Columbia Sportswear Company Reports Third Quarter Results; Raises Full Year 2012 Earnings Outlook

  Columbia Sportswear Company Reports Third Quarter Results; Raises Full Year
  2012 Earnings Outlook

Third Quarter Highlights:

  *Third quarter 2012 consolidated net sales totaled $545.0 million, compared
    with third quarter 2011 net sales of $566.8 million.
  *Third quarter 2012 operating income increased $1.2 million to $87.8
    million, or 16.1 percent of sales, compared with third quarter 2011
    operating income of $86.6 million, or 15.3 percent of sales.
  *Third quarter 2012 net income totaled $64.4 million, or $1.88 per diluted
    share, compared with third quarter 2011 net income of $67.5 million, or
    $1.98 per diluted share. A higher effective tax rate contributed to the
    decline.
  *Fiscal 2012 operating margin outlook raised to approximately 8.3 percent
    (including a $4.0 million pre-tax first quarter restructuring charge), on
    net sales of approximately $1.7 billion.
  *The board of directors approved a quarterly dividend of $0.22 per share,
    payable on November, 29, 2012 to shareholders of record on November 15,
    2012.

Business Wire

PORTLAND, Ore. -- October 25, 2012

Columbia Sportswear Company (NASDAQ: COLM), a leading innovator in the global
active outdoor apparel and footwear industries, today announced net sales of
$545.0 million for the quarter ended September 30, 2012, a 4 percent decline
compared with net sales of $566.8 million for the same period in 2011. Changes
in currency exchange rates reduced reported net sales by approximately 2
percentage points.

Third quarter net income totaled $64.4 million, or $1.88 per diluted share,
compared with net income of $67.5 million, or $1.98 per diluted share, for the
same period in 2011. A higher effective tax rate contributed $0.11 to the
reduction in third quarter 2012 earnings per share compared with the third
quarter of 2011.

Tim Boyle, Columbia’s president and chief executive officer, commented, “Our
third quarter benefited from improved gross margins and disciplined expense
management, resulting in higher operating margin and further demonstrating our
ability to navigate effectively through a slow-growth environment. We are
pleased to raise our 2012 operating margin outlook based on
better-than-expected results through the first nine months of the year.”

Boyle concluded, “Looking ahead to 2013, we anticipate continued slow growth
through at least the first half of the year, based in part on advance Spring
2013 wholesale orders, the fragile U.S. recovery, continued uncertainty in
Europe, and signs of slowing in key Asian markets. However, we believe that
our continued focus on innovation, performance and enhanced design is
elevating our brand portfolio, which holds substantial long-term growth
potential.”

Third Quarter Results

(All comparisons are between third quarter 2012 and third quarter 2011, unless
otherwise noted.)

The $21.8 million net sales decline in the third quarter was concentrated
primarily in the company’s Europe/Middle East/Africa (EMEA) region, where net
sales declined $39.8 million, or 40 percent, to $60.5 million, including an 8
percentage point negative effect from changes in currency exchanges rates. The
decline reflected lower net sales in the company’s EMEA direct markets,
against an increase of more than 70 percent in the comparable 2011 period.
Last year’s warm winter and persistent unfavorable macro-economic conditions
weighed on both the Sorel and Columbia brands, creating headwinds against our
ongoing efforts to revitalize the Columbia brand in key European markets. In
addition, approximately 45 percent of the decline in EMEA net sales was
attributable to previously-referenced timing differences in shipments of fall
orders to EMEA distributors, which were heavily concentrated in the Columbia
brand. Year-to-date Fall 2012 shipments to EMEA distributors are up 7 percent
compared with Fall 2011 shipments in the comparable period. Net sales in
Canada decreased $8.1 million, or 13 percent, including a 3 percentage point
negative effect from changes in currency exchange rates. These declines were
partially offset by net sales increases in the U.S. of $14.2 million, or 4
percent, to $347.8 million, and in the Latin America/Asia Pacific (LAAP)
region of $11.9 million, or 16 percent, to $84.7 million, including a 3
percentage point negative effect from changes in currency exchange rates. (See
“Geographical Net Sales” table below.)

Apparel, Accessories & Equipment net sales declined $8.7 million, or 2
percent, to $429.5 million; and Footwear net sales declined $13.1 million, or
10 percent, to $115.5 million. (See “Categorical Net Sales” table below.)

