Columbia Sportswear 2002 Annual Report Download - page 43

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
the Company’s history of warranty repairs and replacements. A summary of accrued warranties is as follows (in
thousands):
Balance at
beginning of
period
Charged to
costs and
expenses Claims paid
Balance at
end of
period
Year ended December 31, 2002 .......................... $7,475 $2,783 $2,458 $7,800
Year ended December 31, 2001 .......................... 5,780 4,094 2,399 7,475
Year ended December 31, 2000 .......................... 4,200 3,477 1,897 5,780
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 142, “Goodwill and
Other Intangible Assets.” This statement eliminates amortization of goodwill and certain intangible assets with
indefinite useful lives and sets forth methods to periodically evaluate these assets for impairment. The Company
adopted SFAS No. 142 on January 1, 2002 and therefore ceased amortization of certain intangible assets. Other
than the cessation of amortization, the adoption of this statement had no impact on the Company’s results of
operations or cash flows for the year ended December 31, 2002. Amortization expense for intangible assets with
indefinite useful lives was $796,000 for 2001 and $199,000 for 2000. During the fourth quarter of 2002, the
Company completed an impairment test on the intangible assets and determined that these assets were not
impaired.
In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal
Activities.” This statement requires that a liability for a cost associated with an exit or disposal activity be
recognized when the liability is incurred. Under previous guidance, a liability for an exit cost was recognized at
the date of the commitment to an exit plan. The provisions of this statement will be applied prospectively, as
applicable, and are effective for exit or disposal activities that are initiated after December 31, 2002.
In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—
Transition and Disclosure,” an amendment of SFAS No. 123, “Accounting for Stock-Based Compensation.” This
statement provides alternative methods of transition for voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the effect of the method used on
reported results. The Company has chosen to continue to account for stock-based compensation using the
intrinsic value method prescribed in APB 25 and related interpretations. The provisions of SFAS No. 148 are
effective for fiscal years ended after December 15, 2002. Thus, the Company has adopted the disclosure
provisions of SFAS No. 148 in the financial reports for the year ended December 31, 2002. As the adoption of
this statement involves disclosures only, the Company does not expect a material impact on its financial position
or results of operations.
In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). This
interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under specified guarantees that it has issued. It also clarifies that a guarantor is
required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The disclosure requirements in this interpretation are effective for financial statements of
interim or annual periods ending after December 15, 2002. The Company has adopted the disclosure provisions
of FIN 45 (see Note 2 of the Notes to the Consolidated Financial Statements). Additionally, the recognition of a
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