UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT
OF 1934
For the transition period from ______________ to ______________
COLUMBIA SPORTSWEAR COMPANY
(Exact name of registrant as specified in its charter)
Oregon 0-23939 93-0498284
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification Number)
14375 Northwest Science Park Drive Portland, Oregon 97229
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(503) 985-4000
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
6600 North Baltimore Portland, Oregon 97203
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
The number of shares of Common Stock outstanding on October 31, 2001, was
39,247,505.
COLUMBIA SPORTSWEAR COMPANY
SEPTEMBER 30, 2001
INDEX TO FORM 10-Q
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1 - Financial Statements - Columbia Sportswear Company (Unaudited)
Condensed Consolidated Balance Sheets ........................................ 2
Condensed Consolidated Statements of Operations .............................. 3
Condensed Consolidated Statements of Cash Flows .............................. 4
Notes to Condensed Consolidated Financial Statements ......................... 5
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations................................. 8
ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk ............... 11
PART II. OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K ......................................... 12
SIGNATURES ........................................................................ 13
1
ITEM 1 - FINANCIAL STATEMENTS
COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
SEPTEMBER 30, 2001 DECEMBER 31, 2000
------------------ -----------------
ASSETS
Current Assets:
Cash and cash equivalents $ 9,968 $ 35,464
Accounts receivable, net of allowance of $7,586 and
$5,826, respectively 260,707 129,539
Inventories (Note 2) 161,154 105,288
Deferred tax asset 13,729 13,347
Prepaid expenses and other current assets 4,282 5,610
--------- ---------
Total current assets 449,840 289,248
Property, plant, and equipment, net 95,091 76,662
Intangibles and other assets 8,368 9,176
--------- ---------
Total assets $ 553,299 $ 375,086
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 75,377 $ 23,987
Accounts payable 53,283 45,047
Accrued liabilities 34,472 28,294
Income taxes payable 27,258 -
Current portion of long-term debt 4,853 308
--------- ---------
Total current liabilities 195,243 97,636
Long-term debt 25,483 26,000
Deferred tax liability 3,829 2,461
--------- ---------
Total liabilities 224,555 126,097
Commitments and contingencies - -
Shareholders' Equity:
Preferred stock; 10,000 shares authorized; none
issued and outstanding - -
Common stock; 50,000 shares authorized; 39,245 and
38,564 issued and outstanding 148,046 133,736
Retained earnings 188,515 123,901
Accumulated other comprehensive loss (5,601) (5,920)
Unearned portion of restricted stock issued for future
services (2,216) (2,728)
--------- ---------
Total shareholders' equity 328,744 248,989
--------- ---------
Total liabilities and shareholders' equity $ 553,299 $ 375,086
========= =========
See accompanying notes to condensed consolidated financial statements.
2
COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net sales $305,630 $247,346 $565,257 $452,938
Cost of sales 158,985 131,179 306,222 246,504
-------- -------- -------- --------
Gross profit 146,645 116,167 259,035 206,434
Selling, general, and administrative 64,480 55,362 151,368 132,673
-------- -------- -------- --------
Income from operations 82,165 60,805 107,667 73,761
Interest expense, net 1,097 1,413 1,743 2,837
-------- -------- -------- --------
Income before income tax 81,068 59,392 105,924 70,924
Income tax expense 31,492 21,174 41,310 25,816
-------- -------- -------- --------
Net income (Note 3) $ 49,576 $ 38,218 $ 64,614 $ 45,108
======== ======== ======== ========
Earnings per share (Note 4):
Basic $ 1.26 $ 1.00 $ 1.66 $ 1.17
Diluted $ 1.24 $ 0.96 $ 1.62 $ 1.14
Weighted average shares outstanding:
Basic 39,207 38,405 38,980 38,394
Diluted 40,093 39,821 39,881 39,417
See accompanying notes to condensed consolidated financial statements.
