CONSOLIDATION INCOME STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE GAINS AND LOSSES
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED CASH FLOW STATEMENT
Question 1 The financial statements of Louis Vuitton are presented in Appendix F. The complete annual report, including the notes to its financial statements, is available at the company's website. Click here to view Appendix F. Visit Louis Vuitton's website and answer the following questions from Louis Vuitton's 2016 annual report. From the notes to the financial statements, how does the company determine the amount of revenue to record at the time of a sale? From the notes to the financial statements, how does the company determine the provision for product returns? Using the consolidated income statement and consolidated statement of financial position, identify items that may result in adjusting entries for deferrals. Using the consolidated income statement, identify two items that may result in adjusting entries for accruals. Notes 2016 2015 2014 23-24 37,600 (13,039) 30,638 (10,801) 24,561 (14,607) (2,931) 3 35,664 (12,553) 23,111 (13,830) (2,663) (13) 19,837 (11,744) (2,373) (5) 7 23-24 6,605 5,715 7,026 (122) 25 (221) (284) (EUR millions, except for earnings per share) Revenue Cost of sales Gross margin Marketing and selling expenses General and administrative expenses Income (loss) from joint ventures and associates Profit from recurring operations Other operating income and expenses Operating profit Cost of net financial debt Other financial income and expenses Net financial income (expense) Income taxes Net profit before minority interests Minority interests Net profit, Group share 6,904 6,384 5,431 (115) 3,062 (83) (349) (432) (2,109) 26 (78) (336) (414) (1,969) 4,001 2,947 27 4,363 (2,273) 6,105 (457) 17 (382) (428) 3,981 3,573 5,648 28 7.92 502,911,125 7.11 502,395,491 11.27 501,309,369 Basic Group share of net earnings per share (EUR) Number of shares on which the calculation is based Diluted Group share of net earnings per share (EUR) Number of shares on which the calculation is based 28 7.89 504,640,459 7.08 504,894,946 11.21 503,861,733 Notes 2016 2015 2014 (EUR millions) Net profit before minority interests 4,363 4,001 6,105 15.4 631 534 Translation adjustments Amounts transferred to income statement Tax impact 109 (32) (9) 135 104 68 766 638 8, 13 18 Change in value of available for sale financial assets Amounts transferred to income statement Tax impact 4 (32) (91) 20 494 (3,326) 184 1 23 Change in value of hedges of future foreign currency cash flows Amounts transferred to income statement Tax impact 48 (26) (2) (103) (63) 33 3 (2,648) (30) (163) 57 (136) 20 (27) Gains and losses recognized in equity, transferable to income statement 111 636 (2,146) 6 30 64 Change in value of vineyard land Amounts transferred to consolidated reserves Tax impact (17) (10) 9 108 (21) 138 43 (18) Employee benefit commitments: change in value resulting from actuarial gains and losses Tax impact 29 (86) 17 (69) 42 (16) (161) 52 26 (109) Gains and losses recognized in equity, not transferable to income statement 69 69 (127) Comprehensive income Minority interests Comprehensive income, Group share 4,543 (434) 4,706 (558) 3,832 (565) 4,109 4,148 3,267 Notes 2016 2015 2014 3 4 6 7 8 9 27 13,335 10,401 12,139 770 744 ASSETS (EUR millions) Brands and other intangible assets Goodwill Property, plant and equipment Investments in joint ventures and associates Non-current available for sale financial assets Other non-current assets Deferred tax Non-current assets Inventories and work in progress Trade accounts receivable Income