Under Armour 2008 Annual Report Download - page 66

Download and view the complete annual report

Please find page 66 of the 2008 Under Armour annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

value in accordance with SFAS 123 as amended by SFAS No. 148, Accounting for Stock-Based Compensation
Transition and Disclosure (“SFAS 148”), net income and earnings per share for the years ended December 31,
2008, 2007 and 2006 would have been reported as set forth in the following table:
Year Ended December 31,
(In thousands, except per share amounts) 2008 2007 2006
Net income $38,229 $52,558 $38,979
Add: stock-based compensation expense included in
reported net income, net of taxes 4,633 2,468 1,298
Deduct: stock-based compensation expense determined
under fair value based methods for all awards, net of
taxes (4,796) (2,628) (1,452)
Pro forma net income $38,066 $52,398 $38,825
Earnings per share including SFAS 123 compensation
expense
Basic, pro forma $ 0.78 $ 1.09 $ 0.83
Diluted, pro forma $ 0.76 $ 1.05 $ 0.78
Basic, as reported $ 0.79 $ 1.09 $ 0.83
Diluted, as reported $ 0.77 $ 1.05 $ 0.79
The Company issues new shares of Class A Common Stock upon exercise of stock options, grant of
restricted stock or share unit conversion. See Note 12 for further details on stock-based compensation.
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, including estimates relating to 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.
Fair Value of Financial Instruments
The carrying amounts shown for the Company’s cash and cash equivalents, accounts receivable and
accounts payable approximate fair value because of the short term maturity of those instruments. The fair value
of the long term debt approximates its carrying value based on the variable nature of interest rates and current
market rates available to the Company.
Recently Adopted Accounting Standards
In December 2007, the SEC issued SAB 110. SAB 110 amends SAB No. 107, Share-Based Payment, and
allows for the continued use, under certain circumstances, of the “simplified method” in developing an estimate
of the expected term on stock options accounted for under SFAS 123R. SAB 110 is effective for stock options
granted after December 31, 2007. The Company continued to use the “simplified method” in developing an
estimate of the expected term on stock options granted during the year ended December 31, 2008. The Company
does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected
term due to the limited period of time its shares of Class A Common Stock have been publicly traded.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities—Including an amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits
entities to choose to measure many financial instruments and certain other assets and liabilities at fair value on an
instrument-by-instrument basis. The Company adopted SFAS 159 in the first quarter of 2008 and did not choose
to apply fair value accounting to any such assets or liabilities.
58