Columbia Sportswear 2004 Annual Report Download - page 14

In several other countries throughout the world, we sell our products to independent distributors. These
distributors service retail customers in locations such as Australia, New Zealand, South America, portions of
Europe, Russia and China, among others. For 2004, shipments to Russia represented the largest segment of the
international distributor business.
Intellectual Property
We own many trademarks, including “Columbia®,” “Columbia Sportswear Company®,” “Convert®,”
“Sorel®,” “Bugaboo®,” “Bugabootoo®,” “Omni-Tech®,” “GRT®,” “Omni-Grip®,” “Columbia Interchange
System®,” “Titanium®,” “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 goods, including
apparel, footwear and licensed 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, along with
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 or components. With the
acquisition of Mountain Hardwear, we acquired trademarks, patents and other intellectual property 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, orders are subject to cancellation prior to the date of
shipment. At December 31, 2004, our order backlog was $409.1 million, compared to $400.9 million at
December 31, 2003. 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 at December 31
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 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
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