10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

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. 000-51626

UNDER ARMOUR, INC.

(Exact name of registrant as specified in its charter)

Maryland	52-1990078
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1020 Hull Street Baltimore, Maryland 21230	(410) 454-6428
(Address of principal executive offices) (Zip Code)	(Registrant’s telephone number, including area code)

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 x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x                    Accelerated filer ¨                    Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨    No x

Class A Common Stock, $.0003 ¹/3 par value, 35,349,356 shares outstanding as of October 31, 2007 and Class B Convertible Common Stock, $.0003 ¹/3 par value, 13,250,000 shares outstanding as of October 31, 2007.

UNDER ARMOUR, INC.

SEPTEMBER 30, 2007

INDEX TO FORM 10-Q

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Consolidated Balance Sheets as of September 30, 2007 (unaudited) and December 31, 2006	3
	Unaudited Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, 2007 and 2006	4
	Unaudited Consolidated Statements of Stockholders’ Equity and Comprehensive Income for the Nine Months Ended September 30, 2007 and 2006	5
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006	6
	Notes to the Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 6.	Exhibits	30
SIGNATURES		31

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Under Armour, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share data)

	September 30, 2007			December 31, 2006
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	14,473		$	70,655
Accounts receivable, net of allowance for doubtful accounts of $996 and $884 as of September 30, 2007 and December 31, 2006, respectively		128,334			71,867
Inventories		151,760			81,031
Income taxes receivable		-			4,310
Prepaid expenses and other current assets		13,967			8,944
Deferred income taxes		11,441			8,145
Total current assets		319,975			244,952
Property and equipment, net		47,624			29,923
Intangible assets, net		6,856			7,875
Deferred income taxes		8,447			5,180
Other non-current assets		1,368			1,438
Total assets	$	384,270		$	289,368
Liabilities and Stockholders’ Equity
Current liabilities
Revolving credit facility	$	10,000		$	-
Accounts payable		67,022			42,718
Accrued expenses		32,875			25,403
Income taxes payable		5,679			-
Current maturities of long term debt		2,137			2,648
Current maturities of capital lease obligations		475			794
Total current liabilities		118,188			71,563
Long term debt, net of current maturities		1,436			1,893
Capital lease obligations, net of current maturities		567			922
Other long term liabilities		3,300			602
Total liabilities		123,491			74,980
Commitments and contingencies (see Note 5)
Stockholders’ equity
Class A Common Stock, $.0003 1/3 par value; 100,000,000 shares authorized as of September 30, 2007 and December 31, 2006; 35,342,199 shares issued and outstanding as of September 30, 2007, 34,555,907 shares issued and outstanding as of December 31, 2006		12			12
Class B Convertible Common Stock, $.0003 1/3 par value; 13,250,000 shares authorized, issued and outstanding as of September 30, 2007 and December 31, 2006		4			4
Additional paid-in capital		159,727			148,562
Retained earnings		100,907			66,376
Unearned compensation		(229	)		(463	)
Accumulated other comprehensive income (loss)		358			(103	)
Total stockholders’ equity		260,779			214,388
Total liabilities and stockholders’ equity	$	384,270		$	289,368

See accompanying notes.

3

Under Armour, Inc. and Subsidiaries

Consolidated Statements of Income

(in thousands, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2007		2006		2007		2006
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Net revenues	$	186,863	$	127,745	$	431,723	$	295,406
Cost of goods sold		92,346		63,070		217,526		148,212
Gross profit		94,517		64,675		214,197		147,194
Operating expenses
Selling, general and administrative expenses		60,708		42,692		156,186		108,021
Income from operations		33,809		21,983		58,011		39,173
Other income, net		674		177		2,868		1,417
Income before income taxes		34,483		22,160		60,879		40,590
Provision for income taxes		14,453		6,190		25,196		13,462
Net income	$	20,030	$	15,970	$	35,683	$	27,128
Net income available per common share
Basic	$	0.42	$	0.34	$	0.74	$	0.58
Diluted	$	0.40	$	0.32	$	0.71	$	0.55
Weighted average common shares outstanding
Basic		48,183		47,164		47,926		46,848
Diluted		50,085		49,599		49,929		49,512

See accompanying notes.

4

Under Armour, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity and Comprehensive Income

(unaudited; in thousands)

	Class A Common Stock				Class B Convertible Common Stock					Additional Paid-In Capital			Retained Earnings			Unearned Compensation			Notes Receivable from Stockholders			Accumulated Other Comprehensive Income (Loss)			Comprehensive Income			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount
Balance as of December 31, 2006	34,556		$	12	13,250		$	4		$	148,562		$	66,376		$	(463	)	$	-		$	(103	)				$	214,388
Exercise of stock options	585			-	-			-			1,886			-			-			-			-						1,886
Issuance of Class A Common Stock, net of forfeitures	201			-	-			-			727			-			-			-			-						727
Stock-based compensation expense	-			-	-			-			2,732			-			234			-			-						2,966
Excess tax benefits from stock-based compensation arrangements	-			-	-			-			5,820			-			-			-			-						5,820
Effect of adoption of FIN 48	-			-	-			-			-			(1,152	)		-			-			-						(1,152	)
Comprehensive income
Net income	-			-	-			-			-			35,683			-			-			-		$	35,683
Foreign currency translation adjustment, net of tax $239	-			-	-			-			-			-			-			-			461			461
Comprehensive income	-			-	-			-			-			-			-			-			-		$	36,144			36,144
Balance as of September 30, 2007	35,342		$	12	13,250		$	4		$	159,727		$	100,907		$	(229	)	$	-		$	358					$	260,779
Balance as of December 31, 2005	31,223		$	10	15,200		$	5		$	124,803		$	28,067		$	(1,889	)	$	(163	)	$	(3	)				$	150,830
Class B Common Stock converted to Class A Common Stock	1,950			1	(1,950	)		(1	)		-			-			-			-			-						-
Exercise of stock options	1,113			-	-			-			2,425			-			-			-			-						2,425
Issuance of fully vested warrants	-			-	-			-			8,500			-			-			-			-						8,500
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements	(25	)		-	-			-			(64	)		(670	)		-			-			-						(734	)
Issuance of Class A Common Stock, net of forfeitures	75			-	-			-			363			-			-			-			-						363
Stock-based compensation expense	-			-	-			-			704			-			588			-			-						1,292
Excess tax benefits from stock-based compensation arrangements	-			-	-			-			6,521			-			-			-			-						6,521
Reversal of unearned compensation and additional paid-in capital due to the adoption of SFAS 123R	-			-	-			-			(715	)		-			715			-			-						-
Payments received on notes from stockholders	-			-	-			-			-			-			-			114			-						114
Interest earned on notes receivable from stockholders	-			-	-			-			-			-			-			(6	)		-						(6	)
Comprehensive income:
Net income	-			-	-			-			-			27,128			-			-			-		$	27,128
Foreign currency translation adjustment, net of tax ($15)	-			-	-			-			-			-			-			-			(20	)		(20	)
Comprehensive income																									$	27,108			27,108
Balance as of September 30, 2006	34,336		$	11	13,250		$	4		$	142,537		$	54,525		$	(586	)	$	(55	)	$	(23	)				$	196,413

See accompanying notes.

5

Under Armour, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

	Nine Months Ended September 30,
	2007			2006
	(unaudited)			(unaudited)
Cash flows from operating activities
Net income	$	35,683		$	27,128
Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization		9,996			6,774
Unrealized foreign currency transaction gains, net		(2,321	)		(200	)
Stock-based compensation		2,966			1,292
Deferred income taxes		(6,309	)		(6,445	)
Changes in reserves for doubtful accounts, returns, discounts and inventories		6,505			5,063
Changes in operating assets and liabilities:
Accounts receivable		(59,792	)		(38,380	)
Inventories		(70,881	)		(21,804	)
Prepaid expenses and other assets		(4,929	)		(2,672	)
Accounts payable		23,940			6,574
Accrued expenses and other liabilities		8,309			7,746
Income taxes payable and receivable		9,933			(932	)
Net cash used in operating activities		(46,900	)		(15,856	)
Cash flows from investing activities
Purchases of property and equipment		(26,237	)		(10,957	)
Purchases of intangible assets		(125	)		-
Purchases of short-term investments		(62,860	)		(64,650	)
Proceeds from sales of short-term investments		62,860			64,650
Net cash used in investing activities		(26,362	)		(10,957	)
Cash flows from financing activities
Proceeds from revolving credit facility, net		10,000			-
Proceeds from long-term debt		1,117			2,119
Payments on long-term debt		(2,085	)		(1,771	)
Payments on capital lease obligations		(674	)		(1,520	)
Excess tax benefits from stock-based compensation arrangements		5,820			6,521
Proceeds from exercise of stock options and other stock issuances		2,613			2,789
Payments received on notes from stockholders		-			114
Net cash provided by financing activities		16,791			8,252
Effect of exchange rate changes on cash and cash equivalents		289			(159	)
Net decrease in cash and cash equivalents		(56,182	)		(18,720	)
Cash and cash equivalents
Beginning of period		70,655			62,977
End of period	$	14,473		$	44,257
Non-cash financing and investing activities
Fair market value of shares withheld in consideration of employee tax obligations relative to stock-based compensation	$	-		$	734
Reversal of unearned compensation and additional paid in capital due to the adoption of SFAS 123R		-			715
Increase to long term liabilities due to the adoption of FIN 48		1,597			-
Fair market value of warrants issued in partial consideration of intangible asset		-			8,500

See accompanying notes.

6

Under Armour, Inc. and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

(amounts in thousands, except share and per share amounts)

1. Description of the Business

Under Armour, Inc. is a developer, marketer and distributor of branded performance apparel, footwear and accessories. Sales are targeted to athletes and teams at the collegiate and professional levels as well as to consumers with active lifestyles throughout the world.

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 inter-company 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.

Interim Financial Data

The results for the three and nine months ended September 30, 2007 are not necessarily indicative of the results to be expected for the year ending December 31, 2007 or any other portions thereof. Certain information in footnote disclosures normally included in annual financial statements has been condensed or omitted for the interim periods presented, in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim consolidated financial statements.

These financial statements do not contain all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, all adjustments, consisting of normal, recurring adjustments considered necessary for a fair presentation of the financial position and results of operations have been included.

The consolidated balance sheet as of December 31, 2006 is derived from the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2006, which should be read in conjunction with these consolidated financial statements.

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 most significant customers that accounted for a large portion of net revenues and accounts receivable are as follows:

	Customer A		Customer B		Customer C
Net revenues
Nine months ended September 30, 2007	19.5	%	13.2	%	4.6	%
Nine months ended September 30, 2006	20.9	%	15.1	%	3.6	%
Accounts receivable
As of September 30, 2007	23.7	%	13.5	%	4.6	%
As of September 30, 2006	25.0	%	17.7	%	5.1	%

7

Short-Term Investments

From time to time, the Company purchases and sells short-term investments consisting of auction rate municipal bonds. These short-term investments are classified as available-for-sale securities. These auction rate securities are recorded at cost, which approximates fair market value due to their variable interest rates, which typically reset at the regular auctions every 7 to 35 days. Despite the long-term nature of their stated contractual maturities, the Company has the ability to liquidate these securities primarily through the auction process. As a result, the Company had no unrealized gains or losses from its investments in these securities. All income generated from these short-term investments is tax exempt and recorded as interest income. At September 30, 2007 all of these securities had been sold and the proceeds had been invested in highly liquid investments with an original maturity of three months or less. Other income, net on the consolidated statements of income included interest income of $106 and $380 for the three months ended September 30, 3007 and 2006, respectively, and $1,354 and $1,652 for the nine months ended September 30, 2007 and 2006, respectively, primarily related to short-term investments and cash and cash equivalents.

