Columbia Sportswear 2010 Annual Report Download - page 74

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2010 2009 2008
Assets:
United States ........................................... $ 941,154 $ 916,847
LAAP ................................................ 141,911 104,734
EMEA ................................................ 276,136 249,838
Canada ................................................ 150,236 127,205
Total identifiable assets ................................... 1,509,437 1,398,624
Eliminations and reclassifications ........................... (214,683) (185,741)
$1,294,754 $1,212,883
Net sales by product category:
Outerwear ............................................. $ 560,826 $ 482,512 $ 491,777
Sportswear ............................................. 555,812 472,508 540,903
Footwear .............................................. 270,223 214,565 217,237
Accessories and equipment ................................ 96,663 74,438 67,918
$1,483,524 $1,244,023 $1,317,835
NOTE 19—FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
In the normal course of business, the Company’s financial position and results of operations are routinely
subject to a variety of risks. These risks include risks associated with global financial and capital markets,
primarily exchange rate risk and, to a lesser extent, interest rate risk and equity market risk. The Company
regularly assesses these risks and has established policies and business practices designed to result in an
appropriate level of protection against an adverse effect of these risks. The Company does not engage in
speculative trading in any financial or capital market.
The Company’s primary exchange rate risk management objective is to mitigate the uncertainty of
anticipated cash flows attributable to changes in exchange rates. The Company primarily focuses on mitigating
changes in functional currency equivalent cash flows resulting from anticipated U.S. dollar denominated
inventory purchases by subsidiaries that use European euros, Canadian dollars, Japanese yen or Korean won as
their functional currency. The Company manages this risk primarily by using currency forward and option
contracts. If the anticipated transactions are deemed probable, the resulting relationships are formally designated
as cash flow hedges. The Company also uses foreign currency forward and option contracts to hedge net balance
sheet exposures related primarily to intercompany loan agreements and payables.
The effective change in fair value of financial instruments formally designated in cash flow hedging
relationships is initially offset to accumulated other comprehensive income and any ineffective portion is offset
to current income. Amounts accumulated in other comprehensive income are subsequently reclassified to cost of
sales when the underlying transaction is included in income. Hedge effectiveness is determined by evaluating the
ability of a hedging instrument’s cumulative change in fair value to offset the cumulative change in the present
value of expected cash flows on the underlying exposures. For forward contracts, the change in fair value
attributable to changes in forward points are excluded from the determination of hedge effectiveness and
included in current cost of sales. For option contracts, the hedging relationship is assumed to have no
ineffectiveness if the critical terms of the option contract match the hedged transaction’s terms, the strike price,
or prices, match the specified levels beyond or within that of the exposure being hedged, the option’s cash flows
completely offset the hedged item’s cash flow at maturity and the option can only be exercised on a specified
date. Hedge ineffectiveness was not material during the years ended December 31, 2010, 2009 and 2008.
68