Columbia and Sorel brand net sales declined $11.0 million, or 2 percent, and
$10.8 million, or 15 percent, respectively, accounting for the entire net
sales decline in the quarter. (See “Brand Net Sales” table below.)

Balance Sheet

The company ended the third quarter with $96.3 million in cash and short-term
investments, compared with $90.4 million at September 30, 2011.

Consolidated inventories totaled $475.7 million at September 30, 2012,
approximately 10 percent higher than at the same time last year. Higher
average unit costs accounted for all of the increase in inventory valuation,
on a mid-single-digit percentage decline in units.

Raised 2012 Earnings Outlook

The company currently expects full year 2012 net sales of approximately $1.7
billion, a 25 to 35 basis point decrease in gross margin, and 40 to 50 basis
points of SG&A expense leverage (including first quarter restructuring charges
of approximately $4.0 million), resulting in operating margin of approximately
8.3 percent compared with 8.1 percent operating margins in fiscal 2011.

For the fourth quarter of 2012, the company expects net sales to increase up
to 1.5 percent from net sales of $526.1 million in the fourth quarter of 2011,
a 50 to 75 basis point decrease in gross margin, and 150 to 200 basis points
of SG&A expense leverage, resulting in estimated operating margin expansion of
approximately 100 to 150 basis points.

All projections related to anticipated future results are forward-looking in
nature and are subject to risks and uncertainties which may cause actual
results to differ, perhaps significantly.

A more detailed version of the company’s financial outlook can be found in the
“CFO Commentary on Third Quarter Financial Results and 2012 Outlook”,
available on the company’s investor relations website at
http://investor.columbia.com/results.cfm.

Dividend

The board of directors approved a fourth quarter dividend of $0.22 per share,
payable on November 29, 2012 to shareholders of record on November 15, 2012.

CFO’s Third Quarter Financial Commentary Available Online

At approximately 4:15 p.m. EDT, a commentary by Tom Cusick, senior vice
president and chief financial officer, reviewing the company’s third quarter
2012 financial results and improved 2012 outlook will be furnished to the SEC
on Form 8-K and published on the company’s website at
http://investor.columbia.com/results.cfm. Analysts and investors are
encouraged to review this commentary prior to participating in the conference
call.

Conference Call

The company will host a conference call on Thursday, October 25, 2012 at 5:00
p.m. EDT to review its third quarter financial results and 2012 outlook. Dial
877-407-9205 to participate. The call will also be webcast live on the
Investor Relations section of the Company’s website at
http://investor.columbia.com where it will remain available until October 25,
2013.

Fourth Quarter 2012 Reporting Schedule

Columbia Sportswear plans to report financial results for fourth quarter and
full year 2012 on Tuesday, February 5, 2013 at approximately 4:00 p.m. EDT.
Following issuance of the earnings release, a commentary reviewing the
company’s financial results will be furnished to the SEC on Form 8-K and
published on the investor relations section of the company’s website at
http://investor.columbia.com/results.cfm. A public webcast of Columbia’s
earnings conference call will follow at 5:00 p.m. EDT at www.columbia.com.

About Columbia Sportswear

Columbia Sportswear Company is a leading innovator in the global outdoor
apparel, footwear, accessories and equipment industry. Founded in 1938 in
Portland, Oregon, Columbia products are sold in approximately 100 countries
and have earned an international reputation for innovation, quality and
performance. Columbia products feature innovative technologies and designs
that protect outdoor enthusiasts from the elements, increase comfort, and make
outdoor activities more enjoyable. In addition to the Columbia® brand,
Columbia Sportswear Company also owns outdoor brands Mountain Hardwear®,
Sorel®, and Montrail®. To learn more, please visit the company's websites at
www.columbia.com, www.mountainhardwear.com, www.sorel.com, and
www.montrail.com.

Forward-Looking Statements

This document contains forward-looking statements within the meaning of the
federal securities laws, including statements regarding anticipated results,
net sales, gross margins, operating costs, operating margins, SG&A and other
expenses and SG&A expense leverage, tax rates, market conditions and growth
prospects, cost containment measures and advance orders in future periods.
Actual results could differ materially from those projected in these and other
forward-looking statements. The company’s expectations, beliefs and
projections are expressed in good faith and are believed to have a reasonable
basis; however, each forward-looking statement involves a number of risks and
uncertainties, including those set forth in this document, those described in
the company’s Annual Report on Form 10-K for the year ended December 31, 2011
under the heading “Risk Factors,” and other risks and uncertainties that have
been or may be described from time to time in other reports filed by the
company, including reports on Form 8-K, Form 10-Q and Form 10-K. Potential
risks and uncertainties that may affect our future revenues, earnings and
performance and could cause the actual results of operations or financial
condition of the company to differ materially from those expressed or implied
by forward-looking statements in this document include: unfavorable economic
conditions generally and weakness in consumer confidence and spending rates;
our ability to effectively implement our IT infrastructure, data management
and business process initiatives, failure of which could result in material
unanticipated expenses and/or disruptions to our business; the operations of
our computer systems and third party computer systems; our ability to match
our cost structure with business growth levels, particularly in volatile
demand environments in Europe and China; changes in international, federal
and/or state tax policies and rates, which we expect to increase;
international risks, including changes in import limitations and tariffs or
other duties, political instability in foreign markets, exchange rate
fluctuations, and trade disruptions; failure to realize anticipated benefits
of our Chinese joint venture; our ability to attract and retain key employees;
the financial health of our customers and their continued ability to access
credit markets to fund their ongoing operations; higher than expected rates of
order cancellations; increased consolidation of our retail customers; our
ability to effectively source and deliver our products to customers in a
timely manner, the failure of which could lead to increased costs and/or order
cancellations; unforeseen increases and volatility in input costs, such as
cotton and/or oil; our reliance on product acceptance by consumers; our
reliance on product innovations, which may involve greater regulatory and
manufacturing complexity and could pose greater risks of quality issues,
supply disruptions or intellectual property disputes; the effects of
unseasonable weather (including, for example, warm weather in the winter and
cold weather in the spring), which affects consumer demand for the company’s
products; our dependence on independent manufacturers and suppliers; our
ability to source finished products and components at competitive prices from
independent manufacturers in foreign countries that may experience unexpected
periods of inflation, labor and materials shortages or other manufacturing
disruptions; the effectiveness of our sales and marketing efforts; intense
competition in the industry; business disruptions and acts of terrorism or
military activities around the globe; and our ability to establish and protect
our intellectual property. The company cautions that forward-looking
statements are inherently less reliable than historical information. The
company does not undertake any duty to update any of the forward-looking
statements after the date of this document to conform them to actual results
or to reflect changes in events, circumstances or its expectations. New
factors emerge from time to time and it is not possible for the company to
predict all such factors, nor can it assess the impact of each such factor 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.

                          - Financial tables follow-

COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                         
                                               September 30,
                                                2012         2011
Current Assets:
Cash and cash equivalents                      $ 94,164      $ 87,942
Short-term investments                           2,128         2,423
Accounts receivable, net                         422,756       417,976
Inventories, net                                 475,733       432,104
Deferred income taxes                            53,905        42,736
Prepaid expenses and other current assets        38,334        46,789
Total current assets                             1,087,020     1,029,970
                                                               
Property, plant and equipment, net               260,423       231,511
Intangibles and other non-current assets         80,403        82,895
Total assets                                   $ 1,427,846   $ 1,344,376
                                                               
                                                               
Current Liabilities:
Notes payable                                  $ 10,206      $ -
Accounts payable                                 109,879       141,546
Accrued liabilities                              122,501       108,020
Income taxes payable                             13,802        9,001
Deferred income taxes                            954           2,079
Total current liabilities                        257,342       260,646
                                                               
Long-term liabilities                            42,801        40,026
Shareholders' equity                             1,127,703     1,043,704
Total liabilities and shareholders' equity     $ 1,427,846   $ 1,344,376
                                                               


COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
                                               
                Three Months Ended September     Nine Months Ended September
                30,                              30,
                  2012           2011        2012         2011      
                                                                   
Net sales       $  545,005        $  566,791     $ 1,168,503     $ 1,167,907
Cost of sales      301,320          317,206      659,014        656,373   
Gross profit       243,685           249,585       509,489         511,534
                   44.7     %        44.0    %     43.6      %     43.8      %
                                                                   
Selling,
general, and       160,154           167,375       437,881         436,034
administrative
expenses
Net licensing      4,287            4,406        10,817         10,396    
income
Income from        87,818            86,616        82,425          85,896
operations
                                                                   
Interest income    (17      )        462          421            1,246     
(expense), net
Income before      87,801            87,078        82,846          87,142
income tax
                                                                   
Income tax         (23,426  )        (19,539 )     (22,474   )     (20,391   )
expense
Net income      $  64,375        $  67,539     $ 60,372       $ 66,751    
                                                                   
