8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 25, 2011

UNDER ARMOUR, INC.

(Exact name of registrant as specified in its charter)

Maryland	001-33202	52-1990078
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)
1020 Hull Street, Baltimore, Maryland		21230
(Address of principal executive offices)		(Zip Code)

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

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

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

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

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

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

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

Item 2.02. Results of Operations and Financial Condition.

On October 25, 2011, Under Armour, Inc. issued a press release announcing its financial results for the third quarter ended September 30, 2011. A copy of Under Armour’s press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Under Armour has scheduled a conference call for 8:30 a.m. ET on October 25, 2011 to discuss its financial results, and a portion of the script for that call is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit 99.1: Under Armour, Inc. press release announcing financial results for the third quarter ended September 30, 2011.

Exhibit 99.2: Portion of conference call script for October 25, 2011 conference call.

SIGNATURES

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

	UNDER ARMOUR, INC.
Date: October 25, 2011	By:	/s/ BRAD DICKERSON
		Brad Dickerson
		Chief Financial Officer

EX-99.1

Exhibit 99.1

Under Armour, Inc.
1020 Hull Street
Baltimore, MD 21230
CONTACTS
Investors:
Tom Shaw, CFA
Under Armour, Inc.
Tel: 410.843.7676
Media:
Diane Pelkey
Under Armour, Inc.
Tel: 410.246.5927

FOR IMMEDIATE RELEASE

UNDER ARMOUR REPORTS THIRD QUARTER NET REVENUES GROWTH OF 42%; RAISES 2011 NET REVENUES AND OPERATING INCOME OUTLOOK

• Net Revenues Increased 42% to $466 Million

• Diluted EPS Increased to $0.88 from $0.68

• Company Raises 2011 Net Revenues Guidance to $1.46 Billion to $1.47 Billion (+37% to +38%) from $1.42 Billion to $1.44 Billion (+33% to 35%)

• Company Raises 2011 Operating Income Guidance to $159 Million to $162 Million (+42% to +44%) from $155 Million to $160 Million (+38% to 42%)

Baltimore, MD (October 25, 2011) – Under Armour, Inc. (NYSE: UA) today announced financial results for the third quarter ended September 30, 2011. Net revenues increased 42% in the third quarter of 2011 to $466 million compared with net revenues of $329 million in the prior year’s period. Net income increased 32% in the third quarter of 2011 to $46 million compared with $35 million in the prior year’s period. Diluted earnings per share for the third quarter of 2011 were $0.88 on weighted average common shares outstanding of 52.5 million compared with $0.68 per share on weighted average common shares outstanding of 51.2 million in the prior year’s period. Diluted EPS benefited approximately $0.04 as a result of our ongoing tax planning strategies.

Third quarter apparel net revenues increased 31% to $363 million compared with $277 million in the same period of the prior year, driven by continued strength across Men’s, Women’s, Youth, and new product offerings including Charged Cotton and Fleece. Direct-to-Consumer net revenues, which represented 22% of total net revenues for the third quarter, grew 73% year-over-year. Third quarter footwear net revenues doubled to $52 million from $26 million in the prior year’s period, primarily reflecting the introduction of new running footwear and earlier year-over-year shipments of basketball product. Third quarter accessories net revenues increased 211% to $40 million from $13 million in the prior year’s period, primarily driven by the in-house transition of the Company’s previously licensed hats and bags business which commenced in January 2011.

Kevin Plank, Chairman, CEO, and President of Under Armour, Inc., stated, “We surpassed a billion dollars in net revenues last year, and the Brand has already topped that milestone this year through the first three quarters. Our product engines are as strong as ever, as demonstrated by consecutive quarters of 40% plus growth for the first time since 2007. We successfully launched Storm Fleece during the quarter, our cold weather Charged Cotton product. We also elevated our footwear message while continuing to enhance our global distribution network. Our strong results and the early acceptance of new products such as Storm Fleece and our Charge RC footwear give us confidence that the consumer continues to vote for our Brand.”

Gross margin for the third quarter of 2011 was 48.4% compared with 50.9% in the prior year’s quarter primarily due to less favorable apparel product margins and the ongoing impact of the hats and bags transition in 2011. Selling, general and administrative expenses as a percentage of net revenues were 32.3% in the third quarter of 2011 compared with 33.6% in the prior year’s period, reflecting leverage of corporate services and marketing expenses. Marketing expenses for the third quarter of 2011 were 10.4% of net revenues compared with 10.9% in the prior year’s quarter. Third quarter operating income grew 32% to $75 million compared with $57 million in the prior year’s period.

