UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-Q
____________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20212022
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______to_______

 —————————————————————
Commission file number 000-23939
 _____________________________—————————————————————

COLUMBIA SPORTSWEAR COMPANY
(Exact name of registrant as specified in its charter) 
 —————————————————————

Oregon93-0498284
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification Number)
14375 Northwest Science Park Drive, Portland Oregon 97229
(Address of principal executive offices and zip code)
(503) 985-4000
(Registrant's telephone number, including area code)
14375 Northwest Science Park Drive —————————————————————
Portland, Oregon 97229
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockCOLMThe NASDAQ Global Select Market
(Address of principal executive offices and zip code) —————————————————————
(503) 985-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each
exchange on which registered
Common stockCOLMThe NASDAQ Global Select Market

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      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      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.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.YesNo
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).YesNo
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 FilerAccelerated filer
Large Accelerated FilerAccelerated Filer
Non-accelerated FilerfilerSmaller Reporting Company
Emerging Growth Companyreporting 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).YesNo
The number of shares outstanding of the registrant's common stock on October 21, 2022 was 62,113,626.
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  
The number of shares of Common Stock outstanding on October 22, 2021 was 65,217,098.








COLUMBIA SPORTSWEAR COMPANY
September 30, 2021

TABLE OF CONTENTS
Item
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TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.


COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | i
PART I—

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PART I — FINANCIAL INFORMATION
Item 1.    
ITEM 1.FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands)September 30,
2022
December 31,
2021
September 30,
2021
ASSETS
Current Assets:
Cash and cash equivalents$159,221 $763,404 $599,479 
Short-term investments972 131,145 1,132 
Accounts receivable, net of allowance of $5,822, $8,893 and $10,847, respectively600,457 487,803 500,451 
Inventories, net1,056,905 645,379 720,865 
Prepaid expenses and other current assets142,055 86,306 98,146 
Total current assets1,959,610 2,114,037 1,920,073 
Property, plant and equipment, net of accumulated depreciation of $608,522, $602,660 and $591,795, respectively287,338 291,088 293,725 
Operating lease right-of-use assets328,893 330,928 344,876 
Intangible assets, net100,672 101,908 102,321 
Goodwill68,594 68,594 68,594 
Deferred income taxes76,899 92,121 92,493 
Other non-current assets68,146 68,452 67,277 
Total assets$2,890,152 $3,067,128 $2,889,359 
LIABILITIES AND EQUITY
Current Liabilities:
Short-term borrowings$4,441 $— $— 
Accounts payable336,782 283,349 241,119 
Accrued liabilities279,226 316,485 273,590 
Operating lease liabilities65,866 67,429 67,055 
Income taxes payable10,341 13,127 8,955 
Total current liabilities696,656 680,390 590,719 
Non-current operating lease liabilities314,565 317,666 330,765 
Income taxes payable33,215 44,541 49,392 
Deferred income taxes— — 
Other long-term liabilities30,913 35,279 38,165 
Total liabilities1,075,349 1,077,876 1,009,042 
Commitments and contingencies (Note 5)
Shareholders' Equity:
Preferred stock; 10,000 shares authorized; none issued and outstanding— — — 
Common stock (no par value); 250,000 shares authorized; 62,105, 65,164 and 65,501 issued and outstanding, respectively5,803 — — 
Retained earnings1,846,570 1,993,628 1,883,343 
Accumulated other comprehensive income (loss)(37,570)(4,376)(3,026)
Total shareholders' equity1,814,803 1,989,252 1,880,317 
Total liabilities and shareholders' equity$2,890,152 $3,067,128 $2,889,359 

See accompanying notes to unaudited condensed consolidated financial statements.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 1
CONDENSED CONSOLIDATED BALANCE SHEETS

Notes to Condensed Consolidated Financial Statements (Unaudited)
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Unaudited)
(in thousands)September 30,
2021
December 31,
2020
September 30,
2020
ASSETS
Current Assets:
Cash and cash equivalents$599,479 $790,725 $313,429 
Short-term investments1,132 1,224 1,095 
Accounts receivable, net of allowance of $10,847, $21,810, and $29,760, respectively500,451 452,945 479,376 
Inventories, net720,865 556,530 771,724 
Prepaid expenses and other current assets98,146 54,197 82,175 
Total current assets1,920,073 1,855,621 1,647,799 
Property, plant and equipment, at cost, net of accumulated depreciation of $591,795, $574,247, and $550,097, respectively293,725 309,792 322,167 
Operating lease right-of-use assets344,876 339,244 351,277 
Intangible assets, net102,321 103,558 121,471 
Goodwill68,594 68,594 68,594 
Deferred income taxes92,493 96,126 77,055 
Other non-current assets67,277 63,636 63,951 
Total assets$2,889,359 $2,836,571 $2,652,314 
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable241,119 206,697 164,332 
Accrued liabilities273,590 257,278 257,040 
Operating lease liabilities67,055 65,466 73,409 
Income taxes payable8,955 23,181 4,813 
Total current liabilities590,719 552,622 499,594 
Non-current operating lease liabilities330,765 353,181 337,108 
Income taxes payable49,392 49,922 49,195 
Deferred income taxes5,205 7,149 
Other long-term liabilities38,165 42,870 36,452 
Total liabilities1,009,042 1,003,800 929,498 
Commitments and contingencies (Note 6)000
Shareholders' Equity:
Preferred stock; 10,000 shares authorized; none issued and outstanding— — — 
Common stock (no par value); 250,000 shares authorized; 65,501, 66,252, and 66,210, issued and outstanding, respectively— 20,165 13,142 
Retained earnings1,883,343 1,811,800 1,716,044 
Accumulated other comprehensive income (loss)(3,026)806 (6,370)
Total shareholders' equity1,880,317 1,832,771 1,722,816 
Total liabilities and shareholders' equity$2,889,359 $2,836,571 $2,652,314 
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share amounts)2022202120222021
Net sales$955,059 $804,706 $2,294,632 $1,996,682 
Cost of sales496,564 396,346 1,173,530 974,403 
Gross profit458,495 408,360 1,121,102 1,022,279 
Selling, general and administrative expenses318,957 280,121 899,301 796,276 
Net licensing income5,723 5,222 15,899 12,933 
Operating income145,261 133,461 237,700 238,936 
Interest income, net765 196 1,659 1,072 
Other non-operating income (expense), net(269)201 (1,660)(397)
Income before income tax145,757 133,858 237,699 239,611 
Income tax expense(34,007)(33,295)(51,949)(42,464)
Net income$111,750 $100,563 $185,750 $197,147 
Earnings per share:
Basic$1.80 $1.53 $2.95 $2.98 
Diluted$1.80 $1.52 $2.94 $2.96 
Weighted average shares outstanding:
Basic62,09865,86262,96766,182
Diluted62,21066,26663,17866,673

See accompanying notes to unaudited condensed consolidated financial statements.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 2

Notes to Condensed Consolidated Financial Statements (Unaudited)
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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Net income$111,750 $100,563 $185,750 $197,147 
Other comprehensive income (loss):
Unrealized gains on derivative transactions (net of tax effects of $(4,856), $(3,602), $(9,944) and $(5,787), respectively)14,221 10,552 27,938 15,564 
Foreign currency translation adjustments (net of tax effects of $126, $66, $1,123 and $215, respectively)(30,058)(11,422)(61,132)(19,396)
Other comprehensive income (loss)(15,837)(870)(33,194)(3,832)
Comprehensive income$95,913 $99,693 $152,556 $193,315 

See accompanying notes to unaudited condensed consolidated financial statements.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 3

Notes to Condensed Consolidated Financial Statements (Unaudited)
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Nine Months Ended September 30,
(in thousands)20222021
Cash flows from operating activities:
Net income$185,750 $197,147 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, amortization, and non-cash lease expense86,569 84,509 
Provision for uncollectible accounts receivable(1,745)(9,088)
Loss on disposal or impairment of investments, property, plant and equipment, and right-of-use assets2,455 366 
Deferred income taxes1,712 (8,731)
Stock-based compensation16,071 14,487 
Changes in operating assets and liabilities:
Accounts receivable(129,251)(44,500)
Inventories, net(443,194)(173,761)
Prepaid expenses and other current assets(27,535)(40,957)
Other assets2,260 148 
Accounts payable63,868 22,014 
Accrued liabilities(18,409)24,813 
Income taxes payable(14,299)(14,621)
Operating lease assets and liabilities(49,159)(68,823)
Other liabilities(3,182)1,359 
Net cash used in operating activities(328,089)(15,638)
Cash flows from investing activities:
Purchases of short-term investments(44,876)— 
Sales and maturities of short-term investments175,827 1,184 
Capital expenditures(42,489)(20,413)
Net cash provided by (used in) investing activities88,462 (19,229)
Cash flows from financing activities:
Proceeds from credit facilities12,660 29,508 
Repayments on credit facilities(8,133)(29,313)
Payment of line of credit issuance fees(604)— 
Proceeds from issuance of common stock related to stock-based compensation4,598 24,329 
Tax payments related to stock-based compensation(4,178)(5,715)
Repurchase of common stock(287,443)(118,580)
Cash dividends paid(56,556)(51,662)
Net cash used in financing activities(339,656)(151,433)
Net effect of exchange rate changes on cash(24,900)(4,946)
Net decrease in cash and cash equivalents(604,183)(191,246)
Cash and cash equivalents, beginning of period763,404 790,725 
Cash and cash equivalents, end of period$159,221 $599,479 
Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes$59,584 $87,709 
Supplemental disclosures of non-cash investing and financing activities:
Property, plant and equipment acquired through increase in liabilities$7,502 $8,277 
Repurchases of common stock not settled$— $8,628 
See accompanying notes to unaudited condensed consolidated financial statements.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 4

Notes to Condensed Consolidated Financial Statements (Unaudited)
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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)

(in thousands, except per share amounts)Common StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Shares
Outstanding
Amount
Balance, June 30, 202262,091 $— $1,753,450 $(21,733)$1,731,717 
Net income— — 111,750 — 111,750 
Other comprehensive income (loss):
Unrealized gains on derivative transactions, net— — — 14,221 14,221 
Foreign currency translation adjustment, net— — — (30,058)(30,058)
Cash dividends ($0.30 per share)— — (18,630)— (18,630)
Issuance of common stock related to stock-based compensation, net14 368 — — 368 
Stock-based compensation expense— 5,435 — — 5,435 
Balance, September 30, 202262,105 $5,803 $1,846,570 $(37,570)$1,814,803 

(in thousands, except per share amounts)Common StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Shares
Outstanding
Amount
Balance, June 30, 202166,148 $— $1,863,813 $(2,156)$1,861,657 
Net income— — 100,563 — 100,563 
Other comprehensive income (loss):
Unrealized gains on derivative transactions, net— — — 10,552 10,552 
Foreign currency translation adjustment, net— — — (11,422)(11,422)
Cash dividends ($0.26 per share)— — (17,122)— (17,122)
Issuance of common stock related to stock-based compensation, net79 3,767 — — 3,767 
Stock-based compensation expense— 4,664 — — 4,664 
Repurchase of common stock(726)(8,431)(63,911)— (72,342)
Balance, September 30, 202165,501 $— $1,883,343 $(3,026)$1,880,317 

(in thousands, except per share amounts)Common StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Shares
Outstanding
Amount
Balance, December 31, 202165,164 $— $1,993,628 $(4,376)$1,989,252 
Net income— — 185,750 — 185,750 
Other comprehensive income (loss):
Unrealized gains on derivative transactions, net— — — 27,938 27,938 
Foreign currency translation adjustment, net— — — (61,132)(61,132)
Cash dividends ($0.90 per share)— — (56,556)— (56,556)
Issuance of common stock related to stock-based compensation, net176 420 — — 420 
Stock-based compensation expense— 16,071 — — 16,071 
Repurchase of common stock(3,235)(10,688)(276,252)— (286,940)
Balance, September 30, 202262,105 $5,803 $1,846,570 $(37,570)$1,814,803 

See accompanying notes to condensed consolidated financial statements
1

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COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 5

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share amounts)2021202020212020
Net sales$804,706 $701,092 $1,996,682 $1,585,931 
Cost of sales396,346 358,184 974,403 825,079 
Gross profit408,360 342,908 1,022,279 760,852 
Selling, general and administrative expenses280,121 261,192 796,276 755,664 
Net licensing income5,222 3,927 12,933 8,168 
Operating income133,461 85,643 238,936 13,356 
Interest income (expense), net196 (280)1,072 728 
Other non-operating income (expense), net201 (465)(397)2,208 
Income before income tax133,858 84,898 239,611 16,292 
Income tax expense(33,295)(22,147)(42,464)(4,035)
Net income$100,563 $62,751 $197,147 $12,257 
Earnings per share:
Basic$1.53 $0.95 $2.98 $0.18 
Diluted$1.52 $0.94 $2.96 $0.18 
Weighted average shares outstanding:
Basic65,86266,17966,18266,427
Diluted66,26666,53766,67366,807
(in thousands, except per share amounts)Common StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Shares
Outstanding
Amount
Balance, December 31, 202066,252 $20,165 $1,811,800 $806 $1,832,771 
Net income— — 197,147 — 197,147 
Other comprehensive income (loss):
Unrealized gains on derivative transactions, net— — — 15,564 15,564 
Foreign currency translation adjustment, net— — — (19,396)(19,396)
Cash dividends ($0.78 per share)— — (51,662)— (51,662)
Issuance of common stock related to stock-based compensation, net503 18,614 — — 18,614 
Stock-based compensation expense— 14,487 — — 14,487 
Repurchase of common stock(1,254)(53,266)(73,942)— (127,208)
Balance, September 30, 202165,501 $— $1,883,343 $(3,026)$1,880,317 

See accompanying notes to unaudited condensed consolidated financial statementsstatements.
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COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2021202020212020
Net income$100,563 $62,751 $197,147 $12,257 
Other comprehensive income (loss):
Unrealized gains (losses) on derivative transactions (net of tax effects of $(3,602), $3,995, $(5,787) and $1,371, respectively)10,552 (11,685)15,564 (5,022)
Foreign currency translation adjustments (net of tax effects of $66, $(290), $215 and $(253), respectively)(11,422)11,175 (19,396)3,077 
Other comprehensive loss(870)(510)(3,832)(1,945)
Comprehensive income$99,693 $62,241 $193,315 $10,312 

See accompanying notes to condensed consolidated financial statements
3

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COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
(in thousands)20212020
Cash flows from operating activities:
Net income$197,147 $12,257 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, amortization, and non-cash lease expense84,509 102,283 
Provision for uncollectible accounts receivable(9,088)24,684 
Loss on disposal or impairment of property, plant and equipment and right-of-use assets366 8,981 
Deferred income taxes(8,731)4,306 
Stock-based compensation14,487 12,802 
Changes in operating assets and liabilities:
Accounts receivable(44,500)(17,130)
Inventories, net(173,761)(160,090)
Prepaid expenses and other current assets(40,957)9,098 
Other assets148 (20,786)
Accounts payable22,014 (89,790)
Accrued liabilities24,813 (41,182)
Income taxes payable(14,621)(10,011)
Operating lease assets and liabilities(68,823)(41,459)
Other liabilities1,359 8,077 
Net cash used in operating activities(15,638)(197,960)
Cash flows from investing activities:
Purchases of short-term investments— (35,044)
Sales and maturities of short-term investments1,184 36,630 
Capital expenditures(20,413)(25,164)
Net cash used in investing activities(19,229)(23,578)
Cash flows from financing activities:
Proceeds from credit facilities29,508 387,992 
Repayments on credit facilities(29,313)(388,465)
Payment of line of credit issuance fees— (2,096)
Proceeds from issuance of common stock related to stock-based compensation24,329 4,793 
Tax payments related to stock-based compensation(5,715)(4,454)
Repurchase of common stock(118,580)(132,889)
Cash dividends paid(51,662)(17,195)
Net cash used in financing activities(151,433)(152,314)
Net effect of exchange rate changes on cash(4,946)1,272 
Net decrease in cash and cash equivalents(191,246)(372,580)
Cash and cash equivalents, beginning of period790,725 686,009 
Cash and cash equivalents, end of period$599,479 $313,429 
Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes$87,709 $18,385 
Supplemental disclosures of non-cash investing and financing activities:
Property, plant and equipment acquired through increase in liabilities$8,277 $4,774 
Repurchases of common stock not settled$8,628 $— 

See accompanying notes to condensed consolidated financial statements
4

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COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
Three Months Ended September 30, 2021
(in thousands, except per share amounts)Common StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Shares
Outstanding
Amount
BALANCE, JUNE 30, 202166,148 $— $1,863,813 $(2,156)$1,861,657 
Net income— — 100,563 — 100,563 
Other comprehensive income (loss):
Unrealized gains on derivative transactions, net— — — 10,552 10,552 
Foreign currency translation adjustment, net— — — (11,422)(11,422)
Cash dividends ($0.26 per share)— — (17,122)— (17,122)
Issuance of common stock related to stock-based compensation, net79 3,767 — — 3,767 
Stock-based compensation expense— 4,664 — — 4,664 
Repurchase of common stock(726)(8,431)(63,911)— (72,342)
BALANCE, SEPTEMBER 30, 202165,501 $— $1,883,343 $(3,026)$1,880,317 
Three Months Ended September 30, 2020
(in thousands, except per share amounts)Common StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Shares
Outstanding
Amount
BALANCE, JUNE 30, 202066,148 $5,396 $1,653,293 $(5,860)$1,652,829 
Net income— — 62,751 — 62,751 
Other comprehensive income (loss):
Unrealized 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, net62 2,656 — — 2,656 
Stock-based compensation expense— 5,090 — — 5,090 
BALANCE, SEPTEMBER 30, 202066,210 $13,142 $1,716,044 $(6,370)$1,722,816 

See accompanying notes to condensed consolidated financial statements
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COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
Nine Months Ended September 30, 2021
(in thousands, except per share amounts)Common StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Shares
Outstanding
Amount
BALANCE, DECEMBER 31, 202066,252 $20,165 $1,811,800 $806 $1,832,771 
Net income— — 197,147 — 197,147 
Other comprehensive income (loss):
Unrealized gains on derivative transactions, net— — — 15,564 15,564 
Foreign currency translation adjustment, net— — — (19,396)(19,396)
Cash dividends ($0.78 per share)— — (51,662)— (51,662)
Issuance of common stock related to stock-based compensation, net503 18,614 — — 18,614 
Stock-based compensation expense14,487 — — 14,487 
Repurchase of common stock(1,254)(53,266)(73,942)— (127,208)
BALANCE, SEPTEMBER 30, 202165,501 $— $1,883,343 $(3,026)$1,880,317 
Nine Months Ended September 30, 2020
(in thousands, except per share amounts)Common StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Shares
Outstanding
Amount
BALANCE, DECEMBER 31, 201967,561 $4,937 $1,848,935 $(4,425)$1,849,447 
Net income— — 12,257 — 12,257 
Other comprehensive income (loss):
Unrealized 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, net206 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, 202066,210 $13,142 $1,716,044 $(6,370)$1,722,816 

See accompanying notes to condensed consolidated financial statements
| 2022 FORM 10-Q | 6

Table of Contents
COLUMBIA SPORTSWEAR COMPANY
INDEX TO
Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTEPAGE
Note 1Basis of Presentation and Organization
Note 2Revenues
Note 3Intangible Assets, Net and Goodwill
Note 4Short-Term Borrowings and Credit Lines
Note 5Income Taxes
Note 65Commitments and Contingencies
Note 6Shareholders' Equity
Note 7Shareholders' EquityStock-Based Compensation
Note 8Stock-Based Compensation
Note 9Earnings Per Share
Note 109Accumulated Other Comprehensive Income (Loss)
Note 1110Segment Information
Note 1211Financial Instruments and Risk Management
Note 1312Fair Value Measures

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 7

Table of Contents
Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—
Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
NOTE 1 — BASIS OF PRESENTATION AND ORGANIZATION

The accompanying unaudited condensed consolidated financial statements have been prepared by the management of Columbia Sportswear Company (together with its wholly owned subsidiaries, the "Company") and, in the opinion of management, include all normal recurring material adjustments necessary to present fairly the Company's financial position as of September 30, 2021,2022, December 31, 20202021 and September 30, 2020,2021, the results of operations for the three and nine months ended September 30, 20212022 and 2020,2021, and cash flows for the nine months ended September 30, 20212022 and 2020.2021. The December 31, 20202021 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, 2020.2021. 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, 20212022 are not necessarily indicative of results to be expected for other quarterly periods or for the full year.

Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company, however, believes that the disclosures contained in this report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.2021.
Principles of Consolidation
PRINCIPLES OF CONSOLIDATION

The unaudited condensed consolidated financial statements include the accounts of Columbia Sportswear Company and its wholly owned subsidiaries. Intercompanythe Company. All significant intercompany balances and transactions have been eliminated in consolidation.
Estimates and Assumptions
ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions. Some of the moreThe Company's significant estimates relate to revenue recognition;sales reserves, allowance for uncollectible accounts receivable; obsolescence reserves forreceivable, excess, close-out and slow moving inventory;slow-moving inventory, impairment of long-lived assets, intangible assets and goodwill;goodwill, and income taxes.
Recently Adopted Accounting Pronouncements
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
Effective January 1,
None.

RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

In November 2021, the Company adoptedFinancial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2019-122021-10 (“ASU 2021-10”), Income TaxesGovernment Assistance (Topic 740)832): SimplifyingDisclosures by Business Entities about Government Assistance, to increase transparency of government assistance including 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 todisclosure of (1) the types of assistance, (2) an entity’s accounting for taxes under hybrid tax regimes. Atthe assistance, and (3) the effect of the assistance on an entity’s financial statements. ASU 2021-10 is effective for annual periods beginning after December 15, 2021. Early adoption there was not a materialis permitted. The impact toof this new standard will depend on the Company's financial position, resultsamount of operations or cash flows.future government assistance received, if any.
Recent Accounting Pronouncements Not Yet Adopted
None.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 8

Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
NOTE 2 — REVENUES

Index to Notes to Consolidated Financial StatementsDISAGGREGATED REVENUE
COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 2—REVENUES
Disaggregated Revenue
As disclosed below in Note 11,10, the Company has 4four geographic reportable segments: United States ("U.S."), Latin America and Asia Pacific ("LAAP"), Europe, Middle East and Africa ("EMEA") and Canada.

