Columbia Sportswear 2013 Annual Report Download - page 43

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Management regularly discusses with our Audit Committee each of our critical accounting estimates, the development
and selection of these accounting estimates, and the disclosure about each estimate in Management’s Discussion and Analysis
of Financial Condition and Results of Operations. These discussions typically occur at our quarterly Audit Committee
meetings and include the basis and methodology used in developing and selecting these estimates, the trends in and amounts
of these estimates, specific matters affecting the amount of and changes in these estimates, and any other relevant matters
related to these estimates, including significant issues concerning accounting principles and financial statement presentation.
Revenue Recognition
We record wholesale, distributor, e-commerce and licensed product revenues when title passes and the risks and
rewards of ownership have passed to the customer. Title generally passes upon shipment to or upon receipt by the customer
depending on the terms of sale with the customer. Retail store revenues are recorded at the time of sale.
Where title passes upon receipt by the customer, predominantly in our European wholesale business, precise
information regarding the date of receipt by the customer is not readily available. In these cases, we estimate the date of
receipt by the customer based on historical and expected delivery times by geographic location. We periodically test the
accuracy of these estimates based on actual transactions. Delivery times vary by geographic location, generally from one
to five days. To date, we have found these estimates to be materially accurate.
At the time of revenue recognition, we also provide for estimated sales returns and miscellaneous claims from customers
as reductions to revenues. The estimates are based on historical rates of product returns and claims, as well as events and
circumstances that indicate changes to historical rates of returns and claims. However, actual returns and claims in any
future period are inherently uncertain and thus may differ from the estimates. If actual or expected future returns and claims
are significantly greater or lower than the reserves that we have established, we will record a reduction or increase to net
revenues in the period in which we make such a determination.
Allowance for Uncollectable Accounts Receivable
We make ongoing estimates of the collectability of our accounts receivable and maintain an allowance for estimated
losses resulting from the inability of our customers to make required payments. In determining the amount of the allowance,
we consider our historical level of credit losses and we make judgments about the creditworthiness of customers based on
ongoing credit evaluations. We analyze specific customer accounts, customer concentrations, credit insurance coverage,
standby letters of credit and other forms of collateral, current economic trends, and changes in customer payment terms.
Continued uncertainty in credit and market conditions may slow our collection efforts if customers experience difficulty
accessing credit and paying their obligations, leading to higher than normal accounts receivable and increased bad debt
expense. Because we cannot predict future changes in the financial stability of our customers, actual future losses from
uncollectable accounts may differ from our estimates and may have a material effect on our consolidated financial position,
results of operations or cash flows. If the financial condition of our customers deteriorates and results in their inability to
make payments, a larger allowance may be required. If we determine that a smaller or larger allowance is appropriate, we
will record a credit or a charge to SG&A expense in the period in which we make such a determination.
Excess, Close-Out and Slow Moving Inventory
We make ongoing estimates of potential excess, close-out or slow moving inventory. We evaluate our inventory on
hand considering our purchase commitments, sales forecasts, and historical liquidation experience to identify excess, close-
out or slow moving inventory and make provisions as necessary to properly reflect inventory value at the lower of cost or
estimated market value. If we determine that a smaller or larger reserve is appropriate, we will record a credit or a charge
to cost of sales in the period in which we make such a determination.
Product Warranty
We make ongoing estimates of potential future product warranty costs. When we evaluate our reserve for warranty
costs, we consider our product warranty policies, historical claim rates by season, product category and mix, current warranty
claim trends, and the historical cost to repair, replace, or refund the original sale. If we determine that a smaller or larger
reserve is appropriate, we will record a credit or a charge to cost of sales in the period in which we make such a determination.