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McDonalds mcd

McDonalds (MCD)Business Is Really Real Estate And Franchise

June 5th, 2016 Posted by Company Research Report No Comment yet

McDonalds company research.

MCD

McDonalds Company Research

Company’s History and Nature of Business

The business began in 1940; a restaurant opened by brothers Richard and Maurice McDonald in San Bernardino, California. The opening of a franchised was first acquired by Czech-American businessman Ray Kroc in Des Plaines, Illinois on 1955 which led its worldwide expansion and became listed on the public stock markets in 1965. Today, McDonald’s Corporation is the world’s largest chain of hamburger fast food restaurants which serves around 68 million customers daily in 119 countries globally.

The company was managing with its segment which includes the United States, Europe, Asia, the Middle East, and Africa. McDonalds’s offer variations to suit each consumer’s preferences and taste, its menu includes, hamburgers, cheeseburgers, several chicken sandwiches beverages, and many others. They have the passion for quality, that every single ingredient was tested and perfected to fit the operating system. As the company expands into international markets it becomes a symbol of globalization, its prominence has sometimes made as a topic of public debates about obesity, corporate ethics, and consumer responsibility.

How do they make money?

Mc Donald’s generates its income as an investor in properties, a franchiser of restaurants and an operator of restaurants. Around 154% of the restaurants are owned and operated by McDonald’s Corporation directly. Moreover, the business operates through a variety of franchise agreements and joint ventures, wherein they collect franchise fees and marketing fees and also collect rent which calculated on the basis of sales. The company’s policy includes organizing the supply of food and materials to the restaurant through approved third party logistics operators and strictly would not allow direct sales of food or materials to franchisees.

Moreover, the company retains all of the profit earned by company-owned restaurants, they also incur a cost that is largely fixed they ensure the profit of each restaurant is either maintained or increased. The owner of each franchised restaurant keeps all the profit they make through sales after paying McDonald’s a royalty for trading under the brand name and rent for operating in a company’s owned property. The main advantage of operating franchised restaurants is that it guarantees a stream of income as the company sees to it to reduce the level of risk while enabling.

Who is running the business and what is their background?

Corporate Governance is one of the main reason that these terms (CEO, CFO) exist. Corporate titles on company officials are means to identify its function and responsibility in the organization. Here are McDonald’s company official’s brief biographies.

CEO

Thompson, Donald

Mr. Donald has been President, Chief Executive Officer since July 2012, and was also elected as Director on 2011. Prior to that, he serves as President, McDonald’s USA from August 2006 to January 2010, Mr. Thompson has been with the Company for 22 years. Mr. Thompson provides a Company perspective in Board discussions about the business, particularly with respect to worldwide operations, competitive landscape, senior leadership and strategic opportunities and challenges for the Company. In addition, as an independent director of another public company, Mr. Thompson has gained additional perspectives, including on governance and operational matters relevant to the Company.

During his 23 years at McDonald’s, Thompson has helped drive business results and global strategic innovation across the organization. Since joining as an electrical engineer in 1990, he has held a variety of key leadership positions within the company including Regional Vice President, Division President, and Chief Operating Officer. Between 2006 and 2010, Thompson served as President of McDonald’s USA, the company’s largest business segment. Most recently as President and COO of McDonald’s Corporation, Thompson and his leadership team established three global growth priorities in support of the McDonald’s Plan to win: to optimize the menu, modernize the customer experience and broaden restaurant accessibility.

CFO   

Peter J. Bensen

Mr. Peter J. Bensen is Chief Financial Officer, Senior Executive Vice President of the company a position he has held since January 2008. He is responsible for all financials matter of the company including Accounting, Internal Audit, and Controls, Tax, Treasury and Investor Relation as well as IT, Shared Service, Facilities, and Aviation. Moreover, Mr. Bensen has joined McDonald’s in 1996 as Director of Financial Accounting & reporting and subsequently held positions of increasing responsibility. Prior to joining the company, He was a senior manager for Ernst & Young in Chicago, where he serves multi-national audit, clients. Mr. Bensen is a graduate of St. Joseph’s College in Rensselaer, Indiana.

Do you trust these people and are they confident?

Basing from their company’s profile, I do trust these people and I believe they are confident as they played some major roles. Each of their experiences is the best factors that they could contribute in order to the company’s progress.

McDonalds Value Investing

Financial Analysis

The above data shows that McDonald’s corporation has an average degree of liquidity; current ratios which have an average of 1.44 and the quick ratio was averaging to 1.18. It tells us that the company is capable of meeting its short-term obligations when the due date comes. Moreover, the solvency ratio has an average of 0.50, and the leverage ratio has an average of 0.85 percent, an indication that the company is solvent.

McDonald’s gross margin was averaging 38 percent and has a stable movement. Net margin was averaging 18.62 percent however, it is trending down year over year.

McDonalds Investment Valuation

The Investment Valuation has always been a topic in financial and business circles, the method used is the basic mathematical technique that calculates the value of an investment as the present value of all future cash flows expected to be generated by the investment.

McDonald’s has a sustainable growth rate of 17 percent, average, and the calculated margin of safety was 62 percent. Moreover, the market capitalization was $94.84 billion at a share price of $93.53 as of Aug.12, 2014.

The above table shows that the company has:

  • an average return on equity of 32.38,
  • book value per share was averaging of 14.45,
  • the price to earnings ratio has an average of 18.20, this is the price that the investors are willing to pay for the stock of the company.
  • Earnings per share were averaging $ 5.12 this is the company’s net earnings allocated to each share of common stocks.

CITATION

http://www.sec.gov/Archives/edgar/data/63908/000119312514140308/d666434ddef14a.htm http://www.reuters.com/finance/stocks/officerProfile?symbol=MCD&officerId=845631 http://news.mcdonalds.com/US/Executive-Team http://www.aboutmcdonalds.com/mcd/our_company/leadership/peter_j_bensen.html

Research and Written by Meriam

Edited by Cris

Administradora de Fondos de Pensiones-Provida SA

Guide To Administradora de Fondos de Pensiones-Provida SA

November 26th, 2013 Posted by Company Research Report No Comment yet

Company Research on Administradora de Fondos de Pensiones-Provida SA

PVD

Provida is one of the oldest private pension fund administrators operating in Chile, maintaining a leading position in the Chilean private pension industry since its incorporation. As of December 31, 2012, according to official statistics released by the Superintendency of Pensions, Provida was the largest of the six AFPs operating in Chile in terms of the number of participants, contributors, assets under management, participants’ salary base and a number of branch offices. The Chilean private pension system was created in May 1981, when Decree Law 3,500 of November 13, 1980 (the “Pension Law”) was implemented to replace the prior social security system. Subsequently, on March 11, 2008, the Pension Reform Law was promulgated in order to improve the pension system, reinforcing the solidarity character of the system, extending its coverage, increasing competitiveness in the industry and boosting gender equality.

Nature of Business

Administradora de Fondos de Pensiones Provida S.A. (AFP Provida), is a private pension fund administrator. The Company’s services include the investment and collection of its affiliates’ contributions, the management of individual capitalization accounts and the provision of life and disability benefits, as well as senior retirement pensions. Further, Provida through its subsidiary Provida Internacional S.A. (Provida Internacional) maintains equity interests in private pension fund administrators operating in Peru, Ecuador, and Mexico. Provida is also authorized to establish local related corporations that may complement its line of business or invest in pension fund administrators or entities located in other countries whose business is related to pension matters. The Company’s majority shareholder is BBVA Inversiones Chile SA, with 51.62% of its interests.

How do they make money?

PVD2

The most significant source of revenues from operations for Provida is the monthly fee charged to participants in connection with deposits into his/her individual capitalization account. Under the Pension Law, an AFP is permitted to charge a fee for, collection and administration of mandatory contributions from pension payments of programmed withdrawals and temporary income, collection, and administration of voluntary savings, management, and transfer of voluntary pension savings to other entities and transfer of contribution made by voluntary participants.

Provida currently charges fees for each of the above services (as do the other AFPs, except for AFP Habitat and AFP Modelo, which do not charge fees for transferring contributions of voluntary participants).In accordance with the Pension Law, each AFP is allowed to set the fees it charges to its participants or pensioners. In connection with fees charged, the Pension Law establishes that each AFP must apply the same fee levels to each of its participants.

Management of contributions

The services provided by the AFPs in connection with collection and management of contributions include mandatory contributions and voluntary contributions made by its affiliates. Each dependent worker and an affiliate of Provida must contribute 10% of his/her taxable salary into his/her individual capitalization account. Such contributions are deducted from the affiliate’s salary and are used to purchase shares of some of the five types of funds that Provida managers. These funds are legal entities separate from Provida as Administrator.

Provida collects monthly mandatory contributions that are withheld from the salaries of Provida’s affiliates by their employers and those contributions from Provida’s self-employed affiliates and voluntary affiliates. Those monthly contributions are credited to each affiliate’s individual capitalization account.

In the case of dependent workers, each employer must provide Provida with a monthly payroll listing all its employees who are affiliates of AFP Provida, identifying the payments being made on behalf of each employee for pension contributions, both mandatory and voluntary. Self-employed workers prepare and submit their own payrolls. AFP Provida offers its affiliates the option to establish a voluntary savings account into which they may deposit additional funds to be invested in the elected pension fund.

Investment services

The general investment policy of the pension funds is determined by AFP Provida. The general objective of Provida’s investment activity is to administer the investment portfolios composed of the affiliates’ contributions in order to obtain the highest possible return for the level of risk and terms of these affiliates’ profiles.

Life and Disability Benefits

Before the Pension Reform became effective, Provida individually obtained insurance to cover its obligations to provide life and disability benefits to affiliates. If an affiliate dies or becomes disabled prior to the legal age of retirement (65 years of age for men and 60 to 65 years of age for women) and before accumulating sufficient funds in his/her individual capitalization account to finance payments to the affiliate or his/her beneficiaries regarding pension benefits required by law, the AFP has an obligation to make up the shortfall in the affiliate’s individual capitalization account. Under the law, each AFP is required to obtain an insurance policy with a licensed life insurer to provide coverage for this obligation.

Senior Pension Benefits

The Company provides specific senior pension benefits to their affiliates who meet the legal age requirement: 60 years of age for women and 65 years of age for men. At retirement, the affiliate chooses among four options for receiving his/her pension benefits: an immediate life annuity, a temporary income with deferred life annuity, a programmed withdrawal plan or an immediate life annuity with a programmed withdrawal plan.

Who is running the business?

The company needs brain and backbone to run smoothly. For AFP, let us meet and know them better.

Mr. Ricardo Rodriguez Marengo serves as Chief Executive Officer of Administradora de Fondos de Pensiones Provida SA. He was appointed to this post on February 1, 2007. He is Certified Public Accountant and holds a Bachelor’s degree in Business Administration from Pontificia Universidad Catolica de Argentina and a degree in Senior Management Program. Previously, he was the Commercial Chief Officer in AFJP BBVA Consolidar in Argentina. Mr. Marengo has 24,923 colleagues in 2,060 companies located in 110 countries and 12,744 executive movements have been recorded in the last 12 months.

Do you trust this person are they competent?

Yes, I trust company’s CEO because of his excellent records and length of service. On the other hand, there is no CFO data found for the company.

Value Investing Guide

Balance Sheet

The exact accounts on a balance sheet will differ by company and by industry, as there is no one set template that accurately accommodates for the differences between different types of businesses. The table below tells us the 5 years averages of Administradora de Fondos de Pensiones balance sheet.

Solvency ratios measure the ability of a company to pay its long-term debt and the interest on that debt. a part of financial ratio analysis, it helps the business owner determine the chances of the firm’s long-term survival. Solvency ratio varies from industry to industry but generally, a solvency ratio of greater than 20% is considered financially healthy.

Liquidity is a business firm’s ability to repay its short-term debts and obligations on time. Short-term usually means one year or less. It is also characterized by a high level of trading activity.

Current Ratio is mainly used to give an idea of the company’s ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. The quick ratio, on the other hand, measures a company’s ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the better the company’s liquidity position.

Leverage used of various financial instruments or borrowed capital, such as margin to increase the potential return of an investment. It is also the amount of debt used to finance a firm’s assets. A firm with significantly more debt than equity is considered to be highly leveraged.

Ratio

Administradora de Fondos de Pensiones SA PVD’s current ratio has an average of 1.44 the rule of thumb is 2.0 it means that the company may fell a little short in paying its short-term debt and will need to collect its receivables in order to meet its payment. Quick ratio averaging 1.33 and the rule of thumb is 1.0, therefore, the company has the ability to pay its short-term debt using cash and near cash. In other words, PVD has sufficient cash to meet short-term debt. Solvency ratio averaging 15.23 and the rule of thumb is 20% considerable, and financial firms are subject to varying state and national regulations that stipulate solvency ratios. There are no records for the company’s debt which resulted in a zero (0) Leverage which represents a good standing of the company.

Income Statement

Gross margin is a company’s total sales revenue minus its cost of goods sold, divided by the total sales revenue and expressed as a percentage. Net margin is the ratio of net profits to revenues for a company or business segment – typically expressed as a percentage – that shows how much of each dollar earned by the company is translated into profits.

GM

The above table shows that PVD’s Gross margin has an average of 100 percent, which represents a good standing. Net margin has an average of 46.77 percent. This represents how much of each dollar earned by the company is translated into profits.

Cash Flow Statement

Cash flow margin is a measure of the money a company generates from its core operations per dollar of sales. The operating cash flow can be found on the company’s cash flow statement, and the revenue can be found on the income statement. A high operating cash flow margin can indicate that a company is efficient at converting sales to cash, and may also be an indication of high earnings quality.

Free cash flow (FCF) is a measure of financial performance calculated as operating cash flow minus capital expenditures. It represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base.

CFM2

Cash flow margin was averaging of 0.41 or 41 percent, which represents a high operating cash flow margin; an indication that a company is efficient at converting sales to cash. Free cash flow has an average of Ch. $ 108.33 or $21 million, which represents that the company is able to pay dividends, or expands its asset base.

Investment Valuation

The totem Investment model in the valuation of equity adopts the investment style of Benjamin Graham; this model adopts the investment style of Benjamin Graham, the father of Value Investing. The essence of Graham’s Value Investing is that any investment should be worth substantially more than an investor has to pay for it. He believed in thorough analysis, which we call fundamental analysis. He was looking for companies with a strong balance sheet or those with little debt, above average profit margin and ample cash flow. His valuation seeks out undervalued companies whose stock price is temporarily down, but whose fundamentals are sound in the end. His philosophy was to buy wisely when prices fall and to sell wisely when the price rises a great deal.

Sustainable

The sustainable growth rate was averaging 15.23 percent. This measure how much a firm can grow without borrowing more money. Furthermore, the margin of safety using the Benjamin Graham method was averaging 0.84 or 84 percent which passed Graham’s requirement of at least 40 percent. The market price as of November 26, 2013, is 86.90 with 1.9 billion market capitalization.

Relative Valuation Method

The relative valuation method for valuing a stock is to compare the market values of the stock with the fundamentals (earnings, book value, growth multiples, cash flow, and other metrics) of the stocks.

PVD

The above table tells us that return on equity or ROE has an average of 29.89 this is the amount of net income returned as a percentage of shareholders equity. Book value per share was averaging 24.10 while Price to earnings ratio was averaging 6.96. This is the price that investors are willing to pay. The earnings per share were averaging $ 7.55. This is the company’s net earnings allocated to each share of common stocks.

The Warren Buffet Method

Totem also adopts the Warren Buffet method using the financial calculator in the equity selection. The table below shows my calculation.

PVD

The idea behind this method is when the total value is greater than the market price, the stock then is trading at an undervalued price. As shown in the table above, the total value is $173.48 and the market price used as of November 17, 2013, is 87.

Conclusion

The overall company’s valuation shows that PVD is financially stable. The margin of safety passed the criteria based on the Benjamin Graham method. The Warren Buffet method shows that the stock was undervalued, so therefore Administradora de Fondos de Pensiones is a good BUY.

CITATION:

http://www.sec.gov/Archives/edgar/data/931588/000095010313002682/dp37663_20f.htm#item4b

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=PVD

Researched and Written by Meriam

Edited by Cris

Adobe Inc (ADBE) Systems a Quick Look

November 22nd, 2013 Posted by Company Research Report No Comment yet

Adobe Inc. (ADBE) is an American multinational computer software company headquartered in San Jose, California. It has historically focused upon the creation of multimedia and creativity software products, with a more recent foray towards digital marketing software. Wikipedia

ADOBE-SYSTEMS-007

Nature of Business

Adobe Systems Incorporated (Adobe) is a diversified software company. The Company offers a line of software and services used by professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, delivering, measuring and engaging with content and experiences across multiple operating systems, devices and media.

The Company markets and licenses its software directly to enterprise customers through its sales force and to end users through application stores and its Website at www.adobe.com. Adobe also distributes its products through a network of distributors, value-added resellers (VARs), systems integrators, independent software vendors (ISVs), retailers and original equipment manufacturers (OEMs).

adobe-creative-suite1

Who is Running the Business?

Narayen, Shantanu

Chief Executive Officer

Shantanu_Narayen_hi

Mr. Shantanu Narayen is President, Chief Executive Officer, Director of Adobe Systems Inc. He joined Adobe in January 1998 as Vice President and General Manager of Company’s engineering technology group. In January 1999, he was promoted to Senior Vice President, Worldwide Products, and in March 2001 he was promoted to Executive Vice President, Worldwide Product Marketing, and Development. In January 2005, Mr. Narayen was promoted to President and Chief Operating Officer, and effective December 2007, he was appointed Company’s Chief Executive Officer and joined the Company’s Board of Directors. Mr. Narayen serves on the board of directors of Dell Inc. Mr. Narayen holds a B.S. in Electronics Engineering from Osmania University in India, an M.S. in Computer Science from Bowling Green State University and an M.B.A. from the Haas School of Business, University of California, Berkeley.

Garrett, Mark

Chief Financial Officer

garrett-180x250

Mr. Mark Garrett is Chief Financial Officer, Executive Vice President of Adobe Systems Inc., since February 2007. Mr. Garrett served as Senior Vice President and Chief Financial Officer of the Software Group of EMC Corporation, a products, services and solutions provider for information management and storage, from June 2004 to January 2007, his most recent position since EMC’s acquisition of Documentum, Inc., an enterprise content management company, in December 2003. Mr. Garrett first joined Documentum as Executive Vice President and Chief Financial Officer in 1997, holding that position through October 1999 and then re-joining Documentum as Executive Vice President and Chief Financial Officer in 2002. Mr. Garrett is also a director of Informatica Corporation.

Income Statement

Profitability

1

Adobe’s gross margin and net margin was averaging 89.56 and 19.30 percent, respectively, this shows the profit of the company. It also indicates the financial success and viability of Adobe’s products and services. Net margins measure the percentage of revenue that was left after deducting all of the expenses of the company. In other words, it shows how much cash earned during a certain period. Overall, this shows that ADBE is efficient in generating enough revenue from its business operation.

Cash Flow Statement

1

The cash flow margin average is 0.35 or 35 percent. Cash flow margin is cash from operating activities as a percentage of sales.  Cash from operating activities over total sales. On the other hand, Adobe’s free cash flow was averaging $1.49 million. It tells us that the company can of generating enough revenue and has cash left for payment of dividends and for future investment.

Valuation

The Totem Investment model adopts the investment style which we think applicable to the company, we looked for companies with a strong balance sheet or those with little debt, above average profit margin and ample cash flow. One evaluation style is that,  seek out undervalued companies whose stock price are temporarily down, but whose fundamentals are sound in the long run. The philosophy was to buy wisely when prices fall and to sell wisely when the price rise a great deal.

1

The sustainable growth rate is 13.04 percent, this implies how fast Adobe Systems Inc can grow without using more funds from creditors or investors, or where the company can keep its operation internally. Meanwhile, the calculated margin of safety was 98.45 percent. The market price as of November 22, 2013, was $57.17 per share.

Adobe Relative Valuation Methods

1

The relative valuation interpreted the following data: the book value per share average is $10.63, Price to Earnings ratio average was $24.92, and this is the price that the investors are willing to pay for the company’s earnings. The earnings per share average are $1.42, this represents the company’s net earnings allocated to each share of common stock. On the other hand, the return on equity is 14.3 percent; this implies how much profit Adobe generates with the investment that the shareholders’ have invested.

Conclusion

The metrics and methods used have shown that Adobe Systems Inc. is financially stable and sound. Moreover, the profitability ratios and the cash flow margins imply that the company is capable and efficient of generating enough revenue for paying dividends and for future investments. The stock of Adobe Systems Inc. compares the total value with the current price indicates that the company is undervalued. With this, I recommend a BUY on the stock of Adobe Systems, Inc.

CITATIONS:

http://financials.morningstar.com/ratios/r.html?t=ADBE&region=USA&culture=en-US

https://www.google.com/finance?q=NASDAQ%3AADBE&ei=1bqOUriQLI6RkgWdJQ

http://www.reuters.com/finance/stocks/officerProfile?symbol=ADBE.O&officerId=175923

http://www.reuters.com/finance/stocks/officerProfile?symbol=ADBE.O&officerId=920528

Researched and Written by Karla

Edited by Cris

DryShips-inc-drys

DryShips Inc (DRYS) as a Global Shipping Transportation Company

March 13th, 2013 Posted by Company Research Report No Comment yet

DryShips Inc (DRYS) is a global shipping transportation company specializes in the transportation of dry bulk cargoes. Not only, but they also provide reliable and trusted transportation services at competitive cost.

Who started the company and why?

DryShips Inc. is a Marshall Island registered company which was formed on September 9, 2004. The company is located at Omega Building, 80 Kifissias Avenue, Amaroussion GR 151 25, Greece. Its stock is listed on NASDAQ. The core of the business is building and maintaining enduring relationships with charterers of dry bulk carriers and providing reliable seaborne transportation services at competitive cost.

The company’s current CEO, Mr. George Economou, has been active in shipping since 1976 and formed the company’s related technical and commercial ship-management company, Cardiff Marine Inc.

It found in the suburb of Maroússi, 12km/7.5mi north of Athens that occupies the site of the ancient deme of Athmonia, where there was a sanctuary of Artemis Amarysia. In more recent times it has become known through Henry Miller’s “Colossus of Maroussi”.

What is the background of DryShips Inc? Its history and development?

What is the nature of DryShips Inc. business?

Offshore drilling refers to a mechanical process where a wellbore is drilled through the seabed. It is typically carried out in order to explore for and subsequently extract petroleum which lies in rock formations beneath the seabed. Also, offshore drilling presents environmental challenges, both from the produced hydrocarbons and the materials used during the drilling operation. 

DryShips Inc. is a holding company affianced in the ocean transportation services of dry bulk cargoes and crude oil worldwide. The company is a global shipping transportation company specializing in the transportation of dry bulk cargoes through its majority owned subsidiary, Ocean Rig UDW Inc. It owns and operates dry bulk carrier vessels and oil tankers and offshore drilling services through the ownership and operation of ultra-deep-water drilling units. Company’s vessels are able to trade worldwide in a multitude of trade routes carrying a wide range of cargoes for a number of industries. Their cape size and Panamax dry bulk carriers carry predominantly coal and iron ore for energy and steel production as well as grain for feedstocks. The handymax and handy size dry bulk carriers carry iron and steel products, fertilizers, minerals, forest products, ores, bauxite, alumina, cement, and other construction materials. The company’s common stock is listed on the NASDAQ Global Select Market where it trades under the symbol “DRYS.”

Who is running DryShips Inc and their background?

The chief financial officer is the CFO of a company and the chief executive officer is the CEO of a company. The CFO is responsible for a company’s financial affairs and reports to the CEO. To differentiate between the two, think of the CFO as the head of the company’s financial departments and the CEO as head of the entire company. Meriam and Karla will now introduce to us the people running the company and bits of information on their background.
CEO

Mr. George Economou served as chairman, president, and chief executive officer of DryShips Inc. since its inception in 2004. He has overseen the company’s growth into the largest US-listed dry bulk company in fleet size and revenue and the second largest Panamax owner in the world. From 1981-1986, he held the position of general manager of Oceania Maritime Agency in New York. He has been a director and the president of All Ships Ltd. and since 2010; he has been a member of the board of directors of Danaos Corporation. Mr. Economou was born and raised in Athens, Greece and a graduate of Athens College completed his higher education in the United States at the Massachusetts Institute of Technology in Boston. He is a graduate of the Massachusetts Institute of Technology and holds both a Bachelor of Science and a Master of Science degree in Naval Architecture and Marine Engineering and a Master of Science in Shipping and Shipbuilding Management.

CFO

Mr. Ziad Nakhleh is the chief financial officer of DryShips Inc., since November 2009 and he had 12 years of finance experience. He served as a chief financial officer of Aegean Marine Petroleum Network Inc. He was extensively involved in maintaining investor confidence and contributing to the expansion of the company by way of corporate and asset acquisitions. Mr. Nakhleh was engaged in a consulting capacity to various companies in the shipping and marine fuels industries. He was employed at Ernst & Young and Arthur Andersen in Athens. He is a graduate of the University of Richmond in Virginia and is a member of the American Institute of Certified Public Accountants.

Who is directing the company? How are the committees structured?

Dry Ships Inc. has three committees namely: audit, compensation and nominating. The role of the compensation committee is to set appropriate and supportable pay programs that are in the organization’s best interests and aligned with its business mission and strategy. With the adoption of the executive and director compensation disclosure rules by the SEC, changes to the accounting for certain equity awards, and more active shareholder groups wanting a “say on pay,” the compensation committee is working harder to meet the requirements of all observing parties.

Mr. Harry G. Kerames. He is the chairman of the audit committee and member of the compensation committee and an independent director of DryShips Inc.,since July 29, 2009. He has over 22 years of experience in the transportation industry. He has been the managing director of Global Capital Finance where he was responsible for the firm’s shipping practice. Mr. Kerames served as chief marketing officer of Charles R. Weber Company Inc., a ship broker and marine consulting firm, where he brokered tanker freight derivatives, and co-founded a freight derivatives hedge fund. He received a Bachelor of Science from the University of Connecticut.

Mr. Evangelos Mytilineos, the chairman of compensation committee and member of nominating committee. He is an independent director since December 2008. He has over 20 years of experience in the shipping industry. He served as a senior executive in the Peraticos and Inlessis group of companies, which are involved in the drybulk and tanker shipping sectors. Mr. Mytilineos studied at the Athens University of Economics. Mr. George Demathas is an independent director of DryShips Inc., since July 18, 2006. He was also a director of Ocean Rig ASA from 2008 to 2010. He has been the chief executive Officer and a director of Stroigasitera Inc. He has been involved in Malden Investment Trust Inc. in association with Lukoil, working in the Russian petrochemical industry. Mr. Demathas is based in Moscow and travels widely in Europe and the United States. He has a Bachelor of Arts in Mathematics and Physics from Hamilton College in New York and a Master of Science in Electrical Engineering and Computer Science from Columbia University.

How do they make money?

Voyage charter is a charter where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified freight rate per ton. If a charter agreement exists and collection of the related revenue is reasonably assured, revenue is recognized as it is earned ratably during the duration of the period of each voyage. A voyage is deemed to begin upon the completion of discharge of the vessel’s previous cargo and is deemed to end upon the completion of discharge of the current cargo.

The company has three reportable segments from which it derives its revenues: Dry bulk, Tanker and Drilling segments. Currently, revenues in the offshore drilling segment depend on two ultra-deepwater drilling rigs and four drill ships. DRYS makes most of its profits by chartering its vessels to other companies that pay a contracted daily rate to use the ships. It is also derived from contracts including day rate based compensation for drilling services.

They generate all revenues in U.S. Dollars in the drybulk and tanker segments but incur approximately 26.7 percent of operating expenses and the majority of general and administrative expenses in currencies other than the U.S. Dollar, primarily the Euro.

How do they fit in the industry they operate in?

Dry bulk cargo is cargo that is shipped in quantities and can be easily stowed in a single hold with little risk of cargo damage. The company faces competition in Dry Bulk, Tanker and Drilling Industry. Competition for the transportation of dry bulk cargo by sea is intense and depends on price, location, size, age, condition and the acceptability of the vessel as well as company’s reputation as an owner and operator. It also competes with other owners of dry bulk carriers in the Capesize, Panamax and Supramax size sectors.

The tanker industry is highly competitive, arises primarily from other vessel owners, some of whom have substantially greater resources than DRYS. Offshore contract drilling industry is highly competitive with several industry participants, none of which has a dominant market share and is characterized by high capital and maintenance requirements. Major competitors are: Navios Maritime, Eagle Bulk, Excel Maritime, Genco Shipping and Diana Shipping.

Who are their suppliers and customers?

