EYK11-2. Comparative Analysis Problem: Columbia Sportswear Company vs Under Armour, Inc. The financial statements for the Columbia Sportswear Company can be found in Appendix A at the end of this book, and the financial statements of Under Armour, Inc. can be found in Appendix B (the complete annual report is available on this book's Website). UN Required Answer the following questions: a. Calculate the return on common stockholders' equity for each company for 2014. b. Calculate the dividend payout ratio for each company for 2014. c. Based on these ratios, which company performed better for its shareholders during 2014? COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS Sportswear CompanyA4 (In thousands, except per share amounts) Year Ended Decemher 31 of sales fit 100 1,145.639 941.34 and administrative expenses 953.169 54,951 743,655 71 763,063625,656 596,635 from operations net 198,844131,794 133,528 se on note payable to related party (Note 22) expemsa ting expense hoome betore income tax home tax expense (Note 11) (1,053 198,521131426 133,907 41,859 93 93,603 99,859 Net income (loss) attributable to va income attributable to Columbia Sportswear Company S 137,173 $ 94,341 S 99,859 share attributable to Columbia Sportswear Company (Note 17) per S 1.97 S 1.37 S 1.48 194 136 1406 Basic Weighted average shares outstanding (Note 17): 67,680 70,681 69,43468,264 Basic Diluted MEM COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWs 141.859 93,603 s Cash Baws from aperating 27.442 4,291 (4.215) Prepaid expenses and other currens assets 41,941 35,05112,210 ,166 5,534 (11,052) 195 Income taxes payable 185,783 274,275 148,668 Net cash provided by operating activities Cash fnws from investing activities: 188 467) (48,243) (a 12,895 78,636 42319 equisition of business, net of cash acquired Sales of short-term investments (60,283) (69,443 71 Proceeds from sale of property,plant, and equipment (184,027) (116086)(85042) Net cash used in investing activities Cash nows from financing activitiles 52,356 69,136 100,654 (52.205) 69.292) (100,498) 22,277 19,537 14,600 Procends from credir facilities Repayments on credit facilities from issuance of common stock under employee stock plans 3,141) (2.291) (1.486) 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 4,927 1,532 16072 8.000 (15,000) (206) 8,000 Cash dividends paid (39.836) 31,298) (29,780 Net cash used in financing activities 4,550 4,676 (15,700) 11,137) 6,805 1,821 23,931) 146,708 49,74 37,489 290,781 241,034 413.558 437.489 $ 290,781 Net effect of exchange rate changes on cash Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginming of year Cash and cash equivalents, end of year Supplemental disclosures of cash now information Cash paid during the year for income taxes Supplemental disclosures of non-cash investing activities: 53,958S 22,771 S 43,696 Capital expenditures incurred but not yet paid 7,196 5,195 5,313 See accompanying notes to consolidated financial statements Under Armour, Inc. and (In thousands, except share data) oument h and cash equivalents Cash unts receivable, net Prepaid expenses and other 593,175 s 347 489 279835 209 952 536,714469,006 87,477 63,987 38,377 1549,399 1,128,811 income taxes Total current assets y and equipment, net 52,498 Isangible assets, net 123,256 223,952 122.244 income taxes her long term assets Total assets 33,570 31,094 lities and Stockholders' Equity 57.064 47.543 $2,095,083 $1577,741 Curent liabilities Revolving credit facility Accounts payable Accrued expenses Current maturities of long term debt Other current liabilities S$ 100,000 210.432 165.456 147,681 133,729 4,972 34,563 22.473 21,627 426,630 255.250 47951 67906 49.806 744,783 524.387 28,951 Total current liabilities Long term debt, net of current maturities Other long term liabilities Total liabilities Commitments and contingencies (see Note 7) Stockholders' equity Class A Common Stock , $0.0003 1/3 par value; 400,000,000 shares authorized as of December 31, 2014 and 2013; 177.295.988 shares issued and outstanding as of December 31, 2014 and 171,628,708 shares issued and outstanding as of December 31, 2013 59 57 Class B Convertible Common Stock, $0.0003 1/3 par value; 36,600,000 shares authorized, issued and outstanding as of December 31, 2014 and 40,000,000 shares authorized, issued and outstanding as of December 31 2013. 