Exhibit 99.1
3 Q Financial Report
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| Contact: |
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David W. Kiser
Director of Investor Relations
Columbia Sportswear Company
(503) 985-4584 |
COLUMBIA SPORTSWEAR COMPANY
REPORTS THIRD QUARTER 2006 RESULTS
Global spring product backlog increased 15.4% to $414.5 million
Highlights:
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Global net sales increased 10.8 percent to $454.1 million, a third quarter record,
compared to third quarter 2005 net sales of $409.8 million. |
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Third quarter net income was $60.3 million, or $1.67 per diluted share, net of $0.04 per
share of stock-based compensation expense, compared to $66.5 million, or $1.74 per diluted
share, for the same period last year. For purposes of comparison, Columbia recorded a tax
benefit of $5.6 million, or $0.14 per diluted share in the third quarter of last year,
resulting from the favorable conclusion of various income tax audits. |
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Global spring product backlog increased 15.4 percent to $414.5 million compared to
September 30, 2005; consolidated backlog, which includes fall product orders, increased
17.8 percent to $693.9 million. |
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Columbia’s board of directors approved the initiation of a quarterly dividend of $0.14
per share, payable on November 30, 2006 to shareholders of record on November 16, 2006. |
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Columbia expects 2006 net sales growth of approximately 11 percent and estimates 2006
diluted earnings per share of $3.26 to $3.29, including approximately $0.18 per share of
projected stock-based compensation expense. |
Portland, Ore. — October 26, 2006 — Columbia Sportswear Company (Nasdaq: COLM), a global leader
in the active outdoor apparel and footwear industries, today announced net sales of $454.1 million
for the quarter ended September 30, 2006, an increase of 10.8 percent compared to net sales of
$409.8 million for the same period of 2005. Net income for the third quarter was $60.3 million, a
9.3 percent decrease compared to net income of $66.5 million for the same period of 2005. For
purposes of comparison, Columbia recorded a tax benefit of $5.6 million, or $0.14 per diluted share
in the third quarter of last year, resulting from the favorable conclusion of various income tax
audits. Earnings per share for the third quarter of 2006 were $1.67 (diluted) on 36.1 million
weighted average shares, net of $0.04 per share of stock-based compensation expense, compared to
earnings per share of $1.74 (diluted) for the third quarter of 2005 on 38.1 million weighted
average shares.
Compared to the third quarter of 2005, U.S. sales increased 12.8 percent to $276.3 million, Other
International sales increased 15.1 percent to $57.8 million, European sales increased 6.9 percent
to $66.4 million, and Canadian sales increased 1.9 percent to $53.6 million for the third quarter
of 2006.
Excluding changes in currency exchange rates, consolidated net sales for the third quarter of 2006
increased 9.1 percent. U.S. sales increased 12.8 percent, Other International sales increased 14.9
percent, European sales increased 2.3 percent, and Canadian sales decreased 5.7 percent for the
third quarter of 2006 (see “Reconciliation of Net Sales Changes to Net Sales Changes Excluding
Changes in Currency Exchange Rates” below).
For the third quarter of 2006, sportswear sales increased 16.6 percent to $146.6 million, outerwear
sales increased 8.1 percent to $217.8 million, footwear sales increased 8.8 percent to $69.4
million, equipment sales increased 150.0 percent to $4.5 million, and accessories sales decreased
7.6 percent to $15.8 million compared to the third quarter of 2005.
Tim Boyle, Columbia’s president and chief executive officer, commented, “Third quarter gross
margins were higher than anticipated due to better than expected gross margins on Columbia-branded
sportswear, Pacific Trail, and Mountain Hardwear apparel. Growth in global sales was driven by
strong demand for our sportswear and outerwear products domestically and, to a lesser degree,
sportswear in Europe and outerwear in our international distributor markets. Selling and operating
expenses were managed effectively, increasing in line with sales growth. The stronger than
projected gross margins and effective cost management drove better than expected third quarter
results.”
Backlog
The Company reported that as of September 30, 2006, spring backlog increased 15.4 percent to $414.5
million, compared to spring backlog of $359.3 million at September 30, 2005. Consolidated product
backlog, which includes global fall orders at September 30, 2006, was $693.9 million, an increase
of 17.8 percent compared to consolidated product backlog of $588.8 million at September 30, 2005.
Mr. Boyle commented, “Spring order growth was strong, driven by exceptional sportswear growth
globally. Spring outerwear orders were also strong. Footwear orders, including our new Montrail
brand, increased less than the corporate average; however, excluding Montrail orders, global spring
footwear backlog decreased slightly. Geographically, domestic spring apparel orders were very
strong, and international growth was driven by exceptional strength in international distributor
markets. The growth in consolidated orders, including spring backlog, provides good near-term
revenue visibility. Revenue from the consolidated backlog that we reported today will begin to be
recognized when these orders are shipped, beginning in the fourth quarter of this year and
continuing into the third quarter of next year. As always, you should be aware that there are a
number of factors that could cause our future sales to differ from reported future order backlog,
including order cancellations, reorders and fluctuations in foreign currency rates.”
