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Under Armour, Inc. - Quarter Report: 2023 September (Form 10-Q)

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
Form 10-Q
______________________________________
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 001-33202
______________________________________
ualogo013117a01.jpg
UNDER ARMOUR, INC.
(Exact name of registrant as specified in its charter)
______________________________________
Maryland 52-1990078
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
1020 Hull Street
Baltimore, Maryland 21230
 
(410) 468-2512
(Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Class A Common StockUAANew York Stock Exchange
Class C Common StockUANew York Stock Exchange
(Title of each class)(Trading Symbols)(Name of each exchange on which registered)

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  ☑    No  ☐
Indicate by check mark whether the registrant has submitted electronically 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 such files).    Yes  ☑    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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  ☑
As of October 31, 2023 there were 188,786,069 shares of Class A Common Stock, 34,450,000 shares of Class B Convertible Common Stock and 214,917,103 shares of Class C Common Stock outstanding.


Table of Contents

UNDER ARMOUR, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS



Table of Contents
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
Under Armour, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited; In thousands, except share data)
September 30,
2023		March 31,
2023
Assets
Current assets
Cash and cash equivalents$655,866 $711,910 
       Accounts receivable, net (Note 3)
805,197 759,860 
Inventories1,143,872 1,190,253 
Prepaid expenses and other current assets, net266,825 297,563 
Total current assets2,871,760 2,959,586 
Property and equipment, net (Note 4)
687,804 672,736 
Operating lease right-of-use assets (Note 5)449,210 489,306 
Goodwill (Note 6)
474,443 481,992 
Intangible assets, net (Note 7)
8,129 8,940 
Deferred income taxes (Note 17)
196,932 186,167 
Other long-term assets58,275 58,356 
Total assets$4,746,553 $4,857,083 
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt (Note 9)
$80,919 $— 
Accounts payable542,309 649,116 
Accrued expenses312,494 354,643 
Customer refund liabilities (Note 12)
149,451 160,533 
Operating lease liabilities (Note 5)
138,610 140,990 
Other current liabilities59,321 51,609 
Total current liabilities1,283,104 1,356,891 
Long-term debt, net of current maturities (Note 9)
594,655 674,478 
Operating lease liabilities, non-current (Note 5)
657,551 705,713 
Other long-term liabilities121,501 121,598 
Total liabilities2,656,811 2,858,680 
Stockholders' equity (Note 11)
Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of September 30, 2023 and March 31, 2023; 188,724,643 shares issued and outstanding as of September 30, 2023 (March 31, 2023: 188,704,689)
63 63 
Class B Convertible Common Stock, $0.0003 1/3 par value; 34,450,000 shares authorized, issued and outstanding as of September 30, 2023 and March 31, 2023
11 11 
Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of September 30, 2023 and March 31, 2023; 214,688,628 shares issued and outstanding as of September 30, 2023 (March 31, 2023: 221,346,517)
71 73 
Additional paid-in capital1,162,548 1,136,536 
Retained earnings994,110 929,562 
Accumulated other comprehensive income (loss)(67,061)(67,842)
Total stockholders' equity2,089,742 1,998,403 
Total liabilities and stockholders' equity$4,746,553 $4,857,083 
Commitments and Contingencies (Note 10)

See accompanying notes.
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Under Armour, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited; In thousands, except per share amounts)
 Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Net revenues$1,566,710 $1,573,885 $2,883,722 $2,922,942 
Cost of goods sold814,715 860,051 1,523,991 1,578,911 
Gross profit751,995 713,834 1,359,731 1,344,031 
Selling, general and administrative expenses606,236 594,424 1,193,042 1,190,138 
Income (loss) from operations145,759 119,410 166,689 153,893 
Interest income (expense), net(373)(3,555)(1,999)(9,560)
Other income (expense), net(6,429)(5,771)(12,814)(20,012)
Income (loss) before income taxes138,957 110,084 151,876 124,321 
Income tax expense (benefit) 29,494 22,251 33,465 27,908 
Income (loss) from equity method investments151 (908)(248)(1,806)
Net income (loss)$109,614 $86,925 $118,163 $94,607 
Basic net income (loss) per share of Class A, B and C common stock (Note 18)$0.25 $0.19 $0.27 $0.21 
Diluted net income (loss) per share of Class A, B and C common stock (Note 18)$0.24 $0.19 $0.26 $0.20 
Weighted average common shares outstanding Class A, B and C common stock
Basic443,525 454,322 444,195 456,357 
Diluted453,715 464,141 454,107 466,143 
See accompanying notes.
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Under Armour, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited; In thousands)
 Three Months Ended September 30,Six Months Ended September 30,
 2023202220232022
Net income (loss)$109,614 $86,925 $118,163 $94,607 
Other comprehensive income (loss):
Foreign currency translation adjustment(12,631)(16,974)(8,078)(40,499)
Unrealized gain (loss) on cash flow hedges, net of tax benefit (expense) of $(9,393) and $(10,907), for the three months ended September 30, 2023 and 2022, respectively; $(2,208) and $(20,086) for the six months ended September 30, 2023 and 2022, respectively.
26,486 49,412 18,230 91,894 
Gain (loss) on intra-entity foreign currency transactions(989)(16,010)(9,371)(29,544)
Total other comprehensive income (loss)12,866 16,428 781 21,851 
Comprehensive income (loss)$122,480 $103,353 $118,944 $116,458 
See accompanying notes.
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Under Armour, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited; In thousands)
Class A
Common Stock		Class B
Convertible
Common Stock		Class C
Common Stock		Additional Paid-in-CapitalRetained
Earnings		Accumulated Other Comprehensive Income (Loss)Total
Equity
SharesAmountSharesAmountSharesAmount
Balance as of June 30, 2022188,669 $63 34,450 $11 232,026 $77 $1,108,988 $654,599 $(34,663)$1,729,075 
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements— — — — (50)— — (450)— (450)
Class C Common Stock repurchased — — — — (3,244)(1)(250)(24,749)— (25,000)
Issuance of Class A Common Stock, net of forfeitures20 — — — — — — — — — 
Issuance of Class C Common Stock, net of forfeitures— — — — 280 — 1,022 — — 1,022 
Stock-based compensation expense— — — — — — 8,333 — — 8,333 
Comprehensive income (loss)— — — — — — — 86,925 16,428 103,353 
Balance as of September 30, 2022188,689 $63 34,450 $11 229,012 $76 $1,118,093 $716,325 $(18,235)$1,816,333 
Balance as of March 31, 2022188,669 $63 34,450 $11 238,472 $79 $1,046,961 $721,926 $(40,086)$1,728,954 
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements— — — — (85)— — (802)— (802)
Class C Common Stock repurchased— — — — (9,913)(3)49,409 (99,406)— (50,000)
Issuance of Class A Common Stock, net of forfeitures20 — — — — — — — — — 
Issuance of Class C Common Stock, net of forfeitures— — — — 538 — 2,015 — — 2,015 
Stock-based compensation expense— — — — — — 19,708 — — 19,708 
Comprehensive income (loss)— — — — — — — 94,607 21,851 116,458 
Balance as of September 30, 2022188,689 $63 34,450 $11 229,012 $76 $1,118,093 $716,325 $(18,235)$1,816,333 
See accompanying notes.
















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Under Armour, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited; In thousands)
Class A
Common Stock		Class B
Convertible
Common Stock		Class C
Common Stock		Additional Paid-in-CapitalRetained
Earnings		Accumulated Other Comprehensive Income (Loss)Total
Equity
SharesAmountSharesAmountSharesAmount
Balance as of June 30, 2023188,705 $63 34,450 $11 222,060 $73 $1,149,183 $936,007 $(79,927)$2,005,410 
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements— — — — (32)— — (214)— (214)
Excise tax on repurchases of common stock— — — — — — (425)— — (425)
Class C Common Stock repurchased— — — — (7,616)(2)1,299 (51,297)— (50,000)
Issuance of Class A Common Stock, net of forfeitures20 — — — — — — — — — 
Issuance of Class C Common Stock, net of forfeitures— — — — 277 — 911 — — 911 
Stock-based compensation expense— — — — — — 11,580 — — 11,580 
Comprehensive income (loss)— — — — — — — 109,614 12,866 122,480 
Balance as of September 30, 2023188,725 $63 34,450 $11 214,689 $71 $1,162,548 $994,110 $(67,061)$2,089,742 
Balance as of March 31, 2023188,705 $63 34,450 $11 221,347 $73 $1,136,536 $929,562 $(67,842)$1,998,403 
Shares withheld in consideration of employee tax obligations relative to stock-based compensation arrangements— — — — (333)— — (2,318)— (2,318)
Excise tax on repurchases of common stock— — — — — — (425)— — (425)
Class C Common Stock repurchased— — — — (7,616)(2)1,299 (51,297)— (50,000)
Issuance of Class A Common Stock, net of forfeitures20 — — — — — — — — — 
Issuance of Class C Common Stock, net of forfeitures— — — — 1,291 — 1,781 — — 1,781 
Stock-based compensation expense— — — — — — 23,357 — — 23,357 
Comprehensive income (loss)— — — — — — — 118,163 781 118,944 
Balance as of September 30, 2023188,725 $63 34,450 $11 214,689 $71 $1,162,548 $994,110 $(67,061)$2,089,742 
See accompanying notes.
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Under Armour, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited; In thousands)
 Six Months Ended September 30,
20232022
Cash flows from operating activities
Net income (loss)$118,163 $94,607 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization71,177 68,007 
Unrealized foreign currency exchange rate (gain) loss21,145 16,338 
Loss on disposal of property and equipment696 1,074 
Amortization of bond premium and debt issuance costs1,096 1,096 
Stock-based compensation23,357 19,708 
Deferred income taxes(10,788)(2,021)
Changes in reserves and allowances18,471 4,452 
Changes in operating assets and liabilities:
Accounts receivable(52,721)(90,331)
Inventories33,270 (266,824)
Prepaid expenses and other assets(10,934)(15,486)
Other non-current assets49,659 (36,932)
Accounts payable(120,353)167,149 
Accrued expenses and other liabilities(75,751)19,034 
Customer refund liability(11,244)(5,475)
Income taxes payable and receivable9,000 23,105 
Net cash provided by (used in) operating activities64,243 (2,499)
Cash flows from investing activities
Purchases of property and equipment(84,144)(93,864)
Earn-out from the sale of MyFitnessPal platform45,000 35,000 
Net cash provided by (used in) investing activities(39,144)(58,864)
Cash flows from financing activities
Common shares repurchased(50,000)(50,000)
Employee taxes paid for shares withheld for income taxes(2,318)(803)
Proceeds from exercise of stock options and other stock issuances1,781 2,015 
Net cash provided by (used in) financing activities(50,537)(48,788)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(28,671)(43,962)
Net increase (decrease) in cash, cash equivalents and restricted cash(54,109)(154,113)
Cash, cash equivalents and restricted cash
Beginning of period727,726 1,022,126 
End of period$673,617 $868,013 
Non-cash investing and financing activities
Change in accrual for property and equipment$(10,333)$866 

Reconciliation of cash, cash equivalents and restricted cashSeptember 30, 2023September 30, 2022
Cash and cash equivalents$655,866 $853,652 
Restricted cash17,751 14,361 
Total cash, cash equivalents and restricted cash$673,617 $868,013 
See accompanying notes.
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Under Armour, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited; Tabular amounts in thousands, except share and per share data)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Business
Under Armour, Inc. (together with its wholly owned subsidiaries, the "Company") is a developer, marketer and distributor of branded athletic performance apparel, footwear and accessories. The Company creates products engineered to make athletes better with a vision to inspire performance solutions you never knew you needed and can't imagine living without. The Company's products are made, sold and worn worldwide.
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements are presented in U.S. Dollars and include the accounts of Under Armour, Inc. and its wholly owned subsidiaries. Certain information in footnote disclosures normally included in annual financial statements were 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 ("U.S. GAAP") 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. Intercompany balances and transactions were eliminated upon consolidation. Additionally, certain prior period comparative amounts in the Condensed Consolidated Statement of Stockholders' Equity have been reclassified to conform to the current period presentation. Such reclassifications were not material and did not affect the Condensed Consolidated Financial Statements.
The unaudited Condensed Consolidated Balance Sheet as of September 30, 2023 is derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023 ("Fiscal 2023"), filed with the SEC on May 24, 2023 ("Annual Report on Form 10-K for Fiscal 2023"), which should be read in conjunction with these unaudited Condensed Consolidated Financial Statements. The unaudited results for the three and six months ended September 30, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending March 31, 2024 ("Fiscal 2024"), or any other portions thereof.
Management Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. These estimates, judgments and assumptions are evaluated on an on-going basis. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable at that time; however, actual results could differ from these estimates.
As the impacts of major global events continue to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment. The extent to which the evolving events impact the Company's financial statements will depend on a number of factors including, but not limited to, any new information that may emerge concerning the severity of these major events and the actions that governments around the world may take in response. While the Company believes it has made appropriate accounting estimates and assumptions based on the facts and circumstances available as of this reporting date, the Company may experience further impacts based on long-term effects on the Company's customers and the countries in which the Company operates. Please see the risk factors discussed in Part I, Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for Fiscal 2023.

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted Account Pronouncements
The Company assesses the applicability and impact of all Accounting Standard Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB"). The following ASU was adopted during the first half of Fiscal 2024.
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Supplier Finance Programs
In September 2022, the FASB issued ASU 2022-04 "Liabilities - Supplier Finance Programs (Subtopic 405-50)" ("ASU 2022-04") which requires entities to disclose the key terms of supplier finance programs used in connection with the purchase of goods and services along with information about their obligations under these programs, including a rollforward of those obligations. The Company adopted ASU 2022-04 on April 1, 2023 on a retrospective basis, except for the amendments relating to the rollforward requirement, which are required to be adopted on April 1, 2024 on a prospective basis. The adoption did not have a material impact on the Company's Condensed Consolidated Financial Statements. Refer to Note 8 of the Condensed Consolidated Financial Statements for a discussion of the Company's supply chain finance program.
Recently Issued Accounting Pronouncements
The Company assessed all recently issued ASUs and determined them to be either not applicable or expected to have no material impact on its consolidated financial position and results of operations.

NOTE 3. ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Company's allowance for doubtful accounts was established with information available as of September 30, 2023, including reasonable and supportable estimates of future risk. The following table illustrates the activity in the Company's allowance for doubtful accounts:
Allowance for doubtful accounts - within accounts receivable, net
Allowance for doubtful accounts - within prepaid expenses and other current assets (1)
Balance as of March 31, 2023$10,813 $227 
Increases (decreases) to costs and expenses6,570 — 
Write-offs, net of recoveries(67)— 
Balance as of September 30, 2023$17,316 $227 
(1) Includes an allowance pertaining to a royalty receivable.

