What changed in this filing

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Item 1. Financial Statements

2020-08-06 compared with 2020-05-07 · 281 added, 157 removed, 478 unchanged (48% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands) March 31,

(in thousands) June 30,

2020 December 31,

2019 March 31,

2019 June 30,

Current Assets:

35 unchanged sentences

66,148 , 67,561 , and 67,586 , issued and outstanding, respectively

5,396 4,937 100

Retained earnings 1,653,293 1,848,935 1,656,392

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except per share amounts) 2020 2019 2020 2019

5 unchanged sentences

Income (loss) from operations ( 70,300 ) 16,365 ( 72,287 ) 104,323

Interest income, net 1,813 3,400

Other non-operating income 1,738 446

Income before income tax 1,564 91,804

Income tax expense ( 1,351 ) ( 17,627 )

Net income $ 213 $ 74,177

Earnings per share:

Interest income (expense), net ( 805 ) 2,571 1,008 5,971

Other non-operating income, net 935 1,032 2,673 1,478

Income (loss) before income tax ( 70,170 ) 19,968 ( 68,606 ) 111,772

Income tax benefit (expense) 19,463 3,061 18,112 ( 14,566 )

Net income (loss) $ ( 50,707 ) $ 23,029 $ ( 50,494 ) $ 97,206

Earnings (loss) per share:

Basic $ ( 0.77 ) $ 0.34 $ ( 0.76 ) $ 1.43

5 unchanged sentences

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended March 31,

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2020 2019 2020 2019

Net income $ 213 $ 74,177

Net income (loss) $ ( 50,707 ) $ 23,029 $ ( 50,494 ) $ 97,206

Other comprehensive income (loss):

Unrealized holding gains on available-for-sale securities, net

Unrealized gains on derivative transactions (net of tax effects of $( 4,145 ) and $( 395 ), respectively)

Unrealized gains (losses) on derivative transactions (net of tax effects of $ 1,521 , $ 827 , $( 2,624 ) and $ 432 , respectively)

( 4,862 ) ( 1,881 ) 6,663 ( 548 )

Foreign currency translation adjustments (net of tax effects of $( 460 ), $ 224 , $ 37 and $ 887 respectively)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2020 2019

Cash flows from operating activities:

Net income $ 213 $ 74,177

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

Net income (loss) $ ( 50,494 ) $ 97,206

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation, amortization, and non-cash lease expense 65,924 57,487

Provision for uncollectible accounts receivable 22,815 ( 2,146 )

Loss on disposal or impairment of property, plant and equipment 2,138 958

Loss on disposal or impairment of property, plant and equipment, and right-of-use assets 8,800 1,599

Deferred income taxes 4,362 ( 4,338 )

10 unchanged sentences

Other liabilities 4,757 5,919

Net cash provided by operating activities 12,754 58,644

Net cash provided by (used in) operating activities ( 37,276 ) 2,597

Cash flows from investing activities:

2 unchanged sentences

Capital expenditures ( 20,959 ) ( 50,800 )

Net cash used in investing activities ( 42,865 ) ( 33,456 )

Net cash provided by (used in) investing activities ( 19,373 ) 76,444

Cash flows from financing activities:

1 unchanged sentence

Repayments on credit facilities ( 373,390 ) ( 23,208 )

Payment of line of credit issuance fees ( 1,674 ) —

Proceeds from issuance of common stock related to stock-based compensation 1,987 11,286

3 unchanged sentences

Cash dividends paid ( 17,195 ) ( 32,686 )

Net cash provided by (used in) financing activities 21,470 ( 46,086 )

Net cash used in financing activities ( 151,706 ) ( 145,162 )

Net effect of exchange rate changes on cash ( 2,861 ) 476

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

(in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total

BALANCE, DECEMBER 31, 2019 67,561 $ 4,937 $ 1,848,935 $ ( 4,425 ) $ 1,849,447

BALANCE, MARCH 31, 2020 66,116 $ 565 $ 1,704,000 $ ( 7,974 ) $ 1,696,591

Net loss — — ( 50,707 ) — ( 50,707 )

Other comprehensive income (loss):

Unrealized holding losses on derivative transactions, net

— — — ( 4,862 ) ( 4,862 )

Foreign currency translation adjustment, net — — — 6,976 6,976

Issuance of common stock related to stock-based compensation, net

32 794 — — 794

Stock-based compensation expense — 4,037 — — 4,037

BALANCE, JUNE 30, 2020 66,148 $ 5,396 $ 1,653,293 $ ( 5,860 ) $ 1,652,829

Three Months Ended June 30, 2019

(in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total

BALANCE, MARCH 31, 2019 68,346 $ 94 $ 1,723,873 $ ( 3,318 ) $ 1,720,649

Net income — — 23,029 — 23,029

Other comprehensive income (loss):

Unrealized holding gains on derivative transactions, net

Unrealized holding losses on derivative transactions, net

— — — ( 1,881 ) ( 1,881 )

6 unchanged sentences

Repurchase of common stock ( 836 ) ( 7,110 ) ( 74,242 ) — ( 81,352 )

BALANCE, MARCH 31, 2020 66,116 $ 565 $ 1,704,000 $ ( 7,974 ) $ 1,696,591

Three Months Ended March 31, 2019

BALANCE, JUNE 30, 2019 67,586 $ 100 $ 1,656,392 $ ( 1,298 ) $ 1,655,194

See accompanying notes to condensed consolidated financial statements.

COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six months ended June 30, 2020

Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total

BALANCE, DECEMBER 31, 2019 67,561 $ 4,937 $ 1,848,935 $ ( 4,425 ) $ 1,849,447

Net loss — — ( 50,494 ) — ( 50,494 )

Other comprehensive income (loss):

Unrealized holding gains on derivative transactions, net — — — 6,663 6,663

Foreign currency translation adjustment, net — — — ( 8,098 ) ( 8,098 )

Cash dividends ($ 0.26 per share)

— — ( 17,195 ) — ( 17,195 )

Issuance of common stock related to stock-based compensation, net

144 ( 2,317 ) — — ( 2,317 )

Stock-based compensation expense — 7,712 — — 7,712

Repurchase of common stock ( 1,557 ) ( 4,936 ) ( 127,953 ) — ( 132,889 )

BALANCE, JUNE 30, 2020 66,148 $ 5,396 $ 1,653,293 $ ( 5,860 ) $ 1,652,829

Six Months Ended June 30, 2019

Columbia Sportswear Company Shareholders' Equity

(in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Non-Controlling Interest Total

Common Stock Retained Earnings Accumulated Other Comprehensive Loss Non-Controlling Interest Total

BALANCE, DECEMBER 31, 2018 68,246 $ — $ 1,677,920 $ ( 4,063 ) $ 16,456 $ 1,690,313

4 unchanged sentences

— — — 56 — 56

Unrealized holding gains on derivative transactions, net

Unrealized holding losses on derivative transactions, net

— — — ( 548 ) — ( 548 )

Foreign currency translation adjustment, net

— — — 3,356 — 3,356

Cash dividends ($ 0.48 per share)

3 unchanged sentences

Stock-based compensation expense

— 8,781 — — — 8,781

Repurchase of common stock

BALANCE, MARCH 31, 2019 68,346 $ 94 $ 1,723,873 $ ( 3,318 ) $ — $ 1,720,649

( 1,032 ) ( 14,378 ) ( 86,048 ) — — ( 100,426 )

BALANCE, JUNE 30, 2019

67,586 $ 100 $ 1,656,392 $ ( 1,298 ) $ — $ 1,655,194

See accompanying notes to condensed consolidated financial statements.

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Note 9 Stock-Based Compensation 14

Note 10 Earnings Per Share 12

Note 10 Earnings (Loss) Per Share 14

Note 11 Accumulated Other Comprehensive Loss 15

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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 March 31, 2020, December 31, 2019 and March 31, 2019, and the results of operations for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019.

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 June 30, 2020, December 31, 2019 and June 30, 2019, and the results of operations for the three and six months ended June 30, 2020 and 2019, and cash flows for the six months ended June 30, 2020 and 2019.

The December 31, 2019 financial information was derived from the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

A significant part of the Company's business is of a seasonal nature;

therefore, results of operations for the three months ended March 31, 2020 are not necessarily indicative of results to be expected for other quarterly periods or for the full year.

therefore, results of operations for the three and six months ended June 30, 2020 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.

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A novel strain of coronavirus ("COVID-19") was first identified in China in December 2019 and a global pandemic of respiratory disease caused by COVID-19 was declared by the World Health Organization in March 2020.

As of March 31, 2020, in response to this pandemic, many governments worldwide had implemented travel restrictions, business shutdowns or slowdowns, and shelter-in-place or stay-at-home orders.

In first quarter 2020, lower consumer demand related to the COVID-19 pandemic began to impact the Company's financial performance in China in late January, Korea and Japan in early February and North America and Europe in March.

Retail traffic trends declined across North America and Europe in early March, prior to store closures which began in mid-March.

As of the date of this filing, certain regional and local governments have lifted restrictions and orders.

The current environment of uncertainty significantly affected the March 31, 2020 estimates for allowance for uncollectible accounts receivable and excess, close-out and slow-moving inventory.

The current environment of uncertainty significantly affected the June 30, 2020 estimates for allowance for uncollectible accounts receivable and excess, close-out and slow-moving inventory.

These estimates involve assumptions about future events.

The allowance for uncollectible accounts receivable includes assumptions about the future financial condition of our customers and their ability to make required payments.

The allowance for uncollectible accounts receivable includes assumptions about the future financial condition of the Company's customers and their ability to make required payments.

The provision for excess, close-out and slow moving inventory includes assumptions about future demand for the Company’s products and the Company's ability to sell them at a profit.

As a result of lower consumer demand related to the COVID-19 pandemic, we tested certain retail locations and their respective lease right-of-use assets for impairment.

While no significant impairments were identified, further declines in projected future performance or significant declines in market rents for retail spaces may adversely affect the recovery of these retail locations assets.

As a result of lower consumer demand related to the COVID-19 pandemic, the Company tested certain retail locations and their respective lease right-of-use assets for impairment.

In the second quarter of 2020, impairment charges of $6.6 million for certain underperforming retail stores were recognized in Selling, general and administrative expenses (" SG&A expense") .

Additionally, as a result of the COVID-19 pandemic and a significant decline in projected net sales, the prAna brand's trademark and goodwill were tested for impairment as of March 31, 2020.

While no impairment was indicated during the first quarter 2020 tests, the degree by which the fair value of the prAna reporting unit and trademark exceeded their respective carrying values declined from our 2019 impairment test.

If, due to the current level of uncertainty relating to the COVID-19 pandemic, the prAna brand's actual or projected future performance deteriorates from the projections considered in our first quarter 2020 impairment tests, it is possible that an impairment charge would be required.

After performing both qualitative and quantitative analysis, including review of future long-term revenue and cash flow assumptions, the Company concluded a triggering event requiring measurement of the prAna brand's trademark and goodwill for impairment as of June 30, 2020 did not occur.

If, due to the current level of uncertainty relating to the COVID-19 pandemic, the prAna brand's actual or projected future performance deteriorates from the projections considered in the Company's first quarter 2020 impairment tests, it is possible that an impairment charge would be required.

As of June 30, 2020, the Company had received or negotiated lease concessions related to the effects of COVID-19 on a portion of its stores.

The Company expects continued lease concession negotiations to be finalized during the second half of 2020.

In April 2020, the Financial Accounting Standards Board (“FASB”) issued a Staff Q&A, Topic 842 and 840:

Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic.

The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract.