3
COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------
2001 2000
--------- ---------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income $ 64,614 $ 45,108
Adjustments to reconcile net income to net cash provided by (used
in) operating activities:
Depreciation and amortization 11,847 10,048
Non-cash compensation 512 511
Loss (gain) on disposal of property, plant, and equipment 93 (318)
Deferred income taxes 956 494
Changes in operating assets and liabilities:
Accounts receivable (133,465) (103,954)
Inventories (56,951) (35,879)
Prepaid expenses and other current assets 1,292 (1,859)
Intangibles and other assets 97 57
Accounts payable 12,170 21,030
Accrued liabilities 6,455 13,848
Income taxes payable 32,753 12,820
--------- ---------
Net cash used in operating activities (59,627) (38,094)
--------- ---------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Additions to property, plant, and equipment (29,678) (5,390)
Proceeds from sale of property, plant, and equipment 33 432
Purchase of trademarks -- (7,967)
--------- ---------
Net cash used in investing activities (29,645) (12,925)
--------- ---------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net proceeds from notes payable 52,446 44,718
Proceeds from long-term debt 4,511 -
Repayment on long-term debt (576) (537)
Proceeds from issuance of common stock 7,730 3,524
--------- ---------
Net cash provided by financing activities 64,111 47,705
--------- ---------
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH (335) (656)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (25,496) (3,970)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,464 14,622
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9,968 $ 10,652
========= =========
See accompanying notes to condensed consolidated financial statements.
4
COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared by the management of Columbia Sportswear Company (the "Company") and in
the opinion of management contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the Company's financial
position as of September 30, 2001 and the results of operations for the three
and nine months ended September 30, 2001 and 2000 and cash flows for the nine
months ended September 30, 2001 and 2000. It should be understood that
accounting measurements at interim dates inherently involve greater reliance on
estimates than at year end. The results of operations for the three and nine
months ended September 30, 2001 are not necessarily indicative of the results to
be expected for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission. It is suggested
that these condensed consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000.
Certain reclassifications of amounts reported in the prior period financial
statements have been made to conform to classifications used in the current
period financial statements.
NOTE 2. INVENTORIES
Inventories are carried at the lower of cost or market. Cost is determined using
the first-in, first-out method.
Inventories consist of the following (in thousands):
September 30, 2001 December 31, 2000
------------------ -----------------
Raw materials $ 5,633 $ 4,298
Work in process 5,413 9,217
Finished goods 150,108 91,773
-------- --------
$161,154 $105,288
======== ========
NOTE 3. COMPREHENSIVE INCOME
Comprehensive income and its components, net of tax, are as follows (in
thousands):
Three Months Ended Nine months Ended
September 30, September 30,
----------------------- -----------------------
2001 2000 2001 2000
-------- -------- -------- --------
Net income $ 49,576 $ 38,218 $ 64,614 $ 45,108
Foreign currency translation adjustments 134 (1,160) (1,408) (1,452)
Unrealized gain (loss) on derivative transactions (net of
tax (expense) benefit, $28, $0, ($1,077) and $0, respectively) (46) 307 1,727 272
-------- -------- -------- --------
Comprehensive income $ 49,664 $ 37,365 $ 64,933 $ 43,928
======== ======== ======== ========
NOTE 4. EARNINGS PER SHARE
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share," requires dual presentation of basic and diluted earnings per share
("EPS"). Basic EPS is based on the weighted average number of common shares
outstanding. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock.
5
There were no adjustments to net income in computing diluted earnings per share
for the three and nine months ended September 30, 2001 and 2000. A
reconciliation of the common shares used in the denominator for computing basic
and diluted earnings per share is as follows (in thousands):
Three Months Ended Nine months Ended
September 30, September 30,
----------------------- -----------------------
2001 2000 2001 2000
-------- -------- -------- --------
Weighted average common shares outstanding, used in
computing basic earnings per share 39,207 38,405 38,980 38,394
Effect of dilutive stock options 886 1,416 901 1,023
------ ------ ------ ------
Weighted-average common shares outstanding, used in
computing diluted earnings per share 40,093 39,821 39,881 39,417
====== ====== ====== ======
Earnings per share of common stock:
Basic $ 1.26 $ 1.00 $ 1.66 $ 1.17
Diluted $ 1.24 $ 0.96 $ 1.62 $ 1.14
Options to purchase an additional 34 and 0 shares of common stock were
outstanding at September 30, 2001 and 2000, respectively, but were not included
in the computation of diluted earnings per share because their effect would be
antidilutive.
