Columbia Sportswear Company's financial statements are presented in Appendix B. Click here to view Appendix B. The financial statements of VF Corporation are presented in Appendix C. Click here to view Appendix C. 1. 2. Working Capital. (Columbia Sportswear Company: $1,049,172: VF Corporation: $2,507,698) Current ratio. (Columbia Sportswear Company: 3.9.1: VF Corporation: 24:1) Debt to assets ratio. (Columbia Sportswear Company: 21.5%; VF Corporation: 49.3%) Free cash flow. (Columbia Sportswear Company: $177,058: VF Corporation: $666,085) 3 4. (b) Discuss the relative liquidity and solvency of the two companies. 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 Interest income, nel Interest expense on note payable to related party (Note 22). Other non-operating expense Income before income tax... Income tax expense (Note 10) Net income Net income attributable to non-controlling interest Net income attributable to Columbia Sportswear Company 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 2.003 1,531 1,004 (1,041) (1,099) (1.053) (572) (2,834) (274) 256,898 247.319 198,521 (58,459) (67,468) (56,662) 198,439 179,851 141.859 6.541 5,514 4.686 S 191,898 $ 174,337 $ 137,173 +++ Earnings per share attributable to Columbia Sportswear Company (Note 16): Basic... Diluted.. Weighted average shares outstanding (Note 16): Basic.. Diluted 2.75 $ 2.72 2.48 $ 2.45 1.97 1.94 . 69,683 70,632 70,162 71.064 69,807 70,681 ++++ See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Year Ended December 31. 2016 2015 2014 $ 198,439 $ 179,851 $ 141.859 (2) (6) 10 843 (2.908) 7.751 Net income Other comprehensive loss: Unrealized holding gains (losses) on available-for-sale securities (net of tax effects of $0,(3), and (55), respectively). Unrealized gains (losses) on derivative transactions (net of tax effects of ($1.922), (5849) and ($1.507), respectively). Foreign currency translation adjustments (net of tax effects of ($347). (5760) and S1.023, respectively).. Other comprehensive loss.. Comprehensive income. Comprehensive income attributable to non-controlling interest.. Comprehensive income attributable to Columbia Sportswear Company.... (4.485) (34,887) (27,789) (3.644) (37.801) (20.028) 194,795 142,050 121,831 4.678 4.382 4,185 $ 190,117 $ 137,668 $ 117,646 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED BALANCE SHEETS (In thousands De 31. 2016 2015 $ 551,389 $ 369,770 472 629 333.678 371,953 487.997 473.637 38,487 33,400 1,412.023 1,249,389 279.650 291,687 133.438 138.584 68_594 68,594 92.404 76,181 27.695 21,718 $2.013.894 $ 1.846,153 ASSETS Current Assets Cash and cash equivalents... Shors-licrm investments Accounts receivable, net (Note 5). Inventories Prepaid expenses and other current assets, Total current , Property, plant, and equipment, net (Note 6). Intangible assets, net (Note 7) Goodwill (Note 7). Deferred income taxes (Note 10) Other non-current assets... Total arts LIABILITIES AND EQUITY Current Listilities: Short-term borrowings (Note 8) Accounts payable Accrued liabilities (Note 9). Income taxes payable (Note 10) Total current liabilities... Note payable to related party (Note 22) Other long-term liabilities (Notes 11, 12). Income taxes payable (Note 10) Deferred income taxes (Note 10) Total liabilities. Commitments and contingencies (Note 13) Shareholders' Equity Preferred stock: 10.000 shares authorized: none issued and outstanding... Common stock cho grlu 250.000 shares authorised: 69,873 and 69.277 issued and outstanding (Note 14) 215,048 142.158 5.645 362,51 14.053 42,622 12,710 147 432.383 1.940 217.230 141.862 5,038 366.000 15.030 -40.172 8.839 229 430.340 53.801 34,776 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 1.529,636 1.385.860 (22.617) (20,836) 1.560,820 1.399,800 20,691 16.013 1.581.511 1.415.813 $ 2.013.894 S 1.8.46.153 See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31 2016 2015 2014 Cash flows from operating activities: Net income. $ 198,439 $ 179,851 $ 141.859 Adjustments to reconcile net income to net cash provided by operating activities: .. Depreciation and amortization 60,016 56,521 54,017 Loss on disposal or impairment of property, plant, and equipment.. 