(Address of principal executive offices and zip code)

(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 Stock~~NASDAQ Global Select Market ~~LLC~~

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 October ~~25, 2019~~23, 2020 was ~~67,525,997.~~66,211,981.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(In thousands)~~

(Unaudited)

September 30,
2019 December 31,
2018 September 30,
2018
ASSETS
Current Assets:
Cash and cash equivalents (Note 16) $ 239,311
$ 437,825
$ 182,175
Restricted cash (Note 17) —
13,970
13,970
Short-term investments (Note 16) 1,477
262,802
269,313
Accounts receivable, net of allowance of $9,672, $11,051, and $9,176, respectively 646,414
449,382
552,442
Inventories 717,396
521,827
617,194
Prepaid expenses and other current assets 94,253
79,500
77,763
Total current assets 1,698,851
1,765,306
1,712,857
Property, plant and equipment, at cost, net of accumulated depreciation of $515,300, $489,354, and $483,857, respectively 349,302
291,596
284,744
Operating lease right-of-use assets (Note 8) 389,558
—
—
Intangible assets, net (Note 5) 124,340
126,575
127,320
Goodwill 68,594
68,594
68,594
Deferred income taxes 80,193
78,155
68,913
Other non-current assets 40,242
38,495
36,911
Total assets $ 2,751,080
$ 2,368,721
$ 2,299,339
LIABILITIES AND EQUITY
Current Liabilities:
Short-term borrowings (Note 6) $ —
$ —
$ 8,311
Accounts payable 201,806
274,435
237,344
Accrued liabilities (Note 7) 279,932
275,684
255,682
Operating lease liabilities (Note 8) 62,756
—
—
Income taxes payable 13,653
22,763
8,247
Total current liabilities 558,147
572,882
509,584
Non-current operating lease liabilities (Note 8) 366,515
—
—
Income taxes payable 48,619
50,791
62,090
Deferred income taxes 7,711
9,521
13
Other long-term liabilities 22,982
45,214
46,056
Total liabilities 1,003,974
678,408
617,743
Commitments and contingencies (Note 9)

Columbia Sportswear Company Shareholders' Equity:
Preferred stock; 10,000 shares authorized; none issued and outstanding —
—
—
Common stock (no par value); 250,000 shares authorized; 67,562, 68,246, and 69,270, issued and outstanding, respectively (Note 10) —
—
210
Retained earnings 1,754,379
1,677,920
1,669,390
Accumulated other comprehensive loss (Note 13) (7,273 ) (4,063 ) (4,235 )
Total Columbia Sportswear Company shareholders' equity 1,747,106
1,673,857
1,665,365
Non-controlling interest (Note 4) —
16,456
16,231
Total equity 1,747,106
1,690,313
1,681,596
Total liabilities and equity $ 2,751,080
$ 2,368,721
$ 2,299,339


(in thousands)	September 30, 2020		December 31, 2019		September 30, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	313,429	$	686,009	$	239,311

Short-term investments	1,095		1,668		1,477
Accounts receivable, net of allowance of $29,760, $8,925, and $9,672, respectively	479,376		488,233		646,414
Inventories	771,724		605,968		717,396

Prepaid expenses and other current assets	82,175		93,868		94,253
Total current assets	1,647,799		1,875,746		1,698,851
Property, plant and equipment, at cost, net of accumulated depreciation of $550,097, $523,092, and $515,300, respectively	322,167		346,651		349,302
Operating lease right-of-use assets	351,277		394,501		389,558
Intangible assets, net	121,471		123,595		124,340
Goodwill	68,594		68,594		68,594
Deferred income taxes	77,055		78,849		80,193
Other non-current assets	63,951		43,655		40,242
Total assets	$	2,652,314	$	2,931,591	$	2,751,080
LIABILITIES AND EQUITY
Current Liabilities:

Accounts payable	$	164,332	$	255,372	$	201,806
Accrued liabilities	257,040		295,723		279,932
Operating lease liabilities	73,409		64,019		62,756
Income taxes payable	4,813		15,801		13,653

Total current liabilities	499,594		630,915		558,147

Non-current operating lease liabilities	337,108		371,507		366,515
Income taxes payable	49,195		48,427		48,619
Deferred income taxes	7,149		6,361		7,711
Other long-term liabilities	36,452		24,934		22,982
Total liabilities	929,498		1,082,144		1,003,974
Commitments and contingencies (Note 7)
Shareholders' Equity:
Preferred stock; 10,000 shares authorized; NaN issued and outstanding	0		0		0
Common stock (0 par value); 250,000 shares authorized; 66,210, 67,561, and 67,562, issued and outstanding, respectively	13,142		4,937		0
Retained earnings	1,716,044		1,848,935		1,754,379
Accumulated other comprehensive loss	(6,370)		(4,425)		(7,273)
Total shareholders' equity	1,722,816		1,849,447		1,747,106
Total liabilities and shareholders' equity	$	2,652,314	$	2,931,591	$	2,751,080

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

~~(In thousands, except per share amounts)~~

(Unaudited)


														Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
(in thousands, except per share amounts)													(in thousands, except per share amounts)	2020		2019		2020		2019
Net sales	$	906,793		$	795,801		$	2,087,611		$	1,884,728		Net sales	$	701,092	$	906,793	$	1,585,931	$	2,087,611
Cost of sales	460,098			412,098			1,050,596			972,966			Cost of sales	358,184		460,098		825,079		1,050,596
Gross profit	446,695			383,703			1,037,015			911,762			Gross profit	342,908		446,695		760,852		1,037,015
Selling, general and administrative expenses	299,249			259,267			791,767			724,827			Selling, general and administrative expenses	261,192		299,249		755,664		791,767
Net licensing income	4,569			4,708			11,090			11,279			Net licensing income	3,927		4,569		8,168		11,090
Income from operations	152,015			129,144			256,338			198,214			Income from operations	85,643		152,015		13,356		256,338
Interest income, net	1,399			2,524			7,370			7,748
Interest income (expense), net													Interest income (expense), net	(280)		1,399		728		7,370

Other non-operating income (expense), net	(563		)	736			915			372			Other non-operating income (expense), net	(465)		(563)		2,208		915
Income before income tax	152,851			132,404			264,623			206,334			Income before income tax	84,898		152,851		16,292		264,623
Income tax expense	(33,593		)	(30,029		)	(48,159		)	(44,735		)	Income tax expense	(22,147)		(33,593)		(4,035)		(48,159)
Net income	119,258			102,375			216,464			161,599			Net income	$	62,751	$	119,258	$	12,257	$	216,464
Net income attributable to non-controlling interest	—			2,223			—			6,603
Net income attributable to Columbia Sportswear Company	$	119,258		$	100,152		$	216,464		$	154,996
Earnings per share attributable to Columbia Sportswear Company (Note 12):

Earnings per share:													Earnings per share:
Basic	$	1.76		$	1.44		$	3.19		$	2.22		Basic	$	0.95	$	1.76	$	0.18	$	3.19
Diluted	$	1.75		$	1.42		$	3.15		$	2.19		Diluted	$	0.94	$	1.75	$	0.18	$	3.15
Weighted average shares outstanding (Note 12):
Weighted average shares outstanding:													Weighted average shares outstanding:
Basic	67,593			69,589			67,935			69,895			Basic	66,179		67,593		66,427		67,935
Diluted	68,180			70,357			68,620			70,685			Diluted	66,537		68,180		66,807		68,620

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

~~(In thousands)~~

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net income $ 119,258
$ 102,375
$ 216,464
$ 161,599
Other comprehensive income (loss):
Unrealized holding gains (losses) on available-for-sale securities, net —
(162 ) 56
(158 )
Unrealized gains on derivative transactions (net of tax effects of $(801), $(1,062), $(369), and $(6,036), respectively) 2,414
2,896
1,866
18,542
Foreign currency translation adjustments (net of tax effects of $1,560, $(39), $2,447 and $1,780, respectively) (8,389 ) (562 ) (5,033 ) (12,565 )
Other comprehensive income (loss) (5,975 ) 2,172
(3,111 ) 5,819
Comprehensive income 113,283
104,547
213,353
167,418
Comprehensive income attributable to non-controlling interest —
2,256
—
7,255
Comprehensive income attributable to Columbia Sportswear Company $ 113,283
$ 102,291
$ 213,353
$ 160,163


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2020		2019		2020		2019
Net income	$	62,751	$	119,258	$	12,257	$	216,464
Other comprehensive loss:
Unrealized holding gains on available-for-sale securities, net	0		0		0		56
Unrealized gains (losses) on derivative transactions (net of tax effects of $3,995, $(801), $1,371 and $(369), respectively)	(11,685)		2,414		(5,022)		1,866
Foreign currency translation adjustments (net of tax effects of $(290), $1,560, $(253) and $2,447, respectively)	11,175		(8,389)		3,077		(5,033)
Other comprehensive loss	(510)		(5,975)		(1,945)		(3,111)
Comprehensive income	$	62,241	$	113,283	$	10,312	$	213,353

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

~~(In thousands)~~

(Unaudited)


								Nine Months Ended September 30,
	Nine Months Ended September 30,
	2019			2018
(in thousands)							(in thousands)	2020		2019
Cash flows from operating activities:							Cash flows from operating activities:
Net income	$	216,464		$	161,599		Net income	$	12,257	$	216,464
Adjustments to reconcile net income to net cash used in operating activities:							Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, amortization, and non-cash lease expense	88,775			43,544			Depreciation, amortization, and non-cash lease expense	102,283		88,775
Loss on disposal or impairment of property, plant, and equipment	4,866			1,979
Provision for uncollectible accounts receivable							Provision for uncollectible accounts receivable	24,684		(242)
Loss on disposal or impairment of property, plant and equipment, and right-of-use assets							Loss on disposal or impairment of property, plant and equipment, and right-of-use assets	8,981		4,866
Deferred income taxes	(3,157		)	2,103			Deferred income taxes	4,306		(3,157)
Stock-based compensation	13,159			10,247			Stock-based compensation	12,802		13,159
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable	(199,416		)	(125,433		)	Accounts receivable	(17,130)		(199,174)
Inventories	(198,999		)	(188,544		)	Inventories	(160,090)		(198,999)
Prepaid expenses and other current assets	(12,596		)	(7,968		)	Prepaid expenses and other current assets	9,098		(12,596)
Other assets	(3,981		)	(9,782		)	Other assets	(20,786)		(3,981)
Accounts payable	(65,191		)	(14,263		)	Accounts payable	(89,790)		(65,191)
Accrued liabilities	6,497			38,193			Accrued liabilities	(41,182)		6,497
Income taxes payable	(11,286		)	(7,200		)	Income taxes payable	(10,011)		(11,286)
Operating lease assets and liabilities	(39,010		)	—			Operating lease assets and liabilities	(41,459)		(39,010)
Other liabilities	5,716			(2,541		)	Other liabilities	8,077		5,716
Net cash used in operating activities	(198,159		)	(98,066		)	Net cash used in operating activities	(197,960)		(198,159)
Cash flows from investing activities:							Cash flows from investing activities:
Purchases of short-term investments	(181,257		)	(426,278		)	Purchases of short-term investments	(35,044)		(181,257)
Sales and maturities of short-term investments	445,501			252,727			Sales and maturities of short-term investments	36,630		445,501
Capital expenditures	(104,527		)	(45,189		)	Capital expenditures	(25,164)		(104,527)
Proceeds from sale of property, plant, and equipment	—			18

Net cash provided by (used in) investing activities	159,717			(218,722		)	Net cash provided by (used in) investing activities	(23,578)		159,717
Cash flows from financing activities:							Cash flows from financing activities:
Proceeds from credit facilities	74,053			36,051			Proceeds from credit facilities	387,992		74,053
Repayments on credit facilities	(74,053		)	(27,740		)	Repayments on credit facilities	(388,465)		(74,053)
Payment of line of credit issuance fees							Payment of line of credit issuance fees	(2,096)		0
Proceeds from issuance of common stock related to stock-based compensation	17,687			16,508			Proceeds from issuance of common stock related to stock-based compensation	4,793		17,687
Tax payments related to stock-based compensation	(5,739		)	(4,221		)	Tax payments related to stock-based compensation	(4,454)		(5,739)

Repurchase of common stock	(116,239		)	(107,222		)	Repurchase of common stock	(132,889)		(116,239)

Purchase of non-controlling interest	(17,880		)	—			Purchase of non-controlling interest	0		(17,880)

Cash dividends paid	(48,917		)	(46,160		)	Cash dividends paid	(17,195)		(48,917)
Cash dividends paid to non-controlling interest	—			(19,949		)

Net cash used in financing activities	(171,088		)	(152,733		)	Net cash used in financing activities	(152,314)		(171,088)
Net effect of exchange rate changes on cash	(2,954		)	(7,500		)	Net effect of exchange rate changes on cash	1,272		(2,954)
Net decrease in cash, cash equivalents and restricted cash	(212,484		)	(477,021		)
Cash, cash equivalents and restricted cash, beginning of period	451,795			673,166
Cash, cash equivalents and restricted cash, end of period	$	239,311		$	196,145
Net decrease in cash and cash equivalents							Net decrease in cash and cash equivalents	(372,580)		(212,484)
Cash and cash equivalents, beginning of period							Cash and cash equivalents, beginning of period	686,009		451,795
Cash and cash equivalents, end of period							Cash and cash equivalents, end of period	$	313,429	$	239,311
Supplemental disclosures of cash flow information:							Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes	$	73,413		$	47,041		Cash paid during the period for income taxes	$	18,385	$	73,413

Supplemental disclosures of non-cash investing and financing activities:							Supplemental disclosures of non-cash investing and financing activities:
Property, plant and equipment acquired through increase in liabilities	$	11,638		$	7,380		Property, plant and equipment acquired through increase in liabilities	$	4,774	$	11,638

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

~~(In thousands, except per share amounts)~~

(Unaudited)

Three Months Ended September 30, 2019
Columbia Sportswear Company Shareholders' Equity
Common Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest Total
Shares
Outstanding Amount
BALANCE, JUNE 30, 2019 67,586
$ 100
$ 1,656,392
$ (1,298 ) $ —
$ 1,655,194
Net income —
—
119,258
—
—
119,258
Other comprehensive income (loss):
Unrealized holding gains on derivative transactions, net —
—
—
2,414
—
2,414
Foreign currency translation adjustment, net —
—
—
(8,389 ) —
(8,389 )
Cash dividends ($0.24 per share) —
—
(16,231 ) —
—
(16,231 )
Issuance of common stock related to stock-based compensation, net 135
6,251
—
—
—
6,251
Stock-based compensation expense —
4,378
—
—
—
4,378
Repurchase of common stock (159 ) (10,729 ) (5,040 ) —
—
(15,769 )
BALANCE, SEPTEMBER 30, 2019 67,562
$ —
$ 1,754,379
$ (7,273 ) $ —
$ 1,747,106

