10q10k10q10k.net

What changed in Under Armour, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Under Armour, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+316 added−360 removedSource: 10-K (2024-05-29) vs 10-K (2023-05-24)

Top changes in Under Armour, Inc.'s 2024 10-K

316 paragraphs added · 360 removed · 257 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

59 edited+12 added−22 removed57 unchanged
Biggest changeInformation About Our Executive Officers Our executive officers are: Name Age Position Kevin Plank 50 Executive Chair and Brand Chief Stephanie Linnartz 55 President and Chief Executive Officer Colin Browne 58 Chief Operating Officer David Bergman 50 Chief Financial Officer David Baxter 56 President of the Americas Lisa Collier 58 Chief Product Officer Tchernavia Rocker 49 Chief People and Administrative Officer Mehri Shadman-Valavi 41 Chief Legal Officer and Corporate Secretary Kevin Plank has been Executive Chair and Brand Chief since January 2020.
Biggest changeInformation About Our Executive Officers Name Age Position Kevin Plank 51 President and Chief Executive Officer David Bergman 51 Chief Financial Officer Shawn Curran 60 Chief Supply Chain Officer Jim Dausch 48 Chief Strategy and Consumer Experience Officer Yassine Saidi 46 Chief Product Officer Mehri Shadman 42 Chief Legal Officer and Corporate Secretary Kara Trent 44 President of the Americas Kevin Plank has been President and Chief Executive Officer since April 2024.
We also sell our products to distributors in New Zealand, Taiwan, Hong Kong, India and other countries in Southeast Asia where we do not have direct sales operations. We distribute our products in Asia-Pacific through third-party logistics providers based in Hong Kong, China, South Korea, Australia and Singapore.
We also sell our products to distributors in New Zealand, Taiwan, India and other countries in Southeast Asia where we do not have direct sales operations. We distribute our products in Asia-Pacific through third-party logistics providers based in Hong Kong, China, South Korea, Australia and Singapore.
In countries where we no longer have direct sales operations, such as Chile, Argentina, Colombia and Brazil, we distribute our products through independent distributors, sourced primarily through our international distribution hub in Panama. Product Design and Development Our products are developed by internal product development teams and manufactured with technical fabrications produced by third parties.
In countries where we no longer have direct sales operations, such as Chile, Ecuador, Argentina, Colombia and Brazil, we distribute our products through independent distributors, sourced primarily through our international distribution hub in Panama. Product Design and Development Our products are developed by internal product development teams and manufactured with technical fabrications produced by third parties.
Many of the fabrics and technology used in manufacturing our products are not unique to us, and we own a limited number of fabric or process patents. We also compete with other manufacturers, including those specializing in performance apparel and footwear, and private label offerings of certain retailers, including some of our wholesale customers.
Many of the fabrics and technology used in manufacturing our products are not unique to us, and we own a limited number of fabric or process patents. We also compete with other manufacturers, including those specializing in performance apparel, footwear, accessories and private label offerings of certain retailers, including some of our wholesale customers.
Corporate Other consists primarily of (i) operating results related to our MapMyFitness digital platform, which includes MapMyRun® and MapMyRide® (collectively "MMR"), and other digital business opportunities; (ii) general and administrative expenses not allocated to an operating segment, including expenses associated with centrally managed departments such as 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.
Corporate Other consists primarily of (i) operating results related to our MapMyFitness digital platform, which includes MapMyRun® and MapMyRide® (collectively "MMR"), and other digital business opportunities; (ii) general and administrative expenses not allocated to an operating segment, including expenses associated with centrally managed departments such as global marketing, global IT, global supply chain and innovation, and other corporate support functions; (iii) restructuring and restructuring related charges, if any; and (iv) certain foreign currency hedge gains and losses.
These fabric suppliers have primary locations in Taiwan, China, Turkey and Malaysia. The fabrics used by our suppliers and manufacturers are primarily synthetic and involve raw materials, including petroleum-based products that may be subject to price fluctuations and shortages. We also use cotton as a blended fabric in some of our apparel products.
These fabric suppliers have primary locations in Taiwan, China, Malaysia and Vietnam. The fabrics used by our suppliers and manufacturers are primarily synthetic and involve raw materials, including petroleum-based products that may be subject to price fluctuations and shortages. We also use cotton as a blended fabric in some of our apparel products.
Accessories Accessories primarily includes the sale of athletic performance gloves, bags, headwear, socks and sports masks. Some of our accessories include the technologies mentioned above and are designed with advanced fabrications to provide the same level of performance as our other products. License We have agreements with licensees to develop certain Under Armour apparel, footwear, accessories and equipment.
Accessories Accessories primarily includes the sale of athletic performance gloves, bags, headwear and socks. Some of our accessories include the technologies mentioned above and are designed with advanced fabrications to provide the same level of performance as our other products. License We have agreements with licensees to develop certain Under Armour apparel, footwear, accessories and equipment.
Our product teams also work closely with our sports marketing and sales teams and with professional, collegiate and varsity athletes to identify product developments, trends and determine market needs. Sourcing, Manufacturing and Quality Assurance Many specialty fabrics and other raw materials used in our apparel products are technically advanced products produced by third parties.
Our product teams also work closely with our sports marketing and sales teams and with professional, collegiate and young athletes to identify product developments, trends and determine market needs. Sourcing, Manufacturing and Quality Assurance Many specialty fabrics and other raw materials used in our apparel products are technically advanced products produced by third parties.
We have a license agreement with a partner in Japan, which produces, markets and sells our branded apparel, footwear and accessories. Our branded products are sold in this market to large sporting goods retailers, independent specialty stores, professional sports teams and licensee-owned retail stores. We hold a non-controlling stake in our partner.
We have a license agreement with a partner in Japan, which produces, markets and sells our branded apparel, footwear and accessories. Our branded products are sold in this market to large sporting goods retailers, independent specialty stores, professional sports teams and licensee-owned retail stores. We hold a non-controlling interest in our partner.
The fabric and other raw materials used to manufacture our apparel products 5 Table of Contents are sourced by our contracted manufacturers from a limited number of suppliers pre-approved by us . In Fiscal 2023, our top five suppliers provided approximately 38% of the fabric used in our apparel and accessories.
The fabric and other raw materials used to manufacture our apparel products are sourced by our contracted manufacturers from a limited number of suppliers pre-approved by us . In Fiscal 2024, 5 Table of Contents our top five suppliers provided approximately 38% of the fabric used in our apparel and accessories.
In the United States, where approximately 65% of our workforce is located, in addition to market-competitive pay and broad-based bonuses, our full-time teammates are eligible for healthcare benefits; health savings accounts; flexible spending accounts; retirement savings plan; paid time off; caregiver leave; adoption assistance; child and adult care resources; flexible work schedules; short and long term disability; life and accident insurance; tuition assistance; fitness benefits at on-site gyms or eligible fitness programs; commuter benefits; Under Armour merchandise discounts; and a Work-Life Assistance Program.
In the United States, where approximately 65% of our workforce is located, in addition to market-competitive pay and broad-based bonuses, our full-time teammates are eligible for healthcare benefits; health savings accounts; flexible spending accounts; retirement 8 Table of Contents savings plan; paid time off; parental leave; caregiver leave; adoption assistance; child and adult care resources; flexible work schedules; short and long term disability; life and accident insurance; fitness benefits at on-site gyms or eligible fitness programs; commuter benefits; Under Armour merchandise discounts; and a Work-Life Assistance Program.
We have implemented a hybrid working model where many of our global corporate teammates are designated as in-office for a certain number of days each week and remote for the remainder, allowing us to provide our teammates flexibility while still achieving our objectives. We believe in promoting alignment between our teammates and stockholders.
We have implemented a hybrid working model where many of our global corporate teammates are designated as in-office for three days each week and remote for the remainder, allowing us to provide our teammates flexibility while still achieving our objectives. We believe in promoting alignment between our teammates and stockholders.
Our sustainability strategy sets forth our long-term commitment to finding new ways to drive performance through sustainable innovations that not only deliver a better product for athletes, but also a better world. Our sustainability strategy is centered around three interconnected pillars—products, home field and team.
Our sustainability strategy sets forth our long-term aspiration of finding new ways to drive performance through sustainable innovations that not only deliver a better product for athletes, but also a better world. Our sustainability strategy is centered around three interconnected pillars—products, home field and team.
We will continue to aggressively police our trademarks and pursue those who infringe, both domestically and internationally. 6 Table of Contents We believe the distinctive trademarks we use in connection with our products are important in building our brand image and distinguishing our products from those of others. These trademarks are among our most valuable assets.
We will continue to aggressively police our trademarks and pursue those who infringe, both domestically and internationally. We believe the distinctive trademarks we use in connection with our products are important in building our brand image and distinguishing our products from those of others. These trademarks are among our most valuable assets.
In addition to our distinctive trademarks, we also place significant value on our trade dress, which is the overall image and appearance of our products, and we believe our trade dress helps to distinguish our products in the marketplace. We also have copyright protection covering various designs and other original works.
In addition to our distinctive trademarks, we also place significant value on our trade dress, which is the 6 Table of Contents overall image and appearance of our products, and we believe our trade dress helps to distinguish our products in the marketplace. We also have copyright protection covering various designs and other original works.
This ap proach enables us to select and create superior, technically advanced materials, curated to our specifications, while focusing our product development efforts on style, performance and fit. We seek to deliver superior performance in all products, with a mission to make athletes better.
This approach enables us to select and create superior, technically advanced materials, curated to our specifications, while focusing our product development efforts on style, performance and fit. We seek to deliver superior performance in all products, with a mission to make athletes better.
We provide our corporate teammates two meeting-free days per year designated to focusing on professional development. We also offer resources to support individual development planning, including emphasizing development opportunities as part of teammates' annual goal setting process. We invest in developing the leadership strength and capabilities of people-leaders at all levels.
We provide our corporate teammates one meeting-free day per year designated to focusing on professional development. We also offer resources to support individual development planning, including emphasizing development opportunities as part of teammates' annual goal setting process. We invest in developing the leadership strength and capabilities of people-leaders at all levels.
Cotton is a commodity that is subject to price fluctuations and supply shortages. Additionally, our footwear uses raw materials sourced from a diverse base of third-party suppliers. This includes chemicals and petroleum-based components such as rubber that are also subject to price fluctuations and supply shortages. Substantially all of our products are manufactured by unaffiliated manufacturers.
Cotton is a commodity that is subject to price fluctuations and supply shortages. Additionally, our footwear uses raw materials sourced from a diverse base of third-party suppliers. This includes chemicals, petroleum-based components and natural materials like cotton and rubber that are also subject to price fluctuations and supply shortages. Substantially all of our products are manufactured by unaffiliated manufacturers.
Factory House store products are specifically designed for sale in our Factory House stores and serve an important role in our overall inventory management by allowing us to sell a portion of excess, discontinued and out-of-season products, while maintaining the pricing integrity of our brand in our other distribution channels.
Factory House stores serve an important role in inventory management by allowing us to sell a portion of excess, discontinued and out-of-season products, while maintaining the pricing integrity of our brand in our other distribution channels. We also sell products that are specifically designed for sale in our Factory House stores.
We also post on this website our key corporate governance documents, including our board committee charters, our corporate governance guidelines and our code of conduct and ethics.
We also post on this website our key corporate governance documents, including our board committee charters, our corporate governance guidelines and our code of conduct and ethics. 10 Table of Contents
We prioritize and invest in a wide range of training and development opportunities for teammates at all levels, including through both online and instructor-led internal and external programs. All of our teammates have access to an online learning platform and knowledge database, Armour U, which offers an extensive, regularly updated library of seminars on a variety of topics.
We prioritize and invest in a wide range of training and development opportunities for teammates at all levels, including through both online and instructor-led internal and external programs. All of our teammates have access to an online learning platform and knowledge database, Armour U, which offers an extensive, regularly updated library of workshops, seminars and certification prep courses.
In addition, we must compete with others for purchasing decisions, as well as limited floor space at retailers. We believe we have been successful in this area because of the relationships we have developed and the strong sales of our products.
In addition, we must compete with others for purchasing decisions and limited floor space at retailers. We believe we have been largely successful in this area because of the relationships we have developed and the sales performance of our products.
We generally distribute our products to our retail customers and e-commerce consumers in Europe through a third-party logistics provider in the Netherlands and a bonded warehouse in the United Kingdom. We sell our apparel, footwear and accessories through independent distributors in the Middle East and Africa.
We also sell our branded products to various sports clubs and teams in Europe. We generally distribute our products to our retail customers and e-commerce consumers in Europe through a third-party logistics provider in the Netherlands and a bonded warehouse in the United Kingdom. We sell our apparel, footwear and accessories through independent distributors in the Middle East and Africa.
As of March 31, 2023, in North America, we had 176 Factory House stores primarily located in outlet centers and 18 Brand House stores throughout the United States and Canada. Consumers can also purchase our products directly from our e-commerce website.
As of March 31, 2024, in North America, we had 183 Factory House stores primarily located in outlet centers and 17 Brand House stores throughout the United States and Canada. Consumers can also purchase our products directly from our e-commerce website.
However, if retailers earn higher margins from our competitors' products or their own private label offerings, they may favor the display and sale of those products. We believe we have been able to compete successfully because of our brand image and recognition, the performance and quality of our products and our selective distribution policies.
However, if retailers experience higher demand for or earn higher margins from our competitors' products or their own private label offerings, they may favor the display and sale of those products. We believe we compete successfully because of our brand image and recognition, the performance and quality of our products and our selective distribution policies.
Consumers experience a premium expression of our brand through our Brand House stores while having broader access to our performance products. In Fiscal 2023, sales through our wholesale, direct-to-consumer and licensing channels represented 59%, 38% and 2% of net revenues, respectively.
Consumers experience a premium expression of our brand through our Brand House stores while having broader access to our performance products. In Fiscal 2024, sales through our wholesale, direct-to-consumer and licensing channels represented 57%, 41% and 2% of net revenues, respectively.
During Fiscal 2023, our licensees offered collegiate apparel and accessories, baby and youth apparel, team uniforms, socks, water bottles, eyewear and other specific hard goods equipment that feature performance advantages and functionality like our other product offerings.
During Fiscal 2024, our licensees offered collegiate apparel and accessories, baby and youth apparel, team uniforms, socks, underwear, lunch boxes, coolers, water bottles, eyewear and other specific hard goods equipment that feature performance advantages and functionality like our other product offerings.
In Fiscal 2023, substantially all of our footwear products were manufactured by eight p r imary contract manufacturers, operating primarily in Vietnam, Indonesia and China. All of our manufacturers across all product divisions are evaluated for quality systems, social compliance and financial strength by our internal teams before being selected and on an ongoing basis.
In Fiscal 2024, substantially all of our footwear products were manufactured by nine primary contract manufacturers, operating primarily in Vietnam, Indonesia and China. All of our manufacturers across all product divisions are evaluated for quality systems, social compliance and financial strength by our internal teams before being selected and on an ongoing basis.
