UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

For the quarterly period ended September 30, 2010March 31, 2011

or

For the transition period from             to            

Commission File No. 001-33202

UNDER ARMOUR, INC.

(Exact name of registrant as specified in its charter)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

As of October 31, 2010,April 30, 2011, there were 38,496,51539,571,758 shares of Class A Common Stock and 12,500,00012,134,500 shares of Class B Convertible Common Stock outstanding.

UNDER ARMOUR, INC.

SEPTEMBER 30, 2010MARCH 31, 2011

INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Under Armour, Inc. and Subsidiaries

Unaudited Consolidated Balance Sheets

(In thousands, except share data)

See accompanying notes.

Under Armour, Inc. and Subsidiaries

Unaudited Consolidated Statements of Income

(In thousands, except per share amounts)

See accompanying notes.

Under Armour, Inc. and Subsidiaries

Unaudited Consolidated Statements of Stockholders’ Equity and Comprehensive Income

(In thousands)

See accompanying notes.

Under Armour, Inc. and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

(In thousands)

See accompanying notes.

Under Armour, Inc. and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

1. Description of the Business

Under Armour, Inc. is a developer, marketer and distributor of branded performance apparel, footwear and accessories. These 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.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Under Armour, Inc. and its wholly owned subsidiaries (the “Company”). Certain information in footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accounting principles generally accepted in the United States of America for interim consolidated financial statements. In the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair statement of the financial position and results of operations were included. All intercompany balances and transactions were eliminated. The consolidated balance sheet as of December 31, 20092010 is derived from the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 20092010 (the “2009“2010 Form 10-K”), which should be read in conjunction with these consolidated financial statements. The results for the three and nine months ended September 30, 2010March 31, 2011 are not necessarily indicative of the results to be expected for the year ending December 31, 20102011 or any other portions thereof.

Concentration of Credit Risk

Financial instruments that subject the Company to a significant concentration of credit risk consist primarily of accounts receivable. The majority of the Company’s accounts receivable are due from large sporting goods retailers. Credit is extended based on an evaluation of the customer’s financial condition, and generally collateral is not required. The most significant customers that accounted for a large portion of net revenues and accounts receivable were as follows:

Allowance for Doubtful Accounts

As of September 30, 2010,March 31, 2011, December 31, 20092010 and September 30, 2009,March 31, 2010, the allowance for doubtful accounts was $4.6$3.8 million, $5.2$4.9 million and $5.5$5.0 million, respectively.

Sales Returns, Allowances, Markdowns and Discounts

The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. The Company bases its estimates on historical rates of customer returns and allowances as well as the specific identification of outstanding returns, markdowns and markdowns.allowances that have not yet been received by the Company. The actual amount of customer returns and allowances, which is inherently uncertain, may differ from the Company’s estimates. If the Company determineddetermines that actual or expected returns or allowances wereare significantly higher or lower than the reserves it had established, it would record a decreasereduction or an increase, as appropriate, to net sales in the period in which the Company madeit makes such a determination. Provisions for customer specific discounts are based on contractual obligations with certain major customers are recorded as reductions to net sales.customers.

Reserves for returns, allowances, markdowns and allowancesdiscounts are recorded as offsetsan offset to accounts receivable as settlements are made through offsets to outstanding customer invoices. Beginning in the first quarterAs of March 31, 2011, December 31, 2010 reserves for markdowns and discounts earned by customers in the period have been recorded as offsets to accounts receivable as settlements are made through

offsets to outstanding customer invoices. In prior periods, the majority of these amounts were recorded as accrued expenses as settlements were made through cash disbursements. As of September 30,March 31, 2010, there were $8.7$5.5 million, $8.3 million and $6.9 million in customer markdowns and discounts recorded as offsets to accounts receivable, and no amounts were recorded as accrued expenses. As of December 31, 2009 and September 30, 2009, there were no significant customer markdowns or discounts recorded as offsets to accounts receivable, and $6.9 million and $6.4 million were recorded as accrued expenses, respectively.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or settled. Deferred income tax assets are reduced by valuation allowances when necessary.

