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(Mark One)

☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Securities registered pursuant to Section 12(b) of the Act:

Class A Common Stock			UAA			New York Stock Exchange
Class C Common Stock			UA			New 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 July 31, 2023 there were 188,704,689 shares of Class A Common Stock, 34,450,000 shares of Class B Convertible Common Stock and 222,184,702 shares of Class C Common Stock outstanding.

Commitments and Contingencies (Note 10)

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.

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 shareholders' 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 June 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 months ended June 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.

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.

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 quarter of Fiscal 2024.

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 for a discussion of the Company's supply chain finance program.

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.

The Company's allowance for doubtful accounts was established with information available as of June 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 expenses			1,496						—
Write-offs, net of recoveries			79						—
Balance as of June 30, 2023			$	12,388					$	227

(1) Includes an allowance pertaining to a royalty receivable.

Property and equipment consisted of the following: 

(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 was $35.8 million for the three months ended June 30, 2023 (three months ended June 30, 2022: $33.9 million).

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 months ended June 30, 2023 and 2022.

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 June 30,
			2023						2022
Operating lease costs			$	41,091					$	35,555
Variable lease costs			$	2,756					$	3,623

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 June 30, 2023						As of March 31, 2023
Weighted average remaining lease term (in years)			7.99						8.03
Weighted average discount rate			4.86		%				4.69		%

The following table presents supplemental information relating to cash flow arising from lease transactions:

			Three months ended June 30,
			2023						2022
Operating cash outflows from operating leases			$	43,614					$	41,865
Leased assets obtained in exchange for new operating lease liabilities			$	5,380					$	19,589

The following table presents the future minimum lease payments under the Company's operating lease liabilities as of June 30, 2023:

Fiscal year ending March 31,
2024 (nine months ending)			$	129,494
2025			161,177
2026			128,644
2027			108,006
2028			91,134
2029 and thereafter			363,107
Total lease payments			$	981,562
Less: Interest			164,563
Total present value of lease liabilities			$	816,999

As of June 30, 2023, the Company has additional operating lease obligations that have not yet commenced of approximately $6.4 million, which are not reflected in the table above.

The following table summarizes changes in the carrying amount of the Company's goodwill by reportable segment as of the periods indicated:

			North America						EMEA						Asia-Pacific						Latin America						Total
Balance as of March 31, 2023			$	301,371					$	101,096					$	79,525					$	—					$	481,992
Effect of currency translation adjustment			—						1,561						(3,985)						—						(2,424)
Balance as of June 30, 2023			$	301,371					$	102,657					$	75,540					$	—					$	479,568

The following tables summarize the Company's intangible assets as of the periods indicated:

Amortization expense, which is included in selling, general and administrative expenses, was $0.4 million for the three months ended June 30, 2023 (three months ended June 30, 2022: $0.5 million).

During the three months ended June 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 June 30, 2023:

Fiscal year ending March 31,
2024 (nine months ending)			$	1,128
2025			1,504
2026			1,381
2027			9
2028			—
2029 and thereafter			—
Total amortization expense of intangible assets			$	4,022

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 $276.8 million as of June 30, 2023 (March 31, 2023: $250.8 million).

The Company's outstanding debt consisted of the following:

			As of June 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 due			680,919						680,919
Unamortized debt discount on Senior Notes			(750)						(814)
Unamortized debt issuance costs - Convertible Senior Notes			(165)						(267)
Unamortized debt issuance costs - Senior Notes			(1,593)						(1,728)
Unamortized debt issuance costs - Credit facility			(3,385)						(3,632)
Total amount outstanding			675,026						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			$	594,107					$	674,478

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 June 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 June 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.

The consolidated complaint in the Kenney matter 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 consolidated 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 State 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 State Derivative Action.

The Company believes that the claims asserted in the Consolidated State 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.

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 “Federal Court 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. The other three consolidated derivative cases remain pending as part of the Federal Court Derivative Action.

