All the information and financial statements are listed below along with the two questions that are being asked.
(a) Based on the information contained in these financial statements, compute free cash flow for each company. (Show a negative free cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000). Enter amounts in thousands.)
| | | Columbia Sportswear Company | | VF Corporation |
| Free cash flow (in thousands) | | |
(b) What conclusions concerning the management of cash can be drawn from the free cash flow data?
Appendix B Specimen Financial Statements: Columbia Sportswear Company Columbia Sportswear Company is a leader in outdoor sportswear. The following are Columbia's financial statements as presented in its 2016 annual report. The complete annual report, including notes to the financial statements, is available at the company's website. COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Cost of sales ....................................... Gross profit ................................................... Selling, general and administrative expenses . . . . . . Net licensing income. .......................................... Income from operations .... Year Ended December 31, 2016 2015 2014 $ 2.377.045 $ 2,326,180 $ 2.100.590 1,266,697 1,252,680 1,145,639 1,110,348 1,073,500 954,951 864,084 831,971 763,063 10,244 8,192 6,956 256,508 249,721 198,844 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Year Ended December 31. 2016 2015 198,439 $ 179,851 $ 2014 141.859 (2) 843 6 (2.908) 10 7.751 Net income ................................................... $ Other comprehensive loss: Unrealized holding gains (losses) on available-for-sale securities (net of tax effects of $0, ($3), and (S5), respectively). ................ Unrealized gains (losses) on derivative transactions (net of tax effects of ($1.922). ($849) and ($1.507), respectively)...... Foreign currency translation adjustments (net of tax effects of ($347). (S760) and $1,023, respectively) ........., Other comprehensive loss................. Comprehensive income... Comprehensive income attributable to non-controlling interest. .......... Comprehensive income attributable to Columbia Sportswear Company.... $ (4.485) (3,644) 194.795 4.678 190,117 (34,887) (37.801) 142.050 4,382 137,668 (27.789) (20.028) 121,831 4.185 117,646 $ $ See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) December 31, 2016 2015 ASSETS Current Assets: Cash and cash equivalents..... ....... $ 551,389 $ 369,770 Short-term investments .................... ......... 472 629 Accounts receivable, net (Note 5)....... 333,678 371.953 inventories. .................. ............................. 487,997 4 73,637 Prepaid expenses and other current assets... 38.487 33.400 Total current assets....... 1.412.023 1.249.389 Property, plant, and equipment, net (Note 6)....... 279,650 291,687 Intangible assets, net (Note 7) ......... .... 133,438 138,584 Goodwill (Note 7). ....................... 68,594 68,594 Deferred income taxes (Note 10)... 92,494 76,181 Other non-current assets. 27,695 21.718 Total assets ........................ . $2.013.894 $ 1.846.153 LIABILITIES AND EQUITY Current Liabilities: Short-term borrowings (Note 8)....... $ 1.940 Accounts payable........ 215,048 217.230 Accrued liabilities (Note 9).... .... 142,158 141,862 Income taxes payable (Note 10) ........ ... 5,645 5,038 Total current liabilities........... 362,851 366,070 Note payable to related party (Note 22)....... 14.053 15.030 Other long-term liabilities (Notes 11, 12)... 42.622 40.172 Income taxes payable (Note 10) ........ 12,710 8.839 Deferred income taxes (Note 10) ....... 147 229 ...................................... 432,383 430,340 Total liabilities ....... Commitments and contingencies (Note 13) Shareholders' Equity: Preferred stock: 10,000 shares authorized: none issued and outstanding ........... Common stock (no par value); 250,000 shares authorized; 69,873 and 69,277 issued and outstanding (Note 14)....... Retained earnings ...... Accumulated other comprehensive loss (Note 17)....... Total Columbia Sportswear Company shareholders' equity ......... Non-controlling interest (Note 4).............................................. .... Total equity.............. Total liabilities and equity ...... Retained earnings EEEEEEEEEEEEEEEE 53,801 34,776 1,529,636 1,385,860 (22,617) (20,836) 1,560,820 1,399.800 20,691 16.013 1,581,5111,415,813 $ 2,013,894 $1,846,153 See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2015 2016 2014 $ 198,439 $ 179,851 $ 141.859 Cash flows from operating activities: Net income. ......... ......... Adjustments to reconcile net income to net cash provided by operating activities: ..... Depreciation and amortization ................................ Loss on disposal or impairment of property, plant, and equipment.... Deferred income taxes ....................................... Stock-based compensation........ Excess tax benefit from employee stock plans...... Changes in operating assets and liabilities: ...... Accounts receivable . . . . . . ..... 60,016 4,805 (19,178) 10,986 56,521 5,098 (11,709) 11,672 (7,873) 54,017 481 (6,978) 11,120 (4,927) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other current assets ...... Other assets. ....... Accounts payable ....... Accrued liabilities..... Income taxes payable ..... Other liabilities ......... Net cash provided by operating activities................ 36,710 (18,777) (5,452) (5,948) 1,483 4,847 4,768 2,468 275,167 (40,419) (103,296) 4,411 (2,524) 11,418 (2,017) (10,994) 4,966 95,105 (31,478) (62,086) (4,869) 4.291 41.941 35,051 1,166 6,195 185,783 (21,263) 21,263 (49,987) (38,208) 64,980 (69,917) 144 (43,001) (188,467) (48,243) 1 12,895 (60,283) 71 (184,027) 97 (49,890) 62,885 (64,825) 13,167 (5,117) Cash flows from investing activities: Acquisition of business, net of cash acquired ........... Purchases of short-term investments .. Sales of short-term investments.......... Capital expenditures............................................ Proceeds from sale of property, plant, and equipment. .................. Net cash used in investing activities ...... Cash flows from financing activities: Proceeds from credit facilities ........... Repayments on credit facilities .................... Proceeds from issuance of common stock under employee stock plans .... Tax payments related to restricted stock unit issuances................. Excess tax benefit from employee stock plans ....................... Repurchase of common stock ..................................... Cash dividends paid....................... Proceeds from note payable to related party ............. Net cash used in financing activities...... Net effect of exchange rate changes on cash ............ Net increase (decrease) in cash and cash equivalents...... Cash and cash equivalents, beginning of year ................. Cash and cash equivalents, end of year................ ........ $ Supplemental disclosures of cash flow information: Cash paid during the year for income taxes.......................... $ Cash paid during the year for interest on note payable to related party .... Supplemental disclosures of non-cash investing activities: Capital expenditures incurred but not yet paid ...... 53,429 (51,479) 17,442 (4,895) 7,873 (70,068) (43,547) (11) (48,122) 52,356 (52,205) 22.277 (3,141) 4,927 (15,000) (39,836) 16,072 (14,550) (11,137) (23,931) 437,489 413,558 CUIVICUS . . . . (42,023) (1,635) 181,619 369,770 551,389 $ (91,245) (4.647) (43,788) 413,558 369,770 $ $ $ 70,424 1,049 87,350 1,115 53,958 838 2,710 4,698 7.196 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF EQUITY (In thousands) Columbia Sportswear Company Shareholders' Equity Common Stock Accumulated Other Shares Retained Comprehensive Outstanding Amount Earnings Income (Loss) 69,190 $ 52,325 $1,157,733 $ 35,360 - 137,173 Non- Controlling Interest $ 7,446 4,686 Total $ 1,252,864 141,859 - 10 - 10 7,751 (27,288) - (501) 7,751 (27.789) (39,836) (39,836) - BALANCE, JANUARY 1, 2014...... Net income ................................ Other comprehensive income (loss): Unrealized holding gains on available-for-sale securities, net ..... Unrealized holding gains on derivative transactions, net ...................... Foreign currency translation adjustment, net .. Cash dividends ($0.57 per share).............. Issuance of common stock under employee stock plans, net ................ Tax adjustment from stock plans ...... Stock-based compensation expense ............ Repurchase of common stock BALANCE, DECEMBER 31, 2014 ........ Net income ............................... Other comprehensive loss: Unrealized holding losses on available-for- sale securities, net.... 1,059 - - (421) 69,828 - 19,136 5,119 11,120 (15,000) 72,700 - 19,136 5,119 11,120 (15,000) 1,355,234 179,851 1,255,070 174,337 15,833 - - 11,631 5,514 - - - 0 - 0 (2,908) (33,755) (1,132) - (2,908) (34,887) (43,547) (43,547) 835 - - (1,386) 69,277 12,547 7,925 11,672 (70,068) 34,776 - 12,547 7,925 11,672 (70,068) 1,415,813 198,439 1,385,860 191,898 (20,836) - 16,013 6,541 Unrealized holding losses on derivative transactions, net ...................... Foreign currency translation adjustment, net.. Cash dividends ($0.62 per share)..... Issuance of common stock under employee stock plans, net .... Tax adjustment from stock plans ........... Stock-based compensation expense... Repurchase of common stock. ................ BALANCE, DECEMBER 31, 2015 ........ Net income ............................... Other comprehensive income (loss): Unrealized holding losses on available-for- sale securities, net.... Unrealized holding gains on derivative transactions, net ...................... Foreign currency translation adjustment, net.. Cash dividends ($0.69 per share)..... Issuance of common stock under employee stock plans, net .............................. Stock-based compensation expense... Repurchase of common stock. ...... BALANCE, DECEMBER 31, 2016 ......... (2) - (2) 686 (2,465) 157 (2,020) - 843 (4.485) (48,122) (48,122) - - 596 8,050 - 10,986 - (11) 69,873 $ 53,801 $1,529,636 8,050 10,986 (11) $ 1,581,511 $ (22,617) $ 20,691 See accompanying notes to consolidated financial statements Appendix C Specimen Financial Statements: VF Corporation VF Corporation is a leader in outdoor sportswear. The following are VF's financial statements as presented in its 2016 annual report. The complete annual report, including notes to the financial statements, is available at the company's website. VF CORPORATION Consolidated Balance Sheets December 2016 2015 In thousands, except share amounts 1.227,862 $ 944,423 ASSETS Current assets Cash and equivalents Accounts receivable, less allowance for doubtful accounts of $21.131 in 2016 and $23,275 in 2015 Inventories Other current assets Current assets of discontinued operations Total current assets 1,197,678 1,569,325 298.233 1,289,962 1,555,360 284.215 89,176 4,163,136 4,293,098 Columbia Sportswear Company's financial statements are presented in Appendix B. Click here to view Appendix B. Financial statements of VF Corporation are presented in Appendix C. Click here to view Appendix C. (a) Based on the information contained in these financial statements, compute free cash flow for each company. (Show a negative free cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000). Enter amounts in thousands.) Columbia Sportswear Company VF Corporation XULLE Free cash flow in thousands) Columbia Sportswear Company's financial statements are presented in Appendix B. Click here to view Appendix B. Financial statements of VF Corporation are presented in Appendix C. Click here to view Appendix C. (b) What conclusions concerning the management of cash can be drawn from the free cash flow data? Appendix B Specimen Financial Statements: Columbia Sportswear Company Columbia Sportswear Company is a leader in outdoor sportswear. The following are Columbia's financial statements as presented in its 2016 annual report. The complete annual report, including notes to the financial statements, is available at the company's website. COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Cost of sales ....................................... Gross profit ................................................... Selling, general and administrative expenses . . . . . . Net licensing income. .......................................... Income from operations .... Year Ended December 31, 2016 2015 2014 $ 2.377.045 $ 2,326,180 $ 2.100.590 1,266,697 1,252,680 1,145,639 1,110,348 1,073,500 954,951 864,084 831,971 763,063 10,244 8,192 6,956 256,508 249,721 198,844 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Year Ended December 31. 2016 2015 198,439 $ 179,851 $ 2014 141.859 (2) 843 6 (2.908) 10 7.751 Net income ................................................... $ Other comprehensive loss: Unrealized holding gains (losses) on available-for-sale securities (net of tax effects of $0, ($3), and (S5), respectively). ................ Unrealized gains (losses) on derivative transactions (net of tax effects of ($1.922). ($849) and ($1.507), respectively)...... Foreign currency translation adjustments (net of tax effects of ($347). (S760) and $1,023, respectively) ........., Other comprehensive loss................. Comprehensive income... Comprehensive income attributable to non-controlling interest. .......... Comprehensive income attributable to Columbia Sportswear Company.... $ (4.485) (3,644) 194.795 4.678 190,117 (34,887) (37.801) 142.050 4,382 137,668 (27.789) (20.028) 121,831 4.185 117,646 $ $ See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) December 31, 2016 2015 ASSETS Current Assets: Cash and cash equivalents..... ....... $ 551,389 $ 369,770 Short-term investments .................... ......... 