taxes Other current assets Cash and cash equivalents Current assets 13,572 10,122 11,157 729 574 552 1,945 38,651 13,031 8,810 10,387 519 580 489 1,436 777 35,252 10 11 2,058 40,224 10,546 2,685 280 2,343 3,544 10,096 2,521 384 2,355 3,594 9,475 2,274 354 1,916 4,091 12 14 19,398 18,950 18,110 Total assets 59,622 57,601 53,362 Notes 2016 2015 2014 152 15.1 15.1 15.2 15.4 152 2,601 (520) 1,165 1,049 17,965 3,981 26,393 1,510 27,903 2,579 (240) 1,137 949 16,189 3,573 152 2,655 (374) 492 1,019 12,171 5,648 24,339 1,460 21,763 1,240 LIABILITIES AND EQUITY (EUR millions) Share capital Share premium account Treasury shares and LVMH share-settled derivatives Cumulative translation adjustment Revaluation reserves Other reserves Net profit, Group share Equity, Group share Minority interests Equity Long-term borrowings Non-current provisions Deferred tax Other non-current liabilities Non-current liabilities Short-term borrowings Trade accounts payable Income taxes Current provisions Other current liabilities Current liabilities 17 25,799 18 19 27 20 23,003 5,054 2,291 4,392 6,447 3,932 2,342 4,137 8,498 18,909 3,447 4,184 428 352 4,399 4,511 1,950 4,685 7,957 19,103 3,769 3,960 640 421 3,909 18 21.1 18,184 4,189 3,606 549 332 3,499 19 21.2 12,810 12,699 12,175 Total liabilities and equity 59,622 57,601 53,362 EUR millions) Total equity Number of shares Share capital Net profit and other Share Treasury Cumulative premium shares and translation account LVMH adjustment share- settled derivatives reserves Total Revaluation reserves Vineyard Employee land benefit commit ments Available for sale financial assets Group share Minority interests Hedges of future foreign currency cash flows 15.4 15.1 152 15.2 (451) 17 1,028 3,849 (8) 136 946 (37) 19,437 26,879 27,907 2,855 (2,648) 500 (122) (15) (96) (2,381) 5,648 3,267 108 457 5,648 5,648 (2,273 6,105 3,832 500 (2,648) (122) (15) (96) 565 37 37 2 39 27 (17) 10 10 59 59 59 (50) 50 3 3 (1,907) (1,579) (1,579) (328) (1,203) (5,652) (6,855) (6,855) (5) (5) 11 6 (2) (2) 32 30 Notes As of December 31, 2013 507,793,661 Gains and losses recognized in equity Net profit Comprehensive income Stock option plan and similar expenses (Acquisition/disposal of treasury shares and LVMH share-settled derivatives Exercise of LVMH share subscription options 980,323 Retirement of LVMH shares (1,062,271) Capital increase in subsidiaries Interim and final dividends paid Distribution in kind of Herms shares Changes in control of consolidated entities Acquisition and disposal of minority interests' shares Purchase commitments for minority interests' shares As of December 31, 2014 507,711,713 Gains and losses recognized in equity Net profit Comprehensive income Stock option plan and similar expenses Acquisition/disposal of treasury shares and LVMH share-settled derivatives Exercise of LVMH share subscription options 552,137 Retirement of LVMH shares (1,124,740) Capital increase in subsidiaries Interim and final dividends paid Changes in control of consolidated entities Acquisition and disposal of minority interests' shares Purchase commitments for minority interests' shares As of December 31, 2015 507,139,110 Gains and losses recognized in equity (48) 17,819 152 2,655 (374) 14 (133) 492 645 207 (103) ( 931 33 (73) 1,240 130 (25) 25 (48) 21,763 575 3,573 4,148 35 (121) 23,003 705 4,001 4,706 37 428 645 (103) (25) 33 25 3,573 3,573 35 558 2 23 (13) 10 10 35 35 35 (111) 111 89 (229) () (1,659) (1,659) ) 89 (1,888) (9) (9) 1 (8) 5 5 (3) 3 2 2 11 19,762 (198) 1,460 (187) 25,799 152 2,579 (240) 1,137 104 (11) 964 (108) 28 23 19 113 (55) 11 24,339 128 3,981 4,109 Net profit 3,981 3,981 52 382 