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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-Q
____________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from_______to_______
Commission file number 000-23939
 _____________________________
COLUMBIA SPORTSWEAR COMPANY
(Exact name of registrant as specified in its charter) 
Oregon 93-0498284
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
14375 Northwest Science Park Drive
Portland, Oregon 97229
(Address of principal executive offices and zip code)
(503) 985-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each
exchange on which registered
Common stockCOLMThe NASDAQ Global Select Market
_____________________________________
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerxAccelerated Filer¨
Non-accelerated Filer
¨  
Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No  x
The number of shares of Common Stock outstanding on April 24, 2020 was 66,119,051.



COLUMBIA SPORTSWEAR COMPANY
MARCH 31, 2020

TABLE OF CONTENTS



PART I—FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)March 31,
2020
December 31,
2019
March 31,
2019
ASSETS
Current Assets:
Cash and cash equivalents$671,108  $686,009  $430,447  
Short-term investments35,828  1,668  272,603  
Accounts receivable, net of allowance of $27,579, $8,925, and $8,388, respectively
312,951  488,233  341,136  
Inventories577,124  605,968  520,614  
Prepaid expenses and other current assets113,726  93,868  73,850  
Total current assets1,710,737  1,875,746  1,638,650  
Property, plant and equipment, at cost, net of accumulated depreciation of $530,329, $523,092, and $500,018, respectively
332,997  346,651  298,379  
Operating lease right-of-use assets387,984  394,501  362,568  
Intangible assets, net122,850  123,595  125,830  
Goodwill68,594  68,594  68,594  
Deferred income taxes73,827  78,849  77,760  
Other non-current assets54,498  43,655  41,928  
Total assets$2,751,487  $2,931,591  $2,613,709  
LIABILITIES AND EQUITY
Current Liabilities:
Short-term borrowings$174,443  $  $  
Accounts payable150,971  255,372  186,943  
Accrued liabilities214,044  295,723  224,385  
Operating lease liabilities64,456  64,019  59,214  
Income taxes payable6,441  15,801  9,302  
Total current liabilities610,355  630,915  479,844  
Non-current operating lease liabilities364,300  371,507  337,832  
Income taxes payable48,320  48,427  50,610  
Deferred income taxes8,944  6,361  9,112  
Other long-term liabilities22,977  24,934  15,662  
Total liabilities1,054,896  1,082,144  893,060  
Commitments and contingencies (Note 7)
Shareholders' Equity:
Preferred stock; 10,000 shares authorized; none issued and outstanding
      
Common stock (no par value); 250,000 shares authorized; 66,116, 67,561, and 68,346, issued and outstanding, respectively
565  4,937  94  
Retained earnings1,704,000  1,848,935  1,723,873  
Accumulated other comprehensive loss(7,974) (4,425) (3,318) 
Total shareholders' equity1,696,591  1,849,447  1,720,649  
Total liabilities and shareholders' equity$2,751,487  $2,931,591  $2,613,709  
See accompanying notes to condensed consolidated financial statements.
1

COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
Three Months Ended March 31,
(in thousands, except per share amounts)20202019
Net sales$568,228  $654,608  
Cost of sales296,514  317,879  
Gross profit271,714  336,729  
Selling, general and administrative expenses276,820  251,755  
Net licensing income3,119  2,984  
Income (loss) from operations(1,987) 87,958  
Interest income, net1,813  3,400  
Other non-operating income1,738  446  
Income before income tax1,564  91,804  
Income tax expense(1,351) (17,627) 
Net income$213  $74,177  
Earnings per share:
Basic$  $1.09  
Diluted$  $1.07  
Weighted average shares outstanding:
Basic66,970  68,290  
Diluted67,412  69,052  
See accompanying notes to condensed consolidated financial statements.

2

COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended March 31,
(in thousands)20202019
Net income$213  $74,177  
Other comprehensive income (loss):
Unrealized holding gains on available-for-sale securities, net
  56  
Unrealized gains on derivative transactions (net of tax effects of $(4,145) and $(395), respectively)
11,525  1,333  
Foreign currency translation adjustments (net of tax effects of $497 and $663, respectively)
(15,074) (545) 
Other comprehensive income (loss)(3,549) 844  
Comprehensive income (loss)$(3,336) $75,021  
See accompanying notes to condensed consolidated financial statements.