On April 24, 2023, the Derivative Lead Plaintiffs designated an operative complaint in the Federal Court Derivative Action. The operative 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.

It asserts 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 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 asserts breach of fiduciary duty and unjust enrichment claims against the defendants, and asserts a contribution claim under the federal securities laws against certain defendants. The operative complaint seeks damages on behalf of the Company, and also seeks certain corporate governance related actions. The Company and the defendants filed a motion to dismiss the operative complaint on June 23, 2023. Briefing in connection with that motion is not yet complete.

The Company believes that the claims asserted in the Federal Court 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.

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 June 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, reimbursement for $10 million in defense and investigation costs 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 is unknown for the remaining claims in this matter.

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.

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 June 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 June 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.

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.

As of the date of this Quarterly Report on Form 10-Q, the Company has repurchased a total of $425 million or 34.9 million outstanding shares of its Class C Common Stock under its share repurchase program.

The following tables summarize the Company's net revenues by product category and distribution channels:

			Three Months Ended June 30,
			2023						2022
Apparel			$	824,660					$	868,428
Footwear			363,670						347,251
Accessories			97,862						96,831
Net Sales			1,286,192						1,312,510
License revenues			25,072						28,135
Corporate Other			5,748						8,412
Total net revenues			$	1,317,012					$	1,349,057

			Three Months Ended June 30,
			2023						2022
Wholesale			$	741,958					$	791,686
Direct-to-consumer			544,234						520,824
Net Sales			1,286,192						1,312,510
License revenues			25,072						28,135
Corporate Other			5,748						8,412
Total net revenues			$	1,317,012					$	1,349,057

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:

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 June 30, 2023, contract liabilities were $26.2 million (March 31, 2023: $25.9 million).

During the three months ended June 30, 2023, the Company recognized approximately $3.2 million of revenue that was previously included in contract liabilities as of March 31, 2023. During the three months ended June 30, 2022, the Company recognized approximately $4.8 million 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.

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 of $3.4 million for the three months ended June 30, 2023 (three months ended June 30, 2022: $1.6 million).

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 June 30, 2023, the Deferred Compensation Plan obligations, which are included in other long-term liabilities on the Condensed Consolidated Balance Sheets were $14.6 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 June 30, 2023, the assets held in the Rabbi Trust were trust owned life insurance ("TOLI") policies with cash-surrender values of $8.0 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 for a discussion of the fair value measurements of the assets held in the Rabbi Trust and the Deferred Compensation Plan obligations.

The Under Armour, Inc. Third 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 2029. As of June 30, 2023, 8.3 million Class A shares and 17.4 million Class C shares are available for future grants of awards under the 2005 Plan.

Total stock-based compensation expense associated with awards granted to employees and non-employee directors for the three months ended June 30, 2023 was $10.3 million (three months ended June 30, 2022: $11.4 million). As of June 30, 2023, the Company had $101.9 million of unrecognized compensation expense related to these awards expected to be recognized over a weighted average period of 2.29 years.

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:

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.

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 June 30, 2023.

The Company's Employee Stock Purchase Plan (the "ESPP") allows 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 ESPP. As of June 30, 2023, 2.7 million Class A shares and 1.0 million Class C shares are available for future purchases under the ESPP. During the three months ended June 30, 2023, 145.2 thousand Class C shares were purchased under the ESPP (three months ended June 30, 2022: 121.4 thousand).

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 months ended June 30, 2023 was $2.3 million (three months ended June 30, 2022: $0.8 million). As of June 30, 2023, the Company had $77.7 million of unrecognized compensation expense associated with these awards expected to be recognized over a weighted average period of 10.73 years.

