Columbia Sportswear 2004 Annual Report Download - page 48

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The effects of applying SFAS No. 123 in this pro forma disclosure are not necessarily indicative of future
amounts.
Advertising costs:
Advertising costs are expensed as incurred and are included in selling, general and administrative expenses.
Total advertising expense, including cooperative advertising costs, was $47,300,000, $43,221,000 and
$36,273,000 for the years ended December 31, 2004, 2003 and 2002, respectively.
The Company reimburses its wholesale customers for some of their costs of advertising the Company’s
products through cooperative advertising programs based on various criteria, including the value of purchases
from the Company and various advertising specifications. Cooperative advertising costs were $12,132,000,
$9,328,000 and $7,866,000 for the years ended December 31, 2004, 2003 and 2002, respectively.
Product warranty:
Some of our products carry limited warranty provisions for defects in quality and workmanship. A warranty
reserve is established at the time of sale to cover estimated costs based on the Company’s history of warranty
repairs and replacements and is recorded in cost of sales. A summary of accrued warranties for the years ended
December 31 is as follows (in thousands):
2004 2003 2002
Balance at beginning of period ......................... $8,642 $7,800 $7,475
Chargedtocostsandexpenses .......................... 3,375 3,834 2,783
Claims settled ....................................... (2,877) (2,992) (2,458)
Balance at end of period ............................... $9,140 $8,642 $7,800
Recent Accounting Pronouncements:
In December 2004, the Financial Accounting Standards Board (“FASB”) issued 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. The Company 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 its 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. The Company is evaluating the impact that SFAS No. 123R will have on its consolidated financial
position and earnings per share.
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