|
|
|
Contact: |
|
Ron Parham
Director of Investor Relations
Columbia Sportswear Company
(503) 985-4584 |
COLUMBIA SPORTSWEAR COMPANY
REPORTS SECOND QUARTER 2008 RESULTS
Highlights:
|
|
|
Second quarter 2008 consolidated net sales decreased 3 percent to $213.1 million,
compared to second quarter 2007 net sales of $218.6 million. |
|
|
|
|
Second quarter 2008 net loss was $1.8 million, or $(0.05) per diluted share, compared to
net income of $10.0 million, or $0.27 per diluted share, for the second quarter of 2007. |
|
|
|
|
Fiscal 2008 net sales are estimated to decrease approximately 3 percent, and diluted
earnings per share are expected to approximate $2.60 $2.70 for the full year. |
|
|
|
|
The board of directors declared a quarterly dividend of $0.16 per share, payable on
August 28, 2008 to shareholders of record on August 14, 2008. |
PORTLAND, Ore. July 24, 2008 Columbia Sportswear Company (NASDAQ: COLM), a global leader in
the active outdoor apparel and footwear industries, today announced net sales of $213.1 million for
the quarter ended June 30, 2008, a decrease of 3 percent compared to net sales of $218.6 million
for the same period of 2007.
Second quarter net loss totaled $1.8 million, or $(0.05) per diluted share, compared with net
income of $10.0 million, or $0.27 per diluted share, for the same period of 2007. The second
quarter is typically the companys lowest volume quarter, thus the lower-than-expected net sales
amplified the effect of the companys planned incremental marketing and retail expansion
investments on the quarters operating results.
The 3 percent decrease in second quarter 2008 net sales consisted of an 18 percent decline in U.S.
net sales to $95.6 million, partially offset by 13 percent growth in the Europe, Middle-East &
Africa region (EMEA) to $63.4 million, 20 percent growth in the Latin America & Asia Pacific region
(LAAP) to $40.1 million, and 18 percent growth in Canada to $14.0 million. (See Geographical Net
Sales table below.) Changes in foreign currency exchange rates compared with the second quarter
of 2007 contributed 3 percentage points of benefit to the consolidated net sales comparison, 7
percentage points to the EMEA regions net sales growth, 3 percentage points to LAAP regions net
sales growth, and 11 percentage points to Canada net sales growth.
Compared with the second quarter of 2007, second quarter 2008 sportswear net sales declined 7
percent to $115.5 million, partially offset by a 5 percent increase in outerwear net sales to $41.8
million and a 12 percent increase in accessories and equipment net sales to $13.3 million. Second
quarter footwear net sales of $42.5 million were equal to last years second quarter footwear net
sales. (See Categorical Net Sales table below.)
Compared with the second quarter of 2007, second quarter 2008 Columbia brand net sales decreased 3
percent to $194.1 million, partially offset by a 20 percent increase in Mountain Hardwear brand net
sales to $13.8 million. Combined, net sales of Montrail, Sorel and Pacific Trail
brand products did not comprise a significant percentage of sales in the second quarter of either
year. (See Brand Net Sales table below.)
The company ended the quarter with $327.4 million in cash and short-term investments, compared with
$264.5 million at June 30, 2007. Compared with June 30, 2007, accounts receivable declined $11.6
million, or 6 percent, to $172.6 million and inventories declined $36.9 million, or 12 percent, to
$272.9 million.
Tim Boyle, Columbias president and chief executive officer, commented, Our second quarter results
reflect, in part, the economic headwinds we are facing in the U.S. and our EMEA-direct markets,
which resulted in lower net sales than we anticipated. Because the second quarter is our smallest
volume quarter each year, the lower net sales were not sufficient to fully absorb the increased
investments we are choosing to make in demand creation and expansion of our retail store network.
However, our discretionary spending during the quarter was managed as planned. Our inventory
levels improved compared with last years second quarter, contributing to approximately $136
million in operating cash flow generated during the first half of 2008. We remained on pace with
our plans to expand Columbias U.S. network of first-line branded retail stores in key metropolitan
markets and outlet stores in Class-A outlet centers.
Share Repurchase Program
During the second quarter, the company repurchased approximately 107,000 shares of common stock at
an aggregate purchase price of $4.4 million. Through June 30, 2008, the company has repurchased a
total of approximately 7.7 million shares at an aggregate purchase price of $360.7 million since
the inception of the current $400 million stock repurchase program in 2004.