For the first nine months of 2011, net revenues increased 40% to $1.07 billion compared with $763 million in the prior year. Net income for the first nine months of 2011 increased 41% to $64 million compared with $46 million in the same period of 2010. Diluted earnings per share for the first nine months of 2011 were $1.23 on weighted average common shares outstanding of 52.5 million compared with $0.89 per share on weighted average common shares outstanding of 51.0 million in the prior year.

Balance Sheet Highlights

The Company had cash and cash equivalents of $68 million with $30 million of borrowings outstanding under its $300 million revolving credit facility at September 30, 2011. Inventory at September 30, 2011 increased 63% to $319 million compared with $196 million at September 30, 2010. Long-term debt increased to $80 million from $19 million in the prior year’s period, primarily driven by the Company’s completion of the corporate headquarters acquisition in July.

Updated 2011 Outlook

The Company had previously anticipated 2011 net revenues in the range of $1.42 billion to $1.44 billion, representing growth of 33% to 35% over 2010, and 2011 operating income in the range of $155 million to $160 million, representing growth of 38% to 42% over 2010. Based on current visibility, the Company now expects 2011 net revenues of $1.46 billion to $1.47 billion, representing growth of 37% to 38% over 2010, and 2011 operating income in the range of $159 million to $162 million, representing growth of 42% to 44% over 2010. The Company now expects an effective tax rate of approximately 38.4% for the full year, compared to previously provided full year guidance of 40.0% and an effective tax rate of 37.1% for 2010. The Company anticipates fully diluted weighted average shares outstanding of approximately 52.5 million to 52.7 million for 2011.

Mr. Plank concluded, “Our Brand continues to evolve and reach a broader range of consumers, and we believe we are still just scratching the surface of the Brand’s global potential. As we focus on that potential, we will measure our success with an equal focus on driving topline with areas that will drive enhanced profitability and returns through improved management of our overall gross margin and inventory. We will continue to invest in the talent and resources needed to ensure this balanced approach.”

Conference Call and Webcast

The Company will provide additional commentary regarding its third quarter results as well as provide an update on its 2011 outlook during its earnings conference call today, October 25^th, at 8:30 a.m. ET. The call will be webcast live at http://investor.underarmour.com/events.cfm and will be archived and available for replay approximately three hours after the live event. Additional supporting materials related to the call will also be available at http://investor.underarmour.com. The Company’s financial results are also available online at http://investor.underarmour.com/results.cfm.

About Under Armour, Inc.

Under Armour^® (NYSE: UA) is a leading developer, marketer, and distributor of branded performance apparel, footwear, and accessories. The brand’s moisture-wicking fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional products. The Company’s products are sold worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe. The Under Armour global headquarters is in Baltimore, Maryland, with European headquarters in Amsterdam’s Olympic Stadium, and additional offices in Denver, Hong Kong, Toronto, and Guangzhou, China. For further information, please visit the Company’s website at www.ua.com.

Forward Looking Statements

Some of the statements contained in this press release constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “outlook,” “potential” or the negative of these terms or other comparable terminology. The forward-looking statements contained in this press release reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to: changes in general economic or market conditions that could affect consumer spending and the financial health of our retail customers; our ability to effectively manage our growth and a more complex business; our ability to effectively develop and launch new, innovative and updated products; our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands; increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; fluctuations in the costs of our products; loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; changes in consumer preferences or the reduction in demand for performance apparel, footwear and other products; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to effectively market and maintain a positive brand image; the availability, integration and effective operation of management information systems and other technology; and our ability to attract and maintain the services of our senior management and key employees. The forward-looking statements contained in this press release reflect our views and assumptions only as of the date of this press release. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

(Tables Follow)

Under Armour, Inc.