Accounts Receivable

Accounts receivable are recorded at the invoice price net of an allowance for doubtful accounts and reserves for returns and certain sales allowances, and do not bear interest. The majority of discounts earned by customers in the period are recorded as liabilities within accrued expenses as they stipulate settlements to be made through Company cash disbursements. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in accounts receivable. The Company reviews the allowance for doubtful accounts monthly. Receivable balances are written off against the allowance when management believes it is probable the receivable will not be recovered. The Company does not have any off-balance-sheet credit exposure related to its customers.

Inventories

Inventories consist of finished goods, raw materials and work-in-process, and are valued at standard cost which approximates the Company’s landed cost, using the first-in, first-out (“FIFO”) method of cost determination. 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 periodically reviews its inventories and makes provisions as necessary for estimated obsolescence or damaged goods to ensure values approximate lower of cost or market. The amount of such markdowns is equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand, selling prices and market conditions.

Inventories consist of the following:

	September 30, 2007			December 31, 2006
Finished goods	$	156,458		$	83,618
Raw materials		1,082			1,321
Work-in-process		139			133
Subtotal inventories		157,679			85,072
Inventories reserve		(5,919	)		(4,041	)
Total inventories	$	151,760		$	81,031

8

Intangible Assets

Intangible assets that are determined to have a definite life are amortized over the asset’s estimated useful life. The Company continually evaluates whether events or circumstances have occurred that indicate the remaining estimated useful life of intangible assets may warrant revision or that the remaining balance may not be recoverable. When factors indicate that an intangible asset should be evaluated for possible impairment, the Company reviews the intangible asset to assess recoverability from future operations using undiscounted cash flows. Impairments are recognized in earnings to the extent that the carrying value exceeds fair value. No impairments relating to intangible assets were recognized for the nine months ended September 30, 2007 and 2006.

Income Taxes

The Company recorded $14,453 and $6,190 of income tax expense for the three months ended September 30, 2007 and 2006, respectively, and $25,196 and $13,462 of income tax expense for the nine months ended September 30, 2007 and 2006, respectively. The effective rate for income taxes was 41.4% and 33.2% for the nine months ended September 30, 2007 and 2006, respectively. The Company’s annual 2007 effective tax rate is expected to be higher than the 2006 annual effective tax rate of 34.0% primarily due to the impact of 2006 state tax credits.

Foreign Currency Translation and Transactions

The functional currency for the each of the Company’s wholly owned foreign subsidiaries is 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 an average foreign currency exchange rate 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 or loss. Adjustments that arise from foreign currency exchange rate changes on transactions denominated in a currency other than the local currency are included in other income, net on the consolidated statements of income. The Company recorded unrealized foreign currency transaction gains of $1,330 for the three months ended September 30, 2007, and $2,321 and $306 for the nine months ended September 30, 2007 and 2006, respectively. The Company recorded realized foreign currency transaction gains of $70 for the three months ended September 30, 2007, and $350 and $53 for the nine months ended September 30, 2007 and 2006, respectively. No unrealized or realized foreign currency transaction gains or losses were recorded for the three months ended September 30, 2006.

Derivatives

The Company uses derivative financial instruments in the form of foreign currency forward contracts to minimize the risk associated with foreign currency exchange rate fluctuations. The Company accounts for derivative financial instruments pursuant to the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted (“SFAS 133”). SFAS 133 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 non-current 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 Company’s foreign currency forward contracts are not designated as cash flow hedges, and accordingly, changes in their fair value are recorded to other income, net on the consolidated statements of income. The Company does not enter into derivative financial instruments for speculative or trading purposes.

9

Revenue Recognition

The Company recognizes revenue pursuant to applicable accounting standards, including the SEC Staff Accounting Bulletin No. 104, Revenue Recognition, which summarizes certain of the SEC staff’s views in applying generally accepted accounting principles to revenue recognition in financial statements and provides guidance on revenue recognition issues in the absence of authoritative literature addressing a specific arrangement or a specific industry.

Net revenues consist of both net sales and license 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. In some instances, transfer of title and risk of loss takes place at the point of sale (e.g. at the Company’s retail outlet stores). Net sales are recorded net of reserves for returns and certain sales allowances. Provisions for customer specific discounts based on contractual obligations with certain major customers are recorded as reductions to net sales. Returns are estimated at the time of sale based primarily on historical experience and recent trends. License revenues are 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 cost of goods sold.

Shipping and Handling

The Company charges certain customers shipping and handling fees. These revenues are recorded in net revenues. The Company includes the majority of outbound shipping and handling costs as a component of selling, general and administrative expenses. Outbound shipping and handling costs include costs associated with shipping goods to customers and certain costs to operate the Company’s distribution facilities. These costs were $4,367 and $3,119 for the three months ended September 30, 2007 and 2006, respectively, and $9,667 and $6,922 for the nine months ended September 30, 2007 and 2006, respectively.

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. 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, restricted stock, warrants and other equity awards. The following represents a reconciliation from basic earnings per share to diluted earnings per share:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2007		2006		2007		2006
Numerator
Net income, as reported	$	20,030	$	15,970	$	35,683	$	27,128
Denominator (share amounts in thousands)
Weighted average common shares outstanding		48,183		47,164		47,926		46,848
Effect of dilutive securities		1,902		2,435		2,003		2,664
Weighted average common shares and dilutive securities outstanding		50,085		49,599		49,929		49,512
Earnings per share - basic	$	0.42	$	0.34	$	0.74	$	0.58
Earnings per share - diluted	$	0.40	$	0.32	$	0.71	$	0.55

10

Effects of potentially dilutive securities are presented only in periods in which they are dilutive. Options to purchase 72,000 and 178,025 shares of common stock were outstanding for the three months ended September 30, 2007 and 2006, respectively, and options to purchase 125,317 and 146,625 shares of common stock were outstanding for the nine months ended September 30, 2007 and 2006, respectively, but were excluded from the computation of diluted earnings per share because their effect would be anti-dilutive.

Stock-Based Compensation

Prior to January 1, 2006, the Company accounted for grants of stock-based compensation awards to employees and directors using the intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees (“ABP 25”), and related interpretations. Under the intrinsic value method, unearned compensation was recorded equal to the fair market value of the stock underlying the award on the date of grant less any exercise price. Compensation expense was amortized over the vesting period in accordance with Financial Interpretation Number (“FIN”) 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans (“FIN 28”).

Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123R, Share-Based Payment (revised 2004) (“SFAS 123R”). SFAS 123R supersedes APB 25 and requires that all stock-based compensation awards granted to employees and directors be measured at the fair value of the award and recognized as an expense in the financial statements.

Compensation expense under SFAS 123R includes the expense of stock-based compensation awards granted subsequent to January 1, 2006 and the expense for the remaining vesting term of stock-based compensation awards granted subsequent to the Company’s initial filing of the S-1 Registration Statement with the SEC on August 26, 2005. Stock-based compensation awards granted to employees and directors prior to the Company’s initial filing of the S-1 Registration Statement are specifically excluded from SFAS 123R and will continue to be accounted for in accordance with APB 25 and FIN 28 until unearned compensation of $229 as of September 30, 2007 is fully amortized through 2010.

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, including estimates relating to 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.

Recently Issued Accounting Standards

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company does not believe that the adoption of SFAS 159 will have a material impact on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company does not believe that the adoption of SFAS 157 will have a material impact on its consolidated financial statements.

In June 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109 (“FIN 48”), which provides additional guidance and clarifies the accounting for

11

uncertainty in income tax positions. FIN 48 defines the threshold for recognizing tax return positions in the financial statements as “more likely than not” that the position is sustainable, based on its technical merits. FIN 48 also provides guidance on the measurement, classification and disclosure of tax return positions in the financial statements. FIN 48 was effective for the first reporting period beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to the beginning balance of retained earnings in the period of adoption. Upon adoption of FIN 48 as of January 1, 2007, the Company recorded a $1,152 decrease to the beginning balance of retained earnings (see Note 6).

Reclassifications

Certain balances in 2006 have been reclassified to conform to the current period presentation. These changes had no impact on previously reported results of operations or stockholders’ equity.

3. Intangible Assets, Net

In August 2006, the Company and NFL Properties LLC (“NFL Properties”) entered into a Promotional Rights Agreement (the “NFL Agreement”) in which the Company became an authorized supplier of footwear to the National Football League. As partial consideration for the NFL Agreement, which expires in March 2012, the Company issued to NFL Properties fully vested and non-forfeitable warrants to purchase 480,000 shares of the Company’s Class A Common Stock. The resulting $8,500 intangible asset was determined based on the fair value of the warrants as established by an independent third party valuation.

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

	September 30, 2007							December 31, 2006
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible assets subject to amortization:
Footwear promotional rights	$	8,500	$	(1,750	)	$	6,750	$	8,500	$	(625	)	$	7,875
Other		125		(19	)		106		-		-			-
Total	$	8,625	$	(1,769	)	$	6,856	$	8,500	$	(625	)	$	7,875

Intangible assets are amortized using estimated useful lives of 33 months to 68 months with no residual value. Amortization expense, which is included in selling, general and administrative expenses, was $386 and $250 for the three months ended September 30, 2007 and 2006, respectively, and $1,144 and $250 for the nine months ended September 30, 2007 and 2006, respectively. The estimated amortization expense of the Company’s intangible assets is $1,530, $1,545, $1,545, $1,505 and $1,500 for the years ended December 31, 2007 through 2011, respectively.

4. Revolving Credit Facility and Long Term Debt

In December 2006, the Company entered into an amended and restated financing agreement with a lending institution. This financing agreement has a term of five years and provides for a revolving credit line of up to $100,000 based on the Company’s eligible domestic inventory and accounts receivable balances and may be used for working capital and general corporate purposes. This financing agreement is collateralized by substantially all of the Company’s domestic assets, other than its trademarks. Up to $10,000 of the facility may be used to support letters of credit, which if utilized would reduce the availability under the revolving credit line. The Company incurred $260 in deferred financing costs in connection with the financing agreement. In accordance with EITF Issue No. 98-14, Debtor’s Accounting for Changes in Line-of-Credit or Revolving-Debt Arrangements, unamortized deferred financing costs of $618 relating to the Company’s previous revolving credit facility were added to the deferred financing costs of the new revolving credit facility and are being amortized over the remaining life of the new facility.

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If net availability under the financing agreement falls below a certain threshold as defined in the agreement, the Company would be required to maintain a certain leverage ratio and fixed charge coverage ratio as defined in the agreement. This financing agreement also provides the lenders with the ability to reduce the available revolving credit line amount under certain conditions even if the Company is in compliance with all conditions of the agreement. The Company’s net availability as of September 30, 2007 was above the threshold for compliance with the financial covenants and the Company was in compliance with all applicable covenants as of September 30, 2007.

In September 2007, the Company borrowed under its revolving credit facility at a 6.8% interest rate. As of September 30, 2007, the Company’s availability under the revolving credit facility was $100,000 based on the Company’s eligible domestic inventory and accounts receivable balances, less $10,000 of current borrowings outstanding. There was no balance outstanding under the Company’s revolving credit facility in 2007 prior to this borrowing and during the nine months ended September 30, 2006.

In March 2005, the Company entered into a loan and security agreement to finance the acquisition of up to $17,000 of qualifying capital investments. This agreement is collateralized by a first lien on these assets and is otherwise subordinate to the revolving credit facility. Since March 2005, the Company has financed a total of $9,032 of furniture and fixtures under this agreement. The weighted average interest rate on outstanding borrowings was 6.6% as of September 30, 2007. At September 30, 2007, the outstanding principal balance was $3,573.

5. Commitments and Contingencies

The Company is, from time to time, involved in routine legal matters incidental to its business. Management believes that the ultimate resolution of any such current proceedings will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

Certain key executives are party to agreements with the Company that include severance benefits upon involuntary termination, including following a change in control of the Company.

In addition, within the normal course of business, the Company enters into contractual commitments, such as sponsorship agreements with teams and athletes on the collegiate and professional levels and official supplier agreements, in order to promote the Company’s brand and products. These agreements include scheduled sponsorship fee payments or rights fee payments, along with other purchase or product supply obligations over the terms of the agreements.

