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American brand Under Armour reaches settlement in class action lawsuit

24 Jun '24

2 min read

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Under Armour has agreed in principle to settle a securities class action lawsuit for $434 million, covering claims from shareholders between September 2015 and November 2019.
The settlement, including governance changes, is not an admission of wrongdoing.
The payment will be sourced from cash reserves and credit facilities, pending court approval.

Under Armour, Inc. (NYSE: UA, UAA) announced that it has entered into an agreement in principle to resolve the previously disclosed securities class action litigation pending in the United States District Court for the District of Maryland (In re Under Armour Securities Litigation). This lawsuit was originally filed in 2017.

The company has consistently denied the accusations and entered into this agreement in principle, which is not an admission or finding of fault or wrongdoing, given the costs and risks inherent in litigation.

Under the terms of the agreement, Under Armour will pay $434 million to settle claims brought on behalf of purchasers of Under Armour's publicly traded shares from September 16, 2015, to November 1, 2019. Under Armour has also agreed to two governance changes for a specified time period that are detailed in the company's 8-K filed with the SEC.

The settlement, if approved by the court, would resolve all claims against Under Armour and other defendants in this matter.

"We firmly believe that our sales practices, accounting practices, and disclosures were appropriate, and deny any wrongdoing in this case," said Mehri Shadman, Under Armour's Chief Legal Officer and Corporate Secretary. "Today's announcement allows us to move past this more than seven-year-old matter so we can avoid the ongoing distraction of litigation and provide certainty to the business at a time when we are executing on important strategic priorities."

The settlement is subject to definitive documentation and final court approval.

The company intends to pay the settlement amount through cash on hand and/or by drawing on its $1.1 billion revolving credit facility. As of March 31, 2024, the company had $859 million of cash and equivalents. As previously disclosed, Under Armour had recorded an accrual of $100 million in litigation reserves related to this matter. As a result of this agreement, the company now expects the total accrual to reach $434 million during the first quarter of fiscal year 2025. Following this settlement, the company expects to end fiscal 2025 with approximately $500 million in cash and cash equivalents and no borrowings outstanding under its $1.1 billion revolving credit facility.