Applied Case Assignment
Part I: Booz Allen Hamilton Holding Corporation (NYSE: BAH; McLean, VA)
Founded in 1914, Booz Allen Hamilton describes itself as "a leading provider of management consulting, technology, and engineering services to the U.S. government in the defense, intelligence, and civil markets." Booz Allen Hamilton Holding serves as the top-level holding company for the consolidated Booz Allen Hamilton U.S. government consulting business. Answer the following questions based on the Company's Consolidated Balance Sheets for March 31, 2015 and 2014 (hereafter, FY15 and FY14), which are excerpted and presented on the next page:
1. During FY15, the decreases in Class B, Class C, and Class E shares are because those shares were converted to Class A shares. Assume that the remaining increase in Class A share is due to new share issuances for cash. What journal entry would the Company have recorded for the issuance of those new shares?
2. There were no sales of Treasury Stock during FY15. What was the average share price at which the Company repurchased additional Treasury Stock shares during FY15?
3. There were no usual transactions affecting the Company's Retained Earnings during FY15. If Net Income for FY2015 was $232,569 thousand, what was the value of dividends declared during the year?
Part II: Under Armour, Inc. (NYSE: UA; Baltimore, MD)
4. Incorporated in Maryland in 1996, Under Armour, Inc. describes itself as "developing, marketing and distributing branded performance apparel, footwear and accessories for men, women and youth."
On June 15, 2015, Under Armour announced the creation of a new class of non-voting common stock, the Class C common stock. The press release stated that: Under Armour expects to issue Class C stock through a stock dividend to all existing holders of Under Armour's Class A and Class B common stock, which will have the same effect as a two-for-one stock split. Each holder of a share of Class A or Class B stock will receive one share of the new Class C stock. Do you agree or disagree that the effect of the Class C stock dividend will be the same as a two-for one stock split? As an example, assume the transaction would have occurred on January 1, 2015. On the basis of the information on Under Armour's Consolidated Balance Sheet for December 31, 2014 (excerpted and presented on the next page of this assignment), what journal entry would be required to record (a) a two-for-one stock split, and (b) the Class C stock dividend?
(a) Two-for-one stock split:
(b) Class C stock dividend:
Do you agree or disagree that the effect of the Class C stock dividend will be the same as a two-forone stock split?
BONUS Applied Case Assignment
This applied case is OPTIONAL. You do NOT need to complete this assignment. However, if you choose to complete this assignment and submit it along with Applied Case Assignment by the appropriate due date, it will be graded as a BONUS case assignment. Your grade on the BONUS case assignment will replace one of your earlier case assignment grades, if it improves your overall score. Lockheed Martin Corporation (NYSE: LMT; Bethesda, MD) describes itself as "a global security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services," with its principal customers being agencies of the U.S. Government. On the next two pages are Lockheed Martin's Consolidated Statements of Earnings, Comprehensive Income, and Balance Sheets, along with the Long-Term Debt footnote, excerpted from the its 2014 10-K. (You will not need to supplement with outside sources of company data in order to answer the questions.)
1. What is the principal or face value of Lockheed Martin's long-term debt?
2. (a) To what covenant(s) is Lockheed Martin subject under the terms of their revolving credit facility?
(b) How is the covenant ratio described differently from what we might compute as part of the ROE decomposition?
3. The footnote states that "In April 2013, [Lockheed Martin] repaid $150 million of long-term notes with a fixed interest rate of 7.38% due to their scheduled maturities." At the time of repayment, did the net carrying value of these long-term notes reflect at a premium, a discount, or par value? Explain.
4. Has Lockheed Martin's solvency improved or deteriorated in 2014 relative to 2013? Explain your response, and identify the primary cause for that change.
Attachment:- Assignment.rar