The Company elected to account for lease concessions related to the

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

effects of the COVID-19 pandemic in accordance with the Staff Q&A.

For concessions that provide a deferral of payments with no substantive changes to the consideration in the original contract, the Company continues to recognize expense during the deferral period.

For concessions in the form of lease abatements, the reduced lease payments are accounted for as reductions to variable lease expense.

In the periods presented, lease concessions reducing variable lease expense were not material.

In response to COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law in the United States on March 27, 2020.

The CARES Act provides payroll tax credits for employee retention, deferral of payroll tax payments and several income tax provision modifications.

Additionally, there are other subsidies and incentives provided by foreign governments in the countries where the Company conducts business.

In the second quarter of 2020, $4.3 million of government subsidies and incentives reduced SG&A expense .

Recently Adopted Accounting Pronouncements

Effective January 1, 2020, the Company adopted Accounting Standards Update ("ASU") No.

2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) issued by the Financial Accounting Standards Board ("FASB") in August 2018, which clarifies certain aspects of accounting for implementation costs incurred in a cloud computing arrangement ("CCA") that is a service contract.

2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) issued by the FASB in August 2018, which clarifies certain aspects of accounting for implementation costs incurred in a cloud computing arrangement ("CCA") that is a service contract.

Under the ASU, an entity would expense costs incurred in the preliminary-project and post-implementation-operation stages.

The entity would also

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

capitalize certain costs incurred during the application-development stage, as well as certain costs related to enhancements.

The entity would also capitalize certain costs incurred during the application-development stage, as well as certain costs related to enhancements.

The ASU does not change the accounting for the service component of a CCA.

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On an ongoing basis, the Company will contemplate forward-looking economic conditions in recording lifetime expected credit losses for the Company’s financial assets measured at cost, such as the Company’s trade receivables and certain short-term investments.

The following significant accounting policy has been updated since the Company’s 2019 Annual Report on Form 10-K as a result of adoption of ASU No.2016-13:

Summary of Significant Accounting Policies

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

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

2018-15, respectively:

Accounts Receivable

4 unchanged sentences

Write-off activity and recoveries for the periods presented were not material.

Cloud Computing Arrangements

The Company’s CCAs primarily relate to various enterprise resource planning systems, as well as other supporting systems.

These assets are generally included in Other non-current assets in the Condensed Consolidated Balance Sheets and amortize on a straight-line basis over their assessed useful lives or the term of the underlying cloud computing hosting contract, whichever is shorter.

As of June 30, 2020, one asset was placed in-service with a useful life of two years.

As of June 30, 2020, the Company had a balance of capitalized implementation

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

costs of $19.2 million and associated accumulated amortization of $0.1 million.

Changes in these assets are recorded in Other Assets within operating activities in the Condensed Consolidated Statements of Cash Flows.

Recent Accounting Pronouncements Not Yet Adopted

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The Company is currently evaluating the impact this accounting standard will have on the Company's financial position, results of operations or cash flows.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2—REVENUES

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

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

(in thousands)

8 unchanged sentences

Total $ 183,245 $ 67,310 $ 58,291 $ 7,765 $ 316,611

Three Months Ended March 31, 2019

Three Months Ended June 30, 2019

(in thousands)

8 unchanged sentences

Total $ 315,527 $ 101,614 $ 91,527 $ 17,542 $ 526,210

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Six months ended June 30, 2020

(in thousands)

LAAP EMEA Canada Total

Product category net sales

Apparel, Accessories and Equipment $ 461,133 $ 123,789 $ 78,940 $ 32,224 $ 696,086

Footwear 97,980 46,172 35,199 9,402 188,753

Total $ 559,113 $ 169,961 $ 114,139 $ 41,626 $ 884,839

Sales channel net sales

Wholesale $ 276,202 $ 88,593 $ 95,342 $ 25,726 $ 485,863

Direct-to-consumer 282,911 81,368 18,797 15,900 398,976

Total $ 559,113 $ 169,961 $ 114,139 $ 41,626 $ 884,839

Six Months Ended June 30, 2019

(in thousands)

LAAP EMEA Canada Total

Product category net sales

Apparel, Accessories and Equipment $ 622,309 $ 174,433 $ 117,110 $ 44,377 $ 958,229

Footwear 105,442 60,040 45,765 11,342 222,589

Total $ 727,751 $ 234,473 $ 162,875 $ 55,719 $ 1,180,818

Sales channel net sales

Wholesale $ 360,283 $ 122,149 $ 139,890 $ 37,126 $ 659,448

Direct-to-consumer 367,468 112,324 22,985 18,593 521,370

Total $ 727,751 $ 234,473 $ 162,875 $ 55,719 $ 1,180,818

Performance Obligations

For the three months ended March 31, 2020 and 2019, Net sales recognized from performance obligations related to prior periods were not material.

For the three and six months ended June 30, 2020 and 2019, 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 is not material.

Contract Balances

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

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 3—INTANGIBLE ASSETS, NET

Intangible assets, net consisted of the following:

(in thousands) March 31,

(in thousands) June 30,

2020 December 31,

2019 March 31,

2019 June 30,

Intangible assets subject to amortization:

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Intangible assets, net $ 122,105 $ 123,595 $ 125,085

Amortization expense for intangible assets subject to amortization was $ 0.7 million for each of the three months ended March 31, 2020 and 2019.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Amortization expense for intangible assets subject to amortization was $ 0.7 million for both the three months ended June 30, 2020 and 2019, and was $ 1.5 million for both the six months ended June 30, 2020 and 2019.

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

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NOTE 4—SHORT-TERM BORROWINGS AND CREDIT LINES

Except as disclosed below, there have been no significant changes to the Company's short-term borrowing and credit lines as described in Note 9 in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

The Company had an unsecured, committed revolving line of credit agreement, maturing on August 1, 2023 with monthly variable commitments available for funding that averaged $ 50.0 million over the course of a calendar year.

Effective March 27, 2020, the Company entered into a first amendment to its unsecured, committed revolving line of credit agreement to increase the commitment available for funding to $125.0 million through December 31, 2020, removing monthly variability in commitment level.

Under the first amendment interest, payable monthly, is based on the Company’s applicable funded debt ratio and could range from USD LIBOR plus 200.0 basis points to USD LIBOR plus 275.0 basis points.

The first amendment continues to require the Company to comply with certain financial covenants, including a funded debt ratio and interest coverage ratio.

If the Company is in default, it is prohibited from paying dividends or repurchasing common stock.

At March 31, 2020 the Company was in compliance with all associated covenants.

As of March 31, 2020, the outstanding balance under this line of credit was $ 125.0 million, which was accruing interest at a rate of 3.06 % per annum.

As disclosed in Note 15, in April 2020, the Company amended and restated this committed revolving line of credit agreement.

The Company’s Canadian subsidiary has available an unsecured and uncommitted line of credit, which is payable on demand, guaranteed by the Company, and provides for borrowings up to a maximum of CAD$ 30.0 million (approximately US$ 21.2 million) at March 31, 2020.

At the beginning of the 2020, the Company had an unsecured, committed revolving line of credit agreement, maturing on August 1, 2023 with monthly variable commitments available for funding that averaged $ 50.0 million over the course of a calendar year.

In March 2020, the Company entered into a first amendment to its unsecured, committed revolving line of credit agreement to remove the seasonality within the commitment levels and provide $ 125.0 million in committed borrowing availability through December 31, 2020.

Effective April 15, 2020, the Company entered into a second amended and restated credit agreement (the “restated credit agreement”) which amended and restated the committed revolving line of credit agreement.

The restated credit agreement provides for (i) a secured, committed revolving line of credit, maturing on August 1, 2023 with a commitment available for funding of $ 125.0 million (the "Revolving A Loan"), (ii) a secured, committed revolving line of credit, maturing April 13, 2021, with a commitment available for funding of $ 400.0 million (the "Revolving B Loan", together with the Revolving A Loan, the "Revolving Loans"), and (iii) an uncommitted $ 100.0 million incremental facility, which may be added to the Revolving B Loan if it is executed on, upon request by the Company to the administrative agent.

Advances under the Revolving Loans can be either LIBOR loans or base rate loans.

LIBOR loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum equal to LIBOR (subject to a LIBOR floor) plus a margin ranging from 2.00 % to 2.75 % (the "LIBOR Margin").

Base rate loans bear interest on the outstanding principal amount thereof at a rate per annum equal to the LIBOR Margin plus the greater of (i) daily reset one month LIBOR or (ii) in the case of Revolving A Loans, the LIBOR floor;

provided that if the lenders are unable to price loans based on LIBOR, base rate loans will bear interest at an interest rate per annum equal to a margin ranging from 1 % to 1.75 % plus the higher of (A) the rate of interest most recently announced by the administrative agent as its prime rate or (B) the federal funds rate plus 1.50 %.

During the second quarter, the LIBOR floor in the restated agreement was 0.75 % for advances under the Revolving A Loan and 1.00 % for advances under the Revolving B Loan.

The restated credit agreement requires the Company to comply with certain financial covenants, and provides for certain restrictions on dividend payments and stock repurchases.

During the second quarter, the obligations of the Company under the restated credit agreement are secured by all assets of the Company and Columbia Brands USA, LLC, except for intellectual property, real property, equity interests in foreign subsidiaries and certain other exclusions.

If the Company is in default, it is required to comply with certain restrictions on dividend payments and stock repurchases.

At June 30, 2020, the Company was in compliance with all associated covenants, and there was no balance outstanding under these lines and facility.

As disclosed in Note 15, in July 2020, the Company amended its restated credit agreement.

The revolving line accrues interest at the Canadian Prime rate for CAD overdraft borrowings or Bankers' Acceptance rate plus 150 basis points for Bankers' Acceptance loans.

As of March 31, 2020, the outstanding balance under this line of credit was CAD$ 28.4 million (approximately US$ 20.0 million), which was accruing interest at a rate of 2.89% per annum.

The Company’s Japanese subsidiary has two separate unsecured and uncommitted overdraft facilities guaranteed by the Company providing for borrowing up to a maximum of US$ 7.0 million and ¥ 300.0 million, respectively (combined approximately US$ 9.8 million) at March 31, 2020.

Borrowings under these overdraft facilities accrue interest at 275.0 basis points and the Tokyo Interbank Offered Rate plus 0.50 basis

As of June 30, 2020, there was no balance outstanding under this line of credit.

At the beginning of 2020, the Company's European subsidiary had two separate unsecured and uncommitted lines of credit, guaranteed by the Company, and provides for borrowings up to a maximum of € 25.8 million and € 5.0 million.

In June 2020, the Company's European subsidiary entered into an agreement which replaced the € 5.0 million line with a € 4.4 million secured, committed line of credit, and a € 0.6 million unsecured and uncommitted line of credit.

The combined available borrowings of the three lines was approximately US$ 34.6 million at June 30, 2020.

Borrowings under the € 25.8 million line accrues interest at a base rate of 185 basis points plus 275 basis points.

Borrowings under the € 0.6 million and € 4.4 million lines accrue interest at 75 basis points.

As of June 30, 2020, there was no balance outstanding under these facilities.

The Company’s Japanese subsidiary has available two separate unsecured and uncommitted overdraft facilities guaranteed by the Company providing for borrowing up to a maximum of US$ 7.0 million and ¥ 300.0 million (combined approximately US$ 9.8 million) at June 30, 2020.

Borrowings under these overdraft facilities accrue interest at 275.0 basis points and the Tokyo Interbank Offered Rate plus 0.50 basis points, respectively.

As of June 30, 2020, the outstanding balance under the ¥ 300.0 million facility was ¥ 300.0 million (approximately US

Index to Notes to Consolidated Financial Statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

points, respectively.