Assessing the realizability ofwhether deferred tax assets are realizable requires significant judgment. The Company considers all available positive and negative evidence, including historical operating performance and expectations of future operating performance. The ultimate realization of deferred tax assets is often dependent upon future taxable income and therefore can be uncertain. To the extent the Company believes it is more likely than not that all or some portion of the asset will not be realized, valuation allowances are established against the Company’s deferred tax assets, which increase income tax expense in the period when such a determination is made.

Shipping and Handling Costs

The Company charges certain customers shipping and handling fees. These fees are recorded in net revenues. OutboundThe Company includes outbound freight costs associated with shipping goods to customers are recorded as a component of cost of goods sold. The Company includes the majority of outbound handling costs as a component of selling, general and administrative expenses. Outbound handling costs include internal costs associated with preparing goods to ship to customers and certain costs to operate the Company’s distribution facilities. These costs, included within selling, general and administrative expenses, were $5.0$4.8 million and $3.1$3.6 million for the three months ended September 30,March 31, 2011 and 2010, and 2009, respectively, and $12.0respectively.

Minority Investment

The Company holds a minority equity investment in Dome Corporation (“Dome”), its Japanese licensee. As of March 31, 2011, the carrying value of the Company’s investment was $15.6 million, and $7.9 millionwas included in other long term assets on the consolidated balance sheet. The investment is accounted for under the nine months ended September 30, 2010 and 2009, respectively.cost method.

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, including estimates relating to assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Recently Adopted Accounting Standards

In June 2009, the Financial Accounting Standards Board issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (“VIEs”). This amendment requires an enterprise to perform a qualitative analysis when determining whether or not it must consolidate a VIE. The amendment also requires an enterprise to continuously reassess whether it must consolidate a VIE. Finally, an enterprise will be required to disclose significant judgments and assumptions used to determine whether or not to consolidate a VIE. This amendment was effective for financial statements issued for annual periods beginning after November 15, 2009, and for interim periods within the first annual period. The adoption of this amendment in the first quarter of 2010 did not have any impact on the Company’s consolidated financial statements.

Reclassifications

Outbound freight costs associated with shipping goods of $2.4 million and $7.1 million included in selling, general and administrative expenses for the three and nine months ended September 30, 2009, respectively, were reclassified to cost of goods sold to conform to the presentation for the three and nine months ended September 30, 2010. In addition, costs of $1.7 million and $4.5 million associated with the Company’s sourcing offices and Special Make-Up Shop included in cost of goods sold for the three and nine months ended September 30, 2009, respectively, were reclassified to selling, general and administrative expenses to conform to the presentation for the three and nine months ended September 30, 2010. The Company began reclassifying these amounts in the first quarter of 2010 and believes these changes were appropriate given its view that cost of goods sold should primarily include product costs which are variable in nature. In addition, these reclassifications more closely align with the way the Company manages its business.

3. Inventories Net

Inventories consisted of the following:

4. Revolving Credit Facility and Long Term Debt

Revolving Credit Facility

TheIn March 2011, the Company hasentered into a revolvingnew $325.0 million credit facility with certain lending institutions.institutions, and terminated its prior $200.0 million revolving credit facility in order to increase the Company’s available financing and to expand its lending syndicate. The revolvingCompany anticipates using a term loan portion of the new credit facility of up to $25.0 million to finance a portion of the purchase price for the acquisition of part of the Company’s corporate office complex. The term loan commitment expires May 29, 2011. Subject to certain conditions, the acquisition is expected to close by that date.

