Under Armour, Inc.

Inventory management is an important component of our financial condition and operating results. We manage inventory levels based on existing orders, anticipated demand and the rapid delivery requirements of our customers. Our inventory strategy focuses on meeting consumer demand while improving long-term inventory efficiency through implementation of enhanced systems and processes. We also strive to improve inventory performance through disciplined product purchasing, reduced production lead times and enhanced planning and execution of selling excess inventory through our Factory House stores and other liquidation channels.

Our practice, and the general practice in the apparel, footwear and accessory industry, is to offer retail customers the right to return defective or improperly shipped merchandise. Additionally, when introducing new products, which often requires large initial launch shipments, we may begin production prior to receiving orders for those products.