8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 1, 2007

UNDER ARMOUR, INC.

(Exact name of registrant as specified in its charter)

Maryland	000-51626	52-1990078
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

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

Registrant’s telephone number, including area code: (410) 454-6428

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On May 1, 2007, Under Armour, Inc. issued a press release announcing its financial results for the first quarter ended March 31, 2007. A copy of Under Armour’s press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Under Armour has scheduled a conference call for 8:30 a.m. EST on May 1, 2007 to discuss its financial results, and portions of the script for that call are attached hereto as Exhibit 99.2 and are incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit 99.1: Under Armour, Inc. press release announcing financial results for the first quarter ended March 31, 2007.

Exhibit 99.2: Portions of conference call script for May 1, 2007 conference call.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	UNDER ARMOUR, INC.
Date: May 1, 2007	By:	/S/    WAYNE A. MARINO
		Wayne A. Marino
		Executive Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

Under Armour, Inc. 1020 Hull Street Baltimore, MD 21230   CONTACTS Investors: Alex Miyamoto Under Armour, Inc. Tel: 410.454.6578   Financial Media: Arnold Worldwide John Isaf Tel: 617.587.8923 Tel: 617.587.8905

FOR IMMEDIATE RELEASE

UNDER ARMOUR REPORTS 42% TOP LINE GROWTH FOR FIRST QUARTER 2007

• First Quarter Net Revenues Increased 41.8% to $124.3 Million

• First Quarter Net Income Increased 13.8% to $9.9 Million; Diluted EPS of $0.20

• First Quarter Income from Operations Increased 13.1% to $16.0 Million

• Company Reiterates Previously Provided 2007 Net Revenues Outlook of $560 Million to $580 Million (+30% to +35% over 2006)

• Company Reiterates Previously Provided 2007 Income from Operations Outlook of $74.5 Million to $77.5 Million (+30% to +35% over 2006)

Baltimore, MD (May 1, 2007)—Under Armour, Inc. (NYSE: UA) today announced financial results for the first quarter ended March 31, 2007.

Net revenues increased 41.8% in the first quarter of 2007 to $124.3 million compared to net revenues of $87.7 million in the first quarter of 2006. First quarter net income increased 13.8% to $9.9 million compared to $8.7 million in the same period of 2006. Diluted earnings per share was $0.20, on weighted average common shares outstanding of 49.8 million compared to $0.18 per share on weighted average common shares outstanding of 49.5 million in the first quarter of the prior year.

Apparel revenues grew 26.9% for the quarter and accounted for $22.0 million of the year-over-year increase in net revenues. The Compression category continued to drive revenue growth across the apparel business. The Company was able to augment its apparel revenue growth with expanded assortments in key categories such as Baseball and Golf. Apparel revenues also benefited from an increase in average selling price due to the expansion of the Company’s product offerings. Footwear, which was not offered in the first quarter of the prior year, contributed $11.8 million in net revenues for the quarter.

“Our first quarter revenue growth of 42 percent reflects the growing strength of the Under Armour Brand,” stated Kevin A. Plank, Chairman and CEO of Under Armour, Inc. “Our core

apparel business remains very strong, and we saw excellent consumer demand for new products as we expanded our offerings in key apparel categories. These strong results reflect our ability to balance our growth with investments in both our Brand and the growth drivers that will fuel our long-term profitability.”

“The strengthening demand for performance fabrications continues to drive our focus as we look for opportunities to expand the reach of our Brand and bring innovation to the athlete. We believe the increase in average selling prices for our apparel products is further evidence that the consumer is demanding premium technology that can meet the specific needs of their athletic pursuits. Expansion into new categories and an unrelenting passion to innovate will provide us with the opportunity to tell the performance story to an expanding number of consumers as athletes across the globe experience the benefits of technical performance product.”

Gross margin for the quarter was 48.7% compared to 50.5% in the prior year primarily due to the impact of footwear, which was launched in the second quarter of 2006 and carries a lower gross margin than apparel. Selling, general and administrative expenses were 35.8% of net revenues in the first quarter of 2007 compared to 34.3% in the same period of the prior year primarily driven by an increase in marketing expense. Marketing expense for the first quarter was 11.1% of net revenues compared to 8.6% in the prior year due to continued investments made to support the Brand.