Dividend Initiation
The Company announced today that the board of directors has approved the initiation of a quarterly
dividend of $0.14 per share, initially payable on November 30, 2006 to shareholders of record on
November 16, 2006.
Guidance
Mr. Boyle continued, “Based on our current outlook, we anticipate fourth quarter 2006 revenue
growth of approximately 14 percent and net income decline of 4 to 7 percent, including
approximately $1.1 million in after-tax stock-based compensation expense, compared to the same
period of 2005. For the full year 2006, we anticipate net sales growth of approximately 11 percent
compared to 2005, and diluted earnings per share of $3.26 to $3.29, including approximately $0.18
in stock-based compensation expense. These projections are forward-looking in nature, and are
based on backlog and forecasts, which may change, perhaps significantly.”
Mr. Boyle concluded, “Based in part on the reported spring backlog, we expect revenue growth for
the first quarter of 2007 of approximately 11 percent and diluted earnings per share of
approximately $0.55 to $0.58. As a reminder, spring accounts for a relatively small percentage of
our overall business; the bulk of our revenues and profits historically come in the second half of
the year. Further out, it is difficult for us to gauge revenue and profitability levels until we
gain more visibility into the fall 2007 season. We will provide full year 2007 financial guidance
when we report our fall backlog results in April 2007. Please note that these projections are
forward-looking in nature, and are based on backlog and forecasts, which may change, perhaps
significantly.”
The Company will host a conference call to elaborate on third quarter 2006 results on Thursday,
October 26, 2006 at 5:00 p.m. Eastern. The call will include discussions regarding the Company’s
third quarter 2006 performance in general, the Company’s geographic and merchandise category
performance, and the Company’s future opportunities and expectations. To participate, please dial
800-851-3059 in the United States and Canada (International callers can dial 706-679-8430) five to
ten minutes prior to the call. The call will also be webcast live on the investor information
section of the Company’s website at www.columbia.com. The webcast will be archived on the investor
information section of the Company’s website until November 9, 2006.
Founded in 1938 in Portland, Oregon, Columbia Sportswear Company is a global leader in the
designing, sourcing, marketing and distribution of active outdoor apparel and footwear. As one of
the largest outerwear manufacturers in the world and a leading seller of skiwear in the United
States, the Company has developed an international reputation for quality, performance,
functionality and value. The Company manages a portfolio of outdoor brands including Columbia
Sportswear, Mountain Hardwear, Sorel, Montrail and Pacific Trail. To learn more about Columbia,
please visit the Company’s website at www.columbia.com.
This press release contains forward-looking statements, including Mr. Boyle’s statements regarding
anticipated revenues and earnings for the fourth quarter and full year 2006 and the first quarter
of 2007. Actual results could differ materially from those projected in these and other
forward-looking statements as a result of a number of risks and uncertainties, including those set
forth in this press release, those described in the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006, and other risks and uncertainties that have been or may be described
from time to time in other reports filed by the Company, including reports on Form 8-K, Form 10-Q,
and Form 10-K. Risk factors that may affect our future revenues, earnings and performance include
international risks, including changes in quotas and tariffs or other duties, political instability
in foreign markets, exchange rate fluctuations, and trade disruptions; our ability to attract and
retain key employees; unfavorable economic conditions generally and weakness in consumer
confidence; the financial health of our customers; our ability to effectively deliver our products
to customers in a timely manner; our reliance on product acceptance by consumers; the effects of
unseasonable
weather (including, for example, warm weather in the winter and cold weather in the spring, which
affects demand for the Company’s products); our ability to integrate and manage acquired
businesses; our dependence on independent manufacturers and suppliers; the effectiveness of our
sales and marketing efforts; intense competition in the industry (which we expect to increase);
business disruptions and acts of terrorism or military activities around the globe; the effective
implementation and expansion of our distribution facilities; the operations of our computer systems
and third party computer systems; and our ability to establish and protect our intellectual
property. Although forward-looking statements help provide complete information about the Company,
please keep in mind that forward-looking statements are inherently less reliable than historical
information. We do not undertake any duty to update any of the forward-looking statements after
the date of this release to conform them to actual results or to changes in our expectations.