Three Months Ended September 30, 2018
Columbia Sportswear Company Shareholders' Equity
Common Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest Total
Shares
Outstanding Amount
BALANCE, JUNE 30, 2018 69,988
$ 23,162
$ 1,623,612
$ (6,374 ) $ 13,975
$ 1,654,375
Net income —
—
100,152
—
2,223
102,375
Other comprehensive income (loss):
Unrealized holding losses on available-for-sale securities, net —
—
—
(162 ) —
(162 )
Unrealized holding gains on derivative transactions, net —
—
—
2,352
544
2,896
Foreign currency translation adjustment, net —
—
—
(51 ) (511 ) (562 )
Cash dividends ($0.22 per share) —
—
(15,304 ) —
—
(15,304 )
Issuance of common stock related to stock-based compensation, net 42
1,446
—
—
—
1,446
Stock-based compensation expense —
3,648
—
—
—
3,648
Repurchase of common stock (760 ) (28,046 ) (39,070 ) —
—
(67,116 )
BALANCE, SEPTEMBER 30, 2018 69,270
$ 210
$ 1,669,390
$ (4,235 ) $ 16,231
$ 1,681,596


	Three Months Ended September 30, 2020
(in thousands, except per share amounts)	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares Outstanding	Amount
BALANCE, JUNE 30, 2020	66,148	$	5,396	$	1,653,293	$	(5,860)	$	1,652,829
Net Income	—	—		62,751		—		62,751
Other comprehensive loss:

Unrealized holding losses on derivative transactions, net	—	—		—		(11,685)		(11,685)
Foreign currency translation adjustment, net	—	—		—		11,175		11,175

Issuance of common stock related to stock-based compensation, net	62	2,656		—		—		2,656
Stock-based compensation expense	—	5,090		—		—		5,090

BALANCE, SEPTEMBER 30, 2020	66,210	$	13,142	$	1,716,044	$	(6,370)	$	1,722,816


	Three Months Ended September 30, 2019
(in thousands, except per share amounts)	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares Outstanding	Amount
BALANCE, JUNE 30, 2019	67,586	$	100	$	1,656,392	$	(1,298)	$	1,655,194
Net Income	—	—		119,258		—		119,258
Other comprehensive loss:

Unrealized holding gains on derivative transactions, net	—	—		—		2,414		2,414
Foreign currency translation adjustment, net	—	—		—		(8,389)		(8,389)
Cash dividends ($0.24 per share)	—	—		(16,231)		—		(16,231)
Issuance of common stock related to stock-based compensation, net	135	6,251		—		—		6,251
Stock-based compensation expense	—	4,378		—		—		4,378
Repurchase of common stock	(159)	(10,729)		(5,040)		—		(15,769)
BALANCE, SEPTEMBER 30, 2019	67,562	$	0	$	1,754,379	$	(7,273)	$	1,747,106

See accompanying notes to condensed consolidated financial statements.

Table of Contents

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

~~(In thousands, except per share amounts)~~

(Unaudited)

Nine months ended September 30, 2019
Columbia Sportswear Company Shareholders' Equity
Common Stock Retained Earnings Accumulated Other Comprehensive Income (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 —
—
216,464
—
—
216,464
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 gains on derivative transactions, net —
—
—
1,866
—
1,866
Foreign currency translation adjustment, net —
—
—
(5,033 ) —
(5,033 )
Cash dividends ($0.72 per share) —
—
(48,917 ) —
—
(48,917 )
Issuance of common stock related to stock-based compensation, net 507
11,948
—
—
—
11,948
Stock-based compensation expense —
13,159
—
—
—
13,159
Repurchase of common stock (1,191 ) (25,107 ) (91,088 ) —
—
(116,195 )
BALANCE, SEPTEMBER 30, 2019 67,562
$ —
$ 1,754,379
$ (7,273 ) $ —
$ 1,747,106

Nine Months Ended September 30, 2018
Columbia Sportswear Company Shareholders' Equity
Common Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-Controlling Interest Total
Shares
Outstanding Amount
BALANCE, DECEMBER 31, 2017 69,995
$ 45,829
$ 1,585,009
$ (8,887 ) $ 30,308
$ 1,652,259
Net income —
—
154,996
—
6,603
161,599
Other comprehensive income (loss):
Unrealized holding losses on available-for-sale securities, net —
—
—
(158 ) —
(158 )
Unrealized holding gains on derivative transactions, net —
—
—
17,472
1,070
18,542
Foreign currency translation adjustment, net —
—
—
(12,147 ) (418 ) (12,565 )
Dividends to non-controlling interest —
—
—
—
(21,332 ) (21,332 )
Adoption of new accounting standards —
—
14,615
(515 ) —
14,100
Cash dividends ($0.66 per share) —
—
(46,160 ) —
—
(46,160 )
Issuance of common stock related to stock-based compensation, net 535
12,286
—
—
—
12,286
Stock-based compensation expense —
10,247
—
—
—
10,247
Repurchase of common stock (1,260 ) (68,152 ) (39,070 ) —
—
(107,222 )
BALANCE, SEPTEMBER 30, 2018 69,270
$ 210
$ 1,669,390
$ (4,235 ) $ 16,231
$ 1,681,596


	Nine months ended September 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 Income	—	—		12,257		—		12,257
Other comprehensive loss:

Unrealized holding losses on derivative transactions, net	—	—		—		(5,022)		(5,022)
Foreign currency translation adjustment, net	—	—		—		3,077		3,077
Cash dividends ($0.26 per share)	—	—		(17,195)		—		(17,195)
Issuance of common stock related to stock-based compensation, net	206	339		—		—		339
Stock-based compensation expense	—	12,802		—		—		12,802
Repurchase of common stock	(1,557)	(4,936)		(127,953)		—		(132,889)
BALANCE, SEPTEMBER 30, 2020	66,210	$	13,142	$	1,716,044	$	(6,370)	$	1,722,816


	Nine Months Ended September 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	$	0	$	1,677,920	$	(4,063)	$	16,456	$	1,690,313
Net Income	—	—		216,464		—		—		216,464
Purchase of non-controlling interest	—	—		—		(99)		(16,456)		(16,555)
Other comprehensive loss:
Unrealized holding gains on available for-sale-securities, net	—	—		—		56		—		56
Unrealized holding gains on derivative transactions, net	—	—		—		1,866		0		1,866
Foreign currency translation adjustment, net	—	—		—		(5,033)		0		(5,033)
Cash dividends ($0.72 per share)	—	—		(48,917)		—		—		(48,917)
Issuance of common stock related to stock-based compensation, net	507	11,948		—		—		—		11,948
Stock-based compensation expense	—	13,159		—		—		—		13,159
Repurchase of common stock	(1,191)	(25,107)		(91,088)		—		—		(116,195)
BALANCE, SEPTEMBER 30, 2019	67,562	$	0	$	1,754,379	$	(7,273)	$	0	$	1,747,106

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 Per Share

Note 11

Accumulated Other Comprehensive Loss

Note 12

Segment Information

Note 13

Financial Instruments and Risk Management

Note 14

Fair Value Measures

Table of Contents

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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, ~~and entities in which it maintains a controlling financial interest,~~ 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 September 30, ~~2019,~~2020, December 31, ~~2018~~2019 and September 30, ~~2018,~~2019, and the results of operations for the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, and cash flows for the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019. The December 31, ~~2018~~2019 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, ~~2018.~~2019. A significant part of the Company's business is of a seasonal nature; therefore, results of operations for the three and nine months ended September 30, ~~2019~~2020 are not necessarily indicative of results to be expected for other quarterly periods or for the full year.

In accordance with the Disclosure Modernization and Simplification final rule issued by the Securities and Exchange Commission ("SEC") and effective for the Company beginning in the first quarter of 2019, a reconciliation of the changes of shareholders' equity is presented for all periods for which the results of operations are presented.

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 ~~SEC.~~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, ~~2018.~~2019.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Columbia Sportswear Company and its wholly owned ~~subsidiaries and entities in which it maintains a controlling financial interest.~~subsidiaries. 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 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. Some of ~~these~~the more significant estimates relate to revenue recognition, ~~including sales returns and claims from customers,~~ allowance for ~~doubtful~~uncollectible accounts ~~provisions for potential~~receivable, excess, ~~slow-moving~~close-out and ~~closeout inventories,~~slow moving inventory, product warranty, impairment of long-lived ~~and~~assets, intangible assets and goodwill, income taxes, and stock-based compensation.

COVID-19

~~NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~A novel strain of coronavirus ("COVID-19") was first identified in China in December 2019 and a global pandemic of respiratory disease caused by COVID-19 was declared by the World Health Organization in March 2020.

~~Except~~The current environment of uncertainty significantly affected the September 30, 2020 estimates for allowance for uncollectible accounts receivable and excess, close-out and slow-moving inventory. These estimates involve assumptions about future events. The allowance for uncollectible accounts receivable includes assumptions about the future financial condition of the Company's customers and their ability to make required payments. The provision for excess, close-out and slow moving inventory includes assumptions about future demand for the Company’s products and the Company's ability to sell them at a profit.

As a result of lower consumer demand related to the COVID-19 pandemic, the Company tested certain retail locations and their respective lease right-of-use assets for impairment. For the three and nine months ended September 30, 2020, impairment charges for certain underperforming retail stores were $0.1 million and $6.7 million, respectively. These charges were recognized in Selling, general and administrative expenses ("SG&A expense"). Additionally, as ~~disclosed below~~a result of the COVID-19 pandemic and a significant decline in ~~Note 8, pertaining~~projected net sales, the prAna brand's trademark and goodwill were tested for impairment as of March 31, 2020. While no impairment was indicated during the first quarter 2020 tests, the degree by which the fair value of the prAna reporting unit and trademark exceeded their respective carrying values declined from the Company's 2019 impairment test. After performing both qualitative and quantitative analysis, including review of future long-term revenue and cash flow assumptions, the Company concluded a triggering event requiring measurement of the prAna brand's trademark and goodwill for impairment during the quarter ended September 30, 2020 did not occur.

As of September 30, 2020, the Company received or negotiated lease concessions related to ~~our adoption~~the effects of ~~new accounting pronouncements, there have been~~the COVID-19 pandemic on a portion of its stores. In April 2020, the Financial Accounting Standards Board (“FASB”) issued a Staff Q&A, Topic 842 and 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. The Company elected to account for lease concessions related to the effects of the COVID-19 pandemic in accordance with the Staff Q&A. For concessions that provide a deferral of payments with no ~~significant~~substantive changes to the ~~Company's significant accounting policies as described~~consideration in the ~~Company's Annual Report on Form 10-K for the year ended December 31, 2018.~~

~~Recently Adopted Accounting Pronouncements~~

~~On January 1, 2019,~~original contract, the Company ~~adopted Accounting Standards Update ("ASU") No. 2018-07,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements~~continues to ~~Nonemployee Share-Based Payment Accounting,~~ recognize

~~which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most~~Table of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The adoption of this provision did not have a material effect on the Company's financial position, results of operations or cash flows.Contents

~~On January 1, 2019, the Company adopted ASU No. 2016-02,~~ ~~Leases ("ASC 842")~~, which increased transparency and comparability among organizations by recognizing right-of-use ("ROU") assets and lease liabilities on the balance sheet for most leases previously classified as operating leases. The updated guidance and subsequent clarifications require disclosuresIndex to ~~meet the objective of enabling users of financial statements~~Notes to ~~assess the amount, timing and uncertainty of cash flows arising from leases.~~Consolidated Financial Statements

The Company adopted this standard utilizing the modified retrospective approach. The comparative prior period information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized. The Company did not elect the practical expedient to use hindsight for leases existing at adoption date.

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

~~The adoption of ASC 842 resulted~~expense during the deferral period. For concessions in the ~~recognition~~form of ~~ROU assets~~lease abatements, the reduced lease payments are accounted for as reductions to variable lease expense. In the periods presented, lease concessions reducing variable lease expense were not material.

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law in the United States on March 27, 2020. The CARES Act provides payroll tax credits for employee retention, deferral of ~~$352.7~~payroll tax payments and several income tax provision modifications. Additionally, there are other subsidies and incentives provided by foreign governments in the countries where the Company conducts business. For the three and nine months ended September 30, 2020, $2.8 million ~~with corresponding lease liabilities~~and $7.1 million, respectively, of ~~$387.1 million. As a result of adopting the standard, $34.4 million of pre-existing liabilities for deferred rent~~government subsidies and ~~various lease~~ incentives were reclassified as a component of the ROU assets. At adoption, the measurement of the lease liabilities utilized the remaining minimum rental payments as defined under the previous accounting standard and the incremental borrowing rate as ofreduced SG&A expense.

Recently Adopted Accounting Pronouncements

Effective January 1, ~~2019.~~

~~The adoption of ASC 842 did not materially impact~~2020, the Condensed Consolidated Statements of Operations. Also, the adoption of ASC 842 had no material impact on operating, investing or financing cash flows in the Condensed Consolidated Statements of Cash Flows. See Note 8 for additional disclosure regarding the adoption of the new standard.

~~The following table presents the effect of the adoption of ASC 842 on our Condensed Consolidated Balance Sheets as of January 1, 2019:~~

January 1, 2019
(in thousands) December 31, 2018 Adjustments due to ASC 842 January 1, 2019
Operating lease right-of-use assets $ —
$ 352,679
$ 352,679
Total assets 2,368,721
352,679
2,721,400
Accrued liabilities 275,684
(3,346 ) 272,338
Operating lease liabilities —
57,207
57,207
Current liabilities 572,882
53,861
626,743
Non-current operating lease liabilities —
329,865
329,865
Other long-term liabilities 45,214
(31,047 ) 14,167
Total liabilities 678,408
352,679
1,031,087
Total liabilities and equity 2,368,721
352,679
2,721,400

~~Recent Accounting Pronouncements Not Yet Adopted~~

~~In August 2018, the~~ ~~Financial~~Company adopted Accounting Standards ~~Board~~Update ("~~FASB"~~ASU")~~issued ASU~~ No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), issued by the FASB in August 2018, which clarifies certain aspects of accounting for implementation costs incurred in a cloud computing arrangement ("CCA") that is a service contract. Under the ASU, an entity would expense costs incurred in the preliminary-project and post-implementation-operation stages. The entity would also capitalize certain costs incurred during the application-development stage, as well as certain costs related to enhancements. The ASU does not change the accounting for the service component of a CCA. ~~This standard is effective beginning in the first quarter of 2020, with early adoption permitted.~~ The Company ~~is planning to adopt~~adopted the standard using the prospective method and anticipates an increase in cloud-specific implementation assets as specific cloud initiatives are executed by the Company. These assets will generally be included in Other non-current assets in the Condensed Consolidated Balance Sheets and will amortize over their assessed useful lives or the term of the underlying cloud computing hosting contract, whichever is ~~currently evaluating~~shorter. Upon the adoption of the standard, there was no immediate impact ~~this accounting standard will have on~~to the Company's financial position, results of operations or cash flows.