Offshore drilling simply means the process of exploiting mineral resources in the seabed; most of those resources are related to the oil and gas industries. Drilling is conducted by several kinds of specialized vessels, some with a planing hull supporting huge legs and a drilling platform, some with legs more than 300 feet long that rest on the seabed to support a drilling platform, and some that are ships, either purpose-built or converted from other forms of commercial vessel, with a drilling rig on top.

DRYS has three reportable segments such as; the Drybulk , Tanker, and Drilling, which reflects the international organization of the company and are strategic business that offers different products and services. DryBulk fleet mainly carries a variety of dry bulk commodities including major bulk items such as coal, iron ore, and grains, and minor bulk items like bauxite, phosphate, fertilizers and steel products. Drilling business segment is consists of trading of the drilling rigs and drill ships through ownership and trading of such drilling rigs and drill ships. Tanker business segment is consists of vessels for the transportation of crude and refined petroleum cargoes. Its customers generally fall within three categories: national oil companies, large integrated major oil companies and medium to smaller independent exploration and production companies. DRYS and its predecessor, Ocean Rig ASA, both have an established history with 121 wells drilled in 13 countries for 23 different customers.

What is their workforce like?

A skilled worker is any worker who has some special skill knowledge, or ability in their work. They may have attended a college, university or technical school or, a skilled worker may have learned their skills on the job. DRYS only requires highly skilled personnel to work in their company. They are the ones who operate and provide technical services and support for its business in the offshore drilling sector worldwide.

As of December 31, 2011, the company employed 1,305 employees, the majority of whom are full-time crew employed on drilling units. Continued operations depend upon on key management personnel, particularly chairman and chief executive officer Mr. George Economou. DRYS has an agreement with TMS Bulkers, as a successor to Cardiff, which was in the business of providing commercial and technical management for over 22 years, and continue to provide competitive employment opportunities on company’s vessels in the future.

How do they treat their employee? Its pay and working condition like?

Equity Incentive Plan Agreement is a legal contract between a corporation and its employees to provide the employee with an interest in the corporation. The purpose of an Equity Incentive Plan is to strengthen the financials of the corporation by providing incentive stock options to its employees. The Plan serves as a means to attract, retain, and motivate corporate personnel. DRYS has a strong commitment topromoting honest and ethical business conduct by all employees in compliance with the laws that govern the conduthe ct of the company’s business worldwide. It developed a code of business ethics and conduct, the code, which applies to all affiliates of the company and all employees, directors, officers, and agents of the company.

On January 16, 2008, the company’s board of directors approved the 2008 Equity Incentive Plan. This plan has three retirement benefits plans for employees and managed as well as funded through Norwegian Life insurance. The company renders a stock-based compensation which represents restricted common stock granted to employees and directors for their services. On January 18, 2008, the company entered into a Stockholders Rights Agreement in which declared a dividend payable of one preferred share purchase right.  

CITATION

Who started the company and why?

http://www.dryships.com/pages/profile.asp http://en.wikipedia.org/wiki/DryShips_Inc http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm

What is the nature of the business?

http://www.dryships.com/pages/overview.asp http://www.sec.gov/Archives/edgar/data/1308858/000131786113000013/f021313drys6kpricing.htm http://www.google.com/finance?q=NASDAQ%3ADRYS&ei=7boqUaC_H8nEkgWyuQE http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm

What is the background of the company? Its history and development? http://www.google.com/finance?q=NASDAQ%3ADRYS&ei=7boqUaC_H8nEkgWyuQE http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=DRYS.O http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312511099671/d20fa.htm

Who is running the company and their background? http://www.dryships.com/pages/management.asp http://www.reuters.com/finance/stocks/companyOfficers?symbol=DRYS.O&WTmodLOC=C4-Officers-5 http://www.dryships.com/pages/management.asp http://www.reuters.com/finance/stocks/companyOfficers?symbol=DRYS.O&WTmodLOC=C4-Officers-5

Who is directing the company? How are the committees structured? http://investing.businessweek.com/research/stocks/people/committees.asp?ticker=DRYS http://www.reuters.com/finance/stocks/officerProfile?symbol=DRYS.O&officerId=1462786 http://investing.businessweek.com/research/stocks/people/person.asp?personId=33771930&ticker=DRYS&previousCapId=13580386&previousTitle=DRYSHIPS%20INC http://investing.businessweek.com/research/stocks/people/committees.asp?ticker=DRYS http://www.reuters.com/finance/stocks/officerProfile?symbol=DRYS.O&officerId=1315286 http://investing.businessweek.com/research/stocks/people/person.asp?personId=8351841&ticker=MYTIL:GA&previousCapId=13580386&previousTitle=DRYSHIPS%20INC http://investing.businessweek.com/research/stocks/people/committees.asp?ticker=DRYS http://www.reuters.com/finance/stocks/officerProfile?symbol=DRYS.O&officerId=957821

How do they make money? http://www.wikinvest.com/stock/DryShips_%28DRYS%29 http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000091957412005110/d1313146_6-k.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312511099671/d20fa.htm

How do they fit in the industry they operate in? http://www.dryships.com/pages/profile.asp http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.wikinvest.com/stock/DryShips_%28DRYS%29

Who are their suppliers and customers? http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000091957412005110/d1313146_6-k.htm

What is their workforce like? http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312512118109/d316138d20f.htm

How do they treat their employee? What is the pay and working condition like? http://dryships.irwebpage.com/files/dryscoe.pdf http://www.sec.gov/Archives/edgar/data/1308858/000119312511099671/d20fa.htm http://www.sec.gov/Archives/edgar/data/1308858/000119312511099671/d20fa.htm

Researched and Written by Meriam and Karla
Edited by Cris

Microsoft Corporation (MSFT) Behind the Innovation in the Technology

January 16th, 2013 Posted by Company Research Report No Comment yet

Microsoft Corporation (MSFT) is an American multinational technology company with headquarters in Redmond, Washington. It develops, manufactures, licenses supports and sells computer software, consumer electronics, personal computers, and related services. Wikipedia

Have you heard the latest operating system in town? Yes, Windows 8. I bet you already know what company is behind this latest innovation in the technology world. Without any further ado, let us allow the Stories team — Meriam and Karla, present this company research about Microsoft Corporation.

Who started Microsoft Corporation and why?

Almost every computer installed all over the world has dedicated its applications to Microsoft. And we all have Bill Gates and Paul Allen to thank that for. Microsoft Corporation enables people and businesses throughout the world realize their full potential by creating technology that transforms the way people work, play, and communicate.

Microsoft Corporation was founded by Bill Gates and Paul Allen on April 4, 1975. They are childhood friends who both have a passion for computer programming, seeking to make a successful business by utilizing their shared skills. Bill Gates was born in Seattle on 1955 and was first exposed to computers at school in the late 1960s. Paul Allen is the son of two Seattle librarians.

The company develops and markets software, services, and hardware that deliver new opportunities, greater convenience, and enhanced value on most people’s lives.

The process of developing and implementing various sets of instructions to enable a computer to do a certain task is what we call Computer Programming. Furthermore, it is also the process of designing, writing, testing, debugging and maintaining the source code of computer programs, software, and applications we are using today.”

What is the background of the company? Its history and development?

What is the nature of Microsoft Corporation business?

MSFT is a software product line specializing in engineering methods, tools and techniques for creating a collection of similar software systems from a shared set of software assets using a common means of production.

They are an American multinational corporation headquartered in Redmond, Washington and is the largest software company in the world and have offices in more than 100 countries. The company is committed to developing, licensing and supporting a range of software products and services. Microsoft designs and sells hardware, and delivers online advertising to the customers. Operating system server applications, business and consumer applications, and software development tools, as well as Internet software, technologies, and services.

MSFT operates in five segments: Windows & Windows Live Division (Windows Division), Server and Tools, Online Services Division (OSD), Microsoft Business Division (MBD), and Entertainment and Devices Division (EDD).

Who is running the company and their background?


microsoft-ceoMr. Steven A. Ballmer is the chief executive officer of Microsoft Corporation. He graduated from Harvard University with a bachelor’s degree in mathematics and economics. He joined Microsoft in 1980 and was the first business manager hired by Bill gates. He became Executive Vice President, Sales and Support since February 1992. He served as President from July 1998 to February 2001. Mr. Ballmer served as corporate vice president and CFO of Microsoft’s Business Division (MBD)

CFOMr. Peter S.Klein holds a bachelor’s degree from Yale University. He is a Master of Business Administration from the University of Washington. He spent 13 years in corporate finance in the Seattle area, primarily in the communications and technology sector. Mr. Klein joined Microsoft in 2002 and was named Chief Financial Officer in November 2009. He was CFO of Microsoft’s Server & Tools Business Group (STB). He became Chief Financial Officer of Server and Tools from July 2003 to February 2006 and served as Corporate Vice President, Chief Financial Officer, Microsoft Business Division from February 2006 to November 2009.

Corporate finance is the amount, expressed as a percentage, that is earned on a company’s total capital calculated by dividing the total capital into earnings before interest, taxes, or dividends are paid.

Who is directing the company? How are the committees structured?

The company’s strategic planning defines its process, direction and making decisions on allocating their resources to pursue a particular strategy. In order to determine the organization’s direction,  it is important to understand its current position and the possible avenues through which it can pursue a particular course of action.

MSFT’s audit committee is responsible for the appointment, compensation, retention, and oversight of the independent auditor engaged to issue audit reports on companies financial statements and internal control over finances.

Bill Gates is the chairman of the board. He has unparalleled knowledge of the Company’s history, strategies, technologies, and culture and is considered a technology visionary. Mr. Gates retired as an employee effective July 1, 2008, but continues to serve as an advisor on key development projects.

Helmut Panke, Ph.D. is the chairman of Regulatory and Public Policy. Mr. Panke understands product manufacturing processes, how to manage a company through business cycles and intense competition, and how to build and sustain a globally recognized and respected brand.

Charles H. Noski is the chairman of audit and governance and nominating committee. He has an extensive background in finance, accounting, risk, capital markets, and business operations, also has a unique portfolio of business skills. He provides services to leading organizations in the accounting and auditing fields reflects his expertise in finance and accounting matters.

Dina Dublon is the chairman of the compensation committee. She holds a B.A. in economics and mathematics from the Hebrew University of Jerusalem and an M.S. from the Business School at Carnegie Mellon University.

How do they make money?

Windows Division revenue comes from Windows operating system software purchased by original equipment manufacturers (“OEMs”). Generates revenue by developing, licensing, and supporting a wide range of software products and services. MSFT does business worldwide, wherein revenue increased due to strong sales of Server and Tools products and services and the 2010 Microsoft Office system.

Profit is earned primarily from usage fees and advertising. Its cloud-based computing services include Bing, Windows Live Essentials suite, Xbox LIVE service, Microsoft Office 365, Microsoft Dynamics CRM Online customer relationship management services and the Azure family of platform and database services.

Usage cost is an additional cost incurred in repairing or replacing items damaged in assembling handling installing, and/or testing.

How do they fit in the industry they operate in?

Microsoft Corporation is a rivalry in the technology sector derived rapidly with changing and disruptive technologies, shifting user needs, and frequent introductions of new products and services.

Competition among platforms, ecosystems, and devices. Face from firms that provide competing platforms, applications and services. Competitors vary in size from Fortune 100 companies to small, specialized single-product businesses and open source community-based projects. Competes with: Apple Computer, Inc.; Hewlett-Packard Company; International Business Machines Corporation; Logitech International SA; Novell, Inc.; Sony Corporation; Sun Microsystems, Inc.; Time Warner Inc.; Yahoo! Inc.

MSFT continues to develop versions of products with basic functionality that are sold at lower prices than the standard versions.

Information Technology people knew what software is. But for those, just like me, that aren’t familiar with this, I asked some help over the Internet. Software means computer instructions or data. This is anything that can be stored electronically is software, in contrast to storage devices and display devices which are called hardware.

Who are their suppliers and customers?

Company’s growth depends on their ability to innovate by offering new and adding value to their existing software and service offerings.

Primary products and services rendered by MSFT’s segment: Windows & Windows Live Division, Server and Tools, Online Services Division, Microsoft Business Division, and Entertainment and Devices Division. Includes operating systems for personal computers (PCs), servers, phones, and other intelligent devices. Its clients are individual consumers, small- and medium-sized organizations, enterprises, governmental institutions, educational institutions, Internet service providers, application developers, and OEMs. Markets and distributes products and services primarily through the following channels: OEM; distributors and resellers; and online.

Originally an OEM (original equipment manufacturer) REG was a company that supplied equipment to other companies to resell or incorporate into another product using the reseller’s brand name. Sometimes it is referred to as “bulk packed”, “white box”, “brown box” and “gray market”.

What is their workforce like?

As of June 30, 2012, MSFT employed approximately 94,000 people on a full-time basis, 55,000 in the U.S. and 39,000 internationally.

On January 2009, announced and implemented a resource management program to reduce discretionary operating expenses, employee headcount, and capital expenditures. The record employee severance when a specific plan has been approved by management, the plan has been communicated to employees, and it is unlikely that significant changes will be made to the plan. Success is highly dependent onthe  company’s ability to attract and retain qualified employees. None of their employees are subject to collective bargaining agreements.

Program management refers to the process of managing several related projects often with the intention of improving an organization’s performance.

How do they treat their employees? What are the pay and working condition like?

MSFT has an employee stock purchase plan (the “Plan”) for all eligible employees, in which employees may purchase shares having a value not exceeding 15 percent of their gross compensation during an offering period. It has a savings plan in the U.S. that qualifies under Section 401(k) of the Internal Revenue Code, and a number of savings plans in international locations.

The compensation program allows the compensation committee and board to determine pay based on a comprehensive view of quantitative and qualitative factors designed to produce long-term business success. Microsoft designed the executive officer’s benefits programs to attract, motivate, and retain the key executives who drive our success and industry leadership.

CITATION

Who started the company and why?

http://en.wikipedia.org/wiki/Microsoft_Corporation

http://www.sec.gov/Archives/edgar/data/789019/000119312512451049/d423661d424b2.htm

What is the background of the company? Its History and Development?

http://www.google.com/finance?q=NASDAQ%3AMSFT&ei=MTzFUKi5LtCZlQWeHg

http://en.wikipedia.org/wiki/Microsoft_Corporation

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=MSFT.O

What is the nature of the business?

http://www.google.com/finance?q=NASDAQ%3AMSFT&ei=MTzFUKi5LtCZlQWeHg

http://en.wikipedia.org/wiki/Microsoft_Corporation

http://finance.yahoo.com/q/pr?s=MSFT+Profile

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=MSFT.O

www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm

https://www.google.com/url?q=http://www.fundinguniverse.com/company-histories/microsoft-corporation-history/&sa=U&ei=y0bFUM_DAaKKmQWls4GgCQ&ved=0CAcQFjAA&client=internal-uds-cse&usg=AFQjCNGAgEzJfySDeeYx4e-VVgwBJKeMow

Who is running the company and their background?

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm p12

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htmp12

Who is directing the company

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34 p12

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34 p18

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34 p14

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34 p14

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34 p13

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34

How do they make money?

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=MSFT.O

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm p26

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm p51

http://en.wikipedia.org/wiki/Microsoft_Corporation#cite_note-BBCTL-8

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm p4

How do they fit in the industry they operate in?

https://www.google.com/url?q=http://www.fundinguniverse.com/company-histories/microsoft-corporation-history/&sa=U&ei=y0bFUM_DAaKKmQWls4GgCQ&ved=0CAcQFjAA&client=internal-uds-cse&usg=AFQjCNGAgEzJfySDeeYx4e-VVgwBJKeMow

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm p14

http://www.sec.gov/Archives/edgar/data/789019/000119312511200680/d10k.htm p15

Who are their suppliers and customers?

http://www.google.com/finance?q=NASDAQ%3AMSFT&ei=MTzFUKi5LtCZlQWeHg

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=MSFT.O

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=MSFT.O

http://www.sec.gov/Archives/edgar/data/789019/000119312512451049/d423661d424b2.htm

http://www.sec.gov/Archives/edgar/data/789019/000119312511200680/d10k.htm p81

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm p10& 11

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm

What is their workforce like?

http://www.sec.gov/Archives/edgar/data/789019/000119312511200680/d10k.htm p52

http://www.sec.gov/Archives/edgar/data/789019/000119312511276022/d230161d10q.htm

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm

ttp://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm

How do they treat their employees; what is the pay and working condition like?

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm pp83

http://www.sec.gov/Archives/edgar/data/789019/000119312512316848/d347676d10k.htm

http://www.sec.gov/Archives/edgar/data/789019/000119312511200680/d10k.htm p18

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34

http://www.sec.gov/Archives/edgar/data/789019/000119312512418708/d375562ddef14a.htm#sum375562_34 p20

Researched and written by Meriam and Karla
Edited by Cris

GameStop-Corp-GME

GameStop Corporation (GME) World’s Largest Video Game Retailer

November 28th, 2012 Posted by Company Research Report No Comment yet

GameStop Corp. (GME) is an American video game, consumer electronics, and wireless services retailer. The company is headquartered in Grapevine, Texas, United States, a suburb of Dallas, and operates 7,267 retail stores throughout the United States, Canada, Australia, New Zealand, and Europe. Wikipedia

Who started GameStop Corp and why?

GameStop Corp.

GameStop has a lineage that includes several retailing names now relegated to the historical graveyard. It was originated as Babbage’s Inc., the first software retailer store in Dallas Texas which was named after Charles Babbage, the 19th-century British mathematician.

GameStop Corp.

James B. McCurry

Babbage’s Inc. was initiated by two Harvard Business School classmates, James B. McCurry, and Gary M. Kusin. They established a chain of software stores, subsidize on the burgeoning computer and home video industries with an expectation of increasing consumer interest in computer equipment and games. After several changes of names, it became GameStop Inc. in 1999.

For the awareness of everyone, Computer and software stores comprise establishments primarily engaged in retailing new computers, computer peripherals, and prepackaged computer software without retailing other consumer-type electronic products or office equipment, office furniture and office supplies; or retailing these new products in combination with repair and support services.

What is the background of the company? Its history and development?

timeline

What is the nature of  GameStop Corp. business?

nature

Additional bits of information from Meriam and Janice. Retail software is computer software sold to end consumers, usually under restricted licenses. It is also called full retail, the term used to describe a full version of a software package that is sold at online or brick-and-mortar stores.

GameStop is an American video game and entertainment software retailer, located in Grapevine Texas United States. It is one of the biggest U.S players in retail sector specializing in video game and PC amusement software. In line with this, GME is the largest retailer of new and used games, hardware, entertainment software, and accessories.

The company operates approximately 1,750 retail stores located in 49 states under the GameStop Brand. Moreover, the retail network and family of brands include 6,628 company-operated stores in 15 countries worldwide and online at www.GameStop.com. It has a list of subsidiaries such as GameStop, Inc., GameStop.com, Inc., Marketing Control Services, Inc.; Sunrise Publications, Inc., Babbage’s Etc. LLC; and Gamesworld Group Limited.

Who is running GameStop Corp. company and their background?

The company is the world’s largest multichannel video game retailer. It is under the supervision of the executive officers, namely, Mr. J. Paul Raines and Mr. Robert A. Lloyd.

GameStop Corp.J. Paul Raines is the chief Executive officer of GameStop Corp., since June 2010, and upon joining the company, he served as the chief operating officer from September 2008 to June 2010. Prior to GameStop, he served various management positions for eight years with The Home Depot (“Home Depot”) and spent four years in global sourcing for L.L. Bean, and ten years with Kurt Salmon Associates in the consumer products group. He is a member of the board of directors of Advance Auto Parts, Inc. (“Advance Auto Parts”), and serves the Finance Committee and compensation Committee as chairperson.

Mr. Raines has extensive experience in the strategic, operational and merchandising aspects of retail businesses, and broad international experience in Europe and Asia. He shares to the board the insights he gained from his experience and expertise in the areas of retail strategy, store operations, customer service, merchandising, manufacturing, marketing, loss prevention, real estate, supply chain and global sourcing. Paul provides the company an additional unique perspective into corporate management and board dynamics at another specialty retail public company.

GameStop Corp.Robert A. Lloyd, on the other hand, is the executive vice President and chief financial officer since June 2010. He served as company’s Chief Accounting officer wherein he held the position from October 2005 to February 2010. Prior to that, he was the vice president – finance of GameStop or its predecessor companies from October 2000 and was the controller of GameStop’s predecessor companies from December 1996 to October 2000. Mr. Lloyd held several financial management positions as a controller or chief financial officer, primarily in the telecommunications industry. He also serves positions in the public accounting firm of Ernst & Young. Robert is a certified public accountant.

Global sourcing is a way of sourcing from the global market for goods and services across geopolitical boundaries? It is procurement method in which a business seeks to find the most cost effective location to manufacture a product even if the location is in a foreign country. 

I also learned from Janice that the method includes low-cost skilled labor, low-cost raw material and other economic factors like tax breaks and low trade tariffs.

Who is directing the company; How are the committees structured?

GameStop comprises of three committees, the audit, compensation and nominating and corporate governance. The board is headed by chairman of the board, as well directors of which are independent.

Meet Ms. Stephanie M. Shern, the director, and chair of the audit committee. She has been serving the position since 2002. She was the vice chair and global director of Retail and Consumer Products for Ernst & Young LLP (“Ernst & Young”), and a member of Ernst & Young’s Management Committee from 1995 to 2001. Ms. Shern is a CPA and has extensive financial experience. She is a member of the American Institute of CPAs and the New York State Society of CPAs, and a member of Pennsylvania State University’s Smeal College Accounting Advisory Board and a founding member of Tapestry Network’s Lead Director Network. Stephanie inputs to the board vast leadership, financial, international, marketing/consumer industry and retail experience from her nearly 40-year finance career focused significantly on retail and consumer industries in both the United States and abroad.

Mr. Gerald R. Szczepanski, on the other hand, is an independent director and has been serving as a director for the company and its predecessor companies since 2002. He is the chairman of the compensation committee and a member of the audit committee. Mr. Szczepanski was the co-founder and chairman and chief executive officer of Gadzooks, Inc., a publicly traded specialty retailer of casual clothing and accessories for teenagers from 1994 to 2005. Gerald shares to the board over his 35 years of experience in the retail business and has extensive leadership experience of a public company in the specialty retail industry.

Then there’s their non-executive director and chairman of the nominating and corporate governance committee in the name of Mr. Jerome L. Davis. He has been the director of the company since October 2005. He is the current vice president of Food and Retail for Waste Management, Inc. (“Waste Management”), a leading provider of integrated environmental solutions in North America. Mr. Davis is currently serving as a  director and a member of the compensation committee and the nominating and corporate governance committee of Apogee Enterprises, Inc. (“Apogee”), since 2004, and for five years, he chaired the finance and enterprise risks committee of the company. Mr. Davis gives the board his 30 years of experience in Fortune 500 companies and has extensive expertise and insight in multiple areas including marketing and sales, strategy development.

Bankruptcy is a legal status of an insolvent person, firm or corporation, one who cannot repay the debts they owe to creditors. Bankruptcy is imposed by a court order, often initiated by the debtor, this is in most jurisdictions. I learned from Janice that in the United States the term bankruptcy is applied more broadly to formal insolvency proceedings.

How do they make money?

Working under a video game software company is no joke. Wondering where they get their revenues from? Janice has the answers for that.

The company’s sales and profits are primarily driven by the physical stores or from the company’s operating segments: United States, Canada, Australia and Europe.

GameStop records revenue from the sales of their digital products which generally allow consumers to download software or play games on the internet wherein they get a commission. They also sell new and used video game hardware, physical and digital video game software, accessories, as well as PC entertainment software and other merchandise. Revenue is recorded at the time of sale of the products, net of sales discounts, reduced by a provision for sales returns. Other incomes are from advertising revenues for Game Informer which is recorded upon release of magazines for sale to consumers.

This is the business strategy they used to gain more profit is through advertising in newspapers, television and other media to introduce and make the products available to the customers. Another way to increase market share is through increasing awareness of the GameStop brand and membership in the loyalty program, expanding the sales of used video game products, and expanding market leadership position by focusing on the launch of new hardware platforms as well as physical and digital software titles.

How do they fit in the industry they operate in?

Video game industry is the economic sector involved with the development, marketing, and sales of video games. The industry provides lots of job opportunities to people globally. 

GameStop Corp. generally competes with mass merchants and regional chains, computer product and consumer electronics stores, internet-based retailers, and other U.S. and international video game and PC software specialty stores. They also contest with toy retail chains; mail-order businesses; catalogs; direct sales by software publishers; and online retailers and game rental organizations.

Likewise, the company competes with other sellers of used video game products and other PC software distribution firm. Additionally, they compete with other forms of entertainment activities, including browser, social and mobile games, movies, television, theater, sporting events and family entertainment centers. Their top competitors are Electronics Boutique Holdings Corp., Best Buy Co., Inc., Circuit City Stores, Inc., Wal-Mart Stores, Inc., Toys “R” Us, Inc., Target Corporation, Kmart Corporation; and Amazon.com, Inc.

Who are their suppliers and customers?

They deal with new and used video game hardware, and digital Video games software, accessories, as well as personal computer (PC) entertainment software. Other products include controllers, memory cards, and other add-ons; liked playing games and trading cards. Furthermore, they sell a variety of digital goods which generally allow consumers to download software or play games on the internet. Likewise, it renders company’s products primarily through its GameStop, EB Games, and Micromania stores, as well as through its electronic commerce websites. Moreover, they offer GameStop TV in many of its locations and publish Game Informer, a video game magazine with some 7.2 million subscribers.

The company’s suppliers rely on foreign sources, generally in Asia who manufacture a portion of products which they purchased, buy, sell, and trade program that creates value for customers while recycling products no longer being played.

Interactive software is used for entertainment, role playing, and simulation. It is played on a specialized device, mobile device or personal computer, video games which have become extremely realistic, not only in their graphics and animation but in their themes.

What is their workforce like?

The company is in a fast-paced business that demands much and delivers much to those who always improve. To remain in the industry, GameStop looks for individuals who are competitive and demand the best of themselves, and someone who strives to meet and surpass the next challenge, and who set the bar continuously higher.

Approximately, the company has a total 17,000 full-time salaried and hourly employees and between 33,000 and 54,000 part-time hourly employees worldwide. Some of our international employees are covered by collective bargaining agreements, while U.S. employees are not represented by a labor union or are members of a collective bargaining unit. GameStop hires and retains employees who know and enjoy working with the products; this is a line to assist the customers better. Each of stores is managed by one manager, one assistant manager and between two and ten sales associates, most are part-time employees.

Moreover, the success of the company relies on the ability to attract, motivate and retain key management for their stores and skilled merchandising, marketing, financial and administrative personnel at our headquarters. It depends as well on the continued services of the key executive officers; any loss of the key people will adversely affect the business operations.

A store manager is the person responsible for managing the personnel and the economic performance of the store. They handle the day-to-day operation and directly reports to a district or general manager.

How do they treat their employees? What are the pay and working condition like?

Executive people receive compensation which comprises of the following elements; base salary, annual incentive bonus, targeted total annual cash compensation, long-term incentives and total compensation (cash and long-term incentives). Some of the executive officers underwent an employment agreement with the company wherein they get stock options or restricted stock, and cover severance and termination benefits. GameStop also provides savings plan to employees who meet the eligibility requirements, primarily age, and length of service. Another benefit provides are the defined contribution 401(k) plan.

For people working in the physical store, to encourage them to sell the full range of our products and to maximize our profitability, employees are provided with targeted incentive programs to drive overall sales and sales of higher margin products. In some locations, employees have the opportunity to take home and try new video games, to enable them to better explain the games with the customers.

The compensation package, for everybody’s information, is a mixture of salary and benefits received by the employee from his employer. When evaluating job offers, one should not only consider the salary but also the total package.

Pay Structure

Gossips

On November 13, 2012, www.businessweek.com announced that: GameStop ‘Call of Duty’ Sales Top 1 Million in First Day. “Black Ops II’ is shaping up to be our biggest game launch of all time,” Tony Bartel, president of the Grapevine, Texas-based chain said today in an e-mail, “GameStop sold more than 1 million units worldwide during our midnight launch period.”

According to www.bizjournals.com on October 25, 2012: GameStop to debut new GameStop Kids stores. “This is really a way for us to take share away from people who are in the toy business and have an expanded assortment,” CEO Paul Raines said, “and show people how to drive kids to new experiences, new products or an expanded assortment of existing products like Skylanders and Angry Birds.”

An Article coming from www.fool.com on September 8, 2012, stated that: Is It Game Over for GameStop? According to Joel Greenblatt’s “Magic Formula,” GameStop is a great buy — high return on capital and a cheap stock at 5 times cash flow. But as Fool analyst Austin Smith notes, there are downsides to this company.

