Financial Reporting Problem: The Columbia Sportswear Company The financial statements
for the
Columbia Sportswear Company can be found in Appendix A at the end of this textbook.
Required
Answer the following questions using Columbias Consolidated Financial Statements:
a. How much inventory does Columbia carry on its balance sheet? What percentage of Colum-
bias total assets does inventory represent in 2017 and 2016?
b. Compute the inventory turnover and days sales in inventory for 2017 and 2016. Calculate
inventory turnover using end of year inventory.
c. Is Columbias inventory management improving?
COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Year Ended December 31, 2017 2016 2015 Net sales S 2,466,105 2,377,045 2.326,180 1,306,143 Cost of sales 1,266,697 1,252,680 Gross profit Selling, general and administrative expenses 1,159,962 ,0,348 1,073,500 831,97 910,894 864,084 Net licensing income 13,901 10,244 8,192 Income from operations 256,508 262,969 249,721 Interest income, net 4,515 2,003 1,531 Interest expense on note payable to related party (Note 21) Other non-operating expense (1,099) (429) (1,041) (321) (572) (2,834) Income before income tax 266,734 256,898 247,319 Income tax expense (Note 10) (154,419) (58,459) (67,468) 112.315 Net income 198,439 179,85 Net income attributable to non-controlling interest 7,192 6,54 5.514 S 105,123 191,898 S 174,337 Net income attributable to Columbia Sportswear Company Earnings per share attributable to Columbia Sportswear Company (Note 16): 151 Basic S 2.75 2,48 Diluted 1.49 2.72 2.45 Weighted average shares outstanding (Note 16): Basic 69,759 69,683 70,162 71,064 Diluted 70,453 70,632 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) December 31. 2017 2016 ASSETS Current Assets: Cash and cash equivalents (Note 20) 673,166 551,389 Short-term investments (Note 20) 94,983 472 Accounts receivable, net (Note 5) 364,862 333,678 Inventories 457,927 487,997 Prepaid expenses and oth 5 38.487 current assets Total current assets 1,649,497 1412.023 Property, plant, and equipment, net (Note 6) 281,394 279,650 Intangible assets, net (Note 7) Goodwill (Note 7) 129,555 133,438 68,594 68,594 Deferred income taxes (Note 10) 56,804 92,494 Other non-current assets 27,058 27,695 2,013,894 2,212,902 S Total assets LIABILITIES AND EQUITY Current Liabilities: Accounts payable 252,30 S 215,048 Accrued liabilities (Note 9) 182.228 142,158 Income taxes payable (Note 10) 19,107 5,645 Total current liabilities 453,636 362,85 Note payable to related party (Note 21) 14,053 Other long-term liabilities (Notes 11, 12) 48,735 42,622 Income taxes payable (Note 10) Deferred income taxes (Note 10) 58,104 12,710 168 147 432.383 Total liabilities 560,643 Commitments and contingencies (Note 13) Shareholders' Equity Preferred stock; 10,000 shares authorized; none issued and outstanding Common stock (no par value); 125,000 shares authorized; 69,995 and 69,873 issued and outstanding (Note 14) 45,829 53,801 Retained earnings 1,585,009 1,529,636 Accumulated other comprehensive loss (Note 17) (8,887) (22,617) Total Columbia Sportswear Company shareholders' equity 1,621,95 1,560,820 20,69 Non-controlling interest (Note 4) 30,308 Total equity 1,652,259 1,581,5 2,013,894 Total liabilities and equity 2,212,902 S COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF EQUITY (In thousands) Columbia Sportswear Company Shareholders' Equity Common Stock Accumulated Other Comprehensive Income (Loss) Shares Non-Controlling Interest Retained Outstanding Amount Earnings Total BALANCE, JANUARY 1, 2015 69,828 72,700 1,255,070 15,833 11,63 1,355,234 Net income 174,337 5,514 179.851 Other comprehensive loss: Unrealized holding losses on available-for-sale securities, net (6) (6) Unrealized holding losses on derivative transactions, net (2.908) (2,908) Foreign currency translation adjustment, net (1,132) (33.755) (34,887) Cash dividends (S0.62 per share) (43,547) (43,547) Issuance of common stock under employce stock plans, net 835 12.547 12,547 Tax adjustment from stock plans 7.925 7,925 Stock-based compensation expense 11,672 11,672 Repurchase of common stock (70,068) (1,386) (70,068) BALANCE, DECEMBER 31, 2015 (20,836) 1.415,813 69,277 34,776 1385,860 16,013 Net income 191,898 6,541 198,439 Other comprehensive income (loss): Unrealized holding losses on available-for-sale securities, net (2) (2) Unrealized holding gains on derivative transactions, net 157 686 843 Forcign currency translation adjustment, (2,465) (2,020) (4,485) net Cash dividends (S0.69 per share) (48,122) (48,122) Issuance of common stock under cmployee stock plans, net 596 8,050 8,050 Stock-based compensation expense 10,986 10,986 Repurchase of common stock (11) (11) BALANCE, DECEMBER 31, 2016 69,873 53,801 1529,636 (22,617) 20,691 1,581,511 Net income 105,123 7,192 112.315 Other comprehensive income (loss): Unrealized holding losses on derivative transactions, net 1.159 (17,489) (516 (16,846) Forcign currency translation adjustment, net 31,219 2,94 34,160 Cash dividends (S0.73 per share) (50,909) (50,909) Issuance of common stock under employee stock plans, net 787 16,284 16,284 Stock-based compensation expense 11.286 11,286 Repurchase of common stock (35,542) (35,542) (665) BALANCE, DECEMBER 31, 2017 69,995 45.829 1,585,009 S (8.887) 30.308 S 1,652.259 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31 2017 2016 2015 Cash flows from operating activities Net income 12.315 198,439 S 179,851 Adjustments to reconcile net income to net cash provided by operating activities: 59,945 Depreciation and amortization 60,016 56,521 Loss on dispasal cr impairment of property, plant, and equipment Deferred income taxes 1,927 4,805 5,098 44,851 (19,178) (11,709) Sock-based compensation 11,286 10,986 11,672 Excess tax benefit from employee stock plans (7,873) Changes in operating assets and liabilities: Accounts receivables 36,710 (24.197) (40,419) (103,296) Inventories 46,662 (18,777) (5,452) Prepaid expenses and other current assets (19,241) 441 Other assets 931 (5,948) (2,524) Accounts payable 30 568 1,483 11.418 Accrued liabilities 11,581 4,847 (2,017) (10,994 Income taxes payable 58,702 4,768 Other liabilities 5,798 2,468 4,966 Net cash provided by operating activities 341,128 275,167 95.105 Cash flows from investing activities Purchases of short-term investmentsa (130,993) (21,263) (38,208) Sales of short-term investments 36,282 21.263 64,980 Capital expenditures (53.352) (49,987) (69,917) Proceeds from sale of property. plant, and equipment 279 97 144 (49,890 Net cash used in investing activities (147,784) (43,001) Cash flows from financing activities: Proceeds from credit facilities 3374 62,885 53,429 (3,374) Repayments on credit facilities (64,825) (51.479) Proceeds from issuance of common stock under emplayee stock plans 19,946 13.167 17,442 Tax payments related to restricted stock unit issuances (3,662) (5.117 (4,895) Excess tax benefit from employee stock plans 7,873 Repurchase of common stock (35.542) (11) (70,068) Cash dividends paid (50,909) (48,122) (43,547) Payment of relatedd party note payable (14,236) (84.403) Net cash used in financing activities (42,023) (91,245) (1,635 Net effect of exchange rate changes on cash 12,836 (4,647) Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 121,777 181.619 (43.788) 369,770 551.389 413.558 673,166 551.389 369.770 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: 81.045 70.424 87,350 685 1,049 1,115 Capital expenditures incurred but not yet paid 2.710 3.188 4,698 See accompanying notes to consolidated financial statements 45