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

Three Months Ended September 30, 2022
(in thousands)U.S.LAAPEMEACanadaTotal
Product category net sales
Apparel, Accessories and Equipment$473,066 $84,769 $112,817 $55,690 $726,342 
Footwear134,008 30,559 40,713 23,437 228,717 
Total$607,074 $115,328 $153,530 $79,127 $955,059 
Channel net sales
Wholesale$368,040 $76,829 $139,027 $61,133 $645,029 
Direct-to-consumer239,034 38,499 14,503 17,994 310,030 
Total$607,074 $115,328 $153,530 $79,127 $955,059 

Three Months Ended September 30, 2021
(in thousands)U.S.LAAPEMEACanadaTotal
Product category net sales
Apparel, Accessories and Equipment$406,187 $78,160 $75,399 $61,409 $621,155 
Footwear104,299 24,594 33,751 20,907 183,551 
Total$510,486 $102,754 $109,150 $82,316 $804,706 
Channel net sales
Wholesale$292,357 $66,070 $93,899 $65,810 $518,136 
Direct-to-consumer218,129 36,684 15,251 16,506 286,570 
Total$510,486 $102,754 $109,150 $82,316 $804,706 
Three Months Ended September 30, 2020
(in thousands)U.S.LAAPEMEACanadaTotal
Product category net sales
Apparel, Accessories and Equipment$332,713 $70,026 $66,160 $41,221 $510,120 
Footwear112,907 20,925 32,999 24,141 190,972 
Total$445,620 $90,951 $99,159 $65,362 $701,092 
Channel net sales
Wholesale$282,850 $50,723 $85,074 $52,820 $471,467 
Direct-to-consumer162,770 40,228 14,085 12,542 229,625 
Total$445,620 $90,951 $99,159 $65,362 $701,092 

Nine Months Ended September 30, 2021Nine Months Ended September 30, 2022
(in thousands)(in thousands)U.S.LAAPEMEACanadaTotal(in thousands)U.S.LAAPEMEACanadaTotal
Product category net salesProduct category net salesProduct category net sales
Apparel, Accessories and EquipmentApparel, Accessories and Equipment$1,040,432 $212,921 $186,213 $103,549 $1,543,115 Apparel, Accessories and Equipment$1,206,886 $225,073 $213,628 $115,016 $1,760,603 
FootwearFootwear257,781 79,785 82,276 33,725 453,567 Footwear314,567 84,823 92,161 42,478 534,029 
TotalTotal$1,298,213 $292,706 $268,489 $137,274 $1,996,682 Total$1,521,453 $309,896 $305,789 $157,494 $2,294,632 
Channel net salesChannel net salesChannel net sales
WholesaleWholesale$669,425 $153,689 $232,215 $100,523 $1,155,852 Wholesale$817,429 $165,075 $261,580 $109,065 $1,353,149 
Direct-to-consumerDirect-to-consumer628,788 139,017 36,274 36,751 840,830 Direct-to-consumer704,024 144,821 44,209 48,429 941,483 
TotalTotal$1,298,213 $292,706 $268,489 $137,274 $1,996,682 Total$1,521,453 $309,896 $305,789 $157,494 $2,294,632 

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 9

Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
Nine Months Ended September 30, 2021
(in thousands)U.S.LAAPEMEACanadaTotal
Product category net sales
Apparel, Accessories and Equipment$1,040,432 $212,921 $186,213 $103,549 $1,543,115 
Footwear257,781 79,785 82,276 33,725 453,567 
Total$1,298,213 $292,706 $268,489 $137,274 $1,996,682 
Channel net sales
Wholesale$669,425 $153,689 $232,215 $100,523 $1,155,852 
Direct-to-consumer628,788 139,017 36,274 36,751 840,830 
Total$1,298,213 $292,706 $268,489 $137,274 $1,996,682 

Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANYPERFORMANCE OBLIGATIONS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Nine Months Ended September 30, 2020
(in thousands)U.S.LAAPEMEACanadaTotal
Product category net sales
Apparel, Accessories and Equipment$793,846 $193,815 $145,100 $73,445 $1,206,206 
Footwear210,887 67,097 68,198 33,543 379,725 
Total$1,004,733 $260,912 $213,298 $106,988 $1,585,931 
Channel net sales
Wholesale$559,052 $139,316 $180,416 $78,546 $957,330 
Direct-to-consumer445,681 121,596 32,882 28,442 628,601 
Total$1,004,733 $260,912 $213,298 $106,988 $1,585,931 
Performance Obligations
For the three and nine months ended September 30, 20212022 and 2020,2021, Net sales recognized from performance obligations related to prior periods were not material. Net sales expected to be recognized in any future period related to remaining performance obligations areis not material.
Contract Balances
CONTRACT BALANCES

As of September 30, 2021,2022, December 31, 20202021 and September 30, 2020,2021, the Company did not have contract assets and had an immaterial amount of contract liabilities included in Accrued liabilities on the unaudited Condensed Consolidated Balance Sheets, which consisted of obligations associated with the Company's gift card and customer loyalty programs, were not material.Sheets.

NOTE 3—
NOTE 3 — INTANGIBLE ASSETS, NET AND GOODWILL
Intangible assets, net consisted of the following:
(in thousands)September 30, 2021December 31, 2020September 30, 2020
Intangible assets subject to amortization:
Patents and purchased technology$14,198 $14,198 $14,198 
Customer relationships23,000 23,000 23,000 
Gross carrying amount37,198 37,198 37,198 
Accumulated amortization:
Patents and purchased technology(14,198)(14,198)(14,198)
Customer relationships(18,600)(17,363)(16,950)
Accumulated amortization(32,798)(31,561)(31,148)
Net carrying amount4,400 5,637 6,050 
Intangible assets not subject to amortization97,921 97,921 115,421 
Intangible assets, net$102,321 $103,558 $121,471 

(in thousands)September 30, 2022December 31, 2021September 30, 2021
Intangible assets with definite lives:
Patents and purchased technology$14,198 $14,198 $14,198 
Customer relationships23,000 23,000 23,000 
Gross carrying amount37,198 37,198 37,198 
Accumulated amortization:
Patents and purchased technology(14,198)(14,198)(14,198)
Customer relationships(20,249)(19,013)(18,600)
Accumulated amortization(34,447)(33,211)(32,798)
Net carrying amount2,751 3,987 4,400 
Intangible assets with indefinite lives97,921 97,921 97,921 
Intangible assets, net$100,672 $101,908 $102,321 

Amortization expense for intangible assets subject to amortization was $0.4 million and $0.6 million for the three months ended September 30, 20212022 and 2020, respectively,2021, and was $1.2 million and $2.1 million for the nine months ended September 30, 2021,2022 and 2020, respectively.2021.

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 10

Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
The following table presents the remaining estimated annual amortization expense for the years ending 20212022 through 2025:2027:

(in thousands)
2021$1,650 
20221,650 
20231,650 
2024688 
2025— 
(in thousands)
2022$413 
20231,650 
2024688 
2025— 
2026— 
2027— 
10


Table of Contents
Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 4—
NOTE 4 — SHORT-TERM BORROWINGS AND CREDIT LINES
Except as disclosed below, there have been no significant changes to the Company's short-term borrowings and credit lines as described in Note 7 in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.2021.
At
DOMESTIC CREDIT FACILITY

In July 2022, the beginningCompany terminated its unsecured, committed revolving credit agreement, maturing on December 30, 2025, which provided for funding up to $500.0 million (the "Prior Domestic Credit Agreement") and, simultaneously, entered into a new credit agreement (the “Domestic Credit Agreement”). The Domestic Credit Agreement provides for up to $500.0 million of 2021,borrowings pursuant to an unsecured, committed revolving credit facility (the “Credit Facility”), which is available for working capital and general corporate purposes, including a sublimit for the issuance of letters of credit. This Credit Facility matures on July 12, 2027. Interest, generally payable monthly, is based on the Company's Japanese subsidiary had two separate unsecured and uncommitted overdraft facilities guaranteedoption of either the secured overnight financing rate (“SOFR”) plus an applicable margin or a base rate. Base rate is defined as the highest of the following, plus an applicable margin:
• the administrative agent's prime rate;
• the higher of the federal funds rate or overnight bank funding rate set by the Company providingFederal Reserve Bank of New York, plus 0.50%; or
• the one-month SOFR plus 1.00%.

The applicable margin for borrowings upSOFR loans will range from 1.00% to a maximum of ¥1.5 billion and ¥700.0 million. In March 2021,1.50% based on the Company’s funded debt ratio. The applicable margin for base rate loans will range from 0.00% to 0.50% based on the Company’s funded debt ratio. A commitment fee ranging from 0.10% to 0.20% based on the Company's Japanese subsidiary entered into an agreementfunded debt ratio is paid quarterly on the average daily unused commitment amount of the Credit Facility.

The Domestic Credit Agreement requires the Company to establish an unsecuredcomply with a financial covenant to maintain a certain funded debt ratio. In addition, the Domestic Credit Agreement includes customary covenants that, among other things, limit or restrict the ability of the Company and uncommitted overdraft facility providing for borrowings upits subsidiaries to a maximumincur additional indebtedness and liens, engage in mergers, acquisitions and dispositions, and engage in transactions with affiliates, as well as restrict the amount of ¥400.0 million. In September 2021,certain payments, including dividends and share buybacks in the event the Company's Japanese subsidiary entered into an agreement which replaced the ¥1.5 billion overdraft facility withfunded debt ratio is greater than a ¥1.0 billion overdraft facility. At September 30, 2021, the combined available borrowings of the three lines was approximately US$18.8 million. Borrowings under the ¥1.0 billion and ¥400.0 million overdraft facilities accrue interest at the Tokyo Interbank Offered Rate plus 50 basis points and borrowings under the ¥700.0 million overdraft facility accrue interest at 150 basis points. set amount.

As of September 30, 2021, there was no balance outstanding under these facilities.
At the beginning of 2021, the Company's Chinese subsidiary had available an unsecured and uncommitted line of credit providing for borrowings up to a maximum of RMB140.0 million and an unsecured and uncommitted overdraft and clean advance facility, guaranteed by2022, the Company that provided for borrowings of advances or overdrafts up to a maximum of US$20.0 million. In September 2021, the Company's Chinese subsidiary did not renew the agreement for the RMB140.0 million line of credit. At September 30, 2021, the available borrowings of the remaining facility was US$20.0 million. Borrowings under this facility accrue interest on advances of RMB at 4% or advances of USD at 1.62% per annum. As of September 30, 2021,in compliance with all associated covenants and there was no balance outstanding under the facility.Credit Facility.

In October 2022, the Company borrowed $25.0 million from the Credit Facility. These borrowings accrue interest at a rate of 4.14% per annum.

NOTE 5—INCOME TAXESOTHER SHORT-TERM BORROWINGS AND CREDIT LINES
For the three months ended
As of September 30, 2021 and 2020,2022, there was €4.5 million (approximately US$4.4 million) of borrowings outstanding under an overdraft facility utilized by the Company's effective income tax ratesEuropean subsidiary, which was guaranteed by the Company. These borrowings accrued interest at a rate of 3.75% per annum and were 24.9% and 26.1%, respectively. The decreaserepaid in October 2022.

In October 2022, the effective income tax rate for the three months ended September 30, 2021 was primarily due to the mix of book income or loss among jurisdictions. For the nine months ended September 30, 2021 and 2020,Company borrowed €15.0 million (approximately US$15.0 million) from an unsecured, uncommitted credit facility utilized by the Company's effective income tax rates were 17.7% and 24.8%, respectively. The decrease inEuropean subsidiary, which is guaranteed by the effective income taxCompany. These borrowings accrue interest at a rate for the nine months ended September 30, 2021 was primarily due to the non-recurring decrease in accrued foreign withholding taxes and the mix of book income or loss among jurisdictions.2.10% per annum.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 11

NOTE 6—
Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
NOTE 5 — COMMITMENTS AND CONTINGENCIES

LITIGATION

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

NOTE 7—
NOTE 6 — SHAREHOLDERS' EQUITY

Since the inception of the Company's stock repurchase plan in 2004 through September 30, 2021,2022, the Company's Board of Directors has authorized the repurchase of $1.5$2.0 billion of the Company's common stock.stock, including an additional $500 million approved by the Company’s Board of Directors at its regular board meeting in April 2022. Shares of the Company's common stock may be purchased in the open market or through privately negotiated transactions, subject to market conditions, and generally settle subsequent to the trade date. The repurchase program does not obligate the Company to acquire any specific number of shares or to acquire shares over any specified period of time.

Under this program as of September 30, 2021,2022, the Company had repurchased 28.131.7 million shares at an aggregate purchase price of $1,145.0$1,470.6 million and has $355.0had $529.4 million remaining available. During the three and nine months ended September 30, 2021,2022, the Company purchasedrepurchased an aggregate of $72.3$286.9 million and $127.2 million, respectively, of the Company's common stock under this program. The Company did not repurchase common stock during the three months ended September 30, 2022.

NOTE 8—
NOTE 7 — STOCK-BASED COMPENSATION

The Company's Stock Incentive Plan allows for grants of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, and other stock-based or cash-based awards. The Company uses original issuance shares to satisfy share-based payments.
11

Table of Contents
Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANYSTOCK-BASED COMPENSATION EXPENSE
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Stock-Based Compensation Expense
Stock-based compensation expense consisted of the following:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2021202020212020
Stock options$1,500 $1,775 $5,271 $5,234 
Restricted stock units3,164 3,315 9,216 7,568 
Total$4,664 $5,090 $14,487 $12,802 

Stock Options
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Stock options$2,018 $1,500 $5,853 $5,271 
Restricted stock units3,417 3,164 10,218 9,216 
Total$5,435 $4,664 $16,071 $14,487 

STOCK OPTIONS

During the nine months ended September 30, 2021,2022, the Company granted a total of 545,976551,134 stock options at a weighted average grant date fair value of $17.55$18.29 per share.option. As of September 30, 2021,2022, unrecognized costs related to outstanding stock options totaled $13.0$14.9 million, before any related tax benefit. As of September 30, 2021,These unrecognized costs related to stock options are expected to be recognized over a weighted average remaining period of 2.562.42 years.
Restricted Stock Units
RESTRICTED STOCK UNITS

During the nine months ended September 30, 2021,2022, the Company granted 175,556246,031 restricted stock units at a weighted average grant date fair value of $96.06$85.29 per share.restricted stock unit. As of September 30, 2021,2022, unrecognized costs related to outstanding restricted stock units totaled $22.8$25.3 million, before any related tax benefit. As of September 30, 2021,These unrecognized costs related to restricted stock units are expected to be recognized over a weighted average remaining period of 2.332.49 years.

NOTE 9—
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 12

Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
NOTE 8 — EARNINGS PER SHARE

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

A reconciliation of the common shares used in the denominator for computing basic and diluted EPS is as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share amounts)2021202020212020
Weighted average common shares outstanding, used in computing basic earnings per share65,862 66,179 66,182 66,427 
Effect of dilutive stock options and restricted stock units404 358 491 380 
Weighted average common shares outstanding, used in computing diluted earnings per share66,266 66,537 66,673 66,807 
Earnings per share of common stock:
Basic$1.53 $0.95 $2.98 $0.18 
Diluted$1.52 $0.94 $2.96 $0.18 

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share amounts)2022202120222021
Weighted average common shares outstanding, used in computing basic earnings per share62,098 65,862 62,967 66,182 
Effect of dilutive stock options and restricted stock units112 404 211 491 
Weighted average common shares outstanding, used in computing diluted earnings per share62,210 66,266 63,178 66,673 
Earnings per share:
Basic$1.80 $1.53 $2.95 $2.98 
Diluted$1.80 $1.52 $2.94 $2.96 

Stock options, service-based restricted stock units, and performance-based restricted stock units representing 2,174,505 and 652,317 shares of common stock for the three months ended September 30, 2022 and 2021, respectively, and 1,738,354 and 810,092 shares of common stock for the three and nine months ended September 30, 2022 and 2021, respectively, were outstanding but were excluded from the computation of diluted EPS because their effect would have beenbe 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 representing 1,156,073 and 1,282,086 shares of common stock for the three and nine months ended September 30, 2020, respectively, were outstanding but were excluded from the computation of diluted EPS because their effect would have been anti-dilutive due to a net loss in the period or because the shares were subject to performance conditions that had not been met.
12


Table of Contents
Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
NOTE 10—
NOTE 9 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) on the unaudited Condensed Consolidated Balance Sheets is net of applicable taxes, and consists of unrealized 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 setstables set forth the changes in Accumulated other comprehensive income (loss) for the three months ended September 30, 2021::
(in thousands)Unrealized holding
gains (losses) on
derivative transactions
Foreign currency
 translation
adjustments
Total
Balance at June 30, 2021$(4,357)$2,201 $(2,156)
Other comprehensive income (loss) before reclassifications8,170 (11,422)(3,252)
Amounts reclassified from accumulated other comprehensive income (loss)(1)
2,382 — 2,382 
Net other comprehensive income (loss) during the year10,552 (11,422)(870)
Balance at September 30, 2021$6,195 $(9,221)$(3,026)

(in thousands)Unrealized gains (losses) on derivative transactionsForeign currency
 translation
adjustments
Total
Balance as of June 30, 2022$23,631 $(45,364)$(21,733)
Other comprehensive income (loss) before reclassifications17,191 (30,058)(12,867)
Amounts reclassified from accumulated other comprehensive income (loss) (1)
(2,970)— (2,970)
Net other comprehensive income (loss) during the year14,221 (30,058)(15,837)
Balance as of September 30, 2022$37,852 $(75,422)$(37,570)
(1)Amounts reclassified are recorded in Net sales or Cost of salesor Other non-operating income (expense) on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 1211 for further information regarding reclassifications.
The following table sets forth the changes
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 13

Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
(in thousands)Unrealized gains (losses) on derivative transactionsForeign currency
 translation
adjustments
Total
Balance as of June 30, 2021$(4,357)$2,201 $(2,156)
Other comprehensive income (loss) before reclassifications8,170 (11,422)(3,252)
Amounts reclassified from accumulated other comprehensive income (loss) (1)
2,382 — 2,382 
Net other comprehensive income (loss) during the year10,552 (11,422)(870)
Balance as of September 30, 2021$6,195 $(9,221)$(3,026)
(1) Amounts reclassified are recorded in Accumulated other comprehensiveNet sales, Cost of sales, or Other non-operating income (loss)(expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 11 for the three months ended September 30, 2020:further information regarding reclassifications.
(in thousands)Unrealized gains (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— (6,398)11,175 4,777 
Amounts reclassified from accumulated other comprehensive income (loss)(1)
— (5,287)— (5,287)
Net other comprehensive income (loss) during the year— (11,685)11,175 (510)
Balance at September 30, 2020$(4)$4,460 $(10,826)$(6,370)

(in thousands)Unrealized gains (losses) on available-for-sale securitiesUnrealized gains (losses) on derivative transactionsForeign currency
 translation
adjustments
Total
Balance as of December 31, 2021$—��$9,914 $(14,290)$(4,376)
Other comprehensive income (loss) before reclassifications(451)31,780 (61,132)(29,803)
Amounts reclassified from accumulated other comprehensive income (loss) (1)
451 (3,842)— (3,391)
Net other comprehensive income (loss) during the year— 27,938 (61,132)(33,194)
Balance as of September 30, 2022$— $37,852 $(75,422)$(37,570)
(1)Amounts reclassified are recorded in Net sales, Cost of sales, orOther non-operating income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 1211 for further information regarding reclassifications.
The following table sets forth the changes in Accumulated other comprehensive income (loss) for the nine months ended September 30, 2021:
(in thousands)(in thousands)Unrealized holding
gains (losses) on
derivative transactions
Foreign currency
 translation
adjustments
Total(in thousands)Unrealized gains (losses) on derivative transactionsForeign currency
 translation
adjustments
Total
Balance at December 31, 2020$(9,369)$10,175 $806 
Balance as of December 31, 2020Balance as of December 31, 2020$(9,369)$10,175 $806 
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications13,547 (19,396)(5,849)Other comprehensive income (loss) before reclassifications13,547 (19,396)(5,849)
Amounts reclassified from accumulated other comprehensive income (loss)(1)
Amounts reclassified from accumulated other comprehensive income (loss)(1)
2,017 — 2,017 
Amounts reclassified from accumulated other comprehensive income (loss) (1)
2,017 — 2,017 
Net other comprehensive income (loss) during the yearNet other comprehensive income (loss) during the year15,564 (19,396)(3,832)Net other comprehensive income (loss) during the year15,564 (19,396)(3,832)
Balance at September 30, 2021$6,195 $(9,221)$(3,026)
Balance as of September 30, 2021Balance as of September 30, 2021$6,195 $(9,221)$(3,026)
(1)Amounts reclassified are recorded in Net sales, Cost of sales, orOther non-operating income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 1211 for further information regarding reclassifications.
13

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Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 14
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table sets forth the changes in Accumulated other comprehensive income (loss) for the nine months ended September 30, 2020:

(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, 2019$(4)$9,482 $(13,903)$(4,425)
Other comprehensive income before reclassifications— 4,617 3,077 7,694 
Amounts reclassified from accumulated other comprehensive income (loss)(1)
— (9,639)— (9,639)
Net other comprehensive income (loss) during the year— (5,022)3,077 (1,945)
Balance at September 30, 2020$(4)$4,460 $(10,826)$(6,370)
Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
NOTE 10 — SEGMENT INFORMATION
(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 12 for further information regarding reclassifications.
NOTE 11—SEGMENT INFORMATION
The Company has 4four reportable geographic segments: U.S., LAAP, EMEA, and Canada, which are reflective of the Company's internal organization, management and oversight structure. Each geographic segment operates predominantly in one industry: the design, development, marketing, and distribution of outdoor, active and everyday lifestyle products, including apparel, footwear, accessories, and equipment products.equipment. Intersegment net sales and intersegment profits, which are recorded at a negotiated mark-up and eliminated in consolidation, are not material. Unallocated corporate expenses consist of expenses incurred by centrally-managed departments, including global information services, certain supply chain functions, finance, human resources and legal, as well as executive compensation, unallocated benefit program expense, and other miscellaneous costs.