6. Provision for Income Taxes

The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the implementation of FIN 48, the Company recorded an additional $1,597 liability for unrecognized tax benefits, of which $1,152 was accounted for as a reduction to the January 1, 2007 balance of retained earnings with the remainder recorded within deferred tax assets. After recognizing these impacts upon adoption of FIN 48, the total unrecognized tax benefits were approximately $2,054. Of this amount, approximately $1,609 would impact our effective tax rate if recognized. The Company may incur a decrease in the total unrecognized tax benefits within the next twelve months as a result of the possible expiration of certain statutes of limitations for particular tax positions.

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 unrecognized tax benefits liability recorded on January 1, 2007 included $512 for the accrual of interest and penalties.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The majority of the Company’s returns are no longer subject to U.S. federal, state and local or foreign income tax examinations by tax authorities for years before 2004.

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7. Stock-Based Compensation

In May 2007, 122,650 shares of restricted stock and 57,000 stock options were granted to certain officers and key employees under the Company’s 2005 Omnibus Long-Term Incentive Plan (the “2005 Stock Plan”). The exercise price of the stock options and the fair value of each share of restricted stock was $45.12, which was the closing price of the Company’s Class A Common Stock on the date of grant. The stock options and restricted stock vest ratably over a five year period with the stock options having a term of ten years from the date of grant.

In May 2007, 9,972 stock options and 3,324 restricted stock units were granted to non-employee directors under the 2005 Stock Plan. The exercise price of the stock options and the fair value of each restricted stock unit was $45.12, which was the closing price of the Company’s Class A Common Stock on the date of grant. The stock options and restricted stock units vest fully on the date of the 2008 annual stockholders’ meeting with the stock options having a term of ten years from the date of grant. Upon vesting, the restricted stock units will automatically convert to deferred stock units on a one-for-one basis.

8. Foreign Currency Risk Management and Derivatives

The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates primarily relating to transactions generated by its international subsidiaries in currencies other than their local currencies. The Company recorded unrealized foreign currency transaction gains of $1,330 for the three months ended September 30, 2007, and $2,321 and $306 for the nine months ended September 30, 2007 and 2006, respectively. The Company recorded realized foreign currency transaction gains of $70 for the three months ended September 30, 2007, and $350 and $53 for the nine months ended September 30, 2007 and 2006, respectively. No unrealized or realized foreign currency transaction gains or losses were recorded for the three months ended September 30, 2006.

In August 2007, the Company implemented a foreign currency risk management program in order to reduce the risk associated with foreign currency exchange rate fluctuations on projected inventory purchases, inter-company payments and other general working capital requirements for its Canadian and European subsidiaries.

As of September 30, 2007, the notional value of the Company’s outstanding foreign currency forward contracts used to mitigate the foreign currency exchange rate fluctuations on its Canadian subsidiary’s projected inventory purchases was approximately $10,299 with maturities of 1 to 15 months. The foreign currency forward contracts are not designated as cash flow hedges, and accordingly, changes in their fair value are recorded in earnings. The unrealized losses of $550 related to outstanding foreign currency forward contracts were included in the Company’s liabilities on the balance sheet as of September 30, 2007 and were recognized in other income, net on the consolidated statements of income during the three and nine months ended September 30, 2007. In addition, the Company recorded $75 of realized losses related to the settlement of foreign currency forward contracts within other income, net during the three and nine months ended September 30, 2007.

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

9. Segment Data and Related Information

Operating segments are defined as components of an enterprise in which separate financial information is available and is evaluated regularly by the chief operating decision maker in assessing performance and in deciding how to allocate resources. The Company operates exclusively in the consumer products industry in which the Company develops, markets, and distributes apparel, footwear and accessories. Based on the nature of

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the financial information that is received by the chief operating decision maker, the Company operates within two operating segments, North America and International, but has only one reportable segment because the International operating segment does not meet the criteria of a reportable segment in accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. Although the Company operates within one reportable segment, it has several product categories for which the net revenues attributable to each product category are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2007		2006		2007		2006
Men’s	$	112,950	$	79,233	$	242,429	$	173,620
Women’s		39,467		26,513		82,661		59,586
Youth		16,603		10,980		34,821		22,095
Apparel		169,020		116,726		359,911		255,301
Footwear		2,158		2,001		34,086		17,585
Accessories		7,638		3,794		20,010		11,481
Total net sales		178,816		122,521		414,007		284,367
License revenues		8,047		5,224		17,716		11,039
Total net revenues	$	186,863	$	127,745	$	431,723	$	295,406

The table below summarizes product net revenues by geographic regions based on customer location:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2007		2006		2007		2006
United States	$	172,206	$	116,606	$	400,639	$	275,698
Canada		8,449		6,961		17,867		13,114
Subtotal		180,655		123,567		418,506		288,812
Other foreign countries		6,208		4,178		13,217		6,594
Total net revenues	$	186,863	$	127,745	$	431,723	$	295,406

During the nine months ended September 30, 2007 and 2006, substantially all of the Company’s long-lived assets were located in the United States.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Some of the statements contained in this Form 10-Q and any 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,” “intends,” “estimates,” “predicts,” “potential” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this Form 10-Q and any 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 the forward-looking statements, including, but not limited to, those factors described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), under “Risk Factors,” “Qualitative and Quantitative Disclosures About Market Risk” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors include without limitation:

• our ability to manage our growth effectively;

• our ability to maintain effective internal controls;

• the availability, integration and effective operation of management information systems and other technology;

• 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;

• 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 Form 10-Q reflect our views and assumptions only as of the date of this Form 10-Q. 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.

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Overview

We are a leading developer, marketer and distributor of branded performance apparel, footwear and accessories for men, women and youth. Since our founding in 1995, we have grown and reinforced our brand name and image through sales to athletes and teams at the collegiate and professional levels, as well as through sales to consumers with active lifestyles throughout the world. We believe that Under Armour is a widely recognized athletic brand known for its performance and authenticity and is uniquely positioned as a performance alternative to traditional natural fiber products and non-performance apparel and footwear.

We reported net revenues of $431.7 million for the first nine months of 2007, which represented a 46.1% increase from the first nine months of 2006. 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 relative to our competitors, as evidenced by the increases in sales of our men’s, women’s and youth apparel products, footwear and accessories.

We plan to continue to increase our net revenues by building upon our relationships with existing customers, expanding our product offerings in new and existing retail stores and offering new products. In June 2006, we launched our footwear products with the introduction of football cleats and slides. New product offerings in 2007 include baseball and softball cleats, which we began shipping in the fourth quarter of 2006. In addition, in 2007 we are expanding our product offerings to include additional men’s and women’s performance products as well as additional products for off-field outdoor sports, including hunting, fishing, running, mountain sports, skiing and golf. New product offerings in 2008 are expected to include non-cleated footwear, with the introduction of performance training footwear. As we have expanded into new product lines, sales of our existing product lines have continued to grow.

To date, a large majority of our products have been sold in North America; however we believe that our products appeal to athletes and consumers with active lifestyles around the globe. As early as 1999, the Under Armour brand has been sold in the Japanese market place through a third-party. By September 30, 2007, our products were offered primarily in the United States, Canada and Japan, as well as in the United Kingdom, France and Germany, in over 13,000 retail stores, up from approximately 500 retail stores in 2000. In addition, we have signed strategic distribution agreements to sell our products in 15 countries. We plan to increase net revenues internationally by adding product offerings through our Japanese licensee and by expanding our European distribution. In order to support this initiative, during the first quarter of 2006 we opened a European Headquarters in Amsterdam, Netherlands that houses our European sales, marketing and logistics functions.

During the first nine months of 2007, we reported license revenues of $17.7 million which represented a 60.5% increase from the first nine months of 2006. We have entered into licensing agreements with established, high-quality manufacturers to produce and distribute Under Armour branded products to further reinforce our brand identity and increase our net revenues and gross profit. In exchange for the use of our trademarks, our licensees pay us license revenues based on their net sales of core products of socks, hats, bags, eyewear, and other accessories. We seek to continue to grow our license revenues by working with our existing licensees to offer additional products and increase their distribution, and by selectively entering into new licensing agreements.

General

Net revenues comprise both net sales and license revenues. Net sales comprise our five primary product categories, which are men’s, women’s and youth apparel, footwear and accessories.

Cost of goods sold consists primarily of product costs, inbound freight and duty costs, handling costs to make products floor-ready to customer specifications, and write downs for inventory obsolescence. In addition, cost of goods sold includes overhead costs associated with our Special Make-Up Shop located at our distribution facility where we manufacture a limited number of products, and costs relating to our Hong Kong and

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Guangzhou, China offices which help support manufacturing, quality assurance and sourcing efforts. No cost of goods sold is associated with license revenues. We include a majority of our outbound shipping and 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 shipping and handling costs in the calculation of their cost of goods sold. Outbound shipping and handling costs include costs associated with shipping goods to customers and certain costs to operate our distribution facilities. These costs were $4.4 million and $3.1 million for the three months ended September 30, 2007 and 2006, respectively, and $9.7 and $6.9 million for the nine months ended September 30, 2007 and 2006, respectively.

Our selling, general and administrative expenses consist of marketing costs, selling costs, payroll and related costs (excluding those specifically related to marketing and selling) and other corporate costs. Our marketing costs are an important driver of our growth. For the full year 2007, we plan to invest at the high-end of the previously stated range of 10% to 12% of net revenues. For the full year 2008, we expect to increase our investments in marketing to 12% to 13% of net revenues. Marketing costs include payroll costs specific to marketing, commercials, print ads, league, team and player sponsorships, amortization of footwear promotional rights and depreciation expense specific to our in-store fixture program. Selling costs consist primarily of payroll costs specific to selling, commissions paid to third parties and beginning in 2007, the selling costs relating to our Direct to Consumer business, which includes website and catalog sales, and retail outlet stores. Prior period amounts have been reclassified to conform to the current period presentation. Payroll costs consist of payroll and related costs, excluding those specifically related to marketing and selling, and stock-based compensation expense. Other corporate costs consist primarily of distribution and corporate facility operating costs, product creation costs and other company-wide administrative expenses. In recent years, our selling, general and administrative expenses have increased to support our growth and new sales initiatives.

Other income, net consists primarily of interest income, interest expense, unrealized and realized gains and losses on our derivative financial instruments and unrealized and realized gains and losses on adjustments that arise from foreign currency exchange rate changes on transactions.

During 2006, we earned and recognized a state income tax credit which reduced our 2006 annual effective tax rate to 34.0%. We expect our 2007 annual effective tax rate to approximate 41.5%.

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.

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2007		2006		2007		2006
Net revenues	$	186,863	$	127,745	$	431,723	$	295,406
Cost of goods sold		92,346		63,070		217,526		148,212
Gross profit		94,517		64,675		214,197		147,194
Selling, general and administrative expenses		60,708		42,692		156,186		108,021
Income from operations		33,809		21,983		58,011		39,173
Other income, net		674		177		2,868		1,417
Income before income taxes		34,483		22,160		60,879		40,590
Provision for income taxes		14,453		6,190		25,196		13,462
Net income	$	20,030	$	15,970	$	35,683	$	27,128

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	Three Months Ended September 30,		Nine Months Ended September 30,
(As a percentage of net revenues)	2007	2006	2007	2006
Net revenues	100.0%	100.0%	100.0%	100.0%
Cost of goods sold	49.4%	49.4%	50.4%	50.2%
Gross profit	50.6%	50.6%	49.6%	49.8%
Selling, general and administrative expenses	32.5%	33.4%	36.2%	36.5%
Income from operations	18.1%	17.2%	13.4%	13.3%
Other income, net	0.4%	0.1%	0.7%	0.4%
Income before income taxes	18.5%	17.3%	14.1%	13.7%
Provision for income taxes	7.8%	4.8%	5.8%	4.5%
Net income	10.7%	12.5%	8.3%	9.2%

Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006

Net revenues increased $59.2 million, or 46.3%, to $186.9 million for the three months ended September 30, 2007 from $127.7 million for the same period in 2006. This increase was the result of increases in both our net sales and license revenues as noted in the product category table below.