NOTE 4. PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following: 
As of September 30, 2023As of March 31, 2023
Leasehold and tenant improvements$480,807 $462,721 
Furniture, fixtures and displays289,449 289,539 
Buildings68,230 48,632 
Software392,474 380,586 
Office equipment133,474 132,301 
Plant equipment178,195 178,194 
Land82,410 83,626 
Construction in progress (1)
145,308 143,243 
Other16,810 17,837 
Subtotal property and equipment1,787,157 1,736,679 
Accumulated depreciation(1,099,353)(1,063,943)
Property and equipment, net$687,804 $672,736 
(1) Construction in progress primarily includes costs incurred for construction of corporate offices, software systems, leasehold improvements and in-store fixtures and displays not yet placed in use.

Depreciation expense related to property and equipment for the three and six months ended September 30, 2023 was $34.7 million and $70.4 million, respectively (three and six months ended September 30, 2022: $33.2 million and $67.1 million, respectively).


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NOTE 5. LEASES
The Company enters into operating leases domestically and internationally to lease certain warehouse space, office facilities, space for its Brand and Factory House stores, and certain equipment under non-cancelable operating leases. The leases expire at various dates through 2038, excluding extensions at the Company's option, and include provisions for rental adjustments. Short-term lease payments were not material for the three and six months ended September 30, 2023 and 2022.
Lease Costs and Other Information
The Company recognizes lease expense on a straight-line basis over the lease term. The following table illustrates operating and variable lease costs, included in selling, general and administrative expenses within the Company's Condensed Consolidated Statement of Operations, for the periods indicated:
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Operating lease costs$41,632 $36,010 $82,723 $71,565 
Variable lease costs$2,056 $4,360 $4,812 $7,983 
There are no residual value guarantees that exist, and there are no restrictions or covenants imposed by leases. The Company rents or subleases certain excess office facilities and warehouse space to third parties. Sublease income is not material.
The weighted average remaining lease term and discount rate for the periods indicated below were as follows:
As of September 30, 2023As of March 31, 2023
Weighted average remaining lease term (in years)7.938.03
Weighted average discount rate4.89 %4.69 %
Supplemental Cash Flow Information
The following table presents supplemental information relating to cash flow arising from lease transactions:
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Operating cash outflows from operating leases$44,704 $42,254 $88,318 $84,119 
Leased assets obtained in exchange for new operating lease liabilities$16,079 $87,971 $21,459 $107,560 
Maturity of Lease Liabilities
The following table presents the future minimum lease payments under the Company's operating lease liabilities as of September 30, 2023:
Fiscal year ending March 31,
2024 (six months ending)$84,596 
2025164,966 
2026132,655 
2027110,184 
202892,718 
2029 and thereafter372,202 
Total lease payments$957,321 
Less: Interest161,160 
Total present value of lease liabilities$796,161 
As of September 30, 2023, the Company has additional operating lease obligations that have not yet commenced of approximately $9.3 million, which are not reflected in the table above.
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NOTE 6. GOODWILL
The following table summarizes changes in the carrying amount of the Company's goodwill by reportable segment as of the periods indicated:
 North America EMEAAsia-PacificLatin AmericaTotal
Balance as of March 31, 2023$301,371 $101,096 $79,525 $— $481,992 
Effect of currency translation adjustment— (2,622)(4,927)— (7,549)
Balance as of September 30, 2023$301,371 $98,474 $74,598 $— $474,443 

NOTE 7. INTANGIBLE ASSETS, NET
The following tables summarize the Company's intangible assets as of the periods indicated:
 Useful Lives from Date of Acquisitions (in years)As of September 30, 2023
Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount
Intangible assets subject to amortization:
Customer relationships
2-6
8,442 (4,918)3,524 
Lease-related intangible assets
1-15
1,690 (1,592)98 
Total$10,132 $(6,510)$3,622 
Indefinite-lived intangible assets4,507 
Intangible assets, net$8,129 
 Useful Lives from Date of Acquisitions (in years)As of March 31, 2023
Gross Carrying
Amount		Accumulated
Amortization		Net Carrying
Amount
Intangible assets subject to amortization:
Technology
5-7
$2,536 $(2,503)$33 
Customer relationships
2-6
8,711 (4,377)4,334 
Lease-related intangible assets
1-15
1,664 (1,542)122 
Total$12,911 $(8,422)$4,489 
Indefinite-lived intangible assets4,451 
Intangible assets, net$8,940 
Amortization expense, which is included in selling, general and administrative expenses, for the three and six months ended September 30, 2023 was $0.4 million and $0.7 million, respectively (three and six months ended September 30, 2022: $0.5 million and $0.9 million, respectively).
During the six months ended September 30, 2023, the Company reduced the gross carrying amount and related accumulated amortization of technology assets by $2.5 million as a result of such assets being fully amortized.
The following is the estimated future amortization expense for the Company's intangible assets as of September 30, 2023:
Fiscal year ending March 31,
2024 (six months ending)$747 
20251,494 
20261,372 
20279 
2028— 
2029 and thereafter— 
Total amortization expense of intangible assets$3,622 
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NOTE 8. SUPPLY CHAIN FINANCE PROGRAM
The Company facilitates a supply chain finance program, administered through third party platforms, which provides participating suppliers with the opportunity to finance payments due from the Company with certain third-party financial institutions. Participating suppliers may, at their sole discretion, elect to finance one or more invoices of the Company prior to their scheduled due dates at a discounted price with the participating financial institution.
The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by the supplier’s decision to finance amounts under these arrangements. As such, the outstanding payment obligations under the Company’s supply chain financing program are included within Accounts Payable in the Condensed Consolidated Balance Sheets and within operating activities in the Condensed Consolidated Statement of Cash Flows.
The Company’s outstanding payment obligations under this program were $175.8 million as of September 30, 2023 (March 31, 2023: $250.8 million).