The credit facility has a term of threefour years expiring in January 2012, and provides for a committed revolving credit line of up to $200.0$300.0 million based onin addition to the Company’s qualified domestic inventory and accounts receivable balances.$25.0 million term loan facility previously mentioned. The commitment amount under the revolving credit facility may be increased by an additional $50.0 million, subject to certain conditions and approvals underas set forth in the credit agreement. The Company incurred and capitalized $1.6 million in deferred financing costs in connection with the credit facility.

The revolving credit facility may be used for working capital and general corporate purposes. Itpurposes and is collateralized by substantially all of the assets of the Company and certain of its domestic subsidiaries (other than their trademarks and the Company’s trademarks),corporate office complex that the Company expects to purchase) and by a pledge of 65% of the equity interests of certain of the Company’s foreign subsidiaries. Up to $5.0 million of the revolving credit facility may be used to support letters of credit, of which no amountsnone were outstanding as of September 30, 2010.March 31, 2011. The Company mustis required to maintain a certain leverage ratio and fixed chargeinterest coverage ratio as definedset forth in the credit agreement. As of September 30, 2010, the Company was in compliance with these financial covenants. The revolving credit facilityagreement also provides the lenders with the ability to reduce the borrowing base, even if the Company is in compliance with all conditions of the revolving credit facility,agreement, upon a material adverse change to the business, properties, assets, financial condition or results of operations of the Company. The revolving credit facilityagreement contains a number of restrictions that limit the Company’s ability, among other things, and subject to certain limited exceptions, to incur additional indebtedness, pledge its assets as security, guaranty obligations of third parties, make investments, undergo a merger or consolidation, dispose of assets, or materially change its line of business. In addition, the revolving credit facilityagreement includes a cross default provision whereby an event of default under other debt obligations, as defined in the credit agreement, will be considered an event of default under thisthe credit agreement.

Borrowings under the revolving credit facility bear interest based on the daily balance outstanding at a LIBOR (with no rate option (with LIBOR subject to a rate floor of 1.25%)floor) plus an applicable margin (varying from 2.0%1.25% to 2.5%1.75%) or, in certain cases at the Company’s discretion, a base rate option (based on the prime ratea certain lending institution’s Prime Rate or as otherwise specified in the credit agreement, with the baseno rate subject to a rate floor of 2.25%)floor) plus an applicable margin (varying from 1.0%0.25% to 1.5%0.75%). The revolving credit facility also carries a commitment fee varyingequal to the available but unused borrowings multiplied by an applicable margin (varying from 0.38%0.25% to 0.5% of the committed line amount less outstanding borrowings and letters of credit.0.35%). The applicable margins are calculated quarterly and vary based on the Company’s leverage ratio as definedset forth in the credit agreement.

Prior toUpon entering into the revolving credit facility in January 2009,March 2011, the Company terminated its prior $100.0$200.0 million revolving credit facility. In conjunction with the termination of the prior revolving credit facility, the Company repaid the then outstanding balance of $25.0 million. The prior revolving credit facility was also collateralized by substantially all of the Company’s assets, other than its trademarks, and included covenants, conditions and other terms similar to the Company’s current revolvingnew credit facility.

As of September 30, 2010, borrowings under the $200 million revolving credit facility were limited to approximately $184.3 million based on the Company’s eligible domestic inventory and accounts receivable balances. The weighted average interest rate on the balances outstanding under the prior revolving credit facility was 1.4% during the nine months ended September 30, 2009. No balances were outstanding under the current credit facility or prior revolving credit facility during the ninethree months ended September 30, 2010March 31, 2011 and 2009, respectively.

2010.