InEffective January ~~2017,~~1, 2020, the ~~FASB issued~~Company adopted ASU No. 2017-04, ~~Intangibles-Goodwill~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, issued by the FASB in January 2017, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Under this guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. ~~This standard is effective beginning in the first quarter of 2020, with early adoption permitted.~~ The impact of the new standard will depend on the specific facts and circumstances of future individual goodwill impairments, if any.

~~In June 2016,~~Effective January 1, 2020, the ~~FASB issued~~Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~. Subsequently,~~ issued by the FASB ~~has issued~~in June 2016, as well as the clarifying amendments ~~to clarify the codification, in addition to also clarifying the implementation dates and the items that fall within the scope of this pronouncement.~~subsequently issued. The pronouncement changes the impairment model for most financial assets and will require the use of an "expected loss" model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. Upon adoption of the standard, there was no immediate impact to the Company's financial position, results of operations or cash flows. On an ongoing basis, the Company will contemplate forward-looking economic conditions in recording lifetime expected credit losses for the Company’s financial assets measured at cost, such as the Company’s trade receivables and certain short-term investments.

Summary of Significant Accounting Policies

Except as disclosed below, there have been no significant changes to the Company's significant accounting policies as described in Note 2 in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

The following significant accounting policies have been updated since the Company’s 2019 Annual Report on Form 10-K as a result of the adoption of ASU No. 2016-13 and ASU No. 2018-15, respectively:

Accounts Receivable

Accounts receivable have been reduced by an allowance for doubtful accounts. The Company maintains the allowance for estimated losses resulting from the inability of the Company's customers to make required payments. The allowance represents the current estimate of lifetime expected credit losses over the remaining duration of existing accounts receivable considering current market conditions and supportable forecasts when appropriate. The estimate is a result of the Company’s ongoing evaluation of collectability, customer creditworthiness, historical levels of credit losses, and future expectations. Write-off activity and recoveries for the periods presented were not material.

Cloud Computing Arrangements

The Company’s CCAs primarily relate to various enterprise resource planning systems, as well as other supporting systems. These assets are generally included in Other non-current assets in the Condensed Consolidated Balance Sheets and amortize on a straight-line basis over their assessed useful lives or the term of the underlying cloud computing hosting contract, whichever is shorter. As of September 30, 2020, assets were in-service with useful lives ranging from ten months to five years. As of September 30, 2020, CCA assets consisted of capitalized implementation costs of $24.1 million and associated accumulated amortization of $0.7 million. Changes in these assets are recorded in Other assets within operating activitiesin the Condensed Consolidated Statements of Cash Flows.

Table of Contents

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Recent Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which, among other things, removes specific exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods, as well as targeted impacts to the accounting for taxes under hybrid tax regimes. This standard is effective beginning in the first quarter of ~~2020.~~2021 on a prospective basis, with early adoption permitted. The ~~adoption of ASU 2016-13~~Company is ~~not expected to~~currently evaluating the impact this accounting standard will have ~~a material effect~~ on the Company's financial position, results of operations or cash flows.

NOTE 3—2—REVENUES

Disaggregated Revenue

As disclosed below in Note ~~14,~~12, the Company has ~~aggregated its operating segments into~~ 4 geographic reportable segments: ~~the~~ United States ("U.S."), Latin America and Asia Pacific ("LAAP"), Europe, Middle East and Africa ("EMEA"), and Canada.

~~COLUMBIA SPORTSWEAR COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

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


	Three Months Ended September 30, 2020
(in thousands)	U.S.		LAAP		EMEA		Canada		Total
Product category net sales
Apparel, Accessories and Equipment	$	332,713	$	70,026	$	66,160	$	41,221	$	510,120
Footwear	112,907		20,925		32,999		24,141		190,972
Total	$	445,620	$	90,951	$	99,159	$	65,362	$	701,092
Sales channel net sales
Wholesale	$	282,850	$	50,723	$	85,074	$	52,820	$	471,467
Direct-to-consumer	162,770		40,228		14,085		12,542		229,625
Total	$	445,620	$	90,951	$	99,159	$	65,362	$	701,092

Three Months Ended September 30, 2019
(in thousands) United States LAAP EMEA Canada Total
Product category net sales
Apparel, Accessories and Equipment $ 459,633
$ 93,486
$ 66,058
$ 65,532
$ 684,709
Footwear 121,630
29,760
38,345
32,349
222,084
Total $ 581,263
$ 123,246
$ 104,403
$ 97,881
$ 906,793
Sales channel net sales
Wholesale $ 396,275
$ 77,934
$ 91,329
$ 86,993
$ 652,531
Direct-to-consumer 184,988
45,312
13,074
10,888
254,262
Total $ 581,263
$ 123,246
$ 104,403
$ 97,881
$ 906,793


	Three Months Ended September 30, 2019
(in thousands)	U.S.		LAAP		EMEA		Canada		Total
Product category net sales
Apparel, Accessories and Equipment	$	459,633	$	93,486	$	66,058	$	65,532	$	684,709
Footwear	121,630		29,760		38,345		32,349		222,084
Total	$	581,263	$	123,246	$	104,403	$	97,881	$	906,793
Sales channel net sales
Wholesale	$	396,275	$	77,934	$	91,329	$	86,993	$	652,531
Direct-to-consumer	184,988		45,312		13,074		10,888		254,262
Total	$	581,263	$	123,246	$	104,403	$	97,881	$	906,793

Three Months Ended September 30, 2018
(in thousands) United States LAAP EMEA Canada Total
Product category net sales
Apparel, Accessories and Equipment $ 406,474
$ 92,869
$ 63,950
$ 54,294
$ 617,587
Footwear 89,687
25,510
36,401
26,616
178,214
Total $ 496,161
$ 118,379
$ 100,351
$ 80,910
$ 795,801
Sales channel net sales
Wholesale $ 320,102
$ 72,121
$ 87,434
$ 70,099
$ 549,756
Direct-to-consumer 176,059
46,258
12,917
10,811
246,045
Total $ 496,161
$ 118,379
$ 100,351
$ 80,910
$ 795,801

Nine months ended September 30, 2019
(in thousands) United States LAAP EMEA Canada Total
Product category net sales
Apparel, Accessories and Equipment $ 1,081,942
$ 267,919
$ 183,168
$ 109,909
$ 1,642,938
Footwear 227,072
89,800
84,110
43,691
444,673
Total $ 1,309,014
$ 357,719
$ 267,278
$ 153,600
$ 2,087,611
Sales channel net sales
Wholesale $ 756,558
$ 200,083
$ 231,219
$ 124,119
$ 1,311,979
Direct-to-consumer 552,456
157,636
36,059
29,481
775,632
Total $ 1,309,014
$ 357,719
$ 267,278
$ 153,600
$ 2,087,611

Table of Contents

Nine Months Ended September 30, 2018
(in thousands) United States LAAP EMEA Canada Total
Product category net sales
Apparel, Accessories and Equipment $ 970,194
$ 263,849
$ 168,306
$ 99,854
$ 1,502,203
Footwear 168,981
86,983
88,806
37,755
382,525
Total $ 1,139,175
$ 350,832
$ 257,112
$ 137,609
$ 1,884,728
Sales channel net sales
Wholesale $ 636,108
$ 192,967
$ 223,018
$ 109,324
$ 1,161,417
Direct-to-consumer 503,067
157,865
34,094
28,285
723,311
Total $ 1,139,175
$ 350,832
$ 257,112
$ 137,609
$ 1,884,728
Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)


	Nine months ended September 30, 2020
(in thousands)	U.S.		LAAP		EMEA		Canada		Total
Product category net sales
Apparel, Accessories and Equipment	$	793,846	$	193,815	$	145,100	$	73,445	$	1,206,206
Footwear	210,887		67,097		68,198		33,543		379,725
Total	$	1,004,733	$	260,912	$	213,298	$	106,988	$	1,585,931
Sales channel net sales
Wholesale	$	559,052	$	139,316	$	180,416	$	78,546	$	957,330
Direct-to-consumer	445,681		121,596		32,882		28,442		628,601
Total	$	1,004,733	$	260,912	$	213,298	$	106,988	$	1,585,931

During the fourth quarter of 2018, the Company determined that it had understated wholesale and overstated direct-to-consumer ("DTC") net sales by $5.0 million and $11.5 million in the LAAP segment for the three and nine months ended September 30, 2018, respectively, with no effect on LAAP segment total net sales. The Company assessed the significance of the misclassifications and concluded that they were not material to any prior periods. As a result, the LAAP segment wholesale and DTC net sales for the three and nine months ended September 30, 2018 in the table above have been revised from amounts previously reported to correct the misclassifications. These corrections had no effect on the Company's Condensed Consolidated Statements of Operations.


	Nine Months Ended September 30, 2019
(in thousands)	U.S.		LAAP		EMEA		Canada		Total
Product category net sales
Apparel, Accessories and Equipment	$	1,081,942	$	267,919	$	183,168	$	109,909	$	1,642,938
Footwear	227,072		89,800		84,110		43,691		444,673
Total	$	1,309,014	$	357,719	$	267,278	$	153,600	$	2,087,611
Sales channel net sales
Wholesale	$	756,558	$	200,083	$	231,219	$	124,119	$	1,311,979
Direct-to-consumer	552,456		157,636		36,059		29,481		775,632
Total	$	1,309,014	$	357,719	$	267,278	$	153,600	$	2,087,611

Performance Obligations

For the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, Net sales recognized from performance obligations related to prior periods ~~was~~were not material. Net sales expected to be recognized in any future period related to remaining performance obligations ~~are~~is not material.

Contract Balances

As of September 30, ~~2019,~~2020, December 31, ~~2018~~2019 and September 30, ~~2018,~~2019, contract liabilities ~~recorded as~~included in Accrued liabilities on the Condensed Consolidated Balance Sheets, which consisted of obligations associated with ~~our~~the Company's gift card and customer loyalty programs, were not material.

~~NOTE 4—NON-CONTROLLING INTEREST~~

Table of Contents

~~Prior~~Index to ~~January 2, 2019, the Company owned a 60% controlling interest in a joint venture formed with Swire Resources Limited ("Swire")~~Notes to support the development and operation of the Company's business in China. The accounts of the joint venture were included in the condensed consolidated financial statements. Swire's share of net income from the joint venture was included in ~~Net income attributable to non-controlling interest~~ ~~in the Condensed~~ Consolidated Financial Statements ~~of Operations and the non-controlling equity interest in this entity was included in total equity as~~ ~~Non-controlling interest~~ ~~in the Condensed Consolidated Balance Sheets.~~

In September 2018, the Company and Swire entered into an Equity Interest Transfer Agreement ("EITA"), under which the Company committed to buy out the 40% non-controlling interest in the joint venture. On January 2, 2019, the Company closed the buyout. As a result of the buyout, the 2019 condensed consolidated financial statements of the Company do not separately reflect amounts related to the non-controlling interest. See Note 17 for additional information regarding the various terms and conditions and resulting related-party transactions associated with the buyout.

~~NOTE 5—INTANGIBLE ASSETS, NET~~

~~The following table summarizes the Company's identifiable~~ ~~Intangible assets, net~~ ~~balance:~~

(in thousands) September 30,
2019 December 31,
2018 September 30,
2018
Intangible assets subject to amortization:
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 (12,979 ) (11,981 ) (11,649 )
Customer relationships (15,300 ) (14,063 ) (13,650 )
Total accumulated amortization (28,279 ) (26,044 ) (25,299 )
Net carrying amount 8,919
11,154
11,899
Intangible assets not subject to amortization 115,421
115,421
115,421
Intangible assets, net $ 124,340
$ 126,575
$ 127,320

Amortization expense for intangible assets subject to amortization was $0.7 million for each of the three months ended September 30, 2019 and 2018 and was $2.2 million for each of the nine months ended September 30, 2019 and 2018.

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

NOTE 3—INTANGIBLE ASSETS, NET

Intangible assets, net consisted of the following:


(in thousands)	September 30, 2020		December 31, 2019		September 30, 2019
Intangible assets subject to amortization:
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)		(13,311)		(12,979)
Customer relationships	(16,950)		(15,713)		(15,300)

Total accumulated amortization	(31,148)		(29,024)		(28,279)
Net carrying amount	6,050		8,174		8,919
Intangible assets not subject to amortization	115,421		115,421		115,421
Intangible assets, net	$	121,471	$	123,595	$	124,340

Amortization expense for intangible assets subject to amortization was $0.6 million and $0.7 million for the three months ended September 30, 2020 and 2019, respectively, and was $2.1 million and $2.2 million for the nine months ended September 30, 2020 and 2019, respectively.

Annual amortization expense is estimated to be as follows for the years ~~2019~~2020 through ~~2023:~~2024:


(in thousands)
2020	$	2,537
2021	1,650
2022	1,650
2023	1,650
2024	688

(in thousands)
2019 $ 2,980
2020 2,537
2021 1,650
2022 1,650
2023 1,650

NOTE 6—4—SHORT-TERM BORROWINGS AND CREDIT LINES

~~The~~At the beginning of 2020, the Company had an unsecured, committed revolving line of credit agreement, maturing on ~~July~~August 1, ~~2021,~~2023 with monthly variable commitments available for funding that ~~as of March 31, 2019,~~ averaged ~~$100.0~~$50.0 million over the course of a calendar year. AtIn March 2020, the Company entered into a first amendment to its unsecured, committed revolving line of credit agreement to remove the seasonality within the commitment levels and provide $125.0 million in committed borrowing availability through December 31, ~~2018~~2020. In April 2020, the Company entered into a second amended and restated credit agreement (the “restated credit agreement”) which amended and restated the committed revolving line of credit agreement. The restated credit agreement provides for (i) a secured, committed revolving line of credit, maturing on August 1, 2023 with a commitment available for funding of $125.0 million (the "Revolving A Loan"), (ii) a secured, committed revolving line of credit, maturing April 13, 2021, with a commitment available for funding of $400.0 million (the "Revolving B Loan", together with the Revolving A Loan, the "Revolving Loans"), and (iii) an uncommitted $100.0 million incremental facility, which may be added to the Revolving B Loan if it is executed on, upon request by the Company to the administrative agent. Advances under the Revolving Loans can be either LIBOR loans or base rate loans. LIBOR loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum equal to LIBOR (subject to a LIBOR floor) plus a margin ranging from 2.00% to 2.75% (the "LIBOR Margin"). Base rate loans bear interest on the outstanding principal amount thereof at a rate per annum equal to the LIBOR Margin plus the greater of (i) daily reset one month LIBOR or (ii) in the case of Revolving A Loans, the LIBOR floor; provided that if the lenders are unable to price loans based on LIBOR, base rate loans will bear interest at an interest rate per annum equal to a margin ranging from 1.00% to 1.75% plus the higher of (A) the rate of interest most recently announced by the administrative agent as its prime rate or (B) the federal funds rate plus 1.50%. In addition, the restated credit agreement requires the Company to comply with certain financial covenants. If the Company is in default, it is required to comply with certain restrictions on dividend payments and stock repurchases. In connection with the restated agreement, the Company entered into a collateral agreement under which the obligations of the Company were secured by all assets of the Company and Columbia Brands USA, LLC, except for intellectual property, real property, equity interests in foreign subsidiaries and certain other exclusions. Effective July 10, 2020, the Company entered into a first amendment (the "first amendment") to its restated credit agreement. The first amendment provides for

Table of Contents

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

suspensions of and adjustments to the financial covenants beginning on July 1, 2020 through December 31, 2020 (the "covenant suspension period") as follows: (i) the funded debt ratio no longer needs to be maintained during the covenant suspension period, (ii) the interest coverage ratio no longer needs to be maintained during the covenant suspension period, and (iii) the Company must maintain liquidity (inclusive of unrestricted and unencumbered cash-on-hand of the Company and its subsidiaries and, with certain limitations, availability under the revolving credit facilities provided for in the restated credit agreement) of not less than $200.0 million as of each calendar month end during the covenant suspension period. In addition, the minimum LIBOR floors were revised to be 0.50% in the case of both Revolving A and Revolving B loans. The first amendment also provides for a letter of credit facility and contains modifications to certain other negative covenants, including a change to the negative indebtedness covenant to allow for up to $350 million in additional unsecured indebtedness. In connection with the first amendment, the Company amended and restated the collateral agreement, originally dated April 15, 2020 to provide for a pledge by the Company and Columbia Brands USA, LLC of 65% of their equity interests in foreign subsidiaries. At September 30, ~~2018,~~2020, the Company was in compliance with all associated covenants, and there was no balance outstanding under ~~this line of credit. In April 2019, the Company amended~~these lines and ~~restated its~~facility.

The Company’s Canadian subsidiary has available an unsecured ~~committed revolving~~and uncommitted line of credit, ~~agreement~~which is payable on demand, guaranteed by the Company, and provides for borrowings up to ~~reduce~~a maximum of CAD$30.0 million (approximately US$22.4 million) at September 30, 2020. The revolving line accrues interest at the ~~monthly variable commitments available~~Canadian Prime rate for funding to an average of $50.0 million over the course of a calendar year. The maturity date of this amended and restated agreement is August 1, 2023. Interest, payable monthly, continues to be based on the Company's applicable funded debt ratio, which could range from USD LIBORCAD overdraft borrowings or Bankers' Acceptance rate plus ~~87.5~~150 basis points to USD LIBOR plus 162.5 basis points. The amended and restated agreement requires the Company to comply with certain financial covenants covering the Company's funded debt ratio and interest coverage ratio, and eliminates the previous requirements that covered net income, fixed coverage ratio and borrowing basis. If the Company is in default, it is prohibited from paying dividends or repurchasing common stock. Atfor Bankers' Acceptance loans. As of September 30, ~~2019, the Company was in compliance with all associated covenants, and~~2020, there was no0 balance outstanding under this line of credit.

~~The~~At the beginning of 2020, the Company's European subsidiary ~~has available~~had two separate unsecured and uncommitted lines of credit, guaranteed by the Company, ~~providing~~and provides for ~~borrowing~~borrowings up to a maximum of €25.8 million and €5.0 million. In June 2020, the Company's European subsidiary entered into an agreement which replaced the €5.0 million ~~respectively (combined~~line with a €4.4 million secured, committed line of credit, and a €0.6 million unsecured and uncommitted line of credit. The combined available borrowings of the three lines was approximately US$~~33.7 million),~~36.2 million at September 30, ~~2019. The~~2020. Borrowings under the €25.8 million line accrue interest at a base rate of ~~credit~~185 basis points plus 200 basis points. Borrowings under the €4.4 million and €0.6 million lines each accrue interest at 75 basis points. As of September 30, 2020, there was 0 balance outstanding under these facilities.

At the beginning of the third quarter of 2020, the Company’s Japanese subsidiary had available two separate unsecured and uncommitted overdraft facilities guaranteed by the Company providing for borrowing up to a maximum of US$7.0 million and ¥300.0 million. During the third quarter of 2020, the overdraft facility with a maximum borrowing of €5.0 million accrues interest based on the Euro Overnight Index Average plus 75 basis points. During the first quarter of 2019, the interest rate on the line of credit with a maximum borrowing of €25.8¥300.0 million was modified to increase the maximum borrowing to ¥1.5 billion. The combined maximum borrowings of the two lines were approximately US$21.2 million at September 30, 2020. Borrowings under the ¥1.5 billion overdraft facility accrue interest ~~based on~~at the ~~European Central Bank refinancing rate~~Tokyo Interbank Offered Rate plus ~~75.0~~0.50 basis points and borrowings under the US$7.0 million overdraft facility accrue interest at 200 basis points. ~~There~~As of September 30, 2020, there was no0 balance outstanding under ~~either~~these facilities.

The Company’s Korea subsidiary has available an unsecured and uncommitted overdraft facility guaranteed by the Company providing for borrowing up to a maximum of ~~these lines of credit~~US$20.0 million at September 30, ~~2019, December 31, 2018 and~~2020. Borrowings under the overdraft facility accrue interest at the Korea three month CD rate plus 200 basis points. As of September 30, ~~2018.~~2020, there was 0 balance outstanding under this overdraft facility.

~~Except as disclosed above,~~At the beginning of the third quarter of 2020, the Company’s Chinese subsidiary had available an unsecured and uncommitted overdraft and clean advance facility guaranteed by the Company providing for borrowings of advances or overdrafts up to a maximum of US$20.0 million at September 30, 2020. Borrowings under the facility accrue interest on advances of RMB at 4.15%, advances of USD based on LIBOR plus 2.0% per annum or overdrafts of RMB based on 110% of the PBOC rate. In September 2020, the Company's Chinese subsidiary entered into an unsecured and uncommitted line of credit, guaranteed by the Company that provides for borrowings up to a maximum of RMB140.0 million. Borrowings under the facility accrue interest at the one year loan prime rate less 10 basis points. The combined available borrowings of the two lines were approximately US$40.5 million at September 30, 2020. As of September 30, 2020, there ~~have been no significant changes~~was 0 balance outstanding under these facilities.

NOTE 5—INCOME TAXES

For the three months ended September 30, 2020 and 2019, the Company's effective income tax rates were 26.1% and 22.0%, respectively. For the nine months ended September 30, 2020 and 2019, the effective income tax rates were 24.8% and 18.2%, respectively. The increase in the effective income tax rate for the three months ended September 30, 2020 compared to the ~~Company's short-term borrowing and credit lines as described~~three months ended September 30, 2019 was primarily driven by the change in ~~Note 9~~mix of book income or loss among jurisdictions. The increase in the ~~Company's Annual Report on Form 10-K~~effective income tax rate for the ~~year~~nine months ended ~~December~~September 30, 2020 compared to the nine months ended September 30, 2019 was driven primarily by the change in mix of book income or loss among jurisdictions, and the recognition in 2019 of a one-time tax benefit related to the passage of a Swiss tax reform package.

Income tax expense, deferred tax assets and related liabilities are based on estimates. In the three months ended March 31, ~~2018.~~2020, a $1.5 million valuation allowance adjustment was recorded related to the expected portion of tax benefits that would not be realized in certain foreign jurisdictions based on available evidence. The likelihood of realizing the benefits of the deferred tax assets was assessed as of

Table of Contents

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

September 30, 2020 and no additional valuation allowance adjustment was recorded. The Company will continue to monitor the realizability of deferred tax assets, particularly in certain foreign jurisdictions where the economic impacts of the COVID-19 pandemic may result in net operating losses. The ability to recover these deferred tax assets depends on several factors, including results of operations and the ability to project future taxable income in those jurisdictions. If it is determined that some additional portion of the tax benefits will not be realized, valuation allowance would be recorded, which would increase income tax expense. Total deferred tax assets as of September 30, 2020 were approximately $77.1 million, of which approximately $7.7 million related to foreign jurisdictions where the Company expects to incur significant net operating losses in the near term, although the risks of failing to realize these benefits vary across jurisdictions.

NOTE 7—6—PRODUCT WARRANTY

Some of the Company's products carry ~~assurance-type~~life-time or limited warranty provisions for defects in quality and workmanship. A warranty reserve is established at the time of sale to cover estimated costs based on the Company's history of warranty repairs ~~replacements~~ and ~~refunds~~replacements and is recorded in Cost of sales in the Condensed Consolidated Statements of Operations. The warranty reserve is included in Accrued liabilities in the Condensed Consolidated Balance Sheets.

A reconciliation of product warranties is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2020		2019		2020		2019
Balance at beginning of period	$	13,334	$	13,186	$	14,466	$	13,186
Provision for warranty claims	525		645		1,430		3,140
Warranty claims	(493)		(440)		(2,378)		(2,899)
Other	175		(180)		23		(216)
Balance at end of period	$	13,541	$	13,211	$	13,541	$	13,211

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2019 2018 2019 2018
Balance at beginning of period $ 13,186
$ 11,857
$ 13,186
$ 12,339
Provision for warranty claims 645
555
3,140
2,997
Warranty claims (440 ) (378 ) (2,899 ) (3,088 )
Other (180 ) 50
(216 ) (164 )
Balance at end of period $ 13,211
$ 12,084
$ 13,211
$ 12,084

NOTE ~~8—LEASES~~

The Company leases, among other things, retail space, office space, warehouse facilities, storage space, vehicles, and equipment. Generally, the base lease terms are between 5 and 10 years. Certain lease agreements contain scheduled rent escalation clauses and others include rental payments adjusted periodically depending on an index or rate. Certain retail space lease agreements provide for additional rents based on a percentage of annual sales in excess of stipulated minimums ("percentage rent"). Certain lease agreements require the Company to pay real estate taxes, insurance, common area maintenance, and other costs, collectively referred to as operating costs, in addition to base rent.

~~COLUMBIA SPORTSWEAR COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

Certain lease agreements also contain lease incentives, such as tenant improvement allowances and rent holidays. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more. The exercise of lease renewal options is generally at the Company's sole discretion. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a ROU asset and a lease liability at the lease commencement date. The lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date. Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) the lease term and (3) lease payments.

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor's estimated residual value or the amount of the lessor's deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because the Company does not generally borrow on a collateralized basis, it uses quoted interest rates obtained from financial institutions as an input to derive an appropriate incremental borrowing rate, adjusted for the amount of the lease payments, the lease term and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease.

The Company's lease contracts may include options to extend the lease following the initial term or terminate the lease prior to the end of the initial term. In most instances, at the commencement of the leases, the Company has determined that it is not reasonably certain to exercise either of these options; accordingly, these options are generally not considered in determining the initial lease term. At the renewal of an expiring lease, the Company reassesses options in the contract that it is reasonably certain to exercise in its measurement of lease term.

For lease agreements entered into or reassessed after the adoption of ASC 842, the Company has elected the practical expedient to account for the lease and non-lease components as a single lease component. Therefore, for those leases, the lease payments used to measure the lease liability include all of the fixed consideration in the contract.

Variable lease payments associated with the Company's leases are recognized upon occurrence of the event, activity, or circumstance in the lease agreement on which those payments are assessed. Variable lease payments are presented in the Company's Condensed Consolidated Statements of Operations in the same line item as expense arising from fixed lease payments.

~~Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.~~

~~The components of lease cost for the three and nine months ended September 30, 2019 were as follows:~~

(in thousands) Three Months Ended Nine Months Ended
Operating lease cost $ 20,072
$ 57,592
Variable lease cost 12,676
38,572
Short term lease cost 3,442
5,614
$ 36,190
$ 101,778

~~Supplemental cash flow information related to leases for the nine months ended September 30, 2019 is as follows:~~

(in thousands)
Cash paid for amounts included in the measurement of operating lease liabilities $ 56,843
Operating lease liabilities arising from obtaining ROU assets ⁽¹⁾
$ 467,075

⁽¹⁾ ~~Includes amount initially capitalized in conjunction with the adoption of ASC 842.~~

~~Amounts disclosed for lease liabilities arising from obtaining ROU assets include amounts added to the carrying amount of lease liabilities resulting from lease modifications and reassessments.~~

~~Supplemental balance sheet information related to leases as of September 30, 2019 is as follows:~~



~~Weighted average remaining lease term~~	~~6.99 years~~
~~Weighted average discount rate~~	~~3.89~~	%

~~COLUMBIA SPORTSWEAR COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

~~As of September 30, 2019, future maturities of lease liabilities are as follows:~~

(in thousands)
2019 $ 20,119
2020 76,258
2021 68,625
2022 63,532
2023 58,579
Thereafter 212,496
Total lease payments 499,609
Less: imputed interest (70,338 )
Total lease liabilities 429,271
Less: current obligations (62,756 )
Long-term lease obligations $ 366,515

As of September 30, 2019, the Company has additional operating lease commitments that have not yet commenced of $13.6 million. These leases will commence in 2019 and 2020 with lease terms of 1 to 11 years.

~~Disclosures related to periods prior to adoption of ASC 842~~

~~Information on rent expense for the three and nine months ended September 30, 2018 was as follows:~~

(in thousands) Three Months Ended Nine Months Ended
Rent expense included in SG&A expense $ 32,058
$ 96,370
Rent expense included in Cost of sales 448
1,257
$ 32,506
$ 97,627

Future minimum payments determined under the previous accounting standards for all lease obligations, including rent escalation clauses and committed leases that had not yet commenced, at December 31, 2018, were as follows:

(in thousands)
2019 $ 72,280
2020 65,379
2021 57,460
2022 52,607
2023 47,837
Thereafter 155,897
$ 451,460

~~NOTE 9—~~7—COMMITMENTS AND CONTINGENCIES

~~Inventory Purchase Obligations~~

Inventory purchase obligations consist of open production purchase orders and other commitments for raw materials and sourced apparel, footwear, accessories, and equipment. At September 30, 2019, inventory purchase obligations were $356.5 million.

