Required:
1.
This workbook is organized as follows:
Sheet Name Contents
CP7-3 (this worksheet) CP7-3 Problem Requirements and Workbook Layout
Industry Ratio Report Industry Ratio Report
AEO Balance Sheets American Eagle Outfitters, Inc. Consolidated Balance Sheets
AEO Income Statements American Eagle Outfitters, Inc. Consolidated Statements of Operations
CP7-3 Comparing Companies within an Industry
Compute the inventory turnover ratio for both companies for the current year. What do you infer from the difference?
Liquidity
Current Ratio 2.55
Company
Ticker
Quick Ratio 1.38 ANF
ARO
Activity AEO
Inventory
5.92 ANN
Days to Sell
70.897 days BEBE
GES
Profitability JCG
Gross Profit
38.99% LTD
Operating
6.24% JWN
Net Profit
3.77% PSUN
Return on
13.11% ROST
Return on
7.17% BKE
The Buckle Inc
Ross Stores Inc
Pacific Sunwear of California Inc
Quality of
0.07 MW
0.72 URBN
Leverage WTSLA
Times Interest
16.33
Interest
16.39
Total
1.08
Total
1.92
Dividends
Dividend
19.61%
Dividend Yield 2.22%
Other
2.39%
Sales Growth 2.39%
Abercrombie & Fitch
J. Crew Group Inc
bebe stores Inc
Ann Taylor Stores
Guess? Inc
COMPANIES USED IN INDUSTRY ANALYSIS
American Eagle Outfitters
Aeropostale Inc
INDUSTRY RATIO REPORT
Retail Family Clothing Stores
Wet Seal Inc.
Urban Outfitters Inc
The Men’s Warehouse Inc
Nordstrom, Inc.
Limited Brands Inc
Receivables
54.24 CHS
Average
15.07 days PSS
Fixed Asset
5.76 DBRN
Total Asset
1.90 FL
Accounts
6.43 GPS
Collective Brands Inc
Chico’s FAS Inc
Gap Inc
Foot Locker, Inc
Dress Barn Inc.
January 31, February 2,
(in thousands, except per share amounts) 2009 2008
$ 473,342 $ 116,061
10,511 503,878
294,928 286,485
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED BALANCE SHEETS
Merchandise inventory
ASSETS
Short-term investments
Cash and cash equivalents
Current assets:
41,471 31,920
59,660 35,486
45,447 47,004
925,359 1,020,834
740,240 625,568
251,007 165,810
15,001 24,238
21,363 19,751
Non-current deferred income taxes
Other assets, net
Total assets
Property and equipment, at cost, net of accumulated depreciation and amortization
Total current assets
Long-term investments
Deferred income taxes
Prepaid expenses and other
Accounts and note receivable
$ 152,068 $ 157,928
88,314 70,355
39,898 44,837
24,670 35,846
152,882 151,038
– –
Accumulated other comprehensive (loss) income
Commitments and contingencies
Contributed capital
share issued; 205,281 and 204,480 shares outstanding , respectively
Total non-current liabilities
Other non-current liabilities
Stockholders’ equity
Common stock, $0.01 par value; 600,000 shared authorized; 249,328 and 248,763 shares
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued and outstanding
1,694,161 1,601,784
(786,800) (792,681)
1,409,031 1,340,464
$ 1,963,676 $ 1,867,680
LIABILITIES AND STOCKHOLDERS’ EQUITY
Non-current accrued income taxes
Deferred lease credits
Total liabilities and stockholders’ equity
Total stockholders’ equity
Treasury stock, 43,248 and 43,596 shares, repectively, at cost
Retained earnings
Accounts payable
Current liabilities:
Non-current liabilities:
$ 75,000 $ –
29,417 49,494
64,695 62,161
6,259 22,803
42,299 54,554
13,726 12,953
18,299 16,285
401,763 376,178
Notes payable
Current portion of deferred lease credits
Unredeemed stored value cards and gift certificates
Accrued rent
Other liabilities and accrued expenses
Accrued income and other taxes
Accrued compensation and payroll taxes
Total current liabilities
January 1, February 2, February 3,
(In thousands, except per share amounts) 2009 2008 2007
Net sales $ 2,988,866 $ 3,055,419 $ 2,794,409
Operating
302,140 598,755 586,790
Other
17,790 37,626 42,277
Other-than-
22,889 – –
Income
297,041 636,381 629,067
Provision for
117,980 236,362 241,708
Basic
$ 0.87 $ 1.85 $ 1.74
Diluted
$ 0.86 $ 1.82 $ 1.70
Weighted average common shares outstanding – basic
205,169 216,119 222,662
Weighted average common shares outstanding – diluted
207,582 220,280 228,384
For the Years Ended
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Gross profit 1,174,101 1,423,138 1,340,429
740,742 715,180 665,606
Depreciation
131,219 109,203 88,033
CP7-3
Home
January 1, February 2, February 3,
(In thousands) 2009 2008 2007
197 242 356
(378) 947 (191)
– – (177)
– – 878
(49,874) 13,771 (314)
Comprehensive income
Other comprehensive (loss) income
Reclassification adjustment for foreign currenty loss reasinzed in net
income realted to the disposition of National Logistics Services
to trading classification, net of tax
the sale of available-for-sale securities, net of tax
