lenders which bear a range of fixed and variable rates of interest. The nature and amount of our long-term
debt can be expected to vary as a result of future business requirements, market conditions and other factors. We
may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations.
We utilize interest rate swap contracts to convert a portion of variable rate debt to fixed rate debt. The contracts
pay fixed and receive variable rates of interest. The interest rate swap contracts are accounted for as cash flow
hedges and accordingly, the effective portion of the changes in fair value are recorded in other comprehensive
income and reclassified into interest expense over the life of the underlying debt obligation.

As of December 31, 2014, the aggregate notional value of our outstanding interest rate swap contracts was

$188.1 million. During the years ended December 31, 2014 and 2013, we recorded a $1.7 million and
$0.3 million increase in interest expense, respectively, representing the effective portion of the contracts
reclassified from accumulated other comprehensive income. The fair value of the interest rate swap contracts was
a liability of $0.6 million as of December 31, 2014, and was included in other long term liabilities on the
consolidated balance sheet. The fair value of the interest rate swap contract was an asset of $1.1 million as of
December 31, 2013 and was included in other long term assets on the consolidated balance sheet.

Credit Risk

We are exposed to credit risk primarily on our accounts receivable. We provide credit to customers in the

ordinary course of business and perform ongoing credit evaluations. We believe that our exposure to
concentrations of credit risk with respect to trade receivables is largely mitigated by our customer base. We
believe that our allowance for doubtful accounts is sufficient to cover customer credit risks as of December 31,
2014.

Inflation

Inflationary factors such as increases in the cost of our product and overhead costs may adversely affect our
operating results. Although we do not believe that inflation has had a material impact on our financial position or
results of operations in recent periods, a high rate of inflation in the future may have an adverse effect on our
ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage
of net revenues if the selling prices of our products do not increase with these increased costs.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Management on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial

reporting for the Company. We conducted an evaluation of the effectiveness of our internal control over financial
reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in 2013. This evaluation included review of the
documentation of controls, evaluation of the design effectiveness of controls, testing of the operating
effectiveness of controls and a conclusion on this evaluation. Based on our evaluation, we have concluded that
our internal control over financial reporting was effective as of December 31, 2014.

The effectiveness of our internal control over financial reporting as of December 31, 2014, has been audited

by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report
which appears herein.

/S/ KEVIN A. PLANK
Kevin A. Plank

/S/ BRAD DICKERSON
Brad Dickerson

Dated: February 20, 2015

Chairman of the Board of Directors and Chief Executive

Officer

Chief Financial Officer

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Under Armour, Inc.

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1)
present fairly, in all material respects, the financial position of Under Armour, Inc. and its subsidiaries (the
“Company”) at December 31, 2014 and December 31, 2013, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2014 in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule
listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2014, based on criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. The Company’s
management is responsible for these financial statements and financial statement schedule, for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying Report of Management on Internal Control Over
Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial
statement schedule, and on the Company’s internal control over financial reporting based on our integrated
audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement and whether effective internal
control over financial reporting was maintained in all material respects. Our audits of the financial statements
included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit of internal control over financial reporting included obtaining
an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Baltimore, Maryland
February 20, 2015

Under Armour, Inc. and Subsidiaries

Consolidated Balance Sheets
(In thousands, except share data)

Assets
Current assets

Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Deferred income taxes

Total current assets
Property and equipment, net
Goodwill
Intangible assets, net
Deferred income taxes
Other long term assets

Total assets

Liabilities and Stockholders’ Equity
Current liabilities

Revolving credit facility
Accounts payable
Accrued expenses
Current maturities of long term debt
Other current liabilities

Total current liabilities
Long term debt, net of current maturities
Other long term liabilities

Total liabilities

Commitments and contingencies (see Note 7)
Stockholders’ equity

Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized

as of December 31, 2014 and 2013; 177,295,988 shares issued and
outstanding as of December 31, 2014 and 171,628,708 shares issued and
outstanding as of December 31, 2013.

Class B Convertible Common Stock, $0.0003 1/3 par value; 36,600,000

shares authorized, issued and outstanding as of December 31, 2014 and
40,000,000 shares authorized, issued and outstanding as of December 31,
2013.

Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)

Total stockholders’ equity

Total liabilities and stockholders’ equity

See accompanying notes.

December 31,
2014

December 31,
2013

$ 593,175
279,835
536,714
87,177
52,498

1,549,399
305,564
123,256
26,230
33,570
57,064

$ 347,489
209,952
469,006
63,987
38,377

1,128,811
223,952
122,244
24,097
31,094
47,543

$2,095,083

$1,577,741

— $ 100,000
165,456
133,729
4,972
22,473

210,432
147,681
28,951
34,563

421,627
255,250
67,906

744,783

426,630
47,951
49,806

524,387

12
508,350
856,687
(14,808)

13
397,248
653,842
2,194

1,350,300

1,053,354

$2,095,083

$1,577,741

Under Armour, Inc. and Subsidiaries

Consolidated Statements of Income
(In thousands, except per share amounts)

Net revenues
Cost of goods sold

Gross profit

Selling, general and administrative expenses

Income from operations

Interest expense, net
Other expense, net

Income before income taxes

Provision for income taxes

Net income

Net income available per common share
Basic
Diluted

Weighted average common shares outstanding
Basic
Diluted

Year Ended December 31,

2014

2013

2012

$3,084,370
1,572,164

$2,332,051
1,195,381

$1,834,921
955,624

1,512,206
1,158,251

1,136,670
871,572

353,955
(5,335)
(6,410)

342,210
134,168

265,098
(2,933)
(1,172)

260,993
98,663

879,297
670,602

208,695
(5,183)
(73)

203,439
74,661

$ 208,042 $ 162,330 $ 128,778

$
$

0.98
0.95

$
$

0.77
0.75

$
$

0.62
0.61

213,227
219,380

210,696
215,958

208,686
212,760

See accompanying notes.

Under Armour, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income
(In thousands)

Net income
Other comprehensive income (loss):

Foreign currency translation adjustment
Unrealized gain (loss) on cash flow hedge, net of tax of ($408), $505 and

$58 for the years ended December 31, 2014, 2013 and 2012.

Total other comprehensive income (loss)

Comprehensive income

Year Ended December 31,

2014

2013

2012

$208,042

$162,330

$128,778

(16,743)

(897)

(259)

(17,002)

723

(174)

423

(83)

340

$191,040 $162,156

$129,118

See accompanying notes.

Under Armour, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity
(In thousands)

Balance as of December 31, 2011
Exercise of stock options
Shares withheld in consideration of employee

tax obligations relative to stock-based
compensation arrangements

Issuance of Class A Common Stock, net of

forfeitures

Class B Convertible Common Stock converted

to Class A Common Stock

Stock-based compensation expense
Net excess tax benefits from stock-based

compensation arrangements

Comprehensive income

Balance as of December 31, 2012
Exercise of stock options
Shares withheld in consideration of employee

tax obligations relative to stock-based
compensation arrangements

Issuance of Class A Common Stock, net of

forfeitures

Class B Convertible Common Stock converted

to Class A Common Stock

Stock-based compensation expense
Net excess tax benefits from stock-based

compensation arrangements

Comprehensive income

Balance as of December 31, 2013
Exercise of stock options
Shares withheld in consideration of employee

tax obligations relative to stock-based
compensation arrangements

Issuance of Class A Common Stock, net of

forfeitures

Class B Convertible Common Stock converted

to Class A Common Stock

Stock-based compensation expense
Net excess tax benefits from stock-based

compensation arrangements
Comprehensive income (loss)

Class A
Common Stock

Class B
Convertible
Common Stock

Shares Amount Shares Amount

Additional
Paid-In
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Total
Stockholders’
Equity

161,984
2,436

$ 54
2

45,000
—

$ 14
—

$268,172 $366,164

12,370

—

$ 2,028
—

$ 636,432
12,372

(76) —

178 —

—

2,400 —
—

—

(2,400) —
—

—

—
—

166,922

1,822 —

42,600
—

(47) —

332 —

—

2,600
—

—
—

—

—
—

(2,600)
—

—
—

171,629
1,454

57
1

40,000
—

(95) —

908 —

—

3,400
—

—
—

—

—
—

(3,400)
—

—
—

—

(1)

—

—
—

—

(1)

—

—
—

—

(1,761)

3,246

—
19,845

17,670

—

—
—

—

— 128,778

321,303
12,159

493,181

—

(1,669)

3,439

—
43,184

17,163

—

—
—

—

— 162,330

397,248
11,258

653,842

—

—
—

—
340

2,368
—

—

—
—

(1,761)

3,246

—
19,845

17,670
129,118

816,922
12,159

(1,669)

3,439

—
43,184

—
(174)

2,194
—

17,163
162,156

1,053,354
11,259

—

(5,197)

12,067

—
50,812

—

—
—

—

—
—

(5,197)

12,067

—
50,812

36,965

—
— 208,042

—
(17,002)

36,965
191,040

Balance as of December 31, 2014

177,296

$ 59

36,600

$ 12

$508,350 $856,687

$(14,808)

$1,350,300

See accompanying notes.

Under Armour, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
(In thousands)

Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash used in operating activities

Depreciation and amortization
Unrealized foreign currency exchange rate losses (gains)
Loss on disposal of property and equipment
Stock-based compensation
Deferred income taxes
Changes in reserves and allowances
Changes in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued expenses and other liabilities
Income taxes payable and receivable

Year Ended December 31,

2014

2013

2012

$ 208,042

$ 162,330

$128,778

72,093
11,739
261
50,812
(17,584)
31,350

(101,057)
(84,658)
(33,345)
49,137
28,856
3,387

50,549
1,905
332
43,184
(18,832)
13,945

(35,960)
(156,900)
(19,049)
14,642
56,481
7,443

43,082
(2,464)
524
19,845
(12,973)
13,916

(53,433)
4,699
(4,060)
35,370
21,966
4,511

Net cash provided by operating activities

219,033

120,070

199,761

Cash flows from investing activities
Purchases of property and equipment
Purchase of business
Purchases of other assets
Change in loans receivable
Change in restricted cash

Net cash used in investing activities

Cash flows from financing activities
Proceeds from revolving credit facility
Payments on revolving credit facility
Proceeds from term loan
Payments on term loan
Proceeds from long term debt
Payments on long term debt
Excess tax benefits from stock-based compensation arrangements
Proceeds from exercise of stock options and other stock issuances
Payments of debt financing costs

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents
Beginning of period

End of period

Non-cash investing and financing activities
Increase in accrual for property and equipment
Non-cash acquisition of business

Other supplemental information
Cash paid for income taxes
Cash paid for interest, net of capitalized interest

See accompanying notes.

