SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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



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

(Exact name of registrant as specified in its charter)



Maryland		52-1990078
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1020 Hull Street Baltimore, Maryland 21230		(410) 454-6428
(Address of principal executive offices) (Zip Code)		(Registrant’s telephone number, including area code)

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

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



Large accelerated filer	þ	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

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

As of ~~September 30, 2015~~March 31, 2016 there were ~~180,115,884~~183,141,109 shares of Class A Common Stock and ~~35,700,000~~34,450,000 shares of Class B Convertible Common Stock outstanding.

~~Table of Contents~~

UNDER ARMOUR, INC.

~~September 30, 2015~~March 31, 2016

INDEX TO FORM 10-Q




PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements:
	Unaudited Consolidated Balance Sheets as of ~~September 30, 2015,~~March 31, 2016, December 31, ~~2014~~2015 and ~~September 30, 2014~~March 31, 2015	1
	Unaudited Consolidated Statements of Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~	2
	Unaudited Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~	3
	Unaudited Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~	4
	Notes to the Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1413
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2522
Item 4.	Controls and Procedures	2622

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	2723
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2723
Item 6.	Exhibits	2723

SIGNATURES		2825

~~Table of Contents~~

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Under Armour, Inc. and Subsidiaries

Unaudited Consolidated Balance Sheets

(In thousands, except share data)



	March 31, 2016			December 31, 2015			March 31, 2015
Assets
Current assets
Cash and cash equivalents	$	157,001		$	129,852		$	224,927
Accounts receivable, net	566,286			433,638			395,917
Inventories	834,287			783,031			577,947
Prepaid expenses and other current assets	211,209			152,242			169,722
Deferred income taxes	—			—			65,966
Total current assets	1,768,783			1,498,763			1,434,479
Property and equipment, net	601,910			538,531			359,489
Goodwill	588,895			585,181			595,492
Intangible assets, net	73,217			75,686			87,075
Deferred income taxes	92,230			92,157			14,104
Other long term assets	93,089			75,652			53,899
Total assets	$	3,218,124		$	2,865,970		$	2,544,538
Liabilities and Stockholders’ Equity
Current liabilities
Revolving credit facility, current	$	140,000		$	—		$	—
Accounts payable	184,243			200,460			252,051
Accrued expenses	224,076			192,935			137,482
Current maturities of long term debt	27,000			42,000			43,347
Other current liabilities	30,581			43,415			15,339
Total current liabilities	605,900			478,810			448,219
Long term debt, net of current maturities	217,525			349,070			379,984
Revolving credit facility, long term	550,000			275,000			250,000
Other long term liabilities	103,382			94,868			81,809
Total liabilities	1,476,807			1,197,748			1,160,012
Commitments and contingencies (see Note 4)
Stockholders’ equity
Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of March 31, 2016 and 2015; 183,141,109 shares issued and outstanding as of March 31, 2016, 181,646,468 shares issued and outstanding as of December 31, 2015 and 179,386,971 shares issued and outstanding as of March 31, 2015.	61			61			60
Class B Convertible Common Stock, $0.0003 1/3 par value; 34,450,000 shares issued and outstanding as of March 31, 2016, 34,450,000 shares authorized, issued and outstanding as of December 31, 2015 and 36,150,000 shares authorized, issued and outstanding as of March 31, 2015.	12			11			12
Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of March 31, 2016 and 2015; 217,591,109 shares issued and outstanding as of March 31, 2016, 216,096,468 shares issued and outstanding as of December 31, 2015 and 215,536,971 shares issued and outstanding as of March 31, 2015.	73			72			72
Additional paid-in capital	702,972			636,558			554,856
Retained earnings	1,082,027			1,076,533			856,640
Accumulated other comprehensive loss	(43,828		)	(45,013		)	(27,114		)
Total stockholders’ equity	1,741,317			1,668,222			1,384,526
Total liabilities and stockholders’ equity	$	3,218,124		$	2,865,970		$	2,544,538

September 30,
2015 December 31,
2014 September 30,
2014
Assets
Current assets
Cash and cash equivalents $ 159,398
$ 593,175
$ 249,469
Accounts receivable, net 551,188
279,835
449,221
Inventories 867,082
536,714
637,459
Prepaid expenses and other current assets 134,751
87,177
86,914
Deferred income taxes 60,692
52,498
40,840
Total current assets 1,773,111
1,549,399
1,463,903
Property and equipment, net 478,418
305,564
264,629
Goodwill 591,872
123,256
123,356
Intangible assets, net 79,692
26,230
28,850
Deferred income taxes 42,866
33,570
47,602
Other long term assets 69,543
57,064
49,770
Total assets $ 3,035,502
$ 2,095,083
$ 1,978,110
Liabilities and Stockholders’ Equity
Current liabilities
Revolving credit facility, current $ 300,000
$ —
$ —
Accounts payable 274,285
$ 210,432
$ 273,687
Accrued expenses 188,266
147,681
143,299
Current maturities of long term debt 42,124
28,951
19,524
Other current liabilities 43,929
34,563
53,969
Total current liabilities 848,604
421,627
490,479
Long term debt, net of current maturities 362,550
255,250
172,124
Revolving credit facility 200,000
—
—
Other long term liabilities 89,094
67,906
61,366
Total liabilities 1,500,248
744,783
723,969
Commitments and contingencies (see Note 5)

Stockholders’ equity
Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of September 30, 2015, December 31, 2014 and September 30, 2014; 180,115,884 shares issued and outstanding as of September 30, 2015, 177,295,988 shares issued and outstanding as of December 31, 2014 and 176,021,944 shares issued and outstanding as of September 30, 2014. 60
59
59
Class B Convertible Common Stock, $0.0003 1/3 par value; 35,700,000 shares authorized, issued and outstanding as of September 30, 2015, 36,600,000 shares authorized, issued and outstanding as of December 31, 2014 and 37,675,000 shares authorized, issued and outstanding as of September 30, 2014. 12
12
13
Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of September 30, 2015; 0 shares issued and outstanding as of September 30, 2015. —
—
—
Additional paid-in capital 603,123
508,350
490,578
Retained earnings 971,117
856,687
770,484
Accumulated other comprehensive loss (39,058 ) (14,808 ) (6,993 )
Total stockholders’ equity 1,535,254
1,350,300
1,254,141
Total liabilities and stockholders’ equity $ 3,035,502
$ 2,095,083
$ 1,978,110

See accompanying notes.

~~Table of Contents~~

Under Armour, Inc. and Subsidiaries

Unaudited Consolidated Statements of Income

(In thousands, except per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2015			2014			2015			2014			2016			2015
Net revenues	$	1,204,109		$	937,908		$	2,792,627		$	2,189,169		$	1,047,702		$	804,941
Cost of goods sold	616,949			472,608			1,448,750			1,123,227			567,066			427,277
Gross profit	587,160			465,300			1,343,877			1,065,942			480,636			377,664
Selling, general and administrative expenses	415,763			319,194			1,112,912			858,286			445,753			349,997
Income from operations	171,397			146,106			230,965			207,656			34,883			27,667
Interest expense, net	(4,100		)	(1,535		)	(10,572		)	(3,608		)	(4,532		)	(2,210		)
Other expense, net	(3,239		)	(3,355		)	(5,038		)	(3,982		)
Other income (expense), net													2,702			(1,840		)
Income before income taxes	164,058			141,216			215,355			200,066			33,053			23,617
Provision for income taxes	63,581			52,111			88,384			79,733			13,873			11,889
Net income	$	100,477		$	89,105		$	126,971		$	120,333		$	19,180		$	11,728
Net income available per common share
Basic	$	0.47		$	0.42		$	0.59		$	0.56		$	0.04		$	0.03
Diluted	$	0.45		$	0.41		$	0.58		$	0.55		$	0.04		$	0.03
Weighted average common shares outstanding
Basic	215,743			213,522			215,347			213,035			433,626			429,394
Diluted	221,053			217,982			220,708			217,601			443,260			439,232

See accompanying notes.

~~Table of Contents~~

Under Armour, Inc. and Subsidiaries

Unaudited Consolidated Statements of Comprehensive Income

(In thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2015			2014			2015			2014			2016			2015
Net income	$	100,477		$	89,105		$	126,971		$	120,333		$	19,180		$	11,728
Other comprehensive income (loss):
Foreign currency translation adjustment	(11,558		)	(8,218		)	(23,784		)	(9,436		)	7,442			(12,829		)
Unrealized gain (loss) on cash flow hedge, net of tax of ($506) and $404 for the three months ended September 30, 2015 and 2014, respectively, and ($698) and $39 for the nine months ended September 30, 2015 and 2014, respectively.	(105		)	771			(466		)	249
Total other comprehensive loss	(11,663		)	(7,447		)	(24,250		)	(9,187		)
Comprehensive income	$	88,814		$	81,658		$	102,721		$	111,146
Unrealized gain (loss) on cash flow hedge, net of tax of $(2,767) and $(65) for the three months ended March 31, 2016 and 2015.													(6,257		)	523
Total other comprehensive income (loss)													1,185			(12,306		)
Comprehensive income (loss)													$	20,365		$	(578	)

See accompanying notes.

~~Table of Contents~~

Under Armour, Inc. and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

(In thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2015			2014			2016			2015
Cash flows from operating activities
Net income	$	126,971		$	120,333		$	19,180		$	11,728
Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization	72,211			52,391			32,021			21,308
Unrealized foreign currency exchange rate losses	24,677			4,881
Unrealized foreign currency exchange rate (gains) losses							(11,248		)	21,416
Loss on disposal of property and equipment	434			78			384			227
Stock-based compensation	44,800			38,965			14,403			9,043
Deferred income taxes	(15,266		)	(19,783		)	2,724			4,049
Changes in reserves and allowances	19,577			10,794			12,657			5,792
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(288,687		)	(248,256		)	(136,990		)	(127,439		)
Inventories	(357,874		)	(176,770		)	(45,958		)	(50,303		)
Prepaid expenses and other assets	(52,629		)	(20,282		)	(15,351		)	(39,899		)
Accounts payable	58,155			118,236			(976		)	40,066
Accrued expenses and other liabilities	44,863			20,180			8,627			(14,264		)
Income taxes payable and receivable	9,320			26,737			(47,748		)	(58,250		)
Net cash used in operating activities	(313,448		)	(72,496		)	(168,275		)	(176,526		)
Cash flows from investing activities
Purchases of property and equipment	(226,733		)	(96,596		)	(104,573		)	(68,619		)
Purchase of businesses, net of cash acquired	(539,460		)	(10,924		)	—			(539,109		)
Purchases of available-for-sale securities	(80,272		)	—			(19,997		)	(10,424		)
Sales of available-for-sale securities	68,314			—			21,414			3,311
Purchases of other assets	(2,670		)	(724		)	—			(2,494		)
Net cash used in investing activities	(780,821		)	(108,244		)	(103,156		)	(617,335		)
Cash flows from financing activities
Proceeds from revolving credit facility	500,000			—			415,000			250,000
Payments on revolving credit facility	—			(100,000		)
Proceeds from term loan	150,000			150,000			—			150,000
Payments on term loan							(145,000		)	—
Payments on long term debt	(29,527		)	(11,275		)	(500		)	(7,355		)
Excess tax benefits from stock-based compensation arrangements	40,768			33,056			27,058			34,613
Proceeds from exercise of stock options and other stock issuances	7,527			14,060			3,954			2,922
Payments of debt financing costs	(947		)	(1,714		)	(1,258		)	(946		)
Net cash provided by financing activities	667,821			84,127			299,254			429,234
Effect of exchange rate changes on cash and cash equivalents	(7,329		)	(1,407		)	(674		)	(3,621		)
Net decrease in cash and cash equivalents	(433,777		)	(98,020		)
Net increase (decrease) in cash and cash equivalents							27,149			(368,248		)
Cash and cash equivalents
Beginning of period	593,175			347,489			129,852			593,175
End of period	$	159,398		$	249,469		$	157,001		$	224,927

Non-cash investing and financing activities
Increase (decrease) in accrual for property and equipment	$	4,800		$	(10,601	)
Non-cash investing activities
Decrease in accrual for property and equipment							(13,814		)	(195		)
Property and equipment acquired under build-to-suit leases	5,631			—			—			5,631
Non-cash acquisition of business	—			11,233

See accompanying notes.