The Company is a party to various legal claims, actions and complaints from time to time. Although the ultimate resolution of legal proceedings cannot be predicted with certainty, management believes that disposition of these matters will not have a material adverse effect on the Company's condensed consolidated financial statements.

~~COLUMBIA SPORTSWEAR COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

NOTE ~~10—~~8—SHAREHOLDERS' EQUITY

Since the inception of the Company's stock repurchase plan in 2004 through September 30, 2020, the Company's Board of Directors has authorized the purchase of $1.1 billion of the Company's common stock. As of September 30, 2020, the Company had repurchased 26.8 million shares under this program at an aggregate purchase price of $1,017.8 million. Shares repurchased generally settle subsequent to the trade date. Shares of the Company's common stock may be repurchased in the open market or through privately negotiated transactions, subject to market conditions. 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. ~~Shares repurchased generally settle subsequent to their trade date.~~ During the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, the Company repurchased an aggregate of ~~$15.8~~$132.9 million ~~and $116.2 million, respectively,~~ of common stock under the stock repurchase plan authorized by the Company's Board of ~~Directors. During~~Directors and a pre-established written trading plan. In mid-March 2020, to reduce capital outflows and preserve capital, the Company suspended share repurchases. The Company did not repurchase common stock during the three ~~and nine~~ months ended September 30, ~~2018,~~2020.

NOTE 9—STOCK-BASED COMPENSATION

At its Annual Meeting held on June 3, 2020, the Company’s shareholders approved the Company’s 2020 Stock Incentive Plan (the “2020 Plan”), and the 2020 Plan became effective on that date following such approval. The 2020 Plan replaced the Company’s 1997 Stock Incentive Plan (the "Prior Plan”) and no new awards will be granted under the Prior Plan. The terms and conditions of the awards granted under the Prior Plan will remain in effect with respect to awards granted under the Prior Plan. The Company ~~repurchased~~has reserved 3 million shares of common stock for issuance under the 2020 Plan, plus up to an aggregate of ~~$67.1~~1.5 million ~~and $107.2 million, respectively,~~shares of the Company’s common stock that were previously authorized and available for issuance under the ~~stock repurchase plan.~~

~~NOTE 11—STOCK-BASED COMPENSATION~~

Prior Plan. The ~~Company's stock incentive plan~~2020 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. ~~See Note 16 in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 for additional information concerning its stock-based compensation.~~

Table of Contents

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Stock-based compensation expense

Stock-based compensation expense consisted of the following:

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2019 2018 2019 2018
Stock options $ 1,509
$ 1,277
$ 4,600
$ 3,571
Restricted stock units 2,869
2,371
8,559
6,676
Total $ 4,378
$ 3,648
$ 13,159
$ 10,247


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2020		2019		2020		2019
Stock options	$	1,775	$	1,509	$	5,234	$	4,600
Restricted stock units	3,315		2,869		7,568		8,559
Total	$	5,090	$	4,378	$	12,802	$	13,159

During the nine months ended September 30, ~~2019,~~2020, the Company granted a total of ~~394,730~~660,071 stock options at a weighted average grant date fair value of ~~$22.53. At~~$14.67. As of September 30, ~~2019,~~2020, unrecognized costs related to outstanding stock options totaled ~~$11.6~~$13.3 million, before any related tax benefit. ~~The~~As of September 30, 2020, unrecognized costs related to stock options ~~are amortized over the related vesting period using the straight-line attribution method. Unrecognized costs related to stock options at September 30, 2019~~ are expected to be recognized over a weighted average period of ~~2.39~~2.59 years.

Restricted Stock Units

During the nine months ended September 30, ~~2019,~~2020, the Company granted ~~169,134~~209,972 restricted stock units at an estimated average grant date fair value of ~~$95.47. At~~$79.43. As of September 30, ~~2019,~~2020, unrecognized costs related to outstanding restricted stock units totaled ~~$21.8~~$21.5 million, before any related tax benefit. ~~The~~As of September 30, 2020, unrecognized costs related to restricted stock units ~~are being amortized over the related vesting period using the straight-line attribution method. These unrecognized costs at September 30, 2019~~ are expected to be recognized over a weighted average period of ~~2.30~~2.34 years.

NOTE ~~12—~~10—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 common shares used in the denominator for computing basic and diluted EPS is as follows:

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share amounts) 2019 2018 2019 2018
Weighted average shares of common stock outstanding, used in computing basic earnings per share 67,593
69,589
67,935
69,895
Effect of dilutive stock options and restricted stock units 587
768
685
790
Weighted average shares of common stock outstanding, used in computing diluted earnings per share 68,180
70,357
68,620
70,685
Earnings per share of common stock attributable to Columbia Sportswear Company:
Basic $ 1.76
$ 1.44
$ 3.19
$ 2.22
Diluted $ 1.75
$ 1.42
$ 3.15
$ 2.19

~~COLUMBIA SPORTSWEAR COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2020		2019		2020		2019
Weighted average shares of common stock outstanding, used in computing basic earnings per share	66,179		67,593		66,427		67,935
Effect of dilutive stock options and restricted stock units	358		587		380		685
Weighted average shares of common stock outstanding, used in computing diluted earnings per share	66,537		68,180		66,807		68,620
Earnings per share of common stock:
Basic	$	0.95	$	1.76	$	0.18	$	3.19
Diluted	$	0.94	$	1.75	$	0.18	$	3.15

Stock options, service-based restricted stock units, and performance-based restricted stock units representing ~~440,993~~1,156,073 and ~~240,357~~1,282,086 shares of common stock for the three ~~months ended September 30, 2019~~ and ~~2018, respectively, and 378,617 and 349,381 shares of common stock for the~~ nine months ended September 30, ~~2019 and 2018,~~2020, respectively, were outstanding but were excluded from the computation of diluted EPS because their effect would behave been anti-dilutive under the treasury stock method or because the shares were subject to performance conditions that had not been met.

Stock options, service-based restricted stock units, and performance-based restricted stock units representing 440,993 and 378,617 shares of common stock for the three and nine months ended September 30, 2019, respectively, were outstanding but were excluded from the computation of diluted EPS because their effect would have been anti-dilutive under the treasury stock method or because the shares were subject to performance conditions that had not been met.

NOTE ~~13—~~11—ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss~~, net of applicable taxes, reported~~ on the Company's Condensed Consolidated Balance Sheets is net of applicable taxes, and consists of unrealized holding gains and losses on available-for-sale securities, unrealized gains and losses on certain derivative transactions and foreign currency translation adjustments.

~~The following table sets forth the changes in accumulated other comprehensive loss attributable~~

The following table sets forth the changes in ~~accumulated~~Accumulated other comprehensive loss ~~attributable~~ for the three months ended September 30, 2020:


(in thousands)	Unrealized losses on available-for-sale securities		Unrealized holding gains (losses) on derivative transactions		Foreign currency translation adjustments		Total
Balance at June 30, 2020	$	(4)	$	16,145	$	(22,001)	$	(5,860)
Other comprehensive income (loss) before reclassifications	0		(6,398)		11,175		4,777
Amounts reclassified from accumulated other comprehensive loss(1)	0		(5,287)		0		(5,287)
Net other comprehensive income (loss) during the period	0		(11,685)		11,175		(510)
Balance at September 30, 2020	$	(4)	$	4,460	$	(10,826)	$	(6,370)

(1)Amounts reclassified are recorded in Net sales,Cost of sales, or Other non-operating income (expense), net on the Condensed Consolidated Statements of Operations. Refer to ~~Columbia Sportswear Company, net~~Note 13 for further information regarding classifications.

The following table sets forth the changes in Accumulated other comprehensive loss for three months ended September 30, 2019:


(in thousands)	Unrealized losses on available-for-sale securities		Unrealized holding gains (losses) on derivative transactions		Foreign currency translation adjustments		Total
Balance at June 30, 2019	$	(4)	$	11,317	$	(12,611)	$	(1,298)
Other comprehensive income (loss) before reclassifications	0		6,315		(8,389)		(2,074)
Amounts reclassified from accumulated other comprehensive loss(1)	0		(3,901)		0		(3,901)
Net other comprehensive income (loss) during the period	0		2,414		(8,389)		(5,975)
Balance at September 30, 2019	$	(4)	$	13,731	$	(21,000)	$	(7,273)

(1)Amounts reclassified are recorded in Net sales or Cost of ~~tax,~~sales on the Condensed Consolidated Statements of Operations. Refer to Note 13 for further information regarding classifications.

The following table sets forth the changes in Accumulated other comprehensive loss for the nine months ended September 30, ~~2018:~~2020:


(in thousands)	Unrealized losses on available-for-sale securities		Unrealized holding gains (losses) on derivative transactions		Foreign currency translation adjustments		Total
Balance at December 31, 2019	$	(4)	$	9,482	$	(13,903)	$	(4,425)
Other comprehensive income before reclassifications	0		4,617		3,077		7,694
Amounts reclassified from accumulated other comprehensive loss(1)	0		(9,639)		0		(9,639)
Net other comprehensive income (loss) during the period	0		(5,022)		3,077		(1,945)
Balance at September 30, 2020	$	(4)	$	4,460	$	(10,826)	$	(6,370)

(1)Amounts reclassified are recorded in Net sales, Cost of sales, or Other non-operating income (expense), net on the Condensed Consolidated Statements of Operations. Refer to Note 13 for further information regarding classifications.

Unrealized gains (losses) on available-for-sale securities Unrealized holding gains (losses) on derivative transactions Foreign currency translation adjustments Total
Balance at December 31, 2017 $ (4 ) $ (10,716 ) $ 1,833
$ (8,887 )
Other comprehensive income (loss) before reclassifications (158 ) 16,088
(12,147 ) 3,783
Amounts reclassified from accumulated other comprehensive loss —
1,384
—
1,384
Net other comprehensive income (loss) during the period (158 ) 17,472
(12,147 ) 5,167
Adoption of ASU 2017-12 —
(515 ) —
(515 )
Balance at September 30, 2018 $ (162 ) $ 6,241
$ (10,314 ) $ (4,235 )

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Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The following table sets forth the changes in Accumulated other comprehensive loss for the nine months ended September 30, 2019:


(in thousands)	Unrealized gains (losses) on available-for-sale securities		Unrealized holding gains (losses) on derivative transactions		Foreign currency translation adjustments		Total
Balance at December 31, 2018	$	(60)	$	11,964	$	(15,967)	$	(4,063)
Other comprehensive income (loss) before reclassifications	56		9,119		(5,033)		4,142
Amounts reclassified from accumulated other comprehensive loss(1)	0		(7,253)		0		(7,253)
Net other comprehensive income (loss) during the period	56		1,866		(5,033)		(3,111)
Purchase of non-controlling interest	—		(99)		—		(99)
Balance at September 30, 2019	$	(4)	$	13,731	$	(21,000)	$	(7,273)

(1)Amounts reclassified are recorded in Net sales or Cost of sales on the Condensed Consolidated Statements of Operations. Refer to Note 13 for further information regarding classifications.

NOTE ~~14—~~12—SEGMENT INFORMATION

The Company has ~~aggregated its operating segments into~~ 4 reportable geographic segments: ~~the United States,~~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 ~~active~~everyday lifestyle apparel, footwear, accessories, and ~~equipment.~~equipment products. 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 departments, including global information systems, finance, human resources and legal, as well as executive compensation, unallocated benefit program expense, and other miscellaneous costs.

The geographic distribution of the Company's Net sales and Income from operations in the Condensed Consolidated Statements of Operations are summarized in the following table for the three and nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019.

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2019 2018 2019 2018
Net sales to unrelated entities:
United States $ 581,263
$ 496,161
$ 1,309,014
$ 1,139,175
LAAP 123,246
118,379
357,719
350,832
EMEA 104,403
100,351
267,278
257,112
Canada 97,881
80,910
153,600
137,609
$ 906,793
$ 795,801
$ 2,087,611
$ 1,884,728
Segment income from operations:
United States $ 156,190
$ 125,862
$ 298,366
$ 243,332
LAAP 17,081
17,183
53,822
51,548
EMEA 18,162
14,782
36,905
26,328
Canada 27,024
17,944
30,417
21,236
Total segment income from operations 218,457
175,771
419,510
342,444
Unallocated corporate expenses (66,442 ) (46,627 ) (163,172 ) (144,230 )
Interest income, net 1,399
2,524
7,370
7,748
Other non-operating income (expense) (563 ) 736
915
372
Income before income taxes $ 152,851
$ 132,404
$ 264,623
$ 206,334

During the fourth quarter of 2018, the Company revised its methodology for allocating certain expenses to its reportable segments to better reflect how management reviews financial information and makes operating decisions. As a result, prior year balances for segment income from operations for each reportable segment, and unallocated corporate expenses in the table above have been reclassified to conform with the current year's presentation.

In addition, during the fourth quarter of 2018, the Company determined that it had incorrectly allocated certain amounts of operating income to its United States segment, resulting in the overstatement of both total segment income from operations and unallocated corporate expenses by $4.5 million and $10.8 million for the three and nine months ended September 30, 2018, respectively. The Company assessed the significance of the misclassifications and concluded that they were not material to any prior periods. As a result, the United States and total segment income

~~COLUMBIA SPORTSWEAR COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

from operations as well as unallocated corporate expenses for the three and nine months ended September 30, 2018 in the table above have been revised from amounts previously reported to correct the misclassifications. These corrections had no effect on the Company's Condensed Consolidated Statements of Operations.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2020		2019		2020		2019
Net sales to unrelated entities:
U.S.	$	445,620	$	581,263	$	1,004,733	$	1,309,014
LAAP	90,951		123,246		260,912		357,719
EMEA	99,159		104,403		213,298		267,278
Canada	65,362		97,881		106,988		153,600
	$	701,092	$	906,793	$	1,585,931	$	2,087,611
Segment income from operations:
U.S.	$	96,577	$	156,190	$	118,454	$	298,366
LAAP	4,736		17,081		8,690		53,822
EMEA	18,959		18,162		19,032		36,905
Canada	19,767		27,024		15,142		30,417
Total segment income from operations	140,039		218,457		161,318		419,510
Unallocated corporate expenses	(54,396)		(66,442)		(147,962)		(163,172)
Interest income (expense), net	(280)		1,399		728		7,370

Other non-operating income (expense), net	(465)		(563)		2,208		915
Income before income tax	$	84,898	$	152,851	$	16,292	$	264,623

~~No single~~The Company had one customer that accounted for ~~10% or more~~11.4% of Accounts receivable, net of allowance on the Condensed Consolidated Balance Sheets as of September 30, ~~2019 or 2018.~~2020. The Company had one customer that accounted for ~~11.6%~~13.9% of Accounts receivable, net of allowance as of December 31, 2019. No single customer accounted for 10% or more of Accounts receivable, net of allowance as of ~~December 31, 2018.~~September 30, 2019. No

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Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

single customer accounted for 10% or more of Net sales in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2019~~2020 or ~~2018.~~2019.