NOTE 9. CREDIT FACILITY AND OTHER LONG-TERM DEBT
The Company's outstanding debt consisted of the following:
As of
September 30, 2023		As of
March 31, 2023
1.50% Convertible Senior Notes due 2024
$80,919 $80,919 
3.25% Senior Notes due 2026
600,000 600,000 
Total principal payments due680,919 680,919 
Unamortized debt discount on Senior Notes(687)(814)
Unamortized debt issuance costs - Convertible Senior Notes(62)(267)
Unamortized debt issuance costs - Senior Notes(1,459)(1,728)
Unamortized debt issuance costs - Credit facility(3,137)(3,632)
Total amount outstanding675,574 674,478 
Less:
Current portion of long-term debt:
1.50% Convertible Senior Notes due 2024
80,919 — 
Non-current portion of long-term debt$594,655 $674,478 
Credit Facility
On March 8, 2019, the Company entered into an amended and restated credit agreement by and among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders and arrangers party thereto (the "credit agreement"). In May 2020, May 2021 and December 2021, the Company entered into the first, second and third amendments to the credit agreement, respectively (the credit agreement as amended, the "amended credit agreement" or the "revolving credit facility"). The amended credit agreement provides for revolving credit commitments of $1.1 billion and has a term that ends on December 3, 2026, with permitted extensions under certain circumstances. As of September 30, 2023 and March 31, 2023, there were no amounts outstanding under the revolving credit facility.
At the Company's request and a lender's consent, commitments under the amended credit agreement may be increased by up to $300.0 million in aggregate, subject to certain conditions as set forth in the amended credit agreement. Incremental borrowings are uncommitted and the availability thereof will depend on market conditions at the time the Company seeks to incur such borrowings.
Borrowings, if any, under the revolving credit facility have maturities of less than one year. Up to $50.0 million of the facility may be used for the issuance of letters of credit. As of September 30, 2023, there were $4.3 million of letters of credit outstanding (March 31, 2023: $4.4 million).
The obligations of the Company under the amended credit agreement are guaranteed by certain domestic significant subsidiaries of Under Armour, Inc., subject to customary exceptions (the "subsidiary guarantors") and primarily secured by a first-priority security interest in substantially all of the assets of Under Armour, Inc. and the
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subsidiary guarantors, excluding real property, capital stock in and debt of subsidiaries of Under Armour, Inc. holding certain real property and other customary exceptions. The amended credit agreement provides for the permanent fall away of guarantees and collateral upon the Company's achievement of investment grade rating from two rating agencies.
The amended credit agreement contains negative covenants that, subject to significant exceptions, limit the Company's ability to, among other things: incur additional secured and unsecured indebtedness; pledge the assets as security; make investments, loans, advances, guarantees and acquisitions (including investments in and loans to non-guarantor subsidiaries); undergo fundamental changes; sell assets outside the ordinary course of business; enter into transactions with affiliates; and make restricted payments.
The Company is also required to maintain a ratio of consolidated EBITDA, to consolidated interest expense of not less than 3.50 to 1.0 (the "interest coverage covenant") and the Company is not permitted to allow the ratio of consolidated total indebtedness to consolidated EBITDA to be greater than 3.25 to 1.0 (the "leverage covenant"), as described in more detail in the amended credit agreement. As of September 30, 2023, the Company was in compliance with the applicable covenants.
In addition, the amended credit agreement contains events of default that are customary for a facility of this nature, and includes a cross default provision whereby an event of default under other material indebtedness, as defined in the amended credit agreement, will be considered an event of default under the amended credit agreement.
The amended credit agreement implements SOFR as the replacement of LIBOR as a benchmark interest rate for U.S. dollar borrowings (and analogous benchmark rate replacements for borrowings in Yen, Canadian dollars, Pound Sterling and Euro). Borrowings under the amended credit agreement bear interest at a rate per annum equal to, at the Company's option, either (a) an alternate base rate (for borrowings in U.S. dollars), (b) a term rate (for borrowings in U.S. dollars, Euro, Japanese Yen or Canadian dollars) or (c) a "risk free" rate (for borrowings in U.S. dollars or Pounds Sterling), plus in each case an applicable margin. The applicable margin for loans will be adjusted by reference to a grid (the "pricing grid") based on the leverage ratio of consolidated total indebtedness to consolidated EBITDA and ranges between 1.00% to 1.75% (or, in the case of alternate base loans, 0.00% to 0.75%). The Company will also pay a commitment fee determined in accordance with the pricing grid on the average daily unused amount of the revolving credit facility and certain fees with respect to letters of credit. As of September 30, 2023, the commitment fee was 17.5 basis points.
1.50% Convertible Senior Notes
The Company has approximately $80.9 million aggregate principal amount of 1.50% convertible senior notes due 2024 (the "Convertible Senior Notes") outstanding as of September 30, 2023, which were issued in May 2020. The Convertible Senior Notes bear interest at the fixed rate of 1.50% per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning December 1, 2020. The Convertible Senior Notes will mature on June 1, 2024, unless earlier converted in accordance with their terms, redeemed in accordance with their terms or repurchased.
The Convertible Senior Notes are not secured and are not guaranteed by any of the Company's subsidiaries. The indenture governing the Convertible Senior Notes does not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries.
The Convertible Senior Notes are convertible into cash, shares of the Company's Class C Common Stock or a combination of cash and shares of Class C Common Stock, at the Company's election, as described further below. The initial conversion rate is 101.8589 shares of the Company's Class C Common Stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $9.82 per share of Class C Common Stock), subject to adjustment if certain events occur. Prior to the close of business on the business day immediately preceding January 1, 2024, holders may (at their option) convert their Convertible Senior Notes only upon satisfaction of one or more of the following conditions:
•during any calendar quarter commencing after the calendar quarter ended on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company's Class C Common Stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•during the five business day period after any five consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of Convertible Senior Notes for each trading
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day of the measurement period was less than 98% of the product of the last reported sale price of the Company's Class C Common Stock and the conversion rate on each such trading day;
•upon the occurrence of specified corporate events or distributions on the Company's Class C Common Stock; or
•if the Company calls any Convertible Senior Notes for redemption prior to the close of business on the business day immediately preceding January 1, 2024.
On or after January 1, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Convertible Senior Notes at the conversion rate at any time irrespective of the foregoing conditions.
Beginning on December 6, 2022, the Company may redeem for cash all or any part of the Convertible Senior Notes, at its option, if the last reported sale price of the Company's Class C Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the aggregate principal amount of the Convertible Senior Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
If the Company undergoes a fundamental change (as defined in the indenture governing the Convertible Senior Notes) prior to the maturity date, subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their Convertible Senior Notes in principal amounts of $1,000 or an integral multiple thereof at a price which will be equal to 100% of the aggregate principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
Concurrently with the offering of the Convertible Senior Notes, the Company entered into privately negotiated capped call transactions with JPMorgan Chase Bank, National Association, HSBC Bank USA, National Association, and Citibank, N.A. (the "option counterparties"). The capped call transactions are expected generally to reduce potential dilution to the Company's Class C Common Stock upon any conversion of Convertible Senior Notes and/or offset any cash payments the Company is required to make in excess of the aggregate principal amount of converted Convertible Senior Notes upon any conversion thereof, as the case may be, with such reduction and/or offset subject to a cap based on the cap price. The cap price of the capped call transactions is initially $13.4750 per share of the Company's Class C Common Stock, representing a premium of 75% above the last reported sale price of the Company's Class C Common Stock on May 21, 2020, and is subject to certain adjustments under the terms of the capped call transactions.
3.250% Senior Notes
In June 2016, the Company issued $600.0 million aggregate principal amount of 3.250% senior unsecured notes due June 15, 2026 (the "Senior Notes"). The Senior Notes bear interest at the fixed rate of 3.250% per annum, payable semi-annually on June 15 and December 15 beginning December 15, 2016. The Company may redeem some or all of the Senior Notes at any time, or from time to time, at redemption prices described in the indenture governing the Senior Notes. The indenture governing the Senior Notes contains negative covenants that limit the Company's ability to engage in certain transactions and are subject to material exceptions described in the indenture. The Company incurred and deferred $5.4 million in financing costs in connection with the Senior Notes.
Interest Expense
Interest expense, which includes amortization of deferred financing costs, bank fees, capital and built-to-suit lease interest and interest expense under the credit and other long-term debt facilities, was $5.5 million and $11.3 million, respectively, for the three and six months ended September 30, 2023 (three and six months ended September 30, 2022: $6.5 million and $13.2 million, respectively).
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The following are the scheduled maturities of long-term debt as of September 30, 2023:
Fiscal year ending March 31,
2024 (six months ending)$— 
202580,919 
2026— 
2027600,000 
2028— 
2029 and thereafter— 
Total scheduled maturities of long-term debt$680,919 
Current maturities of long-term debt$80,919 
The Company monitors the financial health and stability of its lenders under the credit and other long-term debt facilities, however during any period of significant instability in the credit markets, lenders could be negatively impacted in their ability to perform under these facilities.
NOTE 10. COMMITMENTS AND CONTINGENCIES
From time to time, the Company is involved in litigation and other proceedings, including matters related to commercial and intellectual property disputes, as well as trade, regulatory and other claims related to its business. Other than as described below, the Company believes that all current proceedings are routine in nature and incidental to the conduct of its business. However, the matters described below, if decided adversely to or settled by the Company, could result, individually or in the aggregate, in a liability material to the Company's consolidated financial position, results of operations or cash flows.
In re Under Armour Securities Litigation
On March 23, 2017, three separate securities cases previously filed against the Company in the United States District Court for the District of Maryland (the "District Court") were consolidated under the caption In re Under Armour Securities Litigation, Case No. 17-cv-00388-RDB (the "Consolidated Securities Action"). On September 14, 2020, the District Court issued an order that, among other things, consolidated two additional securities cases into the Consolidated Securities Action.
The operative complaint (the "TAC") in the Consolidated Securities Action was filed on October 14, 2020. The TAC asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), against the Company and Mr. Plank and under Section 20A of the Exchange Act against Mr. Plank. The TAC alleges that the defendants supposedly concealed purportedly declining consumer demand for certain of the Company's products between the third quarter of 2015 and the fourth quarter of 2016 by making allegedly false and misleading statements regarding the Company's performance and future prospects and by engaging in undisclosed and allegedly improper sales and accounting practices, including shifting sales between quarterly periods allegedly to appear healthier. The TAC also alleges that the defendants purportedly failed to disclose that the Company was under investigation by and cooperating with the U.S. Department of Justice ("DOJ") and the U.S. Securities and Exchange Commission (the "SEC") since July 2017. The class period identified in the TAC is September 16, 2015 through November 1, 2019.
On July 23, 2021, the Company and Mr. Plank filed an answer to the TAC denying all allegations of wrongdoing and asserting affirmative defenses to the claims asserted in the TAC. On December 1, 2021, the plaintiffs filed a motion seeking, among other things, certification of the class they are seeking to represent in the Consolidated Securities Action. On September 29, 2022, the court granted the plaintiffs' class certification motion. Discovery in the Consolidated Securities Action concluded on August 31, 2023. On October 2, 2023, the Company and Mr. Plank filed a motion for summary judgment seeking an order dismissing the Consolidated Securities Action with prejudice. Briefing on that motion is not yet complete. The District Court has scheduled trial to begin on July 15, 2024.
The Company continues to believe that the claims asserted in the Consolidated Securities Action are without merit and intends to defend the lawsuit vigorously.
Consolidated Kenney Derivative Litigation
In June and July 2018, two purported stockholder derivative complaints were filed in Maryland state court (in cases captioned Kenney v. Plank, et al. (filed June 29, 2018) and Luger v. Plank, et al. (filed July 26, 2018), respectively). The cases were consolidated on October 19, 2018 under the caption Kenney v. Plank, et. al. The
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consolidated complaint in the Kenney action names Mr. Plank, certain other current and former members of the Company's Board of Directors, certain former Company executives, and Sagamore Development Company, LLC ("Sagamore") as defendants, and names the Company as a nominal defendant. The consolidated complaint asserts breach of fiduciary duty, unjust enrichment, and corporate waste claims against the individual defendants and asserts a claim against Sagamore for aiding and abetting certain of the alleged breaches of fiduciary duty. The consolidated complaint seeks damages on behalf of the Company and certain corporate governance related actions.
The consolidated complaint includes allegations challenging, among other things, the Company's disclosures related to growth and consumer demand for certain of the Company's products, as well as stock sales by certain individual defendants. The consolidated complaint also makes allegations related to the Company's 2016 purchase from entities controlled by Mr. Plank (through Sagamore) of certain parcels of land to accommodate the Company's growth needs, which was approved by the Audit Committee of the Company's Board of Directors in accordance with the Company's policy on transactions with related persons.
On March 29, 2019, the court in the Kenney action granted the Company's and the defendants' motion to stay that case pending the outcome of both the Consolidated Securities Action and an earlier-filed derivative action asserting similar claims to those asserted in the Kenney action relating to the Company's purchase of parcels in the Baltimore Peninsula, an area of Baltimore previously referred to as Port Covington (which derivative action has since been dismissed in its entirety).
Prior to the filing of the derivative complaints in Kenney v. Plank, et al. and Luger v. Plank, et al., both of the purported stockholders had sent the Company's Board of Directors a letter demanding that the Company pursue claims similar to the claims asserted in the derivative complaints. Following an investigation, a majority of disinterested and independent directors of the Company determined that the claims should not be pursued by the Company and both of these purported stockholders were informed of that determination.
In 2020, two additional purported shareholder derivative complaints were filed in Maryland state court, in cases captioned Cordell v. Plank, et al. (filed August 11, 2020) and Salo v. Plank, et al. (filed October 21, 2020), respectively.
Prior to the filing of the derivative complaints in these two actions, neither of the purported stockholders made a demand that the Company's Board of Directors pursue the claims asserted in the complaints. In October 2021, the court issued an order (i) consolidating the Cordell and Salo actions with the consolidated Kenney action into a single consolidated derivative action (the "Consolidated Kenney Derivative Action"); (ii) designating the Kenney action as the lead case; and (iii) specifying that the scheduling order in the Kenney action shall control the Consolidated Kenney Derivative Action.
The Company believes that the claims asserted in the Consolidated Kenney Derivative Action are without merit and intends to defend this matter vigorously. However, because of the inherent uncertainty as to the outcome of this proceeding, the Company is unable at this time to estimate the possible impact of the outcome of this matter.
Consolidated Paul Derivative Litigation
On January 27, 2021, the District Court entered an order consolidating for all purposes four separate stockholder derivative cases that previously had been filed in the court. On February 2, 2023, the District Court issued an order appointing Balraj Paul and Anthony Viskovich as lead plaintiffs (“Derivative Lead Plaintiffs”), appointing counsel for the Derivative Lead Plaintiffs as lead counsel, and recaptioning the consolidated case as Paul et al. v. Plank et al. (the “Paul Derivative Action”). Prior to their filing derivative complaints, both of the Derivative Lead Plaintiffs had sent the Company's Board of Directors a letter demanding that the Company pursue claims similar to the claims asserted in the derivative complaints. Following an investigation, a majority of disinterested and independent directors of the Company determined that the claims should not be pursued by the Company, and the Derivative Lead Plaintiffs were informed of that determination.
On March 16, 2023, the District Court issued an order granting a motion for voluntary dismissal without prejudice that had been filed by the plaintiff in one of the four derivative cases who had not been appointed as a lead plaintiff.
On April 24, 2023, the Derivative Lead Plaintiffs designated an operative complaint in the Paul Derivative Action. The operative complaint named Mr. Plank, certain other current and former members of the Company's Board of Directors, and certain other current and former Company executives as defendants, and named the Company as a nominal defendant. It asserted allegations similar to those in the TAC filed in the Consolidated Securities Action matter discussed above, including allegations challenging (i) the Company's disclosures related to growth and consumer demand for certain of the Company's products; (ii) the Company's practice of shifting sales
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between quarterly periods supposedly to appear healthier and its purported failure to disclose that practice; (iii) the Company's internal controls with respect to revenue recognition and inventory management; and (iv) the Company's supposed failure to timely disclose investigations by the SEC and DOJ. The operative complaint asserted breach of fiduciary duty and unjust enrichment claims against the defendants and asserted a contribution claim against certain defendants. The operative complaint sought damages on behalf of the Company and also sought certain corporate governance related actions.
The Company and the defendants filed a motion to dismiss the operative complaint on June 23, 2023. The District Court granted that motion on September 27, 2023, dismissing the Paul Derivative Action without prejudice, due to lack of subject matter jurisdiction.
Paul, one of the plaintiffs in the Paul Derivative Action, has filed a motion seeking reconsideration of the dismissal decision or leave to amend the complaint. Briefing on that motion will be completed as of November 8, 2023.
On October 27, 2023, the plaintiffs in the Paul Derivative Action other than Paul filed a stockholder derivative complaint in Maryland state court (in a case captioned Viskovich, et al. v. Plank, et al). The complaint asserts claims similar to those that had been asserted in the operative complaint in the Paul Derivative Action before that action was dismissed and seeks similar remedies (including damages and certain corporate governance related actions). The complaint names Mr. Plank, certain other current and former members of the Company's Board of Directors, and certain other current and former Company executives as defendants, and names the Company as a nominal defendant. The defendants and the Company are not under any present obligation to respond to the complaint in the Viskovich action.
The Company believes that the claims asserted in the Paul Derivative Action and the Viskovich action are without merit and intends to defend this matter vigorously. However, because of the inherent uncertainty as to the outcome of this proceeding, the Company is unable at this time to estimate the possible impact of the outcome of this matter.
Contingencies
In accordance with Accounting Standards Codification (“ASC”) Topic 450 “Contingencies” (“Topic 450”), the Company establishes accruals for contingencies when (i) the Company believes it is probable that a loss will be incurred and (ii) the amount of the loss can be reasonably estimated. If the reasonable estimate is a range, the Company will accrue the best estimate in that range; where no best estimate can be determined, the Company will accrue the minimum. As of September 30, 2023, the Company has estimated its liability and recorded $20 million in respect of certain ongoing legal proceedings summarized above. The timing of the resolution is unknown and the amount of loss ultimately incurred in connection with these matters may be substantially higher than the amount accrued for these matters, and the Company expects a portion of the loss, if any is incurred, to be covered by the Company’s insurance. Legal proceedings for which no accrual has been established are disclosed to the extent required by ASC 450.
In addition, in connection with the matters described above and previously disclosed government investigations, the Company provided notice of claims under multiple director and officer liability insurance policy periods. With respect to one policy period, a lawsuit was filed against the Company by certain of its insurance carriers seeking a declaration that no further amounts will be payable with respect to that policy period and with respect to one carrier, seeking reimbursement for amounts previously paid to the Company. On April 26, 2023, the Company and one of its insurance carriers resolved the dispute related to that carrier’s claims for a declaration that no further amounts would be payable and seeking reimbursement of previously paid amounts. The resolution resulted in no reimbursement payable by the Company. The other carriers remaining in the case continue to seek a declaration that no further amounts will be payable with respect to that policy period. The timing of the resolution for the remaining claims in this matter is unknown.
From time to time, the Company’s view regarding probability of loss with respect to outstanding legal proceedings will change, proceedings for which the Company is able to estimate a loss or range of loss will change, and the estimates themselves will change. In addition, while many matters presented in financial disclosures involve significant judgment and may be subject to significant uncertainties, estimates with respect to legal proceedings are subject to particular uncertainties. Other than as described above, the Company believes that all current proceedings are routine in nature and incidental to the conduct of its business. However, the matters described above, if decided adversely to or settled by the Company, could result, individually or in the aggregate, in a liability material to the Company's consolidated financial position, results of operations or cash flows.
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NOTE 11. STOCKHOLDERS' EQUITY
The Company's Class A Common Stock and Class B Convertible Common Stock have an authorized number of 400.0 million shares and 34.45 million shares, respectively, and each have a par value of $0.0003 1/3 per share as of September 30, 2023. Holders of Class A Common Stock and Class B Convertible Common Stock have identical rights, including liquidation preferences, except that the holders of Class A Common Stock are entitled to one vote per share and holders of Class B Convertible Common Stock are entitled to 10 votes per share on all matters submitted to a stockholder vote. Class B Convertible Common Stock may only be held by Kevin Plank, the Company's founder, Executive Chair and Brand Chief, or a related party of Mr. Plank, as defined in the Company's charter. As a result, Mr. Plank has a majority voting control over the Company. Upon the transfer of shares of Class B Convertible Stock to a person other than Mr. Plank or a related party of Mr. Plank, the shares automatically convert into shares of Class A Common Stock on a one-for-one basis. In addition, all of the outstanding shares of Class B Convertible Common Stock will automatically convert into shares of Class A Common Stock on a one-for-one basis upon the death or disability of Mr. Plank or on the record date for any stockholders' meeting upon which the shares of Class A Common Stock and Class B Convertible Common Stock beneficially owned by Mr. Plank is less than 15% of the total shares of Class A Common Stock and Class B Convertible Common Stock outstanding or upon the other events specified in the Class C Articles Supplementary to the Company's charter as documented below. Holders of the Company's common stock are entitled to receive dividends when and if authorized and declared out of assets legally available for the payment of dividends.
The Company's Class C Common Stock has an authorized number of 400.0 million shares and has a par value of $0.0003 1/3 per share as of September 30, 2023. The terms of the Class C Common Stock are substantially identical to those of the Company's Class A Common Stock, except that the Class C Common Stock has no voting rights (except in limited circumstances), will automatically convert into Class A Common Stock under certain circumstances and includes provisions intended to ensure equal treatment of Class C Common Stock and Class B Common Stock in certain corporate transactions, such as mergers, consolidations, statutory share exchanges, conversions or negotiated tender offers, and including consideration incidental to these transactions.
Share Repurchase Program
On February 23, 2022, the Company's Board of Directors authorized the Company to repurchase up to $500 million (exclusive of fees and commissions) of outstanding shares of the Company's Class C Common Stock over the next two years. The Class C Common Stock may be repurchased from time to time at prevailing prices in the open market, through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, via private purchases through forward, derivative, accelerated share repurchase transactions or otherwise, subject to applicable regulatory restrictions on volume, pricing and timing. The timing and amount of any repurchases will depend on market conditions, the Company's financial condition, results of operations, liquidity and other factors.
During the three months ended September 30, 2023, the Company entered into a supplemental confirmation (the "August 2023 ASR Agreement") of an accelerated share repurchase transaction with JPMorgan Chase Bank, National Association ("JPMC") to repurchase $50.0 million of the Company's Class C Common Stock, and received a total of 7.6 million shares of Class C Common Stock from JPMC, which were immediately retired. As a result, $51.3 million was recorded to retained earnings to reflect the difference between the market price of the Class C Common Stock repurchased and its par value. No shares were repurchased under the share repurchase program during the three months ended June 30, 2023.
During the three and six months ended September 30, 2022, pursuant to the previously disclosed accelerated share repurchase transactions, the Company repurchased 3.2 million and 9.9 million shares of Class C Common Stock, respectively, which were immediately retired.
As of September 30, 2023, the Company has repurchased a total of $475 million or 42.5 million outstanding shares of its Class C Common Stock under its share repurchase program.
On August 16, 2022, the Inflation Reduction Act (the "Act") was enacted and signed into law in the United States, which imposed a 1.0% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022. As a result, the Company accrued $0.4 million of excise tax in connection with the share repurchases completed during the six months ended September 30, 2023, which was recorded in other current liabilities on the Condensed Consolidated Balance Sheets as of September 30, 2023.
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NOTE 12. REVENUES
The following tables summarize the Company's net revenues by product category and distribution channels:
 Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Apparel$1,070,437 $1,038,268 $1,895,097 $1,906,696 
Footwear351,202 375,885 714,872 723,136 
Accessories113,933 111,117 211,795 207,948 
Net Sales1,535,572 1,525,270 2,821,764 2,837,780 
License revenues28,646 33,123 53,718 61,258 
Corporate Other2,492 15,492 8,240 23,904 
    Total net revenues$1,566,710 $1,573,885 $2,883,722 $2,922,942 


 Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Wholesale$939,725 $948,154 $1,681,683 $1,739,840 
Direct-to-consumer595,847 577,116 1,140,081 1,097,940 
Net Sales1,535,572 1,525,270 2,821,764 2,837,780 
License revenues28,646 33,123 53,718 61,258 
Corporate Other2,492 15,492 8,240 23,904 
    Total net revenues$1,566,710 $1,573,885 $2,883,722 $2,922,942 
The Company records reductions to revenue for estimated customer returns, allowances, markdowns and discounts. These reserves are included within customer refund liability and the value of the inventory associated with reserves for sales returns are included within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. The following table presents the customer refund liability, as well as the associated value of inventory for the periods indicated:
As of
September 30, 2023		As of
March 31, 2023
Customer refund liability$149,451 $160,533 
Inventory associated with reserves for sales returns$33,722 $40,661 
Contract Liabilities
Contract liabilities are recorded when a customer pays consideration, or the Company has a right to an amount of consideration that is unconditional, before the transfer of a good or service to the customer, and thus represent the Company's obligation to transfer the good or service to the customer at a future date. The Company's contract liabilities primarily consist of payments received in advance of revenue recognition for subscriptions for the Company's digital fitness applications and royalty arrangements which are in in other current and other long-term liabilities, and gift cards, included in accrued expenses on the Company's Condensed Consolidated Balance Sheets. As of September 30, 2023, contract liabilities were $23.4 million (March 31, 2023: $25.9 million).
For the three and six months ended September 30, 2023, the Company recognized approximately $1.9 million and $5.1 million, respectively, of revenue that was previously included in contract liabilities as of March 31, 2023. For the three and six months ended September 30, 2022, the Company recognized approximately $1.3 million and $6.1 million, respectively, of revenue that was previously included in contract liabilities as of March 31, 2022. The change in the contract liabilities balance primarily results from the timing differences between the Company's satisfaction of performance obligations and the customer's payment.

NOTE 13. OTHER EMPLOYEE BENEFITS
The Company offers a 401(k) Deferred Compensation Plan for the benefit of eligible employees. Employee contributions are voluntary and subject to Internal Revenue Service limitations. The Company matches a portion of the participant's contribution and recorded expense for the three and six months ended September 30, 2023 of $3.4
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million and $6.7 million, respectively (three and six months ended September 30, 2022: $2.6 million and $4.2 million, respectively).
In addition, the Company offers the Under Armour, Inc. Deferred Compensation Plan (the "Deferred Compensation Plan") which allows a select group of management or highly compensated employees, as approved by the Human Capital and Compensation Committee of the Board of Directors, to make an annual base salary and/or bonus deferral for each year. As of September 30, 2023, the Deferred Compensation Plan obligations, which are included in other long-term liabilities on the Condensed Consolidated Balance Sheets, were $14.3 million (March 31, 2023: $14.1 million).
The Company established a Rabbi Trust to fund obligations to participants in the Deferred Compensation Plan. As of September 30, 2023, the assets held in the Rabbi Trust were trust owned life insurance ("TOLI") policies with cash-surrender values of $7.7 million (March 31, 2023: $7.7 million). These assets are consolidated and are included in other long-term assets on the Condensed Consolidated Balance Sheets.
Refer to Note 15 of the Condensed Consolidated Financial Statements for a discussion of the fair value measurements of the assets held in the Rabbi Trust and the Deferred Compensation Plan obligations.

NOTE 14. STOCK BASED COMPENSATION
The Under Armour, Inc. Fourth Amended and Restated 2005 Omnibus Long-Term Incentive Plan as amended (the "2005 Plan") provides for the issuance of stock options, restricted stock, restricted stock units and other equity awards to officers, directors, key employees and other persons. The 2005 Plan terminates in 2033. As of September 30, 2023, 8.3 million Class A shares and 33.1 million Class C shares are available for future grants of awards under the 2005 Plan.
Awards Granted to Employees and Non-Employee Directors
Total stock-based compensation expense associated with awards granted to employees and non-employee directors for the three and six months ended September 30, 2023 was $10.0 million and $20.3 million, respectively (three and six months ended September 30, 2022: $8.3 million and $19.7 million, respectively). As of September 30, 2023, the Company had $97.8 million of unrecognized compensation expense related to these awards expected to be recognized over a weighted average period of 2.16 years. The unrecognized expense does not include any expense related to performance-based restricted stock unit awards for which the performance targets have been deemed improbable as of September 30, 2023. Refer to "Stock Options" and "Restricted Stock and Restricted Stock Unit Awards" below for further information on these awards.
A summary of each of these plans is as follows:
Employee Stock Compensation Plan
Stock options, restricted stock and restricted stock unit awards under the 2005 Plan generally vest ratably over a period of two to five years. The contractual term for stock options is generally 10 years from the date of grant. The Company generally receives a tax deduction for any ordinary income recognized by a participant in respect to an award under the 2005 Plan.
Non-Employee Director Compensation Plan
The Company's Non-Employee Director Compensation Plan (the "Director Compensation Plan") provides for cash compensation and equity awards to non-employee directors of the Company under the 2005 Plan. Non-employee directors have the option to defer the value of their annual cash retainers as deferred stock units in accordance with the Under Armour, Inc. Non-Employee Deferred Stock Unit Plan (the "DSU Plan"). Each new non-employee director receives an award of restricted stock units upon the initial election to the Board of Directors, with the units covering stock valued at $100 thousand on the grant date and vesting in three equal annual installments. In addition, each non-employee director receives, following each annual stockholders' meeting, a grant under the 2005 Plan of restricted stock units covering stock valued at $150 thousand on the grant date. Each award vests 100% on the date of the next annual stockholders' meeting following the grant date.
The receipt of the shares otherwise deliverable upon vesting of the restricted stock units automatically defers into deferred stock units under the DSU Plan. Under the DSU Plan each deferred stock unit represents the Company’s obligation to issue one share of the Company's Class A or Class C Common Stock with the shares delivered six months following the termination of the director's service. The Company had 0.8 million deferred stock units outstanding as of September 30, 2023.
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Employee Stock Purchase Plan
The Company's Employee Stock Purchase Plans (the "ESPPs") allow for the purchase of Class A Common Stock and Class C Common Stock by all eligible employees at a 15% discount from fair market value subject to certain limits as defined in the ESPPs. As of September 30, 2023, 2.7 million Class A shares and 0.8 million Class C shares are available for future purchases under the ESPPs. During the three and six months ended September 30, 2023, 156.9 thousand and 302.1 thousand Class C shares, respectively, were purchased under the ESPPs (three and six months ended September 30, 2022: 171.6 thousand and 293.0 thousand, respectively).
Awards granted to Certain Marketing and Other Partners
In addition to the plans discussed above, the Company may also, from time to time, issue deferred stock units or restricted stock units to certain of our marketing and other partners in connection with their entering into endorsement or other service agreements with the Company. The terms of each agreement set forth the number of units to be granted and the delivery dates for the shares, which range over a multi-year period, depending on the contract.
Total stock-based compensation expense related to these awards for the three and six months ended September 30, 2023 was $2.4 million and $4.7 million, respectively (three and six months ended September 30, 2022: $0.8 million and $1.7 million, respectively). As of September 30, 2023, the Company had $75.2 million of unrecognized compensation expense associated with these awards expected to be recognized over a weighted average period of 10.61 years.
Summary by Award Classification:
Stock Options
A summary of the Company's stock options activity for the six months ended September 30, 2023 is presented below:
Number
of Stock
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Total
Intrinsic
Value
Outstanding at March 31, 2023
1,578 $19.44 4.82$— 
Granted, at fair market value— — — — 
Exercised— — — — 
Forfeited— — — — 
Outstanding at September 30, 2023
1,578 $19.44 4.32$— 
Options exercisable at September 30, 2023
1,503 $19.66 4.22$— 

Restricted Stock and Restricted Stock Unit Awards
A summary of the Company's restricted stock and restricted stock unit awards activity for the six months ended September 30, 2023 is presented below: 
Number of
Restricted Shares
Weighted Average
Grant Date Fair Value
Outstanding at March 31, 2023
7,658 $13.01 
Granted18,267 7.72 
Forfeited(1,650)10.49 
Vested(1,088)14.64 
Outstanding at September 30, 2023
23,187 $8.96 
    
The awards outstanding at September 30, 2023 in the table above includes 1.7 million and 0.9 million of performance-based restricted stock units that were awarded to certain executives and key employees under the 2005 Plan during the three months ended September 30, 2023 and Fiscal 2023, respectively. The performance-based restricted stock units awarded during the three months ended September 30, 2023 and Fiscal 2023 have a
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weighted average fair value of $6.92 and $9.13, respectively, and have vesting that is tied to the achievement of certain combined annual revenue and operating income targets.
The Company deemed the achievement of certain of the targets for the performance-based restricted stock units awarded during Fiscal 2023 to be improbable and recorded a reversal of previously recorded expense of $0.9 million during the three months ended September 30, 2023. Inclusive of this reversal, during the three and six months ended September 30, 2023, the Company recorded stock-based compensation expense of ($0.7) million and ($0.5) million, respectively, relating to these awards (three and six months ended September 30, 2022: $0.9 million and $1.3 million, respectively).
The Company deemed the achievement of the targets for the performance-based restricted stock units awarded during the three months ended September 30, 2023 to be probable and recorded stock-based compensation expense of $0.4 million related to these awards.
The Company assesses the probability of the achievement of the remaining revenue and operating income targets at the end of each reporting period and based on that assessment cumulative adjustments may be recorded in future periods.

NOTE 15. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value accounting guidance outlines a valuation framework, creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures, and prioritizes the inputs used in measuring fair value as follows:
Level 1:Observable inputs such as quoted prices in active markets;
Level 2:Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3:Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.
Financial assets and liabilities measured at fair value on a recurring basis
The Company's financial assets (liabilities) measured at fair value on a recurring basis consisted of the following types of instruments as of the following periods:
September 30, 2023March 31, 2023
Level 1Level 2Level 3Level 1Level 2Level 3
Derivative foreign currency contracts (see Note 16)
$— $18,235 $— $— $(3,127)$— 
TOLI policies held by the Rabbi Trust (see Note 13)
$— $7,705 $— $— $7,691 $— 
Deferred Compensation Plan obligations (see Note 13)
$— $(14,340)$— $— $(14,082)$— 
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 contracts represent unrealized gains and losses on derivative contracts, which is the net difference between the U.S. dollar value to be received or paid at the contracts' settlement date and the U.S. dollar value of the foreign currency to be sold or purchased at the current market exchange rate. The fair value of the TOLI policies held by the Rabbi Trust are 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 initially made 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. Liabilities under the Deferred Compensation Plan are recorded at amounts due to participants, based on the fair value of participants' selected investments.
The fair value of long-term debt is estimated based upon quoted prices for similar instruments or quoted prices for identical instruments in inactive markets (Level 2).
As of September 30, 2023, the fair value of the Convertible Senior Notes was $80.1 million (March 31, 2023: $85.8 million).
As of September 30, 2023, the fair value of the Senior Notes was $540.0 million (March 31, 2023: $553.9 million).
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Assets and liabilities measured at fair value on a non-recurring basis
Certain assets are not remeasured to fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. These assets can include long-lived assets and goodwill that have been reduced to fair value when impaired. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs.

NOTE 16. RISK MANAGEMENT AND DERIVATIVES
The Company is exposed to global market risks, including the effects of changes in foreign currency and interest rates. The Company uses derivative instruments to manage financial exposures that occur in the normal course of business and does not hold or issue derivatives for trading or speculative purposes.
The Company may elect to designate certain derivatives as hedging instruments under U.S. GAAP. The Company formally documents all relationships between designated hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives designated as hedges to forecasted cash flows and assessing, both at inception and on an ongoing basis, the effectiveness of the hedging relationships.
The Company's foreign exchange risk management program consists of designated cash flow hedges and undesignated hedges. As of September 30, 2023, the Company has hedge instruments primarily for:
•British Pound/U.S. Dollar;
•U.S. Dollar/Chinese Renminbi;
•Euro/U.S. Dollar;
•U.S. Dollar/Canadian Dollar;
•U.S. Dollar/Mexican Peso; and
•U.S. Dollar/Korean Won.
All derivatives are recognized on the Condensed Consolidated Balance Sheets at fair value and classified based on the instrument's maturity date.
The following table presents the fair values of derivative instruments within the Condensed Consolidated Balance Sheets. Refer to Note 15 of the Condensed Consolidated Financial Statements for a discussion of the fair value measurements.
Balance Sheet ClassificationSeptember 30, 2023March 31, 2023
Derivatives designated as hedging instruments under ASC 815
Foreign currency contractsOther current assets$28,690 $22,473 
Foreign currency contractsOther long-term assets8,670 619 
Total derivative assets designated as hedging instruments$37,360 $23,092 
Foreign currency contractsOther current liabilities$17,215 $21,622 
Foreign currency contractsOther long-term liabilities382 5,769 
Total derivative liabilities designated as hedging instruments$17,597 $27,391 
Derivatives not designated as hedging instruments under ASC 815
Foreign currency contractsOther current assets$116 $3,408 
Total derivative assets not designated as hedging instruments$116 $3,408 
Foreign currency contractsOther current liabilities$379 $6,563 
Foreign currency contractsOther long-term liabilities— 4 
Total derivative liabilities not designated as hedging instruments$379 $6,567 