~~Table of Contents~~

Under Armour, Inc. and Subsidiaries

Notes to the Unaudited Consolidated Financial Statements

1. Description of the Business

Under Armour, Inc. is a developer, marketer and distributor of branded performance apparel, footwear and accessories. These products are sold worldwide and worn by athletes at all levels, from youth to professional on playing fields around the globe, as well as by consumers with active lifestyles. The Under Armour Connected Fitness^TM platform powers the world's largest digital health and fitness community. The Company uses this platform to engage its consumers and increase awareness and sales of its products.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Under Armour, Inc. and its wholly owned subsidiaries (the “Company”). Certain information in footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accounting principles generally accepted in the United States of America for interim consolidated financial statements. In the opinion of management, all adjustments consisting of normal, recurring adjustments considered necessary for a fair statement of the financial position and results of operations were included. ~~All intercompany~~Intercompany balances and transactions were eliminated. The consolidated balance sheet as of December 31, ~~2014~~2015 is derived from the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, ~~2014~~2015 (the “~~2014~~“2015 Form 10-K”), which should be read in conjunction with these consolidated financial statements. The results for the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2015~~2016 or any other portions thereof.

On March ~~17, 2014,~~16, 2016, the Board of Directors ~~declared~~approved the issuance of the Company’s new Class C non-voting common stock. The Class C stock was issued through a ~~two-for-one~~ stock ~~split~~dividend on a one-for-one basis to all existing holders of the Company's Class A and Class B common stock, ~~which was effected in~~referred to as the ~~form~~Class C stock. The shares of ~~a 100% common~~Class C stock ~~dividend~~were distributed on April ~~14, 2014.~~7, 2016, to stockholders of record of Class A and Class B common stock as of March 28, 2016. Stockholders' equity and all references to share and per share amounts in the accompanying consolidated financial statements have been retroactively adjusted to reflect the ~~two-for-one stock split~~Class C dividend for all periods presented.

On January 5, 2015, the Company acquired 100% of the outstanding equity of Endomondo ApS (“Endomondo”), a Denmark-based digital connected fitness company. On March 17, 2015, the Company acquired 100% of the outstanding equity of MyFitnessPal, Inc. (“MFP”), a digital nutrition and connected fitness company. Both companies were acquired to expand the Under Armour Connected Fitness community. ~~The purchase price allocation for each acquisition is reflected in the consolidated balance sheet as of September 30, 2015.~~

The Company identified a prior period error in the classification of available-for-sale securities (“AFS”) for the first and second quarters of 2015. The Company concluded that the error was not material to any of its previously issued financial statements. The Company has ~~included purchases and sales of AFS for the first six months of 2015 of $41.5 million and $19.4 million, respectively, in~~revised its ~~cash flows from investing activities presented herein. Additionally, the Company intends to revise the affected periods when they are presented on a comparable basis~~financial statements to reflect the correct ~~accounting.~~classification. The revision ~~will result~~resulted in a reclassification from "Cash and cash equivalents" to "Prepaid expenses and other current assets" on the March 31, 2015 ~~first and second quarter~~ balance ~~sheets~~sheet of $7.1 ~~million and $22.1 million, respectively.~~million. Correspondingly, the revision ~~will result~~resulted in the presentation of purchases and sales of AFS for the three months ended March 31, 2015 of $10.4 million and $3.3 million, ~~respectively, in addition to the six months 2015 cash flow activities described above.~~respectively.

Concentration of Credit Risk

Financial instruments that subject the Company to significant concentration of credit risk consist primarily of accounts receivable. The majority of the Company’s accounts receivable is due from large sporting goods retailers. Credit is extended based on an evaluation of the customer’s financial condition and collateral is not required. The Company's largest customer in North America accounted for ~~20.7%~~20.3%, ~~23.4%~~18.7% and ~~24.7%~~21.5% of accounts receivable as of ~~September 30, 2015,~~March 31, 2016, December 31, ~~2014~~2015 and ~~September 30, 2014,~~March 31, 2015, respectively. The Company's largest customer accounted for ~~12.5%~~11.0% and ~~15.0%~~12.9% of net revenues for the ~~nine~~three months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014,~~ respectively.

Allowance for Doubtful Accounts

As of ~~September 30, 2015,~~March 31, 2016, December 31, ~~2014~~2015 and ~~September 30, 2014,~~March 31, 2015, the allowance for doubtful accounts was ~~$6.3~~$11.9 million, ~~$3.7~~$5.9 million and ~~$3.5~~$5.4 million, respectively.

~~Table of Contents~~

Shipping and Handling Costs

The Company charges certain customers shipping and handling fees. These fees are recorded in net revenues. The Company includes the majority of outbound handling costs as a component of selling, general and administrative expenses. Outbound handling costs include costs associated with preparing goods to ship to customers and certain costs to operate the Company’s distribution facilities. These costs, included within selling, general and administrative expenses, were ~~$14.3~~$20.1 million and $~~16.7~~13.0 million for the three months ended ~~September 30, 2015~~March 31, 2016 and ~~2014~~2015, ~~respectively, and $40.1 million and $39.7 million for the nine months ended September 30, 2015 and 2014,~~ respectively. The Company includes outbound freight costs associated with shipping goods to customers as a component of cost of goods sold.

Management Estimates

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

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update ("ASU") 2014-09 which supersedes the most current revenue recognition requirements. ~~The new revenue recognition standard~~This ASU requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services. ~~This guidance was previously effective for annual~~In March and ~~interim reporting periods beginning after December 15,~~April 2016, ~~with early adoption not permitted. In August 2015,~~ the FASB issued ~~a one-year deferral of the effective date of the new revenue recognition standard. The new standard~~ASU 2016-08 related to principal versus agent considerations and ASU 2016-10 related to identifying performance obligations and licensing, which provide supplemental adoption guidance and clarification to ASU 2014-09, respectively. These ASUs will ~~now~~ be effective for annual and interim periods beginning after December 15, 2017 with early adoption for annual and interim periods beginning after December 15, 2016 permitted and should be applied retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the ~~original effective~~ date ~~permitted.~~of adoption. The Company is currently evaluating this ~~standard~~pronouncement to determine the impact of its adoption on its consolidated financial statements.

In ~~July 2015,~~February 2016, the FASB issued ~~an Accounting Standard Update~~ASU 2016-02 which ~~simplifies~~amends the ~~measurement~~existing guidance for leases and will require recognition of ~~inventory~~operating leases with lease terms of more than twelve months and all financing leases on the balance sheet. For these leases, companies will record assets for the rights and liabilities for the obligations that are created by ~~requiring certain inventory to be measured at~~ the ~~lower of cost or net realizable value.~~leases. This ~~guidance~~ASU will require disclosures that provide qualitative and quantitative information for the lease assets and liabilities recorded in the financial statements. This ASU is effective for fiscal years beginning after December 15, ~~2016 and for interim periods therein.~~2018. The Company ~~does not expect~~is currently evaluating this ASU to determine the ~~adoption~~impact of ~~this standard to have a significant impact~~its adoption on its consolidated financial statements.

In ~~September 2015,~~March 2016, the FASB issued ~~an Accounting Standards Update~~ASU 2016-05, which ~~requires the acquiring company~~clarifies that a change in counterparty of a derivative contract in a ~~business combination~~hedge accounting relationship does not, in and of itself, require dedesignation of that hedge accounting relationship. This ASU amends ASC 815 to ~~recognize adjustments to provisional amounts~~clarify that ~~are identified during~~such a change does not, in and of itself, represent a termination of the ~~measurement period~~original derivative instrument or a change in the ~~reporting period in~~critical terms of the hedge relationship. The Company is currently evaluating this ASU to determine the impact of its adoption on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, which ~~the adjustment amounts are determined.~~effects all entities that issue share-based payment awards to their employees. The amendments in this ~~Update require that~~ASU cover such areas as the ~~acquiring company record, in~~recognition of excess tax benefits and deficiencies, the ~~same period’s financial statements,~~classification of those excess tax benefits on the ~~effect~~statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on ~~earnings~~the statement of ~~changes in depreciation, amortization, or other income effects, if any, as a result of a change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.~~cash flows. This ~~guidance~~ASU is effective for ~~fiscal years~~annual and interim periods beginning after December 15, ~~2015 and for interim periods therein.~~2016. This guidance can be applied either prospectively, retrospectively or using a modified retrospective transition method. Early adoption is permitted. The Company ~~does~~has not ~~expect~~yet selected a transition date and is currently evaluating this ASU to determine the ~~adoption~~impact of ~~this standard to have a significant impact~~its adoption on its consolidated financial statements.

Recently Adopted Accounting Standards

In ~~January~~November 2015, the FASB issued an Accounting Standards Update which ~~eliminates~~requires deferred tax liabilities and assets to be classified as non-current in a classified statement of financial position. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Earlier adoption is permitted for all entities as of the beginning of an interim or annual reporting period. This amendment may be applied either prospectively or retrospectively to all periods presented. The Company adopted the provisions of this guidance prospectively in the fourth quarter of 2015, and did not retrospectively adjust the prior periods. Had the Company adopted this guidance retrospectively, $66.0 million would have been reclassified from ~~GAAP~~deferred income taxes-current to deferred income taxes-long term for the ~~concept~~three months ended March 31, 2015. The adoption of ~~extraordinary items~~this guidance will simplify the presentation of deferred income taxes and reduce complexity without decreasing the ~~need~~usefulness of information

provided to ~~separately classify, present,~~users of financial statements. The adoption of this pronouncement did not have a significant impact on the Company's financial position, results of operations and ~~disclose extraordinary events and transactions.~~cash flows.

In April 2015, the FASB issued ASU 2015-03 which requires all costs incurred to issue debt to be presented in the balance sheet as a direct deduction from the carrying value of the debt. This ~~guidance~~ASU is effective for annual and interim reporting periods beginning after December 15, 2015, with early adoption ~~permitted provided that~~permitted. The Company adopted the ~~guidance is applied from the beginning of the fiscal year of adoption. The adoption~~provisions of this ~~pronouncement did not have a material impact on~~ASU in the ~~Company's consolidated financial statements.~~

~~3. Acquisitions~~

~~Endomondo~~

~~On January 5, 2015, the Company acquired 100%~~first quarter of ~~the outstanding equity of Endomondo, a Denmark-based digital connected fitness company, to expand the Under Armour Connected Fitness community. The purchase price was $85.0~~2016, and reclassified approximately $4.0 million, ~~adjusted for working capital.~~

~~The Company recognized $0.6~~$2.9 million and ~~$0.8~~$3.5 million ~~in acquisition related costs that were expensed during the three months ended~~from "Other long term assets" to "Long term debt, net of current maturities" as of March 31, 2016, December 31, 2015 and December 31, 2014, respectively. These costs are included in the consolidated statements of income in the line item entitled “Selling, general and administrative expenses.” Pro forma results are not presented, as the acquisition was not considered material to the consolidated Company.

~~Table of Contents~~

~~MyFitnessPal~~

On March 17, 2015, the Company acquired 100% of the outstanding equity of MFP, a digital nutrition and connected fitness company, to expand the Under Armour Connected Fitness community. The final adjusted transaction value totaled $474.0 million. ~~The total consideration of~~ $463.9 million was adjusted to reflect the accelerated vesting of certain share awards of MFP, which are not conditioned upon continued employment, and transaction costs borne by the selling shareholders. The acquisition was funded with $400.0 million of increased term loan borrowings and a draw on the revolving credit facility, with the remaining amount funded by cash on hand.

~~The Company recognized $5.7 million of acquisition related costs that were expensed during the three months ended~~ March 31, 2015. ~~These costs are included in the consolidated statement of income in the line item entitled “Selling, general and administrative expenses.”~~

The following represents the pro forma consolidated income statement as if MFP had been included in the consolidated results of the Company for the three and nine months ended September 30, 2015 and September 30, 2014:

Three Months Ended September 30, Nine months ended September 30,
(In thousands) 2015 2014 2015 2014
Net revenues $ 1,204,109
$ 941,265
$ 2,796,322
$ 2,199,858
Net income 100,477
85,176
125,673
106,512

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of MFP to reflect the acquisition as if it closed on January 1, 2014. Pro forma net income for the nine months ended September 30, 2014 reflects the impact of $5.7 million in transaction expenses included in the consolidated statement of income for the nine months ended September 30, 2015, but excluded from the calculation of pro forma net income for that period.

These acquisitions have been accounted for as business combinations under the acquisition method and, accordingly, the total purchase price is allocated to the tangible and intangible assets acquired and the liabilities assumed based on their respective fair values on the acquisition dates, with the remaining unallocated purchase price recorded as goodwill. These purchase price allocations are final. The following table summarizes the allocation of estimated fair values of the net assets acquired, including the related estimated useful lives, where applicable:

MyFitnessPal Endomondo
(in thousands) Useful life (in years) (in thousands) Useful life (in years)

Finite-lived intangible assets:

User base $ 38,300
10 $ 10,600
10
Nutrition database 4,500
10 —
N/A
Technology 3,200
5 5,000
5
Trade name 2,300
5 400
5
Other assets acquired 16,190
3,738

Liabilities assumed (3,291 )

(2,784 )
Net assets acquired 61,199
16,954

Goodwill 402,728
70,290

Total fair value of consideration $ 463,927
$ 87,244

The Company estimated the acquisition date fair values of intangible assets based on income-based discounted cash flow models using estimates and assumptions regarding future operations. The Company is amortizing the intangible assets on a straight-line basis over their estimated useful lives. These costs are included in the consolidated statements of income in the line item entitled “Selling, general and administrative expenses.”

The goodwill recorded as a result of the acquisitions primarily reflects unidentified intangible assets acquired, including operational synergies across the Company, assembled workforces, the value of integrating acquired technologies and engaging and growing the connected fitness community. The Company is in the process of finalizing the goodwill allocation between its reportable segments. None of the goodwill is expected to be deductible for tax purposes.

4.3. Credit Facility and Other Long Term Debt

Credit Facility

In ~~March 2015,~~January 2016, the Company amended its ~~existing~~ credit agreement ~~providing an additional $150.0~~to increase revolving credit facility commitments from $800.0 million ofto $1.25 billion. This amendment also extended the term ~~loan borrowings, which were borrowed on the closing date~~ of the ~~amendment, resulting in aggregate~~revolving credit facility and the remaining outstanding term ~~loan borrowings~~loans under the credit agreement, which as of ~~$400.0 million. This amendment also increased revolving credit facility commitments available under the~~

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~~credit agreement~~March 31, 2016 totaled $205.0 million, from ~~$400.0 million~~May 2019 to ~~$800.0 million, of which~~January 2021. Simultaneously with entering into this, the Company borrowed ~~$250.0~~$140.0 million on the closing date of the amendment. These additional borrowings were used to fund, in part, the acquisition of MFP. At the Company's request and the lenders' consent, revolving and/or term loan borrowings may be increased by up to $300.0 million in aggregate, subject to certain conditions as set forth in the credit agreement, as amended. These additional amounts are uncommitted and the availability thereof will depend on market conditions at the time the Company seeks to incur such borrowings.

~~Borrowings~~ under the revolving credit facility ~~may be made~~to repay in ~~U.S. Dollars, Euros, Pounds Sterling, Japanese Yen~~full the balance of a $150.0 million term loan borrowing originally borrowed in March 2015. As of March 31, 2016, the Company had $690.0 million outstanding under the revolving credit facility.

The borrowings under the revolving credit facility have maturities of less than one year. However, $550.0 million in borrowings are classified as non-current as the Company has the intent and ~~Canadian Dollars.~~ability to refinance these obligations on a long-term basis. Up to $50.0 million of the facility may be used for the issuance of letters of ~~credit and up to $50.0 million of the facility may be used for the issuance of swingline loans.~~credit. There were ~~$1.2~~$1.3 million of letters of credit ~~and no swingline loans~~ outstanding as of ~~September 30, 2015.~~March 31, 2016.

The credit agreement contains negative covenants that, subject to significant exceptions, limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, make restricted payments, pledge their assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into transactions with affiliates. The Company is also required to maintain a ratio of consolidated EBITDA, as defined in the credit agreement, to consolidated interest expense of not less than 3.50 to 1.00 and is not permitted to allow the ratio of consolidated total indebtedness to consolidated EBITDA to be greater than 3.25 to 1.00 ("consolidated leverage ratio"). As of ~~September 30, 2015,~~March 31, 2016, the Company was in compliance with these ratios. In addition, the credit agreement contains events of default that are customary for a facility of this nature, and includes a cross default provision whereby an event of default under other material indebtedness, as defined in the credit agreement, will be considered an event of default under the credit agreement.

Borrowings under the credit agreement bear interest at a rate per annum equal to, at the Company’s option, either (a) an alternate base rate, or (b) a rate based on the rates applicable for deposits in the interbank market for U.S. Dollars or the applicable currency in which the loans are made (“adjusted LIBOR”), plus in each case an applicable margin. The applicable margin for loans will be adjusted by reference to a grid (the “Pricing Grid”) based on the consolidated leverage ratio and ranges between 1.00% to 1.25% for adjusted LIBOR loans and 0.00% to 0.25% for alternate base rate loans. The weighted average interest ~~rates~~rate under the ~~initial~~outstanding term ~~loan, delayed draw term loan, new term loan~~loans and revolving credit facility ~~were 1.33%, 1.33%, 1.33% and 1.34%~~was 1.56% during the three months ended September 30, 2015, and 1.27%, 1.27%, 1.31% and 1.32% during the nine months ended September 30, 2015, respectively. As of September 30, 2015, $500.0 million was outstanding under the Company’s revolving credit facility. Additionally, theMarch 31, 2016. The Company pays a commitment fee on the average daily unused amount of the revolving credit facility and certain fees with respect to letters of credit. As of ~~September 30, 2015,~~March 31, 2016, the commitment fee was 15.0 basis points. ~~The~~Since inception, the Company incurred and capitalized ~~$2.9~~$3.9 million in deferred financing costs in connection with the credit facility.

Other Long Term Debt

The Company has long term debt agreements with various lenders to finance the acquisition or lease of qualifying capital investments. Loans under these agreements are collateralized by a first lien on the related assets acquired. At ~~September 30, 2015~~, ~~December 31, 2014~~ ~~and~~ ~~September 30, 2014~~, the outstanding principal balance under these agreements was $0.1 million, $2.0 million and $2.6 million, respectively. Currently, advances under these agreements bear interest rates which are fixed at the time of each advance. The weighted average interest rates on outstanding borrowings were 3.3% and 3.0% for the three months ended September 30, 2015 and 2014, respectively, and 4.2% and 3.2% for the nine months ended September 30, 2015 and 2014, respectively.

In December 2012, the Company entered into a $50.0 million recourse loan collateralized by the land, buildings and tenant improvements comprising the Company's corporate headquarters. The loan has a seven year term and maturity date of December 2019. The loan bears interest at one month LIBOR plus a margin of 1.50%, and allows for prepayment without penalty. The loan includes covenants and events of default substantially consistent with the Company's credit agreement discussed above. The loan also requires prior approval of the lender for certain matters related to the property, including transfers of any interest in the property. As of ~~September 30, 2015~~March 31, 2016, December 31, ~~2014~~2015 and ~~September 30, 2014,~~March 31, 2015, the outstanding balance on the loan was ~~$44.5~~$43.5 million, ~~$46.0~~$44.0 million and ~~$46.5~~$45.5 million, respectively. The weighted average interest rate on the loan was 1.9% and 1.7% for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014.~~respectively.

Interest expense, net was $~~4.1~~4.5 million and $~~1.5~~2.2 million for the three months ended ~~September 30, 2015~~March 31, 2016 and ~~2014~~2015, ~~respectively, and $10.6 million and $3.6 million for the nine months ended September 30, 2015 and 2014,~~ respectively. Interest expense includes the amortization of deferred financing costs, bank fees, capital and built-to-suit lease interest and interest expense under the credit and other long term debt facilities.

The Company monitors the financial health and stability of its lenders under the credit and other long term debt facilities, however during any period of significant instability in the credit markets lenders could be negatively impacted in their ability to perform under these facilities.

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5.4. Commitments and Contingencies

There were no significant changes to the contractual obligations reported in the ~~2014~~2015 Form 10-K other than ~~those~~the borrowings and repayments disclosed in Note 3 and changes which occur in the normal course of business.

In connection with various contracts and agreements, the Company has agreed to indemnify counterparties against certain third party claims relating to the infringement of intellectual property rights and other items. Generally, such indemnification obligations do not apply in situations in which the counterparties are grossly negligent, engage in willful misconduct, or act in bad faith. Based on the Company’s historical experience and the estimated probability of future loss, the Company has determined that the fair value of such indemnifications is not material to its consolidated financial position or results of operations.

From time to time, the Company is involved in litigation and other proceedings, including matters related to commercial and intellectual property disputes, as well as trade, regulatory and other claims related to its business. Other than as described below, the Company believes that all current proceedings are routine in nature and incidental to the conduct of its business, and that the ultimate resolution of any such proceedings will not have a material adverse effect on its consolidated financial position, results of operations or cash flows.

Following the Company’s announcement of the creation of ~~a new class of common stock, referred to as~~ the Class C ~~common~~ stock, par value $0.0003 1/3 per share, four purported class action lawsuits were brought against the Company and the members of the Company’s Board of Directors on behalf of the stockholders of the Company, the first of which was filed on June 18, 2015. These lawsuits were filed in the Circuit Court for Baltimore City, Maryland (the "Court"), and were consolidated into one action, In re: Under Armour Shareholder Litigation, Case No. 24-C-15-003240. The lawsuits ~~(the "Court")~~ generally alleged that the individual defendants breached their fiduciary duties in connection with approving the creation of the Class C common stock, as well as in connection with recommending for approval by stockholders certain governance related changes to the Company’s charter.

On ~~October 7, 2015,~~February 29, 2016, the ~~Company announced that it had reached an agreement on~~Court granted its final approval of the settlement terms ~~with~~in the lead plaintiff. A stipulation of settlement reflecting those terms has been submitted to the Court for preliminary approval, and the Court is expected to rule on whether to preliminarily approve the settlement after briefing is complete on the lead plaintiff’s motion for preliminary approval. In the event that the Court preliminarily approves the settlement, the Court would then set a hearing date to determine whether to grant final approval to the settlement.lawsuit. Under the terms of the settlement, following the initial distribution of the Class C common stock, the Company has agreed to issue additional consideration to the holders of Class C common stock in the form of a dividend with a value of $59 million, which will be payable in the form of the Company’s Class A common stock, Class C common stock, cash or a combination thereof, to be determined at the sole discretion of the Company’s Board of Directors. This dividend must be authorized by the Board of Directors within approximately 60 days following the initial distribution of the Class C common ~~stock.~~stock, which occurred on April 7, 2016. Additionally, the settlement agreement includes certain non-monetary remedies, including an amendment to the Confidentiality, Non-Competition and Non-Solicitation Agreement between the Company and Kevin A. Plank, the Company’s Chairman and Chief Executive Officer, and an agreement that the Company’s Board of Directors will undertake certain considerations when using more than a specified amount of shares of Class C common stock as consideration in certain acquisition transactions.

65. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value accounting guidance outlines a valuation framework, creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures, and prioritizes the inputs used in measuring fair value as follows:



Level 1:	Observable inputs such as quoted prices in active markets;

Level 2:	Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3:	Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial assets and (liabilities) measured at fair value are set forth in the table below:

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September 30, 2015 December 31, 2014 September 30, 2014
(In thousands) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Available-for-sale $ 11,958
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Derivative foreign currency contracts (see Note 9) —
1,371
—
—
806
—
—
8
—
Interest rate swap contracts (see Note 9) —
(3,391 ) —
—
(607 ) —
—
1,182
—
TOLI policies held by the Rabbi Trust —
4,384
—
—
4,734
—
—
4,665
—
Deferred Compensation Plan obligations —
(4,741 ) —
—
(4,525 ) —
—
(4,252 ) —



	March 31, 2016							December 31, 2015							March 31, 2015
(In thousands)	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Available-for-sale securities	$	5,109	$	—		$	—	$	6,534	$	—		$	—	$	7,113	$	—		$	—
Derivative foreign currency contracts (see Note 7)	—		(1,122		)	—		—		3,811			—		—		3,187			—
Interest rate swap contracts (see Note 7)	—		(4,282		)	—		—		(1,486		)	—		—		(2,535		)	—
TOLI policies held by the Rabbi Trust (see Note 6)	—		4,568			—		—		4,456			—		—		4,747			—
Deferred Compensation Plan obligations (see Note 6)	—		(6,084		)	—		—		(5,072		)	—		—		(4,798		)	—

Fair values of the financial assets and liabilities listed above are determined using inputs that use as their basis readily observable market data that are actively quoted and are validated through external sources, including third-party pricing services and brokers. The Company purchases marketable securities that are designated as available-for-sale. The foreign currency contracts represent gains and losses on derivative contracts, which is the net difference between the U.S. dollar value to be received or paid at the contracts’ settlement date and the U.S. dollar value of the foreign currency to be sold or purchased at the current market exchange rate. The interest rate swap contracts represent gains and losses on the derivative contracts, which is the net difference between the fixed interest to be paid and variable interest to be received over the term of the contract based on current market rates. The fair value of the trust owned life insurance (“TOLI”) policies held by the Rabbi Trust is based on the cash-surrender value of the life insurance policies, which are invested primarily in mutual funds and a separately managed fixed income fund. These investments are initially made in the same funds and purchased in substantially the same amounts as the selected investments of participants in the Under Armour, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”), which represent the underlying liabilities to participants in the Deferred Compensation Plan. Liabilities under the Deferred Compensation Plan are recorded at amounts due to participants, based on the fair value of participants’ selected investments.

The carrying value of the Company's long term debt approximated its fair value as of ~~September 30, 2015~~March 31, 2016 and ~~2014~~2015. The fair value of the Company's long term debt was estimated based upon quoted prices for similar instruments (Level 2 input).

7.6. Stock-Based Compensation

During the ~~nine~~three months ended ~~September 30, 2015, 0.8~~March 31, 2016, 2.2 million performance-based restricted stock units and ~~0.3~~0.4 million performance-based options were awarded to certain officers and key employees under the Company's Second Amended and Restated 2005 Omnibus Long-Term Incentive ~~Plan.~~Plan, as amended. The awards have vesting conditions tied to the achievement of certain combined annual operating income targets for ~~2015~~2016 and ~~2016.~~2017. Upon the achievement of the targets, one third of the restricted stock units and options will vest each in February ~~2017~~2018, February ~~2018~~2019 and February ~~2019~~2020. If certain lower levels of combined annual operating income for ~~2015~~2016 and ~~2016~~2017 are achieved, fewer or no restricted stock units or options will vest and the remaining restricted stock units and options will be forfeited. The Company deemed the achievement of certain operating income targets for ~~2015~~2016 and ~~2016~~2017 probable during the three months ended March 31, ~~2015.~~2016. The Company assesses the probability of the achievement of the remaining operating income targets at the end of each reporting period. If it becomes probable that any remaining performance targets related to these performance-based restricted stock units and options will be achieved, a cumulative adjustment will be recorded as if ratable stock-based compensation expense had been recorded since the grant date. Additional stock based compensation of up to $2.3 million would have been recorded during the three months ended March 31, 2016, for these performance-based restricted stock units and options had the achievement of the remaining operating income targets been deemed probable.

During 2015, the Company granted performance-based restricted stock units with vesting conditions tied to the achievement of certain combined annual operating income targets for 2015 and 2016. During the three months ended September 30, 2015, the Company deemed the achievement of certain additional operating income targets for 2015 and 2016 probable and recorded a cumulative adjustment of $4.9 million. Additional stock based compensation of up to ~~$2.5~~$4.8 million would have been recorded during the ~~nine~~three months ended ~~September 30, 2015,~~March 31, 2016, for these performance-based restricted stock units and options had the achievement of the remaining operating income targets been deemed probable.

~~During 2014,~~

Warrants

In 2006, the Company ~~granted performance-based restricted stock units with vesting conditions tied~~issued fully vested and non-forfeitable warrants to the achievement of certain combined annual operating income targets for 2014 and 2015. During the three months ended September 30, 2014, the Company deemed the achievement of certain operating income targets for 2014 and 2015 probable and recorded a cumulative adjustment of $3.8 million. During the three months ended September 30, 2015, the Company deemed the achievementpurchase 3.8 million shares of the ~~remaining operating income targets~~Company’s common stock to NFL Properties as partial consideration for ~~2014 and 2015 probable and~~footwear promotional rights which were recorded ~~a cumulative adjustment~~as an intangible asset. As of ~~$5.1 million.~~

During 2012 and 2013, the Company granted performance-based restricted stock units with vesting conditions tied to the achievement of certain combined annual operating income targets for 2013 and 2014. During the three months ended March 31, ~~2014,~~2016, the ~~Company deemed~~warrants were exercisable for 1.9 million shares of Class A common stock and 1.9 million shares of Class C common stock. The warrants have a term of 12 years from the ~~achievement~~date of issuance and have a weighted average exercise price of $4.63 per share, which is the ~~remaining operating income targets for 2013 and 2014 probable and recorded a cumulative adjustment of $6.6 million.~~

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~~The Company issued approximately 289.7 thousand options to purchase shares~~adjusted closing price of the Company’s Class A ~~common stock in connection with~~Common Stock on the ~~acquisition~~date of ~~MFP, which are conditioned upon continuous employment. These shares have been excluded from purchase consideration~~issuance. As of March 31, 2016, all outstanding warrants were exercisable, and ~~are being recognized over the requisite service period as stock-based compensation.~~no warrants were exercised.

~~8. Stockholders' Equity~~

In June 2015, the Company's Board of Directors (the “Board”) approved Articles Supplementary to the Company's charter which designated 400,000,000 shares of common stock as a new class of common stock, referred to as the Class C common stock, par value $0.0003 1/3 per share. The Articles Supplementary became effective on June 15, 2015. The Company has not yet issued any shares of Class C common stock, but the Company has announced the intention of its Board to consider distributing shares of the Class C common stock as a dividend to the Company's holders of Class A and Class B common stock. The decision to proceed with, and timing of, this dividend will be made by the Board in its discretion and there can be no assurance that this dividend will be declared or paid. The terms of the Class C common stock are substantially identical to those of the Company's Class A common stock, except that the Class C common stock has no voting rights (except in limited circumstances), will automatically convert into Class A common stock under certain circumstances and includes provisions intended to ensure equal treatment of Class C common stock and Class B common stock in certain corporate transactions, such as mergers, consolidations, statutory share exchanges, conversions or negotiated tender offers, and including consideration incidental to these transactions.

9.7. Risk Management and Derivatives

Foreign Currency Risk Management

The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to transactions generated by its international subsidiaries in currencies other than their local currencies. These gains and losses are primarily driven by intercompany transactions and inventory purchases denominated in currencies other than the functional currency of the purchasing entity. From time to time, the Company may elect to enter into foreign currency contracts to reduce the risk associated with foreign currency exchange rate fluctuations on intercompany transactions and projected inventory purchases for its international subsidiaries.

As of ~~September 30, 2015,~~March 31, 2016, the aggregate notional value of the Company's outstanding foreign currency contracts was ~~$433.2~~$527.2 million, which was comprised of Canadian Dollar/U.S. Dollar, Euro/U.S. Dollar, Yen/Euro, Mexican Peso/Euro and Pound Sterling/Euro currency pairs with contract maturities ranging from one to ~~fourteen~~nine months. A portion of the Company's foreign currency contracts are not designated as cash flow hedges, and accordingly, changes in their fair value are recorded in earnings. ~~During 2014, the~~The Company ~~began entering~~also enters into foreign currency contracts designated as cash flow hedges. For foreign currency contracts designated as cash flow hedges, changes in fair value, excluding any ineffective portion, are recorded in other comprehensive income until net income is affected by the variability in cash flows of the hedged transaction. The effective portion is generally released to net income after the maturity of the related derivative and is classified in the same manner as the underlying exposure. During the three ~~and nine~~ months ended ~~September 30, 2015,~~March 31, 2016, the Company reclassified $0.9 million ~~and $2.3 million, respectively,~~ from other comprehensive income to cost of goods sold related to foreign currency contracts designated as cash flow hedges. The fair value of the Company's foreign currency contracts were liabilities of $1.1 million as of March 31, 2016, and were included in accrued expenses on the consolidated balance sheet. The fair values of the Company's foreign currency contracts were assets of ~~$1.4 million, $0.8~~$3.8 million and ~~$8.0 thousand~~$3.2 million as of ~~September 30, 2015,~~ December 31, ~~2014~~2015 and ~~September 30, 2014,~~March 31, 2015, respectively, and were included in prepaid expenses and other current assets on the consolidated balance sheet. Refer to Note 65 for a discussion of the fair value measurements. Included in other ~~expense,~~income (expense), net were the following amounts related to changes in foreign currency exchange rates and derivative foreign currency contracts:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(In thousands)	2015			2014			2015			2014			2016			2015
Unrealized foreign currency exchange rate gains (losses)	$	(5,454	)	$	(4,981	)	$	(24,677	)	$	(4,881	)	$	11,248		$	(21,416	)
Realized foreign currency exchange rate gains (losses)	(1,858		)	81			6,999			303			597			6,341
Unrealized derivative gains (losses)	(112		)	(134		)	(182		)	(152		)	211			217
Realized derivative gains (losses)	3,559			1,679			12,196			748			(9,986		)	13,018

Interest Rate Risk Management

In order to maintain liquidity and fund business operations, the Company enters into long term debt arrangements with various lenders which bear a range of fixed and variable rates of interest. The nature and amount of the Company's long-term debt can be expected to vary as a result of future business requirements, market conditions and other factors. The Company may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations. The Company utilizes interest rate swap contracts to convert a portion of variable rate debt to fixed rate debt. The contracts pay fixed and receive

~~Table of Contents~~

variable rates of interest. The interest rate swap contracts are accounted for as cash flow hedges and accordingly, the effective portion of the changes in their fair value are recorded in other comprehensive income and reclassified into interest expense over the life of the underlying debt obligation. Refer to Note 43 for a discussion of long term debt.

As of ~~September 30, 2015~~March 31, 2016, the notional value of the Company's outstanding interest rate swap contracts was ~~$175.0~~$166.3 million. During the three months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014,~~ the Company recorded a ~~$0.7~~$0.5 million and $0.6 million increase in interest expense, respectively, representing the effective portion of the contract reclassified from accumulated other comprehensive income. During the nine months ended September 30, 2015 and 2014, the Company recorded a $2.1 million and $1.0$0.7 million increase in interest expense, respectively, representing the effective portion of the contract reclassified from accumulated other comprehensive income. The fair value of the interest rate swap contracts was a liability of ~~$3.4~~$4.3 million, $1.5 million and ~~$0.6~~$2.5 million as of ~~September 30,~~March 31, 2016, December 31, 2015 and ~~December~~March 31, ~~2014,~~2015, respectively, and was included in other long term liabilities on the consolidated balance sheet. ~~The fair value of the interest rate swap contract was an asset of $1.2 million as of September 30, 2014, and was included in other long term assets on the consolidated balance sheet.~~

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

~~10.~~8. Provision for Income Taxes

The effective rates for income taxes were ~~41.0%~~42.0% and ~~39.9%~~50.3% for the ~~nine~~three months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014,~~ respectively. The effective tax rate for the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016 was ~~higher~~lower than the effective tax rate for the ~~nine~~three months ended ~~September 30, 2014~~March 31, 2015 primarily due to ~~continued international investments, along with increased non-deductible costs incurred in connection with our connected fitness acquisitions. The Company's annual 2015 effective tax rate is expected~~the lower proportion of foreign pre-tax earnings to ~~be approximately 41.0%.~~total earnings as compared to the prior year period.

~~11.~~9. Earnings per Share

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


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(In thousands, except per share amounts)	2015		2014		2015		2014		2016		2015
Numerator
Net income	$	100,477	$	89,105	$	126,971	$	120,333	$	19,180	$	11,728
Denominator
Weighted average common shares outstanding	215,743		213,522		215,347		213,035		433,626		429,394
Effect of dilutive securities	5,310		4,460		5,361		4,566		9,634		9,838
Weighted average common shares and dilutive securities outstanding	221,053		217,982		220,708		217,601		443,260		439,232
Earnings per share - basic	$	0.47	$	0.42	$	0.59	$	0.56	$	0.04	$	0.03
Earnings per share - diluted	$	0.45	$	0.41	$	0.58	$	0.55	$	0.04	$	0.03

Effects of potentially dilutive securities are presented only in periods in which they are dilutive. Stock options, ~~and~~ restricted stock units and warrants representing ~~47.1 thousand~~0.3 million and ~~5.2 thousand~~0.8 million shares of common stock outstanding for the three months ended ~~September 30, 2015~~March 31, 2016 and ~~2014~~2015, respectively, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive. Stock options and restricted stock units representing 463.1 thousand and 27.0 thousand shares of common stock outstanding for the nine months ended September 30, 2015 and 2014, respectively, were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.

~~12.~~10. Segment Data and Related Information

The Company’s operating segments are based on how the Chief Operating Decision Maker (“CODM”) makes decisions about allocating resources and assessing performance. As such, the CODM receives discrete financial information for the Company's principal business by geographic region based on the Company’s strategy to become a global brand. These geographic regions include North America; Latin America; Europe, the Middle East and Africa (“EMEA”); and Asia-Pacific. Each geographic segment operates exclusively in one industry: the development, marketing and distribution of branded performance apparel, footwear and accessories. ~~Beginning in the first quarter of 2015, the~~The CODM ~~began receiving~~also receives discrete financial information for the Company's Connected Fitness business. ~~Following the completion of~~Intersegment revenue is generated by Connected Fitness which runs advertising campaigns for the Company's ~~acquisition of~~

~~Table of Contents~~

~~Endomondo and MFP~~e-commerce business in ~~2015,~~North America. The Company accounts for this intersegment revenue as if the ~~Company has determined its Connected Fitness business is significant and will no longer be combined into other foreign countries for disclosure purposes.~~sales were made to third parties making similar purchases. Due to the insignificance of the Latin America, EMEA and Asia-Pacific operating segments, they continue to be combined into ~~other foreign countries~~International for disclosure purposes.

The net revenues and operating income (loss) associated with the Company's segments are summarized in the following tables. Net revenues represent sales to external customers for each segment. In addition to net revenues, operating income (loss) is a primary financial measure used by the Company to evaluate performance of each segment. ~~Intercompany balances were eliminated for separate disclosure. The majority of corporate~~Corporate service costs ~~within~~are primarily included in North America and have not been allocated to ~~other foreign countries~~International or Connected Fitness; however, certain costs and revenues included within North America in the prior period have been allocated to Connected Fitness in the current period. Prior period segment data has been recast by an immaterial amount within the tables below to conform to current period presentation.Fitness.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(In thousands)	2015		2014		2015		2014		2016			2015
Net revenues
North America	$	1,059,440	$	847,563	$	2,440,728	$	1,988,141	$	880,595		$	700,512
Other foreign countries	130,230		85,847		315,467		187,089
International									149,356			95,998
Connected Fitness	14,439		4,498		36,432		13,939		18,501			8,431
Intersegment eliminations									(750		)	—
Total net revenues	$	1,204,109	$	937,908	$	2,792,627	$	2,189,169	$	1,047,702		$	804,941


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(In thousands)	2015			2014			2015			2014			2016			2015
Operating income (loss)
North America	$	181,822		$	147,509		$	272,543		$	227,045		$	40,095		$	38,369
Other foreign countries	6,180			3,817			6,126			(3,910		)
International													11,249			4,334
Connected Fitness	(16,605		)	(5,220		)	(47,704		)	(15,479		)	(16,461		)	(15,036		)
Total operating income	171,397			146,106			230,965			207,656			34,883			27,667
Interest expense, net	(4,100		)	(1,535		)	(10,572		)	(3,608		)	(4,532		)	(2,210		)
Other expense, net	(3,239		)	(3,355		)	(5,038		)	(3,982		)
Other income (expense), net													2,702			(1,840		)
Income before income taxes	$	164,058		$	141,216		$	215,355		$	200,066		$	33,053		$	23,617

Net revenues by product category are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(In thousands)	2015		2014		2015		2014		2016			2015
Apparel	$	865,514	$	704,557	$	1,936,221	$	1,583,834	$	666,571		$	555,455
Footwear	196,279		121,597		510,864		345,177		264,246			160,966
Accessories	103,564		84,949		249,755		196,419		79,701			63,151
Total net sales	1,165,357		911,103		2,696,840		2,125,430		1,010,518			779,572
License revenues	24,313		22,307		59,355		49,800		19,433			16,938
Connected Fitness	14,439		4,498		36,432		13,939		18,501			8,431
Intersegment eliminations									(750		)	—
Total net revenues	$	1,204,109	$	937,908	$	2,792,627	$	2,189,169	$	1,047,702		$	804,941

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

Forward-Looking Statements

Some of the statements contained in this Form 10-Q constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, the implementation of our marketing and branding strategies, future benefits and opportunities from acquisitions and our planned dividend of shares of our Class C common stock. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “outlook,” ~~"intends,"~~“intends,” “potential” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this Form 10-Q reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by these forward-looking statements, including, but not limited to, those factors described in our Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015 filed with the Securities and Exchange Commission (“SEC”) (our “~~2014~~2015 Form 10-K”) or in this Form 10-Q under “Risk Factors”, if included herein, and “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations” (“MD&A”).~~Operations.” These factors include without limitation:

changes in general economic or market conditions that could affect consumer ~~spending and~~spending;

changes to the financial health of our ~~retail~~ customers;

our ability to effectively manage our growth and a more complex global business;

our ability to successfully manage or realize expected results from acquisitions and other significant investments and capital expenditures;

our ability to effectively develop and launch new, innovative and updated products;

our ability to accurately forecast consumer demand for our products and manage our inventory in response to changing demands;

increased competition causing us to lose market share or reduce the prices of our products or to increase significantly our marketing efforts;

fluctuations in the costs of our products;

loss of key suppliers or manufacturers or failure of our suppliers or manufacturers to produce or deliver our products in a timely or cost-effective manner, including due to port disruptions;

our ability to further expand our business globally and to drive brand awareness and consumer acceptance of our products in other countries;

our ability to accurately anticipate and respond to seasonal or quarterly fluctuations in our operating results;

risks related to foreign currency exchange rate fluctuations;

our ability to effectively market and maintain a positive brand image;

our ability to comply with trade and other regulations;

the availability, integration and effective operation of information systems and other technology, as well as any potential interruption in such systems or technology;

risks related to data security or privacy breaches;

our ability to raise additional capital required to grow our business on terms acceptable to us;

our potential exposure to litigation and other proceedings; and

our ability to attract and retain the services of our senior management and key employees.

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The forward-looking statements contained in this Form 10-Q reflect our views and assumptions only as of the date of this Form 10-Q. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Overview

We are a leading developer, marketer and distributor of branded performance apparel, footwear and accessories. The brand’s moisture-wicking fabrications are engineered in many different designs and styles for wear in nearly every climate to provide a performance alternative to traditional products. Our products are sold worldwide and worn by athletes at all levels, from youth to professional, on playing fields around the globe, as well as by consumers with active lifestyles. The Under Armour Connected Fitness platform powers the world's largest digital health and fitness community and our strategy is focused on engaging with these consumers and increasing awareness and sales of our products. We plan to grow this community by developing innovative applications, services and other digital solutions to impact how athletes and fitness-minded individuals train, perform and live.

Our net revenues grew to ~~$3,084.4~~$3,963.3 million in ~~2014~~2015 from ~~$1,063.9~~$1,472.7 million in ~~2010.~~2011. We reported net revenues of ~~$2,792.6~~$1,047.7 million for the first ~~nine~~three months of ~~2015~~2016, which represented a ~~27.6%~~30% increase from the first ~~nine~~three months of ~~2014~~2015. We believe that ~~our~~the growth in ~~net revenues~~our business has been driven by a growing interest in performance products and the strength of the Under Armour brand in the marketplace. We plan to continue to increase our net revenues over the long term by increased sales of our apparel, footwear and accessories, expansion of our wholesale distribution sales channel, growth in our direct to consumer sales channel and expansion in international markets and engaging with consumers through our Connected Fitness business. Our direct to consumer sales channel includes our brand and factory house stores and websites. New product offerings for ~~2015~~2016 include ~~Armour~~our first smart shoe, the SpeedForm Gemini 2 Record Equipped^®TM ~~baselayer,~~and our ~~Stephen Curry signature basketball shoes and new UA SpeedForm~~^® ~~running introductions.~~first line of golf shoes.

Our primary business operates in four geographic segments: (1) North America, comprising the United States and Canada, (2) EMEA, (3) Asia-Pacific, and (4) Latin America. We also operate our Connected Fitness business as a separate segment. As our international operating segments ~~include North America; Latin America; Europe, the Middle East~~are currently not material, we combine them and ~~Africa (“EMEA”); Asia-Pacific; and Connected Fitness. Due~~refer to ~~the insignificance of the Latin America, EMEA, and Asia-Pacific operating segments, they have been combined into other foreign countries~~them collectively as International for ~~disclosure~~reporting purposes.

Segment operating income consists of the revenues generated by that segment, less the cost of goods sold and selling, general and administrative costs that are incurred directly by that segment, as well as an allocation of certain centrally managed costs. Corporate services costs, which are generally included in our North America operating segment, include company-wide administrative costs.

General

Net revenues comprise net sales, license revenues and Connected Fitness revenues. Net sales comprise sales from our primary product categories, which are apparel, footwear and accessories. Our license revenues primarily consist of fees paid to us by our licensees in exchange for the use of our trademarks on our products. Our Connected Fitness revenues consist of digital advertising, digital fitness platform licenses and subscriptions from our Connected Fitness business.

Cost of goods sold consists primarily of product costs, inbound freight and duty costs, outbound freight costs, handling costs to make products floor-ready to customer specifications, royalty payments to endorsers based on a predetermined percentage of sales of selected products and write downs for inventory obsolescence. The fabrics in many of our products are made primarily of petroleum-based synthetic materials. Therefore our product costs, as well as our inbound and outbound freight costs, could be affected by long term pricing trends of oil. In general, as a percentage of net revenues, we expect cost of goods sold associated with our apparel and accessories to be lower than that of our footwear. A limited portion of cost of goods sold is associated with license and ~~other~~Connected Fitness revenues, primarily website hosting costs and other costs related to our Connected Fitness business.

We include outbound freight costs associated with shipping goods to customers as cost of goods sold; however, we include the majority of outbound handling costs as a component of selling, general and administrative expenses. As a result, our gross profit may not be comparable to that of other companies that include outbound handling costs in their cost of goods sold. Outbound handling costs include costs associated with preparing goods to ship to customers and certain costs to operate our distribution facilities. These costs were ~~$14.3~~$20.1 million and ~~$16.7~~$13.0 million for the three months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014, respectively, and $40.1 million and $39.7 million for the nine months ended September 30, 2015 and 2014,~~ respectively.

Our selling, general and administrative expenses consist of costs related to marketing, selling, product innovation and supply chain and corporate services. ~~Beginning in 2015, we consolidated~~We consolidate our selling, general and administrative expenses into two primary categories: marketing and other. The other category is the sum of our previously outlined selling, product innovation and supply chain and corporate services categories. Personnel costs are included in these categories based on the employees’ function. Personnel costs include salaries, benefits, incentives and stock-based compensation related to our employees. Our marketing costs are an important driver of our growth. Marketing costs consist primarily of commercials, print

~~Table of Contents~~

ads, league, team, player and event sponsorships and depreciation expense specific to our in-store fixture program for our concept shops.

Other ~~expense,~~income (expense), net 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.

Results of Operations

The following table sets forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of net revenues:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(In thousands)	2015			2014			2015			2014			2016			2015
Net revenues	$	1,204,109		$	937,908		$	2,792,627		$	2,189,169		$	1,047,702		$	804,941
Cost of goods sold	616,949			472,608			1,448,750			1,123,227			567,066			427,277
Gross profit	587,160			465,300			1,343,877			1,065,942			480,636			377,664
Selling, general and administrative expenses	415,763			319,194			1,112,912			858,286			445,753			349,997
Income from operations	171,397			146,106			230,965			207,656			34,883			27,667
Interest expense, net	(4,100		)	(1,535		)	(10,572		)	(3,608		)	(4,532		)	(2,210		)
Other expense, net	(3,239		)	(3,355		)	(5,038		)	(3,982		)
Other income (expense), net													2,702			(1,840		)
Income before income taxes	164,058			141,216			215,355			200,066			33,053			23,617
Provision for income taxes	63,581			52,111			88,384			79,733			13,873			11,889
Net income	$	100,477		$	89,105		$	126,971		$	120,333		$	19,180		$	11,728

Consolidated Results of Operations

Three Months Ended ~~September 30, 2015~~March 31, 2016 Compared to Three Months Ended ~~September 30, 2014~~March 31, 2015

The increase in net sales was driven primarily by:

Apparel unit sales growth and new offerings in multiple lines led by training ~~golf~~ and ~~outdoor performance;~~golf; and

Footwear unit sales growth, led by running and basketball and the expansion of our footwear offerings internationally.

License revenues increased ~~$2.0~~$2.5 million, or ~~9.0%~~14.7%, to ~~$24.3~~$19.4 million for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$22.3~~$16.9 million during the same period in ~~2014~~2015 driven primarily by increased ~~distribution and unit volume growth of~~revenue from our ~~licensed products~~licensing partners in ~~Japan.~~North America due to higher royalty rates.

Connected Fitness revenue increased ~~$9.9~~$10.1 million, or ~~221.0%~~119.4%, to ~~$14.4~~$18.5 million for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$4.5~~$8.4 million during the same period in ~~2014~~2015 primarily driven by having a full quarter of operations from our 2015 acquired companies and increased advertising and subscription revenue ~~growth in our existing~~from Connected Fitness ~~business and our connected fitness acquisitions in the first quarter of 2015.~~applications.

Gross profit increased ~~$121.9~~$102.9 million to ~~$587.2~~$480.6 million for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$465.3~~$377.7 million for the same period in ~~2014.~~2015. Gross profit as a percentage of net revenues, or gross margin, decreased 80100 basis points to ~~48.8%~~45.9% for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~49.6%~~46.9% during the same period in ~~2014.~~2015. The decrease in gross margin percentage was primarily driven by the following:

~~approximate 20 basis point decrease driven by higher inbound airfreight costs necessary to service our customers.~~

The above decreases were partially offset by:

Selling, general and administrative expenses increased ~~$96.6~~$95.8 million to ~~$415.8~~$445.8 million for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$319.2~~$350.0 million for the same period in ~~2014~~2015. As a percentage of net revenues, selling, general and administrative expenses ~~increased~~decreased to ~~34.6%~~42.5% for the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~34.0%~~43.5% for the same period in ~~2014.~~2015. These changes were primarily attributable to the following:

Marketing costs increased ~~$28.7~~$14.9 million to ~~$128.5~~$122.5 million for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$99.8~~$107.6 million for the same period in ~~2014~~2015. This increase was primarily due to key marketing campaigns and investments in sponsorships. As a percentage of net revenues, marketing costs ~~increased~~decreased to ~~10.7%~~11.7% for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~10.6%~~13.4% for the same period in ~~2014.~~2015.

Income from operations increased $~~25.3~~7.2 million, or ~~17.3%~~26.1%, to $~~171.4~~34.9 million for the three months ended ~~September 30, 2015~~March 31, 2016 from $~~146.1~~27.7 million for the same period in ~~2014~~2015. Income from operations as a percentage of net revenues ~~decreased to~~remained consistent at ~~14.2%~~3.4% for the three months ended ~~September 30, 2015~~March 31, 2016 ~~from~~and ~~15.6%~~ ~~for the same period in~~ ~~2014~~2015.

Interest expense, net increased $~~2.6~~2.3 million to $~~4.1~~4.5 million for the three months ended ~~September 30, 2015~~March 31, 2016 from $~~1.5~~2.2 million for the same period in ~~2014~~2015. This increase was primarily due to interest on the net increase of ~~$650.0~~$270.0 million in term loan and revolving credit facility borrowings during ~~2015.~~2016.

Other ~~expense,~~income (expense), net ~~decreased $0.2~~increased $4.5 million to income of $~~3.2~~2.7 million for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$3.4~~expense of $1.8 million for the same period in ~~2014~~2015. This ~~decrease~~increase was due to ~~higher net losses~~gains on the combined foreign currency exchange rate changes on transactions denominated in foreign currencies and our derivative financial instruments as compared to the prior ~~period.~~period due to the weakening of the US dollar against other currencies.

Provision for income taxes increased $~~11.5~~2.0 million to ~~$63.6~~$13.9 million during the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$52.1~~$11.9 million during the same period in ~~2014.~~2015. For the three months ended ~~September 30, 2015,~~March 31, 2016, our effective tax rate was ~~38.8%~~42.0% compared to ~~36.9%~~50.3% for the same period in ~~2014.~~2015. The effective rate for the three months ended ~~September 30, 2015~~March 31, 2016 was ~~higher~~lower than the effective tax rate for the three months ended ~~September 30, 2014~~March 31, 2015 primarily due to ~~increased non-deductible costs incurred in connection with our Connected Fitness acquisitions, along with continued international investments. Our 2015 annual effective tax rate is expected~~the lower proportion of foreign pre-tax earnings to ~~be approximately 41.0%.~~

~~Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014~~total earnings.

~~Net revenues~~ increased $603.4 million, or 27.6%, to $2,792.6 million for the nine months ended September 30, 2015 from $2,189.2 million during the same period in 2014. Net revenues by product category are summarized below:

Nine Months Ended September 30,
(In thousands) 2015 2014 $ Change % Change
Apparel $ 1,936,221
$ 1,583,834
$ 352,387
22.2 %
Footwear 510,864
345,177
165,687
48.0 %
Accessories 249,755
196,419
53,336
27.2 %
Total net sales 2,696,840
2,125,430
571,410
26.9 %
License revenues 59,355
49,800
9,555
19.2 %
Connected Fitness 36,432
13,939
22,493
161.4 %
Total net revenues $ 2,792,627
$ 2,189,169
$ 603,458
27.6 %

~~The increase in net sales was driven primarily by:~~

~~Apparel unit sales growth and new offerings in multiple lines led by training, golf and team sports; and~~

~~Footwear unit sales growth, led by running and basketball and the expansion of our footwear offerings internationally.~~

~~License revenues~~ increased $9.6 million, or 19.2%, to $59.4 million during the nine months ended September 30, 2015 from $49.8 million during the same period in 2014 driven primarily by increased distribution and unit volume growth of our licensed products in North America.

~~Connected Fitness~~ revenue increased $22.5 million, or 161.4%, to $36.4 million during the nine months ended September 30, 2015 from $13.9 million during the same period in 2014 primarily driven by revenue growth in our existing Connected Fitness business and our connected fitness acquisitions in the first quarter of 2015.

approximate 80 basis point decrease due to strengthening of the U.S. dollar negatively impacting our gross margins within our international businesses, which we expect to continue through the rest of the year; and

~~approximate 50 basis point decrease driven by higher inbound airfreight costs necessary to service our customers.~~

~~The above decreases were partially offset by:~~

approximate 90 basis points increase driven primarily by favorable product input costs in our North American and International businesses. We expect this favorable trend to continue through the remainder of 2015, but on a more limited basis.

Segment Results of Operations

The net revenues and operating income (loss) associated with our segments are summarized in the following tables. ~~The majority of corporate~~Corporate service costs ~~within~~are primarily included in North America and have not been allocated to ~~other foreign countries~~International or Connected ~~Fitness; however, certain costs and revenues included within North America in the prior period have been allocated to~~Fitness. Intersegment revenue is generated by Connected Fitness which runs advertising campaigns for our e-commerce business in ~~the current period. Prior period segment data has been recast by an immaterial amount within the tables to conform to the current period presentation.~~North America.

Three Months Ended ~~September 30, 2015~~March 31, 2016 Compared to Three Months Ended ~~September 30, 2014~~March 31, 2015

Net revenues in our North America operating segment increased $~~211.8~~180.1 million to $~~1,059.4~~880.6 million for the three months ended ~~September 30, 2015~~March 31, 2016 from $~~847.6~~700.5 million for the same period in ~~2014~~2015 primarily due to the items discussed above in the Consolidated Results of Operations. Net revenues in ~~other foreign countries~~International increased ~~$44.4~~$53.4 million to ~~$130.2~~$149.4 million for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$85.8~~$96.0 million for the same period in ~~2014~~2015 primarily due to unit sales growth in our Asia-Pacific and ~~Latin America~~EMEA operating segments. Net revenues in our Connected Fitness operating segment increased ~~$9.9~~$10.1 million to ~~$14.4~~$18.5 million for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$4.5~~$8.4 million for the same period in ~~2014~~2015 primarily due to ~~revenues generated from Endomondo and MyFitnessPal, which were acquired in the first~~a full quarter of operations from our 2015 acquired companies and ~~growth in~~increased advertising and subscription revenue from our ~~existing~~ Connected Fitness ~~business.~~applications.

Operating income (loss) by segment is summarized below:

Operating income in our North America operating segment ~~increased$34.3 million~~ to ~~$181.8 million~~ ~~for the~~ ~~three months ended September 30, 2015~~ ~~from~~ ~~$147.5 million~~ ~~for the same period in~~ ~~2014~~ ~~primarily due to the items discussed above in the Consolidated Results of Operations. Operating income in other foreign countries~~ increased ~~$2.4~~$1.7 million to ~~$6.2~~$40.1 million for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$3.8~~$38.4 million for the same period in ~~2014~~2015 primarily due to the increases in revenue discussed above in the Segment Results of Operations partially offset by lower gross margin percentage in the current year compared to the prior year, and increased investment in our corporate structure to support our long-term growth. Operating income in International increased $6.9 million to $11.2 million for the three months ended March 31, 2016 from $4.3 million for the same period in 2015 primarily due to sales growth in our ~~EMEA and~~ Asia-Pacific operating segments. Operating loss in our Connected Fitness segment increased ~~$11.4~~$1.5 million to ~~$16.6~~$16.5 million for the three months ended ~~September 30, 2015~~March 31, 2016 from ~~$5.2~~$15.0 million for the same period in ~~2014~~2015 primarily due to

~~investments to support growth in our Connected Fitness business, including the impact of the acquisitions of Endomondo and MyFitnessPal.~~

~~Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014~~

Nine Months Ended September 30,
(In thousands) 2015 2014 $ Change % Change
North America $ 2,440,728
$ 1,988,141
$ 452,587
22.8 %
Other foreign countries 315,467
187,089
128,378
68.6 %
Connected Fitness 36,432
13,939
22,493
161.4 %
Total net revenues $ 2,792,627
$ 2,189,169
$ 603,458
27.6 %

Financial Position, Capital Resources and Liquidity

expansion of our distribution and corporate facilities to support our growth, leasehold improvements to our brand and factory house stores, and investment and improvements in information technology systems.

Our inventory strategy is focused on continuing to meet consumer demand while improving our inventory efficiency over the long term by putting systems and processes in place to improve our inventory management. These systems and processes are designed to improve our forecasting and supply planning capabilities. In addition to systems and processes, key areas of

focus that we believe will enhance inventory performance are added discipline around the purchasing of product, production lead time reduction, and better planning and execution in selling of excess inventory through our factory house stores and other liquidation channels.

We believe our cash and cash equivalents on hand, cash from operations and borrowings available to us under our credit agreement and other financing instruments are adequate to meet our liquidity needs and capital expenditure requirements for at least the next twelve months. As of March 31, 2016, we had $560.0 million of remaining availability under our revolving credit facility. Although we believe we have adequate sources of liquidity over the long term, an economic recession or a slow recovery could adversely affect our business and liquidity. In addition, instability in or tightening of the capital markets could adversely affect our ability to obtain additional capital to grow our business ~~and will affect the cost and~~on terms ~~of such capital.~~acceptable to us or at all.

Operating Activities

Cash used in operating activities ~~increased $240.9~~decreased $8.2 million to ~~$313.4~~$168.3 million for the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016 from $~~72.5~~176.5 million during the same period in ~~2014~~2015. The ~~increase~~decrease in cash used in operating activities was due to ~~an increase~~a decrease in net cash outflows from operating assets and liabilities of $~~306.6~~11.7 million~~, partially offset by~~ and an increase in net income of ~~$6.6~~$7.4 million, ~~and an increase~~partially offset by a decrease in adjustments to net income for non-cash items of ~~$59.1 million~~.$10.9 million. The ~~increase~~decrease in cash outflows related to changes in operating assets and liabilities period over period was primarily driven by the following:

a larger decrease in accounts payable of $41.0 million in the ~~timing of payments~~current period compared to the prior ~~year.~~period, due to the timing of inventory payments.

Adjustments to net income for non-cash items ~~increased~~decreased in the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016 as compared to the same period in ~~2014~~2015 primarily due to ~~increased depreciation~~higher net gains on the combined foreign currency exchange rate changes on transactions denominated in foreign currencies and ~~amortization expense~~our derivative financial instruments in the current period as compared to the prior ~~period related to the expansion of our distribution and corporate facilities as well as our acquisitions of MyFitnessPal and Endomondo.~~period.

Investing Activities

Capital expenditures for the full year ~~2015~~2016 are expected to be approximately ~~$350.0~~$450.0 million to ~~$360.0~~$475.0 million, comprised primarily of investments in ~~a new distribution facility in North America, expansion of~~ our corporate headquarters, ~~and investments in~~ our new SAP platform and ~~expanding SAP platform.~~our direct-to-consumer business.

Financing Activities

In ~~March 2015,~~January 2016, we amended our ~~existing~~ credit agreement ~~providing an additional $150.0~~to increase revolving credit facility commitments from $800.0 million ofto $1.25 billion. This amendment also extended the term ~~loan borrowings, which were borrowed on the closing date~~ of the ~~amendment, resulting in aggregate~~revolving credit facility and the remaining outstanding term ~~loan borrowings~~loans under the credit agreement, which as of ~~$400.0 million. This amendment also increased revolving credit facility commitments available under the credit agreement~~March 31, 2016 totaled $205.0 million, from ~~$400.0~~May 2019 to January 2021. Simultaneously with entering into this, we borrowed $140.0 million to $800.0 million. As of September 30, 2015, we had $300.0 million of available borrowing capacity under our revolving credit facility. At our request and the lenders' consent, revolving and/or term loan borrowings may be increased by up to $300.0 million in aggregate, subject to certain conditions as set forth in the credit agreement, as amended. These additional amounts are uncommitted and the availability thereof will depend on market conditions at the time we seek to incur such borrowings.

Borrowings under the credit agreement bear interest at a rate per annum equal to, at our option, either (a) an alternate base rate, or (b) a rate based on the rates applicable for deposits in the interbank market for U.S. Dollars or the applicable currency in which the loans are made (“adjusted ~~LIBOR rate,~~LIBOR”), plus in each case an applicable margin. The applicable margin for loans will be adjusted by reference to ~~the Pricing Grid~~a grid (the “Pricing Grid”) based on the consolidated leverage ratio and ranges between 1.00% to 1.25% for adjusted LIBOR ~~rate~~ loans and 0.00% to 0.25% for alternate base rate loans. The weighted average interest ~~rates~~rate under the ~~initial~~outstanding term ~~loan, delayed draw term loan, new term loan~~loans and revolving credit facility ~~were 1.33%, 1.33%, 1.33% and 1.34%~~was 1.56% during the three months ended September 30, 2015, and 1.27%, 1.27%, 1.31% and 1.32% during the nine months ended September 30, 2015, respectively. As of September 30, 2015, $500.0 million was outstanding under our revolving credit facility. Additionally, weMarch 31, 2016. We pay a commitment fee on the average daily unused amount of the revolving credit facility and certain fees with respect to letters of credit. As of ~~September 30, 2015,~~March 31, 2016, the commitment fee was 15.0 basis points. We incurred and capitalized ~~$2.9~~$3.9 million in deferred financing costs in connection with the credit facility.

Other Long Term Debt

In December 2012, we entered into a $50.0 million recourse loan collateralized by the land, buildings and tenant improvements comprising our corporate headquarters. The loan has a seven year term and maturity date of December 2019. The loan bears interest at one month LIBOR plus a margin of 1.50%, and allows for prepayment without penalty. The loan includes covenants and events of default substantially consistent with our credit agreement discussed above. The loan also requires prior approval of the lender for certain matters related to the property, including transfers of any interest in the property. As of ~~September 30, 2015~~March 31, 2016, December 31, ~~2014~~2015 and ~~September 30, 2014,~~March 31, 2015, the outstanding balance on the loan was ~~$44.5~~$43.5 million, ~~$46.0~~$44.0 million and ~~$46.5~~$45.5 million, respectively. The weighted average interest rate on the loan was 1.9% and 1.7% for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015, ~~and 2014.~~respectively.

Interest expense, net was $~~4.1~~4.5 million and $~~1.5~~2.2 million for the three months ended ~~September 30, 2015~~March 31, 2016 and ~~2014~~2015, ~~respectively, and $10.6 million and $3.6 million for the nine months ended September 30, 2015 and 2014,~~ respectively. Interest expense includes the amortization of deferred financing costs and interest expense under the credit and long term debt facilities.

We monitor the financial health and stability of our lenders under the credit and other long term debt facilities, however during any period of significant instability in the credit markets lenders could be negatively impacted in their ability to perform under these facilities.

Contractual Commitments and Contingencies

Critical Accounting Policies and Estimates

Our significant accounting policies are described in Note 2 of the audited consolidated financial statements included in our ~~2014~~2015 Form 10-K. The SEC suggests companies provide additional disclosure on those accounting policies considered most critical. The SEC considers an accounting policy to be critical if it is important to our financial condition and results of operations and requires significant judgments and estimates on the part of management in its application. 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. For a complete discussion of our critical accounting policies, see the “Critical Accounting Policies” section of the MD&A in our ~~2014~~2015 Form 10-K. There were no significant changes to our critical accounting policies during the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016.

Recently Issued Accounting Standards

In May 2014, the ~~FASB~~ ~~issued an~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2014-09 which supersedes the most current revenue recognition requirements. ~~The new revenue recognition standard~~This ASU requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services. ~~This guidance was previously effective for annual~~In March and ~~interim reporting periods beginning after December 15,~~April 2016, ~~with early adoption not permitted.~~ ~~In August 2015,~~ the FASB issued ~~a one-year deferral of the effective date of the new revenue recognition standard. The new standard~~ASU 2016-08 related to principal versus agent considerations and ASU 2016-10 related to identifying performance obligations and licensing, which provide supplemental adoption guidance and clarification to ASU 2014-09, respectively. These ASUs will ~~now~~ be effective for annual and interim periods beginning after December 15, 2017 with early adoption for annual and interim periods beginning after December 15, 2016 permitted and should be applied retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the ~~original effective~~ date ~~permitted. We are~~of adoption. The Company is currently evaluating this ~~standard~~pronouncement to determine the impact of its adoption on ~~our~~its consolidated financial statements.

In ~~July 2015,~~February 2016, the FASB issued ~~an Accounting Standard Update~~ASU 2016-02 which ~~simplifies~~amends the ~~measurement~~existing guidance for leases and will require recognition of ~~inventory~~operating leases with lease terms of more than twelve months and all financing leases on the balance sheet. For these leases, companies will record assets for the rights and liabilities for the obligations that are created by ~~requiring certain inventory to be measured at~~ the ~~lower of cost or net realizable value.~~leases. This ~~guidance~~pronouncement will require disclosures that provide qualitative and quantitative information for the lease assets and liabilities recorded in the financial statements. This pronouncement is effective for fiscal years beginning after December 15, ~~2016 and for interim periods therein.~~2018. We ~~do not expect~~are currently evaluating this pronouncement to determine the impact of its adoption ~~of this standard to have a significant impact~~ on ~~our~~its consolidated financial statements.

In ~~September~~March 2016, the FASB issued ASU 2016-05, which clarifies that a change in counterparty of a derivative contract in a hedge accounting relationship does not, in and of itself, require dedesignation of that hedge accounting relationship. This ASU amends ASC 815 to clarify that such a change does not, in and of itself, represent a termination of the original derivative instrument or a change in the critical terms of the hedge relationship. We are currently evaluating this pronouncement to determine the impact of its adoption on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, which effects all entities that issue share-based payment awards to their employees. The amendments in this ASU cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2016. This guidance can be applied either prospectively, retrospectively or using a modified retrospective transition method. Early adoption is permitted. The Company has not yet selected a transition date and is currently evaluating this ASU to determine the impact of its adoption on its consolidated financial statements.

Recently Adopted Accounting Standards

In November 2015, the FASB issued an Accounting Standards Update which requires ~~the acquiring company~~deferred tax liabilities and assets to be classified as non-current in a ~~business combination to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined.~~classified statement of financial position. The amendments in this Update require that the acquiring company record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of a change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. This guidance is effective for ~~fiscal years~~financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after

December 15, 2018. Earlier adoption is permitted for all entities as of the beginning of an interim or annual reporting period. This amendment may be applied either prospectively or retrospectively to all periods presented. The Company adopted the provisions of this guidance prospectively in the fourth quarter of 2015, and did not retrospectively adjust the prior periods. Had the Company adopted this guidance retrospectively, $66.0 million would have been reclassified from deferred income taxes-current to deferred income taxes-long term for ~~interim~~

~~periods therein. We do not expect~~ the three months ended March 31, 2015. The adoption of this ~~standard~~guidance will simplify the presentation of deferred income taxes and reduce complexity without decreasing the usefulness of information provided to users of financial statements. The adoption of this pronouncement did not have a significant impact on ~~our consolidated~~the Company's financial ~~statements.~~

~~Recently Adopted Accounting Standards~~position, results of operations and cash flows.

In ~~January~~April 2015, the FASB issued ~~an Accounting Standards Update~~ASU 2015-03 which ~~eliminates~~requires all costs incurred to issue debt to be presented in the balance sheet as a direct deduction from ~~GAAP~~ the ~~concept~~carrying value of ~~extraordinary items and~~ the ~~need to separately classify, present, and disclose extraordinary events and transactions.~~debt. This ~~guidance~~ASU is effective for annual and interim reporting periods beginning after December 15, 2015, with early adoption ~~permitted provided that~~permitted. The Company adopted the ~~guidance is applied from the beginning of the fiscal year of adoption. The adoption~~provisions of this ~~pronouncement did not have a material impact on our consolidated financial statements.~~

~~Table~~ASU in the first quarter of ~~Contents~~2016, and reclassified approximately $4.0 million, $2.9 million and $3.5 million from "Other long term assets" to "Long term debt, net of current maturities" as of March 31, 2016, December 31, 2015 and March 31, 2015.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Foreign Currency Risk~~

~~We currently generate a majority of~~There have been no significant changes to our consolidated net revenues in the United States, and the reporting currency for our consolidated financial statements is the U.S. dollar. As our net revenues and expenses generated outside of the United States increase, our results of operations could be adversely impacted by changes in foreign currency exchange rates. For example, as we recognize foreign revenues in local foreign currencies and if the U.S. dollar strengthens, it could have a negative impact on our foreign revenues upon translation of those results into the U.S. dollar upon consolidation of our financial statements. In addition, we are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates on transactions generated by our foreign subsidiaries in currencies other than their local currencies. These gains and losses are primarily driven by intercompany transactions and inventory purchases denominated in currencies other than the functional currency of the purchasing entity. These exposures are included in other expense, net on the consolidated statements of income.

~~From time to time, we may elect to use foreign currency contracts to reduce the~~market risk from exchange rate fluctuations primarily for our international subsidiaries. As we expand our international business, we anticipate expanding our current hedging program to include additional currency pairs and instruments. We do not enter into derivative financial instruments for speculative or trading purposes.