Balance Sheet Highlights

Inventory totaled $80.1 million at March 31, 2007, compared to $53.5 million at the end of the same period of the prior year. The increase includes inventory for the Company’s European operations, which did not contribute to inventory levels in the first quarter of the prior year. Cash and cash equivalents, net of debt, increased to $50.8 million at March 31, 2007 compared to $49.8 million at the end of the same period of the prior year. The Company had no borrowings under its $100 million revolving credit facilities.

Outlook for 2007

The Company has previously stated its long-term growth targets of 20% to 25% for the top and bottom line. For 2007, the Company reiterates its expectations for annual net revenues in the range of $560 million to $580 million, an increase of 30% to 35% over 2006. The Company also reiterates its expectations for 2007 income from operations to be in the range of $74.5 Million to $77.5 Million, an increase of 30% to 35% over 2006. The Company expects an effective tax rate of 40.8%, an increase over the previously provided estimate of 40.5%. The Company continues to anticipate fully diluted weighted average shares outstanding of approximately 50.5 million for 2007.

The Company remains committed to investing in its marketing budget at the high-end of the range of 10% to 12% of net revenues for the full year. However, due to the timing of planned investment in marketing, the Company plans to exceed this range for the second quarter. As a result, the Company plans second quarter earnings per share in the range of $0.02 to $0.03.

“We believe Under Armour is the athletic brand of this generation,” Mr. Plank concluded. “As our revenue base broadens, we’re communicating performance benefits to new consumers while staying true to our year-round messaging to the elite athlete. Our marketing spend represents everything from this past weekend’s NFL draft day media blitz, to our permanent signage inside of Wrigley Field, the first and only of its kind. Moving forward in 2007, we will execute on our Brand strategy with a major multi-platform women’s campaign and the

construction of Under Armour concept shops within some of our key retail partners domestically and abroad. From that standpoint, we remain dedicated to supporting our authenticity and maintaining a consistent, loyal connection to the athletes of this generation.”

Conference Call and Webcast

Under Armour will host a conference call and webcast to discuss its financial results today, May 1^st, at 8:30 a.m. EST. This call will be webcast live at investor.underarmour.com and will be archived and available for replay approximately three hours after the live event. Additional supporting materials related to the call will also be available at investor.underarmour.com. The Company's financial results are also available online at investor.underarmour.com.

About Under Armour, Inc.

Under Armour^® (NYSE: UA) is a leading developer, marketer and distributor of branded performance apparel, footwear and accessories. The brand’s moisture-wicking synthetic fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional natural fiber products. The Company's products are sold worldwide and worn by professional football, baseball, and soccer players, as well as athletes in major collegiate and Olympic sports. The Company’s global headquarters is in Baltimore, Maryland and it has offices in Denver, Amsterdam, Hong Kong, and Toronto. For further information, please visit the Company's website at www.underarmour.com.

Forward Looking Statements

Some of the statements contained in this press release 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 press release 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 the forward-looking statements, including, but not limited to: our ability to forecast and manage our growth effectively; our ability to maintain effective internal controls; increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; changes in consumer preferences or the reduction in demand for performance apparel and other products; our ability to accurately forecast consumer demand for our products; reduced demand for sporting goods and apparel generally; failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to effectively market and maintain a positive brand image; the availability and effective operation of management information systems and other technology; our ability to attract and maintain the services of our senior management and key employees; and changes in general economic or market conditions, including as a result of political or military unrest or terrorist attacks. The forward-looking statements contained in this press release reflect our views and assumptions only as of the date of this press release. 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.

(Tables Follow)

Under Armour, Inc.

Quarters Ended March 31, 2007 and 2006

(Unaudited; in thousands, except per share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Quarter Ended 3/31/07		% of Net Revenues		Quarter Ended 3/31/06		% of Net Revenues
Net revenues	$	124,329	100.0	%	$	87,696	100.0	%
Cost of goods sold		63,748	51.3	%		43,384	49.5	%
Gross profit		60,581	48.7	%		44,312	50.5	%
Operating expenses
Selling, general and administrative expenses		44,544	35.8	%		30,132	34.3	%
Income from operations		16,037	12.9	%		14,180	16.2	%
Other income, net		694	0.6	%		498	0.5	%
Income before income taxes		16,731	13.5	%		14,678	16.7	%
Provision for income taxes		6,790	5.5	%		5,944	6.7	%
Net income	$	9,941	8.0	%	$	8,734	10.0	%
Net income available per common share
Basic	$	0.21			$	0.19
Diluted	$	0.20			$	0.18
Weighted average common shares outstanding
Basic		47,619				46,486
Diluted		49,818				49,499

