Under Armour, Inc. fourth quarter net income increased 14% to $7.0 million from $6.2 million in the same period of 2004. Diluted earnings per share was 8 cents compared to diluted earnings per share of 15 cents in the fourth quarter of the prior year.

Net income in 2005 increased 21% to $19.7 million from $16.3 million in the prior year. Diluted earnings per share for 2005 was 36 cents compared to diluted earnings per share in 2004 of 39 cents.

The comparability of earnings per diluted share is affected by the issuance in 2005 of 9.5 million shares of common stock in connection with the Company's initial public offering and the use of a portion of the offering proceeds to redeem the Company's outstanding preferred stock.

Fourth quarter and full year diluted earnings per share in 2005 includes
a one-time charge of $3.5 million associated with the redemption of the
Company's Series A preferred stock in connection with Under Armour's
initial public offering. The impact of this charge on the fully diluted
earnings per share for the fourth quarter and the full year of 2005 is
$0.08 and $0.09, respectively.

On November 18, 2005, the Company issued an additional 9.5 million
shares in connection with its initial public offering, which had the
impact of increasing the weighted average diluted shares outstanding by
4.4 million for the quarter and 1.1 million for the full year.

Since becoming a taxable corporation in 2002, Under Armour has benefited from certain state tax credits which reduced its provision for income taxes. In 2005, the Company's remaining tax credits were fully earned which resulted in an increased effective tax rate compared to 2004. Fourth quarter net income includes a provision for income tax resulting in a 42.1% tax rate versus a 32.6% tax rate for the same period of 2004. Full year net income includes a provision for income tax resulting in a 40.2% tax rate versus a 32.3% tax rate for the same period in 2004.

“Our fourth quarter sales and strong earnings performance topped off an outstanding and eventful year for Under Armour,” stated Kevin A. Plank, Chairman, CEO, and President of Under Armour, Inc. “The demand for our performance apparel remains very strong and we are pleased that we have been able to grow our core men's apparel business while successfully broadening the product offerings in our women's and youth categories.”

Net revenues, which consist of net sales and license revenue, increased 25% in the fourth quarter to $87.3 million compared to net revenues of $69.6 million in the same period of 2004. Fourth quarter net sales, which consist of Under Armour products sold globally other than through licensees, increased 24% to $84.4 million from $68.3 million in the same period of 2004.

Within net sales, the Company's Men's category sales increased 15% to $60.1 million for the quarter. The growth in the Men's category was primarily due to the introduction of new product offerings as well as sales growth in core products. Women's category sales rose 59% to $16.7 million for the quarter. Fourth quarter Youth category sales grew 70% to $5.5 million. Improved sales in Women's and Youth reflect increases in new and existing product offerings along with door expansion. Sales of Accessories declined 11% to $2.1 million in the fourth quarter. The decline for the quarter is due to a shift of certain products to our licensees which were formerly sold within the Accessories category.

Reflecting strong results from existing licensing partnerships and the shift to licensees of certain products formerly in the Accessories category, license revenue increased 111% to $2.9 million from $1.4 million in the fourth quarter of 2004.

Gross margin for the quarter increased to 48.7% compared to 48.6% in last year's fourth quarter. Fourth quarter selling, general and administrative (SG&A) expenses were 34.0% of net revenues compared to 34.7% in the same period of the prior year. The decrease resulted primarily from a shift in timing of marketing to the first half of 2005 to support a Women's media campaign, partially offset by higher selling and payroll costs in support of the Company's footwear and international initiatives, as well as increased costs associated with being a public company. Operating income as a percentage of net revenues for the quarter increased to 14.7% compared to 13.9% in the same period of 2004.

“We are delighted with Under Armour's strong top line growth,” stated Wayne Marino, Chief Financial Officer of Under Armour, Inc. “This sales strength coupled with a very disciplined approach to running our business, enabled us to achieve strong operating margins for the quarter and full year while making important investments in the business. Further, we continue to make significant improvements in managing inventory and we ended the year with a very solid balance sheet. Taken together, this provides a sound foundation on which to further grow the business in 2006 and beyond.”

Net revenues for the year increased 37% to $281.1 million from $205.2 million in 2004. Net sales for the year increased 35% to $271.3 million from $200.9 million in the prior year.

Within net sales, the Company's Men's category sales increased 25% to $189.6 million for the year. Women's category sales rose 87% to $53.5 million for the year. Full year Youth category sales grew 48% to $18.8 million. Improved sales in Men's, Women's and Youth reflect the same factors that contributed to fourth quarter increases. Sales of Accessories grew 25% to $9.4 million for the year.

Reflecting strong results from existing licensing partnerships, license revenue for the year increased 127% to $9.8 million from $4.3 million in 2004.

