Columbia Sportswear 2009 Annual Report Download - page 73

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COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At December 31, 2009, the notional value of outstanding forward contracts designated as hedging
anticipated inventory purchases was approximately $82,730,000. At December 31, 2009, insignificant deferred
gains and losses (net of tax) on both outstanding and matured derivatives accumulated in other comprehensive
income are expected to be reclassified to net income during the next twelve months as a result of underlying
hedged transactions also being recorded in net income. Actual amounts ultimately reclassified to net income are
dependent on U.S. dollar exchange rates in effect against the European euro, Canadian dollar, Japanese yen and
Korean won when outstanding derivative contracts mature.
The classification of effective hedge results in the Consolidated Statements of Operations is the same as that
of the underlying exposure. Results of hedges of product costs are recorded in cost of sales when the underlying
hedged transaction affects income. Unrealized derivative gains and losses, which are recorded in current assets
and liabilities, respectively, are non-cash items and therefore are taken into account in the preparation of the
Consolidated Statements of Cash Flows based on their respective balance sheet classifications.
The Company also uses derivative instruments not formally designated as hedges to manage the exchange
rate risk associated with the functional currency remeasurement of monetary assets and liabilities. At
December 31, 2009, the notional value of outstanding forward contracts not formally designated as hedges was
approximately $61,017,000. The change in fair value of these instruments is recognized immediately in cost of
sales.
The Company does not hold derivatives featuring credit-related contingent terms. In addition, the Company
is not a party to any derivative master agreement featuring credit-related contingent terms. Finally, the Company
has not pledged assets or posted collateral as a requirement for entering into or maintaining derivative positions.
See “Concentration of credit risk” under Note 1 for more information on credit risk related to financial
instruments.
The following table presents the balance sheet classification and fair value of derivative instruments as of
December 31, 2009 (in thousands):
Classification Fair Value
Derivative instruments designated as cash flow
hedges(1):
Derivative instruments in asset positions:
Currency forward contracts .......... Prepaid expenses and other current assets $1,099
Derivative instruments in liability positions:
Currency forward contracts .......... Accrued liabilities 890
(1) Includes a $45,000 net liability position attributable to the component excluded from effectiveness testing.
Classification Fair Value
Derivative instruments not designated as hedges:
Derivative instruments in asset positions:
Currency forward contracts .......... Prepaid expenses and other current assets $ 453
Derivative instruments in liability positions:
Currency forward contracts .......... Accrued liabilities 1,065
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