What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-06 · 205 added, 203 removed, 556 unchanged (42% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands) June 30,

(in thousands) September 30,

2020 December 31,

2019 June 30,

2019 September 30,

Current Assets:

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Current Liabilities:

Short-term borrowings $ 2,789 $ — $ —

Accounts payable $ 164,332 $ 255,372 $ 201,806

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months Ended September 30, Nine Months Ended September 30,

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

Net sales $ 316,611 $ 526,210 $ 884,839 $ 1,180,818

$ 701,092 $ 906,793 $ 1,585,931 $ 2,087,611

Cost of sales

Gross profit 146,230 253,591 417,944 590,320

358,184 460,098 825,079 1,050,596

342,908 446,695 760,852 1,037,015

Selling, general and administrative expenses

261,192 299,249 755,664 791,767

Net licensing income

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

3,927 4,569 8,168 11,090

Income from operations

85,643 152,015 13,356 256,338

Interest income (expense), net

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:

( 280 ) 1,399 728 7,370

Other non-operating income (expense), net

( 465 ) ( 563 ) 2,208 915

Income before income tax

84,898 152,851 16,292 264,623

Income tax expense

( 22,147 ) ( 33,593 ) ( 4,035 ) ( 48,159 )

$ 62,751 $ 119,258 $ 12,257 $ 216,464

Earnings per share:

Basic $ 0.95 $ 1.76 $ 0.18 $ 3.19

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COLUMBIA SPORTSWEAR COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2020 2019 2020 2019

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

Other comprehensive income (loss):

Net income $ 62,751 $ 119,258 $ 12,257 $ 216,464

Other comprehensive loss:

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

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11,175 ( 8,389 ) 3,077 ( 5,033 )

Other comprehensive income (loss) 2,114 2,020 ( 1,435 ) 2,864

Comprehensive income (loss) $ ( 48,593 ) $ 25,049 $ ( 51,929 ) $ 100,070

Other comprehensive loss ( 510 ) ( 5,975 ) ( 1,945 ) ( 3,111 )

Comprehensive income $ 62,241 $ 113,283 $ 10,312 $ 213,353

See accompanying notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2020 2019

Cash flows from operating activities:

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

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

Net income $ 12,257 $ 216,464

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation, amortization, and non-cash lease expense 102,283 88,775

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Other liabilities 8,077 5,716

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

Net cash used in operating activities ( 197,960 ) ( 198,159 )

Cash flows from investing activities:

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

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

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):

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

— — 62,751 — 62,751

Other comprehensive loss:

Unrealized holding losses on derivative transactions, net

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Stock-based compensation expense — 5,090 — — 5,090

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

Three Months Ended June 30, 2019

BALANCE, SEPTEMBER 30, 2020 66,210 $ 13,142 $ 1,716,044 $ ( 6,370 ) $ 1,722,816

Three Months Ended September 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 losses on derivative transactions, net

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

— — 119,258 — 119,258

Other comprehensive loss:

Unrealized holding gains on derivative transactions, net

— — — 2,414 2,414

Foreign currency translation adjustment, net — — — ( 8,389 ) ( 8,389 )

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Repurchase of common stock ( 159 ) ( 10,729 ) ( 5,040 ) — ( 15,769 )

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

BALANCE, SEPTEMBER 30, 2019 67,562 $ — $ 1,754,379 $ ( 7,273 ) $ 1,747,106

See accompanying notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six months ended June 30, 2020

Nine months ended September 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

— — 12,257 — 12,257

Other comprehensive loss:

Unrealized holding losses on derivative transactions, net

— — — ( 5,022 ) ( 5,022 )

Foreign currency translation adjustment, net — — — 3,077 3,077

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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

BALANCE, SEPTEMBER 30, 2020 66,210 $ 13,142 $ 1,716,044 $ ( 6,370 ) $ 1,722,816

Nine Months Ended September 30, 2019

Columbia Sportswear Company Shareholders' Equity

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

Net income — — 97,206 — — 97,206

— — 216,464 — — 216,464

Purchase of non-controlling interest — — — ( 99 ) ( 16,456 ) ( 16,555 )

