Columbia Sportswear 2010 Annual Report Download - page 42

General and administrative expenses increased $31.3 million, or 10%, to 27.4% of net sales in 2009 from
23.4% of net sales for the comparable period in 2008. The increase in general and administrative expenses as a
percentage of net sales was primarily due to incremental operating costs in support our direct-to-consumer
initiatives and the expansion of our in-house sales organization, partially offset by lower bad debt expense.
Depreciation and amortization included in SG&A expense totaled $35.5 million for 2009, compared to
$30.1 million for the same period in 2008.
Impairment of Acquired Intangible Assets: We did not incur any impairment of acquired intangible
assets in 2009. During the fourth quarter of 2008, we incurred a $24.7 million non-cash pre-tax charge, or
approximately $0.46 per diluted share after tax, for the write-down of acquired intangible assets related to our
acquisitions of the Pacific Trail and Montrail brands in 2006. The impairment charge related primarily to
goodwill and trademarks and resulted from our annual evaluation of intangible asset values. These brands had not
achieved our sales and profitability objectives and the deterioration in the macro-economic environment and
resulting effect on consumer demand have decreased the probability of realizing these objectives in the near
future. We remain committed to marketing and distributing Montrail-branded footwear through the outdoor
specialty, running specialty and sporting goods channels. Beginning in 2009, Pacific Trail products are sold
primarily through licensing arrangements.
Net Licensing Income: Net licensing income increased $2.4 million, or 40%, to $8.4 million in 2009 from
$6.0 million in 2008. The increase in net licensing income was primarily due to increased apparel and footwear
licensing in the LAAP region. Products distributed by our licensees in 2009 included apparel, footwear, leather
accessories, eyewear, socks, insulated products including soft-sided coolers, camping gear, bicycles, home
products, luggage, watches and other accessories.
Interest Income, Net: Interest income was $2.1 million in 2009 compared to $7.6 million in 2008. The
decrease in interest income was almost entirely due to significantly lower interest rates in 2009 compared to
2008. Interest expense was nominal in 2009 and 2008.
Income Tax Expense: Our provision for income taxes decreased to $22.8 million in 2009 from
$31.2 million in 2008. This decrease resulted from lower income before tax, partially offset by an increase in our
effective income tax rate to 25.4% in 2009 compared to 24.7% in 2008. Our 2009 effective tax rate varied from
the U.S. statutory rate due to foreign tax credits and the favorable settlement of uncertain tax positions.
Liquidity and Capital Resources
Our primary ongoing funding requirements are for working capital, investing activities associated with the
expansion of our global operations and general corporate needs. At December 31, 2010, we had total cash and
cash equivalents of $234.3 million compared to $386.7 million at December 31, 2009. In addition, we had short-
term investments of $68.8 million at December 31, 2010 compared to $22.8 million at December 31, 2009.
Net cash provided by operating activities was $23.5 million in 2010 compared to $214.4 million in 2009.
The decrease in cash provided by operating activities was primarily the result of increases in inventory and
accounts receivable in 2010 compared to decreases in accounts receivable and inventory in 2009, partially offset
by increases in accounts payable and accrued liabilities in 2010 compared to a net decrease in accounts payable
and accrued liabilities in 2009. The increase in inventory was due to a larger volume of excess fall 2010
inventory designated for sale primarily through our own outlet retail stores compared to fall 2009 inventory,
earlier receipt of spring 2011 inventory compared to spring 2010 inventory, increased 2010 replenishment
inventory compared to 2009 and incremental inventory to support increased direct-to-consumer sales. The
increase in accounts receivable was in line with the 19% increase in net sales and was also due to an increase in
close-out product sales and shipment of spring 2011 advance orders close to the end of the 2010 period.
36