Dividend
The board of directors approved a dividend of $0.16 per share, payable on August 28, 2008 to
shareholders of record on August 14, 2008.
2008 Guidance
The company currently expects 2008 net sales to decline approximately 3 percent compared with 2007,
based primarily on its expectations for continued weakness in U.S. and direct-EMEA markets,
partially offset by its expanding U.S. retail operations, and the estimated effect of changes in
foreign currency exchange rates compared with 2007.
The company currently expects full year 2008 consolidated gross margins to contract approximately
50 basis points from 2007 levels, primarily as a result of an increased proportion of discounted
sales and higher production costs, partially offset by increased contribution from the companys
retail operations, increases in some average selling prices internationally, and favorable foreign
currency hedged rates.
As a result of its reduced net sales expectations, the companys previously stated plans to invest
in incremental marketing activities during 2008 in support of key seasonal brand and product
initiatives, together with initial investments and incremental operating costs of the companys new
retail stores, are expected to increase full year 2008 operating expenses as a percentage of
consolidated net sales by approximately 440 basis points compared with 2007 levels.
Based on the above projections, the company expects full year 2008 operating margins of
approximately 10.0 percent and diluted earnings per share of approximately $2.60 to $2.70.
The company expects net sales in the third quarter of 2008 to decrease approximately 4 percent
compared with last years third quarter and expects third quarter diluted earnings per share of
approximately $1.44 compared to $1.72 in last years third quarter.
Mr. Boyle observed, The current weak retail environment is significantly affecting our business
and reducing our visibility. Most of our large retail partners have stated their intention to
manage their consolidated inventories down over the course of 2008. Reduced consumer spending
levels and tighter credit markets have caused retailers to request unusual and unpredictable levels
of order delays and cancellations. We believe that our reduced revenue forecast for the remainder
of the year appropriately factors in what we currently know and what we currently sense about the
market, but weve also learned in the past ninety days how quickly things can change.
Despite these challenges, we remain committed to using our strong balance sheet and cash flow
during this economic cycle to invest in strategic initiatives that we believe will position our
brands for global growth. Our enhanced marketing efforts, expanding retail footprint and renewed
commitment to innovation across our broad line of outdoor apparel, footwear and accessories are
critical ingredients to successfully elevating and differentiating the Columbia brand in the minds
of consumers around the world. We believe these investments will begin to produce an increasingly
positive impact on consumer demand and sell-through when the current macroeconomic uncertainties
begin to ease, Boyle concluded.
Conference Call
The Company will host a conference call to elaborate on second quarter 2008 results on Thursday,
July 24, 2008 at 5:00 p.m. Eastern. To participate, please dial 800-851-3059 in the United States,
Conference ID # 54697330. Outside the United States, please dial 706-679-8430. The call will also
be webcast live on the investor information section of the Companys website at www.columbia.com,
where it will remain available until Thursday, August 14, 2008.
About Columbia Sportswear
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
companys website at www.columbia.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities
laws, including statements regarding anticipated growth, revenues, gross margins, operating
margins, cash flows, earnings, and strategic initiatives in future periods. Actual results could
differ materially from those projected in these and other forward-looking statements. The
companys expectations, beliefs and projections are expressed in good faith and are believed to
have a reasonable basis, however, each forward-looking statement involves a number of risks and
uncertainties, including those set forth in this press release, those described in the companys
Annual Report on Form 10-K for the year ended December 31, 2007 and the companys most recently
filed Quarterly Report on Form 10-Q, 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. Potential risks and
uncertainties that may affect our future revenues, earnings and performance and could cause the
actual results of operations or financial condition of the company to differ materially from those
expressed or implied by forward-looking statements in this release 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 consumer
demand for the companys products); our ability to integrate and manage acquired businesses; our
dependence on independent manufacturers and suppliers; our ability to source finished products and
components at competitive prices from independent manufacturers in foreign countries that may
experience unexpected periods of inflation, labor and materials shortages or other manufacturing
disruptions; 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; our ability to implement our strategic initiatives and retail expansion plans; the
operations of our computer systems and third party computer systems; and our ability to establish
and protect our intellectual property. The company cautions 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 reflect changes in events, circumstances or our expectations. New factors emerge from time
to time and it is not possible for the company to predict all such factors, nor can it assess the
impact of each such factor or the extent to which any factor, or combination of factors, may cause
results to differ materially from those contained in any forward-looking statement.
