Columbia Sportswear 2013 Annual Report Download - page 40

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• Favorable foreign currency hedge rates.
Selling, General and Administrative Expense: SG&A expense decreased $18.1 million, or 3%, to $596.6 million,
or 35.7% of net sales, in 2012, from $614.7 million, or 36.3% of net sales, in 2011. The SG&A expense decrease was
primarily due to:
• The favorable effect of foreign currency translation;
• Reduced advertising spend; and
• Lower variable selling costs;
partially offset by:
• The expansion of direct-to-consumer operations globally; and
• Higher expenses related to information technology initiatives, including our ongoing ERP implementation.
Depreciation and amortization included in SG&A expense totaled $39.9 million in 2012, compared to $42.9 million
in 2011.
Net Licensing Income: Net licensing income decreased $2.0 million, or 13%, to $13.8 million in 2012 from $15.8
million in 2011. The decrease in net licensing income was primarily due to decreased licensing income from accessories
in the United States and decreased licensing income in the LAAP region, resulting from a timing shift in distributor shipments
from the fourth quarter of 2012 into the first quarter of 2013.
Interest Income, Net: Net interest income was $0.4 million in 2012, compared to $1.3 million in 2011. The decrease
in interest income was primarily driven by lower average interest rates and lower average cash and investment balances
during 2012 compared to 2011. Interest expense was nominal in both 2012 and 2011.
Income Tax Expense: Income tax expense decreased to $34.0 million in 2012 from $34.2 million in 2011. Our
effective income tax rate increased to 25.4% from 24.8% in 2011, primarily due to changes in the geographic mix of income,
partially offset by increased tax benefits from research and development credits and the resolution of uncertain tax positions.
Net Income: Net income decreased $3.6 million, or 3%, to $99.9 million in 2012 from $103.5 million in 2011.
Diluted earnings per share was $2.93 in 2012 compared to $3.03 in 2011.
Liquidity and Capital Resources
Our primary ongoing funding requirements are for working capital, investing activities associated with our ongoing
ERP implementation, expansion of our direct-to-consumer business, and the expansion of our global operations, including
our joint venture in China, and general corporate needs. At December 31, 2013, we had total cash and cash equivalents of
$437.5 million compared to $290.8 million at December 31, 2012. In addition, we had short-term investments of $91.8
million at December 31, 2013 compared to $44.7 million at December 31, 2012. At December 31, 2013, approximately
34% of our cash and short-term investments were held by our foreign subsidiaries where a repatriation of those funds to
the United States would likely result in a significant tax expense for us. However, based on the capital and liquidity needs
of our foreign operations, as well as the status of current tax law, we intend to indefinitely reinvest these funds outside the
United States. In addition, our United States operations do not require the repatriation of these funds to meet our currently
projected liquidity needs.
2013 compared to 2012
Net cash provided by operating activities was $274.3 million in 2013 compared to $148.7 million in 2012. The
increase in cash provided by operating activities was primarily due to larger decreases in inventory and accounts receivable
for the year ended December 31, 2013 compared to the prior year, and an increase in accounts payable and accrued liabilities
for the year ended December 31, 2013 compared to a decrease in the prior year.