Prior to that, he served as Chief Executive Officer and Chair of the Board of Directors from 1996, when he founded our Company, to 2019, and President from 1996 to July 2008 and August 2010 to July 2017. Mr.
He served as Executive Chair and Brand Chief from January 2020 through March 2024. Prior to that, he served as Chief Executive Officer and Chair of the Board of Directors from 1996, when he founded our Company, to 2019, and President from 1996 to July 2008 and August 2010 to July 2017. Mr.
We were incorporated as a Maryland corporation in 1996. We have registered trademarks around the globe, including UNDER ARMOUR®, HEATGEAR®, COLDGEAR®, HOVR® and the Under Armour UA Logo ®, and we have applied to register many other trademarks. This Annual Report on Form 10-K also contains additional trademarks and tradenames of our Company and our subsidiaries.
We have registered trademarks around the globe, including UNDER ARMOUR®, HEATGEAR®, COLDGEAR®, HOVR® and the Under Armour UA Logo ®, and we have applied to register many other trademarks. This Annual Report on Form 10-K also contains additional trademarks and tradenames of our Company and our subsidiaries.
As of March 31, 2023, we had approximately 15,000 teammates worldwide, including approximately 10,000 in our Brand and Factory House stores and approximately 1,400 at our distribution facilities. Approximately 7,400 of our teammates were full-time. Of our approximately 7,400 part-time teammates, approximately 6% were seasonal teammates.
As of March 31, 2024, we had approximately 15,000 teammates worldwide, including approximately 10,500 in our Brand and Factory House stores and approximately 1,200 at our distribution facilities. Approximately 6,800 of our teammates were full-time. Of our approximately 8,200 part-time teammates, approximately 7% were seasonal teammates.
Prior to that, she served as Senior Director, Managing Counsel, Corporate Affairs from January 2017 to February 2019. Before joining Under Armour, Ms. Shadman began her career as an associate at a large international law firm, in its capital markets practice.
Prior to that, she served as Senior Director, Managing Counsel, Corporate Affairs from January 2017 to February 2019. Before joining Under Armour, Ms. Shadman began her career as an associate at a large international law firm, in its capital markets practice. Kara Trent has served as President of the Americas since February 2024. Ms.
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.
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. We were incorporated as a Maryland corporation in 1996.
Our most direct competitors include, among others, NIKE, Adidas, Puma and lululemon athletica, which are large apparel and footwear companies with strong worldwide brand recognition and significantly greater resources than us. Within our international markets, we also compete with local brands that may have stronger brand recognition regionally.
Our most direct competitors include, among others, NIKE, adidas, PUMA and lululemon athletica, which are large apparel and footwear brands with strong worldwide brand recognition and in some cases, significantly greater resources than us. Within our international markets, in addition to global brands, we also compete with regional and country-specific brands that may have stronger local brand recognition.
As of March 31, 2023: • the race and ethnicity of our teammate population in the United States, including teammates in our Brand and Factory House stores and our distribution facilities, was 47% White, 24% Hispanic or Latino, 17% Black or African American, 8% Asian and 4% other; • the race and ethnicity of our "director" level and above positions in the United States was 75% White, 5% Hispanic or Latino, 9% Black or African American, 8% Asian and 3% other; and • 53% of our global teammates were women, and women represented 42% of our "director" level and above positions globally.
As of March 31, 2024: • the race and ethnicity of our teammate population in the United States, including teammates in our Brand and Factory House stores and our distribution facilities, was 46% White, 25% Hispanic or Latino, 17% Black or African American, 7% Asian and 5% other; • the race and ethnicity of our "director" level and above positions in the United States was 77% White, 8% Black or African American, 7% Asian, 4% Hispanic or Latino and 4% other; and • 53% of our global teammates were women, and women represented 45% of our "director" level and above positions globally.
In addition to building a more diverse team, we believe fostering an inclusive and ethical culture is key to our values and who we are as an organization. We believe open lines of communication are critical to fostering this environment.
In addition to building a more diverse team, we believe fostering an inclusive and ethical culture is key to our values and who we are as an organization. We believe open lines of communication are critical to fostering this environment. This starts with "tone at the top" and we emphasize the importance of our Code of Conduct.
We also believe our focus on athletic performance product style and merchandising differentiates us from our competition. In the future we expect to compete for consumer preferences and may face greater competition on pricing.
We also believe our focus on athletic performance product style and merchandising helps differentiate us from our competition. We compete for consumer preferences and expect to continue to do so in the future.
Sports Marketing Our marketing and promotion strategy begins with providing and selling our products to high-performing athletes and teams at the high school, collegiate and professional levels. We execute this strategy through outfitting agreements, professional, club and collegiate sponsorship, individual athlete and influencer agreements and by providing and selling our products directly to teams and individual athletes.
We execute this strategy through outfitting agreements, professional, club and collegiate sponsorship, individual athlete and influencer agreements and by providing and selling our products directly to teams and individual athletes.
In Fiscal 2023 , our apparel and accessories products were manufactu r ed by 33 primary contract manufacturers, operating in 20 countries, with approximately 59% of our apparel and accessories products manufactured in Jordan, Vietnam, Cambodia and Malaysia. Of our 33 primary contract manufacturers, ten produced approximately 62% of our apparel and accessories products.
In Fiscal 2024, our apparel and accessories products were manufactured by 36 primary contract manufacturers, operating in 20 countries, with approximately 63% of our apparel and accessories products manufactured in Jordan, Vietnam, Cambodia and Indonesia. Of our 36 primary contract manufacturers, ten produced approximately 68% of our apparel and accessories products.
Our North America segment accounted for approximately 65% of our net revenues for Fiscal 2023, while our EMEA, Asia-Pacific and Latin America segments combined represented approximately 34%. For Fiscal 2023, no single customer accounted for more than 10% of the Company's net revenues. North America We sell our apparel, footwear and accessories in North America through wholesale and direct-to-consumer channels.
No single customer accounted for more than 10% of the Company's net revenues for Fiscal 2024. 4 Table of Contents North America We sell our apparel, footwear and accessories in North America through wholesale and direct-to-consumer channels.
Plank also serves on the Board of Directors of the National Football Foundation and College Hall of Fame, Inc., and is a member of the Board of Trustees of the University of Maryland College Park Foundation. Stephanie Linnartz has been President and Chief Executive Officer and a member of our Board of Directors since February 2023.
Plank also serves on the Board of Directors of the National Football 9 Table of Contents Foundation and College Hall of Fame, Inc., and is a member of the Board of Trustees of the University of Maryland College Park Foundation. David Bergman has been Chief Financial Officer since November 2017. Mr.
We have always been focused on product innovation, and we are challenging ourselves to be more innovative to improve our existing materials and to create new materials that meet our athletes' expectations—all while using circular design principles to expand our products' sustainability attributes and while reducing the impact of our design, development and manufacturing processes on the environment.
We have always been focused on product innovation, and continue to challenge ourselves to improve our existing materials and to create new materials that meet our athletes' expectations. We are implementing circular design principles within our products' design and are working to reduce the environmental impact of our product development and manufacturing processes.
Marketing and Promotion We currently focus on marketing our products to consumers primarily for use in athletics, fitness, and training activities, emphasizing our ability to support the needs of our athletes at all moments of their day. We seek to drive consumer demand by building brand awareness that our products deliver advantages to help athletes perform better.
Marketing and Promotion We currently focus on marketing our products to consumers primarily for use in athletics, fitness, training activities, as well as casual use through sportswear products, emphasizing our ability to support the needs of our athletes at all moments of their day.
In Fiscal 2023, sales of apparel, footwear and accessories represented 66%, 25% and 7% of net revenues, respectively. Licensing arrangements represented 2% of net revenues. Refer to Note 11 to the Consolidated Financial Statements for net revenues by product category.
In Fiscal 2024, sales of apparel, footwear and accessories represented 66%, 24% and 7% of net revenues, respectively. Licensing arrangements represented 2% of net revenues. Refer to Note 12 to the Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K, for net revenues by product category.
We are exploring more ways to use digital technology to elevate the experience of our customers and consumers while also reducing the impact of our operations on the environment.
We are exploring more ways to use digital technology to elevate the experience of our customers and consumers while also reducing the impact of our operations on the environment. Increasingly, we are working with our supply chain to embed sustainable practices and be mindful about the sustainability profiles of key raw materials.
EMEA We sell our apparel, footwear and accessories in EMEA primarily through wholesale customers and independent distributors, along with e-commerce websites and Brand and Factory House stores we operate within Europe. We also sell our branded products to various sports clubs and teams in Europe.
In some instances, we arrange to have products shipped directly to customer-designated facilities from the factories that manufacture our products. EMEA We sell our apparel, footwear and accessories in EMEA primarily through wholesale customers and independent distributors, along with e-commerce websites and Brand and Factory House stores we operate within Europe.
This may favor larger competitors with lower production costs per unit that can spread the effect of price discounts across a larger array of products and across a larger customer base than ours.
We may face greater competition on pricing in the future, which may favor larger competitors with lower production costs per unit that can spread the effect of price discounts across a more extensive array of products and a larger base of customers and consumers.
We currently have nine teammate-led Teammate Resource Groups, which amplify business initiatives, provide networking opportunities, support community outreach and promote cultural awareness.
We currently have nine teammate-led Teammate Resource Groups, which amplify business initiatives, provide networking opportunities, support community outreach and promote cultural awareness. In addition, we have an internal diversity, equity and inclusion council, known as the Global T.E.A.M.
Total Rewards Our total rewards strategy is focused on providing market competitive and internally equitable total rewards packages that allow us to attract, engage and retain a talented, diverse and inclusive workforce.
(Teammate Equity and Accountability Movement) Council, which consists of "director" level and above corporate teammates and focuses on fostering a diverse and inclusive work environment across our organization. Total Rewards Our total rewards strategy is focused on providing market competitive and internally equitable total rewards packages that allow us to attract, engage and retain a talented, diverse and inclusive workforce.
In addition, we earn license revenues in North America based on our licensees' sales of collegiate apparel and accessories, as well as other licensed products. We distribute the majority of our products to our North American wholesale customers and our own retail stores and e-commerce channels from distribution facilities we lease and operate in California, Maryland and Tennessee.
We distribute the majority of our products to our North American wholesale customers and our own retail stores and e-commerce channels from distribution facilities we lease and operate in California, Maryland and Tennessee. In addition, we distribute our products in Canada through a third-party logistics provider.
Prior to that, she served in various HR and operations roles at Goodyear Dunlop North America Tire Inc. Mehri Shadman has been Chief Legal Officer and Corporate Secretary since October 2022. Ms. Shadman joined Under Armour in 2013 and served as Assistant Corporate Secretary from January 2017 to October 2022.
Saidi held various roles in performance Tennis Product and Marketing at adidas from May 2003 to June 2011. Mehri Shadman has been Chief Legal Officer and Corporate Secretary since October 2022. Ms. Shadman joined Under Armour in 2013 and served as Assistant Corporate Secretary from January 2017 to October 2022.
Human Capital Management Under Armour is led by its purpose— We Empower Those Who Strive for More —and our teammates, who bring their different backgrounds, experiences and perspectives, are central to driving our long-term success as an organization and brand.
Aligned with the Global Reporting Initiative Standards and the Sustainability Accounting Standards Board industry standards, our Fiscal 2023 Sustainability & Impact Report outlines our 23 goals and targets across the three pillars of our sustainability strategy (Products, Home Field, and Team) and describes our progress toward a more sustainable future. 7 Table of Contents Human Capital Management Under Armour is led by its purpose— We Empower Those Who Strive for More —and our teammates, who bring their different backgrounds, experiences and perspectives, are central to driving our long-term success as an organization and brand.
Refer to Note 19 to the Consolidated Financial Statements for net revenues by segment.
Refer to Note 19 to the Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K, for net revenues by segment.
Prior to joining the Company, Mr. Bergman worked as a C.P.A. within the audit and assurance practices at Ernst & Young LLP and Arthur Andersen LLP. David Baxter has been President of the Americas since October 2022 and served as SVP, North America Wholesale from April 2020 to October 2022. Before joining Under Armour, Mr.
Prior to joining the Company, Mr. Bergman worked as a CPA within the audit and assurance practices at Ernst & Young LLP and Arthur Andersen LLP. Shawn Curran has served as Chief Supply Chain Officer since October 2023. Before joining Under Armour, he held several leadership roles across the Gap, Inc. portfolio of companies.
We require unconscious bias training for all of our corporate teammates and our retail and distribution facility leadership, including training focused on promoting diversity during our new-hire interview process. In Fiscal 2023 , we continued a company-wide virtual series to facilitate meaningful conversations on anti-racism and social justice issues.
We encourage our teammates to "speak-up" when they have concerns and provide multiple reporting mechanisms for them to do so. We require unconscious bias training for all of our corporate teammates and our retail and distribution facility leadership, including training focused on promoting diversity during our new-hire interview process.
Latin America In Fiscal 2021, we transitioned away from direct sales operations to distributors in several countries within the Latin America region. We currently sell our apparel, footwear and accessories in Mexico through wholesale and direct-to-consumer channels.
Latin America We sell our apparel, footwear and accessories in Mexico through wholesale and direct-to-consumer channels. We distribute our products in Mexico through a third-party logistics provider.
Our Board of Directors has ongoing oversight of our human capital management strategies and programs and regularly reviews our progress towards achieving our diversity, equity and inclusion goals. We have set measurable, time-bound goals for improving diversity amongst our team, including a commitment to increase the number of historically underrepresented teammates throughout the levels of leadership within our organization.
Our Board of Directors has ongoing oversight of our human capital management strategies and programs and regularly reviews our progress towards achieving our diversity, equity and inclusion goals. We publish our representation statistics annually on our corporate website.
Net revenues generated from the sales of our products in the United States were $3.5 billion for Fiscal 2023. 4 Table of Contents Our direct-to-consumer sales are generated through our Brand and Factory House stores and e-commerce website.
We also earn license revenues in North America based on our licensees' sales of collegiate apparel and accessories, as well as other licensed products. Our direct-to-consumer sales are generated through our Brand and Factory House stores and e-commerce website.
He served as interim President and Chief Executive Officer from June 2022 through February 2023. Previously, he served as Chief Supply Chain Officer from July 2017 to January 2020 and President of Global Sourcing from September 2016 to June 2017.
Prior to that he served as EVP, Chief Operating Officer of Gap, Inc. from March 2020 to June 2021; EVP, Global Supply Chain and Product/Store Operations from March 2019 to February 2020; and EVP, Global Supply Chain and Product Operations from October 2017 to February 2019.
Removed
In addition, we distribute our products in North America through third-party logistics providers with primary locations in Canada, New Jersey and Florida. In some instances, we arrange to have products shipped directly to customer-designated facilities from the factories that manufacture our products.
Added
We seek to drive consumer demand by building brand awareness that our products deliver advantages to help athletes perform better. Sports Marketing Our marketing and promotion strategy begins with providing and selling our products to high-performing athletes and teams at the high school, collegiate and professional levels.