For the Three and Nine Months Ended September 30, 2011 and 2010

(Unaudited; in thousands, except per share amounts)

CONSOLIDATED STATEMENTS OF INCOME

	Quarter Ended September 30,												Nine Months Ended September 30,
	2011			% of Net Revenues			2010			% of Net Revenues			2011			% of Net Revenues			2010			% of Net Revenues
Net revenues	$	465,523			100.0	%	$	328,568			100.0	%	$	1,069,558			100.0	%	$	762,761			100.0	%
Cost of goods sold		240,422			51.6	%		161,196			49.1	%		564,627			52.8	%		387,832			50.8	%
Gross profit		225,101			48.4	%		167,372			50.9	%		504,931			47.2	%		374,929			49.2	%
Selling, general and administrative expenses		150,136			32.3	%		110,683			33.6	%		397,466			37.2	%		297,764			39.1	%
Income from operations		74,965			16.1	%		56,689			17.3	%		107,465			10.0	%		77,165			10.1	%
Interest expense, net		(1,552	)		(0.3	%)		(542	)		(0.2	%)		(2,428	)		(0.2	%)		(1,668	)		(0.2	%)
Other expense, net		(1,193	)		(0.3	%)		(184	)		(0.1	%)		(2,065	)		(0.2	%)		(1,036	)		(0.1	%)
Income before income taxes		72,220			15.5	%		55,963			17.0	%		102,972			9.6	%		74,461			9.8	%
Provision for income taxes		26,233			5.6	%		21,106			6.4	%		38,605			3.6	%		28,932			3.8	%
Net income	$	45,987			9.9	%	$	34,857			10.6	%	$	64,367			6.0	%	$	45,529			6.0	%
Net income available per common share
Basic	$	0.89					$	0.68					$	1.25					$	0.90
Diluted	$	0.88					$	0.68					$	1.23					$	0.89
Weighted average common shares outstanding
Basic		51,558						50,926						51,529						50,703
Diluted		52,528						51,168						52,477						51,047

NET REVENUES BY PRODUCT CATEGORY

	Quarter Ended September 30,							Nine Months Ended September 30,
	2011		2010		% Change			2011		2010		% Change
Apparel	$	363,383	$	276,666		31.3	%	$	798,646	$	599,507		33.2	%
Footwear		52,034		26,458		96.7	%		150,355		105,236		42.9	%
Accessories		39,672		12,755		211.0	%		95,602		29,130		228.2	%
Total net sales		455,089		315,879		44.1	%		1,044,603		733,873		42.3	%
Licensing revenues		10,434		12,689		(17.8	%)		24,955		28,888		(13.6	%)
Total net revenues	$	465,523	$	328,568		41.7	%	$	1,069,558	$	762,761		40.2	%

NET REVENUES BY GEOGRAPHIC SEGMENT

	Quarter Ended September 30,							Nine Months Ended September 30,
	2011		2010		% Change			2011		2010		% Change
North America	$	432,675	$	307,226		40.8	%	$	1,006,194	$	718,992		39.9	%
Other foreign countries		32,848		21,342		53.9	%		63,364		43,769		44.8	%
Total net revenues	$	465,523	$	328,568		41.7	%	$	1,069,558	$	762,761		40.2	%

Under Armour, Inc.

As of September 30, 2011, December 31, 2010 and September 30, 2010

(Unaudited; in thousands)

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of 9/30/11		As of 12/31/10		As of 9/30/10
Assets
Cash and cash equivalents	$	67,859	$	203,870	$	133,936
Accounts receivable, net		235,907		102,034		174,207
Inventories		318,888		215,355		196,170
Prepaid expenses and other current assets		31,163		19,326		21,088
Deferred income taxes		18,187		15,265		10,944
Total current assets		672,004		555,850		536,345
Property and equipment, net		163,256		76,127		76,559
Intangible assets, net		2,916		3,914		4,148
Deferred income taxes		21,268		21,275		20,516
Other long term assets		40,694		18,212		5,295
Total assets	$	900,138	$	675,378	$	642,863
Liabilities and Stockholders’ Equity
Revolving credit facility	$	30,000	$	—	$	—
Accounts payable		103,343		84,679		90,815
Accrued expenses		54,008		55,138		43,685
Current maturities of long term debt		6,046		6,865		8,067
Other current liabilities		15,967		2,465		9,767
Total current liabilities		209,364		149,147		152,334
Long term debt, net of current maturities		73,470		9,077		10,476
Other long term liabilities		25,239		20,188		18,662
Total liabilities		308,073		178,412		181,472
Total stockholders’ equity		592,065		496,966		461,391
Total liabilities and stockholders’ equity	$	900,138	$	675,378	$	642,863

Under Armour, Inc.

