cash flow statements of the company for the three years ended December 1999. Given hereunder now are the consolidated cash flow statements of the company, taken from its Web site, for the three years ended 28th December, 2002. Extend your analysis to have a co-related analysis of the next three years. For this purpose attempt the requirements given at the end of the cash flow statements.
Consolidated Statements of Cash Flows
|
Three Years Ended December 28, 2002 |
|
|
(In millions) |
|
|
2002 |
2001 |
2000 |
|
Cash and cash equivalents, beginning of the year |
S 7,970 |
S 2,976 |
S 3.695 |
|
Cash flows provided by (used for) operating activities: |
|
|
|
|
Net income |
3.117 |
1,291 |
10,535 |
|
Adjustments to reconcile net income to net cash provided by |
|
|
|
|
Operating activities: |
|
|
|
|
Depreciation |
4.676 |
4.131 |
3.249 |
|
Amortization of goodwill |
— |
1.710 |
1.310 |
|
Amortization and impairment of intangibles and other acquisition-related costs |
668 |
717 |
352 |
|
Purchased in-process research and development |
20 |
198 |
109 |
|
(Gains) losses on equity investments, net |
372 |
466 |
(3.759) |
|
(Gain) loss on investment in Camera |
— |
196 |
(117) |
|
Net loss on retirements and impairments of property, plant and equipment |
301 |
119 |
139 |
|
Deferred taxes |
110 |
(519) |
(130) |
|
Tax benefits from employee stock plans |
270 |
435 |
887 |
|
Changes in assets and liabilities: |
|
|
|
|
Trading assets |
(444) |
898 |
38 |
|
Accounts receivable |
30 |
1.561 |
(384) |
|
Inventories |
(26) |
24 |
(731) |
|
Accounts payable |
(226) |
(673) |
978 |
|
Accrued compensation and benefits |
107 |
(524) |
231 |
|
Income taxes payable |
175 |
(270) |
(362) |
|
Other assets and liabilities |
(21) |
(971) |
482 |
|
Total adjustments |
6.012 |
7,498 |
2.292 |
|
Net cash provided by operating activities |
9,129 |
8,789 |
12,827 |
|
Cash flows provided by (used for) investing activities: |
|||
|
Additions to property, plant and equipment |
(4,703) |
(7,309) |
(6,674) |
|
Acquisitions, net of cash acquired |
(57) |
(883) |
(2,317) |
|
Purchases of available-for-sale investments |
(6,309) |
(7,141) |
(17,188) |
|
Maturities and sales of available-for-sale Investments |
5,634 |
15,398 |
17,124 |
|
Other investing activities |
(330) |
(395) |
(980) |
|
Net cash used for investing activities |
(5,766) |
(330) |
(10,035) |
|
Cash flows provided by (used for) financing activities: |
|
|
|
|
Increase (decrease) in short-term debt, net |
(101) |
23 |
138 |
|
Additions to long-term debt |
55 |
306 |
77 |
|
Repayment and retirement of long-term debt |
(18) |
(10) |
(46) |
|
Proceeds from sales of shares through employee stock plans and others |
681 |
762 |
797 |
|
Repurchase and retirement of common stock |
(4,014) |
(4,008) |
(4,007) |
|
Payment of dividends to stockholders |
(533) |
(538) |
(470) |
|
Net cash used for financing activities |
(3,930) |
(3,465) |
(3,511) |
|
Net Increase (decrease) In cash and cash equivalents |
(566) |
4,994 |
(719) |
|
Cash and cash equivalents, end of year |
$ 7,404 |
S 7,970 |
S 2,976 |
|
Supplemental disclosures of cash flow Information: |
|
|
|
|
Cash paid during the year for |
|
|
|
|
Interest |
$69 |
$ 53 |
$ 43 |
|
Income taxes |
$ 475 |
$ 1,208 |
$ 4,209 |
Requirements
- Analyse the cash flows from:
- Operating activities
- Investing activities, and
- Financing activities
- There is extreme volatility in the reported net income but the net cash provided by operating activities is very steady in comparison. Why?
- Higher depreciation, year after year since 1997 means an expanding business which means higher net income. But this is not the case with Intel during 2002 and 2001. Why? Offer possible explanations.
- In 2001 and 2002 net cash provided by operating activities is very high despite low net income. But that is not the case with the year 2000. Why?
- There is hardly any cash outflow towards investing activities during 2001. Does it mean that the company is not pursuing growth path?
- Despite lower net income dividend outgo is rising. Should it? How is it possible? Stretch your imagination.
- Refer to the earlier analysis of the CFSs of the company up to the year 1999 carried out in this chapter. Our prediction there on the ability of the company to generate positive cash flows from operations in future does not seem to have materialized on an analysis of 2000, 2001 and 2002 CFSs of the company in the sense that it is lacking expected growth. Why?
- You may like to check/not find answers to some questions. Go to the Web site of the company and study the management discussion and analysis report for the purpose.
- What do you learn from this case?
- Draft a crisp 3-4-page report.