(140,528)
(10,924)
(860)
—
—

(87,830)
(148,097)
(475)
(1,700)
—

(50,650)
—
(1,310)
—
5,029

(152,312)

(238,102)

(46,931)

—

(100,000)
250,000
(13,750)
—
(4,972)
36,965
15,776
(1,713)

182,306
(3,341)

245,686

100,000
—
—
—
—
(5,471)
17,167
15,099
—

126,795
(3,115)

—
—
—
(25,000)
50,000
(44,330)
17,868
14,776
(1,017)

12,297
1,330

5,648

166,457

347,489

341,841

175,384

$ 593,175

$ 347,489

$341,841

4,922
11,233

3,786
—

$ 12,137

—

103,284
4,146

85,570
1,505

57,739
3,306

Under Armour, Inc. and Subsidiaries

Notes to the Audited Consolidated Financial Statements

1. Description of the Business

Under Armour, Inc. is a developer, marketer and distributor of branded performance apparel, footwear and
accessories. These products are sold worldwide and worn by athletes at all levels, from youth to professional on
playing fields around the globe, as well as by consumers with active lifestyles.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Under Armour, Inc. and its
wholly owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated.
The accompanying consolidated financial statements were prepared in accordance with accounting principles
generally accepted in the United States of America.

On June 11, 2012 and March 17, 2014 the Board of Directors declared two-for-one stock splits of the
Company’s Class A and Class B common stock, which were effected in the form of a 100% common stock
dividend distributed on July 9, 2012 and April 14, 2014, respectively. Stockholders’ equity and all references to
share and per share amounts in the accompanying consolidated financial statements have been retroactively
adjusted to reflect these two-for-one stock splits for all periods presented.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at

date of inception to be cash and cash equivalents. Included in interest expense, net for the years ended
December 31, 2014, 2013 and 2012 was interest income of $192.0 thousand, $23.7 thousand and $25.2 thousand,
respectively, related to cash and cash equivalents.

Concentration of Credit Risk

Financial instruments that subject the Company to significant concentration of credit risk consist primarily

of accounts receivable. The majority of the Company’s accounts receivable is due from large sporting goods
retailers. Credit is extended based on an evaluation of the customer’s financial condition and collateral is not
required. The Company had two customers in North America that individually accounted for 23.4% and 11.1%
of accounts receivable as of December 31, 2014. The Company’s largest customer accounted for 14.4%, 16.6%
and 16.6% of net revenues for the years ended December 31, 2014, 2013 and 2012, respectively.

Allowance for Doubtful Accounts

The Company makes ongoing estimates relating to the collectability of accounts receivable and maintains an

allowance for estimated losses resulting from the inability of its customers to make required payments. In
determining the amount of the reserve, the Company considers historical levels of credit losses and significant
economic developments within the retail environment that could impact the ability of its customers to pay
outstanding balances and makes judgments about the creditworthiness of significant customers based on ongoing
credit evaluations. Because the Company cannot predict future changes in the financial stability of its customers,
actual future losses from uncollectible accounts may differ from estimates. If the financial condition of customers
were to deteriorate, resulting in their inability to make payments, a larger reserve might be required. In the event
the Company determines a smaller or larger reserve is appropriate, it would record a benefit or charge to selling,
general and administrative expense in the period in which such a determination was made. As of December 31,
2014 and 2013, the allowance for doubtful accounts was $3.7 million and $2.9 million, respectively.

Inventories

Inventories consist primarily of finished goods. Costs of finished goods inventories include all costs
incurred to bring inventory to its current condition, including inbound freight, duties and other costs. The
Company values its inventory at standard cost which approximates landed cost, using the first-in, first-out
method of cost determination. Market value is estimated based upon assumptions made about future demand and
retail market conditions. If the Company determines that the estimated market value of its inventory is less than
the carrying value of such inventory, it records a charge to cost of goods sold to reflect the lower of cost or
market. If actual market conditions are less favorable than those projected by the Company, further adjustments
may be required that would increase the cost of goods sold in the period in which such a determination was
made.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and
liabilities are established for temporary differences between the financial reporting basis and the tax basis of the
Company’s assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or
settled. Deferred income tax assets are reduced by valuation allowances when necessary.

Assessing whether deferred tax assets are realizable requires significant judgment. The Company considers

all available positive and negative evidence, including historical operating performance and expectations of
future operating performance. The ultimate realization of deferred tax assets is often dependent upon future
taxable income and therefore can be uncertain. To the extent the Company believes it is more likely than not that
all or some portion of the asset will not be realized, valuation allowances are established against the Company’s
deferred tax assets, which increase income tax expense in the period when such a determination is made.

Income taxes include the largest amount of tax benefit for an uncertain tax position that is more likely than
not to be sustained upon audit based on the technical merits of the tax position. Settlements with tax authorities,
the expiration of statutes of limitations for particular tax positions, or obtaining new information on particular tax
positions may cause a change to the effective tax rate. The Company recognizes accrued interest and penalties
related to unrecognized tax benefits in the provision for income taxes on the consolidated statements of income.

Property and Equipment

Property and equipment are stated at cost, including the cost of internal labor for software customized for
internal use, less accumulated depreciation and amortization. Property and equipment is depreciated using the
straight-line method over the estimated useful lives of the assets: 3 to 10 years for furniture, office equipment,
software and plant equipment and 10 to 35 years for site improvements, buildings and building equipment.
Leasehold and tenant improvements are amortized over the shorter of the lease term or the estimated useful lives
of the assets. The cost of in-store apparel and footwear fixtures and displays are capitalized, included in furniture,
fixtures and displays, and depreciated over 3 years. The Company periodically reviews assets’ estimated useful
lives based upon actual experience and expected future utilization. A change in useful life is treated as a change
in accounting estimate and is applied prospectively.

The Company capitalizes the cost of interest for long term property and equipment projects based on the
Company’s weighted average borrowing rates in place while the projects are in progress. Capitalized interest was
$0.4 million and $0.4 million as of December 31, 2014 and 2013, respectively.

Upon retirement or disposition of property and equipment, the cost and accumulated depreciation are
removed from the accounts and any resulting gain or loss is reflected in selling, general and administrative
expenses for that period. Major additions and betterments are capitalized to the asset accounts while maintenance
and repairs, which do not improve or extend the lives of assets, are expensed as incurred.

Goodwill, Intangible Assets and Long-Lived Assets

Goodwill and intangible assets are recorded at their estimated fair values at the date of acquisition and are

allocated to the reporting units that are expected to receive the related benefits. Goodwill and indefinite lived
intangible assets are not amortized and are required to be tested for impairment at least annually or sooner
whenever events or changes in circumstances indicate that the assets may be impaired. In conducting an annual
impairment test, the Company first reviews qualitative factors to determine whether it is more likely than not that
the fair value of the reporting unit is less than its carrying amount. If factors indicate that is the case, the
Company performs a quantitative assessment over relevant reporting units, analyzing the expected present value
of future cash flows and quantify the amount of impairment, if any. The Company performs its annual
impairment tests in the fourth quarter of each fiscal year.

The Company continually evaluates whether events and circumstances have occurred that indicate the
remaining estimated useful life of long-lived assets may warrant revision or that the remaining balance may not
be recoverable. These factors may include a significant deterioration of operating results, changes in business
plans, or changes in anticipated cash flows. When factors indicate that an asset should be evaluated for possible
impairment, the Company reviews long-lived assets to assess recoverability from future operations using
undiscounted cash flows. If future undiscounted cash flows are less than the carrying value, an impairment is
recognized in earnings to the extent that the carrying value exceeds fair value.

Accrued Expenses

At December 31, 2014, accrued expenses primarily included $61.4 million and $14.0 million of accrued

compensation and benefits and marketing expenses, respectively. At December 31, 2013, accrued expenses
primarily included $56.7 million and $11.9 million of accrued compensation and benefits and marketing
expenses, respectively.

Foreign Currency Translation and Transactions

The functional currency for each of the Company’s wholly owned foreign subsidiaries is generally the
applicable local currency. The translation of foreign currencies into U.S. dollars is performed for assets and
liabilities using current foreign currency exchange rates in effect at the balance sheet date and for revenue and
expense accounts using average foreign currency exchange rates during the period. Capital accounts are
translated at historical foreign currency exchange rates. Translation gains and losses are included in stockholders’
equity as a component of accumulated other comprehensive income. Adjustments that arise from foreign
currency exchange rate changes on transactions, primarily driven by intercompany transactions, denominated in a
currency other than the functional currency are included in other expense, net on the consolidated statements of
income.

Derivatives and Hedging Activities

The Company uses derivative financial instruments in the form of foreign currency forward and interest rate
swap contracts to minimize the risk associated with foreign currency exchange rate and interest rate fluctuations.
The Company accounts for derivative financial instruments pursuant to applicable accounting guidance. This
guidance establishes accounting and reporting standards for derivative financial instruments and requires all
derivatives to be recognized as either assets or liabilities on the balance sheet and to be measured at fair value.
Unrealized derivative gain positions are recorded as other current assets or other long term assets, and unrealized
derivative loss positions are recorded as accrued expenses or other long term liabilities, depending on the
derivative financial instrument’s maturity date.

Currently, the majority of the Company’s foreign currency forward contracts are not designated as cash flow

hedges, and accordingly, changes in their fair value are included in other expense, net on the consolidated
statements of income. During 2014, the Company began entering into foreign currency forward contracts
designated as cash flow hedges, and consequently, changes in fair value, excluding any ineffective portion, are
recorded in other comprehensive income until net income is affected by the variability in cash flows of the
hedged transaction. The effective portion is generally released to net income after the maturity of the related
derivative and is classified in the same manner as the underlying exposure. Additionally, the Company has
designated its interest rate swap contract as a cash flow hedge and accordingly, the effective portion of changes
in fair value are recorded in other comprehensive income and reclassified into interest expense over the life of the
underlying debt obligation. The ineffective portion, if any, is recognized in current period earnings. The
Company does not enter into derivative financial instruments for speculative or trading purposes.

