Columbia Sportswear 2012 Annual Report Download - page 17

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negatively affects orders in future seasons, which may have a material adverse effect on our financial condition, results of
operations or cash flows.
A significant portion of our business is highly dependent on cold-weather seasons and patterns to generate consumer
demand for our cold-weather apparel and footwear. Consumer demand for our cold-weather apparel and footwear may be
negatively affected to the extent global weather patterns trend warmer, reducing typical patterns of cold-weather events, or
increasing weather volatility, which could have a material adverse effect on our financial condition, results of operations
or cash flow.
We May Not Succeed in Realizing the Anticipated Benefits of Our New Joint Venture in China
In August 2012 we entered into an agreement with Swire Resources Limited ("Swire") to establish a joint venture for
purposes of continuing the development of our business in China. The joint venture, in which we will hold a 60% interest,
will be established upon satisfaction of specified conditions, including receipt of certain governmental approvals from
China. These approvals are anticipated to be received prior to January 1, 2014, the anticipated effective date of the joint
venture; however, these government approvals may not be obtained as anticipated or at all, and if they are not, we may be
forced to abandon the joint venture. Even if we are able to establish it, achieving the anticipated benefits of the joint venture
is subject to a number of risks and uncertainties, including the following:
• Our ability to operate the joint venture will be dependent upon, among other things, our ability to attract and
retain personnel with the skills, knowledge and experience necessary to carry out the operations of the joint
venture. We anticipate that approximately 650 to 700 employees currently working with or for Swire will become
employees of, or provide services to, the joint venture. Our ability to effectively operate the joint venture will
depend upon our ability to manage the employees of the joint venture, and to attract new employees as necessary
to supplement and replace the skills, knowledge and expertise of the existing management team and other key
personnel. We face intense competition for these individuals worldwide, including in China. We may not be able
to attract qualified new employees or retain existing employees to operate the joint venture. Additionally, turnover
in key management positions in China could impair our ability to execute our growth strategy, which may
negatively affect the value of our investment in the joint venture and the growth of our sales in China.
• We will be relying on the operational skill of our joint venture partner. Additionally, because our joint venture
partner has voting rights with respect to major business decisions of the joint venture, we may experience difficulty
reaching agreement as to implementation of certain changes to the joint venture’s business. For these reasons,
or as a result of other factors, we may not realize the anticipated benefits of the joint venture, and our participation
in the joint venture could adversely affect the results of our operations on a consolidated basis.
• Continued sales growth in China is an important part of our expectations for our joint venture business. Although
China has experienced significant economic growth in recent years, that growth is slowing. Slowing economic
growth in China could result in reduced consumer discretionary spending, which in turn could result in less
demand for our products, and thus negatively affect the value of our investment in the joint venture and the
growth of our sales in China.
• Although we believe we have achieved a leading market position in China, many of our competitors who are
significantly larger than we are and have substantially greater financial, distribution, marketing and other
resources, more stable manufacturing resources and greater brand strength are also concentrating on growing
their businesses in China. Increased investment by our competitors in this market could decrease our market
share and competitive position in China.
Our International Operations Involve Many Risks
We are subject to risks generally associated with doing business internationally. These risks include the effects of
foreign laws and regulations, changes in consumer preferences, foreign currency fluctuations, managing a diverse and
widespread workforce, political unrest, terrorist acts, military operations, disruptions or delays in shipments, disease
outbreaks, natural disasters and changes in economic conditions in countries in which we manufacture or sell products.
These factors, among others, may affect our ability to sell products in international markets, our ability to manufacture
products or procure materials, and our cost of doing business. For example, unseasonably warm winter weather and a
challenging macroeconomic environment in our EMEA region have hampered our ongoing efforts to elevate the Columbia