	Three Months Ended September 30,
	2007		2006		$ Change		% Change
(In thousands)
Men’s	$	112,950	$	79,233	$	33,717	42.6	%
Women’s		39,467		26,513		12,954	48.9	%
Youth		16,603		10,980		5,623	51.2	%
Apparel		169,020		116,726		52,294	44.8	%
Footwear		2,158		2,001		157	7.8	%
Accessories		7,638		3,794		3,844	101.3	%
Total net sales		178,816		122,521		56,295	45.9	%
License revenues		8,047		5,224		2,823	54.0	%
Total net revenues	$	186,863	$	127,745	$	59,118	46.3	%

Net sales increased $56.3 million, or 45.9%, to $178.8 million for the three months ended September 30, 2007 from $122.5 million during the same period in 2006 as noted in the table above. The increase in net sales primarily reflects:

• continued unit volume growth of our existing apparel products, such as compression, training and golf products, primarily sold to existing retail customers due to additional retail stores and expanded floor space, while pricing of existing apparel products remained relatively unchanged;

• continued growth in sales of men’s and youth apparel products along with increased women’s market penetration by leveraging current customer relationships; and

• new products introduced subsequent to September 30, 2006 in all product categories, most significantly in our golf and training categories and our new mountain category.

License revenues increased $2.8 million, or 54.0%, to $8.0 million for the three months ended September 30, 2007 from $5.2 million during the same period in 2006. This increase in license revenues was a result of increased sales by our licensees due to increased distribution, continued unit volume growth, new product offerings and new licensing agreements, which now include distribution of products to college bookstores and golf pro shops, along with performance eyewear.

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Gross profit increased $29.8 million to $94.5 million for the three months ended September 30, 2007 from $64.7 million for the same period in 2006. Gross profit as a percentage of net revenues, or gross margin, remained flat at 50.6% for the three months ended September 30, 2007 and during the same period in 2006 primarily driven by the following:

• increased inventory reserves and sales returns and allowances, primarily related to certain cleated footwear styles that will not carry forward to the next season, accounting for an approximate 130 basis point decrease; offset by

• lower customer incentives as a percentage of net revenues, primarily driven by changes to certain customer agreements which decreased discounts while increasing certain customer marketing expenditures recorded in selling, general and administrative expenses, accounting for an approximate 80 basis point increase; and

• increased direct to consumer higher margin sales, along with increased license revenues, accounting for an approximate 40 basis point increase.

Selling, general and administrative expenses increased $18.0 million to $60.7 million for the three months ended September 30, 2007 from $42.7 million for the same period in 2006. As a percentage of net revenues, selling, general and administrative expenses decreased to 32.5% for the three months ended September 30, 2007 from 33.4% for the same period in 2006. These changes were primarily attributable to the following:

• Marketing costs increased $8.3 million to $21.5 million for the three months ended September 30, 2007 from $13.2 million for the same period in 2006 primarily due to increased in-store marketing costs, increased media advertising campaign expenditures, sponsorship of new teams and athletes on the collegiate and professional levels and the continued investment in our international growth initiatives. As a percentage of net revenues, marketing costs increased to 11.5% for the three months ended September 30, 2007 from 10.3% for the same period in 2006 primarily due to increased in-store marketing costs.

• Selling costs increased $2.6 million to $10.9 million for the three months ended September 30, 2007 from $8.3 million for the same period in 2006. This increase was primarily driven by the continued development of our Direct to Consumer business. As a percentage of net revenues, selling costs decreased to 5.8% for the three months ended September 30, 2007 from 6.5% for the same period in 2006 as we were able to experience leverage from our sales force with our growth in net revenues.

• Payroll and related costs (excluding those specifically related to marketing and selling) increased $5.5 million to $15.3 million for the three months ended September 30, 2007 from $9.8 million for the same period in 2006. The increase for the three months ended September 30, 2007 was due primarily to the addition of personnel to support our growth including the expansion of our distribution facilities and the design and sourcing of our expanding footwear and apparel lines. In addition, we incurred higher expense related to stock-based compensation during the three months ended September 30, 2007 as compared to the same period in 2006. As a percentage of net revenues, payroll and related costs (excluding those specifically related to marketing and selling) increased to 8.2% for the three months ended September 30, 2007 from 7.7% for the same period in 2006 primarily due to the items noted above.

• Other corporate costs, excluding payroll and related costs, increased $1.6 million to $13.0 million for the three months ended September 30, 2007 from $11.4 million for the same period in 2006. This increase was attributable primarily to additional distribution and corporate facility operating costs to support our growth and increased corporate costs relating to the continued development of our European business, partially offset by lower Sarbanes Oxley Act of 2002 Section 404 (“SOX 404”) compliance costs. As a percentage of net revenues, other corporate costs decreased to 7.0% for the three months ended September 30, 2007 from 8.9% for the same period in 2006 due to lower SOX 404 compliance costs and consulting expenses related to our Enterprise Resource Planning (“ERP”) system. In addition, we were able to experience leverage from our growth in net revenues during the 2007 period.

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Income from operations increased $11.8 million, or 53.8%, to $33.8 million for the three months ended September 30, 2007 from $22.0 million for the same period in 2006. Income from operations as a percentage of net revenues increased to 18.1% for the three months ended September 30, 2007 from 17.2% for the same period in 2006. This increase was a result of a decrease in selling, general and administrative expenses as a percentage of net revenues as discussed above.

Other income, net increased $0.5 million to $0.7 million for the three months ended September 30, 2007 from $0.2 million for the same period in 2006. This increase was primarily due to gains on foreign currency exchange rate changes on transactions, partially offset by losses on derivative financial instruments and lower interest income earned on short-term investments and cash and cash equivalents.

Provision for income taxes increased $8.3 million to $14.5 million for the three months ended September 30, 2007 from $6.2 million for the same period in 2006. For the three months ended September 30, 2007, our effective tax rate was 41.9% compared to 27.9% for the same period in 2006. Our annual 2007 effective tax rate is expected to be higher than our 2006 annual effective tax rate of 34.0% primarily due to the impact of 2006 state tax credits.

Net income increased $4.0 million to $20.0 million for the three months ended September 30, 2007 from $16.0 million for the same period in 2006, as a result of the factors described above.

Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006

Net revenues increased $136.3 million, or 46.1%, to $431.7 million for the nine months ended September 30, 2007 from $295.4 million for the same period in 2006. This increase was the result of increases in both our net sales and license revenues as noted in the product category table below.

	Nine Months Ended September 30,
	2007		2006		$ Change		% Change
(In thousands)
Men’s	$	242,429	$	173,620	$	68,809	39.6	%
Women’s		82,661		59,586		23,075	38.7	%
Youth		34,821		22,095		12,726	57.6	%
Apparel		359,911		255,301		104,610	41.0	%
Footwear		34,086		17,585		16,501	93.8	%
Accessories		20,010		11,481		8,529	74.3	%
Total net sales		414,007		284,367		129,640	45.6	%
License revenues		17,716		11,039		6,677	60.5	%
Total net revenues	$	431,723	$	295,406	$	136,317	46.1	%

Net sales increased $129.6 million, or 45.6%, to $414.0 million for the nine months ended September 30, 2007 from $284.4 million during the same period in 2006 as noted in the table above. The increase in net sales primarily reflects:

• continued unit volume growth of our existing apparel products, such as compression, training and golf products, primarily sold to existing retail customers due to additional retail stores and expanded floor space, while pricing of existing apparel products remained relatively unchanged;

• continued growth in sales of men’s and women’s apparel products along with increased youth market penetration by leveraging current customer relationships;

• $16.5 million increase in footwear product sales, primarily baseball and football cleats, which were introduced in the second and fourth quarter of 2006, respectively; and

• new products introduced subsequent to September 30, 2006 within all product categories, most significantly in our golf and training categories and our new mountain category.

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License revenues increased $6.7 million, or 60.5%, to $17.7 million for the nine months ended September 30, 2007 from $11.0 million during the same period in 2006. This increase in license revenues was a result of increased sales by our licensees due to increased distribution, continued unit volume growth, new product offerings and new licensing agreements, which now include distribution of products to college bookstores and golf pro shops, along with performance eyewear.

Gross profit increased $67.0 million to $214.2 million for the nine months ended September 30, 2007 from $147.2 million for the same period in 2006. Gross profit as a percentage of net revenues, or gross margin, decreased approximately 20 basis points to 49.6% for the nine months ended September 30, 2007 from 49.8% during the same period in 2006. This decrease in gross margin percentage was primarily driven by the following:

• lower gross margin attributable to the introduction of our footwear products in the second quarter of 2006, which have lower profit margins than our current apparel products, accounting for an approximate 60 basis point decrease; and

• increased inventory reserves and sales returns and allowances, accounting for an approximate 80 basis point decrease; partially offset by

• lower customer incentives as a percentage of net revenues, primarily driven by changes to certain customer agreements which decreased discounts while increasing certain customer marketing expenditures recorded in selling, general and administrative expenses, accounting for an approximate 80 basis point increase; and

• increased direct to consumer higher margin sales, along with increased license revenues, accounting for an approximate 50 basis point increase.

Selling, general and administrative expenses increased $48.2 million to $156.2 million for the nine months ended September 30, 2007 from $108.0 million for the same period in 2006. As a percentage of net revenues, selling, general and administrative expenses decreased slightly to 36.2% for the nine months ended September 30, 2007 from 36.5% for the same period in 2006. These changes were primarily attributable to the following:

• Marketing costs increased $20.4 million to $51.6 million for the nine months ended September 30, 2007 from $31.2 million for the same period in 2006 primarily due to increased in-store marketing costs, sponsorship of new teams and athletes on the collegiate and professional levels, increased print and media advertising campaign expenditures, continued investment in our international growth initiatives and footwear promotional rights for the National Football League. As a percentage of net revenues, marketing costs increased to 12.0% for the nine months ended September 30, 2007 from 10.6% for the same period in 2006 primarily due to continued investment in our international growth initiatives and increased in-store marketing costs.

• Selling costs increased $7.6 million to $29.5 million for the nine months ended September 30, 2007 from $21.9 million for the same period in 2006. This increase was primarily driven by the continued development of our Direct to Consumer businesses, along with additional personnel in our sales force. As a percentage of net revenues, selling costs decreased to 6.8% for the nine months ended September 30, 2007 from 7.4% for the same period in 2006 as we were able to experience leverage from our sales force with our growth in net revenues.

• Payroll and related costs (excluding those specifically related to marketing and selling) increased $14.7 million to $41.6 million for the nine months ended September 30, 2007 from $26.9 million for the same period in 2006. The increase was due primarily to the addition of personnel to support our growth including the expansion of our distribution facilities, the design and sourcing of our expanding footwear and apparel lines, additional retail outlet stores and the continued development of our European business. In addition, we incurred higher expense related to stock-based compensation during the nine months ended September 30, 2007 as compared to the same period in 2006. As a percentage of

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net revenues, payroll and related costs (excluding those specifically related to marketing and selling) increased to 9.6% for the nine months ended September 30, 2007 from 9.1% for the same period in 2006 primarily due to the items noted above.

• Other corporate costs, excluding payroll and related costs, increased $5.5 million to $33.5 million for the nine months ended September 30, 2007 from $28.0 million for the same period in 2006. This increase was attributable primarily to additional distribution and corporate facility operating costs to support our growth and increased corporate costs relating to continued development of our European business. These increases were partially offset by lower SOX 404 compliance costs. As a percentage of net revenues, other corporate costs decreased to 7.8% for the nine months ended September 30, 2007 from 9.4% for the same period in 2006 due to lower SOX 404 compliance costs, consulting expenses relating to our ERP system and legal expenses. In addition we were able to experience leverage from our growth in net revenues during the 2007 period.