472 629 Accounts receivable, net (Note 5)....... 333,678 371.953 inventories. .................. ............................. 487,997 4 73,637 Prepaid expenses and other current assets... 38.487 33.400 Total current assets....... 1.412.023 1.249.389 Property, plant, and equipment, net (Note 6)....... 279,650 291,687 Intangible assets, net (Note 7) ......... .... 133,438 138,584 Goodwill (Note 7). ....................... 68,594 68,594 Deferred income taxes (Note 10)... 92,494 76,181 Other non-current assets. 27,695 21.718 Total assets ........................ . $2.013.894 $ 1.846.153 LIABILITIES AND EQUITY Current Liabilities: Short-term borrowings (Note 8)....... $ 1.940 Accounts payable........ 215,048 217.230 Accrued liabilities (Note 9).... .... 142,158 141,862 Income taxes payable (Note 10) ........ ... 5,645 5,038 Total current liabilities........... 362,851 366,070 Note payable to related party (Note 22)....... 14.053 15.030 Other long-term liabilities (Notes 11, 12)... 42.622 40.172 Income taxes payable (Note 10) ........ 12,710 8.839 Deferred income taxes (Note 10) ....... 147 229 ...................................... 432,383 430,340 Total liabilities ....... Commitments and contingencies (Note 13) Shareholders' Equity: Preferred stock: 10,000 shares authorized: none issued and outstanding ........... Common stock (no par value); 250,000 shares authorized; 69,873 and 69,277 issued and outstanding (Note 14)....... Retained earnings ...... Accumulated other comprehensive loss (Note 17)....... Total Columbia Sportswear Company shareholders' equity ......... Non-controlling interest (Note 4).............................................. .... Total equity.............. Total liabilities and equity ...... Retained earnings EEEEEEEEEEEEEEEE 53,801 34,776 1,529,636 1,385,860 (22,617) (20,836) 1,560,820 1,399.800 20,691 16.013 1,581,5111,415,813 $ 2,013,894 $1,846,153 See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2015 2016 2014 $ 198,439 $ 179,851 $ 141.859 Cash flows from operating activities: Net income. ......... ......... Adjustments to reconcile net income to net cash provided by operating activities: ..... Depreciation and amortization ................................ Loss on disposal or impairment of property, plant, and equipment.... Deferred income taxes ....................................... Stock-based compensation........ Excess tax benefit from employee stock plans...... Changes in operating assets and liabilities: ...... Accounts receivable . . . . . . ..... 60,016 4,805 (19,178) 10,986 56,521 5,098 (11,709) 11,672 (7,873) 54,017 481 (6,978) 11,120 (4,927) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and other current assets ...... Other assets. ....... Accounts payable ....... Accrued liabilities..... Income taxes payable ..... Other liabilities ......... Net cash provided by operating activities................ 36,710 (18,777) (5,452) (5,948) 1,483 4,847 4,768 2,468 275,167 (40,419) (103,296) 4,411 (2,524) 11,418 (2,017) (10,994) 4,966 95,105 (31,478) (62,086) (4,869) 4.291 41.941 35,051 1,166 6,195 185,783 (21,263) 21,263 (49,987) (38,208) 64,980 (69,917) 144 (43,001) (188,467) (48,243) 1 12,895 (60,283) 71 (184,027) 97 (49,890) 62,885 (64,825) 13,167 (5,117) Cash flows from investing activities: Acquisition of business, net of cash acquired ........... Purchases of short-term investments .. Sales of short-term investments.......... Capital expenditures............................................ Proceeds from sale of property, plant, and equipment. .................. Net cash used in investing activities ...... Cash flows from financing activities: Proceeds from credit facilities ........... Repayments on credit facilities .................... Proceeds from issuance of common stock under employee stock plans .... Tax payments related to restricted stock unit issuances................. Excess tax benefit from employee stock plans ....................... Repurchase of common stock ..................................... Cash dividends paid....................... Proceeds from note payable to related party ............. Net cash used in financing activities...... Net effect of exchange rate changes on cash ............ Net increase (decrease) in cash and cash equivalents...... Cash and cash equivalents, beginning of year ................. Cash and cash equivalents, end of year................ ........ $ Supplemental disclosures of cash flow information: Cash paid during the year for income taxes.......................... $ Cash paid during the year for interest on note payable to related party .... Supplemental disclosures of non-cash investing activities: Capital expenditures incurred but not yet paid ...... 