Gross margin in 2005 increased to 48.3% compared to 46.5% in the prior year. The improvement reflects leverage on increased volume, improved sourcing, disciplined inventory management, and increased license revenue. SG&A in 2005 increased to 35.6% of net revenues compared to 34.1% in the prior year. The increase resulted from higher selling and payroll costs in support of the Company's footwear and international initiatives, as well as increased costs associated with being a public company. Operating income as a percentage of net revenues for 2005 increased to 12.7% compared to 12.4% in the prior year.

Inventory totaled $53.6 million at December 31, 2005 compared to $48.1 million at the end of 2004. While net revenues increased 37% for the year, inventory increased only 12%, due in large part to initiatives implemented during the year to improve inventory management. At the end of 2005, cash and cash equivalents were $63.0 million which includes a portion of the proceeds from the Company's initial public offering. Cash and cash equivalents, net of debt, were $54.6 million at December 31, 2005.

On November 18, 2005, Under Armour completed its initial public offering of 12,124,000 shares of Class A common stock at a price of $13.00 per share and the simultaneous close of the underwriters' over-allotment to purchase an additional 1,818,600 shares of Class A common stock at the initial public offering price. Of the total offering, Under Armour sold 9,500,000 shares of Class A common stock. The remaining 4,442,600 shares of Class A common stock were sold by certain Under Armour stockholders. Upon closing the offering, Under Armour received net proceeds, after deducting underwriting discounts and commissions and offering expenses, of approximately $112.7 million, of which $12.0 million was used to redeem the Company's Series A preferred stock held by Rosewood Capital, a private equity firm, and $37.2 million was used to repay the Company's senior secured credit facility. The Company intends to use the remainder of the proceeds for general corporate purposes.

Under Armour management is basing its outlook for 2006 on the following assumptions:

  • Net revenue growth of 20% to 25%.
  • Seasonality in the business during 2006 mirroring that which occurred in
    2005.

  • An increase in net income in the range of 20% to 25%.
  • An effective tax rate of 41.5%.
  • Fully diluted weighted average number of shares outstanding of
    approximately 50 million.

  • Capital expenditures in the range of $15 million to $16 million.

Mr. Plank concluded, “We believe our results for 2005 reflect not only the overall strength of the Under Armour brand, but also our dedication to innovating the category of performance, evolving our product lines, and educating consumers by translating complex technology into a very simple marketing message. Most impressive, we accomplished this while laying the groundwork for continued growth, marked by our investments in the business, our entrance into the European market, the ramp up for our launch of footwear, and the recruitment of several key members to our senior management team. We look forward to bringing our business to new levels of success as Under Armour continues to grow.”




    Under Armour, Inc.
    Quarter Ended and Year Ended December 31
    (Amounts in thousands, except per share data)

    CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                 Quarter        Quarter          Year            Year
                  Ended   % of   Ended   % of   Ended    % of   Ended   % of
                  12/31/   Net   12/31/   Net   12/31/    Net   12/31/   Net
                    05   Revenue   04   Revenue   05    Revenue   04   Revenue

    Net revenue  $87,303 100.0% $69,645 100.0% $281,053 100.0% $205,181 100.0%
    Cost of goods
     sold         44,807  51.3%  35,828  51.4%  145,203  51.7%  109,748  53.5%
       Gross
        profit    42,496  48.7%  33,817  48.6%  135,850  48.3%   95,433  46.5%

    Operating
     Expenses:
    Selling, general
     and
     administrative
     expenses     29,632  34.0%  24,149  34.7%   99,961  35.6%   70,053  34.1%

    Income from
     operations   12,864  14.7%   9,668  13.9%   35,889  12.7%   25,380  12.4%

    Other Expenses:
    Interest
     expense, net    791   0.9%     534   0.8%    2,915   1.0%    1,284   0.6%

    Income before
     income taxes 12,073  13.8%   9,134  13.1%   32,974  11.7%   24,096  11.8%
    Provision for
     income taxes  5,079   5.8%   2,974   4.3%   13,255   4.7%    7,774   3.8%

      Net income   6,994   8.0%   6,160   8.8%   19,719   7.0%   16,322   8.0%

    Accretion of
     and cumulative
     preferred
     dividends on
     Series A
     Preferred
     Stock         3,511   4.0%     498   0.7%    5,307   1.9%    1,994   1.0%

    Net income
     available to
     common
     shareholders $3,483   4.0%  $5,662   8.1%  $14,412   5.1%  $14,328   7.0%

    Basic earnings
     per share     $0.08          $0.16           $0.39           $0.41
    Diluted
     earnings
     per share     $0.08          $0.15           $0.36           $0.39

    Average basic
     shares       41,079         35,277          37,199          35,124
    Average
     diluted
     shares       44,083         37,197          39,686          36,774