Long Term Debt

The Company has long term debt agreements with various lenders to finance the acquisition or lease of qualifying capital investments. Loans under these agreements are collateralized by a first lien on the related assets acquired. As these agreements are not committed facilities, each advance is subject to approval by the lenders. Additionally, these agreements include a cross default provision whereby an event of default under other debt obligations, including the Company’s revolving credit facility, will be considered an event of default under these agreements. These agreements require a prepayment fee if the Company pays outstanding amounts ahead of the scheduled terms. The terms of the revolving credit facility limit the total amount of additional financing under these agreements to $35.0$40.0 million, of which $22.1$27.1 million was remaining as of September 30, 2010.March 31, 2011. At September 30, 2010,March 31, 2011, December 31, 20092010 and September 30, 2009,March 31, 2010, the outstanding principal balancesbalance under these agreements were $18.5was $13.6 million, $20.1$15.9 million and $18.1$17.9 million, respectively. Currently, advances under these agreements bear interest rates which are fixed at the time of each advance. The weighted average interest ratesrate on outstanding borrowings were 5.3%was 4.0% and 6.0%5.9% for the three months ended September 30,March 31, 2011 and 2010, and 2009, respectively, and 5.7% and 6.0% for the nine months ended September 30, 2010 and 2009, respectively.

The Company monitors the financial health and stability of its lenders under the revolving credit and long term debt facilities;facilities, however instability in the credit markets could negatively impact lenders and their ability to perform under thesetheir facilities.

Interest expense was $0.5$0.6 million for each of the three months ended September 30, 2010March 31, 2011 and 2009, and $1.7 million and $2.0 million for the nine months ended September 30, 2010 and 2009, respectively.2010. Interest expense, net includes the amortization of deferred financing costs and interest expense under the revolving credit and long term debt facilities.

5. Commitments and Contingencies

There were no significant changes to the contractual obligations reported in the 20092010 Form 10-K other than those which occur in the normal course of business.

6. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value accounting guidance outlines

a valuation framework;framework, creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures;disclosures, and prioritizes the inputs used in measuring fair value as follows:

Financial assets and (liabilities) measured at fair value as of September 30, 2010March 31, 2011 are set forth in the table below:

Fair values of the financial assets and liabilities listed above are determined using inputs that use as their basis readily observable market data that are actively quoted and are validated through external sources, including third-party pricing services and brokers. The foreign currency forward contracts represent gains and losses on derivative contracts, which are the net difference between the U.S. dollars to be received or paid at each contract’s settlement date and the U.S. dollar value of the foreign currency to be sold or purchased at the current forward exchange rate. The fair value of the TOLI held by the Rabbi Trust is based on the cash-surrender value of the life insurance policies, which are invested primarily in mutual funds and a separately managed fixed income fund. These investments are in the same funds and purchased in substantially the same amounts as the selected investments of participants in the Deferred Compensation Plan, which represent the underlying liabilities to participants in this plan. Obligations under the Deferred Compensation Plan are recorded at amounts due to participants, based on the fair value of participants’ selected investments.

7. Stock-Based Compensation

During the six months ended June 30, 2010, 127.5 thousandIn February 2011, 0.2 million shares of restricted stock and 234.0 thousand stock options were awarded to certain officers and key employeesan executive under the Under Armour, Inc. Amended and Restated 2005 Omnibus Long-Term Incentive Plan (“the 2005 Plan”). The shares of restricted stock and stock optionswere scheduled to have a vesting term of four years. Based onten years and had a fair value of $60.18, which was the closing price of the Company’s Class A Common Stock on the date of grant,grant. On May 1, 2011, the restricted stock has a weighted average fair value of $31.38, andshares were forfeited when the stock options have a weighted average exercise price of $30.24 and a term of ten years. The weighted average fair value of the stock options was $16.71 and was estimated using the Black-Sholes option-pricing model consistentexecutive terminated his employment with the weighted average assumptions included within the 2009 Form 10-K.Company.

