colm-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



			FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______to_______

—————————————————————

Commission file number 000-23939

—————————————————————

COLUMBIA SPORTSWEAR COMPANY

(Exact name of registrant as specified in its charter)



Oregon		93-0498284
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)
14375 Northwest Science Park Drive, Portland Oregon 97229
(Address of principal executive offices and zip code)
	(503) 985-4000
	(Registrant's telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	COLM	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

The number of shares outstanding of the registrant's common stock on April 21, 2023 was 62,040,163.


TABLE OF CONTENTS


		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS








PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements and Supplementary Data	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations (Unaudited)	2
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows (Unaudited)	4
	Condensed Consolidated Statements of Equity (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
















PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 6.	Exhibits	39
	Signatures	40

COLUMBIA SPORTSWEAR COMPANY | Q1 2023 FORM 10-Q FORM 10-Q


Table of Contents


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of federal securities laws. Forward-looking statements often use words such as "will", "anticipate", "estimate", "expect", "should", "may" and other words and terms of similar meaning or reference future dates. Forward-looking statements include any statements related to our expectations regarding the effectiveness of our investments, future performance or market position, including any statements regarding outdoor participation and our addressable consumer base, product price changes, the promotional environment, wholesale trade terms, manufacturing and distribution capacity, inventory levels, shipping timing, consumer spending and preferences, store traffic, freight charges, scale efficiencies, logistics constraints, lease commitments, labor costs, inflationary pressures, foreign currency translation, the geopolitical environment, consumer expectations, the impact of seasonal trends, materiality of legal matters, borrowings, capital expenditures, our short and long-term cash needs and our ability to meet those needs, and maturities of liabilities.

These forward-looking statements, and others we make from time to time expressed in good faith, are believed to have a reasonable basis; however, each forward-looking statement involves risks and uncertainties. Many factors may cause actual results to differ materially from projected results in forward-looking statements, including the risks described in Part II, Item 1A of this Quarterly Report on Form 10-Q. Forward-looking statements are inherently less reliable than historical information. Except as required by law, we do not undertake any duty to update forward-looking statements after the date they are made or to conform them to actual results or to changes in circumstances or to reflect changes in events, circumstances or expectations. New factors emerge from time to time and it is not possible for us to predict or assess the effects of all such factors 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.

COLUMBIA SPORTSWEAR COMPANY | Q1 2023 FORM 10-Q | i


Table of Contents


PART I — FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS


CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


(in thousands)	March 31, 2023		December 31, 2022		March 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	361,049	$	430,241	$	435,240

Short-term investments	99,511		722		175,024

Accounts receivable, net of allowance of $5,200, $5,443 and $5,412, respectively	466,690		547,561		408,186
Inventories	959,234		1,028,545		714,415

Prepaid expenses and other current assets	100,880		129,872		105,261
Total current assets	1,987,364		2,136,941		1,838,126

Property, plant and equipment, net of accumulated depreciation of $635,256, $623,911 and $603,229, respectively	282,921		291,214		290,070
Operating lease right-of-use assets	318,728		324,409		333,356
Intangible assets, net	81,146		81,558		101,496
Goodwill	51,694		51,694		68,594
Deferred income taxes	96,865		94,162		89,613
Other non-current assets	70,256		71,568		66,724
Total assets	$	2,888,974	$	3,051,546	$	2,787,979
LIABILITIES AND EQUITY
Current Liabilities:

Accounts payable	$	220,231	$	322,472	$	262,255
Accrued liabilities	271,625		328,759		234,326
Operating lease liabilities	69,452		68,685		68,136
Income taxes payable	7,377		18,802		6,297

Total current liabilities	568,685		738,718		571,014

Non-current operating lease liabilities	303,571		310,625		321,250
Income taxes payable	33,765		33,251		40,299
Deferred income taxes	146		143		—
Other long-term liabilities	35,022		33,020		36,516
Total liabilities	941,189		1,115,757		969,079
Commitments and contingencies (Note 4)
Shareholders' Equity:
Preferred stock; 10,000 shares authorized; none issued and outstanding	—		—		—

Common stock (no par value); 250,000 shares authorized; 62,076, 62,139 and 62,948 issued and outstanding, respectively	1,076		12,692		—
Retained earnings	1,981,287		1,953,734		1,828,074
Accumulated other comprehensive income (loss)	(34,578)		(30,637)		(9,174)
Total shareholders' equity	1,947,785		1,935,789		1,818,900
Total liabilities and shareholders' equity	$	2,888,974	$	3,051,546	$	2,787,979

See accompanying notes to unaudited condensed consolidated financial statements.