On May 2, 2001, the Company announced that the Board of Directors approved a
three-for-two split of the Company's common stock. The additional shares were
distributed on June 4, 2001, to all shareholders of record at the close of
business on May 17, 2001.
The shares presented in the consolidated balance sheets as of September 30, 2001
and December 31, 2000 and the number of shares used in the computation of
earnings per share in the consolidated statements of operations for the three
and nine months ended September 30, 2001 and 2000, are based on the number of
shares outstanding after giving effect to the June 2001 stock split.
NOTE 5. SEGMENT INFORMATION
The Company operates in one industry segment: the design, production, marketing
and selling of active outdoor apparel, including outerwear, sportswear, rugged
footwear, and accessories. The geographic distribution of the Company's net
sales, income before income tax, and identifiable assets are summarized in the
following table (in thousands). Inter-geographic net sales, which are recorded
at a negotiated mark-up and eliminated in consolidation, are not material.
Three Months Ended Nine months Ended
September 30, September 30,
-------------------- -----------------------
2001 2000 2001 2000
--------- -------- --------- ----------
Net sales to unrelated entities:
United States $ 224,142 $182,046 $ 398,567 $ 322,721
Canada 35,800 30,766 57,164 48,142
Other International 45,688 34,534 109,526 82,075
--------- -------- --------- ----------
$ 305,630 $247,346 $ 565,257 $ 452,938
========= ======== ========= ==========
Income before income tax:
United States $ 67,623 $ 50,934 $ 92,077 $ 58,511
Canada 9,036 8,256 11,725 9,604
Other International 4,573 2,322 7,958 4,446
Less interest and other income
(expense) and eliminations (164) (2,120) (5,836) (1,637)
--------- -------- --------- ----------
$ 81,068 $ 59,392 $ 105,924 $ 70,924
========= ======== ========= ==========
6
September 30, December 31,
2001 2000
------------ ------------
Total assets:
United States $ 497,555 $ 351,270
Canada 54,560 31,645
Other international 82,810 56,059
--------- ---------
634,925 438,974
Eliminations (81,626) (63,888)
--------- ---------
Total assets $ 553,299 $ 375,086
========= =========
NOTE 6. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
As part of the Company's risk management programs, the Company uses a variety of
financial instruments, including foreign currency option and forward exchange
contracts. The Company does not hold or issue derivative financial instruments
for trading purposes.
The Company uses a combination of foreign currency option and forward exchange
contracts to hedge against the currency risk associated with Japanese yen,
Canadian dollar and European Euro denominated, firmly committed and anticipated
transactions for the next twelve months.
The Company accounts for these instruments as cash flow hedges. In accordance
with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activity",
as amended, such financial instruments are marked-to-market with the offset to
shareholders' equity and then subsequently recognized as a component of gross
margin when the underlying transaction is recognized. Hedge effectiveness is
determined by evaluating whether gains and losses on hedges will offset gains
and losses on the underlying exposures. Hedge ineffectiveness was not material
during the three and nine months ended September 30, 2001 and 2000.
NOTE 7. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
142, "Goodwill and Other Intangible Assets." SFAS 142 establishes new standards
for goodwill acquired in a business combination and eliminates amortization of
goodwill and certain intangible assets and instead sets forth methods to
periodically evaluate goodwill for impairment. SFAS 142 will be effective for
the Company beginning January 1, 2002. Management has evaluated the impact of
the adoption of SFAS 142 and has determined that this standard will not have a
material impact on the Company's financial position or results of operations.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS 144 establishes a single accounting model
for long-lived assets to be disposed of and replaces SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," and APB Opinion No. 30, "Reporting Results of Operations--Reporting the
Effects of Disposal of a Segment of a Business." The provisions of this
statement are effective beginning with fiscal years starting after December 15,
2001. The Company is evaluating the impact of the adoption of this standard and
has not yet determined the effect of adoption on its financial position or
results of operations.