53,429 (51,479) 17,442 (4,895) 7,873 (70,068) (43,547) (11) (48,122) 52,356 (52,205) 22.277 (3,141) 4,927 (15,000) (39,836) 16,072 (14,550) (11,137) (23,931) 437,489 413,558 CUIVICUS . . . . (42,023) (1,635) 181,619 369,770 551,389 $ (91,245) (4.647) (43,788) 413,558 369,770 $ $ $ 70,424 1,049 87,350 1,115 53,958 838 2,710 4,698 7.196 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF EQUITY (In thousands) Columbia Sportswear Company Shareholders' Equity Common Stock Accumulated Other Shares Retained Comprehensive Outstanding Amount Earnings Income (Loss) 69,190 $ 52,325 $1,157,733 $ 35,360 - 137,173 Non- Controlling Interest $ 7,446 4,686 Total $ 1,252,864 141,859 - 10 - 10 7,751 (27,288) - (501) 7,751 (27.789) (39,836) (39,836) - BALANCE, JANUARY 1, 2014...... Net income ................................ Other comprehensive income (loss): Unrealized holding gains on available-for-sale securities, net ..... Unrealized holding gains on derivative transactions, net ...................... Foreign currency translation adjustment, net .. Cash dividends ($0.57 per share).............. Issuance of common stock under employee stock plans, net ................ Tax adjustment from stock plans ...... Stock-based compensation expense ............ Repurchase of common stock BALANCE, DECEMBER 31, 2014 ........ Net income ............................... Other comprehensive loss: Unrealized holding losses on available-for- sale securities, net.... 1,059 - - (421) 69,828 - 19,136 5,119 11,120 (15,000) 72,700 - 19,136 5,119 11,120 (15,000) 1,355,234 179,851 1,255,070 174,337 15,833 - - 11,631 5,514 - - - 0 - 0 (2,908) (33,755) (1,132) - (2,908) (34,887) (43,547) (43,547) 835 - - (1,386) 69,277 12,547 7,925 11,672 (70,068) 34,776 - 12,547 7,925 11,672 (70,068) 1,415,813 198,439 1,385,860 191,898 (20,836) - 16,013 6,541 Unrealized holding losses on derivative transactions, net ...................... Foreign currency translation adjustment, net.. Cash dividends ($0.62 per share)..... Issuance of common stock under employee stock plans, net .... Tax adjustment from stock plans ........... Stock-based compensation expense... Repurchase of common stock. ................ BALANCE, DECEMBER 31, 2015 ........ Net income ............................... Other comprehensive income (loss): Unrealized holding losses on available-for- sale securities, net.... Unrealized holding gains on derivative transactions, net ...................... Foreign currency translation adjustment, net.. Cash dividends ($0.69 per share)..... Issuance of common stock under employee stock plans, net .............................. Stock-based compensation expense... Repurchase of common stock. ...... BALANCE, DECEMBER 31, 2016 ......... (2) - (2) 686 (2,465) 157 (2,020) - 843 (4.485) (48,122) (48,122) - - 596 8,050 - 10,986 - (11) 69,873 $ 53,801 $1,529,636 8,050 10,986 (11) $ 1,581,511 $ (22,617) $ 20,691 See accompanying notes to consolidated financial statements Appendix C Specimen Financial Statements: VF Corporation VF Corporation is a leader in outdoor sportswear. The following are VF's financial statements as presented in its 2016 annual report. The complete annual report, including notes to the financial statements, is available at the company's website. VF CORPORATION Consolidated Balance Sheets December 2016 2015 In thousands, except share amounts 1.227,862 $ 944,423 ASSETS Current assets Cash and equivalents Accounts receivable, less allowance for doubtful accounts of $21.131 in 2016 and $23,275 in 2015 Inventories Other current assets Current assets of discontinued operations Total current assets 1,197,678 1,569,325 298.233 1,289,962 1,555,360 284.215 89,176 4,163,136 4,293,098 Columbia Sportswear Company's financial statements are presented in Appendix B. Click here to view Appendix B. Financial statements of VF Corporation are presented in Appendix C. Click here to view Appendix C. (a) Based on the information contained in these financial statements, compute free cash flow for each company. (Show a negative free cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000). Enter amounts in thousands.) Columbia Sportswear Company VF Corporation XULLE Free cash flow in thousands) Columbia Sportswear Company's financial statements are presented in Appendix B. Click here to view Appendix B. Financial statements of VF Corporation are presented in Appendix C. Click here to view Appendix C. (b) What conclusions concerning the management of cash can be drawn from the free cash flow data
