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): January 26, 2012

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 January 26, 2012, Under Armour, Inc. issued a press release announcing its financial results for the fourth quarter and year ended December 31, 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 January 26, 2012 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 fourth quarter and year ended December 31, 2011.

Exhibit 99.2: Portion of conference call script for January 26, 2012 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: January 26, 2012	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 FOURTH QUARTER NET REVENUES GROWTH OF 34% AND

FOURTH QUARTER EPS GROWTH OF 40%

• Fourth Quarter Net Revenues Increased 34% to $403 Million; Full Year Net Revenues Increased 38% to $1.473 Billion

• Fourth Quarter Diluted EPS Increased 40% to $0.62 from $0.44; Full Year Diluted EPS Increased 38% to $1.85 from $1.34

• Company Reiterates 2012 Operating Income Outlook at the Higher End of Its 20% to 25% Long-Term Growth Target and Updates 2012 Net Revenues Outlook to the Low End of Its 20% to 25% Long-Term Growth Target

Baltimore, MD (January 26, 2012) – Under Armour, Inc. (NYSE: UA) today announced financial results for the fourth quarter ended December 31, 2011. Net revenues increased 34% in the fourth quarter of 2011 to $403 million compared with net revenues of $301 million in the prior year’s period. Net income increased 42% in the fourth quarter of 2011 to $33 million compared with $23 million in the prior year’s period. Diluted earnings per share for the fourth quarter of 2011 were $0.62 on weighted average common shares outstanding of 52.7 million compared with $0.44 per share on weighted average common shares outstanding of 52.0 million in the prior year’s period.

Fourth quarter apparel net revenues increased 27% to $323 million compared with $254 million in the same period of the prior year, driven by continued strength in Fleece and the expanded Charged Cotton platform. Direct-to-Consumer net revenues, which represented 38% of total net revenues for the fourth quarter, grew 50% year-over-year. Fourth quarter footwear net revenues increased 43% to $31 million from $22 million in the prior year’s period, primarily reflecting new 2011 introductions in running footwear. Fourth quarter accessories net revenues increased 149% to $37 million from $15 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.

Gross margin for the fourth quarter of 2011 was 51.6% compared with 51.7% in the prior year’s quarter reflecting less favorable North American wholesale apparel product margins along with the ongoing impact of the hats and bags transition in 2011. Selling, general and administrative expenses as a percentage of net revenues were 37.9% in the fourth quarter of 2011 compared with 40.0% in the prior year’s period, largely reflecting leverage of corporate services. Marketing expenses for the fourth quarter of 2011 were 10.9% of net revenues compared with 11.1% in the prior year’s quarter. Fourth quarter operating income grew 57% to $55 million compared with $35 million in the prior year’s period.

Kevin Plank, Chairman, CEO, and President of Under Armour, Inc., stated, “We completed a very successful 2011, growing net revenues 38%, the highest overall growth rate since 2007. Our apparel business surpassed the $1 billion mark and we demonstrated our ability to broaden the addressable market for the Brand with the introduction of our premium cotton platform. The strength we continue to see in our apparel and Direct-to-Consumer businesses affords us the ability to continue to make strategic investments in other long-term growth drivers like footwear and international.”

Review of Full Year Operating Results

For the full year 2011, net revenues increased 38% to $1.473 billion compared with $1.064 billion in the prior year and compared with the Company’s prior outlook of $1.46 billion to $1.47 billion. Diluted earnings per share for the full year increased 38% to $1.85 per share on weighted average common shares outstanding of 52.5 million compared with $1.34 per share on weighted average common shares outstanding of 51.3 million in the prior year.

Apparel net revenues increased 31% to $1.122 billion compared with $853 million in the prior year, led by the Training category which included the 2011 introduction of Charged Cotton and strength in our Fleece products across Men’s, Women’s, and Youth. Direct-to-Consumer net revenues, which represented 27% of total net revenues for the year compared to 23% in 2010, grew 62% over the prior year. Footwear net revenues increased 43% to $182 million during 2011 compared to $127 million in 2010. Accessories net revenues tripled to $132 million during 2011 compared to $44 million in 2010.

Gross margin for 2011 was 48.4% compared with 49.9% in 2010 primarily due to less favorable North American wholesale apparel product margins and the impact of the hats and bags transition in 2011. Selling, general and administrative expenses as a percentage of net revenues were 37.3% for 2011 compared with 39.3% for 2010, reflecting leverage of corporate services and marketing expenses. Marketing expense for 2011 was 11.4% of net revenues compared with 12.0% in the prior year. Operating income grew 45% to $163 million in 2011 compared with $112 million in the prior year and compared with the Company’s prior outlook of $159 million to $162 million.

