What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-25 compared with 2020-02-27 · 345 added, 415 removed, 849 unchanged (47% of the section changed)

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Columbia Sportswear Company

To the Shareholders and the Board of Directors of Columbia Sportswear Company

Opinion on the Financial Statements

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to adoption of Accounting Standards Update No.

2016-02, Leases (Topic 842).

Basis for Opinion

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill – prAna Reporting Unit – Refer to Notes 2 and 7 of the Notes to Consolidated Financial Statements

Goodwill – prAna Reporting Unit – Refer to Notes 2 and 6 to the Consolidated Financial Statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

The Company used a combination of discounted cash flow analysis and market-based valuation methods, which requires management to make significant estimates and assumptions related to projected sales, income, cash flows, discount rates, market-based multiples, and other operating performance measures.

The Company uses a combination of discounted cash flow analysis and market-based valuation methods, which requires management to make significant estimates and assumptions related to projected cash flow, discount rates, market-based multiples, and other operating performance measures.

Changes in these assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge, if any, or both.

The goodwill balance was $68.6 million as of December 31, 2020, of which $54.2 million was allocated to the prAna Reporting Unit (“prAna”).

Given prAna’s historical performance as compared to projections, auditing management’s estimates and assumptions related to projected sales, income, cash flows, discount rates, market-based multiples, and other operating performance measures for prAna involved especially subjective judgment.

The fair value of prAna exceeded its carrying value as of the measurement date and, therefore, no impairment was recognized.

Auditing management’s estimates and assumptions related to projected cash flow, discount rates, market-based multiples, and other operating performance measures for prAna involved especially subjective judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s estimates and assumptions related to projected sales, income, cash flows, discount rates, market-based multiples, and other operating performance measures for the prAna goodwill impairment analysis included the following, among others:

• We tested the effectiveness of internal controls over the prAna goodwill impairment analysis, including those over the forecasts for sales, income, cash flows, and other operating performance measures, and the selection of the discount rate and market-based multiples.

• We evaluated management’s ability to accurately forecast sales, income, cash flows, and other operating performance measures by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s sales, operating margin, income, and cash flows forecasts by comparing the forecasts to:

◦ Historical sales, operating margins, income, and cash flows.

Our audit procedures related to management’s estimates and assumptions related to projected cash flow, discount rates, market-based multiples, and other operating performance measures for the prAna goodwill impairment analysis included the following, among others:

• We tested the effectiveness of internal controls over the prAna goodwill impairment analysis, including those over the forecasts for cash flow and other operating performance measures, and the selection of the discount rate and market-based multiples.

• We evaluated management’s ability to accurately forecast cash flow and other operating performance measures by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s cash flow forecasts by comparing the forecasts to:

◦ Historical cash flow.

◦ Forecasted information included in Company press releases as well as in analyst and industry reports for the Company and certain of its peer companies.

• We evaluated the impact of changes in management’s forecasts from the October 31, 2019 annual measurement date to December 31, 2019.

• To evaluate the reasonableness of the discount rate, we:

• We evaluated the impact of changes in management’s cash flow forecasts from the October 31, 2020 annual measurement date to December 31, 2020.

• To evaluate the reasonableness of the discount rate, with the assistance of our fair value specialists, we:

◦ Developed a range of independent estimates of the discount rate and compared those to the discount rate selected by management to assess the appropriateness of the discount rate assumption.

◦ Tested the inputs and source information underlying the determination of the discount rate by comparing to reputable third-party data or industry information and tested the mathematical accuracy of the calculation.

• We evaluated the reasonableness of the multiple management applied to the projected sales as part of their market-based valuation method through comparison to valuation multiples for guideline public companies.

Intangible Assets, Net – prAna Trademark– Refer to Notes 2 and 7 of the Notes to Consolidated Financial Statements

• With the assistance of our fair value specialists, we evaluated the reasonableness of the selection and application of valuation multiples management applied in i market-based valuation method through comparison to valuation multiples for guideline public companies.

Intangible Assets, Net – prAna Trademark– Refer to Notes 2 and 6 to the Consolidated Financial Statements

Critical Audit Matter Description

The Company has trademarks and trade names (“trademarks”) that are indefinite-lived intangible assets.

As of December 31, 2019, the carrying value of the intangible assets was $123.6 million, of which $88.0 million was attributed to prAna’s trademark.

The Company used the relief from royalty method to estimate fair value, which requires management to make significant estimates and assumptions related to projected sales, royalty rates and discount rates to estimate the net present value of future prAna cash flows relating to the trademark.

Given prAna’s historical performance as compared to projections, auditing management’s estimates and assumptions related to projected sales, royalty rates, and discount rates for prAna involved especially subjective judgment.

As of December 31, 2020, the carrying value of the intangible assets was $103.6 million, of which $70.5 million was attributed to prAna’s trademark, after recognizing $17.5 million of impairment loss in the year ended December 31, 2020.

Auditing management’s estimates and assumptions related to projected sales, royalty rates, and discount rates for prAna involved especially subjective judgment.

How the Critical Audit Matter Was Addressed in the Audit

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• We evaluated the impact of changes in management’s forecasts from the October 31, 2020 annual measurement date to December 31, 2020.

• To evaluate the reasonableness of the (1) discount rate and (2) royalty rate, we:

• To evaluate the reasonableness of the (1) discount rate and (2) royalty rate, with the assistance of our fair value specialists, we:

◦ Developed a range of independent estimates of the discount rate and compared those to the discount rate selected by management to assess the appropriateness of the discount rate assumption.

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◦ Compared the royalty rate selected by management to rates from royalty agreements in the outdoor apparel industry for comparable companies and the Company’s own contract royalty rates.

Long-lived Asset Valuation – Refer to Notes 2, 5 and 9 to the Consolidated Financial Statements

Critical Audit Matter Description

The Company evaluates retail location long-lived assets for impairment when events or changes in circumstances exist that may indicate that the carrying amounts of retail location long-lived assets are no longer recoverable.

Events that result in an impairment review include plans to close a retail location or a significant decrease in the operating results of the retail location.

When such an indicator occurs, the Company evaluates its retail location long-lived assets for impairment by comparing the undiscounted future cash flow expected to be generated by the location to the retail location long-lived asset’s carrying amount.

If the carrying amount of an asset exceeds the estimated undiscounted future cash flow, an analysis is performed to estimate the fair value of the asset.

An impairment is recorded if the fair value of the retail location long-lived asset is less than the carrying amount.

The Company makes significant assumptions to evaluate retail location long-lived assets for possible indications of impairment.

Changes in these assumptions could have a significant impact on the retail location long-lived assets identified for further analysis.

For the year ended December 31, 2020, impairment charges from underperforming retail location long-lived assets were $7.0 million for lease right-of-use assets and $4.5 million for property, plant, and equipment.

Given the Company’s evaluation of possible indications of impairment of retail location long-lived assets requires management to make significant assumptions, performing audit procedures to evaluate whether management appropriately identified events or changes in circumstances indicating that the carrying amounts of retail location long-lived assets may not be recoverable involved especially subjective judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the evaluation of retail location long-lived assets for possible indications of impairment included the following, among others:

• We tested the effectiveness of controls over management's identification of possible circumstances that may indicate that the carrying amounts of retail location long-lived assets are no longer recoverable.

• We evaluated management's analysis of long-lived assets for indications of impairment analysis by:

◦ Testing retail location long-lived assets for possible indications of impairment, including searching for locations with a history of losses, current period loss, or projected losses.

◦ Performing inquiries of management regarding the process and assumptions used to identify potential indicators of impairment and evaluating the consistency of the assumptions with evidence obtained in other areas of the audit.

/s/ DELOITTE & TOUCHE LLP

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however, an earlier year could not be reliably determined.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Columbia Sportswear Company

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Columbia Sportswear Company and subsidiaries (the “Company”) as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 25, 2021, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

Portland, Oregon

February 25, 2021

COLUMBIA SPORTSWEAR COMPANY

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Cash and cash equivalents $ 790,725 $ 686,009

Restricted cash — 13,970

Short-term investments 1,224 1,668

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452,945 488,233

Inventories 605,968 521,827

Inventories, net 556,530 605,968

Prepaid expenses and other current assets 54,197 93,868

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Commitments and contingencies (Note 12)

Columbia Sportswear Company Shareholders' Equity:

Shareholders' Equity:

Preferred stock;

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Retained earnings 1,811,800 1,848,935

Accumulated other comprehensive loss ( 4,425 ) ( 4,063 )

Total Columbia Sportswear Company shareholders' equity 1,849,447 1,673,857

Non-controlling interest — 16,456

Total equity 1,849,447 1,690,313

Total liabilities and equity $ 2,931,591 $ 2,368,721

Accumulated other comprehensive income (loss) 806 ( 4,425 )

Total shareholders' equity 1,832,771 1,849,447

Total liabilities and shareholders' equity $ 2,836,571 $ 2,931,591

See accompanying notes to consolidated financial statements

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Interest income, net 435 8,302 9,876

Interest expense on note payable to related party — — ( 429 )

Other non-operating income (expense), net 2,039 2,156 ( 141 )

