UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______to_______
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Commission file number 000-23939
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COLUMBIA SPORTSWEAR COMPANY
(Exact name of registrant as specified in its charter)
Oregon
(State or other jurisdiction of incorporation or organization)
93-0498284
(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:
Trading Symbol(s)
COLM
Securities registered pursuant to Section 12(g) of the Act:
None
Title of each class
Common Stock
Name of each exchange on which registered
The NASDAQ Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Indicate by check mark whether the 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 ☒
No ☐
Yes ☐
No ☒
Yes ☒
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 ☒
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 Filer
☒ Accelerated 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
☐
☐
☒
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2022, based upon the closing price of the common
stock on the last business day of the registrant's most recently completed second fiscal quarter, was $2,349,537,410.
The number of shares outstanding of the registrant's common stock on February 10, 2023 was 62,177,091.
Portions of the registrant's proxy statement related to its 2023 Annual Shareholders' Meeting to be filed subsequently are incorporated by reference into Part III of this Annual Report
on Form 10-K. Except as expressly incorporated by reference, the registrant's proxy statement related to its 2023 Annual Shareholders' Meeting shall not be deemed to be part of
this report.
TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Business
Information About Our Executive Officers
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm (PCAOB 34)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
Consolidated Statements of Equity
Notes to Consolidated Financial Statements
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits, Financial Statement Schedules
Form 10-K Summary
Signatures
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SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of federal securities laws. Forward-looking statements often use
words such as "will", "anticipate", "estimate", "expect", "should", "may" and other words and terms of similar meaning or reference future dates. Forward-looking
statements include any statements related to our expectations regarding the effectiveness of our investments, future performance or market position, including
any statements regarding outdoor participation and our addressable consumer base, product price changes, the promotional environment, wholesale trade
terms, manufacturing and distribution capacity, inventory levels, shipping timing, consumer spending and preferences, store traffic, freight charges, scale
efficiencies, logistics constraints, lease commitments, labor costs, inflationary pressures, foreign currency translation, the geopolitical environment, consumer
expectations, the impact of seasonal trends, materiality of legal matters, borrowings, capital expenditures, our short and long-term cash needs and our ability to
meet those needs, and maturities of liabilities.
These forward-looking statements, and others we make from time to time expressed in good faith, are believed to have a reasonable basis; however, each
forward-looking statement involves risks and uncertainties. Many factors may cause actual results to differ materially from projected results in forward-looking
statements, including the risks described in Item 1A of this Annual Report on Form 10-K. Forward-looking statements are inherently less reliable than historical
information. Except as required by law, we do not undertake any duty to update forward-looking statements after the date they are made or to conform them to
actual results or to changes in circumstances or to reflect changes in events, circumstances or expectations. New factors emerge from time to time and it is not
possible for us to predict or assess the effects of all such factors or the extent to which any factor, or combination of factors, may cause results to differ
materially from those contained in any forward-looking statement.
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ITEM 1.
BUSINESS
GENERAL
PART I
Founded in 1938 in Portland, Oregon, as a small, family-owned, regional hat distributor and incorporated in Oregon in 1961, Columbia Sportswear Company
has grown to become a global leader in designing, developing, marketing, and distributing outdoor, active and lifestyle products, including apparel, footwear,
accessories, and equipment.
Unless the context indicates otherwise, the terms "we," "us," "our," "the Company," and "Columbia" refer to Columbia Sportswear Company, together with its
wholly owned subsidiaries and entities in which it maintained a controlling financial interest.
BRANDS AND PRODUCTS
We connect active people with their passions by providing them with the products they need to seek inspiration and adventure. We meet the diverse needs of
our customers and consumers through our four well-known brands by designing, developing, marketing, and distributing our outdoor, active and lifestyle
products, including apparel, footwear, accessories and equipment.
Columbia® | Founded in 1938, our Columbia brand's mission is to unlock the outdoors for everyone. Our Columbia brand offers authentic, high-value
outdoor apparel, footwear, accessories and equipment products suited for hiking, trail running, snow, and fishing and hunting activities, as well as everyday
outdoor activities.
SOREL® | Acquired in 2000, our SOREL brand's mission is to challenge the status quo by creating unexpected footwear that pushes the boundaries of
function-first fashion. Our SOREL brand offers functional and fashionable footwear suited for all seasons.
Mountain Hard Wear® | Acquired in 2003, our Mountain Hardwear brand's mission is to create performance apparel and equipment to empower outdoor
athletes to live boldly. Our Mountain Hardwear brand offers premium apparel, accessories and equipment products designed to meet the high-performance
needs of mountaineering, climbing, skiing and snowboarding, trail, and camp enthusiasts.
prAna® | Acquired in 2014, our prAna brand's mission is to inspire the pursuit of wellness to create a healthier body, mind and planet. Our prAna brand offers
apparel, accessories and equipment products for trail, climbing, studio and water based activities.
Across our diverse portfolio of brands, our products have gained recognition for their innovation, quality, value, and performance. Our products incorporate the
cumulative design, fabrication, fit, and construction technologies that we have pioneered over several decades and continue to innovate. Our apparel,
accessories and equipment products are designed to be used for all seasons, activities and locations. Our footwear products include durable, lightweight hiking
boots, trail running shoes, rugged cold weather boots for activities on snow and ice, sandals and shoes for use in water activities, and function-first fashion
footwear and casual shoes for lifestyle wear.
SEASONALITY AND VARIABILITY OF BUSINESS
Our business is affected by the general seasonal trends common to the industry, including seasonal weather and discretionary consumer shopping and
spending patterns. Our products are marketed on a seasonal basis, and our sales are weighted substantially toward the third and fourth quarters, while our
operating costs are more equally distributed throughout the year.
PRODUCT DESIGN AND INNOVATION
We are committed to designing innovative and functional products for consumers who participate in a wide range of outdoor, active and lifestyle activities,
enabling them to enjoy those activities longer and in greater comfort. We distinguish our products in the marketplace by placing significant value in the design
and fit, including the overall appearance and image, and technical performance features of our products.
Our team of specialists leads both our internal research and development efforts and works closely with independent suppliers to conceive, develop and
commercialize innovative technologies and products to provide the unique performance benefits desired by consumers. We
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 1
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utilize our working relationships with specialists in the fields of chemistry, biochemistry, engineering, industrial design, materials research, graphic design, and
other related fields, along with consumer insights and feedback, to develop and test innovative performance products, processes, packaging, and displays.
These efforts, coupled with our drive for continuous improvement, represent key factors in the ongoing success of our products.
MANUFACTURING AND SOURCING
We seek to substantially limit our invested capital and avoid the costs and risks associated with large production facilities and the associated labor forces;
therefore, we do not own, operate or manage manufacturing facilities. The majority of our products are produced by contract manufacturers located outside the
United States. We establish and maintain long-term relationships with key manufacturing partners, but generally do not maintain formal long-term manufacturing
volume commitments. The use of contract manufacturers maximizes our flexibility and improves our product pricing.
We value legal, ethical and fair treatment of people involved in manufacturing our products. Independent contractors manufacturing our products are subject to
our standards of manufacturing practices to facilitate safe and humane working conditions, as well as to promote ethical business practices. We have programs
in place to monitor manufacturer practices and assess alignment against these standards.
We maintain seven manufacturing liaison offices in six Asia Pacific countries. Our personnel in these offices monitor production at our contract manufacturers'
facilities to ensure our products are manufactured to our specifications.
In 2022, our apparel, accessories and equipment products for our wholesale customers and DTC businesses were manufactured into finished goods in 14
countries. In 2022, finished goods manufacturers in Vietnam, Bangladesh, Indonesia, and India produced approximately 40%, 20%, 15% and 10%, respectively,
of these products. Five of the largest contract finished goods manufacturers account for approximately 30% of our apparel, accessories and equipment
production, with the largest manufacturer accounting for approximately 10%.
In 2022, our footwear products for our wholesale customer and DTC businesses were manufactured into finished goods in six countries. In 2022, finished goods
manufacturers in Vietnam and China produced approximately 70% and 20%, respectively, of these products. Five of the largest contract finished goods
manufacturers account for approximately 65% of our footwear production, with the largest manufacturer accounting for approximately 20% and two
manufacturers accounting for approximately 15% each.
Raw materials for the finished goods manufacturing of our apparel, accessories, equipment, and footwear products are primarily sourced from Asia and are
purchased directly by our contract manufacturers.
MARKETING
Our portfolio of brands enables us to target a wide range of consumers with differentiated products. Our marketing supports and enhances our competitive
position in the marketplace, drives alignment through seasonal initiatives, builds brand equity, raises brand relevance and awareness, infuses our brands with
excitement, and, most importantly, stimulates consumer demand for our products.
Our integrated marketing efforts deliver consistent messages about the performance benefits, features and styles of our products within each of our brands and
their target consumers. We utilize a variety of means to deliver our marketing messages, including digital marketing, social media interactions, television and
print publications, experiential events, brand ambassadors, enhanced product store displays, and consumer focused public relations efforts. In addition, we
reinforce our brands' marketing messages with our key wholesale customers by utilizing digital platforms, television, print and advertising campaigns, as well as
in-store branded visual merchandising display tools and favorable product presentation.
We operate branded e-commerce and marketing sites and maintain an active presence on a variety of global social media platforms. We authorize and
encourage our international distributors to connect with consumers by operating e-commerce and marketing sites and maintaining a presence on social media
platforms. Digital marketing and social media engagement increase our ability to build strong emotional connections with consumers through consistent, brand-
enhancing content. Our digital media connects our consumers to brand content and products, while facilitating their direct product purchases or directing them to
nearby retail locations.
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SALES AND DISTRIBUTION
We sell our products in approximately 90 countries and operate in four geographic segments: United States ("U.S."), Latin America and Asia Pacific ("LAAP"),
Europe, Middle East and Africa ("EMEA"), and Canada. Each geographic segment operates predominantly in one industry: the design, development, marketing,
and distribution of outdoor, active and lifestyle apparel, footwear, accessories, and equipment products.
We sell our products through a mix of distribution channels. Our wholesale distribution channel consists of small, independently operated specialty outdoor and
sporting goods stores, regional, national and international sporting goods chains, large regional, national and international department store chains, internet
retailers, and international distributors where we generally do not have our own direct operations. Our direct-to-consumer ("DTC") distribution channel consists
of our own network of branded and outlet retail stores, brand-specific e-commerce sites, and concession or franchise based arrangements with third-parties at
branded, outlet and shop-in-shop retail locations in the LAAP and EMEA regions. In addition, we earn revenue through licensing certain of our trademarks
across a range of apparel, accessories, equipment, footwear, and home products.
U.S.
U.S. is our largest segment and provides apparel, accessories and equipment products through our Columbia, Mountain Hardwear, and prAna brands and
footwear products through our Columbia and SOREL brands. These products are sold by our U.S. wholesale and DTC businesses. We have nearly 2,000
wholesale customers in the U.S. In 2022, our three largest U.S. wholesale customers accounted for approximately 15% of U.S. net sales, and were less than
10% individually. As of December 31, 2022, we directly operated 156 retail stores.
We distribute the majority of our U.S. products from distribution centers that we own and operate in Portland, Oregon and Robards, Kentucky, as well as through
third-party logistics companies that operate distribution centers in Louisville, Kentucky and other facilities located near United States ports. We also arrange to
have products directly shipped from contract manufacturers to wholesale customer-designated facilities in the United States.
LAAP
LAAP provides apparel, accessories and equipment products through our Columbia, Mountain Hardwear and prAna brands and footwear products through our
Columbia and SOREL brands. These products are sold by our wholly-owned subsidiaries in Japan, Korea and China, and through distributors in other LAAP
markets. We have nearly 300 wholesale customers, including distributors, in LAAP. In 2022, our four largest LAAP wholesale customers accounted for
approximately 10% of LAAP net sales, and were less than 10% individually. As of December 31, 2022, we directly operated 257 retail stores, and maintained
31 concession and 62 franchise based arrangements with third-parties.
We distribute LAAP products through third-party logistics companies that operate distribution centers near Tokyo, Seoul, and Shanghai for our Japan, Korea and
China businesses, respectively. The vast majority of our products sold to LAAP distributors are shipped directly to the distributors from the contract
manufacturers from which we source our products.
EMEA
EMEA provides apparel, accessories and equipment products through our Columbia, Mountain Hardwear and prAna brands and footwear products through our
Columbia and SOREL brands. These products are sold by our Europe-direct and EMEA distributor businesses. We have nearly 3,550 wholesale customers,
including distributors, in EMEA. In 2022, our largest EMEA wholesale customer accounted for approximately 12% of EMEA net sales. As of December 31, 2022,
we directly operated 25 retail stores and maintained 23 concession-based arrangements with third-parties.
We distribute the majority of EMEA products from a distribution center that we own and operate in France for our Europe-direct business. The vast majority of
our products sold to EMEA distributors are shipped directly to the distributors from the contract manufacturers from which we source our products.
CANADA
Canada provides apparel, accessories and equipment products through our Columbia, Mountain Hardwear and prAna brands and footwear products through our
Columbia and SOREL brands. These products are sold by our Canada wholesale and DTC businesses. We have over 550 wholesale customers in Canada. In
2022, our two largest Canada wholesale customers accounted for approximately 25% of Canada net sales, and were approximately 15% and 10% individually.
As of December 31, 2022, we directly operated 11 retail stores.
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We distribute the majority of Canada products from a distribution center that we own and operate in the province of Ontario in Canada.
See Part II, Item 7 and Item 8 in this Annual Report on Form 10-K for further discussion regarding our reportable segments.
INTELLECTUAL PROPERTY
Our trademarks create a market for our products, identify our company and differentiate our products from competitors' products. We own many trademarks,
including Columbia Sportswear Company®, Columbia®, SOREL®, Mountain Hard Wear®, prAna®, the Columbia diamond shaped logo, the Mountain
Hardwear nut logo, the SOREL polar bear logo, and the prAna sitting pose logo, as well as many other trademarks relating to our brands, products, styles, and
technologies.
Our design and utility patents describe the technologies, processes and designs incorporated into many of our most important products. We file applications for
United States and foreign patents to protect inventions, designs and enhancements that we deem to have commercial value. We have design and utility patents,
which expire at various times, as well as pending patent applications in the United States and other countries.
We vigorously protect these proprietary rights against counterfeit reproductions and other infringing activities.
COMPETITION
The markets for outdoor, active and lifestyle apparel, footwear, accessories, and equipment products are highly competitive and we face significant competition
from numerous companies. Our competition includes large companies with significant financial, marketing and operational resources, small companies with
limited resources but deep entrenchment in their local markets, and other branded competitors. We also face competition from our wholesale customers who,
under their own private brand names, produce and distribute similar products to our target consumers through their own retail stores and e-commerce
businesses. We identify our primary competitive factors in the markets for outdoor, active and lifestyle products to be brand strength, product innovation, design,
functionality, durability, and price, as well as effective marketing and delivery of product in alignment with consumer expectations.
GOVERNMENT REGULATION
As a company with global operations, we are, and our products are, subject to the laws of the United States and multiple foreign jurisdictions in which we
operate and the rules and regulations of various governing bodies, which may differ among jurisdictions, including laws and regulations concerning product
safety, environmental standards, trade, information security, privacy, labor and employment, health, marketing, competition, and safety.
See Item 1A of this Annual Report on Form 10-K for more information of risks relating to these laws, rules, and regulations.
SUSTAINABILITY
Our sustainability strategy is to sustain active lifestyles through investing in initiatives that have a positive impact on the people we reach, the places we touch
and the products we make through:
empowering people;
sustaining places; and
•
•
• maintaining responsible practices.
Each of our four brands focuses on impacts that are unique to their positioning within this strategy.
Detailed information regarding our (and our brands’) corporate responsibility priorities and progress can be found in our latest "Environmental, Social and
Governance Report" at http://columbia.com/corporate-responsibility.
HUMAN CAPITAL
We believe that attracting and retaining talent strengthens our enterprise. As part of these efforts, we strive to offer a competitive compensation and benefits
program and promote employee well-being.
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As of December 31, 2022, our employee workforce of approximately 9,450 employees consisted of approximately 5,040 full-time and part-time retail employees,
1,270 distribution center employees and 3,140 corporate and/or office employees. From December 31, 2021 to December 31, 2022, we had an overall
employee turnover rate of approximately 62%, impacted by approximately 89% and 85% turnover rates in our distribution and retail employee base, respectively.
Approximately 28% of our workforce was located outside of the United States as of December 31, 2022.
Compensation and Benefits
Our compensation plans aim to reward performance. We offer competitive wages and, to align the interest of our management with those of our shareholders,
shares of our common stock through a stock incentive plan. Globally, we offer employees affordable, competitive and comprehensive benefit programs. In the
United States, for our largest employee base, we sponsor comprehensive medical, dental, vision and health savings or flexible spending account plans. We also
provide 401(k) plan matching of employee contributions, paid time off, an employee assistance plan, life insurance, and short-term and long-term disability
insurance.
Diversity, Equity and Inclusion
A Diversity, Equity and Inclusion Leadership Team was formed in 2020 to focus on diversity, equity, and inclusivity in the workplace. This team focuses on
supporting strategies and efforts in the following categories: listening and learning, diversifying talent, creating and sponsoring opportunities, and being a force
for good.
As of December 31, 2022, our global workforce was self-disclosed as 55% female, 42% male, less than 1% non-binary and 2% undisclosed or chose not to
identify. In the United States, the self-disclosed ethnicity of our workforce, including retail and distribution employees, was 59% White, 21% Hispanic or Latino,
7% Asian, 7% Black, less than 1% American Indian or Alaskan Native, less than 1% Native Hawaiian or other Pacific Islander, 3% two or more races and 2%
undisclosed or chose not to identify.
Employee Well-Being
We align our employee programs to the five elements of well-being: physical health, career, social and emotional health, financial, and community.
For more information on our efforts to support our workforce, see our "Environmental, Social and Governance Report" at http://columbia.com/corporate-
responsibility.
AVAILABLE INFORMATION
We make available free of charge on or through the investor relations section on our website at http://investor.columbia.com/sec-filings our proxy statements,
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we file these materials with the Securities and Exchange Commission
("SEC").
The content on any website referred to in this Annual Report on Form 10-K is not incorporated by reference in this annual report unless expressly noted.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table sets forth information about our executive officers. All information is as of the date of the filing of this report.
Name
Timothy P. Boyle
Joseph P. Boyle
Peter J. Bragdon
Lisa A. Kulok
Richelle T. Luther
Skip Potter
Tim Sheerin
Jim A. Swanson
Craig Zanon
Age
73
42
60
57
54
51
58
48
63
Position
Chairman, President and Chief Executive Officer
Executive Vice President, Columbia Brand President
Executive Vice President, Chief Administrative Officer and General Counsel
Executive Vice President, Chief Supply Chain Officer
Executive Vice President, Corporate Affairs and Chief Human Resources Officer
Executive Vice President, Chief Digital Information Officer
Senior Vice President, Global Wholesale
Executive Vice President, Chief Financial Officer
Senior Vice President, Emerging Brands
Timothy P. Boyle joined the Company in 1971 as General Manager, served as the Company's President from 1988 to 2015 and reassumed the role in 2017. Mr.
Boyle has served as Chief Executive Officer since 1988. He has served as a member of the Board of Directors since 1978, and as Interim Chairman of the
Board of Directors from November 2019 until his appointment as Chairman of the Board of Directors in January 2020. Mr. Boyle is also a member of the Board
of Directors of Northwest Natural Holding Company (NYSE: NWN), and its subsidiary, Northwest Natural Gas Company. Mr. Boyle is a third-generation member
of the Company's founding Boyle family, the father of Joseph P. Boyle, and the son of Gertrude Boyle, who served as the Chairman of the Board of Directors
from 1970 until her death in 2019.
Joseph P. Boyle joined the Company in 2005 and has served in numerous roles of increasing leadership and responsibility, including General Merchandising
Manager of Outerwear, Accessories, Equipment, Collegiate and Licensing, Vice President of Apparel Merchandising, and Senior Vice President of Columbia
Brand Merchandising & Design. He was promoted to Executive Vice President, Columbia Brand President in 2017. Prior to joining the Company, Mr. Boyle
served in a business development role for Robert Trent Jones II Golf Course Architects. Mr. Boyle is a fourth-generation member of the Company's founding
Boyle family, and the son of Timothy P. Boyle.
Peter J. Bragdon joined the Company in 1999 and served as Senior Counsel and Director of Intellectual Property until January 2003. From 2003 to 2004, Mr.
Bragdon served as Chief of Staff in the Oregon Governor's office. Mr. Bragdon returned to Columbia in 2004 as Vice President, General Counsel and Secretary,
was named Senior Vice President of Legal and Corporate Affairs, General Counsel and Secretary in 2010 and Executive Vice President, Chief Administrative
Officer, General Counsel and Secretary in 2015. In 2017, he assumed oversight of the Company's international distributor business. Prior to joining the
Company, Mr. Bragdon served as an attorney in the corporate securities and finance group at Stoel Rives LLP, and Special Assistant Attorney General for the
Oregon Department of Justice.
Lisa A. Kulok joined the Company in 2008 as Senior Director of Global Planning. She was promoted to Senior Vice President of Global Supply Chain Operations
in 2015, was named Senior Vice President of Global Supply Chain Operations and Manufacturing in July 2020 and Executive Vice President, Chief Supply
Chain Officer in November 2020. Prior to joining the Company, Ms. Kulok held various leadership positions at Nike, Inc., including USA Apparel Marketplace
Planning Director and Director of Regional Planning.
Richelle T. Luther joined the Company in 2008 as Deputy General Counsel. She was appointed Senior Vice President & Chief Human Resource Officer in
September 2015 and named Executive Vice President, Corporate Affairs and Chief Human Resources Officer in January 2023. Prior to joining the Company,
she served at Northwest Natural Gas from 2002 to 2008, most recently as Corporate Secretary and Chief Governance Officer, and was an attorney at Stoel
Rives LLP from 1997 to 2002.
Skip Potter joined the Company in 2021 as Executive Vice President, Chief Digital Information Officer. Prior to joining the Company, Mr. Potter held various
leadership positions, including Chief Technology Officer and Managing Vice President of Engineering with Nike, Inc., as well as Vice President of Technology
Innovation with Capital One, and CIO/CTO for British Telecommunication's Enterprise Group.
Tim Sheerin joined the Company in January 2021 as Senior Vice President, US Wholesale Sales. He was promoted to Senior Vice President, Global Wholesale
in October 2021. Prior to joining the Company, Mr. Sheerin held various leadership positions at Nike, Inc., including Vice President, North America Sales, Vice
President of Global Sales, Nike Sportswear and Managing Director/General Manager of Nike Korea.
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Jim A. Swanson joined the Company in 2003 and has served in numerous roles of increasing responsibility during his tenure, being named Vice President of
Finance in 2015 and promoted to Senior Vice President, Chief Financial Officer in 2017 and to Executive Vice President and Chief Financial Officer in 2020.
Prior to joining the Company, Mr. Swanson served in a variety of financial planning and analysis, tax, and accounting roles, including senior financial analyst at
Freightliner Corporation and at Tality Corporation, and as a senior tax and business advisory associate at Arthur Andersen.
Craig Zanon joined the Company in 2021 as Senior Vice President, Emerging Brands. Prior to joining the Company, Mr. Zanon spent more than 20 years with
Nike, Inc. and held various leadership roles, including Vice President and General Manager of Global Basketball, as well as Vice President of U.S. Footwear and
General Manager for the Americas.
Item 1A.
RISK FACTORS
In addition to the other information contained in this Annual Report on Form 10-K, the following risk factors should be considered carefully in evaluating our
business. Our business, financial condition, results of operations, or cash flows may be materially adversely affected by these and other risks. Please note that
additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations.
CHANGES IN PRODUCT DEMAND CAN ADVERSELY AFFECT OUR FINANCIAL RESULTS
We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or Wholesale Customer Demand for Our Products and
Lead to a Decline in Sales and/or Earnings.
These risks include, but are not limited to:
•
•
•
•
Volatile Economic Conditions. We are a consumer products company and are highly dependent on consumer discretionary spending. Consumer
discretionary spending behavior is inherently unpredictable. Consumer demand, and related wholesale customer demand, for our products may not
support our sales targets, or may decline, especially during periods of heightened economic uncertainty in our key markets.
Highly Competitive Markets. In each of our geographic markets, we face significant competition from global and regional branded apparel, footwear,
accessories, and equipment companies. Retailers who are our wholesale customers often pose a significant competitive threat by designing, marketing
and distributing apparel, footwear, accessories, and equipment under their own private labels. We also experience direct competition in our DTC business
from retailers that are our wholesale customers. This is true in particular in the digital marketplace, where increased consumer expectations and
competitive pressure related to various aspects of our e-commerce business, including speed of product delivery, shipping charges, return privileges, and
other evolving expectations are key factors.
Consumer Preferences and Fashion/Product Trends. Changes in consumer preferences, consumer interest in outdoor activities, and fashion/product
trends may have a material adverse effect on our business. We also face risks because our success depends on our and our customers' abilities to
anticipate consumer preferences and our ability to respond to changes in a timely manner. Product development and/or production lead times for many of
our products may make it more difficult for us to respond rapidly to new or changing fashion/product trends or consumer preferences.
Brand Images. Our brands have wide recognition, and our success has been due in large part to our ability to maintain, enhance and protect our brand
image and reputation and our consumers' and customers' connection to our brands. Our continued success depends in part on our ability to adapt to a
rapidly changing media environment, including our increasing reliance on social media and online dissemination of advertising campaigns. In addition,
consumer and customer sentiment could be shaped by our sustainability policies and related design, sourcing and operational decisions.
• Weather Conditions, Including Global Climate Change Trends. Our sales are affected by weather conditions. Our DTC sales are dependent in part on the
weather and our DTC sales growth is likely to be adversely impacted or may even decline in years in which weather conditions do not stimulate demand
for our products. Unseasonably warm weather also impacts future sales to our wholesale customers, who may hold inventory into subsequent seasons in
response to unseasonably warm weather. Our results may be negatively impacted if management is not able to adjust expenses in a timely manner in
response to unfavorable weather conditions and the resulting impact on consumer and customer demand. The magnitude by which global weather
patterns trend warmer will influence the extent to which consumer and customer demand for our outerwear products will be negatively affected.
Shifts in Retail Traffic Patterns. Shifts in consumer purchasing patterns, including the growth of e-commerce and large one-stop digital marketplaces, e-
commerce off-price retailing and online comparison shopping, in our key markets may have an adverse
•
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effect on our DTC operations and the financial health of certain of our wholesale customers, some of whom may reduce their brick and mortar store fleet,
file for protection under bankruptcy laws, restructure, or cease operations. These related business impacts have already occurred at certain of our
wholesale customers. We face increased risk of order reduction and cancellation when dealing with financially ailing wholesale customers. We also
extend credit to our wholesale customers based on an assessment of the wholesale customer's financial condition, generally without requiring collateral.
We may choose (and have chosen in the past) to limit our credit risk by reducing our level of business with wholesale customers experiencing financial
difficulties and may not be able to replace those revenues with other customers or through our DTC businesses within a reasonable period or at all.
Innovation. To distinguish our products in the marketplace and achieve commercial success, we rely on product innovations, including new or exclusive
technologies, inventive and appealing design or other differentiating features. If we fail to introduce innovative products that appeal to consumers and
customers, we could suffer reputational damage to our brands and demand for our products could decline.
•
Our Orders from Wholesale Customers are Subject to Cancellation, Which Could Lead to a Decline in Sales or Gross Profit, Write-downs
of Excess Inventory, Increased Discounts or Extended Credit Terms to Our Wholesale Customers.
We do not have long-term contracts with any of our wholesale customers. We do have contracts with our independent international distributors; although these
contracts may have annual purchase minimums that must be met in order to retain distribution rights, the distributors are not otherwise obligated to purchase
products from us. Sales to our wholesale customers (other than our international distributors) are generally on an order-by-order basis and are subject to rights
of cancellation and rescheduling prior to shipment of orders. We place the majority of our orders for products with our contract manufacturers for our wholesale
customers based on these advance orders. We consider the timing of delivery dates in our wholesale customer orders when we forecast our sales and earnings
for future periods. If any of our major wholesale customers experience a significant downturn in business or fail to remain committed to our products or brands,
or if we are unable to deliver products to our wholesale customer in the agreed upon manner or reach mutually agreeable accommodations, these customers
could postpone, reduce, cancel, or discontinue purchases from us, including after we have begun production on any order, or seek to impose chargebacks.
Our Inability to Accurately Predict Consumer and/or Customer Demand for Our Products Could Lead to a Build-up of Inventory or a Lack
of Inventory and Affect Our Gross Margin.
We have implemented key strategic initiatives designed to improve the efficiency of our supply chain, such as spreading out the production of our products over
time, which may lead to the build-up of inventory well in advance of the selling seasons for such products. Additionally, we place orders for our products with our
contract manufacturers in advance of the related selling season and, as a result, are vulnerable to changes in consumer and/or customer demand for our
products. Therefore, we must accurately forecast consumer and/or customer demand for our products well in advance of the selling season. We are subject to
numerous risks relating to consumer and/or customer demand (see “We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or
Customer Demand for our Products and Lead to a Decline in Sales and/or Earnings” and “Our Orders from Wholesale Customers are Subject to Cancellation,
Which Could Lead to a Decline in Sales or Gross Profit, Write-downs of Excess Inventory, Increased Discounts or Extended Credit Terms to Our Wholesale
Customers” for additional information). Our ability to accurately predict consumer and/or customer demand well in advance of the selling season for our
products is impacted by these risks, as well as our reliance on manual processes and judgments that are subject to human error. These risks are heightened
during periods of macroeconomic and geopolitical volatility, such as we are currently experiencing.
Our failure to accurately forecast consumer and/or customer demand could result in inventory levels in excess of demand (as currently is the case), which may
cause inventory write-downs and/or the sale of excess inventory at discounted prices through our owned outlet stores or third-party liquidation channels and
could have a material adverse effect on our brand image and gross margin. In addition, we are experiencing and may continue to experience additional costs
relating to the storage of excess inventory.
Conversely, if we underestimate consumer and/or customer demand for our products or if our contract manufacturers or third-party logistics providers are
unable to supply or deliver products when we need them, we may experience inventory shortages, which may prevent us from fulfilling product orders resulting
in lost sales, delay shipments of product, negatively affect our wholesale customer and consumer relationships, result in increased costs to expedite production
and delivery, or diminish our ability to build brand loyalty.
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WE ARE SUBJECT TO VARIOUS RISKS IN OUR SUPPLY CHAIN
Our Reliance on Contract Manufacturers, Including Our Ability to Enter Into Purchase Order Commitments with Them and Maintain
Quality Standards of Our Products and Standards of Manufacturing Processes at Contract Manufacturers, May Result in Lost Sales and
Impact our Gross Margin and Results of Operations.
