Expand Your Critical Thinking 12-2 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. 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) $ COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) December 31, 2014 ASSETS Current Assets: Cash and cash equivalents $ $ Short-term investments Accounts receivable, net (Note 6) Inventories Deferred income taxes (Note 11) Prepaid expenses and other current assets 413,558 27,267 344,390 384,650 57.001 39,175 1,266,041 291,563 143.731 68,594 22,280 1,792.209 437,489 91,755 306,878 329.228 52.041 33.081 1.250,472 279,373 36.288 14.438 25.017 1.605.588 $ $ S S 173557 120,397 7,251 49 301,254 Total current assets Property, plant, and equipment, net (Note 7) Intangible assets, net (Notes 3.8) Goodwill (Notes 3.8) Other non-current assels Total assets LIABILITIES AND EQUITY Current Liabilities Accounts payable Accrued liabilities (Note 10) Income taxes payable (Note 11) Deferred income taxes (Note 11) Total current liabilities Note payable to related party (Note 22) Other long-term liabilities (Notes 12, 13) Income taxes payable (Note 11) Deferred income taxes (Note 11) Total liabilities Commitments and contingencies (Note 14) Shareholders' Equity Preferred stock, 10.000 shares authorized: none issued and outstanding Common stock (no par value): 250,000 shares authorized: 69,828 and 69,190 issued and outstanding (Note 15) Retained earnings Accumulated other comprehensive income (Note 18) Total Columbia Sportswear Company shareholders' equity Non-controlling interest (Note 5) Total equity Total liabilities and equity 214,275 144.288 14,388 169 373.120 15.728 35.435 9,388 3,304 436,975 29.527 13.984 7959 352,724 72,700 1,255,070 15.833 1,343,603 11.631 1.355.234 1.792.209 52.325 1,157.733 35.360 1.245.418 7.446 1.252.864 1.605.588 $ S See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Year Ended Dermher. 2014 2013 $ 141.859 $ 93.603 $ 2012 99,859 10 7,751 (1.261) (4.745) Net income Other comprehensive loss: Unrealized holding gains (losses) on available for sale securities (net of tax (expense) benefit of ($5). (S2), and 54, respectively) Unrealized gains (losses) on derivative transactions (net of tax (expense) benefit of ($1.507). 59 and (S171), respectively) Foreign currency translation adjustments (net of tax benefit (expense) of $1,023. (5191) and (559), respectively) Other comprehensive loss Comprehensive income Comprehensive income loss) attributable to non-controlline interest Comprehensive income attributable to Columbia Sportswear Company (27.789) (9.861) 611 (11.119) 8 2.484 (554) 83,038 4.518 (234) 99,625 (20.028) 121,831 4,185 $ 117,646 $ S 09.625 See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended ember 31, Cash flows from operating activities: S 141,859 $ 93.603 S 99.859 54,017 4 0.871 480 .344 (6,978) 8,818 11.120 8.878 (4.927) (1.532) 40.892 1.582 7,140 7.833 (1.016) 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 Inventories Prepaid expens and other current assets Other assets Accounts payable Accrued liabilities Income taxes payable Other liabilities Netcash provided by operating activities Cash flows from investing activities: (31,478) (62,086) (4.869) 4.201 41.941 35.0I 1.166 6,195 185,783 27.442 34,089 5.166 (4.215) 31.711 12.210 5.534 2.356 274 275 18. 166 2.951 (2.025) (1.259) (12.330) (11.052) 3.126 148.668 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: (188,467) (48,243) 112.895 (60,283) (125.390) 78,636 (69.443) 111 (116,086) (83.969) 42319 (50.491) 7.099 (184,027) 185.042) 52.356 (52,205) 22.277 (3,141) 4,927 (I5.000) 16,072 69.136 (69.292) 19.537 (2291) 100.654 (100.498) 14.600 (1.486) 1,016 (206) 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 Proceeds from note payable to related party Capital contribution from non-controlling interest Cash dividends paid 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 (39,836) (14,550) (11,137) (23,931) 437.489 413.558 8.000 (31.298) (4.676) (6,805) 146,709 290.78) 437.489 (29,780) (15.700) 1.821 4 9.747 241,034 290.781 $ 5 $ $ 53,938 $ 22.771 $ 43.696 Supplemental disclosures of cash flow information: Cash paid during the year for income taxes Supplemental disclosures of non-cash investing activities: Capital expenditures incurred but not yet paid 7,196 5 ,195 5.313 See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF EQUITY (In thousands) Columbia Sportswear Company Shareholders' Equity Common Stock Shares Outstanding Amount Accumulated Other Comprehensive Income $ 46,897 Non- Controlling Interest $ - Total $ Retained Earnings $ 1.024,611 99,859 67.276 - $ 3,037 - 1,074,545 99.859 BALANCE, JANUARY 1, 2012 Net