Forward-Looking Statements
Some of the statements contained in this Form 10-Q and the documents incorporated herein by reference (if any) 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," the negative of these terms or other comparable terminology.
The forward-looking statements contained in this Form 10-Q and the documents incorporated herein by reference (if any) 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 these forward-looking statements, including, but not limited to, those factors described in our Annual Report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission ("SEC") (our "2011 Form 10-K") or in this Form 10-Q under "Risk Factors", if included herein, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A"). These factors include without limitation:
• 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, global 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;

• our ability to further expand our business globally and to drive brand awareness and consumer acceptance of our products in other countries;

• 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 retain the services of our senior management and key employees.

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.

Overview
We are 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. Our products are sold worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe, as well as by consumers with active lifestyles.
We are a growth company as evidenced by the increase in net revenues to $1,472.7 million in 2011 from $606.6 million in 2007. We reported net revenues of $1,329.1 million for the first nine months of 2012, which represented a 24.3% increase from the first nine months of 2011. 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. We plan to continue to increase our net revenues over the long term by increased sales of our apparel, footwear and accessories, expansion of our wholesale

distribution sales channel, growth in our direct to consumer sales channel and expansion in international markets. Our direct to consumer sales channel includes our factory house and specialty stores, website and catalog. New offerings for 2012 include the Armour Bra, coldblack® technology, Under Armour scent control technology and UA Spine footwear.
A large majority of our products are sold in North America; however, we believe our products appeal to athletes and consumers with active lifestyles around the globe. Outside of North America, our products are offered primarily in Austria, France, Germany, Ireland and the United Kingdom, as well as in Japan through a licensee, and through distributors located in other foreign countries. We hold a minority investment in our licensee in Japan.
Our operating segments are geographic and include North America; Latin America; Europe, the Middle East and Africa ("EMEA"); and Asia. Due to the insignificance of the EMEA, Latin America and Asia operating segments, they have been combined into other foreign countries for disclosure purposes.
Segment operating income consists of the revenues generated by that segment, less the cost of goods sold and selling, general and administrative costs that are incurred directly by that segment, as well as an allocation of certain centrally managed costs, such as our distribution facility costs. Corporate costs, which are included in our North America operating segment, include costs related to company-wide administrative costs and debt service costs. These administrative costs include corporate office support, costs relating to accounting, human resources, legal, information technology, as well as costs related to overall corporate management.

General
Net revenues comprise both net sales and license revenues. Net sales comprise sales from our primary product categories, which are apparel, footwear and accessories. Our license revenues consist of fees paid to us by our licensees in exchange for the use of our trademarks on products such as socks, team uniforms, baby and kids' apparel, eyewear, custom-molded mouth guards, as well as the distribution of our products in Japan.
Cost of goods sold consists primarily of product costs, inbound freight and duty costs, outbound freight costs, handling costs to make products floor-ready to customer specifications, royalty payments to endorsers based on a predetermined percentage of sales of selected products and write downs for inventory obsolescence. The fabrics in many of our products are made primarily of petroleum-based synthetic materials. Therefore our product costs, as well as our inbound and outbound freight costs, could be affected by long term pricing trends of oil. In general, as a percentage of net revenues, we expect cost of goods sold associated with our apparel and accessories to be lower than that of our footwear. No cost of goods sold is associated with license revenues. We include outbound freight costs associated with shipping goods to customers as cost of goods sold; however, we include the majority of outbound 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 handling costs in their cost of goods sold. Outbound handling costs include costs associated with preparing goods to ship to customers and certain costs to operate our distribution facilities. These costs, included within selling, general and administrative expenses, were $9.4 million and $8.0 million for the three months ended September 30, 2012 and 2011, respectively, and $24.0 million and $18.2 million for the nine months ended September 30, 2012 and 2011, respectively.
Our selling, general and administrative expenses consist of costs related to marketing, selling, product innovation and supply chain and corporate services. Personnel costs are included in these categories based on the employees' function. Personnel costs include salaries, benefits, incentives and stock-based compensation related to the employee. Our marketing costs are an important driver of our growth. Marketing costs consist primarily of commercials, print ads, league, team, player and event sponsorships and depreciation expense specific to our in-store fixture program. In addition, marketing costs include costs associated with our Special Make-Up Shop located at one of our distribution facilities where we manufacture a limited number of products primarily for our league, team, player and event sponsorships. Selling costs consist primarily of costs relating to sales through our wholesale channel, commissions paid to third parties and the majority of our direct to consumer sales channel costs, including the cost of factory house and specialty store leases. Product innovation and supply chain costs include our apparel, footwear and accessories product innovation, sourcing and development costs, distribution facility operating costs, and costs relating to our Hong Kong and Guangzhou, China offices which help support product development, manufacturing, quality assurance and sourcing efforts. Corporate services primarily consist of corporate facility operating costs and company-wide administrative expenses. Other income (expense), net consists of unrealized and realized gains and losses on our derivative financial instruments and unrealized and realized gains and losses on adjustments that arise from fluctuations in foreign currency exchange rates relating to transactions generated by our international subsidiaries.

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             Nine Months Ended
                                                       September 30,                 September 30,
(In thousands)                                      2012          2011           2012            2011
Net revenues                                     $ 575,196     $ 465,523     $ 1,329,058     $ 1,069,558
Cost of goods sold                                 294,805       240,422         703,996         564,627
Gross profit                                       280,391       225,101         625,062         504,931
Selling, general and administrative expenses       189,411       150,136         497,959         397,466
Income from operations                              90,980        74,965         127,103         107,465
Interest expense, net                               (1,303 )      (1,552 )        (3,978 )        (2,428 )
Other income (expense), net                            (31 )      (1,193 )           561          (2,065 )
Income before income taxes                          89,646        72,220         123,686         102,972
Provision for income taxes                          32,329        26,233          45,040          38,605
Net income                                       $  57,317     $  45,987     $    78,646     $    64,367



                                                   Three Months Ended        Nine Months Ended
                                                      September 30,            September 30,
(As a percentage of net revenues)                   2012         2011         2012        2011
Net revenues                                      100.0  %      100.0  %    100.0  %     100.0  %
Cost of goods sold                                 51.3  %       51.6  %     53.0  %      52.8  %
Gross profit                                       48.7  %       48.4  %     47.0  %      47.2  %
Selling, general and administrative expenses       32.9  %       32.3  %     37.4  %      37.2  %
Income from operations                             15.8  %       16.1  %      9.6  %      10.0  %
Interest expense, net                              (0.2 )%       (0.3 )%     (0.3 )%      (0.2 )%
Other income (expense), net                           -  %       (0.3 )%        -  %      (0.2 )%
Income before income taxes                         15.6  %       15.5  %      9.3  %       9.6  %
Provision for income taxes                          5.6  %        5.6  %      3.4  %       3.6  %
Net income                                         10.0  %        9.9  %      5.9  %       6.0  %