On August 16, 2012, www.reuters.com said that: GameStop slashes sales outlook, raises the dividend. “Clearly the industry has had a tough first half,” GameStop Chief Executive Officer Paul Raines told Reuters. “The NPD data is significantly down, and perhaps the industry has declined more than anyone, even analysts’ groups, thought it would.”

The video-game retailer sold more than 1 million copies of Activision Blizzard Inc. “Call of Duty: Black Ops II” on its first day. They are launching a new store concept which shows continued confidence by GameStop management in brick-and-mortar retail in the highly digital gaming industry. On the other hand, GME has seen an 11 percent drop in revenue for the most recent quarter and is operating in a deteriorating environment. Also, the company sharply reduced its sales forecast for this year 2012.

CITATION

Who started the company and why?

http://www.today.mccombs.utexas.edu/2010/11/carpenter-kusin-robertson-new-mccombs-hall-of-famers

http://www.123people.ca/ext/frm?ti=personensuche%20telefonbuch&search_term=jim%20mccurry&search_country=CA&st=suche%20nach%20personen&target_url=aHR0cDovL3d3dy5hY2cub3JnL2F0bGFudGEvZXZlbnRzL2V2ZW50LmFzcHg%2FRXZlbnRJZD0yMjIy&section=image&wrt_id=418

http://en.wikipedia.org/wiki/GameStop_Corp.

http://www.fundinguniverse.com/company-histories/gamestop-corp-history/

http://www.chacha.com/question/what-gamestop-is-the-first-gamestop-what-is-gamestop-store-number-one-and-what-is-the-phone-number

What is the background of the company? Its History and Development?

http://www.fundinguniverse.com/company-histories/gamestop-corp-history/

http://www.google.com/finance?q=NYSE%3AGME&ei=3uiiUNCmIojzkQXIZw

http://www.sec.gov/Archives/edgar/data/1326380/000119312512262005/d354414d10q.htm p11

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm

What is the nature of the business?

http://www.fundinguniverse.com/company-histories/gamestop-corp-history/

http://www.sec.gov/Archives/edgar/data/1326380/000119312512381205/d385850d10q.htm p18

http://en.wikipedia.org/wiki/GameStop_Corp.

http://phx.corporate-ir.net/phoenix.zhtml?c=130125&p=irol-irhome

http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=GME

Who is running the company and their background?

http://www.reuters.com/finance/stocks/officerProfile?symbol=GME&officerId=1236761

http://www.sec.gov/Archives/edgar/data/1326380/000119312512225064/d339099ddef14a.htm p4

http://www.sec.gov/Archives/edgar/data/1326380/000119312512225064/d339099ddef14a.htm p12

http://www.reuters.com/finance/stocks/officerProfile?symbol=GME&officerId=775171

Who is directing the company; How are the committees structured?

http://insiders.morningstar.com/trading/insider-committees.action?t=GME

http://www.sec.gov/Archives/edgar/data/1326380/000119312512225064/d339099ddef14a.htm p6

http://insiders.morningstar.com/trading/insider-committees.action?t=GME

http://www.sec.gov/Archives/edgar/data/1326380/000119312512225064/d339099ddef14a.htm p6

http://insiders.morningstar.com/trading/insider-committees.action?t=GME

http://www.sec.gov/Archives/edgar/data/1326380/000119312512225064/d339099ddef14a.htm p5

How do they make money?

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p8

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm#tx283661_15

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm#tx283661_15

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p2

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p4&5

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p39

How do they fit in the industry they operate in?

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p18

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p6

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p15

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p19

Who are their suppliers and customers?

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p2

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm

http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=GME

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p13

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p18

http://finance.yahoo.com/q/pr?s=GME

http://investing.businessweek.com/research/stocks/financials/drawFiling.asp?formType=10-K

What is their workforce like?

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p14

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p16

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p18

How do they treat their employees; what is the pay and working condition like?

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm#tx283661_15 p F-30

http://www.sec.gov/Archives/edgar/data/1326380/000119312512225064/d339099ddef14a.htm p21

http://www.sec.gov/Archives/edgar/data/1326380/000119312512225064/d339099ddef14a.htm p22

http://www.sec.gov/Archives/edgar/data/1326380/000119312512225064/d339099ddef14a.htm p24

http://www.sec.gov/Archives/edgar/data/1326380/000119312512225064/d339099ddef14a.htm p33

http://www.sec.gov/Archives/edgar/data/1326380/000119312512134615/d283661d10k.htm p14

 

Researched  and Written by Meriam, Janice and Karla
Edited by Cris

tuesday-morning-corporation-tues-2/

Tuesday Morning (TUES) Closeout Buyer and Surplus Re-seller

July 26th, 2012 Posted by Company Updates No Comment yet

Tuesday Morning Corporation (TUES) who started?

Tuesday Morning Corporation (TUES) developed its name when the business opened their doors on Tuesday morning, generally the first Tuesday of the month.

The company founder, chairman, and chief executive officer Lloyd Ross conceptualized the title. In line with this, an idea was brought up in the early 1970’s when Lloyd Ross was working in Rathcon, Inc. and noticed that manufacturers had no reliable way to dispose of their surpluses of high-end inventory. Moreover, he started in buying and selling merchandise from top-name manufacturers to department and specialty stores.  In spite of its name, the store is open throughout the week where the products are known to be first-quality, famous-maker giftware.

On our Economics class in high school we tackled Surplus and since then I have completely forgotten what it meant exactly. Surplus, as defined by our research team, is a situation in which assets exceed liabilities, income exceeds expenditures, exports exceed imports, or profits exceed losses. It is the opposite of a deficit. When a country exports more than it imports, it is said to have a trade surplus.

TUES background of the company? Its history and development?

Every single thing on this planet has its own history and background and how it developed. So for Tuesday Morning Corporation, Meriam and Janice have listed some valuable information regarding that.

TUES nature of its business?

The corporation is a closeout retailer of assorted famous maker gift that markets assorted first quality merchandise.

It buys brand name and first quality products at closeout prices and resells it at prices lower than those generally charged by department stores and catalog retailers. Also, they offer home accessories, housewares and famous-maker gifts in the United States. The stores do not sell seconds, irregulars, refurbished or factory-reject products. On March 31, 2011, the company compelled with 840 discount retail stores in the 41 states. The company relies on direct marketing which includes mail, eTreasures, e-mail list an advertisement in newspapers and television.

Brand new items that are no longer being sold for wholesale cost are considered closeouts. Thus, it may be a result of discontinuation and overstocking of the product or a sale in which all remaining stock is disposed of, usually at greatly reduced prices.

Who is running TUES and their background?

As anyone of us knows, a company would only run if there are people working on it. What’s a company called without them anyway? Janice will help ease the questioning with a thorough background description of the company along with the people running it.

Key management personnel of Tuesday Morning Corporation has been serving the company for a couple of years. Mr. Michael J. Marchetti is the interim CEO who has been part of the corporation for more than ten years. Same with the CFO Ms. Stephanie Bowman, that has been employed for almost six years.

Mr. Michael J. Marchetti serves as the president, interim chief executive officer, and chief operating officer of Tuesday Morning Corporation. He joined the company in February 2001 as senior vice president of strategic planning. For a few months, he held the following position as an acting chief financial officer, secretary, and treasurer of the company. Before climbing to his current position, he served several executive positions such chief operating officer, executive vice president and executive vice president of operations. Mr. Marchetti was previously employed as a principal by MarCon Services, Inc. He was also a former chief financial officer of CWT Specialty Stores, Inc.

Ms. Stephanie Bowman is the executive vice president, chief financial officer, secretary and treasurer of the company. She started her employment as the controller in August 2006. She was previously seated as vice president of finance before becoming the CFO. Prior joining on Tuesday Morning Corporation, she was the senior vice president of finance of Summit Global Partners. Ms. Bowman is a certified public accountant and holds a degree in BBA, Accounting from the University of Texas at Arlington.

That was a bit off on my part. Janice then made it clear to me. Interim CEO is a person appointed by a company’s board of directors to assume the role of the chief executive officer during a time of transition or as the result of the sudden departure of the company’s previous CEO. These CEOs are tagged with the “interim” tag due to the fact that they have not officially been given the title of full-time CEO. Like many industry leaders, interim CEOs are often called upon to “steady the ship” in periods of great turmoil.

Who is directing the company? How are the committees structured?

So how about their directors? It’s a good thing Janice was there to help me out. She even gave out bits of information as to how their committees were structured.

The committee is comprised solely of independent directors. The committees are the audit, compensation and nominating and corporate governance committee. Mr. Bruce Quinnell sits as the chairman of the board of the company.

Mr. Quinnell is an independent director and he has been with the company since April 2006. He is the chairperson of the audit and compensation committee. He is a former executive officer of the following companies, namely Walden Book Company, Pace Membership Warehouse and Dollar General Corporation. A member of the board of directors of Bombay, Inc, Cyber Medical Services, Zoom Systems, Inc and chairman of the board of Board of Hot Topic, Inc. Mr. Quinnell is a business consultant with extensive background in the retail industry. He provides leadership and management skills as well as financial, audit and operational expertise to the company.

Steven R. Becker, 45, is the chairperson of the nominating and corporate governance committee. He was appointed as chairman on July 1, 2012.  Mr. Becker is a co-founder and partner of Becker Drapkin Management. He was a former director of Plato Learning and current member of the board of directors of Hot Topic, Ruby Tuesday, Pixelworks. At present, he is an active member of the board of trustees of Dallas Museum of Art. He holds a B.A. degree from Middlebury College and J.D. from the University of Florida.

In non-profit organizations, just as to how Janice had described it, the board of trustees often provides means for members or associates of the organization to elect or appoint individuals that will oversee the function of the organization and ensure that the core values and purposes of the organization are reflected in the operation process. Generally, members of a board of trustees serve terms from one to three years, although various charters may allow persons to be re-elected or re-appointed upon the completion of each term.

It may be selling products or offering services; every business or company has their own means and ways so as the public could enjoy buying and purchasing their goods without further stress on their part and their wallets of course.

How do they make money?

Tuesday Morning offers the finest in closeout product, never seconds or damages. The business uses different strategy formats to be competitive and achieve its financial goal.

Revenues were realized during the transport and sales of the product to the customers. Strategies such as close monitoring and markdown controlling of inventory allow product selling at reasonable rates which contribute well to the company’s earnings. Through “event-based” selling strategy such as “grand openings” and “closeout sales,” major profit is realized. To attract customers, the company promotes major sales events and products through online, radio and television advertising and direct mailings and emails. Items purchased through online by the customers are also one of the sources of company’s income. During the month of October through December, merchandise purchases increased a wherein significant portion of the revenue and net earnings were recognized. Also, earnings of the corporation grew due to the sales per store and increase of transactions in the comparable store sales.

Comparable store sales are the amount of revenue a retail location generated in the most recent accounting period, relative to the amount of revenue it generated in a similar period in the past. Comparable store sales are most commonly used to compare the most recent year’s holiday shopping season, to last year’s, or to compare this week, month, quarter or year’s sales to last week, month, quarter or year’s sales.

How do they fit into the industry they operate in?

Tuesday Morning is a company that most of the industry is not seeing as a major player in the marketplace. So how do they manage to fit into the industry they operate in? That’s what we’re about to find out in Meriam and Janice’s research work.

The company has a significant take on their competition with the supply chain. At present, as a closeout retailer of home furnishing, the company competes against a diverse group of retailers, including department and discount stores, specialty, catalog and e-commerce retailers and mass merchants.  The store also competes in the market with big numbers of retailers who specialize in one or more types of home furnishing and housewares products that TUES sells. Due to competition in the home furnishings retail industries, the company develops a strategic initiative to equally maintain its trend. Business competitors are Bed Bath & Beyond Inc. (BBBY), J. C. Penney Company, Inc. (JCP), Target Corp. (TGT) and Industry – Discount, Variety Stores. No second-hand factory with defects, either damaged products, are sold in the stores that make Tuesday Morning Corporation stand ahead with the competitors such as Samsonite, Cuisinart, Krups, Calphalon, and others.

In the business world, like how our research team has defined it, a retailer is a person that sells goods to the consumer, as opposed to a wholesaler or supplier, who normally sell their goods to another business. The retail transaction is at the end of the supply chain. Manufacturers sell large quantities of products to retailers, and retailers sell small quantities of those products to consumers.

Who are their suppliers and customers?

Tuesday Morning has a dedicated customer base that seeks the best merchandise at outrageously cheap prices.  Wow! That’s good to hear, right? Let’s get to find out more about that; thanks for Meriam and Janice’s detailed article.

They sell various products preferably brand new and no factory defect. Products are lamps, rugs, furniture, kitchen accessories, small electronics, gourmet housewares, linens, luggage, bedroom and bathroom accessories, toys, stationery, silk plants, as well as crystal, collectibles, silver serving pieces, men, women and children’s apparel and accessories  and selected items which are offered at retail shops and website. Normally, closeout products are only available from manufacturers or vendors on a non-recurring basis. The company doesn’t offer long-term contracts with vendors for supply, pricing or access but rather individual purchase decisions, which are often in large quantities.  TUES profits rely on the price of the product they purchase from the suppliers.

Consumer also called as customers, is an individual who buys products or services for personal use and not for manufacture or resale. He/she also makes the decision whether or not to purchase an item at the store and someone who can be influenced by marketing and advertisements. Anytime someone goes to a store and purchases a toy, shirt, beverage, or anything else, they are making that decision as a consumer.

What is their workforce like?

Just like computer parts, once a certain part is missing, the whole machine itself would be useless. Without human intervention to, a computer is a dumb box. Why did I say this? That’s because as of now, we will be reading what’s the workforce like on Tuesday Morning Corporation.

The workforce of the company is a combination of the management team, personnel, and technology.

With today’s competitive market, automated technology process significantly supports the company’s business operations. TUES is believed to have the strong bond with its employees who are not associated with labor groups. It has a total of 1,900 employees on the full-time basis and approximately 7,000 on a part-time basis as of June 30, 2011. Their store management is composed of full-time and part-time employees such as the store, zone and field managers.

Store manager handles the recruitment, training, and supervision of store personnel and stores inventory. In addition, management members held periodic meetings with the regional, field, zone managers and visits selected stores during sales and non-event sales. Key employees and stable management are where the future of the company highly depends on one. Aside from the personnel, the company uses “eTreasures”®, a program that keeps the customers updated with the newest product and offerings. Some labor source to consider manufacturers and vendors wherein they produce and supply items to the stores.

Targeted emails allow information, about your opportunities, event or organization to be sent to a specified target group. It also gives you the ability to segment your email list and target your email messages to their specific audience. Sending targeted emails will minimize unsubscribes and reduce list churn.

How do they treat their employees? What are the pay and working condition like?

So we’ve basically covered from how the company emerged, its development and history. I guess it’s high time to get to know how they treat their employees and what is their pay and working conditions like.

Tuesday Morning Corporation performance is dependent on recruiting, developing, training and retaining quality sales, distribution center and other associates in large numbers, as well as, experienced buying and management personnel.

Executive Officers and Employees

Executive officers and employees follow a code of conducts which established ethical standards in the company. Training is provided to store management personnel upon hiring or during the promotion. The compensation package for the executive officers is the following: base salary, equity-based compensation, annual cash payments perquisites and other personal benefits. Annual cash payments are applicable to executive officers with a certain employment agreement. Stock-based compensation is enjoyed by directors, officers, and key employee however in 2008; it was terminated by the board of directors. For potential liabilities with workers, the company provides a mix of insurance and self-insurance plans. Full-time and eligible employees avail the 401(k) profit sharing plan wherein the certain percentage is deducted from their salary. The company also offers death benefit plan to full-time employees and executive officers.

Death benefit or “survivor benefit” is the amount of a life insurance policy or pension that is payable to the beneficiary when the annuitant passes away. Also, it may be a percentage of the annuitant’s pension. Alternatively, the benefit may be a large lump-sum payment from a life insurance policy. The size and structure of the payment are determined by the type of policy the annuitant held at the time of death.

Summary Compensation Table

The table presents the compensation of executive officers and directors for fiscal years 2009, 2010 and 2011.

tues 1

tues 2

Gossips

Now that we’ve pretty much covered every aspect of the company, let’s get it on with the summary that’s been laid for us by our research team.

According to Reuters news in January 2012 at 08:00 am, Tuesday Morning Corp. revised its guidance for fiscal 2012 and expects net sales to be in the range of $815-$820 million.

Another news from Yahoo finance dated Tuesday, July 10, 2012, there was an increase of 0.8 percent. Comparable store sales for the quarter ended on June 30, 2012, with an increased rate of 0.2 percent. For the fiscal year ended June 30, 2012, and net sales were $812.8 million compared to $821.1 million for fiscal 2011.

On Wednesday, June 6, 2012, Reuters announced Management Changes and Director Resignation of Tuesday Morning Corp. This relieved Kathleen Mason of her duties as President and CEO and commenced a search for a new chief executive.

June 7, 2012, Dallas Business Journal has written, Kathleen Mason Firing surprise. She said,   “The Company has been profitable for 12 consecutive years,”. “We have grown to 850 stores with 10,000 employees and 11 million loyal customers.”

Revision of guidance of Tuesday Morning Corporation increased Net sales this 2012; CEO Michael Marchetti had positive views to achieve an increase in total sales for the quarter. Management changes made Kathleen Mason relieved from her duties, which came as a surprise to her and felt disappointed.

CITATIONS

Who started the company and why?

http://en.wikipedia.org/wiki/Tuesday_Morning

/http://www.fundinguniverse.com/company-histories/tuesday-morning-corporation-history/

http://www.fundinguniverse.com/company-histories/tuesday-morning-corporation-history/

What is the background of the company? its History and development?

http://www.fundinguniverse.com/company-histories/tuesday-morning-corporation-history/

http://en.wikipedia.org/wiki/Tuesday_Morning

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=TUES.O

http://www.sec.gov/Archives/edgar/data/878726/000110465911024289/a11-9588_110q.htm

What is the nature of the business?

http://www.fundinguniverse.com/company-histories/tuesday-morning-corporation-history/ http://www.sec.gov/Archives/edgar/data/878726/000110465911024289/a11-9588_110q.htm

http://en.wikipedia.org/wiki/Tuesday_Morning

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=TUES.O

Who is running the company and their Background?

http://insiders.morningstar.com/trading/executive-profile.action?t=TUES&PersonId=PS000015PH&flag=Executive&insider=Michael_Marchetti&region=USA&culture=en-us&ProductCode=com

http://investing.businessweek.com/research/stocks/people/person.asp?personId=752929&ticker=TUES:US

http://www.sec.gov/Archives/edgar/data/878726/000104746911008263/a2205707zdef14a.htm p19

http://www.sec.gov/Archives/edgar/data/878726/000104746911008263/a2205707zdef14a.htm p1

http://www.reuters.com/finance/stocks/officerProfile?symbol=TUES.O&officerId=1147173

http://www.linkedin.com/pub/stephanie-bowman/13/604/806

http://www.macroaxis.com/invest/manager/TUES–Stephanie_Bowman.

Who is directing the company  How are the committees structured? 

http://ir.tuesdaymorning.com/committees.cfm

http://www.sec.gov/Archives/edgar/data/878726/000104746911008263/a2205707zdef14a.htm p6

http://ir.tuesdaymorning.com/committees.cfm

http://insiders.morningstar.com/trading/executive-profile.action?t=TUES&PersonId=PS00001IV7&flag=Director&insider=Steven_Becker&region=USA&culture=en-us&ProductCode=com

How do they make money?

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm p

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1104659-12-30571 p11

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1047469-11-7754 p4

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1047469-11-7754 p11

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1047469-11-7754 p10

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1047469-11-7754 p24

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1047469-11-7754 p30

How do they fit into the industry they operate in?

http://www.sec.gov/Archives/edgar/data/878726/000110465911024289/a11-9588_110q.htm p11

http://www.sec.gov/Archives/edgar/data/878726/000110465911024289/a11-9588_110q.htm

http://finance.yahoo.com/q/co?s=TUES+Competitors

http://www.wikinvest.com/stock/Tuesday_Morning_(TUES)

Who are their suppliers and customers?

http://www.google.com/finance?q=NASDAQ:TUES

http://www.sec.gov/Archives/edgar/data/878726/000110465911024289/a11-9588_110q.htm

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=TUES.O

http://www.wikinvest.com/stock/Tuesday_Morning_(TUES)

What is their workforce like?

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm p11

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm p6

How do they treat their employees; what is the pay and working condition like?

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm p39

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm p6

http://www.sec.gov/Archives/edgar/data/878726/000104746911008263/a2205707zdef14a.htm P22

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1104659-12-30571

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm pF-8

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm pF-20

http://www.sec.gov/Archives/edgar/data/878726/000104746911008263/a2205707zdef14a.htm P25

Gossips

http://www.reuters.com/finance/stocks/TUES.OQ/key-developments/article/2461788

http://finance.yahoo.com/news/tuesday-morning-corporation-announces-fourth-120000047.html   

http://www.reuters.com/finance/stocks/TUES.OQ/key-developments/article/2461788

http://www.bizjournals.com/dallas/news/2012/06/07/firing-surprised-tuesday-mornings.html?ana=yfcpc

Researched and Written by Meriam and Janice
Edited by Cris

tuesday-morning-corporation-tues-2/

Tuesday Morning Corporation (TUES) the Closeout Buyer and Surplus Reseller

July 26th, 2012 Posted by Company Research Report No Comment yet

Who started Tuesday Morning Corporation and why?

Tuesday Morning Corporation (TUES) developed its name when the business opened their doors on Tuesday morning, generally the first Tuesday of the month.

The company founder, chairman, and chief executive officer Lloyd Ross conceptualized the title. In line with this, an idea was brought up in the early 1970’s when Lloyd Ross was working in Rathcon, Inc. and noticed that manufacturers had no reliable way to dispose of their surpluses of high-end inventory. Moreover, he started in buying and selling merchandise from top-name manufacturers to department and specialty stores.  In spite of its name, the store is open throughout the week where the products are known to be first-quality, famous-maker giftware.

On our Economics class in high school we tackled Surplus and since then I have completely forgotten what it meant exactly. Surplus, as defined by our research team, is a situation in which assets exceed liabilities, income exceeds expenditures, exports exceed imports, or profits exceed losses. It is the opposite of a deficit. When a country exports more than it imports, it is said to have a trade surplus.

What is the background of the company? Its history and development?

Every single thing on this planet has its own history and background and how it developed. So for Tuesday Morning Corporation, Meriam and Janice have listed some valuable information regarding that.

What is the nature of its business?

The corporation is a closeout retailer of assorted famous maker gift that markets assorted first quality merchandise.

It buys brand name and first quality products at closeout prices and resells it at prices lower than those generally charged by department stores and catalog retailers. Also, they offer home accessories, housewares and famous-maker gifts in the United States. The stores do not sell seconds, irregulars, refurbished or factory-reject products. On March 31, 2011, the company compelled with 840 discount retail stores in the 41 states. The company relies on direct marketing which includes mail, eTreasures, e-mail list an advertisement in newspapers and television.

Brand new items that are no longer being sold for wholesale cost are considered closeouts. Thus, it may be a result of discontinuation and overstocking of the product or a sale in which all remaining stock is disposed of, usually at greatly reduced prices.

Who is running Tuesday Morning Corporation and their background?

As anyone of us knows, a company would only run if there are people working on it. What’s a company called without them anyway? Janice will help ease the questioning with a thorough background description of the company along with the people running it.

Key management personnel of Tuesday Morning Corporation has been serving the company for a couple of years. Mr. Michael J. Marchetti is the interim CEO who has been part of the corporation for more than ten years. Same with the CFO Ms. Stephanie Bowman, that has been employed for almost six years.

Mr. Michael J. Marchetti serves as the president, interim chief executive officer, and chief operating officer of Tuesday Morning Corporation. He joined the company in February 2001 as senior vice president of strategic planning. For a few months, he held the following position as an acting chief financial officer, secretary, and treasurer of the company. Before climbing to his current position, he served several executive positions such chief operating officer, executive vice president and executive vice president of operations. Mr. Marchetti was previously employed as a principal by MarCon Services, Inc. He was also a former chief financial officer of CWT Specialty Stores, Inc.

Ms. Stephanie Bowman is the executive vice president, chief financial officer, secretary and treasurer of the company. She started her employment as the controller in August 2006. She was previously seated as vice president of finance before becoming the CFO. Prior joining on Tuesday Morning Corporation, she was the senior vice president of finance of Summit Global Partners. Ms. Bowman is a certified public accountant and holds a degree in BBA, Accounting from the University of Texas at Arlington.

That was a bit off on my part. Janice then made it clear to me. Interim CEO is a person appointed by a company’s board of directors to assume the role of the chief executive officer during a time of transition or as the result of the sudden departure of the company’s previous CEO. These CEOs are tagged with the “interim” tag due to the fact that they have not officially been given the title of full-time CEO. Like many industry leaders, interim CEOs are often called upon to “steady the ship” in periods of great turmoil.

Who is directing the company? How are the committees structured?

So how about their directors? It’s a good thing Janice was there to help me out. She even gave out bits of information as to how their committees were structured.

The committee is comprised solely of independent directors. The committees are the audit, compensation and nominating and corporate governance committee. Mr. Bruce Quinnell sits as the chairman of the board of the company.

Mr. Quinnell is an independent director and he has been with the company since April 2006. He is the chairperson of the audit and compensation committee. He is a former executive officer of the following companies, namely Walden Book Company, Pace Membership Warehouse and Dollar General Corporation. A member of the board of directors of Bombay, Inc, Cyber Medical Services, Zoom Systems, Inc and chairman of the board of Board of Hot Topic, Inc. Mr. Quinnell is a business consultant with extensive background in the retail industry. He provides leadership and management skills as well as financial, audit and operational expertise to the company.

Steven R. Becker, 45, is the chairperson of the nominating and corporate governance committee. He was appointed as chairman on July 1, 2012.  Mr. Becker is a co-founder and partner of Becker Drapkin Management. He was a former director of Plato Learning and current member of the board of directors of Hot Topic, Ruby Tuesday, Pixelworks. At present, he is an active member of the board of trustees of Dallas Museum of Art. He holds a B.A. degree from Middlebury College and J.D. from the University of Florida.

In non-profit organizations, just as to how Janice had described it, the board of trustees often provides means for members or associates of the organization to elect or appoint individuals that will oversee the function of the organization and ensure that the core values and purposes of the organization are reflected in the operation process. Generally, members of a board of trustees serve terms from one to three years, although various charters may allow persons to be re-elected or re-appointed upon the completion of each term.

It may be selling products or offering services; every business or company has their own means and ways so as the public could enjoy buying and purchasing their goods without further stress on their part and their wallets of course.

How do they make money?

Tuesday Morning offers the finest in closeout product, never seconds or damages. The business uses different strategy formats to be competitive and achieve its financial goal.

Revenues were realized during the transport and sales of the product to the customers. Strategies such as close monitoring and markdown controlling of inventory allow product selling at reasonable rates which contribute well to the company’s earnings. Through “event-based” selling strategy such as “grand openings” and “closeout sales,” major profit is realized. To attract customers, the company promotes major sales events and products through online, radio and television advertising and direct mailings and emails. Items purchased through online by the customers are also one of the sources of company’s income. During the month of October through December, merchandise purchases increased a wherein significant portion of the revenue and net earnings were recognized. Also, earnings of the corporation grew due to the sales per store and increase of transactions in the comparable store sales.

Comparable store sales are the amount of revenue a retail location generated in the most recent accounting period, relative to the amount of revenue it generated in a similar period in the past. Comparable store sales are most commonly used to compare the most recent year’s holiday shopping season, to last year’s, or to compare this week, month, quarter or year’s sales to last week, month, quarter or year’s sales.

How do they fit into the industry they operate in?

Tuesday Morning is a company that most of the industry is not seeing as a major player in the marketplace. So how do they manage to fit into the industry they operate in? That’s what we’re about to find out in Meriam and Janice’s research work.

The company has a significant take on their competition with the supply chain. At present, as a closeout retailer of home furnishing, the company competes against a diverse group of retailers, including department and discount stores, specialty, catalog and e-commerce retailers and mass merchants.  The store also competes in the market with big numbers of retailers who specialize in one or more types of home furnishing and housewares products that TUES sells. Due to competition in the home furnishings retail industries, the company develops a strategic initiative to equally maintain its trend. Business competitors are Bed Bath & Beyond Inc. (BBBY), J. C. Penney Company, Inc. (JCP), Target Corp. (TGT) and Industry – Discount, Variety Stores. No second-hand factory with defects, either damaged products, are sold in the stores that make Tuesday Morning Corporation stand ahead with the competitors such as Samsonite, Cuisinart, Krups, Calphalon, and others.