A summary of the Company's stock options activity for the three months ended June 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 June 30, 2023			1,578						$	19.44					4.57						$	—
Options exercisable at June 30, 2023			1,503						$	19.66					4.47						$	—

A summary of the Company's restricted stock and restricted stock unit awards activity for the three months ended June 30, 2023 is presented below: 

			Number of Restricted Shares						Weighted Average Grant Date Fair Value
Outstanding at March 31, 2023			7,658						$	13.01
Granted			15,863						7.84
Forfeited			(488)						12.12
Vested			(873)						14.21
Outstanding at June 30, 2023			22,160						$	9.28

    

The awards outstanding at June 30, 2023 in the table above includes 1.0 million performance-based restricted stock units that were awarded to certain executives and key employees during Fiscal 2023 under the 2005 Plan. The performance-based restricted stock units awarded have a weighted average fair value of $9.13 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 these targets probable and recorded $0.3 million of stock-based compensation expense related to these awards during the three months ended June 30, 2023 (three months ended June 30, 2022: $0.4 million). 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.

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:

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:

			June 30, 2023																		March 31, 2023
			Level 1						Level 2						Level 3						Level 1						Level 2						Level 3
Derivative foreign currency contracts (see Note 16)			$	—					$	(18,403)					$	—					$	—					$	(3,127)					$	—
TOLI policies held by the Rabbi Trust (see Note 13)			$	—					$	8,042					$	—					$	—					$	7,691					$	—
Deferred Compensation Plan obligations (see Note 13)			$	—					$	(14,641)					$	—					$	—					$	(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 June 30, 2023, the fair value of the Convertible Senior Notes was $78.2 million (March 31, 2023: $85.8 million).

As of June 30, 2023, the fair value of the Senior Notes was $551.6 million (March 31, 2023: $553.9 million).

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.

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 June 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.

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 June 30,
			2023												2022
			Total						Amount of Gain (Loss) on Cash Flow Hedge Activity						Total						Amount of Gain (Loss) on Cash Flow Hedge Activity
Net revenues			$	1,317,012					$	4,475					$	1,349,057					$	6,554
Cost of goods sold			$	709,276					$	294					$	718,860					$	(1,948)
Interest income (expense), net			$	(1,626)					$	(9)					$	(6,005)					$	(9)
Other income (expense), net			$	(6,385)					$	—					$	(14,241)					$	—

The following tables present the amounts affecting the Condensed Consolidated Statements of Comprehensive Income (Loss):

			Balance as of March 31, 2023						Amount of gain (loss) recognized in other comprehensive income (loss) on derivatives						Amount of gain (loss) reclassified from other comprehensive income (loss) into income						Balance as of June 30, 2023
Derivatives designated as cash flow hedges
Foreign currency contracts			$	(4,764)					$	(10,681)					$	4,769					$	(20,214)
Interest rate swaps			(458)						—						(9)						(449)
Total designated as cash flow hedges			$	(5,222)					$	(10,681)					$	4,760					$	(20,663)

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 June 30,
			2023												2022
			Total						Amount of Gain (Loss) on Fair Value Hedge Activity						Total						Amount of Gain (Loss) on Fair Value Hedge Activity
Other income (expense), net			$	(6,385)					$	(2,312)					$	(14,241)					$	(4,002)

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 June 30, 2023, the aggregate notional value of the Company's outstanding cash flow hedges was $1,071.8 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.

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 June 30, 2023, the total notional value of the Company's outstanding undesignated derivative instruments was $430.0 million (March 31, 2023: $396.7 million).

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 credit quality of these financial institutions and considers the risk of counterparty default to be minimal.

For the period ended June 30, 2023, 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 30.7% and 39.7% for the three months ended June 30, 2023 and 2022, respectively. The decrease in the Company’s effective tax rate was primarily driven by the lapping of discrete items in the period ended June 30, 2022, partially offset by a reduction in tax benefits attributable to valuation allowance releases in the period ended June 30, 2023 compared to the period ended June 30, 2022.

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 June 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 of 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.

