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TheStreet Open House

Columbia Sportswear Company Reports Fourth Quarter And Full Year 2012 Financial Results; Provides Preliminary Full Year And First Quarter 2013 Financial Outlook

The company’s annual net sales are weighted more heavily toward the fall/winter season, while operating expenses are more equally distributed throughout the year, resulting in a highly seasonal profitability pattern weighted toward the second half of the fiscal year.

The company currently expects 2013 net sales comparable to 2012 net sales of $1.67 billion, and full year operating margin of between approximately 7.5 percent and 8.0 percent of sales. This preliminary outlook does not include the anticipated deferral of operating income from 2013 into future periods as we transition our China distribution from an independent distributor model to a joint venture operation effective January 1, 2014.

For the first quarter of 2013, the company expects net sales comparable to net sales of $333.1 million in the first quarter of 2012. Gross margin is expected to decrease between 120 and 170 basis points, more than offset by anticipated SG&A leverage of between 100 and 150 basis points and increased licensing income, resulting in first quarter operating margin expansion of up to 50 basis points from first quarter 2012 operating margin of 1.6 percent.

A more detailed version of the company’s financial outlook can be found in the “ CFO Commentary on Fourth Quarter/Fiscal Year 2012 Financial Results, and Preliminary 2013 Outlook”, furnished separately to the SEC on Form 8-K and available on the company’s investor relations website at http://investor.columbia.com/results.cfm.

CFO’s Fourth Quarter and Fiscal 2012 Financial Commentary Available Online

At approximately 4:15 p.m. EST, a commentary by Tom Cusick, senior vice president and chief financial officer, reviewing the company’s fourth quarter and fiscal year 2012 financial results and preliminary 2013 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, February 7, 2013 at 5:00 p.m. EST to review its fourth quarter financial results and preliminary 2013 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 approximately February 6, 2014.

First Quarter 2013 Reporting Schedule

Columbia Sportswear plans to report financial results for first quarter 2013 on Thursday, April 25, 2013 at approximately 4:00 p.m. EDT. Following issuance of the earnings release, a commentary reviewing the company’s first quarter 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®, Montrail® and OutDry®. 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 expenses, operating margins, SG&A expense leverage, licensing income, market conditions, advance orders, and the formation and operation of our China joint venture 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 wholesale and 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.

COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
       
December 31,
  2012   2011
Current Assets:
Cash and cash equivalents $ 290,781 $ 241,034
Short-term investments 44,661 2,878
Accounts receivable, net 334,324 351,538
Inventories, net 363,325 365,199
Deferred income taxes 50,929 52,485
Prepaid expenses and other current assets 38,583 36,392
Total current assets 1,122,603 1,049,526
 
Property, plant and equipment, net 260,524 250,910
Intangibles and other non-current assets 75,715 82,106
Total assets $ 1,458,842 $ 1,382,542
 
 
Current Liabilities:
Notes payable $ 156 $ -
Accounts payable 142,240 148,973
Accrued liabilities 105,190 104,496
Income taxes payable 4,406 12,579
Deferred income taxes 67 954
Total current liabilities 252,059 267,002
 
Long-term liabilities 40,616 40,995
Shareholders' equity 1,166,167 1,074,545
Total liabilities and shareholders' equity $ 1,458,842 $ 1,382,542
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
     
Three Months Ended December 31, Twelve Months Ended December 31,
  2012     2011     2012     2011  
 
Net sales $ 501,060 $ 526,078 $ 1,669,563 $ 1,693,985
Cost of sales 294,155   302,304   953,169   958,677  
Gross profit 206,905 223,774 716,394 735,308
41.3 % 42.5 % 42.9 % 43.4 %
 
Selling, general, and administrative expenses 158,754 178,624 596,635 614,658
Net licensing income 2,952   5,360   13,769   15,756  
Income from operations 51,103 50,510 133,528 136,406
 
Interest income (expense), net (42 ) 28   379   1,274  
Income before income tax 51,061 50,538 133,907 137,680
 
Income tax expense (11,574 ) (13,810 ) (34,048 ) (34,201 )
Net Income $ 39,487   $ 36,728   $ 99,859   $ 103,479  
 
Earnings per share:
Basic $ 1.16 $ 1.09 $ 2.95 $ 3.06
Diluted 1.15 1.08 2.93 3.03
Weighted average shares outstanding:
Basic 33,999 33,629 33,840 33,808
Diluted 34,307 33,890 34,132 34,204
 
COLUMBIA SPORTSWEAR COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
   
Year Ended December 31,
  2012     2011  
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 99,859 $ 103,479

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 40,892 43,560
Loss on disposal or impairment of property, plant and equipment 1,582 6,485
Deferred income taxes 7,140 (3,582 )
Stock-based compensation 7,833 7,870
Excess tax benefit from employee stock plans (1,016 ) (1,828 )
Changes in operating assets and liabilities:
Accounts receivable 18,166 (54,334 )
Inventories 2,951 (55,223 )
Prepaid expenses and other current assets (2,025 ) (10,186 )
Other assets (1,259 ) (4,520 )
Accounts payable and accrued liabilities (17,529 ) 36,711
Income taxes payable (11,052 ) (7,010 )
Other liabilities 3,126   2,374  
Net cash provided by operating activities 148,668   63,796  
 
CASH FLOWS FROM INVESTING ACTIVITIES
Net sales (purchases) of short-term investments (41,650 ) 65,721
Capital expenditures (50,491 ) (78,404 )
Proceeds from sale of property, plant, and equipment 7,099   168  
Net cash used in investing activities (85,042 ) (12,515 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facilities 100,654 119,384
Repayments on credit facilities (100,498 ) (119,384 )
Proceeds from issuance of common stock under employee stock plans 14,600 10,991
Tax payments related to restricted stock unit issuances (1,486 ) (2,974 )
Excess tax benefit from employee stock plans 1,016 1,828
Repurchase of common stock (206 ) (20,000 )
Cash dividends paid (29,780 ) (29,075 )
Net cash used in financing activities (15,700 ) (39,230 )
 
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,821   (5,274 )
NET INCREASE IN CASH AND CASH EQUIVALENTS 49,747 6,777
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 241,034   234,257  
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 290,781   $ 241,034  
 
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ACTIVITIES
Capital expenditures incurred but not yet paid $ 5,313 $ 952
 
COLUMBIA SPORTSWEAR COMPANY
(In millions, except percentage changes)
(Unaudited)
             
Three Months Ended December 31, Twelve Months Ended December 31,
  2012   2011 % Change     2012   2011 % Change  
 
Geographical Net Sales:
United States $ 273.8 $ 292.9 (7)% $ 946.7 $ 948.0 -
Latin America & Asia Pacific 132.0 124.3 6% 377.6 341.0 11%
Europe, Middle East, & Africa 62.0 77.1 (20)% 230.6 275.4 (16)%
Canada   33.3     31.8 5%   114.7     129.6 (11)%
Total $ 501.1   $ 526.1 (5)% $ 1,669.6   $ 1,694.0 (1)%
 
 
Categorical Net Sales:
 
Apparel, Accessories & Equipment $ 392.3 $ 400.0 (2)% $ 1,347.0 $ 1,334.9 1%
Footwear   108.8     126.1 (14)%   322.6     359.1 (10)%
Total $ 501.1   $ 526.1 (5)% $ 1,669.6   $ 1,694.0 (1)%
 
 
Brand Net Sales:
Columbia $ 400.5 $ 416.5 (4)% $ 1,391.1 $ 1,391.5 -
Mountain Hardwear 42.7 43.2 (1)% 141.5 142.3 (1)%
Sorel 56.5 64.3 (12)% 127.0 150.3 (16)%
Other   1.4     2.1 (33)%   10.0     9.9 1%
Total $ 501.1   $ 526.1 (5)% $ 1,669.6   $ 1,694.0 (1)%




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