Columbia Sportswear 2013 Annual Report Download - page 20

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competition from retailers who are our customers, some of which primarily operate e-commerce operations and employ
aggressive pricing strategies. 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 strengths may increase.
Increased competition may result in reduced access to production capacity, challenges in obtaining favorable locations
for our retail stores, 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.
We May be Adversely Affected by the Financial Health of our Customers
In recent periods, sluggish economies and consumer uncertainty regarding future economic prospects in our key
markets had an adverse effect on the financial health of our customers, some of whom filed or may file for protection under
bankruptcy laws, which may in turn have a material adverse effect on our results of operations and financial condition. We
extend credit to our customers based on an assessment of the customer’s financial condition, generally without requiring
collateral. To assist in the scheduling of production and the shipping of seasonal products, we offer customers discounts for
placing advance orders and extended payment terms for taking delivery before the peak shipping season. These extended
payment terms increase our exposure to the risk of uncollectable receivables. In addition, we face increased risk of order
reduction or cancellation or reduced availability of credit insurance coverage when dealing with financially ailing retailers
or retailers struggling with economic uncertainty. Some of our significant wholesale customers and distributors have
liquidated or reorganized, while others have had financial difficulties in the past or have experienced tightened credit markets
and sales declines and reduced profitability, which in turn has had an adverse effect on our business. We may reduce our
level of business with customers and distributors experiencing financial difficulties and may not be able to replace that
business with other customers, which could have a material adverse effect on our financial condition, results of operations
or cash flows.
We May be Adversely Affected by Global Credit Market Conditions
Economic downturns and economic uncertainty generally affect global credit markets. Our vendors, customers and
other participants in our supply chain may require access to credit markets in order to do business. Credit market conditions
may slow our collection efforts as customers find it more difficult to obtain necessary financing, leading to higher than
normal accounts receivable. This could result in greater expense associated with collection efforts and increased bad debt
expense. Credit conditions may impair our vendors’ ability to finance the purchase of raw materials or general working
capital needs to support our production requirements, resulting in a delay or non-receipt of inventory shipments during key
seasons.
Historically, we have limited our reliance on debt to finance our working capital, capital expenditures and investing
activity requirements. We expect to fund our future capital expenditures with existing cash, expected operating cash flows
and credit facilities, but if the need arises to finance additional expenditures, we may need to seek additional funding. Our
ability to obtain additional financing will depend on many factors, including prevailing market conditions, our financial
condition, and our ability to negotiate favorable terms and conditions. Financing may not be available on terms that are
acceptable or favorable to us, if at all.
We May be Adversely Affected by Retailer Consolidation
When our wholesale customers combine their operations through mergers, acquisitions, or other transactions, their
consolidated order volume may decrease while their bargaining power and the competitive threat they pose by marketing
products under their own private labels may increase. Some of our significant customers have consolidated their operations
in the past, which in turn has had a negative effect on our business. Future customer consolidations could have a material
adverse effect on our financial condition, results of operations or cash flows.
We Rely on Innovation to Compete in the Market for our Products