Under Armour, Inc and Subsidiaries annual report
Introduction
Annual report of any company is aimed at relaying critical information about the company to shareholders. This paper discusses the annual report of Under Armour, Inc and Subsidiaries as of December 31, 2011.
The main sections of the annual report of Under Armour, Inc and Subsidiaries
The annual report of Under Armour, Inc and Subsidiaries comprise five main sections; letter to shareholders by the Chairman, management discussion, auditor’s report, financial statement and notes to the financial statement. The letter to shareholders by the chairman summarizes the core business of the company, the performance of the company, the future outlook and what the company intends to do in the future. Management discussion provides a detailed breakdown and analysis of the financial statements. It also discusses components of the company and factors that had an impact on the company’s operations. The components discussed in the management discussion include; business, risk factors, unresolved staff comments, properties, legal proceedings, control procedures and mine safety disclosures.
Another major section in the annual report was the auditor’s report. It is a legal requirement for all public companies to be audited by independent auditors.The auditor’s report stated that the presented financial statements were true and fair, and effective internal controls were maintained. It also stated that there are no circumstances that threaten the going concern assumption of Under Armour, Inc and Subsidiaries. The financial statements section contained the financial results of 2011. The financial statements comprised of an income statement, a balance sheets and a statement of cash flows. Lastly, notes to the financial statements contained comprehensive information on how the numbers in the financial statement were derived, the potential problems regarding the numbers and the accounting policies that were used.
Key factors that influenced the financial performance of Under Armour, Inc and Subsidiaries
There was an impressive growth in revenues from $ 1,063,927 in 2010 to $ 1,472,628 in 2011. This growth can be attributed to diversifying to other geographies and categories outside the core of Under Armour. The business outside USA grew by 35 percent in the year 2011 alone. It can also be attributed to product design and innovation. The launch of Charged Cotton, which was a big success, contributed to the growth. New footwear designs, such as UA Charge RC, were launched in 2011 with great success. Another factor that contributed to the growth was Direct-to-Consumer sales. The revenues from this segment, which was 27 percent of total revenues, grew by 62 per cent in 2011.The growth in this segment could be attributed to e-commerce.
Primary assets held by Under Armour, Inc and Subsidiaries
The assets of Under Armour, Inc and Subsidiaries comprised of current assets, intangible assets and non-current assets. The total value of current assets in 2011 was $ 689,663 while the value of intangible assets and non-current assets in the same year was $ 229,547. The total value of all assets owned by Under Armour, Inc and Subsidiaries was $ 919,210. The total value of assets in 2011 was higher than that of 2010 which was $ 675,378. Current assets consisted of cash and cash equivalents, account receivable, inventories prepaid expenses and other current assets, and deferred income. Non-current assets comprised of deferred income tax and other long term assets.
Internal control environment of Under Armour, Inc and Subsidiaries
The internal controls and procedures of Under Armour, Inc and Subsidiaries were evaluated by management with the participation and under the supervision of the Chief Financial officer and Chief Executive Officer. They concluded that the internal controls and procedures were effective as of December 31, 2011 in ensuring that all material information was recorded, processed, summarized and reported. The effectiveness of the internal controls over the internal environment was audited by PricewaterhouseCoopers LLP, who was the external auditors of the company. PricewaterhouseCoopers LLP stated that Under Armour, Inc and Subsidiaries maintained effective internal controls basing on the Integrated framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) .
Conclusion
The annual report of Under Armour, Inc and Subsidiaries comprise five main sections; letter to shareholders by the Chairman, management discussion, auditor’s report, financial statement and notes to the financial statement. The company had an impressive growth in revenue which could be attributed to geographical and category diversification, product design and e-commerce. The company had an effective internal control environment.
References
Eisen, P. (2005). Accounting (revised ed.). New York: Barron's Educational Series.
Gibson, C. H. (2010). Financial Reporting & Analysis: Using Financial Accounting Information (12 ed.). London: Cengage Learning.
Pasewark, W. R. (2008). Understanding Corporate Annual Reports (7, illustrated ed.). New York: McGraw-Hill Higher Education.
Under Armour,Inc and Subsidiaries. (2012, February 24). underarmour. Retrieved July 31, 2012, from http://investor.underarmour.com/annuals.cfm: http://files.shareholder.com/downloads/UARM/1997663161x0x553892/7bb998c7-0789-453b-8245-f11ec4419fe7/2011_FINAL_Annual_Report.pdf