Income from operations increased $18.8 million, or 48.1%, to $58.0 million for the nine months ended September 30, 2007 from $39.2 million for the same period in 2006. Income from operations as a percentage of net revenues increased to 13.4% for the nine months ended September 30, 2007 from 13.3% for the same period in 2006. This increase was a result of a decrease in gross margin percentage largely offset by a decrease in selling, general and administrative expenses as a percentage of net revenues as discussed above.

Other income, net increased $1.5 million to $2.9 million for the nine months ended September 30, 2007 from $1.4 million for the same period in 2006. This increase was primarily due to gains on foreign currency exchange rate changes on transactions, partially offset by losses on derivative financial instruments.

Provision for income taxes increased $11.7 million to $25.2 million for the nine months ended September 30, 2007 from $13.5 million for the same period in 2006. For the nine months ended September 30, 2007, our effective tax rate was 41.4% compared to 33.2% for the same period in 2006. Our annual 2007 effective tax rate is expected to be higher than our 2006 annual effective tax rate of 34.0% primarily due to the impact of 2006 state tax credits.

Net income increased $8.6 million to $35.7 million for the nine months ended September 30, 2007 from $27.1 million for the same period in 2006, as a result of the factors described above.

Seasonality

Historically, we have recognized approximately 70% to 75% of our income from operations in the last two quarters of the year, driven by increased sales volume of our products during the fall selling season, reflecting our historical strength in fall sports, and the seasonality of our higher priced ColdGear^® line. Approximately 61% and 62% of our net revenues were generated during the last two quarters of 2006 and 2005, respectively. The level of our working capital reflects the seasonality and growth in our business. We generally expect inventory, accounts payable and accrued expenses to be higher in the second and third quarters in preparation for the fall selling season. Nonetheless, the high percentage of income from operations and net revenues in the second half of the year may have been in part due to our significant growth in net revenues.

Financial Position, Capital Resources and Liquidity

Our cash requirements have principally been for working capital and capital expenditures. Working capital is primarily funded from cash flows provided by operating activities and cash and cash equivalents on hand. Our working capital requirements reflect the seasonality and growth in our business as we recognize a significant increase in sales leading up to the fall selling season. Prior to 2006, cash requirements for capital investments needed to grow our business were primarily funded through subordinated debt and capital lease obligations. During 2007, we are funding a portion of our working capital (primarily inventory) and capital investments from cash and cash equivalents on hand and borrowings available under our revolving credit facility. Our capital

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investments have included expanding our in-store fixture program, improvements to and expansion of our distribution and corporate facilities to support our growth, leasehold improvements to our new retail outlet stores, the investment in a company-wide ERP system and our new warehouse management system implementation.

We believe that our cash and cash equivalents on hand, cash from operations and borrowings available to us under our revolving credit and subordinated debt facilities will be adequate to meet our liquidity needs and capital expenditure requirements for at least the next twelve months.

The following table presents the major components of net cash flows used in and provided by operating, investing and financing activities for the periods stated:

	Nine Months Ended September 30,
(in thousands)	2007			2006
Net cash (used in) provided by:
Operating activities	$	(46,900	)	$	(15,856	)
Investing activities		(26,362	)		(10,957	)
Financing activities		16,791			8,252
Effect of exchange rate changes on cash and cash equivalents		289			(159	)
Net decrease in cash and cash equivalents	$	(56,182	)	$	(18,720	)

Operating Activities

Operating activities consist primarily of net income adjusted for certain non-cash items. Non-cash items include depreciation and amortization, unrealized foreign currency transaction gains and losses, stock-based compensation, deferred income taxes and changes in reserves for doubtful accounts, returns, discounts and inventories. In addition, operating cash flows include the effect of changes in operating assets and liabilities, principally accounts receivable, inventories, accounts payable, accrued expenses and income taxes payable and receivable.

Cash used in operating activities increased $31.0 million to $46.9 million for the nine months ended September 30, 2007 compared to $15.9 million during the same period in 2006. The $31.0 million additional net use of cash in operating activities was due to increased cash outflows from operating assets and liabilities of $44.0 million, offset by increased non-cash items of $4.4 million and an increase in net income of $8.6 million period-over-period. The increase in cash outflows related to changes in operating assets and liabilities period-over-period was primarily due to the following:

• increased inventory levels of $49.1 million partially offset by the related increase in accounts payable. The increase in inventory is primarily due to our planned strategy which included additional core inventory needed to support the anticipated consumer demand for our products. Core inventory primarily represents inventory that we plan to have available for sale on a 12 month basis at full price. Inventory also increased as a result of additional inventory needed to support our growth, higher average cost per unit due to product mix, and increased in-transit inventory as a result of increased sourcing from Asia;

• increased accounts receivable driven by a 45.9% increase in net sales for the three months ended September 30, 2007 compared to the same period of the prior year; partially offset by

• higher income taxes payable in 2007 compared to 2006.

Non-cash items primarily increased as a result of higher depreciation and amortization expense relating to the expansion of our distribution and corporate facilities and our footwear promotional rights, higher stock-based compensation expense and lower reserves for doubtful accounts, returns, discounts and inventories. The increase in non-cash items was partially offset by a higher unrealized foreign currency transaction gains.

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Investing Activities

Cash used in investing activities, which includes capital expenditures, increased $15.4 million to $26.4 million for the nine months ended September 30, 2007 from $11.0 million for the same period in 2006. This increase in cash used in investing activities primarily represents the costs to improve and to expand our distribution and corporate facilities, along with continued investment in our new warehouse management system implementation, investments in our Direct to Consumer business, information technology initiatives and continued investments in our in-store fixture program, including concept shops.

In April 2006, we began investing a portion of our available cash and cash equivalents in short-term investments, which consist of auction rate municipal bonds. These investments have stated maturities of 14 to 42 years and have variable interest rates, which typically reset at regular auctions every 7 to 35 days. Despite the long-term nature of their stated contractual maturities, we have the ability to liquidate these securities primarily through the auction process. The income generated from these short-term investments is tax exempt and recorded as interest income. At September 30, 2007, all investments in these securities had been sold and the proceeds had been invested in highly liquid investments with an original maturity of three months or less.

We currently anticipate capital investments for all of 2007 to be in the range of $34.0 to $36.0 million, of which approximately $12.0 million will be invested in our distribution facilities to add equipment to improve our shipping velocity and expand our warehouse capacity in anticipation of future growth in our footwear business. In addition, we plan to invest approximately $11.0 million in our in-store fixture program, including concept shops, and approximately $7.0 million in our Direct to Consumer business. The balance will be invested in information technology initiatives and for other general corporate improvements.

Financing Activities

Cash provided by financing activities increased $8.5 million to $16.8 million for the nine months ended September 30, 2007 from $8.3 million for the same period in 2006. This increase was primarily due to the net proceeds received from our revolving credit facility for the nine months ended September 30, 2007 as compared to the same period in 2006.

Revolving Credit Facility Agreement

In December 2006, we entered into an amended and restated financing agreement with a lending institution. This financing agreement has a term of five years and provides for a revolving credit line of up to $100.0 million based on our eligible domestic inventory and accounts receivable balances and may be used for working capital and general corporate purposes. This financing agreement is collateralized by substantially all of our domestic assets, other than our trademarks. Up to $10.0 million of the facility may be used to support letters of credit, which if utilized would reduce the availability under the revolving credit line.

The revolving credit facility bears interest based on the daily balance outstanding at our choice of LIBOR plus an applicable margin (varying from 1.0% to 2.0%) or the JP Morgan Chase Bank prime rate plus an applicable margin (varying from 0.0% to 0.5%). The applicable margin is calculated quarterly and varies based on our pricing leverage ratio as defined in the agreement. The revolving credit facility also carries a line of credit fee varying from 0.1% to 0.5% of the available but unused borrowings.

In September 2007, we borrowed under the revolving credit facility at a 6.8% interest rate. As of September 30, 2007, our availability was $100.0 million based on our eligible domestic inventory and accounts receivable balances, less $10.0 million of current borrowings outstanding. There was no balance outstanding under our revolving credit facility in 2007 prior to this borrowing and during the nine months ended September 30, 2006. All borrowings outstanding under the revolving credit facility were repaid during October 2007.

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This financing agreement contains a number of restrictions that limit our ability, among other things, to pledge our accounts receivable, inventory, trademarks and most of our other assets as security in other borrowings or transactions; pay dividends on stock; redeem or acquire any of our securities; sell certain assets; make certain investments; guaranty certain obligations of third parties; undergo a merger or consolidation; or engage in any activity materially different from those presently conducted by us.

If net availability under the financing agreement falls below certain thresholds as defined in the agreement, we would be required to maintain a certain leverage ratio and fixed charge coverage ratio as defined in the agreement. This financing agreement also provides the lenders with the ability to reduce the available revolving credit line amount under certain conditions even if we are in compliance with all conditions of the agreement. We were in compliance with these covenants as of September 30, 2007.

Subordinated Debt and Lease Obligations

In March 2005, we entered into a loan and security agreement with a lending institution to finance the acquisition of up to $17.0 million of qualifying capital investments. This agreement is collateralized by a first lien on these assets and is otherwise subordinate to the revolving credit facility. Since March 2005, we have financed a total of $9.0 million of capital investments under this agreement. Interest on outstanding borrowings accrues at an average rate of 6.6% and the outstanding principal balance was $3.6 million as of September 30, 2007.

We lease warehouse space, office facilities, space for our retail outlet stores and certain equipment under non-cancelable operating and capital leases.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. To prepare these financial statements, we must make estimates and assumptions that affect the reported amounts of assets and liabilities. These estimates also affect our reported revenues and expenses. Judgments must be made about the disclosure of contingent liabilities as well. Actual results could be significantly different from these estimates. We believe that 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 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. In some instances, transfer of title and risk of loss takes place at the point of sale (e.g., at our retail outlet stores). Net sales are recorded net of reserves for returns and certain sales allowances. Such returns and allowances are estimated at the time of sale based primarily on historical experience and recent trends. License revenues are recognized based upon shipment of licensed products sold by our licensees.

Sales Returns and Allowances

We record reductions to revenue for estimated customer returns and allowances. We base our estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns 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 were significantly greater or lower than the reserves we had established, we would record a reduction or increase, as appropriate, to net sales in the period in which we made such a determination.

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Reserve for Uncollectible Accounts Receivable

We make ongoing estimates relating to the collectibility of our accounts receivable and maintain a reserve for estimated losses resulting from the inability of our customers to make required payments. In determining the amount of the reserve, we consider our historical level of credit losses 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 our estimates. If the financial condition of our customers were to deteriorate, resulting in their inability to make payments, a larger reserve might be required. In the event we determine that a smaller or larger reserve was appropriate, we would record a benefit or charge to selling, general and administrative expense in the period in which we made such a determination.

Inventory Valuation and Reserves

We value our inventory at standard cost which approximates our 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 provide a reserve for such difference as 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 us, further adjustments may be required that would increase our cost of goods sold in the period in which we made such a determination.

Long-Lived Assets

The acquisition of long-lived assets, including furniture and fixtures, office equipment, plant equipment, leasehold improvements, computer hardware and software and in-store fixtures, is recorded at cost, and this cost is depreciated over the asset’s estimated useful life. 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. Impairments are recognized in earnings to the extent that the carrying value exceeds fair value.

Intangible Assets

Intangible assets that are determined to have a definite life are amortized over the asset’s estimated useful life and are evaluated and measured for impairment in accordance with our Long-Lived Assets critical accounting policy discussed above.

Income Tax Provision

We estimate our effective tax rate for the full year and record a quarterly income tax provision in accordance with the expected effective annual tax rate. As the year progresses, we continually refine our estimate based upon actual events and earnings by jurisdiction during the year. This process may result in a change to our expected effective annual tax rate for the year. We recognize in our projected annual effective tax rate, the impact of the largest amount of an uncertain tax position that would not have a greater than 50% likelihood of being sustainable on its technical merits. 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 our expected effective annual tax rate for the year. When changes in our effective annual tax rate occur, we adjust the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision equals the expected effective annual tax rate.

