Columbia Sportswear 2011 Annual Report Download - page 19

In addition, many of our imported products are subject to duties, tariffs or other import limitations that
affect the cost and quantity of various types of goods imported into the United States or into our other sales
markets. Any country in which our products are produced or sold may eliminate, adjust or impose new import
limitations, duties, anti-dumping penalties or other charges or restrictions, any of which could have a material
adverse effect on our financial condition, results of operations or cash flows.
We May Have Additional Tax Liabilities
As a global company, we determine our income tax liability in various competing tax jurisdictions based on
an analysis and interpretation of local tax laws and regulations. This analysis requires a significant amount of
judgment and estimation and is often based on various assumptions about the future actions of the local tax
authorities. These determinations are the subject of periodic domestic and foreign tax audits. Although we accrue
for uncertain tax positions, our accrual may be insufficient to satisfy unfavorable findings. Unfavorable audit
findings and tax rulings may result in payment of taxes, fines and penalties for prior periods and higher tax rates
in future periods, which may have a material adverse effect on our financial condition, results of operations or
cash flows. Changes in tax law or our interpretation of tax laws and the resolution of current and future tax audits
could significantly affect the amounts provided for income taxes in our consolidated financial statements.
We earn a significant amount of our operating income from outside the U.S., and any repatriation of funds
currently held in foreign jurisdictions may result in higher effective tax rates for the company. If we encounter a
significant need for liquidity domestically or at a particular location that we cannot fulfill through borrowings,
equity offerings or other internal or external sources, we may experience unfavorable tax and earnings
consequences as a result of cash transfers. These adverse consequences would occur, for example, if the transfer
of cash into the United States is taxed and no offsetting foreign tax credit is available to offset the U.S. tax
liability, resulting in lower earnings. Furthermore, foreign exchange ceilings imposed by local governments and
the sometimes lengthy approval processes that foreign governments require for international cash transfers may
delay or otherwise limit our internal cash transfers from time to time.
We Operate in Very Competitive Markets
The markets for apparel, footwear, accessories and equipment are highly competitive, as are the markets for
our licensed products. In each of our geographic markets, we face significant competition from global and
regional branded apparel, footwear, accessories and equipment companies.
Retailers who are our customers often pose our most significant competitive threat by marketing apparel,
footwear and equipment under their own private labels. For example, in the United States, several of our largest
customers have developed significant private label brands during the past decade that compete directly with our
products. These retailers have assumed an increasing degree of inventory risk in their private label products and,
as a result, may first cancel advance orders with us in order to manage their own inventory levels downward
during weak economic cycles.
We also compete with other companies for the production capacity of independent factories that
manufacture our products and for import capacity. Many of our competitors are significantly larger than we are
and have substantially greater financial, distribution, marketing and other resources, more stable manufacturing
resources and greater brand strength than we have. In addition, when our competitors combine operations
through mergers, acquisitions or other transactions, their competitive strength may increase.
Increased competition may result in reduced access to production capacity, reductions in display areas in
retail locations, reductions in sales, or reductions in our profit margins, any of which may have a material adverse
effect on our financial condition, results of operations or cash flows.
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