NET REVENUES BY PRODUCT CATEGORY

	Quarter Ended 3/31/07		Quarter Ended 3/31/06*		% Change
Men’s	$	68,465	$	53,659	27.6	%
Women’s		24,690		20,985	17.7	%
Youth		10,491		7,039	49.0	%
Apparel		103,646		81,683	26.9	%
Footwear		11,839		—	—
Accessories		5,274		3,647	44.6	%
Total net sales		120,759		85,330	41.5	%
Licensing revenues		3,570		2,366	50.9	%
Total net revenues	$	124,329	$	87,696	41.8	%

* Net revenues by product category for the quarter ended March 31, 2006 have been reclassified to conform to the current period presentation.

Under Armour, Inc.

As of March 31, 2007, December 31, 2006 and March 31, 2006

(Unaudited; in thousands)

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of 3/31/07		As of 12/31/06		As of 3/31/06
Assets
Cash and cash equivalents	$	57,202	$	70,655	$	58,292
Accounts receivable, net		84,553		71,867		63,217
Inventories		80,068		81,031		53,475
Prepaid expenses, income taxes receivable and other current assets		7,849		13,254		5,162
Deferred income taxes		9,197		8,145		6,334
Total current assets		238,869		244,952		186,480
Property and equipment, net		35,423		29,923		23,659
Intangible asset, net		7,500		7,875		—
Deferred income taxes		6,023		5,180		99
Other non-current assets		1,503		1,438		993
Total assets	$	289,318	$	289,368	$	211,231
Liabilities and Stockholders’ Equity
Accounts payable, accrued expenses and income taxes payable	$	53,819	$	68,121	$	41,805
Current maturities of long term debt		3,469		3,442		3,845
Total current liabilities		57,288		71,563		45,650
Long term debt, net of current maturities		2,961		2,815		4,605
Other long term liabilities		2,446		602		276
Total liabilities		62,695		74,980		50,531
Total stockholders’ equity		226,623		214,388		160,700
Total liabilities and stockholders’ equity	$	289,318	$	289,368	$	211,231

EX-99.2

Exhibit 99.2

UA: First Quarter 2007 Earnings Call—Brad Dickerson

Thanks Kevin. I am going to take a few minutes to provide some information around our first quarter Income Statement and Balance Sheet. First, our Income Statement.

Our consolidated net revenue growth in the first quarter was 42%, well exceeding our 2007 targeted top-line growth of 30 – 35%. This was driven by a 27% growth in our core Men’s, Women’s, and Youth apparel sales, along with growth in our Accessories business and the addition of Footwear, which was not offered in the first quarter of 2006. We are also seeing benefits of an expanded product assortment and our Good/Better/Best strategy with average selling prices in apparel up 8% compared to the first quarter in 2006, and average selling prices including footwear up 11%.

Men’s apparel growth for the quarter was 28% compared to the prior year and was driven by our compression, golf, and baseball products.

Women’s apparel growth for the quarter was 18% compared to the prior year and was primarily driven by our compression products. As we look at our Women’s growth, it is important to note that the quarter reflects the timing of shipments, specifically seasonal styles, and demand outpacing our supply for certain items. As Wayne will discuss later in our full-year Outlook, we fully expect our Women’s business to continue to grow at a pace in excess of 30% for 2007.

Our Youth apparel growth for the quarter was 49% compared to the prior year, driven by our compression and baseball products.

In addition to the 27% growth in our core apparel business, in the first quarter we continued our baseball and softball cleat launch, which helped drive an additional $11.8 million of net sales in our Footwear Business, representing 9.5% of our consolidated net revenues.

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Operating Overview

Now moving to our gross margin. For the quarter, gross margin was 48.7% compared to 50.5% in the same period last year. There are several puts and takes impacting the margin for the quarter. I’ll take you through the significant highlights.

• First, as we previously have stated, margins in the first quarter are impacted by Footwear, which launched in the second quarter of 2006. Our Footwear margins, specifically cleated Footwear, generally have margins lower than our apparel products. 175 basis points of the decrease in the first quarter margins were driven by the effect of our Footwear sales.