4.805 5,098 481 Deferred income taxes.. (19,178) (11.709) (6,978) Stock-based compensation 10,986 11,672 11,120 Excess tax benefit from employee stock plans. (7.873) (4.927) Changes in operating assets and liabilities: Accounts receivable 36,710 (40,419) (31,478) Inventories (18.777) (103,296) (62,086) Prepaid expenses and other current assets (5.452) 4.411 (4.869) Other assets... (5,948) (2,524) 4,291 Accounts payable 1.483 11,418 41.941 Accrued liabilities 4.847 (2.017) 35.051 Income taxes payable 4.768 (10,994) 1,166 Other liabilities 2168 I 275,167 95,105 185.783 (21.263) 21,263 (49.987) 97 (49,890) (38,208) 64,980 (69.917) 144 (43,001) (188,467) (48,243) 112.895 (60.283) ... 71 (184,027) 62,885 (64.825) 13,167 (5.117) Net cash provided by operating activities.. 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 (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 See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF EQUITY (In thousands) Columbia Sportswear Company Shareholders' Equity Common Stock Accumulated Other Non- Shares Retained Comprehensive Controlling Outstanding Amount Earnings Income (Loss) Interest Total 69,190 $ 52,325 $1,157,733 $ 35,360 S 7.446 $ 1.252.864 137,173 4.686 141.859 +++++ 10 10 11 III 7.751 (27,288) (501) 7,751 (27,789) (39.836) (39 1,059 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 (50.57 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... Unrealized holding losses on derivative transactions, net Foreign currency translation adjustment, net.. Cash dividends (S0.62 per share) 19,136 5,119 11,120 (15,000) 72.700 21 11 19,136 5,119 11,120 (15,000) 1,355,234 179,851 (421) 69,828 15,833 1,255,070 174,337 11.631 5,514 (6) (6) (2.908) (33,755) (1,132) (2.908) (34.887) (43,547) (43.547) TU (421) 69.828 11.120 (15,000) 72,700 15,833 1,255,070 174,337 11.631 5.514 (15,000) 1.355.234 179,851 (6 (6) III III (2.908) (33.755) (1.132) (2,908) (34,887) (43.547) (43.547) 835 JILL USEU LUM Repurchase of common stock BALANCE, DECEMBER 31, 2014 Net income. Other comprehensive loss: Unrealized holding losses on available for sale securities, net. Unrealized holding losses on derivative transactions, net Foreign currency translation adjustment, net.. Cash dividends (50.62 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 (50.69 per share). Issuance of common stock under employee stock plans, net ...... Stock-based compensation expense Repurchase of common stock. BALANCE, DECEMBER 31, 2016 12,547 7925 11,672 (70,068) 34,776 111113 12,547 7.925 11.672 (70,068) 1.415.813 198,439 (1.386) 69,277 (20.836) 1,385,860 191,898 16,013 6,541 1 1 1 (2) - - (2) TIL 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 S 8,050 10.986 (11) (22.617) S 20.691 S 1,581,511 IT! III See accompanying notes to consolidated financial statements Appendix C Specimen Financial Statements: VF Corporation Vr Corporation is leader in erat door sportwear. The following are VT's financial statements as presented in its 2016 annual report. The complete annual report, including notes to the financial statement is available at the company's website VY CORPORATION Consolidated Balance Sheets www. 305 Is ham 1.2275625 944,423 1.197.678 109.25 298.233 ASSETS Currents Cash and quals Access mee. ten allowance for Couleul acvents of 2013 in 2016 w 24.75 in 2015 Im Other Com Current sets of decedenti Totalcom Property, plant and equipment Intangibles Goodwill Other sets Other assets of discontinued operations Totalans LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term borrowing Current portion of long term debe Accounts payable Acred liabilities 4.298,098 939.680 1.639.90 1.736.959 9292 129,42 1355.360 284,215 89,176 4.163.136 945.4291 1.948.611 1.788.407 $82,866 210,000 9.619.542 9.7892875 M0295 253,689 661,644 341.638 9.500 3.151 6800606 782.145 1.785.400 2,039,180 973,786 26,018 1.941.713 1,401 820 900,256 10,915 4.798,366 4.254,704 Current liabilities of discontinued operations Total current liabilities Long-term debt Other liabilities Other liabilities of discontinued operations Commitments and contingencies Total liabilities Stockholders' equity