COLUMBIA SPORTSWEAR COMPANY | Q1 2023 FORM 10-Q | 1


Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended March 31,
(in thousands, except per share amounts)		2023		2022
Net sales		$	820,593	$	761,510
Cost of sales		421,093		383,063
Gross profit		399,500		378,447
Selling, general and administrative expenses		347,398		299,086

Net licensing income		4,325		4,305
Operating income		56,427		83,666
Interest income, net		3,283		395
Other non-operating income, net		850		44
Income before income tax		60,560		84,105
Income tax expense		14,358		17,268
Net income		$	46,202	$	66,837

Earnings per share:
Basic		$	0.74	$	1.04
Diluted		$	0.74	$	1.03
Weighted average shares outstanding:
Basic		62,133		64,273
Diluted		62,417		64,591

See accompanying notes to unaudited condensed consolidated financial statements.

COLUMBIA SPORTSWEAR COMPANY | Q1 2023 FORM 10-Q | 2


Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended March 31,
(in thousands)		2023		2022
Net income		$	46,202	$	66,837
Other comprehensive income (loss):
Change in available-for-sale securities (net of tax effect of $146)		—		(451)
Change in derivative transactions (net of tax effects of $2,710 and $656, respectively)		(5,421)		(2,091)


Foreign currency translation adjustments (net of tax effects of $(78) and $850, respectively)		1,480		(2,256)


Other comprehensive income (loss)		(3,941)		(4,798)
Comprehensive income		$	42,261	$	62,039

See accompanying notes to unaudited condensed consolidated financial statements.

COLUMBIA SPORTSWEAR COMPANY | Q1 2023 FORM 10-Q | 3


Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Three Months Ended March 31,
(in thousands)	2023		2022
Cash flows from operating activities:
Net income	$	46,202	$	66,837
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, amortization, and non-cash lease expense	30,583		30,577
Provision for uncollectible accounts receivable	(90)		(3,377)
Loss on disposal or impairment of property, plant and equipment, and right-of-use assets	287		1,598
Deferred income taxes	(85)		2,746
Stock-based compensation	5,808		5,503
Changes in operating assets and liabilities:
Accounts receivable	82,927		81,220
Inventories	71,503		(71,108)
Prepaid expenses and other current assets	23,101		(17,604)
Other assets	(837)		(1,443)
Accounts payable	(95,423)		(20,823)
Accrued liabilities	(59,538)		(81,371)
Income taxes payable	(10,941)		(11,004)
Operating lease assets and liabilities	(17,355)		(15,979)
Other liabilities	1,860		440
Net cash provided by (used in) operating activities	78,002		(33,788)
Cash flows from investing activities:
Purchases of short-term investments	(98,203)		(44,877)
Sales and maturities of short-term investments	570		984
Capital expenditures	(14,047)		(12,885)

Net cash used in investing activities	(111,680)		(56,778)
Cash flows from financing activities:



Proceeds from issuance of common stock related to stock-based compensation	2,678		2,512
Tax payments related to stock-based compensation	(4,297)		(3,959)
Repurchase of common stock	(15,293)		(217,317)

Cash dividends paid	(18,649)		(19,151)
Net cash used in financing activities	(35,561)		(237,915)
Net effect of exchange rate changes on cash	47		317
Net decrease in cash and cash equivalents	(69,192)		(328,164)
Cash and cash equivalents, beginning of period	430,241		763,404
Cash and cash equivalents, end of period	$	361,049	$	435,240
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes	$	30,775	$	18,205
Supplemental disclosures of non-cash investing and financing activities:
Property, plant and equipment acquired through increase in liabilities	$	2,899	$	6,702

See accompanying notes to unaudited condensed consolidated financial statements.