As of March 31, 2020, the outstanding balances under these facilities were US$ 6.5 million and ¥ 300.0 million (approximately US$ 2.8 million), respectively, which were accruing interest at a rate of 2.75% per annum and 0.55% per annum, respectively.

The Company’s Korea subsidiary has available an unsecured and uncommitted overdraft facility guaranteed by the Company providing for borrowing up to a maximum of US$ 20.0 million at March 31, 2020.

$ 2.8 million), which was accruing interest at a rate of 0.54 % per annum.

As of June 30, 2020, there was no balance was outstanding under the US$ 7.0 million facility.

The Company’s Korea subsidiary has available an unsecured and uncommitted overdraft facility guaranteed by the Company providing for borrowing up to a maximum of US$ 20.0 million at June 30, 2020.

Borrowings under the overdraft facility accrue interest at the Korea three month CD rate plus 275.0 basis points.

As of March 31, 2020, the outstanding balance under this overdraft facility was US$ 18.8 million, which was accruing interest at a rate of 4.17% per annum.

The Company’s Chinese subsidiary has available an unsecured and uncommitted overdraft and clean advance facility guaranteed by the Company providing for borrowings of advances or overdrafts up to a maximum of US$ 20.0 million at March 31, 2020.

As of June 30, 2020, there was no balance outstanding under this overdraft facility.

Borrowings under the facility accrue interest on advances of RMB based on the People’s Bank of China (“PBOC”) base rate plus 0.85 %, advances of USD based on LIBOR plus 1.8 % per annum or overdrafts of RMB based on 110% of the PBOC rate.

As of March 31, 2020, the outstanding balance under this facility was RMB9.5 million (approximately US$ 1.3 million), which was accruing interest based on the PBOC rate plus 0.85% or 5.20% per annum.

As of June 30, 2020, there was no balance outstanding under this facility.

NOTE 5—INCOME TAXES

For the three months ended March 31, 2020 and 2019, the Company's effective income tax rates were 86.4 % and 19.2 %, respectively.

The effective income tax rate for the three months ended March 31, 2020 was impacted primarily by the change in mix of book income or loss among jurisdictions, a revaluation of the valuation allowance against deferred tax assets for a foreign operating loss carryforward, and rate arbitrage between the current year expected taxable net operating loss and the tax rate in the year the carryback would offset.

For the three months ended June 30, 2020 and 2019, the Company's effective income tax rates were 27.7 % and negative 15.3 %, respectively.

For the six months ended June 30, 2020 and 2019, the effective income tax rates were 26.4 % and 13.0 %, respectively.

The increases in the effective income tax rate for both the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019 were driven primarily by the change in mix of book income or loss among jurisdictions, and the recognition in 2019 of a one-time tax benefit related to the passage of a Swiss tax reform package.

Income tax expense, deferred tax assets and related liabilities are based on estimates.

The likelihood of realizing the benefits of the deferred tax assets was assessed as of March 31, 2020 and a $ 1.5 million valuation allowance adjustment was recorded related the expected portion of tax benefits that would not be realized in certain foreign jurisdictions based on available evidence.

The Company will continue to monitor the realizability of deferred tax assets, particularly in certain foreign jurisdictions where the COVID-19 pandemic has started to create significant net operating losses.

In the three months ended March 31, 2020, a $ 1.5 million valuation allowance adjustment was recorded related to the expected portion of tax benefits that would not be realized in certain foreign jurisdictions based on available evidence.

The likelihood of realizing the benefits of the deferred tax assets was assessed as of June 30, 2020 and no additional valuation allowance adjustment was recorded.

The Company will continue to monitor the realizability of deferred tax assets, particularly in certain foreign jurisdictions where the economic impacts of the COVID-19 pandemic may result in net operating losses.

The ability to recover these deferred tax assets depends on several factors, including results of operations and the ability to project future taxable income in those jurisdictions.

If it is determined that some additional portion of the tax benefits will not be realized, valuation allowance would be recorded, which would increase income tax expense.

Total deferred tax assets as of March 31, 2020 were approximately $ 73.8 million, of which approximately $ 14.8 million related to foreign jurisdictions where the Company expects to incur significant net operating losses in the near term, although the risks of failing to realize these benefits vary across jurisdictions.

Total deferred tax assets as of June 30, 2020 were approximately $ 73.4 million, of which approximately $ 7.5 million related to foreign jurisdictions where the Company expects to incur significant net operating losses in the near term, although the risks of failing to realize these benefits vary across jurisdictions.

NOTE 6—PRODUCT WARRANTY

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A reconciliation of product warranties is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2020 2019 2020 2019

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NOTE 8—SHAREHOLDERS' EQUITY

Since the inception of the Company's stock repurchase plan in 2004 through March 31, 2020, the Company's Board of Directors has authorized the purchase of $ 1.1 billion of the Company's common stock.

As of March 31, 2020, the Company had repurchased 26.8 million

Since the inception of the Company's stock repurchase plan in 2004 through June 30, 2020, the Company's Board of Directors has authorized the purchase of $ 1.1 billion of the Company's common stock.

As of June 30, 2020, the Company had repurchased 26.8 million

Index to Notes to Consolidated Financial Statements

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Shares repurchased generally settle subsequent to the trade date.

During the three months ended March 31, 2020, the Company repurchased an aggregate of $ 132.9 million of common stock under the stock repurchase plan authorized by the Company's Board of Directors and a pre-established written trading plan.

Shares of the Company's common stock may be repurchased in the open market or through privately negotiated transactions, subject to market conditions.

The repurchase program does not obligate the Company to acquire any specific number of shares or to acquire shares over any specified period of time.

In mid-March 2020, to reduce capital outflows and preserve capital, the Company suspended share repurchases and the Company's Board of Directors suspended the quarterly dividend.

NOTE 9—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.