• Second, during the quarter, we were also able to service additional customer demand by temporarily shifting our sourcing to shorter lead time suppliers. While this allowed us to capitalize on strong demand for our product, this temporary shift in source base also led to a 75 basis point decrease in gross margin.

• Finally, as we discussed in the previous quarter, beginning in 2007 we began to shift dollars previously given as customer discounts to in-store marketing in SG&A. This shift, which represented an 80 basis point improvement in gross margin for the quarter, along with growth in our Direct to Consumer business, helped to offset some of the decrease in gross margin discussed earlier.

SG&A for the first quarter totaled $44.5 million, an increase of $14.4 million compared to the same period last year. SG&A as a percentage of net revenues for the quarter increased to 35.8% from 34.3% in the prior year. Increased investments in our newer growth initiatives, which include International, Footwear, and Direct to Consumer, accounted for approximately 40% of the year-over-year dollar increase in SG&A.

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Within SG&A we continued to invest in our Brand during the quarter by increasing investments in Marketing. Marketing costs represented 11.1% of net revenues in the quarter compared to 8.6% during the same period in the prior year. This increase in cost for the quarter was driven by increased print advertising around our women’s product, increased costs associated with our NFL, Auburn, and Texas Tech sponsorship deals, and as discussed in our gross margin highlights, increased in-store marketing costs. Marketing costs, exclusive of those included in our newer growth initiatives, represented 35% of the growth in the first quarter SG&A compared to the prior year.

We were able to leverage fixed costs during the first quarter, allowing us to invest three-quarters of our incremental SG&A spend on growth initiatives and Marketing, all of which we believe have a direct impact on our top line.

Our operating income for the quarter increased to $16.0 million compared to $14.2 million in the prior year, an increase of 13%.

Operating margin for the first quarter was 12.9% compared to 16.2% in the prior year, reflecting the increased Marketing and investment spending during the quarter along with the lower gross margins associated with our Footwear sales.

Income Taxes for the quarter were at 40.6% of Net Revenues compared to 40.5% in the first quarter of the prior year.

Our resulting net income for the quarter increased to $9.9 million from $8.7 million in the same period last year. First quarter Diluted Earnings Per Share was $0.20 compared to $0.18 in the prior year.

Balance Sheet Summary

Now I’d like to move on to the balance sheet.

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Inventory at quarter-end increased 50% to $80.1 million compared to the prior year quarter end. In addition to increased inventory needed to support our top line growth, the rise in inventory was also partially attributable to the build-up of inventories needed to support our European 3^rd party warehouse, which became operational in June 2006.

We continue to use our existing retail outlet strategy to profitably sell our excess inventory. Year-to-date, we have opened three additional outlet stores bringing our total outlet store count to 14 stores. During the remainder of 2007, we plan to expand our retail outlet strategy with an additional 2 to 3 outlet stores. We believe this investment has been, and will continue to be, successful in protecting the brand, improving our liquidity, and raising gross margins and operating margins.

Net Accounts Receivable increased 34%, or $21.3 million, on a year over year basis and grew at a slower rate than net revenues for the quarter.

Total cash and cash equivalents at the end of the quarter were $57.2 million and cash, net of debt, increased $900 thousand compared to the same period last year to $50.8 million.

Our investment in capital expenditures for the quarter was approximately $8 million. These expenditures were mostly related to infrastructure needs to support our continued growth and primarily included the following three categories:

• First, approximately $3.9 million of CAPEX related to capacity expansion and improvements in our existing warehouses in anticipation of growth in our apparel and footwear businesses, along with continued investments in our warehouse management system implementation. This system will become partially operational during 2007 and fully operational in the first half of 2008.

• Second, Information Technology investments of approximately $1.9 million relating mostly to continued improvements and investments in

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SAP to support our growth, along with other general technology needs, and

• Third, the balance related primarily to in-store fixtures and the build out of our new retail outlet stores.

Now I will turn it over to Wayne who will take you through our outlook for the remainder of 2007.

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UA: First Quarter 2007 Earnings Call—Wayne Marino

Outlook for the remainder of 2007

Thanks Brad and good morning everyone. I’m going to spend time on our outlook for 2007 as well as several key elements of our strategy going forward. I will also include some color around our estimates for Q2.

First, our long term growth targets remain at 20-25% for both our top and bottom line. And as we have said previously, for 2007 we believe we can grow both net revenues and income from operations between 30% and 35% for the full year.