434 180 4,363 4,543 28 23 19 113 (55) 39 39 2 2 41 (322) (21) (343) (343) 64 64 64 907,929 (920,951) (42) 42 Comprehensive income Stock option plan and similar expenses Acquisition)/disposal of treasury shares and LVMH share-settled derivatives Exercise of LVMH share subscription options Retirement of LVMH shares Capital increase in subsidiaries Interim and final dividends paid Changes in control of consolidated entities Acquisition and disposal of minority interests' shares Purchase commitments for minority interests' shares As of December 31, 2016 41 41 (2,083) (1,811) (1,811) (272) (5) ( (5) 22 17 (56) (56) (35) (91) 57 57 26,393 (142) 1,510 ( (85) 27,903 507,126,088 152 2,601 (520) 1,165 127 8 1,077 (163) 21,946 la) See Note 8. 7,080 4,607 EUR millions) Notes 2016 2015 2014 I. OPERATING ACTIVITIES AND OPERATING INVESTMENTS Operating profit 6,904 6,384 5,431 Income/(loss) and dividends from joint ventures and associates 7 18 27 26 Net increase in depreciation, amortization and provisions 2,143 2,081 1,895 Other computed expenses (177) (456) (188) Other adjustments (155) (91) (84) Cash from operations before changes in working capital 8,733 7,945 Cost of net financial debt: interest paid (59) (75) (116) Tax paid (1,923) (1,807) (1,639) Net cash from operating activities before changes in working capital 6,751 6,063 5,325 Change in working capital 14.2 (512) (429) (718) Net cash from operating activities 6,239 5,634 Operating investments 14.3 (2,265) (1,955) (1,775) Net cash from operating activities and operating investments (free cash flow) 3,974 3,679 2,832 II. FINANCIAL INVESTMENTS Purchase of non-current available for sale financial assets la 8,13 (28) (78) (57) Proceeds from sale of non-current available for sale financial assets 8 91 68 160 Dividends received 8 6 4 69 Tax paid related to non-current available for sale financial assets and consolidated investments (461) (265) (237) Impact of purchase and sale of consolidated investments 2.4 310 (240) (167) Net cash from (used in) financial investments (82) (511) (232) III. TRANSACTIONS RELATING TO EQUITY Capital increases of LVMH SE 15.1 64 35 59 Capital increases of subsidiaries subscribed by minority interests 17 41 81 3 Acquisition and disposals of treasury shares and LVMH share-settled derivatives 15.2 (352) 1 1 Interim and final dividends paid by LVMH SE by 15.3 (1,810) (1,671) (1,619) Tax paid related to interim and final dividends paid (145) (304) (79) Interim and final dividends paid to minority interests in consolidated subsidiaries 17 (267) (228) (336) Purchase and proceeds from sale of minority interests 2.4 (95) 10 Net cash from (used in) transactions relating to equity (2,564) (2,090) (1,961) Change in cash before financing activities 1,328 1,078 639 IV. FINANCING ACTIVITIES Proceeds from borrowings 18.1 913 1,008 2,407 Repayment of borrowings 18.1 (2,134) (2,443) (2,100) Purchase and proceeds from sale of current available for sale financial assets) 8,13 (113) (3) (106) Net cash from (used in) financing activities (1,334) (1,438) 201 V. EFFECT OF EXCHANGE RATE CHANGES (47) (33) 27 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1+II+III+IV+V) (53) (393) 867 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14.1 3,390 3,783 2,916 CASH AND CASH EQUIVALENTS AT END OF PERIOD 14.1 3,337 3,390 3,783 TOTAL TAX PAID (2,529) (2,376) (1,955) (a) The cash impact of non-current available for sale financial assets used to hedge net financial debt (see Note 18) is presented under *IV. Financing activities" as "Purchase and proceeds from sale of current available for sale financial assets* b) The distribution in kind of