In addition, in March 2010, 1.1February 2011, 0.3 million performance-based restricted stock optionsunits were awarded to certain officersexecutives and key employees under the 2005 Plan. The performance-based restricted stock optionsunits have vesting that is tied to the achievement of a certain combined annual operating income target for 20112012 and 2012.2013. Upon the achievement of the combined operating income target, 50% of the optionsrestricted stock units will vest on February 15, 2014 and the remaining 50% will vest one year later.on February 15, 2015. If certain lower levels of combined operating income for 20112012 and 20122013 are achieved, fewer or no optionsrestricted stock units will vest at that time and one year later, and the remaining restricted stock optionsunits will be forfeited. The weighted average fair value of the performance-based stock options was $16.38 and was estimated using the Black-Sholes option-pricing model consistent with the weighted average assumptions included within the 2009 Form 10-K. As of September 30, 2010,March 31, 2011, the Company had not recorded stock basedstock-based compensation expense for these performance-based restricted stock optionsunits as the Company concluded it was not probabledetermined the achievement of the combined operating income targets would be reached.was not probable. The Company will assess the probability of the achievement of the operating income targets at the end of each reporting period. If it becomes probable that the performance targets related to these performance-based restricted stock optionsunits will be achieved, a cumulative adjustment will be recorded as if ratable stock-based compensation expense had been recorded since the grant date. Additional stock based compensation of up to $0.9 million would have been recorded through March 31, 2011 for these performance-based restricted stock units had the achievement of these operating income targets been deemed probable.

As of March 31, 2011, the Company had not recorded stock-based compensation expense for a portion of the performance-based stock options granted during 2010 as the Company determined the achievement of the combined operating income targets for 2011 and 2012 was not probable. Additional stock-based compensation of up to $3.1 million$1.7 would have been recorded at September 30, 2010March 31, 2011 had the achievement of allthese operating income targets been deemed probable.

8. Foreign Currency Risk Management and Derivatives

The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates mainly relating to transactions generated by its international subsidiaries in currencies other than their local currencies. These gains and losses are primarily driven by intercompany transactions. When deemed necessary, the Company enters into foreign currency

forward contracts to reduce the risk associated with foreign currency exchange rate fluctuations on intercompany transactions and projected inventory purchases for its European and Canadian subsidiaries.

As of September 30, 2010,March 31, 2011, the notional value of the Company’s outstanding foreign currency forward contract used to mitigate the foreign currency exchange rate fluctuations on its Canadian subsidiary’s intercompany transactions was $18.0$20.8 million with a contract maturity of 1 month. As of September 30, 2010,March 31, 2011, the notional value of the Company’s outstanding foreign currency forward contracts used to mitigate the foreign currency exchange rate fluctuations on its European subsidiary’s intercompany transactions was $63.5$42.4 million with contract maturities of 1 month. The foreign currency forward contracts are not designated as cash flow hedges, and accordingly, changes in their fair value are recorded in other income (expense),expense, net. As of September 30,March 31, 2011, December 31, 2010 and 2009,March 31, 2010, the fair values of the Company’s foreign currency forward contracts were liabilities of $0.3$0.5 million, $0.6 million and $0.5$0.4 million, respectively, and were included in accrued expenses on the consolidated balance sheets. As of December 31, 2009, the fair values of the Company’s foreign currency forward contracts were assets of $0.3 million and were included in prepaid expenses and other current assets on the consolidated balance sheet. Refer to Note 6 for a discussion of the fair value measurements.

Other income (expense), Included in other expense, net includedwere the following amounts related to changes in foreign currency exchange rates and derivative foreign currency forward contracts:

The Company enters into foreign currency forward contracts with major financial institutions with investment grade credit ratings and is exposed to credit losses in the event of non-performance by these financial institutions. This credit risk is generally limited to the unrealized gains in the foreign currency forward contracts. TheHowever, the Company monitors the credit quality of these financial institutions and considers the risk of counterparty default to be minimal.

9. Provision for Income Taxes

The Company recorded $21.1$7.9 million and $20.5$5.2 million of income tax expense for the three months ended September 30,March 31, 2011 and 2010, and 2009, respectively, and $28.9 million and $24.6 million of income tax expense for the nine months ended September 30, 2010 and 2009, respectively.