7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
The statements in this report concerning future financing and working capital
requirements and the impact of Euro implementation on our business constitute
forward-looking statements that are subject to risks and uncertainties. Many
factors could cause actual results to differ materially from those projected in
such forward looking statements, including risks described in our annual report
on Form 10-K for the year ended December 31, 2000 under the heading "Factors
That May Affect Our Business". Factors that could adversely affect future
financing and working capital needs include, but are not limited to, unfavorable
economic conditions, a decline in consumer confidence; the financial health of
our customers; disruptions or other effects related to terrorism and acts of war
(including shipping disruptions, the costs of increased security measures,
changes in consumer behavior, and more unpredictable retail, planning and
sourcing environment); increased competitive factors (including increased
competition, new product offerings by competitors and price pressures); changes
in consumer preferences; unseasonable weather (for example, warmer than average
winter seasons and colder than average spring seasons); an inability to increase
sales to department stores or to open and operate new concept shops on favorable
terms; a failure to manage growth effectively; unavailability of independent
manufacturing, labor or supplies at reasonable prices; disruptions in the
outerwear, sportswear and rugged footwear industries; delays or disruptions in
our capital projects, particularly our proposed European distribution facility;
and our ability to negotiate favorable terms for construction and implementation
of our proposed European distribution facility. Factors that could cause the
implementation of the Euro to have an adverse affect on our business include
operational disruptions that could result from the systems conversion for the
Euro introduction. The Company does not undertake any obligations to update this
forward-looking information to conform it to changes in circumstances or
expectations.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected statements
of operations data expressed as a percentage of net sales.
Three Months Ended Nine months Ended
September 30, September 30,
-------------------- ------------------
2001 2000 2001 2000
------ ------ ------ ------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 52.0 53.0 54.2 54.4
------ ------ ------ ------
Gross profit 48.0 47.0 45.8 45.6
Selling, general and administrative 21.1 22.4 26.8 29.3
------ ------ ------ ------
Income from operations 26.9 24.6 19.0 16.3
Interest expense, net 0.4 0.6 0.3 0.6
------ ------ ------ ------
Income before income tax 26.5 24.0 18.7 15.7
Income tax expense 10.3 8.6 7.3 5.7
------ ------ ------ ------
Net income 16.2% 15.4% 11.4% 10.0%
====== ====== ====== ======
THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2000
NET SALES: Net sales increased 23.6% to $305.6 million for the three month
period ended September 30, 2001 from $247.3 million for the comparable period in
2000. Domestic sales increased 23.1% to $224.1 million for the three month
period ended September 30, 2001 from $182.0 million for the comparable period in
2000. Net international sales, excluding Canada, increased 32.5% to $45.7
million for the three month period ended September 30, 2001 from $34.5 million
for the comparable period in 2000. Canadian sales increased 16.2% to $35.8
million for the three month period ended September 30, 2001 from $30.8 million
for the same period in 2000. These increases were primarily attributable to
increased sales of outerwear units primarily in the United States and Europe as
well as increased sales of footwear units primarily in the United States and
Canada.
8
GROSS PROFIT: Gross profit as a percentage of net sales was 48.0% for the three
months ended September 30, 2001 compared to 47.0% for the comparable period in
2000. The increase in gross margin was the result of several factors including
reduced impact of currency fluctuation when compared to the same quarter last
year, the timely receipt of goods from the factories, and minimal off-priced
selling during the three month period ended September 30, 2001.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE: Selling, general, and
administrative expense (SG&A) increased 16.4% to $64.5 million for the three
months ended September 30, 2001 from $55.4 million for the comparable period in
2000, primarily due to an increase in variable selling and operating expenses to
support the higher level of sales. As a percentage of sales, SG&A decreased to
21.1% for the three months ended September 30, 2001 from 22.4% for the
comparable period in 2000, as we continue to leverage the existing investments
in global infrastructure and maintain prudent cost control measures given the
current economic environment.