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The following table presents the amounts in the Condensed Consolidated Statement of Operations in which the effects of cash flow hedges are recorded and the effects of cash flow hedge activity on these line items:
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
TotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge ActivityTotalAmount of Gain (Loss) on Cash Flow Hedge Activity
Net revenues$1,566,710 $1,071 $1,573,885 $13,697 $2,883,722 $5,546 $2,922,942 $20,251 
Cost of goods sold$814,715 $(523)$860,051 $(891)$1,523,991 $(229)$1,578,911 $(2,839)
Interest income (expense), net$(373)$(9)$(3,555)$(9)$(1,999)$(18)$(9,560)$(18)
Other income (expense), net$(6,429)$— $(5,771)$— $(12,814)$— $(20,012)$— 

The following tables present the amounts affecting the Condensed Consolidated Statements of Comprehensive Income (Loss):
Balance as of
June 30, 2023		Amount of gain (loss) recognized in other comprehensive income (loss) on derivativesAmount of gain (loss) reclassified from other comprehensive income (loss) into incomeBalance as of September 30, 2023
Derivatives designated as cash flow hedges
Foreign currency contracts$(20,214)$36,418 $548 $15,656 
Interest rate swaps(449)— (9)(440)
Total designated as cash flow hedges$(20,663)$36,418 $539 $15,216 

Balance as of
March 31, 2023		Amount of gain (loss) recognized in other comprehensive income (loss) on derivativesAmount of gain (loss) reclassified from other comprehensive income (loss) into incomeBalance as of September 30, 2023
Derivatives designated as cash flow hedges
Foreign currency contracts$(4,764)$25,737 $5,317 $15,656 
Interest rate swaps(458)— (18)(440)
Total designated as cash flow hedges$(5,222)$25,737 $5,299 $15,216 

Balance as of
June 30, 2022		Amount of gain (loss) recognized in other comprehensive income (loss) on derivativesAmount of gain (loss) reclassified from other comprehensive income (loss) into incomeBalance as of September 30, 2022
Derivatives designated as cash flow hedges
Foreign currency contracts$51,693 $73,116 $12,806 $112,003 
Interest rate swaps(486)— (9)(477)
Total designated as cash flow hedges$51,207 $73,116 $12,797 $111,526 
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Balance as of
March 31, 2022		Amount of gain (loss) recognized in other comprehensive income (loss) on derivativesAmount of gain (loss) reclassified from other comprehensive income (loss) into incomeBalance as of September 30, 2022
Derivatives designated as cash flow hedges
Foreign currency contracts$41 $129,374 $17,412 $112,003 
Interest rate swaps(495)— (18)(477)
Total designated as cash flow hedges$(454)$129,374 $17,394 $111,526 

The following table presents the amounts in the Condensed Consolidated Statement of Operations in which the effects of undesignated derivative instruments are recorded and the effects of fair value hedge activity on these line items:
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
TotalAmount of Gain (Loss) on Fair Value Hedge ActivityTotalAmount of Gain (Loss) on Fair Value Hedge ActivityTotalAmount of Gain (Loss) on Fair Value Hedge ActivityTotalAmount of Gain (Loss) on Fair Value Hedge Activity
Other income (expense), net$(6,429)$(2,259)$(5,771)$(849)$(12,814)$(4,571)$(20,012)$(4,851)
Cash Flow Hedges
The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to transactions generated by its international subsidiaries in currencies other than their local currencies. These gains and losses are driven by non-functional currency generated revenue, non-functional currency inventory purchases, investments in U.S. Dollar denominated available-for-sale debt securities, and certain other intercompany transactions. The Company enters into foreign currency contracts to reduce the risk associated with the foreign currency exchange rate fluctuations on these transactions. Certain contracts are designated as cash flow hedges. As of September 30, 2023, the aggregate notional value of the Company's outstanding cash flow hedges was $1,227.0 million (March 31, 2023: $799.7 million), with contract maturities ranging from one to twenty-four months.
The Company may enter into long-term debt arrangements with various lenders which bear a range of fixed and variable rates of interest. The nature and amount of the Company's long-term debt can be expected to vary as a result of future business requirements, market conditions and other factors. The Company may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations. The interest rate swap contracts are accounted for as cash flow hedges. Refer to Note 9 of the Condensed Consolidated Financial Statements for a discussion of long-term debt.
For contracts designated as cash flow hedges, the changes in fair value are reported as other comprehensive income (loss) and are recognized in current earnings in the period or periods during which the hedged transaction affects current earnings. Effective hedge results are classified in the Condensed Consolidated Statement of Operations in the same manner as the underlying exposure.
Undesignated Derivative Instruments
The Company has entered into foreign exchange forward contracts to mitigate the change in fair value of specific assets and liabilities on the Condensed Consolidated Balance Sheets. Undesignated instruments are recorded at fair value as a derivative asset or liability on the Condensed Consolidated Balance Sheets with their corresponding change in fair value recognized in other expense, net, together with the re-measurement gain or loss from the hedged balance sheet position. As of September 30, 2023, the total notional value of the Company's outstanding undesignated derivative instruments was $429.2 million (March 31, 2023: $396.7 million).
Credit Risk
The Company enters into derivative 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 derivative contracts. However, the Company monitors the
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credit quality of these financial institutions and considers the risk of counterparty default to be minimal.
NOTE 17. PROVISION FOR INCOME TAXES
The Company computes its quarterly income tax provision under the effective tax rate method by applying an estimated anticipated annual effective rate to the Company's year-to-date earnings, except for significant and unusual or extraordinary transactions. Losses from jurisdictions for which no benefit can be recognized are excluded from the overall computations of the estimated annual effective tax rate and a separate estimated annual effective tax rate is computed and applied to earnings in the loss jurisdiction. Income tax provision for any significant and unusual or extraordinary transactions are computed and recorded in the period in which the specific transaction occurs.
The effective rates for income taxes were 21.2% and 20.2% for the three months ended September 30, 2023 and 2022, respectively. The change in the Company’s effective tax rate was primarily driven by a discrete reserve for an uncertain tax position recorded during the three months ended September 30, 2023, mostly offset by an increase in valuation allowance releases.
The effective rates for income taxes were 22.0% and 22.4% for the six months ended September 30, 2023 and 2022, respectively. The change in the Company’s effective tax rate was primarily driven by a discrete reserve for an uncertain tax position recorded during the six months ended September 30, 2023, mostly offset by an increase in valuation allowance releases.
Valuation Allowance
The Company evaluates on a quarterly basis whether the deferred tax assets are realizable which requires significant judgment. The Company considers all available positive and negative evidence, including historical operating performance and expectations of future operating performance. 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.
As noted in the Company's Annual Report on Form 10-K for Fiscal 2023, a significant portion of the Company’s deferred tax assets relate to United States state taxing jurisdictions. Realization of these deferred tax assets is dependent on future United States pre-tax earnings. As of September 30, 2023, the Company continues to believe that the weight of the negative evidence outweighs the positive evidence regarding the realization of the Company’s United States state deferred tax assets. Accordingly, the Company continues to maintain a valuation allowance on these deferred tax assets. Furthermore, valuation allowances have also been recorded against a portion of foreign deferred tax assets in jurisdictions where the weight of negative evidence outweighs the positive evidence regarding the realization of deferred tax assets.
As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. The Company's current forecast for the United States indicates that it is reasonably possible that a portion of the state deferred taxes could be realizable during the current fiscal year-end based on near term trend towards three-year cumulative taxable earnings. The actualization of these forecasted results may potentially outweigh the negative evidence, resulting in a reversal of a portion or all previously recorded state valuation allowances in the United States. The release of valuation allowances would result in a benefit to income tax expense in the period the release is recorded, which could have a material impact on net income. The timing and amount of the potential valuation allowance release are subject to significant management judgment, as well as prospective pre-tax earnings in the United States. The Company will continue to evaluate its ability to realize its net deferred tax assets on a quarterly basis.

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NOTE 18. EARNINGS PER SHARE
The following represents a reconciliation from basic net income (loss) per share to diluted net income (loss) per share:
Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Numerator
Net income (loss) - Basic$109,614 $86,925 $118,163 $94,607 
Interest on Convertible Senior Notes due 2024, net of tax225 225 450 449 
Net income (loss) - Diluted$109,839 $87,150 $118,613 $95,056 
Denominator
Weighted average common shares outstanding Class A, B and C - Basic443,525 454,322 444,195 456,357 
Dilutive effect of Class A, B, and C securities1,948 1,577 1,670 1,544 
Dilutive effect of Convertible Senior Notes due 20248,242 8,242 8,242 8,242 
Weighted average common shares and dilutive securities outstanding Class A, B, and C453,715 464,141 454,107 466,143 
Class A and Class C securities excluded as anti-dilutive (1)
13,793 7,712 18,193 8,085 
Basic net income (loss) per share of Class A, B and C common stock$0.25 $0.19 $0.27 $0.21 
Diluted net income (loss) per share of Class A, B and C common stock$0.24 $0.19 $0.26 $0.20 
(1) Represents stock options and restricted stock units of Class A and Class C Common Stock outstanding that were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.

NOTE 19. SEGMENT DATA
The Company's operating segments are based on how the Chief Operating Decision Maker ("CODM") makes decisions about allocating resources and assessing performance. As such, the CODM receives discrete financial information for the Company's principal business by geographic region based on the Company's strategy of being a global brand. These geographic regions include North America, Europe, the Middle East and Africa ("EMEA"), Asia-Pacific and Latin America. Each geographic segment operates exclusively in one industry: the development, marketing and distribution of branded performance apparel, footwear and accessories. Total expenditures for additions to long-lived assets are not disclosed as this information is not regularly provided to the CODM.
The Company excludes certain corporate items from its segment profitability measures. The Company reports these items within Corporate Other, which is designed to provide increased transparency and comparability of the Company's operating segments' performance. Corporate Other consists primarily of (i) operating results related to MMR platforms and other digital business opportunities; (ii) general and administrative expenses not allocated to an operating segment, including expenses associated with centrally managed departments which include global marketing, global IT, global supply chain and innovation, and other corporate support functions; (iii) restructuring and restructuring related charges, if any; and (iv) certain foreign currency hedge gains and losses.
The following tables summarize the Company's net revenues and operating income (loss) by its geographic segments. Intercompany balances were eliminated for separate disclosure:
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Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Net revenues
North America$991,393 $1,011,823 $1,818,045 $1,921,179 
EMEA287,091 262,679 513,732 467,860 
Asia-Pacific232,065 225,729 434,297 402,394 
Latin America53,669 58,162 109,408 107,605 
Corporate Other2,492 15,492 8,240 23,904 
Total net revenues$1,566,710 $1,573,885 $2,883,722 $2,922,942 


Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Operating income (loss)
North America$215,457 $209,206 $373,508 $399,130 
EMEA40,697 35,895 71,646 54,076 
Asia-Pacific54,608 46,134 70,006 66,079 
Latin America13,644 7,177 19,421 13,411 
Corporate Other(178,647)(179,002)(367,892)(378,803)
    Total operating income (loss)145,759 119,410 166,689 153,893 
Interest expense, net(373)(3,555)(1,999)(9,560)
Other income (expense), net(6,429)(5,771)(12,814)(20,012)
    Income (loss) before income taxes$138,957 $110,084 $151,876 $124,321 


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help readers understand our results of operations and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes to our Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for Fiscal 2023, filed with the Securities Exchange Commission ("SEC") on May 24, 2023, under the captions "Business" and "Risk Factors".
This Quarterly Report on Form 10-Q, including this MD&A, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the U.S. Securities Act of 1933, as amended ("the Securities Act"), and is subject to the safe harbors created by those sections. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. See "Forward Looking Statements."
All dollar and percentage comparisons made herein refer to the three and six months ended September 30, 2023 compared with the three and six months ended September 30, 2022, unless otherwise noted.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Quarterly Report on Form 10-Q, including this MD&A, 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 share repurchase program, our future financial condition or results of operations, our prospects and strategies for future growth, expectations regarding promotional activities, freight, product cost pressures and foreign currency impacts, the impact of global economic conditions and inflation on our results of operations, the development and introduction of new products, the implementation of our marketing and branding
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strategies, the future benefits and opportunities from significant investments and the impact of litigation or other proceedings. In many cases, you can identify forward-looking statements by terms such as "may," "will," "could," "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 Quarterly Report on Form 10-Q 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 "Risk Factors" and MD&A herein and in our Annual Report on Form 10-K for Fiscal 2023. These factors include without limitation:
•changes in general economic or market conditions, including increasing inflation, that could affect overall consumer spending or our industry;
•the impact of the COVID-19 pandemic on our industry and our business, financial condition and results of operations, including recent impacts on the global supply chain;
•failure of our suppliers, manufacturers or logistics providers to produce or deliver our products in a timely or cost-effective manner;
•labor or other disruptions at ports or our suppliers or manufacturers;
•increased competition causing us to lose market share or reduce the prices of our products or to increase our marketing efforts significantly;
•fluctuations in the costs of raw materials and commodities we use in our products and our supply chain (including labor);
•changes to the financial health of our customers;
•our ability to successfully execute our long-term strategies;
•our ability to effectively drive operational efficiency in our business;
•our ability to effectively develop and launch new, innovative and updated products;
•our ability to accurately forecast consumer shopping and engagement preferences and consumer demand for our products and manage our inventory in response to changing demands;
•loss of key customers, suppliers or manufacturers;
•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 manage the increasingly complex operations of our global business;
•the impact of global events beyond our control, including military conflict;
•our ability to successfully manage or realize expected results from significant transactions and investments;
•our ability to effectively market and maintain a positive brand image;
•our ability to effectively meet the expectations of our stakeholders with respect to environmental, social and governance practices;
•the availability, integration and effective operation of information systems and other technology, as well as any potential interruption of such systems or technology;
•any disruptions, delays or deficiencies in the design, implementation or application of our global operating and financial reporting information technology system;
•our ability to attract key talent and retain the services of our senior management and other key employees;
•our ability to access capital and financing required to manage our business on terms acceptable to us;
•our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results;
•risks related to foreign currency exchange rate fluctuations;
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•our ability to comply with existing trade and other regulations, and the potential impact of new trade, tariff and tax regulations on our profitability;
•risks related to data security or privacy breaches; and
•our potential exposure to litigation and other proceedings, including those discussed in this Quarterly Report on Form 10-Q.
The forward-looking statements contained in this Quarterly Report on Form 10-Q reflect our views and assumptions only as of the date of this Quarterly Report on 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. Our brand's moisture-wicking fabrications are engineered in various 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, and by consumers with active lifestyles.
Strategically and operationally, we remain focused on driving premium brand-right growth and improved profitability. We plan to continue to grow our business over the long term through increased sales of our apparel, footwear and accessories; growth in our direct-to-consumer sales channel; and expansion of our wholesale distribution. We believe that achievement of our long-term growth objectives depends, in part, on our ability to execute strategic initiatives in key areas including our wholesale, footwear, women’s and direct-to-consumer businesses. Additionally, our digital strategy is focused on supporting these long-term objectives, emphasizing connection and engagement with our consumers through multiple digital touchpoints.
During the first half of Fiscal 2024, we faced a challenging retail environment, particularly in North America, that included higher promotions and discounting related to industry-wide elevated inventory balances as well as lower demand in our wholesale channel.
Quarterly Results
Financial highlights for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 include:
•Total net revenues decreased 0.5%.
•Within our channels, wholesale revenue decreased 0.9% and direct-to-consumer revenue increased 3.2%.
•Within our product categories, apparel revenue increased 3.1%, footwear revenue decreased 6.6%, and accessories revenue increased 2.5%.
•Net revenue decreased 2.0% in North America, increased 9.3% in Europe, Middle East and Africa ("EMEA"), increased 2.8% in Asia-Pacific, and decreased 7.7% in Latin America.
•Gross margin increased 260 basis points to 48.0%.
•Selling, general and administrative expenses increased 2.0%.
Effects of Inflation and Other Global Events
Macroeconomic factors, such as inflationary pressures and fluctuations in foreign currency exchange rates, have and may continue to impact our business. We continue to monitor these factors and the potential impacts they may have on our financial results, including product input costs, freight costs and consumer discretionary spending and therefore consumer demand for our products. We also continue to monitor the broader impacts of conflicts around the world on the economy, including its effect on inflationary pressures and the price of oil globally.
See "Risk Factors—Economic and Industry Risks—Our business depends on consumer purchases of discretionary items, which can be negatively impacted during an economic downturn or periods of inflation. This could materially impact our sales, profitability and financial condition" "—Fluctuations in the cost of raw materials and commodities we use in our products and costs related to our supply chain could negatively affect our operating results" "—Our financial results and ability to grow our business may be negatively impacted by global events beyond our control" and "—Financial Risks—Our financial results could be adversely impacted by currency exchange rate fluctuations" included in Item 1A of our Annual Report on Form 10-K for Fiscal 2023.
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Additionally, the COVID-19 pandemic has in prior periods caused, and a resurgence could cause, disruption and volatility in our business and in the businesses of our wholesale customers, licensing partners, suppliers, logistics providers and vendors. For a more complete discussion of the COVID-19 related risks facing our business, refer to our "Risk Factors" section included in Item 1A of our Annual Report on Form 10-K for Fiscal 2023.