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Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)


(in thousands, except per share amounts)	Common Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares Outstanding	Amount
Balance, December 31, 2022	62,139	$	12,692	$	1,953,734	$	(30,637)	$	1,935,789
Net income	—	—		46,202		—		46,202
Other comprehensive income (loss)	—	—		—		(3,941)		(3,941)
Cash dividends ($0.30 per share)	—	—		(18,649)		—		(18,649)
Issuance of common stock related to stock-based compensation, net	116	(1,619)		—		—		(1,619)
Stock-based compensation expense	—	5,808		—		—		5,808
Repurchase of common stock	(179)	(15,753)		—		—		(15,753)
Excise taxes related to repurchase of common stock	—	(52)		—		—		(52)
Balance, March 31, 2023	62,076	$	1,076	$	1,981,287	$	(34,578)	$	1,947,785


(in thousands, except per share amounts)	Common Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares Outstanding	Amount
Balance, December 31, 2021	65,164	$	—	$	1,993,628	$	(4,376)	$	1,989,252
Net income	—	—		66,837		—		66,837
Other comprehensive income (loss)	—	—		—		(4,798)		(4,798)
Cash dividends ($0.30 per share)	—	—		(19,151)		—		(19,151)
Issuance of common stock related to stock-based compensation, net	113	(1,446)		—		—		(1,446)
Stock-based compensation expense	—	5,503		—		—		5,503
Repurchase of common stock	(2,329)	(4,057)		(213,240)		—		(217,297)
Balance, March 31, 2022	62,948	$	—	$	1,828,074	$	(9,174)	$	1,818,900

See accompanying notes to unaudited condensed consolidated financial statements.

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Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE

PAGE

Note 1

Basis of Presentation and Organization

Note 2

Revenues

Note 3

Intangible Assets, Net and Goodwill

Note 4

Commitments and Contingencies

Note 5

Shareholders' Equity

Note 6

Stock-Based Compensation

Note 7

Earnings Per Share

Note 8

Accumulated Other Comprehensive Income (Loss)

Note 9

Segment Information

Note 10

Financial Instruments and Risk Management

Note 11

Fair Value Measures

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Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


NOTE 1 — BASIS OF PRESENTATION AND ORGANIZATION

The accompanying unaudited condensed consolidated financial statements have been prepared by the management of Columbia Sportswear Company (together with its wholly owned subsidiaries, the "Company") and, in the opinion of management, include all normal recurring material adjustments necessary to present fairly the Company's financial position as of March 31, 2023, December 31, 2022 and March 31, 2022, the results of operations for the three months ended March 31, 2023 and 2022, and cash flows for the three months ended March 31, 2023 and 2022. The December 31, 2022 financial information was derived from the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. A significant part of the Company's business is of a seasonal nature; therefore, results of operations for the three months ended March 31, 2023 are not necessarily indicative of results to be expected for other quarterly periods or for the full year.

Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company, however, believes that the disclosures contained in this report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

PRINCIPLES OF CONSOLIDATION

The unaudited condensed consolidated financial statements include the accounts of the Company. All significant intercompany balances and transactions have been eliminated in consolidation.

ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions. The Company's significant estimates relate to sales reserves, allowance for uncollectible accounts receivable, excess, close-out and slow-moving inventory, impairment of long-lived assets, intangible assets and goodwill, and income taxes.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

None.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

None.

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Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


NOTE 2 — REVENUES

DISAGGREGATED REVENUE

As disclosed below in Note 9, the Company has four geographic reportable segments: United States ("U.S."), Latin America and Asia Pacific ("LAAP"), Europe, Middle East and Africa ("EMEA") and Canada.