INTEREST EXPENSE: Interest expense decreased by 22.3% for the three months ended
September 30, 2001 from the comparable period in 2000. This decrease was
attributable to decreased borrowings during the quarter ended September 30, 2001
when compared to the same period in 2000.
INCOME TAX EXPENSE: The provision for income taxes was $31.5 million and $21.2
million for the three months ended September 30, 2001 and 2000, respectively.
The provision for income taxes, as a percentage of pre-tax income was 38.8% and
35.7% for the three months ended September 30, 2001 and 2000, respectively. We
expect the provision for income taxes, as a percentage of pre-tax income to be
39.0% for the fiscal year ending December 31, 2001. The lower tax rate in 2000
was due primarily to the utilization of non-recurring foreign tax credits.
NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 2000
NET SALES: Net sales increased 24.8% to $565.3 million for the nine month period
ended September 30, 2001 from $452.9 million for the comparable period in 2000.
Domestic sales increased 23.5% to $398.6 million for the nine month period ended
September 30, 2001 from $322.7 million for the comparable period in 2000. Net
international sales, excluding Canada, increased 33.4% to $109.5 million for the
nine month period ended September 30, 2001 from $82.1 million for the comparable
period in 2000. Canadian net sales increased 18.9% to $57.2 million for the nine
month period ended September 30, 2001 from $48.1 million for the comparable
period in 2000. These increases were primarily attributable to increased sales
of outerwear, sportswear and footwear units in the United States, Europe and
Canada.
GROSS PROFIT: Gross profit as a percentage of net sales was 45.8% for the nine
months ended September 30, 2001 compared to 45.6% for the comparable period in
2000. The increase in gross margin was due to the reduced impact of currency
fluctuation for the nine month period ending September 30, 2001 when compared to
the same period in 2000, offset by the decrease in gross margins on increased
sales of spring close-out products for the six month period ending June 30, 2001
when compared to the same period in 2000.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE: SG&A increased 14.1% to $151.4
million for the nine months ended September 30, 2001 from $132.7 million for the
comparable period in 2000, primarily as a result of an increase in variable
selling and operating expenses to support the higher level of sales. As a
percentage of sales, SG&A decreased to 26.8% for the nine months ended September
30, 2001 from 29.3% for the comparable period in 2000 as we were able to
leverage our sales growth over our fixed operating expenses.
INTEREST EXPENSE: Interest expense decreased by 38.6% for the nine months ended
September 30, 2001 from the comparable period in 2000. This decrease was
attributable to decreased borrowings as well as an overall reduction in the
short-term rates during the nine months ended September 30, 2001 when compared
to the same period in 2000.
INCOME TAX EXPENSE: The provision for income taxes was $41.3 million and $25.8
million for the nine months ended September 30, 2001 and 2000, respectively. The
provision for income taxes, as a percentage of pre-tax income was 39.0% and
36.4% for the nine months ended September 30, 2001 and 2000, respectively. We
expect the provision for income taxes, as a percentage of pre-tax income to be
39.0% for the fiscal year ending December 31, 2001. The lower tax rate in 2000
was due primarily to the utilization of non-recurring foreign tax credits.
9
SEASONALITY OF BUSINESS
Our business is affected by the general seasonal trends common to the outdoor
apparel industry, with sales and profits highest in the third calendar quarter.
Our products are marketed on a seasonal basis, with a product mix weighted
substantially toward the fall season. Results of operations in any period should
not be considered indicative of the results to be expected for any future
period. The sale of our products is subject to substantial cyclical fluctuation
or impact from unseasonal weather conditions. Sales tend to decline in periods
of recession or uncertainty regarding future economic prospects that affect
consumer spending, particularly on discretionary items. This cyclicality and any
related fluctuation in consumer demand could have a material adverse effect on
the Company's results of operations, cash flows and financial position.
