Question:
The operating section of the 2014 consolidated statement of cash flows for Imation Corporation, a global technology company, is excerpted in the following table (dollars in millions):
REQUIRED:
a. Review the trends across time of depreciation. Does the companys growth strategy seem to involve investing in property, plant, and equipment? Explain.
b. Why is stock-based compensation added back to net income?
c. Has the inventory balance increased or decreased during the years shown? Explain.
d. Explain the cash flows associated with the asset impairments and the obsolescence of inventory.
Transcribed Image Text:
Imation Corp. Consolidated Statements of Cash Flows Years Ended December 31, 2014 2013 (In millions) 2012 Cash Flows from Operating Activities: $(114.7) $(44.4) $(340.7) Net loss Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 21.7 23.7 35.8 Stock-based compensation 5.3 6.9 7.3 Deferred income taxes and valuation allowance 3.2 (4.7) 5.7 37.8 285.7 Goodwill, intangible and other assets impairments 7.1 Inventory write-offs 4.6 2.7 2.3 0.2 2.4 Pension settlement 12.7 (8.6) Changes in fair value of contingent consideration (0.6) (9.8) Gain on sale of land (5.0) (6.9) Other, net 2.9 Changes in operating assets and liabilities: 48.8 23.7 Accounts receivable 19.1 64.2 Inventories 15.5 45.8 (9.1) 7.8 Other assets 15.4 Accounts payable 6.8 (63.3) (44.0) Accrued payroll and other liabilities (15.5) (29.6) (17.7) (2.2) 7.5 Restricted cash (7.8) Net cash provided by (used in) operating activities 22.1 (8.5)