As of September 30, 2010, the Company had $11.0 million in deferred tax assets associated with foreign net operating loss carryforwards which will begin to expire in 5 to 9 years. As of September 30, 2010, the Company believed certain deferred tax assets associated with foreign net operating loss carryforwards would expire unused based on updated forward-looking financial information impacting the Company’s tax planning strategies. Therefore, a valuation allowance of $1.5 million was recorded against the Company’s net deferred tax assets as of September 30, 2010. The valuation allowance resulted in an increase to income tax expense of $1.5 million. Although realization of the remaining foreign net operating loss carryforwards is not assured, the Company believes it is more likely than not that the remaining $9.5 million will be realized. This realizable amount could be increased or decreased if future taxable income during the carryforward periods is increased or reduced.

The effective rates for income taxes were 38.9%39.5% and 43.8%42.0% for the ninethree months ended September 30,March 31, 2011 and 2010, and 2009, respectively. The effective tax rate for the ninethree months ended September 30, 2010March 31, 2011 was lower than the effective tax rate for the ninethree months ended September 30, 2009March 31, 2010 primarily due to certain tax planning strategies anddecreased losses in foreign subsidiaries, federal and state tax credits reducingforecasted in 2011 and a reduction in the effective tax rate for the period. This reduction was partially offset by the valuation allowance noted above.portion of income subject to state taxes. The Company’s annual 20102011 effective tax rate is expected to be improved from its 2009 annual effective tax rate of 43.2% due to the drivers noted above.approximately 40.0%.

10. Comprehensive Income

Comprehensive income by period is stated below:

11. Earnings per Share

The following represents a reconciliation from basic earnings per share to diluted earnings per share:

Effects of potentially dilutive securities are presented only in periods in which they are dilutive. Stock options and restricted stock units representing 0.80.1 million shares of common stock outstanding for the three months ended September 30, 2010March 31, 2011 were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Stock options, restricted stock units and warrants representing 1.11.3 million shares of common stock outstanding for the three months ended September 30, 2009, and 1.1 million and 1.2 million shares of common stock outstanding for the nine months ended September 30,March 31, 2010 and 2009, respectively, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.

11.12. Segment Data and Related Information

The Company historically operated within oneCompany’s operating and reportable segmentsegments are based on how the Chief Operating Decision Maker (“CODM”) managed the business. Beginning in the second quarter of 2010, the Company’s operating segments changed to reflect how the CODM makes decisions about allocating resources and assessing performance. In order to make these decisions,As such, the CODM now receives discrete financial information by geographic region based on the Company’s strategy to become a global brand. These geographic regions include North America; Latin America; Europe, the Middle East and Africa (“EMEA”); and Asia. The Company’s new operating segments are based on these geographic regions. Each geographic segment operates exclusively in one industry: the development, marketing and distribution of branded performance apparel, footwear and accessories. As the Latin America, EMEA and Asia operating segments did not meet the quantitative thresholds for individual disclosure as reportable segments, they were combined into other foreign countries.

The geographic distribution of the Company’s net revenues, operating income and total assets are summarized in the following tables based on the location of its customers and operations. Net revenues represent sales to external customers for each segment. In addition to net revenues, operating income is a primary financial measure used by the Company to evaluate performance of each segment. Intercompany balances were eliminated for separate disclosure.disclosure and corporate expenses from North America have not been allocated to other foreign countries. Prior period data included below was reclassified to conform to the current period presentation.