The following tables disaggregate the Company's operating segment Net sales by product category and channel, which the Company believes provides a meaningful depiction of how the nature, timing, and uncertainty of Net sales are affected by economic factors:


	Three Months Ended March 31, 2023
(in thousands)	U.S.		LAAP		EMEA		Canada		Total
Product category net sales
Apparel, Accessories and Equipment	$	415,928	$	100,421	$	71,957	$	44,296	$	632,602
Footwear	101,547		35,992		36,332		14,120		187,991
Total	$	517,475	$	136,413	$	108,289	$	58,416	$	820,593
Channel net sales
Wholesale	$	259,350	$	71,162	$	84,578	$	37,398	$	452,488
Direct-to-consumer	258,125		65,251		23,711		21,018		368,105
Total	$	517,475	$	136,413	$	108,289	$	58,416	$	820,593


	Three Months Ended March 31, 2022
(in thousands)	U.S.		LAAP		EMEA		Canada		Total
Product category net sales
Apparel, Accessories and Equipment	$	385,228	$	85,925	$	63,269	$	31,521	$	565,943
Footwear	116,666		35,818		31,448		11,635		195,567
Total	$	501,894	$	121,743	$	94,717	$	43,156	$	761,510
Channel net sales
Wholesale	$	247,509	$	59,938	$	75,294	$	25,483	$	408,224
Direct-to-consumer	254,385		61,805		19,423		17,673		353,286
Total	$	501,894	$	121,743	$	94,717	$	43,156	$	761,510

PERFORMANCE OBLIGATIONS

For the three months ended March 31, 2023 and 2022, Net sales recognized from performance obligations related to prior periods were not material. Net sales expected to be recognized in any future period related to remaining performance obligations is not material.

CONTRACT BALANCES

As of March 31, 2023, December 31, 2022 and March 31, 2022, the Company did not have contract assets and had an immaterial amount of contract liabilities included in Accrued liabilities on the unaudited Condensed Consolidated Balance Sheets.

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Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


NOTE 3 — INTANGIBLE ASSETS, NET AND GOODWILL

INTANGIBLE ASSETS, NET

Intangible assets, net consisted of the following:



(in thousands)	March 31, 2023		December 31, 2022		March 31, 2022
Intangible assets with definite lives:
Patents and purchased technology	$	14,198	$	14,198	$	14,198
Customer relationships	23,000		23,000		23,000
Gross carrying amount	37,198		37,198		37,198
Accumulated amortization:
Patents and purchased technology	(14,198)		(14,198)		(14,198)
Customer relationships	(21,075)		(20,663)		(19,425)
Accumulated amortization	(35,273)		(34,861)		(33,623)
Net carrying amount	1,925		2,337		3,575
Intangible assets with indefinite lives	79,221		79,221		97,921
Intangible assets, net	$	81,146	$	81,558	$	101,496

Amortization expense for intangible assets subject to amortization was $0.4 million for the three months ended March 31, 2023 and 2022.

The following table presents the remaining estimated annual amortization expense of intangible assets with definite lives for the years 2023 through 2028:


(in thousands)
2023	$	1,238
2024	687
2025	—
2026	—
2027	—
2028	—

GOODWILL

There have been no changes to the Company's goodwill as described in Note 6 in Part II, Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.


NOTE 4 — COMMITMENTS AND CONTINGENCIES

LITIGATION

The Company is involved in litigation and various legal matters arising in the normal course of business, including matters related to employment, retail, intellectual property, contractual agreements, and various regulatory compliance activities. Management has considered facts related to legal and regulatory matters and opinions of counsel handling these matters, and does not believe the ultimate resolution of these proceedings will have a material adverse effect on the Company's financial position, results of operations or cash flows.

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Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


NOTE 5 — SHAREHOLDERS' EQUITY

Since the inception of the Company's stock repurchase plan in 2004 through March 31, 2023, the Company's Board of Directors has authorized the repurchase of $2.0 billion of the Company's common stock, excluding excise tax. Shares of the Company's common stock may be purchased in the open market or through privately negotiated transactions, subject to market conditions, and generally settle subsequent to the trade date. The repurchase program does not obligate the Company to acquire any specific number of shares or to acquire shares over any specified period of time.

Under this program as of March 31, 2023, the Company had repurchased 31.9 million shares at an aggregate purchase price of $1,486.4 million and had $513.6 million remaining available, excluding excise tax. During the three months ended March 31, 2023, the Company repurchased an aggregate of $15.8 million of common stock under this program, excluding excise tax.


