Columbia Sportswear 2009 Annual Report Download - page 43

Revenue Recognition
We record wholesale and licensed product revenues when title passes and the risks and rewards of
ownership have passed to the customer, based on the terms of sale. Title generally passes upon shipment to, or
upon receipt by, the customer depending on the country of the sale and the agreement with the customer. Retail
store revenues are recorded at the time of sale and e-commerce revenues are recorded upon shipment to the
customer.
In some countries outside of the United States where title passes upon receipt by the customer,
predominantly in our Western European wholesale business, precise information regarding the date of receipt by
the customer is not readily available. In these cases, we estimate the date of receipt by the customer based on
historical and expected delivery times by geographic location. We periodically test the accuracy of these
estimates based on actual transactions. Delivery times vary by geographic location, generally from one to five
days. To date, we have found these estimates to be materially accurate.
At the time of revenue recognition, we also provide for estimated sales returns and miscellaneous claims
from customers as reductions to revenues. The estimates are based on historical rates of product returns and
claims. However, actual returns and claims in any future period are inherently uncertain and thus may differ from
the estimates. If actual or expected future returns and claims are significantly greater or lower than the reserves
that we have established, we will record a reduction or increase to net revenues in the period in which we make
such a determination. Over the three year period ended December 31, 2009, our actual annual sales returns and
miscellaneous claims from customers have averaged approximately two percent of net sales.
Allowance for Uncollectible Accounts Receivable
We make ongoing estimates of the uncollectibility of our accounts receivable and maintain an allowance for
estimated losses resulting from the inability of our customers to make required payments. In determining the
amount of the allowance, we consider our historical level of credit losses and we make judgments about the
creditworthiness of customers based on ongoing credit evaluations. We analyze specific customer accounts,
customer concentrations, credit insurance coverage, standby letters of credit, current economic trends, and
changes in customer payment terms. Current credit and market conditions may slow our collection efforts as
customers experience increased difficulty in accessing credit and paying their obligations, leading to higher than
normal accounts receivable and increased bad debt expense. Because we cannot predict future changes in the
financial stability of our customers, actual future losses from uncollectible accounts may differ from our
estimates and may have a material effect on our consolidated financial position, results of operations or cash
flows. If the financial condition of our customers deteriorates and results in their inability to make payments, a
larger allowance may be required. If we determine that a smaller or larger allowance is appropriate, we will
record a credit or a charge to SG&A expense in the period in which we make such a determination.
Inventory Obsolescence and Product Warranty
We make ongoing estimates of potential future excess, close-out or slow moving inventory and product
warranty costs. We evaluate our inventory on hand considering our purchase commitments, sales forecasts, and
historical experience to identify excess, close-out or slow moving inventory and make provisions as necessary to
properly reflect inventory value at the lower of cost or estimated market value. When we evaluate our reserve for
warranty costs, we consider our historical claim rates by season, product mix, current economic trends, and the
historical cost to repair, replace, or refund the original sale. If we determine that a smaller or larger reserve is
appropriate, we will record a credit or a charge to cost of sales in the period in which we make such a
determination.
Long-lived assets:
Long-lived assets are amortized over their useful lives and are measured for impairment only when events
or circumstances indicate the carrying value may be impaired. In these cases, we estimate the future
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