In the business world, like how our research team has defined it, a retailer is a person that sells goods to the consumer, as opposed to a wholesaler or supplier, who normally sell their goods to another business. The retail transaction is at the end of the supply chain. Manufacturers sell large quantities of products to retailers, and retailers sell small quantities of those products to consumers.

Who are their suppliers and customers?

Tuesday Morning has a dedicated customer base that seeks the best merchandise at outrageously cheap prices.  Wow! That’s good to hear, right? Let’s get to find out more about that; thanks for Meriam and Janice’s detailed article.

They sell various products preferably brand new and no factory defect. Products are lamps, rugs, furniture, kitchen accessories, small electronics, gourmet housewares, linens, luggage, bedroom and bathroom accessories, toys, stationery, silk plants, as well as crystal, collectibles, silver serving pieces, men, women and children’s apparel and accessories  and selected items which are offered at retail shops and website. Normally, closeout products are only available from manufacturers or vendors on a non-recurring basis. The company doesn’t offer long-term contracts with vendors for supply, pricing or access but rather individual purchase decisions, which are often in large quantities.  TUES profits rely on the price of the product they purchase from the suppliers.

Consumer also called as customers, is an individual who buys products or services for personal use and not for manufacture or resale. He/she also makes the decision whether or not to purchase an item at the store and someone who can be influenced by marketing and advertisements. Anytime someone goes to a store and purchases a toy, shirt, beverage, or anything else, they are making that decision as a consumer.

What is their workforce like?

Just like computer parts, once a certain part is missing, the whole machine itself would be useless. Without human intervention to, a computer is a dumb box. Why did I say this? That’s because as of now, we will be reading what’s the workforce like on Tuesday Morning Corporation.

The workforce of the company is a combination of the management team, personnel, and technology.

With today’s competitive market, automated technology process significantly supports the company’s business operations. TUES is believed to have the strong bond with its employees who are not associated with labor groups. It has a total of 1,900 employees on the full-time basis and approximately 7,000 on a part-time basis as of June 30, 2011. Their store management is composed of full-time and part-time employees such as the store, zone and field managers.

Store manager handles the recruitment, training, and supervision of store personnel and stores inventory. In addition, management members held periodic meetings with the regional, field, zone managers and visits selected stores during sales and non-event sales. Key employees and stable management are where the future of the company highly depends on one. Aside from the personnel, the company uses “eTreasures”®, a program that keeps the customers updated with the newest product and offerings. Some labor source to consider manufacturers and vendors wherein they produce and supply items to the stores.

Targeted emails allow information, about your opportunities, event or organization to be sent to a specified target group. It also gives you the ability to segment your email list and target your email messages to their specific audience. Sending targeted emails will minimize unsubscribes and reduce list churn.

How do they treat their employees? What are the pay and working condition like?

So we’ve basically covered from how the company emerged, its development and history. I guess it’s high time to get to know how they treat their employees and what is their pay and working conditions like.

Tuesday Morning Corporation performance is dependent on recruiting, developing, training and retaining quality sales, distribution center and other associates in large numbers, as well as, experienced buying and management personnel.

Executive Officers and Employees

Executive officers and employees follow a code of conducts which established ethical standards in the company. Training is provided to store management personnel upon hiring or during the promotion. The compensation package for the executive officers is the following: base salary, equity-based compensation, annual cash payments perquisites and other personal benefits. Annual cash payments are applicable to executive officers with a certain employment agreement. Stock-based compensation is enjoyed by directors, officers, and key employee however in 2008; it was terminated by the board of directors. For potential liabilities with workers, the company provides a mix of insurance and self-insurance plans. Full-time and eligible employees avail the 401(k) profit sharing plan wherein the certain percentage is deducted from their salary. The company also offers death benefit plan to full-time employees and executive officers.

Death benefit or “survivor benefit” is the amount of a life insurance policy or pension that is payable to the beneficiary when the annuitant passes away. Also, it may be a percentage of the annuitant’s pension. Alternatively, the benefit may be a large lump-sum payment from a life insurance policy. The size and structure of the payment are determined by the type of policy the annuitant held at the time of death.

Summary Compensation Table

The table presents the compensation of executive officers and directors for fiscal years 2009, 2010 and 2011.

tues 1

tues 2

Gossips

Now that we’ve pretty much covered every aspect of the company, let’s get it on with the summary that’s been laid for us by our research team.

According to Reuters news in January 2012 at 08:00 am, Tuesday Morning Corp. revised its guidance for fiscal 2012 and expects net sales to be in the range of $815-$820 million.

Another news from Yahoo finance dated Tuesday, July 10, 2012, there was an increase of 0.8 percent. Comparable store sales for the quarter ended on June 30, 2012, with an increased rate of 0.2 percent. For the fiscal year ended June 30, 2012, and net sales were $812.8 million compared to $821.1 million for fiscal 2011.

On Wednesday, June 6, 2012, Reuters announced Management Changes and Director Resignation of Tuesday Morning Corp. This relieved Kathleen Mason of her duties as President and CEO and commenced a search for a new chief executive.

June 7, 2012, Dallas Business Journal has written, Kathleen Mason Firing surprise. She said,   “The Company has been profitable for 12 consecutive years,”. “We have grown to 850 stores with 10,000 employees and 11 million loyal customers.”

Revision of guidance of Tuesday Morning Corporation increased Net sales this 2012; CEO Michael Marchetti had positive views to achieve an increase in total sales for the quarter. Management changes made Kathleen Mason relieved from her duties, which came as a surprise to her and felt disappointed.

CITATIONS

Who started the company and why?

http://en.wikipedia.org/wiki/Tuesday_Morning

/http://www.fundinguniverse.com/company-histories/tuesday-morning-corporation-history/

http://www.fundinguniverse.com/company-histories/tuesday-morning-corporation-history/

What is the background of the company? its History and development?

http://www.fundinguniverse.com/company-histories/tuesday-morning-corporation-history/

http://en.wikipedia.org/wiki/Tuesday_Morning

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=TUES.O

http://www.sec.gov/Archives/edgar/data/878726/000110465911024289/a11-9588_110q.htm

What is the nature of the business?

http://www.fundinguniverse.com/company-histories/tuesday-morning-corporation-history/ http://www.sec.gov/Archives/edgar/data/878726/000110465911024289/a11-9588_110q.htm

http://en.wikipedia.org/wiki/Tuesday_Morning

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=TUES.O

Who is running the company and their Background?

http://insiders.morningstar.com/trading/executive-profile.action?t=TUES&PersonId=PS000015PH&flag=Executive&insider=Michael_Marchetti&region=USA&culture=en-us&ProductCode=com

http://investing.businessweek.com/research/stocks/people/person.asp?personId=752929&ticker=TUES:US

http://www.sec.gov/Archives/edgar/data/878726/000104746911008263/a2205707zdef14a.htm p19

http://www.sec.gov/Archives/edgar/data/878726/000104746911008263/a2205707zdef14a.htm p1

http://www.reuters.com/finance/stocks/officerProfile?symbol=TUES.O&officerId=1147173

http://www.linkedin.com/pub/stephanie-bowman/13/604/806

http://www.macroaxis.com/invest/manager/TUES–Stephanie_Bowman.

Who is directing the company  How are the committees structured? 

http://ir.tuesdaymorning.com/committees.cfm

http://www.sec.gov/Archives/edgar/data/878726/000104746911008263/a2205707zdef14a.htm p6

http://ir.tuesdaymorning.com/committees.cfm

http://insiders.morningstar.com/trading/executive-profile.action?t=TUES&PersonId=PS00001IV7&flag=Director&insider=Steven_Becker&region=USA&culture=en-us&ProductCode=com

How do they make money?

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm p

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1104659-12-30571 p11

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1047469-11-7754 p4

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1047469-11-7754 p11

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1047469-11-7754 p10

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1047469-11-7754 p24

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1047469-11-7754 p30

How do they fit into the industry they operate in?

http://www.sec.gov/Archives/edgar/data/878726/000110465911024289/a11-9588_110q.htm p11

http://www.sec.gov/Archives/edgar/data/878726/000110465911024289/a11-9588_110q.htm

http://finance.yahoo.com/q/co?s=TUES+Competitors

http://www.wikinvest.com/stock/Tuesday_Morning_(TUES)

Who are their suppliers and customers?

http://www.google.com/finance?q=NASDAQ:TUES

http://www.sec.gov/Archives/edgar/data/878726/000110465911024289/a11-9588_110q.htm

http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=TUES.O

http://www.wikinvest.com/stock/Tuesday_Morning_(TUES)

What is their workforce like?

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm p11

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm p6

How do they treat their employees; what are the pay and working condition like?

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm p39

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm p6

http://www.sec.gov/Archives/edgar/data/878726/000104746911008263/a2205707zdef14a.htm P22

http://ir.tuesdaymorning.com/secfiling.cfm?filingID=1104659-12-30571

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm pF-8

http://www.sec.gov/Archives/edgar/data/878726/000104746911007754/a2205433z10-k.htm pF-20

http://www.sec.gov/Archives/edgar/data/878726/000104746911008263/a2205707zdef14a.htm P25

Gossips

http://www.reuters.com/finance/stocks/TUES.OQ/key-developments/article/2461788

http://finance.yahoo.com/news/tuesday-morning-corporation-announces-fourth-120000047.html   

http://www.reuters.com/finance/stocks/TUES.OQ/key-developments/article/2461788

http://www.bizjournals.com/dallas/news/2012/06/07/firing-surprised-tuesday-mornings.html?ana=yfcpc

Researched and Written by Meriam and Janice
Grammar checked by Cris

stamps.com-inc-stmp

Stamps.com (STMP) for Stamps Company Research

July 20th, 2012 Posted by Company Research Report No Comment yet

Stamps.com picture: This is a card my wife wrote to my nephew a few years back. Got stamps? (Peter)

Postage stamps are by far one of the things that make any letter or mail sent more valuable. Ever wondered what’s it like without Stamps? It’s like your postages are incomplete without them. They are essential when sending mail or else people wouldn’t receive it. Of course, in these times, where everything is going online and digital, stamps are also going along with it. This explains the birth of Stamps.com

Who started Stamps.com Inc. company and why?

Stamps.com (STMP) is the brainchild of three UCLA MBA graduates – Jim McDermott, Jeff Green and Ari Engelberg with the help of Mohan Ananda. It was founded in 1996 and was launched in 1998. The company has a partnership with America Online, IBM, Microsoft, office depot, Quicken.com, and 3M.

Story behind

The story goes one night when Jim McDermott, during his job search between his first and second year of business school, ran out of stamps. Then he asked why doesn’t he just buy stamps online? So he introduced the idea to his co-founders Ari and Jeff then wrote the business plan for UCLA competition.

Jim McDermott is a student of UCLA or also known as the University of California, Los Angeles.  It is a public research university in Westwood, a neighborhood of Los Angeles, California, USA. The university is organized into five undergraduate colleges, seven professional schools, and five professional Health Science schools.

What is the background of the company? Its history and development?

The company’s background and how they developed from their humble beginnings.

  • STMP was incorporated in January 1998 as Stampmaster Inc.
  • It changed its name to Stamps.com in December 1998
  • In 1998, integrated with Microsoft Word
  • In 1998, USPS Approved Beta for Internet Postage
  • STMP was the first ever USPS-licensed vendor to offer PC Postage® in a software-only business model in 1999
  • In 1999, Stamps.com included its public offering for 5 million shares – NASDAQ Symbol STMP
  • During 1999, the company announced a marketing alliance with IBM
  • The same year, launched nationwide with over 100,000 pre-registered customers
  • Also, Stamps.com passed the 10,000 customer mark
  • Acquired iShip.com in 1999
  • In 1999,Stamps.com announced a Partnership with 3M
  • In 1999, USPS announced approval for Internet-based postage
  • Stamps.com received investment funding from Intel Corporation in 1999
  • Stamps.com announced marketing alliance with Avery Dennison in 1999

 More on Company events

  • Competes with E-Stamp Exits Internet Postage Business in 2000
  • Stamps.com tested PC postage program with Dutch Postal Service in 2000
  • Stamps.com & Intuit Partner, Internet Postage Integrated in New Quicken 2001 Products
  • In 2000, the firm was added to the Russell 3000 and Russell 2000 Indices
  • Forbes.com Selected Stamps.com as “Most Promising” in Best of the Web Guide in 2000
  • Stamps.com announced Alliance with Hewlett–Packard in 2000
  • Introduced My Internet Postage to office supply retail stores in 2000
  • Stamps.com had 87,360 licensed customers after 10 weeks in 2000
  • Partnered with Peachtree Accounting Software in 2001
  • Stamps.com named Ken McBride as president and CEO in 2001
  • UPS acquired iShip Assets from Stamps.com in 2001
  • Acquired E–Stamp Name, Patents in 2001

The launching of PC Postage Software

  • Stamps.com launched Version 3.0 of PC Postage Software in 2002
  • Sold over 330,000 NetStamps Label Sheets in first 6 Weeks in 2002
  • USPS approved Use of Stamps.com’s NetStamps in 2002
  • Stamps.com launched Version 2.4 of PC Postage Software in 2002
  • In 2002, Stamps.com printed 100,000,000 Internet Postage Stamp
  • Microsoft released a beta version of its office productivity suite of programs, which included an electronic postage capacity through Stamps.com in the fall of 2003

So what exactly is the nature of their business? The company’s name is self–explanatory but I guess there are things that we might not know about them yet.

What is the nature of Stamps.com Inc. business?

Stamps.com is a company that provides Internet-based mailing, postage solution and shipping services in Los Angeles, California. It renders multiple PC Postage plans with a variety of features and capabilities. Its software utilizes e-commerce platforms to automate order by processing, managing, and shipping orders from any e-commerce source through a single interface without manual data entry.

PC postage service is associated with address verification technology verifying each destination for mail sent. PC postage business refers to Stamps’ PC Postage Service, Mailing & Shipping Supplies Store and Branded Insurance offering.

Formerly known as Stampsmaster Inc., the company has a system that let users download free windows software services that acknowledge you to print official US Postal service postage directly from your PC and printer were no special hardware is needed. The Print stamps, print shipping labels, print directly on envelopes and postage that you print will automatically deduct from your stamps.com account.

The United States Postal Service or USPS, also known as the Post Office and U.S. Mail is an independent agency which is responsible for providing postal service in the United States.

Who is running Stamps.com Inc. company and their background?

Mr. Kenneth McBride is the president and CEO of Stamps.com. As the president and CEO, he is responsible for the overall management and operations of the company. Previously, he served as the CFO and senior director of finance. He was a research analyst at Salomon Smith Barney and has experience working in the semiconductor industry as an engineer and manager. McBride graduated with a BS degree and holds MBA in electrical engineer from Stanford University. At the age of 44, he is the current chairman of the board of STMP.

Mr. Kyle Huebner is the CFO and co-president of Stamps. He held several positions in the company before climbing to his current status.  Previously, he worked with Baine & Company as a management consultant. He was a research analyst at J.P Morgan for 3 years and holds a B.A. Mathematics degree from Dartmouth College and MBA from Harvard University.

Research Analyst is a person who prepares investigative reports on equity securities. The research conducted by the research analyst is in an effort to inquire, examine, find or revise facts, principles, and theories. The report that this analyst prepares could include an analysis of equity securities of companies or industries.

A director is one responsible for the success of the business and thus it requires hard work from the people behind it.

Who is directing the company? How are the committees structured?

Stamps.com consists of three committees namely: audit, compensation, and nominating committee. All the members of the committee are independent directors except for the chairman, of the board in the person of Mr. Kenneth McBride.

Mr. G. Bradford Jones is a non-executive director and chairman of audit committee since 1998. He serves directorial positions in several privately held companies. He holds a B.A. Chemistry degree, M.A. Physics from Harvard University and J.D/MBA from Stanford University. Mr. Jones shares insights into the company with regards to business strategy, accounting, technology, and financial issues and share repurchase strategies.

Mr. Lloyd Miller is a non-executive director and chairman of the compensation committee since 1992. He served as the corporate board of director in a number of public traded companies. He holds a B.A. degree from Brown University. Mr. Miller is an investor with extensive experience and knowledge in business management, investment management, accounting, finance, and capital markets.

The management

Just a little background information for you guys. The Nominating Committee is responsible for the following: include (i) screening and recommending to our Board qualified candidates for election or appointment to our Board; (ii) recommending the number of members that shall serve on our Board; (iii) evaluating and reviewing the independence of existing and prospective directors; and (iv) reviewing and reporting on additional corporate governance matters as directed by our Board. The committee manages the process for evaluating current Board members at the time they are considered for re-nomination. After considering the appropriate skills and characteristics required by the Board; the current makeup, the results of the evaluations, and the wishes of the Board members to be re-nominated; the Nominating Committee recommends to the Board whether the individuals should be re-nominated.

Every employee has their own means of making money. My mom earns her salary through a very exhausting day at work. As for Stamps, how exactly do they make money?

How do they make money?

Stamps.com success and profit growth indicated the stability and competitiveness of the company in the market.

Revenue generates from the following sources: service and transaction fees, product revenue, insurance, photo stamps, and advertising revenue. The company receives service revenue based on monthly convenience fees. With Amazon.com as their business partner, sales are recognized from the customer’s payment for postages through the market’s payment accounts. Profit of the company also comes from the licensing or use of software and intellectual property, the commission in advertising and sale of products from customers and third-party vendors. Other incomes were also derived from branded insurances charged to customer’s mails or packages.

Amazon.com, Inc. is an American multinational electronic commerce company with headquarters in Seattle and Washington, United States. It is the world’s largest online retailer. The company also produces consumer electronics – notably the Amazon Kindle e-book reader- and is a major provider of cloud computing services.

How do they fit into the industry they operate in?

Existing direct competitors of Stamps.com are Endicia.com or Dymo and Pitney Bowes Inc. The company also competes with the traditional method of accessing US postage like postage stamps, USPS retail and online services, Click N-Chip and those on eBay/Paypal. They also compete with the alternative to the US postal services such as FedEx and UPS. Stamps believe numbers of businesses patronize them which represent 1.5 million separate locations as well as approximately 24 million non-income generating home offices.

For a lighter note, eBay Inc. is an American multinational internet consumer-to-consumer corporation that manages eBay.com. It is an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide.

Online job

Well, the online job is getting way with each and everyone’s knowledge nowadays. And of course, when we speak of the job; let say it is the bread; butter is always next. And that is the payment. So for additional information, there is this called PayPal. What is it? PayPal is a global e-commerce business that allows payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders. PayPal is a subsidiary of eBay Inc.

Who are their suppliers and customers?

The company customers are individuals, small businesses, home offices, medium-size businesses and enterprises. The company supplies PC Postage, mailing and shipping, branded insurance, and photo stamps. Due to limited basis, they admit third parties to render products and promotions to their customer base. Stamps provide USPS special services such as delivery confirmation TM, signature confirmation TM, registered mail, certified mail, insured mail, return receipt, collect on delivery and restricted delivery to their mail pieces.

Online PC Postage

By the way, online PC Postage methods rely upon application software on the customer’s computer contacting a postal security device at the office of the postal service. Postage can now be printed in the form of an electronic stamp or e-stamp from a personal computer using a system called Information Based Indicia.

A company that treats their employees well is served well. At least that’s what I know. Now that we’ve covered pretty much what lies behind Stamps, I guess it’s high time that we tackle how they treat their employees and what are their pay and working conditions like.

How do they treat their employees? What are the pay and working condition like?

Stamps compensation was designed to attract and retain executives and employees who have the skills and experience necessary to achieve corporate goals.

Non-executive member of the board receives an annual retainer’s fee and an additional fee on other services rendered. A new member of the board has an option to purchase shares of common stock which happens upon their initial election or appointment. Currently, executive receives the following compensations: base salary, incentive pay, and equity participation. The company provides post-termination compensation arrangements to some executive members upon termination without cause or a change in control.

Employees benefits

Employees of STMP enjoy the following benefits: medical and dental insurance, 401(k), life insurance, charitable gift matching, and employee stock purchase plan.  Employee Stock Purchase Plan (ESPP) is awarded to eligible employees wherein they are allowed to purchase shares of common stock at semi-annual intervals which are deducted in their accumulated payroll.

About retainers fee

As far as our dear researchers, Janice and Karla know, a retainer fee is a fixed amount of money that a client agrees to pay, in advance, to secure the services of a consultant or freelancer. The fee is typically not associated with the success of a project or based on achieving particular results. A retainer is often paid in a single, lump sum or an ongoing basis (typically monthly or quarterly).

Summary Compensation Table

The following table summarizes all compensation paid to our Executive Officers and Directors in each of the three most recently completed fiscal years: 2009, 2010 and 2011.

Gossips

On May 6, 2004, Stamps.com, the company believed that it was approximately 12 percent below the 50 percent level that triggered impairment of its NOL asset.

According to investor.stamps.com on June 6, 2012, Stamps.com’s customer service team named finalist in2012 American Business award. “We’re very much honored to be a 2012 ABA Customer Service Team of the Year Finalist,” said Chairman and CEO Ken McBride. “The Stamps.com High Volume Shipping Customer Service Team is the result of a company-wide commitment to investing in customer support to ensure superior service. Agents are expertly trained to understand and resolve all shipping issues so that we fulfill our commitment.”

Further,

On May 23, 2012, Stamps.com co-president and chief financial officer Kyle Huebner named TechAmerica’s overall financial star of the year. “Kyle has been a key part of the management team and overall company effort that drove our revenue and profitability to record levels in 2011,” said Stamps.com Chairman and Chief Executive Officer Ken McBride. “He’s a dedicated professional who has made countless lasting contributions to our success and we congratulate him on receiving this significant honor from TechAmerica.”

According to news.investors.com on June 1, 2012, Stocks Open Sharply Lower After Weak Jobs Report. Stamps.com (STMP) posted a 5 percent loss, diving to retest its March lows.

Furthermore,

Stamps.com have proven the good quality of their customer team services after being named a finalist in the “Customer Service Team of the Year” category in the 2012 American Business Awards, a well-known award-giving body. Due to this, the reputation and image of the company will be strengthened. Another plus factor for STMP is the recent involvement of their co-president and CFO Kyle Huebner as TechAmerica’s Overall Financial Star of the Year. It is evident that their CFO has been effective in doing his role and that the award is in line with his field. He is qualified and well suited for the position. However, a recent 5 percent lost with regards to their stocks could greatly affect their operations.

Researched and Written by Karla, Meriam, Janice, Florence

Edited by Cris

stamps.com-inc-stmp

Stamps.com for Stamps Guide for Company Research

July 20th, 2012 Posted by Company Research Report No Comment yet

Picture: This is a card my wife wrote to my nephew a few years back. Got stamps? (Peter)

Postage stamps are by far one of the things that make any letter or mail sent more valuable. Ever wondered what’s it like without Stamps? It’s like your postages are incomplete without them. They are essential when sending mail or else people wouldn’t receive it. Of course, in these times, where everything is going online and digital, stamps are also going along with it. This explains the birth of Stamps.com

Who started Stamps.com Inc. company and why?

Stamps.com (STMP) is the brainchild of three UCLA MBA graduates – Jim McDermott, Jeff Green and Ari Engelberg with the help of Mohan Ananda. It was founded in 1996 and was launched in 1998. The company has a partnership with America Online, IBM, Microsoft, office depot, Quicken.com, and 3M.

The story goes one night when Jim McDermott, during his job search between his first and second year of business school, ran out of stamps. Then he asked why doesn’t he just buy stamps online? So he introduced the idea to his co-founders Ari and Jeff then wrote the business plan for UCLA competition.

Jim McDermott is a student of UCLA or also known as the University of California, Los Angeles.  It is a public research university in Westwood, a neighborhood of Los Angeles, California, USA. The university is organized into five undergraduate colleges, seven professional schools, and five professional Health Science schools.

What is the background of the company? Its history and development?

The company’s background and how they developed from their humble beginnings.

  • STMP was incorporated in January 1998 as Stampmaster Inc.
  • It changed its name to Stamps.com in December 1998
  • In 1998, integrated with Microsoft Word
  • In 1998, USPS Approved Beta for Internet Postage
  • STMP was the first ever USPS-licensed vendor to offer PC Postage® in a software-only business model in 1999
  • In 1999, Stamps.com included its public offering for 5 million shares – NASDAQ Symbol STMP
  • In 1999, the company announced marketing alliance with IBM
  • In 1999, launched nationwide with over 100,000 pre-registered customers
  • In 1999, Stamps.com passed the 10,000 customer mark
  • Acquired iShip.com in 1999
  • In 1999,Stamps.com announced a Partnership with 3M
  • In 1999, USPS announced approval for Internet-based postage
  • Stamps.com received investment funding from Intel Corporation in 1999
  • Stamps.com announced marketing alliance with Avery Dennison in 1999
  • Competes with E-Stamp Exits Internet Postage Business in 2000
  • Stamps.com tested PC postage program with Dutch Postal Service in 2000
  • Stamps.com & Intuit Partner, Internet Postage Integrated in New Quicken 2001 Products
  • In 2000, the firm was added to the Russell 3000 and Russell 2000 Indices
  • Forbes.com Selected Stamps.com as “Most Promising” in Best of the Web Guide in 2000
  • Stamps.com announced Alliance with Hewlett–Packard in 2000
  • Introduced My Internet Postage to office supply retail stores in 2000
  • Stamps.com had 87,360 licensed customers after 10 weeks in 2000
  • Partnered with Peachtree Accounting Software in 2001
  • Stamps.com named Ken McBride as president and CEO in 2001
  • UPS acquired iShip Assets from Stamps.com in 2001
  • Acquired E–Stamp Name, Patents in 2001
  • Stamps.com launched Version 3.0 of PC Postage Software in 2002
  • Sold over 330,000 NetStamps Label Sheets in first 6 Weeks in 2002
  • USPS approved Use of Stamps.com’s NetStamps in 2002
  • Stamps.com launched Version 2.4 of PC Postage Software in 2002
  • In 2002, Stamps.com printed 100,000,000 Internet Postage Stamp
  • Microsoft released a beta version of its office productivity suite of programs, which included an electronic postage capacity through Stamps.com in the fall of 2003

So what exactly is the nature of their business? The company’s name is self–explanatory but I guess there are things that we might not know about them yet.

What is the nature of Stamps.com Inc. business?

Stamps.com is a company that provides Internet-based mailing, postage solution and shipping services in Los Angeles, California. It renders multiple PC Postage plans with a variety of features and capabilities. It’s software utilizes e-commerce platforms to automate order by processing, managing, and shipping orders from any e-commerce source through a single interface without manual data entry.

PC postage service is associated with address verification technology verifying each destination for mail sent. PC postage business refers to Stamps’ PC Postage Service, Mailing & Shipping Supplies Store and Branded Insurance offering.

Formerly known as Stampsmaster Inc., the company has a system that let users download free windows software services that acknowledge you to print official US Postal service postage directly from your PC and printer were no special hardware is needed. The Print stamps, print shipping labels, print directly on envelopes and postage that you print will automatically deduct from your stamps.com account.

The United States Postal Service or USPS, also known as the Post Office and U.S. Mail is an independent agency which is responsible for providing postal service in the United States.

Who is running Stamps.com Inc. company and their background?

Mr. Kenneth McBride is the president and CEO of Stamps.com. As the president and CEO, he is responsible for the overall management and operations of the company. Previously, he served as the CFO and senior director of finance. He was a research analyst at Salomon Smith Barney. He experienced working in the semiconductor industry as engineer and manager. He graduated with a BS degree and holds MBA in electrical engineer from Stanford University. At the age of 44, he is the current chairman of the board of STMP.

Mr. Kyle Huebner is the CFO and co-president of Stamps. He held several positions in the company before climbing to his current status.  Previously, he worked with Baine & Company as a management consultant. He was a research analyst at J.P Morgan for 3 years and holds a B.A. Mathematics degree from Dartmouth College and MBA from Harvard University.

Research Analyst is a person who prepares investigative reports on equity securities. The research conducted by the research analyst is in an effort to inquire, examine, find or revise facts, principles, and theories. The report that this analyst prepares could include an analysis of equity securities of companies or industries.

A director is one responsible for the success of the business and thus it requires hard work from the people behind it.

Who is directing the company? How are the committees structured?

Stamps.com consists of three committees namely: audit, compensation, and nominating committee. All the members of the committee are independent directors except for the chairman, of the board in the person of Mr. Kenneth McBride.

Mr. G. Bradford Jones is a non-executive director and chairman of audit committee since 1998. He serves directorial positions in several privately held companies. He holds a B.A. Chemistry degree, M.A. Physics from Harvard University and J.D/MBA from Stanford University. Mr. Jones share insights to the company with regards to business strategy, accounting, technology and financial issues and share repurchase strategies.