- Financial tables follow-
COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
2008 |
|
|
2007 |
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
324,885 |
|
|
$ |
107,948 |
|
Short-term investments |
|
|
2,546 |
|
|
|
156,547 |
|
Accounts receivable, net |
|
|
172,633 |
|
|
|
184,204 |
|
Inventories, net |
|
|
272,851 |
|
|
|
309,722 |
|
Deferred income taxes |
|
|
33,276 |
|
|
|
28,163 |
|
Prepaid expenses and other current assets |
|
|
29,496 |
|
|
|
18,839 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
835,687 |
|
|
|
805,423 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
228,728 |
|
|
|
200,021 |
|
Intangibles and other non-current assets |
|
|
70,392 |
|
|
|
70,236 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,134,807 |
|
|
$ |
1,075,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
91,158 |
|
|
$ |
120,383 |
|
Accrued liabilities |
|
|
57,661 |
|
|
|
54,672 |
|
Income taxes payable |
|
|
4,581 |
|
|
|
4,182 |
|
Other current liabilities |
|
|
123 |
|
|
|
146 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
153,523 |
|
|
|
179,383 |
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities |
|
|
27,456 |
|
|
|
21,893 |
|
Deferred income taxes |
|
|
5,961 |
|
|
|
8,786 |
|
Shareholders equity |
|
|
947,867 |
|
|
|
865,618 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
1,134,807 |
|
|
$ |
1,075,680 |
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Net sales |
|
$ |
213,147 |
|
|
$ |
218,560 |
|
|
$ |
510,510 |
|
|
$ |
508,200 |
|
Cost of sales |
|
|
127,382 |
|
|
|
127,985 |
|
|
|
294,190 |
|
|
|
290,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
85,765 |
|
|
|
90,575 |
|
|
|
216,320 |
|
|
|
217,273 |
|
|
|
|
40.2 |
% |
|
|
41.4 |
% |
|
|
42.4 |
% |
|
|
42.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expense |
|
|
91,256 |
|
|
|
79,222 |
|
|
|
195,168 |
|
|
|
169,583 |
|
Net licensing income |
|
|
1,161 |
|
|
|
1,054 |
|
|
|
2,004 |
|
|
|
2,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
|
(4,330 |
) |
|
|
12,407 |
|
|
|
23,156 |
|
|
|
49,740 |
|
Interest income (expense), net |
|
|
2,327 |
|
|
|
2,799 |
|
|
|
4,589 |
|
|
|
4,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax |
|
|
(2,003 |
) |
|
|
15,206 |
|
|
|
27,745 |
|
|
|
54,731 |
|
Income tax benefit (expense) |
|
|
233 |
|
|
|
(5,169 |
) |
|
|
(9,584 |
) |
|
|
(18,608 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1,770 |
) |
|
$ |
10,037 |
|
|
$ |
18,161 |
|
|
$ |
36,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.05 |
) |
|
$ |
0.28 |
|
|
$ |
0.52 |
|
|
$ |
1.00 |
|
Diluted |
|
|
(0.05 |
) |
|
|
0.27 |
|
|
|
0.52 |
|
|
|
0.99 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
34,817 |
|
|
|
36,179 |
|
|
|
35,084 |
|
|
|
36,180 |
|
Diluted |
|
|
34,817 |
|
|
|
36,548 |
|
|
|
35,190 |
|
|
|
36,552 |
|
COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2008 |
|
|
2007 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net Income |
|
$ |
18,161 |
|
|
$ |
36,123 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
15,232 |
|
|
|
14,398 |
|
Deferred income tax provision |
|
|
(5,772 |
) |
|
|
(266 |
) |
Stock-based compensation |
|
|
3,587 |
|
|
|
3,696 |
|
Other |
|
|
(25 |
) |
|
|
1,385 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
130,455 |
|
|
|
105,418 |
|
Inventories |
|
|
(5,936 |
) |
|
|
(95,475 |
) |
Prepaid expenses and other current assets |
|
|
(14,721 |
) |
|
|
(6,019 |
) |
Accounts payable and accrued liabilities |
|
|
(11,301 |
) |
|
|
17,066 |
|
Other |
|
|
6,255 |
|