		Three Months Ended
		March 31,
(In thousands)		2011				2010
Operating income
North America		$	18,555			$	12,763
Other foreign countries			2,587				821
Total operating income			21,142				13,584
Interest expense, net			(579	)			(546	)
Other expense, net			(510	)			(685	)
Income before income taxes		$	20,053			$	12,353

Net revenues by product category are as follows:

During the three months ended March 31, 2011 and 2010, substantially all of the Company’s long-lived assets were located in the United States.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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,” “intends,” “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, 2010 filed with the Securities and Exchange Commission (“SEC”) (our “2009“2010 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:

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 $856.4$1,063.9 million in 20092010 from $281.1$430.7 million in 2005.2006. We reported net revenues of $762.8$312.7 million for the first ninethree months of 2010,2011, which represented a 20.3%36.3% increase from the first ninethree months of 2009.2010. 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 relative to our competitors, as evidenced by the increases in sales of many of our products.marketplace. We plan to continue to increase our net revenues over the long term by increased sales of our products,apparel, footwear and accessories, expansion of our wholesale distribution sales channel, growth in our direct to consumer sales channel and expansion ofin international markets. Our direct to consumer sales channel includes sales through our website and factory house and specialty stores. We are currently developing new productsstores, website and product categoriescatalog. New offerings for introduction in the future, including basketball footwear in the fourth quarter of 2010.2011 include headwear and bags, as well as performance-based cotton products.

Our products are currently offered in over twenty three thousand retail stores worldwide. A large majority of our products are sold in North America; however we believe that our products appeal to athletes and consumers with active lifestyles around the globe. Internationally,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 third-party licensee, and through distributors located in other foreign countries.

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 core products such asof socks, headwear, bags, eyewear, custom-molded mouth guards, other accessories and team uniforms, as well as the distribution of our products in Japan. We are currently developinghave developed our own headwear and bags, and beginning in 2011, these products will beare being sold by us rather than by one of our licensees. We expect our net revenues to increase by approximately $60 million from 2010 to 2011 as a result of this change, which includes an increase in accessories revenues and a decrease in our license revenues in 2011. In addition, we expect the related cost of goods sold to increase.

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 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 footwearapparel and accessories to be higherlower than the costthat of goods sold associated with our apparel.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 were $5.0$4.8 million and $3.1$3.6 million for the three months ended September 30,March 31, 2011 and 2010, and 2009, respectively, and $12.0 million and $7.9 million for the nine months ended September 30, 2010 and 2009, 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 and incentive and stock-based compensation expense related to the employee. Our marketing costs are an important driver of our growth. For the full year 2010, we expect to invest approximately 12% of net revenues in marketing. Marketing costs consist primarily of commercials, print ads, league, team, player and event sponsorships, amortization of footwear promotional rights and depreciation expense specific to our in-store fixture program. In addition, marketing costs include costs associated with our Special Make-Up Shop (“SMU 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, the majority of our direct to consumer sales channel costs, including the cost of retail store leases, along with commissions paid to third parties. 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 manufacturing, quality assurance and sourcing efforts. Corporate services primarily consist of corporate facility operating costs and company-wide administrative expenses.

Other income (expense),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.

Reclassifications

Outbound freight costs associated with shipping goods of $2.4 million and $7.1 million included in selling, general and administrative expenses for the three and nine months ended September 30, 2009, respectively, were reclassified to cost of

goods sold to conform to the presentation for the three and nine months ended September 30, 2010. In addition, costs of $1.7 million and $4.5 million associated with our sourcing offices and SMU Shop included in cost of goods sold for the three and nine months ended September 30, 2009, respectively, were reclassified to selling, general and administrative expenses to conform to the presentation for the three and nine months ended September 30, 2010. We began reclassifying these amounts in the first quarter of 2010 and believe these changes were appropriate given our view that cost of goods sold should primarily include product costs which are variable in nature. In addition, these reclassifications more closely align with the way we manage our business.

Lastly, prior period stock-based compensation expense included in the corporate services selling, general and administrative expense category for the three and nine months ended September 30, 2009 was reclassified among the appropriate selling, general and administrative expense categories based on the category in which the stock-based compensation award recipient was included to conform to the presentation for the three and nine months ended September 30, 2010.

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: