COLUMBIA SPORTSWEAR CO 10-Q

ITEM 1. FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands) June 30, 2024 December 31, 2023 June 30, 2023 ASSETS Current Assets: Cash and cash equivalents $ 341,822 $ 350,319 $ 231,571 Short-term investments 369,276 414,185 71,225 Accounts receivable, net of allowance of $ 5,878 , $ 5,450 and $ 4,979 , respectively 222,628 423,079 343,835 Inventories 823,557 746,288 1,162,519 Prepaid expenses and other current assets 90,527 80,814 91,990 Total current assets 1,847,810 2,014,685 1,901,140 Property, plant and equipment, net of accumulated depreciation of $ 689,511 , $ 671,930 and $ 644,585 , respectively 277,509 287,281 280,578 Operating lease right-of-use assets 360,721 357,295 313,698 Intangible assets, net 79,221 79,908 80,733 Goodwill 26,694 26,694 51,694 Deferred income taxes 97,428 105,574 94,671 Other non-current assets 71,438 67,576 67,290 Total assets $ 2,760,821 $ 2,939,013 $ 2,789,804 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 267,853 $ 235,927 $ 247,416 Accrued liabilities 201,700 272,058 238,988 Operating lease liabilities 72,101 71,086 69,784 Income taxes payable 2,787 17,556 1,080 Total current liabilities 544,441 596,627 557,268 Non-current operating lease liabilities 339,327 336,772 298,062 Income taxes payable 13,615 25,688 23,452 Deferred income taxes 64 66 — Other long-term liabilities 39,412 41,250 36,364 Total liabilities 936,859 1,000,403 915,146 Commitments and contingencies (Note 4) Shareholders' Equity: Preferred stock; 10,000 shares authorized; none issued and outstanding — — — Common stock (no par value); 250,000 shares authorized; 58,752 , 59,996 and 61,358 issued and outstanding, respectively — — — Retained earnings 1,878,972 1,984,446 1,915,990 Accumulated other comprehensive loss ( 55,010 ) ( 45,836 ) ( 41,332 ) Total shareholders' equity 1,823,962 1,938,610 1,874,658 Total liabilities and shareholders' equity $ 2,760,821 $ 2,939,013 $ 2,789,804 See accompanying notes to unaudited condensed consolidated financial statements. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 1 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, (in thousands, except per share amounts) 2024 2023 2024 2023 Net sales $ 570,244 $ 620,933 $ 1,340,226 $ 1,441,526 Cost of sales 296,825 306,888 677,248 727,981 Gross profit 273,419 314,045 662,978 713,545 Selling, general and administrative expenses 302,749 312,529 652,019 659,927 Net licensing income 5,528 4,713 9,920 9,038 Operating income (loss) ( 23,802 ) 6,229 20,879 62,656 Interest income, net 8,344 3,506 17,541 6,789 Other non-operating income (expense), net 476 ( 185 ) 747 665 Income (loss) before income tax ( 14,982 ) 9,550 39,167 70,110 Income tax expense (benefit) ( 3,241 ) 1,200 8,608 15,558 Net income (loss) $ ( 11,741 ) $ 8,350 $ 30,559 $ 54,552 Earnings (loss) per share: Basic $ ( 0.20 ) $ 0.14 $ 0.51 $ 0.88 Diluted $ ( 0.20 ) $ 0.14 $ 0.51 $ 0.88 Weighted average shares outstanding: Basic 59,093 61,655 59,458 61,893 Diluted 59,093 61,781 59,603 62,122 See accompanying notes to unaudited condensed consolidated financial statements. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 2 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Net income (loss) $ ( 11,741 ) $ 8,350 $ 30,559 $ 54,552 Other comprehensive income (loss): Change in available-for-sale securities (net of tax effect of $ 46 ) — — ( 145 ) — Change in derivative transactions (net of tax effects of $( 1,550 ), $( 611 ), $( 4,985 ) and $ 2,099 , respectively) 4,057 ( 726 ) 13,834 ( 6,147 ) Foreign currency translation adjustments (net of tax effects of $ 162 , $ 35 , $ 349 and $( 43 ), respectively) ( 7,876 ) ( 6,028 ) ( 22,863 ) ( 4,548 ) Other comprehensive income (loss) ( 3,819 ) ( 6,754 ) ( 9,174 ) ( 10,695 ) Comprehensive income (loss) $ ( 15,560 ) $ 1,596 $ 21,385 $ 43,857 See accompanying notes to unaudited condensed consolidated financial statements. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 3 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, (in thousands) 2024 2023 Cash flows from operating activities: Net income $ 30,559 $ 54,552 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 29,142 27,976 Non-cash lease expense 37,419 33,564 Provision for uncollectible accounts receivable 1,502 145 Deferred income taxes 2,101 488 Stock-based compensation 12,008 11,208 Other, net ( 9,800 ) 491 Changes in operating assets and liabilities: Accounts receivable 191,737 203,846 Inventories ( 88,753 ) ( 135,251 ) Prepaid expenses and other current assets ( 2,809 ) 30,396 Other assets 1,159 366 Accounts payable 31,105 ( 69,305 ) Accrued liabilities ( 63,626 ) ( 90,759 ) Income taxes payable ( 26,688 ) ( 27,303 ) Operating lease assets and liabilities ( 37,275 ) ( 34,317 ) Other liabilities 1,112 3,611 Net cash provided by operating activities 108,893 9,708 Cash flows from investing activities: Purchases of short-term investments ( 388,348 ) ( 117,877 ) Sales and maturities of short-term investments 446,087 50,747 Capital expenditures ( 27,788 ) ( 22,803 ) Net cash provided by (used in) investing activities 29,951 ( 89,933 ) Cash flows from financing activities: Proceeds from credit facilities — 837 Repayments on credit facilities — ( 837 ) Proceeds from issuance of common stock related to stock-based compensation 3,747 4,624 Tax payments related to stock-based compensation ( 4,461 ) ( 4,400 ) Repurchase of common stock ( 102,618 ) ( 78,319 ) Cash dividends paid ( 35,628 ) ( 37,099 ) Net cash used in financing activities ( 138,960 ) ( 115,194 ) Net effect of exchange rate changes on cash ( 8,381 ) ( 3,251 ) Net decrease in cash and cash equivalents ( 8,497 ) ( 198,670 ) Cash and cash equivalents, beginning of period 350,319 430,241 Cash and cash equivalents, end of period $ 341,822 $ 231,571 Supplemental disclosures of cash flow information: Cash paid during the period for income taxes $ 58,151 $ 61,131 Supplemental disclosures of non-cash investing and financing activities: Property, plant and equipment acquired through increase in liabilities $ 6,283 $ 5,982 Repurchases of common stock not settled $ 8,114 $ — See accompanying notes to unaudited condensed consolidated financial statements. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 4 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shares Outstanding Amount Balance, March 31, 2024 59,473 $ — $ 1,960,634 $ ( 51,191 ) $ 1,909,443 Net loss — — ( 11,741 ) — ( 11,741 ) Other comprehensive loss — — — ( 3,819 ) ( 3,819 ) Cash dividends ($ 0.30 per share) — — ( 17,701 ) — ( 17,701 ) Issuance of common stock related to stock-based compensation, net 62 2,534 — — 2,534 Stock-based compensation expense — 6,364 — — 6,364 Repurchase of common stock ( 783 ) ( 8,344 ) ( 52,220 ) — ( 60,564 ) Excise taxes related to repurchase of common stock — ( 554 ) — — ( 554 ) Balance, June 30, 2024 58,752 $ — $ 1,878,972 $ ( 55,010 ) $ 1,823,962 (in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shares Outstanding Amount Balance, March 31, 2023 62,076 $ 1,076 $ 1,981,287 $ ( 34,578 ) $ 1,947,785 Net income — — 8,350 — 8,350 Other comprehensive loss — — — ( 6,754 ) ( 6,754 ) Cash dividends ($ 0.30 per share) — — ( 18,450 ) — ( 18,450 ) Issuance of common stock related to stock-based compensation, net 57 1,843 — — 1,843 Stock-based compensation expense — 5,400 — — 5,400 Repurchase of common stock ( 775 ) ( 7,740 ) ( 55,197 ) — ( 62,937 ) Excise taxes related to repurchase of common stock — ( 579 ) — — ( 579 ) Balance, June 30, 2023 61,358 $ — $ 1,915,990 $ ( 41,332 ) $ 1,874,658 (in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shares Outstanding Amount Balance, December 31, 2023 59,996 $ — $ 1,984,446 $ ( 45,836 ) $ 1,938,610 Net income — — 30,559 — 30,559 Other comprehensive loss — — — ( 9,174 ) ( 9,174 ) Cash dividends ($ 0.60 per share) — — ( 35,628 ) — ( 35,628 ) Issuance of common stock related to stock-based compensation, net 170 ( 714 ) — — ( 714 ) Stock-based compensation expense — 12,008 — — 12,008 Repurchase of common stock ( 1,414 ) ( 10,327 ) ( 100,405 ) — ( 110,732 ) Excise taxes related to repurchase of common stock — ( 967 ) — — ( 