NOTE ~~15—~~13—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 ~~U.S.~~United States dollar inventory purchases. Subsidiaries that use ~~U.S.~~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 Great British pound. The Company manages 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. For forward contracts, prior to June 2019, the time value components ("forward points") were excluded from the determination of hedge effectiveness and included in current periodCost of sales for hedges of anticipated ~~U.S.~~United States dollar inventory purchases and inNet sales for hedges of anticipated non-functional currency denominated sales on a straight-line basis over the life of the contract. Effective June 2019, the forward points are ~~now~~ included in the fair value of the cash flow hedge on a prospective basis. These costs or benefits will be included in Accumulated other comprehensive ~~income~~loss until the underlying hedge transaction is recognized in eitherNet sales orCost of sales, at which time the forward points will also be recognized as a component of Net income. ~~Hedge ineffectiveness was not material during the three and nine months ended September 30, 2019 and 2018.~~

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 ~~U.S.~~United States dollars, euros, Canadian dollars, yen, won, or renminbi as their functional currency. Non-functional currency denominated monetary assets and liabilities consist primarily of cash and cash equivalents, short-term investments, receivables, payables, deferred income taxes, and intercompany loans. 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 (expense), netby 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) September 30,
2019 December 31,
2018 September 30,
2018
Derivative instruments designated as cash flow hedges:
Currency forward contracts $ 412,041
$ 399,348
$ 434,738
Derivative instruments not designated as cash flow hedges:
Currency forward contracts 235,945
379,701
289,772


(in thousands)	September 30, 2020		December 31, 2019		September 30, 2019
Derivative instruments designated as cash flow hedges:
Currency forward contracts	$	419,402	$	471,822	$	412,041

Derivative instruments not designated as cash flow hedges:
Currency forward contracts	224,573		214,086		235,945

At September 30, ~~2019, $11.9~~2020, $5.1 million of deferred net gains on both outstanding and matured derivatives recorded in 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 or Cost of sales in the Condensed Consolidated Statements of Operations. Actual amounts ultimately reclassified to Net sales or Cost of sales in the Condensed Consolidated Statements of Comprehensive Income are dependent on ~~U.S.~~United States dollar exchange rates in effect against the euro, pound sterling, renminbi, Canadian dollar, and yen when outstanding derivative contracts mature.

At September 30, ~~2019,~~2020, the Company's derivative contracts had a remaining maturity of less than four 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 ~~less than $7.0~~$2.9 million at September 30, ~~2019.~~2020. 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

~~COLUMBIA SPORTSWEAR COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

separate derivative transactions or 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.

Table of Contents

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

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

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


	Statement of Operations Classification	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)		2020		2019		2020		2019
Currency Forward and Option Contracts:
Derivative instruments designated as cash flow hedges:
Gain (loss) recognized in other comprehensive loss, net of tax	—	$	(6,398)	$	6,315	$	4,617	$	9,119
Gain reclassified from accumulated other comprehensive income or loss to income for the effective portion	Net sales	80		172		123		282
Gain reclassified from accumulated other comprehensive income or loss to income for the effective portion	Cost of sales	6,906		5,087		11,527		7,208

Gain reclassified from accumulated other comprehensive income or loss to income as a result of cash flow hedge discontinuance	Other non-operating income (expense), net	60		0		1,177		0
Loss recognized in income for amount excluded from effectiveness testing and for the ineffective portion	Net sales	0		0		0		(31)
Gain recognized in income for amount excluded from effectiveness testing and for the ineffective portion	Cost of sales	0		0		0		2,380
Derivative instruments not designated as cash flow hedges:
Gain (loss) recognized in income	Other non-operating income (expense), net	(1,795)		1,855		(465)		1,281

Statement of
Operations
Classification
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2019 2018 2019 2018
Currency Forward and Option Contracts:
Derivative instruments designated as cash flow hedges:
Gain recognized in other comprehensive income (loss), net of tax — $ 6,315
$ 866
$ 9,119
$ 16,493
Gain reclassified from accumulated other comprehensive loss to income for the effective portion Net sales 172
17
282
41
Gain (loss) reclassified from accumulated other comprehensive loss to income for the effective portion Cost of sales 5,087
(4,192 ) 7,208
(7,796 )
Gain (loss) recognized in income for amount excluded from effectiveness testing and for the ineffective portion Net sales —
4
(31 ) 16
Gain recognized in income for amount excluded from effectiveness testing and for the ineffective portion Cost of sales —
1,637
2,380
5,458
Derivative instruments not designated as cash flow hedges:
Gain recognized in income Other non-operating income (expense), net 1,855
372
1,281
2,606

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Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

NOTE ~~16—~~14—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 ~~be received~~receive to sell an asset or ~~paid~~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 —~~


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 ~~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.~~

~~Assets~~ and liabilities measured at fair value ~~on a recurring basis~~are categorized as ~~of September 30, 2019 were as follows:~~

(in thousands) Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents:
Money market funds $ 72,941
$ —
$ —
$ 72,941
Other short-term investments:
Mutual fund shares 1,477
—
—
1,477
Other current assets:
Derivative financial instruments (Note 15) —
18,460
—
18,460
Other non-current assets:
Money market funds 1,528
—
—
1,528
Mutual fund shares 11,362
—
—
11,362
Derivative financial instruments (Note 15) —
4,830
—
4,830
Total assets measured at fair value $ 87,308
$ 23,290
$ —
$ 110,598
Liabilities:
Accrued liabilities:
Derivative financial instruments (Note 15) $ —
$ 521
$ —
$ 521
Other long-term liabilities:
Derivative financial instruments (Note 15) —
109
—
109
Total liabilities measured at fair value $ —
$ 630
$ —
$ 630

⁽¹⁾~~Investments have remaining maturities of less than one year.~~

~~COLUMBIA SPORTSWEAR COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~

~~Assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 were as follows:~~

(in thousands) Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents:
Money market funds $ 122,237
$ —
$ —
$ 122,237
U.S. Government treasury bills —
39,952
—
39,952
Available-for-sale short-term investments⁽¹⁾

U.S. Government treasury bills —
261,602
—
261,602
Other short-term investments:
Mutual fund shares 1,200
—
—
1,200
Other current assets:
Derivative financial instruments (Note 15) —
13,615
—
13,615
Other non-current assets:
Money market funds 869
—
—
869
Mutual fund shares 8,606
—
—
8,606
Derivative financial instruments (Note 15) —
9,922
—
9,922
Total assets measured at fair value $ 132,912
$ 325,091
$ —
$ 458,003
Liabilities:
Accrued liabilities:
Derivative financial instruments (Note 15) $ —
$ 1,017
$ —
$ 1,017
Other long-term liabilities:
Derivative financial instruments (Note 15) —
1
—
1
Total liabilities measured at fair value $ —
$ 1,018
$ —
$ 1,018

⁽¹⁾~~Investments have remaining maturities of less than one year.~~

~~Assets and liabilities measured at fair value on a recurring basis as of September 30, 2018 were as follows:~~

(in thousands) Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents:
Money market funds $ 70,573
$ —
$ —
$ 70,573
Available-for-sale short-term investments⁽¹⁾:

U.S. Government treasury bills —
267,861
—
267,861
Other short-term investments:
Mutual funds shares 1,452
—
—
1,452
Other current assets:
Derivative financial instruments (Note 15) —
8,127
—
8,127
Other non-current assets:
Mutual fund shares 9,950
—
—
9,950
Derivative financial instruments (Note 15) —
7,963
—
7,963
Total assets measured at fair value $ 81,975
$ 283,951
$ —
$ 365,926
Liabilities:
Accrued liabilities:
Derivative financial instruments (Note 15) $ —
$ 738
$ —
$ 738
Total liabilities measured at fair value $ —
$ 738
$ —
$ 738

⁽¹⁾~~Investments have remaining maturities of less than one year.~~

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, ~~which~~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 September 30, 2020 were as follows:


(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	56,337	$	0	$	0	$	56,337




Other short-term investments:
Money market funds	70		0		0		70
Mutual fund shares	1,025		0		0		1,025
Other current assets:
Derivative financial instruments	0		6,940		0		6,940
Other non-current assets:
Money market funds	4,621		0		0		4,621
Mutual fund shares	11,974		0		0		11,974
Derivative financial instruments	0		3,454		0		3,454
Total assets measured at fair value	$	74,027	$	10,394	$	0	$	84,421
Liabilities:
Accrued liabilities:
Derivative financial instruments	$	0	$	2,415	$	0	$	2,415
Other long-term liabilities:
Derivative financial instruments	0		1,186		0		1,186
Total liabilities measured at fair value	$	0	$	3,601	$	0	$	3,601

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Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

~~Non-recurring Fair Value Measurements~~

~~There were no material assets~~Assets and liabilities measured at fair value on a ~~nonrecurring~~recurring basis as of December 31, 2019 were as follows:


(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	288,926	$	0	$	0	$	288,926
United States government treasury bills	0		34,928		0		34,928
Commercial paper	0		33,587		0		33,587






Other short-term investments:
Mutual fund shares	1,668		0		0		1,668
Other current assets:
Derivative financial instruments	0		14,001		0		14,001
Other non-current assets:
Money market funds	1,792		0		0		1,792
Mutual fund shares	12,172		0		0		12,172
Derivative financial instruments	0		4,159		0		4,159
Total assets measured at fair value	$	304,558	$	86,675	$	0	$	391,233
Liabilities:
Accrued liabilities:
Derivative financial instruments	$	0	$	2,266	$	0	$	2,266
Other long-term liabilities:
Derivative financial instruments	0		768		0		768
Total liabilities measured at fair value	$	0	$	3,034	$	0	$	3,034

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2019 ~~December 31, 2018 or September 30, 2018.~~were as follows:

~~NOTE 17—RELATED PARTY TRANSACTIONS~~

As described in Note 4, prior to January 2, 2019, the Company owned a 60% controlling interest in a joint venture formed with Swire, which was a related party. The joint venture arrangement involved Transition Services Agreements ("TSAs") with Swire, under which Swire provided administrative and information technology services to the joint venture. The fees incurred for these services by the joint venture were immaterial during the three and nine months ended September 30, 2018. In addition, the joint venture paid Swire sourcing fees related to the purchase of certain inventory. These sourcing fees were capitalized into ~~Inventories~~ ~~and charged to~~ ~~Cost of sales~~ ~~as the inventories were sold.~~

In addition to the transactions described above, Swire is also a third-party distributor of the Company's brands in certain regions outside of mainland China and purchases products from the Company under the Company's third-party distributor terms and pricing.

The China joint venture declared a cash dividend of RMB341.3 million (approximately US$53.3 million) in June 2018 to stockholders of record as of June 14, 2018 and paid the dividend in the third quarter of 2018. The dividend paid to Swire was RMB136.5 million (approximately US$21.3 million at the date of declaration, which equated to approximately US$20.0 million on the date of payment). The dividend paid to the Company of $32.0 million was eliminated in consolidation. In addition, in September 2018, the Company and Swire entered into an EITA, under which the Company committed to buy out the 40% non-controlling interest in the joint venture. The buyout was subject to various terms and conditions. As part of the buyout arrangement, in September 2018 the Company placed $14.0 million in an escrow account as a portion of the funds needed to complete the buyout in early 2019. The escrow amount was shown as ~~Restricted cash~~ ~~on the Condensed Consolidated Balance Sheets at December 31, 2018 and September 30, 2018.~~

On January 2, 2019, the buyout transaction closed, and Swire was no longer considered to be a related party. Pursuant to the terms of the buyout arrangement, the escrow balance of $14.0 million was paid to Swire. In April 2019, the Company remitted a final payment of $3.9 million to Swire, based on the final outcome of certain accounting estimates associated with the China joint venture. As a result of the buyout, beginning in 2019, the condensed consolidated financial statements of the Company do not separately reflect amounts related to the non-controlling interest.

~~NOTE 18—INCOME TAXES~~

For the three months ended September 30, 2019 and 2018, the effective income tax rates were 22.0% and 22.7%, respectively. For the nine months ended September 30, 2019 and 2018, the effective income tax rates were 18.2% and 21.7%, respectively. The effective income tax rate for the nine months ended September 30, 2019 was impacted by discrete items, primarily the passage of a Swiss tax reform package in May 2019, which resulted in a $6.6 million second-quarter tax benefit related to the revaluation of the Company’s Swiss deferred tax assets at a higher rate.


(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	72,941	$	0	$	0	$	72,941












Other short-term investments:
Mutual funds shares	1,477		0		0		1,477
Other current assets:
Derivative financial instruments	0		18,460		0		18,460
Other non-current assets:
Money market funds	1,528		0		0		1,528
Mutual fund shares	11,362		0		0		11,362
Derivative financial instruments	0		4,830		0		4,830
Total assets measured at fair value	$	87,308	$	23,290	$	0	$	110,598
Liabilities:
Accrued liabilities:
Derivative financial instruments	$	0	$	521	$	0	$	521
Other long-term liabilities:
Derivative financial instruments	0		109		0		109
Total liabilities measured at fair value	$	0	$	630	$	0	$	630

Table of Contents

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Non-recurring Fair Value Measurements

Certain non-financial assets are measured at fair value on a non-recurring basis, primarily long-lived assets, intangible assets, goodwill, and lease right-of-use assets. In connection with periodic evaluations for potential impairment, the inputs used to measure the fair value of these assets are primarily unobservable inputs and, as such, considered Level 3 fair value measurements. See Note 1 for discussion of 2020 impairment charges.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This quarterly report contains forward-looking statements within the meaning of federal securities laws. Forward-looking statements include any statements related to our expectations regarding future performance or market position, including ~~any~~ statements regarding ~~anticipated~~consumer demand, capital outflows, operating expense, our ability to manage credit risk, sales ~~gross margins~~volumes, inventory production and ~~operating margins across markets or segments,~~fulfillment, marketing strategies, income from operations, net sales, profitability, cash and ~~the effect of specified factors on profitability for 2019, expenses, sourcing costs, effects of unseasonable weather on~~ our results of operations, inventory levels, investments in our business and strategic priorities and the expected timing and effects of such investments, including investments in and implementation of our information technology ("IT") systems, intellectual property, other disputes, our DTC businesses, including planned store additions, access to raw materials and factory capacity, financing, and working capital requirements and resources, planned capital expenditures, ability to meet our ~~liquidity needs, plans~~cash needs. 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. Our expectations, beliefs and projections are expressed in good faith and are believed to pay future cash dividends to our shareholders and the funding of such dividends, effects of the Tax Cuts and Jobs Act (the "TCJA") and the adoption of new accounting standards, income tax rates and pre-tax income, results of any tax audit, and our exposure to market risk associated with interest rates and foreign currency exchange rates.

~~These~~have a reasonable basis; however, each forward-looking ~~statements, and others we make from time to time, are subject to~~statement involves a number of risks and ~~uncertainties. Many factors may cause actual results to differ materially from projected results in forward-looking statements,~~uncertainties, including ~~the risks~~those described in Part II, Item 1A, Risk Factors in this quarterly report. We caution that forward-looking statements are inherently less reliable than historical information. 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 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.

As one of the largest outdoor, active and ~~active~~everyday lifestyle apparel and footwear companies in the world, we design, develop, market, and distribute outdoor, active and ~~active~~everyday lifestyle apparel, footwear, accessories, and equipment primarily under the Columbia, SOREL, Mountain Hardwear, and prAna brands. Our products are sold through a mix of wholesale distribution channels, our own ~~DTC~~direct-to-consumer ("DTC") businesses and independent international distributors. In addition, we license some of our trademarks across a range of apparel, footwear, accessories, equipment, and home products.

The popularity of outdoor activities and active lifestyles, changing design trends, consumer adoption of innovative performance technologies, variations in seasonal weather, and the availability and desirability of competitor alternatives affect consumer desire for our products. Therefore, we seek to drive, anticipate and respond to trends and shifts in consumer preferences by developing new products with innovative performance features and designs, creating persuasive and memorable marketing communications to generate consumer awareness, demand and retention, and adjusting the mix, price points and selling channels of available product offerings. ~~Failure to anticipate or respond to consumer needs and preferences in a timely and adequate manner could have a material adverse effect on our sales and profitability.~~

Seasonality and Variability of Business

Our business is affected by the general seasonal trends common to the industry, including seasonal weather and discretionary consumer shopping and spending patterns. Our products are marketed on a seasonal basis and our sales are weighted substantially toward the third and fourth quarters, while our operating costs are more equally distributed throughout the year. In ~~2018,~~2019, approximately 60% of our net sales and approximately ~~80%~~75% of our operating income were realized in the second half of the year, illustrating our dependence upon sales results in the second half of the year, as well as the less seasonal nature of our operating costs. Due to the earlier shipment of Fall 2019 wholesale orders in the third quarter of 2019, we expect a shift of profitability, with a greater portion of the second half of 2019 financial results moving into the third quarter from the fourth quarter compared to the second half of 2018.

We generally solicit orders from wholesale customers and independent international distributors for the fall and spring seasons based on seasonal ordering deadlines that we establish to aid our efforts to plan manufacturing volumes to meet demand. We typically ship the majority of our advance spring season orders to customers beginning in January and continuing through June. Similarly, we typically ship the majority of our advance fall season orders to customers beginning in July and continuing through December. Generally, orders are subject to cancellation prior to the date of shipment.

Results of operations in any period should not be considered indicative of the results to be expected for any future ~~period, particularly~~period.

COVID-19 was first identified in ~~light~~China in December 2019 and a global pandemic of ~~persistent volatility~~respiratory disease caused by COVID-19 was declared by the World Health Organization in ~~global economic~~March 2020. In response to this pandemic, many regional and ~~geopolitical conditions~~local governments worldwide implemented travel restrictions, business shutdowns or slowdowns, and ~~volatility of foreign currency exchange rates which, when combined with seasonal weather patterns~~shelter-in-place or stay-at-home orders.

Lower consumer demand related to the COVID-19 pandemic began to impact our financial performance in China in late January, Korea and ~~inflationary or volatile sourcing costs, reduce the predictability~~Japan in early February and North America and Europe in March, due to store closures, reduced operating hours and decreased retail traffic. In addition, many of our ~~business.~~wholesale customers and international distributors experienced a similar timeline and closed stores or reduced operating hours, resulting in lower than expected sales, cancellation of orders and a slowing of receipt of shipments of our products.

The vast majority of our stores closed due to the pandemic and reopened in China and Korea by late April and in the U.S., Europe, Japan, and Canada predominantly within the May and June timeframe. Throughout the third quarter 2020, while there were isolated temporary store closures from local regulations or safety concerns, the vast majority of our owned stores remained open. Overall, our store retail traffic trends remain well below prior year levels. We continue to restrict store capacity to accommodate social distancing measures, which is impacting the performance of our retail operations. Stores in destination locations and tourist-dependent markets remain some of the most severely impacted stores within our fleet.

Throughout the first nine months of 2020, our global DTC e-commerce business remained operational, supported by the employees in our distribution centers and call centers. During the third quarter, our DTC e-commerce business grew 55% year-over-year and represented 12%

of our global net sales during the quarter. We anticipate our global e-commerce sales growth to remain high for the remainder of the year compared to 2019.

While work has been done throughout the pandemic to mitigate its effect on our inventory supply, the combined effect of retail stores closures and the resulting decrease in consumer demand, as well as actions taken by our wholesale customers to preserve their capital and liquidity, caused higher than normal inventory levels. We received significant order cancellations during the first half of 2020, and, simultaneously, curtailed planned inventory purchases. Our unsold inventory as of September 30, 2020 was slightly elevated compared to September 2019. Nonetheless, it has declined sequentially compared to June 30, 2020. We anticipate profitably selling the remaining inventory in current and future seasons by leveraging our wholesale customers, DTC e-commerce platforms and stores, the majority of which are outlet stores. We expect earlier holiday marketing and promotional activities as retailers seek to mitigate social distancing and shipping capacity constraints to encourage consumers to stretch holiday shopping over a longer time period.

The COVID-19 pandemic also impacted our distribution centers, call centers, retail stores, third-party manufacturing partners and other vendors, due to the effects of facility closures, reductions in operating hours, labor and equipment shortages, port congestion, and real time changes in operating procedures to comply with local government guidelines, while maintaining enhanced health and safety protocols. Our work-from-home policies continue in many regions, including the United States.

In response to the uncertainty of the pandemic described above, we enhanced our liquidity position during the year by taking various actions, including:

•increasing our total available committed and uncommitted credit lines and facilities to provide approximately $665 million of borrowing capacity, of which $530 million is committed and available;

•suspending the quarterly dividend and share repurchases; and

•reducing planned capital expenditures.

We have initiated numerous cost containment measures across the organization, including lowering personnel related expenses, reducing demand creation spend, and minimizing discretionary expenditures. These measures reflect our effort to lower 2020 operating expenses by more than $100 million compared to last year, before expenses related to the COVID-19 pandemic. We are executing cost reduction and resource allocation actions that will impact our cost structure for 2021 and beyond. While certain of these cost containment actions will result in permanent expense reductions, a significant portion of these costs will likely return in 2021, including incentive compensation expense and certain discretionary expenses, such as travel costs. We are executing these actions to ensure the business is structured for sustainable and profitable growth in the face of the evolving market landscape.

See the Liquidity and Capital Resources section below for additional information.

The ~~global~~ongoing business ~~climate presents us with a great deal of~~disruption and uncertainty ~~making~~surrounding the pandemic makes it difficult to predict our future results. ~~Consistent with~~Although our financial performance has been impacted by the ~~historical seasonality of the business,~~pandemic, we anticipate ~~2019~~2020 profitability to be heavily concentrated in the second half of the year. Absent further deterioration in trends due to the pandemic, we anticipate continued sequential improvement in our fundamental operating and financial performance in the fourth quarter. We anticipate sales volumes to remain below prior year levels in the fourth quarter. We expect future material financial impacts associated with the COVID-19 pandemic, including, but not limited to, lower global net sales, the delay of inventory production and fulfillment, and costs associated with the COVID-19 pandemic.

Factors that could significantly affect our full year ~~2019~~2020 financial results include:

~~Growth,~~•lower consumer demand as a result of effects from the COVID-19 pandemic and/or related governmental actions and regulations;

•growth, performance and profitability of our global DTC ~~operations;~~operations, including depressed consumer traffic in our retail stores and recent elevated DTC e-commerce growth trends;

~~Unseasonable~~•our ability to staff and operate our distribution centers to fulfill DTC e-commerce demand while providing a safe working environment with adequate social distancing and other safety precautions;

•equipment and labor capacity of third-party logistics providers to service the demands of our business and the retail industry generally;

•increasing consumer expectations and competitive pressures related to various aspects of our e-commerce business, including speed of product delivery, shipping charges, return privileges and other evolving expectations;

•impairment of long-lived assets, operating lease right-of-use assets, intangible assets and/or goodwill;

•unseasonable weather conditions or other unforeseen factors affecting consumer demand and the resulting effect on cancellations of advance wholesale and distributor orders, sales returns, customer accommodations, replenishment orders and reorders, DTC sales, changes in mix and volume of full price sales in relation to promotional and closeout product sales, and suppressed customer and end-consumer demand in subsequent seasons;

•the stability of our DTC e-commerce platforms and continued optimization of our North America retail information technology systems;

•difficult economic, geopolitical and competitive environments in certain key markets globally, coupled with increasing global economic uncertainty; and

~~Impacts of recent changes to, further changes to, and uncertainty surrounding tariffs or international trade policy;~~

~~These factors and others may have a material effect on our financial condition, results of operations or cash flows, particularly with respect to quarterly comparisons.~~shipments.

Strategic Priorities

~~As part of our commitment~~We are committed to driving sustainable and profitable long-term growth and ~~relentless improvement, we remain focused on investment~~investing in our strategic priorities ~~including:~~to:

~~Driving~~•drive brand awareness and sales growth through increased, focused demand creation investments;

~~Enhancing~~•enhance consumer experience and digital capabilities in all of our channels and geographies;

~~Expanding~~•expand and improving global DTC operations with supporting processes and systems; and

~~Investing~~•invest in our people and optimizing our organization across our portfolio of brands.

We are committed to maintaining a strong balance sheet in order to provide ourselves with maximum strategic flexibility and access to additional liquidity, if warranted. In response to the COVID-19 pandemic, we ~~expect~~immediately shifted our ~~investments~~capital allocation strategies to ~~enable market~~reduce capital outflows. As our business recovers from the pandemic and cash flows become more reliable and predictable, we will review our strategy to return value to shareholders. This includes management's review of resuming our share ~~capture across~~repurchase program and our ~~brand portfolio, expand gross margin, improve selling, general and administrative ("SG&A") expense efficiency, and drive improved operating margin.~~

~~Consumer-First Platform ("C1")~~

~~During 2017, we commenced investment in our C1 initiative, which encompasses the global retail platform and IT systems to support the growth and continued development~~Board of ~~our omnichannel capabilities. The objective~~Directors' review of this initiative is consistent with our strategic priorities to deliver an enhanced consumer experience and to modernize and standardize our processes and systems to enable us to better anticipate and deliver against the needs of our consumers. In the quarter ended September 30, 2019, we rolled out the C1 platform to 140 of our stores in North America, including all Columbia, SOREL and Mountain Hardwear stores.reinstating quarterly dividends.

Experience First ("X1")

During 2018, we commenced investment in our X1 initiative, which is designed to enhance our e-commerce systems to take advantage of the changes in consumer browsing and purchasing ~~behavior~~behaviors towards mobile devices. It encompasses ~~reimplementation~~re-implementation of our e-commerce platforms to offer improved search, browsing, checkout, ~~loyalty,~~mobile payment tenders, and customer care experiences for mobile shoppers.

~~We are working toward a phased implementation of X1.~~ In ~~the quarter ended June 30,~~ 2019, we implemented X1 across 10 countries in ~~Europe-direct~~Europe-Direct and for the prAna brand in the U.S. ~~We expect~~In the third quarter of 2020, we implemented X1 in North America ~~implementation to continue in 2020~~ for the Columbia, SOREL and Mountain Hardwear brands.

During 2017, we initiated Project CONNECT, aimed at aligning our resources to accelerate execution on our strategic priorities, including initiatives to drive net sales, capture cost of sales efficiencies, generate SG&A expense savings, and improve our marketing effectiveness. Efficiencies within cost of sales have created a meaningful benefit to product margin driven by assortment optimization, design-to-value initiatives and DTC pricing and markdown optimization. The financial benefits from these initiatives are reflected in our 2019 financial results. As we realize these benefits in 2018 and 2019, Going forward, we are reallocating resources to our strategic priorities, including incremental demand creation spending, and other investments to drive growth across our brands and distribution channels. We anticipate sustainingfocused on optimizing the ~~financial benefits driven from Project CONNECT, but do not expect the continued level of incremental improvement in the Company's gross margin in 2020.~~

Results of Operations

The following discussion of our results of operations and liquidity and capital resources should be read in conjunction with the condensed consolidated financial statements and ~~accompanying~~accompanying. Notes that appear in Part I, Item 1, Financial Statements in this quarterly report. All references to quarters relate to the quarter ended September 30 of the particular year.

To supplement financial information reported in accordance with accounting principles generally accepted in the United States ("GAAP"), we disclose constant-currency net sales information, which is a non-GAAP financial measure, to provide a framework to assess how the business performed excluding the effects of changes in the exchange rates used to translate net sales generated in foreign currencies into ~~U.S.~~United States dollars. Management believes that this non-GAAP financial measure reflects an additional and useful way of viewing an aspect of our operations that, when viewed in conjunction with our GAAP results, provides a more comprehensive understanding of our business and operations. In particular, investors may find the non-GAAP measures useful by reviewing our net sales results without the volatility in foreign currency exchange rates. This non-GAAP financial measure also facilitates management's internal comparisons to our historical net sales results and comparisons to competitors' net sales results. Constant-currency financial measures should be viewed in addition to, and not in lieu of or superior to, our financial measures calculated in accordance with GAAP.

The following discussion includes references to constant-currency net sales, and we provide a reconciliation of this non-GAAP measure to the most directly comparable financial measure calculated in accordance with GAAP below.

Highlights of the Third Quarter of 2020

Lower net sales and profitability in third quarter 2020 compared to third quarter 2019 primarily reflect the ongoing negative effects of the COVID-19 pandemic.

•Net sales decreased $205.7 million, or 23%, to $701.1 million from $906.8 million in the third quarter of 2019.

~~Net sales increased $111.0 million, or 14%, to $906.8 million from $795.8 million in the third quarter of 2018.~~

•Income from operations decreased $66.4 million, or 44%, to $85.6 millionfrom $152.0 millionin the third quarter of 2019.

•Net income decreased $56.5 million, or 47%, to $62.8 million, or $0.94 per diluted share, from $119.3 million, or $1.75 per diluted share, in the third quarter of 2019.

