Columbia Sportswear 2012 Annual Report Download - page 22

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of a collective bargaining agreement. Labor disputes at independent factories where our goods are produced, shipping ports,
transportation carriers, retail stores or distribution centers create significant risks for our business, particularly if these
disputes result in work slowdowns, lockouts, strikes or other disruptions during our peak manufacturing, shipping and
selling seasons, and may have a material adverse effect on our business, potentially resulting in cancelled orders by customers,
unanticipated inventory accumulation, and reduced revenues and earnings.
We Depend on Key Suppliers
Some of the materials that we use may be available from only one source or a very limited number of sources. For
example, some specialty fabrics are manufactured to our specification by one source or a few sources, and a single vendor
supplies the majority of the zippers used in our products. From time to time, we have difficulty satisfying our raw material
and finished goods requirements. Although we believe that we can identify and qualify additional independent factories to
produce these materials as necessary, there are no guarantees that additional independent factories will be available. In
addition, depending on the timing, any changes in sources or materials may result in increased costs or production delays,
which may have a material adverse effect on our financial condition, results of operations or cash flows.
We Depend on Key Personnel
Our future success will depend in part on the continued service of key personnel and our ability to attract, retain and
develop key managers, designers, sales and information technology professionals and others. We face intense competition
for these individuals worldwide, and there is a significant concentration of well-funded apparel and footwear competitors
in and around our headquarters in Portland, Oregon. We may not be able to attract qualified new employees or retain existing
employees, which may have a material adverse effect on our financial condition, results of operations or cash flows.
Our Business Is Affected by Seasonality
Our business is affected by the general seasonal trends common to the outdoor industry. Our products are marketed
on a seasonal basis and our annual net sales are weighted heavily toward the fall/winter season, while our operating expenses
are more equally distributed throughout the year. As a result, the majority, and sometimes all, of our operating profits are
generated in the second half of the year. The expansion of our direct-to-consumer operations and sales growth in our winter
footwear business (both Sorel and Columbia brands) has increased the proportion of sales and profits that we generate in
the fourth calendar quarter. This seasonality, along with other factors that are beyond our control and that are discussed
elsewhere in this section, may adversely affect our business and cause our results of operations to fluctuate. As a result, our
profitability may be materially affected if management is not able to timely adjust expenses in reaction to adverse events
such as unfavorable weather, weak consumer spending patterns or unanticipated levels of order cancellations. Results of
operations in any period should not be considered indicative of the results to be expected for any future period.
Our Products Are Subject to Increasing Product Regulations and We Face Risks of Product Liability and Warranty
Claims
Our products are subject to increasingly stringent and complex domestic and foreign product labeling and performance
and safety standards, laws and other regulations. These requirements could result in greater expense associated with
compliance efforts, and failure to comply with these regulations could result in a delay, non-delivery or recall or destruction
of inventory shipments during key seasons or in other financial penalties. Significant or continuing noncompliance with
these standards and laws could disrupt our business and harm our reputation and, as a result, could have a material adverse
effect on our financial condition, results of operations or cash flows.
Our products are used in outdoor activities, sometimes in severe conditions. Product recalls or product liability claims
resulting from the failure, or alleged failure, of our products could have a material adverse effect on our financial condition,
results of operations or cash flows. Most of our products carry limited warranties for defects in quality and workmanship.
We maintain a warranty reserve for future warranty claims, but the actual costs of servicing future warranty claims may
exceed the reserve, which may also have a material adverse effect on our financial condition, results of operations or cash
flows.
Our Common Stock Price May Be Volatile