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Stock-Based Compensation

Compensation expense is recognized in accordance with the Statement of Financial Accounting Standards (“SFAS”) No. 123R, Share-Based Payment (revised 2004) (“SFAS 123R”), which we adopted on January 1, 2006. Compensation expense under SFAS 123R includes the expense of stock-based compensation awards granted on and subsequent to January 1, 2006, and the expense for the remaining vesting terms of stock-based compensation awards issued subsequent to our initial filing of the S-1 Registration Statement with the SEC on August 26, 2005. Stock-based compensation awards granted prior to our initial filing of the S-1 Registration Statement are specifically excluded from SFAS 123R and will continue to be accounted for in accordance with Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”) and Financial Interpretation (“FIN”) No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans, until fully amortized through 2010.

Determining the appropriate fair value model and calculating the fair value of stock-based payment awards require the input of highly subjective assumptions, including the expected life of the stock-based payment awards and stock price volatility. We use the Black-Scholes option-pricing model to value stock-based compensation expense. 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. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.

New Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We do not believe the adoption of SFAS 159 will have a material impact on our consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We do not believe that the adoption of SFAS 157 will have a material impact on our consolidated financial statements.

In June 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (“FIN 48”), which provides additional guidance and clarifies the accounting for uncertainty in income tax positions. FIN 48 defines the threshold for recognizing tax return positions in the financial statements as “more likely than not” that the position is sustainable, based on its technical merits. FIN 48 also provides guidance on the measurement, classification and disclosure of tax return positions in the financial statements. FIN 48 was effective for the first reporting period beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to the beginning balance of retained earnings in the period of adoption. Upon adoption of FIN 48 as of January 1, 2007, we recorded a $1.2 million decrease to the beginning balance of retained earnings (see Note 6 to the consolidated financial statements for a further discussion on the adoption of FIN 48).

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange and Foreign Currency Risk Management and Derivatives

We currently generate a small amount of our consolidated net revenues in Canada and Europe. The reporting currency for our consolidated financial statements is the U.S. dollar. To date, net revenues generated

outside of the United States have not been significant. As a result, we have not been impacted materially by

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changes in foreign currency exchange rates and do not expect to be impacted materially for the foreseeable future. However, as our net revenues generated outside of the United States increase, our results of operations could be adversely impacted by changes in foreign currency exchange rates. For example, if we recognize international sales in local foreign currencies (as we currently do in Canada and Europe) and if the U.S. dollar strengthens, it could have a negative impact on our international results upon translation of those results into the U.S. dollar upon consolidation of our financial statements.

Adjustments that arise from foreign currency exchange rate changes on transactions denominated in a currency other than the local currency are included in other income, net on the consolidated statements of income. We recorded unrealized foreign currency transaction gains of $1.3 million for the three months ended September 30, 2007, and $2.3 million and $0.3 million for the nine months ended September 30, 2007 and 2006, respectively. We recorded realized foreign currency transaction gains of $0.1 million for the three months ended September 30, 2007, and $0.3 million and $0.1 million for the nine months ended September 30, 2007 and 2006, respectively. No unrealized or realized foreign currency transaction gains or losses were recorded for the three months ended September 30, 2006.

In August 2007, management implemented a foreign currency risk management program in which foreign currency forward contracts are used in order to minimize some of the impact of foreign currency exchange rate fluctuations on future cash flows. We currently use foreign currency forward contracts to reduce the risk from exchange rate fluctuations on projected inventory purchases, inter-company payments and other working capital requirements for our Canadian subsidiary. We do not enter into derivative financial instruments for speculative or trading purposes. Based on the foreign currency forward contracts outstanding as of September 30, 2007, we receive US Dollars in exchange for Canadian Dollars at a weighted average contractual foreign currency exchange rate of 1.05 CAD per $1.00. As of September 30, 2007, the notional value of our outstanding forward contracts was approximately $10.3 million with maturities of 1 to 15 months. The foreign currency forward contracts are not designated as cash flow hedges, and accordingly, changes in their fair value are recorded in earnings. The unrealized derivative losses of $0.6 million related to outstanding foreign currency forward contracts were included in liabilities on the balance sheet as of September 30, 2007 and were recognized in other income, net on the consolidated statements of income during the three and nine months ended September 30, 2007. In addition, we recorded $0.1 million of realized derivative losses related to the settlement of foreign currency forward contracts within other income, net during the three and nine months ended September 30, 2007.

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.

ITEM 4. 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 the end of the period covered by this report 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 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.

There has been no change in our internal control over financial reporting during the most recent quarter that has materially affected, or that is reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

The Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 have not materially changed.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

From July 31, 2007 through October 3, 2007, we issued 136,128 shares of Class A Common Stock upon the exercise of previously granted employee stock options to employees at a weighted average exercise price of $3.12 per share, for an aggregate amount of consideration of $424,459. The following issuances of Class A Common Stock were made on the dates indicated at exercise prices totaling the aggregate amount of consideration set forth in the following table:

Date	Number of Shares Issued	Aggregate Amount of Exercise Price
July 31, 2007	10,000	$	1,667
August 2, 2007	53,250		222,073
August 3, 2007	4,903		17,053
August 6, 2007	1,500		8,035
August 7, 2007	10,800		3,786
August 8, 2007	17,900		32,081
August 9, 2007	3,075		6,637
August 10, 2007	3,000		7,950
August 15, 2007	500		1,325
August 20, 2007	6,100		57,577
August 21, 2007	500		5,385
September 11, 2007	500		1,325
September 13, 2007	100		265
September 14, 2007	1,000		10,770
September 27, 2007	13,000		27,430
October 3, 2007	10,000		21,100
	136,128	$	424,459

The issuances of securities described above were made in reliance upon Section 4(2) under the Securities Act in that any issuance did not involve a public offering or under Rule 701 promulgated under the Securities Act, in that they were offered and sold either pursuant to written compensatory plans or pursuant to a written contract relating to compensation, as provided by Rule 701.

ITEM 6. EXHIBITS

Exhibit No.
10.01	Under Armour, Inc. Stock Option Plan, as amended
31.01	Section 302 Chief Executive Officer Certification
31.02	Section 302 Chief Financial Officer Certification
32.01	Section 906 Chief Executive Officer Certification
32.02	Section 906 Chief Financial Officer Certification

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SIGNATURES

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.

UNDER ARMOUR, INC.
By:	/s/    WAYNE A. MARINO
	Wayne A. Marino
	Executive Vice President and Chief Financial Officer

Dated: November 7, 2007

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EX-10.1

Exhibit 10.01

UNDER ARMOUR, INC.

STOCK OPTION PLAN

EFFECTIVE AS OF MARCH 1, 2000

1. Establishment, Purpose and Types of Awards

The purpose of the Under Armour, Inc. Stock Option Plan (“the Plan”) is to promote the long-term growth and profitability of Under Armour, Inc. (the “Corporation”) by (i) providing key people with incentives to improve stockholder value and to contribute to the growth and financial success of the Corporation, and (ii) enabling the Corporation to attract, retain and reward the best available persons for positions of substantial responsibility.

The Plan permits the granting of stock options (including nonqualified stock options and incentive stock options qualifying under Section 422 of the Code) and stock appreciation rights (including free-standing, tandem and limited stock appreciation rights) or any combination of the foregoing (collectively, “Awards”).

The Plan is a compensatory benefit plan within the meaning of Rule 701 under the Securities Act of 1933 (the “Securities Act”). Except to the extent any other exemption from the Securities Act is expressly relied upon in connection with any agreement entered into pursuant to the Plan or the securities issuable hereunder are registered under the Securities Act, the issuance of Common Stock pursuant to the Plan is intended to qualify for the exemption from registration under the Securities Act provided by Rule 701. To the extent that an exemption from registration under the Securities Act provided by Rule 701 is unavailable, all unregistered offers and sales of Awards and shares of Common Stock issuable upon exercise of an Award are intended to be exempt from registration under the Securities Act in reliance upon the private offering exemption contained in Section 4(2) of the Securities Act, or other available exemption, and the Plan shall be so administered.

Effective February 2, 2005, the Plan also permits the grant of restricted stock. For the purpose of the Plan, the term “Award” shall also include restricted stock.

2. Definitions

Under this Plan, except where the context otherwise indicates, the following definitions apply:

(a) “Board” shall mean the Board of Directors of the Corporation.

(b) “Change in Control” shall mean: (i) any sale, exchange or other disposition of substantially all of the Corporation’s assets or over 50% of its Common Stock; or (ii) any merger, share exchange, consolidation or other reorganization or business combination in which the Corporation is not the surviving or continuing corporation, or in which the Corporation’s stockholders become entitled to receive cash securities of the Corporation other than voting common stock, or securities of another issuer.

(c) “Code” shall mean the Internal Revenue Code of 1986, as amended, and any regulations issued thereunder.

(d) “Committee” shall mean the Board or committee of Board members appointed pursuant to Section 3 of the Plan to administer the Plan.

(e) “Common Stock” shall mean shares of the Corporation’s common stock.

(f) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(g) “Fair Market Value” of a share of the Corporation’s Common Stock for any purpose on a particular date shall be determined in a manner such as the Committee shall in good faith determine to be appropriate.

(h) “Grant Agreement” shall mean a written agreement between the Corporation and a grantee memorializing the terms and conditions of an Award granted pursuant to the Plan.

(i) “Grant Date” shall mean the date on which the Committee formally acts to grant an Award to a Grantee or such other date as the Committee shall so designate at the time of taking such formal action.

(j) “Parent” shall mean a corporation, whether now or hereafter existing, within the meaning of the definition of “parent corporation” provided in Section 424(e) of the Code, or any successor thereto of similar import.

(k) “Rule 16b-3” shall mean Rule 16b-3 as in effect under the Exchange Act on the effective date of the Plan, or any successor provision prescribing conditions necessary to exempt the issuance of securities under the Plan (and further transactions in such securities) from Section 16(b) of the Exchange Act.

(l) “Subsidiary” and “subsidiaries” shall mean only a corporation or corporations, whether now or hereafter existing, within the meaning of the definition of “subsidiary corporation” provided in Section 424(f) of the Code, or any successor thereto of similar import.

3. Administration

(a) Procedure. The Plan shall be administered by the Board. In the alternative, the Board may appoint a Committee consisting of not less than two (2) members of the Board to administer the Plan on behalf of the Board, subject to such terms and conditions as the Board may prescribe. Once appointed, the Committee shall continue to serve until otherwise directed by the Board. From time to time, the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, and remove all members of the Committee and, thereafter, directly administer the Plan. In the event that the Board is the administrator of the Plan in lieu of a Committee, the term “Committee” as used herein shall be deemed to mean the Board.

Members of the Board or Committee who are either eligible for Awards or have been granted Awards may vote on any matters affecting the administration of the Plan or the grant of Awards pursuant to the Plan, except that no such member shall act upon the granting of an Award to himself or herself, but any such member may be counted in determining the existence of a quorum at any meeting of the Board or the Committee during which action is taken with respect to the granting of an Award to him or her.

The Committee shall meet at such times and places and upon such notice as it may determine. A majority of the Committee shall constitute a quorum. Any acts by the Committee may be taken at any meeting at which a quorum is present and shall be by majority vote of those members entitled to vote. Additionally, any acts reduced to writing or approved in writing by all of the members of the Committee shall be valid acts of the Committee.

(b) Procedure After Registration of Common Stock. Upon and after the point in time that the Common Stock or any other capital stock of the Corporation becomes registered under Section 12 of the Exchange Act, the Board shall take all action necessary to cause the Plan to be administered in accordance with the then effective provisions of Rule 16b-3, provided that any amendment to the Plan required for compliance with such provisions shall be made in accordance with Section 11 of the Plan.