Table of Contents

~~Income from operations increased~~ ~~$22.9 million, or 18%, to~~ ~~$152.0 million from $129.1 million in the third quarter of 2018.~~

~~Net income attributable to Columbia Sportswear Company increased~~ ~~$19.1 million, or 19%, to $119.3 million, or $1.75 per diluted share,~~ ~~from $100.2 million, or $1.42 per diluted share, in the third quarter of 2018.~~

The following table sets forth, for the periods indicated, the percentage relationship to net sales of specified items in our Condensed Consolidated Statements of Operations:

Results of Operations — Consolidated

Quarter Ended September 30, ~~2019~~2020 Compared to Quarter Ended September 30, ~~2018~~2019

Net Sales: Consolidated net sales ~~increased $111.0~~decreased $205.7 million, or ~~14% (15% constant-currency)~~23%, to ~~$906.8~~$701.1 million for the third quarter of ~~2019~~2020 from ~~$795.8~~$906.8 million for the comparable period in ~~2018.~~2019. The overall decrease primarily reflects the negative impacts from the ongoing COVID-19 pandemic.

Net sales by brand, product category and channel are summarized in the following table:

⁽¹⁾Constant-currency net sales information is a non-GAAP financial measure that excludes the effect of changes in foreign currency exchange rates against the ~~U.S.~~United States dollar between comparable reporting periods. We calculate constant-currency net sales by translating net sales in foreign currencies for the current period into ~~U.S.~~United States dollars at the average exchange rates that were in effect during the comparable period of the prior year.

Columbia brand net sales increased $88.6 million, or 14% (15% constant-currency), to $729.5 million, led by increased net sales primarily in the U.S. wholesale business, followed by Canada and the U.S. DTC businesses. Results included increased net sales across all product categories.

~~SOREL brand net sales increased $24.9 million, or 27% (29% constant-currency), to $116.1 million, driven primarily by increased net sales in the U.S. wholesale and Canada businesses.~~



Oregon						93-0498284
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification Number)



Item				Page
PART I—FINANCIAL INFORMATION
Item 1.			Financial Statements ~~– Columbia Sportswear Company (Unaudited)~~:	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)	7
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	2223
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	3433
Item 4.			Controls and Procedures	3433
PART II—OTHER INFORMATION
Item 1.			Legal Proceedings	35
Item 1A.			Risk Factors	35
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	4645
~~Item 5.~~	~~Other Information~~	46
Item 6.			Exhibits	4746
			Signatures	4847



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨ ☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934



	September 30, 2019			December 31, 2018			September 30, 2018
ASSETS
Current Assets:
Cash and cash equivalents (Note 16)	$	239,311		$	437,825		$	182,175
Restricted cash (Note 17)	—			13,970			13,970
Short-term investments (Note 16)	1,477			262,802			269,313
Accounts receivable, net of allowance of $9,672, $11,051, and $9,176, respectively	646,414			449,382			552,442
Inventories	717,396			521,827			617,194
Prepaid expenses and other current assets	94,253			79,500			77,763
Total current assets	1,698,851			1,765,306			1,712,857
Property, plant and equipment, at cost, net of accumulated depreciation of $515,300, $489,354, and $483,857, respectively	349,302			291,596			284,744
Operating lease right-of-use assets (Note 8)	389,558			—			—
Intangible assets, net (Note 5)	124,340			126,575			127,320
Goodwill	68,594			68,594			68,594
Deferred income taxes	80,193			78,155			68,913
Other non-current assets	40,242			38,495			36,911
Total assets	$	2,751,080		$	2,368,721		$	2,299,339
LIABILITIES AND EQUITY
Current Liabilities:
Short-term borrowings (Note 6)	$	—		$	—		$	8,311
Accounts payable	201,806			274,435			237,344
Accrued liabilities (Note 7)	279,932			275,684			255,682
Operating lease liabilities (Note 8)	62,756			—			—
Income taxes payable	13,653			22,763			8,247
Total current liabilities	558,147			572,882			509,584
Non-current operating lease liabilities (Note 8)	366,515			—			—
Income taxes payable	48,619			50,791			62,090
Deferred income taxes	7,711			9,521			13
Other long-term liabilities	22,982			45,214			46,056
Total liabilities	1,003,974			678,408			617,743
Commitments and contingencies (Note 9)
Columbia Sportswear Company Shareholders' Equity:
Preferred stock; 10,000 shares authorized; none issued and outstanding	—			—			—
Common stock (no par value); 250,000 shares authorized; 67,562, 68,246, and 69,270, issued and outstanding, respectively (Note 10)	—			—			210
Retained earnings	1,754,379			1,677,920			1,669,390
Accumulated other comprehensive loss (Note 13)	(7,273		)	(4,063		)	(4,235		)
Total Columbia Sportswear Company shareholders' equity	1,747,106			1,673,857			1,665,365
Non-controlling interest (Note 4)	—			16,456			16,231
Total equity	1,747,106			1,690,313			1,681,596
Total liabilities and equity	$	2,751,080		$	2,368,721		$	2,299,339



	January 1, 2019
(in thousands)	December 31, 2018		Adjustments due to ASC 842			January 1, 2019
Operating lease right-of-use assets	$	—	$	352,679		$	352,679
Total assets	2,368,721		352,679			2,721,400
Accrued liabilities	275,684		(3,346		)	272,338
Operating lease liabilities	—		57,207			57,207
Current liabilities	572,882		53,861			626,743
Non-current operating lease liabilities	—		329,865			329,865
Other long-term liabilities	45,214		(31,047		)	14,167
Total liabilities	678,408		352,679			1,031,087
Total liabilities and equity	2,368,721		352,679			2,721,400



	Three Months Ended September 30, 2019
(in thousands)	United States		LAAP		EMEA		Canada		Total
Product category net sales
Apparel, Accessories and Equipment	$	459,633	$	93,486	$	66,058	$	65,532	$	684,709
Footwear	121,630		29,760		38,345		32,349		222,084
Total	$	581,263	$	123,246	$	104,403	$	97,881	$	906,793
Sales channel net sales
Wholesale	$	396,275	$	77,934	$	91,329	$	86,993	$	652,531
Direct-to-consumer	184,988		45,312		13,074		10,888		254,262
Total	$	581,263	$	123,246	$	104,403	$	97,881	$	906,793



	Three Months Ended September 30, 2018
(in thousands)	United States		LAAP		EMEA		Canada		Total
Product category net sales
Apparel, Accessories and Equipment	$	406,474	$	92,869	$	63,950	$	54,294	$	617,587
Footwear	89,687		25,510		36,401		26,616		178,214
Total	$	496,161	$	118,379	$	100,351	$	80,910	$	795,801
Sales channel net sales
Wholesale	$	320,102	$	72,121	$	87,434	$	70,099	$	549,756
Direct-to-consumer	176,059		46,258		12,917		10,811		246,045
Total	$	496,161	$	118,379	$	100,351	$	80,910	$	795,801



	Nine Months Ended September 30, 2018
(in thousands)	United States		LAAP		EMEA		Canada		Total
Product category net sales
Apparel, Accessories and Equipment	$	970,194	$	263,849	$	168,306	$	99,854	$	1,502,203
Footwear	168,981		86,983		88,806		37,755		382,525
Total	$	1,139,175	$	350,832	$	257,112	$	137,609	$	1,884,728
Sales channel net sales
Wholesale	$	636,108	$	192,967	$	223,018	$	109,324	$	1,161,417
Direct-to-consumer	503,067		157,865		34,094		28,285		723,311
Total	$	1,139,175	$	350,832	$	257,112	$	137,609	$	1,884,728



(in thousands)
2019	$	2,980
2020	2,537
2021	1,650
2022	1,650
2023	1,650



(in thousands)	Three Months Ended		Nine Months Ended
Operating lease cost	$	20,072	$	57,592
Variable lease cost	12,676		38,572
Short term lease cost	3,442		5,614
	$	36,190	$	101,778



(in thousands)
Cash paid for amounts included in the measurement of operating lease liabilities	$	56,843
Operating lease liabilities arising from obtaining ROU assets ⁽¹⁾	$	467,075



(in thousands)
2019	$	20,119
2020	76,258
2021	68,625
2022	63,532
2023	58,579
Thereafter	212,496
Total lease payments	499,609
Less: imputed interest	(70,338		)
Total lease liabilities	429,271
Less: current obligations	(62,756		)
Long-term lease obligations	$	366,515



(in thousands)
2019	$	72,280
2020	65,379
2021	57,460
2022	52,607
2023	47,837
Thereafter	155,897
	$	451,460


(in thousands)	Balance Sheet Classification	September 30, 2019		December 31, 2018		September 30, 2018		(in thousands)	Balance Sheet Classification	September 30, 2020		December 31, 2019		September 30, 2019
Derivative instruments designated as cash flow hedges:								Derivative instruments designated as cash flow hedges:
Derivative instruments in asset positions:								Derivative instruments in asset positions:
Currency forward contracts	Prepaid expenses and other current assets	$	16,603	$	11,818	$	7,262	Currency forward contracts	Prepaid expenses and other current assets	$	4,729	$	11,855	$	16,603

Currency forward contracts	Other non-current assets	4,830		9,922		7,963		Currency forward contracts	Other non-current assets	3,454		4,159		4,830
Derivative instruments in liability positions:								Derivative instruments in liability positions:
Currency forward contracts	Accrued liabilities	201		47		584		Currency forward contracts	Accrued liabilities	2,034		1,313		201
Currency forward contracts	Other long-term liabilities	109		1		—		Currency forward contracts	Other long-term liabilities	1,186		768		109
Derivative instruments not designated as cash flow hedges:								Derivative instruments not designated as cash flow hedges:
Derivative instruments in asset positions:								Derivative instruments in asset positions:
Currency forward contracts	Prepaid expenses and other current assets	1,857		1,797		865		Currency forward contracts	Prepaid expenses and other current assets	2,211		2,146		1,857
Derivative instruments in liability positions:								Derivative instruments in liability positions:
Currency forward contracts	Accrued liabilities	320		970		154		Currency forward contracts	Accrued liabilities	381		953		320


	Three Months Ended September 30,
			Adjust for			Constant-					Constant-
	Reported		Foreign			currency		Reported		Reported	currency		Three Months Ended September 30,
	Net Sales		Currency			Net Sales		Net Sales		Net Sales	Net Sales		Reported Net Sales		Adjust for Foreign Currency Translation			Constant-currency Net Sales			Reported Net Sales			Reported Net Sales		Constant-currency Net Sales
(In millions, except for percentage changes)	2019		Translation			2019⁽¹⁾		2018		% Change	% Change	(In millions, except for percentage changes)	2020				2020(1)			2019			% Change		% Change(1)
Brand Net Sales:												Brand Net Sales:
Columbia	$	729.5	$	5.6		$	735.1	$	640.9	14%	15%	Columbia	$	559.7	$	(3.3)		$	556.4		$	729.5		(23)%		(24)%
SOREL	116.1		1.1			117.2		91.2		27%	29%	SOREL	91.5		(0.5)			91.0			116.1			(21)%		(22)%
prAna	38.5		0.1			38.6		39.9		(4)%	(3)%	prAna	30.5		—			30.5			38.5			(21)%		(21)%
Mountain Hardwear	22.7		(0.1		)	22.6		23.0		(1)%	(2)%	Mountain Hardwear	19.4		(0.1)			19.3			22.7			(15)%		(15)%
Other	—		—			—		0.8		(100)%	(100)%
Total												Total	$	701.1	$	(3.9)		$	697.2		$	906.8		(23)%		(23)%
	$	906.8	$	6.7		$	913.5	$	795.8	14%	15%
Product Category Net Sales:												Product Category Net Sales:
Apparel, Accessories and Equipment												Apparel, Accessories and Equipment	$	510.2	$	(2.8)		$	507.4		$	684.7		(25)%		(26)%
Footwear												Footwear	190.9		(1.1)			189.8			222.1			(14)%		(15)%
Total												Total	$	701.1	$	(3.9)		$	697.2		$	906.8		(23)%		(23)%

Channel Net Sales:												Channel Net Sales:
Wholesale												Wholesale	$	471.5	$	(3.2)		$	468.3		$	652.6		(28)%		(28)%
DTC												DTC	229.6		(0.7)			228.9			254.2			(10)%		(10)%
Total												Total	$	701.1	$	(3.9)		$	697.2		$	906.8		(23)%		(23)%


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)

July 1, 2020 through July 31, 2020	—	$	—	—	$	82.2
August 1, 2020 through August 31, 2020	—	—		—	$	82.2
September 1, 2020 through September 30, 2020	—	—		—	$	82.2
Total	—	$	—	—	$	82.2



+			~~10.1~~3.1	~~Tax Differential~~Third Restated Articles of Incorporation (incorporated by reference to exhibit 3.1 to the Company's Quarterly Report on ~~Supplemental Wages Agreement, dated November 1, 2019,~~Form 10-Q for the quarterly period ended March 31, 2000) (File No. 000-23939).
			3.1(a)	Amendment to Third Restated Articles of Incorporation (incorporated by ~~and between~~reference to exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002) (File No. 000-23939).
			3.1(b)	Second Amendment to Third Restated Articles of Incorporation (incorporated by reference to exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018) (File No. 000-23939).
			3.2	2000 Restated Bylaws of Columbia Sportswear Company, ~~and Franco Fogliato~~as amended (incorporated by reference to exhibit 3.2 to the Company's Form 8-K filed on March 26, 2019) (File No. 000-23939).
+			10.1	Columbia Sportswear Company 401(k) Excess Plan, as amended.
			31.1	Rule 13a-14(a) Certification of Timothy P. Boyle, Chairman, President and Chief Executive Officer

	31.2	Rule 13a-14(a) Certification of Jim A. Swanson, ~~Senior~~Executive Vice President and Chief Financial Officer

	32.1	Section 1350 Certification of Timothy P. Boyle, Chairman, President and Chief Executive Officer

	32.2	Section 1350 Certification of Jim A. Swanson, ~~Senior~~Executive Vice President and Chief Financial Officer
			101
	~~101~~	INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
			101
	~~101~~	SCH XBRL Taxonomy Extension Schema Document
			101
	~~101~~	CAL XBRL Taxonomy Extension Calculation Linkbase Document
			101
	~~101~~	DEF XBRL Taxonomy Extension Definition Linkbase Document
			101
	~~101~~	LAB XBRL Taxonomy Extension Label Linkbase Document
			101
	~~101~~	PRE XBRL Taxonomy Extension Presentation Linkbase Document
			104
	~~104~~	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).



	COLUMBIA SPORTSWEAR COMPANY
November ~~7, 2019~~5, 2020		/s/ JIM A. SWANSON
		Jim A. Swanson
		~~Senior~~Executive Vice President and Chief Financial Officer
		(Duly Authorized Officer and Principal Financial and Accounting Officer)