Removed
Increasingly, we are working with our supply chain to embed sustainable practices, and be mindful about the sustainability profiles of key raw materials. 7 Table of Contents In Fiscal 2021, we publicly announced certain environmental and sustainability goals for 2025, 2030 and 2050 that focus on reducing our greenhouse gas emissions and increasing our annual sourcing of renewable electricity in our owned and operated facilities.
Added
Loyalty Program The Company offers customer loyalty programs in the United States and throughout parts of its Asia-Pacific region, including China in which customers earn points based on purchases and other promotional activities that can be redeemed for discounts on future purchases or other rewards.
Removed
In Fiscal 2023, we published our 2021 Sustainability & Impact Report, which can be found on our website. Aligned with Global Reporting Initiative and Sustainable Accounting Standard Board industry standards, our 2021 Sustainability & Impact Report outlines our 23 goals and targets across the three pillars of our sustainability strategy and describes our progress toward a more sustainable future.
Added
Our North America segment accounted for approximately 61% of our net revenues for Fiscal 2024, while our EMEA, Asia-Pacific and Latin America segments combined represented approximately 38%. Net revenues generated from the sales of our products in the United States were $3.2 billion for Fiscal 2024.
Removed
These goals are publicly outlined on our corporate website, where we also publish our representation statistics annually. We are also committed to continuing to increase representation of women in key areas of our business particularly in leadership, commercial and technical roles globally.
Added
During Fiscal 2024, we published our Fiscal 2023 Sustainability & Impact Report, which can be found on our website.
Removed
Our annual incentive plan for all teammates, including executives, incorporates performance measures in furtherance of our diversity, equity and inclusion goals.
Added
He most recently served as EVP, Chief Operating Officer of Old Navy from July 2021 to June 2022.
Removed
This starts with "tone at the top" and we emphasize the importance of our Code of Conduct and encourage our teammates to "speak-up" when they have concerns and provide multiple reporting mechanisms for them to do so.
Added
Jim Dausch has served as Executive Vice President, Chief Strategy and Consumer Experience Officer since May 2024. Mr. Dausch joined Under Armour in July 2023 and served as Executive Vice President, Chief Consumer Officer from July 2023 to May 2024. Before joining Under Armour, Mr.
Removed
In addition, we have an internal diversity, equity and inclusion council, known as the Global T.E.A.M. 8 Table of Contents (Teammate Equity and Accountability Movement) Council, which consists of "director" level and above corporate teammates and focuses on fostering a diverse and inclusive work environment across our organization.
Added
Dausch served as the Chief Product and Digital Officer for Marriott International since 2020, where he led Marriott’s direct digital channels and spearheaded the company’s largest business transformation initiative. Prior to that role, he served as Senior Vice President, Global Technology where he played a leading role in the successful merger of Marriott and Starwood from 2016 to 2019.
Removed
Throughout the COVID-19 pandemic, we continued to invest in the health and safety of our teammates by implementing COVID-19 protection 9 Table of Contents and prevention measures at our distribution houses, Brand and Factory House retail stores and corporate offices, as well as providing a variety of additional physical, emotional and mental well-being resources.
Added
Prior to that, Mr. Dausch spent 18 years at Marriott in a variety of leadership positions in Finance, Sales & Marketing, Brand Management, Franchise Development and Operations. Earlier in his career, he held positions as a senior consultant at Ernst & Young. Yassine Saidi has served as Chief Product Officer since January 2024. Before joining Under Armour, Mr.
Removed
Before joining Under Armour, Ms. Linnartz served as the President of Marriott International, Inc. beginning in February 2021. Prior to her role as President, she served as Marriott’s Group President Consumer Operations, Technology and Emerging Businesses from 2020 to 2021, and as Marriott’s Executive Vice President and Global Chief Commercial Officer from 2013 to 2019. Ms.
Added
Saidi was the Founder and Business Strategist at AGENC-Y, a Sport, Lifestyle and Fashion product company, from September 2018 to January 2024. From June 2011 to June 2020, he held various leadership roles in SportStyle Footwear, Partnerships, Collaborations and Global Sales at PUMA. Prior to that, Mr.
Removed
Linnartz joined Marriott as a financial analyst in 1997, and held several positions in finance before moving into sales and marketing. Ms. Linnartz also serves on the Board of Directors of The Home Depot, Inc. and is a member of its Audit and Leadership Development & Compensation Committees. Colin Browne has been Chief Operating Officer since February 2020.
Added
Trent joined Under Armour in May 2015, serving in a variety of leadership roles. Most recently, she served as SVP, Managing Director, EMEA from November 2021 to January 2024. Prior to that, she served as Sr.
Removed
Prior to joining our Company, he served as Vice President and Managing Director for VF Corporation, leading its sourcing and product supply organization in Asia and Africa from November 2013 to August 2016 and as Vice President of Footwear Sourcing from November 2011 to October 2013. Prior thereto, Mr.

… 13 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

76 edited+21 added−26 removed140 unchanged
Biggest changeAlthough we believe we have clearly reflected the economics of these transactions in accordance with current rules and regulations, which are generally consistent with the arms-length standard, and the proper documentation is in place, tax authorities may propose and sustain adjustments that could result in changes that may materially impact our tax provision. 23 Table of Contents Additionally, many countries have implemented legislation and other guidance to align their international tax rules with the Organization for Economic Co-operation and Development's ("OECD") Base Erosion and Profit Shifting ("BEPS") recommendations and action plan, which aim to standardize and modernize global corporate tax policy and include changes to cross-border tax, transfer pricing documentation rules and nexus-based tax incentive practices.
Biggest changeAdditionally, many countries have implemented legislation and other guidance to align their international tax rules with the Organization for Economic Co-operation and Development's ("OECD") Base Erosion and Profit Shifting ("BEPS") recommendations and action plan, which aim to standardize and modernize global corporate tax policy and include changes to cross-border tax, transfer pricing documentation rules and nexus-based tax incentive practices.
Should any of these risks actually materialize, our business, financial condition, results of operations and future prospects could be negatively impacted. 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.
Should any of these risks actually materialize, our business, financial condition, results of operations and future prospects could be negatively impacted. 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, results of operations and financial condition.
Many of our products may be considered discretionary items for consumers. Many factors impact discretionary spending, including general economic conditions, unemployment, the availability of consumer credit and inflationary pressures and consumer confidence in future economic conditions.
Many of our products may be considered discretionary items for consumers. Many factors impact discretionary spending, including general economic conditions, unemployment, the availability of consumer credit, inflationary pressures and consumer confidence in future economic conditions.
Furthermore, a slowing economy in our key markets or a continued decline in consumer purchases of sporting goods generally could have an adverse effect on the financial health of our company. From time to time, certain of our customers have experienced financial difficulties and we have been unable to collect all or a portion of the amounts owed to us.
Furthermore, a slowing economy in our key markets or a decline in consumer purchases of sporting goods generally could have an adverse effect on the financial health of our company. From time to time, certain of our customers have experienced financial difficulties and we have been unable to collect all or a portion of the amounts owed to us.
The enactment of Pillar One and Pillar Two taxes in jurisdictions where we have operations could have a material adverse impact on our global transfer pricing arrangements, tax provision, cash tax liability, effective tax rate and profitability.
The enactment of Pillar One and Pillar Two taxes in jurisdictions where we have operations could have a material adverse impact on our global transfer pricing arrangements, tax provision, cash tax liability, effective tax rate, cash flows and profitability.
In addition, our competitors have long-term relationships with our key retail customers that are potentially more important to those customers because of the significantly larger volume and product mix that our competitors sell to them.
In addition, some of our competitors have long-term relationships with our key retail customers that are potentially more important to those customers because of the significantly larger volume and product mix that our competitors sell to them.
A failure to accurately predict the level of demand for our products could adversely impact our profitability or cause us not to achieve our expected financial results. 16 Table of Contents We rely on third-party suppliers and manufacturers to provide raw materials for and to produce our products, and we have limited control over these suppliers and manufacturers and may not be able to obtain quality products on a timely basis or in sufficient quantity.
A failure to accurately predict the level of demand for our products could adversely impact our profitability or cause us not to achieve our expected financial results. 15 Table of Contents We rely on third-party suppliers and manufacturers to provide raw materials for and to produce our products, and we have limited control over these suppliers and manufacturers and may not be able to obtain quality products on a timely basis or in sufficient quantity.
If we cannot effectively execute our long-term growth strategies while managing costs effectively, our business could be negatively impacted and we may not achieve our expected results of operations. 14 Table of Contents If we are unable to anticipate consumer preferences, successfully develop and introduce new, innovative and updated products or engage our consumers, or if consumer preferences shift away from performance products, our sales, net revenues and profitability may be negatively impacted.
If we cannot effectively execute our long-term growth strategies while managing costs effectively, our business could be negatively impacted and we may not achieve our expected results of operations. 13 Table of Contents If we are unable to anticipate consumer preferences, successfully develop and introduce new, innovative and updated products or engage our consumers, or if consumer preferences shift away from performance products, our sales, net revenues and profitability may be negatively impacted.
Similarly, we are exposed to gains and losses resulting from currency exchange rate fluctuations on transactions generated by our foreign subsidiaries in currencies other than their local currencies. In addition, the business of our independent manufacturers may also be disrupted by currency exchange rate fluctuations by making their purchases of raw materials more expensive and more difficult to finance.
Similarly, we are exposed to gains and losses resulting from currency exchange rate fluctuations on transactions generated by our foreign subsidiaries in currencies other than their functional currencies. In addition, the business of our independent manufacturers may also be disrupted by currency exchange rate fluctuations by making their purchases of raw materials more expensive and more difficult to finance.
We must also continually evaluate the need to expand critical functions in our business, including sales and marketing, product development and distribution functions, our management information systems and other processes and technology. We may not manage these efforts cost-effectively or these efforts could increase the strain on our existing resources.
We must also continually evaluate the need to expand critical functions in our business, including sales and marketing, product development, distribution and corporate services functions, our management information systems and other processes and technology. We may not manage these efforts cost-effectively or these efforts could increase the strain on our existing resources.
The loss of the services of our senior management or other key employees could make it more difficult to successfully operate our business and achieve our business goals and could result in harm to key customer relationships, loss of key information, expertise or know-how and unanticipated recruitment and training costs. Changes in our senior management can also disrupt our business.
The loss of the services of our senior management or other key employees could make it more difficult to successfully operate our business and achieve our business goals and could result in harm to key customer relationships, loss of key information, expertise or know-how and unanticipated recruitment and training costs. Changes in our senior management may also disrupt our business.
In addition, we may from time to time exit relationships with certain wholesale customers to further drive our premium brand position or for other reasons. This may negatively impact our net revenues if we are unable to replace those sales with additional sales to our other customers or direct sales to consumers.
In addition, we may from time to time exit or scale down relationships with certain wholesale customers to further drive our premium brand position or for other reasons. This may negatively impact our net revenues if we are unable to replace those sales with additional sales to our other customers or direct sales to consumers.
Factors that could affect our ability to accurately forecast demand for our products include: changing consumer demand for our products; product introductions by competitors; unanticipated changes in general market or economic conditions or other factors, which may result in cancellations of advance orders or a reduction or increase in the rate of reorders or at-once orders placed by retailers; the impact on consumer demand due to unseasonable weather conditions, which may become more frequent or severe as a result of climate change; and terrorism or acts of war, or the threat thereof, political or labor instability or unrest or public health concerns and disease epidemics, such as the current COVID-19 pandemic.
Factors that could affect our ability to accurately forecast demand for our products include: changing consumer demand for our products; product introductions by competitors; unanticipated changes in general market or economic conditions or other factors, which may result in cancellations of advance orders or a reduction or increase in the rate of reorders or at-once orders placed by retailers; the impact on consumer demand due to unseasonable weather conditions, which may become more frequent or severe as a result of climate change; and terrorism or acts of war, or the threat thereof, political or labor instability or unrest or public health concerns and disease epidemics.
For example, while we require our suppliers, manufacturers and licensees of our products to operate their businesses in compliance with applicable laws and 15 Table of Contents regulations, as well as the social and other standards and policies we impose on them, including our code of conduct, we do not control the conduct of these third parties.
For example, while we require our suppliers, manufacturers and licensees of our products to operate their businesses in compliance with applicable laws and regulations, as well as the social and other standards and policies we impose on them, including our supplier code 14 Table of Contents of conduct, we do not control the conduct of these third parties.
Our inability to compete successfully against our competitors and maintain our gross margin could have a negative effect on our brand image and a material adverse effect on our business, financial condition and results of operations. Our profitability may decline or our growth may be negatively impacted as a result of increasing pressure on pricing.
Our inability to compete successfully against our competitors and maintain our gross margin could have a negative effect on our brand image and a material adverse effect on our business, financial condition and results of operations. 11 Table of Contents Our profitability may decline or our growth may be negatively impacted as a result of increasing pressure on pricing.
If we fail to comply with these regulations, we could become subject to significant penalties or claims or be required to stop selling or otherwise recall products, which could negatively impact our results of operations and disrupt our ability to conduct our business, as well as damage our brand image with consumers.
If we or any of our suppliers fail to comply with these regulations, we could become subject to significant penalties or claims or be required to stop importing, selling or otherwise recall products, which could negatively impact our results of operations and disrupt our ability to conduct our business, as well as damage our brand image with consumers.
These requirements are enforced by various federal agencies, including the Federal Trade Commission, Consumer Product Safety Commission and state attorneys general in the United States, as well as by various other federal, state, provincial, local and international regulatory authorities in the locations in which our products are distributed or sold.
These requirements are enforced by various federal agencies, including the Federal Trade Commission, Consumer Product Safety Commission, Customs and Border Protection and state attorneys general in the United States, as well as by various other federal, state, provincial, local and international regulatory authorities in the locations in which our products are distributed or sold.
Our future success is substantially dependent on the continued service of our senior management, particularly Kevin Plank, our founder, Executive Chair and Brand Chief, Stephanie Linnartz, our President and Chief Executive Officer, other top executives and key employees who have substantial experience and expertise in our business, including product creation, innovation, sales, marketing, supply chain, informational technology, operational and other support personnel.
Our future success is substantially dependent on the continued service of our senior management, particularly Kevin Plank, our founder, President and Chief Executive Officer, other top executives and key employees who have substantial experience and expertise in our business, including product creation, innovation, sales, marketing, supply chain, informational technology, operational and other support personnel.
Despite our strategic enforcement efforts, we may not be able to prevent adequately infringement of our trademarks and proprietary rights by others, including imitation of our products and misappropriation of our brand, and intellectual property protection may be unavailable or limited in some jurisdictions.
Despite our strategic enforcement 22 Table of Contents efforts, we may not be able to adequately prevent infringement of our trademarks and proprietary rights by others, including imitation of our products and misappropriation of our brand, and intellectual property protection may be unavailable or limited in some jurisdictions.