Revenue Recognition

The Company recognizes revenue pursuant to applicable accounting standards. Net revenues consist of both
net sales and license and other revenues. Net sales are recognized upon transfer of ownership, including passage
of title to the customer and transfer of risk of loss related to those goods. Transfer of title and risk of loss is based
upon shipment under free on board shipping point for most goods or upon receipt by the customer depending on
the country of the sale and the agreement with the customer. In some instances, transfer of title and risk of loss
takes place at the point of sale, for example, at the Company’s brand and factory house stores. The Company
may also ship product directly from its supplier to the customer and recognize revenue when the product is
delivered to and accepted by the customer. License and other revenues are primarily recognized based upon
shipment of licensed products sold by the Company’s licensees. Sales taxes imposed on the Company’s revenues
from product sales are presented on a net basis on the consolidated statements of income and therefore do not
impact net revenues or costs of goods sold.

The Company records reductions to revenue for estimated customer returns, allowances, markdowns and

discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the
specific identification of outstanding returns, markdowns and allowances that have not yet been received by the
Company. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from
the Company’s estimates. If the Company determines that actual or expected returns or allowances are
significantly higher or lower than the reserves it established, it would record a reduction or increase, as
appropriate, to net sales in the period in which it makes such a determination. Provisions for customer specific
discounts are based on contractual obligations with certain major customers. Reserves for returns, allowances,
markdowns and discounts are recorded as an offset to accounts receivable as settlements are made through
offsets to outstanding customer invoices. As of December 31, 2014 and 2013, there were $68.9 million and
$43.8 million, respectively, in reserves for customer returns, allowances, markdowns and discounts.

Advertising Costs

Advertising costs are charged to selling, general and administrative expenses. Advertising production costs
are expensed the first time an advertisement related to such production costs is run. Media (television, print and
radio) placement costs are expensed in the month during which the advertisement appears, and costs related to
event sponsorships are expensed when the event occurs. In addition, advertising costs include sponsorship
expenses. Accounting for sponsorship payments is based upon specific contract provisions and the payments are
generally expensed uniformly over the term of the contract after recording expense related to specific
performance incentives once they are deemed probable. Advertising expense, including amortization of in-store
marketing fixtures and displays, was $333.0 million, $246.5 million and $205.4 million for the years ended
December 31, 2014, 2013 and 2012, respectively. At December 31, 2014 and 2013, prepaid advertising costs
were $31.1 million and $22.0 million, respectively.

Shipping and Handling Costs

The Company charges certain customers shipping and handling fees. These fees are recorded in net

revenues. The Company includes the majority of outbound handling costs as a component of selling, general and
administrative expenses. Outbound handling costs include costs associated with preparing goods to ship to
customers and certain costs to operate the Company’s distribution facilities. These costs, included within selling,
general and administrative expenses, were $55.3 million, $46.1 million and $34.8 million for the years ended
December 31, 2014, 2013 and 2012, respectively. The Company includes outbound freight costs associated with
shipping goods to customers as a component of cost of goods sold.

Minority Investment

The Company holds a minority investment in Dome Corporation (“Dome”), the Company’s Japanese
licensee. The Company invested ¥1,140.0 million, or $15.5 million, in exchange for 19.5% common stock
ownership in Dome. As of December 31, 2014 and 2013, the carrying value of the Company’s investment was
$13.4 million and $15.2 million, respectively, and was included in other long term assets on the consolidated
balance sheet. The investment is subject to foreign currency translation rate fluctuations as it is held by the
Company’s European subsidiary.

The Company accounts for its investment in Dome under the cost method given that it does not have the

ability to exercise significant influence. Additionally, the Company concluded that no event or change in
circumstances occurred during the year ended December 31, 2014 that may have a significant adverse effect on
the fair value of the investment.

Earnings per Share

Basic earnings per common share is computed by dividing net income available to common stockholders for

the period by the weighted average number of common shares outstanding during the period. Any stock-based
compensation awards that are determined to be participating securities, which are stock-based compensation
awards that entitle the holders to receive dividends prior to vesting, are included in the calculation of basic
earnings per share using the two class method. Diluted earnings per common share is computed by dividing net
income available to common stockholders for the period by the diluted weighted average common shares
outstanding during the period. Diluted earnings per share reflects the potential dilution from common shares
issuable through stock options, warrants, restricted stock units and other equity awards. Refer to Note 11 for
further discussion of earnings per share.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with accounting guidance that requires

all stock-based compensation awards granted to employees and directors to be measured at fair value and
recognized as an expense in the financial statements. In addition, this guidance requires that excess tax benefits
related to stock-based compensation awards be reflected as financing cash flows.

The Company uses the Black-Scholes option-pricing model to estimate the fair market value of stock-based

compensation awards. The Company uses the “simplified method” to estimate the expected life of options, as
permitted by accounting guidance. The “simplified method” calculates the expected life of a stock option equal
to the time from grant to the midpoint between the vesting date and contractual term, taking into account all
vesting tranches. The risk free interest rate is based on the yield for the U.S. Treasury bill with a maturity equal
to the expected life of the stock option. Expected volatility is based on the Company’s historical average.
Compensation expense is recognized net of forfeitures on a straight-line basis over the total vesting period, which
is the implied requisite service period. Compensation expense for performance-based awards is recorded over the
implied requisite service period when achievement of the performance target is deemed probable. The forfeiture
rate is estimated at the date of grant based on historical rates.

The Company issues new shares of Class A Common Stock upon exercise of stock options, grant of

restricted stock or share unit conversion. Refer to Note 12 for further details on stock-based compensation.

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the

United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.

Fair Value of Financial Instruments

The carrying amounts shown for the Company’s cash and cash equivalents, accounts receivable and
accounts payable approximate fair value because of the short term maturity of those instruments. The fair value
of the long term debt approximates its carrying value based on the variable nature of interest rates and current
market rates available to the Company. The fair value of foreign currency forward contracts is based on the net
difference between the U.S. dollars to be received or paid at the contracts’ settlement date and the U.S. dollar
value of the foreign currency to be sold or purchased at the current forward exchange rate. The fair value of the
interest rate swap contract is based on the net difference between the fixed interest to be paid and variable
interest to be received over the term of the contract based on current market rates.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update

which supersedes the most current revenue recognition requirements. The new revenue recognition standard
requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an
amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or
services. This guidance is effective for annual and interim reporting periods beginning after December 15, 2016,
with early adoption not permitted. The Company is currently evaluating the standard to determine the impact of
its adoption on the Company’s consolidated financial statements.

In January 2015, the FASB issued an Accounting Standards Update which eliminates from GAAP the concept of

extraordinary items and the need to separately classify, present, and disclose extraordinary events and transactions.
This guidance is effective for annual and interim reporting periods beginning after December 15, 2015, with early
adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The
adoption of this pronouncement is not expected to impact the Company’s consolidated financial statements.

Recently Adopted Accounting Standards

3. Acquisitions

MapMyFitness

On December 6, 2013, the Company acquired 100% of the outstanding equity of MapMyFitness, Inc., a

digital connected fitness platform, for $150.0 million in cash. The purchase price was financed through
$100.0 million in debt under the Company’s existing revolving credit facility and cash on hand.

The acquisition was accounted for as a business combination. The Company allocated the total purchase
price to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on
the acquisition date, with the remaining unallocated purchase price recorded as goodwill. As a result of the initial
purchase price allocation, the Company recorded intangible assets of $20.6 million, goodwill of $122.2 million,
and other net assets of $6.6 million, primarily consisting of $4.7 million of net deferred tax assets.

Intangible assets consist of $12.0 million of technology, $5.0 million of trade name, and $3.6 million of
customer relationships. The Company estimated the acquisition date fair values of the intangible assets based on
income based discounted cash flow models using estimates and assumptions regarding future operations. The
Company will amortize the intangible assets on a straight-line basis over their estimated useful lives of two to
seven years.

The goodwill recorded as a result of the acquisition primarily reflects unidentified intangible assets

acquired, including the value of integrating and innovating acquired technologies and engaging and growing the
digital community. The acquired goodwill has been allocated primarily within the Company’s North America
operating segment as well as the MapMyFitness operating segment. The goodwill associated with this acquisition
is not deductible for tax purposes.

In connection with this acquisition, the Company incurred acquisition related expenses of approximately

$2.5 million. These expenses were included in selling, general and administrative expenses on the consolidated
statements of income during the year ended December 31, 2013. This acquisition did not have a material impact
to the Company’s consolidated statements of income during the year ended December 31, 2013.

During the three months ended March 31, 2014, the Company finalized its valuation of the assets acquired

and liabilities assumed as of the acquisition date and no adjustments were made to the preliminary purchase price
allocation recorded as of December 31, 2013.

4. Property and Equipment, Net

Property and equipment consisted of the following:

(In thousands)

Leasehold and tenant improvements
Furniture, fixtures and displays
Buildings
Software
Office equipment
Plant equipment
Land
Construction in progress
Other

Subtotal property and equipment

Accumulated depreciation

Property and equipment, net

December 31,

2014

2013

$ 128,088
80,035
46,419
67,506
51,531
70,317
17,628
57,677
3,175

$ 97,776
68,045
45,903
51,984
39,551
45,509
17,628
28,471
1,219

522,376
(216,812)

396,086
(172,134)

$ 305,564

$ 223,952

Construction in progress primarily includes costs incurred for software systems, leasehold improvements

and in-store fixtures and displays not yet placed in use.

Depreciation expense related to property and equipment was $63.6 million, $48.3 million and $39.8 million

for the years ended December 31, 2014, 2013 and 2012, respectively.

5. Goodwill and Intangible Assets, Net

The following table summarizes changes in the carrying amount of the Company’s goodwill by reportable

segment as of the periods indicated:

(In thousands)

Balance as of December 31, 2013
Goodwill acquired

Balance as of December 31, 2014

North America

$119,799

—

$119,799

Other foreign
countries and
businesses

$2,445
1,012

$3,457

Total

$122,244
1,012

$123,256

During 2014, the Company acquired $1.0 million of goodwill in connection with the acquisition of certain

assets of its former distributor in Mexico, which was accounted for as a business combination.