-tables follow-
COLUMBIA SPORTSWEAR COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
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September 30, |
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2006 |
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2005 |
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Current Assets: |
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Cash and cash equivalents |
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$ |
28,998 |
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$ |
120,196 |
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Short-term investments |
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41,580 |
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28,100 |
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Accounts receivable, net |
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374,451 |
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361,870 |
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Inventories |
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272,113 |
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223,048 |
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Deferred tax asset |
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24,145 |
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18,978 |
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Prepaid expenses and other
current assets |
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17,614 |
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14,654 |
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Total current assets |
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758,901 |
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766,846 |
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Property, plant and equipment, net |
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195,651 |
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160,652 |
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Intangibles and other assets |
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69,674 |
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38,745 |
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Total assets |
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$ |
1,024,226 |
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$ |
966,243 |
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Current Liabilities: |
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Notes payable |
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$ |
29,637 |
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$ |
— |
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Accounts payable |
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72,352 |
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89,554 |
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Accrued liabilities |
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79,309 |
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68,912 |
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Income taxes payable |
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42,077 |
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29,323 |
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Current portion of long-term debt |
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3,727 |
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7,185 |
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Total current liabilities |
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227,102 |
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194,974 |
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Long-term debt and other liabilities |
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3,743 |
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7,445 |
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Deferred tax liability |
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9,460 |
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10,782 |
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Shareholders’ equity |
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783,921 |
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753,042 |
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Total liabilities and
shareholders’ equity |
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$ |
1,024,226 |
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$ |
966,243 |
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CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2006 |
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2005 |
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2006 |
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2005 |
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Net sales |
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$ |
454,140 |
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$ |
409,757 |
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$ |
925,904 |
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$ |
841,694 |
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Cost of sales |
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255,892 |
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221,383 |
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534,595 |
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472,524 |
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Gross profit |
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198,248 |
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188,374 |
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391,309 |
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369,170 |
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43.7 |
% |
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46.0 |
% |
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42.3 |
% |
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43.9 |
% |
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Selling, general, and administrative |
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108,292 |
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97,450 |
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270,191 |
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240,360 |
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Net licensing income |
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(1,226 |
) |
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(1,163 |
) |
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(3,350 |
) |
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(2,786 |
) |
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Income from operations |
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91,182 |
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92,087 |
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124,468 |
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131,596 |
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Interest (income) expense, net |
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(927 |
) |
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(989 |
) |
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(4,740 |
) |
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(3,694 |
) |
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Income before income tax |
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92,109 |
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93,076 |
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129,208 |
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135,290 |
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Income tax provision |
|
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31,778 |
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26,620 |
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44,577 |
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41,184 |
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Net income |
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$ |
60,331 |
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$ |
66,456 |
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$ |
84,631 |
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$ |
94,106 |
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Net income per share: |
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Basic |
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$ |
1.69 |
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$ |
1.76 |
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$ |
2.33 |
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$ |
2.42 |
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Diluted |
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1.67 |
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1.74 |
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2.30 |
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2.39 |
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Weighted average shares outstanding: |
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Basic |
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35,687 |
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37,782 |
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36,366 |
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38,964 |
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Diluted |
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36,059 |
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38,138 |
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36,768 |
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39,377 |
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Reconciliation of Net Sales Changes to Net Sales Changes Excluding Changes in Currency
Exchange Rates
Net sales from year to year are affected by changes in selling prices and unit volume as well as
changes in currency exchange rates where we have sales in foreign locations. The Company’s net
sales changes excluding the effect of changes in currency exchange rates are presented below. The
Company discloses changes in sales excluding changes in currency exchange rates because it uses the
measure to understand sales growth excluding any impact from foreign currency exchange rate
changes. In addition, the Company’s foreign management teams are generally evaluated and
compensated in part based on the results of operations excluding currency exchange rate changes for
their respective regions. Amounts calculated in accordance with accounting principles generally
accepted in the United States of America, or GAAP, are denoted.
The Company’s net sales excluding the effect of changes in currency exchange rates are presented
below:
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Quarter ended September 30, 2006 |
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Amount |
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(millions) |
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% Change |
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Consolidated: |
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Net sales increase (GAAP) |
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$ |
44.3 |
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10.8 |
% |
Effect of currency exchange rate changes |
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(6.9 |
) |
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(1.7 |
) |
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Net sales increase excluding changes in
currency exchange rates |
|
$ |
37.4 |
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9.1 |
% |
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United States: |
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Net sales increase (GAAP) |
|
$ |
31.4 |
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12.8 |
% |
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Europe: |
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Net sales increase (GAAP) |
|
$ |
4.3 |
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6.9 |
% |
Effect of currency exchange rate changes |
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(2.8 |
) |
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(4.6 |
) |
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Net sales increase excluding changes in currency
exchange rates |
|
$ |
1.5 |
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2.3 |
% |
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Canada: |
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Net sales increase (GAAP) |
|
$ |
1.0 |
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1.9 |
% |
Effect of currency exchange rate changes |
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(4.0 |
) |
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(7.6 |
) |
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Net sales decrease excluding changes in currency
exchange rates |
|
$ |
(3.0 |
) |
|
|
(5.7 |
%) |
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Other International: |
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Net sales increase (GAAP) |
|
$ |
7.6 |
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|
|
15.1 |
% |
Effect of currency exchange rate changes |
|
|
(0.1 |
) |
|
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(0.2 |
) |
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Net sales increase excluding changes in currency
exchange rates |
|
$ |
7.5 |
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|
14.9 |
% |
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####