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COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended March 31,
(in thousands)20202019
Cash flows from operating activities:
Net income$213  $74,177  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and non-cash lease expense32,994  28,998  
Provision for uncollectible accounts receivable19,229  (2,317) 
Loss on disposal or impairment of property, plant and equipment2,138  958  
Deferred income taxes3,802  191  
Stock-based compensation3,675  4,215  
Changes in operating assets and liabilities:
Accounts receivable150,687  110,954  
Inventories23,510  862  
Prepaid expenses and other current assets(11,922) 6,952  
Other assets(5,873) (3,394) 
Accounts payable(100,402) (81,242) 
Accrued liabilities(77,861) (54,723) 
Income taxes payable(9,429) (13,761) 
Operating lease assets and liabilities(16,807) (14,721) 
Other liabilities(1,200) 1,495  
Net cash provided by operating activities12,754  58,644  
Cash flows from investing activities:
Purchases of short-term investments(35,044) (136,257) 
Sales and maturities of short-term investments1,631  128,000  
Capital expenditures(9,452) (25,199) 
Net cash used in investing activities(42,865) (33,456) 
Cash flows from financing activities:
Proceeds from credit facilities175,719  21,942  
Repayments on credit facilities(1,054) (21,942) 
Proceeds from issuance of common stock related to stock-based compensation1,096  8,579  
Tax payments related to stock-based compensation(4,207) (5,432) 
Repurchase of common stock(132,889) (18,845) 
Purchase of non-controlling interest  (13,970) 
Cash dividends paid(17,195) (16,418) 
Net cash provided by (used in) financing activities21,470  (46,086) 
Net effect of exchange rate changes on cash(6,260) (450) 
Net decrease in cash and cash equivalents(14,901) (21,348) 
Cash and cash equivalents, beginning of period686,009  451,795  
Cash and cash equivalents, end of period$671,108  $430,447  
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes$19,953  $31,646  
Supplemental disclosures of non-cash investing and financing activities:
Property, plant and equipment acquired through increase in liabilities$2,503  $8,177  
See accompanying notes to condensed consolidated financial statements.
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COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)

Three Months Ended March 31, 2020
(in thousands, except per share amounts)Common StockRetained EarningsAccumulated Other Comprehensive LossTotal
Shares
Outstanding
Amount
BALANCE, DECEMBER 31, 201967,561  $4,937  $1,848,935  $(4,425) $1,849,447  
Net income—  —  213  —  213  
Other comprehensive income (loss):
Unrealized holding gains on derivative transactions, net
—  —  —  11,525  11,525  
Foreign currency translation adjustment, net—  —  —  (15,074) (15,074) 
Cash dividends ($0.26 per share)
—  —  (17,195) —  (17,195) 
Issuance of common stock related to stock-based compensation, net
112  (3,111) —  —  (3,111) 
Stock-based compensation expense—  3,675  —  —  3,675  
Repurchase of common stock(1,557) (4,936) (127,953) —  (132,889) 
BALANCE, MARCH 31, 202066,116  $565  $1,704,000  $(7,974) $1,696,591  

Three Months Ended March 31, 2019
Columbia Sportswear Company Shareholders' Equity
(in thousands, except per share amounts)Common StockRetained EarningsAccumulated Other Comprehensive LossNon-Controlling InterestTotal
Shares
Outstanding
Amount
BALANCE, DECEMBER 31, 201868,246  $  $1,677,920  $(4,063) $16,456  $1,690,313  
Net income—  —  74,177  —  —  74,177  
Purchase of non-controlling interest—  —  —  (99) (16,456) (16,555) 
Other comprehensive income (loss):
Unrealized holding gains on available-for-sale securities, net
—  —  —  56  —  56  
Unrealized holding gains on derivative transactions, net
—  —  —  1,333  —  1,333  
Foreign currency translation adjustment, net—  —  —  (545) —  (545) 
Cash dividends ($0.24 per share)
—  —  (16,418) —  —  (16,418) 
Issuance of common stock related to stock-based compensation, net
296  3,147  —  —  —  3,147  
Stock-based compensation expense—  4,215  —  —  —  4,215  
Repurchase of common stock(196) (7,268) (11,806) —  —  (19,074) 
BALANCE, MARCH 31, 201968,346  $94  $1,723,873  $(3,318) $  $1,720,649  
See accompanying notes to condensed consolidated financial statements.