The following table summarizes the Company’s intangible assets as of the periods indicated:

(In thousands)

Intangible assets subject to amortization:

Technology
Trade name
Customer relationships
Lease-related intangible assets
Other

December 31, 2014

December 31, 2013

Gross
Carrying
Amount

$12,000
5,000
11,927
3,896
2,196

Accumulated
Amortization

Net Carrying
Amount

$ (1,907)
(1,353)
(4,692)
(2,762)
(893)

$10,093
3,647
7,235
1,134
1,303

Gross
Carrying
Amount

$12,000
5,000
3,600
3,896
1,266

Accumulated
Amortization

Net Carrying
Amount

$ (126)
(53)
(38)
(2,605)
(532)

$11,874
4,947
3,562
1,291
734

Total

$35,019

$(11,607)

$23,412

$25,762

$(3,354)

$22,408

Indefinite-lived intangible assets

Intangible assets, net

2,818

$26,230

1,689

$24,097

Technology, trade-name and customer relationship intangible assets were acquired with the purchase of

MapMyFitness and are amortized on a straight-line basis over 84 months, 48 months and 24 months,
respectively. Customer relationship intangible assets were also acquired with the acquisition of certain assets of
the Company’s former distributor in Mexico and are amortized on a straight-line basis over 36 months. Lease-
related intangible assets were acquired with the purchase of the Company’s corporate headquarters and are
amortized over the remaining third party lease terms, which ranged from 9 months to 15 years on the date of
purchase. Other intangible assets are amortized using estimated useful lives of 55 months to 120 months with no
residual value. Amortization expense, which is included in selling, general and administrative expenses, was
$8.5 million, $1.6 million and $2.2 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The following is the estimated amortization expense for the Company’s intangible assets as of December 31,
2014:

(In thousands)

2015
2016
2017
2018
2019
2020 and thereafter

Amortization expense of intangible assets

$ 7,862
6,118
3,236
2,074
1,966
2,156

$23,412

At December 31, 2014, 2013 and 2012, the Company determined that its goodwill and indefinite-lived

intangible assets were not impaired.

6. Credit Facility and Long Term Debt

Credit Facility

In May 2014, the Company entered into a new unsecured $650.0 million credit facility and terminated its
prior $325.0 million secured revolving credit facility. The credit agreement has a term of five years through May
2019, with permitted extensions under certain circumstances. The credit agreement provides for a committed
revolving credit facility of $400.0 million, in addition to an aggregate term loan commitment of $250.0 million,
consisting of a $150.0 million term loan, drawn at the closing of the credit agreement, and $100.0 million
delayed draw term loan drawn in November 2014 for general corporate purposes. At the Company’s request and
the lenders’ consent, the revolving credit facility or term loans may be increased by up to an additional
$150.0 million. Borrowings under the revolving credit facility may be made in U.S. Dollars, Euros, Pounds
Sterling, Japanese Yen and Canadian Dollars. Up to $50.0 million of the facility may be used for the issuance of
letters of credit and up to $50.0 million of the facility may be used for the issuance of swingline loans. There
were no significant letters of credit and no swingline loans outstanding as of December 31, 2014.

The credit agreement contains negative covenants that, subject to significant exceptions, limit the ability of

the Company and its subsidiaries to, among other things, incur additional indebtedness, make restricted
payments, pledge their assets as security, make investments, loans, advances, guarantees and acquisitions,
undergo fundamental changes and enter into transactions with affiliates. The Company is also required to
maintain a ratio of consolidated EBITDA, as defined in the credit agreement, to consolidated interest expense of
not less than 3.50 to 1.00 and is not permitted to allow the ratio of consolidated total indebtedness to consolidated
EBITDA to be greater than 3.25 to 1.00 (“consolidated leverage ratio”). As of December 31, 2014, the Company
was in compliance with these ratios. In addition, the credit agreement contains events of default that are
customary for a facility of this nature, and includes a cross default provision whereby an event of default under
other material indebtedness, as defined in the credit agreement, will be considered an event of default under the
credit agreement.

Borrowings under the credit agreement bear interest at a rate per annum equal to, at the Company’s option,
either (a) an alternate base rate, or (b) a rate based on the rates applicable for deposits in the interbank market for
U.S. Dollars or the applicable currency in which the loans are made (“adjusted LIBOR”), plus in each case an
applicable margin. The applicable margin for loans will be adjusted by reference to a grid (the “Pricing Grid”)
based on the consolidated leverage ratio and ranges between 1.00% to 1.25% for adjusted LIBOR loans and
0.00% to 0.25% for alternate base rate loans. The interest rate under both term loans was 1.2% during the year
ended December 31, 2014. No balance was outstanding under the Company’s revolving credit facility as of
December 31, 2014. Additionally, the Company pays a commitment fee on the average daily unused amount of

the revolving credit facility, a ticking fee on the undrawn amounts under the delayed draw term loan and certain
fees with respect to letters of credit. As of December 31, 2014, the commitment fee was 12.5 basis points.

The Company used $100.0 million of the proceeds from the $150.0 million loan to repay the $100.0 million

outstanding under the Company’s prior revolving credit facility. The Company incurred and capitalized
$1.7 million in deferred financing costs in connection with the credit facility.

Other 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. At December 31, 2014, 2013 and 2012, the outstanding principal balance under these agreements
was $2.0 million, $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 3.1%, 3.3% and 3.7% for the years ended December 31, 2014, 2013 and 2012, respectively.

In December 2012, the Company 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 loan includes covenants and events of default substantially
consistent with the new credit agreement discussed above. The loan also requires prior approval of the lender for
certain matters related to the property, including transfers of any interest in the property. As of December 31,
2014, 2013 and 2012, the outstanding balance on the loan was $46.0 million, $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, 2014,
2013 and 2012.

The following are the scheduled maturities of long term debt as of December 31, 2014:

(In thousands)

2015
2016
2017
2018
2019
2020 and thereafter

Total scheduled maturities of long term debt

Less current maturities of long term debt

Long term debt obligations

$ 28,951
27,000
27,000
27,000
138,250
36,000

284,201
(28,951)

$255,250

Interest expense, net was $5.3 million, $2.9 million and $5.2 million for the years ended December 31,

2014, 2013 and 2012, respectively. Interest expense includes the amortization of deferred financing costs and
interest expense under the credit and long term debt facilities.

The Company monitors the financial health and stability of its lenders under the credit and other long term

debt facilities, however during any period of significant instability in the credit markets lenders could be
negatively impacted in their ability to perform under these facilities.

7. Commitments and Contingencies

Obligations Under Operating Leases

The Company leases warehouse space, office facilities, space for its brand and factory house stores and

certain equipment under non-cancelable operating leases. The leases expire at various dates through 2028,

excluding extensions at the Company’s option, and include provisions for rental adjustments. The table below
includes executed lease agreements for brand and factory house stores that the Company did not yet occupy as of
December 31, 2014 and does not include contingent rent the Company may incur at its stores based on future
sales above a specified minimum or payments made for maintenance, insurance and real estate taxes. The
following is a schedule of future minimum lease payments for non-cancelable real property operating leases as of
December 31, 2014 as well as significant operating lease agreements entered into during the period after
December 31, 2014 through the date of this report:

(In thousands)

2015
2016
2017
2018
2019
2020 and thereafter

Total future minimum lease payments

$ 56,452
57,079
52,172
48,345
44,313
214,214

$472,575

Included in selling, general and administrative expense was rent expense of $59.0 million, $41.8 million and

$31.1 million for the years ended December 31, 2014, 2013 and 2012, respectively, under non-cancelable
operating lease agreements. Included in these amounts was contingent rent expense of $11.0 million, $7.8 million
and $6.2 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Sponsorships and Other Marketing Commitments

Within the normal course of business, the Company enters into contractual commitments in order to

promote the Company’s brand and products. These commitments include sponsorship agreements with teams and
athletes on the collegiate and professional levels, official supplier agreements, athletic event sponsorships and
other marketing commitments. The following is a schedule of the Company’s future minimum payments under
its sponsorship and other marketing agreements as of December 31, 2014, as well as significant sponsorship and
other marketing agreements entered into during the period after December 31, 2014 through the date of this
report:

(In thousands)

2015
2016
2017
2018
2019
2020 and thereafter

Total future minimum sponsorship and other marketing payments

$ 90,056
71,654
56,734
44,982
33,155
96,345

$392,926

The amounts listed above are the minimum obligations required to be paid under the Company’s

sponsorship and other marketing agreements. The amounts listed above do not include additional performance
incentives and product supply obligations provided under certain agreements. It is not possible to determine how
much the Company will spend on product supply obligations on an annual basis as contracts generally do not
stipulate specific cash amounts to be spent on products. The amount of product provided to the sponsorships
depends on many factors including general playing conditions, the number of sporting events in which they
participate and the Company’s decisions regarding product and marketing initiatives. In addition, the costs to
design, develop, source and purchase the products furnished to the endorsers are incurred over a period of time
and are not necessarily tracked separately from similar costs incurred for products sold to customers.

Other

From time to time, the Company is involved in litigation and other proceedings, including matters related to
commercial and intellectual property disputes, as well as trade, regulatory and other claims related to its business.
The Company believes that all current proceedings are routine in nature and incidental to the conduct of its
business, and that the ultimate resolution of any such proceedings will not have a material adverse effect on its
consolidated financial position, results of operations or cash flows.

In connection with various contracts and agreements, the Company has agreed to indemnify counterparties

against certain third party claims relating to the infringement of intellectual property rights and other items.
Generally, such indemnification obligations do not apply in situations in which the counterparties are grossly
negligent, engage in willful misconduct, or act in bad faith. Based on the Company’s historical experience and
the estimated probability of future loss, the Company has determined that the fair value of such indemnifications
is not material to its consolidated financial position or results of operations.

8. Stockholders’ Equity

The Company’s Class A Common Stock and Class B Convertible Common Stock have an authorized
number of shares at December 31, 2014 of 400.0 million shares and 36.6 million shares, respectively, and each
have a par value of $0.0003 1/3 per share. Holders of Class A Common Stock and Class B Convertible Common
Stock have identical rights, including liquidation preferences, except that the holders of Class A Common Stock
are entitled to one vote per share and holders of Class B Convertible Common Stock are entitled to 10 votes per
share on all matters submitted to a stockholder vote. Class B Convertible Common Stock may only be held by
Kevin Plank, the Company’s founder and Chief Executive Officer, or a related party of Mr. Plank, as defined in
the Company’s charter. As a result, Mr. Plank has a majority voting control over the Company. Upon the transfer
of shares of Class B Convertible Stock to a person other than Mr. Plank or a related party of Mr. Plank, the shares
automatically convert into shares of Class A Common Stock on a one-for-one basis. In addition, all of the
outstanding shares of Class B Convertible Common Stock will automatically convert into shares of Class A
Common Stock on a one-for-one basis upon the death or disability of Mr. Plank or on the record date for any
stockholders’ meeting upon which the shares of Class A Common Stock and Class B Convertible Common Stock
beneficially owned by Mr. Plank is less than 15% of the total shares of Class A Common Stock and Class B
Convertible Common Stock outstanding. Holders of the Company’s common stock are entitled to receive
dividends when and if authorized and declared out of assets legally available for the payment of dividends.