Balance Sheet Highlights

Cash and cash equivalents decreased 14% to $175 million at December 31, 2011 compared with $204 million at December 31, 2010. The Company had no borrowings outstanding under its $300 million revolving credit facility at December 31, 2011. Inventory at December 31, 2011 increased 51% to $324 million compared with $215 million at December 31, 2010. Long-term debt increased to $78 million at December 31, 2011 from $16 million at December 31, 2010, primarily driven by the acquisition of the Company’s corporate headquarters in July.

Updated 2012 Outlook

The Company continues to expect 2012 operating income growth at the higher end of its 20% to 25% long-term growth target. The Company expects 2012 net revenues growth at the low end of its 20% to 25% long-term growth target, compared to the prior guidance at the higher end of its 20% to 25% long-term growth target. The Company expects an effective tax rate of 37.5% to 38.0% for the full year, compared to an effective tax rate of 38.2% for 2011. The Company anticipates fully diluted weighted average shares outstanding of approximately 53.2 million to 53.4 million for 2012.

Mr. Plank concluded, “With the credibility we have built with our consumer, we upheld our premium positioning in the marketplace in 2011 by delivering compelling innovation through programs like Charged Cotton and our Charge RC running shoes. We remain focused on long-term profitable growth. This means continuing to target distribution where our consumer is looking for us and that is appropriate for our Brand. It also means balancing new, relevant innovation stories such as our ColdBlack apparel technology with re-invigorated product in our heritage baselayer programs. Finally, the operational discipline we continue to add across our organization will help maximize these drivers to our bottom line.”

Conference Call and Webcast

The Company will provide additional commentary regarding its fourth quarter results as well as its updated 2012 outlook during its earnings conference call today, January 26^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 Quarter and Year Ended December 31, 2011 and 2010

(Unaudited; in thousands, except per share amounts)

CONSOLIDATED STATEMENTS OF INCOME

	Quarter Ended December 31,												Year Ended December 31,
	2011			% of Net Revenues			2010			% of Net Revenues			2011			% of Net Revenues			2010			% of Net Revenues
Net revenues	$	403,126			100.0	%	$	301,166			100.0	%	$	1,472,684			100.0	%	$	1,063,927			100.0	%
Cost of goods sold		195,221			48.4	%		145,588			48.3	%		759,848			51.6	%		533,420			50.1	%
Gross profit		207,905			51.6	%		155,578			51.7	%		712,836			48.4	%		530,507			49.9	%
Selling, general and administrative expenses		152,603			37.9	%		120,388			40.0	%		550,069			37.3	%		418,152			39.3	%
Income from operations		55,302			13.7	%		35,190			11.7	%		162,767			11.1	%		112,355			10.6	%
Interest expense, net		(1,413	)		(0.3	%)		(590	)		(0.2	%)		(3,841	)		(0.3	%)		(2,258	)		(0.3	%)
Other income (expense), net		1			0.0	%		(142	)		(0.1	%)		(2,064	)		(0.1	%)		(1,178	)		(0.1	%)
Income before income taxes		53,890			13.4	%		34,458			11.4	%		156,862			10.7	%		108,919			10.2	%
Provision for income taxes		21,338			5.3	%		11,510			3.8	%		59,943			4.1	%		40,442			3.8	%
Net income	$	32,552			8.1	%	$	22,948			7.6	%	$	96,919			6.6	%	$	68,477			6.4	%
Net income available per common share
Basic	$	0.63					$	0.45					$	1.88					$	1.35
Diluted	$	0.62					$	0.44					$	1.85					$	1.34
Weighted average common shares outstanding
Basic		51,693						51,080						51,570						50,798
Diluted		52,674						51,986						52,526						51,282

NET REVENUES BY PRODUCT CATEGORY

	Quarter Ended December 31,							Year Ended December 31,
	2011		2010		% Change			2011		2010		% Change
Apparel	$	323,385	$	253,986		27.3	%	$	1,122,031	$	853,493		31.5	%
Footwear		31,329		21,939		42.8	%		181,684		127,175		42.9	%
Accessories		36,798		14,752		149.4	%		132,400		43,882		201.7	%
Total net sales		391,512		290,677		34.7	%		1,436,115		1,024,550		40.2	%
Licensing revenues		11,614		10,489		10.7	%		36,569		39,377		(7.1	%)
Total net revenues	$	403,126	$	301,166		33.9	%	$	1,472,684	$	1,063,927		38.4	%

