i) NAME OF COMPANY:
The company we are analyzing is Under Armour ii) INDUSTRY - What, specifically, does your company do:
The company is engaged in the business of sports clothing, accessories and is leading supplier of casual wear and sports wear. Company also engaged in footwear business in 2005.iii) What is the address of your firm?
Under Armour is headquartered both in USA and Europe. In US, company is based in Maryland and in Europe the headquarters are based in Amsterdam. For Maryland headquarters following is the complete address of the company:
1020 Hull Street
Baltimore, Maryland 21230
iv) Does your firm have a web site? If so, what is the address? Attach a copy of the home page of the web site.
Indeed the company have their website and following is the address of their web site:
www.underarmour.com/ Basic information of the Company
a. State of incorporation:
Under Armour is a public listed company with market capitalization of $8.50 Billion and share volume of 996426 shares.(Yahoo Finance)b. This report is for fiscal year ending (mm/dd/yy):The annual report used for analysis of the company is for the fiscal year 2012 while the financial statements are made until 31/12/2012.
c. Who is the independent auditor of your company?
The audit commitee of the company has chosen Pricewater Housecoopers as the Independent Auditor of the company.
d. What type of opinion did the auditor issue?
The Independent auditors of the company, Pricewater House has provided the opinion that financial statements of the company present a fair view of the company’s position and also of its subsidiaries. Auditors declare that the financial statements so prepared are in accordance with Generally Accepted Accounting Principle(GAAP) presents fair view in all material aspects.
The auditors also provided their view on internal control position of the company where it is designed to provide reasonable assurance regarding reliability of financial reporting. However, the auditors has stated that because of inherent limitations present in the company, internal control over financial reporting may not be able to prevent misstatements in financial reporting.(Pg 47-48)
e. Who is the CEO of the company?
The founder of the company, Mr.Kevin Plank is the Chief Executive Officer of the company.f. Who is the CFO of the company?
The Chief Financial Officer of the Company is Mr. Brad Dickersong. Who is the Chairman of the Board of Directors of your company?
i. On which exchange does your company trade its stock?
Stock of Under Amrour is traded on New York Stock Exchange, USAj. What is the ticker symbol for your company?
Company trades on NYSE under the ticker symbol of ‘’UA’’.k. What were the 52-week high and low prices of your stock for the reported fiscal year?For the period of 2012, the lowest price was $36.09 on 3rd January, 2013 and the highest price was attained on 14th September, 2012 when the stock traded at $60.03.
The Income Statement
a. How many zeroes are omitted from the presented numbers?
Since the financial statements are made in Thousands, the presentation of accounting numbers have ammiitted three(‘000) zeros and have stated that on its financial statements.(Pg 48)
b. What amount did your company report for each of the following?
Revenue from sale of goods and services:$1894321Cost of Goods Sold: $955624
Income tax expense $74661Interest expense: ($5183)Total expenses (including interest and taxes): $79844
Net income: $128778Primary Earnings per Share: $1.23/share(Pg 49) The Balance Sheet
a. Does your organization's Annual Report include a classified balance sheet (segregates current and long term assets and liabilities)? Yes, the balance sheet as disclosed in the Annual Report do have a classified balance sheet as it gives proper classification of both assets and liabilities. For Instance, while coming up to the total amount of current assets it gives proper segmentation of all the current assets and their related amount like Cash and Cash Equivalents, Accounts Receivables, Inventories, Prepaid Expenses and Deferred Income Tax,
Similarly, segmented information is also provided for current liabilities and other items of Balance Sheet.
b. A comparative balance sheet (presents more than one year)? If so, what years are presented for each statement?
The balance sheet presented in Annual Report of the company for the year 2012 have presented a comparative balance sheet where comparison of the financial data is made between the year 2012 and 2011.c. How much was reported for each item below? Current assets $903598Property, plant and equipment (net): $180850Other long-term assets: $45546Current liabilities: $252228Long-term liabilities:$87933($52757+$35176)Common stock: Contributed capital in excess of par (aka Additional paid-in capital): $321338
Retained earnings (or deficit):$493181(Pg 48) The Statement of Stockholders' Equity
a. Is there a Statement of Stockholders' Equity in your Annual Report?
Yes, company has disclosed Consolidated Statement of Stockholder’s Equity in its Annual Report at page no. 51.b. What was the beginning dollar amount of the year stockholders' equity?
The beginning balance of Stockholder’s Equity was $80992 at 1.1.2012.(Pg 51)c. What was the ending dollar amount stockholders' equity? At the end of fiscal year of 2012, the ending Stockholder’s Equity was $83461.(Pg 51)
d. What is the par value of the stock?Both the classes of common stock, Class A and Class B Stock have par value of $0.0003(Pg 63)
e. How many shares are authorized and outstanding at year end?Company have two types of common stock: Class A Stock and Class B Stock of which Class A have authorized number of 200 Million shares while Class B Stock have authorized number of 21.3 Million Shares.(Pg 63)
The total number of Shares outstanding at the end of year were 104.055 Million.
f. Did your company issue a cash dividend, a stock dividend or declare a stock split during the year? If so, indicate the amount of the dividend or split.
