UARM Under Armour

Second Quarter Net Revenues Increased 63.3% to $80.0 Million BALTIMORE, July 26 /PRNewswire-FirstCall/ -- Under Armour, Inc. (NASDAQ:UARM) today announced financial results for the second quarter ended June 30, 2006. Net revenues increased 63.3% in the second quarter to $80.0 million compared to net revenues of $49.0 million in the second quarter of 2005. Apparel revenues for Men's, Women's, and Youth increased 31.0% to $58.0 million. Footwear revenues, which consist of football cleats and slides, were recorded for the first time in the second quarter of 2006 and totaled $15.6 million. Second quarter net income increased 32.5% to $2.4 million compared to $1.8 million in the same period of 2005. Diluted earnings per share was $0.05, on weighted average common shares outstanding of 49.4 million compared to $0.03 per share on weighted average common shares outstanding of 37.5 million in the second quarter of the prior year. "We accomplished the goals we set for the quarter and in the process exceeded our own expectations," stated Kevin A. Plank, Chairman, CEO, and President of Under Armour, Inc. "We continued to drive revenue growth in our apparel business while building the foundation for a broader revenue base in international markets and in new product categories, such as footwear. We achieved these strategic growth goals while also accomplishing a key operational objective for the quarter, the implementation of SAP. This implementation provides us with the infrastructure needed to support our growing business." Mr. Plank added, "The highlight of the quarter had to be the launch of football cleats. Our Click Clack(TM) marketing campaign created an extraordinary amount of momentum for the brand while the performance of the product has further validated our authenticity on the field. We believe the door is now open for us to apply Under Armour technology to additional athletic footwear categories." Apparel revenues grew 31.0% for the quarter due to continued strength in the Men's and Women's business. Growth in Men's was driven by the golf, training, running, and compression categories as well as the continued expansion of the brand within existing retail doors. Revenue growth in the Women's fitness, training, and compression categories increased as the brand enhanced its presence on the retail floor and continued to focus marketing efforts on the female athlete. Gross margin was 47.8% compared to 50.1% in last year's second quarter. As expected, gross margin was impacted by several factors, primarily the introduction of cleated footwear, which has margins lower than current apparel margins. Selling, general and administrative expenses were 43.6% of net revenues in the second quarter of 2006 compared to 42.7% in the same period of the prior year. The Company had previously stated its commitment to a marketing budget of 10% to 12% of net revenues for the full year but indicated that it would undertake incremental marketing spend in the second quarter to support its footwear launch. Marketing expense for the second quarter was 13.2% of net revenues compared to 12.8% in the same period last year. Increasing Outlook for 2006 Due to the strength of the second quarter, ongoing momentum in its apparel business, and favorable business trends, Under Armour is increasing its outlook for 2006. The Company now expects annual net revenues in the range of $400 million to $410 million, a 42% to 46% increase over 2005, and annual net income in the range of $34 million to $35 million, which represents a 72% to 78% increase from 2005. The Company continues to expect fully diluted weighted average shares outstanding of approximately 50 million for 2006. Conference Call and Webcast Under Armour will host a conference call and webcast to discuss its financial results today, July 26th, at 8:30 a.m. ET. This call will be webcast live at investor.underarmour.com and will be archived and available for replay approximately three hours after the live event. Additional supporting materials related to the call will also be available at investor.underarmour.com. The Company's financial results are also available online at investor.underarmour.com. About Under Armour, Inc. Under Armour(R) (NASDAQ:UARM) is a leading developer, marketer and distributor of branded performance apparel, footwear and accessories. The brand's moisture-wicking synthetic fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional natural fiber products. The Company's products are sold worldwide and worn by professional football, baseball, and soccer players, as well as athletes in major collegiate and Olympic sports. The Under Armour European headquarters is located in Amsterdam's Olympic Stadium, and its global headquarters is located in Baltimore, MD. For further information, please visit the Company's website at http://www.underarmour.com/. Forward Looking Statements Some of the statements contained in this press release constitute forward- looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "outlook," "potential" or the negative of these terms or other comparable terminology. The forward- looking statements contained in this press release reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward- looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to: our ability to manage our growth effectively; our ability to maintain effective internal controls; increased competition causing us to reduce the prices of our products or to increase significantly our marketing efforts in order to avoid losing market share; changes in consumer preferences or the reduction in demand for performance apparel and other products; our ability to accurately forecast consumer demand for our products; reduced demand for sporting goods and apparel generally; failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner; our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results; our ability to effectively market and maintain a positive brand image; the availability and effective operation of management information systems and other technology; our ability to attract and maintain the services of our senior management and key employees; and changes in general economic or market conditions, including as a result of political or military unrest or terrorist attacks. The forward- looking statements contained in this press release reflect our views and assumptions only as of the date of this press release. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. Under Armour, Inc. Quarter and Six Months Ended June 30, 2006 (Amounts in thousands, except per share data) CONDENSED CONSOLIDATED STATEMENTS OF INCOME Quarter Quarter Ended % of Net Ended % of Net 6/30/06 Revenues 6/30/05 Revenues Net revenues $79,965 100.0% $48,957 100.0% Cost of goods sold 41,758 52.2% 24,406 49.9% Gross profit 38,207 47.8% 24,551 50.1% Operating expense Selling, general and administrative expenses 34,838 43.6% 20,906 42.7% Income from operations 3,369 4.2% 3,645 7.4% Other income (expense) Interest income (expense), net 383 0.5% (699) (1.4%) Income before income taxes 3,752 4.7% 2,946 6.0% Provision for income taxes 1,328 1.7% 1,116 2.3% Net income 2,424 3.0% 1,830 3.7% Accretion of and cumulative preferred dividends on Series A Preferred Stock -- 0.0% 599 1.2% Net income available to common shareholders $2,424 3.0% $1,231 2.5% Basic earnings per share $ 0.05 $ 0.03 Diluted earnings per share $ 0.05 $ 0.03 Average basic shares 46,894 35,620 Average diluted shares 49,436 37,485 Six Six Months Months Ended % of Net Ended % of Net 6/30/06 Revenues 6/30/05 Revenues Net revenues $167,661 100.0% $107,144 100.0% Cost of goods sold 85,142 50.8% 56,755 53.0% Gross profit 82,519 49.2% 50,389 47.0% Operating expense Selling, general and administrative expenses 64,970 38.7% 41,847 39.0% Income from operations 17,549 10.5% 8,542 8.0% Other income (expense) Interest income (expense), net 881 0.5% (1,288) (1.2%) Income before income taxes 18,430 11.0% 7,254 6.8% Provision for income taxes 7,272 4.3% 2,915 2.8% Net income 11,158 6.7% 4,339 4.0% Accretion of and cumulative preferred dividends on Series A Preferred Stock -- 0.0% 1,197 1.1% Net income available to common shareholders $11,158 6.7% $3,142 2.9% Basic earnings per share $ 0.24 $0.09 Diluted earnings per share $ 0.23 $0.08 Average basic shares 46,690 35,544 Average diluted shares 49,468 38,674 NET REVENUE BY PRODUCT CATEGORY Quarter Quarter Six Months Six Months Ended Ended % Ended Ended % 6/30/06 6/30/05 Change 6/30/06 6/30/05 Change Mens $ 41,878 $32,227 29.9% $94,387 $72,069 31.0% Womens 12,088 8,810 37.2% 33,073 18,703 76.8% Youth 4,076 3,254 25.3% 11,115 6,458 72.1% Apparel 58,042 44,291 31.0% 138,575 97,230 42.5% Footwear 15,584 -- 100.0% 15,584 -- 100.0% Accessories 2,890 2,488 16.2% 7,687 6,309 21.8% Net sales 76,516 46,779 63.6% 161,846 103,539 56.3% License revenues 3,449 2,178 58.4% 5,815 3,605 61.3% Net revenues $ 79,965 $48,957 63.3% $167,661 $107,144 56.5% Under Armour, Inc. As of June 30, 2006 (Amounts in thousands) CONDENSED CONSOLIDATED BALANCE SHEETS As of As of As of 6/30/06 12/31/05 6/30/05 Assets Cash and cash equivalents $41,918 $62,977 $522 Accounts receivable, net 63,244 53,132 31,136 Inventories 80,220 53,607 49,147 Prepaid expenses and other current assets 8,196 5,252 4,750 Deferred income taxes 9,056 6,822 6,986 Total current assets 202,634 181,790 92,541 Property and equipment, net 25,287 20,865 18,429 Deferred income taxes 194 -- -- Other non-current assets 968 1,032 297 Total assets $229,083 $203,687 $111,267 Liabilities, Mandatorily Redeemable Securities and Stockholders' Equity Revolving credit facility $-- $-- $38,529 Accounts payable, accrued expenses and income taxes payable 52,822 43,864 29,691 Current maturities of long term debt 3,815 3,808 4,570 Total current liabilities 56,637 47,672 72,790 Long term debt, net of current maturities 4,437 4,583 4,910 Deferred income taxes -- 330 186 Other long term liabilities 327 272 214 Total liabilities 61,401 52,857 78,100 Mandatorily Redeemable Series A Preferred Stock -- -- 7,889 Stockholders' equity 167,682 150,830 25,278 Total liabilities, mandatorily redeemable securities and stockholders' equity $229,083 $203,687 $111,267 DATASOURCE: Under Armour, Inc. CONTACT: Investors, Rick Anguilla of Under Armour, Inc., +1-410-454-6478; or Financial Media, Melissa Merrill of Financial Dynamics, +1-212-850-5600 Web site: http://www.underarmour.com/ http://investor.underarmour.com/

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