If the financial condition of our customers declines, our financial condition and results of operations could be adversely impacted. In Fiscal 2023, sales through our wholesale channel represented approximately 59% of our net revenues. We extend credit to our wholesale customers based on an assessment of a customer's financial condition, generally without requiring collateral or getting customer insurance against non-collection.
If the financial condition of our customers declines, our financial condition and results of operations could be adversely impacted. In Fiscal 2024, sales through our wholesale channel represented approximately 57% of our net revenues. We extend credit to our wholesale customers based on an assessment of a customer's financial condition, generally without requiring collateral or getting customer insurance against non-collection.
As a result of these seasonal and quarterly fluctuations, we 21 Table of Contents believe that comparisons of our operating results between different quarters within a single year are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of our future performance.
As a result of these seasonal and quarterly fluctuations, we believe that comparisons of our operating results between different quarters within a single year are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of our future performance.
We must also comply with increasingly complex and evolving regulatory standards throughout the world enacted to protect personal information and other data, including the General Data Protection Regulation, the ePrivacy Directive, the California Consumer Privacy Act of 2018, the California Privacy Rights Act, state privacy laws in Virginia, Utah, Connecticut and Colorado and the Personal Information Protection Law in China.
We must also comply with increasingly complex and evolving regulatory standards throughout the world enacted to protect personal information and other data, including the General Data Protection Regulation, the ePrivacy Directive, the California Consumer Privacy Act of 2018, the California Privacy Rights Act, state privacy laws in Colorado, Connecticut, Florida, Montana, Oregon, Texas, Utah and Virginia and the Personal Information Protection Law in China.
From time to time, our results of operations have been, and may continue to be, adversely impacted by foreign currency exchange rate fluctuations. In addition, we have previously designated cash flow hedges against certain forecasted transactions.
From time to time, our results of operations have been, and may in the future be, adversely impacted by foreign currency exchange rate fluctuations. In addition, we have previously designated cash flow hedges against certain forecasted transactions.
However, as competition in the performance apparel and footwear industry has increased, the costs associated with athlete sponsorships and official supplier licensing agreements, including the costs of obtaining and retaining these sponsorships and agreements, have varied and at times increased greatly.
However, as competition in the performance apparel and footwear industry has increased, the costs associated with athlete sponsorships and official supplier licensing agreements, including the costs of obtaining and retaining these 17 Table of Contents sponsorships and agreements, have varied and at times increased greatly.
We have published, and may continue to publish, a sustainability report and other information describing our practices, targets and commitments on a variety of sustainability and human rights matters, including relating to our actions to address climate change, environmental targets and compliance, social and labor policies and practices, human capital management matters (including those relating to diversity, equity and inclusion) and the materials and manufacturing of our products.
We have published, and may continue to publish, a sustainability report and other information describing our practices, targets and commitments on a variety of sustainability and human rights matters, including relating to our actions to address climate change, environmental targets and compliance, social and labor policies and practices, human capital management matters and the materials and manufacturing of our products.
In addition, during weak economic conditions, such as periods of high inflation and recessionary fears, customers may be more cautious with orders or may slow investments necessary to maintain a high quality in-store experience for consumers, which may result in lower sales of our products.
In addition, during weak economic conditions, such as periods of high inflation, recessionary fears or reduced consumer traffic and purchasing, customers may be more cautious with orders or may slow investments necessary to maintain a high quality in-store experience for consumers, which may result in lower sales of our products.
Our ability to continue to borrow amounts under our amended credit agreement is limited by continued compliance with these financial covenants, and in the past we have amended our credit agreement to provide certain relief from and revisions to our financial covenants for specified periods to provide us with sufficient access to liquidity during those periods.
Our ability to continue to borrow amounts under our amended credit agreement is limited by continued compliance with these financial covenants, and in the past we have amended our credit agreement to provide certain relief from and revisions to our financial covenants for specified periods to provide us 19 Table of Contents with sufficient access to liquidity during those periods.
We are subject to numerous risks and global events beyond our control which could negatively impact consumer spending or the operations of us or our customers or business partners, and therefore our results of operations, including: political or labor unrest; military conflict (such as the ongoing conflict between Russia and Ukraine); terrorism; public health crises, disease epidemics or pandemics (such as COVID-19); natural disasters and extreme weather conditions, which may increase in 13 Table of Contents frequency and severity due to climate change; economic instability resulting in the disruption of trade from foreign countries; the imposition of new laws, regulations and rules, including those relating to sustainability and climate change, data privacy, labor conditions, minimum wage, quality and safety standards and disease epidemics or other public health concerns; changes in trade policy or actions of foreign or U.S. governmental authorities impacting trade and foreign investment, particularly during periods of heightened tension between U.S. and foreign governments, including the imposition of new import limitations, duties, tariffs, anti-dumping penalties, trade restrictions or restrictions on the transfer of funds; inflation; and changes in local economic conditions in countries where our stores, customers, manufacturers and suppliers are located.
We are subject to numerous risks and global events beyond our control which could negatively impact consumer spending or the operations of us or our customers or business partners, and therefore our results of operations, including: political or labor unrest; military conflict (such as the ongoing conflict between Russia and Ukraine, the ongoing war between Israel and Hamas and the conflict in the Red Sea region); terrorism; public health crises, disease epidemics or pandemics; natural disasters and extreme weather conditions, which may increase in frequency and severity due to climate change; economic instability resulting in the disruption of trade from foreign countries; the imposition of new laws, regulations and rules, including those relating to sustainability and climate change, data privacy, labor conditions, minimum wage, quality and safety standards and disease epidemics or other public health concerns; changes in diplomatic and trade relationships, trade policy or actions of foreign or U.S. governmental authorities impacting trade and foreign investment, particularly during periods of heightened tension between U.S. and foreign governments, including the imposition of new import limitations, duties, tariffs, anti-dumping penalties, trade restrictions or restrictions on the transfer of funds; inflation; and changes in local economic conditions in countries where our stores, customers, manufacturers and suppliers are located.
Increased competition could result in reductions in floor space in retail locations or reductions in sales or reductions in the prices of our products, and if retailers have better sell through or earn greater margins from our competitors' products, they may favor the display and sale of those products.
Increased competition could result in reductions in floor space in retail locations or reductions in sales or reductions in the prices of our products, and if retailers have better sell through or earn greater margins from our competitors' products or from their own private label products, they may favor the display and sale of those products.
Depending on the system and scope of disruption, 19 Table of Contents in some instances a service interruption or shutdown could have a material adverse impact on our operating activities or results of operations.
Depending on the system and scope of disruption, in some instances a service interruption or shutdown could have a material adverse impact on our operating activities or results of operations.
From time to time, we may engage in acquisition opportunities we believe are complementary to our business and brand. Integrating acquired businesses can require significant efforts and resources, which could divert management attention from more profitable business operations.
From time to time, we may engage in acquisition opportunities we believe are complementary to our business and brand. Integrating acquired businesses can require significant efforts and resources, which could 16 Table of Contents divert management attention from more profitable business operations.
From time to time, global macroeconomic factors, such as the ongoing impacts of COVID-19, have caused and may continue to cause uncertainty in forecasted cash flows, which has resulted and may in the future result in the de-designation of certain hedged transactions.
From time to time, global macroeconomic factors, such as the COVID-19 pandemic, have caused and may in the future to cause uncertainty in forecasted cash flows, which has resulted and may in the future result in the de-designation of certain hedged transactions.
In addition, the adoption of new legislation, regulations or industry standards, including related to data privacy, sustainability and climate change, or changes in the interpretation of existing regulations may result in significant unanticipated compliance costs or 22 Table of Contents discontinuation of product sales and may impair the marketing of our products, resulting in significant loss of net revenues.
In addition, the adoption of new legislation, regulations, industry standards and reporting obligations, including related to data privacy, sustainability and climate change, or changes in the interpretation of existing regulations may result in significant unanticipated compliance costs or discontinuation of product sales and may impair the marketing of our products, resulting in significant loss of net revenues.
The failure to increase or maintain our sales to these customers as much as we anticipate would have a negative impact on our growth prospects and any decrease or loss of these key customers' business could result in a material decrease in our net revenues and net income or loss.
The failure to increase or maintain our sales to these customers as much as we anticipate has had and may continue to have a negative impact on our growth prospects and any decrease or loss of these key customers' business could result in a material decrease in our net revenues and net income or loss.
Significant price fluctuations, including due to inflation, or shortages in petroleum or other raw materials can materially adversely affect our cost of goods sold. In addition, certain of our manufacturers are subject to government regulations related to wage rates, and therefore the labor costs to produce our products may fluctuate.
Significant price fluctuations, including due to inflation, trade relations, sanctions, or other geopolitical or economic conditions, or shortages in petroleum or other raw materials can materially adversely affect our cost of goods sold. In addition, certain of our manufacturers are subject to government regulations related to wage rates, and therefore the labor costs to produce our products may fluctuate.
Our Class A common stock has one vote per share, our Class B common stock has 10 votes per share and our Class C common stock has no voting rights (except in limited circumstances). Our Executive Chair and Brand Chief, Kevin Plank, beneficially owns all outstanding shares of Class B common stock. As a result, Mr.
Our Class A common stock has one vote per share, our Class B common stock has 10 votes per share and our Class C common stock has no voting rights (except in limited circumstances). Our founder and President and Chief Executive Officer, Kevin Plank, beneficially owns all outstanding shares of Class B common stock. As a result, Mr.
Substantially all of our products are manufactured by unaffiliated manufacturers, and, in Fiscal 2023, ten manufacturers produced approximately 65% of our apparel and accessories products, and six produced substantially all of our footwear products. We have no long-term contracts with our suppliers or manufacturing sources, and we compete with other companies for fabrics, raw materials and production capacity.
Substantially all of our products are manufactured by unaffiliated manufacturers, and, in Fiscal 2024, ten manufacturers produced approximately 68% of our apparel and accessories products, and nine produced substantially all of our footwear products. We have no long-term contracts with our suppliers or manufacturing sources, and we compete with other companies for fabrics, raw materials and production capacity.
Refer to Note 9 to our Consolidated Financial Statements of this Annual Report on Form 10-K for additional information regarding these specific matters. Legal proceedings in general, and securities and class action litigation and regulatory investigations in particular, can be expensive and disruptive.
Refer to Note 10 to our Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K, for additional information regarding these specific matters. Legal proceedings in general, and securities and class action litigation and regulatory investigations in particular, can be expensive and disruptive.
In addition, while one of our growth strategies has been to increase floor space for our products in retail stores and in certain markets expand our distribution to other retailers, retailers have limited resources and floor space, and we must compete with others to develop relationships with them.
In addition, while one of our growth strategies has been to increase floor space for our products in retail stores and in certain markets expand our distribution to other retailers, retailers have limited resources, floor space, and, in some cases, their own private label products, and we must compete with others to develop relationships with them.
Certain customers, consumers, investors and other stakeholders are increasingly focusing on the sustainability and human rights practices of companies, including those related to climate change and diversity, equity and inclusion. If our sustainability and human rights practices do not meet such stakeholder expectations and standards, which continue to evolve, our brand and reputation could be negatively impacted.
Certain customers, consumers, investors and other stakeholders are increasingly focusing on the sustainability and human rights practices of companies, including those related to climate change and diversity, equity and inclusion. If our practices do not meet the expectations of various stakeholders, which can vary greatly and continue to evolve, our brand and reputation could be negatively impacted.
Furthermore, based on its financial performance, our ability to recover our investment in the long term may be limited. Our financial results could be adversely impacted by currency exchange rate fluctuations. During Fiscal 2023, we generated approximately 34% of our consolidated net revenues outside the United States.
Furthermore, based on its financial performance, our ability to recover our investment in the long term may be limited. 20 Table of Contents Our financial results could be adversely impacted by currency exchange rate fluctuations. During Fiscal 2024, we generated approximately 44% of our consolidated net revenues outside the United States.
We have limited experience with regulatory requirements and market practices in certain regions outside of North America, and may face difficulties expanding into and successfully operating in those markets, including differences in regulatory environments, labor and market practices, and difficulties in keeping abreast of market, business and technical developments and consumers' tastes and preferences.
Addressing regulatory requirements and market practices in certain regions outside of North America is challenging, and we may face difficulties expanding into and successfully operating in those markets, including differences in regulatory environments, labor and market practices, and difficulties in keeping abreast of market, business and technical developments and consumers' tastes and preferences.
We have historically provided supply chain finance support to certain of our supply chain partners. In the past, the financial markets supporting supply chain finance programs experienced disruption that resulted in a temporary disruption to our program and challenged the cash flow and liquidity of our partners.
In the past, the financial markets supporting supply chain finance programs experienced disruption that resulted in a temporary disruption to our program and challenged the cash flow and liquidity of our partners.
In addition, our non-voting Class C common stock has traded at a discount to our Class A common stock, and there can be no assurance that this will not continue.
In addition, our non-voting Class C common stock has traded at a discount to our Class A common stock, and there can be no assurance that this will not continue. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Any of the foregoing may require us to make additional investments. Failure to monitor, adapt, build resilience and develop solutions against the physical and transitional impacts from climate change may negatively impact our brand and reputation, sales of our products and our results of operations.
Failure to monitor, adapt, build resilience and develop solutions against the physical and transitional impacts from climate change may negatively impact our brand and reputation, sales of our products and our results of operations.
Our business has been and may continue to be materially impacted by the COVID-19 pandemic, which has negatively affected the U.S. and global economies, disrupted global supply chains and financial markets, and led to significant travel and business restrictions, including mandatory closures, orders to "shelter-in-place" and restrictions on how businesses operate.
The COVID-19 pandemic negatively affected the U.S. and global economies, disrupted global supply chains, financial markets and consumer spending, and led to significant travel and business restrictions, including mandatory closures, orders to "shelter-in-place" and restrictions on how businesses operate.
From time to time, certain of our partners have experienced and may continue to experience disruptions to their operations, including cyber-related disruptions and disruptions related to the COVID-19 pandemic.
From time to time, certain of our partners have experienced and may continue to experience disruptions to their operations, including cyber-related disruptions and disruptions related to public health crises.
We have also developed licensing agreements to be an official supplier of footwear and/or performance apparel to a variety of professional sports leagues and clubs.
We have developed licensing and sponsorship agreements with a variety of sports teams and athletes at the collegiate and professional level to be their official supplier of performance apparel and footwear. We have also developed licensing agreements to be an official supplier of footwear and/or performance apparel to a variety of professional sports leagues and clubs.
Failure to comply with these regulatory standards could result in a violation of data privacy laws and regulations and subject us to legal proceedings against us by governmental entities or others, imposition of fines by governmental authorities, negative publicity and damage to our brand image, all of which could have a negative impact on our profitability.
Failure to comply with these regulatory standards could result in a violation of data privacy laws and regulations and subject us to legal proceedings against us by governmental entities or others, imposition of fines by governmental authorities, negative publicity and damage to our brand image, all of which could have a negative impact on our profitability. 21 Table of Contents Data security or privacy breaches could damage our reputation, cause us to incur additional expense, expose us to litigation and adversely affect our business and results of operations.
