Columbia Sportswear 2014 Annual Report Download - page 14

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fully integrate operations of our joint venture arrangement in China, which began operations in January 2014, and of prAna,
which we acquired in May of 2014. These business initiatives involve many risks and uncertainties that, if not managed
effectively, may have a material adverse effect on our financial condition, results of operations or cash flows.
Our business strategies and related increased expenditures could also cause our operating margin to decline if we are
unable to offset our increased spending with increased sales or gross profit, or comparable reductions in other operating
costs. If our sales or gross profit decline or fail to grow as planned and we fail to sufficiently leverage our operating expenses,
our profitability will decline. This could result in a decision to delay, reduce, modify or terminate our strategic business
initiatives, which could limit our ability to invest in and grow our business and could have a material adverse effect on our
financial condition, results of operations or cash flows.
Initiatives to Upgrade Our Business Processes and Information Technology Infrastructure Involve Many Risks Which
Could Result In, Among Other Things, Business Interruptions and Higher Costs
We regularly implement business process improvement initiatives to optimize our performance. Our current business
process initiatives include plans to improve business results through standardization of business processes and technologies
that support our supply chain and go-to-market strategies through implementation of an integrated global enterprise resource
planning ("ERP") software solution and other complementary information technology systems over the next several years.
Implementation of these solutions and systems is highly dependent on coordination of numerous contractors and software
and system providers. The interdependence of these solutions and systems is a significant risk to the successful completion
of the initiatives and the failure of any one contractor or system could have a material adverse effect on the implementation
of our overall information technology infrastructure. We may experience difficulties as we transition to these new or upgraded
systems and processes, including loss or corruption of data, delayed shipments, decreases in productivity as our personnel
implement and become familiar with new systems, increased costs and lost revenues. In addition, transitioning to these new
or upgraded systems requires significant capital investments and personnel resources. Difficulties in implementing new or
upgraded information systems or significant system failures could disrupt our operations and have a material adverse effect
on our capital resources, financial condition, results of operations or cash flows.
Implementation of this new information technology infrastructure has a pervasive impact on our business processes
and information systems across a significant portion of our operations. As a result, we are undergoing significant changes
in our operational processes and internal controls as our implementation progresses, which in turn require significant change
management, including training of our personnel. If we are unable to successfully manage these changes as we implement
these systems, including harmonizing our systems, data, processes and reporting analytics, our ability to conduct, manage
and control routine business functions could be negatively affected and significant disruptions to our business could occur.
In addition, we could incur material unanticipated expenses, including additional costs of implementation or costs of
conducting business. These risks could result in significant business disruptions or divert management's attention from key
strategic initiatives and have a material adverse effect on our capital resources, financial condition, results of operations or
cash flows.
We Rely on Our Highly Customized Information Management Systems
Our business is increasingly reliant on information technology. Information systems are used across our supply chain
and retail operations, from design to distribution and sales, and are used as a method of communication among employees,
with our subsidiaries and liaison offices overseas and with our customers and retail stores. We also rely on our information
systems to allocate resources, pay vendors and collect from customers, manage product data, develop demand and supply
plans, forecast and report operating results and meet regulatory requirements. System failures, breaches of confidential
information or service interruptions may occur as the result of a number of factors, including our failure to properly maintain
systems redundancy or to protect, repair, maintain or upgrade our systems, computer viruses, programming errors, hacking
or other unlawful activities by third parties, and disasters. Any breach or interruption of critical business information systems
could have a material adverse effect on our financial condition, results of operations or cash flows.
Our legacy product development, retail point-of-sale and other systems, on which we continue to manage a substantial
portion of our business activities, are highly customized. As a result, the availability of internal and external resources with
the expertise to maintain these systems is limited. Our legacy systems may not support desired functionality for our operations
and may inhibit our ability to operate efficiently, which could have an adverse effect on our financial condition, results of