The following represents a reconciliation from basic net income (loss) per share to diluted net income (loss) per share:

			Three Months Ended June 30,
			2023						2022
Numerator
Net income (loss) - Basic			$	8,549					$	7,682
Interest on Convertible Senior Notes due 2024, net of tax			225						225
Net income (loss) - Diluted			$	8,774					$	7,907
Denominator
Weighted average common shares outstanding Class A, B and C - Basic			444,872						458,415
Dilutive effect of Class A, B, and C securities			1,392						1,510
Dilutive effect of Convertible Senior Notes due 2024			8,242						8,242
Weighted average common shares and dilutive securities outstanding Class A, B, and C			454,506						468,167
Class A and Class C securities excluded as anti-dilutive (1)			22,592						8,458
Basic net income (loss) per share of Class A, B and C common stock			$	0.02					$	0.02
Diluted net income (loss) per share of Class A, B and C common stock			$	0.02					$	0.02

(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.

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; 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:

			Three Months Ended June 30,
			2023						2022
Net revenues
North America			$	826,652					$	909,356
EMEA			226,641						205,181
Asia-Pacific			202,232						176,665
Latin America			55,739						49,443
Corporate Other			5,748						8,412
Total net revenues			$	1,317,012					$	1,349,057

			Three Months Ended June 30,
			2023						2022
Operating income (loss)
North America			$	158,051					$	189,924
EMEA			30,949						18,181
Asia-Pacific			15,398						19,945
Latin America			5,777						6,234
Corporate Other			(189,245)						(199,801)
Total operating income (loss)			20,930						34,483
Interest expense, net			(1,626)						(6,005)
Other income (expense), net			(6,385)						(14,241)
Income (loss) before income taxes			$	12,919					$	14,237

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 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 and realize expected benefits from restructuring plans;

•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;

•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.

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 three months ended June 30, 2023, we faced a challenging retail environment, particularly in North America, that included higher promotions and discounting related to industry-wide elevated inventory balances.

Financial highlights for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 include:

•Total net revenues decreased 2.4%.

•Within our channels, wholesale revenue decreased 6.3% and direct-to-consumer revenue increased 4.5%.

•Within our product categories, apparel revenue decreased 5.0%, footwear revenue increased 4.7%, and accessories revenue increased 1.1%.

•Net revenue decreased 9.1% in North America, increased 10.5% in the Europe, Middle East and Africa ("EMEA"), increased 14.5% in Asia-Pacific, and increased 12.7% in Latin America.

•Gross margin decreased 60 basis points to 46.1%.

•Selling, general and administrative expenses decreased 1.5%.

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 the Russia Ukraine conflict on the global 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.

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. As of June 30, 2023, we continue to see improvements across our supply chain, including progress towards a return to pre-pandemic production efficiency and improving freight costs. 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.

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:

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:

(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 decreased by $26.3 million, or 2.0%, to $1,286.2 million during the three months ended June 30, 2023 from $1,312.5 million during the three months ended June 30, 2022. Apparel decreased primarily due to lower unit sales and the impact of foreign exchange rates, partially offset by higher average selling prices and favorable channel mix. Footwear increased primarily due to higher unit sales. Accessories increased primarily due to favorable channel mix. 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 decreased by $3.1 million or 10.9%, to $25.1 million during the three months ended June 30, 2023, from $28.1 million during the three months ended June 30, 2022. This was primarily due to lower revenues from our Japanese licensee and from our licensing partners in the North America region.

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 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 $18.4 million for the three months ended June 30, 2023 (three months ended June 30, 2022: $17.9 million).

Gross profit decreased by $22.5 million to $607.7 million during the three months ended June 30, 2023, as compared to $630.2 million during the three months ended June 30, 2022. Gross profit as a percentage of net revenues, or gross margin, decreased to 46.1% from 46.7%. This decrease in gross margin of 60 basis points was primarily driven by negative impacts of approximately:

•300 basis points from higher promotional activity within our direct-to-consumer channel and unfavorable pricing of sales to the off-price channel;

•70 basis points from changes in foreign currency; and

•30 basis points from unfavorable product and regional mix.

