Columbia Sportswear 2004 Annual Report Download - page 50

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COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Intangible assets acquired consisted of $15.0 million for the trademark and trade names of Mountain
Hardwear, $12.2 million for goodwill and $1.2 million related to patents. The $16.2 million of purchase price
allocated to the trademark and trade names and patents was determined by management, and in part, by a third
party appraiser through established valuation techniques. The trademark and trade names and goodwill are not
subject to amortization as these assets are deemed to have indefinite useful lives. Patents are subject to
amortization over 17 years from the date filed with the U.S. Patent and Trademark Office. At the time of the
acquisition, the remaining useful lives of these patents ranged from 13 to 15 years and the weighted average
useful life was 14.3 years. These intangible assets will be reviewed for impairment in accordance with SFAS
No. 142.
NOTE 4—INVENTORIES, NET
Inventories consist of the following (in thousands):
December 31,
2004 2003
Raw materials ............................................................ $ 2,905 $ 3,386
Work in process ........................................................... 8,323 3,692
Finished goods ............................................................ 154,198 119,730
$165,426 $126,808
NOTE 5—PROPERTY, PLANT, AND EQUIPMENT, NET
Property, plant, and equipment consist of the following (in thousands):
December 31,
2004 2003
Land.................................................................... $ 8,379 $ 7,312
Buildings ................................................................ 74,906 73,332
Machineryandequipment ................................................... 112,540 105,666
Furnitureandfixtures ...................................................... 10,529 9,460
Leasehold improvements .................................................... 10,873 9,889
Construction in progress .................................................... 45,534 12,147
262,761 217,806
Less accumulated depreciation ............................................... 107,748 91,559
$155,013 $126,247
NOTE 6—SHORT-TERM BORROWINGS AND CREDIT LINES
The Company has available an unsecured and committed operating line of credit providing for borrowings
in an aggregate amount not to exceed, at any time, (1) $50,000,000 during the period of August 15 through
November 14 of the calendar year and (2) $5,000,000 at all other times. The maturity date of this agreement is
July 1, 2006. Interest, payable monthly, is computed at the bank’s prime rate minus up to 2.05% per annum. The
agreement also includes a fixed rate option based on the LIBOR rate plus up to 65 basis points. There was no
balance outstanding on this line at December 31, 2004 and 2003. The unsecured operating line of credit requires
the Company to comply with certain covenants including a Capital Ratio, which limits indebtedness to tangible
net worth. At December 31, 2004, the Company was in compliance with all of these covenants. If the Company
defaults on its payments, it is prohibited, subject to certain exceptions, from making dividend payments or other
distributions.
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