Mr. Lloyd Miller is a non-executive director and chairman of compensation committee since 1992. He served as the corporate board of director in a number of public traded companies. He holds a B.A. degree from Brown University. Mr. Miller is an investor with extensive experience and knowledge in business management, investment management, accounting, finance, and capital markets.

Just a little background information for you guys. The Nominating Committee is responsible for the following: include (i) screening and recommending to our Board qualified candidates for election or appointment to our Board; (ii) recommending the number of members that shall serve on our Board; (iii) evaluating and reviewing the independence of existing and prospective directors; and (iv) reviewing and reporting on additional corporate governance matters as directed by our Board. The committee manages the process for evaluating current Board members at the time they are considered for re-nomination. After considering the appropriate skills and characteristics required by the Board; the current makeup, the results of the evaluations, and the wishes of the Board members to be re-nominated; the Nominating Committee recommends to the Board whether the individuals should be re-nominated.

Every employee has their own means of making money. My mom earns her salary through a very exhausting day at work. As for Stamps, how exactly do they make money?

How do they make money?

Stamps.com success and profit growth indicated the stability and competitiveness of the company in the market.

Revenue generates from the following sources: service and transaction fees, product revenue, insurance, photo stamps and advertising revenue. The company receives service revenue based on monthly convenience fees. With Amazon.com as their business partner, sales are recognize from the customer’s payment for postages through the market’s payment accounts. Profit of the company also comes from the licensing or use of software and intellectual property, commission in advertising and sale of products from customers and third party vendors. Other incomes were also derived from branded insurances charged to customer’s mails or packages.

Amazon.com, Inc. is an American multinational electronic commerce company with headquarters in Seattle and Washington, United States. It is the world’s largest online retailer. The company also produces consumer electronics – notably the Amazon Kindle e-book reader- and is a major provider of cloud computing services.

How do they fit into the industry they operate in?

Existing direct competitors of Stamps.com are Endicia.com or Dymo and Pitney Bowes Inc. The company also competes with the traditional method of accessing US postage like postage stamps, USPS retail and online services, Click N-Chip and those on eBay/Paypal. They also compete with the alternative to the US postal services such as FedEx and UPS. Stamps believe numbers of businesses patronize them which represent 1.5 million separate locations as well as approximately 24 million non-income generating home offices.

For a lighter note, eBay Inc. is an American multinational internet consumer-to-consumer corporation that manages eBay.com. It is an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide.

Well, online job is getting way with each and everyone’s knowledge nowadays. And of course, when we speak of job; let say it is the bread; butter is always next. And that is the payment. So for additional information, there is this called PayPal. What is it? PayPal is a global e-commerce business that allows payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders. PayPal is a subsidiary of eBay Inc.

Who are their suppliers and customers?

The company customers are individuals, small businesses, home offices, medium- size businesses and enterprises. The company supplies PC Postage, mailing and shipping, branded insurance, and photo stamps. Due to limited basis, they admit third parties to render products and promotions to their customer base. Stamps provides USPS special services such as delivery confirmation TM, signature confirmation TM, registered mail, certified mail, insured mail, return receipt, collect on delivery and restricted delivery to their mail pieces.

By the way, online PC Postage methods rely upon application software on the customer’s computer contacting a postal security device at the office of the postal service. Postage can now be printed in the form of an electronic stamp or e-stamp from a personal computer using a system called Information Based Indicia.

A company that treats their employees well is served well. At least that’s what I know. Now that we’ve covered pretty much what lies behind Stamps, I guess it’s high time that we tackle how they treat their employees and what are their pay and working conditions like.

How do they treat their employees? What is the pay and working condition like?

Stamps compensation was designed to attract and retain executives and employees who have the skills and experience necessary to achieve the corporate goals.

Non-executive member of the board receives an annual retainer’s fee and an additional fee on other services rendered. A new member of the board has an option to purchase shares of common stock which happens upon their initial election or appointment. Currently, the executive receives the following compensations: base salary, incentive pay, and equity participation. The company provides post-termination compensation arrangements to some executive members upon termination without cause or a change in control. Employees of STMP enjoy the following benefits: medical and dental insurance, 401(k), life insurance, charitable gift matching, and employee stock purchase plan.  Employee Stock Purchase Plan (ESPP) is awarded to eligible employees wherein they are allowed to purchase shares of common stock at semi-annual intervals which are deducted in their accumulated payroll.

As far as our dear researchers, Janice and Karla know, a retainer fee is a fixed amount of money that a client agrees to pay, in advance, to secure the services of a consultant or freelancer. The fee is typically not associated with the success of a project or based on achieving particular results. A retainer is often paid in a single, lump sum or an ongoing basis (typically monthly or quarterly).

Summary Compensation Table

The following table summarizes all compensation paid to our Executive Officers and Directors in each of the three most recently completed fiscal years: 2009, 2010 and 2011.

Gossips

On May 6, 2004, Stamps.com, the company believed that it was approximately 12 percent below the 50 percent level that triggered impairment of its NOL asset.

According to investor.stamps.com on June 6, 2012, Stamps.com’s customer service team named finalist in2012 American Business award. “We’re very much honored to be a 2012 ABA Customer Service Team of the Year Finalist,” said Chairman and CEO Ken McBride. “The Stamps.com High Volume Shipping Customer Service Team is the result of a company-wide commitment to investing in customer support to ensure superior service. Agents are expertly trained to understand and resolve all shipping issues so that we fulfill our commitment.”

On May 23, 2012, Stamps.com co-president and chief financial officer Kyle Huebner named TechAmerica’s overall financial star of the year. “Kyle has been a key part of the management team and overall company effort that drove our revenue and profitability to record levels in 2011,” said Stamps.com Chairman and Chief Executive Officer Ken McBride. “He’s a dedicated professional who has made countless lasting contributions to our success and we congratulate him on receiving this significant honor from TechAmerica.”

However from news.investors.com on June 1, 2012, Stocks Open Sharply Lower After Weak Jobs Report. Stamps.com (STMP) posted a 5 percent loss, diving to retest its March lows.

Stamps.com have proven the good quality of their customer team services after being named finalist in the “Customer Service Team of the Year” category in the 2012 American Business Awards, which is a well-known award giving body. With this, the reputation and image of the company will be strengthened. Another plus factor for STMP is the recent involvement of their co-president and CFO Kyle Huebner as TechAmerica’s Overall Financial Star of the Year. It is evident that their CFO has been effective in doing his role and that the award is in line with his field. That means he is qualified and well suited for the position. However, a recent 5 percent lost with regards to their stocks could greatly affect their operations.

Researched and Written by Karla, Meriam, Janice, Florence

Edited by Cris

cherokee-inc-chke

Cherokee Inc (CHKE) Shows Sustainable Net Margin

July 6th, 2012 Posted by Company Research Report No Comment yet

Cherokee Inc Balance Sheet

Cherokee Financial Liquidity and Leverage

Cherokee Inc. cash position starts with higher working capital and current ratio for the first four years (2007-2011). The company has greater ability to pay its short-term debts or obligations using short-term cash. It was decreasing yearly and this big leap in 2011 leaves the company with no sufficient cash to pay current obligations wherein it shows -$6.56.

Working capital (current assets less current liabilities); the current ratio (current assets over current liabilities); and quick ratio(total asset divided by total liabilities) computations were used to check the company’s ability to meet current obligations to pay bills, meet payroll and make loan payments.

  • The working capital of in dollars was 27.66, 18.21, 12.61, 10.36, and 2.79 respectively with an average of 14.33. This tells us that their working capital was declining and serves as the basis of their operating cycle.
  • Their current ratio was 2.06:1, 2.37:1, 2.40:1, 2.28:1 and 1.17:1 respectively. Average of 2.06:1.
    It means the company has $2.06, 2.37, 2.40, 2.28 and 1.17 of current assets for every $1 of current liabilities.
  • Their cash & cash equivalent minus current liabilities in dollars was 18.40, 8.70, 4.65, 1.31 and -6.56 respectively. Shows that it was decreasing to the point in 2011 cash; a negative amount was not sufficient to pay for their current obligations.

Cherokee’s working capital against total assets and total revenue was also declining. The year 2011 marked the effect in their declining operations, thus, management was inefficient in handling their cash and other resources. In checking the composition of the company’s working capital against the total asset and total revenue from 2007 to 2011, computation as well as computed working capital per share was stated below:

  • The networking capital ratio was 0.44, 0.43, 0.40, 0.38, and 0.10. This shows the decreasing trend in the working capital against total assets.
  • Working capital per dollar revenue was 0.36, 0.44, 0.35, 0.32 and 0.09. This shows a decreasing trend in the working capital against total revenue.
  • While their working capital per share in dollars was 3.13, 2.04, 1.43, 1.18 and 0.33 respectively. Average of $1.62. This represents that 2007 and 2008 were good, and 2009 to 2011 was below the yearly average of $1.62 per share.

Cherokee Cash Efficiency

Cherokee Inc’s accounts receivable turnover, it began with 10.57 times in 2007, a good start with only 34.52 days. But with the following years, it falls to only 4.64 times thus increasing the number of days receivable. If terms are net 30 days net, receivable balance equals to more than 40 days sale would indicate slow collections. For the longer accounts carried, the smaller will be the percentage return realized on invested capital. Hence, their days payable started also with 4.4 days in 2007 ends up 22.2 days in 2011. This means it takes longer to pay their payables to their debtors. Their cash conversion cycle takes longer too, from one month to almost two months, as well as their accounts receivables to be converted to cash to pay accounts payable.

  • This will provide a rough scale on how well receivables was turning into cash, so, accounts receivable turnover was 10.57, 5.65, 6.61, 4.69 and 4.64 from 2007 to 2011 respectively. Average of 6.43 times. And the average collection period was 34.52, 64.5, 55.2,77.8, and 78.7 days. Average of 62.14 days. This measure the movement of accounts receivables or the average time it takes to collect an account and depends on the credit terms the company is offering to its customers.
  • Days payable was 4.4, 7.2, 9.6, 10.9, and 22.2. Average of 10.86 days. This tells us that the company takes 4.4, 7.2, 9.6, 10.9 and 22.2 with an average of 10.86 days to pay its debtors.
  • Cash conversion cycle was 30.1, 57.4, 45.7, 66.9, and 56.6 days respectively. Average of 51.34 days. This was computed as days receivable fewer days payable and this means the length of time for cash to complete the operating cycle.

Total utilization of asset tells us that asset turnover was 1.23, 0.97 times, 1.14 times, 1.20 times and 1.13 times a year. Furthermore, the up and down trend means the company was not generating a favorable revenue against the utilization of total assets.

Debt ratio shows how the company was levered. In 2009, it fell down to 28 percent, then increased by 59 percent in 2011 with the average of 38 percent of the total assets being supplied by creditors or short-term liabilities; and that they were not relying on external sources for financing their assets. Debt to worth ratio is used in determining the debt ceiling but vary from company to company and industry to industry. Only in 2011 and 2007, they showed a higher ratio that is more than the yearly average of 69 percent because it fell down in 2008-2009.

Data below show the more detailed values:

  • Debt ratio was 0.42, 0.31, 0.28, 0.30 and 0.59 from 2007 to 2011 respectively with an average of 0.38 or 38 percent.
  • Debt to worth ratio was 0.72, 0.45, 0.40, 0.43, and 1.46 from 2007 to 2011 respectively. Average of 69 percent.

To check the ability of the company in paying short-term liabilities, solvency ratio was 1.37, 1.34, 1.75, 1.73 and 0.57 from 2007 to 2011 respectively with an average of 135.2 percent. In the first four years, the company illustrates that they were solvent but in 2011 it declined rapidly to 57 percent which was very low. If Cherokee’s operation will not increase, revenues, as well as its net income for the coming year, will be in trouble financially because they will not be capable of meeting its obligation in the long run.

This show that management operating performance in 2007 return was 56 percent in utilizing their total assets, in 2008 due to economic crises returns decrease to 38%, in 2009 and 2010 it increased to 45 percent and 46 percent respectively. But in 2011 it decreases down to 28% for net income is only $7.72 from $12.57 in 2010. It is mainly due to decrease revenues. To verify their general earning power, their return of assets in percentage was 56, 38, 45, 46 and 28 from 2007 to 2011 respectively. This shows the rate of return on their total assets, that for every $1 of money invested in capital they generate in dollars 0.56, 0.38, 0.45, 0.46, and 0.28 of revenue from 2007 to 2011 respectively.

In totality, the relationship of ownership of the company’s total assets was 38 percent claimed by creditors and 62 percent claimed by shareholders. The company did not have long-term liabilities or debts; they are financed with current capital. The data below further interpret this:

  • Total liabilities to total assets in percentage was 42, 31, 28, 30 and 59 claims to their total assets. Average of 38 percent.
  • Stockholders’ equity to total assets in percentage was 58, 69, 72, 70 and 41 claim to their total assets. Average of 62 percent.

Return on equity indicates the profitability of the company to their stockholders. The return was up and down trend in 2007 and 2008 but it went up in 2009, 2010 and 2011. Thus, ending a return of 70 percent is not bad for their stockholders. This show the rate of return of their stockholder’s equity; that for every $1 of money invested, they generate 0.964, 0.556, 0.631, 0.659 and 0.70 of revenue in dollars from 2007 to 2011 respectively.

Trend ratio is used to study the movement of selected items in the balance sheet in yearly horizontal growth or decrease using the earlier year. Below is the summary of data using 2007 as the base year.

  • Cash & cash equivalent in percentage was 100, 49, 30.6, 21 and 21.5. This shows a declining trend from 2007 to 2010, except in 2011 it increased 0.5 percent compared to 2010.
  • Their current assets movement in percentage was 100, 58, 40, 34 and 35.
  • Total assets in percentage were 100, 68.7, 51, 43.61 and 43.62.
  • Current liabilities or total liabilities in percentage was 100, 50.6, 34, 31, and 61.7. This illustrates that the company does not have any long-term debts; only current liabilities; which tells us that it is also decreasing yearly until 2010. In the following year, the amount was doubled.
  • Stockholders’ equity in percentage was 100, 81.8, 62.9, 52.7 and 30.5. This shows that the capital is decreasing yearly.

Looking at the above analysis, it tells us that all their accounts go down yearly with a minimal increase in 2011. Management is not doing their part in the company’s operation. For the past years, they did not rely on getting long-term liabilities to increase operating cash flow as well as to increase revenue and net profits.

Cherokee Inc Income Statement

Cherokee Revenue

The revenue of the company had an average of 43.56 for five years, thus, the trend was alarming because it is continuously decreased by 15, 11 and 6 percent. Gross profit was 100 percent huge of revenue and the company has no direct cost. Below was the result:

  • Revenue in billion dollars was 76.63, 41.62, 36.22, 32.57 and 30.78, an average of 43.56
  • Gross profit in percentage was 100 straight for five years.

The operating income and income before tax had an average difference of 46 percent, meaning there was no unusual expense acquired in five years. The income after tax was decreasing but in 2008 and 2009 was maintained by 40 percent. The net margin was also decreasing the same results of income after tax; it means there is no extraordinary item. The details are:

  • Gross profit in percentage was 100 straight for five years.
  • Operating income in percentage was 74, 63, 63, 63 and 42, an average of 27.88 percent.
  • Income before tax in percentage was 76, 66, 64, 63 and 42, an average of 28. 34 percent.
  • Income after tax in percentage was 45, 40, 40, 39 and 25
  • Net margin in percentage was 45, 40, 40, 39 and 25, an average of 38 percent.

After deducting all the expenses, the income of the company was profitable with an average of 38 percent for five years but was not progressive. The movement was downward because the revenue also went down for five years.

Cherokee Profitability

To determine the net margin, we consider the cost and expenses. Does the company manage its cost efficiently? How much the total expense incurred for the year? Then, was the company profitable? Below are the results:

  • No direct cost of revenue.
  • The selling & general administrative expense in percentage was 24, 34, 33, 33 and 53.
  • Depreciation in percentage was 1, 3, 4, 4 and 5.
  • The income tax in percentage was 30, 26, 24, 24 and 17.
  • Total expense incurred in percentage was 56, 63, 61, 61 and 75.
  • The net margin in percentage was 45, 40, 40, 39 and 25.

Based on the above data, the expenses were managed efficiently; there was no direct cost of revenue. The selling and general expense had an increased margin of 10 percent in 2008 and down to 1 percent in 2009 and 2010. It jumped by 20 percent in 2011. Thus, the net margin from 2007 to 2011 was profitable but due to the increase in expenses in 2011 it was affected, resulting in 25 percent net. Overall the net margin was still sustainable.

  • In analyzing, the return on asset, equity and investment were used to measure management effectiveness. The results are:
  • Return on the asset in percentage was 56, 38, 45, 46 and 28, an average of 43.
  • Return on equity in percentage was 96, 56, 63, 66 and 70, an average of 70.
  • Return on investment in percentage was -161, -3937, 176, 147 and 70.

The management was effective in handling their resources, in terms of their asset and equity; for their five years of operation, the return for every $1, it had .43 and .70 dollars, respectively. The return on investment was not quite good and they still need to work it on. For the last two years (2007 to 2008) it had a negative return, though in 2009 it recovered to 176 percent it went down from 2010 to 2011.

Cherokee Cash Flow

Cherokee Cash Flow From Operating Activities

Cash from operating activities is the cash available for the operation. By using this, we can determine if the company had enough funds for the operation and know what are the key accounts affected, how much are the changes in working capital. Below were the results for the company:

  • Net income/starting line was 34.79, 16.44, 14.35, 12.57 and 7.72
  • Changes in working capital were 17.86, -14.19, -0.57, -0.98 and 2.63
  • Cash from operating activities was 53.96, 4.9, 15.96, 13.74 and 12.51

The cash from operating activities had a positive result but the movement was decreasing. It had a bulk decrease in 2008 by 91 percent and in 2009 slightly recovered by 69 percent; it had decreased again in 14 and 8 percent in 2010 and 2011, respectively. This was due to the net income going down continuously.

Cherokee Cash Flow from Investing

  • Purchase of fixed assets was $-0.03, -0.04, -0.08, -0.05 and -0.06
  • Purchase/acquisition of intangibles was $-0.26, -1.39, -0.34, -0.29 and -0.32
  • Cash from investing activities was $-0.29, -1.43, -0.42,-0.35 and -0.38

Data show they had invested more in the acquisition of intangibles; the total average for five years is -2.6; compared to a fixed asset with a total average of –.26. This means that total cash from investing in 2008 had increased by 1.14 and from 2009 to 2010, decreased by 1.01 and .7 respectively.

Cherokee Cash Flow from Financing

We can determine if the company had raised additional funds through cash from financing. What was unique about this company is that they issue stocks of cash dividends. Below are the results:

  • Financing cash flow items was 0.21, 0.19, 0.15, 0 and 0.
  • Total cash dividends paid was -22.43, -26.69, -22.24, -17.63 and -13.46, average for five years -20.49.
  • Cash from financing activities was -20.99, -26.08, -23.84, -17.63 and -11.96.
  • The Free cash flow was 76.68, 33.02, 38.62, 31.72 and 26.35
  • Free cash flow per share was 8.71, 3.71, 4.39, 3.60 and 3.10

After deducting the capital expenditure and dividend, the results had a positive free cash flow. It was in a sideways movement that in 2008, it decreased by 57 percent and 2009 increased by 5.6 percent.

Cherokee Cash Flow Efficiency

  • Cash flow from sales to sales ratio 54.79, 5.94, 16.88, 14.42 and 13.01.
  • Cash flow solvency 6.65, 0.72, 2.62, 1.91 and 0.77
  • Cash flow margin 0.70, 0.12, 0.44, 0.42 and 0.41

It indicates that in 2007 it has a greater amount of cash generated from sales in every $1; it had 5.48 compared in 2008 wherein it only had .06. The cash flow solvency was also in sideways as well as the cash flow margin.

Written by Nelly, Rio, and Dyne
Edited by Cris

Interested in learning more about the company? Here’s company research to know more about its background and history; and investment valuation for the pricing.

cherokee-inc-chke

Cherokee Inc (CHKE) Shows Sustainable Net Margin

July 6th, 2012 Posted by Company Research Report No Comment yet

Cherokee Inc Balance Sheet

Financial Liquidity and Leverage

Cherokee Inc. cash position starts with higher working capital and current ratio for the first four years (2007-2011). The company has a greater ability to pay its short-term debts or obligations using short-term cash. It was decreasing yearly and this big leap in 2011 leaves the company with no sufficient cash to pay current obligations wherein it shows -$6.56.

Working capital (current assets less current liabilities); the current ratio (current assets over current liabilities); and quick ratio(total asset divided by total liabilities) computations were used to check the company’s ability to meet current obligations to pay bills, meet payroll and make loan payments.

  • The working capital of in dollars was 27.66, 18.21, 12.61, 10.36, and 2.79 respectively with an average of 14.33. This tells us that their working capital was declining and serves as the basis of their operating cycle.
  • Their current ratio was 2.06:1, 2.37:1, 2.40:1, 2.28:1 and 1.17:1 respectively. Average of 2.06:1.
    It means the company has $2.06, 2.37, 2.40, 2.28 and 1.17 of current assets for every $1 of current liabilities.
  • Their cash & cash equivalent minus current liabilities in dollars was 18.40, 8.70, 4.65, 1.31 and -6.56 respectively. Shows that it was decreasing to the point in 2011 cash; a negative amount was not sufficient to pay for their current obligations.

The company’s working capital against total assets and total revenue was also declining. The year 2011 marked the effect in their declining operations, thus, management was inefficient in handling their cash and other resources. In checking the composition of the company’s working capital against the total asset and total revenue from 2007 to 2011, computation as well as computed working capital per share was stated below:

  • The networking capital ratio was 0.44, 0.43, 0.40, 0.38, and 0.10. This shows the decreasing trend in the working capital against total assets.
  • Working capital per dollar revenue was 0.36, 0.44, 0.35, 0.32 and 0.09. This shows a decreasing trend in the working capital against total revenue.
  • While their working capital per share in dollars was 3.13, 2.04, 1.43, 1.18 and 0.33 respectively. Average of $1.62. This represents that 2007 and 2008 were good, and 2009 to 2011 was below the yearly average of $1.62 per share.

Cash Efficiency

Cherokee Inc’s accounts receivable turnover, it began with 10.57 times in 2007, a good start with only 34.52 days. But with the following years, it falls to only 4.64 times thus increasing the number of days receivable. If terms are net 30 days net, receivable balance equals to more than 40 days sale would indicate slow collections. For the longer accounts carried, the smaller will be the percentage return realized on invested capital. Hence, their days payable started also with 4.4 days in 2007 ends up 22.2 days in 2011. This means it takes longer to pay their payables to their debtors. Their cash conversion cycle takes longer too, from one month to almost two months, as well as their accounts receivables to be converted to cash to pay accounts payable.

  • This will provide a rough scale on how well receivables was turning into cash, so, accounts receivable turnover was 10.57, 5.65, 6.61, 4.69 and 4.64 from 2007 to 2011 respectively. Average of 6.43 times. And average collection period was 34.52, 64.5, 55.2,77.8, and 78.7 days. Average of 62.14 days. This measure the movement of accounts receivables or the average time it takes to collect an account and depends on the credit terms the company is offering to its customers.
  • Days payable was 4.4, 7.2, 9.6, 10.9, and 22.2. Average of 10.86 days. This tells us that the company takes 4.4, 7.2, 9.6, 10.9 and 22.2 with an average of 10.86 days to pay its debtors.
  • Cash conversion cycle was 30.1, 57.4, 45.7, 66.9, and 56.6 days respectively. Average of 51.34 days. This was computed as days receivable fewer days payable and this means the length of time for cash to complete the operating cycle.

Total utilization of asset tells us that asset turnover was 1.23, 0.97 times, 1.14 times, 1.20 times and 1.13 times a year. Furthermore, the up and down trend means the company was not generating a favorable revenue against the utilization of total assets.

Debt ratio shows how the company was levered. In 2009, it fell down to 28 percent, then increased by 59 percent in 2011 with the average of 38 percent of the total assets being supplied by creditors or short-term liabilities; and that they were not relying on external sources for financing their assets. Debt to worth ratio is used in determining the debt ceiling but vary from company to company and industry to industry. Only in 2011 and 2007, they showed a higher ratio that is more than the yearly average of 69 percent because it fell down in 2008-2009.

Data below show more detailed values:

  • Debt ratio was 0.42, 0.31, 0.28, 0.30 and 0.59 from 2007 to 2011 respectively with an average of 0.38 or 38 percent.
  • Debt to worth ratio was 0.72, 0.45, 0.40, 0.43, and 1.46 from 2007 to 2011 respectively. Average of 69 percent.

To check the ability of the company in paying short term liabilities, solvency ratio was 1.37, 1.34, 1.75, 1.73 and 0.57 from 2007 to 2011 respectively with an average of 135.2 percent. In the first four years, the company illustrates that they were solvent but in 2011 it declined rapidly to 57 percent which was very low. If company’s operation will not increase, revenues, as well as its net income for the coming year, will be in trouble financially because they will not be capable of meeting its obligation in the long run.

This show that management operating performance in 2007 return was 56 percent in utilizing their total assets, in 2008 due to economic crises returns decrease to 38%, in 2009 and 2010 it increased to 45 percent and 46 percent respectively. But in 2011 it decreases down to 28% for net income is only $7.72 from $12.57 in 2010. It is mainly due to decrease in revenues. To verify their general earning power, their return of assets in percentage was 56, 38, 45, 46 and 28 from 2007 to 2011 respectively. This shows the rate of return on their total assets, that for every $1 of money invested in capital they generate in dollars 0.56, 0.38, 0.45, 0.46, and 0.28 of revenue from 2007 to 2011 respectively.

In totality, the relationship of ownership of the company’s total assets was 38 percent claimed by creditors and 62 percent claimed by shareholders. The company did not have long-term liabilities or debts; they are financed with current capital. The data below further interpret this:

  • Total liabilities to total assets in percentage was 42, 31, 28, 30 and 59 claims to their total assets. Average of 38 percent.
  • Stockholders’ equity to total assets in percentage was 58, 69, 72, 70 and 41 claim to their total assets. Average of 62 percent.

Return on equity indicates the profitability of the company to their stockholders. The return was up and down trend in 2007 and 2008 but it went up in 2009, 2010 and 2011. Thus, ending a return of 70 percent is not bad for their stockholders. This show the rate of return of their stockholder’s equity; that for every $1 of money invested, they generate 0.964, 0.556, 0.631, 0.659 and 0.70 of revenue in dollars from 2007 to 2011 respectively.

Trend ratio is used to study the movement of selected items in the balance sheet in yearly horizontal growth or decrease using the earlier year. Below is the summary of data using 2007 as the base year.

  • Cash & cash equivalent in percentage was 100, 49, 30.6, 21 and 21.5. This shows a declining trend from 2007 to 2010, except in 2011 it increased by 0.5 percent compared to 2010.
  • Their current assets movement in percentage was 100, 58, 40, 34 and 35.
  • Total assets in percentage were 100, 68.7, 51, 43.61 and 43.62.
  • Current liabilities or total liabilities in percentage was 100, 50.6, 34, 31, and 61.7. This illustrates that the company does not have any long-term debts; only current liabilities; which tells us that it is also decreasing yearly until 2010. In the following year, the amount was doubled.
  • Stockholders’ equity in percentage was 100, 81.8, 62.9, 52.7 and 30.5. This shows that the capital is decreasing yearly.

Looking in the above analysis, it tells us that all their accounts go down yearly with minimal increase in 2011. Management is not doing their part in the company’s operation. For the past years, they did not rely on getting long-term liabilities to increase operating cash flow as well as to increase revenue and net profits.

Income Statement

Revenue

The revenue of the company had an average of 43.56 for five years, thus, the trend was alarming because it is continuously decreased by 15, 11 and 6 percent. Gross profit was 100 percent huge of revenue and the company has no direct cost. Below was the result:

  • Revenue in billion dollars was 76.63, 41.62, 36.22, 32.57 and 30.78, an average of 43.56
  • Gross profit in percentage was 100 straight for five years.

The operating income and income before tax had an average difference of 46 percent, meaning there was no unusual expense acquired in five years. The income after tax was decreasing but in 2008 and 2009 was maintained by 40 percent. The net margin was also decreasing the same results of income after tax; it means there is no extraordinary item. The details are:

  • Gross profit in percentage was 100 straight for five years.
  • Operating income in percentage was 74, 63, 63, 63 and 42, an average of 27.88 percent.
  • Income before tax in percentage was 76, 66, 64, 63 and 42, an average of 28. 34 percent.
  • Income after tax in percentage was 45, 40, 40, 39 and 25
  • Net margin in percentage was 45, 40, 40, 39 and 25, an average of 38 percent.

