Columbia Sportswear 2002 Annual Report Download - page 41

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Revenue Recognition:
The Company records wholesale and licensed product revenues when title passes and the risks and rewards
of ownership have passed to the customer, based on the terms of sale. Title generally passes upon shipment or
upon receipt by the customer depending on the country of the sale and the agreement with the customer. Retail
store revenues are recorded at the time of sale.
In certain countries outside of the U.S., precise information regarding the date of receipt by the customer is
not readily available. In these cases, the Company estimates the date of receipt by the customer based upon
historical and expected delivery times by geographic location.
Upon shipment, the Company also provides 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.
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 claim were significantly greater or lower than the reserves that
had been established, the Company would record a reduction or increase to net revenues in the period in which it
made such determination.
Foreign currency translation:
The assets and liabilities of the Company’s foreign subsidiaries have been translated into U.S. dollars using
the exchange rates in effect at period end, and the net sales and expenses have been translated into U.S. dollars
using average exchange rates in effect during the period. The foreign currency translation adjustments are
included as a separate component of accumulated other comprehensive loss in shareholders’ equity and are not
currently adjusted for income taxes as they relate to indefinite net investments in non-U.S. operations.
Fair value of financial instruments:
Based on borrowing rates currently available to the Company for bank loans with similar terms and
maturities, the fair value of the Company’s long-term debt approximates the carrying value. Furthermore, the
carrying value of all other financial instruments potentially subject to valuation risk (principally consisting of
cash and cash equivalents, accounts receivable and accounts payable) also approximate fair value because of
their short-term maturities.
Derivatives:
The Company accounts for derivatives in accordance with SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” as amended by SFAS No. 137, “Accounting for Derivative Instruments and
Hedging Activities – Deferral of the Effective Date of SFAS No. 133” and SFAS No. 138, “Accounting for
Certain Derivative Instruments and Certain Hedging Activities – an Amendment of SFAS No. 133.”
Substantially all foreign currency derivatives entered into by the Company qualify for and are designated as
foreign-currency cash flow hedges, including those hedging foreign currency denominated firm commitments.
Changes in fair values of outstanding cash flow hedge derivatives that are highly effective are recorded in
other comprehensive income, until earnings are affected by the variability of cash flows of the hedged
transaction. In most cases amounts recorded in other comprehensive income will be released to earnings some
time after maturity of the related derivative. The consolidated statement of operation classification of effective
hedge results is the same as that of the underlying exposure. Results of hedges of product costs are recorded in
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