There can be no assurance that these attacks will not have a material impact in the future. Any breach of our data security or that of our service providers could result in an unauthorized release or transfer of customer, consumer, vendor or employee information, or the loss of money, valuable business data or cause a disruption in our business.
Any breach of our data security or that of our service providers could result in an unauthorized release or transfer of customer, consumer, vendor or employee information, or the loss of money, valuable business data or cause a disruption in our business.
From time to time, we also enter into collaborative arrangements with athletes, designers or other partners. Negative publicity regarding these partners could negatively impact our brand image and result in diminished loyalty to our brand, regardless of whether such claims are accurate. Furthermore, social media can potentially accelerate and increase the scope of negative publicity.
Negative publicity regarding these partners or legal or regulatory matters could negatively impact our brand image and result in diminished loyalty to our brand, regardless of whether such claims are accurate. Furthermore, social media can potentially accelerate and increase the scope of negative publicity.
Many of our competitors have significant competitive advantages, including greater financial, distribution, marketing, digital and other resources; longer 12 Table of Contents operating histories; better brand recognition among consumers; more experience in global markets; greater ability to invest in technology, the digital consumer experience and innovations around sustainability; and greater economies of scale.
Many of our competitors have significant competitive advantages, including greater financial, distribution, marketing, digital and other resources; longer operating histories; better brand recognition among consumers; more experience in global markets; greater ability to invest in technology and adapt to changes, including the use of data analytics, artificial intelligence, machine learning and the digital consumer experience; greater ability to source sustainable and traceable raw materials at cost-effective prices and invest in innovations around sustainability; and greater economies of scale.
We may incur additional costs, face market and technological barriers, require additional resources or change investment decisions, which may require us to adjust or restate some or all of our targets and commitments.
It is possible that stakeholders may not be satisfied with such disclosures, practices, targets or commitments or the speed or success of their adoption. We may incur additional costs, face market and technological barriers, require additional resources or change investment decisions, which may require us to adjust or restate some or all of our targets and commitments.
Significant delays or disruption in receiving and distributing our products, has had, and may again have, an adverse effect on our business, including canceled orders by customers, unanticipated inventory accumulation or shortages, increased expense (including air freight) to deliver our products and reduced net revenues and net income or higher net loss. 17 Table of Contents If we fail to successfully manage or realize expected results from significant transactions or investments, or if we are required to recognize an impairment of our goodwill or other intangible assets, it may have an adverse effect on our results of operations and financial position.
Significant delays or disruption in receiving and distributing our products, has had, and may again have, an adverse effect on our business, including canceled orders by customers, unanticipated inventory accumulation or shortages, increased expense (including air freight) to deliver our products and reduced net revenues and net income or higher net loss.
Any near or long-term economic disruptions in markets where we sell our products, particularly in the United States, China or other key markets, may materially harm our sales, profitability and financial condition and our prospects for growth. 11 Table of Contents The COVID-19 pandemic has caused and may continue to cause significant disruption in our industry, which has and may continue to materially impact our business, financial condition and results of operations.
Any near or long-term economic disruptions in markets where we sell our products, particularly in the United States or other key markets, may materially harm our sales, profitability and financial condition and our prospects for growth.
Manufacturing delays or unexpected transportation delays, such as those caused by COVID-19 related global logistics challenges, have caused and may continue to cause us to rely more heavily on airfreight to achieve timely delivery to our customers. These factors have and may continue to significantly increase our freight costs.
Manufacturing delays or unexpected transportation delays have caused and may continue to cause us to rely more heavily on airfreight to achieve timely delivery to our customers. These factors have significantly increased our freight costs in the past, and may do so again in the future.
Climate change and an increased focus on sustainability issues, including those related to climate change, human rights and diversity, equity and inclusion, may have an adverse effect on our brand, sales of our products and our results of operations.
Climate change and an increased regulatory and stakeholder focus on sustainability and social matters may have an adverse effect on our brand, sales of our products and our results of operations.
Our insurance may not cover all claims that may be asserted against us, and we are unable 24 Table of Contents to predict how long the legal proceedings to which we are currently subject will continue.
Our insurance may not cover all claims that may be asserted against us, and we are unable to predict how long the legal proceedings to which we are currently subject will continue. An unfavorable outcome of any legal proceeding may have a material adverse impact on our business, financial condition and results of operations or our stock price.
In addition, as part of our growth strategy, we are investing significantly in enhancing our online platform capabilities, implementing systems to evolve towards a more omni-channel approach to service our consumers and establishing and growing consumer loyalty programs in certain regions.
In addition, as part of our growth strategy, we are investing significantly in enhancing our online platform capabilities and establishing and growing consumer loyalty programs in certain regions. We are also investing in capabilities and tools to drive higher digital engagement with our consumers and create new digital experiences.
Since 2017, we have executed three separate restructuring plans designed to more closely align our financial resources against the critical priorities of our business and rebalance our cost base to further improve future profitability and cash flow generation.
We may not fully realize the expected benefits of our restructuring plans or other operating or cost-saving initiatives, which may negatively impact our profitability. We have recently announced a restructuring plan designed to more closely align our financial resources against the critical priorities of our business and rebalance our cost base to further improve future profitability and cash flow generation.
If we fail to achieve targeted operating improvements and/or cost reductions, our profitability and results of operations could be negatively impacted, which may be dilutive to our earnings in the short term. 20 Table of Contents Financial Risks Our credit agreement contains financial covenants, and both our credit agreement and debt securities contain other restrictions on our actions, which could limit our operational flexibility or otherwise adversely affect our financial condition.
If we fail to achieve targeted operating improvements and/or cost reductions, our profitability and results of operations could be negatively impacted, which may be dilutive to our earnings in the short term.
Global and U.S. economic conditions continue to be uncertain, particularly in light of rising interest rates, recession fears and instability in the U.S. banking system.
Global and U.S. economic conditions and trends in consumer discretionary spending continue to be uncertain, particularly in light of the potential impacts of inflation volatility in the U.S. and global markets and recession fears.
Many countries in which we have operations are required to, or voluntarily plan to, implement Pillar Two taxes.
Many countries in which we have operations are required to, or voluntarily plan to, implement Pillar Two taxes. Many jurisdictions have adopted or announced an intention to adopt Pillar Two for tax years beginning on or after January 1, 2024.
We have, from time to time, financed our liquidity needs in part from borrowings made under our credit facility and the issuance of debt securities. Our Senior Notes limit our ability to, subject to certain significant exceptions, incur secured debt and engage in sale leaseback transactions.
Our Senior Notes limit our ability to, subject to certain significant exceptions, incur secured debt and engage in sale leaseback transactions.
The failure to successfully transition and assimilate key employees could adversely affect our results of operations. In addition, to profitably grow our business and manage our operations, we will need to continue to attract, retain and motivate highly talented management and other employees with a range of skills, backgrounds and experiences.
In addition, to profitably grow our business and manage our operations, we will need to continue to attract, retain and motivate highly talented management and other employees with a range of skills, backgrounds and experiences. Competition for experienced and well-qualified employees in our industry is intense and we may not be successful in attracting and retaining such personnel.
If we experience any significant disruption to our financial information systems that we are unable to mitigate, our ability to timely report our financial results could be impacted, which could negatively impact our stock price.
If we experience any significant disruption to our financial information systems that we are unable to mitigate, our ability to timely report our financial results could be impacted, which could negatively impact our stock price. 18 Table of Contents Our future success is substantially dependent on the continued service of our senior management and other key employees, and our continued ability to attract and retain highly talented new team members.
Moreover, our suppliers may not be able to fill our orders in a timely manner depending on market conditions or increased demand for product. For example, in Fiscal 2021, certain of our manufacturers experienced significant financial and operational disruption due to COVID-19, including in key sourcing countries.
Moreover, our suppliers may not be able to fill our orders in a timely manner depending on market conditions or increased demand for product. We have historically provided supply chain finance support to certain of our supply chain partners.
Like other companies in our industry, we have in the past experienced, and we expect to continue to experience, cyberattacks, including phishing, cyber fraud incidents and other attempts to gain unauthorized access to our systems. These attempted attacks have increased throughout the COVID-19 pandemic and with our implementation of a hybrid work model for many of our global corporate employees.
We also rely on third parties for the operation of certain of our e-commerce websites, and do not control these service providers. Like other companies in our industry, we have in the past experienced, and we expect to continue to experience, cyberattacks, including phishing, cyber fraud incidents and other attempts to gain unauthorized access to our systems.
Any failure, or perceived failure, to meet stakeholder expectations or our targets or commitments could harm our reputation, negatively impact our employee retention or have a negative effect on our sales and results of operations. 18 Table of Contents The costs and return on our investments for our sports marketing sponsorships may become more challenging and this could impact the value of our brand image.
Any failure, or perceived failure, to meet our targets, commitments or stakeholder expectations or to comply with reporting regulations could harm our reputation, negatively impact our employee retention, the willingness of our suppliers to do business with us or investor interest in our securities, or have a negative effect on our sales and results of operations.
We collect and store a variety of information regarding our consumers, and on some of our platforms allow users to share their personal information with each other and with third parties. We also rely on third parties for the operation of certain of our e-commerce websites, and do not control these service providers.
We collect proprietary business information and personally identifiable information in connection with digital marketing, digital commerce, our in-store payment processing systems and our digital business (including our MapMyFitness platform). We collect and store a variety of information regarding our consumers, and on some of our platforms allow users to share their personal information with each other and with third parties.
In addition, governmental authorities in various countries have proposed, and are likely to continue to propose, legislation and regulation to reduce or mitigate the impacts of climate change. Various countries and regions are following different approaches to the regulation of climate change, which could increase the complexity of, and potential cost related to complying with, such regulations.
In addition, governmental authorities in various countries have enacted or proposed, and are likely to continue to propose, legislation and regulation regarding public reporting, business practices and marketing of goods related to sustainability and social matters, including reducing or mitigating the impacts of climate change.
A key element of our marketing strategy has been to create a link in the consumer market between our products and professional, collegiate and young athletes. We have developed licensing and sponsorship agreements with a variety of sports teams and athletes at the collegiate and professional level to be their official supplier of performance apparel and footwear.
The costs and return on our investments for our sports marketing sponsorships may become more challenging and this could impact the value of our brand image. A key element of our marketing strategy has been to create a link in the consumer market between our products and professional, collegiate and young athletes.
We have utilized cash on hand and cash generated from operations, accessed our credit facility and issued debt securities as sources of liquidity. For example, during the first and second quarters of Fiscal 2020, our cash generated from operations was negatively impacted due to widespread temporary store closures as a result of the COVID-19 pandemic.
We have utilized cash on hand and cash generated from operations, accessed our credit facility and issued debt securities as sources of liquidity. As of March 31, 2024, our cash and cash equivalents totaled $859 million.
In the event that one or more of these factors make it undesirable or impractical for us to conduct business in a particular country, our business could be adversely affected. Business and Operational Risks We derive a substantial portion of our sales from large wholesale customers.
In the event that one or more of these factors make it undesirable or impractical for us to conduct business in a particular country, our business could be adversely affected. 12 Table of Contents Global or regional public health emergencies, such as the COVID-19 pandemic, have caused and may in the future cause significant disruption in our industry, which has had and may in the future have a material or adverse impact our business, financial condition and results of operations.
Furthermore, publicity surrounding ongoing legal proceedings, even if resolved favorably for us, could result in additional legal proceedings against us, as well as damage our brand image. Risks Related to our Common Stock Kevin Plank, our Executive Chair and Brand Chief, controls the majority of the voting power of our common stock.
Risks Related to our Common Stock Kevin Plank, our founder and President and Chief Executive Officer, controls the majority of the voting power of our common stock.
Additionally, the COVID-19 pandemic has caused and may continue to cause global logistical challenges, including increased freight costs, shipping container shortages, transportation delays, labor shortages and port congestion.
For example, the COVID-19 pandemic reduced consumer traffic; negatively impacted the operation of our and our wholesale customers’ retail stores; caused global logistical challenges, including increased freight costs, shipping container shortages, transportation delays, labor shortages and port congestion; negatively impacted our cash generated from operations during certain periods; and led to significant volatility in the capital markets, which adversely impacted our stock price.
Removed
The pandemic had an adverse impact on our business and results of operations, particularly in Fiscal 2020, and although conditions improved during Fiscal 2021, the Transition Period and Fiscal 2023, adverse impacts may continue.
Added
Failure to acknowledge or react appropriately to the entry or growth of a viable competitor or disruptive force could affect our ability to differentiate and grow our brand.
Removed
The extent of the impact of the COVID-19 pandemic on our business and financial performance will depend on future developments, including any resurgences, which are uncertain and cannot be predicted.
Added
The COVID-19 pandemic and related government, private sector and individual consumer responsive actions had an adverse impact on our business and results of operations, as well as the businesses and results of operations of our business partners, including our customers, suppliers and vendors.

… 43 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

4 edited+1 added−0 removed2 unchanged
Biggest changeWe also lease additional office space for sales, quality assurance and sourcing, marketing and administrative functions. We anticipate that we will be able to extend these leases that expire in the near future on satisfactory terms or relocate to other locations.
Biggest changeWe anticipate that we will be able to extend these leases that expire in the near future on satisfactory terms or relocate to other locations. Third-Party Operated We have distribution centers which are leased and operated by third-party logistics providers in Canada, the United Kingdom, Netherlands, Hong Kong and Panama.
These leases expire at various dates, with the earliest lease termination date occurring in December 2027. We believe our distribution facilities and space available through our third-party logistics providers will be adequate to meet our short term needs.
These leases expire at various dates, with the earliest lease termination date occurring in December 2027. We believe our distribution facilities and space available through our third-party logistics providers, described below, will be adequate to meet our short term needs.
ITEM 2. PROPERTIES The following includes a summary of the principal properties that we own or lease as of March 31, 2023. Our principal executive and administrative offices are located at an office complex in Baltimore, Maryland, the majority of which we own and a portion of which we lease.
ITEM 2. PROPERTIES 25 Table of Contents The following includes a summary of the principal properties that we own or lease as of March 31, 2024. Company Operated Our principal executive and administrative offices are located at an office complex in Baltimore, Maryland, the majority of which we own and a portion of which we lease.
In addition, as of March 31, 2023, we leased 439 Brand and Factory House stores located primarily in the United States, China, Canada, Mexico, Korea, Chile, Australia, the United Kingdom, and Malaysia with lease 25 Table of Contents termination dates occurring in 2023 through 2035.
As of March 31, 2024, we leased 440 Brand and Factory House retail stores located primarily in the United States, China, Canada, Mexico, Korea, Australia, the United Kingdom and Malaysia with lease termination dates occurring in 2024 through 2038. We also lease additional office space for sales, quality assurance and sourcing, marketing and administrative functions.
Added
During Fiscal 2024, we entered into an agreement with a new third-party logistics provider to operate a distribution center in the Netherlands, which is expected to commence in February 2026.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we have been involved in litigation and other proceedings, including matters related to commercial disputes and intellectual property, as well as trade, regulatory and other claims related to our business. See Note 9 to our Consolidated Financial Statements for information on certain legal proceedings, which is incorporated by reference herein. ITEM 4.
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we have been involved in litigation and other proceedings, including matters related to commercial disputes and intellectual property, as well as trade, regulatory and other claims related to our business.
Added
See Note 10 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for information on certain legal proceedings, which is incorporated by reference herein. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 26 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−2 removed2 unchanged
Biggest changeRefer to "Financial Position, Capital Resources and Liquidity" within Management's Discussion and Analysis and Note 8 to the Consolidated Financial Statements for a further discussion of our credit facility.
Biggest changeRefer to "Financial Position, Capital Resources and Liquidity" within Management's Discussion and Analysis, included in Part II, Item 7 of this Annual Report on Form 10-K and Note 9 to the Consolidated Financial Statements , included in Part II, Item 8 of this Annual Report on Form 10-K, for a further discussion of our credit facility.
Stock Compensation Plans See Item 12 "Security Ownership of Certain beneficial Owners and Management and Related Stockholder Matters" for information regarding our equity compensation plans. 26 Table of Contents Stock Performance Graph The stock performance graph below compares cumulative total return on Under Armour, Inc.
Stock Compensation Plans See Item 12 "Security Ownership of Certain beneficial Owners and Management and Related Stockholder Matters" for information regarding our equity compensation plans. Stock Performance Graph The stock performance graph below compares cumulative total return on Under Armour, Inc.
Class A Common Stock to the cumulative total return of the S&P 500 Index and S&P 500 Apparel, Accessories and Luxury Goods Index from December 31, 2017 through March 31, 2023. The graph assumes an initial investment of $100 in Under Armour and each index as of December 31, 2017 and reinvestment of any dividends.
Class A Common Stock to the cumulative total return of the S&P 500 Index and S&P 500 Apparel, Accessories and Luxury Goods Index from December 31, 2018 through March 31, 2024. The graph assumes an initial investment of $100 in Under Armour and each index as of December 31, 2018 and reinvestment of any dividends.
Our Class C Common Stock was listed on the NYSE under the symbol "UA.C" since its initial issuance on April 8, 2016 until December 6, 2016 and under the symbol "UA" since December 7, 2016.
Our Class C Common Stock was listed on the NYSE under the symbol "UA.C" since its initial issuance on April 8, 2016 until December 6, 2016 and under the symbol "UA" since December 7, 2016. Unregistered Sales of Equity Securities and Use of Proceeds None.
As of May 15, 2023, there were 2,306 record holders of our Class A Common Stock, 5 record holders of Class B Convertible Common Stock which are beneficially owned by our Executive Chair and Brand Chief, Kevin A. Plank, and 1,578 record holders of our Class C Common Stock.
As of May 15, 2024, there were 2,176 record holders of our Class A Common Stock, 5 record holders of Class B Convertible Common Stock which are beneficially owned by our President and Chief Executive Officer, Kevin A. Plank, and 1,432 record holders of our Class C Common Stock.
We currently anticipate we will retain future earnings for use in our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. However, if we were to consider declaring a cash dividend to our stockholders, we may be limited in our ability to do so under our credit facility.
However, if we were to consider declaring a cash dividend to our stockholders, we may be limited in our ability to do so under our credit facility.
The performance shown on the graph below is not intended to forecast or be indicative of possible future performance of our common stock. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 3/31/2022 3/31/2023 Under Armour, Inc. $ 100.00 $ 122.45 $ 149.69 $ 118.99 $ 146.85 $ 117.94 $ 65.76 S&P 500 $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 182.77 $ 168.65 S&P 500 Apparel, Accessories & Luxury Goods $ 100.00 $ 84.24 $ 103.82 $ 93.06 $ 98.71 $ 81.67 $ 56.59
The performance shown on the graph below is not intended to forecast or be indicative of possible future performance of our common stock. 27 Table of Contents 12/31/2018 12/31/2019 12/31/2020 12/31/2021 3/31/2022 3/31/2023 3/31/2024 Under Armour, Inc. $ 100.00 $ 122.24 $ 97.17 $ 119.92 $ 96.32 $ 53.70 $ 41.75 S&P 500 $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 191.15 $ 176.38 $ 229.08 S&P 500 Apparel, Accessories & Luxury Goods $ 100.00 $ 123.24 $ 110.47 $ 117.17 $ 96.95 $ 67.17 $ 57.12 ITEM 6. [RESERVED] Not applicable.
Removed
Unregistered Sales of Equity Securities and Use of Proceeds The following table sets forth the Company's repurchases of Class C Common Stock during the quarter ended March 31, 2023 under the two-year $500 million share repurchase program authorized by our Board of Directors in February 2022.
Added
Dividends No cash dividends were declared or paid during Fiscal 2024, Fiscal 2023, Fiscal 2021 or the Transition Period on any class of our common stock. We currently anticipate we will retain future earnings for use in our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
Removed
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Program Approximately Dollar Value of Shares that May Yet be Purchased Under the Program (in millions) 01/01/2023 to 01/31/2023 1,049,821 $ 9.14 1,049,821 $ 75.0 02/01/2023 to 02/28/2023 — $ — — $ 75.0 03/01/2023 to 03/31/2023 — $ — — $ 75.0 Dividends No cash dividends were declared or paid during Fiscal 2023, Fiscal 2021, Fiscal 2020 or the Transition Period on any class of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

99 edited+23 added−53 removed49 unchanged
Biggest changeThis 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 this Annual Report on Form 10-K. 29 RESULTS OF OPERATIONS The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of net revenues: (In thousands) Year ended March 31, 2023 Twelve months ended March 31, 2022 Net revenues $ 5,903,636 $ 5,727,216 Cost of goods sold 3,254,296 2,889,194 Gross profit 2,649,340 2,838,022 Selling, general and administrative expenses 2,365,529 2,414,499 Restructuring and impairment charges — 90,079 Income (loss) from operations 283,811 333,444 Interest income (expense), net (12,826) (36,317) Other income (expense), net 16,780 (43,984) Income (loss) before income taxes 287,765 253,143 Income tax expense (benefit) (101,046) 30,372 Income (loss) from equity method investments (2,042) (73) Net income (loss) $ 386,769 $ 222,698 (As a percentage of net revenues) Year ended March 31, 2023 Twelve months ended March 31, 2022 Net revenues 100.0 % 100.0 % Cost of goods sold 55.1 % 50.4 % Gross profit 44.9 % 49.6 % Selling, general and administrative expenses 40.1 % 42.2 % Restructuring and impairment charges — % 1.6 % Income (loss) from operations 4.8 % 5.8 % Interest income (expense), net (0.2) % (0.6) % Other income (expense), net 0.3 % (0.8) % Income (loss) before income taxes 4.9 % 4.4 % Income tax expense (benefit) (1.7) % 0.5 % Loss from equity method investment — % — % Net income (loss) 6.6 % 3.9 % 30 Table of Contents Revenues Net revenues consist of net sales, license revenues, and revenues from digital subscriptions, other digital business opportunities and advertising.
Biggest changeThe following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of net revenues: (In thousands) Year Ended March 31, 2024 2023 Net revenues $ 5,701,879 $ 5,903,165 Cost of goods sold 3,071,626 3,259,334 Gross profit 2,630,253 2,643,831 Selling, general and administrative expenses 2,400,502 2,380,245 Income (loss) from operations 229,751 263,586 Interest income (expense), net 268 (12,826) Other income (expense), net 32,055 17,096 Income (loss) before income taxes 262,074 267,856 Income tax expense (benefit) 30,006 (108,645) Income (loss) from equity method investments (26) (2,042) Net income (loss) $ 232,042 $ 374,459 Year Ended March 31, (As a percentage of net revenues) 2024 2023 Net revenues 100.0 % 100.0 % Cost of goods sold 53.9 % 55.2 % Gross profit 46.1 % 44.8 % Selling, general and administrative expenses 42.1 % 40.3 % Income (loss) from operations 4.0 % 4.5 % Interest income (expense), net — % (0.2) % Other income (expense), net 0.6 % 0.3 % Income (loss) before income taxes 4.6 % 4.5 % Income tax expense (benefit) 0.5 % (1.8) % Income (loss) from equity method investments — % — % Net income (loss) 4.1 % 6.3 % Revenues Net revenues consist of net sales, license revenues, and revenues from digital subscriptions, digital advertising and other digital business opportunities.
This was primarily driven by an increase in both our wholesale channel and 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.
This was primarily driven by an increase in both our direct-to-consumer channel and our wholesale channel. Within our direct-to-consumer channel, net revenues increased in both owned and operated retail store and e-commerce sales.
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.
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 or Japanese Yen) or (c) a "risk free" rate (for borrowings in U.S. dollars or Pounds Sterling), plus in each case an applicable margin.
These open purchase orders specify fixed or minimum quantities of products at determinable prices. The product purchase obligations also includes fabric commitments with our suppliers, which secure a portion of our material needs for future seasons. The reported amounts exclude product purchase liabilities included in accounts payable as of March 31, 2023.
These open purchase orders specify fixed or minimum quantities of products at determinable prices. The product purchase obligations also includes fabric commitments with our suppliers, which secure a portion of our material needs for future seasons. The reported amounts exclude product purchase liabilities included in accounts payable as of March 31, 2024.
Other Income (Expense), net Other income (expense), net primarily consists of unrealized and realized gains and losses on our foreign currency derivative financial instruments, and unrealized and realized gains and losses on adjustments that arise from fluctuations in foreign currency exchange rates relating to transactions generated by our international subsidiaries.
Other Income (Expense), net Other income (expense), net generally 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.
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.
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 39 Table of Contents 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 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, previously referred to as Port Covington.
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.
Refer to our "Risk Factors" section included in Item 1A of this Annual Report on Form 10-K. Share Repurchase Program On February 23, 2022, our Board of Directors authorized us to repurchase up to $500 million (exclusive of fees and commissions) of outstanding shares of our Class C Common Stock over the following two years.
Refer to our "Risk Factors" section included in Part I, Item 1A of this Annual Report on Form 10-K. 35 Table of Contents Share Repurchase Program On February 23, 2022, our Board of Directors authorized us to repurchase up to $500 million (exclusive of fees and commissions) of outstanding shares of our Class C Common Stock over the following two years.
In addition, it is not possible to determine the performance incentive amounts we may be required to pay under these agreements as they are primarily subject to certain performance based and other variables. The amounts listed above are the fixed minimum amounts required to be paid under these sponsorship agreements.
In addition, it is not possible to determine the performance incentive amounts we may be required to pay under these agreements as they are primarily subject to certain performance based and other variables. The amounts listed above are 36 Table of Contents the fixed minimum amounts required to be paid under these sponsorship agreements.
In conducting an annual impairment test, we first review qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If factors indicate that is the case, we perform the goodwill impairment test. We compare the fair value of the reporting unit with its carrying amount.
In conducting an annual impairment test, we first review qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If factors indicate that is the case, we perform a quantitative goodwill impairment test.
Our inventory strategy is focused on continuing to meet consumer demand while improving our inventory efficiency over the long 35 Table of Contents 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.
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.
As of March 31, 2023 and March 31, 2022, there were no amounts outstanding under the revolving credit facility. 38 Table of Contents 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.
As of March 31, 2024 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.
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.
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 such as global marketing, global IT, global supply chain and innovation, and other corporate support functions; (iii) restructuring and restructuring related charges, if any; and (iv) certain foreign currency hedge gains and losses.
During Fiscal 2023, we incurred capital expenditures of $68.1 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.
During the Fiscal 2024, we incurred capital expenditures of $95.5 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.
Summary of Significant Account Policies Refer to Note 2 of our Consolidated Financial Statements, included in this Annual Report on Form 10-K, for a summary of our significant accounting policies and our assessment of recently issued accounting standards.
Summary of Significant Account Policies Refer to Note 2 of our Consolidated Financial Statements, included in Part II, Item 8 this Annual Report on Form 10-K, for a summary of our significant accounting policies and our assessment of recently issued accounting standards.
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 March 31, 2023, we had approximately $711.9 million of cash and cash equivalents.
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 March 31, 2024, we had approximately $858.7 million of cash and cash equivalents.
In the event we determine a smaller or larger reserve is appropriate, we would record a benefit or charge to selling, general and administrative expense in the period in which such a determination was made. As of March 31, 2023 and 2022, the allowance for doubtful accounts was $10.8 million and $7.1 million, respectively.
In the event we determine a smaller or larger reserve is appropriate, we would record a benefit or charge to selling, general and administrative expense in the period in which such a determination was made. As of March 31, 2024 and 2023, the allowance for doubtful accounts was $15.0 million and $10.8 million, respectively.
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.
We also continue to monitor the broader impacts of conflicts around the world on the economy, including its effect on inflationary pressures and the price of oil globally. See "Risk Factors—Economic and Industry Risks— Our business depends on consumer purchases of discretionary items, which can be negatively impacted during an economic downturn or periods of inflation.
As of March 31, 2023, we were in compliance with the applicable covenants.
As of March 31, 2024, we were in compliance with the applicable covenants.
Additionally, these amounts include minimum guaranteed royalty payments to endorsers and licensors based upon a predetermined percent of sales of particular products. The table above excludes a liability of $58.8 million for uncertain tax positions, inclusive of related interest and penalties, as the Company is unable to reasonably estimate the timing an amount of future cash settlement.
Additionally, these amounts include minimum guaranteed royalty payments to endorsers and licensors based upon a predetermined percent of sales of particular products. The table above excludes a liability of $63.5 million for uncertain tax positions, inclusive of related interest and penalties, as we are unable to reasonably estimate the timing an amount of future cash settlement.
We estimate fair value using the discounted cash flows model, under the income approach, which indicates the fair value of the reporting unit based on the present value of the cash flows that we expect the reporting unit to generate in the future.
We compare the fair value of the reporting unit with its carrying amount. We estimate fair value using the discounted cash flows model, under the income approach, which indicates the fair value of the reporting unit based on the present value of the cash flows that we expect the reporting unit to generate in the future.
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).
The amended credit agreement implemented SOFR as the replacement for LIBOR as a benchmark interest rate for the U.S. dollar borrowings (and analogous benchmark rate replacements for borrowings in Yen, Pound Sterling and Euro).
As of March 31, 2023, $396.5 million or approximately 56% of cash and cash equivalents was held by our foreign subsidiaries. Based on the capital and liquidity needs of our foreign operations, we intend to indefinitely reinvest these funds outside the United States.
As of March 31, 2024, $632.2 million or approximately 74% of cash and cash equivalents was held by our foreign subsidiaries. Based on the capital and liquidity needs of our foreign operations, we intend to indefinitely reinvest these funds outside the United States.
This was primarily due to a decline in gross profit, higher distribution and selling expenses and higher bad debt expense, partially offset by lower marketing-related expenses.
This was primarily due to an increase in gross profit, lower marketing-related expenses and lower selling and distribution expenses, partially offset by higher facilities-related expenses and bad debt expenses.