These negative impacts were partially offset by positive impacts of approximately:

•320 basis points of supply chain impacts mainly due to lower freight costs; and

•20 basis points from favorable channel impacts.

We expect discounting and promotional activities to continue to negatively impact our gross margin in the near term.

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.

Selling, general and administrative expenses decreased by $8.9 million, or 1.5%, during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. Within selling, general and administrative expense:

•Marketing costs decreased $13.9 million or 9.1%, due to a reduction in marketing activities during the period. As a percentage of net revenues, marketing costs decreased to 10.6% from 11.4%.

•Other costs increased $5.0 million or 1.1%, primarily driven by higher salaries, incentive compensation expenses and distribution and selling expenses, partially offset by lower non-salaried wages, litigation accrual, and consulting expenses. As a percentage of net revenues, other costs increased to 34.0% from 32.8%.

As a percentage of net revenues, selling, general and administrative expenses increased to 44.6% during the three months ended June 30, 2023 as compared to 44.2% during the three months ended June 30, 2022.

Interest expense, net is primarily comprised of interest incurred on our debt facilities, offset by interest income earned on our cash and cash equivalents.

Interest expense, net decreased by $4.4 million to $1.6 million during the three months ended June 30, 2023. This was primarily due to an increase in interest income as a result of higher interest rates. See Note 9 to our Condensed Consolidated Financial Statements.

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.

Other expense, net decreased by $7.9 million to $6.4 million during the three months ended June 30, 2023. This was primarily due to a decrease in losses from changes in foreign currency exchange rates of $5.0 million and a decrease in losses on foreign currency hedges of $1.7 million.

Income tax expense decreased $1.7 million to 4.0 million during the three months ended June 30, 2023 from income tax expense of 5.7 million during the same period in 2022. For the three months ended June 30, 2023, our effective tax rate was 30.7% compared to 39.7% for the same period in 2022. The decrease in the Company’s effective tax rate was primarily driven by the lapping of discrete items in the period ended June 30, 2022, partially offset by a reduction in tax benefits attributable to valuation allowance releases in the period ended June 30, 2023 compared to the period ended June 30, 2022.

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; 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.

(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 three months ended June 30, 2023, compared to the three months ended June 30, 2022, was driven by the following:

•Net revenues in our North America region decreased by $82.7 million, or 9.1%, to $826.7 million from $909.4 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 owned and operated retail store sales and e-commerce sales were flat.

•Net revenues in our EMEA region increased by $21.5 million, or 10.5%, to $226.6 million from $205.2 million. This was primarily driven by an increase in both our wholesale channel and our direct-to-consumer 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 Asia-Pacific region increased by $25.6 million, or 14.5%, to $202.2 million from $176.7 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, partly due to the negative impacts of the COVID-19 related restrictions during the three months ended June 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 $6.3 million, or 12.7%, to $55.7 million from $49.4 million. This was primarily driven by an increase in both our wholesale channel and our direct-to-consumer channel. Within our direct-to-consumer channel, net revenues increased both 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 $2.7 million to $5.7 million from $8.4 million. This was primarily driven by lower foreign currency hedge gains related to revenues generated by entities within our operating segments.

(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 decrease in total operating income for three months ended June 30, 2023, compared to the three months ended June 30, 2022, was primarily driven by the following:

•Operating income in our North America region decreased by $31.9 million to $158.1 million from $189.9 million. This was primarily due to a decline in gross profit, partially offset by lower marketing-related expenses. The decline in gross profit was driven by increased promotions and discounting and lower net revenues as discussed above, partially offset by lower product input and freight costs.