Herms shares in 2014 had no impact on cash, apart from related tax effects. See Note 8. Question 1 The financial statements of Louis Vuitton are presented in Appendix F. The complete annual report, including the notes to its financial statements, is available at the company's website. Click here to view Appendix F. Visit Louis Vuitton's website and answer the following questions from Louis Vuitton's 2016 annual report. From the notes to the financial statements, how does the company determine the amount of revenue to record at the time of a sale? From the notes to the financial statements, how does the company determine the provision for product returns? Using the consolidated income statement and consolidated statement of financial position, identify items that may result in adjusting entries for deferrals. Using the consolidated income statement, identify two items that may result in adjusting entries for accruals. Notes 2016 2015 2014 23-24 37,600 (13,039) 30,638 (10,801) 24,561 (14,607) (2,931) 3 35,664 (12,553) 23,111 (13,830) (2,663) (13) 19,837 (11,744) (2,373) (5) 7 23-24 6,605 5,715 7,026 (122) 25 (221) (284) (EUR millions, except for earnings per share) Revenue Cost of sales Gross margin Marketing and selling expenses General and administrative expenses Income (loss) from joint ventures and associates Profit from recurring operations Other operating income and expenses Operating profit Cost of net financial debt Other financial income and expenses Net financial income (expense) Income taxes Net profit before minority interests Minority interests Net profit, Group share 6,904 6,384 5,431 (115) 3,062 (83) (349) (432) (2,109) 26 (78) (336) (414) (1,969) 4,001 2,947 27 4,363 (2,273) 6,105 (457) 17 (382) (428) 3,981 3,573 5,648 28 7.92 502,911,125 7.11 502,395,491 11.27 501,309,369 Basic Group share of net earnings per share (EUR) Number of shares on which the calculation is based Diluted Group share of net earnings per share (EUR) Number of shares on which the calculation is based 28 7.89 504,640,459 7.08 504,894,946 11.21 503,861,733 Notes 2016 2015 2014 (EUR millions) Net profit before minority interests 4,363 4,001 6,105 15.4 631 534 Translation adjustments Amounts transferred to income statement Tax impact 109 (32) (9) 135 104 68 766 638 8, 13 18 Change in value of available for sale financial assets Amounts transferred to income statement Tax impact 4 (32) (91) 20 494 (3,326) 184 1 23 Change in value of hedges of future foreign currency cash flows Amounts transferred to income statement Tax impact 48 (26) (2) (103) (63) 33 3 (2,648) (30) (163) 57 (136) 20 (27) Gains and losses recognized in equity, transferable to income statement 111 636 (2,146) 6 30 64 Change in value of vineyard land Amounts transferred to consolidated reserves Tax impact (17) (10) 9 108 (21) 138 43 (18) Employee benefit commitments: change in value resulting from actuarial gains and losses Tax impact 29 (86) 17 (69) 42 (16) (161) 52 26 (109) Gains and losses recognized in equity, not transferable to income statement 69 69 (127) Comprehensive income Minority interests Comprehensive income, Group share 4,543 (434) 4,706 (558) 3,832 (565) 4,109 4,148 3,267 Notes 2016 2015 2014 3 4 6 7 8 9 27 13,335 10,401 12,139 770 744 ASSETS (EUR millions) Brands and other intangible assets Goodwill Property, plant and equipment Investments in joint ventures and associates Non-current available for sale financial assets Other non-current assets Deferred tax Non-current assets Inventories and work in progress Trade accounts receivable Income taxes Other current assets Cash and cash equivalents Current assets 13,572 10,122 11,157 