For the Nine Months Ended September 30, 2011 and 2010

(Unaudited; in thousands)

	Nine Months Ended 9/30/11			Nine Months Ended 9/30/10
Cash flows from operating activities
Net income	$	64,367		$	45,529
Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization		25,968			23,191
Unrealized foreign currency exchange rate losses, net		3,638			4,127
Stock-based compensation		13,592			10,046
Gain on bargain purchase of office complex (excludes transaction costs of $1.9 million)		(3,300	)		—
Loss on disposal of property and equipment		19			44
Deferred income taxes		(2,933	)		(5,116	)
Changes in reserves and allowances		2,934			(4,077	)
Changes in operating assets and liabilities:
Accounts receivable		(135,405	)		(99,502	)
Inventories		(106,849	)		(44,583	)
Prepaid expenses and other assets		(23,358	)		(5,494	)
Accounts payable		18,848			21,604
Accrued expenses and other liabilities		2,770			9,899
Income taxes payable and receivable		13,625			12,425
Net cash used in operating activities		(126,084	)		(31,907	)
Cash flows from investing activities
Purchase of property and equipment		(45,281	)		(22,533	)
Purchase of corporate headquarters and related expenditures		(22,852	)		—
Purchase of trust-owned life insurance policies		(552	)		(325	)
Purchase of long term investment		(3,700	)		—
Purchase of intangible asset		(601	)		—
Change in restricted cash		(4,887	)		—
Net cash used in investing activities		(77,873	)		(22,858	)
Cash flows from financing activities
Proceeds from revolving credit facility		30,000			—
Proceeds from term loan		25,000			—
Proceeds from long term debt		5,644			5,262
Payments on long term debt		(5,626	)		(6,846	)
Payments on capital lease obligations		—			(97	)
Excess tax benefits from stock-based compensation arrangements		6,957			2,594
Payments of deferred financing costs		(2,324	)		—
Proceeds from exercise of stock options and other stock issuances		10,320			3,796
Net cash provided by financing activities		69,971			4,709
Effect of exchange rate changes on cash and cash equivalents		(2,025	)		(3,305	)
Net decrease in cash and cash equivalents		(136,011	)		(53,361	)
Cash and cash equivalents
Beginning of period		203,870			187,297
End of period	$	67,859		$	133,936
Non-cash investing and financing activities
Debt assumed in connection with purchase of corporate headquarters	$	38,556		$	—

EX-99.2

Exhibit 99.2

Under Armour: Third Quarter 2011 Earnings Call, October 25, 2011 (Brad Dickerson)

Thanks, Kevin. I would now like to spend some time discussing our third quarter and year-to-date financial results, followed by our updated 2011 guidance. I will conclude with our early read on 2012.

Our net revenues for the third quarter of 2011 increased 42% to $466 million. Year-to-date net revenues are up 40% to $1.07 billion.

Apparel grew 31% to $363 million during the quarter and is up 33% year-to-date. We continue to experience strength across each of our Men’s, Women’s, and Youth categories. Our Men’s business was driven in part by growth in the Training category, including Armour Fleece and Storm Fleece, while both Graphics and Hunting easily outpaced overall growth during the quarter. In Women’s, Armour Fleece continues to be a standout and we also saw strong growth in Running, led by our Escape program of both tops and bottoms.

Our Direct-to-Consumer net revenues increased 73% for the quarter, representing approximately 22% of net revenues compared to 18% in the prior year period. The growth rates for both the Retail and Ecommerce businesses were strong during the quarter. On the Retail side, we opened four new Factory House stores during the third quarter, increasing our Factory House store base to 76, up over 50% from 50 locations at the end of last year’s third quarter. We plan to open 4 additional Factory House stores in the fourth quarter, bringing our total Factory House door count by year end to 80. Our Ecommerce growth remains robust as we continue to drive both higher traffic and conversion rates year-over-year. In addition, we expect our new Web platform to go live over the next few weeks with enhanced features and functionality added during 2012.

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Footwear net revenues during the third quarter increased 97% to $52 million from $26 million last year, representing 11% of net revenues. We had solid results with our back-to-school running product led by the Split and strong consumer response to our new line of outdoor boots. From a timing standpoint, we shipped the bulk of our basketball footwear during the third quarter this year, compared to our initial product last year which launched in the fourth quarter. In addition, we continued to introduce footwear to our Japanese consumer through our licensee Dome, by shipping nearly $5 million of product to Dome during the quarter.