•Operating income in our EMEA region increased by $12.8 million to $30.9 million from $18.2 million. This was primarily due to an increase in gross profit and lower marketing related expenses, partially offset by higher distribution and selling 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 decreased by $4.5 million to $15.4 million from $19.9 million. This was primarily due to higher marketing-related expenses and higher distribution and selling expenses, partially offset by an increase in gross profit. The increase in gross profit was driven by higher net revenues as discussed above, partially offset by increased promotions and discounting.

•Operating income in our Latin America region decreased by $0.5 million to $5.8 million from $6.2 million. This was primarily due to higher distribution costs, partially offset by an increase in gross profit, driven by higher net revenues as discussed above.

•Operating loss in our Corporate Other non-operating segment decreased by $10.6 million to $189.2 million from $199.8 million. This was primarily due to a decrease in our litigation accrual and consulting expenses, and gains arising from foreign currency hedges, partially offset by an increase in salaries and incentive compensation expenses.

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 June 30, 2023, we had approximately $703.6 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 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 the date of this Quarterly Report on Form 10-Q, we have repurchased a total of $425 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.

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.

As of the date of this Quarterly Report on Form 10-Q, we have repurchased a total of $425 million or 34.9 million outstanding shares of our Class C Common Stock under the share repurchase program.

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:

			Three months ended June 30,
(In thousands)			2023						2022						Change ($)
Net cash provided by (used in):
Operating activities			$	1,031					$	87,496					$	(86,465)
Investing activities			5,409						(747)						6,156
Financing activities			(1,234)						(24,359)						23,125
Effect of exchange rate changes on cash and cash equivalents			(12,087)						(21,454)						9,367
Net increase (decrease) in cash and cash equivalents			$	(6,881)					$	40,936					$	(47,817)

Cash flows from operating activities decreased by $86.5 million, as compared to the three months ended June 30, 2022, primarily driven by a decrease from changes in working capital of $94.2 million, partially offset by an increase in net income before the impact of non-cash items of $7.7 million.

The changes in working capital were due to the following outflows:

•$91.5 million from changes in accrued expenses and other liabilities;

•$49.5 million from changes in accounts payable;

•$21.9 million from changes in customer refund liabilities; and

•$6.0 million from changes in inventories.

These outflows were partially offset by the following working capital inflows:

•$54.5 million from changes in accounts receivable;

•$10.4 million from changes in other non-current assets; and

•$8.9 million from changes in income taxes payable and receivable, net; and

•$0.9 million from changes in prepaid expenses and other current assets.

Cash flows provided by investing activities increased by $6.2 million, as compared to the three months ended June 30, 2022. This was primarily due to a higher earnout collected in connection with the sale of the MyFitnessPal platform, partially offset by an increase in capital expenditures.

Total capital expenditures during the three months ended June 30, 2023 were $39.6 million, or approximately 3% of net revenues, representing a $3.8 million increase from $35.7 million during the three months ended June 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 three months ended June 30, 2023, we incurred capital expenditures of $16.3 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.

Cash flows used in financing activities decreased by $23.1 million, as compared to the three months ended June 30, 2022. During the three months ended June 30, 2022, we paid $25.0 million to repurchase shares of our Class C Common Stock through accelerated share repurchase programs. No shares were repurchased during the three months ended June 30, 2023. For more details, see discussion above under "Share Repurchase Program".

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 June 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 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 June 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 June 30, 2023, we were in compliance with the applicable covenants.

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 June 30, 2023, the commitment fee was 17.5 basis points.

We have approximately $80.9 million aggregate principal amount of 1.50% convertible senior notes due 2024 (the "Convertible Senior Notes") outstanding as of June 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:

•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.

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.

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.

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 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.

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 our Annual report on Form 10-K for Fiscal 2023.

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.

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. We have not experienced any material impact to our internal controls over financial reporting despite the fact that a significant number of our employees remain in a hybrid work environment.

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.

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.

(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 June 30, 2023 under the two-year $500 million share repurchase program authorized by our Board of Directors in February 2022.