During the year ended December 31, 2014, 3.4 million shares of Class B Convertible Common Stock were

converted into shares of Class A Common Stock on a one-for-one basis in connection with stock sales.

9. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an

orderly transaction between market participants at the measurement date (an exit price). The fair value
accounting guidance outlines a valuation framework, creates a fair value hierarchy in order to increase the
consistency and comparability of fair value measurements and the related disclosures, and prioritizes the inputs
used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2:

Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to

develop its own assumptions.

Financial assets and (liabilities) measured at fair value are set forth in the table below:

(In thousands)

December 31, 2014

December 31, 2013

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Derivative foreign currency forward contracts (see Note 14)
Interest rate swap contracts (see Note 14)
TOLI policies held by the Rabbi Trust (see Note 13)
Deferred Compensation Plan obligations (see Note 13)

806 $ — $ — $
$ — $
(607) —
—
—
4,734 —
— (4,525) —

12 $ —
1,087 —
—
—
4,625 —
— (3,338) —

Fair values of the financial assets and liabilities listed above are determined using inputs that use as their

basis readily observable market data that are actively quoted and are validated through external sources,
including third-party pricing services and brokers. The foreign currency forward contracts represent gains and
losses on derivative contracts, which is the net difference between the U.S. dollar value to be received or paid at
the contracts’ settlement date and the U.S. dollar value of the foreign currency to be sold or purchased at the
current forward exchange rate. The interest rate swap contract represents gains and losses on the derivative
contract, which is the net difference between the fixed interest to be paid and variable interest to be received over
the term of the contract based on current market rates. The fair value of the trust owned life insurance (“TOLI”)
policies held by the Rabbi Trust is based on the cash-surrender value of the life insurance policies, which are
invested primarily in mutual funds and a separately managed fixed income fund. These investments are initially
made in the same funds and purchased in substantially the same amounts as the selected investments of
participants in the Under Armour, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”), which
represent the underlying liabilities to participants in the Deferred Compensation Plan. Liabilities under the
Deferred Compensation Plan are recorded at amounts due to participants, based on the fair value of participants’
selected investments.

The carrying value of the Company’s long term debt approximated its fair value as of December 31, 2014
and 2013. The fair value of the Company’s long term debt was estimated based upon quoted prices for similar
instruments (Level 2 input).

10. Provision for Income Taxes

Income before income taxes is as follows:

(In thousands)

Income before income taxes:

United States
Foreign

Total

Year Ended December 31,

2014

2013

2012

$269,503
72,707

$196,558
64,435

$155,514
47,925

$342,210

$260,993

$203,439

The components of the provision for income taxes consisted of the following:

(In thousands)

Current
Federal
State
Other foreign countries

Deferred
Federal
State
Other foreign countries

Provision for income taxes

Year Ended December 31,

2014

2013

2012

$110,439
24,419
16,489

$ 85,542
19,130
13,295

$ 66,533
12,962
8,139

151,347

117,967

87,634

(15,368)
(4,073)
2,262

(14,722)
(5,541)
959

(9,606)
(3,563)
196

(17,179)

(19,304)

(12,973)

$134,168

$ 98,663

$ 74,661

A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as

follows:

U.S. federal statutory income tax rate
State taxes, net of federal tax impact
Unrecognized tax benefits
Nondeductible expenses
Foreign rate differential
Foreign valuation allowance
Other

Effective income tax rate

Year Ended December 31,

2014

35.0%
3.8
1.9
1.0
(4.5)
2.5
(0.5)

39.2%

2013

35.0%
2.4
2.5
1.1
(4.8)
1.5
0.1

37.8%

2012

35.0%
2.1
2.7
0.6
(4.9)
0.8
0.4

36.7%

The increase in the 2014 full year effective income tax rate, as compared to 2013, is primarily due to
increased foreign investments driving a lower proportion of foreign taxable income in 2014 and state tax credits
received in 2013.

Deferred tax assets and liabilities consisted of the following:

(In thousands)

Deferred tax asset
Stock-based compensation
Allowance for doubtful accounts and other reserves
Foreign net operating loss carryforward
Accrued expenses
Deferred rent
Inventory obsolescence reserves
Tax basis inventory adjustment
Foreign tax credits
U. S. net operating loss carryforward
State tax credits, net of federal tax impact
Deferred compensation
Other

Total deferred tax assets
Less: valuation allowance

Total net deferred tax assets

Deferred tax liability
Property, plant and equipment
Intangible assets
Prepaid expenses
Other

Total deferred tax liabilities

Total deferred tax assets, net

December 31,

2014

2013

$ 35,161
24,774
16,302
11,398
11,005
8,198
5,845
5,131
4,733
4,245
1,858
4,592

$ 25,472
16,262
13,829
3,403
8,980
6,269
5,633
3,807
10,119
5,342
1,372
5,889

133,242
(15,550)

117,692

106,377
(8,091)

98,286

(17,638)
(7,010)
(6,424)
(612)

(13,375)
(8,627)
(6,380)
(447)

(31,684)

(28,829)

$ 86,008

$ 69,457

In connection with the Company’s acquisition of MapMyFitness (see Note 3), the Company acquired
$10.5 million in deferred tax assets associated with approximately $42.5 million in federal and state net operating
loss (“NOLs”) carryforwards. The acquisition resulted in a “change of ownership” within the meaning of
Section 382 of the Internal Revenue Code, and, as a result, such NOLs are subject to an annual limitation.

As of December 31, 2014, the Company had $4.7 million in deferred tax assets associated with

approximately $23.1 million in federal and state net operating losses from the acquisition of MapMyFitness
remaining, which will expire beginning 2029 through 2033. Based upon the historical taxable income and
projections of future taxable income over periods in which these NOLs will be deductible, the Company believes
that it is more likely than not that the Company will be able to fully utilize these NOLs before the carry-forward
periods expire beginning 2029 through 2033, and therefore a valuation allowance is not required.

As of December 31, 2014, the Company had $16.3 million in deferred tax assets associated with
approximately $62.0 million in foreign net operating loss carryforwards, which will expire beginning 2016
through 2020. As of December 31, 2014, the Company believes certain deferred tax assets associated with
foreign net operating loss carryforwards will expire unused based on the Company’s projections. Therefore, a
valuation allowance of $6.1 million was recorded against the Company’s net deferred tax assets in 2014.

As of December 31, 2014, the Company had $5.1 million in deferred tax assets associated with foreign tax

credits. As of December 31, 2014 the Company believes that a portion of the foreign taxes paid would not be
creditable against its future income taxes. Therefore, a valuation allowance of $1.3 million was recorded against
the Company’s net deferred tax assets in 2014.

As of December 31, 2014, approximately $129.2 million of cash and cash equivalents was held by the
Company’s non-U.S. subsidiaries whose cumulative undistributed earnings total $176.8 million. Withholding and
U.S. taxes have not been provided on the undistributed earnings as the earnings are being permanently reinvested
in its non-U.S. subsidiaries. Determining the tax liability that would arise if these earnings were repatriated is not
practical.

We utilize the “with and without” method for intraperiod allocation of income tax provisions. Certain tax

benefits associated with the Company’s stock-based compensation arrangements are recorded directly to
Stockholders’ equity including benefit from excess tax deductions.

As of December 31, 2014 and 2013, the total liability for unrecognized tax benefits, including related

interest and penalties, was approximately $31.3 million and $24.1 million, respectively. The following table
represents a reconciliation of the Company’s total unrecognized tax benefits balances, excluding interest and
penalties, for the years ended December 31, 2014, 2013 and 2012:

(In thousands)

Beginning of year
Increases as a result of tax positions taken in a prior period
Decreases as a result of tax positions taken in a prior period
Increases as a result of tax positions taken during the current period
Decreases as a result of tax positions taken during the current period
Decreases as a result of settlements during the current period
Reductions as a result of a lapse of statute of limitations during the current

period

End of year

Year Ended December 31,

2014

2013

2012

$21,712
250
—
8,947
—
—

$15,297
—
—
7,526
—
—

$ 9,783
—
—
5,702
—
—

(2,556)

(1,111)

(188)

$28,353

$21,712

$15,297

As of December 31, 2014, $26.3 million of unrecognized tax benefits, excluding interest and penalties,

would impact the Company’s effective tax rate if recognized.

As of December 31, 2014, 2013 and 2012, the liability for unrecognized tax benefits included $3.0 million,
$2.4 million and $1.8 million, respectively, for the accrual of interest and penalties. For each of the years ended
December 31, 2014, 2013 and 2012, the Company recorded $1.2 million, $1.0 million and $0.7 million,
respectively, for the accrual of interest and penalties in its consolidated statements of income. The Company
recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes
on the consolidated statements of income.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign

jurisdictions. The Company is currently under audit by the Internal Revenue Service for the 2011 tax year and by
the Canada Revenue Authority for the 2011 through 2012 tax years. The majority of the Company’s returns for
years before 2011 are no longer subject to U.S. federal, state and local or foreign income tax examinations by tax
authorities

The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change
based on future events including, but not limited to, the settlements of ongoing tax audits and assessments and
the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly
uncertain, the Company does not anticipate that the balance of gross unrecognized tax benefits, excluding interest
and penalties, will change significantly during the next twelve months. However, changes in the occurrence,
expected outcomes, and timing of such events could cause the Company’s current estimates to change materially
in the future.

11. Earnings per Share

The calculation of earnings per share for common stock shown below excludes the income attributable to

outstanding restricted stock awards from the numerator and excludes the impact of these awards from the
denominator. The following is a reconciliation of basic earnings per share to diluted earnings per share:

(In thousands, except per share amounts)

Numerator
Net income

Denominator
Weighted average common shares outstanding
Effect of dilutive securities

Year Ended December 31,

2014

2013

2012

$208,042

$162,330

$128,778

213,227
6,153

210,696
5,262

208,686
4,074

Weighted average common shares and dilutive securities outstanding

219,380

215,958

212,760

Earnings per share—basic
Earnings per share—diluted

$
$

0.98
0.95

$
$

0.77
0.75

$
$

0.62
0.61

Effects of potentially dilutive securities are presented only in periods in which they are dilutive. Stock
options, restricted stock units and warrants representing 22.6 thousand, 116.9 thousand and 208.9 thousand
shares of common stock were outstanding for the years ended December 31, 2014, 2013 and 2012, respectively,
but were excluded from the computation of diluted earnings per share because their effect would be anti-dilutive.