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended
transfer of investment securities from available-for-sale classification
Reclassification adjustment for gain realized in net income realted to the
Unrealized (loss) gain on investments, net of tax
$ 179,061 $ 400,019 $ 387,359
related to ARS
Reclassification adjustment for OTTI charges realized in net income
Reclassification adjustment for losses realized in net income due to
Net income
Other comprehensive (loss) income:
Accumulated
Shares Deferred Other
Outstanding Common Contributed Retained Treasury Compensation Comprehensive Stockholders’
(1) Stock Capital Earnings Stock (2) Expense Income (loss) Equity
221,897 $ 2,416 $ 369,807 $ 978,855 $ (216,513) $ (1,041) $ 22,028 $ 1,155,552
4,556 45 83,615 – – 1,041 – 84,701
– – – – – (314) (314)
– – – (61,521) – – – (61,521)
221,284 2,461 453,418 1,302,345 (362,626) – 21,714 1,417,312
– – – (13,304) – (13,304)
221,284 2,461 453,418 1,289,041 (362,626) – 21,714 1,404,008
1,092 20 39,977 – – – – 39,997
(18,750) – – – (438,291) – – (438,291)
(415) – – – (12,310) – – (12,310)
1,269 – – (6,480) 20,546 – – 14,066
204,480 2,481 493,395 1,601,784 (792,681) – 35,485 1,340,464
453 4 20,179 420 – – – 20,603
(164) – – – (3,432) – – (3,432)
Repurchase of common stock from employees
Stock awards
Net income
Repurchase of common stock from employees
of publicly announced programs
Balance at February 2, 2008
Cash dividends ($0.98 per share)
Other comprehensive income, net of tax
Repurchase of common stock as part
Stock awards
512 – – (4,710) 9,313 – – 4,603
– – – 179,061 – – – 179,061
– – – – – – (49,874) (49,874)
– – – (82,394) – – – (82,394)
$ 205,281 $ 2,485 $ 513,574 $ 1,694,161 $ (786,800) $ – $ (14,389) $ 1,409,031
Reissuance of treasury stock
Balance at January 31, 2009
Cash dividends ($0.40 per share)
Other comprehensive loss, net of tax
Net income
Stock awards
Other comprehensive loss, net of tax
Adoption of FIN 48
Balance at February 3, 2007
Balance at February 4, 2007
AMERICAN EAGLE OUTFITTERS, INC.
Cash dividends ($0.28 per share)
Balance at January 31, 2006
(in thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(5,250) – – (146,485) – – (146,485)
(4) – (113) – – – – (113)
528 – 109 (2,348) 8,007 – – 5,768
announced programs
Repurchase of common stock as part of publicly
Net income
stock split
Cash paid for fractional shares in three-for-two
Reissuance of treasury stock
January 31, February 2, February 3,
(In thousands) 2009 2008 2007
Operating activities:
Net income
$ 179,061 $ 400,019 $ 387,359
Adjustments to reconcile income to net cash provided by operating activities:
Depreciation and amortization
133,141 110,753 89,698
Stock-based compensation
20,296 33,670 36,556
Provision for deferred income taxes
24,469 (8,147) (27,572)
Other assets, net
390 (3,242) (5,357)
Accounts payable
(3,053) (15,559) 32,345
Unredeemed gift cards and gift certificates
(11,392) (699) 11,623
Deferred lease credits
18,887 4,640 7,791
Accrued income and other taxes
(20,697) (31,416) 43,482
(19,188) (2,598) 33,047
123,132 64,251 361,909
(265,335) (250,407) (225,939)
– – 12,345
(48,655) (1,772,653) (1,353,339)
393,559 2,126,891 915,952
(1,180) (1,170) (140)
Financing activities:
Payments on note payable and capital leases
(2,177) (1,912) (3,020)
Proceeds from issuance of note payable
75,000 – 2,025
Repurchase of common stock as part of publicly announced programs
– (438,291) (146,485)
Repurchase of common stock from employees
(3,432) (12,310) (7,635)
– – (113)
3,799 13,183 28,447
693 6,156 19,541
(82,394) (80,796) (61,521)
(14,790) 3,363 (178)
116,061 59,737 130,529
AMERICAN EAGLE OUTFITTERS, INC.
For the Years Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS
1,121 7,260 25,465
(693) (6,156) (19,541)
(1,141) 1,221 687
6,713 592 –
22,889 – –
(13,735) (19,074) (53,527)
(10,094) (5,660) 7,448
(24,781) (1,334) (4,204)
2009 2008
Accrued compensation
Accounts payable
Preferred shares; $.0001 par value, 10,000,000 shares authorized,
505,407 299,291
155,226 64,748
43,974 19,983
1,329,009$ 769,205$
none issued – –
167,712,088 and 166,104,615 issued and outstanding respectively 17 16
170,166 134,146
901,339 426,190
Total Assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Retained earnings
Additional paid-in capital
Common shares; $.0001 par value, 200,000,000 shares authorized,
Property and equipment, net
Marketable securities
Deferred income taxes and other assets
(in thousands, except share and per share data)
Consolidated Balance Sheets
URBAN OUTFITTERS, INC.
