Columbia Sportswear 2004 Annual Report Download - page 31

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Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standard (“SFAS”) No. 153, “Exchange of Nonmonetary Assets—An Amendment of Accounting
Principles Board (“APB”) Opinion No. 29.” SFAS No. 153 eliminates the exception from fair value
measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29
and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 specifies
that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for the fiscal periods beginning after
June 15, 2005. Management is evaluating the effect of the adoption of SFAS No. 153 but does not expect the
adoption of this statement to have a material impact on our financial position, results of operations or cash flows.
In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment,” a revision of SFAS No. 123,
“Accounting for Stock Based Compensation” which supersedes APB Opinion No. 25, “Accounting for Stock
Issued to Employees.” SFAS No. 123R requires all share-based payments to employees, including grants of
employee stock options, be recognized in the financial statements based on their fair values effective for the first
interim or annual period beginning after June 14, 2005, with early adoption encouraged. The pro-forma
disclosures previously permitted under SFAS No. 123 will no longer be an alternative to financial statement
recognition. Management is evaluating the impact that SFAS No. 123R will have on our consolidated financial
position and earnings per share.
In December 2004, the FASB issued FASB Staff Position (“FSP”) No. 109-1, “Application of FASB
Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities
Provided by the American Jobs Creation Act of 2004,” and FSP No. 109-2, “Accounting and Disclosure
Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004.”
These staff positions provide accounting guidance on how companies should account for the effects of the
American Jobs Creation Act of 2004 (the “Act”) that was signed into law on October 22, 2004. FSP No. 109-1
states that tax relief (special tax deduction for domestic manufacturing) from this legislation should be accounted
for as a special deduction instead of a tax rate reduction. FSP 109-2 gives a company additional time to evaluate
the effects of the legislation on any plan for reinvestment or repatriation of foreign earnings for purposes of
applying SFAS No. 109. Management is evaluating all U.S. Treasury guidance as well as awaiting anticipated
further guidance. Management expects to complete this evaluation within a reasonable amount of time after
additional guidance is published. Management estimates that the range of possible amounts considered for
repatriation under this provision is between $0 and $150 million. The potential range of income tax is subject to
various factors and will become determinable once further guidance has been issued.
In November 2004, the FASB issued SFAS No. 151, “Inventory Costs—An Amendment of Accounting
Research Bulletin (“ARB”) No. 43, Chapter 4.” SFAS No. 151 requires abnormal amounts of inventory costs
related to idle facility, freight, handling costs and wasted material (spoilage) expenses to be recognized as current
period charges. In addition, SFAS No. 151 requires that the allocation of fixed production overheads to the costs
of conversion be based on the normal capacity of the production facilities. SFAS No. 151 is effective for the
fiscal years beginning after June 15, 2005. Management believes that the adoption of this statement will not have
a material impact on our financial position, results of operations or cash flows.
Forward Looking Statements
This Annual Report, including Item 1 of Part I and Items 7 and 7(a) of Part II, contains forward-looking
statements. Forward-looking statements include any statements related to our expectations regarding future
performance or conditions, including any statements regarding anticipated sales growth across markets,
distribution channels, and product categories, access to raw materials and factory capacity, and financing and
working capital requirements and resources. These forward-looking statements, and others we make from time to
time, are subject to a number of risks and uncertainties. Many factors could cause actual results to differ
materially from those projected in forward-looking statements, including the risks described below under the
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