At its Annual Meeting held on June 3, 2020, the Company’s shareholders approved the Company’s 2020 Stock Incentive Plan (the “2020 Plan”), and the 2020 Plan became effective on that date following such approval.

The 2020 Plan replaced the Company’s 1997 Stock Incentive Plan (the "Prior Plan”) and no new awards will be granted under the Prior Plan.

The terms and conditions of the awards granted under the Prior Plan will remain in effect with respect to awards granted under the Prior Plan.

The Company has reserved 3 million shares of common stock for issuance under the 2020 Plan, plus up to an aggregate of 1.5 million shares of the Company’s common stock that were previously authorized and available for issuance under the Prior Plan.

The 2020 Plan allows for grants of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, and other stock-based or cash-based awards.

Stock-based compensation expense

Stock-based compensation expense consisted of the following:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2020 2019 2020 2019

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Stock Options

During the three months ended March 31, 2020, the Company granted a total of 640,219 stock options at a weighted average grant date fair value of $ 14.36 .

As of March 31, 2020, unrecognized costs related to outstanding stock options totaled $ 16.4 million, before any related tax benefit.

As of March 31, 2020, unrecognized costs related to stock options are expected to be recognized over a weighted average period of 3.03 years.

During the six months ended June 30, 2020, the Company granted a total of 660,071 stock options at a weighted average grant date fair value of $ 14.67 .

As of June 30, 2020, unrecognized costs related to outstanding stock options totaled $ 15.1 million, before any related tax benefit.

As of June 30, 2020, unrecognized costs related to stock options are expected to be recognized over a weighted average period of 2.83 years.

Restricted Stock Units

During the three months ended March 31, 2020, the Company granted 201,349 restricted stock units at an estimated average grant date fair value of $ 79.51 .

As of March 31, 2020, unrecognized costs related to outstanding restricted stock units totaled $ 27.3 million, before any related tax benefit.

As of March 31, 2020, unrecognized costs related to restricted stock units are expected to be recognized over a weighted average period of 2.81 years.

NOTE 10—EARNINGS PER SHARE

Earnings per share ("EPS") is presented on both a basic and diluted basis.

During the six months ended June 30, 2020, the Company granted 209,708 restricted stock units at an estimated average grant date fair value of $ 79.43 .

As of June 30, 2020, unrecognized costs related to outstanding restricted stock units totaled $ 24.5 million, before any related tax benefit.

As of June 30, 2020, unrecognized costs related to restricted stock units are expected to be recognized over a weighted average period of 2.59 years.

NOTE 10—EARNINGS (LOSS) PER SHARE

Earnings (loss) 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.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A reconciliation of common shares used in the denominator for computing basic and diluted EPS is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except per share amounts) 2020 2019 2020 2019

Weighted average shares of common stock outstanding, used in computing basic earnings per share

Weighted average shares of common stock outstanding, used in computing basic earnings (loss) per share

66,135 67,930 66,553 68,109

Effect of dilutive stock options and restricted stock units — 630 — 716

Weighted average shares of common stock outstanding, used in computing diluted earnings per share

Weighted average shares of common stock outstanding, used in computing diluted earnings (loss) per share

66,135 68,560 66,553 68,825

Earnings per share of common stock:

Earnings (loss) per share of common stock:

Basic $ ( 0.77 ) $ 0.34 $ ( 0.76 ) $ 1.43

Diluted $ ( 0.77 ) $ 0.34 $ ( 0.76 ) $ 1.41

Stock options, service-based restricted stock units, and performance-based restricted stock units representing 937,523 and 325,226 shares of common stock for the three months ended March 31, 2020 and 2019, respectively, were outstanding but were excluded from the computation of diluted EPS because their effect would be anti-dilutive under the treasury stock method or because the shares were subject to performance conditions that had not been met.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock options, service-based restricted stock units, and performance-based restricted stock units representing 2,468,516 and 2,334,223 shares of common stock for the three and six months ended June 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.

Stock options, service-based restricted stock units, and performance-based restricted stock units representing 431,712 and 356,167 shares of common stock for the three and six months ended June 30, 2019, respectively, were outstanding but were excluded from the computation of diluted EPS because their effect would have been anti-dilutive under the treasury stock method or because the shares were subject to performance conditions that had not been met.

NOTE 11—ACCUMULATED OTHER COMPREHENSIVE LOSS

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

The following table sets forth the changes in Accumulated other comprehensive loss for the three months ended March 31, 2020:

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

(in thousands) Unrealized losses on available-for-sale securities Unrealized holding gains (losses) on derivative transactions Foreign currency translation adjustments Total

Balance at December 31, 2019 $ ( 4 ) $ 9,482 $ ( 13,903 ) $ ( 4,425 )

Balance at March 31, 2020 $ ( 4 ) $ 21,007 $ ( 28,977 ) $ ( 7,974 )

Other comprehensive income (loss) before reclassifications

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— ( 1,515 ) — ( 1,515 )

Net other comprehensive income (loss) income during the period

Net other comprehensive income (loss) during the period

— ( 4,862 ) 6,976 2,114

Balance at March 31, 2020 $ ( 4 ) $ 21,007 $ ( 28,977 ) $ ( 7,974 )

Balance at June 30, 2020 $ ( 4 ) $ 16,145 $ ( 22,001 ) $ ( 5,860 )

(1) Amounts reclassified are recorded in Net sales, Cost of sales, or Other non-operating income on the Condensed Consolidated Statements of Operations.

Refer to Note 13 for further information regarding classifications.

The following table sets forth the changes in Accumulated other comprehensive loss for three months ended March 31, 2019:

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

(in thousands) Unrealized losses on available-for-sale securities Unrealized holding gains (losses) on derivative transactions Foreign currency translation adjustments Total

Balance at March 31, 2019 $ ( 4 ) $ 13,198 $ ( 16,512 ) $ ( 3,318 )

Other comprehensive income (loss) before reclassifications

— ( 464 ) 3,901 3,437

Amounts reclassified from accumulated other comprehensive loss (1)

— ( 1,417 ) — ( 1,417 )

Net other comprehensive income (loss) during the period

— ( 1,881 ) 3,901 2,020

Balance at June 30, 2019 $ ( 4 ) $ 11,317 $ ( 12,611 ) $ ( 1,298 )

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) Amounts reclassified are recorded in Net Sales or Cost of sales on the Condensed Consolidated Statements of Operations.