Refering to the annual report of the company we find that it has not declared any dividends during the year and also it has declared that because of its plans, the company expects to retain the earnings for use in the company.
However, on July 9th, 2012, company declared a stock split of two for one stock split both for Class A and Class B which was effected in the form of a 100% common stock dividend.(Pg 23)
The Statement of Cash Flows
a. What was the company’s beginning cash balance?
Refering to the consolidated Cash Flow Statement we find that the beginning cash balance of the company was $175384.(Pg 52)b. What was their ending cash balance?
As on 31st December, 2012 the ending cash balance was $341841.(Pg 52)
c. What was their net increase or decrease in cash?During the year 2012, company experienced increase of Cash and Cash Equivalents by $166457.(Pg 52)
d. What was the net cash flow from Operating Activities?Net Cash Inflow from Operating Activities was $199761.( Pg 52)e. Given the answers above, do you believe that the company used its cash wisely for investing and financing activities? Why or why not?Refering to the Cash Flow Statement of the company we find that overall cash position of the company has been strong during the year. The Net Income of the company has improved by 32.87% during the year and after adjusting for Non-Cash Expenses and Working Capital Changes, company managed to earn cash inflow of $199761 from its operating activities which was 1212% higher than mere CFO of $15218 of 2011.(Pg 52)
Since the year of 2012 was financially well for the company it most appropriately used its cash in Investing as well as Financing Activities. While for Investing Activities, company invested $50650 in plant, property and equipment along with changes in restricted cash amount, for Financing Activities it used good proportion of cash both received and paid for Long Term Debt as it ended the year with Cash Inflow of $12297 and net increase in cash was recorded to be $166457 during the year.
Thus, Under Armour used its Cash from Operating Activities most appropriately for Investing Activities and Financing Activities.
Notes to the Financial Statementsa. How many Notes are listed at the end of the financial statements?A total of 17 Notes are provided to the Financial Statements of the company.
b. What inventory method does your company use (LIFO, FIFO, etc.)?
Refering to Note of the financial Statement relating to Inventory we find that the company is using First- in- First- Out Method(FIFO) for valuation of its inventory. The company following FIFO method values its inventory at standard cost which approximates landed cost. Since company follows GAAP accounting standards, if the market value of its Inventory is less than the carrying value of such inventory, it records a change to cost of goods sold to reflect the lower of cost or market.(pg 54)
c. Which depreciation method does your organization use? Is more than one method used?
Concerning the depreciation expense only with Tangible Assets, UnderArmour use straight line depreciation method over the estimated useful lives of the assets, For instance for depreciating its property, plant and equipment useful live of asset, 3 to 10 years for furniture, office equipment and software and plant equipment while for site improvements, buildings and building equipment useful live of 10 to 35 years is used. The company declared that for the purpose of depreciation, it periodically reviews estimated useful lives based upon actual experience and expected future utilization.(Pg 54)
d. Does your company have any stock based compensation?
As of Fiscal Year 2012, company had not recorded any stock based compensation. However, it declared in its annual report that an additional stock based compensation of up to $16.6 million would have been recorded through 31st December, 2012 for all performance based restricted stock units had the full achievement of these operating income targets been deemed probable.(Pg 70)e. Were any new accounting pronouncements applied during the year? If so, which ones?No new accounting pronouncements were applied during the year.
f. What is the number of the Note that relates to income taxes?
Note 2(f) relates to Income Taxes.(Pg 53)
g. Did your company list any subsequent events in the notes? Company in its Annual Report of 2012, disclosed two subsequent events relating to Stockholder’s Equity and Stock Based Compensation:
Company declared that during February 2013, 0.3 Million Shares of Class Bo of Convertible Common Stock were converted into shares of Class A Common Stock on a one for one basis in connection with a stock sale.(pg 74)
Stock Based Compensation:
Company declared that during Februrary 2013, 0.6 Million performance based restricted stock units were awarded to crtain officers and employees under the 2005 Plan. The stock based compensation is still vested which will be provided on achieving operating income targets of 2013 and 2014. Thus, on achievement of combined operating income targets, the vested intereste will be be vested in 2015, 2016 and 2017 on one third basis for every year of allocation.8. What is your overall opinion of the annual report? Did it include the required information? How much PR fluff was included? Would the average investor be able to understand the information presented?
The overall presentation of the annual report was lucid and easy to understand even for an average investor who have basic knowledge of accounting and finance. The company tried its very best to disclose everything that should be in knowledge of its investors in order to provide a fair view of its financial statements and its operations.
Most Importantly, classified balance sheet and included comparison with the fiscal year of 2011 was indeed a way to help the investor learn about current performance of the company and what constitutes it assets and liabilities. On the whole, we did not find any PR Fluff in the Annual Report included by the company. Overall the report and its contents were justified with notes to financial statements where even an avergae investor can look for what happened in the company and its likely effect on the financial statement.
MorningStar. UnderArmour(UA). n.d. Web. 23 November 2013.
UnderArmour. Annual Report 2012. Annual Report. Maryland: Under Armour Inc, 2012. Web Document.
Yahoo Finance. UnderArmour Historical Prices. 31 December 2012. Web. 23 November 2013.