Our products are manufactured by contract manufacturers worldwide, primarily in the Asia Pacific region. Although we enter into purchase order commitments
with these contract manufacturers each season, we generally do not maintain long-term manufacturing commitments with them, and various factors could
interfere with our ability to source our products. Without long-term commitments, there is no assurance that we will be able to secure adequate or timely
production capacity and our competitors may obtain production capacities that effectively limit or eliminate the availability of our contract manufacturers. If we
are unable to obtain necessary production capacities, we may be unable to meet consumer demand, resulting in lost sales.
In addition, contract manufacturers may fail to perform as expected. If a contract manufacturer fails to ship orders in a timely manner (as was the case
throughout 2022), we could experience supply disruptions that result in missed delivery deadlines, which may cause our customers to cancel their orders, refuse
to accept deliveries or demand a reduction in purchase price or cause us to incur additional freight costs.
Reliance on contract manufacturers also creates quality control risks. Contract manufacturers may need to use sub-contracted manufacturers to fulfill our
orders, which could result in compromised quality of our products. A failure in our quality control program, or a failure of our contract manufacturers or their
subcontractors to meet our quality control standards, may result in diminished product quality, which in turn could result in increased order cancellations, price
concessions, product returns, decreased consumer and customer demand for our products, non-compliance with our product standards or regulatory
requirements, or product recalls or other regulatory actions.
We impose standards of manufacturing practices on our contract manufacturers for the benefit of workers and require compliance with our restricted substances
list and product safety and other applicable laws, including environmental, health and safety and forced labor laws. We also require that our contract
manufacturers impose these practices, standards and laws on their subcontractors. If a contract manufacturer or subcontractor violates labor or other laws or
engages in practices that are not generally accepted as safe or ethical, we may experience production disruptions, lost sales or significant negative publicity that
could result in long-term damage to our reputation. In some circumstances, parties may assert that we are liable for our contract manufacturers' or
subcontractors' labor and operational practices, which could have a material adverse effect on our brand image, results of operations and our financial condition.
Volatility in the Availability of and Prices for Raw Materials We Use in Our Products Could Have a Material Adverse Effect on Our
Revenues, Costs, Gross Margins and Profitability.
Our products are derived from raw materials that are subject to both disruptions to supply availability and price volatility. If there are supply disruptions or price
increases for raw materials we use in our products (as is currently the case) and we are unable to obtain sufficient raw materials to meet production needs or
offset rising costs by increasing the price of our products or achieving efficiency improvements, we could experience negative impacts to our sales and
profitability.
For Certain Materials We Depend on a Limited Number of Suppliers, Which May Cause Increased Costs or Production Delays.
As an innovative company, some of our materials are highly technical and/or proprietary and may be available from only one source or a very limited number of
sources. As a result, from time to time, we may have difficulty satisfying our material requirements. Although we believe that we can identify and qualify
additional contract manufacturers to produce or supply these materials or alternative materials as necessary, there are no guarantees that additional contract
manufacturers will be available. In addition, depending on the timing, any changes in sources or materials may result in increased costs or production delays.
Our Success Depends on Third-Party Logistics Providers and Our and Third-Party Distribution Facilities.
The majority of our products are manufactured outside of our principal sales markets, which requires these products to be consolidated and transported,
sometimes over large geographical distances. A small number of third-party logistics providers currently consolidate, deconsolidate and/or transload almost all
of our products. Any disruption in the operations of these providers or changes to the costs they charge, due to capacity constraints, volatile fuel prices or
otherwise, could materially impact our sales and profitability. A prolonged disruption in the operations of these providers could also require us to seek alternative
distribution arrangements, which may not be available on attractive terms and could lead to delays in distribution of products, either of which could have a
significant and material adverse effect on our business, results of operations and financial condition.
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In addition, the ability to move products over larger geographical distances could be constrained by ocean, air and trucking cargo capacity, or disrupted by
limitations at ports or borders. These constraints and disruptions could hinder our ability to satisfy demand through our wholesale and DTC businesses, and we
may miss delivery deadlines, which may cause our customers to cancel their orders, refuse to accept deliveries or demand a reduction in purchase price. In
addition, increases in distribution costs, including but not limited to freight costs, could adversely affect our costs, which we may not be able to offset through
price increases or decreased promotions.
We receive our products from third-party logistics providers at our owned distribution centers in the United States, Canada and France. The fixed costs
associated with owning, operating and maintaining such distribution centers during a period of economic weakness or declining sales can result in lower
operating efficiencies, financial deleverage and potential impairment in the recorded value of distribution assets.
We also receive and distribute our products through third-party operated distribution facilities internationally and domestically. We depend on these third-parties
to manage the operation of their distribution facilities as necessary to meet our business needs. If the third-parties fail to manage these responsibilities, our
international and domestic distribution operations could face significant disruptions.
Our ability to meet consumer and customer expectations, manage inventory, complete sales, and achieve our objectives for operating efficiencies depends on
the proper operation of our existing distribution facilities, as well as the facilities of third-parties, the development or expansion of additional distribution
capabilities and services, and the timely performance of services by third-parties, including those involved in moving products to and from our distribution
facilities and facilities operated by third-parties. The uneven flow of inventory receipts during peak times at our distribution centers may cause us to miss delivery
deadlines, as we work through inventory, which in turn may cause our customers to cancel their orders, refuse to accept deliveries or demand a reduction in
purchase price.
OUR INVESTMENT IN STRATEGIC PRIORITIES EXPOSES US TO CERTAIN RISKS
We May Be Unable to Execute Our Strategic Priorities, Which Could Limit Our Ability to Invest in and Grow Our Business.
Our strategic priorities are to drive brand awareness and sales growth through increased, focused demand creation investments, enhance consumer
experience and digital capabilities in all of our channels and geographies, expand and improve global DTC operations with supporting processes and systems
and invest in our people and optimize our organization across our portfolio of brands.
To implement our strategic priorities, we must continue to, among other things, modify and fund various aspects of our business, effectively prioritize our
initiatives and execute effective change management. These efforts, coupled with a continuous focus on expense discipline, may place strain on internal
resources, and we may have operating difficulties as a result.
Our strategic priorities also generally involve increased expenditures, which could cause our profitability or operating margin to decline if we are unable to offset
our increased spending with increased sales or gross profit or comparable reductions in other operating costs. This could result in a decision to delay, modify, or
terminate certain initiatives related to our strategic priorities.
Initiatives to Upgrade Our Business Processes and Information Technology Systems to Optimize Our Operational and Financial
Performance Involve Many Risks Which Could Result in, Among Other Things, Business Interruptions, Higher Costs and Lost Profits.
We regularly implement business process improvement and information technology initiatives intended to optimize our operational and financial performance.
Transitioning to these new or upgraded processes and systems requires significant capital investments and personnel resources. Implementation is also highly
dependent on the coordination of numerous employees, contractors and software and system providers. The interdependence of these processes and systems
is a significant risk to the successful completion and continued refinement of these initiatives, and the failure of any aspect could have a material adverse effect
on the functionality of our overall business. We may also experience difficulties in implementing or operating our new or upgraded business processes or
information technology systems, including, but not limited to, ineffective or inefficient operations, significant system failures, system outages, delayed
implementation and loss of system availability, which could lead to increased implementation and/or operational costs, loss or corruption of data, delayed
shipments, excess inventory and interruptions of operations resulting in lost sales and/or profits.
We May Not Realize Returns on Our Fixed Cost Investments in Our DTC Business Operations.
We continue to make investments in our digital capabilities and our DTC operations, including new stores. (See “Initiatives to Upgrade Our Business Processes
and Information Technology Systems to Optimize Our Operational and Financial Performance Involve Many Risks Which Could Result in, Among Other Things,
Business Interruptions, Higher Costs and Lost Profits”). Since many of the costs of our DTC
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operations are fixed, we may be unable to reduce expenses in order to avoid losses or negative cash flows if we have insufficient sales, including as a result of
restrictions on operations. We may not be able to exit DTC brick and mortar locations and related leases at all or without significant cost or loss, renegotiate the
terms thereof, or effectively manage the profitability of our existing brick and mortar stores. In addition, obtaining real estate and effectively renewing real estate
leases for our DTC brick and mortar operations is subject to the real estate market and we may not be able to secure adequate new locations or successfully
renew leases for existing locations.
WE ARE SUBJECT TO CERTAIN INFORMATION TECHNOLOGY RISKS
We Rely on Information Technology Systems, including Third-Party Cloud-based Solutions, and Any Failure of These Systems May Result
in Disruptions or Outages in Our E-Commerce and In-Store Retail Platforms, Loss of Processing Capabilities, and/or Loss of Data, Any of
Which May Have a Material Adverse Effect on Our Financial Condition, Results of Operations or Cash Flow.
Our reputation and ability to attract, retain and serve consumers and customers is dependent upon the reliable performance of our underlying technology
infrastructure and external service providers, including third-party cloud-based solutions. These systems are vulnerable to damage or interruption and we have
experienced interruptions in the past. We rely on cloud-based solutions furnished by third-parties primarily to allocate resources, pay vendors, collect from
customers, manage loyalty programs, process transactions, develop demand and supply plans, manage product design, production, transportation, and
distribution, forecast and report operating results, meet regulatory requirements and administer employee payroll and benefits, among other functions. In
addition, our DTC operations, both in-store and online, rely on cloud-based solutions to process transactions. We have also designed a significant portion of our
software and computer systems to utilize data processing and storage capabilities from third-party cloud solution providers. Both our on-premises and cloud-
based infrastructure may be susceptible to outages due to any number of reasons, including, human error, fire, floods, power loss, telecommunications failures,
terrorist attacks and similar events. Despite the implementation of security measures that we believe to be reasonable, both our on-premises and our cloud-
based infrastructure may also be vulnerable to hacking, computer viruses, the installation of malware and similar disruptions either by third-parties or employees,
which may result in outages. We do not have redundancy for all of our systems and our disaster recovery planning may not account for all eventualities. If we or
our existing third-party cloud-based solution providers experience interruptions in service regularly or for a prolonged basis, or other similar issues, our business
could be seriously harmed and, in some instances, our consumers and customers may not be able to purchase our products, which could significantly and
negatively affect our sales. Additionally, our existing cloud-based solution providers have broad discretion to change and interpret their terms of service and
other policies with respect to us, and they may take actions beyond our control that could harm our business. We also may not be able to control the quality of
the systems and services we receive from our third-party cloud-based solution providers. Any transition of the cloud-based solutions currently provided to
different cloud providers would be difficult to implement and may cause us to incur significant time and expense.
If we and/or our cloud-based solution providers are not successful in preventing or effectively responding to outages and cyberattacks, our financial condition,
results of operations and cash flow could be materially and adversely affected.
A Security Breach of Our or Our Third-Parties' Systems, Exposure of Personal or Confidential Information or Increased Government
Regulation Relating to Handling of Personal Data, Could, Among Other Things, Disrupt Our Operations or Cause Us to Incur Substantial
Costs or Negatively Affect Our Reputation.
We and many of our third-party vendors manage and maintain various types of proprietary information and sensitive and confidential data relating to our
business, such as personally identifiable information of our consumers, our customers, our employees, and our business partners, as well as credit card
information in certain instances. Unauthorized parties may attempt to gain access to these systems or information through fraud or other means of deceiving our
employees or third-party service providers. The methods used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly
changing and evolving, and may be difficult to anticipate or detect for long periods of time. The ever-evolving threats mean we and our third-parties must
continually evaluate and adapt our systems and processes, and there is no guarantee that these efforts will be adequate to safeguard against all data security
breaches or misuses of data. Any breaches of our or our third-parties’ systems could expose us, our customers, our consumers, our suppliers, our employees, or
other individuals that may be affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our reputation, or
otherwise harm our business. While we maintain cyber liability insurance policies for coverage in the event of a cybersecurity incident, we cannot be certain that
our existing coverage will continue to be available on acceptable terms or will be available, and in sufficient amount, to cover the potentially significant losses
that could result from a cybersecurity incident or that the insurer will not deny coverage as to any future claims.
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In addition, as the regulatory environment related to information security, data collection and use and privacy becomes increasingly rigorous, with new and
constantly changing requirements applicable to our business, compliance with those requirements could also result in additional costs or liabilities. Non-U.S.
data privacy and data security laws and regulations, various U.S. federal and state laws and other information privacy and security standards may be and are
applicable to us. Violations of these requirements could result in significant penalties, investigations or litigation. Significant legislative, judicial or regulatory
changes have been and could be issued in the future. As new requirements are issued, new processes must be implemented to ensure compliance. In addition,
previously implemented processes must be continually refined. This work is accomplished through significant efforts by our employees. The diverted attention of
these employees may impact our operations and there may be additional costs incurred by us for third-party resources to advise on the constantly changing
landscape. We have recently experienced this with the new privacy laws in China. Limitations on the use of data may also impact our future business
strategies. Additionally, our DTC business depends on customers' willingness to entrust us with their personal information. Events that adversely affect that trust
could adversely affect our brand and reputation.
We Depend on Certain Legacy Information Technology Systems, Which May Inhibit Our Ability to Operate Efficiently.
Our legacy product development, retail and other systems, on which we continue to manage a portion of our business activities, rely on the availability of limited
internal and external resources with the expertise to maintain the systems. In addition, our legacy systems, including aged systems in our Japanese and Korean
businesses, may not support desired functionality for our operations and may inhibit our ability to operate efficiently. As we continue to transition from our legacy
systems and implement new systems, certain functionality and information from our legacy systems, including that of third-party systems that interface with our
legacy systems, may not be fully compatible with the new systems.
WE ARE SUBJECT TO LEGAL AND REGULATORY RISKS
Our Success Depends on the Protection of Our Intellectual Property Rights.
Our registered and common law trademarks, our patented or patent-pending designs and technologies, trade dress and the overall appearance and image of our
products have significant value and are important to our ability to differentiate our products from those of our competitors.
As we strive to achieve product innovations, extend our brands into new product categories and expand the geographic scope of our marketing, we face a
greater risk of inadvertent infringements of third-party rights or compliance issues with regulations applicable to products with technical features or components.
We may become subject to litigation based on allegations of infringement or other improper use of intellectual property rights of third-parties. In addition, failure
to successfully obtain and maintain patents on innovations could negatively affect our ability to market and sell our products.
We regularly discover products that are counterfeit reproductions of our products or that otherwise infringe on our proprietary rights. Increased instances of
counterfeit manufactured products and sales may adversely affect our sales and the reputation of our brands and result in a shift of consumer preference away
from our products. The actions we take to establish and protect trademarks and other proprietary rights may not be adequate to prevent imitation of our products
by others or to prevent others from seeking to block sales of our products as violations of proprietary rights. In markets outside of the United States, it may be
more difficult for us to establish our proprietary rights and to successfully challenge use of those rights by other parties.
Litigation is often necessary to defend against claims of infringement or to enforce and protect our intellectual property rights. Intellectual property litigation may
be costly and may divert management's attention from the operation of our business. Adverse determinations in any litigation may result in the loss of our
proprietary rights, subject us to significant liabilities or require us to seek licenses from third-parties, which may not be available on commercially reasonable
terms, if at all.
Certain of Our Products Are Subject to Product Regulations and/or Carry Warranties, Which May Cause an Increase to Our Expenses in
the Event of Non-Compliance and/or Warranty Claims.
Our products are subject to increasingly stringent and complex domestic and foreign product labeling, performance, environmental and safety standards, laws
and other regulations, including those pertaining to perfluoroalkyl and polyfluoroalkyl substances and other environmental impacts. These requirements could
result in greater expense associated with compliance efforts, and failure to comply with these regulations could result in a delay, non-delivery, recall, or
destruction of inventory shipments during key seasons, a loss of advance orders from
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wholesale customers or in other financial penalties. Significant or continuing noncompliance with these standards and laws could disrupt our business and harm
our reputation.
Our products are generally used in outdoor activities, sometimes in severe conditions. Product recalls or product liability claims resulting from the failure, or
alleged failure, of our products could have a material adverse effect on the reputation of our brands and result in additional expenses. Most of our products carry
limited warranties for defects in quality and workmanship. We maintain a warranty reserve for estimated future warranty claims, but the actual costs of servicing
future warranty claims may exceed the reserve.
We May Have Additional Tax Liabilities or Experience Increased Volatility in Our Effective Tax Rate.
As a global company, we determine our income tax liability in various tax jurisdictions and our effective tax rate based on an analysis and interpretation of local
tax laws and regulations and our financial projections. This analysis requires a significant amount of judgment and estimation and is often based on various
assumptions about the future, which, in times of economic disruptions, are highly uncertain. These determinations are the subject of periodic domestic and
foreign tax audits. Although we accrue for uncertain tax positions, our accruals may be insufficient to satisfy unfavorable findings. Unfavorable audit findings and
tax rulings may result in payment of taxes, fines and penalties for prior periods and higher tax rates in future periods.
On December 22, 2017, the United States government enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the "TCJA").
The TCJA made broad and complex changes to the United States tax code. In addition, on March 27, 2020, the United States government enacted the U.S.
Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). A change in interpretation of the applicable revisions to the United States tax code and
related tax accounting guidance, changes in assumptions made in developing these estimates, and regulatory guidance that may be issued with respect to the
applicable revisions to the United States tax code, and state tax implications as a result of the TCJA, the CARES Act, and other recent legislation may cause
actual amounts to differ from our provisional estimates. In addition, proposals to reform U.S. and foreign tax laws could significantly impact how U.S.
multinational corporations are taxed on foreign earnings and could increase the U.S. corporate tax rate. Although we cannot predict whether or in what form
these proposals will pass, several of the proposals considered, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense
and cash flows.
Other changes in the tax laws of the jurisdictions where we do business, including an increase in tax rates or an adverse change in the treatment of an item of
income or expense, could result in a material increase in our tax expense. For example, changes in the tax laws of foreign jurisdictions could arise as a result of
the Base Erosion and Profit Shifting project undertaken by the Organization for Economic Co-operation and Development ("OECD"). The OECD, which
represents a coalition of member countries, has recommended changes to numerous long-standing tax principles. In addition, recent efforts to reform how digital
profits are taxed globally could have significant compliance and cost implications. As these changes are adopted by countries, tax uncertainty could increase
and may adversely affect our provision for income taxes.
WE OPERATE GLOBALLY AND ARE SUBJECT TO SIGNIFICANT RISKS IN MANY JURISDICTIONS
Global Regulation and Economic and Political Conditions, as well as Potential Changes in Regulations, Legislation and Government
Policy, May Negatively Affect Our Business.
We are subject to risks generally associated with doing business internationally. These risks include, but are not limited to, the burden of complying with, and
unexpected changes to, foreign and domestic laws and regulations, such as anti-corruption and forced labor regulations and sanctions regimes, climate-change
regulations, the effects of fiscal and political crises and political and economic disputes, changes in diverse consumer preferences, foreign currency exchange
rate fluctuations, managing a diverse and widespread workforce, political unrest, terrorist acts, military operations, disruptions or delays in shipments, disease
outbreaks, natural disasters, and changes in economic conditions in countries in which we contract to manufacture, source raw materials or sell products. Our
ability to sell products in certain markets, demand for our products in certain markets, our ability to collect accounts receivable, our contract manufacturers'
ability to procure raw materials or manufacture products, distribution and logistics providers' ability to operate, our ability to operate brick and mortar stores, our
workforce, and our cost of doing business (including the cost of freight and logistics) may be impacted by these events should they occur and laws and
regulations. Our exposure to these risks is heightened in Vietnam, where a significant portion of our contract manufacturing is located, and in China, where a
large portion of the raw materials used in our products is sourced by our contract manufacturers. Should certain of these events occur in Vietnam or China, they
could cause a substantial disruption to our business and have a material adverse effect on our financial condition, results of operations and cash flows.
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In addition, many of our imported products are subject to duties, tariffs or other import limitations that affect the cost and quantity of various types of goods
imported into the United States and other markets, including the punitive tariffs on U.S. products imported from China imposed in 2019. In addition, goods
suspected of being manufactured with forced labor could be blocked from importation into the U.S., which could materially impact sales.
In connection with the United Kingdom's exit from the European Union (commonly referred to as "Brexit"), on December 24, 2020, the European Union ("E.U.")
and the United Kingdom ("U.K.") reached an agreement, the E.U.-U.K. Trade and Cooperation Agreement, to govern aspects of the relationship of the E.U. and
U.K. following Brexit. As a result of no longer having "free circulation" between the U.K. and the E.U., we have incurred and will continue to incur additional
duties. We are investigating alternatives to mitigate these additional costs in the future.
Fluctuations in Inflation and Currency Exchange Rates Could Result in Lower Revenues, Higher Costs and/or Decreased Margins and
Earnings.
We derive a significant portion of our sales from markets outside the United States, which consist of sales to wholesale customers and directly to consumers by
our entities in Europe, Asia, and Canada and sales to independent international distributors who operate within EMEA and LAAP. The majority of our purchases
of finished goods inventory from contract manufacturers are denominated in United States dollars, including purchases by our foreign entities. These purchase
and sale transactions expose us to the volatility of global economic conditions, including fluctuations in inflation and foreign currency exchange rates. Our
international revenues and expenses generally are derived from sales and operations in foreign currencies, and these revenues and expenses could be and
have been affected by currency fluctuations, specifically amounts recorded in foreign currencies and translated into United States dollars for consolidated
financial reporting, as weakening of foreign currencies relative to the United States dollar adversely affects the United States dollar value of the Company’s
foreign currency-denominated sales and earnings.
Our exposure is increased with respect to our wholesale customers (including international distributors), where, in order to facilitate solicitation of advance
orders for the spring and fall seasons, we establish local-currency-denominated wholesale and retail price lists in each of our foreign entities approximately six
to nine months prior to United States dollar-denominated seasonal inventory purchases. As a result, our consolidated results are directly exposed to
transactional foreign currency exchange risk and have been and could be further impacted by the United States dollar strengthening during the six to nine
months between when we establish seasonal local-currency prices and when we purchase inventory. In addition to the direct currency exchange rate exposures
described above, our wholesale business is indirectly exposed to currency exchange rate risks. Weakening of a wholesale customer’s functional currency
relative to the United States dollar makes it more expensive for it to purchase finished goods inventory from us, which may cause a wholesale customer to
cancel orders or increase prices for our products, which may make our products less price-competitive in those markets. In addition, in order to make purchases
and pay us on a timely basis, our international distributors must exchange sufficient quantities of their functional currency for United States dollars through the
financial markets and may be limited in the amount of United States dollars they are able to obtain.
We employ several strategies in an effort to mitigate this transactional currency risk, but these strategies may not and, in the current environment, have not fully
mitigated the negative effects of adverse foreign currency exchange rate fluctuations on the cost of our finished goods in a given period and there is no
assurance that price increases will be accepted by our wholesale customers, international distributors or consumers. Our gross margins are adversely affected
whenever we are not able to offset the full extent of finished goods cost increases caused by adverse fluctuations in foreign currency exchange rates.
Currency exchange rate fluctuations may also create indirect risk to our business by disrupting the business of independent finished goods manufacturers from
which we purchase our products. When their functional currencies weaken in relation to other currencies, the raw materials they purchase on global
commodities markets become more expensive and more difficult to finance. Although each manufacturer bears the full risk of fluctuations in the value of its
currency against other currencies, our business can be and has been indirectly affected when adverse fluctuations cause a manufacturer to raise the prices of
goods it produces for us, disrupt the manufacturer's ability to purchase the necessary raw materials on a timely basis, or disrupt the manufacturer's ability to
function as an ongoing business.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 14
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WE ARE SUBJECT TO NUMEROUS OPERATIONAL RISKS
Our Ability to Manage Fixed Costs Across a Business That is Affected by Seasonality May Impact Our Profits.
Our business is affected by the general seasonal trends common to the outdoor industry. Our products are marketed on a seasonal basis and our annual net
sales are weighted heavily toward the fall/winter season, while our operating expenses are more equally distributed throughout the year. As a result, often a
majority of our operating profits are generated in the second half of the year. If we are unable to manage our fixed costs in the seasons where we experience
lower net sales, our profits may be adversely impacted.
Labor Matters, Changes in Labor Laws and Our Ability to Meet Our Labor Needs May Reduce Our Revenues and Earnings.
Our business depends on our ability to source and distribute products in a timely manner. While a majority of our own operations are not subject to organized
labor agreements, our relationship with our Cambrai distribution center employees is governed by French law, which includes a formal representation of
employees by a Works Council and the application of a collective bargaining agreement. Matters that may affect our workforce (including COVID-19 infections or
the risk thereof) at contract manufacturers where our goods are produced, shipping ports, transportation carriers, retail stores, or distribution centers create risks
for our business, particularly if these matters result in work shut-downs (with little to no notice), slowdowns, lockouts, strikes, limitations on the number of
individuals able to work (e.g. social distancing) or other disruptions. The foregoing includes potential impacts to our business as a result of the International
Longshore and Warehouse Union negotiations. Labor matters may have a material adverse effect on our business, potentially resulting in canceled orders by
customers, inability to fulfill potential e-commerce demand, unanticipated inventory accumulation and reduced net sales and net income.
In addition, our ability to meet our labor needs at our distribution centers, retail stores, corporate headquarters, and regional subsidiaries, including our ability to
find qualified employees while controlling wage and related labor costs, is generally subject to numerous external factors, including the availability of a sufficient
number of qualified people in the work force of the markets in which our operations are located, unemployment levels within those markets, absenteeism,
prevailing wage rates, changing demographics, parental responsibilities, health and other insurance costs, adoption of new or revised employment and labor
laws and regulations, and fear of contracting COVID-19. Our ability to source, distribute and sell products in a timely and cost-effective manner may be
negatively affected to the extent we experience these factors. Our ability to comply with labor laws, including our ability to adapt to rapidly changing labor laws,
as well as provide a safe working environment may increase our risk of litigation and cause us to incur additional costs.
We May Incur Additional Expenses, Be Unable to Obtain Financing, or Be Unable to Meet Financial Covenants of Our Financing
Agreements as a Result of Downturns in the Global Markets.
Our vendors, wholesale customers, licensees and other participants in our supply chain may require access to credit markets in order to do business. Credit
market conditions may slow our collection efforts as our wholesale customers find it more difficult to obtain necessary financing, leading to higher than normal
accounts receivable. This could result in greater expense associated with collection efforts and increased bad debt expense. Credit conditions and/or supply
chain disruptions may impair our vendors' ability to finance the purchase of raw materials or general working capital needs to support our production
requirements, resulting in a delay or non-receipt of inventory shipments during key seasons.
Historically, we have limited our reliance on debt to finance our working capital, capital expenditures and investing activity requirements. We expect to fund our
future capital expenditures with existing cash, expected operating cash flows and credit facilities, but, if the need arises to finance additional expenditures, we
may need to seek additional funding. Our ability to obtain additional financing will depend on many factors, including prevailing market conditions, our financial
condition and our ability to negotiate favorable terms and conditions. Financing may not be available on terms that are acceptable or favorable to us, if at all.
Our credit agreements have various financial and other covenants. If an event of default were to occur, the lenders could, among other things, declare
outstanding amounts due and payable. If we were to borrow under our credit agreements, we would be subject to market interest rates and may incur additional
interest expense when borrowing in a high interest rate environment.
Acquisitions Are Subject to Many Risks.
From time to time, we may pursue growth through strategic acquisitions of assets or companies. Acquisitions are subject to many risks, including potential loss
of significant customers or key personnel of the acquired business as a result of the change in ownership, difficulty integrating the operations of the acquired
business or achieving targeted efficiencies, the incurrence of substantial costs and expenses related to the acquisition effort, and diversion of management's
attention from other aspects of our business operations.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 15
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Acquisitions may also cause us to incur debt or result in dilutive issuances of our equity securities. Our acquisitions may cause large one-time expenses or
create goodwill or other intangible assets that could result in significant impairment charges in the future. We also make various estimates and assumptions in
order to determine purchase price allocation and estimate the fair value of assets acquired and liabilities assumed. If our estimates or assumptions used to
value these assets and liabilities vary from actual or future projected results, we may be exposed to losses, including impairment losses, that could be material.
We do not provide any assurance that we will be able to successfully integrate the operations of any acquired businesses into our operations or achieve the
expected benefits of any acquisitions. The failure to successfully integrate newly acquired businesses or achieve the expected benefits of strategic acquisitions
in the future could have an adverse effect on our financial condition, results of operations or cash flows. We may not complete a potential acquisition for a
variety of reasons, but we may nonetheless incur material costs in the preliminary stages of evaluating and pursuing such an acquisition that we cannot recover.
Extreme Weather Conditions, Climate Change, and Natural Disasters Could Negatively Impact Our Operating Results and Financial
Condition.
Extreme weather conditions in the areas in which our retail stores, suppliers, consumers, customers, distribution centers, headquarters and vendors are located
could adversely affect our operating results and financial condition. Moreover, climate change and natural disasters such as earthquakes, hurricanes and
tsunamis, whether occurring in the United States or abroad, and their related consequences and effects, including energy shortages and public health issues,
could disrupt our operations, the operations of our vendors and other suppliers or result in economic instability and changes in consumer preferences and
spending that may negatively impact our operating results and financial condition.
An Outbreak of Disease or Similar Public Health Threat, Such as a Pandemic, Could Have an Adverse Impact on Our Business, Operating
Results and Financial Condition.
An outbreak of disease or similar public health threat, such a pandemic, could have an adverse impact on our business, financial condition and operating
results, including in the form of lowered net sales and the delay of inventory production and fulfillment in impacted regions.
Our Investment Securities May Be Adversely Affected by Market Conditions.
Our investment portfolio is subject to a number of risks and uncertainties. Changes in market conditions, such as those that accompany an economic downturn
or economic uncertainty, may negatively affect the value and liquidity of our investment portfolio, perhaps significantly. Our ability to find diversified investments
that are both safe and liquid and that provide a reasonable return may be impaired, potentially resulting in lower interest income, less diversification, longer
investment maturities, or other-than-temporary impairments.
We Depend on Certain Key Personnel.
Our future success will depend in part on our ability to attract, retain and develop certain key talent and to effectively manage succession. We face intense
competition for these individuals worldwide, and there is a significant concentration of well-funded apparel and footwear competitors near our headquarters in
Portland, Oregon. We may not be able to attract qualified new employees or retain existing employees, which may have a material adverse effect on our
financial condition, results of operations or cash flows.
We License our Proprietary Rights to Third-Parties and Could Suffer Reputational Damage to Our Brands if We Fail to Choose Appropriate
Licensees.