Accessories net revenues during the third quarter increased 211% to $40 million from $13 million last year, reflecting the addition of our hats and bags business which we brought in-house in January and has received strong consumer acceptance. We are on track for our hats and bags business to contribute $65 to $70 million to net revenue for the full year 2011.

International net revenues increased 53% to $33 million in the third quarter and represented approximately 7% of total net revenues. The footwear sales to Dome that I previously mentioned also played a significant part in the growth rate of our international business during the quarter.

Licensing net revenues declined 18% to $10 million in the third quarter, driven as expected by the transition of our hats and bags business in-house.

Third quarter gross margins contracted 250 basis points to 48.4% compared with 50.9% in the prior year’s quarter. Results were largely in line with our prior guidance and primarily reflect three factors:

• First, in North American apparel, less favorable product mix and higher input costs negatively impacted margins by 140 basis points.

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• Second, a lower mix of licensing net revenues negatively impacted margins by approximately 70 basis points.

• And finally, an unfavorable year-over-year impact of inventory reserves, net of benefits in discounts and sales allowances, negatively impacted margins by 40 basis points. It is important to note that the prior year period’s margins benefited from a reversal of inventory reserves.

Selling, general and administrative expenses as a percentage of net revenues leveraged 130 basis points to 32.3% in the third quarter of 2011 from 33.6% in the prior year’s period. Details around our four SG&A buckets are as follows:

• First, Marketing costs declined to 10.4% of net revenues for the quarter from 10.9% in the prior year period. Once again, our strong top line allowed us to leverage marketing costs, which increased 35% during the period.

• Second, Selling costs increased to 7.9% of net revenues for the quarter from 7.1% in the prior year period, primarily driven by the continued expansion of our Factory House stores and investments in our Ecommerce business.

• Third, Product Innovation and Supply Chain costs held steady year-over-year at 7.7% of net revenues, as we continue to invest in these areas to support our long-term growth.

• Finally, Corporate Services decreased to 6.3% of net revenues compared to 7.9% in the prior year period as we leveraged corporate personnel, facility expenses, and IT.

Operating income during the third quarter grew 32% to $75 million compared with $57 million in the prior year. Operating margin contracted 120 basis points to 16.1% from 17.3% in the prior-year quarter.

Below the operating line, other expenses increased to $2.7 million from $0.7 million in the prior year’s period. Two factors drove this increase. First, given the sharp declines

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in the Canadian dollar and Euro late in the quarter, we had a little over $1 million of net FX exposure during the period. Second, we experienced a $1 million increase in interest expense related to the debt assumed for our acquisition of our corporate headquarters.

Our third quarter tax rate of 36.3% was favorable to the 37.7% rate in the prior year period and our 40% guidance. The lower tax rate during the quarter was a function of favorable developments in our ongoing tax planning strategies, including a benefit of $1.8 million during the quarter. As a reminder, during the third quarter of last year, we benefitted from the receipt of state and federal tax credits.

Our resulting net income in the third quarter increased 32% to $46 million compared with $35 million in the prior year period. Third quarter diluted earnings per share increased 29% to $0.88 compared with $0.68 in the prior year. Results include the aforementioned tax planning strategies, which benefitted EPS by approximately $0.04.

Switching over to the balance sheet. Total cash and cash equivalents at quarter-end declined to $68 million compared with $134 million at September 30, 2010. From a funding perspective, we borrowed $30 million from our $300 million revolving credit facility. Given the level of cash flow we typically generate in the fourth quarter, we expect to fully pay down these borrowings during the current quarter. Long term debt also increased to $80 million from $19 million in the prior year’s period, reflecting the acquisition of our corporate headquarters. As we outlined last quarter, this debt consists of a $25 million term loan and a $38 million assumption of debt attached to the property.

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Inventory at quarter-end increased 63% year-over-year to $319 million compared to $196 million at September 30, 2010. Although still exceeding our net revenue growth rate of 42%, our inventory growth rate has moved more in line compared to the second quarter inventory and net revenue growth rates of 74% and 42%, respectively. Two factors to consider in the third quarter inventory growth are:

• the transition of our hats and bags business in-house, and

• higher input costs.

Excluding these two factors, inventory would have increased approximately 52%.