729 574 552 1,945 38,651 13,031 8,810 10,387 519 580 489 1,436 777 35,252 10 11 2,058 40,224 10,546 2,685 280 2,343 3,544 10,096 2,521 384 2,355 3,594 9,475 2,274 354 1,916 4,091 12 14 19,398 18,950 18,110 Total assets 59,622 57,601 53,362 Notes 2016 2015 2014 152 15.1 15.1 15.2 15.4 152 2,601 (520) 1,165 1,049 17,965 3,981 26,393 1,510 27,903 2,579 (240) 1,137 949 16,189 3,573 152 2,655 (374) 492 1,019 12,171 5,648 24,339 1,460 21,763 1,240 LIABILITIES AND EQUITY (EUR millions) Share capital Share premium account Treasury shares and LVMH share-settled derivatives Cumulative translation adjustment Revaluation reserves Other reserves Net profit, Group share Equity, Group share Minority interests Equity Long-term borrowings Non-current provisions Deferred tax Other non-current liabilities Non-current liabilities Short-term borrowings Trade accounts payable Income taxes Current provisions Other current liabilities Current liabilities 17 25,799 18 19 27 20 23,003 5,054 2,291 4,392 6,447 3,932 2,342 4,137 8,498 18,909 3,447 4,184 428 352 4,399 4,511 1,950 4,685 7,957 19,103 3,769 3,960 640 421 3,909 18 21.1 18,184 4,189 3,606 549 332 3,499 19 21.2 12,810 12,699 12,175 Total liabilities and equity 59,622 57,601 53,362 EUR millions) Total equity Number of shares Share capital Net profit and other Share Treasury Cumulative premium shares and translation account LVMH adjustment share- settled derivatives reserves Total Revaluation reserves Vineyard Employee land benefit commit ments Available for sale financial assets Group share Minority interests Hedges of future foreign currency cash flows 15.4 15.1 152 15.2 (451) 17 1,028 3,849 (8) 136 946 (37) 19,437 26,879 27,907 2,855 (2,648) 500 (122) (15) (96) (2,381) 5,648 3,267 108 457 5,648 5,648 (2,273 6,105 3,832 500 (2,648) (122) (15) (96) 565 37 37 2 39 27 (17) 10 10 59 59 59 (50) 50 3 3 (1,907) (1,579) (1,579) (328) (1,203) (5,652) (6,855) (6,855) (5) (5) 11 6 (2) (2) 32 30 Notes As of December 31, 2013 507,793,661 Gains and losses recognized in equity Net profit Comprehensive income Stock option plan and similar expenses (Acquisition/disposal of treasury shares and LVMH share-settled derivatives Exercise of LVMH share subscription options 980,323 Retirement of LVMH shares (1,062,271) Capital increase in subsidiaries Interim and final dividends paid Distribution in kind of Herms shares Changes in control of consolidated entities Acquisition and disposal of minority interests' shares Purchase commitments for minority interests' shares As of December 31, 2014 507,711,713 Gains and losses recognized in equity Net profit Comprehensive income Stock option plan and similar expenses Acquisition/disposal of treasury shares and LVMH share-settled derivatives Exercise of LVMH share subscription options 552,137 Retirement of LVMH shares (1,124,740) Capital increase in subsidiaries Interim and final dividends paid Changes in control of consolidated entities Acquisition and disposal of minority interests' shares Purchase commitments for minority interests' shares As of December 31, 2015 507,139,110 Gains and losses recognized in equity (48) 17,819 152 2,655 (374) 14 (133) 492 645 207 (103) ( 931 33 (73) 1,240 130 (25) 25 (48) 21,763 575 3,573 4,148 35 (121) 23,003 705 4,001 4,706 37 428 645 (103) (25) 33 25 3,573 3,573 35 558 2 23 (13) 10 10 35 35 35 (111) 111 89 (229) () (1,659) (1,659) ) 89 (1,888) (9) (9) 1 (8) 5 5 (3) 3 2 2 11 19,762 (198) 1,460 (187) 25,799 152 2,579 (240) 1,137 104 (11) 964 (108) 28 23 19 113 (55) 11 24,339 128 3,981 4,109 Net profit 3,981 3,981 52 382 434 180 4,363 4,543 28 23 19 113 (55) 39 39 2 2 41 (322) (21) (343) (343) 64 64 64 