To the extent we believe it is more likely than not that all or some portion of the asset will not be realized, valuation allowances are established against our deferred tax assets, which increase income tax expense in the period when such a determination is made. 42 Table of Contents A significant portion of our deferred tax assets relate to U.S. federal and state taxing jurisdictions.
To the extent we believe it is more likely than not that all or some portion of the asset will not be realized, valuation allowances are established against our deferred tax assets, which increase income tax expense in the period when such a determination is made.
Accessories decreased primarily due to lower average selling prices, the impact of foreign exchange rates and unfavorable channel mix. From a channel perspective, the increase in net sales was due to an increase in wholesale, partially offset by a decrease in direct-to-consumer.
Accessories decreased primarily due to lower average selling prices and lower unit sales, partially offset by favorable channel and regional 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.
Please refer to Part II, Item 7 of our Annual Report on Form 10-K, filed with the Securities Exchange Commission ("SEC") on February 23, 2022, for a comparative discussion of our Fiscal 2021 financial results as compared to Fiscal 2020, which is incorporated by reference herein.
Please refer to Part II, Item 7 of our Annual Report on Form 10-K, filed with the Securities Exchange Commission ("SEC") on May 24, 2023 for a comparative discussion of our Fiscal 2023 financial results as compared with the twelve months ended March 31, 2022, which is incorporated by reference herein.
Pursuant to the previously disclosed accelerated share repurchase transactions that we entered into in February 2022, May 2022, August 2022 and November 2022 (the "ASR Agreements"), we repurchased 18.7 million and 16.2 million shares of Class C Common Stock, which were immediately retired, during Fiscal 2023 and the Transition Period, respectively.
Pursuant to a number of previously disclosed accelerated share repurchase transactions that the Company entered into between May 2022 and November 2023 (the "ASR Agreements"), we repurchased 10.7 million and 18.7 million shares of Class C Common Stock, which were immediately retired, during Fiscal 2024 and Fiscal 2023, respectively.
Deferred income tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or settled. Deferred income tax assets are reduced by valuation allowances when necessary.
Income Taxes Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or settled.
We expect a portion of our capital expenditures over the next few years to include investments incorporating sustainable and intelligent building design features into this facility. Financing Activities Cash flows used in financing activities decreased by $599.4 million, as compared to the twelve months ended March 31, 2022.
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. 37 Table of Contents Financing Activities Cash flows used in financing activities decreased by $47.7 million, as compared to Fiscal 2023.
If actual market conditions are less favorable than those that we projected, further adjustments may be required that would increase the cost of goods sold in the period in which such a determination was made. As of March 31, 2023 and 2022, the inventory reserve was $34.8 million and $26.8 million, respectively.
If actual market conditions are less favorable than those that we projected, further adjustments may be required that would increase the cost of goods sold in the period in which such a determination was made.
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 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.
As a percentage of net revenues, marketing costs decreased to 10.5% from 11.9%. • Other costs increased $16.4 million or 0.9%, primarily driven by higher salaries, other selling expenses, litigation accrual, travel expenses and facility-related expenses, partially offset by lower incentive compensation expenses and lower consulting expenses. As a percentage of net revenues, other costs decreased to 29.6% from 30.2%.
As a percentage of net revenues, marketing costs decreased to 10.0% from 10.5%. • Other costs increased $72.0 million or 4.1%, primarily driven by higher litigation reserve, incentive compensation expenses, selling and distribution expenses, and facility related expenses, partially offset by lower consulting expenses. As a percentage of net revenues, other costs increased to 32.1% from 29.8%.
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 income (expense), net also includes earn-out income recorded in connection with the sale of the MyFitnessPal platform and rent expense relating to lease assets held solely for sublet purposes, primarily the lease related to our New York City, 5th Avenue location.
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.
Selling, General and Administrative Expenses Our selling, general and administrative expenses consist of costs related to marketing, selling, product innovation and supply chain, and corporate services. We consolidate our selling, general and administrative expenses into two primary categories: marketing and other. The other category is the sum of our selling, product innovation and supply chain, and corporate services categories.
Corporate Other also includes expenses related to our central supporting functions. The decrease in total operating income for Fiscal 2023, compared to the twelve months ended March 31, 2022, was primarily driven by the following: • Operating income in our North America region decreased by $180.7 million to $734.9 million from $915.6 million.
Corporate Other also includes expenses related to our central supporting functions. The decrease in total operating income for Fiscal 2024, compared to Fiscal 2023, was primarily driven by the following: • Operating income in our North America region decreased by $36.8 million to $677.9 million from $714.7 million.
In addition, this table includes executed lease agreements for Brand and Factory House stores that we did not yet occupy as of March 31, 2023. The operating leases generally contain renewal provisions for varying periods of time.
The leases expire at various dates through 2038, excluding extensions at our option, and include provisions for rental adjustments. In addition, this table includes executed lease agreements for Brand and Factory House stores that we did not yet occupy as of March 31, 2024. The operating leases generally contain renewal provisions for varying periods of time.
These outflows were partially offset by the following working capital inflows: • $127.6 million from changes in accrued expenses and other liabilities; • $33.2 million from changes in customer refund liabilities; • $26.4 million from changes in accounts payable; and • $5.0 million from changes in income taxes payable and receivable, net.
These inflows were partially offset by the following working capital outflows: • $274.2 million from changes in accounts payable; • $77.9 million from changes in income taxes payable and receivable, net; • $22.3 million from changes in customer refund liabilities; and • $8.9 million from changes in accrued expenses and other liabilities.
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.
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.
Securities Act of 1933, as amended ("the Securities Act"), and is subject to the safe harbors created by those sections. All statements other than statements of historical facts are statements that could be deemed forward-looking statements.
Securities Act of 1933, as amended ("the Securities Act"), and is subject to the safe harbors created by those sections. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. See "Forward Looking Statements." All dollar and percentage comparisons made herein refer to Fiscal 2024 compared with Fiscal 2023, unless otherwise noted.
This was primarily driven by foreign currency hedge gains related to revenues generated by entities within our operating segments, but managed through our central foreign exchange risk management program.
This was primarily driven by lower foreign currency hedge gains related to revenues generated by entities within our operating segments.
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.
The cap price of the capped call transactions is initially $13.4750 per share of our Class C Common Stock, representing a premium of 75% above the last reported sale price of our Class C Common Stock on May 21, 2020, and is subject to certain adjustments under the terms of the capped call transactions. 3.250% Senior Notes In June 2016, we issued $600.0 million aggregate principal amount of 3.250% senior unsecured notes due June 15, 2026 (the "Senior Notes").
Fiscal 2023 Performance Financial highlights for Fiscal 2023 as compared to the twelve months ended March 31, 2022 include: • Total net revenues increased 3.1%. • Within our channels, wholesale revenue increased 5.9% and direct-to-consumer revenue decreased 2.5%. • Within our product categories, apparel revenue decreased 0.9%, footwear revenue increased 16.3%, and accessories revenue decreased 7.4%. • Net revenue in Europe, the Middle East and Africa ("EMEA"), Latin America and Asia-Pacific increased 13.2%, 10.7% and 2.7%, respectively, while revenue decreased 0.6% in North America. • Gross margin decreased 470 basis points to 44.9%. • Selling, general and administrative expenses decreased 2.0%.
Financial highlights for Fiscal 2024 as compared to Fiscal 2023 include: • Total net revenues decreased 3.4%. • Within our channels, wholesale revenue decreased 6.5% and direct-to-consumer revenue increased 3.0%. 28 Table of Contents • Within our product categories, apparel revenue decreased 2.1%, footwear revenue decreased 4.9%, and accessories revenue decreased 0.7%. • Net revenue decreased 8.3% in North America, increased 9.0% in EMEA, increased 5.8% in Asia-Pacific, and increased 7.6% in Latin America. • Gross margin increased 130 basis points to 46.1%. • Selling, general and administrative expenses increased 0.9%.
As of March 31, 2023, the commitment fee was 17.5 basis points. 1.50% Convertible Senior Notes In May 2020, we issued $500.0 million aggregate principal amount of 1.50% convertible senior notes due 2024 (the "Convertible Senior Notes").
As of March 31, 2024, the commitment fee was 15.0 basis points. 38 Table of Contents 1.50% Convertible Senior Notes We have approximately $80.9 million aggregate principal amount of 1.50% convertible senior notes due 2024 (the "Convertible Senior Notes") outstanding as of March 31, 2024, which were issued in May 2020.
If the carrying amount of a reporting unit exceeds its fair value, goodwill is impaired to the extent that the carrying value exceeds the fair value of the reporting unit. Income Taxes Income taxes are accounted for under the asset and liability method.
If the carrying amount of a reporting unit exceeds its fair value, goodwill is impaired to the extent that the carrying value exceeds the fair value of the reporting unit.
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.
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.
Following the Exchanges, approximately $80.9 million aggregate principal amount of the Convertible Senior Notes remain outstanding as of March 31, 2023. 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 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 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.
The amended credit agreement provides for an aggregate $1.1 billion of revolving credit commitments comprised of two tranches: (i) one tranche of $50 million that has a term that ends on December 3, 2026, and (ii) a second tranche of $1.05 billion that has a term that ends on December 3, 2027, in each case with permitted extensions under certain circumstances.
This was primarily due to gains from foreign currency hedges, lower incentive compensation expenses and no further restructuring charges, partially offset by an increase in salaries expenses and litigation expenses. LIQUIDITY AND CAPITAL RESOURCES Our cash requirements have principally been for working capital and capital expenditures.
This was primarily due to higher litigation reserve, net losses arising from foreign currency hedges, and higher incentive compensation expenses, partially offset by lower consulting expenses. 34 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Our cash requirements have principally been for working capital and capital expenditures.
For more details, see discussion below under "1.50% Convertible Senior Notes". Additionally, during Fiscal 2023 and the twelve months ended March 31, 2022, we paid $125.0 million and $300.0 million, respectively, to repurchase shares of our Class C Common Stock through accelerated share repurchase programs. For more details, see discussion above under "Share Repurchase Program".
During Fiscal 2024 and Fiscal 2023, we paid $75.0 million and $125.0 million, respectively, to repurchase shares of our Class C Common Stock through accelerated share repurchase transactions. For more details, see discussion above under "Share Repurchase Program".
The changes in working capital were due to the following outflows: • $411.3 million from changes in inventories; • $140.7 million from changes in other non-current assets; • $69.5 million from changes in accounts receivable; and • $20.3 million from changes in prepaid expenses and other current assets.
The changes in working capital were due to the following inflows: • $585.5 million from changes in inventories; • $95.9 million from changes in other non-current assets; • $57.0 million from changes in accounts receivable; and • $8.8 million from changes in prepaid expenses and other current assets.
In addition, compensation expense for performance-based awards is recorded over the related service period when achievement of the performance targets is deemed probable, which requires management judgment.
Stock-Based Compensation The assumptions used in calculating the fair value of stock-based compensation awards represent management’s best estimates, but the estimates involve inherent uncertainties and the application of management judgment. In addition, compensation expense for performance-based awards is recorded over the related service period when achievement of the performance targets is deemed probable, which requires management judgment.
(2) Includes the minimum payments for lease obligations. The lease obligations do not include any contingent rent expense we may incur at our Brand and Factory house stores based on future sales above a specified minimum or payments made for maintenance, insurance and real estate taxes. Contingent rent expense was $14.2 million for Fiscal 2023.
Minimum payments for lease obligations exclude variable lease costs, such as contingent rent expense we may incur at our Brand and Factory house stores based on future sales above a specified minimum or payments made for common area maintenance and real estate taxes.
Within selling, general and administrative expense: • Marketing costs decreased $65.3 million or 9.6%, due to lower marketing activity during the period.
Within selling, general and administrative expense: • Marketing costs decreased $51.8 million or 8.3%, due to a reduction in marketing activities during the period.
Goodwill, Intangible Assets and Long-Lived Assets Goodwill and intangible assets are recorded at their estimated fair values at the date of acquisition and are allocated to the reporting units that are expected to receive the related benefits.
As of March 31, 2024 and 2023, the inventory reserve was $44.2 million and $34.8 million, respectively. 40 Table of Contents Goodwill, Intangible Assets and Long-Lived Assets Goodwill and intangible assets are recorded at their estimated fair values at the date of acquisition and are allocated to the reporting units that are expected to receive the related benefits.
Within our direct-to-consumer channel, net revenues were lower due to decreases in both e-commerce and owned and operated retail store sales, which were negatively impacted by COVID-19 related restrictions and limitations in China.
Within our direct-to-consumer channel, net revenues increased in both owned and operated retail store and e-commerce sales. During Fiscal 2023, our direct-to-consumer channel was negatively impacted by the COVID-19 related restrictions, which included temporary closures of our owned and operated stores and distribution centers in China.
The decline in gross profit was driven by increased promotions and discounting, partially offset by higher net revenues as discussed above. • Operating income in our Latin America region decreased by $3.8 million to $23.5 million from $27.3 million.
The increase in gross profit was driven by higher net revenues as discussed above. • Operating income in our Latin America region increased by $14.9 million to $38.4 million from $23.5 million. This was primarily due to an increase in gross profit, partially offset by higher selling and distribution costs.
The decline in gross profit was driven by higher product input and freight costs, increased promotions and discounting and lower net revenues as discussed above. • Operating income in our EMEA region decreased by $24.1 million to $112.2 million from $136.3 million.
This was primarily due to a decrease in gross profit, partially offset by lower marketing-related expenses. The decline in gross profit was driven by lower net revenues as discussed above, partially offset by lower product input costs and freight costs. • Operating income in our EMEA region increased by $64.0 million to $176.2 million from $112.2 million.
As of March 31, 2023, there was $4.4 million of letters of credit outstanding (March 31, 2022: $4.5 million).
As of March 31, 2024, $4.2 million of letters of credit were outstanding (March 31, 2023: $4.4 million).
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 $20.6 million, or 10.7%, to $213.2 million from $192.6 million.
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 $16.3 million, or 7.6%, to $229.5 million from $213.2 million. This was primarily driven by an increase in both our direct-to-consumer channel and our wholesale channel.
Outbound handling costs include costs associated with preparing goods to ship to customers and certain costs to operate our distribution facilities. These costs were $79.5 million in Fiscal 2023 (twelve months ended March 31, 2022: $76.9 million). Gross profit decreased by $188.7 million to $2,649.3 million during Fiscal 2023, from $2,838.0 million during the twelve months ended March 31, 2022.
Outbound handling costs include costs associated with preparing goods to ship to customers and certain costs to operate our distribution facilities. These costs were $79.8 million in Fiscal 2024 (Fiscal 2023: $79.5 million). Gross profit decreased by $13.6 million to $2,630.3 million during Fiscal 2024, as compared to $2,643.8 million in Fiscal 2023.