|
|
(4,902 |
) |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
135,935 |
|
|
|
71,424 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net sales (purchases) of short-term investments |
|
|
79,228 |
|
|
|
(1,384 |
) |
Capital expenditures |
|
|
(28,369 |
) |
|
|
(13,250 |
) |
Proceeds from sale of property, plant, and equipment |
|
|
27 |
|
|
|
23 |
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
50,886 |
|
|
|
(14,611 |
) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Repurchases of common stock |
|
|
(44,628 |
) |
|
|
(17,433 |
) |
Cash dividends paid |
|
|
(11,172 |
) |
|
|
(10,130 |
) |
Net proceeds from (repayments on) notes payable and long-term debt |
|
|
12 |
|
|
|
(3,636 |
) |
Proceeds from issuance of common stock |
|
|
2,675 |
|
|
|
13,673 |
|
Other |
|
|
14 |
|
|
|
1,602 |
|
|
|
|
|
|
|
|
Net cash (used in) financing activities |
|
|
(53,099 |
) |
|
|
(15,924 |
) |
|
|
|
|
|
|
|
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH |
|
|
(787 |
) |
|
|
2,179 |
|
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
132,935 |
|
|
|
43,068 |
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
|
191,950 |
|
|
|
64,880 |
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
|
$ |
324,885 |
|
|
$ |
107,948 |
|
|
|
|
|
|
|
|
COLUMBIA SPORTSWEAR COMPANY
(In millions, except percentage changes)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2008 |
|
|
2007 |
|
|
% Change |
|
|
2008 |
|
|
2007 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographical Net Sales to Unrelated Entities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
95.6 |
|
|
$ |
117.1 |
|
|
|
(18 |
)% |
|
$ |
251.4 |
|
|
$ |
272.6 |
|
|
|
(8 |
)% |
Europe, Middle East, & Africa |
|
|
63.4 |
|
|
|
56.2 |
|
|
|
13 |
% |
|
|
129.1 |
|
|
|
123.8 |
|
|
|
4 |
% |
Latin America & Asia Pacific |
|
|
40.1 |
|
|
|
33.4 |
|
|
|
20 |
% |
|
|
89.1 |
|
|
|
74.1 |
|
|
|
20 |
% |
Canada |
|
|
14.0 |
|
|
|
11.9 |
|
|
|
18 |
% |
|
|
40.9 |
|
|
|
37.7 |
|
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
213.1 |
|
|
$ |
218.6 |
|
|
|
(3 |
)% |
|
$ |
510.5 |
|
|
$ |
508.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Categorical Net Sales to Unrelated Entities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sportswear |
|
$ |
115.5 |
|
|
$ |
124.4 |
|
|
|
(7 |
)% |
|
$ |
276.6 |
|
|
$ |
287.5 |
|
|
|
(4 |
)% |
Outerwear |
|
|
41.8 |
|
|
|
39.8 |
|
|
|
5 |
% |
|
|
111.4 |
|
|
|
99.6 |
|
|
|
12 |
% |
Footwear |
|
|
42.5 |
|
|
|
42.5 |
|
|
|
|
|
|
|
93.8 |
|
|
|
95.4 |
|
|
|
(2 |
)% |
Accessories & Equipment |
|
|
13.3 |
|
|
|
11.9 |
|
|
|
12 |
% |
|
|
28.7 |
|
|
|
25.7 |
|
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
213.1 |
|
|
$ |
218.6 |
|
|
|
(3 |
)% |
|
$ |
510.5 |
|
|
$ |
508.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brand Net Sales to Unrelated Entities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Columbia |
|
$ |
194.1 |
|
|
$ |
200.1 |
|
|
|
(3 |
)% |
|
$ |
461.3 |
|
|
$ |
463.0 |
|
|
|
|
|
Sorel |
|
|
2.4 |
|
|
|
3.2 |
|
|
|
(25 |
)% |
|
|
6.1 |
|
|
|
6.7 |
|
|
|
(9 |
)% |
Mountain
Hardwear |
|
|
13.8 |
|
|
|
11.5 |
|
|
|
20 |
% |
|
|
35.6 |
|
|
|
29.2 |
|
|
|
22 |
% |
Montrail |
|
|
2.8 |
|
|
|
3.5 |
|
|
|
(20 |
)% |
|
|
6.7 |
|
|
|
8.4 |
|
|
|
(20 |
)% |
Pacific Trail |
|
|
|
|
|
|
0.3 |
|
|
|
(100 |
)% |
|
|
0.8 |
|
|
|
0.9 |
|
|
|
(11 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
213.1 |
|
|
$ |
218.6 |
|
|
|
(3 |
)% |
|
$ |
510.5 |
|
|
$ |
508.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
###