We currently license, and expect to continue licensing, certain of our proprietary rights, such as trademarks or copyrighted material, to third-parties. We rely on
our licensees to help preserve the value of our brands. Although we attempt to protect our brands through approval rights, we cannot completely control the use
of our licensed brands by our licensees. The misuse of a brand by or negative publicity involving a licensee could have a material adverse effect on that brand
and on us.
In addition, from time to time we license the right to operate retail stores for our brands to third-parties, primarily to our independent international distributors. We
provide training to support these stores and set operational standards. However, these third-parties may not operate the stores in a manner consistent with our
standards, which could cause reputational damage to our brands or harm these third-parties' sales.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 16
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RISKS RELATED TO OUR SECURITIES
Our Common Stock Price May Be Volatile.
Our common stock is traded on the NASDAQ Global Select Market. The size of our public float and our average daily trading volume makes the price of our
common stock susceptible to large degrees of fluctuation. Factors such as general market conditions, actions by institutional investors to rapidly accumulate or
divest of a substantial number of our shares, fluctuations in financial results, variances from financial market expectations, changes in earnings estimates or
recommendations by analysts, or announcements by us or our competitors may cause the market price of our common stock to fluctuate, perhaps substantially.
Certain Shareholders Have Substantial Control Over Us and Are Able to Influence Corporate Matters.
As of December 31, 2022, three related shareholders, Timothy P. Boyle, Joseph P. Boyle, and Molly E. Boyle, controlled just under 50% of our common stock
outstanding. As a result, if acting together, Timothy P. Boyle, Joseph P. Boyle, and Molly E. Boyle are able to exercise significant influence over all matters
requiring shareholder approval. These holdings could be significantly diminished (and with them the related effective control percentage) to satisfy any
applicable estate or unrealized gains tax obligations of holders.
The Sale or Proposed Sale of a Substantial Number of Shares of Our Common Stock Could Cause the Market Price of Our Common Stock
to Decline.
Shares held by Timothy P. Boyle, Joseph P. Boyle, and Molly E. Boyle, are available for resale, subject to the requirements of, and the rules under, the
Securities Act of 1933 and the Securities Exchange Act of 1934. The sale or the prospect of the sale of a substantial number of these shares may have an
adverse effect on the market price of our common stock.
We also may issue our capital stock or securities convertible into our capital stock from time to time in connection with a financing, acquisition, investments, or
otherwise. Any such issuance could result in substantial dilution to our existing shareholders and cause the market price of our common stock to decline.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 17
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ITEM 2.
PROPERTIES
The following is a summary of principal properties owned or leased by us.
Location
Portland, Oregon
Portland, Oregon
Carlsbad, California
Richmond, California
Portland, Oregon
Robards, Kentucky
London, Ontario
Geneva, Switzerland
Strasbourg, France
Cambrai, France
Shanghai, China
Tokyo, Japan
Seoul, Korea
(1)
Use
Corporate Headquarters
SOREL Headquarters
prAna Headquarters
Mountain Hardwear Headquarters
U.S. Distribution Center
U.S. Distribution Center
Canadian Operation and Distribution Center
Europe Headquarters
Europe Administrative Operation
Europe Distribution Center
LAAP China Headquarters
LAAP Japan Headquarters
LAAP Korea Headquarters
(2)
Ownership
Owned
Leased/Owned
Leased
Leased
Owned
Owned
Owned
Leased
Owned
Owned
Leased
Leased
Leased
(1)
(2)
Corporate Headquarters is an approximate 30-acre site consisting of over 10 buildings, which includes the Columbia brand headquarters and centrally-managed departmental functions,
including consumer digital technology, certain supply chain functions, finance, human resources and legal.
A portion of the SOREL Headquarters is leased and the remainder is owned by the Company.
In addition, as of December 31, 2022, we directly operated approximately 450 retail stores, the vast majority of which are leased under a variety of
arrangements, including long-term, short-term, and variable-payment leases. We also have several leases globally for office space, warehouse facilities,
storage space, vehicles, and equipment, among other things. Refer to Note 9 in Part II, Item 8 of this Annual Report on Form 10-K for further lease-related
disclosures.
ITEM 3.
LEGAL PROCEEDINGS
We are involved in litigation and various legal matters arising in the normal course of business, including matters related to employment, retail, intellectual
property, contractual agreements, and various regulatory compliance activities. We have considered facts related to legal and regulatory matters and opinions of
counsel handling these matters and do not believe the ultimate resolution of these proceedings will have a material adverse effect on our financial condition,
results of operations or cash flows.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 18
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Item 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
PART II
MARKET INFORMATION
Our common stock is traded on the NASDAQ Global Select Market under the symbol "COLM".
HOLDERS
As of February 10, 2023, we had 252 shareholders of record, although we have a much larger number of beneficial owners, whose shares of record are held by
banks, brokers and other financial institutions.
DIVIDENDS
Our current dividend policy is dependent on our earnings, capital requirements, financial condition, restrictions imposed by our credit agreements, and other
factors considered relevant by our Board of Directors. Quarterly dividends on our common stock, when declared by our Board of Directors, are paid in March,
May, August, and November.
Our Board of Directors approved a regular quarterly cash dividend of $0.30 per share, payable on March 21, 2023 to shareholders of record on March 10, 2023.
PERFORMANCE GRAPH
The line graph below compares the cumulative total shareholder return of our common stock with the cumulative total return of the Russell 1000 Index and
Russell 1000 Clothing and Accessories Index for the period beginning December 31, 2017 and ending December 31, 2022.
The graph and table below assume that $100 was invested on December 31, 2017, and that any dividends were reinvested. Historical stock price performance
should not be relied on as indicative of future stock price performance.
(1)
The FTSE Russell, which manages various indexes, completed a multi-year consultation and enhancement process for Russell US Indexes. This resulted in the Russell 1000 Textile
Apparel and Shoe Index to be classified as the Russell 1000 Clothing and Accessories Index.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 19
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Total Return Analysis
Columbia Sportswear Company
Russell 1000 Index
Russell 1000 Clothing and Accessories Index
ISSUER PURCHASES OF EQUITY SECURITIES
Year Ended December 31,
2017
2018
2019
2020
2021
2022
$
$
$
100.00 $
100.00 $
100.00 $
118.22 $
95.22 $
102.79 $
142.28 $
125.14 $
140.93 $
124.53 $
151.37 $
175.76 $
140.26 $
191.42 $
194.82 $
127.95
154.80
135.97
Since the inception of our share repurchase program in 2004 through December 31, 2022, our Board of Directors has authorized the repurchase of $2.0 billion
of our common stock. Shares of our common stock may be purchased in the open market or through privately negotiated transactions, subject to market
conditions, and generally settle subsequent to the trade date. The repurchase program does not obligate us to acquire any specific number of shares or to
acquire shares over any specified period of time. Under this program as of December 31, 2022, we had repurchased 31.7 million shares at an aggregate
purchase price of $1,470.6 million, and had $529.4 million remaining available.
The Company did not repurchase common stock during the quarter ended December 31, 2022.
ITEM 6.
[Reserved]
Not applicable.
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Special Note Regarding Forward-
Looking Statements", Part I, Item 1 and Item 1A of this Annual Report on Form 10-K. In addition, refer to Part II, Item 7 in our Annual Report on Form 10-K for
the year ended December 31, 2021 for our discussion and analysis comparing financial condition and results of operations from 2021 to 2020.
OVERVIEW
We connect active people with their passions. We are a global leader in designing, developing, marketing, and distributing outdoor, active and lifestyle products.
We manage these products in two categories: apparel, accessories, and equipment products and footwear products. We provide our products through our four
well-known brands: Columbia, SOREL, Mountain Hardwear, and prAna. Apparel, accessories, and equipment products are provided by our Columbia, Mountain
Hardwear and prAna brands. Footwear products are provided by our Columbia and SOREL brands. We sell our products in approximately 90 countries and
operate in four geographic segments: U.S., LAAP, EMEA, and Canada.
We are investing in our strategic priorities to:
accelerate profitable growth;
create iconic products that are differentiated, functional and innovative;
drive brand engagement through increased, focused demand creation investments;
enhance consumer experiences by investing in capabilities to delight and retain consumers;
amplify marketplace excellence, with digitally-led, omni-channel, global distribution; and
empower talent that is driven by our core values through a diverse and inclusive workplace.
•
•
•
•
•
•
Ultimately, we expect our investments to enable market share capture across our brand portfolio, expand gross margin, improve selling, general and
administrative expense efficiency, and drive improved operating margin over the long-term.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 20
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Business Environment and Trends
Economic Environment Impacting Consumer Spending Ability and Preferences | In 2022, we believe inflationary pressures, rising interest rates and
recessionary fears began to impact wholesale customer behavior. We expect consumer discretionary spending to be under pressure in 2023 and are preparing
for the potential of a mild recession in the second half of 2023.
Elevated Inflationary Pressures | Inflationary pressures, including inbound and outbound freight, raw materials, labor, and product input costs, impacted our
2022 results. We implemented product price increases for our Spring 2022 season and, to a greater extent, for our Fall 2022 and Spring 2023 seasons. Price
increases varied by market and product category. In the U.S., on average, we increased pricing by a mid-single digit percent for our Spring 2022 product line, by
a high-single to low-double-digit percent for our Fall 2022 product line, and by a high-single to low double-digit percent for our Spring 2023 product line. Although
price increases were not expected to fully offset gross margin pressure in 2022, in the fourth quarter of 2022, we began to experience lower inbound freight
costs which we expect will benefit gross margin beginning in 2023. We do not expect to implement meaningful product price increases as we begin to see the
benefit of these lower costs.
Strengthening U.S. Dollar | The rapid strengthening of the U.S. dollar relative to major foreign currencies unfavorably impacted our results in 2022. The impact
of unfavorable foreign currency translation is anticipated to continue to unfavorably impact net sales and profitability through at least the first half of 2023 before
shifting to a favorable impact in the second half of 2023.
Heightened Geopolitical Environment | Geopolitical tensions throughout the globe escalated in 2022 as a result of the invasion of Ukraine by Russia and
other actions. We believe these geopolitical tensions will remain elevated and have the potential to manifest themselves in certain regions where we directly
operate.
Increased Freight Charges | In the first nine months of 2022, we experienced elevated ocean freight costs as a result of price increases stemming from an
imbalance of supply and demand for steamship and ocean container capacity. As a result, these costs have had a substantially unfavorable impact on our gross
margin. In the fourth quarter of 2022, we experienced significant declines in ocean freight prices. We anticipate these lower ocean freight prices to persist into
2023.
Later Inventory Receipts | During the third quarter of 2021, several weeks of government mandated factory closures in Vietnam disrupted our manufacturing
partners' operations and impacted production of product. As a result of these and other supply chain disruptions that impacted the market, we received Fall
2021, Spring 2022 and Fall 2022 inventory later than expected and realized much higher than normal cancellations of Spring 2022 and Fall 2022 orders from our
wholesale customers.
Spring 2023 inventory production and logistics transit times are improving markedly and are expected to be more in-line with our historical experience, assuming
no material downturn in port and railroad labor relations.
COVID-19 Impacts in China | Throughout 2022, the efforts to control the spread of COVID-19 in China severely impacted the operations of our business in
China. For most of the second quarter of 2022, government efforts to control the spread of COVID-19 in China disrupted our distribution center's operations,
which resulted in an inability to fulfill e-commerce, wholesale and owned DTC stores orders in China. In the third and fourth quarter of 2022, similar restrictions
impacted various aspects of our business, including the operation of DTC stores in China, as well as stores operated by our wholesale customers. Upon the
change in China's zero-COVID policy in early December 2022, increased COVID-19 infections negatively impacted business performance. However, these
impacts eased quickly and our business in China is rebounding.
Elevated Inventories | Strong consumer demand in 2021 and the first quarter of 2022 coupled with ongoing supply chain constraints resulted in a shortage of
inventory in the marketplace. By the end of the second quarter of 2022, the arrival of long-delayed orders at retailers and a slowing of consumer demand
resulted in excess inventory in the marketplace. With higher marketplace inventories and a rapidly changing economic environment, retailers rationalized their
inventory needs and demonstrated a more conservative approach to inventory management. As a result of the foregoing and the later inventory receipts
previously discussed, we experienced increased order cancellations for Spring 2022 and Fall 2022 orders. Due to our elevated inventory positions, we have
adjusted future inventory purchases and are utilizing our outlet stores to profitability sell a portion of our excess inventory. We expect our inventory position to
normalize in the latter half of 2023.
Increased U.S. Distribution Center Capacity Pressure | Elevated inventory levels combined with uneven flow of inventory receipts and shipments are
resulting in storage and process capacity pressures within our U.S. distribution centers and third-party logistics operations. We began to experience these
pressures as we received Fall 2022 inventory and expect this trend to continue well into 2023. We expect to incur
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 21
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additional inventory carrying costs in 2023 as a result of additional costs for outside storage, and other inventory related holding costs, as we look to normalize
our inventory position.
Talent Market and Wage Rate Pressures | Labor costs have risen in an effort to retain and compete for employees. We have made certain wage adjustments
in an effort to be more competitive in the current environment. However, we anticipate rising costs to continue into 2023 resulting from the continued competition
for talent.
Changes in Promotional Environment | In the first half of 2022, we operated in a low promotional environment and experienced fewer sales returns and
customer accommodations than we have historically. Near the end of the third quarter of 2022, an increase in promotional activity began to unfavorably impact
our DTC product margins compared to the same period in the prior year in which promotions were exceptionally low. With elevated marketplace inventory, we
anticipate the promotional environment and less favorable trading terms to continue into 2023.
Increased Outdoor Participation by Consumers | The COVID-19 pandemic drew a record number of individuals in the United States to spend an increased
amount of time outside, including participating in outdoor recreational activities. While outdoor participation rates may not be maintained, we believe that our
addressable consumer base worldwide has been expanded and expect outdoor participation to remain elevated in comparison to pre-pandemic levels.
Changing Consumer Expectations | Consumer behavior continues to fluctuate. Consumer expectations and the related competitive pressures have increased
and continue to increase relative to various aspects of our e-commerce business, including speed of product delivery, shipping charges, return privileges and
other evolving expectations. We maintain and continue to make substantial investments in information systems, processes and personnel to support our
ongoing demand planning efforts to provide forecasting of optimal inventory to meet customer and consumer demands.
Seasonality | Our business is affected by the general seasonal trends common to the industry, including seasonal weather and discretionary consumer
shopping and spending patterns. Our products are marketed on a seasonal basis, and our sales are weighted substantially toward the third and fourth quarters,
while our operating costs are more equally distributed throughout the year. In 2022, over 60% of our net sales and over 75% of our operating income were
realized in the second half of the year.
RESULTS OF OPERATIONS
The following discussion of our results of operations and liquidity and capital resources should be read in conjunction with Part II, Item 8 of this Annual Report on
Form 10-K.
Non-GAAP Financial Measure
To supplement financial information reported in accordance with accounting principles generally accepted in the United States ("GAAP"), we disclose constant-
currency net sales information, which is a non-GAAP financial measure, to provide a framework to assess how the business performed excluding the effects of
changes in foreign currency exchange rates against the United States dollar between comparable reporting periods. We calculate constant-currency net sales
by translating net sales in foreign currencies for the current period into United States dollars at the exchange rates that were in effect during the comparable
period of the prior year. Management believes that this non-GAAP financial measure reflects an additional and useful way of viewing an aspect of our operations
that, when viewed in conjunction with our GAAP results, provides a more comprehensive understanding of our business and operations. In particular, investors
may find the non-GAAP measure useful by reviewing our net sales results without the volatility in foreign currency exchange rates. This non-GAAP financial
measure also facilitates management's internal comparisons to our historical net sales results and comparisons to competitors' net sales results. Constant-
currency financial measures should be viewed in addition to, and not in lieu of or superior to, our financial measures calculated in accordance with GAAP.
The following discussion includes references to constant-currency net sales, and we provide a reconciliation of this non-GAAP measure to the most directly
comparable financial measure calculated in accordance with GAAP below.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 22
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Results of Operations — Consolidated
The following table presents the items in our Consolidated Statements of Operations, both in dollars and as a percentage of net sales:
(in millions, except for percentage of net sales and per share amounts)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Impairment of goodwill and intangible assets
Net licensing income
Operating income
Interest income, net
Other non-operating income (expense), net
Income before income tax
Income tax expense
Net income
Diluted earnings per share
Year Ended December 31,
2022
2021
$
$
$
3,464.2
1,753.1
1,711.1
1,304.4
35.6
22.0
393.1
2.7
1.6
397.4
(86.0)
311.4
4.95
100.0 % $
50.6
49.4
37.7
1.1
0.7
11.3
0.1
0.1
11.5
(2.5)
9.0 % $
3,126.4
1,513.9
1,612.5
1,180.3
—
18.3
450.5
1.4
(0.4)
451.5
(97.4)
354.1
$
5.33
100.0 %
48.4
51.6
37.8
—
0.6
14.4
—
—
14.4
(3.1)
11.3 %
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Net Sales. Net sales by brand, product category and channel are summarized in the following table:
(in millions, except for percentages)
Brand Net Sales:
Columbia
SOREL
prAna
Mountain Hardwear
Total
Product Category Net Sales:
Apparel, Accessories and Equipment
Footwear
Total
Channel Net Sales:
Wholesale
Direct-to-consumer
Total
$
$
$
$
$
$
Reported
Net Sales
2022
Adjust for
Foreign
Currency
Translation
Constant-
currency
Net Sales
2022
(1)
Reported
Net Sales
2021
Reported
Net Sales
% Change
Constant-currency
Net Sales
% Change
(1)
Year Ended December 31,
2,864.3 $
347.3
143.1
109.5
3,464.2 $
94.2 $
9.1
—
1.7
105.0 $
2,958.5 $
356.4
143.1
111.2
3,569.2 $
2,557.4
320.9
141.9
106.2
3,126.4
2,661.1 $
803.1
3,464.2 $
74.6 $
30.4
105.0 $
2,735.7 $
833.5
3,569.2 $
2,389.2
737.2
3,126.4
1,867.7 $
1,596.5
3,464.2 $
57.8 $
47.2
105.0 $
1,925.5 $
1,643.7
3,569.2 $
1,660.4
1,466.0
3,126.4
12%
8%
1%
3%
11%
11%
9%
11%
12%
9%
11%
16%
11%
1%
5%
14%
15%
13%
14%
16%
12%
14%
(1)
Constant-currency net sales is a non-GAAP financial measure. See "Non-GAAP Financial Measure" above for further information.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 23
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Overall, our global net sales increase reflected higher shipments of Spring 2022 and Fall 2022 wholesale orders and higher consumer demand in our DTC
business. Retailers generally exited 2021 with lower than optimal inventory levels which contributed to the increased Spring 2022 and Fall 2022 wholesale
demand to replenish inventory and fulfill anticipated consumer demand. In addition, consumer demand in our DTC business remained healthy throughout the
year as consumer traffic levels recovered in our DTC stores and positive e-commerce trends were sustained. In 2022, our global DTC e-commerce net sales
grew 8% and represented 18% of our global net sales. In 2021, DTC e-commerce net sales grew 20% and represented 18% of our global net sales.
Columbia and SOREL brand net sales benefited from favorable late season cold weather product sales in the first quarter of 2022. Columbia brand net sales
continued to experience broad-based growth across all channels, product categories, and regions. In the fourth quarter of 2022, SOREL, Mountain Hardwear
and prAna net sales were unfavorably impacted from wholesale order cancellations resulting from supply chain disruptions and retailer cautiousness, as well as
lower consumer demand.
Our global net sales increase was tempered by unfavorable impacts from changes in foreign currency exchange rates.
Gross Profit. Gross profit is summarized in the following table:
(in millions, except for percentages and basis points)
Gross profit
Gross margin
Year Ended December 31,
2022
2021
$
1,711.1
$
1,612.5
$
49.4 %
51.6 %
Change
98.6
-220 bps
6 %
Gross margin contracted primarily due to the following factors:
•
•
an approximate 180 bps decrease related to elevated inbound freight costs; and
unfavorable channel and regional net sales shifts primarily due to a higher mix of wholesale sales which typically carry a lower margin compared to DTC
sales.
Selling, General and Administrative Expenses. SG&A expenses is summarized in the following table:
(in millions, except for percentages and basis points)
Selling, general and administrative expenses
Selling, general and administrative expenses as percent of net sales
2022
2021
$
1,304.4
$
1,180.3
$
37.7 %
37.8 %
Change
124.1
-10 bps
11 %
Year Ended December 31,
SG&A expense growth reflects expenses to support the growth of our business, inflationary pressures, and investments to drive our brand-led consumer-
focused strategies.
SG&A expenses increased primarily due to the following factors:
•
•
•
•
•
•
higher personnel expenses of $39.8 million, reflecting increased headcount to support business growth, as well as annual merit and other wage rate
increases;
increased demand creation spending of $21.0 million, including higher spending aligned with sales growth;
higher global retail expenses associated with sales growth and the impact of new stores;
higher information technology related expenses; and
higher outside storage and third-party logistics expenses; partially offset by
lower incentive compensation expense.
Impairment of Goodwill and Intangible Assets. For the year ended December 31, 2022, we recognized $35.6 million of impairment charges related to the
prAna brand as a result of our annual fourth quarter impairment testing. These charges consisted of an $18.7 million impairment charge related to prAna's
trademark, an indefinite-lived intangible asset, and a $16.9 million impairment charge related to the goodwill attributable to the prAna business. For the year
ended December 31, 2021, there were no impairment charges recorded for goodwill and intangible assets with indefinite lives.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 24
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Refer to our Critical Accounting Policies and Estimates below for further information regarding impairments.
Income Tax Expense. Income tax expense and the related effective income tax rate are summarized in the following table:
(in millions, except for percentages)
Income tax expense
Effective income tax rate
Year Ended December 31,
2022
2021
$
(86.0)
21.6 %
$
(97.4)
21.6 %
$
Change
(11.4)
(12)%
Our effective income tax rates for the years ended December 31, 2022 and 2021 were impacted by discrete tax items, which lowered the effective income tax
rate in each period. For the year ended December 31, 2022, our effective income tax rate was primarily impacted by a non-recurring benefit related to the
finalization of U.S. and foreign tax audits, a non-recurring benefit related to a decrease in accrued foreign withholding taxes and a non-recurring benefit related
to a foreign currency loss resulting from an intercompany transaction. For the year ended December 31, 2021, our effective income tax rate was primarily
impacted by a decrease in accrued foreign withholding taxes and a non-recurring benefit related to common stock benefits.
Results of Operations — Segment
Segment operating income includes net sales, cost of sales, SG&A expenses, and net licensing income for each of our four reportable geographic segments.
Operating income as a percentage of net sales in the U.S. is typically higher than the other segments primarily due to scale efficiencies associated with the
larger base of net sales in the U.S. and, to a lesser extent, incremental licensing income.
We anticipate this trend to continue until other segments achieve scale efficiencies from higher levels of net sales volume relative to the fixed cost structure
necessary to operate the business.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Net sales by geographic segment are summarized in the following table:
(in millions, except for percentage changes)
U.S.
LAAP
EMEA
Canada
Year Ended December 31,
Reported
Net Sales
2022
Adjust for
Foreign
Currency
Translation
Constant-
currency
Net Sales
2022
(1)
Reported
Net Sales
2021
$
$
2,302.2 $
473.9
438.6
249.5
3,464.2 $
— $
51.8
41.9
11.3
105.0 $
2,302.2 $
525.7
480.5
260.8
3,569.2 $
2,060.3
465.5
382.1
218.5
3,126.4
Reported
Net Sales
% Change
12%
2%
15%
14%
11%
Constant-currency
Net Sales
% Change
(1)
12%
13%
26%
19%
14%
(1)
Constant-currency net sales is a non-GAAP financial measure. See "Non-GAAP Financial Measure" above for further information.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 25
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Operating income for each reportable segment and unallocated corporate expenses are summarized in the following table:
(in millions)
U.S.
LAAP
EMEA
Canada
Total segment operating income
Unallocated corporate expenses
Operating income
U.S.
Year Ended December 31,
2021
2022
Change
$
$
519.8 $
47.0
80.2
53.0
700.0
(306.9)
393.1 $
536.5 $
42.0
65.5
52.7
696.7
(246.2)
450.5 $
(16.7)
5.0
14.7
0.3
3.3
(60.7)
(57.4)
U.S. operating income decreased $16.7 million to $519.8 million, or 22.6% of net sales, in 2022 from $536.5 million, or 26.0% of net sales, in 2021. The
decrease was driven primarily by increased net sales, more than offset by decreased gross margin. U.S. net sales increased $241.9 million, or 12%, in 2022,
compared to 2021. U.S. net sales increased across all channels, product categories, and most brands, led by increased net sales for our Columbia and SOREL
brands. Increased U.S. wholesale net sales were driven by increased consumer demand and shipment of higher Spring 2022 and Fall 2022 orders compared to
shipment of 2021 season orders in the prior year, partially offset by increased order cancellations in the second half of 2022. U.S. DTC net sales increased from
sales growth generated from our retail stores and e-commerce business. U.S. gross margin decreased primarily due to elevated inbound freight costs. As of
December 31, 2022, our U.S. business operated 156 retail stores, compared to 142 stores as of December 31, 2021. SG&A expenses increased as a
percentage of net sales to 27.7% in 2022 compared to 26.7% for 2021.
LAAP
LAAP operating income increased $5.0 million to $47.0 million, or 9.9% of net sales, in 2022 from $42.0 million, or 9.0% of net sales, in 2021. The increase was
driven primarily by increased net sales. LAAP net sales increased $8.4 million, or 2% (13% constant-currency), in 2022, compared to 2021, primarily in our
LAAP distributor business. LAAP net sales increased due to higher shipment of Fall 2022 orders compared to shipment of Fall 2021 orders, earlier shipment of
Spring 2023 orders compared to shipment of Spring 2022 orders, and higher consumer demand as we lapped prior year restrictions to prevent the spread of
COVID-19 in Japan. These increases were partially offset by unfavorable impacts from changes in foreign currency exchange rates and government efforts to
control the spread of COVID-19 in China. LAAP SG&A expenses decreased as a percentage of net sales to 46.0% in 2022 compared to 48.3% in 2021.
EMEA
EMEA operating income increased $14.7 million to $80.2 million, or 18.3% of net sales, in 2022 from $65.5 million, or 17.1% of net sales, in 2021. The increase
was driven primarily by increased net sales. EMEA net sales increased $56.5 million, or 15% (26% constant-currency), in 2022, compared to 2021, driven by
increased net sales in our Europe-direct and EMEA distributor businesses. Europe-direct net sales increased primarily due to higher consumer demand,
partially offset by unfavorable impacts from changes in foreign currency exchange rates. EMEA distributor net sales increased primarily due to higher shipments
of Fall 2022 orders compared to shipment of Fall 2021 orders and earlier shipment of Spring 2023 orders compared to shipment of Spring 2022 orders. EMEA
SG&A expenses decreased as a percentage of net sales to 26.1% in 2022 compared to 28.0% in 2021.
Canada
Canada operating income increased $0.3 million to $53.0 million, or 21.2% of net sales, in 2022 from $52.7 million, or 24.1% of net sales in 2021. The increase
primarily resulted from increased net sales. Canada net sales increased $31.0 million, or 14% (19% constant-currency), in 2022, compared to 2021, primarily
driven by increased net sales in our Canada DTC and wholesale businesses. Canada SG&A expenses increased as a percentage of net sales to 25.0% in
2022, compared to 24.0% in 2021.
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Unallocated Corporate Expenses
Unallocated corporate expenses increased by $60.7 million to $306.9 million in 2022 from $246.2 million in 2021, largely driven by prAna impairment charges of
$35.6 million, higher personnel expenses and technology related expenses, partially offset by lower incentive compensation.
LIQUIDITY AND CAPITAL RESOURCES
Including cash, cash equivalents, short-term investments and available committed credit lines, we had approximately $935 million in total liquidity as of
December 31, 2022. Our liquidity may be affected by the general seasonal trends common to the industry. Our products are marketed on a seasonal basis and
our sales are weighted substantially toward the third and fourth quarters, while our operating costs are more equally distributed throughout the year. Our cash
and cash equivalents and short-term investments balances generally are at their lowest level just prior to the start of the U.S. holiday season and increase
during the fourth quarter from collection of wholesale business receivables and fourth quarter DTC sales. This trough cash position is impacted by the amount of
product we order from our contract manufacturers in anticipation of customer demand and is more heavily impacted in advance of periods of expected high
demand.
Cash Flow Activities
Cash flows are summarized in the following table:
(in millions)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Net effect of exchange rate changes on cash
Net decrease in cash and cash equivalents
Year Ended December 31,
2021
2022
Change
$
$
(25.2) $
72.7
(360.8)
(19.8)
(333.1) $
354.4 $
(163.8)
(210.9)
(7.0)
(27.3) $
(379.6)
236.5
(149.9)
(12.8)
(305.8)
The change in cash flows used in operating activities was driven by a $388.1 million increase in cash used in changes in assets and liabilities, partially offset by
a $8.5 million increase in cash provided by net income and non-cash adjustments. The most significant comparative changes in assets and liabilities included
Inventories, and to a lesser extent, Accrued liabilities, Accounts payable, Accounts receivable, net, and Operating lease assets and liabilities . The
$299.6 million increase in cash used in Inventories was driven by an increase in inventory purchases in anticipation of sales growth, temporary store closures
due to government efforts to control the spread of COVID-19 in China, supply chain disruptions, and higher than initially planned wholesale order cancellations.
The $45.8 million decrease in cash provided by Accrued liabilities was primarily driven by changes in accruals for incentive compensation. The $35.1 million
decrease in cash provided by Accounts payable primarily resulting from the effects of reduced in-transit inventory compared to 2021. The $32.9 million increase
in cash used in Accounts receivable, net was primarily driven by growth in wholesale sales, partially offset by an increase in collections. These amounts were
partially offset by the $22.4 million decrease in cash used in Operating lease assets and liabilities , which was primarily due to payment of non-recurring deferred
rents and lease termination fees in 2021.
Net cash provided by investing activities was $72.7 million for 2022, compared to net cash used in investing activities of $163.8 million for 2021. For 2022, net
cash provided by investing activities consisted of $131.2 million in net sales and maturities of short-term investments, partially offset by $58.5 million in cash
used for capital expenditures. For 2021, net cash used in investing activities consisted of $129.1 million in net purchases of short-term investments and
$34.7 million for capital expenditures.
Net cash used in financing activities was $360.8 million for 2022 compared to $210.9 million for 2021. For 2022, net cash used in financing activities primarily
consisted of repurchases of common stock of $287.4 million and dividend payments to our shareholders of $75.1 million. For 2021, net cash used in financing
activities primarily consisted of repurchases of common stock of $165.4 million and dividend payments to our shareholders of $68.6 million, partially offset by net
proceeds from the issuance of common stock related to share-based compensation of $23.0 million.
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Sources of Liquidity
Cash and cash equivalents and short-term investments
As of December 31, 2022, we had cash and cash equivalents of $430.2 million and short-term investments of $0.7 million, compared to $763.4 million and
$131.1 million, respectively, as of December 31, 2021.
Domestic Credit Facility
Refer to Note 7 in Part II, Item 8 of this Annual Report on Form 10-K for further information regarding the domestic credit facility.
As of December 31, 2022, we had available an unsecured, committed revolving credit facility, which provides for borrowings up to $500.0 million. We were in
compliance with all associated covenants and there was no balance outstanding under the facility.
International Credit Facility
As of December 31, 2022, our European subsidiary had available an unsecured, committed line of credit, which is guaranteed by the Company and provides for
borrowings up to €4.4 million (approximately US$4.7 million). There was no balance outstanding under the facility.
Other Sources
As of December 31, 2022, collectively, our international subsidiaries had unsecured, uncommitted lines of credit, credit facilities and overdraft facilities, providing
for borrowings up to approximately US$106.1 million. There was no balance outstanding under these facilities.
Capital Requirements
Our expected short-term and long-term cash needs are primarily for working capital and capital expenditures. We expect to meet these short-term and long-term
cash needs primarily with cash flows from operations and, if needed, borrowings from our existing credit facilities.
Our working capital management goals include maintaining an optimal level of inventory necessary to deliver goods on time to our customers and our retail
stores to satisfy end consumer demand, alleviating manufacturing capacity constraints, and driving efficiencies to minimize the cycle time from the purchase of
inventory from our suppliers to the collection of accounts receivable balances from our customers. Inventory balances may be elevated in advance of periods of
expected high demand. As of December 31, 2022, our inventory balance increased to $1,028.5 million, compared to $645.4 million as of December 31, 2021.
Unrealized projected sales growth for Fall 2022 and earlier receipts of Spring 2023 product resulted in higher inventory levels. We believe older season
inventories represent a manageable portion of our total inventory mix. To align inventory levels more closely with anticipated demand, we have adjusted future
inventory purchases and we are leveraging our outlet stores to sell excess merchandise. We expect inventory to remain elevated into the second half of 2023 as
we carry forward inventory into future seasons, balancing reducing inventory levels with maintaining profitability.
We have planned 2023 capital expenditures of approximately $70 to $90 million. This includes investments in our DTC operations, including new stores, U.S.
distribution projects to increase efficiency and expand storage, and digital and supply chain capabilities to support our strategic priorities. Our actual capital
expenditures may differ from the planned amounts depending on factors such as the timing of system implementations and new store openings and related
construction as well as the availability of capital assets from suppliers.
Our long-term goal is to maintain a strong balance sheet and a disciplined approach to capital allocation. Dependent upon market conditions and our strategic
priorities, our capital allocation approach includes:
•
•
•
investing in organic growth opportunities to drive long-term profitable growth;
returning at least 40% of free cash flow to shareholders through dividends and share repurchases; and
considering opportunistic mergers and acquisitions.
Free cash flow is a non-GAAP financial measure. Free cash flow is calculated by reducing net cash flow from operating activities by capital expenditures.
Management believes free cash flow provides investors with an important perspective on the cash available for shareholders and acquisitions after making the
capital investments required to support ongoing business operations and long-term value creation. Free cash flow does not represent the residual cash flow
available for discretionary expenditures since it excludes certain mandatory expenditures. Management uses free cash flow as a measure to assess both
business performance and overall liquidity.
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Other cash commitments
Our non-current Income taxes payable on the Consolidated Balance Sheet as of December 31, 2022 includes approximately $9.3 million of net unrecognized
tax benefits. We are uncertain about whether or when these amounts may be settled. Refer to Note 10 in Part II, Item 8 of this Annual Report on Form 10-K for
additional information.
The following table presents our estimated significant contractual commitments that will require use of funds:
(in millions)
Inventory purchase obligations
(1)
Operating lease obligations
TCJA transition tax obligations
(2)
2023
2024
2025
2026
2027
Thereafter
Total
$
401.4 $
79.8
7.7
— $
— $
— $
— $
— $
74.0
10.6
64.8
13.3
57.2
—
48.0
—
100.7
—
401.4
424.5
31.6
Year Ended December 31,
(1)
(2)
Refer to Operating Leases in Note 9 in Part II, Item 8 of this Annual Report on Form 10-K.
Refer to Income Taxes in Note 10 in Part II, Item 8 of this Annual Report on Form 10-K.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been
prepared in accordance with GAAP. The preparation of these financial statements requires us to make various estimates and judgments that affect reported
amounts of assets, liabilities, sales, cost of sales, and expenses and related disclosure of contingent assets and liabilities. Refer to Note 2 in Part II, Item 8 of
this Annual Report on Form 10-K for additional information regarding the significant accounting policies and methods used in the preparation of our consolidated
financial statements.
We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential effect on our
financial statements, so we consider these to be our critical accounting policies and estimates. Because of the uncertainty inherent in these matters, actual
results may differ from the estimates we use in applying these critical accounting policies and estimates. We base our ongoing estimates on historical
experience and other assumptions that we believe to be reasonable in the circumstances. Our critical accounting policies and estimates relate to sales reserves,
allowance for uncollectible accounts receivable, excess, close-out and slow-moving inventory, impairment of long-lived assets, intangible assets and goodwill,
and income taxes.
Management regularly discusses with our audit committee each of our critical accounting estimates, the development and selection of these accounting
estimates, and the disclosure about each estimate in this Annual Report on Form 10-K. These discussions typically occur at our quarterly audit committee
meetings and include the basis and methodology used in developing and selecting these estimates, the trends in and amounts of these estimates, specific
matters affecting the amount of and changes in these estimates, and any other relevant matters related to these estimates, including significant issues
concerning accounting principles and financial statement presentation.
Sales Reserves
The amount of consideration we receive and recognize as Net sales across both wholesale and DTC channels varies with changes in sales returns and other
accommodations and incentives we offer to our customers. When we give our customers the right to return products or provide other accommodations such as
chargebacks and markdowns, we estimate the expected sales returns and miscellaneous claims from customers and record sales reserves to reduce Net sales.
As of December 31, 2022, our sales-related reserves were $115.4 million compared to $99.0 million as of December 31, 2021. The most significant variable
affecting these reserve balances is net sales levels. As a percentage of Net sales, the sales reserves balances were 3.3% as of December 31, 2022 compared
to 3.2% as of December 31, 2021. The reserve for returns from customers or consumers is the most susceptible component of our sales related to reserves to
estimation uncertainty. These estimates are based on 1) historical rates of product returns and claims; and 2) events and circumstances that indicate changes to
such historical rates, such as our customers' net inventory positions and their anticipated sell-through rates. However, actual returns and claims in any future
period are inherently uncertain and thus may differ from our estimates. As a result, we adjust our estimates of revenue at the earlier of when the most likely
amount of consideration we expect to receive changes or when the amount of consideration becomes fixed. If actual or expected future returns and claims are
significantly different than the sales reserves established, we record an adjustment to Net sales in the period in which such determination was made.
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Allowance for Uncollectible Accounts Receivable
We make ongoing estimates of the collectability of our accounts receivable and maintain an allowance for estimated credit losses resulting from the inability of
our customers to make required payments. The allowance represents our current estimate of lifetime expected credit losses over the remaining duration of
existing accounts receivable considering current market conditions and supportable forecasts when appropriate. In determining the amount of the allowance, we
consider our historical level of credit losses, as well as our judgments about the creditworthiness of customers based on ongoing credit evaluations. We analyze
specific customer accounts, including aged receivables, customer concentrations, credit insurance coverage, standby letters of credit, and other forms of
collateral, current economic trends, and changes in customer payment terms.
Our allowance for uncollectible accounts receivable decreased to $5.4 million as of December 31, 2022 compared to $8.9 million as of December 31, 2021.
Because future changes in the financial stability of our customers is difficult to estimate, actual future losses from uncollectible accounts may differ from our
estimates and may have a material effect on our financial position, results of operations or cash flows. If the financial condition of our customers deteriorates
and results in their inability to make payments, a larger allowance may be required. If we determine that a smaller or larger allowance is appropriate, we will
record an adjustment to SG&A expenses in the period in which we make such a determination.
Excess, Close-Out and Slow-Moving Inventory
We make ongoing estimates of potential excess, close-out or slow-moving inventory. We evaluate our inventory on hand to identify excess, close-out or slow-
moving inventory by contemplating our 1) purchasing plans; 2) sales forecasts; 3) historical liquidation experience; and 4) the level and composition of inventory
from current and prior seasons that remains unsold and establish provisions as necessary to properly reflect inventory value at the lower of cost or net realizable
value. Provisions are established when necessary in the period in which we make such a determination. As of December 31, 2022, our inventory provisions
reduced gross inventory by $29.4 million compared to $19.9 million as of December 31, 2021. The level of estimated excess inventory as of December 31, 2022
increased reflecting both higher total inventory and unsold inventory levels partially offset by an improvement in the aging of unsold inventory.
Impairment of Long-Lived Assets, Intangible Assets and Goodwill
Long-lived assets, which include property, plant and equipment, lease right-of-use ("ROU") assets, capitalized implementation costs for cloud computing
arrangements, and intangible assets with finite lives are measured for impairment only when events or circumstances indicate the carrying value may not be
recoverable. Our retail fleet long‐lived assets are evaluated at the retail location level. Events that result in an impairment review of a retail location include plans
to close a retail location or a significant decrease in the operating results of the retail location. When such an indicator occurs, we evaluate retail location long‐
lived assets for impairment by comparing the undiscounted future cash flow expected to be generated by the location to the location long‐lived asset’s carrying
amount. If the carrying amount of an asset exceeds the estimated undiscounted future cash flow, an analysis is performed to estimate the fair value of the
asset. An impairment is recorded if the fair value of the retail location long‐lived asset is less than the carrying amount.
During 2022 we tested certain long-lived assets consisting of property, plant, and equipment and lease ROU assets for impairment at certain underperforming
retail locations. For the years ended December 31, 2022 and 2021, impairment charges from underperforming retail stores were not material. Further declines
in projected future performance may adversely affect the recovery of retail locations assets.
We review and test our intangible assets with indefinite lives and goodwill for impairment in the fourth quarter of each year and when events or changes in
circumstances indicate that it is more likely than not that the fair value of the asset or reporting unit is less than its carrying amount. Our intangible assets with
indefinite lives consist of trademarks and trade names (collectively "trademarks"). Substantially all of our goodwill is recorded in the U.S. segment and
impairment testing for goodwill is performed at the reporting unit level. Key assumptions used in the discounted cash flow models are cash flow projections and
the discount rate. Cash flow projections are developed in part from our annual planning process. The discount rate is based on the estimated weighted-average
costs of capital of the reporting unit from a market-participant perspective. When we include market-based valuation methods to estimate fair value of our
reporting units as part of the goodwill impairment testing, we utilize market multiples for guideline public companies.
In the impairment tests for trademarks, we compare the estimated fair value of each asset to its carrying amount. The fair values of trademarks are estimated
using a relief from royalty method under the income approach. If the carrying amount of a trademark exceeds its estimated fair value, we calculate impairment
as the excess of carrying amount over the estimate of fair value. In our 2022 impairment test, we determined that the prAna brand’s trademark was impaired
and we recognized an $18.7 million impairment charge for the year ended December 31, 2022 reducing the carrying value to $51.8 million. The decline in
estimated fair value from the fourth-quarter 2021 impairment
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test reflects a decline in forecasted revenue, a lower estimated royalty rate, and a slightly higher discount rate. As part of our 2020 annual impairment test, we
previously recognized a $17.5 million impairment of p rAna’s trademark.
In the impairment test for goodwill, we compare the estimated fair value of the reporting unit with the carrying amount of that reporting unit. If the carrying
amount of the reporting unit exceeds its estimated fair value, we calculate an impairment as the excess of carrying amount over the estimate of fair value. We
estimate the fair value of our reporting units using a combination of discounted cash flow analysis and market-based valuation methods, as appropriate. In our
2022 impairment test, we determined that prAna goodwill was impaired and we recognized a $16.9 million impairment charge for the year ended December 31,
2022, reducing the carrying value of prAna's goodwill to $37.3 million. The decline in estimated fair value from the fourth quarter 2021 impairment test reflects
lower assumed revenue and operating income levels, while the weighted average costs of capital used in the discounted cash flow model remained relatively
unchanged.
Our impairment tests and related fair value estimates are based on a number of factors, including assumptions and estimates for projected sales, income, cash
flows, discount rates, market-based multiples, and other operating performance measures. Changes in estimates or the application of alternative assumptions
could produce significantly different results. These assumptions and estimates may change in the future due to changes in economic conditions, changes in our
ability to meet sales and profitability objectives or changes in our business operations or strategic direction.
Income Taxes
We make assumptions, judgments and estimates to determine our current provision for income taxes, our deferred tax assets and liabilities and our uncertain
tax positions. Our judgments, assumptions and estimates relative to the current provision for income tax take into account current tax laws, our interpretation of
current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Changes in tax law or our interpretation
of tax laws and the resolution of current and future tax audits could significantly affect the amounts provided for Income tax expense in our Consolidated
Statements of Operations.
Our assumptions, judgments and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category of future
taxable income. Actual operating results and the underlying amount and category of income in future years could cause our current assumptions, judgments
and estimates of recoverable net deferred tax assets to be inaccurate. Changes in any of the assumptions, judgments and estimates mentioned above could
cause our actual income tax obligations to differ from our estimates, which could materially affect our financial position, results of operations or cash flows.
Our assumptions, judgement and estimates relative to uncertain tax positions take into account whether a tax position is more likely than not to be sustained
upon examination by the relevant taxing authority based on the technical merits of the position and the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement with the relevant taxing authority. Changes in tax law or our interpretation of tax laws and the resolution of current and
future tax audits could significantly affect the amounts provided for Income tax expense in our Consolidated Statements of Operations.
Our tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into
account in the relevant period. As the calendar year progresses, we periodically refine our estimate based on actual events and earnings by jurisdiction. This
ongoing estimation process can result in changes to our expected effective tax rate for the full calendar year. When this occurs, we adjust the income tax
provision during the quarter in which the change in estimate occurs so that our year-to-date provision equals our expected annual effective tax rate.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 2 in Part II, Item 8 of this Annual Report on Form 10-K.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, our financial position and results of operations are subject to a variety of risks, including risks associated with global financial
and capital markets, primarily currency exchange rate risk and, to a lesser extent, interest rate risk. We regularly assess these risks and have established
policies and business practices designed to mitigate their effects. We do not engage in speculative trading in any financial or capital market.
FOREIGN EXCHANGE RISK
Our primary currency exchange rate risk management objective is to mitigate the uncertainty of anticipated cash flows attributable to changes in exchange
rates. We focus on mitigating changes in functional currency equivalent cash flows resulting from anticipated United States dollar denominated inventory
purchases by subsidiaries that use European euros, Canadian dollars, Japanese yen, Chinese renminbi, or Korean won as their functional currency. We also
mitigate changes in functional currency equivalent cash flows resulting from anticipated non-functional currency denominated sales for subsidiaries that use
United States dollars and European euros as their functional currency. We manage this risk primarily by using currency forward contracts. Additionally, we
hedge net balance sheet exposures related primarily to non-functional currency denominated monetary assets and liabilities using foreign currency forward
contracts in European euros, Japanese yen, Canadian dollars, Swiss francs, Chinese renminbi, Korean won, British pound sterling, Danish krone, Norwegian
kroner, Polish zloty, Swedish krona and Czech koruna. Non-functional currency denominated monetary assets and liabilities consist of cash and cash
equivalents, short-term investments, receivables, payables, deferred income taxes, and intercompany loans and dividends.
The net fair value of our derivative contracts was favorable by approximately $24.9 million as of December 31, 2022. A 10% unfavorable exchange rate change
in the euro, franc, Canadian dollar, yen, renminbi, won, pound sterling, krone, zloty, krona and koruna against the United States dollar would have resulted in
the net fair value declining by approximately $66.4 million as of December 31, 2022. Changes in fair value of derivative contracts resulting from foreign
exchange rate fluctuations would be substantially offset by the change in value of the underlying hedged transactions.
INTEREST RATE RISK
Our negotiated credit facilities generally charge interest based on a benchmark rate such as the secured overnight financing rate. Fluctuations in short-term
interest rates cause interest payments on drawn amounts to increase or decrease. As of December 31, 2022, no balance was outstanding under our credit
facilities.
COMMODITY PRICE RISK
We are exposed to market risk for the pricing of the raw materials used to manufacture our products. These raw materials are purchased directly by our contract
manufacturers.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 32
Table of Contents
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our management is responsible for the information and representations contained in this report. The financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America ("GAAP"), which we consider appropriate in the circumstances and include some
amounts based on our best estimates and judgments. Other financial information in this report is consistent with these financial statements.
Our accounting systems include controls designed to reasonably ensure that assets are safeguarded from unauthorized use or disposition and which provide for
the preparation of financial statements in conformity with GAAP. These systems are supplemented by the selection and training of qualified financial personnel
and an organizational structure providing for appropriate segregation of duties.
The audit committee is responsible for appointing the independent registered public accounting firm and reviews with the independent registered public
accounting firm and management the scope and the results of the annual examination, the effectiveness of the accounting control system and other matters
relating to our financial affairs as they deem appropriate.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 33
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Columbia Sportswear Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Columbia Sportswear Company and subsidiaries (the "Company") as of December 31, 2022
and 2021, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended
December 31, 2022, the related notes, and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in
the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal
control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2023, expressed an unqualified opinion on the
Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required
to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on
the accounts or disclosures to which they relate.
Intangible Assets, Net – prAna Trademark– Refer to Notes 2 and 6 to the Consolidated Financial Statements
Critical Audit Matter Description
The Company has trademarks and trade names (“trademarks”) that are indefinite-lived intangible assets. As of December 31, 2022, the carrying value of the
intangible assets were $81.6 million, of which $51.8 million was attributed to prAna’s trademark, after recognizing $18.7 million of impairment loss in the year
ended December 31, 2022. The Company used the relief from royalty method to estimate fair value, which requires management to make significant estimates
and assumptions related to projected revenues, royalty rates and discount rates to estimate the fair value of the prAna trademark.
Auditing management’s estimates and assumptions related to projected revenues for prAna involved especially subjective judgement.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 34
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s estimates and assumptions related to projected revenues for the prAna trademark valuation included the
following, among others:
• We tested the effectiveness of controls over intangible assets, including those over the forecasts of future revenues.
• We evaluated management’s ability to accurately forecast future revenues by comparing actual results to management’s historical forecasts.
• We evaluated the reasonableness of management’s revenue forecasts by comparing the forecasts to:
◦
◦
Historical revenues.
Forecasted information included in Company press releases as well as in analyst and industry reports for the Company and certain of its peer
companies.
•
To evaluate the reasonableness of the (1) discount rate and (2) royalty rate, with the assistance of our fair value specialists, we:
◦
Developed a range of independent estimates of the discount rate and compared those to the discount rate selected by management to assess the
appropriateness of the discount rate assumption.
Tested the inputs and source information underlying the determination of the discount rate by comparing to reputable third-party data or industry
information and tested the mathematical accuracy of the calculation.
Testing the source information underlying the determination of the royalty rate selected by management and compared the selected royalty rates from
royalty agreements in the outdoor apparel industry for comparable companies and the Company's own contract royalty rates.
◦
◦
Goodwill – prAna Goodwill – Refer to Notes 2 and 6 to the Consolidated Financial Statements
Critical Audit Matter Description
The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The goodwill balance
was $51.7 million as of December 31, 2022, of which $37.3 million was allocated to the prAna Reporting Unit (“prAna”), after recognizing $16.9 million of
impairment loss in the year ended December 31, 2022. The Company used a combination of discounted cash flow analysis and market-based valuation
methods, which requires management to make significant estimates and assumptions related to projected revenues, discount rates, market-based multiples,
and other operating performance measures. Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill
impairment charge, if any, or both.
Auditing management’s estimates and assumptions related to projected revenues, discount rate and market multiples for prAna involved especially subjective
judgment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures for management’s estimates and assumptions related to projected revenues, for the prAna Goodwill valuation included the following,
among others:
• We tested the effectiveness of internal controls over the prAna goodwill impairment analysis, including those over the forecast of future revenues, the
selection of the discount rate and market-based multiples.
• We evaluated management’s ability to accurately forecast revenues by comparing actual results to management’s historical forecasts.
• We evaluated the reasonableness of management’s revenue forecasts by comparing the forecasts to:
◦
◦
Historical revenues.
Forecasted information included in Company press releases as well as in analyst and industry reports for the Company and certain of its peer
companies.
•
To evaluate the reasonableness of the discount rate, with the assistance of our fair value specialists, we:
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 35
◦
◦
Developed a range of independent estimates of the discount rate and compared those to the discount rate by comparing to reputable third-party data or
industry information and tested the mathematical accuracy of the calculation.
Tested the inputs and source information underlying the determination of the discount rate by comparing to reputable third-party data or industry
information and tested the mathematical accuracy of the calculation.
• With the assistance of our fair value specialists, we evaluated the reasonableness of the market multiple management applied to the projected revenues as
part of their market-based valuation method through comparison to valuation multiples for guideline public companies.
/s/ DELOITTE & TOUCHE LLP
Portland, Oregon
February 23, 2023
We have served as the Company’s auditor since at least 1994; however, an earlier year could not be reliably determined.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 36
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Columbia Sportswear Company
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Columbia Sportswear Company and subsidiaries (the “Company”) as of December 31, 2022,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 23, 2023, expressed an unqualified
opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Report of Management. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Portland, Oregon
February 23, 2023
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 37
Table of Contents
Notes to Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
(in thousands)
Current Assets:
ASSETS
Cash and cash equivalents
Short-term investments
Accounts receivable, net of allowance of 5,443 and 8,893, respectively
Inventories
Prepaid expenses and other current assets
LIABILITIES AND EQUITY
Total current assets
Property, plant and equipment, net
Operating lease right-of-use assets
Intangible assets, net
Goodwill
Deferred income taxes
Other non-current assets
Total assets
Current Liabilities:
Accounts payable
Accrued liabilities
Operating lease liabilities
Income taxes payable
Total current liabilities
Non-current operating lease liabilities
Income taxes payable
Deferred income taxes
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 12)
Shareholders' Equity:
Preferred stock; 10,000 shares authorized; none issued and outstanding
Common stock (no par value); 250,000 shares authorized; 62,139 and 65,164 issued and outstanding,
respectively
Retained earnings
Accumulated other comprehensive income (loss)
Total shareholders' equity
Total liabilities and shareholders' equity
See accompanying notes to consolidated financial statements.
2022
2021
430,241 $
722
547,561
1,028,545
129,872
2,136,941
291,214
324,409
81,558
51,694
94,162
71,568
3,051,546 $
322,472 $
328,759
68,685
18,802
738,718
310,625
33,251
143
33,020
1,115,757
763,404
131,145
487,803
645,379
86,306
2,114,037
291,088
330,928
101,908
68,594
92,121
68,452
3,067,128
283,349
316,485
67,429
13,127
680,390
317,666
44,541
—
35,279
1,077,876
—
—
12,692
1,953,734
(30,637)
1,935,789
3,051,546 $
—
1,993,628
(4,376)
1,989,252
3,067,128
$
$
$
$
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 38
Table of Contents
Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Impairment of goodwill and intangible assets
Net licensing income
Operating income
Interest income, net
Other non-operating income (expense), net
Income before income tax
Income tax expense
Net income
Earnings per share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
$
$
$
$
2022
Year Ended December 31,
2021
2020
3,464,152 $
1,753,074
1,711,078
1,304,394
35,600
22,020
393,104
2,713
1,593
397,410
(85,970)
311,440 $
4.96 $
4.95 $
62,754
62,970
3,126,402 $
1,513,947
1,612,455
1,180,323
—
18,372
450,504
1,380
(373)
451,511
(97,403)
354,108 $
5.37 $
5.33 $
65,942
66,415
2,501,554
1,277,665
1,223,889
1,081,448
17,500
12,108
137,049
435
2,039
139,523
(31,510)
108,013
1.63
1.62
66,376
66,772
See accompanying notes to consolidated financial statements.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 39
Table of Contents
Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Other comprehensive income (loss):
Change in available-for-sale securities
Change in derivative transactions (net of tax effects of $( 4,358), $(7,138), and $6,271,
respectively)
Foreign currency translation adjustments (net of tax effects of $ 218, $(40), and
$(388), respectively)
Other comprehensive income (loss)
Comprehensive income
2022
Year Ended December 31,
2021
2020
311,440 $
354,108 $
108,013
—
11,876
(38,137)
(26,261)
285,179 $
—
19,283
(24,465)
(5,182)
348,926 $
4
(18,851)
24,078
5,231
113,244
$
$
See accompanying notes to consolidated financial statements.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 40
Table of Contents
Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization, and non-cash lease expense
Provision for uncollectible accounts receivable
Loss on disposal or impairment of investments, property, plant and equipment, right-of-use
assets, goodwill, and intangible assets
Deferred income taxes
Stock-based compensation
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued liabilities
Income taxes payable
Operating lease assets and liabilities
Other liabilities
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Purchases of short-term investments
Sales and maturities of short-term investments
Capital expenditures
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from credit facilities
Repayments on credit facilities
Payment of line of credit issuance fees
Proceeds from issuance of common stock related to stock-based compensation
Tax payments related to stock-based compensation
Repurchase of common stock
Cash dividends paid
Net cash used in financing activities
Net effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes
Supplemental disclosures of non-cash investing and financing activities:
Property, plant and equipment acquired through increase in liabilities
$
$
$
2022
Year Ended December 31,
2021
2020
$
311,440 $
354,108 $
108,013
117,399
(2,044)
38,194
(8,118)
21,021
(64,495)
(399,851)
(25,749)
(2,475)
40,429
20,683
(5,871)
(62,749)
(3,055)
(25,241)
(44,876)
176,083
(58,467)
72,740
52,918
(52,979)
(604)
6,588
(4,229)
(287,443)
(75,082)
(360,831)
(19,831)
(333,163)
763,404
430,241 $
115,571
(10,758)
1,233
(9,798)
19,126
(31,622)
(100,261)
(24,858)
1,231
75,513
66,457
(15,248)
(85,176)
(1,112)
354,406
(130,191)
1,184
(34,744)
(163,751)
38,334
(38,156)
—
28,783
(5,812)
(165,415)
(68,623)
(210,889)
(7,087)
(27,321)
790,725
763,404 $
92,110 $
129,483 $
11,103 $
5,853 $
146,601
19,156
31,342
(11,263)
17,778
22,885
64,884
33,712
(21,224)
(49,275)
(52,115)
9,082
(52,112)
8,613
276,077
(35,044)
36,631
(28,758)
(27,171)
402,422
(403,146)
(3,278)
6,919
(4,533)
(132,889)
(17,195)
(151,700)
7,510
104,716
686,009
790,725
14,687
3,831
See accompanying notes to consolidated financial statements.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 41
Table of Contents
Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF EQUITY
Common Stock
(in thousands, except per share amounts)
Balance, December 31, 2019
Net income
Other comprehensive income (loss)
Cash dividends ($0.26 per share)
Issuance of common stock related to stock-based
Shares
Outstanding
67,561 $
—
—
—
Amount
Retained Earnings
1,848,935
$
108,013
—
(17,195)
4,937 $
—
—
—
compensation, net
Stock-based compensation expense
Repurchase of common stock
Balance, December 31, 2020
Net income
Other comprehensive income (loss)
Cash dividends ($1.04 per share)
Issuance of common stock related to stock-based
compensation, net
Stock-based compensation expense
Repurchase of common stock
Balance, December 31, 2021
Net income
Other comprehensive income (loss)
Cash dividends ($1.20 per share)
Issuance of common stock related to stock-based
compensation, net
Stock-based compensation expense
Repurchase of common stock
Balance, December 31, 2022
248
—
(1,557)
66,252
—
—
—
567
—
(1,655)
65,164
—
—
—
210
—
(3,235)
62,139 $
2,386
17,778
(4,936)
20,165
—
—
—
22,971
19,126
(62,262)
—
—
—
—
2,359
21,021
(10,688)
12,692 $
—
—
(127,953)
1,811,800
354,108
—
(68,623)
—
—
(103,657)
1,993,628
311,440
—
(75,082)
—
—
(276,252)
$
1,953,734
Accumulated Other
Comprehensive Income
(Loss)
Total
(4,425)$
—
5,231
—
—
—
—
806
—
(5,182)
—
—
—
—
(4,376)
—
(26,261)
—
—
—
—
(30,637)$
1,849,447
108,013
5,231
(17,195)
2,386
17,778
(132,889)
1,832,771
354,108
(5,182)
(68,623)
22,971
19,126
(165,919)
1,989,252
311,440
(26,261)
(75,082)
2,359
21,021
(286,940)
1,935,789
See accompanying notes to consolidated financial statements.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 42
Table of Contents
Notes to Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
Note 14
Note 15
Note 16
Note 17
Note 18
Note 19
Basis of Presentation and Organization
Summary of Significant Accounting Policies
Revenues
Concentrations
Property, Plant and Equipment, Net
Intangible Assets, Net and Goodwill
Short-Term Borrowings and Credit Lines
Accrued Liabilities
Leases
Income Taxes
Retirement Savings Plans
Commitments and Contingencies
Shareholders' Equity
Stock-Based Compensation
Earnings Per Share
Accumulated Other Comprehensive Income (Loss)
Segment Information
Financial Instruments and Risk Management
Fair Value Measures
PAGE
44
44
49
50
50
51
52
53
53
55
57
58
58
58
62
63
64
65
68
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 43
Table of Contents
Notes to Consolidated Financial Statements
NOTE 1 — BASIS OF PRESENTATION AND ORGANIZATION
NATURE OF THE BUSINESS
Columbia Sportswear Company connects active people with their passions through its four well-known brands, Columbia, SOREL, Mountain Hardwear, and
prAna, by designing, developing, marketing, and distributing its outdoor, active and lifestyle apparel, footwear, accessories, and equipment products to meet the
diverse needs of its customers and consumers.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Columbia Sportswear Company, its wholly owned subsidiaries and entities in which it
maintained a controlling financial interest (the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation.
RECLASSIFICATIONS
Certain amounts in prior period consolidated financial statements have been reclassified to conform to our current period presentation.
ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from
these estimates and assumptions. The Company's significant estimates relate to sales reserves, allowance for uncollectible accounts receivable, excess, close-
out and slow-moving inventory, impairment of long-lived assets, intangible assets and goodwill, and income taxes.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are stated at fair value or at cost, which approximates fair value, and include short-term highly liquid investments that are both
readily convertible to known amounts of cash and so near their maturity they present insignificant risk of changes in value because of changes in interest rates.
As of December 31, 2022 and December 31, 2021, Cash and cash equivalents consisted of cash and money market funds.
INVESTMENTS
As of December 31, 2022, Short-term investments consisted of money market funds and mutual fund shares held as part of the Company's deferred
compensation plan expected to be distributed in the next twelve months. As of December 31, 2021, Short-term investments consisted of United States
government treasury bills as well as money market funds and mutual fund shares held as part of the Company's deferred compensation plan expected to be
distributed in the next twelve months. The United States government treasury bills are classified as available-for-sale securities and are recorded at fair value
with any unrealized gains or losses reported, net of tax, in Other comprehensive income (loss). Investments held as part of the Company's deferred
compensation plan are classified as trading securities and are recorded at fair value with any unrealized gains and losses included in Selling, general, and
administrative ("SG&A") expenses. Realized gains or losses from these trading securities are determined based on the specific identification method and are
included in SG&A expenses.
As of December 31, 2022 and 2021, long-term investments included in Other non-current assets consisted of money market funds and mutual fund shares held
to offset liabilities to participants in the Company's deferred compensation plan. These investments are classified as long-term because the related deferred
compensation liabilities are not expected to be paid within the next year. These investments are classified as trading securities and are recorded at fair value
with unrealized gains and losses reported as SG&A expenses.
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ACCOUNTS RECEIVABLE
Accounts receivable have been reduced by an allowance for doubtful accounts. The Company maintains an allowance for estimated credit 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-offs of
accounts receivable were $1.0 million and $ 0.2 million for the years ended December 31, 2022 and 2021, respectively.
INVENTORIES
Inventories consist primarily of finished goods and are carried at the lower of cost or net realizable value. Cost is determined using standard cost, which
approximates the first-in, first-out method. The Company periodically reviews its inventories for excess, close-out or slow-moving items and makes provisions
as necessary to properly reflect inventory value.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is provided using the straight-line method over the estimated
useful lives of the assets. The principal estimated useful lives are: land improvements, 15 years; buildings and building improvements, 15-30 years; furniture
and fixtures, 3-10 years; and machinery, software and equipment, 3-10 years. Leasehold improvements are depreciated over the lesser of the estimated useful
life of the improvement, which is most commonly 7 years, or the remaining term of the underlying lease.
Improvements to property, plant and equipment that substantially extend the useful life of the asset are capitalized. Repair and maintenance costs are expensed
as incurred. Internal and external costs directly related to the development of internal-use software during the application development stage, including costs
incurred for third party contractors and employee compensation, are capitalized and depreciated over a 3-10 year estimated useful life.
INTANGIBLE ASSETS AND GOODWILL
Intangible assets with indefinite lives and goodwill are not amortized but are periodically evaluated for impairment. Intangible assets that are determined to have
finite lives are amortized using the straight-line method over their estimated useful lives and are measured for impairment only when events or circumstances
indicate the carrying value may be impaired. Intangible assets with finite lives include patents, purchased technology and customer relationships and have
estimated useful lives which range from approximately 3 to 10 years.
CLOUD COMPUTING ARRANGEMENTS
The Company’s cloud computing arrangements that are service contracts ("CCAs") primarily relate to various enterprise resource planning systems, as well as
other supporting systems. Implementation costs associated with CCAs are capitalized ("CCA assets") when incurred during the application development stage
and generally included in Other non-current assets in the Consolidated Balance Sheets. CCA assets are amortized on a straight-line basis over their assessed
useful lives or the contractual term of the CCA contract, whichever is shorter, with amortization included in the same financial statement line item in the
Consolidated Statement of Operations as the expense for fees in the associated CCA contract. As of December 31, 2022, CCA assets in-service have useful
lives which range from approximately ten months to six years. As of December 31, 2022 and 2021, CCA assets consisted of capitalized implementation costs of
$36.0 million and $ 26.6 million, respectively and associated accumulated amortization of $ 12.6 million and $ 6.8 million, respectively. Changes in these assets
are recorded in Other assets within operating activities in the Consolidated Statements of Cash Flows.
LEASES
The Company leases, among other things, retail space, office space, warehouse facilities, storage space, vehicles, and equipment. Generally, the base lease
terms are between 5 and 10 years. Certain lease agreements contain scheduled rent escalation clauses and others include rental payments adjusted
periodically depending on an index or rate. Certain retail space lease agreements provide for additional rents based on a percentage of annual sales in excess
of stipulated minimums ("percentage rent"). Certain lease agreements require the Company to pay real estate taxes, insurance, common area maintenance,
and other costs, collectively referred to as operating costs, in addition to base rent.
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Certain lease agreements also contain lease incentives, such as tenant improvement allowances and rent holidays. Most leases include one or more options to
renew, with renewal terms that can extend the lease term from one to 10 years or more. The exercise of lease renewal options is generally at the Company's
sole discretion. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right-of-use ("ROU") asset and a lease
liability at the lease commencement date. The lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement
date. Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value,
(2) the lease term and (3) lease payments.
Unpaid lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental
borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor's estimated
residual value or the amount of the lessor's deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount
rate for the lease. The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an
amount equal to the lease payments under similar terms. Because the Company does not generally borrow on a collateralized basis, it uses market-based rates
as an input to derive an appropriate incremental borrowing rate, adjusted for the lease term and the effect on that rate of designating specific collateral with a
value equal to the unpaid lease payments for that lease. The Company also contemplates adjusting the discount rate for the amount of the lease payments.
The Company's lease contracts may include options to extend the lease following the initial term or terminate the lease prior to the end of the initial term. In
most instances, at the commencement of the leases, the Company has determined that it is not reasonably certain to exercise either of these options;
accordingly, these options are generally not considered in determining the initial lease term. At the renewal of an expiring lease, the Company reassesses
options in the contract that it is reasonably certain to exercise in its measurement of lease term.
For lease agreements entered into or reassessed after the adoption of Accounting Standards Codification ("ASC") 842, the Company has elected the practical
expedient to account for the lease and non-lease components as a single lease component. Therefore, for those leases, the lease payments used to measure
the lease liability include all of the fixed consideration in the contract.
Variable lease payments associated with the Company's leases are recognized upon occurrence of the event, activity, or circumstance in the lease agreement
on which those payments are assessed. Variable lease payments are presented in the Company's Consolidated Statements of Operations in the same line item
as expense arising from fixed lease payments.
Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-
line basis over the lease term.
For lease concessions related to the effects of the COVID-19 pandemic that provide a deferral of payments with no substantive changes to the consideration in
the original contract, the Company continues to recognize expense during the deferral period. For concessions related to the effects of the COVID-19 pandemic
in the form of lease abatements, the reduced lease payments are accounted for as reductions to variable lease expense.
IMPAIRMENT OF LONG-LIVED ASSETS, INTANGIBLE ASSETS AND GOODWILL
Long-lived assets, which include property, plant and equipment, lease ROU assets, capitalized implementation costs for cloud computing arrangements, and
intangible assets with finite lives, are tested for recoverability only when events or circumstances indicate the carrying value may not be recoverable. In these
cases, the Company estimates the future undiscounted cash flows to be derived from the asset or asset group to determine whether a potential impairment
exists. If the sum of the estimated undiscounted cash flows is less than the carrying value of the asset or asset group, the Company recognizes an impairment
loss, measured as the amount by which the carrying value exceeds the estimate of fair value.
The Company reviews and tests its intangible assets with indefinite lives and goodwill for impairment in the fourth quarter of each year and when events or
changes in circumstances indicate that it is more likely than not that the fair value of the asset or reporting unit is less than its carrying amount. The Company's
intangible assets with indefinite lives consist of trademarks and trade names. In the impairment test for goodwill, the estimated fair value of the reporting unit is
compared with the carrying amount of that reporting unit. In the impairment tests for trademarks and trade names, the Company compares the estimated fair
value of each asset to its carrying amount. For goodwill and trademarks and trade names, if the carrying amount exceeds its estimated fair value, the Company
calculates an impairment as the excess of carrying amount over the estimate of fair value.
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Impairment charges of long-lived assets, if any, are classified as SG&A expenses. Impairment charges of goodwill and indefinite-lived intangible assets, if any,
are classified as Impairment of goodwill and intangible assets in the Consolidated Statements of Operations.
INCOME TAXES
Income taxes are based on amounts of taxes payable or refundable in the current year and on expected future tax consequences of events that are recognized
in the financial statements in different periods than they are recognized in tax returns. As a result of timing of recognition and measurement differences between
financial accounting standards and income tax laws, temporary differences arise between amounts of pre-tax financial statement income and taxable income
and between reported amounts of assets and liabilities in the Consolidated Balance Sheets and their respective tax bases. Deferred income tax assets and
liabilities reported in the Consolidated Balance Sheets reflect estimated future tax effects attributable to these temporary differences and to net operating loss
and net capital loss carryforwards, based on tax rates expected to be in effect for years in which the differences are expected to be settled or realized.
Realization of deferred tax assets is dependent on future taxable income in specific jurisdictions. Valuation allowances are used to reduce deferred tax assets to
amounts considered likely to be realized.
Accrued income taxes in the Consolidated Balance Sheets include unrecognized income tax benefits relating to uncertain tax positions, including related
interest and penalties, appropriately classified as current or non-current. The Company recognizes the tax benefit from an uncertain tax position if it is more
likely than not that the tax position will be sustained on examination by the relevant taxing authority based on the technical merits of the position. The tax
benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement with the relevant tax authority. In making this determination, the Company assumes that the taxing authority will
examine the position and that it will have full knowledge of all relevant information. Changes in the Company's assessment may result in the recognition of a tax
benefit or an additional charge to the tax provision in the period the assessment changes.
DERIVATIVES
The effective portion of changes in fair values of outstanding cash flow hedges is recorded in Accumulated other comprehensive income (loss) until earnings are
affected by the hedged transaction, and any ineffective portion is included in earnings. In most cases, amounts recorded in Accumulated other comprehensive
income (loss) will be released to earnings after maturity of the related derivative. The Consolidated Statements of Operations classification of effective hedge
results is the same as that of the underlying exposure. Results of hedges of product costs are recorded in Cost of sales when the underlying hedged
transactions affect earnings. Results of hedges of revenue are recorded in Net sales when the underlying hedged transactions affect earnings. Unrealized
derivative gains and losses, which are recorded in assets and liabilities, respectively, are non-cash items and therefore are taken into account in the preparation
of the Consolidated Statements of Cash Flows based on their respective balance sheet classifications.
FOREIGN CURRENCY TRANSLATION
For the Company's subsidiaries whose functional currency is not the United States dollar, assets and liabilities have been translated into United States dollars
using the exchange rates in effect at period end, and the sales and expenses have been translated into United States dollars using average exchange rates in
effect during the period. The foreign currency translation adjustments are included as a component of Accumulated other comprehensive income (loss) in the
Consolidated Balance Sheets.
REVENUE RECOGNITION
Revenues are recognized when the Company's performance obligations are satisfied as evidenced by transfer of control of promised goods to customers or
consumers, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Within the
Company's wholesale channel, control generally transfers to the customer upon shipment to, or upon receipt by, the customer depending on the terms of sale
with the customer. Within the Company's direct-to-consumer ("DTC") channel, control generally transfers to the consumer at the time of sale within retail stores
and concession-based arrangements and generally upon shipment to the consumer with respect to e-commerce transactions.
The amount of consideration the Company expects to be entitled to receive and recognize as Net sales across both wholesale and DTC channels varies with
changes in sales returns, other accommodations and incentives offered. The Company estimates expected sales returns and other accommodations, such as
chargebacks and markdowns, and records a sales reserve to reduce Net sales. These estimates are based on historical rates of product returns and claims, as
well as events and circumstances that indicate changes to such historical rates. However, actual returns and claims in any future period are inherently uncertain
and thus may differ from estimates. As a result, the
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Company adjusts estimates of revenue at the earlier of when the most likely amount of consideration the Company expects to receive changes or when the
amount of consideration becomes fixed. If actual or expected future returns and claims are significantly greater or lower than the sales reserves established, the
Company records an adjustment to Net sales in the period in which it made such determination.
Licensing income, which is presented separately as Net licensing income on the Consolidated Statements of Operations and represents less than 1% of total
revenue, is recognized over time based on the greater of contractual minimum royalty guarantees and actual, or estimated, sales of licensed products by the
Company's licensees.
The Company expenses sales commissions when incurred, which is generally at the time of sale, because the amortization period would have been one year or
less. These costs are recorded within SG&A expenses.
Revenue recognized from contracts with customers is recorded net of sales taxes, value added taxes, or similar taxes that are collected on behalf of local taxing
authorities.
Shipping and Handling Costs
The Company treats shipping and handling activities as fulfillment costs, and as such recognizes the costs for these activities at the time the related revenue is
recognized. The majority of these costs, typically associated with warehousing and handling of inventory, are generally recorded as SG&A expenses, while the
direct costs associated with shipping goods to customers and consumers are recorded as Cost of sales. Shipping and handling fees billed to customers are
recorded as Net sales. Shipping and handling costs recorded as a component of SG&A expenses were $155.8 million, $114.4 million and $ 98.0 million for the
years ended December 31, 2022, 2021 and 2020, respectively.
COST OF SALES
Cost of sales consists of all direct product costs, including shipping, duties and importation costs, as well as specific provisions for excess, close-out or slow-
moving inventory. In addition, certain products carry life-time or limited warranty provisions for defects in quality and workmanship. Cost of sales includes a
warranty reserve established for these provisions at the time of sale to cover estimated costs based on the Company's history of warranty repairs and
replacements.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
SG&A expenses consists of personnel-related costs, advertising, depreciation and amortization, occupancy, and other selling and general operating expenses
related to the Company's business functions.
STOCK-BASED COMPENSATION
Stock-based compensation cost is estimated at the grant date based on the award's fair value. For stock options and service-based restricted stock units, stock-
based compensation cost is recognized over the expected requisite service period using the straight-line attribution method. For performance-based restricted
stock units, stock-based compensation cost is recognized based on the Company's assessment of the probability of achieving performance targets in the
reporting period. The Company estimates forfeitures for stock-based awards granted, but which are not expected to vest.
ADVERTISING COSTS
Advertising costs, including marketing and demand creation spending, are expensed in the period incurred and are included in SG&A expenses. Total
advertising expense, including cooperative advertising costs, was $205.9 million, $184.8 million and $ 141.3 million for the years ended December 31, 2022,
2021 and 2020, respectively. Cooperative advertising costs are expensed when the related revenues are recognized and included in SG&A expenses.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
The Company adopted ASU No. 2021-10 (“ASU 2021-10”), Government Assistance (Topic 832): Disclosures by Business Entities about Government
Assistance, effective January 1, 2022, using the prospective method of adoption. ASU 2021-10 increases transparency of government assistance received by a
business entity by requiring annual disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on
an entity’s financial statements. ASU 2021-10 was effective for annual periods beginning after December 15, 2021. At adoption, there was not a material impact
to the Company's consolidated financial statements.
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Notes to Consolidated Financial Statements
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
None.
NOTE 3 — REVENUES
DISAGGREGATED REVENUE
As disclosed below in Note 17, 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 channel, which the Company believes provides a
meaningful depiction of how the nature, timing, and uncertainty of Net sales are affected by economic factors:
(in thousands)
Product category net sales
Apparel, Accessories and Equipment
Footwear
Total
Channel net sales
Wholesale
Direct-to-consumer
Total
(in thousands)
Product category net sales
Apparel, Accessories and Equipment
Footwear
Total
Channel net sales
Wholesale
Direct-to-consumer
Total
Year Ended December 31, 2022
U.S.
LAAP
EMEA
Canada
Total
1,829,389 $
472,857
2,302,246 $
1,114,337 $
1,187,909
2,302,246 $
354,000 $
119,866
473,866 $
225,932 $
247,934
473,866 $
303,731 $
134,823
438,554 $
364,598 $
73,956
438,554 $
173,911 $
75,575
249,486 $
162,773 $
86,713
249,486 $
2,661,031
803,121
3,464,152
1,867,640
1,596,512
3,464,152
Year Ended December 31, 2021
U.S.
LAAP
EMEA
Canada
Total
1,624,542 $
435,758
2,060,300 $
983,799 $
1,076,501
2,060,300 $
347,071 $
118,428
465,499 $
215,448 $
250,051
465,499 $
263,432 $
118,628
382,060 $
317,104 $
64,956
382,060 $
154,109 $
64,434
218,543 $
144,008 $
74,535
218,543 $
2,389,154
737,248
3,126,402
1,660,359
1,466,043
3,126,402
$
$
$
$
$
$
$
$
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Notes to Consolidated Financial Statements
(in thousands)
Product category net sales
Apparel, Accessories and Equipment
Footwear
Total
Channel net sales
Wholesale
Direct-to-consumer
Total
PERFORMANCE OBLIGATIONS
Year Ended December 31, 2020
U.S.
LAAP
EMEA
Canada
Total
1,231,835
371,948
1,603,783 $
838,388
765,395
1,603,783 $
$
$
320,616
103,873
424,489 $
198,083
226,406
424,489 $
197,052
101,855
298,907 $
249,161
49,746
298,907 $
118,116 $
56,259
174,375 $
117,628 $
56,747
174,375 $
1,867,619
633,935
2,501,554
1,403,260
1,098,294
2,501,554
For the years December 31, 2022 and 2021, 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 December 31, 2022 and 2021, the Company did not have contract assets and had an immaterial amount of contract liabilities included in Accrued
liabilities on the Consolidated Balance Sheets.
NOTE 4 — CONCENTRATIONS
TRADE RECEIVABLES
The Company had one customer that accounted for approximately 13.8% and 14.3% of Accounts receivable, net as of December 31, 2022 and 2021,
respectively. No single customer accounted for 10% or more of Net sales for any of the years ended December 31, 2022, 2021 or 2020.
NOTE 5 — PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following:
(in thousands)
Land and improvements
Buildings and improvements
Machinery, software and equipment
Furniture and fixtures
Leasehold improvements
Construction in progress
Less accumulated depreciation
December 31,
2022
2021
$
$
32,964 $
211,495
386,657
104,190
162,210
17,609
915,125
(623,911)
291,214 $
33,107
209,792
382,337
99,946
155,872
12,694
893,748
(602,660)
291,088
Depreciation expense for Property, plant and equipment, net was $53.1 million, $54.2 million, and $60.9 million for the years ended December 31, 2022, 2021
and 2020, respectively.
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Impairment charges for Property, plant and equipment, net are inclu ded in SG&A expenses and were $0.8 million, $0.5 million, and $5.0 million for the years
ended December 31, 2022, 2021 and 2020, respectively. Charges during the years ended December 31, 2022, 2021 and 2020 were recorded primarily for
certain underperforming retail stores in the U.S., EMEA and LAAP regions.
NOTE 6 — INTANGIBLE ASSETS, NET AND GOODWILL
INTANGIBLE ASSETS, NET
Intangible assets, net consisted of the following:
(in thousands)
Intangible assets with definite lives:
Patents and purchased technology
Customer relationships
Gross carrying amount
Accumulated amortization:
Patents and purchased technology
Customer relationships
Accumulated amortization
Net carrying amount
Intangible assets with indefinite lives
Intangible assets, net
December 31,
2022
2021
14,198 $
23,000
37,198
(14,198)
(20,663)
(34,861)
2,337
79,221
81,558 $
14,198
23,000
37,198
(14,198)
(19,013)
(33,211)
3,987
97,921
101,908
$
$
Amortization expense for intangible assets subject to amortization was $ 1.7 million, $1.7 million and $ 2.5 million for the years ended December 31, 2022, 2021
and 2020 respectively.
For the year ended December 31, 2022, an im pairment charge of $ 18.7 million was recorded for the impairment of prAna's trademar k and trade name
(collectively, "trademark"), which is an indefinite-lived intangible asset recorded in the U.S. segment. The impairment of the prAna trademark was determined as
part of the annual impairment test. The decline in estimated fair value from the fourth quarter 2021 impairment test reflects a decline in forecasted revenue, a
lower estimated royalty rate, and a slightly higher discount rate. For the year ended December 31, 2021, there were no impairments recorded for intangible
assets with indefinite lives. For the year ended December 31, 2020, an impairment charge of $17.5 million was recorded for the impairment of prAna's
trademark. The impairment of the prAna trademark was determined as part of the annual impairment test. The decline in estim ated fair value from the fourth
quarter 2020 impairment test compared to the fourth quarter 2019 impairment test reflected a lower estimated royalty rate and a decline in forecasted revenues.
The Company estimated fair value using a relief from royalty method under the income approach. Cash flow projections were developed in part from the
Company's annual planning process. The discount rate was the equity component of the estimated weighted average cost of capital of the reporting unit from a
market-participant perspective.
The following table presents the remaining estimated annual amortization expense of intangible assets with definite lives for the years 2023 through 2027:
(in thousands)
2023
2024
2025
2026
2027
1,650
687
—
—
—
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Notes to Consolidated Financial Statements
GOODWILL
The following table sets forth the changes in Goodwill.:
(in thousands)
Balance as of December 31, 2020
Gross
Accumulated impairment loss
Carrying value
Balance as of December 31, 2021
Gross
Accumulated impairment loss
Carrying value
Impairment losses during the year
Balance as of December 31, 2022
Gross
Accumulated impairment loss
Carrying value
$
$
73,208
(4,614)
68,594
73,208
(4,614)
68,594
(16,900)
73,208
(21,514)
51,694
Substantially all of the Company's goodwill is recorded in the U.S. segment. For the y ear ended December 31, 2022, an impairment charge of $ 16.9 million was
recorded. The impairment of goodwill attributable to the prAna business was determined as part of the annual impairment test. The Company estimated the fair
value of the prAna reporting unit using a combination of discounted cash flow analysis and market-based valuation methods. Key assumptions used in the
discounted cash flow models are cash flow projections and the discount rate. Cash flow projections are developed in part from our annual planning process.
The discount rate is the estimated weighted-average costs of capital of the reporting unit from a market-participant perspective. The market-based valuation
methods to estimate fair value of the reporting units utilized market multiples for guideline public companies. The decline in estimated fair value from the fourth-
quarter 2021 impairment test reflects lower assumed revenue and operating income levels, while the weighted-average cost of capital used in the discounted
cash flow model remained relatively unchanged. The Company determined that goodwill was not impaired for the years ended December 31, 2021 and 2020.
NOTE 7 — SHORT-TERM BORROWINGS AND CREDIT LINES
DOMESTIC CREDIT FACILITY
The Company has an unsecured, committed revolving credit facility (the “Credit Facility”) that provides for up to $ 500.0 million of borrowings, which is available
for working capital and general corporate purposes, including a sublimit for the issuance of letters of credit. The Credit Facility matures on July 12, 2027.
Interest, generally payable monthly, is based on the Company's option of either the secured overnight financing rate (“SOFR”) plus an applicable margin or a
base rate. Base rate is defined as the highest of the following, plus an applicable margin:
• the administrative agent's prime rate;
• the higher of the federal funds rate or overnight bank funding rate set by the Federal Reserve Bank of New York, plus 0.50%; or
• the one-month SOFR plus 1.00%.
The applicable margin for SOFR loans will range from 1.00% to 1.50% based on the Company’s funded debt ratio. The applicable margin for base rate loans
will range from 0.00% to 0.50% based on the Company’s funded debt ratio. A commitment fee ranging from 0.10% to 0.20% based on the Company's funded
debt ratio is paid quarterly on the average daily unused commitment amount of the Credit Facility.
The agreement for the Credit Facility requires the Company to comply with a financial covenant to maintain a certain funded debt ratio. In addition, the
agreement includes customary covenants that, among other things, limit or restrict the ability of the Company and its subsidiaries to incur additional
indebtedness and liens, engage in mergers, acquisitions and dispositions, and engage in transactions with
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affiliates, as well as restrict the amount of certain payments, including dividends and share buybacks in the event the Company's funded debt ratio is greater
than a set amount.
As of December 31, 2022, the Company was in compliance with all associated covenants and there was no balance outstanding under the Credit Facility. As of
December 31, 2021 there was no balance outstanding under the credit agreement in effect for such period.
INTERNATIONAL CREDIT FACILITIES
The Company's European subsidiary has available an unsecured, committed line of credit, which is guaranteed by the Company, and provides for borrowing up
to a maximum of €4.4 million (approximately US$4.7 million) as of December 31, 2022, with borrowings to accrue interest at a base rate plus 75 basis points.
As of December 31, 2022 and 2021 there was no balance outstanding.
NOTE 8 — ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
(in thousands)
Sales reserves
Accrued salaries, bonus, paid time off and other benefits
Accrued import duties
Taxes other than income taxes payable
Product warranties
Other
A reconciliation of product warranties is as follows:
(in thousands)
Balance at beginning of year
Provision for warranty claims
Warranty claims
Other
Balance at end of year
NOTE 9 — LEASES
The components of lease cost consisted of the following:
(in thousands)
Operating lease cost
Variable lease cost
Short term lease cost
December 31,
2022
2021
$
$
115,366 $
99,524
30,847
23,262
13,810
45,950
328,759 $
98,998
121,074
17,272
27,930
13,645
37,566
316,485
2022
Year Ended December 31,
2021
2020
13,645 $
3,627
(3,163)
(299)
13,810 $
14,745 $
2,179
(2,917)
(362)
13,645 $
14,466
3,033
(3,128)
374
14,745
2022
Year Ended December 31,
2021
2020
76,650 $
63,537
5,775
145,962 $
71,996 $
67,745
5,612
145,353 $
104,906
58,391
9,600
172,897
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 53
$
$
$
$
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Notes to Consolidated Financial Statements
For the year ended December 31, 2022, operating lease costs included $0.8 million of ROU asset impairment charges related to underperforming retail
locations, as well as a gain of $4.8 million from the completion of lease termination negotiations and settlements related to certain retail store closures in 2020
and 2022, primarily in the U.S. segment. For the year ended December 31, 2021, operating lease costs included $0.5 million of ROU asset impairment charges
related to underperforming retail locations primarily in the EMEA. segment, as well as a gain of $8.6 million from the completion of lease termination
negotiations and settlements related to certain 2020 retail store closures, primarily in the U.S. segment. For the year ended December 31, 2020, operating
lease cost included $16.5 million of accelerated amortization for retail locations that permanently closed during 2020 for which the related lease liabilities had
not been extinguished as of December 31, 2020 due to ongoing negotiations with the landlords. In addition, for the year ended December 31, 2020, operating
lease cost included $7.0 million of ROU asset impairment charges related to underperforming retail locations primarily in the U.S. segment for the year ended
December 31, 2020.
In the periods presented, lease concessions reducing variable lease expense were not material.
The following table presents supplemental cash flow information related to leases:
(in thousands)
Cash paid for amounts included in the measurement of operating lease liabilities
Operating lease liabilities arising from obtaining ROU assets
Reductions to ROU assets resulting from reductions to operating lease liabilities
(1)
2022
Year Ended December 31,
2021
2020
$
$
$
81,130 $
51,976 $
52 $
83,827 $
53,168 $
118 $
82,083
22,416
6,400
(1)
Includes amounts added to the carrying amount of lease liabilities resulting from lease modifications and reassessments.
The following table presents supplemental balance sheet information related to leases:
Weighted average remaining lease term
Weighted average discount rate
The following table presents the future maturities of lease liabilities as of December 31, 2022:
(in thousands)
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: imputed interest
Total lease liabilities
Less: current obligations
Long-term lease obligations
December 31,
2022
2021
6.02 years
4.21 %
5.72 years
3.25 %
$
$
79,832
73,958
64,814
57,184
48,000
100,685
424,473
(45,163)
379,310
(68,685)
310,625
As of December 31, 2022, the Company has additional operating lease commitments that have not yet commenced of $ 1.5 million. These leases will
commence in 2023 with lease terms of approximately three to six years.
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Notes to Consolidated Financial Statements
NOTE 10 — INCOME TAXES
INCOME TAX PROVISION
Consolidated income from operations before income taxes consisted of the following:
(in thousands)
United States operations
Foreign operations
Income before income tax
The components of the provision for income taxes consisted of the following:
(in thousands)
Current:
Federal
State and local
Non-United States
Deferred:
Federal
State and local
Non-United States
Income tax expense
$
$
$
$
Year Ended December 31,
2022
2021
2020
243,695 $
153,715
397,410 $
318,306 $
133,205
451,511 $
29,154
110,369
139,523
Year Ended December 31,
2022
2021
2020
52,503 $
11,191
25,615
89,309
(13,248)
(710)
10,619
(3,339)
85,970 $
51,790 $
14,429
33,825
100,044
(3,042)
(266)
667
(2,641)
97,403 $
18,435
4,929
26,897
50,261
(14,728)
(5,097)
1,074
(18,751)
31,510
21.0 %
1.5
2.1
(0.9)
(1.2)
0.1
(1.4)
0.5
(0.8)
1.7
22.6 %
The following is a reconciliation of the statutory federal income tax rate to the effective rate reported in the financial statements:
(percent of income before tax)
Provision for federal income taxes at the statutory rate
State and local income taxes, net of federal benefit
Non-United States income taxed at different rates
Foreign tax credits
Adjustment to deferred taxes
Global Intangible Low-Taxed Income
Research credits
Withholding taxes
Excess tax benefits from stock plans
Other
Actual provision for income taxes
2022
Year Ended December 31,
2021
2020
21.0 %
1.6
(0.4)
—
0.1
0.1
(0.4)
0.2
—
(0.6)
21.6 %
21.0 %
2.5
2.7
(2.4)
—
0.1
(0.4)
(1.4)
(0.9)
0.4
21.6 %
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 55
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Notes to Consolidated Financial Statements
DEFERRED INCOME TAX BALANCES
Significant components of the Company's deferred taxes consisted of the following:
(in thousands)
Deferred tax assets:
Accruals and allowances
Lease liability
Capitalized inventory costs
Sales reserves
Stock compensation
Net operating loss carryforwards
Depreciation and amortization
Tax credits
Other
Gross deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Depreciation and amortization
Prepaid expenses
ROU lease asset
Deferred tax liability associated with future repatriations
Foreign currency
Gross deferred tax liabilities
Total net deferred taxes
December 31,
2022
2021
$
31,957 $
89,742
26,147
16,897
7,659
18,778
15,463
2,751
10,902
220,296
(19,649)
200,647
(5,844)
(2,892)
(78,274)
(11,267)
(8,351)
(106,628)
$
94,019 $
40,518
81,012
23,950
13,881
6,329
22,767
22,076
387
2,164
213,084
(22,502)
190,582
(10,414)
(3,447)
(68,148)
(13,069)
(3,383)
(98,461)
92,121
The Company had foreign net operating loss carryforwards of $ 64.3 million as of December 31, 2022, all of which has an unlimited carryforward period. As of
December 31, 2022 and 2021, the net operating losses result in deferred tax assets of $18.8 million and $ 22.8 million, respectively, and were subject to a
valuation allowance of $18.8 million and $ 20.2 million, respectively.
As of December 31, 2022, the Company had accumulated undistributed earnings generated by the Company's foreign subsidiaries of $ 422.9 million. As a result
of the Tax Cuts and Jobs Act, these earnings have been subject to U.S. tax, so any further taxes associated with such earnings would generally be limited to
foreign withholding and state taxes. The Company has recorded a deferred tax liability for these, except in the jurisdictions where the Company intends to
indefinitely reinvest the earnings.
UNRECOGNIZED TAX BENEFITS
The Company conducts business globally and, as a result, the Company or one or more of its subsidiaries file income tax returns in the United States federal
jurisdiction and various state and foreign jurisdictions. The Company is subject to examination by taxing authorities throughout the world, including such major
jurisdictions as Canada, China, France, Japan, South Korea, Switzerland, and the United States. The Company has effectively settled Canadian tax
examinations of all years through 2012, United States tax examinations of all years through 2018, Japanese tax examinations of all years through 2019, France
tax examinations of all years through 2016, Swiss tax examinations of all years through 2019, Italy tax examinations of all years through 2016, and China tax
examinations of all years through 2018. The Korean National Tax Service concluded an audit of the Company's 2009 through 2013 corporate income tax returns
in 2014, an audit of the Company's 2014 corporate income tax return in 2016, and an audit of 2016 through 2020 corporate income tax returns in 2022. Due to
the nature of the findings in the 2009 through 2014 audits, the Company has invoked the Mutual Agreement Procedures outlined in the United States-Korean
income tax treaty. The Company does not anticipate that adjustments relative to these findings, or any other ongoing tax audits, will result in material changes
to its financial condition, results of operations or cash flows. As of December 31, 2022, the
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Notes to Consolidated Financial Statements
Company was under audit in Canada for tax year 2018. Other than the findings and audits previously noted, the Company is not currently under examination in
any other major jurisdiction.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
(in thousands)
Balance at beginning of year
Increases related to prior year tax positions
Decreases related to prior year tax positions
Increases related to current year tax positions
Expiration of statute of limitations
Balance at end of year
Year Ended December 31,
2022
2021
2020
$
$
13,855 $
234
(1,646)
1,355
(3,621)
10,177 $
14,493 $
355
(1,447)
883
(429)
13,855 $
12,478
1,903
(162)
906
(632)
14,493
Due to the potential for resolution of income tax audits currently in progress, and the expiration of various statutes of limitation, it is reasonably possible that the
unrecognized tax benefits balance may change within the twelve months following December 31, 2022 by a range of zero to $2.4 million. Open tax years,
including those previously mentioned, contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the
amount, timing, or inclusion of revenue and expenses or the sustainability of income tax credits for a given examination cycle.
Unrecognized tax benefits of $9.2 million, $12.9 million and $ 13.6 million would affect the effective tax rate if recognized as of December 31, 2022, 2021 and
2020, respectively.
The Company recognizes interest expense and penalties related to income tax matters in Income tax expense. The Company recognized a net decrease of
accrued interest and penalties of $0.8 million in 2022, and a net increase of accrued interest and penalties of $ 0.3 million in 2021 and a net increase of accrued
interest and penalties of $0.8 million in 2020, all of which related to uncertain tax positions. The Company had $ 1.8 million and $ 2.6 million of accrued interest
and penalties related to uncertain tax positions as of December 31, 2022 and 2021, respectively.
NOTE 11 — RETIREMENT SAVINGS PLANS
401(K) PROFIT-SHARING PLAN
The Company has a 401(k) profit-sharing plan, which covers substantially all United States employees. Participation begins the first day of the quarter following
completion of 30 days of service. The Company, with approval of the Board of Directors, may elect to make discretionary matching or non-matching
contributions. Costs recognized for Company contributions to the plan were $13.3 million, $10.7 million and $ 10.1 million for the years ended December 31,
2022, 2021 and 2020, respectively.
DEFERRED COMPENSATION PLAN
The Company sponsors a nonqualified retirement savings plan for certain senior management employees whose contributions to the tax qualified 401(k) plan
would be limited by provisions of the Internal Revenue Code. This plan allows participants to defer receipt of a portion of their salary and incentive compensation
and to receive matching contributions for a portion of the deferred amounts. Costs recognized for Company matching contributions to the plan were immaterial
for the years ended December 31, 2022, 2021 and 2020. Participants earn a return on their deferred compensation based on investment earnings of participant-
selected investments. Deferred compensation, including accumulated earnings on the participant-directed investment selections, is distributable in cash at
participant-specified dates or upon retirement, death, disability, or termination of employment.
The Company has purchased specific money market and mutual funds in the same amounts as the participant-directed investment selections underlying the
deferred compensation liabilities. These investment securities and earnings thereon, held in an irrevocable trust, are intended to provide a source of funds to
meet the deferred compensation obligations, subject to claims of creditors in the event of the Company's insolvency. Changes in the market value of the
participants' investment selections are recorded as an adjustment to the investments and as
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Notes to Consolidated Financial Statements
unrealized gains and losses in SG&A expenses. A corresponding adjustment of an equal amount is made to the deferred compensation liabilities and
compensation expense, which is included in SG&A expenses.
As of December 31, 2022 and 2021 , the long-term portion of the liability to participants under this plan was $20.5 million and $ 21.8 million, respectively, and was
recorded in Other long-term liabilities. As of December 31, 2022 and 2021, the current portion of the participant liability was $ 0.7 million and $ 1.0 million,
respectively, and was recorded in Accrued liabilities. As of December 31, 2022 and 2021, the fair value of the long-term portion of the investments related to
this plan was $20.5 million and $ 21.8 million, respectively, and was recorded in Other non-current assets. As of December 31, 2022 and 2021, the current
portion of the investments related to this plan was $0.7 million and $1.0 million, respectively, and was recorded in Short-term investments.
NOTE 12 — COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is involved in litigation and various legal matters arising in the normal course of business, including matters related to employment, retail,
intellectual property, contractual agreements, and various regulatory compliance activities. Management has considered facts related to legal and regulatory
matters and opinions of counsel handling these matters, and does not believe the ultimate resolution of these proceedings will have a material adverse effect on
the Company's financial position, results of operations or cash flows.
INDEMNITIES AND GUARANTEES
During its normal course of business, the Company has made certain indemnities, commitments and guarantees under which it may be required to make
payments in relation to certain transactions. These include (i) intellectual property indemnities to the Company's customers and licensees in connection with the
use, sale or license of Company products, (ii) indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease,
(iii) indemnities to customers, vendors and service providers pertaining to claims based on the negligence or willful misconduct of the Company, (iv) executive
severance arrangements, and (v) indemnities involving the accuracy of representations and warranties in certain contracts. The duration of these indemnities,
commitments and guarantees varies, and in certain cases, may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for
any limitation of the maximum potential for future payments the Company could be obligated to make. The Company has not recorded any liability for these
indemnities, commitments and guarantees in the accompanying Consolidated Balance Sheets.
NOTE 13 — SHAREHOLDERS' EQUITY
Since the inception of the Company's stock repurchase plan in 2004 through December 31, 2022, the Company's Board of Directors has authorized the
repurchase of $2.0 billion of the Company's common stock. Shares of the Company's common stock may be purchased in the open market or through privately
negotiated transactions, subject to market conditions, and generally settle subsequent to the trade date. The repurchase program does not obligate the
Company to acquire any specific number of shares or to acquire shares over any specified period of time.
Under this program as of December 31, 2022, the Company had repurchased 31.7 million shares at an aggregate purchase price of $ 1,470.6 million and had
$529.4 million remaining available. During the year ended December 31, 2022, the Company repurchased an aggregate of $ 286.9 million of common stock
under this program.
NOTE 14 — STOCK-BASED COMPENSATION
At its Annual Meeting held on June 3, 2020, the Company’s shareholders approved the Company’s 2020 Stock Incentive Plan (the “2020 Plan”), and the 2020
Plan became effective on that date following such approval. The 2020 Plan replaced the Company’s 1997 Stock Incentive Plan (the "Prior Plan”) and no new
awards will be granted under the Prior Plan. The terms and conditions of the awards granted under the Prior Plan will remain in effect with respect to awards
granted under the Prior Plan. The Company has reserved 3.0 million shares of common stock for issuance under the 2020 Plan, plus up to an aggregate of 1.5
million shares of the Company's common stock that were previously authorized and available for issuance under the Prior Plan. As of December 31, 2022,
3,094,028 shares were available for future grants under the 2020 Plan.
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Notes to Consolidated Financial Statements
The Company's Stock Incentive Plan allows for grants of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, and
other stock-based or cash-based awards. The Company uses original issuance shares to satisfy share-based payments.
STOCK-BASED COMPENSATION EXPENSE
Stock-based compensation expense consisted of the following:
(in thousands)
Cost of sales
SG&A expenses
Pre-tax stock-based compensation expense
Income tax benefits
Total stock-based compensation expense, net of tax
2022
Year Ended December 31,
2021
2020
$
$
312 $
20,709
21,021
(4,867)
16,154 $
313 $
18,813
19,126
(4,465)
14,661 $
303
17,475
17,778
(4,015)
13,763
The Company realized a tax benefit for the deduction from stock-based award transactions of $ 3.6 million, $8.3 million and $ 4.1 million for the years ended
December 31, 2022, 2021 and 2020, respectively.
STOCK OPTIONS
Options to purchase the Company's common stock are granted at exercise prices equal to or greater than the fair market value of the Company's common stock
on the date of grant. Options generally vest and become exercisable ratably on an annual basis over a period of four years and expire ten years from the date of
the grant.
The fair value of stock options is determined using the Black-Scholes model. Key inputs and assumptions used in the model include the exercise price of the
award, the expected option term, the expected stock price volatility of the Company's stock over the option's expected term, the risk-free interest rate over the
option's expected term, and the Company's expected annual dividend yield. The option's expected term is derived from historical option exercise behavior and
the option's terms and conditions, which the Company believes provide a reasonable basis for estimating an expected term. The expected volatility is estimated
based on observations of the Company's historical volatility over the most recent term commensurate with the expected term. The risk-free interest rate is
based on the United States Treasury yield approximating the expected term. The dividend yield is based on the expected cash dividend payouts.
The weighted average assumptions for stock options granted and resulting fair value is as follows:
Expected option term
Expected stock price volatility
Risk-free interest rate
Expected annual dividend yield
Weighted average grant date fair value per stock option granted
2022
4.36 years
25.38%
1.72%
1.26%
$18.33
Year Ended December 31,
2021
4.35 years
24.88%
0.54%
1.09%
$17.95
2020
4.39 years
21.19%
1.14%
1.13%
$14.67
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 59
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Notes to Consolidated Financial Statements
The following table summarizes stock option activity under the Plan:
Options outstanding as of December 31, 2019
Granted
Forfeited or expired
Exercised
Options outstanding as of December 31, 2020
Granted
Forfeited or expired
Exercised
Options outstanding as of December 31, 2021
Granted
Forfeited or expired
Exercised
Options outstanding as of December 31, 2022
Options vested and expected to vest as of December 31, 2022
Options exercisable as of December 31, 2022
Number of
Options
Weighted
Average
Exercise
Price
Weighted Average
Remaining
Contractual Life
Aggregate
Intrinsic Value
(1)
(in thousands)
1,479,674 $
660,071
(78,163)
(142,419)
1,919,163
687,772
(213,444)
(459,957)
1,933,534
561,295
(223,813)
(116,109)
2,154,907 $
2,070,905 $
958,748 $
66.74
87.25
83.76
48.58
74.45
95.90
89.96
62.58
83.19
89.25
91.09
56.75
85.37
85.12
77.38
7.11 $
49,930
7.19
29,489
7.26
29,889
7.02 $
13,929
6.95 $
5.42 $
13,855
12,735
(1)
The aggregate intrinsic value above represents pre-tax intrinsic value that would have been realized if all options had been exercised on the last business day of the period indicated, based
on the Company's closing stock price on that day.
Stock option compensation expense was $7.8 million, $6.9 million and $ 7.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. As of
December 31, 2022, unrecognized costs related to outstanding stock options totaled $12.9 million, before any related tax benefit. The unrecognized costs
related to stock options are being amortized over the related vesting period using the straight-line attribution method. These unrecognized costs related to stock
options are being amortized over a weighted average period of 2.18 years. The aggregate intrinsic value of stock options exercised was $ 3.4 million, $19.2
million and $4.9 million for the years ended December 31, 2022, 2021 and 2020, respectively. The total cash received as a result of stock option exercises was
$6.6 million, $28.8 million and $ 6.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.
RESTRICTED STOCK UNITS
Service-based restricted stock units are granted at no cost to key employees and generally vest over a period of four years. Performance-based restricted stock
units are granted at no cost to certain members of the Company's senior executive team, excluding the Chief Executive Officer. Performance-based restricted
stock units granted after 2009 generally vest over a performance period of between two and three years. Restricted stock units vest in accordance with the
terms and conditions established by the Compensation Committee of the Board of Directors, and are based on continued service and, in some instances, on
individual performance or Company performance or both.
The fair value of service-based and performance-based restricted stock units that are not eligible for dividends are valued at the closing price of the Company’s
common stock on the date of grant, reduced by the present value of dividends not received during the vesting period. Other assumptions incorporated into the
grant date fair value include the vesting period and the Company's expected annual dividend yield.
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Notes to Consolidated Financial Statements
The weighted average assumptions for restricted stock units granted and resulting fair value are as follows:
Vesting period
Expected annual dividend yield
Weighted average grant date fair value per restricted stock unit granted
The following table summarizes the restricted stock unit activity under the Plan:
2022
3.71 years
1.31%
$85.27
Year Ended December 31,
2021
3.77 years
1.04%
$96.07
2020
3.79 years
1.18%
$78.90
Restricted stock units outstanding as of December 31, 2019
Granted
(1)
Vested
Forfeited
Restricted stock units outstanding as of December 31, 2020
Granted
(1)
Vested
Forfeited
Restricted stock units outstanding as of December 31, 2021
Granted
(1)
Vested
Forfeited
Restricted stock units outstanding as of December 31, 2022
Number of
Restricted Stock Units
Weighted Average
Grant Date Fair
Value Per Unit
405,104 $
216,318
(160,229)
(35,918)
425,275
176,804
(164,088)
(68,399)
369,592
247,860
(141,674)
(64,925)
410,853 $
76.45
78.90
68.72
79.36
80.37
96.07
75.61
86.38
88.88
85.27
87.64
89.29
87.07
(1)
The number of vested units includes shares withheld by the Company to pay up to maximum statutory requirements to taxing authorities on behalf of the employee. For the years ended
December 31, 2022, 2021 and 2020, the Company withheld 47,130, 56,792 and 54,543 shares, respectively, to satisfy $4.2 million, $5.8 million and $4.5 million of employees' tax
obligations, respectively.
Restricted stock unit compensation expense was $ 13.2 million, $12.2 million and $ 10.8 million for the years ended December 31, 2022, 2021 and 2020,
respectively. As of December 31, 2022, unrecognized costs related to restricted stock units totaled $ 21.7 million, before any related tax benefit. The
unrecognized costs related to restricted stock units are being amortized over the related vesting period using the straight-line attribution method. These
unrecognized costs as of December 31, 2022 are expected to be recognized over a weighted average period of 2.24 years. The total grant date fair value of
restricted stock units vested was $12.4 million, $12.4 million and $ 11.0 million during the years ended December 31, 2022, 2021 and 2020, respectively.
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Notes to Consolidated Financial Statements
NOTE 15 — EARNINGS PER SHARE
Earnings per share ("EPS") is presented on both a basic and diluted basis. Basic EPS is based on the weighted average number of common shares
outstanding. Diluted EPS reflects the potential dilution that could occur if outstanding securities or other contracts to issue common stock were exercised or
converted into common stock.
A reconciliation of the common shares used in the denominator for computing basic and diluted EPS is as follows:
(in thousands, except per share amounts)
Weighted average common shares outstanding, used in computing basic earnings per
share
Effect of dilutive stock options and restricted stock units
Weighted average common shares outstanding, used in computing diluted earnings per
share
Earnings per share:
Basic
Diluted
Anti-dilutive common shares
(1)
Year Ended December 31,
2022
2021
2020
62,754
216
62,970
4.96 $
4.95 $
1,735
65,942
473
66,415
5.37 $
5.33 $
844
66,376
396
66,772
1.63
1.62
1,123
$
$
(1)
Common stock related to stock options and service-based restricted stock units, and performance-based restricted stock were outstanding but were excluded from the computation of diluted
EPS because their effect would be anti-dilutive under the treasury stock method or because the shares were subject to performance conditions that had not been met.
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Notes to Consolidated Financial Statements
NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets is net of applicable taxes, and consists of unrealized gains and losses on
available-for-sale securities, unrealized gains and losses on certain derivative transactions and foreign currency translation adjustments.
The following table sets forth the changes in Accumulated other comprehensive income (loss) :
(in thousands)
Balance as of December 31, 2019
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive income
(loss)
(1)
Net other comprehensive income (loss)
Balance as of December 31, 2020
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive income
(loss)
(1)
Net other comprehensive income (loss)
Balance as of December 31, 2021
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive income
(loss)
(1)
Net other comprehensive income (loss)
Balance as of December 31, 2022
Available-for-sale
securities
Derivative
transactions
Foreign currency
translation
adjustments
Total
$
$
(4) $
4
9,482 $
(7,218)
(13,903) $
24,078
—
4
—
—
—
—
—
(451)
(11,633)
(18,851)
(9,369)
16,113
3,170
19,283
9,914
20,724
—
24,078
10,175
(24,465)
—
(24,465)
(14,290)
(38,137)
451
—
— $
(8,848)
11,876
21,790 $
—
(38,137)
(52,427) $
(4,425)
16,864
(11,633)
5,231
806
(8,352)
3,170
(5,182)
(4,376)
(17,864)
(8,397)
(26,261)
(30,637)
(1)
Amounts reclassified are recorded in Net sales, Cost of sales, or Other non-operating income (expense), net on the Consolidated Statements of Operations. Refer to Note 18 for further
information regarding reclassifications.
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Notes to Consolidated Financial Statements
NOTE 17 — SEGMENT INFORMATION
The Company has four reportable geographic segments: U.S., LAAP, EMEA, and Canada, which are reflective of the Company's internal organization,
management and oversight structure. Each geographic segment operates predominantly in one industry: the design, development, marketing, and distribution of
outdoor, active and lifestyle products, including apparel, footwear, accessories, and equipment. Intersegment net sales and intersegment profits, which are
recorded at a negotiated mark-up and eliminated in consolidation, are not material. Unallocated corporate expenses consist of expenses incurred by centrally-
managed departmental functions, including consumer digital technology, certain supply chain functions, finance, human resources and legal, as well as
executive compensation, unallocated benefit program expense, goodwill and intangible asset impairment charges, and other miscellaneous costs.
The following tables present financial information for the Company's reportable segments:
(in thousands)
Net sales to unrelated entities:
U.S.
LAAP
EMEA
Canada
Segment operating income
U.S.
LAAP
EMEA
Canada
Total segment operating income
Unallocated corporate expenses
Interest income, net
Other non-operating income (expense), net
Income before income tax
Depreciation and amortization expense:
U.S.
LAAP
EMEA
Canada
Unallocated corporate expense
Year Ended December 31,
2022
2021
2020
$
$
$
$
$
$
2,302,246 $
473,866
438,554
249,486
3,464,152 $
519,812 $
47,025
80,192
52,957
699,986
(306,882)
2,713
1,593
397,410 $
20,428 $
4,984
3,066
2,461
23,813
54,752 $
2,060,300 $
465,499
382,060
218,543
3,126,402 $
536,475 $
42,025
65,496
52,731
696,727
(246,223)
1,380
(373)
451,511 $
21,098 $
5,733
3,423
2,586
23,082
55,922 $
1,603,783
424,489
298,907
174,375
2,501,554
250,485
35,875
31,235
37,620
355,215
(218,166)
435
2,039
139,523
25,852
5,756
3,739
2,825
25,244
63,416
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 64
Table of Contents
Notes to Consolidated Financial Statements
(in thousands)
Accounts receivable, net:
U.S.
LAAP
EMEA
Canada
Inventories:
U.S.
LAAP
EMEA
Canada
Property, plant and equipment, net:
U.S.
Canada
All other countries
December 31,
2022
2021
$
$
$
$
$
$
280,199 $
87,391
107,626
72,345
547,561 $
747,762 $
105,158
98,777
76,848
1,028,545 $
233,382 $
25,350
32,482
291,214 $
265,731
85,696
79,942
56,434
487,803
455,960
77,620
65,263
46,536
645,379
232,610
24,898
33,580
291,088
NOTE 18 — FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
In the normal course of business, the Company's financial position, results of operations and cash flows are routinely subject to a variety of risks. These risks
include risks associated with financial markets, primarily currency exchange rate risk and, to a lesser extent, interest rate risk and equity market risk. The
Company regularly assesses these risks and has established policies and business practices designed to mitigate them. The Company does not engage in
speculative trading in any financial market.
The Company actively manages the risk of changes in functional currency equivalent cash flows resulting from anticipated non-functional currency denominated
purchases and sales. Subsidiaries that use European euros, Canadian dollars, Japanese yen, Chinese renminbi, or Korean won as their functional currency are
primarily exposed to changes in functional currency equivalent cash flows from anticipated United States dollar inventory purchases. Subsidiaries that use
United States dollars and euros as their functional currency also have non-functional currency denominated sales for which the Company hedges the Canadian
dollar and British pound sterling. The Company seeks to manage these risks by using currency forward contracts formally designated and effective as cash flow
hedges. Hedge effectiveness is generally determined by evaluating the ability of a hedging instrument's cumulative change in fair value to offset the cumulative
change in the present value of expected cash flows on the underlying exposures. Time value components ("forward points") for forward contracts are included
in the fair value of the cash flow hedge. These costs or benefits will be included in Accumulated other comprehensive income (loss) until the underlying hedge
transaction is recognized in either Net sales or Cost of sales , at which time, the forward points will also be recognized as a component of Net income.
The Company also uses currency forward contracts not formally designated as hedges to manage the consolidated currency exchange rate risk associated with
the remeasurement of non-functional currency denominated monetary assets and liabilities by subsidiaries that use United States dollars, euros, Canadian
dollars, yen, renminbi, or won as their functional currency. Non-functional currency denominated monetary assets and liabilities consists of cash and cash
equivalents, short-term investments, receivables, payables, deferred income taxes, and intercompany loans and dividends. The gains and losses generated on
these currency forward contracts not formally designated as hedges are expected to be largely offset in Other non-operating income (expense), net by the gains
and losses generated from the remeasurement of the non-functional currency denominated monetary assets and liabilities.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 65
Table of Contents
Notes to Consolidated Financial Statements
The following table presents the gross notional amount of outstanding derivative instruments:
(in thousands)
Derivative instruments designated as cash flow hedges:
Currency forward contracts
Derivative instruments not designated as hedges:
Currency forward contracts
December 31,
2022
2021
$
514,365 $
485,083
448,838
267,982
As of December 31, 2022, $ 22.8 million of deferred net gains on both outstanding and matured derivatives recorded in Accumulated other comprehensive
income (loss) are expected to be reclassified to Net income during the next twelve months as a result of underlying hedged transactions also being recorded in
Net sales, Cost of sales, or Other non-operating income (expense), net in the Consolidated Statements of Operations. When outstanding derivative contracts
mature, actual amounts ultimately reclassified to Net sales, Cost of sales, or Other non-operating income (expense), net in the Consolidated Statements of
Operations are dependent on United States dollar exchange rates in effect against the euro, pound sterling, renminbi, Canadian dollar, won, and yen as well as
the euro exchange rate in effect against the pound sterling.
As of December 31, 2022, the Company's derivative contracts had a remaining maturity of less than three years. The maximum net exposure to any single
counterparty, which is generally limited to the aggregate unrealized gain of all contracts with that counterparty, was $ 7.5 million as of December 31, 2022. All of
the Company's derivative counterparties have credit ratings that are investment grade or higher. The Company is a party to master netting arrangements that
contain features that allow counterparties to net settle amounts arising from multiple separate derivative transactions or net settle in the case of certain
triggering events such as a bankruptcy or major default of one of the counterparties to the transaction. The Company has not pledged assets or posted
collateral as a requirement for entering into or maintaining derivative positions.
The following table presents the balance sheet classification and fair value of derivative instruments:
(in thousands)
Derivative instruments designated as cash flow hedges:
Derivative instruments in asset positions:
Currency forward contracts
Currency forward contracts
Derivative instruments in liability positions:
Currency forward contracts
Currency forward contracts
Derivative instruments not designated as cash flow hedges:
Derivative instruments in asset positions:
Currency forward contracts
Derivative instruments in liability positions:
Currency forward contracts
Balance Sheet Classification
2022
2021
December 31,
Prepaid expenses and other current assets $
Other non-current assets
20,306 $
7,153
Accrued liabilities
Other long-term liabilities
Prepaid expenses and other current assets
Accrued liabilities
1,249
1,770
3,027
2,533
7,927
10,142
2,545
318
1,470
1,027
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 66
Table of Contents
Notes to Consolidated Financial Statements
The following table presents the statement of operations effect and classification of derivative instruments:
(in thousands)
Currency Forward Contracts:
Derivative instruments designated as cash flow hedges:
Gain (loss) recognized in other comprehensive income (loss), net of
tax
Gain (loss) reclassified from accumulated other comprehensive
income (loss) to income for the effective portion
Gain (loss) reclassified from accumulated other comprehensive
income (loss) to income for the effective portion
Gain reclassified from accumulated other comprehensive income
(loss) to income as a result of cash flow hedge discontinuance
Derivative instruments not designated as cash flow hedges:
Loss recognized in income
Statement Of
Operations
Classification
Year Ended December 31,
2022
2021
2020
—
$
20,724 $
16,113 $
(7,218)
Net sales
(146)
(448)
191
Cost of sales
Other non-operating income
(expense), net
Other non-operating income
(expense), net
12,100
(4,072)
14,495
320
451
817
(1,955)
(608)
(2,865)
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 67
Table of Contents
Notes to Consolidated Financial Statements
NOTE 19 — FAIR VALUE MEASURES
Certain assets and liabilities are reported at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount
that the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants, under a three-tier fair value
hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1
Level 2
— observable inputs such as quoted prices for identical assets or liabilities in active liquid markets;
—
inputs, other than the quoted market prices in active markets, that are observable, either directly or indirectly; or observable market
prices in markets with insufficient volume or infrequent transactions; and
Level 3
—
unobservable inputs for which there is little or no market data available, that require the reporting entity to develop its own
assumptions.
The Company's assets and liabilities measured at fair value are categorized as Level 1 or Level 2 instruments. Level 1 instrument valuations are obtained from
real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from inputs, other than
quoted market prices in active markets, that are directly or indirectly observable in the marketplace and quoted prices in markets with limited volume or
infrequent transactions.
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 are as follows:
(in thousands)
Assets:
Cash equivalents:
Money market funds
Short-term investments:
Money market funds
Mutual fund shares
Prepaid expenses and other current assets:
Derivative financial instruments
Other non-current assets:
Money market funds
Mutual fund shares
Derivative financial instruments
Total assets measured at fair value
Liabilities:
Accrued liabilities:
Derivative financial instruments
Other long-term liabilities:
Derivative financial instruments
Total liabilities measured at fair value
Level 1
Level 2
Level 3
Total
$
120,481 $
— $
— $
120,481
80
642
—
1,456
19,026
—
141,685 $
— $
—
— $
$
$
$
—
—
23,333
—
—
7,153
30,486 $
3,782 $
1,770
5,552 $
—
—
—
—
—
—
— $
— $
—
— $
80
642
23,333
1,456
19,026
7,153
172,171
3,782
1,770
5,552
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 68
Table of Contents
Notes to Consolidated Financial Statements
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 are as
follows:
(in thousands)
Assets:
Cash equivalents:
Money market funds
Short-term investments:
Available-for-sale short-term investments:
(1)
U.S. Government treasury bills
Other short-term investments:
Money market funds
Mutual fund shares
Prepaid and other current assets:
Derivative financial instruments
Other non-current assets:
Money market funds
Mutual fund shares
Derivative financial instruments
Total assets measured at fair value
Liabilities:
Accrued liabilities:
Derivative financial instruments
Other long-term liabilities:
Derivative financial instruments
Total liabilities measured at fair value
Level 1
Level 2
Level 3
Total
$
2,677 $
— $
— $
2,677
—
73
904
—
2,219
19,606
—
25,479 $
— $
—
— $
130,168
—
—
9,397
—
—
10,142
149,707 $
3,572 $
318
3,890 $
$
$
$
—
—
—
—
—
—
—
— $
— $
—
— $
130,168
73
904
9,397
2,219
19,606
10,142
175,186
3,572
318
3,890
(1)
Available-for-sale short-term investments have remaining maturities of less than one year.
NON-RECURRING FAIR VALUE MEASUREMENTS
The Company measured the fair value of certain retail store long-lived assets consisting of property, plant and equipment, certain trademark intangible assets
and goodwill, and lease ROU assets as part of impairment testing for the year ended December 31, 2022. The inputs used to measure the fair value of these
assets are primarily unobservable inputs and, as such, considered Level 3 fair value measurements. Refer to Notes 5, 6 and 9 herein for discussion of
impairment charges.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 69
Table of Contents
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A.
CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We have evaluated, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the
effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") as of the end of the period covered by this report. These disclosure controls and procedures require information to be disclosed in our Exchange Act
reports to be (1) recorded, processed, summarized, and reported in a timely manner and (2) accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer.
Based on our evaluation, we, including our Chief Executive Officer and Chief Financial Officer, have concluded that as of December 31, 2022 our disclosure
controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to
disclose in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities
and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the
Exchange Act. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement preparation and presentation.
Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we have assessed the
effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, we used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013) . Based on our assessment, we,
including our Chief Executive Officer and Chief Financial Officer, have concluded our internal control over financial reporting is effective as of December 31,
2022.
The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in its report, which is included in Part II, Item 8 in this Annual Report on Form 10-K.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have not been any changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2022 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 70
Table of Contents
PART III
ITEM 10.
DIRECTORS, EXECUTIVES OFFICERS AND CORPORATE GOVERNANCE
The sections of our 2023 Proxy Statement entitled "PROPOSAL 1: ELECTION OF DIRECTORS," "CORPORATE GOVERNANCE - Oversight Documents -
Code of Business Conduct and Ethics," and "CORPORATE GOVERNANCE - Board Structure - Committees" are incorporated herein by reference.
Information regarding our executive officers is included in Part I under "Information About Our Executive Officers" of this Annual Report on Form 10-K.
ITEM 11.
EXECUTIVE COMPENSATION
The sections of our 2023 Proxy Statement entitled "EXECUTIVE COMPENSATION," "DIRECTOR COMPENSATION," "CORPORATE GOVERNANCE - Board
Structure - Committees - Compensation Committee - Compensation Committee Interlocks and Insider Participation" and "COMPENSATION COMMITTEE
REPORT" are incorporated herein by reference.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The sections of our 2023 Proxy Statement entitled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" and "EQUITY
COMPENSATION PLAN INFORMATION" are incorporated herein by reference.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The sections of our 2023 Proxy Statement entitled "CORPORATE GOVERNANCE - Certain Relationships and Related Person Transaction" and "CORPORATE
GOVERNANCE - Board Structure - Independence" are incorporated herein by reference.
ITEM 14
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The sections of our 2023 Proxy Statement entitled "PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM - Principal Accountant Fees and Services" and "PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM - Pre-Approval Policy" are incorporated herein by reference.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 71
Table of Contents
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
PART IV
(a)(1) and (a)(2) Financial Statements | The Financial Statements of Columbia and Supplementary Data filed as part of this Annual Report on Form 10-K are
on pages 33 to 69 of this Annual Report on Form 10-K. The financial statement schedule required to be filed by Item 8 of this Annual Report on Form 10-K and
paragraph (b) of this Item 15 is included below.
(a)(3) | See Exhibit Index below for a description of the documents that are filed as Exhibits to this Annual Report on Form 10-K or incorporated herein by
reference.
(in thousands)
Allowance for doubtful accounts:
Year Ended December 31, 2022
Year Ended December 31, 2021
Year Ended December 31, 2020
Schedule II
Valuation and Qualifying Accounts
Balance at
Beginning
of Period
Charged to
Costs and
Expenses
Deductions
(1)
Other
(2)
Balance at
End of
Period
$
$
$
8,893 $
21,810 $
8,925 $
(2,044) $
(10,758) $
19,156 $
(980) $
(210) $
(7,991) $
(426) $
(1,949) $
1,720 $
5,443
8,893
21,810
(1)
(2)
Charges to the accounts included in this column are for the purposes for which the reserves were created.
Amounts included in this column primarily relate to foreign currency translation.
EXHIBIT INDEX
In reviewing the agreements included as exhibits to this Annual Report on Form 10-K, please remember they are included to provide you with information
regarding their terms and are not intended to provide any other factual or disclosure information about Columbia or the other parties to the agreements. The
agreements may contain representations and warranties by each of the parties to the applicable agreement.
These representations and warranties have been made solely for the benefit of the other party or parties to the applicable agreement and:
•
should not in all instances be treated as categorical statements of fact, but rather as a means of allocating the risk to one of the parties if those
statements prove to be inaccurate;
• may have been qualified by disclosures that were made to the other party or parties in connection with the negotiation of the applicable agreement, which
disclosures are not necessarily reflected in the agreement;
• may apply standards of materiality in a manner that is different from what may be viewed as material to you or other investors; and
•
were made only as of the date of the applicable agreement or other date or dates that may be specified in the agreement and are subject to more recent
developments.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional
information about Columbia may be found elsewhere in this Annual Report on Form 10-K and Columbia's other public filings, which are available without charge
through the SEC's website at http://www.sec.gov.
Exhibit No.
3.1
3.1(a)
3.1(b)
3.2
Exhibit Name
Third Restated Articles of Incorporation (incorporated by reference to exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2000) (File No. 000-23939).
Amendment to Third Restated Articles of Incorporation (incorporated by reference to exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 2002) (File No. 000-23939).
Second Amendment to Third Restated Articles of Incorporation (incorporated by reference to exhibit 3.1 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2018) (File No. 000-23939).
2023 Amended and Restated Bylaws of Columbia Sportswear Company (incorporated by reference to exhibit 3.2 to the Company's Form 8-K filed on
February 1, 2023) (File No. 000-23939).
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 72
Table of Contents
Exhibit No.
4.1
4.2
+ 10.1
† 10.2
10.3
+ 10.4
+ 10.5(a)
+ 10.5(b)
+ 10.5(c)
+ 10.5(d)
+ 10.6
+ 10.6(a)
+ 10.6(b)
+ 10.7
+ 10.7(a)
+ 10.7(b)
+ 10.8
+ 10.9
+ 10.9(a)
+ 10.10
+ 10.10(a)
+ 10.11
+ 10.12
+ 10.13
+ 10.14
10.15
Exhibit Name
See Article II of Exhibit 3.1, as amended, and Article I of Exhibit 3.2.
Description of the Registrant's Securities Registered under Section 12 of the Exchange Act of 1934.
Columbia Sportswear Company 1997 Stock Incentive Plan, as amended (incorporated by reference to exhibit 10.2 to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2017) (File No. 000-23939).
Subscription and Shareholders' Agreement, dated August 6, 2012, by and among CSMM Hong Kong Limited, SCCH Limited, Columbia Sportswear
Company and Swire Resources Limited (incorporated by reference to exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2012) (File No. 000-23939).
Share Purchase Agreement, dated April 28, 2014, by and among Columbia Sportswear Company, prAna Living, LLC, the Shareholders of prAna
Living, LLC and Steelpoint Capital Advisors, LLC as the shareholder representative (incorporated by reference to exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014) (File No. 000-23939).
Employment Offer Letter from Columbia Sportswear Company to Franco Fogliato (incorporated by reference to exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017) (File No. 000-23939).
Form of Nonstatutory Stock Option Agreement for stock options granted on or after January 23, 2009 (incorporated by reference to exhibit 10.2(e) to
the Company's Annual Report on Form 10-K for the year ended December 31, 2008) (File No. 000-23939).
Form of Nonstatutory Stock Option Agreement for stock options granted on or after June 7, 2012 (incorporated by reference to exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012) (File No. 000-23939).
Form of Nonstatutory Stock Option Agreement for stock options granted on or after July 20, 2017 (incorporated by reference to exhibit 10.2(m) to the
Company's Annual Report on Form 10-K for the year ended December 31, 2017) (File No. 000-23939).
Form of Nonstatutory Stock Option Agreement for stock options granted on or after January 24, 2019 (incorporated by reference to exhibit 10.5(e) to
the Company's annual Report on Form 10-K for the year ended December 31, 2018) (File No. 000-23939).
Form of Restricted Stock Unit Award Agreement for restricted stock units granted on or after June 7, 2012 (incorporated by reference to exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012) (File No. 000-23939).
Form of Restricted Stock Unit Award Agreement for restricted stock units granted on or after July 20, 2017 (incorporated by reference to exhibit 10.2(l)
to the Company's Annual Report on Form 10-K for the year ended December 31, 2017) (File No. 000-23939).
Form of Restricted Stock Unit Award Agreement for restricted stock units granted on or after January 24, 2019 (incorporated by reference to exhibit
10.6(c) to the Company's Annual Report on Form 10-K for the year ended December 31, 2018) (File No. 000-23939).
Columbia Sportswear Company 401(k) Excess Plan (incorporated by reference to exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2009) (File No. 000-23939).
Columbia Sportswear Company 401(k) Excess Plan, as amended (incorporated by reference to exhibit 10.7(a) to the Company's Annual Report on
Form 10-K for the year ended December 31, 2018) (File No. 000-23939).
Columbia Sportswear Company 401(k) Excess Plan, as amended (incorporated by reference to exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2020) (File No. 000-23939).
Columbia Sportswear Company 401(k) Excess Retirement Plan (incorporated by reference to exhibit 10.8 to the Company's Annual Report on Form
10-K for the year ended December 31, 2021) (File No. 000-23939).
Form of Performance-based Restricted Stock Unit Award Agreement for performance-based restricted stock units granted on or after December 17,
2013 (incorporated by reference to exhibit 10.2(l) to the Company's Annual Report on Form 10-K for the year ended December 31, 2013) (File No.
000-23939).
Form of Performance-based Restricted Stock Unit Award Agreement for performance-based restricted stock units granted on or after January 24, 2019
(incorporated by reference to exhibit 10.8(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 2018) (File No. 000-
23939).
Form of Long-Term Incentive Cash Award Agreement for cash awards granted under the Company's 1997 Stock Incentive Plan, on or after December
17, 2013 (incorporated by reference to exhibit 10.2(m) to the Company's Annual Report on Form 10-K for the year ended December 31, 2013) (File
No. 000-23939).
Form of Long-Term Incentive Cash Award Agreement for cash awards granted under the Company's 1997 Stock Incentive Plan on or after January 24,
2019 (incorporated by reference to exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019) (File
000-23939).
Long Term Cash Incentive Plan of Columbia Sportswear Company, effective January 1, 2019 (incorporated by reference to exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019) (File No. 000-23939).
Form of Long-Term Incentive Cash Award Agreement for cash awards granted under the Company's Long-Term Incentive Cash Plan granted on or
after January 1, 2019 (incorporated by reference to exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2019) (File No. 000-23939).
Executive Incentive Compensation Plan, as amended (incorporated by reference to exhibit 10.3 to the Company's Quarterly report on Form 10-Q for
the quarterly period ended March 31, 2019) (File No. 000-23939).
Columbia Sportswear Company Second Amendment Change in Control Severance Plan (incorporated by reference to exhibit 10.4 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017) (File No. 000-23939).
Amended and Restated Credit Agreement dated April 17, 2019 among Columbia Sportswear Company, Wells Fargo Bank, National Association, as the
administrative agent for the lenders and as a lender, and Bank of America, N.A., as a lender (incorporated by reference to the Company's Form 8-K
filed on April 22, 2019) (File No. 000-23939).
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 73
Table of Contents
Exhibit No.
10.16
10.17
10.18
10.19
10.20
* 10.21
+ 10.21(a)
+ 10.22
+ 10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
21.1
23.1
31.1
31.2
32.1
32.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Exhibit Name
First Amendment to Amended and Restated Credit Agreement dated March 26, 2020, among Columbia Sportswear Company, Wells Fargo Bank,
National Association, as the administrative agent for the lenders and as a lender, and Bank of America, N.A., as a lender (incorporated by reference to
exhibit 10.1 to the Company's Form 8-K filed on April 1, 2020) (File No. 000-23939).
Second Amended and Restated Credit Agreement dated April 15, 2020, among Columbia Sportswear Company, Wells Fargo Bank, National
Association, as the administrative agent for the lenders and as a lender, and Bank of America, N.A., as a lender (incorporated by reference to exhibit
10.1 to the Company's Form 8-K filed on April 16, 2020) (File No. 000-23939).
First Amendment to Second Amended and Restated Credit Agreement, entered into as of July 10, 2020, among Columbia Sportswear Company, Wells
Fargo Bank, National Association, as the administrative agent for the lenders and as a lender, and Bank of America, N.A., as a lender (incorporated by
reference to exhibit 10.1 to the Company's Form 8-K filed on July 14, 2020) (File No. 000-23939).
Credit Agreement dated December 30, 2020, among Columbia Sportswear Company, JPMorgan Chase Bank, National Association, as the
administrative agent for the lenders and as a lender, and the other lenders party thereto (incorporated by reference to exhibit 10.1 to the Company's
Form 8-K filed on January 4, 2021) (File No. 000-23939).
Credit Agreement dated July 12, 2022, among Columbia Sportswear Company, JPMorgan Chase Bank, National Association, as the administrative
agent for the lenders and as a lender, and the other lenders party thereto. (incorporated by reference to exhibit 10.1 to the Company's Form 8-K, filed
on July 18, 2022) (File No. 000-23939).
Form of Indemnity Agreement for Directors (incorporated by reference to exhibit 10.17 to the Company's Registration Statement Filed on Form S-1 filed
on December 24, 1997) (File No. 333-43199).
Form of Indemnity Agreement for Directors and Executive Officers (incorporated by reference to exhibit 10.23 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2004) (File No. 000-23939).
1999 Employee Stock Purchase Plan, as amended (incorporated by reference to exhibit 10.21 to the Company's Annual Report on Form 10-K for the
year ended December 31, 2001) (File No. 000-23939).
Tax Differential on Supplemental Wages Agreement, dated November 1, 2019, by and between Columbia Sportswear Company and Franco Fogliato
(incorporated by reference to exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019) (File
No. 000-23939).
Columbia Sportswear 2020 Stock Incentive Plan ("2020 Stock Incentive Plan") (incorporated by reference to Exhibit 99.1 to the Registrant's
Registration Statement on Form S-8, filed on June 4, 2020) (File No. 333-238935).
Form of Nonstatutory Stock Option Agreement for stock options granted under the Company's 2020 Stock Incentive Plan (incorporated by reference to
exhibit 10.2 to the Company's Form 8-K, filed on June 4, 2020) (File No. 000-23939).
Form of Restricted Stock Units Award Agreement for restricted stock units granted under the Company's 2020 Stock Incentive Plan (incorporated by
reference to exhibit 10.3 to the Company's Form 8-K, filed on June 4, 2020) (File No. 000-23939).
Form of Performance-Based Restricted Stock Units Award Agreement for performance-based restricted stock units granted under the Company's 2020
Stock Incentive Plan (incorporated by reference to exhibit 10.4 to the Company's Form 8-K, filed on June 4, 2020) (File No. 000-23939).
Form of Long-Term Incentive Cash Award Agreement for cash awards granted under the Company's 2020 Stock Incentive Plan (incorporated by
reference to exhibit 10.5 to the Company's Form 8-K, filed on June 4, 2020) (File No. 000-23939).
Form of Long-Term Incentive Cash Award Agreement for cash awards granted under the Company's 2020 Stock Incentive Plan on or after April 21,
2022.
Form of Performance-Based Restricted Stock Units Award Agreement for performance-based restricted stock units granted under the Company's 2020
Stock Incentive Plan on or after April 21, 2022.
Subsidiaries of the Company.
Consent of Deloitte & Touche LLP.
Rule 13a-14(a) Certification of Timothy P. Boyle, Chairman, President and Chief Executive Officer.
Rule 13a-14(a) Certification of Jim A. Swanson, Executive Vice President and Chief Financial Officer.
Section 1350 Certification of Timothy P. Boyle, Chairman, President and Chief Executive Officer.
Section 1350 Certification of Jim A. Swanson, Executive Vice President and Chief Financial Officer.
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline
XBRL document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File, formatted as Inline XBRL and contained in Exhibit 101
+ Management Contract or Compensatory Plan
† Confidential treatment has been granted for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. Confidential portions of
this exhibit have been separately filed with the Securities and Exchange Commission.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 74
Table of Contents
* Incorporated by reference to the Company's Registration Statement on Form S-1 (Reg. No. 333-43199).
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 75
Table of Contents
ITEM 16.
FORM 10-K SUMMARY
None.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 76
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
COLUMBIA SPORTSWEAR COMPANY
Date:
February 23, 2023
By:
/s/ JIM A. SWANSON
Jim A. Swanson
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
SIGNATURE
TITLE
/s/
/s/
/s/
/s/
/s/
/s/
/s/
/s/
/s/
/s/
TIMOTHY P. BOYLE
Timothy P. Boyle
JIM A. SWANSON
Jim A. Swanson
STEPHEN E. BABSON
Stephen E. Babson
ANDY D. BRYANT
Andy D. Bryant
JOHN W. CULVER
John W. Culver
KEVIN MANSELL
Kevin Mansell
RONALD E. NELSON
Ronald E. Nelson
SABRINA L. SIMMONS
Sabrina L. Simmons
CHRISTIANA SMITH SHI
Christiana Smith Shi
MALIA H. WASSON
Malia H. Wasson
Date: February 23, 2023
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-K | 77
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
EXHIBIT 4.2
As of February 23, 2023, Columbia Sportswear Company (the “Company”) has one class of securities registered under Section 12 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), our common stock (“Common Stock”).
Description of Common Stock
The following description of Common Stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our
Third Restated Articles of Incorporation and the amendments thereto (collectively, the “Articles of Incorporation”) and our 2023 Amended and Restated Bylaws
(the “Bylaws”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.2 is a part. We encourage
you to read our Articles of Incorporation, our Bylaws and the applicable provisions of The Oregon Business Corporation Act, Chapter 60 of the Oregon Revised
Statutes (the “OBCA”), for additional information.
Authorized Capital Shares
Our authorized capital shares consist of 250,000,000 shares of Common Stock and 10,000,000 shares of preferred stock (“Preferred Stock”). The outstanding
shares of Common Stock are fully paid and nonassessable.
Voting Rights
Holders of Common Stock are entitled to one vote per share on any matter submitted to the shareholders and do not have any cumulative voting rights.
Dividend Rights
Subject to the preferential rights of holders of Preferred Stock, if any, holders of Common Stock are entitled to receive dividends as may from time to time be
declared by the Board of Directors of the Company (the “Board”) out of funds legally available therefor. From time to time, our credit facilities may restrict or
prohibit the paying of dividends without our lender’s consent.
Liquidation Rights
On dissolution of the Company, after any preferential amount with respect to Preferred Stock has been paid or set aside, the holders of Common Stock and the
holders of any series of Preferred Stock, if any, entitled to participate in the distribution of assets are entitled to receive the net assets of the Company.
Other Rights and Preferences
Holders of Common Stock have no preemptive, conversion, redemption or sinking fund rights.
Anti-takeover Effects of Certain Provisions of the Articles of Incorporation and Bylaws
The provisions of the Company’s Articles and Bylaws summarized below may have an anti-takeover effect and may delay, defer or prevent a tender offer or
takeover attempt.
Authorized but Unissued Securities
The existence of authorized but unissued shares of Common Stock may enable the Board to render more difficult or to discourage an attempt to obtain control of
the Company by means of a merger, tender offer or otherwise.
In addition, the Board has the authority to issue Preferred Stock in one or more series and to fix the number of shares constituting any such series and the
preferences, limitations and relative rights, including dividend rights, dividend rate, voting rights, terms of redemption, redemption price or prices, conversion
rights and liquidation preferences of the shares constituting any series, without any further vote or action by the shareholders of the Company. The potential
issuance of Preferred Stock may have the effect of delaying or preventing a change in control of the Company.
No Cumulative Voting
The Articles of Incorporation do not grant holders of the Common Stock the right to vote cumulatively. The absence of cumulative voting could have the effect of
preventing shareholders holding a minority of the Company’s shares from obtaining representation on the Board.
Notice Provisions Relating to Shareholder Proposals and Nominees
The Company’s Bylaws contain provisions requiring shareholders give advance written notice to the Company of a proposal or director nomination in order to
have the proposal or the nominee considered at an annual meeting of shareholders. The notice for a shareholder
proposal must be received at least 90 days, and no earlier than 120 days, before the first anniversary of the date of the proxy statement for the preceding year's
annual meeting; provided, however, that if the date of the annual meeting is more than 30 days before or more than 70 days after the anniversary date, notice
by the shareholder to be timely must be so delivered no earlier than 120 days before the annual meeting and no later than the later of 90 days prior to such
annual meeting or 10 days following the day on which public announcement of the date of such meeting is first made by the Company. The Bylaws also specify
the form and content of a shareholder’s notice. These provisions may prevent shareholders from bringing matters before an annual meeting of shareholders or
from nominating candidates for election as directors at an annual meeting of shareholders.
Calling a Shareholder Meeting
Special meetings of the shareholders, for any purposes, unless otherwise prescribed by statute, may only be called by the President or the Board.
Oregon Control Share and Business Combination Statutes
The Company is subject to the Oregon Control Share Act (the "Control Share Act"). The Control Share Act generally provides that a person (the "Acquiror") who
acquires voting stock of an Oregon corporation in a transaction (other than a transaction in which voting shares are acquired from the issuing public
corporation) that results in the Acquiror holding more than 20%, 33 1/3% or 50% of the total voting power of the corporation (a "Control Share Acquisition")
cannot vote the shares it acquires in the Control Share Acquisition ("control shares") unless voting rights are accorded to the control shares by (i) a majority of
each voting group entitled to vote and (ii) the holders of a majority of the outstanding voting shares, excluding the control shares held by the Acquiror and shares
held by the Company's officers and inside directors. The term "Acquiror" is broadly defined to include persons acting as a group.
The Acquiror may, but is not required to, submit to the Company a statement setting forth certain information about the Acquiror and its plans with respect to
the Company. The statement may also request that the Company call a special meeting of shareholders to determine whether voting rights will be accorded to
the control shares. If the Acquiror does not request a special meeting of shareholders, the issue of voting rights of control shares will be considered at the next
annual or special meeting of shareholders. If the Acquiror's control shares are accorded voting rights and represent a majority or more of all voting power,
shareholders who do not vote in favor of voting rights for the control shares will have the right to receive the appraised "fair value" of their shares, which may not
be less than the highest price paid per share by the Acquiror for the control shares.
The Company is also subject to sections 60.825 to 60.845 of the OBCA, which govern business combinations between corporations and interested shareholders
(the "Business Combination Act"). The Business Combination Act generally provides that if a person or entity acquires 15% or more of the outstanding voting
stock of an Oregon corporation (an "Interested Shareholder"), the corporation and the Interested Shareholder, or any affiliated entity of the Interested
Shareholder, may not engage in certain business combination transactions for three years following the date the person became an Interested Shareholder.
Business combination transactions for this purpose include (a) a merger or plan of share exchange, (b) any sale, lease, mortgage or other disposition of 10% or
more of the assets of the corporation and (c) certain transactions that result in the issuance or transfer of capital stock of the corporation to the Interested
Shareholder. These restrictions do not apply if (i) the Interested Shareholder, as a result of the transaction in which such person became an Interested
Shareholder, owns at least 85% of the outstanding voting stock of the corporation (disregarding shares owned by directors who are also officers and certain
employee benefit plans), (ii) the board of directors approves the business combination or the transaction that resulted in the shareholder becoming an
Interested Shareholder before the Interested Shareholder acquires 15% or more of the corporation's voting stock or (iii) the board of directors and the holders of
at least two-thirds of the outstanding voting stock of the corporation (disregarding shares owned by the Interested Shareholder) approve the business
combination after the Interested Shareholder acquires 15% or more of the corporation's voting stock.
The Control Share Act and the Business Combination Act have anti-takeover effects because they will encourage any potential acquirer to negotiate with the
Company’s Board and will also discourage potential acquirers unwilling to comply with the provisions of these laws. An Oregon corporation may provide in its
articles of incorporation or bylaws that the laws described above do not apply to its shares. The Company has not adopted such a provision.
Listing
The Common Stock is traded on The Nasdaq Stock Market LLC under the trading symbol “COLM.”
Transfer Agents and Registrar
The transfer agent and registrar for the Common Stock is Computershare Trust Company, Inc.
EXHIBIT 10.29
LONG-TERM INCENTIVE CASH
AWARD AGREEMENT
This Long-Term Incentive Cash Award Agreement (the "Agreement") is entered into as of [DATE] (the "Award Date") by and between Columbia Sportswear Company,
an Oregon corporation (the "Company"), and [NAME] (the "Recipient").
The Award is made pursuant to Section 7 of the 2020 Stock Incentive Plan, as amended (the "Plan") and the Recipient desires to accept the award subject to the terms and
conditions of this Agreement.
IN CONSIDERATION of the mutual covenants and agreements set forth in this Agreement, the parties agree to the following.
1. Award. The Company awards to the Recipient under the Plan a Long-Term Incentive Cash Award with a target amount of [AMOUNT] (the "Award"), subject to
forfeiture or increase as provided in Section 1(c) of this Agreement and to the restrictions, terms and conditions set forth in this Agreement.
(a) Rights under Award. The Award represents the unfunded, unsecured right to require the Company to deliver to the Recipient a payment in cash as provided in this
Agreement. The amount of cash deliverable with respect to the Award is subject to adjustment as provided in Section 1(c) of this Agreement.
(b) Vesting Date. The Award shall initially be 100% unvested and subject to forfeiture. The portion of the Award not forfeited pursuant to Section 1(c) of this Agreement
shall vest on the date (the "Vesting Date") on which the Compensation Committee of the Board of Directors (the "Compensation Committee") confirms the Cumulative
Operating Income and Average ROIC, as defined below (collectively, the "Performance Results"), for the Performance Period, as defined below; provided, however, that to
the extent the Recipient has not been employed by the Company continuously from the Award Date to the Vesting Date, any portion of the Award not forfeited pursuant to
Section 1(c) of this Agreement shall vest on the Vesting Date with respect to a prorated amount calculated based on Recipient’s days of continuous employment from the
beginning of the Performance Period through the date Recipient’s employment terminated. If the Vesting Date falls on a weekend or any other day on which the Nasdaq Stock
Market ("NSM") or any national securities exchange on which the Common Stock then is principally traded (the "Exchange") is not open, affected portions of the Award shall
vest on the next following NSM or Exchange business day, as the case may be.
(c) Adjustment of Award.
(1) Forfeiture of Award on Termination of Service. If the Recipient ceases to be an employee of the Company prior to the Vesting Date, and such termination of
employment is not due to the Recipient’s retirement, disability or death on any date that is after the later of (i) the second anniversary of the first day of the applicable
Performance Period and (ii) if retirement, the Recipient’s retirement eligibility date (a “Qualified Termination”), the Recipient shall immediately forfeit the Award pursuant to
this Agreement and the Recipient shall have no right to receive the related cash payment. Absence on leave approved by the Company (or, if the Recipient is an executive
officer of the Company, by the Board of Directors), shall not be deemed a termination or interruption of employment or service. Unless otherwise determined by the Company
or the Board of Directors in its sole discretion, (i) vesting of Award shall continue during a medical, family or military leave of absence, whether paid or unpaid, and (ii) vesting
of Award shall be suspended during, and the amount of the cash payment deliverable at the Vesting Date shall be proportionately reduced as a result of, any other unpaid leave
of absence. In the event of a Recipient’s Qualified Termination, the Recipient’s Award shall not be immediately forfeited and shall instead be eligible to vest on a prorated basis
as provided in Section 1(b) of this Agreement. For purposes of this Agreement, “retirement” shall have the same meaning as provided in the applicable policy maintained by the
Company or the Employer for the benefit of the Recipient or, in the absence of such policy, as determined by the Board in its discretion in accordance with applicable law.
(2) Forfeiture of Award on Violation of Code of Business Conduct and Ethics. Recipient acknowledges that compliance with the Company's Code of Business Conduct
and Ethics is a condition to the receipt and vesting of the Award. If, during the term of this Agreement, the Board of Directors (or a committee of directors designated by the
Board of Directors) determines in good faith that the Recipient's conduct is or has been in violation of the Company's Code of Business Conduct and Ethics, then the Board of
Directors or committee may cause the Recipient to immediately forfeit all or a portion of the unvested Award granted pursuant to this Agreement and the Recipient shall have
no right to receive the related cash payment.
(3) Forfeiture or Increase of Award Based on Performance. For the period beginning [DATE] and ending [DATE] (the "Performance Period"), the Award shall be
adjusted as follows.
(i) 50% of the Award (the "Operating Income Component") is subject to increase or forfeiture (and if forfeited the Recipient shall have no right to receive
the related cash payment, except as provided in Section 3(iii)) based on the Cumulative Operating Income of the Company in the Performance Period, as defined below. The
Operating Income Component will be adjusted by multiplying cumulative operating income by the “Payout as a % of Target” percentage set forth in the table below. If
results are between data points, the percentage of the Award payable shall be determined by interpolation between data points.
64071-0002/142961332.2 COMPANY CONFIDENTIAL
(in 000s – USD)
"Cumulative Operating Income" means the sum of the annual income from operations for each of the fiscal years in the Performance Period as set forth in the
audited consolidated financial statements of the Company, excluding the following items (collectively, the "Excluded Effects"), for the Performance Period: [EXCLUDED
EFFECTS]
(ii) 50% of the Award (the “ROIC Component”) is subject to increase or forfeiture (and if forfeited the Recipient shall have no right to receive the related
cash payment, except as provided in Section 3(iii)) based on the Average ROIC of the Company in the Performance Period, as defined below. The ROIC Component will be
adjusted by multiplying it by the “Payout as a % of Target” percentage set forth in the table below. If results are between data points, the percentage of the Award payable
shall be determined by interpolation between data points.
"Average ROIC" means the average annual percentage return on invested capital in the Performance Period, excluding the Excluded Effects. The return on
invested capital is calculated as follows.
ROIC
=
(net operating profit/loss after taxes)
(beginning total assets for the period) - (beginning cash and short-term investments for the period – [$] for working capital need) -
(beginning non-interest-bearing current liabilities for the period)
Notwithstanding the foregoing, the Compensation Committee may, in its sole discretion, disregard all or any part of any Excluded Effects when determining the
Performance Results for the Performance Period.
(both the Operating Income Component and the ROIC Component are at Payout as 0% of
(iii) If adjustment of the Operating Income and ROIC Component pursuant to Section 1(c)(3)(i) and (ii) would result in forfeiture of 100% of the Award
64071-0002/142961332.2 COMPANY CONFIDENTIAL
Target), than rather than being forfeited, 100% of the Award shall be subject to increase or forfeiture (and if forfeited the Recipient shall have no right to receive the related
cash payment) based on the EBIT Margin (defined below) of the Company relative to the EBIT Margin of companies in the Company's compensation peer group in the
Performance Period, as determined by the Compensation Committee and set forth in Exhibit A. The cash payment available under the Award that vest on the Vesting Date will
be determined by the rank of the Company's EBIT Margin within its compensation peer group at the conclusion of the Performance Period, as follows:
"EBIT Margin" means the percentage of EBIT Margin in the Performance Period. EBIT Margin is calculated as follows.
EBIT Margin
=
(cumulative earnings before interest and taxes “EBIT”)
(cumulative net sales)
EBIT and cumulative net sales are determined on the same basis as is presented in the consolidated financial statements of the Company.
(d) Restrictions on Transfer and Delivery on Death. The Recipient may not sell, transfer, assign, pledge or otherwise encumber or dispose of the Award subject to this
Agreement. If the Recipient dies before the delivery date, the cash payment will be delivered to the Recipient's estate.
(e) Payment. As soon as practicable following the Vesting Date, provided that the Recipient has completed, signed and returned any documents and taken any additional
action the Company deems appropriate, the Company shall pay in cash the amount represented by the vested portion of the Award to the Recipient. In the in the event of the
Recipient’s death or total disability, the cash payment will be made to the Recipient’s beneficiary or executor.
Notwithstanding the foregoing, a delivery date may be delayed in order to provide the Company such time as it determines appropriate to determine tax withholding and other
administrative matters; provided, however, that in any event the cash payment shall be made not later than the later to occur of the date that is 2 1/2 months from the end of
(i) the Recipient's tax year that includes the Vesting Date, or (ii) the Company's tax year that includes the Vesting Date.
(f) Taxes and Tax Withholding.
(i) The Recipient acknowledges that under United States federal tax laws in effect on the Award Date, the Recipient will have taxable compensation income at the time of
vesting based on the amount of the cash payment made to the Recipient pursuant to the Award. The Recipient shall be responsible for all taxes imposed in connection with the
Award, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Award. The Company makes no
representation or undertaking regarding the adequacy of any tax withholding in connection with the grant or vesting of the Award.
(ii) The Company shall deduct from any and all cash payments pursuant to the Award all domestic or foreign income, employment or other tax withholding obligation,
whether national, federal, state or local (the "Tax Withholding Obligation"), arising as a result of any grant, vesting or payment of cash pursuant to this Award, in amounts
determined by the Company.
(g) No Solicitation. The Recipient agrees that for 18 months after the Recipient's employment with the Company terminates for any reason, with or without cause, whether
by the Company or the Recipient, the Recipient shall not recruit, attempt to hire, solicit, or assist others in recruiting or hiring, any person who is an employee of the Company,
or any of its subsidiaries. In addition to other remedies that may be available to the Company, the Recipient shall pay to the Company in cash, upon demand, the net value of
any cash payment made under this Agreement if the Recipient violates this Section 1(g).
(h) Not a Contract of Employment. This Agreement shall not be construed as a contract of employment between the Company and the Recipient and nothing contained in
this Agreement or in the Plan shall confer upon the Recipient any right to be continued in
64071-0002/142961332.2 COMPANY CONFIDENTIAL
the employment of the Company or any subsidiary or to interfere in any way with the right of the Company or any subsidiary by whom the Recipient is employed to terminate
the Recipient's employment at any time for any reason, with or without cause, or to decrease the Recipient's compensation or benefits.
2. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to the subjects hereof.
(b) Interpretation of the Plan and the Agreement. The Board of Directors, or a committee of the Board of Directors responsible for administering the Plan (the
"Administrator"), shall have the sole authority to interpret the provisions of this Agreement and the Plan, and all determinations by it shall be final and conclusive.
(c) Section 409A. The Award made pursuant to this Agreement is intended not to constitute a "nonqualified deferred compensation plan" within the meaning of
Section 409A the Internal Revenue Code of 1986, as amended, and instead is intended to be exempt from the application of Section 409A. To the extent that the Award is
nevertheless deemed to be subject to Section 409A, the Award shall be interpreted in accordance with Section 409A and Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other guidance issued after the grant of the Award. Notwithstanding any provision of the Award to the
contrary, in the event that the Administrator determines that the Award is or may be subject to Section 409A, the Administrator may adopt such amendments to the Award or
adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are
necessary or appropriate to (i) exempt the Award from the application of Section 409A or preserve the intended tax treatment of the benefits provided with respect to the Award,
or (ii) comply with the requirements of Section 409A.
(d) Electronic Delivery. The Recipient consents to the electronic delivery of any prospectus and any other documents relating to this Award in lieu of mailing or other form
of delivery.
(e) Rights and Benefits. The rights and benefits of this Agreement shall inure to the benefit of and be enforceable by the Company's successors and assigns and, subject to
the restrictions on transfer of this Agreement, be binding upon the Recipient's heirs, executors, administrators, successors and assigns.
(f) Further Action. The parties agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this
Agreement.
(g) Governing Law, Venue and Jurisdiction; Attorneys' Fees. This Agreement and the Plan will be interpreted under the laws of the state of Oregon, exclusive of choice of
law rules. Venue and jurisdiction will be in the state or federal courts in Washington County, Oregon, and nowhere else. In the event either party institutes litigation hereunder,
the prevailing party shall be entitled to reasonable attorneys' fees to be set by the trial court and, upon any appeal, the appellate court.
(h) Consent to Transfer Personal Data. By signing this Agreement, the Recipient voluntarily acknowledges and consents to the collection, use, processing and transfer of
personal data as described in this paragraph. The Recipient is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide
the consent may affect the Recipient's ability to participate in the Plan. The Company and its subsidiaries hold certain personal information about the Recipient, including name,
home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of stock or
directorships held in the Company, details of all entitlement to shares of stock awarded, canceled, purchased, vested, unvested or outstanding in the Recipient's favor, for the
purpose of managing and administering the Plan ("Data"). The Company and/or its subsidiaries will transfer Data amongst themselves as necessary for the purpose of
implementation, administration and management of the Plan, and the Company and/or any of its subsidiaries may each further transfer Data to any third parties assisting the
Company in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, or elsewhere throughout the
world, including the United States. The Recipient authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing the Recipient's participation in the Plan, including any requisite transfer of such Data as may be required for the administration of
the Plan and/or the subsequent holding of shares of stock on the Recipient's behalf to a broker or other third party with whom the Recipient may elect to deposit any shares of
stock acquired pursuant to the Plan. The Recipient may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by
contacting the Company; however, withdrawing consent may affect the Recipient's ability to participate in the Plan.
(i) Acknowledgment of Discretionary Nature of the Plan; No Vested Rights. The Recipient acknowledges and agrees that the Plan is discretionary in nature and limited in
duration, and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time. The Award under the Plan is a one-time benefit and does not create
any contractual or other right to receive a grant of another award or benefits in lieu of another award in the future. Future awards, if any, will be at the sole discretion of the
Company, including, but not limited to, the timing of any award, the type and amount of any award and vesting provisions.
(j) Character of Award. Participation in the Plan is voluntary. The value of the Award is an extraordinary item of compensation outside the scope of the Recipient's
employment contract, if any. As such, the Award is not part of normal or expected compensation
64071-0002/142961332.2 COMPANY CONFIDENTIAL
for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.
(k) Recovery Policy. Notwithstanding any other provision of this Agreement to the contrary and to the extent applicable to the Recipient, the Recipient acknowledges and
agrees that any cash payment received by the Recipient under this Award may be subject to potential cancellation, recoupment, rescission, payback or other action in
accordance with the terms of the Columbia Sportswear Company Incentive Compensation Recovery Policy (the "Recovery Policy") as in effect on the Award Date (and to the
extent applicable to the Recipient, a copy of which has been made available to the Recipient) and as may be amended from time to time in order to comply with changes in laws,
rules or regulations that are applicable to such Award and shares of Common Stock. As a condition to the grant of this Award, to the extent applicable, the Recipient expressly
agrees and consents to the Company’s application, implementation and enforcement of (a) the Recovery Policy and (b) any provision of applicable law relating to cancellation,
recoupment, rescission or payback of compensation. Further, the Recipient expressly agrees that the Company may take such actions as are necessary or appropriate to
effectuate the Recovery Policy (as applicable to the Recipient) or applicable law without further consent or action being required by the Recipient. For purposes of the foregoing
and as a condition to the grant of this Award, the Recipient expressly and explicitly authorizes the Company to issue instructions, on the Recipient's behalf, to any third party
broker/administrator engaged by the Company for purposes of administering awards granted under the Plan to re-convey, transfer or otherwise return such shares and/or other
amounts to the Company. To the extent that the terms of this Agreement and the Recovery Policy conflict, the terms of the Recovery Policy shall prevail.
(m) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original.
COLUMBIA SPORTSWEAR COMPANY
By:
RECIPIENT
By:
64071-0002/142961332.2 COMPANY CONFIDENTIAL
EXHIBIT 10.30
PERFORMANCE-BASED RESTRICTED STOCK UNIT
AWARD AGREEMENT
This Award Agreement (the "Agreement") is entered into as of [DATE] (the "Award Date") by and between Columbia Sportswear Company, an Oregon corporation (the
"Company"), and [NAME], for the award of restricted stock units with respect to the Company's Common Stock ("Common Stock").
The award of restricted stock units to the Recipient is made pursuant to Section 7 of the 2020 Stock Incentive Plan, as amended (the "Plan") and the Recipient desires to
accept the award subject to the terms and conditions of this Agreement.
IN CONSIDERATION of the mutual covenants and agreements set forth in this Agreement, the parties agree to the following.
1. Award and Terms of Restricted Stock Units. The Company awards to the Recipient under the Plan [SHARES] restricted stock units (the "Award"), subject to forfeiture
or increase as provided in Section 1(c) of this Agreement and to the restrictions, terms and conditions set forth in this Agreement.
(a) Rights under Restricted Stock Units. A restricted stock unit (a "RSU") represents the unfunded, unsecured right to require the Company to deliver to the Recipient one
share of Common Stock for each RSU. The number of shares of Common Stock deliverable with respect to each RSU is subject to adjustment (1) as provided in Section 1(c) of
this Agreement and (2) as determined by the Board of Directors of the Company as to the number and kind of shares of stock deliverable upon any merger, reorganization,
consolidation, recapitalization, stock dividend, spin-off or other change in the corporate structure affecting the Common Stock generally.
(b) Vesting Date. The RSUs awarded under this Agreement shall initially be 100% unvested and subject to forfeiture. The RSUs not forfeited pursuant to Section 1(c) of
this Agreement shall vest on the date (the "Vesting Date") on which the Compensation Committee of the Board of Directors (the "Compensation Committee") confirms the
Cumulative Operating Income and Average ROIC, as defined below (collectively, the "Performance Results"), for the Performance Period, as defined below; provided,
however, that to the extent the Recipient has not been employed by the Company continuously from the Award Date to the Vesting Date, any RSUs not forfeited pursuant to
Section 1(c) of this Agreement shall vest on the Vesting Date with respect to a prorated number of RSUs calculated based on Recipient’s days of continuous employment from
the beginning of the Performance Period through the date Recipient’s employment terminated. If the Vesting Date falls on a weekend or any other day on which the Nasdaq
Stock Market ("NSM") or any national securities exchange on which the Common Stock then is principally traded (the "Exchange") is not open, affected RSUs shall vest on
the next following NSM or Exchange business day, as the case may be.
(c) Adjustment of RSUs.
(1) Treatment of RSUs on Termination of Service. If the Recipient ceases to be an employee of the Company prior to the Vesting Date, and such termination of
employment is not due to the Recipient’s retirement, disability or death on any date that is after the later of (i) the second anniversary of the first day of the applicable
Performance Period and (ii) if retirement, the Recipient’s retirement eligibility date (a “Qualified Termination”), the Recipient shall immediately forfeit all outstanding RSUs
awarded pursuant to this Agreement and the Recipient shall have no right to receive the related Common Stock. Absence on leave approved by the Company (or, if the
Recipient is an executive officer of the Company, by the Board of Directors), shall not be deemed a termination or interruption of employment or service. Unless otherwise
determined by the Company or the Board of Directors in its sole discretion, (i) vesting of RSUs shall continue during a medical, family or military leave of absence, whether
paid or unpaid, and (ii) vesting of RSUs shall be suspended during, and the number of shares deliverable at the Vesting Date shall be proportionately reduced as a result of, any
other unpaid leave of absence. In the event of a Recipient’s Qualified Termination, the Recipient’s RSUs shall not be immediately forfeited and shall instead be eligible to vest
on a prorated basis as provided in Section 1(b) of this Agreement. For purposes of this Agreement, “retirement” shall have the same meaning as provided in the applicable
policy maintained by the Company or the Employer for the benefit of the Recipient or, in the absence of such policy, as determined by the Board in its discretion in accordance
with applicable law.
(2) Forfeiture of RSUs on Violation of Code of Business Conduct and Ethics. Recipient acknowledges that compliance with the Company's Code of Business Conduct
and Ethics is a condition to the receipt and vesting of the RSUs. If, during the term of this Agreement, the Board of Directors (or a committee of directors designated by the
Board of Directors) determines in good faith that the Recipient's conduct is or has been in violation of the Company's Code of Business Conduct and Ethics, then the Board of
Directors or committee may cause the Recipient to immediately forfeit all or a portion of the unvested RSUs granted pursuant to this Agreement and the Recipient shall have no
right to receive the related Common Stock.
(3) Forfeiture or Increase of RSUs Based on Performance. For the period beginning [DATE] and ending [DATE] (the "Performance Period"), the Award shall be
adjusted as follows.
(i) 50% of the Award (the "Operating Income Component") is subject to increase or forfeiture (and if forfeited the Recipient shall have no right to receive
the related Common Stock, except as provided in Section 3(iii)) based on the Cumulative Operating Income of the Company in the Performance Period, as defined below.
The Operating Income Component
64071-0002/142961332.2
will be adjusted by multiplying cumulative operating income by the “Payout as a % of Target” percentage set forth in the table below. If results are between data points, the
percentage of the Award payable shall be determined by interpolation between data points.
(in 000s – USD)
"Cumulative Operating Income" means the sum of the annual income from operations for each of the fiscal years in the Performance Period as set forth in the
audited consolidated financial statements of the Company, excluding the following items (collectively, the "Excluded Effects"), for the Performance Period: [EXCLUDED
EFFECTS]
(ii) 50% of the Award (the “ROIC Component”) is subject to increase or forfeiture (and if forfeited the Recipient shall have no right to receive the related
Common Stock, excepted as provided in Section 3(iii)) based on the Average ROIC of the Company in the Performance Period, as defined below. The ROIC Component will
be adjusted by multiplying it by the “Payout as a % of Target” percentage set forth in the table below. If results are between data points, the percentage of the Award payable
shall be determined by interpolation between data points.
"Average ROIC" means the average annual percentage return on invested capital in the Performance Period, excluding the Excluded Effects. The return on
invested capital is calculated as follows.
ROIC
=
(net operating profit/loss after taxes)
(beginning total assets for the period) - (beginning cash and short-term investments for the period – [$] for working capital need) -
(beginning non-interest-bearing current liabilities for the period)
Notwithstanding the foregoing, the Compensation Committee may, in its sole discretion, disregard all or any part of any Excluded Effects when determining the
Performance Results for the Performance Period.
64071-0002/142961332.2
(iii) If adjustment of the Operating Income and ROIC Component pursuant to Section 1(c)(3)(i) and (ii) would result in forfeiture of 100% of the Award
(both the Operating Income Component and the ROIC Component are at Payout as 0% of Target), than rather than being forfeited, 100% of the Award shall be subject to
increase or forfeiture (and if forfeited the Recipient shall have no right to receive the related Common Stock) based on the EBIT Margin (defined below) of the Company
relative to the EBIT Margin of companies in the Company's compensation peer group in the Performance Period, as determined by the Compensation Committee and set forth
in Exhibit A. The number of shares available under the Award that vest on the Vesting Date will be determined by the rank of the Company's EBIT Margin within its
compensation peer group at the conclusion of the Performance Period, as follows:
"EBIT Margin" means the percentage of EBIT Margin in the Performance Period. EBIT Margin is calculated as follows.
EBIT Margin
=
(cumulative earnings before interest and taxes “EBIT”)
(cumulative net sales)
EBIT and cumulative net sales are determined on the same basis as is presented in the consolidated financial statements of the Company.
(d) Restrictions on Transfer and Delivery on Death. The Recipient may not sell, transfer, assign, pledge or otherwise encumber or dispose of the RSUs subject to this
Agreement. If the Recipient dies before the delivery date, the shares will be delivered to the Recipient's estate.
(e) Voting Rights and Dividend Equivalents. The Recipient shall have no rights as a shareholder with respect to the RSUs or the Common Stock underlying the RSUs until
the Vesting Date for the relevant RSUs. The Recipient will not be entitled to receive a cash payment equal to any cash dividends paid with respect to the Common Stock
underlying the RSUs awarded under this Agreement that are declared prior to the particular Vesting Date for the relevant RSUs.
(f) Physical Delivery of Share Certificates. As soon as practicable following the Vesting Date, provided that the Recipient has satisfied its tax withholding obligations as
specified under Section 1(g) and the Recipient has completed, signed and returned any documents and taken any additional action the Company deems appropriate, the
Company shall deliver the shares of Common Stock represented by vested RSUs to the Recipient (the date of delivery of such shares is referred to as a "delivery date"),
rounded to the nearest whole share. No fractional shares of Common Stock shall be issued. The shares of Common Stock will be issued in the Recipient’s name or, in the event
of the Recipient’s death or total disability, to the Recipient’s beneficiary or executor.
Notwithstanding the foregoing, (i) the Company shall not be obligated to vest or deliver any shares of Common Stock during any period when the Company determines that
the conversion of a RSU or the delivery of shares hereunder would violate any federal, state or other applicable laws and may issue shares with any restrictive legend that, as
determined by the Company, is necessary to comply with securities laws or other regulatory requirements, and (ii) a delivery date may be delayed in order to provide the
Company such time as it determines appropriate to determine tax withholding and other administrative matters; provided, however, that in any event the shares shall be
delivered not later than the later to occur of the date that is 2 1/2 months from the end of (i) the Recipient's tax year that includes the Vesting Date, or (ii) the Company's tax
year that includes the Vesting Date.
(g) Taxes and Tax Withholding.
(i) The Recipient acknowledges that under United States federal tax laws in effect on the Award Date, the Recipient will have taxable compensation income at the time of
vesting based on the Market Value (as defined below) of the Common Stock on the Vesting Date. The Recipient shall be responsible for all taxes imposed in connection with the
Award, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Award. The Company makes no
representation or undertaking regarding the adequacy of any tax withholding in connection with the grant or vesting of the Award.
64071-0002/142961332.2
(ii) The Company shall have the right, but not the obligation, to deduct from any and all payments made under the Plan, or to withhold from any delivery of Common
Stock hereunder all domestic or foreign income, employment or other tax withholding obligations, whether national, federal, state or local (the "Tax Withholding
Obligation"), arising as a result of any grant, vesting or delivery of Common Stock pursuant to this Award, in amounts determined by the Company. Unless otherwise
determined by the Company, the Tax Withholding Obligation will be satisfied by the Company withholding from the vested shares of Common Stock a number of whole shares
of Common Stock with an aggregate Market Value (as defined below) equal to the required minimum tax withholding. The Recipient shall pay to the Company in cash, upon
demand, the amount of any Tax Withholding Obligation that is not satisfied by the withholding of shares described above, and authorizes the Company to withhold from other
amounts payable by the Company to the Recipient, including through additional payroll withholding, any amount not so paid. The Company has no obligation to deliver shares
of Common Stock pursuant to this Award until the Company's tax withholding obligations have been satisfied by the Recipient.
(h) No Solicitation. The Recipient agrees that for 18 months after the Recipient's employment with the Company terminates for any reason, with or without cause, whether
by the Company or the Recipient, the Recipient shall not recruit, attempt to hire, solicit, or assist others in recruiting or hiring, any person who is an employee of the Company,
or any of its subsidiaries. In addition to other remedies that may be available to the Company, the Recipient shall pay to the Company in cash, upon demand, the net value of
any shares of Common Stock, valued as of the Vesting Date, delivered under this Agreement if the Recipient violates this Section 1(h).
(i) Not a Contract of Employment. This Agreement shall not be construed as a contract of employment between the Company and the Recipient and nothing contained in
this Agreement or in the Plan shall confer upon the Recipient any right to be continued in the employment of the Company or any subsidiary or to interfere in any way with the
right of the Company or any subsidiary by whom the Recipient is employed to terminate the Recipient's employment at any time for any reason, with or without cause, or to
decrease the Recipient's compensation or benefits.
2. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to the subjects hereof.
(b) Interpretation of the Plan and the Agreement. The Board of Directors, or a committee of the Board of Directors responsible for administering the Plan (the
"Administrator"), shall have the sole authority to interpret the provisions of this Agreement and the Plan, and all determinations by it shall be final and conclusive.
(c) Section 409A. The Award made pursuant to this Agreement is intended not to constitute a "nonqualified deferred compensation plan" within the meaning of
Section 409A the Internal Revenue Code of 1986, as amended, and instead is intended to be exempt from the application of Section 409A. To the extent that the Award is
nevertheless deemed to be subject to Section 409A, the Award shall be interpreted in accordance with Section 409A and Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other guidance issued after the grant of the Award. Notwithstanding any provision of the Award to the
contrary, in the event that the Administrator determines that the Award is or may be subject to Section 409A, the Administrator may adopt such amendments to the Award or
adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are
necessary or appropriate to (i) exempt the Award from the application of Section 409A or preserve the intended tax treatment of the benefits provided with respect to the Award,
or (ii) comply with the requirements of Section 409A.
(d) Market Value. "Market Value" as of a particular date shall mean (i) the closing sales price per share of Common Stock as reported by the NSM on that date, or (ii) if the
shares of Common Stock are not listed or admitted to trading on the NSM, the closing price on the national securities exchange on which such stock is principally traded on that
date, or (iii) if the shares of Common Stock are not then listed on the NSM or on another national securities exchange, the average of the highest reported bid and lowest
reported asked prices for the shares of Common Stock on that date or (iv) if the shares of Common Stock are not then listed on any securities exchange and prices therefor are
not reported, such value as determined in good faith by the Board of Directors (or any duly authorized committee thereof) as of that date.
(e) Electronic Delivery. The Recipient consents to the electronic delivery of any prospectus and any other documents relating to this Award in lieu of mailing or other form
of delivery.
(f) Rights and Benefits. The rights and benefits of this Agreement shall inure to the benefit of and be enforceable by the Company's successors and assigns and, subject to
the restrictions on transfer of this Agreement, be binding upon the Recipient's heirs, executors, administrators, successors and assigns.
(g) Further Action. The parties agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this
Agreement.
(h) Governing Law, Venue and Jurisdiction; Attorneys' Fees. This Agreement and the Plan will be interpreted under the laws of the state of Oregon, exclusive of choice of
law rules. Venue and jurisdiction will be in the state or federal courts in Washington
64071-0002/142961332.2
County, Oregon, and nowhere else. In the event either party institutes litigation hereunder, the prevailing party shall be entitled to reasonable attorneys' fees to be set by the trial
court and, upon any appeal, the appellate court.
(i) Consent to Transfer Personal Data. By signing this Agreement, the Recipient voluntarily acknowledges and consents to the collection, use, processing and transfer of
personal data as described in this paragraph. The Recipient is not obliged to consent to such collection, use, processing and transfer of personal data. However, failure to provide
the consent may affect the Recipient's ability to participate in the Plan. The Company and its subsidiaries hold certain personal information about the Recipient, including name,
home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of stock or
directorships held in the Company, details of all entitlement to shares of stock awarded, canceled, purchased, vested, unvested or outstanding in the Recipient's favor, for the
purpose of managing and administering the Plan ("Data"). The Company and/or its subsidiaries will transfer Data amongst themselves as necessary for the purpose of
implementation, administration and management of the Plan, and the Company and/or any of its subsidiaries may each further transfer Data to any third parties assisting the
Company in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, or elsewhere throughout the
world, including the United States. The Recipient authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing the Recipient's participation in the Plan, including any requisite transfer of such Data as may be required for the administration of
the Plan and/or the subsequent holding of shares of stock on the Recipient's behalf to a broker or other third party with whom the Recipient may elect to deposit any shares of
stock acquired pursuant to the Plan. The Recipient may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by
contacting the Company; however, withdrawing consent may affect the Recipient's ability to participate in the Plan.
(j) Acknowledgment of Discretionary Nature of the Plan; No Vested Rights. The Recipient acknowledges and agrees that the Plan is discretionary in nature and limited in
duration, and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time. The award of RSUs under the Plan is a one-time benefit and does
not create any contractual or other right to receive a grant of RSUs or benefits in lieu of RSUs in the future. Future awards, if any, will be at the sole discretion of the Company,
including, but not limited to, the timing of any award, the number of RSUs and vesting provisions.
(k) Character of Award. Participation in the Plan is voluntary. The value of the Award is an extraordinary item of compensation outside the scope of the Recipient's
employment contract, if any. As such, the Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of
service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.
(l) Recovery Policy. Notwithstanding any other provision of this Agreement to the contrary and to the extent applicable to the Recipient, the Recipient acknowledges and
agrees that the Recipient’s RSUs, any shares of Common Stock acquired pursuant thereto and/or any amount received with respect to any sale of such shares may be subject to
potential cancellation, recoupment, rescission, payback or other action in accordance with the terms of the Columbia Sportswear Company Incentive Compensation Recovery
Policy (the "Recovery Policy") as in effect on the Award Date (and to the extent applicable to the Recipient, a copy of which has been made available to the Recipient) and as
may be amended from time to time in order to comply with changes in laws, rules or regulations that are applicable to such Award and shares of Common Stock. As a condition
to the grant of the RSUs, to the extent applicable, the Recipient expressly agrees and consents to the Company’s application, implementation and enforcement of (a) the
Recovery Policy and (b) any provision of applicable law relating to cancellation, recoupment, rescission or payback of compensation. Further, the Recipient expressly agrees
that the Company may take such actions as are necessary or appropriate to effectuate the Recovery Policy (as applicable to the Recipient) or applicable law without further
consent or action being required by the Recipient. For purposes of the foregoing and as a condition to the grant of the RSUs, the Recipient expressly and explicitly authorizes the
Company to issue instructions, on the Recipient's behalf, to any third party broker/administrator engaged by the Company for purposes of administering awards granted under
the Plan to re-convey, transfer or otherwise return such shares and/or other amounts to the Company. To the extent that the terms of this Agreement and the Recovery Policy
conflict, the terms of the Recovery Policy shall prevail.
( m ) Acceptance. By accepting the grant of the Award, the Recipient acknowledges that the Recipient has read the Agreement, the Addendum to the Agreement (as
applicable) and the Plan, and specifically accepts and agrees to the provisions therein.
This Award of RSUs is subject to the Recipient's on-line acceptance of the terms and conditions of this Agreement through the E*TRADE web
portal. By accepting the terms and conditions of this Agreement, the Recipient acknowledges receipt of a copy of the Plan, the U.S. Prospectus
for the Plan, and the local country tax supplement to the U.S. Prospectus for the Plan (the "Award Information"). The Recipient represents
that the Recipient is familiar with the terms and provisions of the Award Information and hereby accepts this Award on the terms and
conditions set forth herein and in the Plan, and acknowledges that the Recipient had the opportunity to obtain independent legal, investment
and tax advice at the Recipient's personal expense prior to accepting this Award.
COLUMBIA SPORTSWEAR COMPANY
64071-0002/142961332.2
Columbia Sportswear Company
List of Subsidiaries
As of December 31, 2022
Name
Columbia Brands Holding Company
Columbia Brands International Sàrl
Columbia Brands USA, LLC
Columbia Brands Canada Limited
Columbia Sportswear Austria GmbH
Columbia Sportswear Canada GP ULC
Columbia Sportswear Canada LP
Columbia Sportswear Commercial (Shanghai) Co., Ltd.
Columbia Sportswear Company (Dongguan) Limited
Columbia Sportswear Company (Hong Kong) Limited
Columbia Sportswear Company Limited
Columbia Sportswear Czech s.r.o.
Columbia Sportswear Denmark ApS
Columbia Sportswear Distribution S.A.S.
Columbia Sportswear Europe S.A.S.
Columbia Sportswear Finland Oy
Columbia Sportswear GmbH
Columbia Sportswear India Sourcing Private Limited
Columbia Sportswear Information Consultant (Zhuhai) Co., Ltd.
Columbia Sportswear International Sàrl
Columbia Sportswear Italy S.r.l.
Columbia Sportswear Japan, Inc.
Columbia Sportswear Korea
Columbia Sportswear LO Holdings LLC
Columbia Sportswear Luxembourg Holdings Sàrl
Columbia Sportswear Netherlands B.V.
Columbia Sportswear North America, Inc.
Columbia Sportswear Norway AS
Columbia Sportswear Poland Sp.z.o.o
Columbia Sportswear Spain S.L.U.
Columbia Sportswear Sweden AB
CSMM Hong Kong Limited
GTS, Inc.
Montrail Corporation
Mountain Hardwear, Inc.
OutDry Technologies Corporation
Pacific Trail Corporation
prAna Living, LLC
Sorel Corporation
Columbia Sportswear Vietnam Limited Liability Company
Exhibit 21.1
Jurisdiction of Incorporation
Oregon
Switzerland
Oregon
Canada
Austria
Canada
Canada
China
China
Hong Kong
United Kingdom
Czech Republic
Denmark
France
France
Finland
Germany
India
China
Switzerland
Italy
Japan
Korea
Oregon
Luxembourg
The Netherlands
Oregon
Norway
Poland
Spain
Sweden
Hong Kong
Oregon
Oregon
Utah
Oregon
Oregon
Oregon
Delaware
Vietnam
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23.1
We consent to the incorporation by reference in Registration Statement Nos. 333-53785, 333-186958, 333-238935, 333-160702, 333-117986, 333-108342,
333-86224, and 333-80387 on Form S-8 of our reports dated February 23, 2023, relating to the financial statements of Columbia Sportswear Company and the
effectiveness of Columbia Sportswear Company’s internal control over financial reporting appearing in this Annual Report on Form 10-K of Columbia
Sportswear Company for the year ended December 31, 2022.
/s/ DELOITTE & TOUCHE LLP
Portland, Oregon
February 23, 2023
I, Timothy P. Boyle, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Columbia Sportswear Company;
CERTIFICATION
EXHIBIT 31.1
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 23, 2023
/s/ TIMOTHY P. BOYLE
Timothy P. Boyle
Chairman, President and Chief Executive
Officer
(Principal Executive Officer)
I, Jim A. Swanson, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Columbia Sportswear Company;
CERTIFICATION
EXHIBIT 31.2
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 23, 2023
/s/ JIM A. SWANSON
Jim A. Swanson
Executive Vice President and Chief Financial
Officer
(Principal Financial and Accounting Officer)
SECTION 1350 CERTIFICATION
EXHIBIT 32.1
In connection with the Annual Report of Columbia Sportswear Company (the “Company") on Form 10-K for the period ended December 31, 2022 as filed with
the Securities and Exchange Commission on the date hereof (the "Form 10-K"), I, Timothy P. Boyle, Chief Executive Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Form 10-K fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 as of, and for, the
periods presented in the Form 10-K; and
(2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of the operations of the Company.
Dated: February 23, 2023
/s/ TIMOTHY P. BOYLE
Timothy P. Boyle
Chairman, President and Chief Executive
Officer
(Principal Executive Officer)
SECTION 1350 CERTIFICATION
EXHIBIT 32.2
In connection with the Annual Report of Columbia Sportswear Company (the “Company") on Form 10-K for the period ended December 31, 2022 as filed with
the Securities and Exchange Commission on the date hereof (the "Form 10-K"), I, Jim A. Swanson, Chief Financial Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Form 10-K fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 as of, and for, the
periods presented in the Form 10-K; and
(2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of the operations of the Company.
Dated: February 23, 2023
/s/ JIM A. SWANSON
Jim A. Swanson
Executive Vice President and Chief Financial
Officer
(Principal Financial and Accounting Officer)