The balance sheets for 2004 and 2003 for Columbia Sportswear are attached. In addition, Columbia reported the following information:
- 2004 net income was $138,624. Tax expense was $76,297.
- Columbia did not pay dividends in 2004.
- Columbia sold property, plant and equipment for $40 cash and recognized a loss of $541 on this sale.
- Columbia sold investments for cash at original cost (i.e., there was no gain or loss).
- Depreciation of plant, property and equipment totaled $18,544 in 2004. Amortization of intangible assets totaled $84.
- Assume all capital expenditures and purchases of other long-term assets were paid in cash.
- Other liabilities consist of various long-term operating liabilities.
Note you will have to determine the effect on the cash flow statement of any other event(s) by analyzing the given information.
1) Prepare the cash flow statement for 2004 using the indirect method.
2) Suppose you are an investor. Evaluate Columbia's policy of not paying you a dividend. Why may Columbia not pay a dividend? Does the company have sufficient cash flow to pay a dividend? Explain.
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Columbia Sportswear Company
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Balance Sheet
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(in thousands)
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December 31, 2007
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2004
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2003
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Assets
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Cash and cash equivalents
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$ 130,023
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$ 104,135
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Short-term investments
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160,205
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160,450
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Accounts receivable, net
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267,653
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206,024
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Inventories
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165,426
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126,808
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Prepaid expenses and other current assets
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32,726
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22,813
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Total current assets
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756,033
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620,230
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Property, plant and equipment, net
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155,013
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126,247
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Goodwill and other intangibles
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38,398
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37,289
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Total assets
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$ 949,444
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$ 783,766
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Liabilities and Shareholders' Equity
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Accounts payable
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$ 78,309
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$ 62,432
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Accrued Liabilities
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49,789
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42,303
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Income Taxes payable
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11,819
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8,069
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Long-term debt
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16,434
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20,931
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Other liabilities
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12,843
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9,202
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Total liabilities
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169,194
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142,937
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Shareholders' Equity
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780,250
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640,829
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Total liabilities and shareholders' equity
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$ 949,444
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$ 783,766
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