The following table presents financial information for the Company's reportable segments:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2021202020212020
Net sales to unrelated entities:
U.S.$510,486 $445,620 $1,298,213 $1,004,733 
LAAP102,754 90,951 292,706 260,912 
EMEA109,150 99,159 268,489 213,298 
Canada82,316 65,362 137,274 106,988 
$804,706 $701,092 $1,996,682 $1,585,931 
Segment operating income:
U.S.$139,101 $96,577 $320,819 $118,454 
LAAP7,628 4,736 16,347 8,690 
EMEA26,215 18,959 47,809 19,032 
Canada22,849 19,767 29,710 15,142 
Total segment operating income195,793 140,039 414,685 161,318 
Unallocated corporate expenses(62,332)(54,396)(175,749)(147,962)
Interest income (expense), net196 (280)1,072 728 
Other non-operating income (expense), net201 (465)(397)2,208 
Income before income tax$133,858 $84,898 $239,611 $16,292 

Concentrations
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Net sales to unrelated entities:
U.S.$607,074 $510,486 $1,521,453 $1,298,213 
LAAP115,328 102,754 309,896 292,706 
EMEA153,530 109,150 305,789 268,489 
Canada79,127 82,316 157,494 137,274 
$955,059 $804,706 $2,294,632 $1,996,682 
Segment operating income
U.S.$145,268 $139,101 $325,790 $320,819 
LAAP11,771 7,628 21,712 16,347 
EMEA35,567 26,215 51,036 47,809 
Canada20,237 22,849 31,913 29,710 
Total segment operating income212,843 195,793 430,451 414,685 
Unallocated corporate expenses(67,582)(62,332)(192,751)(175,749)
Interest income, net765 196 1,659 1,072 
Other non-operating income (expense), net(269)201 (1,660)(397)
Income before income tax$145,757 $133,858 $237,699 $239,611 

CONCENTRATIONS

The Company had 1did not have any customer that accounted for 10.4%, 14.3% and 11.4%10% or more of Accounts receivable, net on the Condensed Consolidated Balance Sheets as of September 30, 2021,2022. The Company had one customer that accounted for approximately 14.3% and 10.4% of Accounts receivable, net as of December 31, 2020,2021 and September 30, 2020,2021, respectively. No single
14

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Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company did not have any customer that accounted for 10% or more of Net sales in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 20212022 and 2020.September 30, 2021.

NOTE 12—
NOTE 11 — FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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

The Company actively manages the risk of changes in functional currency equivalent cash flows resulting from anticipated non-functional currency denominated purchases and sales. Subsidiaries that use European euros, Canadian dollars, Japanese yen, Chinese renminbi, or Korean won as their functional currency are primarily exposed to changes in functional currency equivalent cash flows from anticipated United States dollar inventory purchases. Subsidiaries that use United States dollars and European euros as their functional currency also
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 15

Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
have non-functional currency denominated sales for which the Company hedges the Canadian dollar and British pound. The Company managesseeks to manage these risks by using currency forward contracts formally designated and effective as cash flow hedges. Hedge effectiveness is generally determined by evaluating the ability of a hedging instrument's cumulative change in fair value to offset the cumulative change in the present value of expected cash flows on the underlying exposures. ForTime value components ("forward points") for forward contracts forward points are included in the fair value of the cash flow hedge. These costs or benefits arewill be included in Accumulated other comprehensive income (loss) until the underlying hedge transaction is recognized in either Net sales or Cost of sales, at which time, the forward points will also be recognized as a component of Net income.

The Company also uses currency forward contracts not formally designated as hedges to manage the consolidated currency exchange rate risk associated with the remeasurement of non-functional currency denominated monetary assets and liabilities by subsidiaries that use United States dollars, euros, Canadian dollars, yen, 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), net by the gains and losses generated from the remeasurement of the non-functional currency denominated monetary assets and liabilities.

The following table presents the gross notional amount of outstanding derivative instruments:
(in thousands)September 30, 2021December 31, 2020September 30, 2020
Derivative instruments designated as cash flow hedges:
Currency forward contracts$471,250 $417,707 $419,402 
Derivative instruments not designated as cash flow hedges:
Currency forward contracts247,134 326,280 224,573 

(in thousands)September 30, 2022December 31, 2021September 30, 2021
Derivative instruments designated as cash flow hedges:
Currency forward contracts$459,189 $485,083 $471,250 
Derivative instruments not designated as hedges:
Currency forward contracts287,825 267,982 247,134 
At
As of September 30, 2021, $0.32022, $30.4 million of deferred net lossesgains on both outstanding and matured derivatives recorded in OtherAccumulated other comprehensive lossincome (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, or Other non-operating income (expense), net in the unaudited Condensed Consolidated Statements of Operations. ActualWhen outstanding derivative contracts mature, actual amounts ultimately reclassified to Net sales, or Cost of sales, or Other non-operating income (expense), net in the unaudited Condensed Consolidated Statements of Comprehensive IncomeOperations are dependent on United States dollar exchange rates in effect against the euro, pound sterling, renminbi, Canadian dollar, and yen when outstanding derivative contracts mature.as well as the euro exchange rate in effect against the pound sterling.
At
As of September 30, 2021,2022, the Company's derivative contracts had a remaining maturity of less than fourthree 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 $3.5$13.1 million atas of September 30, 2021.2022. All of the Company's derivative counterparties have credit ratings that are investment grade or higher. The Company is a party to master netting arrangements that contain features that allow counterparties to net settle amounts arising from multiple separate derivative transactions or net settle in the case of certain triggering events such as a bankruptcy or major default of one of the counterparties to the transaction. The Company has not pledged assets or posted collateral as a requirement for entering into or maintaining derivative positions.

15
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 16

Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the balance sheet classification and fair value of derivative instruments:
(in thousands)Balance Sheet ClassificationSeptember 30, 2021December 31, 2020September 30, 2020
Derivative instruments designated as cash flow hedges:
Derivative instruments in asset positions:
Currency forward contractsPrepaid expenses and other current assets$5,500 $947 $4,729 
Currency forward contractsOther non-current assets8,723 1,126 3,454 
Derivative instruments in liability positions:
Currency forward contractsAccrued liabilities2,164 7,573 2,034 
Currency forward contractsOther long-term liabilities449 6,590 1,186 
Derivative instruments not designated as cash flow hedges:
Derivative instruments in asset positions:
Currency forward contractsPrepaid expenses and other current assets1,633 1,650 2,211 
Currency forward contractsOther non-current assets109 — — 
Derivative instruments in liability positions:
Currency forward contractsAccrued liabilities251 2,268 381 
Currency forward contractsOther long-term liabilities17 — — 

16

Table of Contents
(in thousands)Balance Sheet
Classification
September 30, 2022December 31, 2021September 30, 2021
Derivative instruments designated as cash flow hedges:
Derivative instruments in asset positions:
Currency forward contractsPrepaid expenses and other current assets$32,289 $7,927 $5,500 
Currency forward contractsOther non-current assets13,919 10,142 8,723 
Derivative instruments in liability positions:
Currency forward contractsAccrued liabilities— 2,545 2,164 
Currency forward contractsOther long-term liabilities436 318 449 
Derivative instruments not designated as cash flow hedges:
Derivative instruments in asset positions:
Currency forward contractsPrepaid expenses and other current assets2,912 1,470 1,633 
Currency forward contractsOther non-current assets— — 109 
Derivative instruments in liability positions:
Currency forward contractsAccrued liabilities1,514 1,027 251 
Currency forward contractsOther long-term liabilities— — 17 
Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents the statement of operations effect and classification of derivative instruments:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)Statement Of Operations Classification2021202020212020
Currency Forward Contracts:
Derivative instruments designated as cash flow hedges:
Gain (loss) recognized in other comprehensive loss, net of tax$8,170 $(6,398)$13,547 $4,617 
Gain (loss) reclassified from accumulated other comprehensive income (loss) to income for the effective portionNet sales(170)80 (182)123 
Gain (loss) reclassified from accumulated other comprehensive income (loss) to income for the effective portionCost of sales(3,257)6,906 (2,833)11,527 
Gain reclassified from accumulated other comprehensive income (loss) to income as a result of cash flow hedge discontinuanceOther non-operating income (expense), net345 60 451 1,177 
Derivative instruments not designated as cash flow hedges:
Gain (loss) recognized in incomeOther non-operating income (expense), net1,077 (1,795)355 (465)

Statement Of
Operations
Classification
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Currency Forward Contracts:
Derivative instruments designated as cash flow hedges:
Gain recognized in other comprehensive income (loss), net of tax$17,191 $8,170 $31,780 $13,547 
Loss reclassified from accumulated other comprehensive income (loss) to income for the effective portionNet sales(28)(170)(204)(182)
Gain (loss) reclassified from accumulated other comprehensive income (loss) to income for the effective portionCost of sales4,114 (3,257)5,373 (2,833)
Gain reclassified from accumulated other comprehensive income (loss) to income as a result of cash flow hedge discontinuanceOther non-operating income (expense), net— 345 222 451 
Derivative instruments not designated as cash flow hedges:
Gain recognized in incomeOther non-operating income (expense), net1,341 1,077 2,638 355 
NOTE 13—


COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 17

Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
NOTE 12 — FAIR VALUE MEASURES

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

Level 1observable inputs such as quoted prices for identical assets or liabilities in active liquid markets;
Level 2inputs, 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 3unobservable inputs for which there is little or no market data available, that require the reporting entity to develop its own assumptions.

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

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 are as follows:

(in thousands)Level 1Level 2Level 3Total
Assets:
Short-term investments:
Money market funds$79 $— $— $79 
Mutual fund shares893 — — 893 
Other current assets:
Derivative financial instruments— 35,201 — 35,201 
Non-current assets:
Money market funds1,201 — — 1,201 
Mutual fund shares17,332 — — 17,332 
Derivative financial instruments— 13,919 — 13,919 
Total assets measured at fair value$19,505 $49,120 $— $68,625 
Liabilities:
Accrued liabilities:
Derivative financial instruments$— $1,514 $— $1,514 
Other long-term liabilities:
Derivative financial instruments— 436 — 436 
Total liabilities measured at fair value$— $1,950 $— $1,950 


17
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 18

Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 are as follows:

(in thousands)Level 1Level 2Level 3Total
Assets:
Cash equivalents:
Money market funds$2,677 $— $— $2,677 
Available-for-sale short-term investments:(1)
U.S. Government treasury bills— 130,168 — 130,168 
Other short-term investments:
Money market funds73 — — 73 
Mutual fund shares904 — — 904 
Other current assets:
Derivative financial instruments— 9,397 — 9,397 
Non-current assets:
Money market funds2,219 — — 2,219 
Mutual fund shares19,606 — — 19,606 
Derivative financial instruments— 10,142 — 10,142 
Total assets measured at fair value$25,479 $149,707 $— $175,186 
Liabilities:
Accrued liabilities:
Derivative financial instruments$— $3,572 $— $3,572 
Other long-term liabilities:
Derivative financial instruments— 318 — 318 
Total liabilities measured at fair value$— $3,890 $— $3,890 
(1) Available-for-sale short-term investments have remaining maturities of less than one year.
Index to Notes to Consolidated Financial Statements


COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 19
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Notes to Condensed Consolidated Financial Statements (Unaudited)
colm-20220930_g1.jpg
Assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 are as follows:

(in thousands)Level 1Level 2Level 3Total
Assets:
Cash equivalents:
Money market funds$2,903 $— $— $2,903 
Short-term investments:
Money market funds67 — — 67 
Mutual fund shares1,065 — — 1,065 
Other current assets:
Derivative financial instruments— 7,133 — 7,133 
Non-current assets:
Money market funds3,397 — — 3,397 
Mutual fund shares17,209 — — 17,209 
Derivative financial instruments— 8,832 — 8,832 
Total assets measured at fair value$24,641 $15,965 $— $40,606 
Liabilities:
Accrued liabilities:
Derivative financial instruments$— $2,415 $— $2,415 
Other long-term liabilities:
Derivative financial instruments— 466 — 466 
Total liabilities measured at fair value$— $2,881 $— $2,881 

18

Table of Contents
Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Assets and liabilities measured at fair value on a recurring basis at December 31, 2020 are as follows:
(in thousands)Level 1Level 2Level 3Total
Assets:
Cash equivalents:
Money market funds$119,378 $— $— $119,378 
United States government treasury bills— 234,982 — 234,982 
Short-term investments:
Money market funds105 — — 105 
Mutual fund shares1,119 — — 1,119 
Other current assets:
Derivative financial instruments— 2,597 — 2,597 
Non-current assets:
Money market funds4,059 — — 4,059 
Mutual fund shares14,657 — — 14,657 
Derivative financial instruments— 1,126 — 1,126 
Total assets measured at fair value$139,318 $238,705 $— $378,023 
Liabilities:
Accrued liabilities:
Derivative financial instruments$— $9,841 $— $9,841 
Other long-term liabilities:
Derivative financial instruments— 6,590 — 6,590 
Total liabilities measured at fair value$— $16,431 $— $16,431 
19

Table of Contents
Index to Notes to Consolidated Financial Statements
COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Assets and liabilities measured at fair value on a recurring basis at September 30, 2020 are as follows:
(in thousands)Level 1Level 2Level 3Total
Assets:
Cash equivalents:
Money market funds$56,337 $— $— $56,337 
Short-term investments:
Money market funds70 — — 70 
Mutual fund shares1,025 — — 1,025 
Other current assets:
Derivative financial instruments— 6,940 — 6,940 
Non-current assets:
Money market funds4,621 — — 4,621 
Mutual fund shares11,974 — — 11,974 
Derivative financial instruments— 3,454 — 3,454 
Total assets measured at fair value$74,027 $10,394 $— $84,421 
Liabilities:
Accrued liabilities:
Derivative financial instruments$— $2,415 $— $2,415 
Other long-term liabilities:
Derivative financial instruments— 1,186 — 1,186 
Total liabilities measured at fair value$— $3,601 $— $3,601 
| 2022 FORM 10-Q | 20

colm-20220930_g1.jpg
Item 2.    
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SpecialThe following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Special Note Regarding Forward Looking Statements
This quarterly report contains forward-looking statements within the meaning of federal securities laws. Forward-looking statements often use words such as "will"Forward-Looking Statements", "anticipate", "estimate", "expect", "should", "may"Part I, Item 1 and other words and terms of similar meaning or reference future dates. Forward-looking statements include any statements related to our expectations regarding future performance or market position, including any statements regarding the impacts of the COVID-19 pandemic, store traffic, supply chain disruptions, constraints and costs, inventory receipts and deliveries, net sales and gross margin, profitability, return on investments, inflationary pressures and related price increases, performance obligations, unrecognized costs, derivative instruments, inventory purchase obligations, income tax rates, materiality of legal matters, our ability to meet our liquidity needs, amortization expenses and maturities of liabilities.
These forward-looking statements, and others we make from time to time expressed in good faith, are believed to have a reasonable basis; however, each forward-looking statement involves risks and uncertainties. Many factors may cause actual results to differ materially from projected results in forward-looking statements, including the risks described inPart II, Item 1A of this quarterly report. Forward-looking statements are inherently less reliable than historical information. Except as required by law, we do not undertake any dutyQuarterly Report on Form 10-Q. In addition, refer to update forward-looking statements afterItem 7 in our Annual Report on Form 10-K for the date they are made oryear ended December 31, 2021 for our discussion and analysis comparing financial condition and results of operations from 2021 to conform them to actual results or to changes in circumstances or to reflect changes in events, circumstances or expectations. New factors emerge from time to time and it is not possible for us to predict or assess the effects of all such factors or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.2020.

Our BusinessOVERVIEW

We connect active people with their passionspassions. We are a global leader in designing, developing, marketing, and distributing outdoor, active and lifestyle products. We manage these products in two categories: apparel, accessories, and equipment products and footwear products. We provide our products through our four well-known brands,brands: Columbia, SOREL, Mountain Hardwear, and prAna, by designing, developing, marketing, and distributing our outdoor, active and everyday lifestyle apparel, footwear,prAna. Apparel, accessories, and equipment products to meet the diverse needs ofare provided by our customersColumbia, Mountain Hardwear and consumers. OurprAna brands. Footwear products are soldprovided by our Columbia and SOREL brands. We sell our products in approximately 90 countries and operate in four geographic segments: U.S., LAAP, EMEA, and Canada.

On September 22, 2022, we refined our long-term growth strategy. We are investing in our strategic priorities to:
accelerate profitable growth;
create iconic products that are differentiated, functional and innovative;
drive brand engagement through increased, focused demand creation investments;
enhance consumer experiences by investing in capabilities to delight and retain consumers;
amplify marketplace excellence , with digitally-led, omni-channel, global distribution; and
empower talent that is driven by our core values through a mix of wholesale distribution channels,diverse and inclusive workplace.

Ultimately, we expect our own direct-to-consumer ("DTC") businessesinvestments to enable market share capture across our brand portfolio, expand gross margin, improve selling, general and independent international distributors.administrative expense efficiency, and drive improved operating margin over the long-term.

Business Environment and Trends

Changes in Consumer Spending Ability and Preferences | In 2021, we believe government stimulus and unemployment benefits increased consumers’ discretionary spending ability. In addition, we license somebelieve we benefited as consumers shifted from service-based to product-based spending due to their limited ability to travel, attend entertainment-based experiences or purchase certain services. Beginning in the second quarter of 2022, we believe U.S. inflationary pressures, rising interest rates and recession fears are weighing on the market. As a result, we expect consumer discretionary spending will come under increasing pressure over the next several months.

Increased Inflationary Pressures | Inflationary pressures, including inbound freight, raw materials, labor and product input costs, impacted our results in the first nine months of 2022. We implemented product price increases for our Spring 2022 season and, to a greater extent, for our Fall 2022 season. Price increases varied by market and product category. In the U.S., on average, we increased pricing by a mid-single digit percent for our Spring 2022 product line and by a high-single to low-double-digit percent for our Fall 2022 product line. Although price increases are not expected to offset gross margin pressure in 2022, we are beginning to experience lower inbound freight costs which will benefit gross margin over time. As inbound freight costs subside and begin to offset inflationary cost pressures, including raw materials and labor, we expect lower product price increases in 2023.

Strengthening U.S. Dollar | The rapid strengthening of the U.S. dollar relative to major foreign currencies unfavorably impacted our results in the first nine months of 2022. The impact of unfavorable foreign currency translation is anticipated to continue to reduce 2022 net sales growth and profitability. We anticipate this trend to continue into 2023, impacting both the translation of our trademarks acrossearnings as well as our foreign currency hedging of inventory purchases and non-functional currency sales.

Changing Geopolitical Environment | The macro-geopolitical environment changed rapidly as a rangeresult of apparel, footwear, accessories, equipmentthe invasion of Ukraine by Russian forces in the first quarter of 2022. We do not have any direct operations in Russia and home products.historically have operated in that market through a contract with a third-party international distributor on an advance order basis. We paused taking new orders from this distributor for Russia, Ukraine, and Belarus following the invasion. However, prior to the conflict, we had already taken Fall 2022 orders from this distributor under its contract, certain of which we planned to and did fulfill in the third quarter of 2022. The impact of the invasion is being felt not only in
The popularity
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 21

our relationship with this distributor, but also increased political tensions throughout the globe. These political tensions have the potential to manifest themselves in certain regions where we directly operate.

Increased Freight Charges | In the first nine months of outdoor activities, active2022, we experienced elevated ocean freight charges as a result of an imbalance of supply and everyday lifestyles, changing design trends, consumer adoptiondemand for steamship and ocean container capacity. As a result, these costs have had a substantially unfavorable impact on our gross margin. More recently, we began to experience declines in ocean freight charges. We anticipate this shift in trend to continue for the remainder of innovative performance technologies, variations2022 and into 2023, and to benefit gross margin over time. We capitalize the cost of inbound freight into inventory, which creates a lag from the period in seasonal weather,which we experience the decline in these charges and the availability and desirability of competitor alternatives affect consumer desire for our products. Therefore, we seeksubsequent impact to drive, anticipate and respondgross margin. Additionally, elevated oil prices continue to trends and shiftsresult in consumer preferences by developing new products and 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.
Our production cyclefuel surcharges from the design to the deliverycertain of our products requires significantfreight carriers that deliver product to our retail stores and to consumers.

Later Inventory Receipts | During the third quarter of 2021, several weeks of government mandated factory closures in Vietnam disrupted our manufacturing partners' operations and impacted production of product. As a result of these and other supply chain disruptions, we received Fall 2021, Spring 2022 and Fall 2022 inventory commitment. We generally solicitlater than expected.

For most of the second quarter of 2022, government efforts to control the spread of COVID-19 in China disrupted our distribution center's operations, which resulted in an inability to fulfill e-commerce, wholesale and owned DTC stores orders in China. In July 2022, certain disruptions from these government efforts eased. Excluding disruptions from government efforts to control the spread of COVID-19 as well as potential risks associated with the International Longshore and Warehouse Union negotiations, we expect supply chain inbound transit times to continue to modestly improve by late 2022. However, we continue to anticipate longer than historical inbound transit times for inventory receipts and shipments to our wholesale customers and independent international distributorsinventory available for our DTC businesses in 2022, potentially resulting in impacts to future net sales and gross margin.

Looking forward to the Spring 2023 product season, we expect inventory production and logistics transit times to improve markedly and be more in-line with our historical experience, assuming no material downturn in port and railroad labor relations.

Excess Inventory Across the Marketplace | Strong consumer demand in 2021 and the first half of 2022 coupled with ongoing supply chain constraints resulted in a shortage of inventory in the marketplace. By the end of the second quarter of 2022, the arrival of long-delayed orders at retailers and a slowing of consumer demand resulted in excess inventory in the marketplace. With higher marketplace inventories and a rapidly changing economic environment, retailers are rationalizing their inventory needs. As a result, we experienced and continue to expect increased order cancellations for Spring 2022 and Fall 2022 orders. Because we expect marketplace inventories to remain elevated and order cancellations to continue, we are adjusting future inventory purchases and plan to utilize our outlet stores to sell a portion of our excess inventory.

