colm-20200630

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 June 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 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 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 x No ¨

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 x No ¨

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	x	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 ☐ No x

The number of shares of Common Stock outstanding on July 24, 2020 was 66,148,596.

COLUMBIA SPORTSWEAR COMPANY

JUNE 30, 2020

TABLE OF CONTENTS

Item

Page

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements:

Condensed Consolidated Balance Sheets (Unaudited)

Condensed Consolidated Statements of Operations (Unaudited)

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Condensed Consolidated Statements of Cash Flows (Unaudited)

Condensed Consolidated Statements of Equity (Unaudited)

Notes to Condensed Consolidated Financial Statement s (Unaudited)

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

Signatures

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands)	June 30, 2020		December 31, 2019		June 30, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	474,793	$	686,009	$	386,150

Short-term investments	975		1,668		138,198
Accounts receivable, net of allowance of $28,783, $8,925, and $8,072, respectively	217,536		488,233		280,641
Inventories	806,887		605,968		756,378

Prepaid expenses and other current assets	102,574		93,868		100,800
Total current assets	1,602,765		1,875,746		1,662,167
Property, plant and equipment, at cost, net of accumulated depreciation of $546,397, $523,092, and $510,267, respectively	328,904		346,651		312,948
Operating lease right-of-use assets	365,521		394,501		368,856
Intangible assets, net	122,105		123,595		125,085
Goodwill	68,594		68,594		68,594
Deferred income taxes	73,395		78,849		82,418
Other non-current assets	61,113		43,655		42,379
Total assets	$	2,622,397	$	2,931,591	$	2,662,447
LIABILITIES AND EQUITY
Current Liabilities:
Short-term borrowings	$	2,789	$	—	$	—
Accounts payable	255,702		255,372		309,945
Accrued liabilities	203,827		295,723		200,816
Operating lease liabilities	70,916		64,019		60,804
Income taxes payable	2,594		15,801		6,416

Total current liabilities	535,828		630,915		577,981

Non-current operating lease liabilities	347,967		371,507		345,063
Income taxes payable	48,863		48,427		53,216
Deferred income taxes	7,942		6,361		8,518
Other long-term liabilities	28,968		24,934		22,475
Total liabilities	969,568		1,082,144		1,007,253
Commitments and contingencies (Note 7)
Shareholders' Equity:
Preferred stock; 10,000 shares authorized; none issued and outstanding	—		—		—
Common stock (no par value); 250,000 shares authorized; 66,148, 67,561, and 67,586, issued and outstanding, respectively	5,396		4,937		100
Retained earnings	1,653,293		1,848,935		1,656,392
Accumulated other comprehensive loss	(5,860)		(4,425)		(1,298)
Total shareholders' equity	1,652,829		1,849,447		1,655,194
Total liabilities and shareholders' equity	$	2,622,397	$	2,931,591	$	2,662,447

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands, except per share amounts)	2020		2019		2020		2019
Net sales	$	316,611	$	526,210	$	884,839	$	1,180,818
Cost of sales	170,381		272,619		466,895		590,498
Gross profit	146,230		253,591		417,944		590,320
Selling, general and administrative expenses	217,652		240,763		494,472		492,518
Net licensing income	1,122		3,537		4,241		6,521
Income (loss) from operations	(70,300)		16,365		(72,287)		104,323
Interest income (expense), net	(805)		2,571		1,008		5,971

Other non-operating income, net	935		1,032		2,673		1,478
Income (loss) before income tax	(70,170)		19,968		(68,606)		111,772
Income tax benefit (expense)	19,463		3,061		18,112		(14,566)
Net income (loss)	$	(50,707)	$	23,029	$	(50,494)	$	97,206

Earnings (loss) per share:
Basic	$	(0.77)	$	0.34	$	(0.76)	$	1.43
Diluted	$	(0.77)	$	0.34	$	(0.76)	$	1.41
Weighted average shares outstanding:
Basic	66,135		67,930		66,553		68,109
Diluted	66,135		68,560		66,553		68,825

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020		2019		2020		2019
Net income (loss)	$	(50,707)	$	23,029	$	(50,494)	$	97,206
Other comprehensive income (loss):
Unrealized holding gains on available-for-sale securities, net	—		—		—		56
Unrealized gains (losses) on derivative transactions (net of tax effects of $1,521, $827, $(2,624) and $432, respectively)	(4,862)		(1,881)		6,663		(548)
Foreign currency translation adjustments (net of tax effects of $(460), $224, $37 and $887 respectively)	6,976		3,901		(8,098)		3,356
Other comprehensive income (loss)	2,114		2,020		(1,435)		2,864
Comprehensive income (loss)	$	(48,593)	$	25,049	$	(51,929)	$	100,070

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(in thousands)	2020		2019
Cash flows from operating activities:
Net income (loss)	$	(50,494)	$	97,206
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation, amortization, and non-cash lease expense	65,924		57,487
Provision for uncollectible accounts receivable	22,815		(2,146)
Loss on disposal or impairment of property, plant and equipment, and right-of-use assets	8,800		1,599
Deferred income taxes	4,362		(4,338)
Stock-based compensation	7,712		8,781
Changes in operating assets and liabilities:
Accounts receivable	244,112		171,777
Inventories	(202,646)		(232,117)
Prepaid expenses and other current assets	(3,199)		(21,815)
Other assets	(14,596)		(4,830)
Accounts payable	3,397		41,469
Accrued liabilities	(89,323)		(75,360)
Income taxes payable	(12,633)		(13,967)
Operating lease assets and liabilities	(26,264)		(27,068)
Other liabilities	4,757		5,919
Net cash provided by (used in) operating activities	(37,276)		2,597
Cash flows from investing activities:
Purchases of short-term investments	(35,045)		(181,257)
Sales and maturities of short-term investments	36,631		308,501
Capital expenditures	(20,959)		(50,800)

