Columbia Sportswear 2003 Annual Report Download - page 36

products we have ordered from manufacturers or that we have in our inventory. Customers are allowed to cancel
an order prior to shipment with sufficient advance notice. Inventory levels in excess of customer demand may
result in inventory write-downs and the sale of excess inventory at discounted prices, which could have a
material adverse effect on our results of operations and financial condition.
We Depend on Key Personnel
Our future success will depend in part on the continued service of key personnel, particularly Timothy
Boyle, our President and Chief Executive Officer, and Gertrude Boyle, our Chairman and widely recognized
advertising spokesperson. Our future success will also depend on our ability to attract and retain key managers,
designers, sales people and others. We face intense competition for such individuals worldwide, and there is a
significant concentration of well-funded apparel and footwear competitors in and around Portland, Oregon
(including Nike and adidas-Salomon). We may not be able to attract or retain these employees, and our failure to
do so could have a material adverse effect on our results of operations and financial condition.
Our Business Is Affected by Seasonality and Fluctuations in Operating Results
Our results of operations have fluctuated and are likely to fluctuate significantly from period to period. Our
products are marketed on a seasonal basis, with a product mix now weighted substantially toward the fall season.
Our results of operations for the quarter ended September 30 in the past have been much stronger than the results
for the other quarters. This seasonality, along with other factors that are beyond our control, including general
economic conditions, changes in consumer behavior, weather conditions, availability of import quotas and
currency exchange rate fluctuations, could adversely affect our business and cause our results of operations to
fluctuate. Results of operations in any period should not be considered indicative of the results to be expected for
any future period.
We Face Risks of Product Liability and Warranty Claims
Our products are used in outdoor activities, sometimes in severe conditions. Although we have not
experienced any significant expense as the result of product recalls or product liability claims, recalls or these
types of claims could occur in the future and have a material adverse effect on our business. Some of our
outerwear and Sorel products carry limited warranties for defects in quality and workmanship. We maintain a
warranty reserve for future warranty claims, but the actual costs of servicing future warranty claims could exceed
the reserve and have a material adverse effect on our results of operations and financial condition.
Our Common Stock Price May Be Volatile
The price of our common stock has fluctuated substantially since our initial public offering. Our common
stock is traded on the Nasdaq National Market, which has experienced and is likely to experience significant
price and volume fluctuations that could adversely affect the market price of our common stock without regard to
our operating performance. We also believe factors such as fluctuations in financial results, variances from
financial market expectations, changes in earnings estimates by analysts, or announcements by us or competitors
may cause the market price of the common stock to fluctuate, perhaps substantially.
Insiders Control a Majority of Our Common Stock and Could Sell Shares
Timothy Boyle, Gertrude Boyle and Sarah Bany (Gertrude Boyle’s daughter and a member of our Board of
Directors), beneficially own a majority of our common stock. As a result, if acting together, they are able to
effectively control matters requiring shareholder approval without the cooperation of other shareholders. Shares
held by these three insiders are available for resale, subject to the requirements of, and the rules under the
Securities Act of 1933. The sale or prospect of the sale of a substantial number of these shares could have an
adverse effect on the market price of our common stock.
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