Columbia Sportswear 2009 Annual Report Download - page 64

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
receive matching contributions for a portion of the deferred amounts. Company contributions to the plan totaled
$108,000 and $115,000 for the years ended December 31, 2009 and 2008, respectively. Participants earn a return
on their deferred compensation based on investment earnings of participant-selected mutual funds. Changes in
the market value of the participants’ investment selections are recorded as an adjustment to deferred
compensation liabilities, with an offset to compensation expense. Deferred compensation, including accumulated
earnings on the participant-directed investment selections, is distributable in cash at participant-specified dates or
upon retirement, death, disability or termination of employment. At December 31, 2009, the liability to
participants under this plan was $826,000 and was recorded in other long-term liabilities. The current portion of
the participant liability at December 31, 2009 was not material.
The Company has purchased specific mutual funds in the same amounts as the participant-directed
investment selections underlying the deferred compensation liabilities. These investment securities and earnings
thereon, held in an irrevocable trust, are intended to provide a source of funds to meet the deferred compensation
obligations, subject to claims of creditors in the event of the Company’s insolvency. The mutual funds are
recorded at fair value in intangibles and other non-current assets. At December 31, 2009, the fair value of the
mutual fund investments was $826,000. Realized and unrealized gains and losses on the mutual fund investments
are recorded in compensation expense and offset losses and gains resulting from changes in deferred
compensation liabilities to participants.
NOTE 11—COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases, among other things, retail space, office space, warehouse facilities, storage space,
vehicles and equipment. Generally, the base lease terms are between 5 and 10 years. Certain lease agreements
contain scheduled rent escalation clauses in their future minimum lease payments. Future minimum lease
payments are recognized on a straight-line basis over the minimum lease term and the pro rata portion of
scheduled rent escalations is included in other long-term liabilities in the Consolidated Balance Sheet. Certain
retail space lease agreements provide for additional rents based on a percentage of annual sales in excess of
stipulated minimums (percentage rent). Certain lease agreements require the Company to pay real estate taxes,
insurance, CAM, and other costs, collectively referred to as operating costs, in addition to base rent. Percentage
rent and operating costs are recognized as incurred in SG&A expense in the Consolidated Statement of
Operations. Certain lease agreements also contain lease incentives, such as tenant improvement allowances and
rent holidays. The Company recognizes the benefits related to the lease incentives on a straight-line basis over
the applicable lease term.
Rent expense, including percentage rent but excluding operating costs for which the Company is obligated,
was $32,034,000, $25,220,000 and $13,938,000 for non-related party leases during the years ended
December 31, 2009, 2008 and 2007, respectively. Of these amounts $30,569,000, $23,687,000 and $12,504,000
were included as part of selling, general and administrative expense for the years ended December 31, 2009,
2008 and 2007, respectively, and $1,465,000, $1,533,000 and $1,434,000 were included as part of cost of goods
sold for the years ended December 31, 2009, 2008 and 2007, respectively.
The Company leases certain operating facilities from related parties of the Company. Total rent expense for
these leases was included as part of selling, general and administrative expense and amounted to $571,000,
$543,000 and $583,000 for the years ended December 31, 2009, 2008 and 2007, respectively.
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