NOTE 6 — STOCK-BASED COMPENSATION

The Company's Stock Incentive Plan allows for grants of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, and other stock-based or cash-based awards. The Company uses original issuance shares to satisfy share-based payments.

STOCK-BASED COMPENSATION EXPENSE

Stock-based compensation expense consisted of the following:


	Three Months Ended March 31,
(in thousands)		2023		2022
Stock options		$	2,038	$	1,896
Restricted stock units		3,770		3,607
Total		$	5,808	$	5,503

STOCK OPTIONS

During the three months ended March 31, 2023, the Company granted a total of 470,803 stock options at a weighted average grant date fair value of $22.80 per option. As of March 31, 2023, unrecognized costs related to outstanding stock options totaled $19.9 million, before any related tax benefit. These unrecognized costs related to stock options are expected to be recognized over a weighted average remaining period of 2.72 years.

RESTRICTED STOCK UNITS

During the three months ended March 31, 2023, the Company granted 256,331 restricted stock units at a weighted average grant date fair value of $83.50 per restricted stock unit. As of March 31, 2023, unrecognized costs related to outstanding restricted stock units totaled $36.3 million, before any related tax benefit. These unrecognized costs related to restricted stock units are expected to be recognized over a weighted average remaining period of 3.01 years.

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Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


NOTE 7 — EARNINGS PER SHARE

Earnings per share ("EPS") is presented on both a basic and diluted basis. Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur if outstanding securities or other contracts to issue common stock were exercised or converted into common stock.

A reconciliation of the common shares used in the denominator for computing basic and diluted EPS is as follows:


	Three Months Ended March 31,
(in thousands, except per share amounts)		2023		2022
Weighted average common shares outstanding, used in computing basic earnings per share		62,133		64,273
Effect of dilutive stock options and restricted stock units		284		318
Weighted average common shares outstanding, used in computing diluted earnings per share		62,417		64,591

Earnings per share:
Basic		$	0.74	$	1.04
Diluted		$	0.74	$	1.03

Anti-dilutive common shares (1)		1,574		1,231

(1) Common stock related to stock options and service-based restricted stock units, and performance-based restricted stock were outstanding but were excluded from the computation of diluted EPS because their effect would be anti-dilutive under the treasury stock method or because the shares were subject to performance conditions that had not been met.


NOTE 8 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) on the unaudited Condensed Consolidated Balance Sheets is net of applicable taxes, and consists of unrealized gains and losses on available-for-sale securities, unrealized gains and losses on certain derivative transactions and foreign currency translation adjustments.

The following tables set forth the changes in Accumulated other comprehensive income (loss):


(in thousands)	Derivative transactions		Foreign currency translation adjustments		Total
Balance as of December 31, 2022	$	21,790	$	(52,427)	$	(30,637)
Other comprehensive income (loss) before reclassifications	(1,678)		1,480		(198)
Amounts reclassified from accumulated other comprehensive income (loss) (1)	(3,743)		—		(3,743)
Net other comprehensive income (loss) during the period	(5,421)		1,480		(3,941)
Balance as of March 31, 2023	$	16,369	$	(50,947)	$	(34,578)

(1) Amounts reclassified are recorded in Net sales, Cost of sales, or Other non-operating income, net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 10 for further information regarding reclassifications.

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Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


(in thousands)	Available-for- sale securities		Derivative transactions		Foreign currency translation adjustments		Total
Balance as of December 31, 2021	$	—	$	9,914	$	(14,290)	$	(4,376)
Other comprehensive loss before reclassifications	(451)		(1,864)		(2,256)		(4,571)
Amounts reclassified from accumulated other comprehensive income (loss) (1)	—		(227)		—		(227)
Net other comprehensive loss during the period	(451)		(2,091)		(2,256)		(4,798)
Balance as of March 31, 2022	$	(451)	$	7,823	$	(16,546)	$	(9,174)


NOTE 9 — SEGMENT INFORMATION

The Company has four reportable geographic segments: U.S., LAAP, EMEA, and Canada, which are reflective of the Company's internal organization, management and oversight structure. Each geographic segment operates predominantly in one industry: the design, development, marketing, and distribution of outdoor, active and lifestyle products, including apparel, footwear, accessories, and equipment. Intersegment net sales and intersegment profits, which are recorded at a negotiated mark-up and eliminated in consolidation, are not material. Unallocated corporate expenses consist of expenses incurred by centrally-managed departmental functions, including consumer digital technology, certain supply chain functions, finance, human resources and legal, as well as executive compensation, unallocated benefit program expense, and other miscellaneous costs.