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Unrealized holding gains (losses) on available-for-sale securities, net 4 56 ( 56 )

Unrealized gains (losses) on derivative transactions (net of tax effects of $ 830 , $( 7,782 ), and $ 8,176 , respectively)

Unrealized holding gains (losses) on derivative transactions (net of tax effects of $ 6,271 , $ 830 , and $( 7,782 ), respectively)

( 18,851 ) ( 2,383 ) 24,262

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Depreciation, amortization, and non-cash lease expense 146,601 121,725 58,230

Loss on disposal or impairment of property, plant, and equipment 5,442 4,208 1,927

Provision for uncollectible accounts receivable 19,156 ( 108 ) 3,908

Loss on disposal or impairment of intangible assets, property, plant and equipment, and right-of-use assets 31,342 5,442 4,208

Deferred income taxes ( 11,263 ) ( 1,808 ) 1,462

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Changes in operating assets and liabilities:

Accounts receivable, net ( 37,537 ) ( 25,601 ) ( 24,197 )

Inventories ( 84,058 ) ( 94,716 ) 46,662

Accounts receivable 22,885 ( 37,429 ) ( 29,509 )

Inventories, net 64,884 ( 84,058 ) ( 94,716 )

Prepaid expenses and other current assets 33,712 ( 15,068 ) ( 9,771 )

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Repayments on credit facilities ( 403,146 ) ( 78,186 ) ( 70,576 )

Payment of line of credit issuance fees ( 3,278 ) — —

Proceeds from issuance of common stock related to stock-based compensation 6,919 19,793 18,484

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Cash dividends paid to non-controlling interest — — ( 19,949 )

Payment of related party note payable — — ( 14,236 )

Net cash used in financing activities ( 151,700 ) ( 190,722 ) ( 270,014 )

Net effect of exchange rate changes on cash 7,510 ( 1,244 ) ( 8,695 )

Net increase (decrease) in cash, cash equivalents and restricted cash 234,214 ( 221,371 ) 121,777

Cash, cash equivalents and restricted cash, beginning of period 451,795 673,166 551,389

Cash, cash equivalents and restricted cash, end of period $ 686,009 $ 451,795 $ 673,166

Net increase (decrease) in cash and cash equivalents 104,716 234,214 ( 221,371 )

Cash and cash equivalents, beginning of period 686,009 451,795 673,166

Cash and cash equivalents, end of period $ 790,725 $ 686,009 $ 451,795

Supplemental disclosures of cash flow information:

Cash paid during the year for income taxes $ 14,687 $ 99,062 $ 77,408

Cash paid during the year for interest on note payable to related party $ — $ — $ 685

Supplemental disclosures of non-cash investing and financing activities:

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Other comprehensive income (loss):

Unrealized holding gains (losses) on derivative transactions, net

— — 1,159 ( 17,489 ) ( 516 ) ( 16,846 )

Unrealized holding losses on available-for-sale securities, net — — — ( 56 ) — ( 56 )

Unrealized holding gains on derivative transactions, net — — — 23,195 1,067 24,262

Foreign currency translation adjustment, net — — — ( 17,800 ) ( 279 ) ( 18,079 )

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— — ( 62,664 ) — — ( 62,664 )

Dividends to non-controlling interest — — — — ( 21,332 ) ( 21,332 )

Adoption of new accounting standards — — 14,600 ( 515 ) — 14,085

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

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Net income — — 330,489 — — 330,489

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

Other comprehensive income (loss):

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

— — — ( 56 ) — ( 56 )

Unrealized holding gains on derivative transactions, net

— — — 23,195 1,067 24,262

Unrealized holding gains on available-for-sale securities, net — — — 56 — 56

Unrealized holding losses on derivative transactions, net — — — ( 2,383 ) — ( 2,383 )

Foreign currency translation adjustment, net — — — 2,064 — 2,064

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— — ( 65,127 ) — — ( 65,127 )

Dividends to non-controlling interest — — — — ( 21,332 ) ( 21,332 )

Adoption of new accounting standards — — 14,600 ( 515 ) — 14,085

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

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Net income — — 108,013 — — 108,013

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

Other comprehensive income (loss):

Unrealized holding gains on available-for-sale securities, net — — — 4 — 4

— — — 56 — 56

Unrealized holding losses on derivative transactions, net — — — ( 18,851 ) — ( 18,851 )

— — — ( 2,383 ) — ( 2,383 )

Foreign currency translation adjustment, net — — — 24,078 — 24,078

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Note 4 Concentrations 51

Note 5 Non-Controlling Interest 47

Note 5 Property, Plant and Equipment, Net 51

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Note 15 Earnings Per Share 61

Note 17 Accumulated Other Comprehensive Loss 59

Note 16 Accumulated Other Comprehensive Income (Loss) 62

Note 17 Segment Information 62

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Note 19 Fair Value Measures 66

Note 21 Related Party Transactions 64

Index to Notes to Consolidated Financial Statements

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Nature of the Business

Columbia Sportswear Company is a global leader in the design, sourcing, marketing, and distribution of outdoor, active and everyday lifestyle apparel, footwear, accessories, and equipment products.

Columbia Sportswear Company connects active people with their passions through its four well-known brands, Columbia, SOREL, Mountain Hardwear, and prAna, by designing, developing, marketing, and distributing its outdoor, active and everyday lifestyle apparel, footwear, accessories, and equipment products to meet the diverse needs of its customers and consumers.

Principles of Consolidation

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Actual results may differ from these estimates and assumptions.

Some of the more significant estimates relate to revenue recognition, allowance for uncollectible accounts receivable, excess, close-out and slow moving inventory, product warranty, impairment of long-lived assets, intangible assets and goodwill, income taxes, and stock-based compensation.

Some of the more significant estimates relate to revenue recognition, allowance for uncollectible accounts receivable, excess, close-out and slow moving inventory, impairment of long-lived assets, intangible assets and goodwill, and income taxes.

Recently Adopted Accounting Pronouncements

On January 1, 2019, the Company adopted Accounting Standards Update ("ASU") No.

2018-07, Compensation - Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services.

Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees.

The adoption of this provision did not have a material effect on the Company's financial position, results of operations or cash flows.

On January 1, 2019, the Company adopted ASU No.

2016-02, Leases ("ASC 842"), which increased transparency and comparability among organizations by recognizing right-of-use ("ROU") assets and lease liabilities on the balance sheet for most leases previously classified as operating leases.

The updated guidance and subsequent clarifications require disclosures to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

The Company adopted this standard utilizing the modified retrospective approach.

The comparative prior period information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized.

The Company did not elect the practical expedient to use hindsight for leases existing at adoption date.

The adoption of ASC 842 resulted in the recognition of ROU assets of $ 352.7 million, with corresponding lease liabilities of $ 387.1 million.

As a result of adopting the standard, $ 34.4 million of pre-existing liabilities for deferred rent and various lease incentives were reclassified as a component of the ROU assets.

At adoption, the measurement of the lease liabilities utilized the remaining minimum rental payments as defined under the previous accounting standard and the incremental borrowing rate as of January 1, 2019.

The adoption of ASC 842 did not materially impact the Consolidated Statements of Operations.

Also, the adoption of ASC 842 had no material impact on operating, investing or financing cash flows in the Consolidated Statements of Cash Flows.

See Note 10 for additional disclosure regarding the adoption of the new standard.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents the effect of the adoption of ASC 842 on the Company's Consolidated Balance Sheets:

(in thousands)

December 31, 2018 Adjustments due to

ASC 842 January 1, 2019

Operating lease right-of-use assets $ — $ 352,679 $ 352,679

Total assets 2,368,721 352,679 2,721,400

Accrued liabilities 275,684 ( 3,346 ) 272,338

Operating lease liabilities — 57,207 57,207

Current liabilities 572,882 53,861 626,743

Non-current operating lease liabilities — 329,865 329,865

Other long-term liabilities 45,214 ( 31,047 ) 14,167

Total liabilities 678,408 352,679 1,031,087

Total liabilities and equity 2,368,721 352,679 2,721,400

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.

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

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.

The Company adopted the standard using the prospective method and anticipates an increase in cloud-specific implementation assets as specific cloud initiatives are executed by the Company.

These assets will generally be included in Other non-current assets in the Consolidated Balance Sheets and will amortize over their assessed useful lives or the term of the underlying cloud computing hosting contract, whichever is shorter.

Upon the adoption of the standard, there was no immediate impact to the Company's financial position, results of operations or cash flows.

Effective January 1, 2020, the Company adopted ASU No.

2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment issued by the FASB in January 2017, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test.

Under this guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

The impact of the new standard will depend on the specific facts and circumstances of future individual goodwill impairments, if any.

Effective January 1, 2020, the Company adopted ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments issued by the FASB in June 2016, as well as the clarifying amendments subsequently issued.

The pronouncement changes the impairment model for most financial assets and requires the use of an "expected loss" model for instruments measured at amortized cost.

Under this model, entities are required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset.

Upon adoption of the standard, there was no immediate impact to the Company's financial position, results of operations or cash flows.

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.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Cash and cash equivalents are stated at fair value or at cost, which approximates fair value, and include investments with original maturities of 90 days or less at the date of acquisition.

At December 31, 2020, Cash and cash equivalents consisted of cash, money

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

market funds, and United States government treasury bills.

At December 31, 2019, Cash and cash equivalents consisted of cash, money market funds, United States government treasury bills, and commercial paper.

At December 31, 2018, Cash and cash equivalents consisted of cash, money market funds and United States government treasury bills.

At December 31, 2019, Short-term investments consisted of mutual fund share investments held as part of the Company's deferred compensation plan expected to be distributed in the next twelve months.

At December 31, 2018, Short-term investments consisted of United States government treasury bills, and mutual fund share investments held as part of the Company's deferred compensation plan expected to be distributed in the next twelve months.

The United States government treasury bills are classified as available-for-sale securities and are recorded at fair value with any unrealized gains and losses reported, net of tax, in Other comprehensive income (loss) .

Investments held as part of the Company's deferred compensation plan are classified as trading securities and are recorded at fair value with any unrealized gains and losses reported as a component of operating income.

Realized gains or losses are determined based on the specific identification method.

At December 31, 2019 and 2018, long-term investments included in Other non-current assets consisted of money market and mutual fund shares held to offset liabilities to participants in the Company's deferred compensation plan.

At December 31, 2020, Short-term investments consisted of money market funds and mutual fund shares held as part of the Company's deferred compensation plan expected to be distributed in the next twelve months.

At December 31, 2019, Short-term investments consisted of mutual fund shares held as part of the Company's deferred compensation plan expected to be distributed in the next twelve months.

Investments held as part of the Company's deferred compensation plan are classified as trading securities and are recorded at fair value with any unrealized gains and losses included in SG&A expense .

Realized gains or losses from these trading securities are determined based on the specific identification method and are included in SG&A expense .

At December 31, 2020 and 2019, long-term investments included in Other non-current assets consisted of money market funds and mutual fund shares held to offset liabilities to participants in the Company's deferred compensation plan.

The investments are classified as long-term because the related deferred compensation liabilities are not expected to be paid within the next year.

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Accounts receivable have been reduced by an allowance for doubtful accounts.

The Company makes ongoing estimates of the collectability of accounts receivable and maintains an allowance for estimated losses resulting from the inability of the Company's customers to make required payments.

The Company maintains the allowance for estimated losses resulting from the inability of the Company's customers to make required payments.

The allowance represents the current estimate of lifetime expected credit losses over the remaining duration of existing accounts receivable considering current market conditions and supportable forecasts when appropriate.

The estimate is a result of the Company’s ongoing evaluation of collectability, customer creditworthiness, historical levels of credit losses, and future expectations.

Write-offs of accounts receivable were $ 8.0 million and $ 1.2 million for the years ended December 31, 2020 and 2019, respectively.

Inventories consist primarily of finished goods and are carried at the lower of cost or net realizable value.

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and machinery, software and equipment, 3 - 10 years.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Leasehold improvements are depreciated over the lesser of the estimated useful life of the improvement, which is most commonly 7 years, or the remaining term of the underlying lease.

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Internal and external costs directly related to the development of internal-use software during the application development stage, including costs incurred for third party contractors and employee compensation, are capitalized and depreciated over a 3 - 10 year estimated useful life.

Impairment of long-lived assets

Long-lived assets are amortized over their estimated useful lives and are measured for impairment only when events or circumstances indicate the carrying value may be impaired.

In these cases, the Company estimates the future undiscounted cash flows to be derived from the asset or asset group to determine whether a potential impairment exists.

If the sum of the estimated undiscounted cash flows is less than the carrying value of the asset, the Company recognizes an impairment loss, measured as the amount by which the carrying value exceeds the estimated fair value of the asset.

Intangible assets and goodwill

I ntangible assets and goodwill

Intangible assets with indefinite useful lives and goodwill are not amortized but are periodically evaluated for impairment.

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Intangible assets with finite lives include patents, purchased technology and customer relationships and have estimated useful lives which range from approximately 3 to 10 years.

Impairment of intangible assets and goodwill

The Company reviews and tests its intangible assets with indefinite useful lives and goodwill for impairment in the fourth quarter of each year and when events or changes in circumstances indicate that the carrying amount of such assets may be impaired.

The Company's intangible assets with indefinite lives consist of trademarks and trade names.

Substantially all of the Company's goodwill is recorded in the United States segment and impairment testing for goodwill is performed at the reporting unit level.

In the impairment test for goodwill, the two-step process first compares the estimated fair value of the reporting unit with the carrying amount of that reporting unit.

The Company estimates the fair value of its reporting units using a combination of discounted cash flow analysis, comparisons with the market values of similar publicly traded companies and other operating performance based valuation methods, as necessary.

If step one indicates impairment, step two compares the estimated fair value of the reporting unit to the estimated fair value of all reporting unit assets and liabilities, except goodwill, to determine the implied fair value of goodwill.

The Company calculates impairment as the excess of carrying amount of goodwill over the implied fair value of goodwill.

If events or circumstances indicate the carrying value of intangible assets with finite lives may be impaired, the Company estimates the future undiscounted cash flows to be derived from the asset or asset group to determine whether a potential impairment exists.

If the sum of the estimated undiscounted cash flows is less than the carrying value of the asset the Company recognizes an impairment loss, measured as the amount by which the carrying value exceeds the estimated fair value of the asset.

Impairment charges, if any, are classified as a component of SG&A expense.

The impairment tests and related fair value estimates are based on a number of factors, including assumptions and estimates for projected sales, income, cash flows, discount rates, remaining useful lives, and other operating performance measures.

Changes in estimates or the application of alternative assumptions could produce significantly different results.

These assumptions and estimates may change in the future due to changes in economic conditions, changes in the Company's ability to meet sales and profitability objectives or changes in the Company's business operations or strategic direction.

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 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 December 31, 2020, CCAs in-service have useful lives which range from approximately ten months to five years.

As of December 31, 2020, CCA assets consisted of capitalized implementation costs of $ 24.3 million and associated accumulated amortization of $ 1.9

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The Company leases, among other things, retail space, office space, warehouse facilities, storage space, vehicles, and equipment.

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Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of lease renewal options is generally at the Company's sole discretion.

The exercise of lease renewal options is generally at the Company's sole discretion.

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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The Company's incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

Because the Company does not generally borrow on a collateralized basis, it uses quoted interest rates as an input to derive an appropriate incremental borrowing rate, adjusted for the lease term and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease.

Because the Company does not generally borrow on a collateralized basis, it uses market-based rates as an input to derive an appropriate incremental borrowing rate, adjusted for the lease term and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease.

The Company also contemplates adjusting the discount rate for the amount of the lease payments.

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the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Income taxes are provided on financial statement earnings for financial reporting purposes.

In April 2020, the 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 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.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Impairment of long-lived assets, intangible assets and goodwill

Long-lived assets, which include property, plant and equipment, lease right-of-use assets, capitalized implementation costs for cloud computing arrangements, and intangible assets with finite lives, are measured for impairment only when events or circumstances indicate the carrying value may be impaired.

In these cases, the Company estimates the future undiscounted cash flows to be derived from the asset or asset group to determine whether a potential impairment exists.

The Company's intangible assets with indefinite lives consist of trademarks and trade names.

In the impairment test for goodwill, the estimated fair value of the reporting unit is compared with the carrying amount of that reporting unit.

In the impairment tests for trademarks and trade names, the Company compares the estimated fair value of each asset to its carrying amount.

For goodwill and trademarks and trade names, if the carrying amount exceeds its estimated fair value, the Company calculates an impairment as the excess of carrying amount over the estimate of fair value.

Impairment charges, if any, are classified as a component of SG&A expense .

Income taxes are based on amounts of taxes payable or refundable in the current year and on expected future tax consequences of events that are recognized in the financial statements in different periods than they are recognized in tax returns.

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The provision for income taxes also includes estimates of interest and penalties related to uncertain tax positions.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The effective portion of changes in fair values of outstanding cash flow hedges is recorded in other comprehensive income until earnings are affected by the hedged transaction, and any ineffective portion is included in current income.

In most cases, amounts recorded in other comprehensive income will be released to earnings after maturity of the related derivative.

The effective portion of changes in fair values of outstanding cash flow hedges is recorded in Other comprehensive income (loss) until earnings are affected by the hedged transaction, and any ineffective portion is included in current income.

In most cases, amounts recorded in Other comprehensive income (loss) will be released to earnings after maturity of the related derivative.

The Consolidated Statements of Operations classification of effective hedge results is the same as that of the underlying exposure.

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Unrealized derivative gains and losses, which are recorded in assets and liabilities, respectively, are non-cash items and therefore are taken into account in the preparation of the Consolidated Statements of Cash Flows based on their respective balance sheet classifications.

Refer to Note 19 for more information on derivatives and risk management.

Foreign currency translation

The assets and liabilities of the Company's foreign subsidiaries have been translated into United States dollars using the exchange rates in effect at period end, and the sales and expenses have been translated into United States dollars using average exchange rates in effect during the period.

The foreign currency translation adjustments are included as a separate component of Accumulated other comprehensive loss in the Consolidated Balance Sheets.

The foreign currency translation adjustments are included as a separate component of Accumulated other comprehensive income (loss) in the Consolidated Balance Sheets.

Revenue recognition

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Revenues are recognized when the Company's performance obligations are satisfied as evidenced by transfer of control of promised goods to customers or consumers, in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services.

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Within the Company's direct-to-consumer ("DTC") channel, control generally transfers to the consumer at the time of sale within retail stores and concession-based arrangements and upon shipment to the consumer with respect to e-commerce transactions.

The amount of consideration the Company expects to be entitled to receive and recognize as Net sales across both wholesale and DTC channels varies with changes in sales returns and other accommodations and incentives offered to customers and consumers.

When the Company gives customers the right to return products or provide other accommodations such as chargebacks and markdowns, the Company estimates the expected sales returns and miscellaneous claims and records a sales reserve to reduce Net sales.

The Company estimates expected sales returns and other accommodations, such as chargebacks and markdowns and records a sales reserve to reduce Net sales.

These estimates are based on historical rates of product returns and claims, as well as events and circumstances that indicate changes to such historical rates.

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These costs are recorded within SG&A expenses .

Revenue recognized from contracts with customers is recorded net of sales taxes, value added taxes, or similar taxes that are collected on behalf of local taxing authorities.

Shipping and handling costs

The Company treats shipping and handling activities as fulfillment costs, and as such recognize the costs for these activities at the time related revenue is recognized.

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Shipping and handling fees billed to customers are recorded as Net sales .

Revenue recognized from contracts with customers is recorded net of sales taxes, value added taxes, or similar taxes that are collected on behalf of local taxing authorities.

Shipping and handling costs recorded as a component of SG&A expenses and were $ 98.0 million, $ 89.2 million and $ 82.7 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Cost of sales

The expenses that are included in Cost of sales include all direct product costs related to shipping, duties and importation.

Specific provisions for excess, close-out or slow moving inventory are also included in cost of sales.

In addition, some of the Company's products carry life-time or limited warranty provisions for defects in quality and workmanship.

A warranty reserve is established at the

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

time of sale to cover estimated costs based on the Company's history of warranty repairs and replacements and is recorded in Cost of sales .

Selling, general and administrative expense

SG&A expense consists of personnel-related costs, advertising, depreciation, occupancy, and other selling and general operating expenses related to the Company's business functions, including planning, receiving finished goods, warehousing, distribution, retail operations and information technology.

Shipping and handling costs

Shipping and handling fees billed to customers and consumers are recorded as Net sales .

Inventory planning, receiving, storage and handling costs are recorded as a component of SG&A expenses and were $ 89.2 million, $ 82.7 million and $ 73.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Cost of sales consists of all direct product costs, including shipping, duties and importation costs, as well as specific provisions for excess, close-out or slow moving inventory.

In addition, certain products carry life-time or limited warranty provisions for defects in quality and workmanship.

Cost of sales includes a warranty reserve established for these provisions at the time of sale to cover estimated costs based on the Company's history of warranty repairs and replacements.

Selling, general and administrative expenses

SG&A expenses consists of personnel-related costs, advertising, depreciation and amortization, occupancy, and other selling and general operating expenses related to the Company's business functions.

Stock-based compensation

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Total advertising expense, including cooperative advertising costs, were $ 141.3 million, $ 166.4 million and $ 150.4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Cooperative advertising costs are expensed when the related revenues are recognized and included in SG&A expenses when the Company receives an identifiable benefit in exchange for the cost, the advertising may be obtained from a party other than the customer, and the fair value of the advertising benefit can be reasonably estimated.

Recently issued accounting pronouncements

Effective January 1, 2020, the Company adopted ASU No.

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 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.

The Company adopted the standard using the prospective method and anticipates an increase in cloud-specific implementation assets as specific cloud initiatives are developed at the Company.

These assets will amortize over their assessed useful lives or the term of the underlying cloud computing hosting contract, whichever is shorter.

Effective January 1, 2020, the Company adopted ASU No.

2017-04, Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment issued by the FASB in January 2017, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test.

The impact of the new standard will depend on the specific facts and circumstances of future individual goodwill impairments, if any.

Effective January 1, 2020, the Company adopted ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments issued by the FASB in June 2016, as well as the clarifying amendments subsequently issued.

The pronouncement changes the impairment model for most financial assets and will require the use of an "expected loss" model for instruments measured at amortized cost.

Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset.

Upon adoption of the standard, there was no immediate impact to the Company's financial position, results of operations or cash flows.

Cooperative advertising costs are expensed when the related revenues are recognized and included in SG&A expenses when the Company receives an identifiable benefit in exchange for the

Index to Notes to Consolidated Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In December 2019, the FASB issued ASU 2019-12 , Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes.

This standard is effective beginning in the first quarter of 2021 on a prospective basis, with early adoption permitted.

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

cost, the advertising may be obtained from a party other than the customer, and the fair value of the advertising benefit can be reasonably estimated.

Recently issued accounting pronouncements

Effective January 1, 2021, the Company adopted ASU No.

2019-12 , Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which, among other things, removes specific exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods, as well as targeted impacts to the accounting for taxes under hybrid tax regimes.

At adoption, there was not a material impact to the Company's financial position, results of operations or cash flows.

NOTE 3—REVENUES

Disaggregated revenue

As disclosed below in Note 18, the Company has aggregated its operating segments into four geographic segments:

As disclosed below in Note 17, the Company has four geographic reportable segments:

United States ("U.S."), Latin America and Asia Pacific ("LAAP"), Europe, Middle East and Africa ("EMEA") and Canada.

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

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

Year Ended December 31, 2020

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Total $ 1,603,783 $ 424,489 $ 298,907 $ 174,375 $ 2,501,554

Sales channel net sales

Channel net sales

Wholesale $ 838,388 $ 198,083 $ 249,161 $ 117,628 $ 1,403,260

Direct-to-consumer 893,707 256,893 54,725 54,357 1,259,682

DTC 765,395 226,406 49,746 56,747 1,098,294

Total $ 1,603,783 $ 424,489 $ 298,907 $ 174,375 $ 2,501,554

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Total $ 1,943,007 $ 529,282 $ 367,072 $ 203,117 $ 3,042,478

Sales channel net sales

Channel net sales

Wholesale $ 1,049,300 $ 272,389 $ 312,347 $ 148,760 $ 1,782,796

Direct-to-consumer 825,548 263,150 50,128 51,477 1,190,303

DTC 893,707 256,893 54,725 54,357 1,259,682

Total $ 1,943,007 $ 529,282 $ 367,072 $ 203,117 $ 3,042,478

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Year Ended December 31, 2018

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Total $ 1,728,476 $ 530,152 $ 350,754 $ 192,944 $ 2,802,326

Sales channel net sales

Channel net sales

Wholesale $ 902,928 $ 267,002 $ 300,626 $ 141,467 $ 1,612,023

Direct-to-consumer 691,257 210,757 36,431 39,636 978,081

DTC 825,548 263,150 50,128 51,477 1,190,303

Total $ 1,728,476 $ 530,152 $ 350,754 $ 192,944 $ 2,802,326

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Performance obligations

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Contract balances

As of December 31, 2019 and 2018, contract liabilities included in Accrued Liabilities on the Consolidated Balance Sheets, which consisted of obligations associated with our gift card and customer loyalty programs, were not material.

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

NOTE 4—CONCENTRATIONS

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No single customer accounted for 10% or more of Net sales for any of the years ended December 31, 2020, 2019 or 2018.

Country and supplier concentrations

The majority of the Company's products are manufactured by contract manufacturers located outside the United States.

The Company's apparel, accessories and equipment products are manufactured in 12 countries, with approximately 50 % of these products produced in Vietnam and China.

Five of the largest contract manufacturers account for approximately 30 % of the Company's apparel, accessories and equipment production, with the largest manufacturer accounting for approximately 10 %.

The Company's footwear products are manufactured in three countries, with the majority of these products produced in Vietnam and China.

Five of the largest contract manufacturers account for approximately 85 % of the Company's footwear production, with the largest manufacturer accounting for approximately 45 %.

NOTE 5—NON-CONTROLLING INTEREST

Prior to January 2, 2019, the Co mpany owned a 60 % controlling interest in a joint venture formed with Swire Resources, Limited ("Swire") to support the development and operation of the Company's business in China.

The accounts of the joint venture were included in the Consolidated Financial Statements.

Swire's share of net income from the joint venture was included in Net income attributable to non-controlling interest in the Consolidated Statements of Operations and the non-controlling equity interest in this entity was included as Non-controlling interest in the Consolidated Balance Sheets and Consolidated Statements of Equity.

In September 2018, the Company and Swire entered into an Equity Interest Transfer Agreement ("EITA"), in which the Company committed to buy out the 40 % non-controlling interest in the joint venture.

On January 2, 2019, the Company closed the buyout.

As a result of the buyout, the 2019 Consolidated Financial Statements do not separately reflect amounts related to the non-controlling interest.

See Note 21 for additional information regarding the various terms and conditions and resulting related-party transactions associated with the buyout.

NOTE 5—PROPERTY, PLANT AND EQUIPMENT, NET

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$ 309,792 $ 346,651

Depreciation expense for property, plant and equipment, net was $ 60.9 million, $ 59.8 million, and $ 58.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Impairment charges for property, plant and equipment are included in SG&A expense and were $ 5.0 million, $ 0.4 million and $ 2.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Charges during the years ended December 31, 2020, 2019 and 2018 were recorded primarily for certain underperforming retail stores in the U.S., EMEA and LAAP regions.

Index to Notes to Consolidated Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Depreciation and amortization expense for property, plant and equipment, net was $ 59.8 million, $ 58.2 million, and $ 59.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.

NOTE 6—INTANGIBLE ASSETS, NET AND GOODWILL

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Intangible assets, net $ 103,558 $ 123,595

Amortization expense for intangible assets subject to amortization was $ 3.0 million for the years ended December 31, 2019 and 2018, respectively, and $ 3.9 million for the year ended December 31, 2017.

At December 31, 2019 and 2018, the Company determined that its goodwill and intangible assets were not impaired.

Amortization expense for intangible assets subject to amortization was $ 2.5 million for the year ended December 31, 2020, and $ 3.0 million for the years ended December 31, 2020 and 2019.

Impairment charges for the intangible assets not subject to amortization are included in SG&A expense and were $ 17.5 million for the year ended December 31, 2020.

The impairment of the prAna trademark and trade name intangible asset was determined as part of the annual impairment test.

The fair value was estimated using a relief from royalty method under the income approach.

Cash flow projections were developed in part from the Company's annual planning process.

The discount rate is the estimated weighted-average costs of capital of the reporting unit from a market-participant perspective.

The decline in estimated fair value from the fourth-quarter 2019 impairment test reflects a lower estimated royalty rate and a decline in forecasted revenues.

There was no impairment recorded for intangible assets not subject to amortization for the years ended December 31, 2019 and 2018.

Substantially all of the Company's goodwill is recorded in the U.S.

The Company determined that goodwill was no t impaired for the years ended December 31, 2020, 2019, and 2018.

The following table presents the estimated annual amortization expense for the years 2021 through 2025:

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NOTE 7—SHORT-TERM BORROWINGS AND CREDIT LINES

The Co mpany has an unsecured, committed revolving line of credit with monthly variable commitments available for funding that average $ 50.0 million over the course of a calendar year.

The maturity date of this agreement is August 1, 2023 .

Interest, payable monthly, is based on the Company's applicable funded debt ratio, which could range from USD LIBOR plus 87.5 basis points to USD LIBOR plus 162.5 basis points.

This line of credit requires the Company to comply with certain financial covenants covering the Company's funded debt ratio and interest coverage ratio.

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

At December 31, 2019, the Company was in compliance with all associated covenants.

At December 31, 2019 and 2018, no balance was outstanding under this line of credit.

The Company's Canadian subsidiary has available an unsecured and uncommitted line of credit guaranteed by the Company providing for borrowing up to a maximum of CAD$ 30.0 million (approximately US$ 23.0 million) at December 31, 2019.

The revolving line accrues interest at the bank's Canadian prime rate .

At December 31, 2019 and 2018 no balance was outstanding under this line of credit.

The Company's European subsidiary has available two separate unsecured and uncommitted lines of credit guaranteed by the Company providing for borrowing up to a maximum of € 25.8 million and € 5.0 million, respectively (combined approximately US$ 34.5 million), at December 31, 2019.

The line of credit with a maximum borrowing of € 25.8 million accrues interest based on the European

Columbia Sportswear Company Credit Lines

In 2020, the Company entered into a credit agreement, maturing on December 30, 2025, which provides an unsecured, committed revolving credit facility that provides for funding up to $ 500.0 million.

Interest, payable monthly, is based on the Company's option of either LIBOR plus an applicable margin or a base rate.

Base rate is defined as the highest of the following, plus an applicable margin:

• the administrative agent's prime rate;

• the higher of the federal funds rate or the overnight bank funding rate set by the Federal Reserve Bank of New York, plus 0.50%;

• the one-month LIBOR plus 1.00%.

Index to Notes to Consolidated Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Central Bank refinancing rate plus 75 basis points.

The line of credit with a maximum borrowing of € 5.0 million accrues interest based on the Euro Overnight Index Average plus 75 basis points.

There was no balance outstanding under either line at December 31, 2019 or 2018.

The Company's Japanese subsidiary has two separate unsecured and uncommitted lines of credit 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 December 31, 2019.

These lines accrue interest at JPY LIBOR plus 100 basis points and the Bank of Tokyo Prime Rate, respectively.

There was no balance outstanding under either line at December 31, 2019 or 2018.

The Company's Korean subsidiary has available an unsecured and uncommitted line of credit guaranteed by the Company providing for borrowing up to a maximum of US$ 20.0 million at December 31, 2019.

The revolving line accrues interest at the Korean three month CD rate plus 220 basis points.

There was no balance outstanding under this line at December 31, 2019 or 2018.

The Company's Chinese subsidiary has available an unsecured and uncommitted line of credit guaranteed by the Company providing for borrowings of advances or overdrafts up to a maximum of US$ 20.0 million at December 31, 2019.

Once the line is drawn upon, the revolving line accrues interest on advances of RMB based on the People's Bank of China ("PBOC") base rate, advances of USD based on LIBOR + 1.8 % per annum or overdrafts of RMB based on 110 % of the PBOC base rate.

There was no balance outstanding under this line at December 31, 2019 or 2018.

This credit agreement requires the Company to comply with certain financial covenants covering the Company's funded debt ratio and asset coverage ratio.

The credit agreement also includes customary covenants that, among other things, limit or restrict the ability of the Company and its subsidiaries to incur additional indebtedness and liens, engage in mergers, acquisitions and dispositions, and engage in transactions with affiliates, as well as restrict certain payments, including dividends and share buybacks.

At December 31, 2020, the Company was in compliance with all associated covenants and there was no balance outstanding.

At December 31, 2019, there was no balance outstanding under the credit agreement in effect for such period.

Columbia Sportswear Company's Subsidiary Credit Lines

At December 21, 2020 and 2019, there was no balance outstanding under the Company's subsidiary credit lines.

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 borrowing up to a maximum of CAD$ 30.0 million (approximately US$ 23.5 million) at December 31, 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.

The Company's European subsidiary has available two separate unsecured and uncommitted lines of credit, and an unsecured, committed line of credit, which are guaranteed by the Company, and provide for borrowing up to a maximum of € 25.8 million, € 0.6 million, and € 4.4 million, respectively (combined approximately US$ 37.9 million), at December 31, 2020.

Borrowings under the € 25.8 million line accrue interest at a base rate of 185 basis points plus 175 basis points.

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

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 ¥ 1.5 billion and US$ 7.0 million, respectively (combined approximately US$ 21.5 million) at December 31, 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 175 basis points.

The Company's Korean 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 December 31, 2020.

Borrowings under the overdraft facility accrue interest at the Korea three month CD rate plus 175 basis points.

The Company's Chinese subsidiary has available an unsecured and uncommitted line of credit providing for borrowings up to a maximum of RMB 140.0 million at December 31, 2020.

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

Borrowings under the RMB 140.0 million line of credit accrue interest at the one year loan prime rate less 10 basis points.

Borrowings under the US$ 20.0 million facility accrue interest on advances of RMB at 4.15%, advances of USD based on LIBOR plus 1.75% per annum or overdrafts of RMB based on 110% of the People's Bank of China rate.

The combined available borrowings of the two facilities were approximately US$ 41.5 million at December 31, 2020.

NOTE 8—ACCRUED LIABILITIES

Accrue d liabilities consisted of the following:

Accrued liabilities consisted of the following:

(in thousands) 2020 2019

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$ 257,278 $ 295,723

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A reconciliation of product warranties is as follows:

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NOTE 9—LEASES

The components of lease cost for the year ended December 31, 2019 were as follows:

The components of lease cost consisted of the following:

Year Ended December 31,

(in thousands) 2020 2019

Operating lease cost (1)

$ 104,906 $ 78,609

Variable lease cost (1)

58,391 60,085

Short term lease cost (1)

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) Prior to the adoption of ASC 842, $ 143.9 million and $ 84.6 million of rent expense was included in SG&A expense for the years ended December 31, 2018 and 2017, respectively, and $ 1.6 million of rent expense was included in Cost of sales for the years ended December 31, 2018 and 2017, respectively.

Supplemental cash flow information for the year ended December 31, 2019 is as follows:

$ 172,897 $ 147,707

(1) For the year ended December 31, 2018, prior to the adoption of ASC 842 on January 1, 2019, rent expenses of $ 143.9 million and $ 1.6 million was included in SG&A expense and Cost of sales, respectively .

For the year ended December 31, 2020, operating lease cost included $ 16.5 million of accelerated amortization for retail locations that permanently closed during 2020 for which the related lease liabilities have not been extinguished as of December 31, 2020 due to ongoing negotiations with the landlords.

In addition, for the year ended December 31, 2020, operating lease cost included $ 7.0 million of right-of-use asset impairment charges related to underperforming retail locations primarily in the U.S.

segment for the year ended December 31, 2020.

There was no impairment recorded for the year ended December 31, 2019.

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

The following table presents supplemental cash flow information:

Year Ended December 31,

(in thousands) 2020 2019

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Operating lease liabilities arising from obtaining ROU assets (1)(2)

(1) Includes amount initially capitalized in conjunction with the adoption of ASC 842.

Amounts disclosed for lease liabilities arising from obtaining ROU assets include amounts added to the carrying amount of lease liabilities resulting from lease modifications and reassessments.

Supplemental balance sheet information related to leases as of December 31, 2019 is as follows:

Weighted average remaining lease term 6.79 years

22,416 471,396

Reductions to ROU assets resulting from reductions to operating lease liabilities 6,400 783

(1) The year ended December 31, 2019 reflects the impact from amount initially capitalized in conjunction with the adoption of ASC 842.

(2) Includes amounts added to the carrying amount of lease liabilities resulting from lease modifications and reassessments.

The following table presents supplemental balance sheet information related to leases:

Year Ended December 31,

Weighted average remaining lease term 6.16 years 6.79 years

Weighted average discount rate 3.72 % 3.82 %

As of December 31, 2019, future maturities of liabilities are as follows:

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents the future maturities of liabilities as of December 31, 2020:

(in thousands)

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As of December 31, 2020, the Company has additional operating lease commitments that have not yet commenced of $ 3.9 million.

These leases will commence in 2020 with lease terms of 6 to 11 years.

These leases will commence in 2021 with lease terms of approximately two to 10 years.

NOTE 10—INCOME TAXES

Income Tax Provision

Consoli dated income from continuing operations before income taxes consisted of the following:

Consolidated income from continuing operations before income taxes consisted of the following:

Year Ended December 31,

4 unchanged sentences

Income before income tax $ 139,523 $ 405,429 $ 360,717

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The components of the provision (benefit) for income taxes consisted of the following:

The components of the provision for income taxes consisted of the following:

Year Ended December 31,

10 unchanged sentences

Income tax expense $ 31,510 $ 74,940 $ 85,769

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following is a reconciliation of the statutory federal income tax rate to the effective rate reported in the financial statements:

Year Ended December 31,

2019 2018 2017

(percent of income)

(percent of income before tax) 2020 2019 2018

Provision for federal income taxes at the statutory rate 21.0 % 21.0 % 21.0 %

7 unchanged sentences

Excess tax benefits from stock plans ( 0.8 ) ( 1.6 ) ( 1.4 )

Provision for income taxes related to tax reform — — 1.4

Other 1.7 ( 0.1 ) 0.7

Actual provision for income taxes, pre-provisional TCJA expense 18.5 22.4 22.0

Effects of the TCJA:

Reduction of United States federal corporate tax rate — ( 0.4 ) 5.6

Transition tax on foreign earnings — 1.5 18.7

Deferred tax liability associated with future repatriations — 0.5 8.9

Foreign tax credits — ( 0.2 ) 2.7

Provision for income taxes related to the TCJA — 1.4 35.9

Actual provision for income taxes 22.6 % 18.5 % 23.8 %

Effects of the TCJA

On December 22, 2017, the United States Government enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act ("TCJA").

The TCJA made broad and complex changes to the United States tax code, including, but not limited to:

• reducing the United States federal corporate tax rate from 35% to 21%;

• requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries;

• generally eliminating United States federal income taxes on dividends from foreign subsidiaries;

• requiring a current inclusion in United States federal taxable income of certain earnings of controlled foreign corporations;

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

• eliminating the corporate alternative minimum tax ("AMT") and changing how existing AMT credits can be realized;

• creating the base erosion anti-abuse tax;

• a new provision designed to tax global intangible low-taxed income ("GILTI");

• creating a new limitation on deductible interest expense;

• changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.

In conjunction with the enactment of the TCJA, the SEC staff issued Staff Accounting Bulletin 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the TCJA.

SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting for the effects of the TCJA.

Any legislative changes, including the final Section 965 transition tax regulations issued on January 15, 2019, the impacts of which are currently being assessed due to the complexity and interdependency of the legislative provisions, as well as other new or proposed Treasury regulations, may result in additional income tax impacts which could be material in the period any such changes are enacted.

For the year ended December 31, 2017, in accordance with SAB 118, the Company reflected the income tax effects in the financial statements for those aspects of the TCJA for which the accounting was complete and recorded an incremental provisional net tax expense of $ 95.6 million for those aspects for which the accounting was incomplete but able to determine a reasonable estimate.

For the year ended December 31, 2018, the Company recorded an incremental tax expense of $ 5.1 million as adjustments to the provisional tax expense.

Details related to the incremental expenses in 2018 are outlined below.

Reduction of United States federal corporate tax rate

The TCJA reduces the United States federal corporate tax rate from 35% to 21%, effective January 1, 2018.

For the year ended December 31, 2017, the Company recorded a provisional decrease to net deferred tax assets of $ 15.0 million, for certain deferred tax assets and liabilities, with a corresponding charge to deferred income tax expense of $ 15.0 million.

In 2018, the Company determined the provisional amount was affected by other analyses related to the TCJA, including, but not limited to, the Company's calculation of deemed repatriation of foreign income and the state tax effect of adjustments made to federal temporary differences.

As a result, in the year ended December 31, 2018, the Company recorded an increase to net deferred tax assets of $ 1.5 million for certain deferred tax assets and liabilities, with a corresponding charge to deferred income tax expenses of $ 1.5 million to finalize the accounting for this element of the TCJA.

Transition tax on foreign earnings

The Deemed Repatriation Transition Tax ("Transition Tax") is a United States tax on the Company's previously untaxed accumulated and current earnings and profits ("E&P") of certain of the Company's foreign subsidiaries.

For the year ended December 31, 2017, the Company recorded a provisional obligation of $ 49.9 million.

In 2018, the Company determined, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-United States income taxes paid on such earnings.

As a result, in the year ended December 31, 2018, the Company recorded $ 5.4 million to a liability account to finalize the accounting for this element of the TCJA.

The Transition Tax will be paid over an eight year period beginning for the tax year ending December 31, 2017.

Deferred tax liability associated with future repatriations

For the year ended December 31, 2017, the Company recorded a provisional estimate of $ 23.7 million related to the tax effects on future repatriations of foreign earnings.

In 2018, the Company completed additional analysis of the effects of the TCJA and of its applicable foreign earnings.

As a result, in the year ended December 31, 2018, the Company recorded $ 1.6 million of income tax expense to finalize the accounting for this element of the TCJA.

Disallowance of foreign tax credits

The Company repatriated foreign earnings in 2017 for which certain foreign tax credits were no longer allowable under the TCJA.

As a result, for the year ended December 31, 2017, the Company recorded a provisional estimate of $ 7.0 million of income tax expense.

In 2018, the Company completed additional analysis of the effects of the TCJA and recorded a decrease of $ 0.6 million in the year ended December 31, 2018 to finalize the accounting for this element of the TCJA.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Global intangible low-taxed income ("GILTI") tax

For the year ended December 31, 2017, the Company did not record a provision related to the new GILTI tax under the TCJA because of the complexity of the new tax rules and the lack of clarity surrounding the application of the relevant accounting guidance.

In 2018, the Company elected an accounting policy with respect to the GILTI tax rules, which is to treat GILTI as a period cost.

Deferred Income Tax Balances

Significant components of the Company's deferred taxes consisted of the following (in thousands):

Significant components of the Company's deferred taxes consisted of the following:

(in thousands)

6 unchanged sentences

Tax credits 844 2,329

Foreign currency 2,418 —

Other 2,304 2,258

6 unchanged sentences

Deferred tax liability associated with future repatriations ( 19,008 ) ( 19,847 )

Foreign currency loss ( 3,610 ) ( 6,520 )

Foreign currency — ( 3,610 )

Gross deferred tax liabilities ( 37,299 ) ( 41,856 )

1 unchanged sentence

The Company has foreign net operating loss carryforwards of $ 89.1 million as of December 31, 2020, of which $ 72.7 million have an unlimited carryforward period and $ 16.5 million expire between 2025 and 2040.

The net operating losses result in deferred tax assets of $ 23.7 million and $ 18.8 million at December 31, 2019 and 2018, respectively.

These deferred tax assets were subject to a valuation allowance of $ 21.9 million and $ 16.5 million at December 31, 2019 and 2018, respectively.

At December 31, 2019, the Company has accumulated undistributed earnings generated by the Company's foreign subsidiaries of $ 420.6 million.

As $ 174.8 million of such earnings have previously been subject to the one-time transition tax on foreign earnings by the TCJA, any additional taxes due with respect to such earnings would generally be limited to foreign and state taxes and have been recorded as a deferred tax liability.

The net operating losses result in deferred tax assets of $ 24.3 million and $ 23.7 million and were subject to a valuation allowance of $ 21.2 million and $ 21.9 million at December 31, 2020 and 2019, respectively.

At December 31, 2020, the Company has accumulated undistributed earnings generated by the Company's foreign subsidiaries of

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

$ 320.8 million.

As $ 100.0 million of such earnings have previously been subject to the one-time transition tax on foreign earnings by the Tax Cuts and Jobs Act, any additional taxes due with respect to such earnings would generally be limited to foreign and state taxes and have been recorded as a deferred tax liability.

However, the Company intends to indefinitely reinvest the earnings generated after January 1, 2018 and expects future domestic cash generation to be sufficient to meet future domestic cash needs.

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The Korean National Tax Service concluded an audit of the Company's 2009 through 2013 corporate income tax returns in 2014, and an audit of the Company's 2014 corporate income tax return in 2016.

Due to the nature of the findings in both of these audits, the Company has invoked the Mutual Agreement Procedures outlined in the United States-Korean

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

income tax treaty.

Due to the nature of the findings in both of these audits, the Company has invoked the Mutual Agreement Procedures outlined in the United States-Korean income tax treaty.

The Company does not anticipate that adjustments relative to these findings, or any other ongoing tax audits, will result in material changes to its financial condition, results of operations or cash flows.

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The Company recognizes interest expense and penalties related to income tax matters in Income tax expense .

The Company recognized a net reversal of accrued interest and penalties of $ 0.5 million in 2019, and a net increase of accrued interest and penalties of $ 0.4 million in 2018 and a net reversal of accrued interest and penalties of $ 1.4 million in 2017, all of which related to uncertain tax positions.

The Company recognized a net increase of accrued interest and penalties of $ 0.8 million in 2020, and a net reversal of accrued interest and penalties of $ 0.5 million in 2019 and a net increase of accrued interest and penalties of $ 0.4 million in 2018, all of which related to uncertain tax positions.

The Company had $ 2.3 million and $ 1.5 million of accrued interest and penalties related to uncertain tax positions at December 31, 2020 and 2019, respectively.

5 unchanged sentences

Costs recognized for Company contributions to the plan were $ 10.1 million, $ 9.4 million and $ 8.9 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred Compensation Plan

2 unchanged sentences

Costs recognized for Company matching contributions to the plan totaled $ 0.4 million, $ 0.5 million and $ 0.4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Participants earn a return on their deferred compensation based on investment earnings of participant-selected investments.

Participants earn a return on their deferred compensation ba sed on investment earnings of participant-selected investments.

Deferred compensation, including accumulated earnings on the participant-directed investment selections, is distributable in cash at participant-specified dates or upon retirement, death, disability, or termination of employment.

3 unchanged sentences

A corresponding adjustment of an equal amount is made to the deferred compensation liabilities and compensation expense, which is included in SG&A expense .

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At December 31, 2020, and 2019 , the long-term portion of the liability to participants under this plan was $ 18.7 million and $ 14.0 million, respectively, and was recorded in Other long-term liabilities .

3 unchanged sentences

NOTE 12—COMMITMENTS AND CONTINGENCIES

Inventory Purchase Obligations

Inventory purchase obligations consist of open production purchase orders for sourced apparel, footwear, accessories, and equipment products and raw material commitments not included in open production purchase orders.

At December 31, 2019, inventory purchase obligations were $ 337.2 million.

The Company is involved in litigation and various legal matters arising in the normal course of business, including matters related to employment, retail, intellectual property, contractual agreements, and various regulatory compliance activities.

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NOTE 13—SHAREHOLDERS' EQUITY

Since t he inception of the Company's stock repurchase plan in 2004 through December 31, 2019, the Company's Board of Directors has authorized the repurchase of $ 1.1 billion of the Company's common stock.

As of December 31, 2019, the Company had repurchased 25.3 million shares under this program at an aggregate purchase price of $ 884.9 million.

Shares repurchased generally settle subsequent to the trade date.

During the year ended December 31, 2019, the Company purchased an aggregate of $ 121.2 million of common stock under the stock repurchase plan.

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

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

Shares of the Company's common stock may be purchased in the open market or through privately negotiated transactions, subject to market conditions, and generally settle subsequent to the trade date.

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.

NOTE 15—STOCK-BASED COMPENSATION

The Company's stock incentive plan (the " Plan") provides for issuance of up to 20,800,000 shares of the Company's common stock, of which 1,877,407 shares were available for future grants under the Plan at December 31, 2019.

The 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.

The Company uses original issuance shares to satisfy share-based payments.

Under this program as of December 31, 2020, the Company had repurchased 26.8 million shares at an aggregate purchase price of $ 1,017.8 million and have $ 82.2 million remaining available.

During the year ended December 31, 2020, the Company purchased an aggregate of $ 132.9 million of common stock under this program.

Index to Notes to Consolidated Financial Statements

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In January 2021, the Company's Board of Directors approved a $ 400.0 million increase in share repurchase authorization.

NOTE 14—STOCK-BASED COMPENSATION

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 3.0 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.

At December 31, 2020, 4,169,642 shares were available for future grants under the 2020 Plan and up to 328,486 additional shares that were previously authorized and available for issuance under the Prior Plan may become available for future grants under the 2020 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.

The Company uses original issuance shares to satisfy share-based payments.

Stock Compensation

17 unchanged sentences

The dividend yield is based on the expected cash dividend payouts.

The following table presents the weighted average assumptions for stock options granted and resulting fair value in the years ended December 31:

The weighted average assumptions for stock options granted and resulting fair value is as follows:

Year Ended December 31,

2020 2019 2018

29 unchanged sentences

At December 31, 2020, unrecognized costs related to outstanding stock options totaled $ 11.5 million, before any related tax benefit.

The unrecognized costs related to stock options are being amortized over the related vesting period using the straight-line attrition method.

The unrecognized costs related to stock options are being amortized over the related vesting period using the straight-line attribution method.

These unrecognized costs related to stock options are being amortized over a weighted average period of 2.33 years.

8 unchanged sentences

Key inputs and assumptions used in the model include the vesting period, the Company's expected annual dividend yield and the closing price of the Company's common stock on the date of grant.

The following table presents the weighted average assumptions for restricted stock units granted in the years ended December 31:

The weighted average assumptions for restricted stock units granted and resulting fair value are as follows:

Year Ended December 31,

2020 2019 2018

22 unchanged sentences

Restricted stock units outstanding at December 31, 2020 425,275 $ 80.37

(1) The number of vested units includes shares withheld by the Company to pay minimum statutory requirements to taxing authorities on behalf of the employee.

(1) The number of vested units includes shares withheld by the Company to pay up to maximum statutory requirements to taxing authorities on behalf of the employee.

For the years ended December 31, 2020, 2019 and 2018, the Company withheld 54,543 , 56,843 and 55,907 shares, respectively, to satisfy $ 4.5 million, $ 5.8 million and $ 4.3 million of employees' tax obligations, respectively.

5 unchanged sentences

NOTE 15—EARNINGS PER SHARE

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

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.

12 unchanged sentences

Diluted $ 1.62 $ 4.83 $ 3.81

Stock options and service-based restricted stock units, and performance-based restricted stock representing 405,928 , 372,516 and 928,443 shares of common stock for the years ended December 31, 2019, 2018 and 2017, respectively, were outstanding but were excluded from the computation of diluted EPS because their effect would be anti-dilutive as a result of applying the treasury stock method or because performance conditions had not been met.

Stock options and service-based restricted stock units, and performance-based restricted stock representing 1,122,935 , 405,928 and 372,516 shares of common stock for the years ended December 31, 2020, 2019 and 2018, 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

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 17—ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumul ated other comprehensive loss on the 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 attributable to the Company:

NOTE 16—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) on the 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 income (loss) attributable to the Company:

(in thousands) Unrealized gains (losses)

6 unchanged sentences

Other comprehensive income (loss) before reclassifications ( 56 ) 23,065 ( 17,800 ) 5,209

— ( 15,559 ) 31,219 15,660

Amounts reclassified from accumulated other comprehensive loss (1)

— ( 1,930 ) — ( 1,930 )

Net other comprehensive income (loss) during the year ( 56 ) 23,195 ( 17,800 ) 5,339

— ( 17,489 ) 31,219 13,730

Balance at December 31, 2017 ( 4 ) ( 10,716 ) 1,833 ( 8,887 )

Other comprehensive income (loss) before reclassifications

( 56 ) 23,065 ( 17,800 ) 5,209

Amounts reclassified from accumulated other comprehensive loss (1)

Net other comprehensive income (loss) during the year

( 56 ) 23,195 ( 17,800 ) 5,339

Adoption of ASU 2017-12 — ( 515 ) — ( 515 )

1 unchanged sentence

Other comprehensive income before reclassifications 56 6,669 2,064 8,789

56 6,669 2,064 8,789

Amounts reclassified from accumulated other comprehensive loss (1)

1 unchanged sentence

Net other comprehensive income (loss) during the year 56 ( 2,383 ) 2,064 ( 263 )

56 ( 2,383 ) 2,064 ( 263 )

Purchase of non-controlling interest — ( 99 ) — ( 99 )

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

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

Other comprehensive income (loss) before reclassifications 4 ( 7,218 ) 24,078 16,864

Amounts reclassified from accumulated other comprehensive income (1)

— ( 11,633 ) — ( 11,633 )

Net other comprehensive income (loss) during the year 4 ( 18,851 ) 24,078 5,231

Balance at December 31, 2020 $ — $ ( 9,369 ) $ 10,175 $ 806

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

Refer to Note 18 for further information regarding reclassifications.

NOTE 17—SEGMENT INFORMATION

The C ompany has aggregated its operating segments into four reportable geographic segments:

The Company has four reportable geographic segments:

U.S., LAAP, EMEA, and Canada, which are reflective of the Company's internal organization, management and oversight structure.

2 unchanged sentences

Intersegment net sales and intersegment profits, which are recorded at a negotiated mark-up and eliminated in consolidation, are not material.

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.

The geographic distribution of the Company's Net sales and Income from operations in the Consolidated Statements of Operations, as well as depreciation and amortization expense, are summarized in the following tables for the years ended December 31, 2019, 2018 and 2017 as well as Accounts receivable, net , Inventories and Property, plant and equipment, net on the Consolidated Balance Sheets at December 31, 2019 and 2018.

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

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents financial information for the Company's reportable segments:

Year Ended December 31,

(in thousands)

3 unchanged sentences

LAAP 424,489 529,282 530,152

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

EMEA 298,907 367,072 350,754

9 unchanged sentences

Interest income, net 435 8,302 9,876

Interest expense on note payable to related party — — ( 429 )

Other non-operating income (expense), net 2,039 2,156 ( 141 )

13 unchanged sentences

$ 452,945 $ 488,233

Inventories, net:

$ 362,061 $ 398,192

18 unchanged sentences

Subsidiaries that use European euros, Canadian dollars, Japanese yen, Chinese renminbi, or Korean won as their functional currency are primarily exposed to changes in functional currency equivalent cash flows from anticipated United States dollar inventory purchases.

Subsidiaries that use United States dollars and euros as their functional currency also have non-functional currency denominated sales for which the Company hedges the Canadian dollar and Great British pound.

The Company manages these risks by using currency forward contracts formally designated and effective as cash flow hedges.

2 unchanged sentences

Effective June 2019, the forward points are now 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 .

Hedge ineffectiveness was not material during the years ended December 31, 2019, 2018 and 2017.

These costs or benefits will be included in Accumulated other comprehensive income (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.

7 unchanged sentences

Currency forward contracts 326,280 214,086

At December 31, 2019, $ 9.9 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 sa les or Cost of sales in the Consolidated Statements of Operations.

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

At December 31, 2020, $ 4.3 million of deferred net loss on both outstanding and matured derivatives recorded in Other comprehensive income (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 sa les or Cost of sales in the Consolidated Statements of Operations.

Actual amounts ultimately reclassified to Net sa les or Cost of sales in the 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 December 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 $ 1.4 million at December 31, 2020.

All of the Company's derivative counterparties have investment grade credit ratings.

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

The Company is a party to master netting arrangements that contain features that allow counterparties to net settle amounts arising from multiple separate derivative transactions or net settle in the case of certain triggering events such as a bankruptcy or major default of one of the counterparties to the transaction.

17 unchanged sentences

Currency forward contracts Accrued liabilities 2,268 953

The following table presents the statement of operations effect and classification of derivative instruments for the years ended December 31, 2019, 2018 and 2017:

For the Year Ended December 31,

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

Year Ended December 31,

(in thousands) Statement Of Operations Classification 2020 2019 2018

1 unchanged sentence

Derivative instruments designated as cash flow hedges:

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

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

— $ ( 7,218 ) $ 6,669 $ 23,503

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

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

Net sales 191 338 62

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

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

Cost of sales 14,495 9,558 ( 7,604 )

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

Other non-operating income (expense), net

Gain (loss) recognized in income for amount excluded from effectiveness testing and for the ineffective portion

2 unchanged sentences

Cost of sales — 2,380 7,009

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

Other non-operating expense — — ( 178 )

Derivative instruments not designated as hedges:

Gain (loss) recognized in income Other non-operating expense 411 3,334 ( 3,943 )

NOTE 20—FAIR VALUE MEASURES

Certain assets and liabilities are reported at fair value on either a recurring or nonrecurring basis.

Fair value is defined as an exit price, representing the amount that the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants, under a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

Derivative instruments not designated as cash flow hedges:

Gain (loss) recognized in income

Other non-operating income (expense), net

( 2,865 ) 411 3,334

Index to Notes to Consolidated Financial Statements

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 19—FAIR VALUE MEASURES

Certain assets and liabilities are reported at fair value on either a recurring or nonrecurring basis.

Level 1 — observable inputs such as quoted prices for identical assets or liabilities in active liquid markets;

9 unchanged sentences

Money market funds $ 119,378 $ — $ — $ 119,378

Government treasury bills — 34,928 — 34,928

Commercial paper — 33,587 — 33,587

Other short-term investments:

United States government treasury bills — 234,982 — 234,982

Short-term investments:

Money market funds 105 — — 105

Mutual fund shares 1,119 — — 1,119

18 unchanged sentences

Money market funds $ 288,926 $ — $ — $ 288,926

Government treasury bills — 39,952 — 39,952

Available-for-sale short-term investments:

Government treasury bills — 261,602 — 261,602

Other short-term investments:

United States government treasury bills — 34,928 — 34,928

Commercial paper — 33,587 — 33,587

Short-term investments:

Mutual fund shares 1,668 — — 1,668

11 unchanged sentences

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

(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 at December 31, 2019 or 2018.

NOTE 21—RELATED PARTY TRANSACTIONS

As described in Note 5, the Company owned a 60 % controlling interest in a joint venture formed with Swire.

In 2018, the Company and Swire entered into an EITA, under which the Company committed to buy out the 40 % non-controlling interest in the joint venture.

The buyout was subject to various terms and conditions.

As part of the buyout arrangement, in 2018, the Company placed $ 14.0 million in an escrow account as a portion of the funds needed to complete the buyout in early 2019.

The escrow account is shown as Restricted cash on the Consolidated Balance Sheets at December 31, 2018.

On January 2, 2019, the buyout transaction closed, and Swire was no longer considered to be a related party.

Pursuant to the terms of the buyout arrangement, the escrow balance of $ 14.0 million was paid to Swire.

In April 2019, the Company remitted a final payment of $ 3.9 million to Swire, based on the final outcome of certain accounting estimates associated with the China joint venture.

As a result of the buyout, beginning in 2019, the consolidated financial statements of the Company do not separately reflect amounts related to the non-controlling interest.

The Company engaged in the following related-party transactions with Swire for the years ended December 31, 2018 and 2017:

Administrative, information technology and sourcing services

The joint venture arrangement involved Transition Services Agreements with Swire, under which Swire provided administrative and information technology services to the joint venture.

The fees incurred for these services by the joint venture were immaterial during the years ended December 31, 2018 and 2017.

In addition, the joint venture paid Swire sourcing fees related to the purchase of

Index to Notes to Consolidated Financial Statements

COLUMBIA SPORTSWEAR COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

certain inventory.

These sourcing fees were capitalized into Inventories and expensed as Cost of sales when the inventories were sold.

Loan repayment

In 2014, both the Company and Swire funded long-term loans to the joint venture.

In 2017, the Company repaid these loans, including the note with Swire in the principal amount of RMB 97.6 million (approximately US$ 14.2 million).

Interest expense related to this note was $ 0.4 million for the year ended December 31, 2017.

Third-party distributor

As a third-party distributor, Swire purchased the Company's products under the Company's standard third-party distributor terms and pricing, and sold to consumers in certain regions outside of mainland China.

Dividends paid

The China joint venture declared a cash dividend of RMB 341.3 million (approximately US$ 53.3 million) in June 2018 to stockholders of record as of June 14, 2018 and paid the dividend in the third quarter of 2018.

The dividend paid to Swire was RMB 136.5 million (approximately US$ 21.3 million at the date of declaration, which equated to approximately US$ 20.0 million on the date of payment).

The dividend paid to the Company of approximately $ 32.0 million was eliminated in consolidation.

The Company measured the fair value of certain trademark and trade name intangible assets and certain retail store long-lived assets consisting of property, plant and equipment, and lease right-of-use assets as part of impairment testing for the year ending December 31, 2020.

The inputs used to measure the fair value of these assets are primarily unobservable inputs and, as such, considered Level 3 fair value measurements.

See Notes 5, 6 and 9 for discussion of 2020 impairment charges.

SUPPLEMENTARY DATA—QUARTERLY FINANCIAL DATA

3 unchanged sentences

Gross profit 271,714 146,230 342,908 463,037

Net income attributable to Columbia Sportswear Company

Net income (loss)

213 ( 50,707 ) 62,751 95,756

Earnings per share attributable to Columbia Sportswear Company:

Earnings (loss) per share:

Basic $ 0.00 $ ( 0.77 ) $ 0.95 $ 1.45

6 unchanged sentences

Gross profit 336,729 253,591 446,695 478,655

Net income attributable to Columbia Sportswear Company

74,177 23,029 119,258 114,025

Earnings per share attributable to Columbia Sportswear Company:

Earnings per share:

Basic $ 1.09 $ 0.34 $ 1.76 $ 1.69

2 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data