Earnings per
share:
Basic           $  1.90           $  2.00        $ 1.79          $ 1.97
Diluted            1.88              1.98          1.77            1.95
Weighted
average shares
outstanding:
Basic              33,872            33,849        33,761          33,868
Diluted            34,155            34,177        34,035          34,303
                                                                             


COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                             
                                               Nine Months Ended September 30,
                                                 2012           2011     
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                     $  60,372          $ 66,751
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization                     30,763            32,115
Loss on disposal or impairment of property,       505               229
plant and equipment
Deferred income taxes                             974               3,183
Stock-based compensation                          5,707             5,855
Excess tax benefit from employee stock plans      (604      )       (1,814   )
Changes in operating assets and liabilities:
Accounts receivable                               (68,605   )       (121,949 )
Inventories                                       (108,027  )       (122,998 )
Prepaid expenses and other current assets         (1,784    )       (19,286  )
Other assets                                      (266      )       (1,521   )
Accounts payable and accrued liabilities          (32,734   )       27,182
Income taxes payable                              825               (11,343  )
Other liabilities                                 2,298            1,571    
Net cash used in operating activities             (110,576  )       (142,025 )
                                                                    
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of short-term investments           879               66,271
Capital expenditures                              (32,431   )       (40,171  )
Proceeds from sale of property, plant, and        6                168      
equipment
Net cash provided by (used in) investing          (31,546   )       26,268   
activities
                                                                    
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from credit facilities               10,206            -
Proceeds from issuance of common stock under      9,607             10,342
employee stock plans
Tax payments related to restricted stock          (1,261    )       (2,942   )
unit issuances
Excess tax benefit from employee stock plans      604               1,814
Repurchase of common stock                        (206      )       (16,429  )
Cash dividends paid                               (22,309   )       (21,677  )
Net cash used in financing activities             (3,359    )     (28,892  )
                                                                    
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH       (1,389    )       (1,666   )
NET DECREASE IN CASH AND CASH EQUIVALENTS         (146,870  )       (146,315 )
                                                                    
CASH AND CASH EQUIVALENTS, BEGINNING OF           241,034          234,257  
PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD       $  94,164         $ 87,942   
                                                                    
SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING ACTIVITIES:
Capital expenditures incurred but not yet      $  5,967           $ 1,195
paid
Repurchases of common stock not yet paid          -                 2,896
                                                                             

                                                                                    
COLUMBIA SPORTSWEAR COMPANY
(In millions, except percentage changes)
(Unaudited)
                                                                 
                Three Months Ended September      Nine Months Ended September 30,
                30,
                 2012     2011    %             2012       2011      %      
                                    Change                                Change
                                                                                    
Geographical
Net Sales:
  United        $ 347.8   $ 333.6   4      %      $ 672.9     $ 655.1     3      %
  States
  Latin
  America &       84.7      72.8    16     %        245.6       216.7     13     %
  Asia
  Pacific
  Europe,
  Middle          60.5      100.3   (40    )%       168.6       198.3     (15    )%
  East, &
  Africa
  Canada         52.0     60.1    (13    )%      81.4       97.8      (17    )%
  Total         $ 545.0   $ 566.8   (4     )%     $ 1,168.5   $ 1,167.9   -
                                                                                    
Categorical
Net Sales:
  Apparel,
  Accessories   $ 429.5   $ 438.2   (2     )%     $ 954.7     $ 934.9     2      %
  and
  Equipment
  Footwear       115.5    128.6   (10    )%      213.8      233.0     (8     )%
  Total         $ 545.0   $ 566.8   (4     )%     $ 1,168.5   $ 1,167.9   -
                                                                                    
Brand Net
Sales:
  Columbia      $ 436.8   $ 447.8   (2     )%     $ 990.6     $ 975.0     2      %
  Mountain        44.4      44.7    (1     )%       98.8        99.1      -
  Hardwear
  Sorel           61.2      72.0    (15    )%       70.5        86.0      (18    )%
  Other          2.6      2.3     13     %       8.6        7.8       10     %
  Total         $ 545.0   $ 566.8   (4     )%     $ 1,168.5   $ 1,167.9   -
                                                                                    

Contact:

Columbia Sportswear Company
Ron Parham
Sr. Director of Investor Relations & Corporate Communications
503-985-4584
rparham@columbia.com
 
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