The following tables present financial information for the Company's reportable segments:


	Three Months Ended March 31,
(in thousands)		2023		2022
Net sales to unrelated entities:
U.S.		$	517,475	$	501,894
LAAP		136,413		121,743
EMEA		108,289		94,717
Canada		58,416		43,156
		$	820,593	$	761,510
Segment operating income
U.S.		$	81,600	$	113,176
LAAP		18,326		13,002
EMEA		20,354		16,499
Canada		10,801		8,141
Total segment operating income		131,081		150,818
Unallocated corporate expenses		(74,654)		(67,152)
Interest income, net		3,283		395
Other non-operating income, net		850		44
Income before income tax		$	60,560	$	84,105

CONCENTRATIONS

The Company had one customer that accounted for approximately 12.3%, 13.8% and 13.0% of Accounts receivable, net as of March 31, 2023, December 31, 2022 and March 31, 2022, respectively. The Company did not have any customer that accounted for 10% or more of Net sales for the three months ended March 31, 2023 and March 31, 2022.

COLUMBIA SPORTSWEAR COMPANY | Q1 2023 FORM 10-Q | 12


Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


NOTE 10 — FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

In the normal course of business, the Company's financial position, results of operations and cash flows are routinely subject to a variety of risks. These risks include risks associated with financial markets, primarily currency exchange rate risk and, to a lesser extent, interest rate risk and equity market risk. The Company regularly assesses these risks and has established policies and business practices designed to mitigate them. The Company does not engage in speculative trading in any financial market.

The Company actively manages the risk of changes in functional currency equivalent cash flows resulting from anticipated non-functional currency denominated purchases and sales. Subsidiaries that use European euros, Canadian dollars, Japanese yen, Chinese renminbi, or Korean won as their functional currency are primarily exposed to changes in functional currency equivalent cash flows from anticipated United States dollar inventory purchases. Subsidiaries that use United States dollars and euros as their functional currency also have non-functional currency denominated sales for which the Company hedges the Canadian dollar and British pound sterling. The Company seeks to manage these risks by using currency forward contracts formally designated and effective as cash flow hedges. Hedge effectiveness is generally determined by evaluating the ability of a hedging instrument's cumulative change in fair value to offset the cumulative change in the present value of expected cash flows on the underlying exposures. Time value components ("forward points") for forward contracts are included in the fair value of the cash flow hedge. These costs or benefits will be included in Accumulated other comprehensive income (loss) until the underlying hedge transaction is recognized in either Net sales or Cost of sales, at which time, the forward points will also be recognized as a component of Net income.

The Company also uses currency forward contracts not formally designated as hedges to manage the consolidated currency exchange rate risk associated with the remeasurement of non-functional currency denominated monetary assets and liabilities by subsidiaries that use United States dollars, euros, Canadian dollars, yen, renminbi, or won as their functional currency. Non-functional currency denominated monetary assets and liabilities consists of cash and cash equivalents, short-term investments, receivables, payables, deferred income taxes, and intercompany loans and dividends. The gains and losses generated on these currency forward contracts not formally designated as hedges are expected to be largely offset in Other non-operating income, net by the gains and losses generated from the remeasurement of the non-functional currency denominated monetary assets and liabilities.

The following table presents the gross notional amount of outstanding derivative instruments:



(in thousands)	March 31, 2023		December 31, 2022		March 31, 2022
Derivative instruments designated as cash flow hedges:
Currency forward contracts	$	525,781	$	514,365	$	536,790
Derivative instruments not designated as hedges:
Currency forward contracts	393,450		448,838		230,968

As of March 31, 2023, $17.8 million of deferred net gains on both outstanding and matured derivatives recorded in Accumulated other comprehensive income (loss) are expected to be reclassified to Net income during the next twelve months as a result of underlying hedged transactions also being recorded in Net sales, Cost of sales, or Other non-operating income, net in the unaudited Condensed Consolidated Statements of Operations. When outstanding derivative contracts mature, actual amounts ultimately reclassified to Net sales, Cost of sales, or Other non-operating income, net in the unaudited Condensed Consolidated Statements of Operations are dependent on United States dollar exchange rates in effect against the euro, pound sterling, renminbi, Canadian dollar, won, and yen as well as the euro exchange rate in effect against the pound sterling.