Net cash provided by (used in) investing activities	(19,373)		76,444
Cash flows from financing activities:
Proceeds from credit facilities	375,759		23,208
Repayments on credit facilities	(373,390)		(23,208)
Payment of line of credit issuance fees	(1,674)		—
Proceeds from issuance of common stock related to stock-based compensation	1,987		11,286
Tax payments related to stock-based compensation	(4,304)		(5,589)

Repurchase of common stock	(132,889)		(100,293)

Purchase of non-controlling interest	—		(17,880)

Cash dividends paid	(17,195)		(32,686)

Net cash used in financing activities	(151,706)		(145,162)
Net effect of exchange rate changes on cash	(2,861)		476
Net decrease in cash and cash equivalents	(211,216)		(65,645)
Cash and cash equivalents, beginning of period	686,009		451,795
Cash and cash equivalents, end of period	$	474,793	$	386,150
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes	$	13,294	$	66,604

Supplemental disclosures of non-cash investing and financing activities:
Property, plant and equipment acquired through increase in liabilities	$	2,414	$	9,524

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Three Months Ended June 30, 2020
(in thousands, except per share amounts)	Common Stock							Retained Earnings		Accumulated Other Comprehensive Loss		Total
		Shares Outstanding			Amount
BALANCE, MARCH 31, 2020	66,116		$	565		$	1,704,000	$	(7,974)	$	1,696,591
Net loss	—		—			(50,707)		—		(50,707)
Other comprehensive income (loss):

Unrealized holding losses on derivative transactions, net	—		—			—		(4,862)		(4,862)
Foreign currency translation adjustment, net	—		—			—		6,976		6,976

Issuance of common stock related to stock-based compensation, net	32		794			—		—		794
Stock-based compensation expense	—		4,037			—		—		4,037

BALANCE, JUNE 30, 2020	66,148		$	5,396		$	1,653,293	$	(5,860)	$	1,652,829


	Three Months Ended June 30, 2019
(in thousands, except per share amounts)	Common Stock							Retained Earnings		Accumulated Other Comprehensive Loss		Total
		Shares Outstanding			Amount
BALANCE, MARCH 31, 2019	68,346		$	94		$	1,723,873	$	(3,318)	$	1,720,649
Net income	—		—			23,029		—		23,029
Other comprehensive income (loss):

Unrealized holding losses on derivative transactions, net	—		—			—		(1,881)		(1,881)
Foreign currency translation adjustment, net	—		—			—		3,901		3,901
Cash dividends ($0.24 per share)	—		—			(16,268)		—		(16,268)
Issuance of common stock related to stock-based compensation, net	76		2,550			—		—		2,550
Stock-based compensation expense	—		4,566			—		—		4,566
Repurchase of common stock	(836)		(7,110)			(74,242)		—		(81,352)
BALANCE, JUNE 30, 2019	67,586		$	100		$	1,656,392	$	(1,298)	$	1,655,194

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Six months ended June 30, 2020
	Common Stock							Retained Earnings		Accumulated Other Comprehensive Loss		Total
		Shares Outstanding			Amount
BALANCE, DECEMBER 31, 2019	67,561		$	4,937		$	1,848,935	$	(4,425)	$	1,849,447
Net loss	—		—			(50,494)		—		(50,494)
Other comprehensive income (loss):

Unrealized holding gains on derivative transactions, net	—		—			—		6,663		6,663
Foreign currency translation adjustment, net	—		—			—		(8,098)		(8,098)
Cash dividends ($0.26 per share)	—		—			(17,195)		—		(17,195)
Issuance of common stock related to stock-based compensation, net	144		(2,317)			—		—		(2,317)
Stock-based compensation expense	—		7,712			—		—		7,712
Repurchase of common stock	(1,557)		(4,936)			(127,953)		—		(132,889)
BALANCE, JUNE 30, 2020	66,148		$	5,396		$	1,653,293	$	(5,860)	$	1,652,829


	Six Months Ended June 30, 2019
	Columbia Sportswear Company Shareholders' Equity
	Common Stock							Retained Earnings		Accumulated Other Comprehensive Loss		Non-Controlling Interest		Total
		Shares Outstanding			Amount
BALANCE, DECEMBER 31, 2018	68,246		$	—		$	1,677,920	$	(4,063)	$	16,456	$	1,690,313
Net income	—		—			97,206		—		—		97,206
Purchase of non-controlling interest	—		—			—		(99)		(16,456)		(16,555)
Other comprehensive income (loss):
Unrealized holding gains on available-for-sale securities, net	—		—			—		56		—		56
Unrealized holding losses on derivative transactions, net	—		—			—		(548)		—		(548)
Foreign currency translation adjustment, net	—		—			—		3,356		—		3,356
Cash dividends ($0.48 per share)	—		—			(32,686)		—		—		(32,686)
Issuance of common stock related to stock-based compensation, net	372		5,697			—		—		—		5,697
Stock-based compensation expense	—		8,781			—		—		—		8,781
Repurchase of common stock	(1,032)		(14,378)			(86,048)		—		—		(100,426)
BALANCE, JUNE 30, 2019	67,586		$	100		$	1,656,392	$	(1,298)	$	—	$	1,655,194

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE

PAGE

Note 1

Basis of Presentation and Organization

Note 2

Revenues

Note 3

Intangible Assets, Net

Note 4

Short-Term Borrowings and Credit Lines

Note 5

Income Taxes

Note 6

Product Warranty

Note 7

Commitments and Contingencies

Note 8

Shareholders' Equity

Note 9

Stock-Based Compensation

Note 10

Earnings (Loss) Per Share

Note 11