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(c) Powers of the Committee. The Committee shall have all the powers vested in it by the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards and establish programs for granting Awards. The Committee shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan, including, but not limited to, the authority to:

(i) determine the eligible persons to whom, and the time or times at which Awards shall be granted,

(ii) determine the types of Awards to be granted,

(iii) determine the number of shares to be covered by or used for reference purposes for each Award,

(iv) impose such terms, limitations, restrictions and conditions upon any such Award as the Committee shall deem appropriate,

(v) modify, extend or renew outstanding Awards, accept the surrender of outstanding Awards and substitute new Awards, provided that no such action shall be taken with respect to any outstanding Award which would adversely affect the grantee without the grantee’s consent, and

(vi) accelerate or otherwise change the time in which an Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part, of any restriction or condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the vesting or exercisability of an Award following termination of any grantee’s employment.

The Committee shall have full power and authority to administer and interpret the Plan and to adopt such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct of its business as the Committee deems necessary or advisable and to interpret same, all within the Committee’s sole and absolute discretion.

(d) Limited Liability. To the maximum extent permitted by law, no member of the Board or Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any Award thereunder.

(e) Indemnification. To the maximum extent permitted by law, the members of the Board and Committee shall be indemnified by the Corporation in respect of all their activities under the Plan.

(f) Effect of Committee’s Decision. All actions taken and decisions and determinations made by the Committee on all matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Committee’s sole and absolute discretion and shall be conclusive and binding on all parties concerned, including the Corporation, its stockholders, any participants in the Plan and any other employee of the Corporation, and their respective successors in interest.

4. Shares Available for the Plan; Maximum Awards

Subject to adjustments as provided in Section 10 of the Plan, the shares of stock that may be delivered or purchased or used for reference purposes (with respect to stock appreciation rights) under the Plan, including with respect to incentive stock options intended to qualify under Section 422 of the Code, shall not exceed an aggregate of 10,856,000 shares of Common Stock of the Corporation and the Corporation shall reserve said number of shares of Common Stock for issuance pursuant to the Plan. If any Award, or portion of an Award, under the Plan expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares, the shares subject to such Award shall thereafter be available for further Awards under the Plan.

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5. Participation

Participation in the Plan shall be open to all employees, officers, directors and consultants of the Corporation, or of any Parent or Subsidiary of the Corporation, as may be selected by the Committee from time to time. Notwithstanding the foregoing, participation in the Plan with respect to Awards of incentive stock options shall be limited to employees of the Corporation, or of any Parent or Subsidiary of the Corporation.

Awards may be granted to such eligible persons and for or with respect to such number of shares of Common Stock as the Committee shall determine, subject to the limitations in Section 4 of the Plan. A grant of any type of Award made in any one year to an eligible person shall neither guarantee nor preclude a further grant of that or any other type of Award to such person in that year or subsequent years.

6. Stock Options

Subject to the other applicable provisions of the Plan, the Committee may from time to time grant to eligible participants nonqualified stock options or incentive stock options as that term is defined in Section 422 of the Code. The stock options granted shall be subject to the following terms and conditions.

(a) Grant of Option. The grant of a stock option shall be evidenced by a Grant Agreement, executed by the Corporation and the grantee, stating the number of shares of Common Stock subject to the stock option evidenced thereby and the terms and conditions of such stock option, in such form as the Committee may from time to time determine.

(b) Price. The price per share payable upon the exercise of each stock option (“exercise price”) shall be determined by the Committee.

(c) Payment. Stock options may be exercised in whole or in part by payment of the exercise price of the shares to be acquired in accordance with the provisions of the Grant Agreement, and/or such rules and regulations as the Committee may have prescribed, and/or such determinations, orders, or decisions as the Committee may have made. Payment may be made in cash (or cash equivalents acceptable to the Committee) or, if approved by the Committee, in shares of Common Stock or a combination of cash and shares of Common Stock, or by such other means as the Committee may prescribe. The Fair Market Value of shares of Common Stock delivered on exercise of stock options shall be determined as of the date of exercise. Shares of Common Stock delivered in payment of the exercise price may be previously owned shares or, if approved by the Committee, shares acquired upon exercise of the stock option. Any fractional share will be paid in cash. If approved by the Board of Directors, the Corporation may make or guarantee loans to grantees to assist grantees in exercising stock options and satisfying any related withholding tax obligations.

If the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Committee, subject to such limitations as it may determine, may authorize payment of the exercise price, in whole or in part, by delivery of a properly executed exercise notice, together with irrevocable instructions, to: (i) a brokerage firm designated by the Corporation to deliver promptly to the Corporation the aggregate amount of sale or loan proceeds to pay the exercise price and any withholding tax obligations that may arise in connection with the exercise, and (ii) the Corporation to deliver the certificates for such purchased shares directly to such brokerage firm.

(d) Terms of Options. The term during which each stock option may be exercised shall be determined by the Committee; provided, however, that in no event shall a stock option be exercisable more than ten years from the date it is granted. Prior to the exercise of the stock option and delivery of the shares certificates represented thereby, the grantee shall have none of the rights of a stockholder with respect to any shares represented by an outstanding stock option.

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(e) Restrictions on Incentive Stock Options. Incentive Stock Options granted under the Plan shall comply in all respects with Code Section 422 and, as such, shall meet the following additional requirements.

(i) Grant Date. An incentive stock option must be granted within 10 years of the earlier of the Plan’s adoption by the Board of Directors or approval by the Corporation’s shareholders.

(ii) Exercise Price and Term. The exercise price of an incentive stock option shall not be less than 100% of the Fair Market Value of the shares on the date the stock option is granted and the term of the stock option shall not exceed ten years. Also, the exercise price of any incentive stock option granted to a grantee who owns (within the meaning of Section 422(b)(6) of the Code, after the application of the attribution rules in Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of shares of the Corporation or its Parent or Subsidiary corporations (within the meaning of Sections 422 and 424 of the Code) shall be not less than 110% of the Fair Market Value of the Common Stock on the grant date and the term of such stock option shall not exceed five years.

(iii) Maximum Grant. The aggregate Fair Market Value (determined as of the Grant Date) of shares of Common Stock with respect to which all incentive stock options first become exercisable by any grantee in any calendar year under this or any other plan of the Corporation and its Parent and Subsidiary corporations may not exceed $100,000 or such other amount as may be permitted from time to time under Section 422 of the Code. To the extent that such aggregate Fair Market Value shall exceed $100,000, or other applicable amount, such stock options shall be treated as nonqualified stock options. In such case, the Corporation may designate the shares of Common Stock that are to be treated as stock acquired pursuant to the exercise of an incentive stock option by issuing a separate certificate for such shares and identifying the certificate as incentive stock option shares in the stock transfer records of the Corporation.

(iv) Grantee. Incentive stock options shall only be issued to employees of the Corporation, or of a Parent or Subsidiary of the Corporation.

(v) Designation. No stock option shall be an incentive stock option unless so designated by the Committee at the time of grant or in the Grant Agreement evidencing such stock option.

(vi) Stockholder Approval. No stock option issued under the Plan shall be an incentive stock option unless the Plan is approved by the shareholders of the Corporation within 12 months of its adoption by the Board in accordance with the Bylaws and Certificates of the Corporation and governing law relating to such matters.

(f) Other Terms and Conditions. Stock options may contain such other provisions, not inconsistent with the provisions of the Plan, as the Committee shall determine appropriate from time to time.

7. Stock Appreciation Rights

(a) Award of Stock Appreciation Rights. Subject to the other applicable provisions of the Plan, the Committee may at any time and from time to time grant stock appreciation rights (“SARs”) to eligible participants, either on a free-standing basis (without regard to or in addition to the grant of a stock option) or on a tandem basis (related to the grant of an underlying stock option), as it determines. SARs granted in tandem with or in addition to a stock option may be granted either at the same time as the stock option or at a later time; provided, however, that a tandem SAR shall not be granted with respect to any outstanding incentive stock option Award without the consent of the grantee. SARs shall be evidenced by Grant Agreements, executed by the Corporation and the grantee, stating the number of shares of Common Stock subject to the SAR evidenced thereby and the terms and conditions of such SAR, in such form as the

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Committee may from time to time determine. The term during which each SAR may be exercised shall be determined by the Committee. In no event shall a SAR be exercisable more than ten years from the date it is granted. The grantee shall have none of the rights of a stockholder with respect to any shares of Common Stock represented by a SAR.

(b) Restrictions of Tandem SARs. No incentive stock option may be surrendered in connection with the exercise of a tandem SAR unless the Fair Market Value of the Common Stock subject to the incentive stock option is greater than the exercise price for such incentive stock option. SARs granted in tandem with stock options shall be exercisable only to the same extent and subject to the same conditions as the stock options related thereto are exercisable. The Committee may, in its discretion, prescribe additional conditions to the exercise of any such tandem SAR.

(c) Amount of Payment Upon Exercise of SARs. A SAR shall entitle the grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment having an aggregate value equal to the product of (i) the excess of (A) the Fair Market Value on the exercise date of one share of Common Stock over (B) the base price per share specified in the Grant Agreement, times (ii) the number of shares specified by the SAR, or portion thereof, which is exercised. In the case of exercise of a tandem SAR, such payment shall be made in exchange for the surrender of the unexercised related stock option (or any portion or portions thereof which the grantee from time to time determines to surrender for this purpose).

(d) Form of Payment Upon Exercise of SARs. Payment by the Corporation of the amount receivable upon any exercise of a SAR may be made by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the Committee from time to time. If upon settlement of the exercise of a SAR a grantee is to receive a portion of such payment in shares of Common Stock, the number of shares shall be determined by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise date. No fractional shares shall be used for such payment and the Committee shall determine whether cash shall be given in lieu of such fractional shares or whether such fractional shares shall be eliminated.

8. Withholding Of Taxes

The Corporation may require, as a condition to the grant of any Award under the Plan or exercise pursuant to such Award or to the delivery of certificates for shares issued or payments of cash to a grantee pursuant to the Plan or a Grant Agreement (hereinafter collectively referred to as a “taxable event”), that the grantee pay to the Corporation, in cash or, if approved by the Corporation, in shares of Common Stock, including shares acquired upon grant of the Award or exercise of the Award, valued at Fair Market Value on the date as of which the withholding tax liability is determined, any federal, state or local taxes of any kind required by law to be withheld with respect to any taxable event under the Plan. The Corporation, to the extent permitted or required by law, shall have the right to deduct from any payment of any kind (including salary or bonus) otherwise due to a grantee any federal, state or local taxes of any kind required by law to be withheld with respect to any taxable event under the Plan, or to retain or sell without notice a sufficient number of the shares to be issued to such grantee to cover any such taxes.

9. Transferability

No Award granted under the Plan shall be transferable by a grantee otherwise than by will or the laws of descent and distribution. Unless otherwise determined by the Committee in accord with the provisions of the immediately preceding sentence, an Award may be exercised during the lifetime of the grantee, only by the grantee or, during the period the grantee is under a legal disability, by the grantee’s guardian or legal representative.

10. Adjustments; Business Combinations

If the number of outstanding shares of Common Stock is increased or decreased or the shares of Common Stock are changed into or exchanged for a different number or kind of shares or other securities of the Corporation on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase

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or decrease in such shares effected without receipt of consideration by the Corporation, the number and kind of shares for which Awards are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the grantee immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding stock options or SARs shall not change the aggregate exercise price payable with respect to shares that are subject to the unexercised portion of an outstanding stock option or SAR, as applicable, but shall include a corresponding proportionate adjustment in the per share exercise price of such stock option or SAR. The conversion of any convertible securities of the Corporation shall not be treated as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Corporation’s stockholders of securities of any other entity or other assets (including an extraordinary cash dividend but excluding a non-extraordinary dividend payable in cash or in stock of the Corporation) without receipt of consideration by the Corporation, the Corporation may, in such manner as the Corporation deems appropriate, adjust (i) the number and kind of shares subject to outstanding Awards and/or (ii) the exercise price of outstanding stock options and SARs to reflect such distribution.