12. Stock-Based Compensation

Stock Compensation Plans

The Under Armour, Inc. Amended and Restated 2005 Omnibus Long-Term Incentive Plan (the “2005
Plan”) provides for the issuance of stock options, restricted stock, restricted stock units and other equity awards
to officers, directors, key employees and other persons. Stock options and restricted stock and restricted stock
unit awards under the 2005 Plan generally vest ratably over a two to four year period. The contractual term for
stock options is generally ten years from the date of grant. The Company generally receives a tax deduction for
any ordinary income recognized by a participant in respect to an award under the 2005 Plan. The 2005 Plan
terminates in 2015. As of December 31, 2014, 19.3 million shares are available for future grants of awards under
the 2005 Plan.

Total stock-based compensation expense for the years ended December 31, 2014, 2013 and 2012 was
$50.8 million, $43.2 million and $19.8 million, respectively. As of December 31, 2014, the Company had
$28.6 million of unrecognized compensation expense expected to be recognized over a weighted average period
of 1.0 year. This unrecognized compensation expense does not include any expense related to performance-based
restricted stock units for which the performance targets have not been achieved as of December 31, 2014. Refer
to “Restricted Stock and Restricted Stock Units” below for further information on these awards.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (the “ESPP”) allows for the purchase of Class A Common
Stock by all eligible employees at a 15% discount from fair market value subject to certain limits as defined in
the ESPP. As of December 31, 2014, 2.8 million shares are available for future purchases under the ESPP.
During the years ended December 31, 2014, 2013 and 2012, 87.6 thousand, 108.4 thousand and 113.8 thousand
shares were purchased under the ESPP, respectively.

Non-Employee Director Compensation Plan and Deferred Stock Unit Plan

The Company’s Non-Employee Director Compensation Plan (the “Director Compensation Plan”) provides
for cash compensation and equity awards to non-employee directors of the Company under the 2005 Plan. Non-
employee directors have the option to defer the value of their annual cash retainers as deferred stock units in
accordance with the Under Armour, Inc. Non-Employee Deferred Stock Unit Plan (the “DSU Plan”). Each new
non-employee director receives an award of restricted stock units upon the initial election to the Board of
Directors, with the units covering stock valued at $100.0 thousand on the grant date and vesting in three equal
annual installments. In addition, each non-employee director receives, following each annual stockholders’
meeting, a grant under the 2005 Plan of restricted stock units covering stock valued at $75.0 thousand on the
grant date. Beginning in 2015, this annual grant is increasing from $75.0 thousand to $125.0 thousand. Each
award vests 100% on the date of the next annual stockholders’ meeting following the grant date.

The receipt of the shares otherwise deliverable upon vesting of the restricted stock units automatically
defers into deferred stock units under the DSU Plan. Under the DSU Plan each deferred stock unit represents the
Company’s obligation to issue one share of the Company’s Class A Common Stock with the shares delivered six
months following the termination of the director’s service.

Stock Options

The weighted average fair value of a stock option granted for the year ended December 31, 2013 was

$12.91. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions:

Risk-free interest rate
Average expected life in years
Expected volatility
Expected dividend yield

Year Ended
December 31,

2013

1.2%
6.25
55.4%
— %

There were no stock options granted during the years ended December 31, 2014 and December 31, 2012.

A summary of the Company’s stock options as of December 31, 2014, 2013 and 2012, and changes during

the years then ended is presented below:

(In thousands, except per share amounts)

2014

2013

2012

Year Ended December 31,

Outstanding, beginning of year
Granted, at fair market value
Exercised
Expired
Forfeited

Outstanding, end of year

Number
of Stock
Options

4,272
—
(1,454)
—

(7)

Weighted
Average
Exercise
Price

$ 8.11
—
7.74
—
16.46

Number
of Stock
Options

6,298
20
(1,822)
—
(224)

Weighted
Average
Exercise
Price

$ 7.66
24.35
6.68
—
8.41

Number
of Stock
Options

9,616
—
(2,436)
—
(882)

2,811

$ 8.28

4,272

$ 8.11

6,298

Weighted
Average
Exercise
Price

$7.00
—
5.09
—
7.60

$7.66

Options exercisable, end of year

2,707

$ 7.87

2,346

$ 7.80

1,936

$6.55

The intrinsic value of stock options exercised during the years ended December 31, 2014, 2013 and 2012

was $73.0 million, $44.1 million and $44.5 million, respectively.

The following table summarizes information about stock options outstanding and exercisable as of

December 31, 2014:

(In thousands, except per share amounts)

Options Outstanding

Options Exercisable

Number of
Underlying
Shares

2,811

Weighted
Average
Exercise
Price Per
Share

$8.28

Weighted
Average
Remaining
Contractual
Life (Years)

Total
Intrinsic
Value

Number of
Underlying
Shares

5.01

$167,623

2,707

Weighted
Average
Exercise
Price Per
Share

$7.87

Weighted
Average
Remaining
Contractual
Life (Years)

Total
Intrinsic
Value

4.94

$162,518

Restricted Stock and Restricted Stock Units

A summary of the Company’s restricted stock and restricted stock units as of December 31, 2014, 2013 and

2012, and changes during the years then ended is presented below:

(In thousands, except per share amounts)

2014

2013

2012

Year Ended December 31,

Outstanding, beginning of year
Granted
Forfeited
Vested

Outstanding, end of year

Number
of
Restricted
Shares

Weighted
Average
Fair Value

Number
of
Restricted
Shares

Weighted
Average
Fair Value

Number
of
Restricted
Shares

Weighted
Average
Fair Value

5,244
1,061
(958)
(837)

4,510

$22.19
54.17
20.98
19.49

$30.42

4,514
1,682
(410)
(542)

5,244

$19.51
26.35
17.37
16.76

$22.19

3,292
2,658
(758)
(678)

4,514

$14.56
22.92
16.73
11.66

$19.51

Included in the table above are 1.0 million, 1.4 million and 2.0 million performance-based restricted stock
units awarded to certain executives and key employees under the 2005 Plan during the years ended December 31,
2014, 2013 and 2012, respectively. These performance-based restricted stock units have a weighted average fair
value of $30.30 and have vesting that is tied to the achievement of certain combined annual operating income
targets.

During the year ended December 31, 2014, the Company deemed the achievement of certain operating
income targets probable for the awards granted in 2014, 2013 and 2012, and recorded $38.4 million for a portion
of these awards, including cumulative adjustments of $6.6 million during the three months ended March 31, 2014
and $3.8 million during the three months ended September 30, 2014. During the year ended December 31, 2013,
the Company deemed the achievement of certain operating targets probable for the awards granted in 2013, 2012
and 2011, and recorded $30.8 million for a portion of these awards, including cumulative adjustments of
$9.0 million during the three months ended March 31, 2013 and $11.3 million during the three months ended
December 31, 2013. During the year ended December 31, 2012, the Company deemed the achievement of certain
operating income targets probable for the awards granted in 2011, and recorded $4.1 million for a portion of
these awards, including a cumulative adjustment of $2.4 million during the three months ended March 31, 2012.
The Company will assess the probability of the achievement of the operating income targets at the end of each
reporting period. If it becomes probable that the remaining performance targets related to these performance-
based restricted stock units will be achieved, a cumulative adjustment will be recorded as if ratable stock-based
compensation expense had been recorded since the grant date. Additional stock based compensation of up to
$2.7 million would have been recorded through December 31, 2014 for all performance-based restricted stock
units had the full achievement of these operating income targets been deemed probable.

Warrants

In 2006, the Company issued fully vested and non-forfeitable warrants to purchase 1.9 million shares of the

Company’s Class A Common Stock to NFL Properties as partial consideration for footwear promotional rights
which were recorded as an intangible asset. With the assistance of an independent third party valuation firm, the
Company assessed the fair value of the warrants using various fair value models. Using these measures, the
Company concluded that the fair value of the warrants was $8.5 million. The warrants have a term of 12 years
from the date of issuance and an exercise price of $9.25 per share, which is the adjusted closing price of the
Company’s Class A Common Stock on the date of issuance. As of December 31, 2014, all outstanding warrants
were exercisable, and no warrants were exercised.

13. Other Employee Benefits

The Company offers a 401(k) Deferred Compensation Plan for the benefit of eligible employees. Employee
contributions are voluntary and subject to Internal Revenue Service limitations. The Company matches a portion
of the participant’s contribution and recorded expense of $4.9 million, $2.7 million and $2.3 million for the years
ended December 31, 2014, 2013 and 2012, respectively. Shares of the Company’s Class A Common Stock are
not an investment option in this plan.

In addition, the Company offers the Under Armour, Inc. Deferred Compensation Plan which allows a select
group of management or highly compensated employees, as approved by the Compensation Committee, to make
an annual base salary and/or bonus deferral for each year. As of December 31, 2014 and 2013, the Deferred
Compensation Plan obligations were $4.5 million and $3.3 million, respectively, and were included in other long
term liabilities on the consolidated balance sheets.

The Company established the Rabbi Trust to fund obligations to participants in the Deferred Compensation

Plan. As of December 31, 2014 and 2013, the assets held in the Rabbi Trust were TOLI policies with cash-
surrender values of $4.7 million and $4.6 million, respectively. These assets are consolidated and are included in
other long term assets on the consolidated balance sheet. Refer to Note 9 for a discussion of the fair value
measurements of the assets held in the Rabbi Trust and the Deferred Compensation Plan obligations.

14. Risk Management and Derivatives

Foreign Currency Risk Management

The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates
relating to transactions generated by its international subsidiaries in currencies other than their local currencies.

These gains and losses are primarily driven by intercompany transactions and inventory purchases denominated
in currencies other than the functional currency of the purchasing entity. From time to time, the Company may
elect to enter into foreign currency forward contracts to reduce the risk associated with foreign currency
exchange rate fluctuations on intercompany transactions and projected inventory purchases for its international
subsidiaries. As the Company expands its international business, it may expand the current hedging program to
include additional currency pairs and instruments.

