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Contact:
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David W. Kiser |
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Director of Investor Relations |
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Columbia Sportswear Company |
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(503) 985-4584 |
COLUMBIA SPORTSWEAR COMPANY
REPORTS SECOND QUARTER 2006 RESULTS
Highlights:
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• |
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Second quarter net sales increased 13.6 percent to $211.6 million. |
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• |
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Second quarter diluted earnings per share were $0.13, net of $0.05 per share of
stock-based compensation expense, on 37.0 million weighted average shares, compared to
$0.16 on 39.3 million weighted average shares for the second quarter of 2005. |
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• |
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Company expects 2006 net sales growth of approximately 11 percent and diluted earnings
per share of approximately $3.22, including approximately $0.20 per share of projected
stock-based compensation expense, on 37.0 million weighted average shares. |
PORTLAND, Ore. — July 27, 2006 — Columbia Sportswear Company (NASDAQ: COLM), a global leader in
the active outdoor apparel and footwear industries, today announced second quarter net sales of
$211.6 million for the quarter ended June 30, 2006, an increase of 13.6 percent over net sales of
$186.2 million for the same period of 2005. Net income decreased 23.8 percent to $4.8 million for
the second quarter of 2006 from $6.3 million for the same period of 2005. Net income for the
second quarter of 2006 included $2.0 million in after-tax stock-based compensation expense, or
$0.05 per diluted share. Diluted earnings per share for the second quarter of 2006 were $0.13 on
37.0 million weighted average shares, compared to diluted earnings per share of $0.16 for the
second quarter of 2005 on 39.3 million weighted average shares. The decrease in weighted average
shares outstanding is the result of the Company’s repurchases of shares over the last twelve
months.
Compared to the second quarter of 2005, Other International sales increased 25.2 percent to $51.1
million, U.S. sales increased 7.8 percent to $118.9 million, Europe sales increased 14.6 percent to
$29.1 million, and Canada sales increased 28.9 percent to $12.5 million for the second quarter of
2006.
Excluding changes in currency exchange rates, consolidated net sales increased 13.5 percent, Other
International sales increased 25.7 percent, U.S. sales increased 7.8 percent, Europe sales
increased 17.3 percent, and Canada sales increased 17.5 percent for the second quarter of 2006,
compared to the same period of 2005 (see “Reconciliation of Net Sales Changes to Net Sales Changes
Excluding Changes in Currency Exchange Rate” below).
For the second quarter of 2006, sportswear sales increased 9.6 percent to $112.2 million, footwear
sales increased 25.9 percent to $43.2 million, equipment sales increased 159.3 percent to $7.0
million, outerwear sales increased 8.0 percent to $43.2 million and accessories sales decreased
11.8 percent to $6.0 million, compared to the second quarter of 2005.
Tim Boyle, Columbia’s president and chief executive officer, commented, “Second quarter gross
margins were higher than anticipated due primarily to better than expected sportswear margins and
lower than expected closeout sales at higher margins for sportswear and outerwear. Second quarter
sales growth was driven by increased demand for our apparel products in international markets and
strong shipments of footwear products domestically. Consolidated selling and operating expenses
increased $11.0 million, primarily due to additional personnel costs, including incremental
stock-based compensation expense, but were less than expected as a result of our cost control
measures. The stronger than projected sales and margins, coupled with effective cost management
drove better than expected results for the quarter.”
“In reviewing the second quarter results, investors should be aware that the second quarter is our
smallest revenue quarter of the year, as we conclude our spring product shipping season and begin
shipping fall products late in the quarter. Because of the comparatively low revenue levels in the
quarter, changes in shipments in any one channel, geography or category may be amplified and
therefore, changes in operating results may not necessarily be indicative of future results,”
continued Mr. Boyle.
Share Repurchase
During the second quarter, the Company repurchased approximately 1.5 million shares at an aggregate
purchase price of $73.7 million. The Company has repurchased a total of approximately 6.0 million
shares at an aggregate purchase price of $284.3 million of the $400 million authorized since the
inception of the stock repurchase program in April 2004.
Guidance
Mr. Boyle continued, “Based on our current outlook, we anticipate third quarter 2006 revenue growth
of 11 to 12 percent and net income decline of approximately 12 percent, including approximately $2
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 up to approximately $3.22, including $0.20 in stock-based
compensation expense. 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 second quarter 2006 results on Thursday,
July 27, 2006 at 5:00 p.m. Eastern. The call will include discussions regarding the Company’s
second quarter 2006 performance in general, the Company’s geographic and merchandise category
performance, and the Company’s future opportunities. To participate, please dial 800-851-3059 in
the United States (outside the United States, please 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, where it will remain available until August 10,
2006.
Founded in 1938 in Portland, Oregon, Columbia Sportswear Company is a global leader in the design,
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 third quarter and full year 2006 and growth in future
periods. 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 March 31, 2006, under the heading “Risk Factors,” 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.
Risks and uncertainties that may affect the Company’s future revenues and earnings include growth
trends in the industry in general; local, national, and international economic conditions; the
financial health of the Company’s customers; intense competition in the industry (which the Company
expects to increase); the effects of unseasonable weather on consumer demand for the Company’s
products; international risks, including foreign laws and regulations, trade disruptions, political
instability in foreign markets, exchange rate fluctuations, and changes in quotas and tariffs or
other duties; business disruptions and costs arising from disease outbreaks, disasters, acts of
terrorism or military activities around the globe; the Company’s dependence on key personnel; the
effective implementation of the Company’s Kentucky distribution center and expansion of its other
distribution facilities; the Company’s ability to fully and cost-effectively integrate acquired
businesses into its existing operations; the Company’s ability to effectively deliver its products
to customers in a timely manner despite potential service interruptions; the Company’s reliance on
product acceptance by consumers; the Company’s dependence on independent manufacturers and
suppliers; the effectiveness of the Company’s sales and marketing efforts; the Company’s ability to
achieve and manage growth effectively; the operations of the Company’s own and third party computer
systems; and the Company’s ability to establish and protect its intellectual property. The Company
does 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 its expectations.
-tables follow-
COLUMBIA SPORTSWEAR COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
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June 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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$ |
47,626 |
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$ |
174,869 |
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Short-term investments |
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126,169 |
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68,010 |
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Accounts receivable, net |
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165,350 |
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165,252 |
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Inventories |
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272,248 |
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215,937 |
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Deferred tax asset |
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24,396 |
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20,598 |
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Prepaid expenses and other current assets |
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14,914 |
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10,139 |
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Total current assets |
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650,703 |
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654,805 |
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Property, plant and equipment, net |
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195,741 |
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154,661 |
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Intangibles and other assets |
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69,638 |
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38,402 |
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Total assets |
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$ |
916,082 |
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$ |
847,868 |
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Current Liabilities: |
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Accounts payable |
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$ |
115,667 |
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$ |
88,454 |
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Accrued liabilities |
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49,788 |
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42,561 |
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Income taxes payable |
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13,187 |
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|
6,370 |
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Current portion of long-term debt |
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4,657 |
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7,206 |
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Total current liabilities |
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183,299 |
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144,591 |
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Long-term debt and other liabilities |
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7,350 |
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11,997 |
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Deferred tax liability |
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9,014 |
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9,649 |
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Shareholders’ equity |
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716,419 |
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|
681,631 |
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Total liabilities and shareholders’ equity |
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$ |
916,082 |
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$ |
847,868 |
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CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 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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$ |
211,553 |
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$ |
186,231 |
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$ |
471,764 |
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$ |
431,937 |
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Cost of sales |
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130,129 |
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|
112,678 |
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278,703 |
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251,141 |
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Gross profit |
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81,424 |
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73,553 |
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193,061 |
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180,796 |
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38.5 |
% |
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39.5 |
% |
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40.9 |
% |
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41.9 |
% |
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Selling, general, and administrative |
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77,080 |
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66,119 |
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161,899 |
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142,910 |
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Net licensing income |
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(1,119 |
) |
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(907 |
) |
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(2,124 |
) |
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(1,623 |
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Income from operations |
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5,463 |
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8,341 |
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33,286 |
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39,509 |
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Interest (income) expense, net |
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(1,915 |
) |
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(1,298 |
) |
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(3,813 |
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(2,705 |
) |
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Income before income tax |
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7,378 |
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9,639 |
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37,099 |
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42,214 |
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Income tax provision |
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2,545 |
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|
|
3,326 |
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|
|
12,799 |
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14,564 |
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Net income |
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$ |
4,833 |
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$ |
6,313 |
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$ |
24,300 |
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$ |
27,650 |
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Net income per share: |
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Basic |
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$ |
0.13 |
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$ |
0.16 |
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$ |
0.66 |
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$ |
0.70 |
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Diluted |
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0.13 |
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|
0.16 |
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|
|
0.65 |
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|
|
0.69 |
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Weighted average shares outstanding: |
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|
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Basic |
|
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36,555 |
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|
|
38,956 |
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|
|
36,712 |
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|
|
39,546 |
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Diluted |
|
|
36,965 |
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|
|
39,329 |
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|
|
37,134 |
|
|
|
39,987 |
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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 June 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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$ |
25.4 |
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13.6 |
% |
Decrease due to currency exchange rate changes |
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(0.2 |
) |
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(0.1 |
) |
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Net sales increase excluding changes in currency exchange rates |
|
$ |
25.2 |
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13.5 |
% |
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United States: |
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Net sales increase (GAAP) |
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$ |
8.6 |
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7.8 |
% |
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|
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Europe: |
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Net sales increase (GAAP) |
|
$ |
3.7 |
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|
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14.6 |
% |
Increase due to currency exchange rate changes |
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0.7 |
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2.7 |
|
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|
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Net sales increase excluding changes in currency exchange rates |
|
$ |
4.4 |
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17.3 |
% |
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|
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Canada: |
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Net sales increase (GAAP) |
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$ |
2.8 |
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|
|
28.9 |
% |
Decrease due to currency exchange rate changes |
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(1.1 |
) |
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(11.4 |
) |
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Net sales increase excluding changes in currency exchange rates |
|
$ |
1.7 |
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|
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17.5 |
% |
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Other International: |
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Net sales increase (GAAP) |
|
$ |
10.3 |
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|
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25.2 |
% |
Increase due to currency exchange rate changes |
|
|
0.2 |
|
|
|
0.50 |
|
|
|
|
|
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Net sales increase excluding changes in currency exchange rates |
|
$ |
10.5 |
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|
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25.7 |
% |
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####