After deducting all the expenses, the income of the company was profitable with an average of 38 percent for five years but was not progressive. The movement was downward because the revenue also went down for five years.

Profitability

To determine the net margin, we consider the cost and expenses. Does the company manage its cost efficiently? How much the total expense incurred for the year? Then, was the company profitable? Below are the results:

  • No direct cost of revenue.
  • The selling & general administrative expense in percentage was 24, 34, 33, 33 and 53.
  • Depreciation in percentage was 1, 3, 4, 4 and 5.
  • The income tax in percentage was 30, 26, 24, 24 and 17.
  • Total expense incurred in percentage was 56, 63, 61, 61 and 75.
  • The net margin in percentage was 45, 40, 40, 39 and 25.

Based on the above data, the expenses were managed efficiently; there was no direct cost of revenue. The selling and general expense had an increased margin of 10 percent in 2008 and down to 1 percent in 2009 and 2010. It jumped by 20 percent in 2011. Thus, the net margin from 2007 to 2011 was profitable but due to the increase in expenses in 2011 it was affected, resulting in a 25 percent net. Overall the net margin was still sustainable.

  • In analyzing, the return on asset, equity and investment were used to measure the management effectiveness. The results are:
  • Return on the asset in percentage was 56, 38, 45, 46 and 28, an average of 43.
  • Return on equity in percentage was 96, 56, 63, 66 and 70, an average of 70.
  • Return on investment in percentage was -161, -3937, 176, 147 and 70.

The management was effective in handling their resources, in terms of their asset and equity; for their five years of operation, the return for every $1, it had .43 and .70 dollars, respectively. The return on investment was not quite good and they still need to work it on. For the last two years (2007 to 2008) it had a negative return, though in 2009 it recovered to 176 percent but it went down from 2010 to 2011.

Cash Flow

Cash Flow From Operating Activities

Cash from operating activities is the cash available for the operation. By using this, we can determine if the company had enough funds for the operation and know what are the key accounts affected, how much are the changes in working capital. Below were the results for the company:

  • Net income/starting line was 34.79, 16.44, 14.35, 12.57 and 7.72
  • Changes in working capital were 17.86, -14.19, -0.57, -0.98 and 2.63
  • Cash from operating activities was 53.96, 4.9, 15.96, 13.74 and 12.51

Based on the above data, the cash from operating activities had a positive result but the movement was decreasing. It had a bulk decrease in 2008 by 91 percent and in 2009 slightly recovered by 69 percent; it had decreased again in 14 and 8 percent in 2010 and 2011, respectively. This was due to the net income going down continuously.

Cash Flow from Investing

  • Purchase of fixed assets was $-0.03, -0.04, -0.08, -0.05 and -0.06
  • Purchase/acquisition of intangibles was $-0.26, -1.39, -0.34, -0.29 and -0.32
  • Cash from investing activities was $-0.29, -1.43, -0.42,-0.35 and -0.38

Data show they had invested more in the acquisition of intangibles; the total average for five years is -2.6; compared to fixed asset with a total average of –.26. This means that total cash from investing in 2008 had increased by 1.14 and in 2009 to 2010, decreased by 1.01 and .7 respectively.

Cash Flow from Financing

We can determine if the company had raised additional funds through cash from financing. What was unique about this company is that they issue stocks of cash dividends. Below are the results:

  • Financing cash flow items was 0.21, 0.19, 0.15, 0 and 0.
  • Total cash dividends paid was -22.43, -26.69, -22.24, -17.63 and -13.46, average for five years -20.49.
  • Cash from financing activities was -20.99, -26.08, -23.84, -17.63 and -11.96.
  • The Free cash flow was 76.68, 33.02, 38.62, 31.72 and 26.35
  • Free cash flow per share was 8.71, 3.71, 4.39, 3.60 and 3.10

After deducting the capital expenditure and dividend, the results had a positive free cash flow. It was in a sideways movement that in 2008, it decreased by 57 percent and 2009 increased by 5.6 percent.

Cash Flow Efficiency

  • Cash flow from sales to sales ratio 54.79, 5.94, 16.88, 14.42 and 13.01.
  • Cash flow solvency 6.65, 0.72, 2.62, 1.91 and 0.77
  • Cash flow margin 0.70, 0.12, 0.44, 0.42 and 0.41

It indicates that in 2007 it has a greater amount of cash generated from sales in every $1; it had 5.48 compared in 2008 wherein it only had .06. The cash flow solvency was also in sideways as well as the cash flow margin.

Written by Nelly, Rio, and Dyne
Edited by Cris

Interested in learning more about the company? Here’s company research to know more about its background and history; and investment valuation for the pricing.

Research In Motion Ltd (RIMM)

Research in Motion (RIMM) Interesting Beginning

June 1st, 2012 Posted by Company Updates No Comment yet

Research in Motion (RIMM) featured picture, a man with the umbrella struggling against the New York City snowstorm back in February of 2010.  This could almost describe what has been happening with recent events at Research In Motion Limited – RIMM, they were caught ill-prepared for a storm of their own back on October 10, 2011.

RIMM Company Research

In the mid-90s when I was still working in Manhattan I remembered having to work with RIMM.  Everyone in the company had a Blackberry.  The problem was we couldn’t open MS Word with the Blackberry. I was asked to help coordinate.  I don’t remember the outcome but I remember the team with Blackberry was nice, polite and professional.  They sat with our IT department, on our problem.  No wonder they dominated the business market for years.

Who started the company and why?

Research In Motion (RIMM), is a global leader in wireless innovation founded by Mike Lazaridis and Jim Balsillie in 1984. RIMM worked with RAM Mobile Data and Ericsson to turn the Ericsson-developed Mobitex wireless data network into a two-way paging and wireless e-mail network. Mobitex is an Open System Interconnection (OSI) based, national public access wireless packet switched data network. Developed by Swedish Televerket Radio at the beginning of the 1980s.

RIMM started in a one-room office; the founders were a twenty-three-year-old college dropout.  RIMM was a company with a difference. Mike and Doug were practical and visionary at the same time, and the pair turned out to be superb engineers. The company was financed by the family and a $15,000 government loan.

RIMM’s first big job was a $600,000 contract making networked LCD screens for the General Motors Canada assembly line. Based in Waterloo, Ontario, RIMM operates in North America, Europe, Asia-Pacific, and Latin America.

What is the background of the company? its history and development?

Now, let’s focus on the storytelling. The company’s background, history and development followed by the nature of the business.

·    The company incorporated under the Business Corporations Act (Ontario) (“OBCA”) on March 7, 1984.
·    Early development financed by Canadian Institutional and Venture Capital Investors in 1995.
·    Was funded C$30,000,000 before initial public offering on the Toronto Stock Exchange in January 1998 under the symbol RIMM.
·    In August 1998, RIMM began shipping [email protected] pager 950.
·    Introduced the BlackBerry® solution in 1999.
·    Company’s last amalgamation with its wholly owned subsidiaries happened on February 24, 2003.
·    On 2006, Research In Motion and Information Appliance Associates have a licensing agreement in which RIMM would offer a version of PocketMac for BlackBerry to Macintosh users for free.
·    On October 2008, RIMM became one of “Canada’s Top 100 Employers” by Mediacorp Canada Inc., and was featured in Maclean’s magazine.

From 2009

·    RIMM announced in February 2009 that they were expanding their global operations by opening an office and training facility in North Sydney, New South Wales, Australia.
·    On June 2009, RIMM announced the purchase of Dash Navigation.
·    On August 2009, RIMM bought Torch Mobile.

·    On August 18, 2009, Fortune Magazine named RIMM the fastest growing company in the world.
·    As of May 2010, RIMM OS held 10.4 percent of the smartphone operating system market.
·    On March 26, 2010, the company announced the acquisition of BlackBerry applications developer Viigo, a Toronto-based company.
·    RIMM agreed with Harman International on April 12, 2010, to buy QNX Software Systems.
·    On September 27, 2010, RIMM announced BlackBerry PlayBook tablet computer.

From 2011

·    On March 25, 2011, RIMM bought 100 percent of a company whose technology is being incorporated into the company’s developer tools.
·    The BlackBerry PlayBook was released to the US and Canadian consumers on April 19, 2011.
·    On April 26, 2011, the company bought assets and incorporated into the Company’s products.
·    On June 2011, the company acquired Scoreloop.
·    On June 2011, RIMM bought Nortel patent portfolio.
·    On June 30, 2011, an investor push for the company to split its dual-CEO structure was unexpectedly withdrawn after an agreement was made with RIMM.

More in 2011

·    On July 21, 2011, the BlackBerry PlayBook tablet received Federal Information Processing Standard 140-2 certification.
·    On September 2011, RIMM decided to build an assembly factory (hardware) in Malaysia, instead of in Indonesia.
·    On October 10, 2011, RIMM experienced one of the worst service outages in the company’s history.
·    Service was restored when the outrage ended on October 13, 2011.

From 2012

·    During fiscal 2012, the company launched the wireless fidelity Wi-Fi-enabled BlackBerry PlayBook tablet in 44 markets around the world.
·    On January 22, 2012, RIMM new CEO Thorsten Heins.
·    On February 21, 2012, it released the BlackBerry PlayBook OS 2.0 software.
·    On March 2012 it was announced that RIMM awarded a patent for placing fuel cell behind mobile phone keyboards.
·    On March 8, 2012, the company acquired Paratek Microwave Inc.
·    During the fiscal year ended March 3, 2012 (fiscal 2012), the company bought 100 percent interests of a company whose technology will provide a multi-platform BlackBerry Enterprise Solution for managing and securing mobile devices for enterprises and government organizations.
·    On March 29, 2012, RIMM announced a strategic review of its future business strategy; a plan to refocus on the enterprise business and leverage on its leading position in the enterprise space.

What is the nature of Research in Motion Limited (USA) business?

Research in Motion Ltd is a manufacturer, distributor, marketer, product, and service oriented company. RIMM is a global leader in wireless innovation and developed mobile industry with the introduction of BlackBerry. The company is a designer, manufacturer, and marketer of wireless solutions.

According to Karla, “Blackberry is a line of mobile email and smartphone devices designed to function as personal digital assistants, portable media players, Internet browsers, gaming devices and much more.” She said, “BlackBerry is known for their ability to send and receive (push) email and instant messages while maintaining a high level of security through on-device message encryption.” BlackBerry support a large variety of instant messaging features, including BlackBerry Messenger.

RIMM offers platforms and solutions for seamless access to information, including e-mail, voice, instant messaging, short message service (SMS), the Internet and Intranet-based applications and browsing. BlackBerry Balance, as one of its products and technology, provide enterprise users access to both work and personal information in a convenient and centralized way while keeping the content separate and secure.

Who is running the company and their background?

Who is running the company and their background? Let us learn about the key people. On January 2012, Thorsten Heins was named President and CEO.  He was Chief Operating Officer, Product Engineering, in charge of overseeing BlackBerry smartphone portfolio worldwide. He joined RIMM in 2007 and has a global reputation for delivering on their commitments with his 27 years of broad experience in wireless networks and consumer electronics devices. He has a master’s degree in Science and Physics from the University of Hannover in Germany. He is married to Petra, a mathematician, and physicist. They have a  21-year-old son and a 23-year-old daughter.

“Physics is also called the fundamental science because it’s the basis for all branches of natural science.  Used in engineering and medicine. Applied physicist uses physics to develop new technologies or solve a problem.” Said Nelly, part of our Stories team.

Since December 17, 2009, Brian Bidulka is the Chief Financial Officer of RIMM.  He is working with Jim Rowan in overseeing the Cost Optimization Program.  He joined the company in 2005. He received an Honors Bachelor of Commerce degree from McMaster University and he received his Chartered Accountant’s designation in 1989.

Who is directing the company? How are the committees structured?

Who is directing the company then? How are the committees formed? Research in Motion Ltd has five committees: Audit and Risk Management Committee, Compensation Committee, Nominating and Corporate Governance Committee, Innovation Committee, and Strategic Planning Committee. Committees have a respective chairman and members composed of directors and independent directors.

Barbara Stymiest is a director since March 2007 and Chairman of the Board. She is Chairman of Audit and Risk Management Committee. John D. Wetmore is an independent director since March 2007. He held various finance positions and a graduate of Bachelor of Mathematics. He is the current Chairman of Compensation, Nomination and Governance Committee. Michael Lazarid is at 50, an independent director and co-founder of RIMM. He’s been with the company since 1984. He is known in the global wireless community and current Chairman of Innovation Committee.

How do they make money?

The primary source of revenue is from BlackBerry smartphone and tablet, service and software. BlackBerry wireless solution has various support levels to cater to customers. The company sells hardware to carriers and distributors.  RIMM has been developing integrated services offering that leverages on BBM, security and manageability, to increase revenues. The software is the programs and data storage; cannot be touched.

How do they fit into the industry they operate in?

Despite competitive pressures, RIMM remains a leader in enterprise mobility. BlackBerry smartphones, with the BlackBerry Enterprise Server, set the standard in the mobile enterprise for secure, reliable and manageable mobile access to enterprise resources and applications.

The company outsourced most of its manufacturing to specialized global Electronic Manufacturing Services (“EMS”). They work with many businesses, some are direct competitors with one another and others are current or potential competitors of RIMM include Apple Inc. (IOS), Google Inc. (Android), Microsoft Inc. (Windows Phone), and Nokia Corporation (Symbian).  I still don’t understand this type of competitive relationship.

The company pioneered the sophisticated multimode centralized architecture responsible for the routing messages; their competitive edge. This propelled RIMM to rapid growth in Thailand, Indonesia, Spain, Latin America, and other consumer segments. RIMM intends to maintain leadership in the global wireless community with the Blackberry.

Who are their suppliers and customers?

The products are in line with the customer’s network and equipment. They use third-party applications to deliver confidential information. Third-party software is the key to customer growth. The company depends on third-party network infrastructure developers, software platform vendors, and service platform vendors. RIMM wants developers to further integrate and enhance the user experience between smartphones and vehicle audio and information systems.

What is their workforce like?

Just got home from work, I wonder what would I be if I am one of the employees of RIMM; what is the working atmosphere looked like? Research in Motion provides an individual the opportunity to grow, contribute and succeed whether it’s a career in software development, product management, corporate or any other department.

RIMM is a refreshing and energy driven environment. People are competitive, hard worker and inspire one another to succeed. RIMM’s success depends on adopting changes in the board of directors and management. The company continues to invest in highly qualified employees and focused on realigning the organizational structure and as of March 3, 2012, the company has 16,500 full-time employees.

How do they treat their employees? What are the pay and working condition like?

Research in Motion rewarded and recognized the contributions of both team and individual in every step of the way. The company believes in empowering people, investing in their people and their futures. The incentive program is available to all permanent employees and is based on performance. Benefits are available to all full-time employees and it is competitive in the local market.

Employee assistance plan, gym and fitness center membership subsidy and worldwide travel and medical emergency assistance program (Global Travel Program). The company supports employee training and development to promote employee personal and professional development.  Employee enjoys social activities such as holiday parties, summer picnics, and team building sessions and employee giveaways.  A free BlackBerry® smartphone for your use while you’re employed with the company. Also, RIMM offers the [email protected] program and supports to give back to communities through Proud2Be programs.

RIMM Value Investing

Balance Sheet

Liquidity

The main purpose of balance sheet analysis is to determine a company’s financial strength and efficiency. Financial ratios look at liquidity and solvency.  Liquidity refers to the company’s ability to meet its current obligations. Solvency, on the other hand, has to do with the ability to meet the interest costs and repayment schedules associated with its long-term obligations.

Working capital, current ratios and quick ratios of RIMM from 2007 to 2011:

  • Current ratio in percent was 3.51, 2.36, 2.29, 2.39 and 2.06. Average of 2.52, which means that current assets were more than double the current liabilities, on average, $2.52 of current assets for every $1 of current liabilities.   The quick ratio in percent was 3.04, 2.09, 1.97, 2.12 and 1.89. Average of 1.01, which tells us that, excluding inventory, current assets, on average dropped to 1.01 from 2.52 for $1 of current liabilities.
  • Working capital was $1372.69, 2002.92, 2726.24, 3381 and 3858, with an average of $2,668.17. The increasing trend, with the exception of 2011; the company can meet current obligations.

Does the company have sufficient resources to stay in business in the short term? Have they the ability to service their long-term debts? RIMM has sufficient resources to stay in the business in the short term shown in the current ratio analysis.  Current assets were greater than the current liabilities at the ratio of 2.52 to 1 average, while quick ratios average 1.01. Working capital showed a yearly increase during its five years of operation, the company could meet its current obligations.

Cash Conversion Period

Cash conversion period is the time for cash to complete the operating cycle. Calculated by adding the inventory conversion period and the receivable conversion period, then, deducts the payable conversion period.  RIMM has an average conversion period of 81 days for the last five years of operation.

Further interpretation for cash conversion cycle:

Particulars    2007    2008    2009    2010    2011    Ave.
Inventory conversion period    68    49    42    29    20    42
Average collection period    69    71    70    63    73    69
Payable conversion period    34    34    27    27    27    30
Cash conversion period    102    87    84    65    65    81

Inventory turnover ratio is used to evaluate the size of the inventory. It varies greatly with the nature of the business. It is calculated to show how many times the company’s inventory turns over a period, likewise, shows if assets are tied up in inventory. Inventory conversion period of RIMM takes on average of 42 days.

The receivable turnover ratio was 5 times average during the five years and its receivables take 69 days average to be collected. Days receivables can be related to the credit terms offered by the company and should not exceed 1 1/3 times the regular payment period. Payable is 30 days.

What kind of assets does the company primary hold? How efficient is the company’s overall process of converting products or services into cash? Current assets include cash, inventory, and receivables. cash conversion cycle shows that RIMM was efficient enough, with an average of 81 days conversion period for the past five years in operation.

Who controls the business; creditors, bondholders or stockholders? Current liabilities to total assets show the creditors claim, long-term liabilities to total assets show bondholders’ claim, while, stockholders equity to total assets show stockholders claim on the business. Creditors have 25 percent, while stockholders have 74 percent claim on total assets.

Leverage

What kind of leverage does the company used in normal business? Large fix assets, working capital provided by suppliers? RIMM used working capital and current assets to finance its normal business operation.  Financial leverage ratios from 2007 to 2011:

  • Debt ratio was .20, .29, .27, .25 and .31, the average of .26, which means the total liabilities of RIMM was 26 percent, on average, of total assets.
  • Debt to equity ratio was .24, .40, .38, .34 and .44. Average of .36.
  • Solvency ratio was 1.17, .89, .94, 1.06 and .98. Average of 1.01. Solvency ratio was 117 percent, 89, 94, 106 and 98 or has an average of 101 percent of income against total debt.
  • Current liabilities to total assets ratio was .18, .27, .26, .24 and .28. Average of .25.
  • Stockholders’ equity to total asset was .80, .71, .73, .75 and .69. Average of .74.

How productive is the company use of funds and total resources?  RIMM averaged 23.4 percent for the five years. The return on equity was 32.2 percent. The firm is capable and productive in using funds and total resources.  Profitability ratios of RIMM from 2007 to 2011:

  • Return on asset, for every $1 worth of the asset, RIMM generates 20.4 percent, 23.5, 23.4, 24.1 and 26.5 of revenue or an average of 23.4 in five years period.
  • Return on equity was 25.4 percent, 32.9, 32.2, 32.3 and 38.2, the average of 32.2.

RIMM has sufficient resources to stay in the business in the short term and could meet current obligations, as shown by the current ratio analysis; current assets were greater than the current liabilities, 2.52 is to 1, on average, while quick ratio was 1.01 is to 1, on average.  Working capital showed increases during five years of operation.

The company holds cash, inventory, and receivables. RIMM is efficient in turning resources into cash, with an average of 81 days cash conversion period for the past five years in operation.

Income Statement

The income statement reports earnings over a specific period. The company could generate sufficient revenue for daily operation.  Gross margin ratio deteriorated by 5 percent but was stable at 44 percent during the last two years. Operating profit averaged 25 percent.  Net income was stable at 18.6 percent during five years of operation.

Income

Revenue growth increased at 98 percent, 84, 35 and 33 from 2008. Gross margin was 86 percent, 65, 29 and 34 from 2008. Operating profit was 115 percent, 57, 19 and 44. The pretax margin was also stable at 25.8 percent.  The growth was at 111 percent, 55, 17 and 42 from 2008. Net income increased by 104 percent, 46, 30 and 39 from 2008. Additional data on the income statement for 2007 to 2011:

  • The total revenue was 3037.1, 6009.4, 11065.19, 14953.22 and 19907. Total revenue grew over time by 97.87 percent, 84, 35 and 33 from 2008. The operation of the business is generating income and has been improving consistently.
  • Gross profit margin was 54.59, 51.26, 46.07, 44.03 and 44.33. The ratio deteriorated by 3.33 percent, 5.19, 2.04 and 0.3 from 2008.
  • Operating profit to sales was 26.57 percent, 28.80, 24.60, 21.65 and 23.37. This ratio moved erratically up and down; increased 2.23 percent, decreased by 4.2.
  • The net profit margin (Pretax) was 28.28 percent, 30.13, 25.31, 21.84 and 23.33. RIMM has sufficient income from operation.
  • Net profit margin was 20.80 percent, 21.53, 17.10, 16.43 and 17.13. The ratio deteriorated by less than 1 percent except in 2009 in which it decreased by 4.43 percent. The company makes $0.20, 0.22, 0.17, 0.16 and 0.17 for every $1 in revenue.

Expenses

Three important categories of expenses under the income statement. How does the company handle expenses? Is the company efficient in handling the revenue? The cost of revenue was 52 percent, 14 percent goes to operating expenses; it is the selling, general and administrative expenses. Research and development make up 7 percent. Depreciation was 2 percent. Income tax was 7 percent, on average. The total was 82 percent.  The remaining 18 percent was net income.  The details of the expenses 2007 to 2011:

  • The cost of revenues was 45.42, 48.73, 53.93, 55.97 and 55.67. This is the direct expense incurred in generating sales. More than half the total revenue was the direct cost.
  • Operating expenses were 17.71, 14.67, 13.46, 12.37 and 12.02. These are the selling, general and administrative expenses.
  • Income tax was 7.49, 8.6, 8.2, 5.41 and 6.19. Average 7.18.

Profitability

Most often the gross profit margin (GPM) is calculated and interpreted in the measurement of the company’s efficiency. Most investors thought that high GPM is profitable. However, we cannot just gauge a company’s profitability based on GPM. The company is making money in the operation of its business with an average of 19 percent of revenue. The management performance is up.

Profitability ratio for the year 2007 to 2011:

  • Return on asset was 20.4, 23.5, 23.4, 24.1 and 26.5. The company can turn a profit from an asset.
  • Return on equity was 25.4, 32.9, 32.2, 32.3 and 38.2. This company could return 25 percent, 33, 32, 32 and 38 for every $1 of equity.

Cash Flow Statement

Cash flow analysis is a method of analyzing the financing, investing and operating activities of the company. It summarizes the cash generated during a period. The cash flow measures the money flowing into, or out of, a company.

Cash Flow from Operating Activities

The cash flow from operation (CFO) signifies the ability of the management to generate cash flow from the business. RIMM was able and effective in generating cash flow with an increased trend of 100 percent and 30 percent. Cris wrote, “I calculated the ratio of CF from operation over net income [for 2007 to 2011] and the result was 116, 122, 77, 124 and 118.” She continues, “I calculate the ratio between CFO and capital expenditure, the results indicates that the company can invest for the future and is also able to fund capital expenditures out of CFO.”

Cash flow from operating activities from 2007 to 2011:

  • Cash flow from operating activities was 735.67, 1576.76, 1451.85, 3034.87 and 4009.00. It shows an increasing trend from its five years of operation.
  • Net income was 631.57, 1293.87, 1892.62, 2457.14 and 3411. These figures were favorably up.
  • Depreciation was 126.36, 177.37, 327.9, 615.62 and 927. These figures were added back to the net income because depreciation is not a cash item.
  • Changes in working capital were -142.58, 130.79, -769.11, -160.71 and 496. These were added or deducted to the balance; it constituted changes in accounts receivable, accounts payable and other current assets accounts.
  • Deferred tax in was 101.58, -67.24, -36.62, 51.36 and 92.
  • Non-cash item was -142.58, 130.79, -769.11, -160.71 and 496.

Cash Flow from Financing Activities

Cash from financing activities reports the issuance and payment of bonds and stocks and payments of dividends. The company has a transaction of the retirement of stocks; the contributing element in the negative balance. This doesn’t mean that the company has no cash fund this category in CFS only involves the activities about financing.  The company has cash ending balance in its cash flow.  Cash from financing activities from 2007 to 2011:

  • Total cash inflow was 128.31, which represents 1 percent of the ending balance.
  • Total cash outflow was 3106.60, which represents 99 percent of the ending balance.
  • Cash from financing activities was -153.66, 80.40, 25.37, -843.38 and -2087. The result shows a negative balance due to its cash outflows greater than the inflows. What contributed to higher outflows is the retirement of stocks?

Cash Flow from Investing Activities

Cash flow from investing activities reports the purchase and sale of long-term investments and purchase of fixed assets.  Under cash from investing activities, what contributed to its negative balance is the purchased of fixed assets; half the total outflow and the capital expenditures; 44 percent.  These were the expenses involved in the operation of the business involving current resources. The company has a cash fund balance in its cash flow.   Cash flow from investing activities from 2007 to 2011:

  • Total cash inflow was 6,208.79. This is the sale of the investment.
  • Total cash outflow was -12,322.14.  It represented:
    a.    Capital expenditure of $5588.63, which represented 44 percent.
    b.    Acquisition of business in $808.20, which represents 6 percent.
    c.    Purchase of fixed assets in $6322.14, which represents 50 percent.
  • Cash flow from investing activities was -364.58, -1153.94, -1823.52, -1470.13 and -1698. Ending balance resulted in a negative amount due to its cash outflow was greater than the cash inflow.  This doesn’t mean that the company has no cash funds available for investing activities. This report involves only the activities in investing activities.

Net Cash

The net cash ending balance shows an increasing trend except in 2009 where It deteriorates by 29 percent. This company can generate sufficient revenue for operations and could generate a cash flow to be used for future reinvesting, payments of dividends and future business expansions.

Cash balance from 2007 to 2011 are as follows:

  • Net cash beginning balance was 459.54, 677.14, 1184.40, 835.55 and 1551.0
  • Net cash ending balance was 677.14, 1184.40, 835.55, 1550.86 and 1791.
  • Changes in cash balance were 217.60, 507.26, -348.85, 715.31 and 240.
  • Changes in percentage were 47, 75, -29, 86 and 15.

Explanation

The company could generate positive cash flow from operating activities. Income was sufficient for its working expenses. It has money left over for future expansions, investing and for payments of dividends. In financing activities, the company paid for the retirement of stocks, which was 99 percent of the financing activities.  Cash from investing activities, the outflows are greater than its inflow.  The outflow was for capital expenditure, acquisition of business and purchase of fixed assets. The company is effective in generating cash flows and is profitable.

Written by: Rio, Cris, Nelly, Janice, Meriam, Karla

Edited by Cris

Citations

Who started the company and why?

http://en.wikipedia.org/wiki/Research_In_Motion
http://books.google.ca/books?id=KGrtBbPlR7EC&lpg=PP1&dq=Research+In+Motion&pg=PP1&hl=en#v=onepage&q=Research%20In%20Motion&f=
ttp://www.sec.gov/Archives/edgar/data/1070235/000107023512000036/pr050812.htm

What is the background of the company? it’s History & Development?

http://www.sec.gov/Archives/edgar/data/1070235/000119312512155342/d253804dex11.htm#253804ex1_1_2
http://en.wikipedia.org/wiki/Research_In_Motion
http://www.sec.gov/Archives/edgar/data/1070235/000107023512000036/pr050812.htm
http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=RIMM.O

What is the nature of the business?

http://www.sec.gov/Archives/edgar/data/1070235/000119312512155342/d253804dex11.htm#253804ex1_1_2
http://www.google.com/finance?q=NASDAQ:RIMM
http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=RIMM.O
http://www.sec.gov/Archives/edgar/data/1070235/000119312512155342/d253804dex11.htm#253804ex1_1_1

Who is running the company and their background?