As of December 31, 2014, the aggregate notional value of our outstanding foreign currency forward

contracts was $123.3 million, which was comprised of Canadian Dollar/U.S. Dollar, Euro/U.S. Dollar, Yen/Euro,
Mexican Peso/Euro and Pound Sterling/Euro currency pairs with contract maturities ranging from one to eleven
months. The majority of the Company’s foreign currency forward contracts are not designated as cash flow
hedges, and accordingly, changes in their fair value are recorded in earnings. During 2014, the Company began
entering into foreign currency forward contracts designated as cash flow hedges. For foreign currency forward
contracts designated as cash flow hedges, changes in fair value, excluding any ineffective portion, are recorded in
other comprehensive income until net income is affected by the variability in cash flows of the hedged
transaction. The effective portion is generally released to net income after the maturity of the related derivative
and is classified in the same manner as the underlying exposure. During the year ended December 31, 2014, the
Company reclassified $0.4 million from other comprehensive income to cost of goods sold related to foreign
currency forward contracts designated as cash flow hedges. The fair values of the Company’s foreign currency
forward contracts were assets of $806.0 thousand and $12.1 thousand as of December 31, 2014 and 2013,
respectively, and were included in prepaid expenses and other current assets on the consolidated balance sheet.
Refer to Note 9 for a discussion of the fair value measurements. Included in other expense, net were the
following amounts related to changes in foreign currency exchange rates and derivative foreign currency forward
contracts:

(In thousands)

Year Ended December 31,

2014

2013

2012

Unrealized foreign currency exchange rate gains (losses)
Realized foreign currency exchange rate gains (losses)
Unrealized derivative gains (losses)
Realized derivative gains (losses)

$(11,739)
2,247
1
3,081

$(1,905)
477
13
243

$ 2,464
(182)
675
(3,030)

Interest Rate Risk Management

In order to maintain liquidity and fund business operations, the Company enters into long term debt
arrangements with various lenders which bear a range of fixed and variable rates of interest. The nature and
amount of the Company’s long-term debt can be expected to vary as a result of future business requirements,
market conditions and other factors. The Company may elect to enter into interest rate swap contracts to reduce
the impact associated with interest rate fluctuations. The Company utilizes interest rate swap contracts to convert
a portion of variable rate debt to fixed rate debt. The contracts pay fixed and receive variable rates of interest.
The interest rate swap contracts are accounted for as cash flow hedges and accordingly, the effective portion of
the changes in their fair value are recorded in other comprehensive income and reclassified into interest expense
over the life of the underlying debt obligation.

As of December 31, 2014, the aggregate notional value of our outstanding interest rate swap contracts was
$188.1 million. During the years ended December 31, 2014 and 2013, the Company recorded a $1.7 million and
$0.3 million increase in interest expense, respectively, representing the effective portion of the contracts
reclassified from accumulated other comprehensive income. The fair value of the interest rate swap contracts was
a liability of $0.6 million as of December 31, 2014, and was included in other long term liabilities on the
consolidated balance sheet. The fair value of the interest rate swap contract was an asset of $1.1 million as of
December 31, 2013 and was included in other long term assets on the consolidated balance sheet.

The Company enters into derivative contracts with major financial institutions with investment grade credit
ratings and is exposed to credit losses in the event of non-performance by these financial institutions. This credit
risk is generally limited to the unrealized gains in the foreign currency forward contracts. However, the Company
monitors the credit quality of these financial institutions and considers the risk of counterparty default to be
minimal.

15. Related Party Transactions

The Company has agreements to license software systems with a software company whose CEO is a
director of the Company. During the years ended December 31, 2014, 2013 and 2012, the Company paid
$5.2 million, $3.7 million and $1.9 million, respectively, in licensing fees and related support services to this
company. There were no amounts payable to this related party as of December 31, 2014 and 2013.

The Company has an operating lease agreement with an entity controlled by the Company’s CEO to lease an

aircraft for business purposes. The Company paid $1.8 million, $1.0 million and $0.8 million in lease payments
to the entity for its use of the aircraft during the years ended December 31, 2014, 2013 and 2012, respectively.
No amounts were payable to this related party as of December 31, 2014 and 2013. The Company determined the
lease payments were at or below fair market lease rates.

During 2014, the Company entered into a lease agreement with an entity controlled by the Company’s CEO

to lease office space for business purposes. The lease has a 10 year term beginning in 2016 and lease payments
are expected to begin at $1.1 million annually with an annual escalation of 2.0% thereafter. The Company
determined the lease payments were at or below fair market lease rates.

16. Segment Data and Related Information

The Company’s operating segments are based on how the Chief Operating Decision Maker (“CODM”)
makes decisions about allocating resources and assessing performance. As such, the CODM receives discrete
financial information for the Company’s principal business by geographic region based on the Company’s
strategy to become a global brand. These geographic regions include North America; Latin America; Europe, the
Middle East and Africa (“EMEA”); and Asia-Pacific. Each geographic segment operates exclusively in one
industry: the development, marketing and distribution of branded performance apparel, footwear and accessories.
The CODM also receives discrete financial information for the Company’s MapMyFitness business. Due to the
insignificance of the EMEA, Latin America, Asia-Pacific and MapMyFitness operating segments, they have been
combined into other foreign countries and businesses for disclosure purposes.

The net revenues and operating income (loss) associated with the Company’s segments are summarized in

the following tables. Net revenues represent sales to external customers for each segment. In addition to net
revenues, operating income (loss) is a primary financial measure used by the Company to evaluate performance
of each segment. Intercompany balances were eliminated for separate disclosure and the majority of corporate
expenses within North America have not been allocated to other foreign countries and businesses.

(In thousands)

Net revenues
North America
Other foreign countries and businesses

Year Ended December 31,

2014

2013

2012

$2,796,390
287,980

$2,193,739
138,312

$1,726,733
108,188

Total net revenues

$3,084,370

$2,332,051

$1,834,921

(In thousands)

Operating income (loss)
North America
Other foreign countries and businesses

Total operating income

Interest expense, net
Other expense, net

Year Ended December 31,

2014

2013

2012

$372,347
(18,392)

$271,338
(6,240)

$200,084
8,611

353,955
(5,335)
(6,410)

265,098
(2,933)
(1,172)

208,695
(5,183)
(73)

Income before income taxes

$342,210

$260,993

$203,439

Net revenues by product category are as follows:

(In thousands)

Apparel
Footwear
Accessories

Total net sales

Licensing and other revenues

Total net revenues

Year Ended December 31,

2014

2013

2012

$2,291,520
430,987
275,425

2,997,932
86,438

$1,762,150
298,825
216,098

2,277,073
54,978

$1,385,350
238,955
165,835

1,790,140
44,781

$3,084,370

$2,332,051

$1,834,921

As of December 31, 2014 and 2013, the majority of the Company’s long-lived assets were located in the
United States. Net revenues in the United States were $2,670.4 million, $2,082.5 million and $1,650.4 million for
the years ended December 31, 2014, 2013 and 2012, respectively.

17. Unaudited Quarterly Financial Data

(In thousands)

2014
Net revenues
Gross profit
Income from operations
Net income
Earnings per share-basic
Earnings per share-diluted

2013
Net revenues
Gross profit
Income from operations
Net income
Earnings per share-basic
Earnings per share-diluted

Quarter Ended (unaudited)

March 31,

June 30,

September 30,

December 31,

$641,607
300,690
26,856
13,538
0.06
0.06

$
$

$471,608
216,551
13,492
7,814
0.04
0.04

$
$

$609,654
299,952
34,694
17,690
0.08
0.08

$
$

$454,541
219,631
32,310
17,566
0.08
0.08

$
$

$937,908
465,300
146,106
89,105
0.42
0.41

$
$

$723,146
350,135
120,829
72,784
0.34
0.34

$
$

$895,201
446,264
146,299
87,709
0.41
0.40

$
$

$682,756
350,353
98,467
64,166
0.30
0.30

$
$

Year Ended
December 31,

$3,084,370
1,512,206
353,955
208,042
0.98
0.95

$
$

$2,332,051
1,136,670
265,098
162,330
0.77
0.75

$
$

18. Subsequent Events

Acquisitions

On January 5, 2015, the Company acquired 100% of the outstanding equity of Endomondo ApS, a

Denmark-based connected fitness company for $85 million, subject to adjustment for working capital. In
connection with this acquisition, the Company incurred acquisition related expenses of approximately
$0.8 million during the year ended December 31, 2014. These expenses were included in selling, general and
administrative expenses on the consolidated statements of income. The operating results for this acquisition will
be included in the Company’s consolidated statements of income from the date of acquisition. The Company is
currently in the process of assessing the fair value of the assets acquired and liabilities assumed, which is
expected to be final during the first quarter of 2015.

On February 3, 2015, the Company entered into an agreement to acquire MyFitnessPal, Inc.

(“MyFitnessPal”). The purchase price for the acquisition will be $475 million in cash, which will be adjusted to
reflect that the acquisition of MyFitnessPal by the Company at the closing on a debt free basis with
MyFitnessPal’s transaction expenses borne by the sellers. In addition, the aggregate purchase price payable at the
closing is subject to an upward adjustment to reflect the amount of net cash held by MyFitnessPal at closing. The
acquisition is currently expected to close during the first quarter of 2015, subject to the satisfaction of customary
closing conditions, including among others, regulatory approvals, the continuing accuracy of representations and
warranties and the execution of noncompetition agreements by certain key employee stockholders. The
acquisition is expected to be funded through a combination of increased term loan borrowings, a draw on the
increased revolving credit facility and cash on hand.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

Our management has evaluated, under the supervision and with the participation of our Chief Executive

Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of
December 31, 2014 pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”).
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of
December 31, 2014, our disclosure controls and procedures are effective in ensuring that information required to
be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner
and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Refer to Item 8 of this
report for the “Report of Management on Internal Control over Financial Reporting.”

There has been no change in our internal control over financial reporting during the most recent fiscal
quarter that has materially affected, or that is reasonably likely to materially affect our internal control over
financial reporting.

ITEM 9B. OTHER INFORMATION

None

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item regarding directors is incorporated herein by reference from the 2015

Proxy Statement, under the headings “NOMINEES FOR ELECTION AT THE ANNUAL MEETING,”
“CORPORATE GOVERNANCE AND RELATED MATTERS: Audit Committee” and “SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.” Information required by this Item regarding
executive officers is included under “Executive Officers of the Registrant” in Part 1 of this Form 10-K.

