The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of VF Corporation are presented in Appendix C. Assume Columbia's weighted average number of shares outstanding was 227,514,000, and VF's was 56,997,000 Instructions (a) For each company, calculate the following values for 2014. 1. Working capital. 2. Current ratio. 3.Debt to assets ratio. 4.Free cash flow. (Hint: When calculating free cash flow, do not consider business acquisitions to be part of capital expenditures.) (b) Based on your findings above, discuss the relative liquidity and solvency of the two companies. Page 22 CHAPTER 2 CT2-2 Comparative Analysis Problem: Columbia Sportswear vs. VF Corporation Financial statements for Columbia Sportswear Company are presented in Appendix B and for VF corporation are presented in Appendix c(these are also provided in BbLearn). (a) Compute the following for each company for 2014 Comit #4 free cash flow, but add item (5) to calculate earnings per share): Ratio or VF Corporation Columbia Sportswear capital (2) Current ratio (3) Debt to total assets ratio (5) Earnings per (correct weighted average number of shares outstanding = 69,807 thousand; use "Net income attributable to Columbia Sportswear") (correct weighted average number of shares outstanding = 432,611 thousand, use "Net income attributable to VF Corporation common stockholders) share (b) Based on your findings above, discuss the relative liquidity and solvency of the two companies Liquidity: Solvency: 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 $ 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 $10.315.443 942,181 2,433,552 593.597 $9.980,140 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 $i; 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 $ 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 6.077 028 $10.315.443 VF CORPORATION Consolidated Statements of Income Year Ended December 2014 2013 2012 In thousands, except per share amounts $12,154,784 $11,302,350 $10,766,020 127.377 117.298 _ 113.835 12.282.161 11.419.648 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 Basic 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 $ $ 2.47 2.42 2.38 .1075 2.76 2.71 0.9150 $ 2.43 0.7575 $ VF CORPORATION Consolidated Statements of Comprehensive Income 2014 Year Ended December 2013 In thousands 2012 $1.047,505 $1,210,119 $1,086,138 (469.663) 6,075 109,463 1.252 3 7,648 9.443 (203.234) 37,518 5,445 60.588 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 146,746 85,356 1,270 (90.285) (173,959) 69,744 3,357 37,013 88,387 (34,736) 32,111 (12,619) (8,133) 3.196 (12.169) 4.782 19.555) 3.976 (15,883) 6.199 1.239 (542) (401) (698) 274 (490,552) 556,953 242,175 1.452.294 (32,418) 1.053.720 (39) $1.053.581 $ 556.953 $1.452.294 VE CORPORATION Consolidated Statements of Cash Flows 2014 Year Ended December 2013 In thousands 2012 $ 1,047,505 $1,210,119 $1,086,138 396,362 172.443 42,061 60.379 104,313 (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 (111.571) 87.620 (74,294) 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 26,213 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 (35.912) 73.183 1.275,000 (234,077) (271,153) (67,943) (27.235) (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 (1.107,421) 65.461) 195.492 776 403 $ 971,895 (269.010) (2,776) (307,282) (333.229) 62,770 47.213 (201) (802.515) 4.039 256,233 341.228 S 597.461 (983.831) 7.005 178,942 597.461 776,403 $ See notes to consolicht VE CORPORATION Consolidated Statements of Stockholders' Equity VF Corporation Stockholders Accumulated Conan Additional Other Stock Paid-in Comprehensive Shares Amounts Capital Income (Loss) In thousands, except share amounts 442,227,924 $110,557 $2,316,107 $ (421,477) Retained Farines Non- controlling Interests $ (816) $2,520,804 1,085.999 (333,229) (297,692) (34,435) (8,072,920) 6,663,932 (2.018) 1.666 211,761 115 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 47,091 (63,845) (15,263) (401) $ (453,895) 11 440,818.936 $110,205 $2,527,868 $2,941,447 1.210.119 (402,136) (280,408) (36,932) (6,849,160) 6,340,594 (1.712) 1,585 218,722 111 110,715 143,087 (12,324) 697 440.310.370 $110.078 $2746.590 (211.720) $3.432.090 Continued VF CORPORATION Consolidated Statements of Stockholders' Equity VF Corporation Stockholders Accumulated Con Additional Other Stock Paid-in Comprehensive Araunts Capital Incon (los) In thousands, except share amounts 440,310,370 $110,078 $2,746,590 $ (211,720) Retained Earnings Leterests $ 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 $3,432,090 1,047,505 (478,933) (724,786) (44,123) (12,037,000) 4.586,521 (3.009) 1,146 IIIIIIIIIII 2 46,596 (463,588) (99,683) 73.143 424) S (702.272) 432.859,891 S108,215 $2.993.186 $3.231.753 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) December 31 2014 2013 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 9 1.755 306,878 329.228 5 2,041 33,081 1.250,472 279.373 36,288 14,438 25.017 $ 1,605,588 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 Total current assets Property, plant, and equipment, net (Note 7) Intangible assets, net (Notes 3.8) Goodwill (Notes 3, 8) Other non-current assets Total assets LIABILITIES AND EOUT 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 1S) 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 $ 173,557 144,288 1 20,397 14,3887 .251 16949 373.120 301.254 15.728 35.435 2 9,527 9,388 13,984 3,304 7.959 436975352.724 11 72.700 1.255.070 15,833 1.343,603 11.631 1.355.234 $ 1.792.209 52.325 1,157.733 3 5.360 1.245.418 7446 1.252.864 $ 1.605,588 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, net Interest expense on note payable to related party (Note 22) Other non-operating expense Income before income tax Income tax expense (Note 11) Net income Net income (loss) attributable to non-controlling interest Net income attributable to Columbia Sportswear Company Year Ended December 31, 2014 2013 2012 $2,100,590 $1,684,996 $1,669,563 1,145,639 941,341 953,169 954,951 743,655716,394 763,063 625,656 596,635 6,956 13,795 13,769 198,844 131.794 133,528 1,004 503 379 (1.053) (274) (871) 198,521 131,426 133,907 (56,662) (37,823) (34,048) 141.859 93,603 9 9,859 4,686 (738) $ 137,173 S 94.341 $ 99,859 Earnings per share attributable to Columbia Sportsw vear Company (No Basic Diluted 1.97 S 1.94 Weighted average shares outstanding (Note 17) Basic Diluted 69,807 70,681 68,756 67 68 67,680 69.434 68,264 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Year Ended December 31, 2014 2013 2012 $ 141,859 $ 93,603 $ 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), ($2), and $4, respectively) Unrealized gains (losses) on derivative transactions (net of tax expense) benefit of ($1.507). $9 and ($171), respectively) Foreign currency translation adjustments (net of tax benefit (expense) of $1,023, ($191) and ($59), respectively) Other comprehensive loss Comprehensive income Comprehensive income (loss) attributable to non-controlling interest Comprehensive income attributable to Columbia Sportswear Company (27,789) (20,028) 121,831 4.185 $117,646 (9,861) 4,518 (11,119) (234) 82,484 99,625 (554) $ 83,038 $ 99,625 COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31. 2014 2013 1.166 Cash flows from operating activities: S 141.859 S 93,603 $ 99.859 Net income Adjustments to reconcile net income to net cash provided by operating activities 54,017 40,87140,892 Depreciation and amortization Loss on disposal or impairment of property, plant, and equipment 4819,344 1.582 Deferred income taxes (6,978) 8,818 7.140 Stock-based compensation 11,120 8.878 7.833 Excess tax benefit from employee stock plans (4.927) (1.532) (1.016) Changes in operating assets and liabilities Accounts receivable (31.478) 27.442 18.166 Inventories (62.086) 34,089 2,951 Prepaid expenses and other current assets (4.869) 5.166 (2,025) Other assets (4.215) (1.259) Accounts payable 41.941 31.711 (12,330) Accrued liabilities 35,051 12.210 (5.199) Income taxes payable 5.534 (11.052) Other liabilities 6,195 2,356 3.126 Net cash provided by operating activities 185.783 274 275 148.668 Cash flows from investing activities: Acquisition of business, net of cash required (188.467) Purchases of short-term investments (48,243) (125.390) (83,969) Sales of short-term investments 112.895 78.636 42.319 Capital expenditures (60,283) (69.443) (50,491) Proceeds from sale of property, plant, and equipment 71 7,099 Net cash used in investing activities (184,027) (116,086) (85.042) Cash flows from financing activities: Proceeds from credit facilities 52.356 69,136 100.654 Repayments on credit facilities (52 205) (69.292) (100.498) Proceeds from issuance of common stock under employee stock plans 22.277 19,5371462 Tax payments related to restricted stock unit issuances (3.141) Excess tax benefit from employee stock plans (2.291) (1.486) 4,927 1.532 Repurchase of common stock 1,016 Proceeds from note payable to related party (1:5.000) (206) Capital contribution from non-controlling interest 16,072 8,000 Cash dividends paid (39.836) 31.298) 29.780) Net cash used in financing activities (14550) (4.676) (15.700) Net effect of exchange rate changes on cash Net increase (decrease in cash and cash equivalents (11.137) (6.805) 1.821 Cash and cash equivalents, beginning of year (23.931) 1-46,708 49.747 437,489 Cash and cash equivalents, end of year 290,781 241,034 Supplemental disclosure of cash flow information: $ 413.558 5 437.489 S 290,781 Cash paid during the year for income taxes Supplemental disclosures of non-cash investing activities: $ 53,958 S 22,771 $ 43.696 Capital expenditures incurred but not yet paid 7.1965 .195 5313 See accompanying notes to consolidated financial statements COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF EQUITY (In thousands) Columbia Sportswear Company Shareholders' Equity Leated Other Reted Comprehensive Amount Karin Income S3037 S10246115 Outstanding Interest $ 1.074.545 99.859 (7) (4.745) 4,518 (29.780) 13.114 13.114 1.036 7.833 (206) 24,814 1,094 690 1.166,167 93,603 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 Foreign currency translation adjustment, net Cash dividends (50 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 (50.46 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 (S0 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 (1.261) (10,045) (1.261) (9,861) (31.298) 17.246 8,000 1.187 69.190 52325 3520 7.446 137.173 1.252.864 141,59 10 7.751 (27,283) 501) 7.751 (27,789) (39.836) 1.059 19.136 5.119 11.120 (15.000) 72.700 (421) 69,825 19.136 3.119 11.120 (15.000) 5 13 214 51.255.00 $ 11.631