As of March 31, 2023 and 2022, there were $160.5 million and $159.6 million, respectively, in reserves for returns, allowances, markdowns and discounts within customer refund liability and $40.7 million and $44.3 million, respectively, as the estimated value of inventory associated with the reserves for sales returns within prepaid expenses and other current assets on the Consolidated Balance Sheets. 41 Table of Contents Allowance for Doubtful Accounts We make ongoing estimates relating to the collectability of accounts receivable and maintain an allowance for estimated losses resulting from the inability of our customers to make required payments.
As of March 31, 2024 and 2023, there were $139.3 million and $160.5 million, respectively, in reserves for returns, allowances, markdowns and discounts within customer refund liability and $29.5 million and $40.7 million, respectively, as the estimated value of inventory associated with the reserves for sales returns within prepaid expenses and other current assets on the Consolidated Balance Sheets.
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.
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. Revenue Recognition We recognize revenue pursuant to Accounting Standards Codification 606 ("ASC 606").
The decline in gross profit was driven by unfavorable channel mix, partially offset by higher net revenues as discussed above. • Operating income in our Asia-Pacific region increased by $8.4 million to $100.3 million from $91.9 million. This was primarily due to a decrease in marketing-related expenses, consulting expenses and facility-related expenses, partially offset by a decline in gross profit.
This was primarily due to an increase in gross profit, partially offset by higher selling and distribution expenses, facilities-related expenses and non-salaried wage expenses. The increase in gross profit was driven by higher net revenues as discussed above and lower freight costs. • Operating income in our Asia-Pacific region increased by $19.4 million to $119.7 million from $100.3 million.
Refer to Note 17 to the Consolidated Financial Statements for a further discussion of our uncertain tax positions.
Refer to Note 17 to the Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report on Form 10-K, for a further discussion of our uncertain tax positions.
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 similar to those we used in Fiscal 2020, 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.
If there are unexpected material impacts to our business in future periods from global or regional public health emergencies or other global macroeconomic factors, or if we are subject to an adverse verdict or enter in to a settlement of our material litigation (see Note 10 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K) that results in a significant cash outlay by us 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.
License revenues License revenues decreased by $0.8 million or 0.7%, to $116.7 million during Fiscal 2023, from $117.6 million during the twelve months ended March 31, 2022. This was primarily due to lower revenues from our Japanese licensee, partially offset by higher revenues from our licensing partners in the North America region.
License Revenues License revenues decreased by $5.5 million or 4.7%, to $111.2 million during Fiscal 2024, from $116.7 million in Fiscal 2023. This was primarily due to lower revenues from our licensing partners in North America and our Japanese licensee.
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, subsequently, during the Transition Period and Fiscal 2023, we entered into agreements related to accelerated share repurchase transactions to repurchase $425 million of our Class C Common Stock.
For example, as further described below, we repurchased a total of $500 million of our Class C Common Stock through a series of accelerated share repurchase transactions during Fiscal 2024, Fiscal 2023 and the Transition Period, under the two-year program authorized by our Board of Directors in February 2022, and, in May 2024, our Board of Directors authorized a new share repurchase program pursuant to which we are authorized to repurchase a total of $500 million of our Class C Common Stock through May 2027.
Within our direct-to-consumer channel, 34 Table of Contents net revenues were slightly higher due to increases in both owned and operated retail store sales and e-commerce sales. • Net revenues in our Corporate Other non-operating segment increased by $42.7 million to $51.5 million from $8.8 million.
Within our direct-to-consumer channel, net revenues increased in both owned and operated retail store 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 $39.2 million to $12.3 million from $51.5 million.
The increase in total net revenues for Fiscal 2023, compared to the twelve months ended March 31, 2022, was driven by the following: • Net revenues in our North America region decreased by $24.8 million, or 0.6%, to $3,821.0 million from $3,845.7 million.
The decrease in total net revenues for Fiscal 2024, compared to Fiscal 2023, was driven by the following: • Net revenues in our North America region decreased by $315.4 million, or 8.3%, to $3,505.2 million from $3,820.5 million.
Within our direct-to-consumer channel, net revenues were lower due to a decrease in owned and operated retail store sales, partially offset by an increase in e-commerce sales. • Net revenues in our EMEA region increased by $115.9 million, or 13.2%, to $992.6 million from $876.7 million.
This was driven by a decrease in both our wholesale channel and our direct-to-consumer channel as well as a decrease in licensing revenues. Within our direct-to-consumer channel, net revenues decreased in both e-commerce and owned and operated retail store sales. • Net revenues in our EMEA region increased by $89.3 million, or 9.0%, to $1,081.9 million from $992.6 million.
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.
We report these items within Corporate Other, which is designed to provide increased transparency and comparability of our operating segments' performance.
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 this Annual Report on Form 10-K. Effects of Inflation and Other Global Events Macroeconomic factors, such as inflationary pressures and fluctuations in foreign currency exchange rates have and may continue to impact our business.
Effects of Inflation and Other Global Events Macroeconomic factors, such as inflationary pressures and fluctuations in foreign currency exchange rates, have and may continue to impact our business.
Operating Income (loss) (In thousands) Year ended March 31, 2023 Twelve months ended March 31, 2022 Change $ Change % North America $ 734,881 $ 915,615 $ (180,734) (19.7) % EMEA 112,161 136,252 (24,091) (17.7) % Asia-Pacific 100,276 91,862 8,414 9.2 % Latin America 23,487 27,274 (3,787) (13.9) % Corporate Other (1) (686,994) (837,559) 150,565 18.0 % Total operating income (loss) $ 283,811 $ 333,444 $ (49,633) (14.9) % (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.
Operating Income (Loss) Year Ended March 31, (In thousands) 2024 2023 Change ($) Change (%) North America $ 677,882 $ 714,656 $ (36,774) (5.1) % EMEA 176,205 112,161 64,044 57.1 % Asia-Pacific 119,650 100,276 19,374 19.3 % Latin America 38,401 23,487 14,914 63.5 % Corporate Other (1) (782,387) (686,994) (95,393) (13.9) % Total operating income (loss) $ 229,751 $ 263,586 $ (33,835) (12.8) % (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.
(In thousands) Year ended March 31, 2023 Twelve months ended March 31, 2022 Change $ Change % Selling, General and Administrative Expenses $ 2,365,529 $ 2,414,499 $ (48,970) (2.0) % Selling, general and administrative expenses decreased by $49.0 million , or 2.0%, during Fiscal 2023 as compared to the twelve months ended March 31, 2022.
Year Ended March 31, (In thousands) 2024 2023 Change ($) Change (%) Selling, General and Administrative Expenses $ 2,400,502 $ 2,380,245 $ 20,257 0.9 % Selling, general and administrative expenses increased by $20.3 million, or 0.9%, during Fiscal 2024 as compared to Fiscal 2023.
Net sales Net sales increased by $134.5 million, or 2.4%, to $5,735.4 million during Fiscal 2023, from $5,600.9 million during the twelve months ended March 31, 2022. Apparel decreased primarily due to lower average selling prices, resulting from higher discounts and promotions and the impact of foreign exchange rates, partially offset by higher unit sales and favorable channel mix.
Net Sales Net sales decreased by $156.6 million, or 2.7%, to $5,578.3 million during Fiscal 2024, from $5,735.0 million in Fiscal 2023. Apparel decreased primarily due to lower unit sales, partially offset by higher average selling prices and favorable channel mix. Footwear decreased primarily due to lower unit sales, partially offset by higher average selling prices and favorable channel mix.
Net revenues in our EMEA region were also negatively impacted by changes in foreign exchange rates. • Net revenues in our Asia-Pacific region increased by $21.9 million, or 2.7%, to $825.3 million from $803.5 million.
Net revenues in our EMEA region were also positively impacted by changes in foreign exchange rates. • Net revenues in our Asia-Pacific region increased by $47.7 million, or 5.8%, to $873.0 million from $825.3 million. This was driven by an increase in both our direct-to-consumer channel and our wholesale 33 Table of Contents channel.
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").
In March 2024, we entered into a fourth amendment to the credit agreement (the credit agreement as amended and the "amended credit agreement" or the "revolving credit facility").
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS Our 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.
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 judgments, probabilities and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable.
Assessing whether deferred tax assets are realizable requires significant judgment. We consider all available positive and negative evidence, including historical operating performance and expectations of future operating performance. The ultimate realization of deferred tax assets is often dependent upon future taxable income and therefore can be uncertain.
The ultimate realization of deferred tax assets is often dependent upon future taxable income and therefore can be uncertain.

… 95 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+0 added−0 removed11 unchanged
Biggest changeThe table below provides information about our foreign currency forward exchange agreements for the currencies listed above and presents the notional amounts and weighted average exchange rates by contractual maturity dates: Fiscal year ending March 31, Fair Value as of (In thousands) 2024 2025 2026 2027 2028 and There-after Total March 31, 2023 March 31, 2022 December 31, 2021 On-Balance Sheet Financial Instruments USD Functional Currency EUR Notional $ 91,046 $ 22,218 $ — $ — $ — $ 113,264 $ (3,263) $ 2,238 $ 4,447 Weighted Average Exchange Rate 1.07 1.05 1.07 GBP Notional 213,437 43,741 — — — 257,178 6,024 8,764 3,270 Weighted Average Exchange Rate 1.29 1.19 1.27 CNY Functional Currency USD Notional 121,935 35,842 — — — 157,777 2,461 (7,691) (6,090) Weighted Average Exchange Rate 6.65 6.75 6.67 CAD Functional Currency USD Notional 71,318 32,491 — — — 103,809 3,538 (775) (343) Weighted Average Exchange Rate 1.29 1.32 1.30 MXN Functional Currency USD Notional 75,527 15,568 — — — 91,095 (15,271) (2,917) (237) Weighted Average Exchange Rate 22.00 22.58 22.10 KRW Functional Currency USD Notional 25,561 16,714 — — — 42,275 646 (1,790) — Weighted Average Exchange Rate 1,234.64 1,310.96 1,264.82 We currently generate a majority of our consolidated net revenues in the United States, and the reporting currency for our Consolidated Financial Statements is the U.S. dollar.
Biggest changeThe table below provides information about our foreign currency forward exchange agreements for the currencies listed above and presents the notional amounts and weighted average exchange rates by contractual maturity dates: Fiscal year ending March 31, Fair Value as of (In thousands) 2025 2026 2027 2028 2029 and thereafter Total March 31, 2024 March 31, 2023 On-Balance Sheet Financial Instruments USD Functional Currency EUR Notional $ 152,245 $ 57,791 $ — $ — $ — $ 210,036 $ 668 $ (3,263) Weighted Average Exchange Rate 1.09 1.12 1.10 GBP Notional 280,717 114,995 — — — 395,712 (3,721) 6,024 Weighted Average Exchange Rate 1.24 1.28 1.25 JPY Notional 22,808 5,711 — — — 28,519 2,705 897 Weighted Average Exchange Rate 0.01 0.01 0.01 CNY Functional Currency USD Notional 203,049 84,249 — — — 287,298 3,158 2,461 Weighted Average Exchange Rate 7.00 6.96 6.99 CAD Functional Currency USD Notional 79,063 32,208 — — — 111,271 1,299 3,538 Weighted Average Exchange Rate 1.34 1.34 1.34 MXN Functional Currency USD Notional 74,227 28,966 — — — 103,193 (10,452) (15,271) Weighted Average Exchange Rate 19.35 18.53 19.12 KRW Functional Currency USD Notional 45,838 17,200 — — — 63,038 1,740 646 Weighted Average Exchange Rate 1,281.40 1,296.24 1,285.45 We currently generate a majority of our consolidated net revenues in the United States, and the reporting currency for our Consolidated Financial Statements is the U.S. dollar.
We use derivative instruments to manage financial exposures that occur in the normal course of business and do not hold or issue derivatives for trading or speculative purposes. 43 Table of Contents We may elect to designate certain derivatives as hedging instruments under U.S. GAAP.
We use derivative instruments to manage financial exposures that occur in the normal course of business and do not hold or issue derivatives for trading or speculative purposes. 41 Table of Contents We may elect to designate certain derivatives as hedging instruments under U.S. GAAP.
Our foreign exchange risk management program consists of designated cash flow hedges and undesignated hedges. As of March 31, 2023, we had 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/South Korean Won currency pairs.
Our foreign exchange risk management program consists of designated cash flow hedges and undesignated hedges. As of March 31, 2024, we had hedge instruments, primarily for British Pound/U.S. Dollar, U.S. Dollar/Chinese Renminbi, Euro/U.S. Dollar, U.S. Dollar/South Korean Won, U.S. Dollar/Mexican Peso, and U.S. Dollar/Canadian Dollar currency pairs.
We believe that our allowance for doubtful accounts is sufficient to cover customer credit risks as of March 31, 2023. Refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates - Allowance for Doubtful Accounts" for a further discussion on our policies.
We believe that our allowance for doubtful accounts is sufficient to cover customer credit risks as of March 31, 2024. Refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates - Allowance for Doubtful Accounts" for a further discussion on our policies.
One of the criteria for this accounting treatment is the notional value of these derivative contracts should not be in excess of specifically identified anticipated transactions. By their very nature, our estimates of the anticipated transactions may fluctuate over time and may ultimately vary from actual transactions.
One of the criteria for this accounting treatment is the notional value of these 42 Table of Contents derivative contracts should not be in excess of specifically identified anticipated transactions. By their very nature, our estimates of the anticipated transactions may fluctuate over time and may ultimately vary from actual transactions.
See our "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 " included in Item 1A of this Annual Report on Form 10-K. 45 Table of Contents
See our "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, results of operations and financial condition " included in Item 1A of this Annual Report on Form 10-K. 43 Table of Contents
All derivatives are recognized on the Consolidated Balance Sheets at fair value and classified based on the instruments maturity dates.
All derivatives are recognized on the Consolidated Balance Sheets at fair value and classified based on the instruments' maturity dates.
Our interest rate swap contracts are accounted for as cash flow hedges. For contracts designated as cash flow hedges, the changes in fair value are reported as other comprehensive income and are recognized in current earnings in the period or periods during which the hedged transaction affects current earnings.
For contracts designated as cash flow hedges, the changes in fair value are reported as other comprehensive income and are recognized in current earnings in the period or periods during which the hedged transaction affects current earnings.
As of March 31, 2023, the aggregate notional value of our outstanding cash flow hedges wa s $799.7 million, w i th contract maturities ranging from one to twenty-four months.
As of March 31, 2024, the aggregate notional value of our outstanding cash flow hedges wa s $1,199.1 million, w i th contract maturities ranging from one to twenty-four months.
In order to maintain liquidity and fund business operations, we may enter into long term debt arrangements with various lenders which bear a range of fixed and variable rates of interest.
In order to maintain liquidity and fund business operations, we 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 our long term debt can be expected to vary as a result of future business requirements, market conditions and other factors.
The nature and amount of our long term debt can be expected to vary as a result of future business requirements, market conditions and other factors. 44 Table of Contents We may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations from time to time.
We may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations from time to time. Our interest rate swap contracts are accounted for as cash flow hedges.

Other UAA 10-K year-over-year comparisons