LIQUIDITY AND CAPITAL RESOURCES
Our primary ongoing funding requirements are to finance working capital and the
continued growth of the business. At September 30, 2001, we had total cash
equivalents of $10.0 million compared to $10.7 million at September 30, 2000.
Cash used in operating activities was $59.6 million for the nine months ended
September 30, 2001 and $38.1 million for the comparable period in 2000. This
increase was primarily due to an increase in accounts receivable and inventories
required to support the higher sales levels partially offset by an increase in
earnings.
Our primary capital requirements are for working capital, investing activities
associated with the expansion of our domestic and international operations and
general corporate needs. Net cash used in investing activities was $29.6 million
for the nine months ended September 30, 2001 and $12.9 million for the
comparable period in 2000. This increase was primarily due to expenditures
related to the expansion of our domestic distribution center and improvements to
our recently purchased Corporate Headquarters.
Cash provided by financing activities was $64.1 million for the nine months
ended September 30, 2001 and $47.7 million for the comparable period in 2000.
The increase in net cash provided by financing activities was due to proceeds
from the increase in borrowings relating to inventory purchases.
To fund our working capital requirements, we have available unsecured revolving
lines of credit with aggregate seasonal limits ranging from approximately $35 to
$75 million, of which $10 million to $50 million is committed. As of September
30, 2001, $31.8 million was outstanding under these lines of credit.
Internationally, our subsidiaries have local currency operating lines in place
guaranteed by our domestic operations.
Additionally, we maintain credit agreements in order to provide us with
unsecured import lines of credit with a combined limit of approximately $175
million available for issuing documentary letters of credit. As set forth in the
terms of the agreement with Nissho Iwai American Corporation, our agreement
dated October 1, 1998 was allowed to expire on September 30, 2001. Nissho Iwai
American Corporation will continue to provide import and related financing
services through the first fiscal quarter of 2002. We have an initial agreement
with a major financial institution to provide unsecured import lines of credit
for future inventory purchases which will be finalized prior to December 31,
2001.
We have recently announced capital expenditures to support our continued growth,
including the expansion of our domestic distribution center, remodeling of our
recently purchased corporate headquarters and construction of a European
distribution facility. We anticipate the capital expenditures associated with
these projects, as well as our maintenance capital, will be approximately $40
million in 2001 and will be funded by existing cash and cash provided by
operations. However, if the need for additional financing arises, our ability to
obtain additional credit facilities will depend on prevailing market conditions,
our financial condition, and our ability to negotiate favorable terms and
conditions.
EURO CURRENCY CONVERSION
On January 1, 1999, the Euro was adopted as the national currency of the
participating countries - Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, Netherlands, Portugal and Spain. Greece adopted the Euro on
January 1, 2001. Initially, the Euro will be used for non-cash transactions.
Legacy currencies of the participating member states will remain legal tender
until January 1, 2002. On this date, Euro-denominated bills and coins will be
issued for use in cash transactions.
10
The introduction of the Euro is a significant event with potential implications
for our existing operations within the participating countries. As such, we have
committed resources to conduct risk assessments and to take corrective actions,
where required, to ensure that we are prepared for the introduction of the Euro.
Progress regarding Euro implementation is reported regularly to management.
We have not experienced any significant operational disruptions to date and at
this time do not expect the continued implementation of the Euro to cause any
significant operational disruptions. In addition, we have not incurred and do
not expect to incur any significant costs from the continued implementation of
the Euro, including any additional currency risk, which could materially affect
our liquidity or capital resources.
ITEM 3 -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has not been any material change in the market risk disclosure contained
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2000.
11
PART II. OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
12
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: 11/14/01 /s/ Patrick D. Anderson
-------- -----------------------
Patrick D. Anderson
Chief Financial Officer and
Authorized Officer
13