Company: UAA
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001336917-25-000198
Chunk: 115

Company: Under Armour, Inc.
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 8
Chunk 115
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 and forecasted pre-tax earnings, the impact of U.S taxation of foreign earnings, increased global minimum taxes and valuation allowances on increased U.S. interest expense carryforwards.The United States enacted the budget reconciliation H.R. 1, referred to as One Big Beautiful Bill Act (“OBBBA”) on July 4, 2025. The OBBBA includes a broad range of tax reform provisions, including modifications to U.S. taxation on foreign earnings, the restoration of bonus depreciation and research expensing and other U.S. corporate tax provisions. While the Company is continuing to assess the impact of the legislation, it did not have a material impact to the Company’s financial statements for the three and six months ended September 30, 2025.Valuation AllowanceThe Company evaluates on a quarterly basis whether the deferred tax assets are realizable which requires significant judgment. The Company considers available positive and negative evidence, including historical operating performance and expectations of future operating performance. To the extent the Company believes it is more likely than not that all or some portion of the asset will not be realized, valuation allowances are established against the Company's deferred tax assets, which increase income tax expense in the period when such a determination is made.As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of September 30, 2025, for the Company's U.S. federal interest expense carryforwards and the majority of the U.S. states and certain foreign taxing jurisdictions, the Company believes the weight of the negative evidence continues to outweigh the positive evidence regarding the realization of these deferred tax assets and has maintained valuation allowances against these assets. The Company currently has valuation allowances on all of its deferred tax assets in China. The Company's current forecast for China taxable earnings indicates that it is reasonably possible that its deferred taxes could be realizable in that jurisdiction during the current fiscal year-end based on a near term trend towards three-year cumulative taxable earnings. The actualization of these forecasted results may potentially outweigh the negative evidence, resulting in a reversal of the previously recorded valuation allowances in China. The release of valuation allowances would result in a benefit to income tax expense in the period the release is recorded, which could have a material impact on net income. The timing and amount of the potential valuation allowance release are subject to significant management judgment, as well as prospective taxable earnings in China. Additionally, the Company is actively monitoring the global trade environment due to recent tariff increases and is actively