Code of Ethics

We have a written code of ethics in place that applies to all our employees, including our principal executive

officer, principal financial officer, and principal accounting officer and controller. A copy of our code of ethics
policy is available on our website: www.underarmour.com. We are required to disclose any change to, or waiver
from, our code of ethics for our senior financial officers. We intend to use our website as a method of
disseminating this disclosure as permitted by applicable SEC rules.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference herein from the 2015 Proxy Statement
under the headings “CORPORATE GOVERNANCE AND RELATED MATTERS: Compensation of Directors,”
and “EXECUTIVE COMPENSATION.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated by reference herein from the 2015 Proxy Statement
under the heading “SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
OF SHARES.” Also refer to Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE

The information required by this Item is incorporated by reference herein from the 2015 Proxy Statement

under the heading “TRANSACTIONS WITH RELATED PERSONS” and “CORPORATE GOVERNANCE
AND RELATED MATTERS—Independence of Directors.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated by reference herein from the 2015 Proxy Statement

under the heading “INDEPENDENT AUDITORS.”

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a. The following documents are filed as part of this Form 10-K:

1. Financial Statements:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2014 and 2013

Consolidated Statements of Income for the Years Ended December 31, 2014, 2013 and 2012

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2014, 2013 and

2012

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2014, 2013 and 2012

Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013 and 2012

Notes to the Audited Consolidated Financial Statements

2. Financial Statement Schedule

Schedule II—Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable or the required information is shown in the

consolidated financial statements or notes thereto.

3. Exhibits

The following exhibits are incorporated by reference or filed herewith. References to the Company’s 2007

Form 10-K are to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2007.
References to the Company’s 2010 Form 10-K are to the Registrant’s Annual Report on Form 10-K for the year
ended December 31, 2010. References to the Company’s 2011 Form 10-K are to the Registrant’s Annual Report
on Form 10-K for the year ended December 31, 2011. References to the Company’s 2012 Form 10-K are to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012. References to the Company’s
2013 Form 10-K are to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013.

Exhibit
No.

2.01

2.02

3.01

3.02

Agreement and Plan of Merger, dated as of November 8, 2013, among Under Armour, Inc., MMF
Merger Sub, Inc., MapMyFitness, Inc. and Fortis Advisors LLC (incorporated by reference to
Exhibit 2.1 of the Company’s Current Report on Form 8-K filed November 14, 2013).

Agreement and Plan of Merger, dated as of February 3, 2015, among Under Armour, Inc.,
Marathon Merger Sub, Inc., MyFitnessPal, Inc. and Fortis Advisors LLC.

Articles of Amendment (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed
March 17, 2014).

Second Amended and Restated By-Laws (incorporated by reference to Exhibit 3.02 of the
Company’s Form 8-K filed February 21, 2013).

4.01 Warrant Agreement between the Company and NFL Properties LLC dated as of August 3, 2006

(incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed August 7, 2006).

10.01

10.02

10.03

10.04

10.05

10.06

10.07

10.08

Credit Agreement, dated May 29, 2014, by and among the Company, as borrower, JPMorgan
Chase Bank, N. A., as administrative agent, PNC Bank, National Association, as Syndication
Agent, Bank of America, N. A. SunTrust Bank and Wells Fargo Bank, National Association as
Co-Documentation Agents and the other lenders and arrangers party thereto (incorporated by
reference to Exhibit 10.01 of the Current Report on Form 8-K filed June 2, 2014).

Under Armour, Inc. Executive Incentive Plan (incorporated by reference to Exhibit 10.01 of the
Company’s Current Report on Form 8-K filed on May 6, 2013).*

Under Armour, Inc. Deferred Compensation Plan (incorporated by reference to Exhibit 10.15 of
the Company’s 2007 Form 10-K) and Amendment One to this plan (incorporated by reference to
Exhibit 10.14 of the Company’s 2010 Form 10-K).*

Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.05 of
the Company’s 2013 Form 10-K).*

Under Armour, Inc. Amended and Restated 2005 Omnibus Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.01 of the Company’s Form 10-Q for the quarterly period
ending March 31, 2014).*

Restricted Stock Grant Agreement under the Amended and Restated 2005 Omnibus Long-Term
Incentive Plan between Henry Stafford and the Company (incorporated by reference to
Exhibit 10.07a of the Company’s 2011 Form 10-K).*

Forms of Non-Qualified Stock Option Grant Agreement under the Amended and Restated 2005
Omnibus Long-Term Incentive Plan (incorporated by reference to Exhibit 10.23 of the Company’s
2007 Form 10-K and Exhibit 10.08 of the Company’s 2011 Form 10-K).*

Form of Restricted Stock Unit Grant Agreement under the Amended and Restated 2005 Omnibus
Long-Term Incentive Plan (filed herewith and incorporated by reference to Exhibit 10.09 of the
Company’s 2011 Form 10-K).*

10.09

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

21.01

23.01

31.01

31.02

32.01

32.02

Forms of Performance-Based Stock Option Grant Agreement under the Amended and Restated
2005 Omnibus Long-Term Incentive Plan (filed herewith and incorporated by reference to
Exhibits 10.02 of the Company’s Form 10-Q for the quarterly period ended March 31, 2009 and
Exhibit 10.03 of the Company’s Form 10-Q for the quarterly period ended March 31, 2010).*

Amendment to Stock Option Awards Effective August 3, 2011 (incorporated by reference to
Exhibit 10.11 of the Company’s 2011 Form 10-K).*

Forms of Performance-Based Restricted Stock Unit Grant Agreement for U.S. Employees under
the Amended and Restated 2005 Omnibus Long-Term Incentive Plan (filed herewith and
incorporated by reference to Exhibit 10.12 of the Company’s 2013 Form 10-K, Exhibit 10.12 of
the Company’s 2012 Form 10-K and Exhibit 10.12 of the Company’s 2011 Form 10-K) and
Supplement to Restricted Stock Unit Grant Agreement (incorporated by reference to Exhibit 10.01
of the Company’s Form 10-Q for the quarterly period ended September 30, 2014).*

Form of Performance-Based Restricted Stock Unit Grant Agreement for International Employees
under the Amended and Restated 2005 Omnibus Long-Term Incentive Plan (filed herewith and
incorporated by reference to Exhibit 10.13 of the Company’s 2013 Form 10-K).*

Form of Employee Confidentiality, Non-Competition and Non-Solicitation Agreement by and
between certain executives and the Company (incorporated by reference to Exhibit 10.14 of the
Company’s 2013 Form 10-K).*

Employment Agreement by and between Karl-Heinz Maurath and the Company (portions of this
exhibit have been omitted pursuant to a request for confidential treatment) (incorporated by
reference to Exhibit 10.15 of the Company’s 2012 Form 10-K).*

Under Armour, Inc. 2015 Non-Employee Director Compensation Plan (filed herewith), Form of
Initial Restricted Stock Unit Grant (incorporated by reference to Exhibit 10.1 of the Current Report
on Form 8-K filed June 6, 2006), Form of Annual Stock Option Award (incorporated by reference
to Exhibit 10.3 of the Current Report on Form 8-K filed June 6, 2006) and Form of Annual
Restricted Stock Unit Grant (incorporated by reference to Exhibit 10.6 of the Company’s
Form 10-Q for the quarterly period ended June 30, 2011).*

Under Armour, Inc. 2006 Non-Employee Director Deferred Stock Unit Plan (incorporated by
reference to Exhibit 10.02 of the Company’s Form 10-Q for the quarterly period ended March 31,
2010) and Amendment One to this plan (incorporated by reference to Exhibit 10.23 of the
Company’s 2010 Form 10-K).*

Change in Control Severance Agreement between Karl-Heinz Maurath and the Company
(incorporated by reference to Exhibit 10.18 of the Company’s 2013 Form 10-K).*

List of Subsidiaries.

Consent of PricewaterhouseCoopers LLP.

Section 302 Chief Executive Officer Certification.

Section 302 Chief Financial Officer Certification.

Section 906 Chief Executive Officer Certification.

Section 906 Chief Financial Officer Certification.

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

* Management contract or a compensatory plan or arrangement required to be filed as an Exhibit pursuant to

Item 15(b) of Form 10-K.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

UNDER ARMOUR, INC.

By: /s/ KEVIN A. PLANK
Kevin A. Plank
Chairman of the Board of Directors
and Chief Executive Officer

Dated: February 20, 2015

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the

following persons on behalf of the registrant and in the capacities and on the date indicated.

/s/ KEVIN A. PLANK

Kevin A. Plank

/s/ BRAD DICKERSON

Brad Dickerson

/s/ BYRON K. ADAMS, JR.

Byron K. Adams, Jr.

/s/ GEORGE W. BODENHEIMER

George W. Bodenheimer

/s/ DOUGLAS E. COLTHARP

Douglas E. Coltharp

/s/ ANTHONY W. DEERING

Anthony W. Deering

/s/ KAREN W. KATZ
Karen Katz

/s/ A.B. KRONGARD

A.B. Krongard

/s/ WILLIAM R. MCDERMOTT

William R. McDermott

/s/ ERIC T. OLSON

Eric T. Olson

Chairman of the Board of Directors and Chief Executive

Officer (principal executive officer)

Chief Financial Officer (principal accounting and

financial officer)

Director

/s/ HARVEY L. SANDERS

Harvey L. Sanders

/s/ THOMAS J. SIPPEL

Thomas J. Sippel

Director

Dated: February 20, 2015

Schedule II

Valuation and Qualifying Accounts

(In thousands)

Description

Allowance for doubtful accounts
For the year ended December 31, 2014
For the year ended December 31, 2013
For the year ended December 31, 2012

Sales returns and allowances
For the year ended December 31, 2014
For the year ended December 31, 2013
For the year ended December 31, 2012

Deferred tax asset valuation allowance
For the year ended December 31, 2014
For the year ended December 31, 2013
For the year ended December 31, 2012

Balance at
Beginning
of Year

Charged to
Costs and
Expenses

Write-Offs
Net of
Recoveries

Balance at
End of
Year

$ 2,938
3,286
4,070

1,028
210
(108)

(273) $ 3,693
2,938
(558)
3,286
(676)

$ 34,102
32,919
20,600

$156,791
135,739
107,536

$(137,920) $52,973
34,102
32,919

(134,556)
(95,217)

$ 8,091
3,996
1,784

7,581
4,095
2,855

(122) $15,550
8,091
—
3,996
(643)

[THIS PAGE INTENTIONALLY LEFT BLANK]

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