income Other comprehensive income (loss): Unrealized holding losses on available-for-sale securities, net Unrealized holding losses on derivative transactions, net (4,745) 4.518 III (29,780) - 13,114 1,036 7.833 (206) 24,814 (4.745) 4.518 (29,780) 13.114 1,036 7.833 (206) 1,166, 167 93,603 (8) 68,150 46,663 1,094,690 94.341 (738) (1.261) (10,045) - 184 (31,298) 1,040 17.246 Foreign currency translation adjustment, net Cash dividends ($0.44 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, 2012 Net income (loss) Other comprehensive income (loss): Unrealized holding gains on available-for-sale securities, net Unrealized holding losses on derivative transactions, net Foreign currency translation adjustment, net Cash dividends ($0.46 per share) Issuance of common stock under employee stock plans, net Capital contribution from non-controlling interest Tax adjustment from stock plans Stock-based compensation expense BALANCE, DECEMBER 31, 2013 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 8,000 (1,261) (9,861) (31,298) 17.246 8.000 1,387 8,878 1,252,864 141.859 1,387 8,878 52.325 - 69,190 35,360 1.157.733 137.173 7,446 4,686 10 7.751 (27,288) (501) (39,836) 1,059 19,136 10 7.751 (27.789) (39,836) 19.136 5,119 11,120 (15,000) 1,355,234 5,119 11,120 (421) 69,828 (15,000) 72,700 $ $ 1,255,070 $ 15,833 $ 11,631 $ See accompanying notes to consolidated financial statements Specimen Financial Statements: VF Corporation VF Corporation is a leader in outdoor sportswear. The following are VF's financial statements as presented in its 2014 annual report. To access VF's complete annual report, including notes to the financial statements, follow these steps: 1. Go to www.vfc.com. 2. Select the Investor Relations link and then select Financial Reports. 3. Select the 2014 Annual Report on Form 10-K. 4. The Notes to Consolidated Financial Statements. VF CORPORATION Consolidated Balance Sheets December 2014 2013 In thousands, except share amounts $ 971,895 1,276,224 1,482,804 154,285 300,646 4,185,854 942,181 2,433,552 1,824,956 593,597 $ 9,980,140 $ 776,403 1,360,443 1,399,062 169,321 177,753 3,882,982 932.792 2,960,201 2,021,750 517,718 $ 10,315,443 $ $ ASSETS Current assets Cash and equivalents Accounts receivable, less allowance for doubtful accounts of $26,694 in 2014 and $45,350 in 2013 Inventories Deferred income taxes Other current assets Total current assets Property, plant and equipment Intangible assets Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term borrowings Current portion of long-term debt Accounts payable Accrued liabilities Total current liabilities Long-term debt Other liabilities Commitments and contingencies Stockholders' equity Preferred Stock, par value $1; shares authorized, 25,000,000; no shares outstanding in 2014 and 2013 Common Stock, stated value $0.25; shares authorized, 1,200,000,000; 432,859,891 shares outstanding in 2014 and 440,310,370 in 2013 Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 21,822 3,975 690,842 903,602 1,620,241 1,423,581 1,305,436 18,810 5,167 638,732 905,292 1,568,001 1,426,829 1,243,575 108,215 2,993,186 (702,272) 3,231,753 5,630,882 $ 9,980,140 110,078 2,746,590 (211,720) 3,432,090 6,077,038 $ 10,315,443 See notes to consolidated financial statements. VF CORPORATION Consolidated Statements of Income 2013 Year Ended December 2014 2012 In thousands, except per share amounts $12.154.784 S 11.302.350 S 10,766,020 127.377 117,298 113,835 12,282,161 1 1,419,648 10,879,855 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 5,931,469 3,841,032 5,817,880 3,596,708 Operating income Interest income Interest expense Other income (expense), net Income before income taxes Income taxes Net Income Net income attributable to noncontrolling interests Net income attributable to VF Corporation common stockholders Earnings per common share attributable to VF Corporation common stockholders Basle Diluted Cash dividends per common share 6,288,190 4.159.885 396,362 10,844,437 1,437,724 6.911 (86,725) (5,544) 1,352,366 304,861 1,047,505 9,772,501 1.647.147 4.141 (84,773) (4,025) 1,562,490 352,371 1,210,119 9,414,588 1,465,267 3,353 (93,605) 46,860 1,421,875 335,737 1,086,138 (139) 1,085,999 $ 1,047,505 $ 1,210,119 $ $ S $ 2.42 238 1.1075 2.76 2.71 0.9150 2.47 2.43 0.7575 $ S S See notes to consolidated financial statements. VF CORPORATION Consolidated Statements of Comprehensive Income Year Eaded December 2014 2012 $1,047,505 In thousands $1,210,119 $1,086,138 (469,663) 6,075 109,463 1,252 37.648 9,443 (203,234) 37,518 5,445 60,588 146,746 85,356 1,270 (90,285) (173,959) 69,744 3.357 37.013 Net income Other comprehensive income (loss) Foreign currency translation 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 Less income tax effect Derivative financial instruments Gains (losses) arising during year Less income tax effect Reclassification to net income for (gains) losses realized Less income tax effect Marketable securities Gains (losses) arising during year Less income tax effect Other comprehensive income (loss) Comprehensive income including noncontrolling interests Comprehensive (income) loss attributable to noncontrolling interests Comprehensive income attributable to VF Corporation 88,387 (34,736) 32.111 (12,619) (8,133) 3,196 (12,169) 4,782 (9,555) 3,976 (15,883) 6.199 (401) (698) 274 (490,552) 556,953 1,239 (542) 242,175 1,452,294 (32.418) 1,053,720 (139) $1,053,581 $ 556,953 $1,452,294 See notes to consolidated financial statements. VF CORPORATION Consolidated Statements of Cash Flows Yer Fede December 2012 $ 1,047,SOS $1,210,119 $1.086,138 396,362 172.443 42,061 60379 104 313 (2.198) (9,864) (78,064) 157,810 45.787 49.676 87.118 15,756 (28.102) (12,370) 148,969 47.929 41,058 92.814 19.264 (20.198) (20,797) (44,485) (40,931) 4,112 14.306 Operating activities Net income Adjustments to reconcile net income to cash provided by operating activities: Impairment of goodwill and intangible assets Depreciation Amortization of intangible assets Other amortization Stock-based compensation Provision for doubtful accounts Pension expense less than contributions Deferred income taxes Gain on sale of businesses Other, net Changes in operating assets and liabilities, net of purchases and sales of businesses: Accounts receivable Inventories Accounts payable Income taxes Accrued liabilities Other assets and liabilities Cash provided by operating activities Investing activities Capital expenditures Business acquisitions, net of cash acquired Proceeds from sale of businesses Software purchases Other, net Cash used by investing activities Financing activities Net increase (decrease) in short-term borrowings Payments on long-term debt Purchases of treasury stock Cash dividends paid Proceeds from issuance of Common Stock, net of shares withheld for taxes Tax benefits of stock-based compensation Other, net Cash used by financing activities Effect of foreign currency rate changes on cash and equivalents Net change in cash and equivalents Cash and equivalents-beginning of year Cash and equivalents - end of year 854 (130.540) 69,807 (44,144) 41.989 22.614 1,697,629 (155,053) (47,240) 75,073 16.628 84.472 (7.939) 1,506.041 (111,571) 87.620 (74,294) 26.213 (35,912) 73,183 1,275,000 (234,077) (271,153) (67,943) (27235) (329,255) (53,989) (25.131) (350,273) (251,940) (1,750) 72,519 (30,890) (8,230) (220,291) 4,761 (4,760) (727,795) (478,933) 34,869 64,437 9,032 (404,872) (282.024) (402,136) 48,029 48,140 (269,010) (2,776) (307,282) (333,229) 62.770 47.213 (201) (802.515) 4.039 256.233 341.228 $ 597,461 (1.107.421) (65,461) 195.492 776 403 $ 971,895 1983,831 7.005 178,942 597.461 $ 776,403 See notes to consolidated financial statements. VF CORPORATION Consolidated Statements of Stockholders' Equity V Stock Corporation Stockholders Accumulated Additional Other Gumarchenstve Capital Income (Loss) In thousands, exp share amounts $2,316,107 S (421,477) Retained Fermings controlling 442,227,924 $110,557 $ (816) $2,520,804 1,085,999 (333.229) (297,692) (34,435) (8,072,920) 6,663,932 (2,018) 1,666 211,761 47,091 (63,845) (15,263) (401) S (453,895) 440,818,936 $110,205 $2,527,868 Balance, December 2011 Net income Dividends on Common Stock Purchase of treasury stock Stock-based compensation, net Disposition of noncontrolling interests Foreign currency translation Defined benefit pension plans Derivative financial instruments Marketable securities Balance, December 2012 Net income Dividends on Common Stock Purchase of treasury stock Stock-based compensation, net Foreign currency translation Defined benefit pension plans Derivative financial instruments Marketable securities Balance, December 2013 Net income Dividends on Common Stock Purchase of treasury stock Stock-based compensation, net Foreign currency translation Defined benefit pension plans Derivative financial instruments Marketable securities Balance, December 2014 $2,941,447 1.210.119 (402,136) (280,408) (36,932) (6.849,160) 6,340,594 (1.712) 1,585 218,722 110,715 143,087 (12324) 697 440,310,370 $110,078 $2,746,590 5 (211,720) $3,432,090 5 (12,037,000) 4,586,521 1,047,505 (478,933) (724,786) (44,123) 13.009) 1.146 246,596 (463,588) (99,683) 73.143 (424) $ (702,272) 432,859,891 $108,215 $2.993,186 $3,231,753 See notes to consolidated financial statements