~~As of~~ ~~September 30, 2015~~, the aggregate notional value of our outstanding foreign currency contracts was $433.2 million, which was comprised of Canadian Dollar/U.S. Dollar, Euro/U.S. Dollar, Yen/Euro, Mexican Peso/Euro and Pound Sterling/Euro currency pairs with contract maturities of one to ~~fourteen months. The foreign currency contracts outstanding as of~~ ~~September 30, 2015~~ have weighted average contractual foreign currency exchange rates of 1.32 CAD per $1.00, €0.89 per $1.00, 143.36 JPY per €1.00, 18.91 MXN per €1.00 and £0.79 per €1.00. A portion of our foreign currency contracts are not designated as cash flow hedges, and accordingly, changes in their fair value are recorded in earnings. During the second quarter of 2014, we began entering into foreign currency contracts designated as cash flow hedges. For foreign currency contracts designated as cash flow hedges, changes in fair value, excluding any ineffective portion, are recorded in other comprehensive income until net income is affected by the variability in cash flows of the hedged transaction. The effective portion is generally released to net income after the maturity of the related derivative and is classified in the same manner as the underlying exposure. During the three and nine months ended September 30, 2015, we reclassified $0.9 million and $2.3 million, respectively, from other comprehensive income to cost of goods sold related to foreign currency contracts designated as cash flow hedges. The fair values of our foreign currency contracts were assets of $1.4 million, $0.8 million and $8.0 thousand as of September 30, 2015,since December 31, 2014 and September 30, 2014, respectively, and were included in prepaid expenses and other current assets on the consolidated balance sheet. Refer to Note 6 to the Consolidated Financial Statements for2015. For a discussion of ~~the fair value measurements. Included in other expense, net were the following amounts related to changes in foreign currency exchange rates and derivative foreign currency contracts:~~

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2015 2014 2015 2014
Unrealized foreign currency exchange rate gains (losses) $ (5,454 ) $ (4,981 ) $ (24,677 ) $ (4,881 )
Realized foreign currency exchange rate gains (losses) (1,858 ) 81
6,999
303
Unrealized derivative gains (losses) (112 ) (134 ) (182 ) (152 )
Realized derivative gains (losses) 3,559
1,679
12,196
748

We enter into foreign currency contracts with major financial institutions with investment grade credit ratings and are exposed to credit losses in the event of non-performance by these financial institutions. This credit risk is generally limited to the unrealized gains in the foreign currency contracts. However, we monitor the credit quality of these financial institutions and consider the risk of counterparty default to be minimal. Although we have entered into foreign currency contracts to minimize some of the impact of foreign currency exchange rate fluctuations on future cash flows, we cannot be assured that foreign currency exchange rate fluctuations will not have a material adverse impact on our financial condition and results of operations.

~~Interest Rate Risk~~

In order to maintain liquidity and fund business operations, we 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. We may elect to enter into interest rate swap contracts to reduce the impact associated with interest rate fluctuations. We utilize interest rate swap contracts to convert a portion of variable rate debt to fixed rate debt. The contracts pay fixed and receive variable rates of interest. The interest rate swap contracts are accounted for as cash flow hedges and accordingly, the effective portion of the changes in fair value are recorded in other comprehensive income and reclassified into interest expense over the life of the underlying debt obligation.

~~Table of Contents~~

~~As of~~ ~~September 30, 2015, the notional value of our outstanding interest rate swap contracts was $175.0 million~~. During the three months ended September 30, 2015 and 2014, we recorded a $0.7 million and $0.6 million increase in interest expense, respectively, representing the effective portion of the contract reclassified from accumulated other comprehensive income. During the nine months ended September 30, 2015 and 2014, we recorded a $2.1 million and $1.0 million increase in interest expense, respectively, representing the effective portion of the contract reclassified from accumulated other comprehensive income. The fair value of the interest rate swap contracts was a liability of $3.4 million and $0.6 million as of September 30, 2015 and December 31, 2014, respectively, and was included in other long term liabilities on the consolidated balance sheet. The fair value of the interest rate swap contract was an asset of $1.2 million as of September 30, 2014, and was included in other long term assets on the consolidated balance sheet.

~~Credit Risk~~

~~We are exposed to credit risk primarily on our accounts receivable. We provide credit to customers in the ordinary course of business and perform ongoing credit evaluations. We believe that~~ our exposure to ~~concentrations of credit~~market risk, ~~with respect~~refer to ~~trade receivables is largely mitigated by~~ our ~~customer base. We believe that our allowance~~Annual Report on Form 10-K for ~~doubtful accounts is sufficient to cover customer credit risks as ofSeptember 30, 2015~~.

~~Inflation~~

~~Inflationary factors such as increases in~~ the cost of our product and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations in recent periods, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net revenues if the selling prices of our products do not increase with these increased costs.year ended December 31, 2015.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There has been no change in our internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) during the most recent fiscal quarter that has materially affected, or that is reasonably likely to materially affect our internal control over financial reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in litigation and other proceedings, including matters related to commercial and intellectual property, as well as trade, regulatory and other claims related to our business. See Note 54 to our Consolidated Financial Statements for information on certain legal proceedings, which is incorporated by reference herein.

ITEM 1A. RISK FACTORS

The Risk Factors included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, ~~2014~~2015 have not materially changed.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

From ~~July~~January 1, ~~2015~~2016 through ~~September 30, 2015,~~March 31, 2016, we entered into contractual arrangements to issue ~~16,102~~124,055 deferred stock units automatically exchangeable for shares of Class A Common Stock on a one-for-one basis to one or more of our marketing partners in connection with their entering into endorsement and other marketing services agreements with us. As a result of the Class C stock dividend, these units will be exchangeable for an additional 124,055 shares of Class C Common Stock. These offers of our securities were made in reliance upon Section 4(2) under the Securities Act and did not involve any public offering. We did not receive any cash consideration in connection with these arrangements.

ITEM 6. EXHIBITS



Exhibit No.

3.01	Amended and Restated Articles of Incorporation (filed to incorporate the amendment referred to in Exhibit 3.02 herein, effective April 6, 2016).

3.02	Articles of Amendment to the Company's Amended and Restated Articles of Incorporation.

4.01	Terms of Settlement of In re: Under Armour Shareholder Litigation, CaseNo, 24-C-15-00324 (incorporated by reference from Exhibit 4.2 of the Company's Registration Statement on Form 8-A filed on March 21, 2016).

10.01	Amendment No. 2, dated as of January 22, 2016, to the Credit Agreement, dated May 29, 2014, by and among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, PNC Bank, National Association, as Syndication Agent, Bank of America, N.A. SunTrust Bank and Wells Fargo Bank, National Association as Co-Documentation Agents and the other lenders and arrangers party thereto (incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed on January 22, 2016).

10.02	Under Armour, Inc. Second Amended and Restated 2005 Omnibus Long-Term Incentive Plan, as amended (incorporated by reference to Exhibit 4.5 of the Company’s Registration Statement on Form S-8 (Registration No. 333-210844) filed on April 20, 2016).

10.03	First Amendment, dated April 7, 2016, to the Confidentiality, Non-Competition and Non-Solicitation Agreement, dated June 15, 2015, between the Company and Kevin Plank.

31.01	Section 302 Chief Executive Officer Certification.

31.02	Section 302 Chief Financial Officer Certification.

32.01	Section 906 Chief Executive Officer Certification.

32.02	Section 906 Chief Financial Officer Certification.

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	XBRL Taxonomy Extension Label Linkbase Document

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

~~Table of Contents~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	UNDER ARMOUR, INC.

	By:	/s/ BL~~RAD~~AWRENCE DP. M~~ICKERSON~~OLLOY
		~~Brad Dickerson~~Lawrence P. Molloy
		~~Chief Operating Officer and~~ Chief Financial Officer

Date: ~~November 4, 2015~~April 29, 2016

2825



	September 30, 2015			December 31, 2014			September 30, 2014
Assets
Current assets
Cash and cash equivalents	$	159,398		$	593,175		$	249,469
Accounts receivable, net	551,188			279,835			449,221
Inventories	867,082			536,714			637,459
Prepaid expenses and other current assets	134,751			87,177			86,914
Deferred income taxes	60,692			52,498			40,840
Total current assets	1,773,111			1,549,399			1,463,903
Property and equipment, net	478,418			305,564			264,629
Goodwill	591,872			123,256			123,356
Intangible assets, net	79,692			26,230			28,850
Deferred income taxes	42,866			33,570			47,602
Other long term assets	69,543			57,064			49,770
Total assets	$	3,035,502		$	2,095,083		$	1,978,110
Liabilities and Stockholders’ Equity
Current liabilities
Revolving credit facility, current	$	300,000		$	—		$	—
Accounts payable	274,285			$	210,432		$	273,687
Accrued expenses	188,266			147,681			143,299
Current maturities of long term debt	42,124			28,951			19,524
Other current liabilities	43,929			34,563			53,969
Total current liabilities	848,604			421,627			490,479
Long term debt, net of current maturities	362,550			255,250			172,124
Revolving credit facility	200,000			—			—
Other long term liabilities	89,094			67,906			61,366
Total liabilities	1,500,248			744,783			723,969
Commitments and contingencies (see Note 5)
Stockholders’ equity
Class A Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of September 30, 2015, December 31, 2014 and September 30, 2014; 180,115,884 shares issued and outstanding as of September 30, 2015, 177,295,988 shares issued and outstanding as of December 31, 2014 and 176,021,944 shares issued and outstanding as of September 30, 2014.	60			59			59
Class B Convertible Common Stock, $0.0003 1/3 par value; 35,700,000 shares authorized, issued and outstanding as of September 30, 2015, 36,600,000 shares authorized, issued and outstanding as of December 31, 2014 and 37,675,000 shares authorized, issued and outstanding as of September 30, 2014.	12			12			13
Class C Common Stock, $0.0003 1/3 par value; 400,000,000 shares authorized as of September 30, 2015; 0 shares issued and outstanding as of September 30, 2015.	—			—			—
Additional paid-in capital	603,123			508,350			490,578
Retained earnings	971,117			856,687			770,484
Accumulated other comprehensive loss	(39,058		)	(14,808		)	(6,993		)
Total stockholders’ equity	1,535,254			1,350,300			1,254,141
Total liabilities and stockholders’ equity	$	3,035,502		$	2,095,083		$	1,978,110



	MyFitnessPal				Endomondo
	(in thousands)			Useful life (in years)	(in thousands)			Useful life (in years)
	(in thousands)			Useful life (in years)	(in thousands)			Useful life (in years)
Finite-lived intangible assets:
User base	$	38,300		10	$	10,600		10
Nutrition database	4,500			10	—			N/A
Technology	3,200			5	5,000			5
Trade name	2,300			5	400			5
Other assets acquired	16,190				3,738
Liabilities assumed	(3,291		)		(2,784		)
Net assets acquired	61,199				16,954
Goodwill	402,728				70,290
Total fair value of consideration	$	463,927			$	87,244



	September 30, 2015							December 31, 2014							September 30, 2014
(In thousands)	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Available-for-sale	$	11,958	$	—		$	—	$	—	$	—		$	—	$	—	$	—		$	—
Derivative foreign currency contracts (see Note 9)	—		1,371			—		—		806			—		—		8			—
Interest rate swap contracts (see Note 9)	—		(3,391		)	—		—		(607		)	—		—		1,182			—
TOLI policies held by the Rabbi Trust	—		4,384			—		—		4,734			—		—		4,665			—
Deferred Compensation Plan obligations	—		(4,741		)	—		—		(4,525		)	—		—		(4,252		)	—


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(As a percentage of net revenues)	2015		2014		2015		2014		2016		2015
Net revenues	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	51.2	%	50.4	%	51.9	%	51.3	%	54.1	%	53.1	%
Gross profit	48.8	%	49.6	%	48.1	%	48.7	%	45.9	%	46.9	%
Selling, general and administrative expenses	34.6	%	34.0	%	39.8	%	39.2	%	42.5	%	43.5	%
Income from operations	14.2	%	15.6	%	8.3	%	9.5	%	3.4	%	3.4	%
Interest expense, net	(0.3	)%	(0.2	)%	(0.4	)%	(0.2	)%	(0.4	)%	(0.3	)%
Other expense, net	(0.3	)%	(0.3	)%	(0.2	)%	(0.2	)%
Other income (expense), net									0.2	%	(0.2	)%
Income before income taxes	13.6	%	15.1	%	7.7	%	9.1	%	3.2	%	2.9	%
Provision for income taxes	5.3	%	5.6	%	3.2	%	3.6	%	1.4	%	1.4	%
Net income	8.3	%	9.5	%	4.5	%	5.5	%	1.8	%	1.5	%