907,929 (920,951) (42) 42 Comprehensive income Stock option plan and similar expenses Acquisition)/disposal of treasury shares and LVMH share-settled derivatives Exercise of LVMH share subscription options Retirement of LVMH shares Capital increase in subsidiaries Interim and final dividends paid Changes in control of consolidated entities Acquisition and disposal of minority interests' shares Purchase commitments for minority interests' shares As of December 31, 2016 41 41 (2,083) (1,811) (1,811) (272) (5) ( (5) 22 17 (56) (56) (35) (91) 57 57 26,393 (142) 1,510 ( (85) 27,903 507,126,088 152 2,601 (520) 1,165 127 8 1,077 (163) 21,946 la) See Note 8. 7,080 4,607 EUR millions) Notes 2016 2015 2014 I. OPERATING ACTIVITIES AND OPERATING INVESTMENTS Operating profit 6,904 6,384 5,431 Income/(loss) and dividends from joint ventures and associates 7 18 27 26 Net increase in depreciation, amortization and provisions 2,143 2,081 1,895 Other computed expenses (177) (456) (188) Other adjustments (155) (91) (84) Cash from operations before changes in working capital 8,733 7,945 Cost of net financial debt: interest paid (59) (75) (116) Tax paid (1,923) (1,807) (1,639) Net cash from operating activities before changes in working capital 6,751 6,063 5,325 Change in working capital 14.2 (512) (429) (718) Net cash from operating activities 6,239 5,634 Operating investments 14.3 (2,265) (1,955) (1,775) Net cash from operating activities and operating investments (free cash flow) 3,974 3,679 2,832 II. FINANCIAL INVESTMENTS Purchase of non-current available for sale financial assets la 8,13 (28) (78) (57) Proceeds from sale of non-current available for sale financial assets 8 91 68 160 Dividends received 8 6 4 69 Tax paid related to non-current available for sale financial assets and consolidated investments (461) (265) (237) Impact of purchase and sale of consolidated investments 2.4 310 (240) (167) Net cash from (used in) financial investments (82) (511) (232) III. TRANSACTIONS RELATING TO EQUITY Capital increases of LVMH SE 15.1 64 35 59 Capital increases of subsidiaries subscribed by minority interests 17 41 81 3 Acquisition and disposals of treasury shares and LVMH share-settled derivatives 15.2 (352) 1 1 Interim and final dividends paid by LVMH SE by 15.3 (1,810) (1,671) (1,619) Tax paid related to interim and final dividends paid (145) (304) (79) Interim and final dividends paid to minority interests in consolidated subsidiaries 17 (267) (228) (336) Purchase and proceeds from sale of minority interests 2.4 (95) 10 Net cash from (used in) transactions relating to equity (2,564) (2,090) (1,961) Change in cash before financing activities 1,328 1,078 639 IV. FINANCING ACTIVITIES Proceeds from borrowings 18.1 913 1,008 2,407 Repayment of borrowings 18.1 (2,134) (2,443) (2,100) Purchase and proceeds from sale of current available for sale financial assets) 8,13 (113) (3) (106) Net cash from (used in) financing activities (1,334) (1,438) 201 V. EFFECT OF EXCHANGE RATE CHANGES (47) (33) 27 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1+II+III+IV+V) (53) (393) 867 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14.1 3,390 3,783 2,916 CASH AND CASH EQUIVALENTS AT END OF PERIOD 14.1 3,337 3,390 3,783 TOTAL TAX PAID (2,529) (2,376) (1,955) (a) The cash impact of non-current available for sale financial assets used to hedge net financial debt (see Note 18) is presented under *IV. Financing activities" as "Purchase and proceeds from sale of current available for sale financial assets* b) The distribution in kind of Herms shares in 2014 had no impact on cash, apart from related tax effects. See Note 8