RESULTS OF OPERATIONS
The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of net revenues:
(In thousands)Three Months Ended September 30,Six Months Ended September 30,
2023202220232022
Net revenues$1,566,710 $1,573,885 $2,883,722 $2,922,942 
Cost of goods sold814,715 860,051 1,523,991 1,578,911 
Gross profit751,995 713,834 1,359,731 1,344,031 
Selling, general and administrative expenses606,236 594,424 1,193,042 1,190,138 
Income (loss) from operations145,759 119,410 166,689 153,893 
Interest income (expense), net(373)(3,555)(1,999)(9,560)
Other income (expense), net(6,429)(5,771)(12,814)(20,012)
Income (loss) before income taxes138,957 110,084 151,876 124,321 
Income tax expense (benefit)29,494 22,251 33,465 27,908 
Income (loss) from equity method investments151 (908)(248)(1,806)
Net income (loss)$109,614 $86,925 $118,163 $94,607 
Three Months Ended September 30,Six Months Ended September 30,
(As a percentage of net revenues)2023202220232022
Net revenues100.0 %100.0 %100.0 %100.0 %
Cost of goods sold52.0 %54.6 %52.8 %54.0 %
Gross profit48.0 %45.4 %47.2 %46.0 %
Selling, general and administrative expenses38.7 %37.8 %41.4 %40.7 %
Income (loss) from operations9.3 %7.6 %5.8 %5.3 %
Interest income (expense), net— %(0.2)%(0.1)%(0.3)%
Other income (expense), net(0.4)%(0.4)%(0.4)%(0.7)%
Income (loss) before income taxes8.9 %7.0 %5.3 %4.3 %
Income tax expense (benefit)1.9 %1.4 %1.2 %1.0 %
Loss from equity method investment— %(0.1)%— %(0.1)%
Net income (loss)7.0 %5.5 %4.1 %3.2 %
Revenues
Net revenues consist of net sales, license revenues, and revenues from digital subscriptions, other digital business opportunities and advertising. Net sales consist of sales from apparel, footwear and accessories products. Our license revenues primarily consist of fees paid to us by licensees in exchange for the use of our trademarks on their products. The following tables summarize net revenues by product category and distribution channel for the periods indicated:
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Three Months Ended September 30,Six Months Ended September 30,
(In thousands)20232022Change
($)		Change (%)20232022Change
($)		Change (%)
Net Revenues by Product Category
Apparel$1,070,437 $1,038,268 $32,169 3.1 %$1,895,097 $1,906,696 $(11,599)(0.6)%
Footwear351,202 375,885 (24,683)(6.6)%714,872 723,136 (8,264)(1.1)%
Accessories113,933 111,117 2,816 2.5 %211,795 207,948 3,847 1.8 %
Net Sales1,535,572 1,525,270 10,302 0.7 %2,821,764 2,837,780 (16,016)(0.6)%
License revenues28,646 33,123 (4,477)(13.5)%53,718 61,258 (7,540)(12.3)%
Corporate Other (1)
2,492 15,492 (13,000)(83.9)%8,240 23,904 (15,664)(65.5)%
    Total net revenues$1,566,710 $1,573,885 $(7,175)(0.5)%$2,883,722 $2,922,942 $(39,220)(1.3)%
Net Revenues by Distribution Channel
Wholesale$939,725 $948,154 $(8,429)(0.9)%$1,681,683 $1,739,840 $(58,157)(3.3)%
Direct-to-consumer595,847 577,116 18,731 3.2 %1,140,081 1,097,940 42,141 3.8 %
Net Sales1,535,572 1,525,270 10,302 0.7 %2,821,764 2,837,780 (16,016)(0.6)%
License revenues28,646 33,123 (4,477)(13.5)%53,718 61,258 (7,540)(12.3)%
Corporate Other (1)
2,492 15,492 (13,000)(83.9)%8,240 23,904 (15,664)(65.5)%
    Total net revenues$1,566,710 $1,573,885 $(7,175)(0.5)%$2,883,722 $2,922,942 $(39,220)(1.3)%
(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program, as well as subscription revenues from MMR and revenue from other digital business opportunities.
Net Sales
Net sales increased by $10.3 million, or 0.7%, to $1,535.6 million during the three months ended September 30, 2023 from $1,525.3 million during the three months ended September 30, 2022. Apparel increased primarily due to higher average selling prices, partially offset by lower unit sales. Footwear decreased primarily due to lower unit sales, partially offset by higher average selling prices. Accessories increased primarily due to higher average selling prices and the impact of foreign exchange rates, partially offset by lower unit sales. From a channel perspective, the increase in net sales was due to an increase in direct-to-consumer, partially offset by a decrease in wholesale.
Net sales decreased by $16.0 million, or 0.6%, to $2,821.8 million during the six months ended September 30, 2023 from $2,837.8 million during the six months ended September 30, 2022. Apparel decreased primarily due to lower unit sales, partially offset by higher average selling prices and favorable channel and regional mix. Footwear decreased primarily due to lower unit sales, partially offset by higher average selling prices. Accessories increased primarily due to higher average selling prices, partially offset by lower unit sales. From a channel perspective, the decrease in net sales was due to a decrease in wholesale, partially offset by an increase in direct-to-consumer.
License Revenues
License revenues decreased by $4.5 million or 13.5%, to $28.6 million during the three months ended September 30, 2023, from $33.1 million during the three months ended September 30, 2022. This was primarily due to lower revenues from our licensing partners in the North America region and from our Japanese licensee.
License revenues decreased by $7.5 million or 12.3%, to $53.7 million during the six months ended September 30, 2023, from $61.3 million during the six months ended September 30, 2022. This was primarily due to lower revenues from our Japanese licensee and from our licensing partners in the North America region.
Gross Profit
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. In general, as a percentage of net revenues, we expect cost of goods sold associated with our apparel and
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accessories to be lower than that of our footwear. A limited portion of cost of goods sold is associated with digital subscription and advertising revenues, primarily website hosting costs, and no cost of goods sold is associated with our 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 $20.7 million and $39.1 million for the three and six months ended September 30, 2023 (three and six months ended September 30, 2022: $20.2 million and $38.1 million, respectively).
Gross profit increased by $38.2 million to $752.0 million during the three months ended September 30, 2023, as compared to $713.8 million during the three months ended September 30, 2022. Gross profit as a percentage of net revenues, or gross margin, increased to 48.0% from 45.4%. This increase in gross margin of 260 basis points was primarily driven by positive impacts of approximately:
•410 basis points from supply chain benefits, mainly due to lower freight costs.
These positive impacts were partially offset by negative impacts of approximately:
•120 basis points from unfavorable pricing due to deep discounts in our sales to the off-price channel;
•20 basis points from unfavorable channel mix related to a higher percentage of off-price sales; and
•10 basis points from changes in foreign currency.

Gross profit increased by $15.7 million to $1,359.7 million during the six months ended September 30, 2023, as compared to $1,344.0 million during the six months ended September 30, 2022. Gross profit as a percentage of net revenues, or gross margin, increased to 47.2% from 46.0%. This increase in gross margin of 120 basis points was primarily driven by positive impacts of approximately:
•370 basis points from supply chain benefits, mainly due to lower freight costs.
This was partially offset by negative impacts of approximately:
•200 basis points from higher promotional activity within our direct-to-consumer channel and unfavorable pricing of sales to the off-price channel;
•40 basis points from changes in foreign currency; and
•10 basis points from unfavorable regional mix.

We expect discounting and promotional activities to continue to negatively impact our gross margin in the near term.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist of costs related to marketing, selling, product innovation and supply chain, and corporate services. We consolidate our selling, general and administrative expenses into two primary categories: marketing and other. The other category is the sum of our selling, product innovation and supply chain, and corporate services categories. The marketing category consists primarily of sports and brand marketing, media, and retail presentation. Sports and brand marketing includes professional, club and collegiate sponsorship agreements, individual athlete and influencer agreements, and providing and selling products directly to teams and individual athletes. Media includes digital, broadcast, and print media outlets, including social and mobile media. Retail presentation includes sales displays and concept shops and depreciation expense specific to our in-store fixture programs. Our marketing costs are an important driver of our growth.
Three Months Ended September 30,Six Months Ended September 30,
(In thousands)20232022Change ($)Change (%)20232022Change ($)Change (%)
Selling, General and Administrative Expenses$606,236 $594,424 $11,812 2.0 %$1,193,042 $1,190,138 $2,904 0.2 %
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Selling, general and administrative expenses increased by $11.8 million, or 2.0%, during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. Within selling, general and administrative expense:
•Marketing costs increased $11.5 million or 8.0%, due to an increase in marketing activities during the period. As a percentage of net revenues, marketing costs increased to 9.9% from 9.1%.
•Other costs increased $0.3 million or 0.1%, primarily driven by higher non-salaried wages and facility related expenses, partially offset by lower legal expenses resulting from an accrual in the prior year for certain ongoing legal proceedings, and lower consulting expenses. As a percentage of net revenues, other costs increased to 28.8% from 28.6%.
As a percentage of net revenues, selling, general and administrative expenses increased to 38.7% during the three months ended September 30, 2023 as compared to 37.8% during the three months ended September 30, 2022.
Selling, general and administrative expenses increased by $2.9 million, or 0.2%, during the six months ended September 30, 2023 as compared to the six months ended September 30, 2022. Within selling, general and administrative expense:
•Marketing costs decreased $2.4 million or 0.8%, due to a reduction in marketing activities during the period. As a percentage of net revenues, marketing costs remained flat at 10.2%.
•Other costs increased $5.3 million or 0.6%, primarily driven by higher salaries, facility related expenses and distribution and selling expenses, partially offset by lower legal expenses resulting from an accrual in the prior year for certain ongoing legal proceedings, consulting expenses and non-salaried wages. As a percentage of net revenues, other costs increased to 31.2% from 30.6%.
As a percentage of net revenues, selling, general and administrative expenses increased to 41.4% during the six months ended September 30, 2023 as compared to 40.7% during the six months ended September 30, 2022.
Interest Expense, net
Interest expense, net is primarily comprised of interest incurred on our debt facilities, offset by interest income earned on our cash and cash equivalents.
Three Months Ended September 30,Six Months Ended September 30,
(In thousands)20232022Change ($)Change (%)20232022Change ($)Change (%)
Interest expense, net$373 $3,555 $(3,182)(89.5)%$1,999 $9,560 $(7,561)(79.1)%
Interest expense, net decreased by $3.2 million to $0.4 million during the three months ended September 30, 2023. This was due to an increase in interest income of $2.1 million, resulting from higher interest rates, and a decrease in interest expense of $1.0 million. See Note 9 to our Condensed Consolidated Financial Statements.

Interest expense, net decreased by $7.6 million to $2.0 million during the six months ended September 30, 2023. This was due to an increase in interest income of $5.7 million, resulting from higher interest rates, and a decrease in interest expense of $1.9 million. See Note 9 to our Condensed Consolidated Financial Statements.
Other Income (Expense), net
Other income (expense), net primarily consists of unrealized and realized gains and losses on our foreign currency derivative financial instruments, and unrealized and realized gains and losses on adjustments that arise from fluctuations in foreign currency exchange rates relating to transactions generated by our international subsidiaries. Other income (expense), net also includes rent expense relating to lease assets held solely for sublet purposes, primarily the lease related to our New York City, 5th Avenue location.
Three Months Ended September 30,Six Months Ended September 30,
(In thousands)20232022Change ($)Change (%)20232022Change ($)Change (%)
Other income (expense), net$(6,429)$(5,771)$(658)(11.4)%$(12,814)$(20,012)$7,198 36.0 %
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Other expense, net increased by $0.7 million to $6.4 million during the three months ended September 30, 2023. This was primarily due to an increase in losses on foreign currency hedges of $1.4 million, partially offset by a net gain from changes in foreign currency exchange rates of $0.7 million.