13 508,350 397.248 856,687 653,842 (14,808) 2,194 1,350,300 1,053,354 $2,095,083 $1,577,741 12 Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total stockholders' equity Total liabilities and stockholders' equity See accompanying notes. Under Armour, Inc. and Subsidiaries Consolidated Statements of Income (In thousands, except per share amounts) Year Ended Decrmber 31 2013 2014 20 $3,084,370 $2,332,051 SI83 921 955624 1,572.164 1.195,381 1,512,206 1,136,670 1.158.251 871.572 670.60 Net revenues Cost of goods sold Gross proft 2 Selling, general and administrative expenses 353,955 265,098 (5,335) (2,933) 208,695 (6.410) 1,172) Income from operations (5,183) Interest expense, net Other expense, net 342,210 134.168 260,993 23 439 74.661 Income before income taxes 98.663 Provision for income taxes s 208.042 S 162,330 5 128.778 Net income Net income available per common share Basic Diluted s 0.98 0.77 0.62 0.95 $ 0.75 S 0.61 Weighted average common shares outstanding Basic Diluted 213,227 210,696 208,686 219,380 215,958 212.760 Under Armour, Inc. and Subsidiaries (In thousands) as of December 31, 2011 of stock options ithheld in consideration of employee ligations relative to stock-based 4 4500 s 14 $268.172 sM6.164 2.028 6%412 2.436 e of Class A Common Stock, net of le Common Stock converted R Convertibl lass A Common Stock 178 3.246 compensation expense 2,400(2,400) cess tax benefits from stock-based tion arrangements 19,845 17,670 166,922 56 42,600 14 321,303 493,1812,368 $16922 ise of stock options Bahit withheld in consideration of employee 1,822_ ax obligations relative to stock-based of Class A Common Stock, net of (1.669) - 1 569) B Convertible Common Stock converted 3,439 o Class A Common Stock guack-based compensation expense er excess tax benefits from stock-based 2,600 1 (2.60) (1) - 43,184_ 43,184 17,163 171,629 57 40,000 13 397248 653,842 2194 1,053,34 tion arrangements ve income 17,163 Rulance as of December 31, 2013 Exercise of stock options Shares withheld in consideration of employee ax obligations relative to stock-basecd compensation arrangements suance of Class A Common Stock, net of 11.259 11,258- (5,197) (5,197) 12,067 12,067 Class B Convertible Common Stock converted (3,400) (1) 3,400 50,812 5 - 208042 (17002)191.040 177,296 S 59 36,600 $ 12 $508,350 $856,687 $14,808) $1,350,300 to Class A Common Stock 50,812- Stock-based compensation expense Net excess tax benefits from stock-based 36,965 - Comprehensive income (loss) Balance as of December 31, 2014 See accompanying notes. Appendix A Columbia Sportswear Company CONSOLIDATED STATEMENTS OF CASH FLows (In thousands) COLUMBIA SPORTSWEAR COMPANY Year Ended Decber3, s 141,859 $ 93,603 $ 99,859 Cash flows from operating activities: Net income 4,01740,87140,892 9,344 1,582 40 833 to reconcile net income to net cash provided by operating (6,978) 11,120 (4,927)(1.532) (1,016 8,818 Loss on disposal or impairment of property, plant, and Deferred income taxes Stock-based Excess tax benefit from employee stock plans (31.478) 27,44218,166 (62,086)34,089 receivable (4,869 5,166(2,025) Prepaid expenses and other current assets Other assets 4,291 (4215) (1,259) 41941 31,711 (12,330) payable 35,051 12,210 5,534 (11,052) Accrued liabilities Income taxes payable Other liabilities 1,166 6195 2.356 3,126 185,783 274,275 148,668 Net cash provided by operating activities Cash flows from investing activities: (188,467) (48,243) (125,3 Acquisition of business, net of cash acquired es of short-term investments Sales of short-term investments Capital expenditures Proceeds from sale of property, plant, and equipment 112,895 78,636 42,319 (60,283) (69,443) (50,491) 71 7,099 Net cash used in investing activities (184,027) (116,086) (85,042) Cash flows from financing activities 52,356 69,136 100,654 (52,205) (69,292) (100,498) 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 22,277 19,537 14,600 (3,141) (2,291) (1,486) 1,53 4,927 (15,000) 16,072 016 (206) Proceeds from note payable to related party Capital contribution from non-controlling interest 8,000 Cash dividends paid Net effect of exchange rate changes on cash Cash and cash equivalents, beginning of year (39.836) (31.298) (29.780 (14,550 (4,676) (15,700) (11,137) (6,805) 1,821 (23,931) 146,708 49,747 437,489 290,78241,034 413,558 S 437,489 $ 290,781 Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, end of year Supplemental disclosures of cash flow information: Cash paid during the year for income taxes Supplemental disclosures of non-cash investing activities: S 53,958 S 22,771 S 43,696 Capital expenditures incurred but not yet paid See accompanying notes to consolidated financial statements 7,196 5,195 5,313