Preferred Stock, par value St;shares authorized, 25,000,000; no shares outstanding in 2016 and 2015 Common Stock, stated value 0,25; shares authorized, 1.200,000,000, 414,012,954 shares outstanding in 2016 and 426,614.274 shares outstanding in 2015 Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 103,503 3.333,423 (1,041,463) 2.545,458 4.940,921 9,739,287 S 106,654 3.192,675 (1.043.222) 3,128,731 5.384,838 9,639.542 $ See notes to consolidated financial statements VF CORPORATION Consolidated Statements of Income 306 $ Year Ended her 2015 2014 In this epper sharemmin 11.902.314 11.909,615 S 11,757,199 116,689 123,020 124,331 12.019.003 12.032,655 11.881.730 6.235,699 4,009,029 Net sales Royalty Income Total revenues Costs and operating expenses Cost of goods sold Selling general and administrative expenses Impairment of goodwill and intangible assets Total costs and operating expenses Operating income Interest Income Interest expense Other Incote expense, net 6.112.880 3.970,536 6.196,335 4.243,798 79.644 10:319,777 1.499.226 9,094 194,730) 2.001 10.244,728 1.787.927 7,152 (88.772) 1,028 10,083.416 1.798.314 6911 (86,104) (5.545) 1.415.591 243,061 1.172,527 (98,421) 1,074,106 1.707,315 392,204 1.315,131 (83.338) 1.231.59 $ 1.713.576 385.827 1.327,749 (280.244) 1.047.505 Income from continuing operations before income taxes Income taxes Income from continuing operations Laws from discontinued operations, net of tax Net Income Earnings per common sharebasie Continuing operations Discontinued operations Total earnings per common share. basie Earnings per common share-diluted Continuing operations Discontinued operations Total earnings per common share-diluted Cash dividends per common share 2.82 5 (0.24) 2.58 $ 3.09 $ (0.19) 2.90 S 3.07 (0.65) 2.42 $ 2.78 $ (0.24) 2545 1.53005 3.04 5 (0.19 2.85$ 1.3300 S 3.02 (0.64 2.38 1.1075 See notes to consolidated financial statements. VF CORPORATION Consolidated Statements of Comprehensive Income 3016 2014 Year Ended December 2015 In the sand 1.231.5935 1.074,106 1.047,505 (361.814) (52,028) (24.382) (469,663) 6,075 586 Net Income Other comprehensive income (los) Foreign currency translation and other Gains (losses) arising during year Less income tax effect Defined benefit pension plans Current year actuarial gains (losses) and plan amendments Amortization of net deferred actuarial losses Amortization of deferred prior service costs Reclassification of net actuarial loss from settlement charge Less income tax effect Derivative financial instruments Gains (losses) arising during year Less income tax effect Reclassification to net income for (gains) losses realized (5.384) 65.212 2,584 50,922 (43.836) (62.556) 61.966 3,038 4,062 (1.571) (203,234) 37,518 5.445 60,388 90,708 (9.672) (107.457) 89.993 (34.668) (64.976) 88.387 (34,736) 32.111 35.092 25,404 (12.619) (69) 274 Less income tax effect Marketable securities Gains classes) arising during year Less income tax effect Reclassification to net income for (gains) losses realized Less income tax effect Other comprehensive income loss) Comprehensive income 495 (195) (1.177) 463 (340.950) 890.6435 1.759 1,075.8655 (490,552) 556,953 See notes to consolidated financial statements VF CORPORATION Consolidated Statements of Cash Flows 2016 Year Ended December 2015 In thousands 2014 1,074,106 $ 1,231,593 $ 1.047,505 Operating activities Net income Adjustments to reconcile net income to cash provided by operating activities: Impairment of goodwill and intangible assets Depreciation and amortization Stock-based compensation Provision for doubtful accounts Pension expense in excess of (less than) contributions Deferred income taxes Loss on sale of businesses Other, net Changes in operating assets and liabilities: Accounts receivable Inventories Accounts payable 79,644 281.577 67,762 17.283 89,005 (71.625) 104,357 (15,232) 143.562 272,075 73,420 12,006 (208,709) 7,088 396,362 274.883 104,313 (2.198) (9,864) (78,064) (34,784) 4,112 47,102 (37,210) (9,553) (124,248) (175,098) 14.225 854 (130,540) 69.807 Income taxes (129,574) 4,206 20.293 Accrued liabilities 28,904 (14,505) 41.989 Other assets and liabilities (48,627) 2,599 22,614 Cash provided by operating activities 1.477.919 1,203.430 1,762,066 Investing activities Capital expenditures (175,840) (254,501) (234,077) Proceeds from sale of businesses, net of cash sold 115.983 Software purchases (44.226) (63,283) (67,943) Other, net (8.331) (5,038) (27,235) Cash used by investing activities (112,414) (322,822) (329,255) Financing activities Net (decrease) increase in short-term borrowings (421,069) 432,262 4.761 Payments on long-term debt (13.276) (3,975) (4.760) Payment of debt issuance costs (6,807) (1.475) Proceeds from long-term debt 951,817 Purchases of treasury stock (1.000,468) (732,623) (727.795) Cash dividends paid (635,994) (565,275) (478,933) Proceeds from issuance of Common Stock, net of shares withheld for taxes 48,918 30,871 34,869 Cash used by financing activities (1,076,879) (840,215) (1,171,858) Effect of foreign currency rate changes on cash and equivalents (6.369) (66,683) (65.461) Net change in cash and equivalents 282,257 (26,290) 195,492 Cash and equivalents - beginning of year 945,605 971.895 776.403 Cash and equivalents - end of year 1,227,862 $ 945.605 $ 971.895 W The cash flows related to discontinued operations have not been segregated and are included in the Consolidated Statements of Cash Flows. The cash and equivalents amount presented at December 2015 differs from cash and equivalents in the Consolidated Balance Sheet due to cash included in "Current assets of discontinued operations." See notes to consolidated financial statements ca) Cash dividends paid (635,994) (565,275) (478,933) Proceeds from issuance of Common Stock, net of shares withheld for taxes 48,918 30.871 34.869 Cash used by financing activities (1.076,879) (840.215) (1,171,858) Effect of foreign currency rate changes on cash and equivalents (6,369) (66,683) (65.461) Net change in cash and equivalents 282.257 (26,290) 195,492 Cash and equivalents -- beginning of year 945,605 971.895 776,403 Cash and equivalents -- end of year! 1.227.862 $ 945.605 5 971,895 The cash flows related to discontinued operations have not been segregated and are included in the Consolidated Statements of Cash Flows. The cash and equivalents amount presented at December 2015 differs from cash and equivalents in the Consolidated Balance Sheet due to cash included in "Current assets of discontinued operations." See notes to consolidated financial statements. VF CORPORATION Consolidated Statements of Stockholders' Equity Balance, December 2013 Net income Dividends on Common Stock Purchase of treasury stock Stock-based compensation, net Foreign currency translation and other Defined benefit pension plans Accumulated Common Stock Additional Other Paid in Comprehensive Retained Shares Amounts Capital Loss Earnings In thousands, except share amounts 440,310,370 $ 110,078 $ 2,746,590 $ (211.720) $ 3,432,090 1,047,505 (478,933) (12,037,000) (3,009) (724.786) 4,586,521 1.146 246.596 (44.123) (463,588) (99,683) III (12.037.000) 4,586,521 (3,009) 1,146 (724.786) (44,123) 246,596 (463.588) (99,683) 73.143 (424) (702,272) 432.859,891 108.215 2,993,186 3.231.753 1.231.593 (565,275) (730,114) (39.226) (10,036,100) 3.790,483 (2,509) 948 199.489 Purchase of treasury stock Stock-based compensation, net Foreign currency translation and other Defined benefit pension plans Derivative financial instruments Marketable securities Balance, December 2014 Net income Dividends on Common Stock Purchase of treasury stock Stock-based compensation, net Foreign currency translation and other Defined benefit pension plans Derivative financial instruments Marketable securities Balance, December 2015 Net income Dividends on Common Stock Purchase of treasury stock Stock-based compensation, net Foreign currency translation and other Defined benefit pension plans Derivative financial instruments Balance, December 2016 (361,228) 4.939 15.753 (414) (1.043.222) 426,614.274 106,654 3,192,675 3.128,731 1.074.106 (635,994) (996,485) (24.900) (3,983) (15,932,075) 3.330.755 832 140,748 (76,410) 69,498 8,671 3,333,423 $ (1,041,463) $ 414.012,954 $ 103,503 $ 2,545,458 See notes to consolidated financial statements