In the event of any proposed Change in Control, the Committee shall take such action as it deems appropriate and equitable to effectuate the purposes of this Plan and to protect the grantees of Awards, which action may include, but without limitation, any one or more of the following: (i) acceleration or change of the exercise and/or expiration dates of any Award to require that exercise be made, if at all, prior to the Change in Control; (ii) cancellation of any Award upon payment to the holder in cash of the Fair Market Value of the Common Stock subject to such Award as of the date of (and, to the extent applicable, as established for purposes of) the Change in Control, less the aggregate exercise price, if any, of the Award; and (iii) in any case where equity securities of another entity are proposed to be delivered in exchange for or with respect to Common Stock of the Corporation, arrangements to have such other entity replace the Awards granted hereunder with awards with respect to such other securities, with appropriate adjustments in the number of shares subject to, and the exercise prices under, the award.

The Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in the preceding two paragraphs of this Section 10) affecting the Corporation, or the financial statements of the Corporation or any Subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

In the event the Corporation dissolves and liquidates (other than pursuant to a plan of merger or reorganization), then notwithstanding any restrictions on exercise set forth in this Plan or any Grant Agreement, or other agreement evidencing a stock option or stock appreciation right: (i) each grantee shall have the right to exercise his stock option or stock appreciation right at any time up to ten (10) days prior to the effective date of such liquidation and dissolution; and (ii) the Committee may make arrangements with the grantees for the payment of appropriate consideration to them for the cancellation and surrender of any stock option or stock appreciation right that is so canceled or surrendered at any time up to ten (10) days prior to the effective date of such liquidation and dissolution. The Committee may establish a different period (and different conditions) for such exercise, delivery, cancellation, or surrender to avoid subjecting the grantee to liability under Section 16(b) of the Exchange Act. Any stock option or stock appreciation right not so exercised, canceled, or surrendered shall terminate on the last day for exercise prior to such effective date.

Except as hereinbefore expressly provided, issuance by the Corporation of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefore, or upon conversion of shares or obligations of the Corporation convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Common Stock subject to Awards theretofore granted or the purchase price per share of Common Stock subject to Awards.

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11. Termination and Modification of the Plan

The Board, without further approval of the stockholders, may modify or terminate the Plan or any portion thereof at any time, except that no modification shall become effective without prior approval of the stockholders of the Corporation to increase the number of shares of Common Stock subject to the Plan or if stockholder approval is necessary to comply with any tax or regulatory requirement or rule of any exchange or Nasdaq System upon which the Common Stock is listed or quoted (including for this purpose stockholder approval that is required for continued compliance with Rule 16b-3 or stockholder approval that is required to enable the Committee to grant incentive stock options pursuant to the Plan).

The Committee shall be authorized to make minor or administrative modifications to the Plan as well as modifications to the Plan that may be dictated by requirements of federal or state laws applicable to the Corporation or that may be authorized or made desirable by such laws. The Committee may amend or modify the grant of any outstanding Award in any manner to the extent that the Committee would have had the authority to make such Award as so modified or amended. No modification may be made that would materially adversely affect any Award previously made under the Plan without the approval of the grantee.

12. Non-Guarantee of Employment

Nothing in the Plan or in any Grant Agreement thereunder shall confer any right on an employee to continue in the employ of the Corporation or shall interfere in any way with the right of the Corporation to terminate an employee at any time.

13. Termination of Employment

For purposes of maintaining a grantee’s continuous status as an employee and accrual of rights under any Award, transfer of an employee among the Corporation and the Corporation’s Parent or Subsidiaries shall not be considered a termination of employment. Nor shall it be considered a termination of employment for such purposes if an employee is placed on military or sick leave or such other leave of absence which is considered as continuing intact the employment relationship; in such a case, the employment relationship shall be continued until the date when an employee’s right to reemployment shall no longer be guaranteed either by law or contract.

14. Written Agreement

Each Grant Agreement entered into between the Corporation and a grantee with respect to an Award granted under the Plan shall incorporate the terms of this Plan and shall contain such provisions, consistent with the provisions of the Plan, as may be established by the Committee.

15. Non-Uniform Determinations

The Committee’s determinations under the Plan (including without limitation determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.

16. Limitation on Benefits

With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

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17. Listing and Registration

If the Corporation determines that the listing, registration or qualification upon any securities exchange or upon any listing or quotation system established by the National Association of Securities Dealers, Inc. (“Nasdaq System”) or under any law, of shares subject to any Award is necessary or desirable as a condition of, or in connection with, the granting of same or the issue or purchase of shares thereunder, no such Award may be exercised in whole or in part and no restrictions on such Award shall lapse, unless such listing, registration or qualification is effected free of any conditions not acceptable to the Corporation.

18. Compliance with Securities Law

The Corporation may require that a grantee, as a condition to exercise of an Award, and as a condition to the delivery of any share certificate, provide to the Corporation, at the time of each such exercise and each such delivery, a written representation that the shares of Common Stock being acquired shall be acquired by the grantee solely for investment and will not be sold or transferred without registration or the availability of an exemption from registration under the Securities Act and applicable state securities laws. The Corporation may also require that a grantee submit other written representations which will permit the Corporation to comply with federal and applicable state securities laws in connection with the issuance of the Common Stock, including representations as to the knowledge and experience in financial and business matters of the grantee and the grantee’s ability to bear the economic risk of the grantee’s investment. The Corporation may require that the grantee obtain a “purchaser representative” as that term is defined in applicable federal and state securities laws. The stock certificates for any shares of Common Stock issued pursuant to this Plan may bear a legend restricting transferability of the shares of Common Stock unless such shares are registered or an exemption from registration is available under the Securities Act and applicable state securities laws. The Corporation may notify its transfer agent to stop any transfer of shares of Common Stock not made in compliance with these restrictions. Common Stock shall not be issued with respect to an Award granted under the Plan unless the exercise of such Award and the issuance and delivery of share certificates for such Common Stock pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any national securities exchange or Nasdaq System upon which the Common Stock may then be listed or quoted, and shall be further subject to the approval of counsel for the Corporation with respect to such compliance to the extent such approval is sought by the Committee.

19. No Trust or Fund Created

Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Corporation and a grantee or any other person. To the extent that any grantee or other person acquires a right to receive payments from the Corporation pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Corporation.

20. No Limit on Other Compensation Arrangements

Nothing contained in the Plan shall prevent the Corporation or its Parent or Subsidiary corporations from adopting or continuing in effect other compensation arrangements (whether such arrangements be generally applicable or applicable only in specific cases) as the Committee in its discretion determines desirable, including without limitation the granting of stock options, stock awards, stock appreciation rights or phantom stock units otherwise than under the Plan.

21. No Restriction of Corporate Action

Nothing contained in the Plan shall be construed to prevent the Corporation or any Parent or Subsidiary from taking any corporate action which is deemed by the Corporation or such Parent or Subsidiary to be appropriate or in its best interest, whether or not such action would have an adverse effect

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on the Plan or any Award issued under the Plan. No employee, beneficiary or other person shall have any claim against the Corporation or any Parent or Subsidiary as a result of such action.

22. Governing Law

The validity, construction and effect of the Plan, of Grant Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Board or Committee relating to the Plan or such Grant Agreements, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with applicable federal laws and the laws of the State of Maryland without regard to its conflict of laws rules and principles.

23. Plan Subject to Charter and By-Laws

This Plan is subject to the Charter and By-Laws of the Corporation, as they may be amended from time to time.

24. Effective Date; Termination Date

The Plan is effective as of the date on which the Plan was adopted by the Board; provided that no stock options issued hereunder shall be treated as incentive stock options, regardless of the designation in the Grant Agreement, unless the Plan is approved by the shareholders of the Corporation as provided in Section 6(e)(vi). No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan. Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards.

25. Restricted Stock

(a) Grant of Restricted Stock. The Committee may from time to time grant to eligible participants shares of Common Stock that are subject to restrictions and to a risk of forfeiture (referred to as “restricted stock”). Restricted stock shall be subject to such restrictions, conditions and other terms as the Committee may determine.

(b) Restrictions. At the time an award of restricted stock is made, the Committee shall establish a restriction period applicable to such restricted stock. Each Award of restricted stock may be subject to a different restriction period. The Committee may, in its sole discretion, at the time a grant of restricted stock is made, prescribe conditions that must be satisfied prior to the expiration of the restriction period, including the satisfaction of corporate or individual performance objectives or continued Service, in order that all or any portion of the restricted stock shall vest. The Committee also may, in its sole discretion, shorten or terminate the restriction period or waive any of the conditions applicable to all or a portion of the restricted stock. The restricted stock may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the restriction period or prior to the satisfaction of any other conditions prescribed by the Committee with respect to such restricted stock.

(c) Restricted Stock Certificates. The Corporation shall issue, in the name of each eligible participant to whom restricted stock has been granted, stock certificates representing the total number of shares of restricted stock granted to the grantee, as soon as reasonably practicable after the grant date. The Board may provide in an Award that either (i) the Secretary of the Corporation shall hold such certificates for the grantee’s benefit until such time as the restricted stock is forfeited to the Corporation, or the restrictions lapse, or (ii) such certificates shall be delivered to the grantee, provided, however, that such certificates shall bear a legend or legends that complies with the applicable securities laws and regulations and makes appropriate reference to the restrictions imposed under the Plan and the Grant Agreement. The Corporation may also use the book-entry method of share recordation in lieu of issuing share certificates.

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(d) Rights of Holders of Restricted Stock. Unless the Committee otherwise provides in a Grant Agreement, holders of restricted stock shall have the right to vote such stock and the right to receive any dividends declared or paid with respect to such stock. The Committee may provide that any dividends paid on restricted stock must be reinvested in shares of stock, which may or may not be subject to the same vesting conditions and restrictions applicable to such restricted stock. All distributions, if any, received by a grantee with respect to restricted stock as a result of any stock split, stock dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Award.

(e) Termination of Employment. Unless otherwise provided by the Committee in the applicable Grant Agreement, upon the termination of a grantee’s employment with the Corporation (including if a non-employee director of the Corporation shall cease to be a director), any shares of restricted stock held by such grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon forfeiture of restricted stock, the grantee shall have no further rights with respect to such Award, including but not limited to any right to vote restricted stock or any right to receive dividends with respect to shares of restricted stock.

(f) Purchase and Delivery of Stock. The grantee shall be required to purchase the restricted stock from the Corporation at a purchase price equal to the greater of (i) the aggregate par value of the shares of Stock represented by such restricted stock or (ii) the purchase price, if any, specified in the Grant Agreement relating to such restricted stock. The purchase price shall be payable by cash or cash equivalents or, in the discretion of the Committee, in consideration for past services rendered to the Corporation. Upon the expiration or termination of the restriction period and the satisfaction of any other conditions prescribed by the Committee, having properly paid the purchase price, the restrictions applicable to shares of restricted stock shall lapse, and, unless otherwise provided in the Grant Agreement, a stock certificate for such shares shall be delivered, free of all such restrictions, to the grantee or the grantee’s beneficiary or estate, as the case may be.

As amended through October 11, 2007

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EX-31.01

EXHIBIT 31.01

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Kevin A. Plank, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Under Armour, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2007

/s/    KEVIN A. PLANK

Kevin A. Plank

President, Chief Executive Officer and Chairman of the Board

EX-31.02

EXHIBIT 31.02

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Wayne A. Marino, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Under Armour, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2007

/s/    WAYNE A. MARINO

Wayne A. Marino

Executive Vice President and Chief Financial Officer

EX-32.01

EXHIBIT 32.01

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Under Armour, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the quarterly report on Form 10-Q of the Company for the period ended September 30, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 7, 2007	/s/    KEVIN A. PLANK
	Kevin A. Plank
	President, Chief Executive Officer and Chairman of the Board

A signed original of this written statement required by Section 906 has been provided to Under Armour, Inc. and will be retained by Under Armour, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.02

EXHIBIT 32.02

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Under Armour, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the quarterly report on Form 10-Q of the Company for the period ended September 30, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 7, 2007	/s/    WAYNE A. MARINO
	Wayne A. Marino
	Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Under Armour, Inc. and will be retained by Under Armour, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.