(Reuters) – Under Armor said on Friday it has agreed to pay $434 million to settle a 2017 class action lawsuit accusing the sportswear maker of deceiving shareholders on earnings growth to meet Wall Street forecasts.
The proposed settlement, subject to court approval, avoids a scheduled July 15 trial in federal court in Baltimore.
The shareholder lawsuit accused the apparel maker and CEO Kevin Plank of intentionally misleading them about the company’s financial health.
The Baltimore-based company agreed in 2021 to pay $9 million to settle Securities and Exchange Commission (SEC) charges that it misled investors about its earnings growth.
The Securities and Exchange Commission (SEC) found in its investigation that Under Armor (NYSE:) failed to disclose to investors that it used sales tactics to accelerate or “pull” existing orders totaling $408 million in the second half of 2015. .
Mark Solomon, lead shareholder counsel and partner at litigation firm Robbins Geller Rudman & Dowd, called the proposed settlement an “important victory” that underscores the key role pension funds play in holding companies accountable.
Under Armor said it intends to pay the $434 million settlement in cash on hand and through a $1.1 billion revolving credit facility.
The company added in a regulatory filing that it has also agreed to continue to separate the roles of chairman and chief executive officer for at least three years.
Under Armor said it consistently denies the allegations and entered into this agreement in principle, which does not constitute an admission or determination of guilt or wrongdoing.
The company expects its total provision for litigation contingencies related to the claim to reach $434 million in the first quarter of fiscal 2025, up from $100 million at the end of fiscal 2024.