CEO
http://www.rim.com/newsroom/mediaexecutive/index.shtml
http://www.reuters.com/finance/stocks/officerProfile?symbol=RIMM.O&officerId=1565220
http://www.guardian.co.uk/technology/2012/jan/23/thorston-heims-new-rim-ceo?newsfeed=true

CFO
http://www.reuters.com/finance/stocks/officerProfile?symbol=RIMM.O&officerId=932886
http://www.rim.com/newsroom/mediaexecutive/index.shtml
http://www.sec.gov/Archives/edgar/data/1070235/000119312512155342/d253804dex11.htm
http://www.bgr.com/2011/07/25/rim-to-lay-off-2000-employees-reorganize-management/

Who is directing the company? How are the committees structured?

http://www.sec.gov/Archives/edgar/data/1070235/000119312512155342/d253804dex11.htm#253804ex1_1_29>
http://www.rim.com/investors/governance/boardofdirectors.shtml
http://insiders.morningstar.com/trading/insider-committees.action?t=RIM&region=CAN&culture=en_us

How do they make money?

http://www.sec.gov/Archives/edgar/data/1070235/000119312512155342/d253804dex11.htm
http://www.sec.gov/Archives/edgar/data/1070235/000119312511346445/d269984d6k.htm

How do they fit into the industry they operate in?

http://www.sec.gov/Archives/edgar/data/1070235/000119312512155342/d253804dex11.htm#253804ex1_1_18
http://en.wikipedia.org/wiki/Research_In_Motion#Patent_litigation

Who are their suppliers and customers?

http://www.sec.gov/Archives/edgar/data/1070235/000119312512155342/d253804dex11.htm#253804ex1_1_28
http://en.wikipedia.org/wiki/Research_In_Motion

What is their workforce like?

http://www.rim.com/careers/why_rim/life_rim/
http://www.rim.com/careers/why_rim/
http://www.sec.gov/Archives/edgar/data/1070235/000119312512155342/d253804dex11.htm

How do they treat their employees; what is the pay and working condition like?

http://www.rim.com/careers/why_rim/rewards/
http://www.rim.com/company/corporate-responsibilities/corporate_philanthropy.shtml

Gossips

http://www.reuters.com/article/2012/05/09/researchinmotion-idUSL4E8G98ZB20120509?type=companyNews
http://ca.news.yahoo.com/research-motion-appoints-chief-operating-officer-chief-marketing-125856275–finance.html
http://www.reuters.com/finance/stocks/RIMM.O/key-developments/article/2345402
http://www.reuters.com/finance/stocks/RIMM.O/key-developments/article/2348586
http://www.thestreet.com/story/11534235/1/7-stocks-fall-to-52-week-lows.html?cm_ven=RSSFeed
http://beta.fool.com/bobbyfisher/2012/05/08/applications-are-vital-research-motion-comeback/4304/?source=TheMotleyFool

Interested to learn more about the company? Here’s company research to know more of its background and history; value investing guide for the financial status; and investment valuation for the pricing.

freeport mcmoran copper and gold inc-fcx

Freeport McMoRan Copper Inc (FCX) Company Research

May 24th, 2012 Posted by Company Research Report No Comment yet

Freeport McMoRan Inc (FCX) features picture above was taken way back in Arizona; these guys gave a friend a hand when he needed most, brave souls.  I didn’t realize Freeport-McMoran Copper and Gold Inc. was founded in Arizona until now.

Freeport McMoRan Company Research

What is the background of the company? Its history and development?

  • On 1881, Phelps Dodge entered mining.
  • Freeport has roots in the mineral industry in the early 1900s.
  • Phelps Dodge quit the import-export business in 1906.
  • The company began to diversify in 1931.
  • Produced nickel during WW2, and potash in the 1950s.
  • On 1955, invested $119 million and constructed a nickel-cobalt mine at Moa Bay.
  • In 1956, the company formed Freeport Oil Company.
  • In 1961, the company entered the kaolin business.
  • By 1966, Freeport Indonesia, Inc. was founded.
  • McMoran Oil & Gas was formed in 1967.

May 1970

  • Construction of an open pit mine began in May 1970.
  • In the mid-1980s, it was the first to use solution extraction and electrowinning.
  • Freeport McMoran Copper and Gold Inc. was founded in 1987 and is established in Phoenix, Arizona.
  • On 1988, Grasberg copper-gold deposit discovered in Indonesia.
  • On 1989, series of expansions begun after the Grasberg discovery.
  • On 1991, a new 30-year term contract to 10 years extensions was signed with the Indonesia government.
  • Freeport McMoRan completed the acquisition of Atlantic Copper (formerly Rio Tinto Minera) in 1993.
  • Remaining eighty percent of FCX was publicly listed on NYSE in 1995.
  • In 1997, Freeport McMoRan received approval from Indonesia’s Minister of Environment for the expansion of the milling rate up to 300,000 metric tons of ore per day.
  • On 1998, the fourth concentrator mill expansion completed, Freeport McMoRan became one of the world’s leading producer of copper and gold.

December 1999

  • Received Montgomery-Watson Environmental Audit in December 1999.
  • On 2001, Freeport McMoRan signed a special voluntary Trust Fund agreement with the Amungme and Kamoro villagers.
  • Bought 23.9 million common shares from Rio Tinto for $882 million in 2004.
  • Achieved record copper and gold production in 2005.
  • The company showed consistent performance resulted in record revenue, earnings, and cash flow in 2007. (Production from Grasberg was one of the factors.)
  • Phelps Dodge merged with Freeport McMoRan Copper and Gold Inc. in March 2007.

Freeport McMoRan nature of business?

Freeport McMoRan Copper and Gold Inc is one of the world’s leading producers of copper, molybdenum, and gold. The company markets copper in seven principal forms: Bayway Operations Specialty Copper Products, Continuous Cast Copper Rod, Copper Cathodes, Copper Concentrate, Copper Electrode & Bare Wire, Copper Sulfate, and Magnetite. Gold is used for jewelry, industrial and electronic applications and sold throughout the world. Molybdenum is a key alloying element in steel and the raw material for several chemical-grade products.

Freeport McMoran Copper operations through its principal operating subsidiaries and they continuously develop their mining strategy. The company was headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware on November 10, 1987. The company has principal operating subsidiaries are PT Freeport Indonesia, Freeport McMoran Corporation (formerly Phelps Dodge) and Atlantic Copper.

Freeport McMoRan is known as the largest publicly traded copper and molybdenum producer in the world, mines and mills ores containing copper, gold, molybdenum, and silver.  The company applies “variable cutoff grade” strategy for underground ore bodies used by geologists and geological engineers.

Copper is used as a ductile metal with very high thermal and electrical conductivity.  Pure copper is soft and malleable.  Copper was used as a conductor of heat and electricity, a building material, and are part of various metal alloys.

Molybdenum is the free element, silvery metal with a gray cast. Industrially, molybdenum compounds are used in high-pressure and high-temperature applications, as pigments and catalysts.

Freeport McMoRan Leadership and their background?

Let’s look into people behind the company. Richard C. Adkerson is the President, CEO, director, and has been a board member in Freeport McMoRan since 2006. He previously was CFO from October 2000 to December 2003 and he served as Co-Chairman of the Board of McMoran Exploration Co. (MMR) since 1998. He is CEO since 2003 and president since 2008. He also completed an advanced management program at Harvard Business School (HBS). HBS is part of Harvard University in Boston, Massachusetts, United States. HBS is recognized as one of the top business schools in the world. Mr. Richard C. Adkerson has been with the company for 23 years.

The second-in-command is the CFO. Kathleen L. Quirk has been with the company for 21 years. She worked as the Treasurer of Freeport-McMoran Copper since 2000, then Chief Financial Officer since December 2003.  She was Executive Vice President since March 2007.  Her responsibility includes tax, investor relations, treasury, and finance.  She is a graduate of Louisiana State University with a BS degree in Accounting.

Do you know what does a Treasurer does? A treasury is where currency or things of value are received and paid. The Treasurer heads the treasury.

Who is directing the company? How are the committees structured?

Freeport McMoran Copper board of directors is 12 members with various perspectives and experience in the mining industry, geology, business, finance, economics, accounting, and public affairs. Directors are elected to oversee the activities of a company. We will focus on the members charged with heading the committees.

Robert A. Day is an independent and nonexecutive director since 1995, director of McMoran exploration, founding chairman of W. M. Keck Foundation, and chairman of the audit committee of FCX. Graham H. Devon, Jr. is an independent and nonexecutive director since 2000. He was the President of R. E. Smith Interests, and chairman of corporate personnel committee of FCX. Robert J. Allison is an independent and nonexecutive director since 2001. He was chairman of Anadarko Petroleum Corporation and chairman of nominating and corporate governance committee of FCX. Stephen H. Siegel is an independent and nonexecutive director, a founding executive officer of Advanced Delivery & Chemical Systems, Inc. (ADCS), and an investor and current chairman of the public policy committee of FCX.

What is their workforce like?

The competitive edge of the company is the innovation and workforce.  The global workforce totaled of 31,800 employees and 27,400 subcontractors were by unions as of December 31, 2011.

How do they treat their employees? What are the pay and working condition like?

The pay structure of Freeport-McMoran Copper and Gold Inc. is a combination of cash and equity-based incentive payment to attract and retain directors to serve. The principal part of executive officer salary is base salaries, annual incentive awards, and long-term incentive awards; all of these are “total direct compensation.” As a rough guide, the individual base salary is about 13% of the executive officers’ salary.

The compensation committee links the company’s performance to incentive compensation using cash (short-term), performance-based restricted stock units (long-term), and stock options (long term). Nonexecutive directors and advisory directors may exchange or defer all or part of their annual fee and meeting fees for an equivalent number of shares of the common stock on the payment date, based on the fair market value.

Gossips

What is happening with the company lately? On 14 December 2011, Reuter reported that FCX resolved PT-FI labor problems and updates the status of PT-FI operations. The labor strike that started on September 15, 2011, has ended.

Tatyana Shumsky, with 4-traders.com through Dow Jones Newswires, reported on March 19, 2012, that (FCX) copper-mining operations in Indonesia are back after labor-related disruptions during the first quarter. Richard Adkerson said. “We are seeing progress in returning to normal operations. Milling rates are back above 200,000 tons per day; from around 115,000 throughout the first quarter.” Reuters reported on April 19, 2012; a sharp drop in first-quarter profit, partly due to lower metal sales following labor problems at its Grasberg mine in Indonesia. The result was a loss of 80 million pounds of copper output and around 125,000 ounces of gold production.

Freeport McMoRan Value Investing

So far we have been exploring the qualitative side provided by our Stories team.  The rest of the post will be from our Numbers team. They will help us analyze the numbers and interpret the meanings.

Freeport McMoRan Balance Sheet

Liquidity

In value investing, the balance sheet is a formal statement showing the financial condition, or the ability to pay its obligations, with liquidity, solvency, and stability of the company. We can find out what happened and not what is happening.  It shows the past. Here the working capital shows that FCX has sufficient resources to meet their current obligations; current asset was greater than its current debts, with a slight dip in 2008 to 2010, overall the ratio is impressive at 2.62, on average. The average for quick ratio was 1.31. This consists of liquid assets over the current liability.  By 2011 both ratios had increased from the dip in 2008.

Working capital, current ratio and quick ratio for 2007 to 2011 are as follows:

  • Working capital was $2,034, 2,075, 4,464, 6,088 and 7,107. Average of $4,353.60 with an uptrend.
  • Current ratio was 2.90, 1.66, 2.48, 2.62, and 3.42, averaged 2.62. To put it another way; there was $2.62 of current assets for every $1 of current liabilities, on average.
  • Quick ratio was 0.75, 0.66, 1.49, 1.64, and 2.03. Like having $0.75, 0.66, 1.49, 1.64, and 2.03 for every $1 of current liabilities.

The company’s accounts receivable turnover is averaging 12 times; funds are not tied up in receivables. Average collection period was 33 days. This number indicates how strict or relax the company’s credit policy towards the customer. Freeport-McMoRan Copper & Gold Inc. takes an average of 65 days to sell the entire inventory while payables took an average of 24 days to be paid.

Freeport McMoRan Cash Conversion Cycle

Cash conversion cycle shows an average of 73 days during the five years of operation. This measures liquidity and provides the interval in which additional short-term financing might be needed. It takes only a month for receivable and two months for inventory to turn into cash. During the same period, the company can pay creditors within 24 days. The details below are the breakdown of the various parts needed for the cash conversion cycle for the period between 2007 and 2011:

  • A rough gauge on how fast receivables are converted to cash. Accounts receivable turnover was 13.1, 14.7, 8.3, 7.8, and 18.3. Average collection period was 28, 25, 44, 47, and 20 days. Average of 33 days.  This measure the movement of accounts receivables or the average time it takes to collect an account.
  • Inventory turnover was 5.87, 6.4, 5.2, 5.5, and 5.4. Average of 5.7 times inventory. Inventory conversion period was 62.2, 57, 70, 66, 67.6 days. The company takes about 65 days to sell the entire inventory.
  • Payables turnover ratio was 14.2, 15.3, 16.9, 14.9, and 15.4. Average of 15.3 times. Average day payable was 25.7, 23.9, 21.6, 24.5, and 23.7days. Average of 24 days for payables to be paid.
  • Thus, the cash conversion cycle was 64, 58, 92, 88, and 64 days. Average of 73 days.  The time for cash to complete the operating cycle was 73 days.

To determine how efficient management is we need to look into fixed assets and total assets. The company’s fixed assets turnover ratio was 0.91, 0.92, 0.91, 0.91 and 0.91. The calculation is the ratio of revenue to fixed assets. Total assets turnover ratio was 0.42, 0.76, 0.58, 0.65, and 0.65. The average is 0.612 or 61.2 cents of revenue was generated for every $1 of total assets. Fixed assets turnover was constant for the average five years except in 2008 in which it slightly increased due to increases in total assets.

Leverage

Leverage is when the firm is financed with current or long-term debt capital. The debt ratio is slightly decreasing year after year. On average, 60.6 percent of the total asset is supplied by long-term debt or banks. Debt to equity ratio was high in 2008 since have been decreasing; with an average 170.6 percent. The higher the level of equity the more stable the company’s earnings; the basis for determining the debt ceiling. Solvency has to do with how the company’s ability to meet the interest repayment schedules associated with its long-term obligations. The solvency ratio shows that from 2007 to 2009, after tax net profit plus depreciation is not enough, but in 2010 to 2011 shows a higher solvency ratio of 119 percent and 162 percent respectively. This is enough to service the short and long-term obligations.

Ownership of the company’s total assets are; creditors have 11.6 percent claims on the company’s total assets while the bondholders have 60.6 percent. Owners or stockholders have on average 39.4 percent claim against total assets.  The details for 2007 to 2011 are below:

  • Debt ratio was 0.55, 0.75, 0.65, 0.57and 0.51. The average was 0.606 or 60.6 percent of the company’s total liabilities against its total assets.
  • Debt to equity ratio was 1.23, 3.05, 1.85, 1.35, and 1.05. Averaged 170.6 percent of total liabilities against total equity; the extent the company is levered.
  • Solvency ratio was 0.52, -1.43, 0.55, 1.19, and 1.62.
  • Current liabilities to total assets were 0.10, 0.14, 0.12, 0.13 and 0.09.
  • Total liabilities to total assets were 0.55, 0.75, 0.65, 0.57and 0.51.
  • Equity to total asset was 0.45, 0.25, 0.35, 0.43 and 0.49.

Efficiency

Return on asset (ROA) reflects what was earned on the investment of all the resources committed to the company. On average, the return was -10 percent and -16.3 percent from capital from equity holders or return on equity (ROE). Both ratios show a dip in 2008 and gradually recovered from 2009 to 2011; the operations had a stable increase. Here’s the summary for 2007 to 2011:

  • Return on asset was 7.3, -47.4, 10.6, 14.8, and 14.2. Average of -10 percent. The company lost 10 percent of the value in the five years period.
  • Return on equity was 16.3, -191.7, 30.1, 34.7, and 29.2.

Freeport McMoRan Income Statement

Now, let’s focus on the income statement. Why are we looking at the income statement? What are the trends for revenue and profit margins; what are the various margins. What is the relationship between revenue and margins? What are some key items affecting and driving these trends? How is the company’s ability to manage costs? How profitable is the company?

We have to determine how the company generates profit or loss. Two key areas we will be exploring are the total volume of business the company can generate and at the same time what sort of margins throughout the production cycle from gross profit margins to net profit margins. We analyze the revenue to determine the trend; if a trend was, what is the likelihood the trend will continue, and how that will affect the company’s profit? The second area is the margins; to help us determine how competitive the company with the competition.

Income

Revenue from 2007 to 2011 was trending up; 2009 was the year it went down by 15 percent, averaged in five years was 20 percent. Operating margin loss 71.5 percent in 2008, recovered in 2009 with an increase of 160 percent. The net margin was profitable, in 2008 down by 62.2 percent but recovered gradually by 18 percent, 22.8 percent from 2009 to 2010. Below are the results from 2007 to 2011:

  • Total revenue in $billion was 16.94, 17.8, 15.04, 18.98 and 20.88
  • Gross profit margin in percentage was 42.3, 27.1, 46.7, 50.6 and 47.7.
  • Operating profit margin ratios in percentage were 37.7, -71.5, 42.9, 47.3 and 43.4.
  • Income before tax in percentage was 36.2, -74.7, 38.7, 44.8 and 42.2.
  • Net profit margin was 17.6, -62.2, 18.3, 22.8 and 21.8.

Expenses

We also analyzed the cost and expenses. We want to know how the company managed cost. How these affect operations and what are the total expenses for the year?  The results of cost and other expenses incurred for the year 2007 to 2011 are:

  • The cost of revenue against total revenue was 58, 73, 53, 49 and 52.
  • The operating expense against total revenue in percentage was 5, 99, 4, 3, and 4.
  • Income tax over total revenue in percentage was 14, -16, 15, 16 and 15.

Through the cost of revenue to income tax expense, the management was efficient in managing total expense, except in 2008, wherein, the cost of revenue rose by 15 percent and the total operating expense reached at 99 percent of total revenue.

Freeport McMoRan Cash Flow Statement

To determine how management used funds we have to study the cash flow statement. This statement is used with the balance sheet and income statement.  The cash flow statement shows the incoming funds and the outgoing funds in three areas; operating, investing and financing.

Cash Flow from Operating Activities

Cash from operating activities is generated from the actual business. We can determine what was left from sales after the company pays the expense incurred while selling and converting the sales to cash.

Management was effective in generating cash from the operation. The starting line was the net income, which dropped by -376.5 percent in 2008 and -133.8 percent in 2009, corrected by 56.9 percent 2010. Depreciation increased 41.0 percent in 2008. The unusual item increased by 10848.7 percent in 2008. While, working capital decreased by -171.6 percent in 2008, -35.0 percent in 2009, then, went up 32.7 percent in 2010. Net cash from operating activities decreased by 45.9 percent in 2008 then reversed with a 305 percent increase in 2009, an increase of 42.7 percent and 5.5 percent for 2010 and 2011, respectively.

  • Net income was 3,779, -10450, 3,534, 5,544 and 5,747, average of 1,630.8 for five years.
  • Depreciation was $1,264, 1,782, 1,014, 1,036 and 1,022.
  • Unusual item was 152, 16,642, -56, -115, and -102.
  • Change in working capital was 1,223, -876, -5,692, -755 and -537.
  • Cash from operating activities was 6,225, 3,370, 4,397, 6,273 and 6,620.

Cash Flow from Investing Activities

Next, we will focus on cash from investing. This will provide us with clues on what is happening with the company in buying and selling assets.  Is the company growing organically or through mergers and acquisitions? What is the current direction of the company with investments?

The cash was used throughout the years from 2007 to 2008 to pay for assets and expenses. Fixed asset increased by 35.19 percent in 2008, it went down by 70.64 percent in 2009. The other investing cash flow was in 2009 while cash inflow went up by 982.05 percent.

Below are the results:

  • Purchase of fixed asset was -1,755, -2,708, -1,587, -1,412 and -2,534, average of $1,999.20 for five years.
  • Other investing cash flow was -53, 344, -39, 23 and -26.
  • Cash from investing activities was -14,861, -2,318, -1,601, -1,869 and -2,535 average of -4,636.80 for five years.

Cash Flow from Financing Activities

Cash from financing activities, here we can determine how the company raise funds to finance operations to the acquisition; what management prefer between debt and equity?

The company raised money through debt financing in 2007.  In the same year the outflow of cash to service the debt was high, later the repayment tapered.  What I noticed was that in the same year cash outflow for dividend was not as high as 2008 and 2010. The net inflow of cash in 2007 overshadowed past and later years. After 2007, the company increased the repayment level. The details are below for 2007 to 2011:

  • Financing cash flow items is $-1,223, -482, -473, -688 and -313.
  • Total cash dividends paid is $-596, -948, -229, -980 and -1,423.
  • Issue (retire) debt, net is $5,555, 124, -1,050, -1,654 and -1,265.
  • Cash from financing activities is $9,355, -1,806, -1,012, -3,322 and -3,001.

Sources
History & Development

http://www.fcx.com/company/history.htm
http://en.wikipedia.org/wiki/Freeport-McMoRan
http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.htm
http://finance.yahoo.com/q/pr?s=FCX+Profile

Products & Services

http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.htm
http://www.fcx.com/metals/products.htm
http://www.fcx.com/metals/fmi/tomarket.html

Organizational Structure

http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.ht.
http://en.wikipedia.org/wiki/Freeport-McMoRan
http://www.fcx.com/company/structure.htm

MANAGEMENT

CEO

http://www.fcx.com/ir/bios.htm
http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.htm#s0C0DA546DD21BAB601B0A861FCDDB768
http://images.businessweek.com/slideshows/20110830/highest-paid-ceos-with-mbas/slides/2
http://www.sec.gov/Archives/edgar/data/831259/000119312512191204/d328627ddef14a.htm
http://www.forbes.com/lists/2012/12/ceo-compensation-12_Richard-C-Adkerson_94C5.html

CFO

http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.htm#s0C0DA546DD21BAB601B0A861FCDDB768
http://www.fcx.com/ir/bios.htm#top
http://www.boardroominsiders.com/executive-profiles/5305/Freeport-McMoRan-Copper-and-Gold-Inc./Kathleen-L.-Quirk

Board of Directors & Committees

http://www.sec.gov/Archives/edgar/data/831259/000119312512191204/d328627ddef14a.htm
http://www.fcx.com/ir/board.htm
http://www.reuters.com/finance/stocks/officerProfile?symbol=FCX&officerId=18542
http://www.marketwatch.com/investing/stock/fcx/insiders?pid=21345
http://www.reuters.com/finance/stocks/officerProfile?symbol=FCX&officerId=171535
http://www.reuters.com/finance/stocks/officerProfile?symbol=FCX&officerId=835276

Workforce

http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.htm#s0C0DA546DD21BAB601B0A861FCDDB768

Stories Team: Karla, Janice, Meriam, and Nelly

Numbers Team:  Nelly and Dyne

Edited by Cris

freeport mcmoran copper and gold inc-fcx

Freeport-McMoRan Copper and Gold Inc (FCX) the Mining Company

May 24th, 2012 Posted by Company Research Report No Comment yet

The picture above was taken way back in Arizona; these guys gave a friend a hand when he needed most, brave souls.  I didn’t realize Freeport-McMoran Copper and Gold Inc (FCX) was founded in Arizona until now.

Company Research

What is the background of the company? Its history and development?

  • On 1881, Phelps Dodge entered mining.
  • Freeport has roots in the mineral industry in the early 1900s.
  • Phelps Dodge quit the import-export business in 1906.
  • The company began to diversify in 1931.
  • Produced nickel during WW2, and potash in the 1950s.
  • On 1955, invested $119 million and constructed a nickel-cobalt mine at Moa Bay.
  • On 1956, the company formed Freeport Oil Company.
  • On 1961, the company entered the kaolin business.
  • By 1966, Freeport Indonesia, Inc. was founded.
  • McMoran Oil & Gas was formed in 1967.
  • Construction of an open pit mine began in May 1970.
  • In the mid-1980s, it was the first to use solution extraction and electrowinning.
  • Freeport-McMoran Copper and Gold Inc. was founded in 1987 and is established in Phoenix, Arizona.
  • On 1988, Grasberg copper-gold deposit discovered in Indonesia.
  • On 1989, a series of expansions begun after the Grasberg discovery.
  • On 1991, a new 30-year term contract to 10 years extensions were signed with the Indonesia government.
  • FCX completed the acquisition of Atlantic Copper (formerly Rio Tinto Minera) in 1993.
  • Remaining eighty percent of FCX was publicly listed on NYSE in 1995.
  • In 1997, FCX received approval from Indonesia’s Minister of Environment for the expansion of the milling rate up to 300,000 metric tons of ore per day.
  • On 1998, the fourth concentrator mill expansion completed, FCX became one of the world’s leading producer of copper and gold.
  • Received Montgomery-Watson Environmental Audit in December 1999.
  • On 2001, FCX signed a special voluntary Trust Fund agreement with the Amungme and Kamoro villagers.
  • Bought 23.9 million common shares from Rio Tinto for $882 million in 2004.
  • Achieved record copper and gold production in 2005.
  • The company showed consistent performance resulted in record revenue, earnings, and cash flow in 2007. (Production from Grasberg was one of the factors.)
  • Phelps Dodge merged with Freeport-McMoran Copper and Gold Inc. in March 2007.

What is the nature of business?

Freeport-McMoRan Copper and Gold Inc is one of the world’s leading producers of copper, molybdenum, and gold. The company markets copper in seven principal forms: Bayway Operations Specialty Copper Products, Continuous Cast Copper Rod, Copper Cathodes, Copper Concentrate, Copper Electrode & Bare Wire, Copper Sulfate, and Magnetite. Gold is used for jewelry, industrial and electronic applications and sold throughout the world. Molybdenum is a key alloying element in steel and the raw material for several chemical-grade products.

Freeport McMoran Copper operations through its principal operating subsidiaries and they continuously develop their mining strategy. FCX headquartered in Phoenix, Arizona, incorporated under the laws of the state of Delaware on November 10, 1987. The company has principal operating subsidiaries are PT Freeport Indonesia, Freeport McMoran Corporation (formerly Phelps Dodge) and Atlantic Copper.

FCX is known as the largest publicly traded copper and molybdenum producer in the world, mines and mills ores containing copper, gold, molybdenum, and silver.  FCX applies “variable cutoff grade” strategy for underground ore bodies used by geologists and geological engineers.

Now, what is copper? The other day I was amazed that asparagus grows into a brushing plant, not at all like the one I had for dinner. With that, I wasn’t sure I know what copper does. Karla told me that copper is used as a ductile metal with very high thermal and electrical conductivity. She said, “Pure copper is soft and malleable.” Copper was used as a conductor of heat and electricity, a building material, and are part of various metal alloys.

Molybdenum is the free element, silvery metal with a gray cast. Industrially, molybdenum compounds are used in high-pressure and high-temperature applications, as pigments and catalysts.

Who is running the company and their background?

Let’s look into the people behind the company. Richard C. Adkerson is the President, CEO, director, and has been a board member in FCX since 2006. He previously was CFO from October 2000 to December 2003 and he served as Co-Chairman of the Board of McMoran Exploration Co. (MMR) since 1998. He is CEO since 2003 and president since 2008. He also completed an advanced management program at Harvard Business School (HBS). HBS is part of Harvard University in Boston, Massachusetts, United States. HBS is recognized as one of the top business schools in the world. Mr. Richard C. Adkerson has been with the company for 23 years.

The second-in-command is the CFO. Kathleen L. Quirk has been with the company for 21 years. She worked as the Treasurer of Freeport-McMoran Copper since 2000, then Chief Financial Officer since December 2003.  She was Executive Vice President since March 2007.  Her responsibility includes tax, investor relations, treasury, and finance.  She is a graduate of Louisiana State University with a BS degree in Accounting.

Do you know what does a Treasurer does? A treasury is where currency or things of value are received and paid. The Treasurer heads the treasury.

Who is directing the company? How are the committees structured?

Freeport-McMoran Copper board of directors is 12 members with various perspectives and experience in the mining industry, geology, business, finance, economics, accounting, and public affairs. Directors are elected to oversee the activities of a company. We will focus on the members charged with heading the committees.

Robert A. Day is an independent and nonexecutive director since 1995, director of McMoran exploration, founding chairman of W. M. Keck Foundation, and chairman of the audit committee of FCX. Graham H. Devon, Jr. is an independent and nonexecutive director since 2000. He was the President of R. E. Smith Interests, and chairman of corporate personnel committee of FCX. Robert J. Allison is an independent and nonexecutive director since 2001. He was chairman of Anadarko Petroleum Corporation and chairman of nominating and corporate governance committee of FCX. Stephen H. Siegel is an independent and nonexecutive director, a founding executive officer of Advanced Delivery & Chemical Systems, Inc. (ADCS), and an investor and current chairman of the public policy committee of FCX.

What is their workforce like?

The competitive edge of the company is innovation and workforce.  The global workforce totaled of 31,800 employees and 27,400 subcontractors were by unions as of December 31, 2011.