Other comprehensive income (loss):

Other comprehensive loss:

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

— — — 56 — 56

Unrealized holding losses on derivative transactions, net

Unrealized holding gains on derivative transactions, net

— — — 1,866 — 1,866

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( 1,191 ) ( 25,107 ) ( 91,088 ) — — ( 116,195 )

BALANCE, JUNE 30, 2019

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

BALANCE, SEPTEMBER 30, 2019 67,562 $ — $ 1,754,379 $ ( 7,273 ) $ — $ 1,747,106

See accompanying notes to condensed consolidated financial statements.

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Note 9 Stock-Based Compensation 14

Note 10 Earnings (Loss) Per Share 14

Note 10 Earnings Per Share 15

Note 11 Accumulated Other Comprehensive Loss 15

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Note 14 Fair Value Measures 19

Note 15 Subsequent Event 22

Index to Notes to Consolidated Financial Statements

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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 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 accompanying unaudited condensed consolidated financial statements have been prepared by the management of Columbia Sportswear Company (together with its wholly owned subsidiaries, the "Company") and, in the opinion of management, include all normal recurring material adjustments necessary to present fairly the Company's financial position as of September 30, 2020, December 31, 2019 and September 30, 2019, and the results of operations for the three and nine months ended September 30, 2020 and 2019, and cash flows for the nine months ended September 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 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.

therefore, results of operations for the three and nine months ended September 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.

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.

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

These estimates involve assumptions about future events.

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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") .

For the three and nine months ended September 30, 2020, impairment charges for certain underperforming retail stores were $ 0.1 million and $ 6.7 million, respectively.

These charges 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 the Company's 2019 impairment test.

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.

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

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

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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

The Company elected to account for lease concessions related to the 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

Index to Notes to Consolidated Financial Statements

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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.

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.

In response to the COVID-19 pandemic, 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 .

For the three and nine months ended September 30, 2020, $ 2.8 million and $ 7.1 million, respectively, of government subsidies and incentives reduced SG&A expense .

Recently Adopted Accounting Pronouncements

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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.

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:

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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

As of September 30, 2020, assets were in-service with useful lives ranging from ten months to five years .

As of September 30, 2020, CCA assets consisted of capitalized implementation costs of $ 24.1 million and associated accumulated amortization of $ 0.7 million.

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

Index to Notes to Consolidated Financial Statements

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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 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 June 30, 2020

Three Months Ended September 30, 2020

(in thousands)

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Total $ 445,620 $ 90,951 $ 99,159 $ 65,362 $ 701,092

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

(in thousands)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Six months ended June 30, 2020

Nine months ended September 30, 2020

(in thousands)

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Total $ 1,004,733 $ 260,912 $ 213,298 $ 106,988 $ 1,585,931

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

(in thousands)

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Performance Obligations

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.

For the three and nine months ended September 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 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.

As of September 30, 2020, December 31, 2019 and September 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.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 3—INTANGIBLE ASSETS, NET

Intangible assets, net consisted of the following:

(in thousands) June 30,

(in thousands) September 30,

2020 December 31,

2019 June 30,

2019 September 30,

Intangible assets subject to amortization:

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Intangible assets, net $ 121,471 $ 123,595 $ 124,340

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.

Amortization expense for intangible assets subject to amortization was $ 0.6 million and $ 0.7 million for the three months ended September 30, 2020 and 2019, respectively, and was $ 2.1 million and $ 2.2 million for the nine months ended September 30, 2020 and 2019, respectively.

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

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.

At the beginning of 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.

In April 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.

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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 1.00 % 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.

In addition, the restated credit agreement requires the Company to comply with certain financial covenants.

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 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$ 22.0 million) at June 30, 2020.

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 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

In connection with the restated agreement, the Company entered into a collateral agreement under which the obligations of the Company were 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.

Effective July 10, 2020, the Company entered into a first amendment (the "first amendment") to its restated credit agreement.

The first amendment provides for

Index to Notes to Consolidated Financial Statements

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

$ 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.

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 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, including 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.

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

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

The combined available borrowings of the three lines was approximately US$ 36.2 million at September 30, 2020.

Borrowings under the € 25.8 million line accrue interest at a base rate of 185 basis points plus 200 basis points.

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

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

At the beginning of the third quarter of 2020, the Company’s Japanese subsidiary had 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.

During the third quarter of 2020, the overdraft facility with a maximum borrowing of ¥ 300.0 million was modified to increase the maximum borrowing to ¥ 1.5 billion.

The combined maximum borrowings of the two lines were approximately US$ 21.2 million at September 30, 2020.

Borrowings under the ¥ 1.5 billion overdraft facility accrue interest at the Tokyo Interbank Offered Rate plus 0.50 basis points and borrowings under the US$ 7.0 million overdraft facility accrue interest at 200 basis points.

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

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 September 30, 2020.

Borrowings under the overdraft facility accrue interest at the Korea three month CD rate plus 200 basis points.

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

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 June 30, 2020.

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

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

At the beginning of the third quarter of 2020, the Company’s Chinese subsidiary had 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 September 30, 2020.

Borrowings under the facility accrue interest on advances of RMB at 4.15%, advances of USD based on LIBOR plus 2.0 % per annum or overdrafts of RMB based on 110% of the PBOC rate.

In September 2020, the Company's Chinese subsidiary entered into an unsecured and uncommitted line of credit, guaranteed by the Company that provides for borrowings up to a maximum of RMB140.0 million.

Borrowings under the facility accrue interest at the one year loan prime rate less 10 basis points.

The combined available borrowings of the two lines were approximately US$ 40.5 million at September 30, 2020.

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

NOTE 5—INCOME TAXES

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.

For the three months ended September 30, 2020 and 2019, the Company's effective income tax rates were 26.1 % and 22.0 %, respectively.

For the nine months ended September 30, 2020 and 2019, the effective income tax rates were 24.8 % and 18.2 %, respectively.

The increase in the effective income tax rate for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 was primarily driven by the change in mix of book income or loss among jurisdictions.

The increase in the effective income tax rate for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was 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.

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 likelihood of realizing the benefits of the deferred tax assets was assessed as of

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 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.

1 unchanged sentence

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 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.

Total deferred tax assets as of September 30, 2020 were approximately $ 77.1 million, of which approximately $ 7.7 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 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 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

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

shares under this program at an aggregate purchase price of $ 1,017.8 million.

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

As of September 30, 2020, the Company had repurchased 26.8 million shares under this program at an aggregate purchase price of $ 1,017.8 million.

Shares repurchased generally settle subsequent to the trade date.

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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.

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.

In mid-March 2020, to reduce capital outflows and preserve capital, the Company suspended share repurchases.

The Company did not repurchase common stock during the three months ended September 30, 2020.

NOTE 9—STOCK-BASED COMPENSATION

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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.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock-based compensation expense

Stock-based compensation expense consisted of the following:

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

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2020 2019 2020 2019

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Stock Options

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.

During the nine months ended September 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 September 30, 2020, unrecognized costs related to outstanding stock options totaled $ 13.3 million, before any related tax benefit.

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

Restricted Stock Units

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.

During the nine months ended September 30, 2020, the Company granted 209,972 restricted stock units at an estimated average grant date fair value of $ 79.43 .

As of September 30, 2020, unrecognized costs related to outstanding restricted stock units totaled $ 21.5 million, before any related tax benefit.

As of September 30, 2020, unrecognized costs related to restricted stock units are expected to be recognized over a weighted average period of 2.34 years.

NOTE 10—EARNINGS PER SHARE

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

Basic EPS is based on the weighted average number of common shares outstanding.

Diluted EPS reflects the potential dilution that could occur if outstanding securities or other contracts to issue common stock were exercised or converted into common stock.

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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

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

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

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

66,179 67,593 66,427 67,935

Effect of dilutive stock options and restricted stock units 358 587 380 685

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

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

66,537 68,180 66,807 68,620

Earnings (loss) per share of common stock:

Earnings per share of common stock:

Basic $ 0.95 $ 1.76 $ 0.18 $ 3.19

Diluted $ 0.94 $ 1.75 $ 0.18 $ 3.15

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.

Stock options, service-based restricted stock units, and performance-based restricted stock units representing 1,156,073 and 1,282,086 shares of common stock for the three and nine months ended September 30, 2020, respectively, were outstanding but were excluded from the computation of diluted EPS because their effect would have been anti-dilutive under the treasury stock method or because the shares were subject to performance conditions that had not been met.

Stock options, service-based restricted stock units, and performance-based restricted stock units representing 440,993 and 378,617 shares of common stock for the three and nine months ended September 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 June 30, 2020:

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth the changes in Accumulated other comprehensive loss for the three months ended September 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 March 31, 2020 $ ( 4 ) $ 21,007 $ ( 28,977 ) $ ( 7,974 )

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

Other comprehensive income (loss) before reclassifications

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Net other comprehensive income (loss) during the period — ( 11,685 ) 11,175 ( 510 )

— ( 4,862 ) 6,976 2,114

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.

Balance at September 30, 2020 $ ( 4 ) $ 4,460 $ ( 10,826 ) $ ( 6,370 )

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

Refer to Note 13 for further information regarding classifications.

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

The following table sets forth the changes in Accumulated other comprehensive loss for three months ended September 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 )

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

Other comprehensive income (loss) before reclassifications

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Net other comprehensive income (loss) during the period — 2,414 ( 8,389 ) ( 5,975 )

— ( 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)

Balance at September 30, 2019 $ ( 4 ) $ 13,731 $ ( 21,000 ) $ ( 7,273 )

(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

The following table sets forth the changes in Accumulated other comprehensive loss for the nine months ended September 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 )

Other comprehensive income (loss) before reclassifications

Other comprehensive income before reclassifications

— 4,617 3,077 7,694

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Net other comprehensive income (loss) during the period — ( 5,022 ) 3,077 ( 1,945 )

— 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.

Balance at September 30, 2020 $ ( 4 ) $ 4,460 $ ( 10,826 ) $ ( 6,370 )

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

Refer to Note 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:

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth the changes in Accumulated other comprehensive loss for the nine months ended September 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

Other comprehensive income (loss) before reclassifications

56 9,119 ( 5,033 ) 4,142

2 unchanged sentences

Net other comprehensive income (loss) during the period 56 1,866 ( 5,033 ) ( 3,111 )

56 ( 548 ) 3,356 2,864

Purchase of non-controlling interest

— ( 99 ) — ( 99 )

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

Balance at September 30, 2019 $ ( 4 ) $ 13,731 $ ( 21,000 ) $ ( 7,273 )

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

7 unchanged sentences

Unallocated corporate expenses consist of expenses incurred by centrally-managed departments, including global information systems, finance, human resources and legal, as well as executive compensation, unallocated benefit program expense, and other miscellaneous costs.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

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 and six months ended June 30, 2020 and 2019.

