Columbia Sportswear 2009 Annual Report Download - page 19

Conversely, if we underestimate demand for our products or if our independent factories are unable to
supply products when we need them, we may experience inventory shortages. Inventory shortages might prevent
us from fulfilling customer orders, delay shipments to customers, negatively affect customer relationships, and
diminish our ability to build brand loyalty.
We May be Adversely Affected by Weather Conditions
Our business is adversely affected by unseasonable weather conditions. A significant portion of the sales of
our sportswear, outerwear, footwear, accessories and equipment is dependent in part on the weather and may
decline in years in which weather conditions do not favor the use of these products. Periods of unseasonably
warm weather in the fall or winter or unseasonably cold or wet weather in the spring and summer may have a
material adverse effect on our financial condition, results of operations or cash flows. For example, in spring
2008, unseasonably cool weather in the United States caused customers to delay, and in some cases reduce or
cancel, orders for our sportswear and footwear, which had an adverse effect on our net sales and profitability.
Inventory accumulation by our wholesale customers resulting from unseasonable weather in one season may
negatively affect orders in future seasons, which may have a material adverse effect on our financial condition,
results of operations or cash flows in future periods.
Our International Operations Involve Many Risks
We are subject to the risks generally associated with doing business abroad. These risks include the effects
of foreign laws and regulations, changes in consumer preferences, foreign currency fluctuations, political unrest,
terrorist acts, military operations, disruptions or delays in shipments, disease outbreaks and changes in economic
conditions in countries in which we manufacture or sell products. These factors, among others, may affect our
ability to sell products in international markets, our ability to manufacture products or procure materials, and our
cost of doing business. If any of these or other factors make the conduct of business in a particular country
undesirable or impractical, our business may be materially and adversely affected. As we expand our operations
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 intellectual property rights and to defend
against claims of infringement by others.
As a global company, we determine our income tax liability in various competing tax jurisdictions based on
a careful analysis and interpretation of local tax laws and regulations. This analysis requires a significant amount
of judgment and estimation and is often based on various assumptions about the future actions of the local tax
authorities. These determinations are the subject of periodic domestic and foreign tax audits. Although we accrue
for uncertain tax positions, our accrual may be insufficient to satisfy unfavorable findings, which by their nature
cannot be predicted with certainty. Unfavorable audit findings and tax rulings may result in payment of taxes,
fines and penalties for prior periods and higher tax rates in future periods, which may have a material adverse
effect on our financial condition, results of operations or cash flows. Changes in tax law or our interpretation of
tax laws and the resolution of current and future tax audits could significantly affect the amounts provided for
income taxes in our consolidated financial statements.
In addition, many of our imported products are subject to duties, tariffs or quotas that affect the cost and
quantity of various types of goods imported into the United States or into our other sales markets. Any country in
which our products are produced or sold may eliminate, adjust or impose new quotas, duties, tariffs, anti-
dumping penalties or other charges or restrictions, any of which could have a material adverse effect on our
financial condition, results of operations or cash flows.
We Operate in Very Competitive Markets
The markets for sportswear, outerwear, footwear, accessories and equipment are highly competitive, as are
the markets for our licensed products. In each of our geographic markets, we face significant competition from
global and regional branded apparel, footwear, accessories and equipment companies.
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