How do they treat their employees? What are the pay and working condition like?

The pay structure of Freeport-McMoran Copper and Gold Inc. is a combination of cash and equity-based incentive payment to attract and retain directors to serve. The principal part of the executive officer salary is base salaries, annual incentive awards, and long-term incentive awards; all of these are “total direct compensation.” As a rough guide, the individual base salary is about 13% of the executive officers’ salary.

The compensation committee links the company’s performance to incentive compensation using cash (short-term), performance-based restricted stock units (long term), and stock options (long term). Nonexecutive directors and advisory directors may exchange or defer all or part of their annual fee and meeting fees for an equivalent number of shares of the common stock on the payment date, based on the fair market value.

Gossips

What is happening with the company lately? On 14 December 2011, Reuter reported that FCX resolved PT-FI labor problems and updates the status of PT-FI operations. The labor strike that started on September 15, 2011, has ended.

Tatyana Shumsky, with 4-traders.com through Dow Jones Newswires, reported on March 19, 2012, that (FCX) copper-mining operations in Indonesia are back after labor-related disruptions during the first quarter. Richard Adkerson said. “We are seeing progress in returning to normal operations. Milling rates are back above 200,000 tons per day; from around 115,000 throughout the first quarter.” Reuters reported on April 19, 2012; a sharp drop in first-quarter profit, partly due to lower metal sales following labor problems at its Grasberg mine in Indonesia. The result was a loss of 80 million pounds of copper output and around 125,000 ounces of gold production.

Value Investing

So far we have been exploring the qualitative side provided by our Stories team.  The rest of the post will be from our Numbers team. They will help us analyze the numbers and interpret the meanings.

Balance Sheet

Liquidity

In value investing, the balance sheet is a formal statement showing the financial condition, or the ability to pay its obligations, with liquidity, solvency, and stability of the company. We can find out what happened and not what is happening.  It shows the past. Here the working capital shows that FCX has sufficient resources to meet their current obligations; current asset was greater than its current debts, with a slight dip in 2008 to 2010, overall the ratio is impressive at 2.62, on average. The average for quick ratio was 1.31. This consists of liquid assets over the current liability.  By 2011 both ratios had increased from the dip in 2008.

Working capital, current ratio and quick ratio for 2007 to 2011 are as follows:

  • Working capital was $2,034, 2,075, 4,464, 6,088 and 7,107. Average of $4,353.60 with an uptrend.
  • Current ratio was 2.90, 1.66, 2.48, 2.62, and 3.42, averaged 2.62. To put it another way; there was $2.62 of current assets for every $1 of current liabilities, on average.
  • Quick ratio was 0.75, 0.66, 1.49, 1.64, and 2.03. Like having $0.75, 0.66, 1.49, 1.64, and 2.03 for every $1 of current liabilities.

The company’s accounts receivable turnover is averaging 12 times; funds are not tied up in receivables. Average collection period was 33 days. This number indicates how strict or relax the company’s credit policy towards the customer. Freeport-McMoRan Copper & Gold Inc. takes an average of 65 days to sell the entire inventory while payables took an average of 24 days to be paid.

Cash Conversion Cycle

Cash conversion cycle shows an average of 73 days during the five years of operation. This measures liquidity and provides the interval in which additional short-term financing might be needed. It takes only a month for receivable and two months for inventory to turn into cash. During the same period, the company can pay creditors within 24 days. The details below are the breakdown of the various parts needed for the cash conversion cycle for the period between 2007 and 2011:

  • A rough gauge on how fast receivables are converted to cash. Accounts receivable turnover was 13.1, 14.7, 8.3, 7.8, and 18.3. Average collection period was 28, 25, 44, 47, and 20 days. Average of 33 days.  This measure the movement of accounts receivables or the average time it takes to collect an account.
  • Inventory turnover was 5.87, 6.4, 5.2, 5.5, and 5.4. Average of 5.7 times of inventory. Inventory conversion period was 62.2, 57, 70, 66, 67.6 days. The company takes about 65 days to sell the entire inventory.
  • Payables turnover ratio was 14.2, 15.3, 16.9, 14.9, and 15.4. Average of 15.3 times. Average day payable was 25.7, 23.9, 21.6, 24.5, and 23.7days. Average of 24 days for payables to be paid.
  • Thus, the cash conversion cycle was 64, 58, 92, 88, and 64 days. Average of 73 days.  The time for cash to complete the operating cycle was 73 days.

To determine how efficient management is we need to look into fixed assets and total assets. The company’s fixed assets turnover ratio was 0.91, 0.92, 0.91, 0.91 and 0.91. The calculation is the ratio of revenue to fixed assets. Total assets turnover ratio was 0.42, 0.76, 0.58, 0.65, and 0.65. The average is 0.612 or 61.2 cents of revenue was generated for every $1 of total assets. Fixed assets turnover was constant for the average five years except in 2008 in which it slightly increased due to increases in total assets.

Leverage

Leverage is when the firm is financed with current or long-term debt capital. The debt ratio is slightly decreasing year after year. On average, 60.6 percent of the total asset is supplied by long-term debt or banks. Debt to equity ratio was high in 2008 since have been decreasing; with an average 170.6 percent. The higher the level of equity the more stable the company’s earnings; the basis for determining the debt ceiling. Solvency has to do with how the company’s ability to meet the interest repayment schedules associated with its long-term obligations. The solvency ratio shows that from 2007 to 2009, after tax net profit plus depreciation is not enough, but from 2010 to 2011 shows a higher solvency ratio of 119 percent and 162 percent respectively. This is enough to service the short and long term obligations.

Ownership of the company’s total assets are; creditors have 11.6 percent claims on the company’s total assets while the bondholders have 60.6 percent. Owners or stockholders have on average 39.4 percent claim against total assets.  The details for 2007 to 2011 are below:

  • Debt ratio was 0.55, 0.75, 0.65, 0.57and 0.51. The average was 0.606 or 60.6 percent of the company’s total liabilities against its total assets.
  • Debt to equity ratio was 1.23, 3.05, 1.85, 1.35, and 1.05. Averaged 170.6 percent of total liabilities against total equity; the extent the company is levered.
  • Solvency ratio was 0.52, -1.43, 0.55, 1.19, and 1.62.
  • Current liabilities to total assets were 0.10, 0.14, 0.12, 0.13 and 0.09.
  • Total liabilities to total assets were 0.55, 0.75, 0.65, 0.57and 0.51.
  • Equity to total asset was 0.45, 0.25, 0.35, 0.43 and 0.49.

Efficiency

Return on asset (ROA) reflects what was earned on the investment of all the resources committed to the company. On average, the return was -10 percent and -16.3 percent from capital from equity holders or return on equity (ROE). Both ratios show a dip in 2008 and gradually recovered from 2009 to 2011; the operations had a stable increase. Here’s the summary for 2007 to 2011:

  • Return on asset was 7.3, -47.4, 10.6, 14.8, and 14.2. Average of -10 percent. The company lost 10 percent of the value in the five years period.
  • Return on equity was 16.3, -191.7, 30.1, 34.7, and 29.2.

Income Statement

Now, let’s focus on the income statement. Why are we looking at the income statement? What are the trends for revenue and profit margins; what are the various margins. What is the relationship between revenue and margins? What are some key items affecting and driving these trends? How is the company’s ability to manage costs? How profitable is the company?

We have to determine how the company generates profit or loss. Two key areas we will be exploring are the total volume of business the company can generate and at the same time what sort of margins throughout the production cycle from gross profit margins to net profit margins. We analyze the revenue to determine the trend; if a trend was, what is the likelihood the trend will continue, and how that will affect the company’s profit? The second area is the margins; to help us determine how competitive the company with the competition.

Income

Revenue from 2007 to 2011 was trending up; 2009 was the year it went down by 15 percent, averaged in five years was 20 percent. Operating margin loss of 71.5 percent in 2008, recovered in 2009 with an increase of 160 percent. The net margin was profitable, in 2008 down by 62.2 percent but recovered gradually by 18 percent, 22.8 percent from 2009 to 2010. Below are the results from 2007 to 2011:

  • Total revenue in $billion was 16.94, 17.8, 15.04, 18.98 and 20.88
  • Gross profit margin in percentage was 42.3, 27.1, 46.7, 50.6 and 47.7.
  • Operating profit margin ratios in percentage was 37.7, -71.5, 42.9, 47.3 and 43.4.
  • Income before tax in percentage was 36.2, -74.7, 38.7, 44.8 and 42.2.
  • Net profit margin was 17.6, -62.2, 18.3, 22.8 and 21.8.

Expenses

We also analyzed the cost and expenses. We want to know how the company managed cost. How these affect operations and what are the total expenses for the year?  The results of cost and other expenses incurred for the year 2007 to 2011 are:

  • The cost of revenue against total revenue was 58, 73, 53, 49 and 52.
  • The operating expense against total revenue in percentage was 5, 99, 4, 3, and 4.
  • Income tax over total revenue in percentage was 14, -16, 15, 16 and 15.

Through the cost of revenue to income tax expense, the management was efficient in managing total expense, except in 2008, wherein, the cost of revenue rose by 15 percent and the total operating expense reached at 99 percent of total revenue.

Cash Flow Statement

To determine how management used funds we have to study the cash flow statement. This statement is used with the balance sheet and income statement.  The cash flow statement shows the incoming funds and the outgoing funds in three areas; operating, investing and financing.

Cash Flow from Operating Activities

Cash from operating activities is generated from the actual business. We can determine what was left from sales after the company pays the expense incurred while selling and converting the sales to cash.

Management was effective in generating cash from the operation. The starting line was the net income, which dropped by -376.5 percent in 2008 and -133.8 percent in 2009, corrected by 56.9 percent in 2010. Depreciation increased by 41.0 percent in 2008. The unusual item increased by 10848.7 percent in 2008. While, working capital decreased by -171.6 percent in 2008, -35.0 percent in 2009, then, went up 32.7 percent in 2010. Net cash from operating activities decreased by 45.9 percent in 2008 then reversed with a 305 percent increase in 2009, an increase of 42.7 percent and 5.5 percent for 2010 and 2011, respectively.

  • Net income was 3,779, -10450, 3,534, 5,544 and 5,747, average of 1,630.8 for five years.
  • Depreciation was $1,264, 1,782, 1,014, 1,036 and 1,022.
  • Unusual item was 152, 16,642, -56, -115, and -102.
  • Change in working capital was 1,223, -876, -5,692, -755 and -537.
  • Cash from operating activities was 6,225, 3,370, 4,397, 6,273 and 6,620.

Cash Flow from Investing Activities

Next, we will focus on cash from investing. This will provide us with clues on what is happening with the company in buying and selling assets.  Is the company growing organically or through mergers and acquisitions? What is the current direction of the company with investments?

The cash was used throughout the years from 2007 to 2008 to pay for assets and expenses. Fixed asset increased by 35.19 percent in 2008, it went down by 70.64 percent in 2009. The other investing cash flow was in 2009 while cash inflow went up by 982.05 percent.

Below are the results:

  • Purchase of fixed asset was -1,755, -2,708, -1,587, -1,412 and -2,534, average of $1,999.20 for five years.
  • Other investing cash flow was -53, 344, -39, 23 and -26.
  • Cash from investing activities was -14,861, -2,318, -1,601, -1,869 and -2,535 average of -4,636.80 for five years.

Cash Flow from Financing Activities

Cash from financing activities, here we can determine how the company raise funds to finance operations to the acquisition; what management prefer between debt and equity?

The company raised money through debt financing in 2007.  In the same year the outflow of cash to service the debt was high, later the repayment tapered.  What I noticed was that in the same year cash outflow for dividend was not as high as 2008 and 2010. The net inflow of cash in 2007 overshadowed past and later years. After 2007, the company increased the repayment level. The details are below for 2007 to 2011:

  • Financing cash flow items is $-1,223, -482, -473, -688 and -313.
  • Total cash dividends paid is $-596, -948, -229, -980 and -1,423.
  • Issue (retire) debt, net is $5,555, 124, -1,050, -1,654 and -1,265.
  • Cash from financing activities is $9,355, -1,806, -1,012, -3,322 and -3,001.

Sources
History & Development

http://www.fcx.com/company/history.htm
http://en.wikipedia.org/wiki/Freeport-McMoRan
http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.htm
http://finance.yahoo.com/q/pr?s=FCX+Profile

Products & Services

http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.htm
http://www.fcx.com/metals/products.htm
http://www.fcx.com/metals/fmi/tomarket.html

Organizational Structure

http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.ht.
http://en.wikipedia.org/wiki/Freeport-McMoRan
http://www.fcx.com/company/structure.htm

MANAGEMENT

CEO

http://www.fcx.com/ir/bios.htm
http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.htm#s0C0DA546DD21BAB601B0A861FCDDB768
http://images.businessweek.com/slideshows/20110830/highest-paid-ceos-with-mbas/slides/2
http://www.sec.gov/Archives/edgar/data/831259/000119312512191204/d328627ddef14a.htm
http://www.forbes.com/lists/2012/12/ceo-compensation-12_Richard-C-Adkerson_94C5.html

CFO

http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.htm#s0C0DA546DD21BAB601B0A861FCDDB768
http://www.fcx.com/ir/bios.htm#top
http://www.boardroominsiders.com/executive-profiles/5305/Freeport-McMoRan-Copper-and-Gold-Inc./Kathleen-L.-Quirk

Board of Directors & Committees

http://www.sec.gov/Archives/edgar/data/831259/000119312512191204/d328627ddef14a.htm
http://www.fcx.com/ir/board.htm
http://www.reuters.com/finance/stocks/officerProfile?symbol=FCX&officerId=18542
http://www.marketwatch.com/investing/stock/fcx/insiders?pid=21345
http://www.reuters.com/finance/stocks/officerProfile?symbol=FCX&officerId=171535
http://www.reuters.com/finance/stocks/officerProfile?symbol=FCX&officerId=835276

Workforce

http://www.sec.gov/Archives/edgar/data/831259/000083125912000014/a2011form10-k.htm#s0C0DA546DD21BAB601B0A861FCDDB768

Stories Team: Karla, Janice, Meriam, and Nelly

Numbers Team:  Nelly and Dyne

Accenture plc acn

Accenture Plc (ACN) a Multi-Business Company

May 15th, 2012 Posted by Company Research Report No Comment yet

Company Research

What is the background of the company? Its history and development?

To understand Accenture Plc, I believe, it is important to understand its history. Accenture started back in 1953, much like others; out of necessity.  Through the years, the company went through massive changes.

  • Started in 1993 as a business and technology consulting division of accounting firm Arthur Andersen.
  • In the 90s, there was tension between Andersen Consulting and Arthur Andersen.
  • And by January 1993, the company was doing business in 23 countries throughout North America, Europe, Asia, and the Pacific.
  • In addition, January 1, 2001, Andersen Consulting became Accenture.
  • And on July 19, 2001, Accenture went public with the New York Stock Exchange (NYSE).
  • Meanwhile, in October 2002, the General Accounting Office (GAO) identified Accenture as publicly-traded federal contractors incorporated in a tax haven country.
  • Moreover, February 29, 2012, the company was named as a defendant in the litigation.
  • Lastly on March 21, 2012, the Board of Directors declared a cash dividend of $0.675 per share on Class A ordinary shares.

What is the nature of Accenture Plc business?

Accenture PLC is a global company, organized to improve their client’s operations. They supply people with the skills to get a job done; the technology to accomplish a task; or expertise to outsource a business function. Noteworthy, Accenture owns the following companies: Coritel BPM, Avanade, Navitaire, Accenture Federal Services, Accenture Defense Group, Accenture Technology Solutions, Accenture SAP, Digiplug, Accenture Mobility, Accenture Interactive, and  Accenture CAS.

Accenture is a management consulting company located in Dublin, Republic of Ireland. The business is providing technology services and outsourcing. Outsourcing is common these days but It turns out the word outsourcing was used near the turn of the 21st century, to mean contracting the work which previously done in-house to some third party provider.

Business Extension

Accenture’s have businesses in the digital phone, local and long distance video phone, high-speed internet, wireless, television, home security, home security and automation, computer support, energy,  small business, and services.  I had no idea Accenture was into so many businesses.

They are organized into five segments within the company; Communications, Media & Technology, Financial Services, Health, and Public Service and Products and Resources.  At the center of these segments, Accenture’s global delivery network is focused in India and the Philippines.

I wasn’t sure what it meant so I went to their website to get this point clarified. According to the website, it is the ability to tab on a global pool of talents to meet their client’s needs, and at the moment, their talent pool comes from India and the Philippines. As of February 29, 2012, the total employment was 246,000, an increase of 2,000 additional employee since November 30, 2011, due to demands.

Who is running the company and their background?

The CEO of the company is Pierre Nanterme. He is responsible for making decision and policy for the company. He is on the Board of Directors. Meanwhile, Mr. Nanterme is the one coming up with the plans and getting it implemented. His job is to interact with clients and stakeholders of the company. Further, he joined Accenture in 1993 and in 2011 was made CEO. Furthermore, he is a graduate from ESSEC (École Supérieure des Sciences Économiques et Commerciales) Business School in Paris.

Second, in command, Pamela J. Craig serves as Chief Financial Officer. She is responsible for accounting, treasury, tax, investor relations, finance, and strategic planning. She joined in 1979 as a certified public accountant. Three years later shifted to consulting and nine years afterward made partner in 1991. She has a Master of Business Administration degree from New York University and a Bachelor degree with honors in economics from Smith College.

Who is directing the company? How are the committees structured?

The Board of Directors governs and oversee the strategy, operations, and management of Accenture. They look after the senior management for the owners.  Here we are looking for competent and honest people to represent equity stakeholders. They serve in the Audit Committee, Compensation Committee, Nominating Committee, Corporate Governance Committee, and the Advisory Committee.

Audit Committee is headed by William L. Kimsey, a Director since 2003. Dennis F. Hightower is a Director since 2010, he is the Chairman of both Compensation and Nominating Committee. The Corporate Governance Committee is lead by Charles Giancarlo, a Director since 2008.

What is their workforce like?

Accenture has more than 246,000 employees with varied experience and expertise serving it’s clients globally in 120 countries within five segments.  The employees have access to what they called clients engagements teams.  These are subcontractors, experts, professionals, and specialists. The company considers employees as the most important asset.

How do they treat their employees? What are the pay and working condition like?

Employees are paid on a total compensation package. The cash portion has three components: base compensation,  annual bonus plan, and individual performance. There are three performance programs:  Key Executive Performance Share, Senior Officer Performance Equity Award, and Performance Equity Award. In addition, employees are encouraged to balance career aspiration with a healthy lifestyle, through what they called “Total Rewards” package. I like the ideas of a total reward concept.  I wonder how that works in the real world?

Gossips

According to The Street published by Business Wire on April 26, 2012: Accenture Claim Components, was rated “Strong Positive”, the highest possible rating. In Gartner’s latest “Market Scope for North American Property and Casualty Insurance Claims Management Modules.”

What is Accenture Claim Components? It is a web-based technology solution designed to help insurers from the world’s largest to smaller carriers. To improve the efficiency of their claims in handling operations. In addition, more than 65,000 claims handlers worldwide use it to process more than 40 million insurance claims each year. The system is linked to the carrier’s financials and reserve management.

As Lead Management Consultant

Reuters news on Monday, 13 Feb 2012, Accenture PLC was selected as the lead management consultant and information technology partner under a contract signed in June 2011. This is to develop a new national crime management system for the Norwegian National Police Directorate (POD) to support police investigations and criminal prosecutions in Norway.

However on earlier news from Reuters written by Siddharth Cavale on Thursday, Dec 15, 2011: Chief Financial Officer Pamela Craig said: “The company also cut its earnings forecast for the fiscal year by 4 cents to $3.76-$3.84 per share, to reflect foreign exchange fluctuations.”

Latest News

According to a report published by Business Wire on April 25, 2012, Mark Spelman, managing director, Strategy, Accenture said,

Quote: “There’s a double paradox in that European businesses are cutting back on skills development at the very time when they should invest more, and skills shortages are persisting in spite of a very large pool of unused talent here and across the world,”.

Value Investing

Balance Sheet

Now, we continue with our analysis of the financial results for the past five years, from 2007 to 2011. Currently, our Numbers team is responsible for helping us make sense; decode the meaning behind the numbers. Over time our goal is to make the analysis as simple as can possibly be. However, that will take time. Meanwhile, we continue to share with you what we currently have; the quality of our current report. 

Rio, in our Numbers team, wrote, “The company was able to meet its current obligations; payment of salaries to its staffs, utility bills and make loan payments. On average, there are $1.4 of assets to every $1 of liabilities.” How do we know that? Look at working capitals, current ratios and quick ratios for 2007 to 2011. Further, working capitals were 1,091, 2,311, 2,751, 2,996 and 3,565, respectively.  Furthermore, current ratios and quick ratios were 1.2, 1.3, 1.4, 1.5 and 1.4.

Cash Conversion Cycle

Cash conversion cycle averaged 14 days for five years of operation from 2007 to 2011; the length of time for cash to complete the operating cycle. It is a measure of liquidity. It also indicates the time interval of which additional short-term financing might be available.

Solvency pertains to the company’s ability to meet the interest costs and repayment schedules associated with its long-term debts. Creditors have 54 percent claim on the company’s total assets while the bondholders have a 78 percent claim on the company, on average. While the stockholders have an average of 22 percent claim against total assets.

Return on Assets (ROA)

Return on assets (ROA) reflects what the company earned on the investment of all the financial resources committed to the firm. Accenture earned on average 13.32 percent from the total assets used in the company.  Moreover, the return on equity averaged 60.88 percent; 60.2, 66.6, 56.1, 62.8 and 58.7, for 2007 to 2011, respectively. 

Income Statement

Let’s focus our attention in on income and expense over a period of time and to provide important insights into how effective the management in controlling its expense.

  • Total revenues in $billion were 21.42, 25.31, 23.17, 23.09 and 27.35.
  • While, gross profit margins in percentage were 28, 28, 30, 31 and 31.
  • Likewise, operating profit margin ratios in percentage were 12, 12, 11, 13 and 13.
  • Income before taxes in percentage were 12, 12, 12, 13 and 13.
  • And, the Income after-tax margins in percentage were 8, 9, 8, 9 and 9.
  • Moreover, net profit margins in percentage were 6, 7, 7,  8, and 8.

Explanation

The company was able to generate sufficient revenue for its daily business operation in the five years. Gross profit margin is trending up. Its operating profit margin is stable at an average of 12 percent. Income before taxes and income after taxes were 12 percent and 8 percent, respectively. Likewise, the net profit margin indicates a stable margin of 7 percent during its five years of operation.  Overall, shows the profitability of the company.

Expenses for the period 2007 to 2011:

  • The cost of revenue against total revenue in percentage was 72, 72, 70, 69 and 69.
  • While operating expense against total revenue was 16, 16, 17, 19 and 18.
  • In addition, the income tax rate was 34.2, 29.3, 27.6, 29.3 and 27.3 percent of the taxable income.

Explanation

All expenses were categorized. The cost of revenue or the direct costs incurred in producing the revenue shows an average of 70 percent. While the operating expense or the selling, general and the administrative expense was 17 percent. In addition, income tax represented 4 percent, on average. The overall expense was 91 percent plus the extraordinary items. Total overall expenses were 98.2 percent and the remaining  7.08 percent, as the net profit.

Return on Asset Ratio

The return on assets ratio, in general, indicates an upward trend, except in 2009 where the rate went down by 1 percent. It gives the investors a return of $0.13 for every $1 investment in assets. Return on equity gives the investors a decent return of  61 percent or $0.61 for every $1 of equity.  The earning per share indicates favorable results. Profitability ratios for 2007 to 2011:

  • Return on asset was, 12, 14., 13, 14. and 15 for every $1 of assets.
  • On the other hand, return on equity was 60, 67, 56, 63 and 59 for every $1 of equity.
  • Moreover, the earnings per share (EPS) was 2, 3, 2, 3 and 3.

Cash Flow

Cash flow statement provides the in and outs of the movement of cash in three key areas; operation, investing and financing. Cash flow from operating activities showed that the company has more than enough funds for its operating activities from 2007 to 2011. The last bullet point below provides a wonderful upward trend of the company cash injection from running the business.

Facts

  • Net Income in $billion was 1243.15, 2197.19, 1938.15, 2060.46 and 2553.24, average of 1998.44.
  • On the other hand, depreciation in $million was 444.5, 491.42, 498.59, 474.69 and 513.26.
  • Non-cash items in $million was 798.3, 376.56, 785.03, 470.96 and 532.78.
  • In addition, changes in working capital were $252.29, -171.97, 1.42, 26.78 and 38.85.
  • Moreover, cash flow from operating activities was $2630.57, 2803.25, 3160.20, 3091.62 and 3441.74.

Explanation

Cash flow from investing activities showed a negative balance in five years period of operation. Total cash inflow was $1288.48 while total cash outflow was -$3185.26. Here the negative balance isn’t necessarily a bad thing.  The amount of outflow exceeds the incoming funds.  The company must be exchanging cash for assets. The details for 2007 to 2011 (in dollars):

  • Cash flow from investing activities was -$350.45, -323.99, -245.17, -273.77 and -703.39. Total of -1896.77.
  • Moreover, cash outflow was -$-1250.46, -646.17, -274.73, -292.83 and -721.07. Total of -3185.26.

Cash Flow from Borrowing

The last areas are the cash flow from borrowing or repaying a liability. Cash flow from financing activities also has a negative balance for five years period. The company is reducing its liability. Financing activities from 2007 to 2011 (in dollars):

  • Cash flow from financing activities was -$2127.71, -2161.52, -1850.30, -2429.03 and  -2121.50.
  • In addition, the total cash inflow was -$1819.70, -1820.27, -1450.67, -1633.85 and -1614.51; total of -8339.
  • Likewise, total cash outflow was -$308.01, -341.26, -399.63, -795.17 and -506.99; total of -2351.06.

Written by: Janice, Meriam, Karla, Nelly, Cris, and Rio

Edited by Cris

Interested in learning more about the company? Here’s investment valuation for the pricing.

Accenture plc acn

Accenture Plc (ACN) a Multi-Business Company

May 15th, 2012 Posted by Company Research Report No Comment yet

Company Research

What is the background of the company? Its history and development?

To understand Accenture Plc (ACN) I believe, it is important to understand its history. Accenture started back in 1953, much like others; out of necessity.  Through the years, the company went through massive changes.

  • Started in 1993 as a business and technology consulting division of accounting firm Arthur Andersen.
  • In the 90s, there was tension between Andersen Consulting and Arthur Andersen.
  • By January 1993, the company was doing business in 23 countries throughout North America, Europe, Asia, and the Pacific.
  • January 1, 2001, Andersen Consulting became Accenture.
  • On July 19, 2001, Accenture went public with the New York Stock Exchange (NYSE).
  • In October 2002, the General Accounting Office (GAO) identified Accenture as publicly-traded federal contractors incorporated in a tax haven country.
  • February 29, 2012, the company was named as a defendant in the litigation.
  • On March 21, 2012, the Board of Directors declared a cash dividend of $0.675 per share on Class A ordinary shares.

What is the nature of Accenture Plc business?

Accenture PLC is a global company, organized to improve their client’s operations. They supply people with the skills to get a job done; the technology to accomplish a task; or expertise to outsource a business function. Accenture owns the following companies: Coritel BPM, Avanade, Navitaire, Accenture Federal Services, Accenture Defense Group, Accenture Technology Solutions, Accenture SAP, Digiplug, Accenture Mobility, Accenture Interactive and  Accenture CAS.

Accenture is a management consulting company located in Dublin, Republic of Ireland. The business is providing technology services and outsourcing. Outsourcing is common these days but It turns out the word outsourcing was used near the turn of the 21st century, to mean contracting the work which previously done in-house to some third party provider.

Accenture’s have businesses in the digital phone, local and long distance video phone, high-speed internet, wireless, television, home security, home security and automation, computer support, energy,  small business, and services.  I had no idea Accenture was into so many businesses.

They are organized into five segments within the company; Communications, Media & Technology, Financial Services, Health, and Public Service and Products and Resources.  At the center of these segments, Accenture’s global delivery network is focused in India and the Philippines.

I wasn’t sure what it meant so I went to their website to get this point clarified. According to the website, it is the ability to tab on a global pool of talents to meet their client’s needs, and at the moment, their talent pool comes from India and the Philippines. As of February 29, 2012, the total employment was 246,000, an increase of 2,000 additional employee since November 30, 2011, due to demands.

Who is running the company and their background?

The CEO of the company is Pierre Nanterme. He is responsible for making decision and policy for the company. He is on the Board of Directors. Mr. Nanterme is the one coming

Note:

Research Reports can be found under the company tab.