Columbia Sportswear 2009 Annual Report Download - page 23

We Depend on Independent Factories
Our products are produced by independent factories worldwide. We do not operate or own any production
facilities. Although we enter into purchase order commitments with these independent factories each season, we
generally do not maintain long-term manufacturing commitments with them. Because of these factors,
independent factories may fail to perform as expected or our competitors may obtain production or quota
capacities that effectively limit or eliminate the availability of these resources to us. If an independent
manufacturer fails to ship orders in a timely manner or to meet our standards or if we are unable to obtain
necessary production or quota capacities, we may miss delivery deadlines or incur additional costs, which may
result in cancellation of orders, refusal to accept deliveries, a reduction in purchase prices, or increased costs, any
of which could have a material adverse effect on our financial condition, results of operations or cash flows.
Reliance on independent factories also creates quality control risks. A failure in our quality control program
may result in diminished product quality, which may result in increased order cancellations and returns,
decreased consumer demand for our products, or product recalls, any of which could have a material adverse
effect on our financial condition, results of operations or cash flows.
Finally, if an independent manufacturer violates labor or other laws, or engages in practices that are not
generally accepted as ethical in our key markets, we may be subject to significant negative publicity that could
result in long-term damage to our brand image, consumer demand for our products may decrease, and under
some circumstances we may be subject to liability for the independent manufacturer’s practices, any of which
may have a material adverse effect on our financial condition, results of operations or cash flows.
We Depend on Key Suppliers
Some of the materials that we use may be available 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, and zippers are supplied by one manufacturer. From time to time, we have difficulty satisfying our raw
material and finished goods requirements. Although we believe that we can identify and qualify additional
independent factories to produce these materials as necessary, there are no guarantees that additional independent
factories will be available. In addition, depending on the timing, any changes may result in increased costs or
production delays, which may have a material adverse effect on our financial condition, results of operations or
cash flows.
We Depend on Key Personnel
Our future success will depend in part on the continued service of key personnel and 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. We may not be able to attract qualified new employees or retain existing employees,
which may have a material adverse effect on our financial condition, results of operations or cash flows.
Our Business Is Affected by Seasonality
Our business is affected by the general seasonal trends common to the outdoor apparel industry. Our
products are marketed on a seasonal basis and our product mix is weighted substantially toward the fall season,
resulting in sales and profits being highest in the third calendar quarter. We expect the expansion of our retail
operations to have a modest effect on the seasonality of our business, increasing the proportion of sales and
profits that we generate in the fourth calendar quarter. This seasonality, along with other factors that are beyond
our control and that are discussed elsewhere in this section, may adversely affect our business and cause our
results of operations to fluctuate. Results of operations in any period should not be considered indicative of the
results to be expected for any future period.
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