Refer to Note 13 for further information regarding classifications.

The following table sets forth the changes in Accumulated other comprehensive loss for the six months ended June 30, 2020:

(in thousands) Unrealized gains (losses) on available-for-sale securities Unrealized holding gains (losses) on derivative transactions Foreign currency translation adjustments Total

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— 6,663 ( 8,098 ) ( 1,435 )

Balance at June 30, 2020 $ ( 4 ) $ 16,145 $ ( 22,001 ) $ ( 5,860 )

(1) Amounts reclassified are recorded in Net Sales, Cost of sales, or Other non-operating income on the Condensed Consolidated Statements of Operations.

Refer to Note 13 for further information regarding classifications.

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

(in thousands) Unrealized gains (losses) on available-for-sale securities Unrealized holding gains (losses) on derivative transactions Foreign currency translation adjustments Total

Balance at December 31, 2018 $ ( 60 ) $ 11,964 $ ( 15,967 ) $ ( 4,063 )

Other comprehensive income before reclassifications

56 2,804 3,356 6,216

Amounts reclassified from accumulated other comprehensive loss (1)

— ( 3,352 ) — ( 3,352 )

Net other comprehensive income (loss) during the period

56 ( 548 ) 3,356 2,864

Purchase of non-controlling interest

Balance at March 31, 2019 $ ( 4 ) $ 13,198 $ ( 16,512 ) $ ( 3,318 )

— ( 99 ) — ( 99 )

Balance at June 30, 2019 $ ( 4 ) $ 11,317 $ ( 12,611 ) $ ( 1,298 )

(1) Amounts reclassified are recorded in Net Sales or Cost of sales on the Condensed Consolidated Statements of Operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The geographic distribution of the Company's Net sales and Income (loss) from operations in the Condensed Consolidated Statements of Operations are summarized in the following table for the three months ended March 31, 2020 and 2019.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2020 2019 2020 2019

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Canada ( 8,776 ) ( 2,618 ) ( 4,625 ) 3,393

Total segment income from operations 50,255 137,670

Total segment income (loss) from operations ( 28,976 ) 63,383 21,279 201,053

Unallocated corporate expenses ( 41,324 ) ( 47,018 ) ( 93,566 ) ( 96,730 )

Interest income, net 1,813 3,400

Interest income (expense), net ( 805 ) 2,571 1,008 5,971

Other non-operating income, net 935 1,032 2,673 1,478

Income before income taxes $ 1,564 $ 91,804

Income (loss) before income tax $ ( 70,170 ) $ 19,968 $ ( 68,606 ) $ 111,772

Concentrations

No single customer accounted for 10% or more of Accounts receivable, net of allowance on the Condensed Consolidated Balance Sheets as of March 31, 2020 or 2019.

The Company had two customers that accounted for 13.3 % and 12.9 %, respectively, of Accounts receivable, net of allowance on the Condensed Consolidated Balance Sheets as of June 30, 2020.

The Company had one customer that accounted for 13.9 % of Accounts receivable, net of allowance as of December 31, 2019.

No single customer accounted for 10 % or more of Net sales in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 or 2019.

The Company had one customer that accounted for 10.7 % of Accounts receivable, net of allowance as of June 30, 2019.

No single customer accounted for 10 % or more of Net sales in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 or 2019.

NOTE 13—FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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Effective June 2019, the forward points are included in the fair value of the cash flow hedge on a prospective basis.

These costs or benefits will be included in Accumulated other comprehensive 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

Non-functional currency denominated

Index to Notes to Consolidated Financial Statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

income taxes, and intercompany loans.

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 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) March 31,

(in thousands) June 30,

2020 December 31,

2019 March 31,

2019 June 30,

Derivative instruments designated as cash flow hedges:

2 unchanged sentences

Currency forward contracts 223,500 214,086 359,179

At March 31, 2020, $ 16.8 million of deferred net gains on both outstanding and matured derivatives recorded in Other comprehensive loss are expected to be reclassified to Net income during the next twelve months as a result of underlying hedged transactions also being recorded in Net sales or Cost of sales in the Condensed Consolidated Statements of Operations.

At June 30, 2020, $ 14.9 million of deferred net gains on both outstanding and matured derivatives recorded in O ther comprehensive income are expected to be reclassified to Net income (loss) during the next twelve months as a result of underlying hedged transactions also being recorded in Net sales or Cost of sales in the Condensed Consolidated Statements of Operations.

Actual amounts ultimately reclassified to Net sales or Cost of sales in the Condensed Consolidated Statements of Comprehensive Income are dependent on United States dollar exchange rates in effect against the euro, pound sterling, renminbi, Canadian dollar, and yen when outstanding derivative contracts mature.

At March 31, 2020, the Company's derivative contracts had a remaining maturity of less than four years .

The maximum net exposure to any single counterparty, which is generally limited to the aggregate unrealized gain of all contracts with that counterparty, was less than $ 9.5 million at March 31, 2020.

At June 30, 2020, the Company's derivative contracts had a remaining maturity of less than approximately four years .

The maximum net exposure to any single counterparty, which is generally limited to the aggregate unrealized gain of all contracts with that counterparty, was $ 6.0 million at June 30, 2020.

All of the Company's derivative counterparties have credit ratings that are investment grade or higher.