January 31,
Marketable securities
Accounts receivable, net of allowance for doubtful accounts of $1,229
Prepaid expenses and other current assets
Deferred taxes
Cash and cash equivalents
2009 2008 2007
Net sales 1,834,618$ 1,507,724$ 1,224,717$
Cost of sales, including certain buying, distribution
and occupancy costs 1,121,140 930,952 772,796
Gross profit 713,478 576,772 451,921
Selling, general and administrative expenses 414,043 351,827 287,932
Income from operations 299,435 224,945 163,989
Interest income 11,504 9,390 6,531
Consolidated Statements of Income
URBAN OUTFITTERS, INC.
Fiscal Year Ended January 31,
(in thousands, except share and per share data)
Other income 694 575 353
Other expenses (2,143) (515) (715)
Income before income tax expense 309,490 234,395 170,158
Income tax expense 110,126 74,164 53,952
Net income per common share:
Weighted average common shares outstanding:
Accumulated
Additional Other
Comprehensive Number of Par Paid-in Unearned Retained Comprehensive
Income Shares Value Capital Compensation Earnings Income (loss) Total
Balances as of February 1, 2006 164,831,477 16$ 138,050$ (3,905)$ 426,190$ 528$ 560,880$
Net Income 116,206$ – – – – 116,206 – 116,206
Foreign currency translation 3,614 – – – – – 3,614 3,614
Unrealized losses on marketable securities,
net of tax 142 – – – – – 142 142
Comprehensive income 119,962$
Share-based compensation – – 3,497 – – 3,497
Unearned compensation reclass – – (3,905) 3,905 – – –
Share-based compensation – – 3,277 – – – 3,277
Exercise of stock options 1,117,152 – 5,000 – – – 5,000
Tax effect of share exercises – – 7,341 – – – 7,341
Balances as of January 31, 2008 166,104,615 17 144,204 – 701,975 7,235 853,431
Net income 199,364 – – – – 199,364 – 199,364
Foreign currency translation (19,866) – – – – – (19,866) (19,866)
Unrealized losses on marketable securities,
net of tax (5,116) – – – – – (5,116) (5,116)
Comprehensive income 174,382$
Share-based compensation – – 3,637 – – – 3,637
Exercise of stock options 1,607,473 – 8,891 – – – 8,891
Tax effect of share exercises – – 13,434 – – – 13,434
Balances as of January 31, 2009 167,712,088 17$ 170,166$ –$ 901,339$ (17,747)$ 1,053,775$
Consolidated Statements of Shareholders’ Equity
URBAN OUTFITTERS, INC.
(in thousands, except share data)
Common Shares
Exercise of stock options 1,375,986 1 6,350 – – – 6,351
Tax effect of share exercises – 5,394 5,394
Share Repurchase (1,220,000) – (20,801) – – – (20,801)
Balances as of January 31, 2007 164,987,463 17 128,586 – 542,396 4,284 675,283
Net income 160,231 – – – – 160,231 – 160,231
Foreign currency translation 703 – – – – – 703 703
FIN48 adjustment – (652) (652)
Unrealized gains on marketable securities,
net of tax 2,248 – – – – – 2,248 2,248
Comprehensive income 163,182$
2009 2008 2007
Cash flows from operating activities:
Net income 199,364$ 160,231$ 116,206$
Accounts payable, accrued expenses and other liabilities (8,868) 75,967 33,600
Net cash provided by operating activities 251,570 254,353 187,117
Cash flows from investing activities:
Cash flows from financing activities:
Exercise of stock options 8,891 5,000 6,351
Excess tax benefit of stock options exercises 13,434 7,341 5,394
Share repurchases – – (20,801)
Net cash provided by (used in) financing activities 22,325 12,341 (9,056)
Effect of exchange rate changes on cash and cash equivalents (6,224) 212 702
Increase (decrease) in cash and cash equivalents 210,764 78,004 (22,645)
Cash and cash equivalents at beginning of period 105,271 27,267 49,912
Cash and cash equivalents at end of period 316,035$ 105,271$ 27,267$
Supplemental cash flow information:
Cash paid during the year for:
Income taxes 115,040$ 70,765$ 52,535$
Non-cash investing activities – Accrued capital expenditures 6,561$ 6,645$ 14,618$
Cash paid for property and equipment (112,553) (115,370) (212,029)
Cash paid for marketable securities (809,039) (293,633) (182,653)
(in thousands)
Consolidated Statements of Cash Flows
URBAN OUTFITTERS, INC.
Fiscal Year Ended January 31,
Adjustments to reconcile net income to net cash provided by operating activities: