Columbia Sportswear 2000 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ...retail distribution without compromising the Columbia brand. Internationally, the Sorel name has been associated with the design and creation of durable, cold weather footwear for nearly 40 years. Sorel's reputation as a quality, value-oriented brand is a superb fit with Columbia's footwear business...

  • Page 3
    ... developing in 2000 with the first shipments to retailers of Columbia licensed product. Moreover, the addition of new licensees in the small leather goods, thermal underwear, and adventure travel bags categories will present additional growth opportunities for the Columbia Sportswear brand. Looking...

  • Page 4
    ... to design, manufacture, and market backpacks and adventure travel bags. The extensive collection of bags will be available in stores for Spring 2001. July 25, 2000 Columbia Sportswear Company Reports Record Second Quarter 2000 Results Columbia Sportswear Company® today announced record net sales...

  • Page 5
    ... Jacket™ as a "Best Buy" in the category of winter outerwear. November 1, 2000 Columbia Sportswear Purchases New Facility for Headquarters International outdoor apparel and footwear manufacturer Columbia Sportswear Company® announced today that it has purchased a new facility for its corporate...

  • Page 6
    ..., expanding our international business, the continued development of our sportswear and footwear businesses, and expanding distribution into department stores and specialty footwear retailers. Columbia's substantial growth indicates that our strategy has been working. Sales have increased from...

  • Page 7
    ...our brand in the United Kingdom, we opened a London office in May 2000. Where we previously had a distributor managing the brand, now we are able to handle business in the U.K. as we do in our other key European markets by selling directly to retailers. Providing a high level of customer service is...

  • Page 8
    ... in February 2000 we signed a licensing agreement with Humphreys, Inc. that include belts, travel kits, wallets, and other leather goods. These products are currently available in stores, and we are enthused about the initial performance of these products at retail. High-quality primary layers are...

  • Page 9
    ...A lot has happened to outdoor apparel and footwear in the 63 years that we have been in business, and we continually seek to pioneer new designs and technology. For example, in Fall 2000 we debuted our most technical line of outerwear yet, our Titanium Alloyâ„¢ group. Designed using state-of-the-art...

  • Page 10
    ... Investor Relations, Columbia Sportswear Company, P.O. Box 83239, Portland, Oregon 97283-0239. In addition, these and similar reports can be accessed through our website at www.columbia.com. EXECUTIVE OFFICERS GERTRUDE BOYLE Chairman of the Board AUDITORS Deloitte & Touche LLP, Portland, Oregon...

  • Page 11
    ...IRS Employer IdentiÃ'cation Number) 6600 North Baltimore, Portland, Oregon (Address of principal executive oÇces) 97203 (Zip Code) (503) 286-3676 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former Ã'scal year, if changed since last report...

  • Page 12
    COLUMBIA SPORTSWEAR COMPANY December 31, 2000 TABLE OF CONTENTS Page Item Item Item Item Item 1. 2. 3. 4. 4a. PART I Business Properties Legal Proceedings Submission of Matters to a Vote of Security Holders Executive OÇcers and Key Employees of the Registrant 1 8 8 8 9 11 12 13 20 21 39 ...

  • Page 13
    ... and distribution of active outdoor apparel and footwear, with operations in North America, Europe and Asia. As one of the largest outerwear companies in the world and the leading seller of skiwear in the United States, we have developed an international reputation across an expanding product line...

  • Page 14
    ... net sales for 2000. Our sportswear line is made up of outdoor sportswear, golf apparel, and GRT» (Gear for Rugged Trekking, Travel and Training). The outdoor sportswear product line, consisting primarily of hiking shorts, water sport trunks, Ã-eece and pile products, sweaters, chinos, knit shirts...

  • Page 15
    ... introduce Columbia brand casual and outdoor socks, packs and adventure travel bags, small personal leather goods and thermal tops, bottoms and accessories to North American markets and outdoor performance socks to the Eastern European, Western European and Russian markets. Our United States sock...

  • Page 16
    ... risk entirely because customer orders are subject to cancellation prior to shipment. Product Design Our experienced in-house merchandising and design teams, working closely with internal sales and production teams as well as with retailers and consumers, produce products designed primarily for...

  • Page 17
    ... factory to comply with a code of conduct relating to factory working conditions and the treatment of workers involved in the production of Columbia brand products. Our quality control program is designed to ensure our products meet the highest quality standards. Our employees monitor the quality...

  • Page 18
    ... Canadian distribution from an approximately 103,000 square foot warehouse in Strathroy, Ontario. In some instances, we arrange to have the product shipped directly from the independent manufacturers to a customer-designated facility. Other International We have a European sales and marketing oÇce...

  • Page 19
    ...service retail customers in locations such as Australia, New Zealand, South America, Eastern Europe and Russia. Distributors also oÃ...er Columbia products in Mexico, Norway, Turkey, Switzerland and Greece. In late 1999, we established a subsidiary in the United Kingdom for direct sales in that market...

  • Page 20
    ... through 2003. U.S. Administrative OÇces: Portland, Oregon (2 locations) Ì leased Canadian Operation: Strathroy, Ontario (1 location) Ì leased U.S. Distribution Facility: Portland, Oregon (1 location) Ì owned Corporate Headquarters(1): Portland, Oregon (1 location) Ì owned (1) In October of...

  • Page 21
    ... and service company. From 1982 to 1989 he was National Sales Manager of Gore's Fabric Division. Grant D. Prentice joined Columbia in May 1984 as General Manager Ì Outerwear Merchandising. From 1977 to 1984, Mr. Prentice worked as a sales representative for Gerry Outdoor Products, a skiwear company...

  • Page 22
    ... Men's and Women's Sportswear and in August 2000 was named General Manager Ì Sportswear Merchandising. Prior to joining Columbia, Mr. Sandquist worked in various managerial positions for Union Bay from 1985 to 1995. Rodney R. Gumringer joined Columbia in December 1993 as General Manager Ì Footwear...

  • Page 23
    ...development and expansion of our business and, therefore, we have no current plans to pay cash dividends. Future dividend policy will depend on our earnings, capital requirements, Ã'nancial condition, restrictions imposed by our credit agreement, and other factors considered relevant by our Board of...

  • Page 24
    ... elsewhere in this Annual Report and Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 7. 2000 Year Ended December 31, 1999 1998 1997 1996 Statement of Operations Data: Net sales Cost of sales Gross proÃ't Selling, general and administrative...

  • Page 25
    ... primarily attributable to increased sales of outerwear units, predominantly in the United States, Canada and Europe, and increased sales of sportswear and footwear units across all regions. Gross ProÃ't: Gross proÃ't as a percentage of net sales was 45.6% and 44.8% for 2000 and 1999, respectively...

  • Page 26
    ... in net international sales was due primarily to increases in European and Japanese direct sales, which increased $14.2 million or 52.1% and $10.4 million or 133.8%, respectively. Unit sales generated these increases for both Europe and Japan across all product lines. Canadian sales increased...

  • Page 27
    ... Sorel trademark for approximately $8.0 million (see Note 2 to the Consolidated Financial Statements) and a corporate headquarters facility for approximately $13.0 million. Cash used in Ã'nancing activities was $1.7 million for the year ended December 31, 2000 and $2.8 million for 1999. In 2000, net...

  • Page 28
    ... in domestic and international markets, growth in merchandise categories, increased sales to department stores and footwear specialty shops, implementation and performance of new management information systems and distribution facilities, access to raw materials and factory capacity, Euro currency...

  • Page 29
    ... weather in the United States in 1998 and 1999 caused customers to delay, and in some cases reduce or cancel, orders for our outerwear, which had an adverse eÃ...ect on the our net sales and proÃ'tability. Periods of unseasonably warm weather could have a material adverse eÃ...ect on our business. 17

  • Page 30
    ... and winning consumer acceptance. Increasing sales to department stores, and the number of concept shops opened and their success, will each depend on various factors, including strength of our brand name, competitive conditions, our ability to manage increased sales and concept shop expansion, the...

  • Page 31
    ... we do not control these vendors or their labor practices. We Depend on Key Suppliers for Some Specialty Fabrics Some of the materials that we use may be available, in the short-term, from only one or a very limited number of sources. For example, some specialty fabrics are manufactured to our speci...

  • Page 32
    ... and image of our products. In markets outside the United States, it may be more diÇcult for us to establish our proprietary rights and to challenge successfully use of those rights by other parties. We will also face additional challenges as we extend our brand into new product categories...

  • Page 33
    ... 8. Financial Statements and Supplemental Data Our management is responsible for the information and representations contained in this report. The Ã'nancial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which we considered...

  • Page 34
    INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of Columbia Sportswear Company: We have audited the accompanying consolidated balance sheets of Columbia Sportswear Company and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, ...

  • Page 35
    COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED BALANCE SHEETS (In thousands) ASSETS December 31, 2000 1999 Current Assets: Cash and cash equivalents Accounts receivable, net of allowance of $5,826 and $4,535, respectively Inventories, net...restricted stock issued for future Services (Note 11 2,728) ...

  • Page 36
    COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) 2000 Year Ended December 31, 1999 1998 Net sales Cost of sales Gross proÃ't Selling, general, and administrative Income from operations Interest expense, net Income before income tax ...

  • Page 37
    COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) 2000 Year Ended December 31, 1999 1998 Cash Provided by (Used in) Operating Activities: Net Income 58,611 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization...

  • Page 38
    COLUMBIA SPORTSWEAR COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands) Unearned Portion of Restricted Stock Issued For Future Services Common Stock Shares Outstanding Amount Retained Earnings Accumulated Other Comprehensive Income (Loss) Comprehensive Income Total Balance, ...

  • Page 39
    ... of Presentation and Organization Nature of the business: Columbia Sportswear Company (the ""Company'') is a global leader in the design, manufacture, marketing and distribution of active outdoor apparel, including outerwear, sportswear, footwear, and related accessories. Note 2 Ì Summary of Signi...

  • Page 40
    ...other assets: In September 2000, the Company acquired the Sorel trademark rights, associated brand names and other related intellectual property rights for $7,967,000 in cash. The acquired intangible assets are being amortized over their estimated useful lives on a straight-line basis over ten years...

  • Page 41
    ... the Company's fourth quarter of Ã'scal year 2000. The adoption of this bulletin did not have a material eÃ...ect on the Company's consolidated Ã'nancial statements. Note 3 ÃŒ Inventories, Net Inventories consist of the following (in thousands): December 31, 2000 1999 Raw materials Work in process...

  • Page 42
    ... was $0 and $9,145,000 at December 31, 2000 and 1999, respectively. The unsecured operating line of credit requires the Company to comply with certain covenants including a Capital Ratio, which limits indebtedness to tangible net worth. If the Company defaults on its payments, it is prohibited...

  • Page 43
    COLUMBIA SPORTSWEAR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company's European branch has a line of credit providing for borrowing to a maximum of 90,000,000 FRF (US$12,930,000 at December 31, 2000). The balance outstanding was $11,463,000 and $8,039,000, at an interest ...

  • Page 44
    ... of common stock are authorized for issuance under the ESPP, which allows qualiÃ'ed employees of the Company to purchase shares on a quarterly basis up to Ã'fteen percent of their respective compensation. The purchase price of the shares is equal to eighty Ã've percent of the lesser of the closing...

  • Page 45
    COLUMBIA SPORTSWEAR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following is a reconciliation of the normal expected statutory federal income tax rate to the eÃ...ective rate reported in the Ã'nancial statements: Year Ended December 31 2000 1999 1998 (percent of income) ...

  • Page 46
    .... Compensation expense related to the Participation Plan and the 1996 conversion totaled $682,000, $970,000, and $970,000 for the years ended December 31, 2000, 1999, and 1998, respectively. Note 12 Ì Commitments and Contingencies The Company leases certain operating facilities from related parties...

  • Page 47
    COLUMBIA SPORTSWEAR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the stock option activity under the Company's option plan: Number of shares Weighted Average Exercise Price Options outstanding at January 1, 1998 Granted Cancelled Exercised ...

  • Page 48
    ... operates predominantly in one industry segment: the design, production, marketing and selling of active outdoor apparel, including outerwear, sportswear, rugged footwear and related accessories. The geographic distribution of the Company's net sales, income before income tax, identiÃ'able assets...

  • Page 49
    COLUMBIA SPORTSWEAR COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2000 1999 1998 Assets: United States Canada Other international Total identiÃ'able assets Eliminations Total assets Interest expense (income), net: United States Canada Other International Depreciation and ...

  • Page 50
    ... Company's quarterly Ã'nancial data for the past two years ending December 31, 2000 (in thousands, except per share amounts): First Quarter Second Quarter Third Quarter Fourth Quarter 2000 Net sales Gross proÃ't Net income Net income per share ÃŒ basic diluted 1999 Net sales Gross proÃ't Net...

  • Page 51
    ... than 120 days after the end of our Ã'scal year ended December 31, 2000. Information with respect to executive oÇcers is included under Item 4(a) of Part I of this report. Item 11. Executive Compensation There is incorporated herein by reference the information required by this Item included in...

  • Page 52
    ... Option Agreement Form of Executive Stock Option Agreement Credit Agreement between the Hong Kong and Shanghai Banking Corporation Limited and the Company dated September 17, 1991, as amended Buying Agency Agreement between Nissho Iwai American Corporation and the Company dated January 1, 1992, as...

  • Page 53
    ..., 1999) Executive Incentive Compensation 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 March 31, 2000) Subsidiaries of the Company Consent of Deloitte & Touche LLP Powers of Attorney ‰ Management Contract...

  • Page 54
    ... caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, as of March 28, 2001. COLUMBIA SPORTSWEAR COMPANY By: /s/...Executive OÇcer and Director (Principal Executive OÇcer) Chief Financial OÇcer (Principal Financial and Accounting OÇcer) Chairman of the Board...

  • Page 55
    ... statements regarding the distribution center investments in the U.S. and France, references to growth prospects in international markets, and information about opportunities for growth of the brand through licensing. All forward-looking statements, including those made in this annual report as well...

  • Page 56
    Where the sidewalk ends, the world begins. OUTERWEAR SPORTSWEAR FOOTWEAR ACCESSORIES P.O. Box 83239 Portland, OR 97283-0239 Phone 503.286.3676 Facsimile 503.289.6602 Toll Free 1.800.547.8066 Printed on recycled paper with soy based inks ©2001Columbia Sportswear Company Printed in USA, 4/01 C0.062...