Our investment in capital expenditures was approximately $13 million for the third quarter and approximately $45 million year-to-date, excluding expenditures related to our acquisition of our corporate headquarters. We are now planning capital expenditures for 2011 in the range of $50 to $53 million, compared to our prior indication of the high end of the $45 to $50 million range. In addition to our normal operating capital expenditures plans, we have approximately $63 million in total investments for 2011 related to the purchase of our corporate headquarters and other investments and improvements in the campus.

Now moving onto our updated outlook for 2011. Previously, we anticipated 2011 net revenues of $1.42 billion to $1.44 billion, an increase of 33% to 35% over 2010, and 2011 operating income of $155 million to $160 million, an increase of 38% to 42% over 2010. Based on third quarter results and our visibility for the remainder of the year, we are raising this full year 2011 outlook. We now anticipate 2011 net revenues in the range of $1.46 billion to $1.47 billion, an increase of 37% to 38% over 2010, and 2011 operating income in the range of $159 million to $162 million, an increase of 42% to 44% over 2010. Our current guidance implies full year operating margins of between 10.9% to 11.0%, leveraging 30 to 40 basis points from the 10.6% level achieved in 2010.

Similar to my comments on the quarter, other expense should remain higher year-over-year, as we incur additional interest expense tied to our headquarters acquisition. With

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the benefits of our ongoing tax planning strategies during the third quarter, we now expect to see an effective tax rate of approximately 38.4% for the full year. As a reminder our full year effective tax rate in 2010 was 37.1%, due in part to the one-time tax credits received in both the third and fourth quarters. Finally, we anticipate fully diluted weighted average shares outstanding in the range of 52.5 to 52.7 million.

Now we would like to provide some additional color around our outlook for the remainder of 2011.

First, regarding gross margins. Consistent with our previous guidance, we continue to anticipate a 160 to 180 basis point decline in gross margins for the full year. The primary contributors to this decline are unchanged and are primarily due to lower apparel margins driven by higher input costs and the transition of our hats and bags in-house.

Second, a little additional color on SG&A. We previously indicated Marketing spend would equate to 11.3% to 11.5% of net revenues. While we expect a generally consistent level of dollars spent as implied in prior guidance, our higher top line guidance should allow us to leverage this line to a greater extent. We now expect Marketing spending as a percentage of net revenues of between 11.2% and 11.3%. This additional leverage in Marketing will be offset by higher costs in our Direct-to-Consumer business as we continue to invest to drive current and future growth.

And finally regarding inventory. We closed the gap between inventory growth and revenue growth during the quarter and continue to anticipate inventory growth moving more in line with revenue growth during the fourth quarter. As we highlighted on our last call, we believe we are continuing to make the right investments across Supply Chain and Planning to help stabilize, and then improve, our inventory turns and fill-rates in 2012 and beyond.

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Before we turn it over for Q&A, we would also like to provide you with our preliminary view for 2012. Based on our current visibility, we anticipate both 2012 net revenues and operating income growth to be at the higher end of our longer-term growth targets of 20%-25%.

While we will provide additional details on our 2012 guidance in future calls, there a couple of preliminary factors to consider when comparing 2012 growth compared to our updated 2011 guidance. First, we will anniversary the hats and bags transition in 2012 which is providing over a 6% lift to this year’s net revenue growth. Second, we are planning for Factory House door growth of approximately 20% to 25% in 2012 compared to nearly 50% in 2011. An additional consideration for 2012 is our tax rate. As a function of our ongoing tax planning strategies, we expect our effective tax rate starting in 2012 will be at or below the 38.4% level forecast for 2011.

Forward Looking Statements

Some of the statements contained in this script constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “outlook,” “potential” or the negative of these terms or other comparable terminology. The forward-looking statements contained in this script 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: changes in general economic or market conditions that could affect consumer spending and the financial health of our retail customers; our ability to effectively manage our growth and a more complex business; our ability to effectively develop and launch new, innovative and updated products; our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands; increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; fluctuations in the costs of our products; loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; changes in consumer preferences or the reduction in demand for performance apparel, footwear and other products; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to effectively market and maintain a positive brand image; the availability, integration and effective operation of management information systems and other technology; and our ability to attract and maintain the services of our senior management and key employees. The forward-looking statements contained in this script reflect our views and assumptions only as of the date of this script. 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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