As of March 31, 2023, the Company's derivative contracts had a remaining maturity of less than three years. The maximum net exposure to any single counterparty, which is generally limited to the aggregate unrealized gain of all contracts with that counterparty, was $6.0 million as of March 31, 2023. All of the Company's derivative counterparties have credit ratings that are investment grade or higher. The Company is a party to master netting arrangements that contain features that allow counterparties to net settle amounts arising from multiple separate derivative transactions or net settle in the case of certain triggering events such as a bankruptcy or major default of one of the counterparties to the transaction. The Company has not pledged assets or posted collateral as a requirement for entering into or maintaining derivative positions.

COLUMBIA SPORTSWEAR COMPANY | Q1 2023 FORM 10-Q | 13


Table of Contents Notes to unaudited Condensed Consolidated Financial Statements

The following table presents the balance sheet classification and fair value of derivative instruments:



(in thousands)	Balance Sheet Classification	March 31, 2023		December 31, 2022		March 31, 2022
Derivative instruments designated as cash flow hedges:
Derivative instruments in asset positions:
Currency forward contracts	Prepaid expenses and other current assets	$	16,826	$	20,306	$	9,184
Currency forward contracts	Other non-current assets	5,935		7,153		7,351
Derivative instruments in liability positions:
Currency forward contracts	Accrued liabilities	2,630		1,249		3,411
Currency forward contracts	Other long-term liabilities	1,788		1,770		1,383
Derivative instruments not designated as cash flow hedges:
Derivative instruments in asset positions:
Currency forward contracts	Prepaid expenses and other current assets	890		3,027		1,888

Derivative instruments in liability positions:
Currency forward contracts	Accrued liabilities	2,257		2,533		902

The following table presents the statement of operations effect and classification of derivative instruments:


	Statement Of Operations Classification	Three Months Ended March 31,
(in thousands)			2023		2022
Currency Forward Contracts:
Derivative instruments designated as cash flow hedges:
Loss recognized in other comprehensive income (loss), net of tax	—		$	(1,678)	$	(1,864)
Gain (loss) reclassified from accumulated other comprehensive income (loss) to income for the effective portion	Net sales		191		(136)
Gain reclassified from accumulated other comprehensive income (loss) to income for the effective portion	Cost of sales		5,762		311

Gain (loss) reclassified from accumulated other comprehensive income (loss) to income as a result of cash flow hedge discontinuance	Other non-operating income, net		(7)		222


Derivative instruments not designated as cash flow hedges:

Gain (loss) recognized in income	Other non-operating income, net		(1,187)		590

COLUMBIA SPORTSWEAR COMPANY | Q1 2023 FORM 10-Q | 14


Table of Contents Notes to unaudited Condensed Consolidated Financial Statements


NOTE 11 — FAIR VALUE MEASURES

Certain assets and liabilities are reported at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:


Level 1	—	observable inputs such as quoted prices for identical assets or liabilities in active liquid markets;
Level 2	—	inputs, other than the quoted market prices in active markets, that are observable, either directly or indirectly; or observable market prices in markets with insufficient volume or infrequent transactions; and
Level 3	—	unobservable inputs for which there is little or no market data available, that require the reporting entity to develop its own assumptions.

The Company's assets and liabilities measured at fair value are categorized as Level 1 or Level 2 instruments. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from inputs, other than quoted market prices in active markets, that are directly or indirectly observable in the marketplace and quoted prices in markets with limited volume or infrequent transactions.

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 are as follows:


(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	106,092	$	—	$	—	$	106,092
U.S. Government treasury bills	—		49,695		—		49,695

Short-term investments:
Available-for-sale short-term investments: (1)