Increased U.S. Distribution Center Capacity Pressure | Elevated inventory levels combined with uneven flow of inventory receipts and shipments is resulting in storage and process capacity pressures within our U.S. distribution centers. We began to experience these pressures as we started moving Fall 2022 inventory into the marketplace. As a result of these expected pressures, our operations may be less efficient, and we expect to incur additional labor, outside storage and other costs.

Continued Labor Shortages | Labor shortages continue to be prevalent in the U.S. and labor costs have risen in an effort to compete for employees. We have made certain wage adjustments in an effort to be more competitive in the current environment and have diminished the effects of current labor shortages on our operations at this time. However, we anticipate rising costs and labor shortages to continue 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 shipremainder of 2022 resulting from the continued competition for talent.

Changes in Direct-to-Consumer Store Traffic | For the first nine months of 2022, the majority of our advance spring season ordersstores remained open in all major markets except China. For most of the second quarter of 2022, government efforts to customers beginning in January and continuing through June. Similarly, we typically shipcontrol the majorityspread of COVID-19 impacted many of our advance fall season orders to customers beginningstores in July and continuing through December. Subsequent to advance order placements, wholesale customers may request replenishment orders for various productsChina. In the third quarter of 2022, the easing of shutdowns as a result of China's zero-COVID policies improved consumer demand, increases. Generally, orders are subjectfavorably impacting the performance of our stores in China. Overall, our global store retail traffic trends continued to cancellation priorimprove, with our U.S. retail store traffic recovering to pre-pandemic levels in the first nine months of 2022. We expect store traffic to remain uneven across our store fleet.

Changes in Promotional Environment | In the first half of 2022, we operated in a low promotional environment and experienced fewer sales returns and customer accommodations than we have historically. In the third quarter of 2022, an increase in promotional activity began to unfavorably impact our DTC product margins compared to the datesame period from prior year in which promotions were exceptionally low. With elevated marketplace inventory, we anticipate the promotional environment and less favorable trading terms to continue.

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 22

Increased Outdoor Participation by Consumers | The COVID-19 pandemic drew a record number of shipment.individuals in the United States to spend an increased amount of time outside, including participating in outdoor recreational activities. While outdoor participation rates may not be maintained, we believe that our addressable consumer base worldwide has been expanded and expect outdoor participation to remain elevated in comparison to pre-pandemic levels.

Casualization of the Apparel and Footwear Market | During the COVID-19 pandemic, we saw a move to casualization by consumers. Our products provide comfort and function in diverse environments. We believe we have benefited from this trend and expect it to continue to be a tailwind moving forward.

Changing Consumer Expectations | Consumer behavior continues to fluctuate. Consumer expectations and the related competitive pressures have increased and continue to increase relative to various aspects of our e-commerce business, including speed of product delivery, shipping charges, return privileges and other evolving expectations. We maintain and continue to make substantial investments in information systems, processes and personnel to support our ongoing demand planning efforts to provide forecasting of optimal inventory to meet customer and consumer demands.

Seasonality |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 2020, approximately 65%2021, over 60% of our net sales and the majorityover 75% of our operating income were realized in the second half of the year. Although impacts from the ongoing COVID-19 pandemic exacerbated seasonal net sales and profitability patterns, this still illustrates our dependence upon sales results in the second half of the year, as well as the less seasonal nature of our operating costs.
Results of operations in any period should not be considered indicative of the results to be expected for any future period.
COVID-19 and Supply Chain Update
The COVID-19 pandemic continues to impact the global economy. In response to this pandemic, many regional and local governments worldwide continue to implement travel restrictions, business shutdowns or slowdowns, and shelter-in-place or stay-at-home orders.
21

In the first nine months of 2021, the majority of our stores remained open. For most of the first quarter of 2021, government mandated lockdowns impacted our stores in Europe, Canada and Japan. At varying times during the second quarter of 2021, government mandated lockdowns, including pandemic-related temporary store closures or reduced store operating hours, impacted stores in Japan, China, Europe and Canada. At varying times during the third quarter of 2021, government mandated lockdowns, including pandemic-related temporary store closures or reduced store operating hours, impacted stores in Japan and China. Overall, our store retail traffic trends improved in the first nine months of 2021, but remained below pre-pandemic levels. Stores in destination locations and tourist-dependent markets were some of the most impacted stores within our fleet.
In addition, certain of our wholesale customers and international distributors experienced a similar timeline and closed stores or reduced operating hours. Despite these impacts, consumer demand accelerated in the first nine months of 2021 and we did not realize significant wholesale order cancellations or customer accommodations.
We, our third party partners and our customers continue to be impacted by the supply chain environment, including freight capacity, port congestion, production factory closures, and other logistics constraints. In the first nine months of 2021, these disruptions and constraints resulted in later timing of Fall 2021 inventory receipts and shipments, as well as higher freight and logistics costs. We expect these supply chain disruptions, constraints and increases in costs to continue through the balance of this year and into 2022. In addition, during the third quarter of 2021, government mandated factory closures in Vietnam disrupted our manufacturing partners' operations and impacted production of Fall 2021 and Spring 2022 product. Factories in Vietnam began to reopen as of October 1, 2021 at less than full capacity. As a result of these supply chain disruptions and temporary factory closures, we anticipate later than expected Fall 2021 and Spring 2022 inventory receipts and shipments to our wholesale customers and inventory availability for our DTC businesses, resulting in impacts to our future net sales and gross margin.
Business Outlook
The ongoing business disruption and uncertainty surrounding the COVID-19 pandemic and the global supply chain make it difficult to predict our future results. Consistent with the seasonality and variability of our business, we anticipate 2021 profitability to be weighted toward the second half of the year.
Our full year 2021 financial results are being, or could be, significantly impacted by the following factors:RESULTS OF OPERATIONS
the ability of third-party logistics providers to service the demands of our business and the retail industry generally, which may result in cancellations of advance wholesale and distributor orders and reduced availability of inventory to support our DTC business;
increasing operating costs associated with a constrained supply chain, including increased ocean freight and other logistics related costs;
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 close-out product sales, and suppressed customer and end-consumer demand in subsequent seasons;
our ability to staff and operate our U.S. distribution centers, retail stores, and consumer call center during the peak holiday season amid U,S. labor shortages;
our ability to secure production capacity with our contract manufacturers, and their ability to maintain operations as pandemic-related outbreaks impact less vaccinated countries/regions;
changes in consumer demand as a result of ongoing effects from the COVID-19 pandemic and/or related governmental actions and regulations, and any potential incremental cost that may be associated with a U.S. government vaccine mandate or related testing protocol;
growth, performance and profitability of our global DTC operations, including depressed consumer traffic in our retail stores and elevated DTC e-commerce growth trends;
increasing consumer expectations and competitive pressure related to various aspects of our e-commerce business, including speed of product delivery, shipping charges, return privileges and other evolving expectations;
our ability to effectively manage our inventory, including liquidating excess inventory timely and profitably through close-out sales in our wholesale and DTC businesses; and
difficult economic, geopolitical and competitive environments in certain key markets globally, coupled with global economic uncertainty.
We expect many of these factors to continue into 2022.
In addition, we expect inflationary pressures to continue to build across our business beyond 2021. We are implementing price increases beginning with our Spring 2022 season and, to a greater extent, our Fall 2022 season to mitigate these higher costs, to the
22

extent possible, while attempting to minimize potential risks to dampening consumer demand. We do not expect planned price increases will fully offset these gross margin pressures.
Strategic Priorities
We are committed to driving sustainable and profitable long-term growth and investing in our strategic priorities to:
drive global brand awareness and sales growth through increased, focused demand creation investments;
enhance consumer experience and digital capabilities in all of our channels and geographies;
expand and improve global DTC operations with supporting processes and systems; and
invest in our people and optimize our organization across our portfolio of brands.
Ultimately, we expect our investments to enable market share capture across our brand portfolio, expand gross margin, improve selling, general and administrative expense efficiency, and drive improved operating margin over the long-term.
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 Notes that appear in Part 1,I, Item 1 Financial Statements inof this quarterly report.Quarterly Report on Form 10-Q. All references to quarters relate to the quarter ended September 30 of thethat particular year.

Non-GAAP Financial Measure

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 foreign currency exchange rates against the 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 United States dollars at the exchange rates used to translate net sales generatedthat were in foreign currencies into United States dollars.effect during the comparable period of the prior year. 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 measure 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.

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 23

Results of Contents
Highlights of the Third Quarter of 2021Operations — Consolidated
Net sales increased $103.6 million, or 15%, to $804.7 million, from $701.1 million in the third quarter of 2020.
Gross profit as a percentage of net sales expanded to 50.7% from 48.9% in the third quarter of 2020.
Operating income increased $47.9 million to $133.5 million from $85.6 million in the third quarter of 2020.
Income tax expense increased $11.2 million to $33.3 million from $22.1 million in the third quarter of 2020.
Net income increased $37.8 million to $100.6 million, or $1.52 per diluted share, from $62.8 million, or $0.94 per diluted share, in the third quarter of 2020.
Net cash used in operating activities for the nine months ended September 30, 2021 decreased $182.3 million to $15.6 million, compared to net cash used in operating activities of $198.0 million for the comparable period in 2020.
We paid cash dividends to shareholders totaling $17.1 million, or $0.26 per share.
The following table presents the items in our unaudited Condensed Consolidated Statements of Operations, both in dollars and as a percentage of net sales:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net sales100.0 %100.0 %100.0 %100.0 %
Cost of sales49.3 51.1 48.8 52.0 
Gross profit50.7 48.9 51.2 48.0 
Selling, general and administrative expenses34.8 37.3 39.9 47.6 
Net licensing income0.7 0.6 0.7 0.4 
Operating income16.6 12.2 12.0 0.8 
Interest income (expense), net— — — 0.1 
Other non-operating income (expense), net— (0.1)— 0.1 
Income before income tax16.6 12.1 12.0 1.0 
Income tax expense(4.1)(3.1)(2.1)(0.2)
Net income12.5 %9.0 %9.9 %0.8 %

Three Months Ended September 30,Nine Months Ended September 30,
(in millions, except for percentage of net sales and per share amounts)2022202120222021
Net sales$955.0 100.0 %$804.7 100.0 %$2,294.6 100.0 %$1,996.7 100.0 %
Cost of sales496.5 52.0 396.3 49.3 1,173.5 51.1 974.4 48.8 
Gross profit458.5 48.0 408.4 50.7 1,121.1 48.9 1,022.3 51.2 
Selling, general and administrative expenses319.0 33.4 280.1 34.8 899.3 39.2 796.3 39.9 
Net licensing income5.8 0.6 5.2 0.7 15.9 0.7 12.9 0.7 
Operating income145.3 15.2 133.5 16.6 237.7 10.4 238.9 12.0 
Interest income, net0.8 0.1 0.2 — 1.7 0.1 1.1 — 
Other non-operating income (expense), net(0.3)— 0.2 — (1.7)(0.1)(0.4)— 
Income before income tax145.8 15.3 133.9 16.6 237.7 10.4 239.6 12.0 
Income tax expense(34.0)(3.6)(33.3)(4.1)(51.9)(2.3)(42.5)(2.1)
Net income$111.8 11.7 %$100.6 12.5 %$185.8 8.1 %$197.1 9.9 %
Diluted earnings per share$1.80 $1.52 $2.94 $2.96 

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Results of Operations Consolidated
QuarterThree Months Ended September 30, 20212022 Compared to QuarterThree Months Ended September 30, 20202021

Net Sales: Sales.Consolidated net sales increased $103.6 million, or 15%, to $804.7 million for the third quarter 2021 from $701.1 million for the comparable period in 2020. The increase primarily reflects higher consumer demand and economic recovery from the ongoing COVID-19 pandemic. This increase was constrained by supply chain disruptions that resulted in later inventory receipts and lower than expected wholesale shipments during the quarter.
Net sales increased across all regions, primarily driven by increased Columbia brand net sales in our U.S. DTC, Canada, LAAP and Europe businesses. Our global DTC e-commerce business grew 6% and represented 11% of our global net sales for the third quarter 2021, compared to 12% of our global net sales for the same period in 2020.
Net sales by brand, product category and channel are summarized in the following table:
Three Months Ended September 30,
(in millions, except for percentage changes)
Reported
Net Sales
2021
Adjust for Foreign Currency Translation
Constant-currency
Net Sales
2021(1)
Reported
Net Sales
2020
Reported
Net Sales
% Change
Constant-currency
Net Sales
% Change(1)
Brand Net Sales:
Columbia$651.5 $(7.6)$643.9 $559.7 16%15%
SOREL88.1 (0.9)87.2 91.5 (4)%(5)%
prAna36.4 — 36.4 30.5 19%19%
Mountain Hardwear28.7 (0.1)28.6 19.4 48%47%
Total$804.7 $(8.6)$796.1 $701.1 15%14%
Product Category Net Sales:
Apparel, Accessories and Equipment$621.1 $(6.3)$614.8 $510.2 22%21%
Footwear183.6 (2.3)181.3 190.9 (4)%(5)%
Total$804.7 $(8.6)$796.1 $701.1 15%14%
Channel Net Sales:
Wholesale$518.2 $(6.7)$511.5 $471.5 10%8%
DTC286.5 (1.9)284.6 229.6 25%24%
Total$804.7 $(8.6)$796.1 $701.1 15%14%

Three Months Ended September 30,
(in millions, except for percentages)
Reported
Net Sales
2022
Adjust for Foreign Currency Translation
Constant-currency
Net Sales
2022 (1)
Reported
Net Sales
2021
Reported
Net Sales
% Change
Constant-currency
Net Sales
% Change (1)
Brand Net Sales:
Columbia$773.3 $26.6 $799.9 $651.5 19%23%
SOREL112.4 2.6 115.0 88.1 28%31%
prAna37.4 — 37.4 36.4 3%3%
Mountain Hardwear31.9 0.4 32.3 28.7 11%13%
Total$955.0 $29.6 $984.6 $804.7 19%22%
Product Category Net Sales:
Apparel, Accessories and Equipment$726.3 $21.2 $747.5 $621.1 17%20%
Footwear228.7 8.4 237.1 183.6 25%29%
Total$955.0 $29.6 $984.6 $804.7 19%22%
Channel Net Sales:
Wholesale$645.1 $20.4 $665.5 $518.2 24%28%
DTC309.9 9.2 319.1 286.5 8%11%
Total$955.0 $29.6 $984.6 $804.7 19%22%
(1)Constant-currency net sales information is a non-GAAP financial measure, which excludes the effectmeasure. See "Non-GAAP Financial Measure" above for further information.

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 24

colm-20220930_g1.jpg
Overall, our global net sales increase reflected earlier shipment of higher Fall 2022 wholesale orders compared to shipment of Fall 2021 orders and higher consumer demand in our DTC business. This increase was tempered by later than historical shipping patterns for Fall 2022 shipments, as well as unfavorable impacts from changes in foreign currency exchange rates against the 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 United States dollars at the exchange rates that were in effect during the comparable periodrates. Our global DTC e-commence business increased 9% and represented 11% of the prior year.
Gross Profit: Gross profit as a percentage of net sales expanded to 50.7% for the third quarter 2021 from 48.9% for the comparable period in 2020, primarily reflecting:
an approximate 290 basis points increase in channel profitability, including favorable DTC product margin driven by lower promotional levels, increased wholesale product margin driven by strong retail sell-through performance resulting in lower customer accommodations and, to a lesser extent, favorable full-price sales mix, and unfavorable impacts from higher inbound freight costs due to supply chain capacity constraints; partially offset by
a decrease resulting from the non-recurrence of inventory provision activity that benefited gross margin performance in the third quarter of 2020; and
a decrease driven by an unfavorable sales mix as sales shifted to channels which carry lower margins, including regional net sales shifts to wholesale from DTC channels and higher net sales in stores within the DTC channel.
Selling, General and Administrative Expense: SG&A expense increased $18.9 million, or 7%, to $280.1 million, or 34.8% ofour global net sales for the third quarter of 2021, from $261.2 million, or 37.3%2022, compared to growth of 6% and represented 11% of global net sales for the comparable period in 2020.2021.

Gross Profit.Our gross profit may not be comparable to other companies in our industry as some companies may include all costs related to their distribution network in Cost of sales, while we include these expenses in SG&A expenses. Gross profit is summarized in the following table:

Three Months Ended September 30,
(in millions, except for percentages and basis points)20222021Change
Gross profit$458.5 $408.4 $50.1 12 %
Gross margin48.0 %50.7 %-270 bps

Gross margin contracted primarily due to the following factors:
an approximate 210 bps decrease related to elevated inbound freight costs;
unfavorable channel and regional net sales shifts primarily due to a higher mix of wholesale sales, largely driven by higher distributor sales, which typically carry a lower margin compared to DTC sales; and
unfavorable year-over-year changes in inventory provisions; partially offset by
increased channel profitability due to the net effect of higher wholesale margins and, to a lesser extent, lower DTC margins.

Higher wholesale margins discussed above were primarily driven by price increases and a higher proportion of full price versus off price sales, partially offset by input cost pressure. Lower DTC margins discussed above were primarily driven by increased promotional activity.

Selling, General and Administrative Expenses.SG&A expenses includes all costs associated with our design, merchandising, marketing, distribution, and corporate functions, including related depreciation and amortization.

SG&A expenses is summarized in the following table:

Three Months September 30,
(in millions, except for percentages and basis points)20222021Change
Selling, general and administrative expenses$319.0 $280.1 $38.9 14 %
Selling, general and administrative expenses as percent of net sales33.4 %34.8 %-140 bps

The SG&A expenseexpenses increase was primarily due to:to expenses incurred to support the growth of our business and investments to drive our brand-led consumer-focused strategies. Factors primarily contributing to the increase of SG&A expenses included:
higher personnel expenses of $13.3 million, reflecting increased headcount to support business growth, as well as annual merit and other wage rate increases;
increased demand creation, including higher spending with sales growth; and
higher global retail expenses relative to prior year temporary store closures;
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higher incentive compensation;
increased demand creation spending driven by higher variable spendingassociated with sales growth and incremental strategic investment; and
higher personnel expenses to support business growth, annual merit increases, and wage increases to mitigate workforce shortages;new stores; partially offset by
the benefitlower incentive compensation expense, reflecting lower expectation of $7.0 million from the completion of a lease termination and settlement of liabilities relatedyear-end incentive compensation compared to a prior year store closure; andlast year.
the non-recurrence of prior year COVID-19 related expenses.
The benefit of $7.0 million from the completion of a lease termination and settlement of liabilities discussed above relates to a portion of the $16.5 million of accelerated amortization of lease right-of-use assets for stores that permanently closed in 2020 for which the related lease liabilities had not been extinguished as of December 31, 2020 due to ongoing negotiations with the landlords as disclosed in our 2020 Annual Report.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 25

Operating Income: Operating income increased $47.9 million to $133.5 million, or 16.6% of net sales, for the third quarter of 2021, from $85.6 million, or 12.2% of net sales, for the comparable period in 2020.
colm-20220930_g1.jpg
Income Tax Expense:Expense. Income tax expense increased to $33.3 million forand the third quarter of 2021 from $22.1 million for the comparable period in 2020. Ourrelated effective income tax rate was 24.9% compared to 26.1% forare summarized in the third quarter of 2020. following table:

Three Months Ended September 30,
(in millions, except for percentages)20222021Change
Income tax expense$(34.0)$(33.3)$0.7 %
Effective income tax rate23.3 %24.9 %

Our effective income tax rate for the third quarter of 2021 decreased compared tothree months ended September 30, 2022 was impacted by discrete tax items, which lowered the third quarter of 2020 primarily driven by the mix of bookeffective income or loss among jurisdictions.
Net Income: Net income increased $37.8 million to $100.6 million, or $1.52 per diluted share,tax rate for the third quarter ofperiod. For the three months ended September 30, 2022, our effective income tax rate was primarily impacted by a non-recurring benefit related to a decrease in accrued foreign withholding taxes. For the three months ended September 30, 2021, impacts to our effective income tax rate from $62.8 million, or $0.94 per diluted share, for the comparable period in 2020.discrete tax items were immaterial.

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Table of Contents
Nine Months Ended September 30, 20212022 Compared to Nine Months Ended September 30, 20202021

Net Sales: Sales.Consolidated net sales increased $410.8 million, or 26%, to $1,996.7 million for the nine months ended September 30, 2021 from $1,585.9 million for the comparable period in 2020. The increase primarily reflects higher consumer demand and an accelerated economic recovery compared to the same period in 2020, which was impacted by wholesale order cancellations, temporary store closures and lower consumer demand.
Net sales increased across all regions, product categories, and brands, primarily driven by increased Columbia brand net sales in the U.S. DTC and wholesale businesses. In addition, our DTC e-commerce business grew 16% and represented 15% of our global net sales for the nine months ended September 30, 2021, compared to 17% of our global net sales for the same period in 2020.
Net sales by brand, product category and channel are summarized in the following table:
Nine Months Ended September 30,
(in millions, except for percentage changes)
Reported
Net Sales
2021
Adjust for Foreign Currency Translation
Constant-currency
Net Sales
2021(1)
Reported
Net Sales
2020
Reported
Net Sales
% Change
Constant-currency
Net Sales
% Change(1)
Brand Net Sales:
Columbia$1,663.2 $(27.8)$1,635.4 $1,297.2 28%26%
SOREL157.5 (1.8)155.7 143.5 10%9%
prAna107.6 — 107.6 94.7 14%14%
Mountain Hardwear68.4 (0.6)67.8 50.5 35%34%
Total$1,996.7 $(30.2)$1,966.5 $1,585.9 26%24%
Product Category Net Sales:
Apparel, Accessories and Equipment$1,543.1 $(21.0)$1,522.1 $1,206.2 28%26%
Footwear453.6 (9.2)444.4 379.7 19%17%
Total$1,996.7 $(30.2)$1,966.5 $1,585.9 26%24%
Channel Net Sales:
Wholesale$1,155.9 $(19.2)$1,136.7 $957.3 21%19%
DTC840.8 (11.0)829.8 628.6 34%32%
Total$1,996.7 $(30.2)$1,966.5 $1,585.9 26%24%

Nine Months Ended September 30,
(in millions, except for percentages)
Reported
Net Sales
2022
Adjust for Foreign Currency Translation
Constant-currency
Net Sales
2022 (1)
Reported
Net Sales
2021
Reported
Net Sales
% Change
Constant-currency
Net Sales
% Change (1)
Brand Net Sales:
Columbia$1,903.0 $48.9 $1,951.9 $1,663.2 14%17%
SOREL204.7 3.3 208.0 157.5 30%32%
prAna110.8 — 110.8 107.6 3%3%
Mountain Hardwear76.1 0.8 76.9 68.4 11%12%
Total$2,294.6 $53.0 $2,347.6 $1,996.7 15%18%
Product Category Net Sales:
Apparel, Accessories and Equipment$1,760.6 $37.2 $1,797.8 $1,543.1 14%17%
Footwear534.0 15.8 549.8 453.6 18%21%
Total$2,294.6 $53.0 $2,347.6 $1,996.7 15%18%
Channel Net Sales:
Wholesale$1,353.2 $31.8 $1,385.0 $1,155.9 17%20%
DTC941.4 21.2 962.6 840.8 12%14%
Total$2,294.6 $53.0 $2,347.6 $1,996.7 15%18%
(1)Constant-currency net sales information is a non-GAAP financial measure, which excludesmeasure. See "Non-GAAP Financial Measure" above for further information.