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

The geographic distribution of the Company's Net sales and Income from operations in the Condensed Consolidated Statements of Operations are summarized in the following table for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2020 2019 2020 2019

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$ 701,092 $ 906,793 $ 1,585,931 $ 2,087,611

Segment income (loss) from operations:

Segment income from operations:

$ 96,577 $ 156,190 $ 118,454 $ 298,366

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Canada 19,767 27,024 15,142 30,417

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

Total segment income from operations 140,039 218,457 161,318 419,510

Unallocated corporate expenses ( 54,396 ) ( 66,442 ) ( 147,962 ) ( 163,172 )

Interest income (expense), net ( 280 ) 1,399 728 7,370

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

Other non-operating income (expense), net ( 465 ) ( 563 ) 2,208 915

Income before income tax $ 84,898 $ 152,851 $ 16,292 $ 264,623

Concentrations

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 11.4 % of Accounts receivable, net of allowance on the Condensed Consolidated Balance Sheets as of September 30, 2020.

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

No single customer accounted for 10% or more of Accounts receivable, net of allowance as of September 30, 2019.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

single customer accounted for 10 % or more of Net sales in the Condensed Consolidated Statements of Operations for the three and nine months ended September 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 (loss) .

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

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

Non-functional currency denominated monetary assets and liabilities consist primarily of cash and cash equivalents, short-term investments, receivables, payables, deferred income taxes, and intercompany loans.

The gains and losses generated on these currency forward contracts not formally designated as hedges are expected to be largely offset in Other non-operating income (expense), net by the gains and losses generated from the remeasurement of the non-functional currency denominated monetary assets and liabilities.

The following table presents the gross notional amount of outstanding derivative instruments:

(in thousands) June 30,

(in thousands) September 30,

2020 December 31,

2019 June 30,

2019 September 30,

Derivative instruments designated as cash flow hedges:

2 unchanged sentences

Currency forward contracts 224,573 214,086 235,945

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.

At September 30, 2020, $ 5.1 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.

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 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.

At September 30, 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 $ 2.9 million at September 30, 2020.

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

1 unchanged sentence

The Company has not pledged assets or posted collateral as a requirement for entering into or maintaining derivative positions.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

(in thousands) Balance Sheet Classification June 30,

(in thousands) Balance Sheet Classification September 30,

2020 December 31,

2019 June 30,

2019 September 30,

Derivative instruments designated as cash flow hedges:

10 unchanged sentences

Currency forward contracts Accrued liabilities 381 953 320

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

Classification Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2020 2019 2020 2019

1 unchanged sentence

Derivative instruments designated as cash flow hedges:

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

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

— $ ( 6,398 ) $ 6,315 $ 4,617 $ 9,119

4 unchanged sentences

Gain reclassified from accumulated other comprehensive income or loss to income as a result of cash flow hedge discontinuance

Other non-operating income 6 — 1,117 —

Other non-operating income (expense), net

Loss recognized in income for amount excluded from effectiveness testing and for the ineffective portion

3 unchanged sentences

Derivative instruments not designated as cash flow hedges:

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

Gain (loss) recognized in income

Other non-operating income (expense), net ( 1,795 ) 1,855 ( 465 ) 1,281

Index to Notes to Consolidated Financial Statements

11 unchanged sentences

Level 2 instrument valuations are obtained from inputs, other than quoted market prices in active markets, that are directly or indirectly observable in the marketplace and quoted prices in markets with limited volume or infrequent transactions.

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

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

(in thousands) Level 1 Level 2 Level 3 Total

13 unchanged sentences

Derivative financial instruments $ — $ 2,415 $ — $ 2,415

Other long-term liabilities:

Derivative financial instruments — 1,186 — 1,186

Total liabilities measured at fair value $ — $ 3,601 $ — $ 3,601

12 unchanged sentences

Derivative financial instruments — 14,001 — 14,001

Non-current assets:

Other non-current assets:

Money market funds 1,792 — — 1,792

7 unchanged sentences

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

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

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

(in thousands) Level 1 Level 2 Level 3 Total

1 unchanged sentence

Money market funds $ 72,941 $ — $ — $ 72,941

Available-for-sale short-term investments:

United States government treasury bills — 136,721 — 136,721

Other short-term investments:

15 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Non-recurring Fair Value Measurements

1 unchanged sentence

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 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.

See Note 1 for discussion of 2020 impairment charges.

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