NET REVENUES BY GEOGRAPHIC SEGMENT

	Quarter Ended December 31,							Year Ended December 31,
	2011		2010		% Change			2011		2010		% Change
North America	$	377,152	$	278,824		35.3	%	$	1,383,346	$	997,816		38.6	%
Other foreign countries		25,974		22,342		16.3	%		89,338		66,111		35.1	%
Total net revenues	$	403,126	$	301,166		33.9	%	$	1,472,684	$	1,063,927		38.4	%

Under Armour, Inc.

As of December 31, 2011 and 2010

(Unaudited; in thousands)

CONDENSED CONSOLIDATED BALANCE SHEETS

	As of 12/31/11		As of 12/31/10
Assets
Cash and cash equivalents	$	175,384	$	203,870
Accounts receivable, net		134,043		102,034
Inventories		324,409		215,355
Prepaid expenses and other current assets		39,643		19,326
Deferred income taxes		16,184		15,265
Total current assets		689,663		555,850
Property and equipment, net		158,392		76,127
Intangible assets, net		6,278		3,914
Deferred income taxes		15,885		21,275
Other long term assets		48,992		18,212
Total assets	$	919,210	$	675,378
Liabilities and Stockholders’ Equity
Accounts payable	$	100,527	$	84,679
Accrued expenses		69,285		55,138
Current maturities of long term debt		6,882		6,865
Other current liabilities		6,913		2,465
Total current liabilities		183,607		149,147
Long term debt, net of current maturities		70,842		9,077
Other long term liabilities		28,329		20,188
Total liabilities		282,778		178,412
Total stockholders’ equity		636,432		496,966
Total liabilities and stockholders’ equity	$	919,210	$	675,378

Under Armour, Inc.

For the Year Ended December 31, 2011 and 2010

(Unaudited; in thousands)

	Year Ended 12/31/11			Year Ended 12/31/10
Cash flows from operating activities
Net income	$	96,919		$	68,477
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		36,301			31,321
Unrealized foreign currency exchange rate losses		4,027			1,280
Stock-based compensation		18,063			16,227
Gain on bargain purchase of office complex (excludes transaction costs of $1.9 million)		(3,300	)		—
Loss on disposal of property and equipment		36			44
Deferred income taxes		3,620			(10,337	)
Changes in reserves and allowances		5,536			2,322
Changes in operating assets and liabilities:
Accounts receivable		(33,923	)		(32,320	)
Inventories		(114,646	)		(65,239	)
Prepaid expenses and other assets		(42,633	)		(4,099	)
Accounts payable		17,209			16,158
Accrued expenses and other liabilities		23,442			21,330
Income taxes payable and receivable		4,567			4,950
Net cash provided by operating activities		15,218			50,114
Cash flows from investing activities
Purchase of property and equipment		(56,228	)		(30,182	)
Purchase of corporate headquarters and related expenditures		(23,164	)		—
Purchase of long term investment		(3,862	)		(11,125	)
Purchases of other assets		(1,153	)		(478	)
Change in restricted cash		(5,029	)		—
Net cash used in investing activities		(89,436	)		(41,785	)
Cash flows from financing activities
Proceeds from revolving credit facility		30,000			—
Payments on 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		(7,418	)		(9,446	)
Payments on capital lease obligations		—			(97	)
Excess tax benefits from stock-based compensation arrangements		10,260			4,189
Payments of deferred financing costs		(2,324	)		—
Proceeds from exercise of stock options and other stock issuances		14,645			7,335
Net cash provided by financing activities		45,807			7,243
Effect of exchange rate changes on cash and cash equivalents		(75	)		1,001
Net increase (decrease) in cash and cash equivalents		(28,486	)		16,573
Cash and cash equivalents
Beginning of period		203,870			187,297
End of period	$	175,384		$	203,870
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: Fourth Quarter 2011 Earnings Call, January 26, 2012 (Brad Dickerson)

I would now like to spend some time discussing our fourth quarter and full year 2011 financial results, followed by our updated 2012 guidance.

Our net revenues for the fourth quarter of 2011 increased 34% to $403 million. For the full year, net revenues increased 38% to $1.473 billion, which compares to our most recent full year guidance of $1.46 to $1.47 billion.