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

(in thousands) Balance Sheet Classification March 31,

(in thousands) Balance Sheet Classification June 30,

2020 December 31,

2019 March 31,

2019 June 30,

Derivative instruments designated as cash flow hedges:

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

Classification Three Months Ended March 31,

Classification Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2020 2019 2020 2019

1 unchanged sentence

Derivative instruments designated as cash flow hedges:

Gain recognized in other comprehensive income (loss), net of tax

Gain (loss) recognized in other comprehensive income (loss), net of tax

— $ ( 3,347 ) $ ( 464 ) $ 11,015 $ 2,804

Gain (loss) reclassified from accumulated other comprehensive income or loss to income for the effective portion

Gain reclassified from accumulated other comprehensive income or loss to income for the effective portion

Net sales 165 75 43 110

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Derivative instruments not designated as cash flow hedges:

Gain recognized in income Other non-operating income 1,649 563

Gain (loss) recognized in income Other non-operating income ( 319 ) ( 1,137 ) 1,330 ( 574 )

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 14—FAIR VALUE MEASURES

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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.

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 as of March 31, 2020 were as follows:

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 were as follows:

(in thousands) Level 1 Level 2 Level 3 Total

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Money market funds $ 151,823 $ — $ — $ 151,823

United States government treasury bills — 44,973 — 44,973

Available-for-sale short-term investments:

United States government treasury bills — 35,032 — 35,032

Other short-term investments:

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Total liabilities measured at fair value $ — $ 604 $ — $ 604

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

Index to Notes to Consolidated Financial Statements

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Total liabilities measured at fair value $ — $ 3,034 $ — $ 3,034

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2019 were as follows:

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 were as follows:

(in thousands) Level 1 Level 2 Level 3 Total

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Derivative financial instruments $ — $ 2,090 $ — $ 2,090

Other long-term liabilities:

Derivative financial instruments — 140 — 140

Total liabilities measured at fair value $ — $ 2,230 $ — $ 2,230

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

Index to Notes to Consolidated Financial Statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Non-recurring Fair Value Measurements

There were no material assets and liabilities measured at fair value on a nonrecurring basis as of March 31, 2020, December 31, 2019 or March 31, 2019.

Certain non-financial assets are measured at fair value on a non-recurring basis, primarily long-lived assets, intangible assets, goodwill, and lease right-of-use assets.

In connection with periodic evaluations for potential impairment, the inputs used to measure the fair value of these assets are primarily unobservable inputs and, as such, considered Level 3 fair value measurements.

For impairment charges for the quarter ended June 30, 2020, see Note 1.

NOTE 15—SUBSEQUENT EVENT

On April 15, 2020 the Company entered into a second amended and restated credit agreement (the “restated credit agreement”) which amended and restated the committed revolving line of credit agreement that was in effect as of March 31, 2020 and disclosed in Note 4.

The restated credit agreement provides for i) a secured, committed revolving line of credit, maturing on August 1, 2023 with a commitment available for funding of $ 125.0 million (the "Revolving A Loan"), ii) a secured, committed revolving line of credit, maturing April 13, 2021, with a commitment available for funding of $ 400.0 million (the "Revolving B Loan", together with the Revolving A Loan, the "Revolving Loans"), and iii) an uncommitted $ 100.0 million incremental facility, which may be added to the Revolving B Loan if it is executed on, upon request by us to the administrative agent.

Advances under the Revolving Loans can be either LIBOR loans or base rate loans.

LIBOR loans bear interest on the outstanding principal amount thereof for each interest period at a rate per annum equal to LIBOR (subject to a LIBOR floor of 0.75 % for advances under the Revolving A Loan and a LIBOR floor of 1.00 % for advances under the Revolving B Loan) plus a margin ranging from 2.00 % to 2.75 % (the "LIBOR Margin").

The restated credit agreement requires the Company to comply with certain financial covenants, including a funded debt ratio, interest coverage ratio, and asset coverage ratio.

The obligations of the Company under the restated credit agreement are secured by all assets of the Company and Columbia Brands USA, LLC, except for intellectual property, real property, equity interests in foreign subsidiaries and certain other exclusions.

If the Company is in default, it is required to comply with certain restrictions on dividend payments and stock repurchases.

On April 15, 2020, the Company borrowed $ 200 million under the Revolving B Loan, which supplemented $ 125 million that the Company had previously borrowed under the Revolving A Loan.

Those amounts have been subsequently repaid and, at the time of this filing, there is no outstanding balance under the restated credit agreement.

Except for the Company's Japanese subsidiary's overdraft facility with a maximum borrowing of ¥ 300.0 million (approximately US$ 2.8 million), amounts outstanding under the Company's international subsidiaries' lines of credit and overdraft facilities as of March 31, 2020 have been subsequently repaid.

On July 10, 2020 the Company entered into a first amendment (the "first amendment") to its restated credit agreement that was in effect as of June 30, 2020 and disclosed in Note 4.

The first amendment provides for suspensions of and adjustments to the financial covenants beginning on July 1, 2020 through December 31, 2020 (the "covenant suspension period") as follows:

(i) the funded debt ratio no longer needs to be maintained during the covenant suspension period, (ii) the interest coverage ratio no longer needs to be maintained during the covenant suspension period, and (iii) the Company must maintain liquidity (inclusive of unrestricted and unencumbered cash-on-hand of the Company and its subsidiaries and, with certain limitations, availability under the revolving credit facilities provided for in the revolving credit facilities provided for in the restated credit agreement) of not less than $ 200.0 million as of each calendar month end during the covenant suspension period.

In addition, the minimum LIBOR floors were revised to be 0.50 % in the case of both Revolving A and Revolving B loans.

The first amendment also provides for a letter of credit facility and contains modifications to certain other negative covenants.

This includes a change to the negative indebtedness covenant to allow for up to $ 350 million in additional unsecured indebtedness.

In connection with the first amendment, the Company amended and restated the collateral agreement, originally dated April 15, 2020 to provide for a pledge by the Company and Columbia Brands USA, LLC of 65% of their equity interests in foreign subsidiaries.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements