Columbia Sportswear 2003 Annual Report Download - page 15

System®,” “Tough Mother®,” “Mountain Hardwear®,” the Columbia diamond shaped logo, the Mountain
Hardwear “nut” logo and the Sorel polar bear logo. Our trademarks, many of which are registered or subject to
pending applications in the United States and other nations, are used on a variety of items of apparel, footwear,
and other products. We believe that our trademarks are valuable, providing the consumer with an assurance that
the product being purchased is of high quality and provides good value. We also place significant value on
product designs (the overall appearance and image of our products) which, as much as trademarks, distinguish
our products in the marketplace. In connection with the acquisition of the Sorel trademarks we acquired
industrial designs and patents protecting some Sorel styles. With the acquisition of Mountain Hardwear, we
acquired patents and other proprietary information relating to Mountain Hardwear products. We protect these
proprietary rights and frequently take action to prevent counterfeit reproductions or other infringing activity. In
the past we have successfully resolved conflicts over proprietary rights through legal action and negotiated
settlements. As our market share expands in geographic scope and product categories, we anticipate intellectual
property disputes will increase as well, making it more expensive and challenging to establish and protect our
proprietary rights and to defend against claims of infringement by others.
Backlog
We typically receive the bulk of our orders for each of the fall and spring seasons at least three months prior
to the date the products are shipped to customers. Generally, the orders are subject to cancellation prior to the
date of shipment. At December 31, 2003, our order backlog was $400.9 million, compared to $331.5 million at
December 31, 2002. For a variety of reasons, including the timing of shipments, timing of order deadlines, timing
of receipt of orders, product mix of customer orders and the amount of in-season orders, backlog may not be a
reliable measure of future sales for any succeeding period. For these reasons backlog figures in one year also
may not be directly comparable to backlog figures in another year when measured at the same date.
Seasonality
Our business is affected by the general seasonal trends common to the outdoor apparel industry, with sales
and profits being the highest in the third calendar quarter. Our products are marketed on a seasonal basis, with a
product mix weighted substantially toward the fall season. The results of our operations in any period should not
be considered indicative of the results to be expected for any future period. Our product sales are subject to
substantial cyclical fluctuations and are affected by unseasonal weather conditions. Sales tend to decline in
periods of recession or uncertainty regarding future economic prospects that affect consumer spending,
particularly on discretionary items. This cyclicality and any related fluctuation in consumer demand could have a
material adverse effect on the Company’s business.
Competition
The active outerwear, sportswear and footwear segments of the apparel industry are highly competitive and
we believe that this competition will increase. In addition, our licensees operate in very competitive markets
(such as those for watches, leather outerwear, adventure travel bags and socks). We encounter substantial
competition in the active outerwear and sportswear business from, among others, The North Face, Inc. (VF
Corporation), Marmot Mountain Ltd., Woolrich Woolen Mills, Inc., The Timberland Company (“Timberland”),
Patagonia Corporation, Helly-Hansen A/S, Burton and Pacific Trail (London Fog). In addition, we compete with
major sport companies, such as Nike, Inc., adidas-Salomon AG and Reebok International Ltd., and with fashion-
oriented competitors, such as Polo Ralph Lauren Corporation, Nautica Enterprises, Inc. (VF Corporation) and
Tommy Hilfiger Corporation. Our footwear line competes with, among others, Timberland, Nike ACG,
adidas-Salomon AG, Merrill, Carhartt, Wolverine, Teva and Kamik. Many of these companies have global
operations and compete with us in Europe and Asia. In Europe we also face competition from brands such as
Berghaus of the United Kingdom, Jack Wolfskin of Germany, La Fuma of France, as well as many other regional
brands. In Asia our competition is from brands such as Mont-Bell and Patagonia among others. In many cases,
our most significant competition comes from our own retail customers that manufacture and market clothing and
footwear
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