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COLUMBIA SPORTSWEAR COMPANY
INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE  PAGE
Note 1Basis of Presentation and Organization
Note 2Revenues
Note 3Intangible Assets, Net
Note 4Short-Term Borrowings and Credit Lines
Note 5Income Taxes
Note 6Product Warranty
Note 7Commitments and Contingencies
Note 8Shareholders' Equity
Note 9Stock-Based Compensation
Note 10Earnings Per Share
Note 11Accumulated Other Comprehensive Loss
Note 12Segment Information
Note 13Financial Instruments and Risk Management
Note 14Fair Value Measures
Note 15  Subsequent Event


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COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1—BASIS OF PRESENTATION AND ORGANIZATION
The accompanying unaudited condensed consolidated financial statements have been prepared by the management of Columbia Sportswear Company (together with its wholly owned subsidiaries, the "Company") and, in the opinion of management, include all normal recurring material adjustments necessary to present fairly the Company's financial position as of March 31, 2020, December 31, 2019 and March 31, 2019, and the results of operations for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019. The December 31, 2019 financial information was derived from the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. A significant part of the Company's business is of a seasonal nature; therefore, results of operations for the three months ended March 31, 2020 are not necessarily indicative of results to be expected for other quarterly periods or for the full year.
Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company, however, believes that the disclosures contained in this report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Columbia Sportswear Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions. Some of the more significant estimates relate to revenue recognition, allowance for uncollectible accounts receivable, excess, close-out and slow moving inventory, product warranty, impairment of long-lived assets, intangible assets and goodwill, income taxes, and stock-based compensation.
A novel strain of coronavirus ("COVID-19") was first identified in China in December 2019 and a global pandemic of respiratory disease caused by COVID-19 was declared by the World Health Organization in March 2020. As of March 31, 2020, in response to this pandemic, many governments worldwide had implemented travel restrictions, business shutdowns or slowdowns, and shelter-in-place or stay-at-home orders. In first quarter 2020, lower consumer demand related to the COVID-19 pandemic began to impact the Company's financial performance in China in late January, Korea and Japan in early February and North America and Europe in March. Retail traffic trends declined across North America and Europe in early March, prior to store closures which began in mid-March. As of the date of this filing, certain regional and local governments have lifted restrictions and orders.
The current environment of uncertainty significantly affected the March 31, 2020 estimates for allowance for uncollectible accounts receivable and excess, close-out and slow-moving inventory. These estimates involve assumptions about future events. The allowance for uncollectible accounts receivable includes assumptions about the future financial condition of our customers and their ability to make required payments. The provision for excess, close-out and slow moving inventory includes assumptions about future demand for the Company’s products and the Company's ability to sell them at a profit.
As a result of lower consumer demand related to the COVID-19 pandemic, we tested certain retail locations and their respective lease right-of-use assets for impairment. While no significant impairments were identified, further declines in projected future performance or significant declines in market rents for retail spaces may adversely affect the recovery of these retail locations assets. Additionally, as a result of the COVID-19 pandemic and a significant decline in projected net sales, the prAna brand's trademark and goodwill were tested for impairment as of March 31, 2020. While no impairment was indicated during the first quarter 2020 tests, the degree by which the fair value of the prAna reporting unit and trademark exceeded their respective carrying values declined from our 2019 impairment test. If, due to the current level of uncertainty relating to the COVID-19 pandemic, the prAna brand's actual or projected future performance deteriorates from the projections considered in our first quarter 2020 impairment tests, it is possible that an impairment charge would be required.
Recently Adopted Accounting Pronouncements
Effective January 1, 2020, the Company adopted Accounting Standards Update ("ASU") No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) issued by the Financial Accounting Standards Board ("FASB") in August 2018, which clarifies certain aspects of accounting for implementation costs incurred in a cloud computing arrangement ("CCA") that is a service contract. Under the ASU, an entity would expense costs incurred in the preliminary-project and post-implementation-operation stages. The entity would also
7

