Columbia Sportswear 2011 Annual Report Download - page 66

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COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 13—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. 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, common area maintenance
(“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 Statements 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,
consisted of the following (in thousands):
Year Ended December 31,
2011 2010 2009
Rent expense included in SG&A ............................... $46,869 $39,898 $31,140
Rent expense included in cost of sales ........................... 1,429 1,351 1,465
$48,298 $41,249 $32,605
Approximate future minimum payments, including rent escalation clauses and stores that are not yet open,
on all lease obligations at December 31, 2011, are as follows (in thousands). Operating lease obligations listed
below do not include percentage rent, real estate taxes, insurance, CAM, and other costs for which the Company
is obligated. These operating lease commitments are not reflected on the Consolidated Balance Sheet.
2012 ............................................................. $ 38,773
2013 ............................................................. 35,060
2014 ............................................................. 29,819
2015 ............................................................. 26,892
2016 ............................................................. 25,254
Thereafter ......................................................... 94,892
$250,690
Inventory Purchase Obligations
Inventory purchase obligations consist of open production purchase orders for sourced apparel, footwear,
accessories and equipment, and raw material commitments not included in open production purchase orders. At
December 31, 2011 inventory purchase obligations were $351,854,000. To support certain inventory purchase
obligations, the Company maintains unsecured and uncommitted lines of credit available for issuing import
letters of credit. At December 31, 2011 the Company had letters of credit of $2,029,000 outstanding for inventory
purchase obligations.
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