Columbia Sportswear 2004 Annual Report Download - page 36

We Depend on Key Suppliers
Some of the materials that we use may be available, in the short-term, from only one source or a very
limited number of sources. For example, some specialty fabrics are manufactured to our specification by one
source or a few sources. From time to time, we have experienced difficulty satisfying our raw material and
finished goods requirements. Although we believe that we could identify and qualify additional factories to
produce these materials, the unavailability of some existing manufacturers for supply of these materials could
have a material adverse effect on our results of operations and financial condition.
Our Advance Purchases of Products May Result in Excess Inventories
To minimize our purchasing costs, the time necessary to fill customer orders and the risk of non-delivery,
we place orders for our products with manufacturers prior to receiving all of our customers’ orders and maintain
an inventory of various products that we anticipate will be in greater demand. We may not be able to sell the
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 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 these 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, which could
have a material adverse effect on our results of operations and financial condition.
Our Business Is Affected by Seasonality
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 sales 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 preferences, weather conditions, availability of import quotas
and currency exchange rate fluctuations, could adversely affect our business and cause our results of operations
to fluctuate. Our operating margins are also sensitive to a number of factors that are beyond our control,
including shifts in product sales mix, geographic sales trends, and currency exchange rate fluctuations, all of
which we expect to continue as we expand our product offerings and geographic penetration. 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
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 continue to experience
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