We plan to accomplish this by executing our strategic growth drivers:

Ø Continuing to expand our Men’s and Women’s businesses

Ø Ramping up our Footwear

Ø Continuing to build our International business and

Ø Expanding our Direct to consumer business

Kevin spoke earlier about some of the product and marketing stories that will help drive our core apparel business in 2007. In addition to the new categories that he mentioned, we believe our core growth in Men’s—with a broader product offering in Golf, Baseball and Outdoor—and Women’s—including our Cold Gear, and compression programs—will benefit from the continued growth in our footprint within our existing distribution. Our focus on the build-out of concept shops with our retail partners will also help us secure this floor space and tell an impactful story at retail. As Brad said earlier, our product line expansion efforts are proving successful with average selling prices in apparel up 8% compared to last year and overall average selling prices including footwear up over 11%.

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In 2007, for the full year we expect our Men’s business to grow at a pace greater than our long term growth target of 20-25% with our other businesses growing at an even faster pace. The consumer’s appetite for our Women’s products remains strong and as Brad commented earlier, the 18% growth in our Women’s business for the quarter reflects the timing of our shipments, specifically seasonal styles, as well as demand outpacing our supply for certain items. We continue to invest in Inventory and infrastructure to improve our service levels to the level of demand that the consumer has for our product and for the full year our women’s business is on track to grow at a pace exceeding 30%.

On the international front, we will continue to focus on Western Europe, with particular emphasis on the UK, France and Germany. We currently sell to approximately 950 doors in Europe and are planning to grow that number to 1,200 by year end. We continue to believe that the opportunity for the Under Armour brand internationally is as large as the opportunity in the U.S. and we will make the appropriate investments in 2007 and beyond to reach that goal.

I also want to point out that although our Footwear and International businesses will be investments in 2007, combined they are projected to contribute approximately 20% to the year over year dollar growth in 2007.

Our Direct to Consumer business, which includes our on-line and catalogue businesses as well as our Outlet Stores, will contribute approximately 15% of our year over year top line dollar growth and an even greater percentage of our year over year operating income growth. As Kevin mentioned earlier, with the success that we have had to date selling our product directly to the consumer, we are planning to open 1 full price test store in the fourth quarter of 2007. This 4,000-5,000 sq ft. store will be close to home and will allow us to capitalize on one of our strengths—communicating with the consumer—and test new products and new retail concepts. Although this is a

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test store, we are planning this test store to be profitable in its first year of operations.

Now I would like to provide you with highlights of our strategy for 2007.

• First, we continue to expect both net revenues and income from operations to grow between 30% and 35% for the full year.

• We are projecting our year over year operating margin to increase once again for the 4^th consecutive year.

• Our Gross Margins will have puts and takes, but overall we are projecting gross margin improvement for the full year.

• Our fixed costs will leverage in 2007 and Marketing will be at the high end of our 10-12% range.

• We will continue to make the right investments to support large scaleable businesses; we will invest in Working Capital, specifically core inventory to meet demand, and we will invest in our warehouse management systems, in-store fixtures and concept shops, I.T. infrastructure and in our Direct to Consumer business.

Now let me take you through some of the detail:

- First our Gross Margin. In our initial outlook we provided for 80-100 bps improvement in gross margin. With better visibility into the year and simply better forecasting, we are projecting an improvement of 10-20bps. Here are some of the puts and takes:

- First, the improvement that we have seen in the gross margin from our sourcing initiatives will moderate in 2007 as we temporarily shift some of our production to shorter lead time manufacturers in an effort to fill demand.

- Secondly, we anticipate that our higher margin Direct to Consumer businesses will grow at a faster rate than our overall business.

- We will also have a positive benefit to our gross margins from the shift in spending from discounts to in-store marketing.

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- A significant portion of these improvements will be offset by our anticipated growth in our cleated footwear business, both football and baseball, which carry margins lower than our existing apparel margins.

• I would like to point out, that as we increase our volumes in footwear and expand our sourcing base, we anticipate gross margin improvement in our cleated footwear business.

• Taking all this into account, we are planning gross margin improvement of 10-20bps for the full year.

• Now moving to SG&A—Our fixed costs, specifically other costs, are expected to leverage at an even greater rate for 2007 than we originally anticipated, with the majority of this leverage coming in the back half of the year where historically our volumes are greater. Marketing is a variable expense and for 2007 we are planning to invest at the high end of the 10-12% range for the full year compared to 11.2% in 2006. For these reasons, we are planning our full year operating expenses as a percentage of revenues to remain essentially flat to the prior year.

Taking this all into account, we continue to project 2007 operating income to be in the range of $74.5-$77.5 million.

- We are forecasting our Net Interest Income to be approximately $2.0 million for the full year and our effective tax rate to increase to 40.8%.

- Weighted average diluted share count in 2007 is expected to be approximately 50.5 million.

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Now turning to our Balance Sheet for 2007

Inventory—Our inventory strategy is simple:

a. Be in stock on core offerings to meet consumer demand while improving our inventory efficiency over the long term.

b. Ship seasonal product at the start of the shipping window.

c. Earmark any seasonal excess for our 14 Outlet Stores and operate those stores at a profit.

Our core items such as cold gear, tech-t and compression tops and bottoms drive over 50% of our business. In 2006, we took receipt of fall merchandise earlier than we did in the prior year to support an increased number of product launches in the 3^rd quarter and that strategy paid off with over 40% growth in apparel for the 3^rd quarter in 2006. For 2007, we are looking at 30-35% growth and are planning a similar strategy where we will invest in core inventory, specifically Fleece and Cold Gear, in the second quarter and third quarters to position ourselves for anticipated strong consumer demand in the back half of the year.

Capital expenditures:

Now moving to Capex. 2007 is still an investment year for Under Armour as we implement the infrastructure to support large scalable businesses. Previously we provided a plan to invest between $20-22 million to accomplish this goal. Now, with better visibility, confidence in our ability to execute infrastructure projects and greater investment in concept shops at our larger accounts, we are raising our capex number for 2007 to $34-36 million.

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Let me take you through some of the details:

To support the growing scale of our apparel and footwear businesses, we are investing 1/3, or approximately $12 million, of our Capex investment in our Distribution House where we will add new equipment to improve our shipping velocity and expand our warehouse capacity in anticipation of future growth. Just a couple of weeks ago we completed phase 1 of our warehouse management project and went live with our footwear. Our teams have done a great job with implementing systems and we are confident in our ability to complete our projects on time with minimal risk to our businesses. Making these investments now helps ensure that we are able to execute on the growth we have planned for 2007 as well as build capacity for new businesses such as non-cleated footwear in 2008 and beyond.

Additionally, as we work with our customers to make a more impactful statement on the retail floor, we continue to shift discount dollars to concept shops. We now plan to invest approximately $11.0 million in our in-store fixtures and concept shop program. We believe that this has a positive impact, not only on the productivity of the floor space, but also on our brand image as an authentic athletic brand with premium product.

We will also invest approximately $6.5 million in our Direct to Consumer business, which for 2007 will include our Web and catalogue businesses, 1 full price test store projected to open in the fourth quarter of 07 and 5-6 new Outlet Stores to be opened for the full year. The balance of our capital will be invested in IT initiatives and general corporate improvements. We are confident that these investments both support our long term infrastructure needs and secure critical space at retail to offer our products.

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Cash Flow for 2007—Taking into account these strategic investments, including our expected investment in working capital (specifically inventory) and our additional capital expenditures, in 2007 we are expecting to use approximately $12 million of our $70+ million cash balance at 12/31/06 to fund our growth.

Now for some color around our 2^nd quarter:

Similar to 2006, the second quarter for 2007 is planned to be our lowest volume quarter, with a similar percentage of revenue in the quarter coming from our lower-margin cleated footwear business. In addition, as a result of the timing of our Marketing initiatives such as Click-Clack II, our marketing spend will exceed the high end of our range in the second quarter. As a result, we expect our second quarter diluted EPS to be between $0.02 and $0.03.

For the full year, we are planning our Marketing spend to be at the high end of the 10-12% range with Q4 marketing planned to be below the 10-12% range. And once again, our full year income from operations is expected to increase to $74.5-$77.5 million, as previously provided.

We remain proud of our accomplishments for the quarter and we are confident that the investments we are making for the growth of the Brand will yield large scalable businesses. We are excited about the opportunities we have created for the future long term success of Under Armour.

This concludes our prepared remarks.

Now, Kevin, Brad and I will take your questions. I ask each of you to please limit yourself to 1 or 2 questions each, so we can hear from as many of you as possible.

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