Apparel grew 27% to $323 million during the quarter. Similar to last quarter, our Fleece business led the way with strength across Men’s, Women’s, and Youth. Our Charged Cotton platform also continued to drive growth during the quarter and contributed approximately $65 million in net revenue growth during the full year.

Our Direct-to-Consumer net revenues increased 50% for the quarter, representing approximately 38% of net revenues compared to 33% in the prior year period. For the full year, Direct-to-Consumer net revenues increased 62%, representing 27% of net revenues compared to 23% in 2010. On the Retail side, we opened four new Factory House stores during the fourth quarter, increasing our Factory House store base to 80, up nearly 50% from 54 locations at the end of 2010. We also opened our first Mountain Specialty store in Vail, Colorado in November and will look to test additional full-price concepts going forward. On the Ecommerce side, we launched our new Web site in November and registered our first $2 million dollar day on this platform during the quarter. We will focus on optimizing our site during 2012 and expect Ecommerce to grow at a faster rate than our Factory House business in 2012.

Footwear net revenues during the fourth quarter increased 43% to $31 million from $22 million in the prior year, representing 8% of net revenues. This growth was primarily driven by the performance of our new 2011 running styles including the Assert, the Split, and the recently introduced Charge RC, which has performed well across Men’s and Women’s at a premium $120 price point.

Page 1

Accessories net revenues during the fourth quarter increased nearly 150% to $37 million from $15 million in the prior year period, reflecting the addition of our hats and bags business which we brought in-house in January 2011.

International net revenues increased 16% to $26 million in the fourth quarter and represented approximately 6% of total net revenues, driven by strong growth with our Japanese licensing partner Dome.

Fourth quarter gross margins contracted 10 basis points to 51.6% compared with 51.7% in the prior year’s quarter. These results drove our full-year gross margins down 150 basis points to 48.4%, which compares to our previous guidance of 2011 gross margins down 160 to 180 basis points. Three factors primarily contributed to our fourth quarter gross margin performance:

• First, in North American wholesale apparel, less favorable product mix and higher input costs negatively impacted margins by 70 basis points.

• Second, a lower mix of licensing net revenues negatively impacted margins by approximately 30 basis points.

• Third, these factors were largely offset by favorable year-over-year impacts related to sales returns and allowances.

Selling, general and administrative expenses as a percentage of net revenues leveraged 210 basis points to 37.9% in the fourth quarter of 2011 from 40.0% in the prior year’s period. Details around our four SG&A buckets are as follows:

• First, Marketing costs declined to 10.9% of net revenues for the quarter from 11.1% in the prior year period. For the full year, marketing spend was 11.4% of net revenues, slightly above our previous 11.2%-11.3% guidance, and compared to 12.0% in 2010. Even with this leverage, we spent $40 million more in marketing year-over-year.

Page 2

• Second, Selling costs increased to 10.9% of net revenues for the quarter from 10.1% 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 declined to 8.2% of net revenues for the quarter from 9.1% in the prior year period, partially driven by leverage in personnel costs.

• Finally, Corporate Services decreased to 7.9% of net revenues compared to 9.7% in the prior year period, primarily as we leveraged corporate personnel and facility costs.

Operating income during the fourth quarter grew 57% to $55 million compared with $35 million in the prior year period. For the full year, operating income increased 45% to $163 million, compared to our most recent full year guidance of $159 to $162 million.

Operating margin expanded 200 basis points during the quarter to 13.7% and 50 basis points for the full year to 11.1%.

Below the operating line, net other expenses increased to $1.4 million in the fourth quarter from $0.7 million in the prior year’s period, as a result of the debt assumed for our acquisition of our corporate headquarters.

Our fourth quarter tax rate of 39.6% was unfavorable to the 33.4% rate in last year’s period which included positive impacts from tax credits and tax planning strategies. For similar reasons, our full year effective tax rate of 38.2% was above the 37.1% effective tax rate in 2010.

Page 3

Our resulting net income in the fourth quarter increased 42% to $33 million compared with $23 million in the prior year period. Fourth quarter diluted earnings per share increased 40% to $0.62 compared with $0.44 in the prior year period. Full year diluted earnings per share increased 38% to $1.85 compared to $1.34 in 2010.

Now switching over to the balance sheet. Total cash and cash equivalents at quarter-end decreased 14% to $175 million compared with $204 million at December 31, 2010. We had no borrowings outstanding on our $300 million revolving credit facility at quarter-end. Long term debt increased to $78 million at quarter-end from $16 million at the end of 2010, reflecting the acquisition of our corporate headquarters.

Inventory at quarter-end increased 51% year-over-year to $324 million compared to $215 million at December 31, 2010. A portion of this growth in inventory dollars is being driven by higher costs per unit, as the growth in inventory units at approximately 35% is more in-line with our Q4 top-line growth. This higher cost per unit is heightened in the current quarter as we flow products into our inventory to service our Spring/Summer 2012 season which is the peak of our current input cost pressures. I will provide additional color around this and our anticipated 2012 gross margin and inventory position shortly.

Our investment in operating capital expenditures was approximately $8 million for the fourth quarter and approximately $54 million for 2011. We are currently planning 2012 operating capital expenditures in the range of $60 to $65 million. As a reminder, in 2011 we also invested nearly $62 million related to the purchase of our corporate headquarters.

Now moving onto our updated outlook for 2012. Our prior preliminary outlook called for 2012 net revenues and operating income growth to be at the higher end of our long-term growth targets of 20%-25%.

Page 4

We are now taking a more prudent view on our wholesale apparel revenue growth heading into 2012. The impact of unseasonably warm weather has led to elevated inventory levels at retail to start 2012. When we combine this with the overall more conservative approach our retail partners are taking to manage their own inventories, we believe a more conservative expectation around revenue growth within our wholesale business is appropriate.

Given these factors, we are now planning for 2012 net revenues to come in at the low end of our long-term growth target of 20%-25%.

Looking at gross margins, we continue to see different first half and second half stories for the year. Our product costs for the first half of 2012 were locked in last spring when synthetic and cotton inflation hit peak levels. As a result, we continue to expect the net impact to product margins during the first half of 2012 to approximate the 2011 full year product margin impact of 110 basis points. We expect this dynamic to be the primary gross margin story during the first half of 2012.

In the second half of 2012, while we expect raw material headwinds to abate, we are still much more dependent on synthetic prices which have not shown the same level of declines as cotton prices. We believe margin improvement in the second half of 2012 will be more dependent on the continued efforts of our improving sourcing and planning functions, as well as our efforts to rationalize our SKU base. We believe these efforts should yield second half gross margin improvement that will generally offset the pressure expected during the first half of 2012.

Looking at SG&A, we see the opportunity for moderate leverage even while sustaining investments for our future growth.

• We currently expect to see a similar Marketing spend rate in 2012 as in 2011, and expect the quarterly spending cadence to look comparable to 2011.

Page 5

• Selling expenses should continue to deleverage throughout the year as we expect our Direct-to-Consumer growth rate to outpace our overall growth rate. We anticipate adding 15-20 outlet doors in 2012, a growth rate of 20-25% over the 80 doors at the end of 2011. Additionally, we will continue our ongoing enhancements around our Ecommerce business.

• The Product Innovation and Supply Chain expense rate is expected to be at a relatively flat percentage of revenue compared to 2011, as we continue to make the right investments to support our future growth.

• Finally, Corporate expenses are expected to leverage, though to a much lesser degree than 2011.

Rolling Gross Margin and SG&A factors together, we continue to expect 2012 operating income growth to be at the higher-end of our long-term growth target of 20%-25%.

Below operating results, we anticipate higher year-over-year interest expense given a full year of the additional long-term debt for our headquarters acquisition. In addition, we expect a full year effective tax rate of 37.5% to 38.0%, given our on-going tax planning strategies. We expect our fully diluted weighted average shares outstanding to be in the range of 53.2 to 53.4 million.

Before opening up to Q&A, we would also like to provide some additional color on inventory. As we mentioned, inventory ended 2011 up 51% year-over-year, a rate that was down 12% sequentially from the prior quarter. In 2012, we remain laser focused on improving our inventory management and we will build upon several initiatives developed in 2011.

SKU rationalization has been a big focus for us and we anticipate a reduction of our total assortment by 20% during 2012. This creates a filter to assist our forecasting and planning processes, where we are much more focused and disciplined not only on how

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we will buy, but also how we will flow product into our warehouses. Our planning strategy also means that we will lean more on our Factory House outlet channel in 2012 to support these processes and ultimately optimize our inventory positioning. Finally, we are seeing some encouraging signs with our sourcing strategy as we focus on supplementing our current supplier base and shortening our lead times.

Combining these factors, we expect the inventory growth rate to contract further in the first half of 2012, though the gap with the net revenues growth rate will still exist. In the second half of 2012, we anticipate the inventory growth rate will come in below the net revenues growth rate.

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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