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
capitalize certain costs incurred during the application-development stage, as well as certain costs related to enhancements. The ASU does not change the accounting for the service component of a CCA. The Company adopted the standard using the prospective method and anticipates an increase in cloud-specific implementation assets as specific cloud initiatives are executed by the Company. These assets will generally be included in Other non-current assets in the Condensed Consolidated Balance Sheets and will amortize over their assessed useful lives or the term of the underlying cloud computing hosting contract, whichever is shorter. Upon the adoption of the standard, there was no immediate impact to the Company's financial position, results of operations or cash flows.
Effective January 1, 2020, the Company adopted ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment issued by the FASB in January 2017, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Under this guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The impact of the new standard will depend on the specific facts and circumstances of future individual goodwill impairments, if any.
Effective January 1, 2020, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments issued by the FASB in June 2016, as well as the clarifying amendments subsequently issued. The pronouncement changes the impairment model for most financial assets and will require the use of an "expected loss" model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. Upon adoption of the standard, there was no immediate impact to the Company's financial position, results of operations or cash flows. On an ongoing basis, the Company will contemplate forward-looking economic conditions in recording lifetime expected credit losses for the Company’s financial assets measured at cost, such as the Company’s trade receivables and certain short-term investments. The following significant accounting policy has been updated since the Company’s 2019 Annual Report on Form 10-K as a result of adoption of ASU No.2016-13:
Accounts Receivable
Accounts receivable have been reduced by an allowance for doubtful accounts. The Company maintains the allowance for estimated losses resulting from the inability of the Company's customers to make required payments. The allowance represents the current estimate of lifetime expected credit losses over the remaining duration of existing accounts receivable considering current market conditions and supportable forecasts when appropriate. The estimate is a result of the Company’s ongoing evaluation of collectability, customer creditworthiness, historical levels of credit losses, and future expectations. Write-off activity and recoveries for the periods presented were not material.
Recent Accounting Pronouncements Not Yet Adopted
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which, among other things, removes specific exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods, as well as targeted impacts to the accounting for taxes under hybrid tax regimes. This standard is effective beginning in the first quarter of 2021 on a prospective basis, with early adoption permitted. The Company is currently evaluating the impact this accounting standard will have on the Company's financial position, results of operations or cash flows.

8

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2—REVENUES
Disaggregated Revenue
As disclosed below in Note 12, the Company has four geographic reportable segments: United States ("U.S."), Latin America and Asia Pacific ("LAAP"), Europe, Middle East and Africa ("EMEA"), and Canada.
The following tables disaggregate the Company's operating segment Net sales by product category and sales channel, which the Company believes provide a meaningful depiction of how the nature, timing, and uncertainty of Net sales are affected by economic factors:
Three Months Ended March 31, 2020
(in thousands)
U.S.LAAPEMEACanadaTotal
Product category net sales
Apparel, Accessories and Equipment$309,677  $75,913  $39,930  $26,649  $452,169  
Footwear66,191  26,738  15,918  7,212  116,059  
Total$375,868  $102,651  $55,848  $33,861  $568,228  
Sales channel net sales
Wholesale$202,868  $57,374  $42,256  $23,462  $325,960  
Direct-to-consumer173,000  45,277  13,592  10,399  242,268  
Total$375,868  $102,651  $55,848  $33,861  $568,228  

Three Months Ended March 31, 2019
(in thousands)
U.S.LAAPEMEACanadaTotal
Product category net sales
Apparel, Accessories and Equipment$344,705  $100,337  $50,701  $30,224  $525,967  
Footwear67,519  32,522  20,647  7,953  128,641  
Total$412,224  $132,859  $71,348  $38,177  $654,608  
Sales channel net sales
Wholesale$208,569  $70,978  $56,369  $27,242  $363,158  
Direct-to-consumer203,655  61,881  14,979  10,935  291,450  
Total$412,224  $132,859  $71,348  $38,177  $654,608  


Performance Obligations
For the three months ended March 31, 2020 and 2019, Net sales recognized from performance obligations related to prior periods were not material. Net sales expected to be recognized in any future period related to remaining performance obligations is not material.
Contract Balances
As of March 31, 2020, December 31, 2019 and March 31, 2019, contract liabilities included in Accrued liabilities on the Condensed Consolidated Balance Sheets, which consisted of obligations associated with the Company's gift card and customer loyalty programs, were not material.
9

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3—INTANGIBLE ASSETS, NET
Intangible assets, net consisted of the following:
(in thousands)March 31,
2020
December 31,
2019
March 31,
2019
Intangible assets subject to amortization:
Patents and purchased technology$14,198  $14,198  $14,198  
Customer relationships23,000  23,000  23,000  
Gross carrying amount37,198  37,198  37,198  
Accumulated amortization:
Patents and purchased technology(13,644) (13,311) (12,314) 
Customer relationships(16,125) (15,713) (14,475) 
Total accumulated amortization(29,769) (29,024) (26,789) 
Net carrying amount7,429  8,174  10,409  
Intangible assets not subject to amortization115,421  115,421  115,421  
Intangible assets, net$122,850  $123,595  $125,830  
Amortization expense for intangible assets subject to amortization was $0.7 million for each of the three months ended March 31, 2020 and 2019.
Annual amortization expense is estimated to be as follows for the years 2020 through 2024:
(in thousands) 
2020$2,537  
20211,650  
20221,650  
20231,650