Other expense, net decreased by $7.2 million to $12.8 million during the six months ended September 30, 2023. This was primarily due to a decrease in losses from changes in foreign currency exchange rates of $5.7 million and on foreign currency hedges of $0.3 million.
Income Tax Expense (Benefit)
Three Months Ended September 30,Six Months Ended September 30,
(In thousands)20232022Change ($)Change (%)20232022Change ($)Change (%)
Income tax expense (benefit)$29,494 $22,251 $7,243 32.6 %$33,465 $27,908 $5,557 19.9 %
Income tax expense increased $7.2 million to $29.5 million during the three months ended September 30, 2023 from income tax expense of $22.3 million during the three months ended September 30, 2022. For the three months ended September 30, 2023, our effective tax rate was 21.2% compared to 20.2% for the same period in the prior fiscal year. The change in our effective tax rate was primarily driven by a discrete reserve for an uncertain tax position recorded during the three months ended September 30, 2023, mostly offset by an increase in valuation allowance releases.

Income tax expense increased $5.6 million to $33.5 million during the six months ended September 30, 2023 from income tax expense of $27.9 million during the six months ended September 30 ,2022. For the six months ended September 30, 2023, our effective tax rate was 22.0% compared to 22.4% for the same period in the prior fiscal year. The change in our effective tax rate was primarily driven by a discrete reserve for an uncertain tax position recorded during the six months ended September 30, 2023, mostly offset by an increase in valuation allowance releases.

SEGMENT RESULTS OF OPERATIONS
Our operating segments are based on how our Chief Operating Decision Maker ("CODM") makes decisions about allocating resources and assessing performance. Our segments are defined by geographic regions, including North America, EMEA, Asia-Pacific, and Latin America.
We exclude certain corporate items from our segment profitability measures. We report these items within Corporate Other, which is designed to provide increased transparency and comparability of our operating segments' performance. Corporate Other consists primarily of (i) operating results related to our MMR platforms and other digital business opportunities; (ii) general and administrative expenses not allocated to an operating segment, including expenses associated with centrally managed departments which include global marketing, global IT, global supply chain and innovation, and other corporate support functions; (iii) restructuring and restructuring related charges, if any; and (iv) certain foreign currency hedge gains and losses.
The net revenues and operating income (loss) associated with our segments are summarized in the following tables.
Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022
Net Revenues
Three Months Ended September 30,
(In thousands)20232022Change ($)Change (%)
North America$991,393 $1,011,823 $(20,430)(2.0)%
EMEA287,091 262,679 24,412 9.3 %
Asia-Pacific232,065 225,729 6,336 2.8 %
Latin America53,669 58,162 (4,493)(7.7)%
Corporate Other (1)
2,492 15,492 (13,000)(83.9)%
Total net revenues$1,566,710 $1,573,885 $(7,175)(0.5)%
(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program, as well as subscription revenues from MMR and revenue from other digital business opportunities.
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The decrease in total net revenues for the three months ended September 30, 2023, compared to the three months ended September 30, 2022, was driven by the following:
•Net revenues in our North America region decreased by $20.4 million, or 2.0%, to $991.4 million from $1,011.8 million. This was driven by a decrease in both our wholesale channel and our direct-to-consumer channel as well as decrease in licensing revenues. Within our direct-to-consumer channel, net revenues were lower due to a decrease in e-commerce sales and owned and operated retail store sales.
•Net revenues in our EMEA region increased by $24.4 million, or 9.3%, to $287.1 million from $262.7 million. This was driven by an increase in both our direct-to-consumer channel and wholesale channel. Within our direct-to-consumer channel, net revenues increased in both owned and operated retail store sales and e-commerce sales. Net revenues in our EMEA region were also positively impacted by changes in foreign exchange rates.
•Net revenues in our Asia-Pacific region increased by $6.3 million, or 2.8%, to $232.1 million from $225.7 million. This was driven by an increase in both our wholesale channel and our direct-to-consumer channel. Within our direct-to-consumer channel, the increase in net revenues was due to an increase in owned and operated retail store sales, partially offset by a decrease in e-commerce sales. Our direct-to-consumer channel was negatively impacted by the COVID-19 related restrictions during the three months ended September 30, 2022, which included temporary closures of our owned and operated stores and distribution centers in China. Net revenues in our Asia-Pacific region were also negatively impacted by changes in foreign exchange rates.
•Net revenues in our Latin America region decreased by $4.5 million, or 7.7%, to $53.7 million from $58.2 million. This was primarily driven by a decrease in our wholesale channel, partially offset by an increase in our direct-to-consumer channel. Within our direct-to-consumer channel, net revenues increased in owned and operated retail store sales and e-commerce sales. Net revenues in our Latin America region were also positively impacted by changes in foreign exchange rates.
•Net revenues in our Corporate Other non-operating segment decreased by $13.0 million to $2.5 million from $15.5 million. This was primarily driven by lower foreign currency hedge gains related to revenues generated by entities within our operating segments.
Operating Income (Loss)
Three Months Ended September 30,
(In thousands)20232022Change ($)Change (%)
North America$215,457 $209,206 $6,251 3.0 %
EMEA40,697 35,895 4,802 13.4 %
Asia-Pacific54,608 46,134 8,474 18.4 %
Latin America13,644 7,177 6,467 90.1 %
Corporate Other (1)
(178,647)(179,002)355 0.2 %
Total operating income (loss)$145,759 $119,410 $26,349 22.1 %
(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program, as well as subscription revenues from MMR and revenue from other digital business opportunities. Corporate Other also includes expenses related to our central supporting functions.

The increase in total operating income for three months ended September 30, 2023, compared to the three months ended September 30, 2022, was primarily driven by the following:
•Operating income in our North America region increased by $6.3 million to $215.5 million from $209.2 million. This was primarily due to lower marketing-related expenses and lower distribution and selling expenses, partially offset by a decrease in gross profit. The decline in gross profit was driven by lower net revenues as discussed above, partially offset by lower freight costs.
•Operating income in our EMEA region increased by $4.8 million to $40.7 million from $35.9 million. This was primarily due to an increase in gross profit, partially offset by higher marketing related expenses. The increase in gross profit was driven by higher net revenues as discussed above and lower freight costs.
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•Operating income in our Asia-Pacific region increased by $8.5 million to $54.6 million from $46.1 million. This was primarily due to an increase in gross profit, driven by higher net revenues as discussed above, and lower marketing-related expenses.
•Operating income in our Latin America region increased by $6.5 million to $13.6 million from $7.2 million. This was primarily due to an increase in gross profit, partially offset by an increase in selling and distribution expenses and marketing expenses. The increase in gross profit was driven by lower freight costs, partially offset by lower net revenues as discussed above.
•Operating loss in our Corporate Other non-operating segment decreased by $0.4 million to $178.6 million from $179.0 million. This was primarily due to lower legal expenses resulting from an accrual in the prior year for certain ongoing legal proceedings, partially offset by net losses arising from foreign currency hedges.

Six Months Ended September 30, 2023 Compared to Six Months Ended September 30, 2022
Net Revenues
Six Months Ended September 30,
(In thousands)20232022Change ($)Change (%)
North America$1,818,045 $1,921,179 $(103,134)(5.4)%
EMEA513,732 467,860 45,872 9.8 %
Asia-Pacific434,297 402,394 31,903 7.9 %
Latin America109,408 107,605 1,803 1.7 %
Corporate Other (1)
8,240 23,904 (15,664)(65.5)%
Total net revenues$2,883,722 $2,922,942 $(39,220)(1.3)%
(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program, as well as subscription revenues from MMR and revenue from other digital business opportunities.

The decrease in total net revenues for the six months ended September 30, 2023, compared to the six months ended September 30, 2022, was driven by the following:
•Net revenues in our North America region decreased by $103.1 million, or 5.4%, to $1,818.0 million from $1,921.2 million. This was driven by a decrease in both our wholesale channel and our direct-to-consumer channel. Within our direct-to-consumer channel, net revenues were lower due to a decrease in both owned and operated retail store sales and e-commerce sales.
•Net revenues in our EMEA region increased by $45.9 million, or 9.8%, to $513.7 million from $467.9 million. This was primarily driven by an increase in both our direct-to-consumer channel and our wholesale channel. Within our direct-to-consumer channel, net revenues increased in both owned and operated retail store sales and e-commerce sales. Net revenues in our EMEA region were also positively impacted by changes in foreign exchange rates.
•Net revenues in our Asia-Pacific region increased by $31.9 million, or 7.9%, to $434.3 million from $402.4 million. This was driven by an increase in both our direct-to-consumer channel and our wholesale channel. Within our direct-to-consumer channel, net revenues increased in both owned and operated retail store sales and e-commerce sales. Our direct-to-consumer channel was negatively impacted by the COVID-19 related restrictions during the six months ended September 30, 2022, which included temporary closures of our owned and operated stores and distribution centers in China. Net revenues in our Asia-Pacific region were also negatively impacted by changes in foreign exchange rates.
•Net revenues in our Latin America region increased by $1.8 million, or 1.7%, to $109.4 million from $107.6 million. This was primarily driven by an increase in our direct-to-consumer channel, partially offset by a decrease in our wholesale channel. Within our direct-to-consumer channel, net revenues increased in both owned and operated retail store sales and e-commerce sales. Net revenues in our Latin America region were also positively impacted by changes in foreign exchange rates.
•Net revenues in our Corporate Other non-operating segment decreased by $15.7 million to $8.2 million from $23.9 million. This was primarily driven by lower foreign currency hedge gains related to revenues generated by entities within our operating segments.
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Operating Income (Loss)
Six Months Ended September 30,
(In thousands)20232022Change ($)Change (%)
North America$373,508 $399,130 $(25,622)(6.4)%
EMEA71,646 54,076 17,570 32.5 %
Asia-Pacific70,006 66,079 3,927 5.9 %
Latin America19,421 13,411 6,010 44.8 %
Corporate Other (1)
(367,892)(378,803)10,911 2.9 %
Total operating income (loss)$166,689 $153,893 $12,796 8.3 %
(1) Corporate Other primarily includes foreign currency hedge gains and losses related to revenues generated by entities within our operating segments but managed through our central foreign exchange risk management program, as well as subscription revenues from MMR and revenue from other digital business opportunities. Corporate Other also includes expenses related to our central supporting functions.
The increase in total operating income for six months ended September 30, 2023, compared to the six months ended September 30, 2022, was primarily driven by the following:
•Operating income in our North America region decreased by $25.6 million to $373.5 million from $399.1 million. This was primarily due to a decline in gross profit, partially offset by lower marketing-related expenses and lower non-salaried wages. The decline in gross profit was driven by lower net revenues as discussed above and increased promotions and discounting, partially offset by lower product input and freight costs.
•Operating income in our EMEA region increased by $17.6 million to $71.6 million from $54.1 million. This was primarily due to an increase in gross profit, partially offset by an increase in marketing related expenses. The increase in gross profit was driven by higher net revenues as discussed above and lower freight costs.
•Operating income in our Asia-Pacific region increased by $3.9 million to $70.0 million from $66.1 million. This was primarily due to an increase in gross profit, driven by higher net revenues as discussed above, partially offset by higher facilities related expenses.
•Operating income in our Latin America region increased by $6.0 million to $19.4 million from $13.4 million. This was primarily due to an increase in gross profit, partially offset by higher selling and distribution costs and higher marketing-related expenses. The increase in gross profit was driven by lower freight costs, and higher net revenues as discussed above.
•Operating loss in our Corporate Other non-operating segment decreased by $10.9 million to $367.9 million from $378.8 million. This was primarily due to lower legal expenses resulting from an accrual in the prior year for certain ongoing legal proceedings, and lower consulting expenses, partially offset by an increase in salaries expense and net losses arising from foreign currency hedges.

LIQUIDITY AND CAPITAL RESOURCES
Our cash requirements have principally been for working capital and capital expenditures. We fund our working capital, primarily inventory, and capital investments from cash flows from operating activities, cash and cash equivalents on hand, and borrowings available under our credit and long-term debt facilities. Our working capital requirements generally reflect the seasonality in our business as we historically recognize the majority of our net revenues in the last two quarters of the calendar year. Our capital investments have generally included expanding our in-store fixture and branded concept shop program, improvements and expansion of our distribution and corporate facilities, including construction of our new global headquarters, leasehold improvements to our Brand and Factory House stores, and investment and improvements in information technology systems. Our inventory strategy is focused on continuing to meet consumer demand while improving our inventory efficiency over the long term by putting systems and processes in place to improve our inventory management. These systems and processes are designed to improve our forecasting and supply planning capabilities. In addition, we strive to enhance our inventory performance by focusing on adding discipline around product purchasing, reducing production lead time and improving planning and execution for selling excess inventory through our Factory House stores and other liquidation channels.
As of September 30, 2023, we had approximately $655.9 million of cash and cash equivalents. We believe our cash and cash equivalents on hand, cash from operations, our ability to reduce our expenditures as needed, borrowings available to us under our amended credit agreement, our ability to access the capital markets, and other
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financing alternatives are adequate to meet our liquidity needs and capital expenditure requirements for at least the next twelve months. In addition, from time to time, based on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors and subject to compliance with applicable laws and regulations, we may seek to utilize cash on hand, borrowings or raise capital to retire, repurchase or redeem our debt securities, repay debt, repurchase shares of our common stock or otherwise enter into similar transactions to support our capital structure and business or utilize excess cash flow on a strategic basis. For example, as described below, in February 2022, our Board of Directors authorized the repurchase of up to $500 million of our Class C Common Stock over the following two years, and, as of September 30, 2023, we have repurchased a total of $475 million of our Class C Common Stock through accelerated share repurchase transactions.
If there are unexpected material impacts to our business in future periods from COVID-19 or other global macroeconomic factors and we need to raise or conserve additional cash to fund our operations, we may consider additional alternatives, including further reducing our expenditures, changing our investment strategies, reducing compensation costs, including through temporary reductions in pay and layoffs, limiting certain marketing and capital expenditures, and negotiating, extending or delaying payment terms with our customers and vendors. In addition, we may seek alternative sources of liquidity, including but not limited to, accessing the capital markets, sale leaseback transactions or other sales of assets, or other alternative financing measures. However, instability in, or tightening of the capital markets, could adversely affect our ability to access the capital markets on terms acceptable to us or at all. Although we believe we have adequate sources of liquidity over the long term, a prolonged or more severe economic recession, inflationary pressure, or a slow recovery could adversely affect our business and liquidity and could require us to take certain of the liquidity preserving actions described above.
Refer to our "Risk Factors" section included in Item 1A of our Annual Report on Form 10-K for Fiscal 2023.
Share Repurchase Program
On February 23, 2022, our Board of Directors authorized us to repurchase up to $500 million (exclusive of fees and commissions) of outstanding shares of our Class C Common Stock over the following two years. The Class C Common Stock may be repurchased from time to time at prevailing prices in the open market, through plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, via private purchases through forward, derivative, accelerated share repurchase transactions or otherwise, subject to applicable regulatory restrictions on volume, pricing and timing. The timing and amount of any repurchases will depend on market conditions, our financial condition, results of operations, liquidity and other factors.
During the three months ended September 30, 2023, the Company entered into a supplemental confirmation (the "August 2023 ASR Agreement") of an accelerated share repurchase transaction with JPMorgan Chase Bank, National Association ("JPMC") to repurchase $50.0 million of the Company's Class C Common Stock, and received a total of 7.6 million shares of Class C Common Stock from JPMC, which were immediately retired. As a result, $51.3 million was recorded to retained earnings to reflect the difference between the market price of the Class C Common Stock repurchased and its par value. No shares were repurchased under the share repurchase program during the three months ended June 30, 2023.
During the three and six months ended September 30, 2022, pursuant to the previously disclosed accelerated share repurchase transactions, we repurchased 3.2 million and 9.9 million shares of Class C Common Stock, respectively, which were immediately retired.
As of September 30, 2023, we have repurchased a total of $475 million or 42.5 million outstanding shares of our Class C Common Stock under the share repurchase program.
Cash Flows
The following table presents the major components of our cash flows provided by and used in operating, investing and financing activities for the periods presented:
Six Months Ended September 30,
(In thousands)20232022Change ($)
Net cash provided by (used in):
Operating activities$64,243 $(2,499)$66,742 
Investing activities(39,144)(58,864)19,720 
Financing activities(50,537)(48,788)(1,749)
Effect of exchange rate changes on cash and cash equivalents(28,671)(43,962)15,291 
Net increase (decrease) in cash and cash equivalents$(54,109)$(154,113)$100,004 
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Operating Activities
Cash flows from operating activities increased by $66.7 million, as compared to the six months ended September 30, 2022, primarily driven by an increase in net income before the impact of non-cash items of $40.0 million and an increase from changes in working capital of $26.7 million.
The changes in working capital were due to the following inflows:
•$300.1 million from changes in inventories;
•$86.6 million from changes in other non-current assets;
•$37.6 million from changes in accounts receivable; and
•$4.6 million from changes in prepaid expenses and other current assets.
These inflows were partially offset by the following working capital outflows:
•$287.5 million from changes in accounts payable;
•$94.8 million from changes in accrued expenses and other liabilities;
•$14.1 million from changes in income taxes payable and receivable, net; and
•$5.8 million from changes in customer refund liabilities.
Investing Activities
Cash flows used in investing activities decreased by $19.7 million, as compared to the six months ended September 30, 2022. This was primarily due to a higher earnout collected in connection with the sale of the MyFitnessPal platform and a decrease in capital expenditures.
Total capital expenditures during the six months ended September 30, 2023 were $84.1 million, or approximately 3% of net revenues, representing a $9.7 million decrease from $93.9 million during the six months ended September 30, 2022. Our long-term operating principle for capital expenditures is to spend between 3% and 5% of annual net revenues as we invest in our global direct-to-consumer, e-Commerce and digital businesses, information technology systems, distribution centers and our global offices, including our new global headquarters in the Baltimore Peninsula, an area of Baltimore, Maryland. During the six months ended September 30, 2023, we incurred capital expenditures of $40.3 million relating to the construction of our new global headquarters. As previously disclosed, our plans for our new headquarters have been designed in line with our long-term sustainability strategy and include a commitment to reduce greenhouse gas emissions and increase sourcing of renewable electricity in our owned and operated facilities. We expect a portion of our capital expenditures over the next few years to include investments incorporating sustainable and intelligent building design features into this facility.
Financing Activities
Cash flows used in financing activities increased by $1.7 million, as compared to the six months ended September 30, 2022. This was primarily due to an increase in employee taxes paid for shares withheld for income taxes. Additionally, during both the six months ended September 30, 2022 and 2023, we paid $50.0 million to repurchase shares of our Class C Common Stock through accelerated share repurchase transactions. For more details, see discussion above under "Share Repurchase Program".

Capital Resources
Credit Facility
On March 8, 2019, we entered into an amended and restated credit agreement by and among us, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders and arrangers party thereto (the "credit agreement"). In May 2020, May 2021 and December 2021, we entered into the first, second and third amendments to the credit agreement, respectively (the credit agreement as amended and the "amended credit agreement" or the "revolving credit facility"). The amended credit agreement provides for revolving credit commitments of $1.1 billion and has a term that ends on December 3, 2026, with permitted extensions under certain circumstances. As of September 30, 2023 and March 31, 2023, there were no amounts outstanding under the revolving credit facility.
At our request and a lender's consent, commitments under the amended credit agreement may be increased by up to $300.0 million in aggregate, subject to certain conditions as set forth in the amended credit
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agreement. Incremental borrowings are uncommitted and the availability thereof will depend on market conditions at the time we seek to incur such borrowings.
Borrowings, if any, under the revolving credit facility have maturities of less than one year. Up to $50.0 million of the facility may be used for the issuance of letters of credit. As of September 30, 2023, there was $4.3 million of letters of credit outstanding (March 31, 2023: $4.4 million).
Our obligations under the amended credit agreement are guaranteed by certain domestic significant subsidiaries of Under Armour, Inc., subject to customary exceptions (the "subsidiary guarantors") and primarily secured by a first-priority security interest in substantially all of the assets of Under Armour, Inc. and the subsidiary guarantors, excluding real property, capital stock in and debt of subsidiaries of Under Armour, Inc. holding certain real property and other customary exceptions. The amended credit agreement provides for the permanent fall away of guarantees and collateral upon our achievement of investment grade rating from two rating agencies.
The amended credit agreement contains negative covenants that, subject to significant exceptions, limit our ability to, among other things: incur additional secured and unsecured indebtedness; pledge the assets as security; make investments, loans, advances, guarantees and acquisitions (including investments in and loans to non-guarantor subsidiaries); undergo fundamental changes; sell assets outside the ordinary course of business; enter into transactions with affiliates; and make restricted payments.
We are also required to maintain a ratio of consolidated EBITDA, to consolidated interest expense of not less than 3.50 to 1.0 (the "interest coverage covenant") and we are not permitted to allow the ratio of consolidated total indebtedness to consolidated EBITDA to be greater than 3.25 to 1.0 (the "leverage covenant"), as described in more detail in the amended credit agreement. As of September 30, 2023, we were in compliance with the applicable covenants.
In addition, the amended credit agreement contains events of default that are customary for a facility of this nature, and includes a cross default provision whereby an event of default under other material indebtedness, as defined in the amended credit agreement, will be considered an event of default under the amended credit agreement.
The amended credit agreement implements SOFR as the replacement of LIBOR as a benchmark interest rate for the U.S. dollar borrowings (and analogous benchmark rate replacements for borrowings in Yen, Canadian dollars, Pound Sterling and Euro). Borrowings under the amended credit agreement bear interest at a rate per annum equal to, at our option, either (a) an alternate base rate (for borrowings in U.S. dollars), (b) a term rate (for borrowings in U.S. dollars, Euros, Japanese Yen or Canadian dollars) or (c) a "risk free" rate (for borrowings in U.S. dollars or Pounds Sterling), plus in each case an applicable margin. The applicable margin for loans will be adjusted by reference to a grid (the "pricing grid") based on the leverage ratio of consolidated total indebtedness to consolidated EBITDA and ranges between 1.00% to 1.75% (or, in the case of alternate base rate loans 0.00% to 0.75%). We will also pay a commitment fee determined in accordance with the pricing grid on the average daily unused amount of the revolving credit facility and certain fees with respect to letters of credit. As of September 30, 2023, the commitment fee was 17.5 basis points.
1.50% Convertible Senior Notes
We have approximately $80.9 million aggregate principal amount of 1.50% convertible senior notes due 2024 (the "Convertible Senior Notes") outstanding as of September 30, 2023, which were issued in May 2020. The Convertible Senior Notes bear interest at the fixed rate of 1.50% per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning December 1, 2020. The Convertible Senior Notes will mature on June 1, 2024, unless earlier converted in accordance with their terms, redeemed in accordance with their terms or repurchased.
The Convertible Senior Notes are not secured and are not guaranteed by any of our subsidiaries. The indenture governing the Convertible Senior Notes does not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by us or any of our subsidiaries.
The Convertible Senior Notes are convertible into cash, shares of our Class C Common Stock or a combination of cash and shares of Class C Common Stock, at our election, as described further below. The initial conversion rate is 101.8589 shares of our Class C Common Stock per $1,000 principal amount of Convertible Senior Notes (equivalent to an initial conversion price of approximately $9.82 per share of Class C Common Stock), subject to adjustment if certain events occur. Prior to the close of business on the business day immediately preceding January 1, 2024, holders may (at their option) convert their Convertible Senior Notes only upon satisfaction of one or more of the following conditions:
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•during any calendar quarter commencing after the calendar quarter ended on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of our Class C Common Stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•during the five business day period after any five consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of Convertible Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class C Common Stock and the conversion rate on each such trading day;
•upon the occurrence of specified corporate events or distributions on our Class C Common Stock; or
•if we call any Convertible Senior Notes for redemption prior to the close of business on the business day immediately preceding January 1, 2024.
On or after January 1, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Convertible Senior Notes at the conversion rate at any time irrespective of the foregoing conditions.
Beginning on December 6, 2022, we may redeem for cash all or any part of the Convertible Senior Notes, at our option, if the last reported sale price of our Class C Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the aggregate principal amount of the Convertible Senior Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
If we undergo a fundamental change (as defined in the indenture governing the Convertible Senior Notes) prior to the maturity date, subject to certain conditions, holders may require us to repurchase for cash all or any portion of their Convertible Senior Notes in principal amounts of $1,000 or an integral multiple thereof at a price which will be equal to 100% of the aggregate principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
Concurrently with the offering of the Convertible Senior Notes, we entered into privately negotiated capped call transactions with JPMorgan Chase Bank, National Association, HSBC Bank USA, National Association, and Citibank, N.A. (the "option counterparties"). The capped call transactions are expected generally to reduce potential dilution to our Class C Common Stock upon any conversion of Convertible Senior Notes and/or offset any cash payments we are required to make in excess of the aggregate principal amount of converted Convertible Senior Notes upon any conversion thereof, as the case may be, with such reduction and/or offset subject to a cap based on the cap price. The cap price of the capped call transactions is initially $13.4750 per share of our Class C Common Stock, representing a premium of 75% above the last reported sale price of our Class C Common Stock on May 21, 2020, and is subject to certain adjustments under the terms of the capped call transactions.
3.250% Senior Notes
In June 2016, we issued $600.0 million aggregate principal amount of 3.250% senior unsecured notes due June 15, 2026 (the "Senior Notes"). The proceeds were used to pay down amounts outstanding under the revolving credit facility, at the time. The Senior Notes bear interest at the fixed rate of 3.250% per annum, payable semi-annually on June 15 and December 15 beginning December 15, 2016. Prior to March 15, 2026 (three months prior to the maturity date of the Notes), we may redeem some or all of the Senior Notes at any time or from time to time at a redemption price equal to the greater of 100% of the principal amount of the Senior Notes to be redeemed or a "make-whole" amount applicable to such Senior Notes as described in the indenture governing the Senior Notes, plus accrued and unpaid interest to, but excluding, the redemption date.
The indenture governing the Senior Notes contains covenants, including limitations that restrict our ability and the ability of certain of our subsidiaries to create or incur secured indebtedness and enter into sale and leaseback transactions and our ability to consolidate, merge or transfer all or substantially all of our properties or assets to another person, in each case subject to material exceptions described in the indenture.

CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
Our Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. To prepare these financial statements, we must make estimates and assumptions that affect the reported amounts of
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assets, liabilities, revenues and expenses, as well as the disclosures of contingent assets and liabilities. Our estimates are often based on complex judgments, probabilities and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable. It is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. Actual results could be significantly different from these estimates.
Refer to Note 2 of our Consolidated Financial Statements, included in our Annual Report on Form 10-K for Fiscal 2023, for a summary of our significant accounting policies and our assessment of recently issued accounting standards.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes to our market risk since March 31, 2023. For a discussion of our exposure to market risk, refer to Item 7A. of our Annual report on Form 10-K for Fiscal 2023.

ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls
We have assessed the impact on changes to our internal controls over financial reporting, and conclude that there have been no changes in our internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), during the most recent fiscal quarter that have materially affected, or that are reasonably likely to materially affect our internal controls over financial reporting.


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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
From time to time, we have been involved in litigation and other proceedings, including matters related to commercial disputes and intellectual property, as well as trade, regulatory and other claims related to our business. See Note 10 to our Condensed Consolidated Financial Statements for information on certain legal proceedings, which is incorporated by reference herein.

ITEM 1A. RISK FACTORS
Our results of operations and financial condition could be adversely affected by numerous risks. In addition to the other information in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for Fiscal 2023. These are not the only risks and uncertainties facing us. Additional risks not currently known to us or that we currently believe are immaterial may also negatively impact our business, financial condition, results of operations and future prospects.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Issuer purchases of equity securities:
The following table sets forth the Company's repurchases of Class C Common Stock during the three months ended September 30, 2023 under the two-year $500 million share repurchase program authorized by our Board of Directors in February 2022.
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of a Publicly Announced ProgramApproximately Dollar Value of Shares that May Yet be Purchased Under the Program
(in millions)
07/01/2023 to 07/31/2023— $— — $75.0 
08/01/2023 to 08/31/2023— $— — $75.0 
09/01/2023 to 09/30/2023(1)
7,616,030 $6.74 7,616,030 $25.0 
(1) Represents Class C Common Stock repurchased through accelerated share repurchase agreements. See Note 11 to our Condensed Consolidated Financial Statements for details.

ITEM 5. OTHER INFORMATION
(c)
During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement", as each term is defined in Item 408(a) of Regulation S-K.


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ITEM 6. EXHIBITS
Exhibit
No.
 
Under Armour, Inc. Fourth Amended and Restated 2005 Omnibus Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on August 31, 2023).*
Form of Performance-Based Restricted Stock Unit Agreement under the 2005 Plan.*
Section 302 Chief Executive Officer Certification.
Section 302 Chief Financial Officer Certification.
Section 906 Chief Executive Officer Certification.
Section 906 Chief Financial Officer Certification.
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
*Management contract or a compensatory plan or arrangement required to be filed as an Exhibit pursuant to Item 6 of Form 10-Q.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
UNDER ARMOUR, INC.
By:/s/ DAVID E. BERGMAN
David E. Bergman
Chief Financial Officer
Date: November 8, 2023

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