Overall, our global net sales increase reflected earlier shipment of higher Spring 2022 and Fall 2022 wholesale orders and higher consumer demand in our DTC business. In addition, Columbia and SOREL brand net sales benefited from favorable late season cold weather product sales in the effectfirst quarter of 2022. Our global net sales increase was tempered by temporary store closures due to government efforts to control the spread of COVID-19 in China, supply chain disruptions, and unfavorable impacts from changes in foreign currency exchange rates against the United States dollar between comparable reporting periods. We calculate constant-currencyrates. Our global DTC e-commence business grew 10% and represented 15% of our global net sales by translatingfor the first nine months of 2022, compared to growth of 16% and represented 15% of global net sales in foreign currencies for the current period into United States dollars at the exchange rates that were in effect during the comparable period of the prior year.in 2021.

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 26

colm-20220930_g1.jpg
Gross Profit:Profit. Gross profit is summarized in the following table:

Nine Months Ended September 30,
(in millions, except for percentages and basis points)20222021Change
Gross profit$1,121.1 $1,022.3 $98.8 10 %
Gross margin48.9 %51.2 %-230 bps

Gross margin contracted primarily due to the following factors:
an approximate 300 bps decrease related to elevated inbound freight costs; partially offset by
increased channel profitability due to higher DTC and wholesale margins.

Higher DTC margins discussed above were primarily driven by lower promotional levels, particularly in the first half of 2022. Higher wholesale margins discussed above were primarily driven by price increases and a higher proportion of full price versus off price sales, partially offset by input cost pressure.

Selling, General and Administrative Expenses.SG&A expenses is summarized in the following table:

Nine Months Ended September 30,
(in millions, except for percentages and basis points)20222021Change
Selling, general and administrative expenses$899.3 $796.3 $103.0 13 %
Selling, general and administrative expenses as percent of net sales39.2 %39.9 %-70 bps

The SG&A expenses increase was primarily due to expenses incurred to support the growth of our business and investments to drive our brand-led consumer-focused strategies. Factors primarily contributing to the increase of SG&A expenses included:
higher personnel expenses of $30.6 million, reflecting increased headcount to support business growth, as a percentagewell as annual merit and other wage rate increases;
increased demand creation of net$20.7 million, including higher spending with sales expanded to 51.2%growth; and
higher global retail expenses associated with sales growth and new stores.

Income Tax Expense. Income tax expense and the related effective income tax rate are summarized in the following table:

Nine Months Ended September 30,
(in millions, except for percentages)20222021Change
Income tax expense$(51.9)$(42.5)$9.4 22 %
Effective income tax rate21.9 %17.7 %

Our effective income tax rates for the nine months ended September 30, 2022 and 2021 from 48.0% forwere impacted by discrete tax items, which lowered the comparable periodeffective income tax rate in 2020,each period. For the nine months ended September 30, 2022, our effective income tax rate was primarily reflecting:
an approximate 230 basis points increaseimpacted by a non-recurring benefit related to the finalization of the U.S. and foreign audits, a non-recurring benefit related to a decrease in channel profitability, including favorable DTC product margin driven by lower promotional levelsaccrued foreign withholding taxes and unfavorable impacts from higher inbound freight costs duea non-recurring benefit related to supply chain capacity constraints; and
an approximate 110 basis points increase primarilyforeign currency loss resulting from decreased inventory reserve provisions.
Selling, General and Administrative Expense: SG&A expense increased $40.6 million, or 5%, to $796.3 million, or 39.9% of net sales, foran intercompany transaction. For the nine months ended September 30, 2021, from $755.7 million, or 47.6% of net sales, for the comparable period in 2020. The increase in SG&A expenses primarily reflects the variable component of our SG&A expense structure, which correlates with changes in sales volume.
The SG&A expense increase was primarily due to:
higher personnel expenses of $26.9 million to support business growth and annual merit increases;
higher global retail expenses of $26.0 million relative to prior year temporary store closures;
increased demand creation spending of $23.8 million, driven by higher variable spending with sales growth and incremental strategic investment; and
higher incentive compensation; partially offset by
27

Table of Contents
lower bad debt expenses of $33.8 million;
the non-recurrence of prior year COVID-19 related expenses of $21.7 million; and
the benefit of $8.6 million from the completion of lease terminations and settlements of liabilities related to prior year store closures.
The decrease in bad debt expenses was driven by incremental COVID-19 pandemic related bad debt reserve provisions in the first nine months of 2020, compared to a reduction in bad debt reserves in the same period in 2021 reflecting the continued recovery of the market and a healthier wholesale customer base.
The benefit of $8.6 million from the completion of a lease termination and settlement of liabilities discussed above relates to a portion of the $16.5 million of accelerated amortization of lease right-of-use assets for stores that permanently closed in 2020 for which the related lease liabilities had not been extinguished as of December 31, 2020 due to ongoing negotiations with the landlords as disclosed in our 2020 Annual Report.
Operating Income: Operating income increased $225.6 million to $238.9 million, or 12.0% of net sales, for the nine months ended September 30, 2021, from $13.4 million, or 0.8% of net sales, for the comparable period in 2020.
Income Tax Expense: Income tax expense was $42.5 million for the nine months ended September 30, 2021, compared to $4.0 million for the comparable period in 2020. Our effective income tax rate was 17.7% for the nine months ended September 30, 2021 compared to 24.8% for the comparable period in 2020. The change in our effective income tax rate for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily drivenimpacted by the non-recurringa decrease in accrued foreign withholding taxes and the mix of book income or loss among jurisdictions.a non-recurring benefit related to common stock benefits.

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 27

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Results of Operations — Segment
Net Income:
Net
Segment operating income increased $184.9 millionincludes net sales, cost of sales, SG&A expenses, and net licensing income for each of our four reportable geographic segments. Operating income as a percentage of net sales in the U.S. is typically higher than the other segments primarily due to $197.1 million, or $2.96 per diluted share, forscale efficiencies associated with the nine months ended September 30, 2021,larger base of net sales in the U.S. and, to a lesser extent, incremental licensing income.

We anticipate this trend to continue until other segments achieve scale efficiencies from $12.3 million, or $0.18 per diluted share, forhigher levels of net sales volume relative to the comparable period in 2020.fixed cost structure necessary to operate the business.

Results of OperationsSegment
QuarterThree Months Ended September 30, 20212022 Compared to QuarterThree Months Ended September 30, 20202021

Net sales by geographic segment are summarized in the following table:
Three Months Ended September 30,
(in millions, except for percentage changes)
Reported
Net Sales
2021
Adjust for Foreign Currency Translation
Constant-currency
Net Sales
2021(1)
Reported
Net Sales
2020
Reported
Net Sales
% Change
Constant-currency
Net Sales
% Change(1)
U.S.$510.5 $— $510.5 $445.6 15%15%
LAAP102.7 (2.3)100.4 90.9 13%10%
EMEA109.2 (1.3)107.9 99.2 10%9%
Canada82.3 (5.0)77.3 65.4 26%18%
$804.7 $(8.6)$796.1 $701.1 15%14%
(1) Constant-currency net sales information is a non-GAAP financial measure, which excludes the effect of changes in foreign currency exchange rates against the 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 United States dollars at the exchange rates that were in effect during the comparable period of the prior year.

28
Three Months Ended September 30,
(in millions, except for percentage changes)
Reported
Net Sales
2022
Adjust for Foreign Currency Translation
Constant-currency
Net Sales
2022 (1)
Reported
Net Sales
2021
Reported
Net Sales
% Change
Constant-currency
Net Sales
% Change (1)
U.S.$607.0 $— $607.0 $510.5 19%19%
LAAP115.4 12.0 127.4 102.7 12%24%
EMEA153.5 14.8 168.3 109.2 41%54%
Canada79.1 2.8 81.9 82.3 (4)%—%
$955.0 $29.6 $984.6 $804.7 19%22%

Table of Contents(1) Constant-currency net sales is a non-GAAP financial measure. See "Non-GAAP Financial Measure" above for further information.

Operating income (loss) for each reportable segmentssegment and unallocated corporate expenses are summarized in the following table:
Three Months Ended September 30,
(in millions)20212020Change ($)
U.S.$139.1 $96.6 $42.5 
LAAP7.6 4.7 2.9 
EMEA26.2 19.0 7.2 
Canada22.8 19.7 3.1 
Total segment operating income195.7 140.0 55.7 
Unallocated corporate expenses(62.2)(54.4)(7.8)
Operating income$133.5 $85.6 $47.9 

Unless otherwise noted below, segment net sales and operating income within all regions increased due to the result of unfavorable COVID-19 pandemic impacts realized in the comparable period in 2020, which led to economic lockdowns, including temporary store closures and lower consumer demand.
Three Months Ended September 30,
(in millions)20222021Change
U.S.$145.3 $139.1 $6.2 
LAAP11.8 7.6 4.2 
EMEA35.6 26.2 9.4 
Canada20.2 22.8 (2.6)
Total segment operating income212.9 195.7 17.2 
Unallocated corporate expenses(67.6)(62.2)(5.4)
Operating income$145.3 $133.5 $11.8 

U.S.

U.S. operating income increased $42.5$6.2 million to $145.3 million, or 23.9% of net sales, for the third quarter of 2022 from $139.1 million, or 27.2% of net sales, for the third quarter of 2021 from $96.6 million, or 21.7% of net sales, for the comparable period in 2020.2021. The increase was driven primarily by increased net sales, combined with increasedpartially offset by decreased gross margin. U.S. net sales increased $64.9$96.5 million, or 15%19%, for the third quarter of 20212022, compared to the same period in 2020,2021. U.S. net sales increased across all channels, product categories and brands, largely driven by increased wholesale net sales primarily infor our Columbia and SOREL brands. Increased U.S. wholesale net sales were driven by earlier shipment of higher Fall 2022 orders compared to shipment of Fall 2021 orders. U.S. DTC businessnet sales increased primarily from net sales growth generated from retail stores and, to a lesser extent, our e-commerce business. As of September 30, 2022, our U.S. wholesale business. U.S. wholesale net sales increased duebusiness operated 148 retail stores, compared to higher Fall 2021 order shipments, but were constrained by supply chain disruptions that resulted in later inventory receipts and later than expected wholesale shipments during the quarter. U.S.138 stores as of September 30, 2021. SG&A expense decreasedexpenses increased as a percentage of net sales to 25.2% for the three months ended September 30, 2021 compared to 28.5% for the comparable period in 2020. U.S. SG&A expense25.9% for the third quarter of 2020 included non-recurring COVID-19 related expenses.2022 compared to 25.2% for the same period in 2021.

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 28

LAAP

LAAP operating income increased $4.2 million to $11.8 million, or 10.2% of net sales, for the third quarter of 2022 from $7.6 million, or 7.4% of net sales, for the third quarter of 2021 increased $2.9 million from $4.7 million, or 5.2% of net sales, for the comparable period in 2020.2021. The increase was driven primarily by increased net sales combined with increased gross margin.and SG&A expense leverage. LAAP net sales increased $11.8$12.7 million, or 13% (10%12% (24% constant-currency), for the third quarter of 20212022, compared to the same period in 2020,2021, primarily driven by increased net sales in our ChinaLAAP distributor business. LAAP net sales increased due to earlier shipment of higher Fall 2022 orders compared to shipment of Fall 2021 wholesale order shipments, partially offset by lowerorders and higher consumer demand due to COVID-19 relatedas we lapped prior year provincial and government mandated restrictions to prevent the spread of the virus.COVID-19. These increases were offset by unfavorable impacts from changes in foreign currency rates. LAAP SG&A expense increasedexpenses decreased as a percentage of net sales to 46.9%40.9% for the third quarter of 20212022 compared to 46.6%46.9% for the comparablesame period in 2020.2021, primarily driven by demand creation, personnel and retail expenses.

EMEA

EMEA operating income increased $7.2$9.4 million to $35.6 million, or 23.2% of net sales, for the third quarter of 2022 from $26.2 million, or 24.0% of net sales, for the third quarter of 2021 from $19.0 million, or 19.1% of net sales, for the comparable period in 2020.2021. The increase was driven primarily by increased net sales combined with increased gross margin and SG&A expense leverage. EMEA net sales increased $10.0$44.3 million, or 10% (9%41% (54% constant-currency), for the third quarter of 20212022, compared to the same period in 2020. EMEA2021, driven by increased net sales increased primarily in our Europe-directEMEA distributor business and, to a lesser extent, our Europe-direct business. EMEA distributor business.net sales increased primarily due to the later shipment of Fall 2022 orders to our Russia-based distributor business, under pre-existing contractual obligations. Europe-direct net sales increased primarily due to higher Fall 2021 wholesale order shipments.consumer demand, partially offset by unfavorable impacts from changes in foreign currency rates. EMEA SG&A expense decreased as a percentage of net sales to 22.6%19.7% for the third quarter of 20212022 compared to 26.3% for the same period22.6% in 2020 driven by leveraging of fixed operating expenses.2021.

Canada

Canada operating income decreased $2.6 million to $20.2 million, or 25.6% of net sales, for the third quarter of 2022 from $22.8 million, or 27.8% of net sales, for the third quarter of 2021 increased $3.1 million from $19.8 million, or 30.2% of net sales, for the comparable period in 2020.2021. The increasedecrease primarily resulted from increaseddecreased net sales. Canada net sales increased $16.9decreased $3.2 million, or 26% (18%4% (flat constant-currency), for the third quarter of 20212022, compared to the same period in 2020.2021. The decrease in Canada net sales increasedwas primarily duedriven by unfavorable impacts from changes in foreign currency rates and decreased net sales related to higherlater shipment of Fall 2022 orders compared to shipments of Fall 2021 orders in our Canada wholesale order shipments.business, partially offset by increased net sales in our Canada DTC business. Canada SG&A expense increased as a percentage of net sales to 20.1%21.1% for the third quarter of 20212022 compared to 17.5%20.1% for the comparablesame period in 2020.2021.
29

Unallocated corporate expenses increased by $7.8$5.4 million to $62.3$67.6 million for the third quarter of 2021,in 2022, from $54.4$62.2 million for the comparable period in 2020, primarily driven by higher incentive compensation and personnel expenses.2021.

Nine Months Ended September 30, 20212022 Compared to Nine Months Ended September 30, 20202021

Net sales by geographic segment are summarized in the following table:
Nine Months Ended September 30,
(in millions, except for percentage changes)
Reported
Net Sales
2021
Adjust for Foreign Currency Translation
Constant-currency
Net Sales
2021(1)
Reported
Net Sales
2020
Reported
Net Sales
% Change
Constant-currency
Net Sales
% Change(1)
U.S.$1,298.2 $— $1,298.2 $1,004.7 29%29%
LAAP292.7 (11.9)280.8 260.9 12%8%
EMEA268.5 (9.6)258.9 213.3 26%21%
Canada137.3 (8.7)128.6 107.0 28%20%
$1,996.7 $(30.2)$1,966.5 $1,585.9 26%24%
(1) Constant-currency net sales information is a non-GAAP financial measure, which excludes the effect of changes in foreign currency exchange rates against the 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 United States dollars at the exchange rates that were in effect during the comparable period of the prior year.

Nine Months Ended September 30,
(in millions, except for percentage changes)
Reported
Net Sales
2022
Adjust for Foreign Currency Translation
Constant-currency
Net Sales
2022 (1)
Reported
Net Sales
2021
Reported
Net Sales
% Change
Constant-currency
Net Sales
% Change (1)
U.S.$1,521.4 $— $1,521.4 $1,298.2 17%17%
LAAP309.9 24.6 334.5 292.7 6%14%
EMEA305.8 24.6 330.4 268.5 14%23%
Canada157.5 3.8 161.3 137.3 15%17%
$2,294.6 $53.0 $2,347.6 $1,996.7 15%18%
(1) Constant-currency net sales is a non-GAAP financial measure. See "Non-GAAP Financial Measure" above for further information.

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 29

Operating income for each reportable segmentssegment and unallocated corporate expenses are summarized in the following table:
Nine Months Ended September 30,
(in millions)20212020Change ($)
U.S.$320.8 $118.5 $202.3 
LAAP16.3 8.7 7.6 
EMEA47.8 19.0 28.8 
Canada29.7 15.1 14.6 
Total segment operating income414.6 161.3 253.3 
Unallocated corporate expenses(175.7)(147.9)(27.8)
Operating income$238.9 $13.4 $225.5 

Nine Months Ended September 30,
(in millions)20222021Change
U.S.$325.8 $320.8 $5.0 
LAAP21.7 16.3 5.4 
EMEA51.0 47.8 3.2 
Canada31.9 29.7 2.2 
Total segment operating income430.4 414.6 15.8 
Unallocated corporate expenses(192.7)(175.7)(17.0)
Operating income$237.7 $238.9 $(1.2)

Unless otherwise noted below, segment net sales and operating income within all regions increased due to the result of unfavorable COVID-19 pandemic impacts realized in the comparable period in 2020, which led to economic lockdowns, including temporary store closures and lower consumer demand.U.S.
U.S.
U.S. operating income increased $202.3$5.0 million to $320.8$325.8 million, or 24.7%21.4% of net sales, for the nine months ended September 30, 20212022 from $118.5$320.8 million, or, 11.8%24.7% of net sales, for the comparable period in 2020.2021. The increase was driven primarily by increased net sales, combined with increasedpartially offset by decreased gross margin, as well as a reduction in bad debt expense.margin. U.S. net sales increased $293.5$223.2 million, or 29%17%, for the nine months ended September 30, 20212022, compared to the same period in 2020,2021. U.S. net sales increased across all channels, product categories and brands, led by increased net sales for our Columbia and SOREL brands. Increased U.S. wholesale net sales were driven by increased consumer demand and shipment of higher Spring 2022 and Fall 2022 orders compared to shipment of 2021 season orders. U.S. DTC net sales increased from net sales growth generated from our retail stores and e-commerce business. As of September 30, 2022, our U.S. business operated 148 retail stores, compared to 138 stores as of September 30, 2021. SG&A expenses increased as a percentage of net sales to 28.7% for the nine months ended September 30, 2022 compared to 28.2% for the same period in 2021.

LAAP

LAAP operating income increased $5.4 million to $21.7 million, or 7.0% of net sales, for the nine months ended September 30, 2022 from $16.3 million, or 5.6% of net sales, for the comparable period in 2021. The increase was driven primarily by increased net sales. LAAP net sales increased $17.2 million, or 6% (14% constant-currency), for the nine months ended September 30, 2022, compared to the same period in 2021, primarily in our LAAP distributor business and, to a lesser extent, our Japan and Korea businesses. This increase was primarily driven by earlier shipment of higher Fall 2022 orders compared to shipment of Fall 2021 orders and higher consumer demand as we lapped prior year provincial mandated restrictions to prevent the spread of COVID-19. These increases were offset by unfavorable impacts from changes in foreign currency rates and government efforts to control the spread of COVID-19 in China the second quarter of 2022. LAAP SG&A expense decreased as a percentage of net sales to 47.9% for the nine months ended September 30, 2022 compared to 50.3% for the same period in 2021.

EMEA

EMEA operating income increased $3.2 million to $51.0 million, or 16.7% of net sales, for the nine months ended September 30, 2022 from $47.8 million, or 17.8% of net sales, for the comparable period in 2021. The increase was driven primarily by increased net sales. EMEA net sales increased $37.3 million, or 14% (increased 23% constant-currency), for the nine months ended September 30, 2022, compared to the same period in 2021, driven by increased net sales in our U.S. DTC retail stores, wholesaleEurope-direct and EMEA distributor businesses. Europe-direct net sales increased primarily due to a lesser extent, DTC e-commerce businesses. The reductionhigher consumer demand, partially offset by unfavorable impacts from changes in bad debt reserves reflected the continued recoveryforeign currency rates. EMEA distributor net sales increased primarily due to higher shipments of the market and a healthier wholesale customer base.Fall 2022 orders compared to shipment of Fall 2021 orders. EMEA SG&A expenses decreased as a percentage of net sales to 28.2%26.4% for the nine months ended September 30, 20212022 compared to 37.3% for the comparable period26.6% in 2020, primarily driven by leveraging of fixed operating expenses, a reduction in bad debt expense, and the non-recurrence of prior year COVID-19 related expenses.2021.
LAAP
LAAPCanada

Canada operating income increased $7.6$2.2 million to $16.3$31.9 million, or 5.6%20.3% of net sales, for the nine months ended September 30, 20212022 from $8.7 million, or 3.3% of net sales, for the comparable period in 2020. The increase was driven primarily by increased net sales combined with increased gross margin. LAAP net sales increased $31.8 million, or 12% (8% constant-currency) for the nine months ended September 30, 2021 compared to the same period in 2020, primarily driven by increased net sales in our China business and to a lesser extent our Korea and Japan businesses, partially offset by decreased net sales in our LAAP
30

distributor businesses. LAAP SG&A expense increased as a percentage of net sales to 50.3% for the nine months ended September 30, 2021 compared to 48.5% for the comparable period in 2020, primarily driven by increased investment in demand creation and the non-recurrence of prior year COVID-19 government subsidies received.
EMEA
EMEA operating income increased $28.8 million to $47.8 million, or 17.8% of net sales, for the nine months ended September 30, 2021 from $19.0 million, or 8.9% of net sales, for the comparable period in 2020. The increase was driven primarily by increased net sales combined with increased gross margin. EMEA net sales increased $55.2 million to $268.5 million, or 26% (21% constant-currency), for the nine months ended September 30, 2021 compared to the same period in 2020. EMEA net sales increased in both our Europe-direct and EMEA distributors businesses. SG&A expense decreased as a percentage of net sales to 26.6% for the nine months ended September 30, 2021 compared to 33.6% for the same period in 2020 driven by leveraging of fixed operating expenses, the non-recurrence of prior year COVID-19 related expenses and lower reserve provisions for bad debt.
Canada
Canada operating income increased $14.6 million to $29.7 million, or 21.6% of net sales, for the nine months ended September 30, 2021 from $15.1 million, or 14.2% of net sales, for the comparable period in 2020.2021. The increase primarily resulted from increased net sales combined with increased gross margin.sales. Canada net sales increased $30.3$20.2 million, or 28% (20%15% (17% constant-currency), for the nine months ended September 30, 20212022, compared to the same period in 2020.2021, primarily driven by increased net sales in our Canada DTC and wholesale businesses. Canada SG&A expense decreased as a percentage of net sales to 26.3%26.2% for the nine months ended September 30, 20212022, compared to 32.6%26.3% for the comparablesame period in 2020, primarily driven by leveraging of fixed operating expenses, a reduction in bad debt expense and the non-recurrence of prior year COVID-19 government subsidies received.2021.
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 30


Unallocated corporate expenses increased by $27.8$17.0 million to $175.7$192.7 million for the nine months ended September 30, 2021,2022 from $148.0$175.7 million for the comparablesame period in 2020, primarily2021, largely driven by higher personnel expenses and technology related expenses, partially offset by lower incentive compensation and personnel expenses.compensation.

LiquidityLIQUIDITY AND CAPITAL RESOURCES

Including cash, cash equivalents, short-term investments and Capital Resources
Atavailable committed credit lines, we had approximately $665 million in total liquidity as of September 30, 2021, we had total cash and cash equivalents of $599.5 million, compared to $790.7 million at December 31, 2020 and $313.4 million at September 30, 2020.
2022. Our primary ongoing cash needs are for working capital and capital expenditures, including investment in our DTC operations, including new stores, and investment in digital and supply chain capabilities to support our strategic priorities. We have planned 2021 capital expenditures of approximately $45 million to $50 million. Our actual 2021 capital expendituresliquidity may differ from the planned amounts depending on factors such as the timing of new store acquisitions and related construction as well as the availability of capital assets from suppliers. We expect to meet our cash needs for the next twelve months with cash flows from operations.
Our business isbe affected by the general seasonal trends common to the industry. 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. Our cash and cash equivalents and short-term investments balances generally are at their lowest level atjust prior to the endstart of the third quarterU.S. holiday season and increase during the fourth quarter from collection of wholesale business receivables and fourth quarter DTC sales. This trough cash position is impacted by the amount of product we order from our contract manufacturers in anticipation of customer demand and is more heavily impacted in advance of periods of expected high demand.
Short-term borrowings and credit lines
Refer to Note 4 in Item 1 of this quarterly report for additional information regarding our lines of credit and overdraft facilities in place. At September 30, 2021, we had a $500.0 million committed revolving line of credit available domestically under our credit agreement and, internationally, our subsidiaries had approximately $118.0 million in committed and uncommitted lines of credit and overdraft facilities in place, some of which were guaranteed by Columbia Sportswear Company. At September 30, 2021, there was no balance outstanding under these lines of credit and overdraft facilities. At the time of this filing, we are in compliance with all financial covenants necessary as a condition for borrowing under the domestic credit agreement.
Cash flow activitiesFlow Activities
Net
Cash flows are summarized in the following table:

Nine Months Ended September 30,
(in millions)20222021Change
Net cash provided by (used in):
Operating activities$(328.1)$(15.6)$(312.5)
Investing activities88.5 (19.2)107.7 
Financing activities(339.7)(151.4)(188.3)
Net effect of exchange rate changes on cash(24.9)(5.0)(19.9)
Net decrease in cash and cash equivalents$(604.2)$(191.2)$(413.0)

The change in cash flows used in operating activities was $15.6 million for the nine months ended September 30, 2021 compared to net cash used in operating activities of $198.0 million for the comparable period in 2020. The change in operating cash flow was driven by a $113.4$324.6 million increase in operating cash flow provided by net income and non-cash adjustments, and a $68.9 million decrease in cash used in changes in assets and liabilities.liabilities, partially offset by a $12.1 million increase in cash provided by net income and non-cash adjustments. The most significant comparative changes included Accounts receivableInventories, net, , Prepaid expenses and other current assets,to a lesser extent, Accounts payablereceivable, net,Accrued liabilities, and Operating lease assets and liabilities Accounts payable. The $269.4 million increase in cash used byin Accounts receivableInventories, net was driven by an increase in inventory purchases in anticipation of sales growth, temporary store closures due to government efforts to control the spread of COVID-19 in China and supply chain disruptions, resulting in higher wholesale net sales, partially offset by higher collections of accounts receivable in 2021.
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than initially planned order cancellations. The $84.8 million increase in cash used byin Prepaid expenses and other current assetsAccounts receivable, net was primarily driven by changesgrowth in US inventory prepayments and US prepaid income taxes.wholesale sales, partially offset by an increase in collections. The $43.2 million increase in cash provided byused in Accounts payable primarily reflects the effects of higher receipts of inventory in the third quarter of 2021 compared to the third quarter of 2020 due to stronger customer demand and increased in-transit inventory. The increase in cash provided by AccruedAccrued liabilities was primarily driven by changes in accruals for incentive compensation, wholesale refund liabilities, and wholesale and retail sales return liabilities. Thecompensation. These amounts were partially offset by the $41.9 million increase in cash usedprovided by Operating lease assets and liabilitiesAccounts payable includesprimarily resulting from the paymenteffects of deferred rents.higher in-transit inventory.

Net cash used inprovided by investing activities was $19.2$88.5 million for the nine months ended September 30, 20212022, compared to net cash used in investing activities of $23.6$19.2 million for the comparablesame period in 2020.2021. For the 2022 period, net cash provided by investing activities consisted of $131.0 million in net sales and maturities of short-term investments, partially offset by $42.5 million in cash used for capital expenditures. For the 2021 period, net cash used in investing activities primarily consisted of $20.4 million for capital expenditures, partially offset by $1.2 million in cash provided by sales and maturities of short-term investments. For the same period in 2020, net cash used in investing activities primarily consisted of $25.2 million for capital expenditures, partially offset by $1.6 million in net sales and maturities of short-term investments.

Net cash used in financing activities was $151.4$339.7 million for the nine months ended September 30, 20212022 compared to $151.4 million for the same period in 2021. For the 2022 period, net cash used in financing activities primarily consisted of $152.3repurchases of common stock of $287.4 million for the comparable period in 2020.and dividend payments to our shareholders of $56.6 million. For the 2021 period, net cash used in financing activities primarily consisted of repurchases of common stock of $118.6 million and dividend payments to our shareholders of $51.7 million, partially offset by net proceeds from the issuance of common stock related to stock-basedshare-based compensation of $24.3$18.6 million. For

COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 31

Sources of Liquidity

Cash and cash equivalents and short-term investments

As of September 30, 2022, we had cash and cash equivalents of $159.2 million and short-term investments of $1.0 million, compared to $763.4 million and $131.1 million, respectively, as of December 31, 2021 and $599.5 million and $1.1 million, respectively, as of September 30, 2021.

Domestic Credit Facility

Refer to Note 4 in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information regarding the 2020 period,domestic credit facility.

As of September 30, 2022, we had available an unsecured, committed revolving credit facility, which provides for borrowings up to $500.0 million. We were in compliance with all associated covenants and there was no balance outstanding under the facility.

In October 2022, we borrowed $25 million from the domestic credit facility. These borrowings accrue interest at a rate of 4.14% per annum. We plan to repay these borrowings in the fourth quarter of 2022.

International Credit Facility

As of September 30, 2022, our European subsidiary had available an unsecured, committed line of credit, which is guaranteed by the Company and provides for borrowings up to €4.4 million (approximately US$4.3 million). There was no balance outstanding under the facility.

Other Sources

As of September 30, 2022, collectively, our international subsidiaries had unsecured, uncommitted lines of credit, credit facilities and overdraft facilities, providing for borrowings up to approximately US$102.4 million. There was €4.5 million (approximately US$4.4 million) of borrowings outstanding under an overdraft facility utilized by our European subsidiary, which was guaranteed by the Company. These borrowings accrued interest at a rate of 3.75% per annum and were repaid in October 2022.

In October 2022, we borrowed €15.0 million (approximately US$15.0 million) from an unsecured, uncommitted credit facility utilized by our European subsidiary, which is guaranteed by the Company. These borrowings accrue interest at a rate of 2.10% per annum. We plan to repay these borrowings in the fourth quarter of 2022.

Capital Requirements

Our expected short-term and long-term cash needs are primarily for working capital and capital expenditures. We expect to meet these short-term and long-term cash needs primarily with cash flows from operations and, if needed, borrowings from our existing credit facilities. As our cash and cash equivalents and short-term investments balances are generally at their lowest levels just prior to the start of the U.S. holiday season, we borrowed $25 million from our domestic credit facility in October 2022 to meet our short-term cash needs prior to the fourth quarter cash collection of wholesale business receivables and fourth quarter DTC sales.

Our working capital management goals include maintaining an optimal level of inventory necessary to deliver goods on time to our customers and our retail stores to satisfy end consumer demand, alleviating manufacturing capacity constraints, and driving efficiencies to minimize the cycle time from the purchase of inventory from our suppliers to the collection of accounts receivable balances from our customers. Inventory balances may be elevated in advance of periods of expected high demand. We maintain and continue to make substantial investments in information systems, processes and personnel to support our ongoing demand planning efforts to meet our working capital management goals. As of September 30, 2022, our inventory balance increased to $1,056.9 million, compared to $645.4 million and $720.9 million as of December 31, 2021 and September 30, 2021, respectively. Late inventory receipts and slower consumer demand have resulted in greater than anticipated order cancellations and higher inventory levels. We believe older season inventories represent a manageable portion of our total inventory mix. To align inventory levels more closely with anticipated demand, we are adjusting future inventory purchases and utilizing our outlet stores to sell excess merchandise. We expect inventory to remain elevated for the next several quarters as we balance reducing inventory levels with maintaining profitability.

We have planned 2022 capital expenditures of approximately $80 to $90 million. This includes investments in our DTC operations, including new stores, and digital and supply chain capabilities to support our strategic priorities. Our actual capital expenditures may differ from the planned amounts depending on factors such as the timing of system implementations and new store openings and related construction as
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 32

well as the availability of capital assets from suppliers.

Our long-term goal is to maintain a strong balance sheet and a disciplined approach to capital allocation. Dependent upon market conditions and our strategic priorities, our capital allocation approach includes:
investing in organic growth opportunities to drive long-term profitable growth;
returning at least 40% of free cash flow to shareholders through dividends and share repurchases; and
considering opportunistic mergers and acquisitions.

Free cash flow is a non-GAAP financial measure. Free cash flow is calculated by reducing net cash used in financingflow from operating activities primarily consisted of repurchases of common stock of $132.9 millionby capital expenditures. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders and dividend paymentsacquisitions after making the capital investments required to our shareholders of $17.2 million.support ongoing business operations and long-term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures since it excludes certain mandatory expenditures. Management uses free cash flow as a measure to assess both business performance and overall liquidity.
Contractual obligations
Other cash commitments

Our inventory purchase obligations increasedwere $435.5 million as of September 30, 2022, compared to $656.5 million and $542.8 million atas of December 31, 2021 and September 30, 2021, compared to $305.7 million at December 31, 2020. respectively.

There have been no other materialsignificant changes to the estimated contractualour other cash commitments containedas described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020.2021.

Critical Accounting Policies and EstimatesCRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make various estimates and judgments that affect reported amounts of assets, liabilities, sales, cost of sales, and expenses and related disclosure of contingent assets and liabilities. We believe that the estimates, assumptions and judgments involved in the accounting policies referred to in Part II, Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2020sales reserves, allowance for uncollectible accounts receivable, excess, close-out and slow-moving inventory, impairment of long-lived assets, intangible assets and goodwill, and income taxes have the greatest potential effect on our financial statements, so we consider these to be our critical accounting policies and estimates. Because of the uncertainty inherent in these matters, actual results may differ from the estimates we use in applying these critical accounting policies.policies and estimates. We base our ongoing estimates on historical experience and other assumptions that we believe to be reasonable in the circumstances. OurRefer to Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information regarding our critical accounting policies relate to revenue recognition; allowance for uncollectible accounts receivable; obsolescence reserves for excess, close-out and slow-moving inventory; impairment of long-lived assets, intangible assets and goodwill; and income taxes.estimates.

Management regularly discusses with our audit committee each of our critical accounting estimates, the development and selection of these accounting estimates, and the disclosure about each estimate in this quarterly report.Quarterly Report on Form 10-Q. These discussions typically occur at our quarterly audit committee meetings and include the basis and methodology used in developing and selecting these estimates, the trends in and amounts of these estimates, specific matters affecting the amount of and changes in these estimates, and any other relevant matters related to these estimates, including significant issues concerning accounting principles and financial statement presentation.
Except as disclosed in Note 1 in Item 1 of this quarterly report, pertaining to our adoption of new accounting pronouncements, there
There have been no significant changes to the Company's significant accounting policies as described at Note 2 in the Company'sItem 8 of our Annual Report on Form 10-K for the year ended December 31, 2020.2021.

Recent Accounting PronouncementsRECENT ACCOUNTING PRONOUNCEMENTS
None.
Refer to Note 1 in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 3.    
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has not been any material change in the market risk disclosure contained in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2020.2021.
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ITEM 4.CONTROLS AND PROCEDURES
Item 4.    
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We have evaluated, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this report. These disclosure controls and procedures require information to be disclosed in our Exchange Act reports to be (1) recorded, processed, summarized, and reported in a timely manner and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer.

Based on our evaluation, we, including our Chief Executive Officer and Chief Financial Officer, have concluded that as of September 30, 2022 our disclosure controls and procedures wereare designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this quarterly report.appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have not been any changes in our internal control over financial reporting that occurred during the quarter ended September 30, 20212022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—
colm-20220930_g1.jpg
PART II — OTHER INFORMATION
Item 1.    
ITEM 1.LEGAL PROCEEDINGS

We are involved in litigation and various legal matters arising in the normal course of business, including matters related to employment, retail, intellectual property, contractual agreements, and various regulatory compliance activities. We have considered facts related to legal and regulatory matters and opinions of counsel handling these matters and do not believe the ultimate resolution of these proceedings will have a material adverse effect on our financial condition, results of operations or cash flows.

Item 1A.    
Item 1A.RISK FACTORS

In addition to the other information contained in this Quarterly Report on Form 10-Q, the following risk factors should be considered carefully in evaluating our business. Our business, financial condition, results of operations, or cash flows may be materially adversely affected by these and other risks. Please note that additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations.

The following risk factors include changes to and supersede the description of the risk factors associated with our business previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.2021.

CHANGES IN PRODUCT DEMAND CAN ADVERSELY AFFECT OUR FINANCIAL RESULTS

We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or Wholesale Customer Demand for Our Products and Lead to a Decline in Sales and/or Earnings.

These risks include, but are not limited to:

Volatile Economic Conditions. We are a consumer products company and are highly dependent on consumer discretionary spending. Consumer discretionary spending behavior is inherently unpredictable. Consumer demand, and related wholesale customer demand, for our products may not support our sales targets, or may decline, especially during periods of heightened economic uncertainty in our key markets.
Highly Competitive Markets. In each of our geographic markets, we face significant competition from global and regional branded apparel, footwear, accessories, and equipment companies. Retailers who are our wholesale customers often pose a significant competitive threat by designing, marketing and distributing apparel, footwear, accessories, and equipment under their own private labels. We also experience direct competition in our DTC business from retailers that are our wholesale customers. This is true in particular in the digital marketplace, where increased consumer expectations and competitive pressure related to various aspects of our e-commerce business, including speed of product delivery, shipping charges, return privileges, and other evolving expectations are key factors.
Consumer Preferences and Fashion/Product Trends. Changes in consumer preferences, consumer interest in outdoor activities, and fashion/product trends may have a material adverse effect on our business. We also face risks because our success depends on our and our customers' abilities to anticipate consumer preferences and our ability to respond to changes in a timely manner. Product development and/or production lead times for many of our products may make it more difficult for us to respond rapidly to new or changing fashion/product trends or consumer preferences.
Brand Images. Our brands have wide recognition, and our success has been due in large part to our ability to maintain, enhance and protect our brand image and reputation and our consumers' and customers' connection to our brands. Our continued success depends in part on our ability to adapt to a rapidly changing media environment, including our increasing reliance on social media and online dissemination of advertising campaigns. In addition, consumer and customer sentiment could be shaped by our sustainability policies and related design, sourcing and operationsoperational decisions.
Weather Conditions, Including Global Climate Change Trends. Our sales are adversely affected by unseasonable weather conditions. A significant portion of our DTC sales is dependent in part on the weather and our DTC sales growth is likely to be adversely impacted or may even decline in years in which weather conditions do not stimulate demand for our products. Unseasonable weather also impacts future sales to our wholesale customers, who may hold inventory into subsequent seasons in response to unseasonable weather. Our results may be negatively impacted if management is not able to adjust expenses in a timely manner in response to unfavorable weather conditions and the resulting impact on consumer and customer demand. The extent to
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 35

magnitude by which global weather patterns trend warmer will determineinfluence the magnitude byextent to which consumer and customer demand for our outerwear products will be negatively affected.
Shifts in Retail Traffic Patterns. Shifts in consumer purchasing patterns, including the growth of e-commerce and large one-stop digital marketplaces, e-commerce off-price retailing and online comparison shopping, in our key markets may have an
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adverse effect on our DTC operations and the financial health of certain of our wholesale customers, some of whom may reduce their brick and mortar store fleet, file for protection under bankruptcy laws, restructure, or cease operations. These related business impacts have already occurred at certain of our wholesale customers. We face increased risk of order reduction and cancellation when dealing with financially ailing wholesale customers. We also extend credit to our wholesale customers based on an assessment of the wholesale customer's financial condition, generally without requiring collateral. We may choose (and have chosen in the past) to limit our credit risk by reducing our level of business with wholesale customers experiencing financial difficulties and may not be able to replace those revenues with other customers or through our DTC businesses within a reasonable period or at all.
Innovation. To distinguish our products in the marketplace and achieve commercial success, we rely on product innovations, including new or exclusive technologies, inventive and appealing design or other differentiating features. If we fail to introduce innovative products that appeal to consumers and customers, we could suffer reputational damage to our brands and demand for our products could decline.

Certain of the above risks may be or have been exacerbated by the COVID-19 pandemic, see “An Outbreak of Disease or Similar Public Health Threat, or Fear of Such an Event, Such as the COVID-19 Pandemic, Could Have, and in the Case of the COVID-19 Pandemic Has Had and is Expected to Continue to Have, an Adverse Impact on Our Business, Operating Results and Financial Condition.”

Our Orders from Wholesale Customers are Subject to Cancellation, Which Could Lead to a Decline in Sales or Gross Profit, Write-downs of Excess Inventory, Increased Discounts or Extended Credit Terms to Our Wholesale Customers.

We do not have long-term contracts with any of our wholesale customers. We do have contracts with our independent international distributors; although these contracts may have annual purchase minimums that must be met in order to retain distribution rights, the distributors are not otherwise obligated to purchase products from us. Sales to our wholesale customers (other than our international distributors) are generally on an order-by-order basis and are subject to rights of cancellation and rescheduling prior to shipment of orders. We place the majority of our orders for products with our contract manufacturers for our wholesale customers based on these advance orders. We consider the timing of delivery dates in our wholesale customer orders when we forecast our sales and earnings for future periods. If any of our major wholesale customers experience a significant downturn in business or fail to remain committed to our products or brands, or if we are unable to deliver products to our wholesale customer in the agreed upon manner or reach mutually agreeable accommodations, these customers could postpone, reduce, cancel, or discontinue purchases from us, including after we have begun production on any order.order, or seek to impose chargebacks.

Our Inability to Accurately Predict Consumer and/or Customer Demand for Our Products Could Lead to a Build-up of Inventory or a Lack of Inventory and Affect Our Gross Margin.

We have implemented key strategic initiatives designed to improve the efficiency of our supply chain, such as spreading out the production of our products over time, which may lead to the build-up of inventory well in advance of the selling seasons for such products. Additionally, we place orders for our products with our contract manufacturers in advance of the related selling season and, as a result, are vulnerable to changes in consumer and/or customer demand for our products. Therefore, we must accurately forecast consumer and/or customer demand for our products well in advance of the selling season. We are subject to numerous risks relating to consumer and/or customer demand (see “We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or Customer Demand for our Products and Lead to a Decline in Sales and/or Earnings” and “Our Orders from Wholesale Customers are Subject to Cancellation, Which Could Lead to a Decline in Sales or Gross Profit, Write-downs of Excess Inventory, Increased Discounts or Extended Credit Terms to Our Wholesale Customers” for additional information). Our ability to accurately predict consumer and/or customer demand well in advance of the selling season for our products is impacted by these risks, as well as our reliance on manual processes and judgments that are subject to human error. These risks are heightened during periods of macroeconomic and geopolitical volatility (as we are currently experiencing).

Our failure to accurately forecast consumer and/or customer demand could result in inventory levels in excess of demand (as currently is the case), which may cause inventory write-downs and/or the sale of excess inventory at discounted prices through our owned outlet stores or third-party liquidation channels and could have a material adverse effect on our brand image and gross margin. In addition, we may experience additional costs relating to the storage of excess inventory.

Conversely, if we underestimate consumer and/or customer demand for our products or if our contract manufacturers or third partythird-party logistics providers are unable to supply or deliver products when we need them, we may experience inventory shortages, which may prevent us from
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 36

fulfilling product orders resulting in lost sales, delay shipments of product, negatively affect our wholesale customer and consumer relationships, result in increased costs to expedite production and delivery, andor diminish our ability to build brand loyalty.
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WE ARE SUBJECT TO VARIOUS RISKS IN OUR SUPPLY CHAIN.

Our Reliance on Contract Manufacturers, Including Our Ability to Enter Into Purchase Order Commitments with Them and Maintain Quality Standards of Our Products and Standards of Manufacturing Processes at Contract Manufacturers, May Result in Lost Sales and Impact our Gross Margin and Results of Operations.

Our products are manufactured by contract manufacturers worldwide, primarily in the Asia Pacific region. Although we enter into purchase order commitments with these contract manufacturers each season, we generally do not maintain long-term manufacturing commitments with them, and various factors could interfere with our ability to source our products. Without long-term commitments, there is no assurance that we will be able to secure adequate or timely production capacity and our competitors may obtain production capacities that effectively limit or eliminate the availability of our contract manufacturers. If we are unable to obtain necessary production capacities, we may be unable to meet consumer demand, resulting in lost sales.sales, as has recently occurred.

In addition, contract manufacturers may fail to perform as expected. If a contract manufacturer fails to ship orders in a timely manner, we could experience supply disruptions that result in missed delivery deadlines, which may cause our customers to cancel their orders, refuse to accept deliveries or demand a reduction in purchase price or cause us to incur additional freight costs.

Reliance on contract manufacturers also creates quality control risks. Contract manufacturers may need to use sub-contracted manufacturers to fulfill our orders, which could result in compromised quality of our products. A failure in our quality control program, or a failure of our contract manufacturers or their subcontractors to meet our quality control standards, may result in diminished product quality, which in turn could result in increased order cancellations, price concessions, product returns, decreased consumer and customer demand for our products, non-compliance with our product standards or regulatory requirements, or product recalls or other regulatory actions.

We impose standards of manufacturing practices on our contract manufacturers for the benefit of workers and require compliance with our restricted substances list and product safety and other applicable laws, including environmental, health and safety and forced labor laws. We also require that our contract manufacturers impose these practices, standards and laws on their subcontractors. If a contract manufacturer or subcontractor violates labor or other laws or engages in practices that are not generally accepted as safe or ethical, we may experience production disruptions, lost sales or significant negative publicity that could result in long-term damage to our reputation. In some circumstances, parties may assert that we are liable for our contract manufacturers' or subcontractors' labor and operational practices, which could have a material adverse effect on our brand image, results of operations and our financial condition.

Volatility in the Availability of and Prices for Commodities and Raw Materials We Use in Our Products Could Have a Material Adverse Effect on Our Revenues, Costs, Gross Margins and Profitability.

Our products are derived from raw materials that are subject to the prices in the market.both disruptions to supply availability and price volatility. If there is a volatility in the availability and pricesare supply disruptions or price increases for commodities and raw materials we use in our products (as is currently the case) and we are unable to obtain sufficient raw materials to meet production needs or offset such rising costs by pricing actionsincreasing the price of our products or achieving efficiency improvements, we could experience pressure onnegative impacts to our gross marginssales and profitability.

For Certain Materials We Depend on a Limited Number of Suppliers, Which May Cause Increased Costs or Production Delays.
Some
As an innovative company, some of theour materials that are used in our productshighly technical and/or proprietary and may be available from only one source or a very limited number of sources. For example, some specialty fabrics are manufactured to our specification by one source or a few sources, and a single vendor supplies the majority of the zippers used in our products. As a result, from time to time, we may have difficulty satisfying our material requirements. Although we believe that we can identify and qualify additional contract manufacturers to produce or supply these materials or alternative materials as necessary, there are no guarantees that additional contract manufacturers will be available. In addition, depending on the timing, any changes in sources or materials may result in increased costs or production delays.

Our Success Depends on Third-Party Logistics Providers and Our and Third-Party Distribution Facilities.

The majority of our products are manufactured outside of our principal sales markets, which requires these products to be consolidated and transported, sometimes over large geographical distances. A small number of third-party logistics providers currently consolidate, deconsolidate and/or transload almost all of our products. Any disruption in the operations of these providers or changes to the costs they charge, due to capacity constraints, or volatile fuel prices or otherwise, could materially impact our sales and profitability. A prolonged disruption
COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 37

in the operations of these providers could also require us to seek alternative distribution arrangements, which may not be available on attractive terms and could lead to delays in distribution of products, either of which could have a significant and material adverse effect on our business, results of operations and financial condition.

In addition, the ability to move products over larger geographical distances could be (as is currently the case) constrained by ocean, air and trucking cargo capacity, or disrupted by limitations at ports or borders. These constraints and disruptions could hinder our ability to satisfy demand through our wholesale
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and DTC businesses, and we may miss delivery deadlines, which may cause our customers to cancel their orders, refuse to accept deliveries or demand a reduction in purchase price. In addition, increases in distribution costs, including but not limited to trucking and freight costs, could (as is currently the case) adversely affect our costs, which we may or may not be able to offset through price increases or decreased promotions.

We receive our products from third-party logistics providers at our owned distribution centers in the United States, Canada and France. The fixed costs associated with owning, operating and maintaining such distribution centers during a period of economic weakness or declining sales can result in lower operating efficiencies, financial deleverage and potential impairment in the recorded value of distribution assets.

We also receive and distribute our products through third-party operated distribution facilities internationally and domestically. We depend on these third-parties to manage the operation of their distribution facilities as necessary to meet our business needs. If the third-parties fail to manage these responsibilities, our international and domestic distribution operations could face significant disruptions.

Our ability to meet consumer and customer expectations, manage inventory, complete sales, and achieve our objectives for operating efficiencies depends on the proper operation of our existing distribution facilities, as well as the facilities of third-parties, the development or expansion of additional distribution capabilities and services, and the timely performance of services by third-parties, including those involved in moving products to and from our distribution facilities and facilities operated by third-parties. The uneven flow of inventory receipts during peak times at our distribution centers may cause us to miss delivery deadlines, as we work through inventory, which in turn may cause our customers to cancel their orders, refuse to accept deliveries or demand a reduction in purchase price.

OUR INVESTMENT IN STRATEGIC PRIORITIES EXPOSES US TO CERTAIN RISKS

We May Be Unable to Execute Our Strategic Priorities, Which Could Limit Our Ability to Invest in and Grow Our Business.

Our strategic priorities are to drive brand awareness and sales growth through increased, focused demand creation investments, enhance consumer experience and digital capabilities in all of our channels and geographies, expand and improve global DTC operations with supporting processes and systems and invest in our people and optimize our organization across our portfolio of brands.

To implement our strategic priorities, we must continue to, among other things, modify and fund various aspects of our business, effectively prioritize our initiatives and execute effective change management. These efforts, coupled with a continuous focus on expense discipline, may place strain on internal resources, and we may have operating difficulties as a result.

Our strategic priorities also generally involve increased expenditures, which could cause our profitability or operating margin to decline if we are unable to offset our increased spending with increased sales or gross profit or comparable reductions in other operating costs. This could result in a decision to delay, modify, or terminate certain initiatives related to our strategic priorities.

Initiatives to Upgrade Our Business Processes and Information Technology Systems to Optimize Our Operational and Financial Performance Involve Many Risks Which Could Result in, Among Other Things, Business Interruptions, Higher Costs and Lost Profits.

We regularly implement business process improvement and information technology initiatives intended to optimize our operational and financial performance. Transitioning to these new or upgraded processes and systems requires significant capital investments and personnel resources. Implementation is also highly dependent on the coordination of numerous employees, contractors and software and system providers. The interdependence of these processes and systems is a significant risk to the successful completion and continued refinement of these initiatives, and the failure of any aspect could have a material adverse effect on the functionality of our overall business. We may also experience difficulties in implementing or operating our new or upgraded business processes or information technology systems, including, but not limited to, ineffective or inefficient operations, significant system failures, system outages, delayed implementation and loss of system availability, which could lead to increased implementation and/or operational costs, loss or corruption of data, delayed shipments, excess inventory and interruptions of operations resulting in lost sales and/or profits.

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We May Not Realize Returns on Our Fixed Cost Investments in Our DTC Business Operations.
One of our strategic priorities is to expand and improve our global DTC business operations. Accordingly, we
We continue to make significant investments in our e-commerce platforms,digital capabilities and our global retail platforms and information technology system upgradesDTC operations, including new stores. (See “Initiatives to Upgrade Our Business Processes and Information Technology Systems to Optimize Our Operational and Financial Performance Involve Many Risks Which Could Result in, Among Other Things, Business Interruptions, Higher Costs and Lost Profits”). Since many of the costs of our DTC operations are fixed, we may be unable to reduce expenses in order to avoid losses or negative cash flows if we have insufficient sales, including as a result of restrictions on operations. We may not be able to exit DTC brick and mortar locations and related leases at all or without significant cost or loss, renegotiate the terms thereof, or effectively manage the profitability of our existing brick and mortar stores. In addition, obtaining real estate and effectively renewing real estate
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leases for our DTC brick and mortar operations is subject to the real estate market and we may not be able to secure adequate new locations or successfully renew leases for existing locations.

WE ARE SUBJECT TO CERTAIN INFORMATION TECHNOLOGY RISKS

We Rely on Information Technology Systems, including Third-Party Cloud-based Solutions, and Any Failure of These Systems May Result in Disruptions or Outages in Our E-Commerce and In-Store Retail Platforms, Loss of Processing Capabilities, and/or Loss of Data, Any of Which May Have a Material Adverse Effect on Our Financial Condition, Results of Operations or Cash Flow.

Our reputation and ability to attract, retain and serve consumers and customers is dependent upon the reliable performance of our underlying technicaltechnology infrastructure and external service providers, including third-party cloud-based solutions. These systems are vulnerable to damage or interruption and we have experienced interruptions in the past. We rely on cloud-based solutions furnished by third-parties primarily to allocate resources, pay vendors, collect from customers, process transactions, develop demand and supply plans, manage product design, production, transportation, and distribution, forecast and report operating results, meet regulatory requirements and administer employee payroll and benefits, among other functions. In addition, our DTC operations, both in-store and online, rely on cloud-based solutions to process transactions. We have also designed a significant portion of our software and computer systems to utilize data processing and storage capabilities from third-party cloud solution providers. Both our on-premises and cloud-based infrastructure may be susceptible to outages due to any number of reasons, including, human error, fire, floods, power loss, telecommunications failures, terrorist attacks and similar events. Despite the implementation of security measures that we believe to be reasonable, both our on-premises and our cloud-based infrastructure may also be vulnerable to hacking, computer viruses, the installation of malware and similar disruptions either by third-parties or employees, which may result in outages. We do not have redundancy for all of our systems and our disaster recovery planning may not account for all eventualities. If we or our existing third-party cloud-based solution providers experience interruptions in service regularly or for a prolonged basis, or other similar issues, our business wouldcould be seriously harmed and, in some instances, our consumers and customers may not be able to purchase our products, which could significantly and negatively affect our sales. Additionally, our existing cloud-based solution providers have broad discretion to change and interpret their terms of service and other policies with respect to us, and they may take actions beyond our control that could harm our business. We also may not be able to control the quality of the systems and services we receive from our third-party cloud-based solution providers. Any transition of the cloud-based solutions currently provided to different cloud providers would be difficult to implement and willmay cause us to incur significant time and expense.

If we and/or our cloud-based solution providers are not successful in preventing or effectively responding to outages and cyberattacks, our financial condition, results of operations and cash flow could be materially and adversely affected.

A Security Breach of Our or Our Third-Parties' Systems, Exposure of Personal or Confidential Information or Increased Government Regulation Relating to Handling of Personal Data, Could, Among Other Things, Disrupt Our Operations or Cause Us to Incur Substantial Costs or Negatively Affect Our Reputation.

We and many of our third-party vendors manage and maintain various types of proprietary information and sensitive and confidential data relating to our business, such as personally identifiable information of our consumers, our customers, our employees, and our business partners, as well as credit card information in certain instances. Unauthorized parties may attempt to gain access to these systems or information through fraud or other means of deceiving our employees or third-party service providers. The methods used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly changing and evolving, and may be difficult to anticipate or detect for long periods of time. The ever-evolving threats mean we and our third-parties must continually evaluate and adapt our systems and processes, and there is no guarantee that these efforts will be adequate to safeguard against all data security breaches or misuses of data. For example, in 2017, we reported the discovery of a cybersecurity incident involving our prAna.com e-commerce website, for which a number of responsive actions were taken, including notification of potentially affected prAna consumers. Any future breaches of our or our third-parties’ systems could expose us, our customers, our consumers, our suppliers, our employees, or other individuals that may be affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our reputation, or otherwise harm our business. While we maintain cyber liability insurance policies for coverage in the event of a cybersecurity incident, we cannot be certain that our existing coverage will continue to be available on acceptable terms or will be available, and in
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sufficient amount, to cover the potentially significant losses that could result from a cybersecurity incident or that the insurer will not deny coverage as to any future claim.claims.

In addition, as the regulatory environment related to information security, data collection and use and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could also result in additional costs or liabilities. For example,Non-U.S. data privacy and data security laws, various U.S. federal and state laws and other information privacy and security standards may be applicable to us. Significant legislative, judicial or regulatory changes have been and could be issued in the European Union's General Data Protection Regulation, which became effective in May 2018, and more recently, the California Consumer Privacy Act, which went into effect in January 2020, requiredfuture. As new requirements are issued, new processes must be implemented to ensure compliance and now require the continued refinement of suchcompliance. In addition, previously implemented processes as the regulations
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evolve, whichmust be continually refined. This work is accomplished through significant efforts by our employees. The diverted attention of these employees may impact our operations and there may be additional costs incurred by us for third-party resources to advise on the constantly changing landscape. Limitations on the use of data may also impact our future business strategies. Additionally, violations of these requirements could result in significant penalties or litigation from consumers.

In June 2021, the European Commission finalized recommendations in relation to cross border data transfers and published new versions of the Standard Contractual Clauses. The new requirements may cause us to incur costs and expenses in order to comply and may impact the transfer of personal data throughout the Company and to third parties.

We Depend on Certain Legacy Information Technology Systems, Which May Inhibit Our Ability to Operate Efficiently.

Our legacy product development, retail and other systems, on which we continue to manage a substantial portion of our business activities, rely on the availability of limited internal and external resources with the expertise to maintain the systems. In addition, our legacy systems, including aged systems in our Japanese and Korean businesses, may not support desired functionality for our operations and may inhibit our ability to operate efficiently. As we continue to transition from our legacy systems and implement new systems, certain functionality and information from our legacy systems, including that of third-party systems that interface with our legacy systems, may not be fully compatible with the new systems.

WE ARE SUBJECT TO LEGAL AND REGULATORY RISKS

Our Success Depends on the Protection of Our Intellectual Property Rights.

Our registered and common law trademarks, our patented or patent-pending designs and technologies, trade dress and the overall appearance and image of our products have significant value and are important to our ability to differentiate our products from those of our competitors.

As we strive to achieve product innovations, extend our brands into new product categories and expand the geographic scope of our marketing, we face a greater risk of inadvertent infringements of third-party rights or compliance issues with regulations applicable to products with technical features or components. We may become subject to litigation based on allegations of infringement or other improper use of intellectual property rights of third-parties. In addition, failure to successfully obtain and maintain patents on innovations could negatively affect our ability to market and sell our products.

We regularly discover products that are counterfeit reproductions of our products or that otherwise infringe on our proprietary rights. Increased instances of counterfeit manufactured products and sales may adversely affect our sales and the reputation of our brands and result in a shift of consumer preference away from our products. The actions we take to establish and protect trademarks and other proprietary rights may not be adequate to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as violations of proprietary rights. In markets outside of the United States, it may be more difficult for us to establish our proprietary rights and to successfully challenge use of those rights by other parties.

Litigation is often necessary to defend against claims of infringement or to enforce and protect our intellectual property rights. Intellectual property litigation may be costly and may divert management's attention from the operation of our business. Adverse determinations in any litigation may result in the loss of our proprietary rights, subject us to significant liabilities or require us to seek licenses from third-parties, which may not be available on commercially reasonable terms, if at all.

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Certain of Our Products Are Subject to Product Regulations and/or Carry Warranties, Which May Cause an Increase to Our Expenses in the Event of Non-Compliance and/or Warranty Claims.

Our products are subject to increasingly stringent and complex domestic and foreign product labeling, and performance, environmental and safety standards, laws and other regulations.regulations (such as those that will soon impact textiles containing certain polyfluoroalkyl substances). These requirements could result in greater expense associated with compliance efforts, and failure to comply with these regulations could result in a delay, non-delivery, recall, or destruction of inventory shipments during key seasons or in other financial penalties. Significant or continuing noncompliance with these standards and laws could disrupt our business and harm our reputation.

Our products are generally used in outdoor activities, sometimes in severe conditions. Product recalls or product liability claims resulting from the failure, or alleged failure, of our products could have a material adverse effect on the reputation of our brands and result in additional expenses. Most of our products carry limited warranties for defects in quality and workmanship. We maintain a warranty reserve for estimated future warranty claims, but the actual costs of servicing future warranty claims may exceed the reserve.

We May Have Additional Tax Liabilities or Experience Increased Volatility in Our Effective Tax Rate.

As a global company, we determine our income tax liability in various tax jurisdictions and our effective tax rate based on an analysis and interpretation of local tax laws and regulations and our financial projections. This analysis requires a significant amount of judgment and estimation and is often based on various assumptions about the future, which, in times of economic disruptions, are highly uncertain. These determinations are the subject of periodic domestic and foreign tax audits. Although we accrue for uncertain
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tax positions, our accruals may be insufficient to satisfy unfavorable findings. Unfavorable audit findings and tax rulings may result in payment of taxes, fines and penalties for prior periods and higher tax rates in future periods.

On December 22, 2017, the United States government enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"). The TCJA made broad and complex changes to the United States tax code. In addition, on March 27, 2020, the United States government enacted the U.S. Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). A change in interpretation of the applicable revisions to the United States tax code and related tax accounting guidance, changes in assumptions made in developing these estimates, and regulatory guidance that may be issued with respect to the applicable revisions to the United States tax code, and state tax implications as a result of the TCJA, the CARES Act, and other recent legislation may cause actual amounts to differ from our provisional estimates. ProposalsIn addition, proposals to reform U.S. and foreign tax laws could significantly impact how U.S. multinational corporations are taxed on foreign earnings and could increase the U.S. corporate tax rate. Although we cannot predict whether or in what form these proposals will pass, several of the proposals considered, if enacted into law, could have an adverse impact on our effective tax rate, income tax expense and cash flows.

Other changes in the tax laws of the jurisdictions where we do business, including an increase in tax rates or an adverse change in the treatment of an item of income or expense, could result in a material increase in our tax expense. For example, changes in the tax laws of foreign jurisdictions could arise as a result of the Base Erosion and Profit Shifting project undertaken by the Organization for Economic Co-operation and Development ("OECD"). The OECD, which represents a coalition of member countries, has recommended changes to numerous long-standing tax principles. In addition, recent efforts to reform how digital profits are taxed globally could have significant compliance and cost implications. As these changes are adopted by countries, tax uncertainty could increase and may adversely affect our provision for income taxes.

WE OPERATE GLOBALLY AND ARE SUBJECT TO SIGNIFICANT RISKS IN MANY JURISDICTIONS

Global Regulation and Economic and Political Conditions, as well as Potential Changes in Regulations, Legislation and Government Policy, May Negatively Affect Our Business.

We are subject to risks generally associated with doing business internationally. These risks include, but are not limited to, the burden of complying with, and unexpected changes to, foreign and domestic laws and regulations, such as anti-corruption and forced labor regulations and sanctions regimes, climate-change regulations, the effects of fiscal and political crises and political and economic disputes, changes in diverse consumer preferences, foreign currency exchange rate fluctuations, (such as those that may be caused by Brexit), managing a diverse and widespread workforce, political unrest, terrorist acts, military operations, disruptions or delays in shipments, disease outbreaks, such as the COVID-19 outbreak, natural disasters, and changes in economic conditions in countries in which we contract to manufacture, source raw materials or sell products. Our ability to sell products in certain markets, demand for our products in certain markets, our ability to collect accounts receivable, our contract manufacturers' ability to procure raw materials or manufacture products, distribution and logistics providers' ability to operate, our ability to operate brick and mortar stores, our workforce, and our cost of doing business (including the cost of freight and logistics) may be impacted by these events should they occur.occur and
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laws and regulations. Our exposure to these risks is heightened in Vietnam, where a significant portion of our contract manufacturing is located, in Russia, where our largest international distributor is located, and in China, where a large portion of the raw materials used in our products is sourced by our contract manufacturers. Should certain of these events occur in Vietnam Russia or China, they could cause a substantial disruption to our business and have a material adverse effect on our financial condition, results of operations and cash flows. Historically, this risk was also heightened in Russia, where our largest international distributor was located. However, following Russia's invasion of Ukraine, we paused all new orders with our Russia-based third-party international distributor for the Russia region. In 2021, the Russia-based distributor accounted for $66.6 million in revenue.

In addition, many of our imported products are subject to duties, tariffs or other import limitations that affect the cost and quantity of various types of goods imported into the United States and other markets, including the punitive tariffs on U.S. products imported from China imposed in 2019. In addition, goods suspected of being manufactured with forced labor could be blocked from importation into the U.S., which could materially impact sales.

In connection with the United Kingdom's recent exit from the European Union (commonly referred to as "Brexit"), on December 24, 2020, the European Union ("E.U.") and the United Kingdom ("U.K.") reached an agreement, on a new trade agreement that became effective on January 1, 2021. However, as partthe E.U.-U.K. Trade and Cooperation Agreement, to govern aspects of the agreement, there will be a new seriesrelationship of customsthe E.U. and regulatory checks, and asU.K. following Brexit. As a result we anticipate increased shipping costs and near-term delays. The full effects of Brexit and the impact from the trade agreement and other formal agreementsno longer having "free circulation" between the U.K. and European Union thatthe E.U., we have incurred additional duties. These additional costs may impact us remain uncertain and could lead to additional cost, delays and volatilitybe mitigated in currency exchange rates, as well as create legal and global economic uncertainty.the future.

Fluctuations in Inflation and Currency Exchange Rates Could Result in Lower Revenues, Higher Costs and/or Decreased Margins and Earnings.

We derive a significant portion of our sales from markets outside the United States, which consist of sales to wholesale customers and directly to consumers by our entities in Europe, Asia, and Canada and sales to independent international distributors who operate within EMEA and LAAP. The majority of our purchases of finished goods inventory from contract manufacturers are denominated in
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United States dollars, including purchases by our foreign entities. These purchase and sale transactions expose us to the volatility of global economic conditions, including fluctuations in inflation and foreign currency exchange rates. Our international revenues and expenses generally are derived from sales and operations in foreign currencies, and these revenues and expenses could be and have been affected by currency fluctuations, specifically amounts recorded in foreign currencies and translated into United States dollars for consolidated financial reporting, as weakening of foreign currencies relative to the United States dollar adversely affects the United States dollar value of the Company’s foreign currency-denominated sales and earnings.

Our exposure is increased with respect to our wholesale customers (including international distributors), where, in order to facilitate solicitation of advance orders for the spring and fall seasons, we establish local-currency-denominated wholesale and retail price lists in each of our foreign entities approximately six to nine months prior to United States dollar-denominated seasonal inventory purchases. As a result, our consolidated results are directly exposed to transactional foreign currency exchange risk to the extent thatand have been and could be further impacted by the United States dollar strengthensstrengthening during the six to nine months between when we establishestablished seasonal local-currency prices and when we purchase inventory. In addition to the direct currency exchange rate exposures described above, our wholesale business is indirectly exposed to currency exchange rate risks. Weakening of a wholesale customer’s functional currency relative to the United States dollar makes it more expensive for it to purchase finished goods inventory from us, which may cause a wholesale customer to cancel orders or increase prices for our products, which may make our products less price-competitive in those markets. In addition, in order to make purchases and pay us on a timely basis, our international distributors must exchange sufficient quantities of their functional currency for United States dollars through the financial markets and may be limited in the amount of United States dollars they are able to obtain.

We employ several strategies in an effort to mitigate this transactional currency risk, but there is no assurance that these strategies will succeedmay not and, in the current environment, have not fully mitigatingmitigated the negative effects of adverse foreign currency exchange rate fluctuations on the cost of our finished goods in a given period or that price increases will be accepted by our wholesale customers, international distributors or consumers. Our gross margins are adversely affected whenever we are not able to offset the full extent of finished goods cost increases caused by adverse fluctuations in foreign currency exchange rates.

Currency exchange rate fluctuations may also create indirect risk to our business by disrupting the business of independent finished goods manufacturers from which we purchase our products. When their functional currencies weaken in relation to other currencies, the raw materials they purchase on global commodities markets become more expensive and more difficult to finance. Although each manufacturer bears the full risk of fluctuations in the value of its currency against other currencies, our business can be and has been indirectly affected when adverse fluctuations cause a manufacturer to raise the prices of goods it produces for us, disrupt the manufacturer's ability to purchase the necessary raw materials on a timely basis, or disrupt the manufacturer's ability to function as an ongoing business.

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WE ARE SUBJECT TO NUMEROUS OPERATIONAL RISKS

Our Ability to Manage Fixed Costs Across a Business That is Affected by Seasonality May Impact Our Profits.

Our business is affected by the general seasonal trends common to the outdoor industry. Our products are marketed on a seasonal basis and our annual net sales are weighted heavily toward the fall/winter season, while our operating expenses are more equally distributed throughout the year. As a result, often a majority of our operating profits are generated in the second half of the year. If we are unable to manage our fixed costs in the seasons where we experience lower net sales, our profits may be adversely impacted.

Labor Matters, Changes in Labor Laws and Our Ability to Meet Our Labor Needs May Reduce Our Revenues and Earnings.

Our business depends on our ability to source and distribute products in a timely manner. While a majority of our own operations are not subject to organized labor agreements, our relationship with our Cambrai distribution center employees is governed by French law, which includes a formal representation of employees by a Works Council and the application of a collective bargaining agreement. Matters that may affect our workforce (including COVID-19 infections or the risk thereof) at contract manufacturers where our goods are produced, shipping ports, transportation carriers, retail stores, or distribution centers create risks for our business, particularly if these matters result in work shut-downs (with little to no notice), slowdowns, lockouts, strikes, limitations on the number of individuals able to work (e.g. social distancing) or other disruptions. The foregoing includes potential impacts to our business as a result of the International Longshore and Warehouse Union negotiations. Labor matters may have a material adverse effect on our business, potentially resulting in canceled orders by customers, inability to fulfill potential e-commerce demand, unanticipated inventory accumulation and reduced net sales and net income.

In addition, our ability to meet our labor needs at our distribution centers, retail stores, corporate headquarters, and regional subsidiaries, including our ability to find qualified employees while controlling wage and related labor costs, is generally subject to numerous external factors, including the availability of a sufficient number of qualified people in the work force of the markets in which our operations are located, unemployment levels within those markets, absenteeism, prevailing and minimum wage rates, changing demographics, parental responsibilities, health and other insurance costs, adoption of new or revised employment and labor laws and regulations,
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and fear of contracting COVID-19. If we are unable to locate, attract or retain qualified employees or experience higher than normal absenteeism, ourOur ability to source, distribute and sell products in a timely and cost-effective manner may be negatively affected.affected to the extent we experience these factors. Our ability to comply with labor laws, including our ability to adapt to rapidly changing labor laws, as well as provide a safe working environment may increase our risk of litigation and cause us to incur additional costs. Such risks are heightened during the COVID-19 pandemic since medical uncertainty about the virus increases the risk that safety protocols in our owned or affiliated facilities will not be effective or not be perceived as effective, or that any virus-related illnesses will be linked or alleged to be linked to such facilities, whether accurate or not.

We May Incur Additional Expenses, Be Unable to Obtain Financing, or Be Unable to Meet Financial Covenants of Our Financing Agreements as a Result of Downturns in the Global Markets.

Our vendors, wholesale customers, licensees and other participants in our supply chain may require access to credit markets in order to do business. Credit market conditions may slow our collection efforts as our wholesale customers find it more difficult to obtain necessary financing, leading to higher than normal accounts receivable. This could result in greater expense associated with collection efforts and increased bad debt expense. Credit conditions and/or supply chain disruptions may impair our vendors' ability to finance the purchase of raw materials or general working capital needs to support our production requirements, resulting in a delay or non-receipt of inventory shipments during key seasons.

Historically, we have limited our reliance on debt to finance our working capital, capital expenditures and investing activity requirements. We expect to fund our future capital expenditures with existing cash, expected operating cash flows and credit facilities, but, if the need arises to finance additional expenditures, we may need to seek additional funding. Our ability to obtain additional financing will depend on many factors, including prevailing market conditions, our financial condition and our ability to negotiate favorable terms and conditions. Financing may not be available on terms that are acceptable or favorable to us, if at all.

Our credit agreements have various financial and other covenants. If an event of default were to occur, the lenders could, among other things, declare outstanding amounts due and payable. In addition, if the financial marketsIf we were to return to recessionary conditions, the ability of one or more of the banks participating inborrow under our credit agreementagreements we would be subject to honor their commitments thereunder could be impaired.market interest rates and may incur additional interest expense when borrowing in a high interest rate environment.

Acquisitions Are Subject to Many Risks.

From time to time, we may pursue growth through strategic acquisitions of assets or companies. Acquisitions are subject to many risks, including potential loss of significant customers or key personnel of the acquired business as a result of the change in ownership, difficulty integrating the operations of the acquired business or achieving targeted efficiencies, the incurrence of substantial costs and expenses related to the acquisition effort, and diversion of management's attention from other aspects of our business operations. For example, we may face integration challenges as we continue to fully integrate the operations of our prAna subsidiary acquired in May 2014.
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Acquisitions may also cause us to incur debt or result in dilutive issuances of our equity securities. Our acquisitions may cause large one-time expenses or create goodwill or other intangible assets that could result in significant impairment charges in the future. We also make various estimates and assumptions in order to determine purchase price allocation and estimate the fair value of assets acquired and liabilities assumed. If our estimates or assumptions used to value these assets and liabilities vary from actual or future projected results, we may be exposed to losses, including impairment losses, that could be material. In the fourth quarter of 2020, we incurred a prAna brand trademark impairment charge of $17.5 million.

We do not provide any assurance that we will be able to successfully integrate the operations of any acquired businesses into our operations or achieve the expected benefits of any acquisitions. The failure to successfully integrate newly acquired businesses or achieve the expected benefits of strategic acquisitions in the future could have an adverse effect on our financial condition, results of operations or cash flows. We may not complete a potential acquisition for a variety of reasons, but we may nonetheless incur material costs in the preliminary stages of evaluating and pursuing such an acquisition that we cannot recover.

Extreme Weather Conditions, Climate Change, and Natural Disasters Could Negatively Impact Our Operating Results and Financial Condition.

Extreme weather conditions in the areas in which our retail stores, suppliers, consumers, customers, distribution centers, headquarters and vendors are located could adversely affect our operating results and financial condition. Moreover, climate change and natural disasters such as earthquakes, hurricanes and tsunamis, whether occurring in the United States or abroad, and their related consequences and effects, including energy shortages and public health issues, could disrupt our operations, the operations of our vendors and other suppliers or result in economic instability and changes in consumer preferences and spending that may negatively impact our operating results and financial condition.
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An Outbreak of Disease or Similar Public Health Threat, Such as the COVID-19 Pandemic, Could Have, and in the Case of the COVID-19 Pandemic Has Had and is Expected to Continue to Have, an Adverse Impact on Our Business, Operating Results and Financial Condition.

An outbreak of disease or similar public health threat, such as the COVID-19 pandemic, could have, and in the case of the COVID-19 pandemic has had and is expected to continue to have, an adverse impact on our business, financial condition and operating results, including in the form of lowered net sales and the delay of inventory production and fulfillment in impacted regions. Fear of contracting COVID-19, individuals contracting COVID-19 and the actions taken, and that may be taken, by governmental authorities, our third-party logistics providers, our landlords, our competitors or by us relating to the COVID-19 pandemic may (and in many cases, have):
Cause disruptions in the supply chain, including the ability to produce and deliver product as expected (see “Our Reliance on Contract Manufacturers, Including Our Ability to Enter Into Purchase Order Commitments with Them and Maintain Quality Standards of Our Products and Standards of Manufacturing Processes at Contract Manufacturers, May Result in Lost Sales and Impact Ourour Gross Margin and Results of Operations”, “For Certain Materials We Depend on a Limited Number of Suppliers, Which May Cause Increased Costs or Production Delays” and “Our Success Depends on Third-Party Logistics Providers and Our and Third-Party Distribution Facilities, and Other Third-Party Logistics Providers”Facilities”);
Result in canceled orders, non-payment for orders received and/or delayed payment for orders received (see "Our Orders from Wholesale Customers are Subject to Cancellation, Which Could Lead to a Decline in Sales or Gross Profit, Write-downs of Excess Inventory, Increased Discounts or Extended Credit Terms to Our Wholesale Customers");
Restrict the operation of our retail store operations and our ability to meet consumer demand at our stores (see "Labor Matters, Changes in Labor Laws and Our Ability to Meet Our Labor Needs May Reduce Our Revenues and Earnings" and "We May Not Realize Returns on Our Fixed Cost Investments in Our DTC Business Operations."Operations");
Cause inflation and currency rate fluctuations (see “Fluctuations in Inflation and Currency Exchange Rates Could Result in Lower Revenues, Higher Costs and/or Decreased Margins and Earnings”);
Result in a misalignment between demand and supply (see "Our Inability to Accurately Predict Consumer and/or Customer Demand for Our Products Could Lead to a Build-up of Inventory or a Lack of Inventory and Affect Our Gross Margin");
Result in labor shortages, including as a result of any vaccine mandate or our return to work policies ("Labor Matters, Changes in Labor Laws and Our Ability to Meet Our Labor Needs May Reduce Our Revenues and Earnings");
Increase reliance by consumers on e-commerce platforms (see "We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or Wholesale Customer Demand for Our Products and Lead to a Decline in Sales and/or Earnings" and "We Rely on Information Technology Systems, including Third-Party Cloud-based Solutions, and Any Failure of These Systems May Result in Disruptions or Outages in Our E-Commerce and In-Store Retail Platforms, Loss of Processing Capabilities, and/or Loss of Data, Any of Which May Have a Material Adverse Effect on Our Financial Condition, Results of Operations or Cash Flow");
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Impair the financial health of certain of our wholesale customers (see "We are Subject to a Number of Risks Which May Adversely Affect Consumer and/or Wholesale Customer Demand for Our Products and Lead to a Decline in Sales and/or Earnings");
Impact previous business assumptions (see "Acquisitions Are Subject to Many Risks", "We May Have Additional Tax Liabilities or Experience Increased Volatility in Our Effective Tax Rate" and "Our Inability to Accurately Predict Consumer and/or Customer Demand for Our Products Could Lead to a Build-up of Inventory or a Lack of Inventory and Affect Our Gross Margin");
Increase the reliance of our employees on digital solutions (see “We Rely on Information Technology Systems, including Third-Party Cloud-based Solutions, and Any Failure of These Systems May Result in Disruptions or Outages in ourOur E-Commerce and In-Store Retail Platforms, Loss of Processing Capabilities, and/or Loss of Data, Any of Which May Have a Material Adverse Effect on Our Financial Condition, Results of Operations or Cash Flow” and “A Security Breach of Our or Our Third-Parties' Systems, Exposure of Personal or Confidential Information or Increased Government Regulation Relating to Handling of Personal Data, Could, Among Other Things, Disrupt Our Operations or Cause Us to Incur Substantial Costs or Negatively Affect Our Reputation”);
Restrict global business and travel (see “Global Regulation and Economic and Political Conditions, as well as Potential Changes in Regulations, Legislation and Government Policy, May Negatively Affect Our Business”);
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Impair our ability to ship product through our owned or affiliated distribution centers, including as a result of capacity reductions, shift changes, labor shortages, higher than normal absenteeism and/or the complete shut-downs of facilities for deep cleaning procedures (see “Labor Matters, Changes in Labor Laws and Our Ability to Meet Our Labor Needs May Reduce Our Revenues and Earnings”);
Cause rapid changes to employment and tax law (see “Labor Matters, Changes in Labor Laws and OtherOur Ability to Meet Our Labor IssuesNeeds May Reduce Our Revenues and Earnings”, and "We May Have Additional Tax Liabilities or Experience Increased Volatility in Our Effective Tax Rate");
Impair our key personnel (see "We“We Depend on Key Personnel"Personnel”);
Result in incremental costs from the adoption of preventative measures, including providing facial coverings and hand sanitizer, rearranging operations to follow social distancing protocols, conducting temperature checks and undertaking regular and thorough disinfecting of surfaces, and providing testing; and/or
Cause any number of other disruptions to our business, the risks of which may be otherwise identified herein.

In addition, the impact of the COVID-19 pandemic may also exacerbate other risks discussed in this Item 1A, any of which could have a material effect on us. The COVID-19 pandemic is ongoing, and its dynamic nature, including uncertainties relating to the duration of the pandemic, the return of consumer confidence and actions that may be taken by governmental authorities, landlords, our competitors or by us to contain the pandemic or to treat its impact, makes it difficult to forecast the degree to, or the time period over, which our sales and operations will be affected.

Our Investment Securities May Be Adversely Affected by Market Conditions.

Our investment portfolio is subject to a number of risks and uncertainties. Changes in market conditions, such as those that accompany an economic downturn or economic uncertainty, may negatively affect the value and liquidity of our investment portfolio, perhaps significantly. Our ability to find diversified investments that are both safe and liquid and that provide a reasonable return may be impaired, potentially resulting in lower interest income, less diversification, longer investment maturities, or other-than-temporary impairments.

We Depend on Key Personnel.

Our future success will depend in part on our ability to attract, retain and develop key talent and to effectively manage succession. We face intense competition for these individuals worldwide, and there is a significant concentration of well-funded apparel and footwear competitors near our headquarters in Portland, Oregon. We may not be able to attract qualified new employees or retain existing employees, which may have a material adverse effect on our financial condition, results of operations or cash flows.

We License our Proprietary Rights to Third-Parties and Could Suffer Reputational Damage to Our Brands if We Fail to Choose Appropriate Licensees.

We currently license, and expect to continue licensing, certain of our proprietary rights, such as trademarks or copyrighted material, to third-parties. We rely on our licensees to help preserve the value of our brands. Although we attempt to protect our brands through approval rights, we cannot completely control the use of our licensed brands by our licensees. The misuse of a brand by or negative publicity involving a licensee could have a material adverse effect on that brand and on us.

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In addition, from time to time we license the right to operate retail stores for our brands to third-parties, primarily to our independent international distributors. We provide training to support these stores and set operational standards. However, these third-parties may not operate the stores in a manner consistent with our standards, which could cause reputational damage to our brands or harm these third-parties' sales.

RISKS RELATED TO OUR SECURITIES

Our Common Stock Price May Be Volatile.

Our common stock is traded on the NASDAQ Global Select Market. The size of our public float and our average daily trading volume makes the price of our common stock susceptible to large degrees of fluctuation. Factors such as general market conditions, actions by institutional investors to rapidly accumulate or divest of a substantial number of our shares, fluctuations in financial results, variances from financial market expectations, changes in earnings estimates or recommendations by analysts, or announcements by us or our competitors may cause the market price of our common stock to fluctuate, perhaps substantially.

Certain Shareholders Have Substantial Control Over Usus and Are Able to Influence Corporate Matters.
At
As of September 30, 2021, five2022, three related shareholders, The Gertrude Boyle Trust, Sarah A. Bany, Timothy P. Boyle, Joseph P. Boyle, and Molly E. Boyle, controlled just under 50% of our common stock outstanding. Following Gertrude Boyle's death, Sarah A. Bany is
44

serving as trustee of The Gertrude Boyle Trust, which holds the shares that were beneficially owned by Gertrude Boyle. As a result, if acting together, Sarah A. Bany, Timothy P. Boyle, Joseph P. Boyle, and Molly E. Boyle are able to exercise significant influence over all matters requiring shareholder approval. These holdings could be significantly diminished (and with them the related effective control percentage) as a result ofto satisfy any applicable estate or unrealized gains tax obligations of holders.

The Sale or Proposed Sale of a Substantial Number of Shares of Our Common Stock Could Cause the Market Price of Our Common Stock to Decline.

Shares held by The Gertrude Boyle Trust, Sarah A. Bany, Timothy P. Boyle, Joseph P. Boyle, and Molly E. Boyle, are available for resale, subject to the requirements of, and the rules under, the Securities Act of 1933 and the Securities Exchange Act of 1934. The sale or the prospect of the sale of a substantial number of these shares may have an adverse effect on the market price of our common stock.

We also may issue our capital stock or securities convertible into our capital stock from time to time in connection with a financing, acquisition, investments, or otherwise. Any such issuance could result in substantial dilution to our existing shareholders and cause the market price of our common stock to decline.

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Item 2.    
Item 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES AND USE OF PROCEEDS

PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
(in millions)
July 1, 2021 through July 31, 2021192,729 $97.94 192,729 $408.5 
August 1, 2021 through August 31, 2021291,598 $101.72 291,598 $378.8 
September 1, 2021 through September 30, 2021241,145 $98.71 241,145 $355.0 
Total725,472 $99.72 725,472 $355.0 
Since the inception of the Company's stockour share repurchase plan,program in 2004 through September 30, 2022, our Board of Directors has authorized the repurchase of $1.5$2.0 billion of our common stock. Asstock, including an approved increase in April 2022 of September 30, 2021, we had repurchased 28.1 million shares under this program at an aggregate purchase price of $1,145.0 million, pursuant to a pre-established written plan.$500 million. Shares of our common stock may be purchased in the open market or through privately negotiated transactions, subject to market conditions.conditions, and generally settle subsequent to the trade date. The repurchase program does not obligate us to acquire any specific number of shares or to acquire shares over any specified period of time. Under this program as of September 30, 2022, we had repurchased 31.7 million shares at an aggregate purchase price of $1,470.6 million, and had $529.4 million remaining available. The Company did not repurchase common stock during the three months ended September 30, 2022.

45COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 47

ITEM 6.EXHIBITS
Item 6.
(a) | EXHIBITSSee Exhibit Index below for a description of the documents that are filed as Exhibits to this quarterly report or incorporated herein by reference.
(a)
EXHIBIT INDEX
Exhibits
Exhibit No.Exhibit Name
3.1
3.1(a)
3.1(b)
3.2
10.1
31.1
31.2
32.1
32.2
101101.INSINS 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.document
101101.SCHSCH XBRL Taxonomy Extension Schema Document
101101.CALCAL XBRL Taxonomy Extension Calculation Linkbase Document
101101.DEFDEF XBRL Taxonomy Extension Definition Linkbase Document
101101.LABLAB XBRL Taxonomy Extension Label Linkbase Document
101101.PREPRE XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File, (formattedformatted as Inline XBRL and contained in Exhibit 101).101
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SIGNATURES

46

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

COLUMBIA SPORTSWEAR COMPANY
Date:November 4, 20213, 2022By:/s/ JIM A. SWANSON
Jim A. Swanson
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial and Accounting Officer)

47COLUMBIA SPORTSWEAR COMPANY | 2022 FORM 10-Q | 49