967 ) Balance, June 30, 2024 58,752 $ — $ 1,878,972 $ ( 55,010 ) $ 1,823,962 COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 5 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements (in thousands, except per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shares Outstanding Amount Balance, December 31, 2022 62,139 $ 12,692 $ 1,953,734 $ ( 30,637 ) $ 1,935,789 Net income — — 54,552 — 54,552 Other comprehensive loss — — — ( 10,695 ) ( 10,695 ) Cash dividends ($ 0.60 per share) — — ( 37,099 ) — ( 37,099 ) Issuance of common stock related to stock-based compensation, net 173 224 — — 224 Stock-based compensation expense — 11,208 — — 11,208 Repurchase of common stock ( 954 ) ( 23,493 ) ( 55,197 ) — ( 78,690 ) Excise taxes related to repurchase of common stock — ( 631 ) — — ( 631 ) Balance, June 30, 2023 61,358 $ — $ 1,915,990 $ ( 41,332 ) $ 1,874,658 See accompanying notes to unaudited condensed consolidated financial statements. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 6 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE PAGE Note 1 Basis of Presentation and Organization 8 Note 2 Revenues 9 Note 3 Intangible Assets, Net and Goodwill 11 Note 4 Commitments and Contingencies 11 Note 5 Shareholders' Equity 11 Note 6 Stock-Based Compensation 12 Note 7 Earnings (Loss) Per Share 13 Note 8 Accumulated Other Comprehensive Loss 14 Note 9 Segment Information 15 Note 10 Financial Instruments and Risk Management 16 Note 11 Fair Value Measures 18 COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 7 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 1 — BASIS OF PRESENTATION AND ORGANIZATION The accompanying unaudited condensed consolidated financial statements have been prepared by the management of Columbia Sportswear Company (together with its wholly owned subsidiaries, the "Company") and, in the opinion of management, include all normal recurring material adjustments necessary to present fairly the Company's financial position as of June 30, 2024, December 31, 2023 and June 30, 2023, the results of operations for the three and six months ended June 30, 2024 and 2023, and cash flows for the six months ended June 30, 2024 and 2023. The December 31, 2023 financial information was derived from the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. A significant part of the Company's business is of a seasonal nature; therefore, results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of results to be expected for other quarterly periods or for the full year. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company, however, believes that the disclosures contained in this report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. PRINCIPLES OF CONSOLIDATION The unaudited condensed consolidated financial statements include the accounts of the Company. All significant intercompany balances and transactions have been eliminated in consolidation. ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions. The Company's significant estimates relate to sales reserves, allowance for uncollectible accounts receivable, excess, close-out and slow-moving inventory, impairment of long-lived assets, impairment of indefinite-lived intangible assets and goodwill, and income taxes. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS None. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") No. 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within the reported measure of segment profit or loss, among other disclosure requirements. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with early adoption permitted, and should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine the impact on the Company's disclosures. In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through disaggregation of specific rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and may be applied prospectively or retrospectively. The Company is currently evaluating the ASU to determine the impact on the Company’s disclosures. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 8 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements RECLASSIFICATIONS Certain amounts in the prior-period financial statements have been reclassified to conform to the current period presentation. Non-cash lease expense is now presented on its own line in the Company's unaudited Condensed Consolidated Statements of Cash Flows instead of combined with depreciation and amortization. Additionally, Loss on disposal or impairment of property, plant and equipment is now included in Other, net in the Company's unaudited Condensed Consolidated Statements of Cash Flows. NOTE 2 — REVENUES DISAGGREGATED REVENUE As disclosed below in Note 9, 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 the Company's reportable segment Net sales by product category and channel, which the Company believes provides a meaningful depiction of how the nature, timing, and uncertainty of Net sales are affected by economic factors: Three Months Ended June 30, 2024 (in thousands) U.S. LAAP EMEA Canada Total Product category net sales Apparel, Accessories and Equipment $ 292,353 $ 73,538 $ 76,742 $ 21,307 $ 463,940 Footwear 47,875 25,946 27,180 5,303 106,304 Total $ 340,228 $ 99,484 $ 103,922 $ 26,610 $ 570,244 Channel net sales Wholesale $ 132,394 $ 47,414 $ 86,755 $ 11,821 $ 278,384 Direct-to-consumer 207,834 52,070 17,167 14,789 291,860 Total $ 340,228 $ 99,484 $ 103,922 $ 26,610 $ 570,244 Three Months Ended June 30, 2023 (in thousands) U.S. LAAP EMEA Canada Total Product category net sales Apparel, Accessories and Equipment $ 325,525 $ 68,662 $ 72,271 $ 22,507 $ 488,965 Footwear 73,584 24,667 28,583 5,134 131,968 Total $ 399,109 $ 93,329 $ 100,854 $ 27,641 $ 620,933 Channel net sales Wholesale $ 185,352 $ 41,663 $ 87,634 $ 13,633 $ 328,282 Direct-to-consumer 213,757 51,666 13,220 14,008 292,651 Total $ 399,109 $ 93,329 $ 100,854 $ 27,641 $ 620,933 COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 9 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements Six Months Ended June 30, 2024 (in thousands) U.S. LAAP EMEA Canada Total Product category net sales Apparel, Accessories and Equipment $ 689,841 $ 181,501 $ 149,132 $ 62,520 $ 1,082,994 Footwear 124,793 56,629 59,310 16,500 257,232 Total $ 814,634 $ 238,130 $ 208,442 $ 79,020 $ 1,340,226 Channel net sales Wholesale $ 349,528 $ 114,445 $ 162,503 $ 42,805 $ 669,281 Direct-to-consumer 465,106 123,685 45,939 36,215 670,945 Total $ 814,634 $ 238,130 $ 208,442 $ 79,020 $ 1,340,226 Six Months Ended June 30, 2023 (in thousands) U.S. LAAP EMEA Canada Total Product category net sales Apparel, Accessories and Equipment $ 741,453 $ 169,083 $ 144,228 $ 66,803 $ 1,121,567 Footwear 175,131 60,659 64,915 19,254 319,959 Total $ 916,584 $ 229,742 $ 209,143 $ 86,057 $ 1,441,526 Channel net sales Wholesale $ 444,702 $ 112,825 $ 172,212 $ 51,031 $ 780,770 Direct-to-consumer 471,882 116,917 36,931 35,026 660,756 Total $ 916,584 $ 229,742 $ 209,143 $ 86,057 $ 1,441,526 PERFORMANCE OBLIGATIONS For the three and six months ended June 30, 2024 and 2023, Net sales recognized from performance obligations related to prior periods were not material. Net sales expected to be recognized in any future period related to remaining performance obligations is not material. CONTRACT BALANCES As of June 30, 2024, December 31, 2023 and June 30, 2023, the Company did not have contract assets and had an immaterial amount of contract liabilities included in Accrued liabilities on the unaudited Condensed Consolidated Balance Sheets. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 10 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 3 — INTANGIBLE ASSETS, NET AND GOODWILL INTANGIBLE ASSETS, NET Intangible assets, net consisted of the following: (in thousands) June 30, 2024 December 31, 2023 June 30, 2023 Intangible assets with definite lives: Patents and purchased technology $ 14,198 $ 14,198 $ 14,198 Customer relationships 23,000 23,000 23,000 Gross carrying amount 37,198 37,198 37,198 Accumulated amortization: Patents and purchased technology ( 14,198 ) ( 14,198 ) ( 14,198 ) Customer relationships ( 23,000 ) ( 22,313 ) ( 21,488 ) Accumulated amortization ( 37,198 ) ( 36,511 ) ( 35,686 ) Net carrying amount — 687 1,512 Intangible assets with indefinite lives 79,221 79,221 79,221 Intangible assets, net $ 79,221 $ 79,908 $ 80,733 Amortization expense for intangible assets subject to amortization was $ 0.3 million and $ 0.4 million for the three months ended June 30, 2024 and 2023, respectively, and was $ 0.7 million and $ 0.8 million for the six months ended June 30, 2024 and 2023, respectively. GOODWILL There have been no changes to the Company's goodwill as described in Note 6 in Part II, Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023. NOTE 4 — COMMITMENTS AND CONTINGENCIES LITIGATION 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. Management has considered facts related to legal and regulatory matters and opinions of counsel handling these matters, and does not believe the ultimate resolution of these proceedings will have a material adverse effect on the Company's financial position, results of operations or cash flows. NOTE 5 — SHAREHOLDERS' EQUITY Since the inception of the Company's stock repurchase plan in 2004 through June 30, 2024, the Company's Board of Directors has authorized the repurchase of $ 2.0 billion of the Company's common stock, excluding excise tax. 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. Under this program as of June 30, 2024, the Company had repurchased 35.5 million shares at an aggregate purchase price of $ 1,765.4 million and had $ 234.6 million remaining available, excluding excise tax. During the three and six months ended June 30, 2024, the Company repurchased an aggregate of $ 60.6 million and $ 110.7 million, respectively, of common stock under this program, excluding excise tax. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 11 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 6 — STOCK-BASED COMPENSATION The Company's Stock Incentive Plan allows for grants of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, and other stock-based or cash-based awards. The Company uses original issuance shares to satisfy share-based payments. STOCK-BASED COMPENSATION EXPENSE Stock-based compensation expense consisted of the following: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Stock options $ 1,560 $ 1,898 $ 3,207 $ 3,936 Restricted stock units 4,804 3,502 8,801 7,272 Total $ 6,364 $ 5,400 $ 12,008 $ 11,208 STOCK OPTIONS During the six months ended June 30, 2024, the Company granted a total of 156,277 stock options at a weighted average grant date fair value of $ 20.86 per option. As of June 30, 2024, unrecognized costs related to outstanding stock options totaled $ 11.9 million, before any related tax benefit. These unrecognized costs related to stock options are expected to be recognized over a weighted average remaining period of 2.38 years. RESTRICTED STOCK UNITS During the six months ended June 30, 2024, the Company granted 421,786 restricted stock units at a weighted average grant date fair value of $ 78.82 per restricted stock unit. As of June 30, 2024, unrecognized costs related to outstanding restricted stock units totaled $ 42.6 million, before any related tax benefit. These unrecognized costs related to restricted stock units are expected to be recognized over a weighted average remaining period of 2.84 years. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 12 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 7 — EARNINGS (LOSS) PER SHARE Earnings (loss) per share ("EPS") is presented on both a basic and diluted basis. Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur if outstanding securities or other contracts to issue common stock were exercised or converted into common stock. A reconciliation of the common shares used in the denominator for computing basic and diluted EPS is as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands, except per share amounts) 2024 2023 2024 2023 Weighted average common shares outstanding, used in computing basic earnings (loss) per share 59,093 61,655 59,458 61,893 Effect of dilutive stock options and restricted stock units — 126 145 229 Weighted average common shares outstanding, used in computing diluted earnings (loss) per share 59,093 61,781 59,603 62,122 Earnings (loss) per share: Basic $ ( 0.20 ) $ 0.14 $ 0.51 $ 0.88 Diluted $ ( 0.20 ) $ 0.14 $ 0.51 $ 0.88 Weighted average common shares excluded (1) 2,969 2,213 2,029 1,789 (1) Common stock related to stock options, service-based restricted stock units and certain market-based restricted stock units, and performance-based restricted stock units were outstanding but were excluded from the computation of diluted EPS because their effect would be anti-dilutive under the treasury stock method, due to a net loss in the period, or because the shares were subject to performance conditions that had not been met. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 13 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 8 — ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss on the unaudited Condensed Consolidated Balance Sheets is net of applicable taxes, and consists of unrealized gains and losses on available-for-sale securities, unrealized gains and losses on certain derivative transactions and foreign currency translation adjustments. The following tables set forth the changes in Accumulated other comprehensive loss : (in thousands) Derivative transactions Foreign currency translation adjustments Total Balance as of March 31, 2024 $ 13,466 $ ( 64,657 ) $ ( 51,191 ) Other comprehensive income (loss) before reclassifications 5,451 ( 7,876 ) ( 2,425 ) Amounts reclassified from accumulated other comprehensive loss (1) ( 1,394 ) — ( 1,394 ) Net other comprehensive income (loss) during the period 4,057 ( 7,876 ) ( 3,819 ) Balance as of June 30, 2024 $ 17,523 $ ( 72,533 ) $ ( 55,010 ) (1) Amounts reclassified are recorded in Net sales, Cost of sales, or Other non-operating income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 10 for further information regarding reclassifications. (in thousands) Derivative transactions Foreign currency translation adjustments Total Balance as of March 31, 2023 $ 16,369 $ ( 50,947 ) $ ( 34,578 ) Other comprehensive income (loss) before reclassifications 2,404 ( 6,028 ) ( 3,624 ) Amounts reclassified from accumulated other comprehensive loss (1) ( 3,130 ) — ( 3,130 ) Net other comprehensive loss during the period ( 726 ) ( 6,028 ) ( 6,754 ) Balance as of June 30, 2023 $ 15,643 $ ( 56,975 ) $ ( 41,332 ) (1) Amounts reclassified are recorded in Net sales, Cost of sales, or Other non-operating income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 10 for further information regarding reclassifications. (in thousands) Available-for- sale securities Derivative transactions Foreign currency translation adjustments Total Balance as of December 31, 2023 $ 145 $ 3,689 $ ( 49,670 ) $ ( 45,836 ) Other comprehensive income (loss) before reclassifications — 17,178 ( 22,863 ) ( 5,685 ) Amounts reclassified from accumulated other comprehensive loss (1) ( 145 ) ( 3,344 ) — ( 3,489 ) Net other comprehensive income (loss) during the period ( 145 ) 13,834 ( 22,863 ) ( 9,174 ) Balance as of June 30, 2024 $ — $ 17,523 $ ( 72,533 ) $ ( 55,010 ) (1) Amounts reclassified are recorded in Net sales , Cost of sales , or Other non-operating income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 10 for further information regarding reclassifications . COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 14 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements (in thousands) Derivative transactions Foreign currency translation adjustments Total Balance as of December 31, 2022 $ 21,790 $ ( 52,427 ) $ ( 30,637 ) Other comprehensive income (loss) before reclassifications 726 ( 4,548 ) ( 3,822 ) Amounts reclassified from accumulated other comprehensive loss (1) ( 6,873 ) — ( 6,873 ) Net other comprehensive loss during the period ( 6,147 ) ( 4,548 ) ( 10,695 ) Balance as of June 30, 2023 $ 15,643 $ ( 56,975 ) $ ( 41,332 ) (1) Amounts reclassified are recorded in Net sales , Cost of sales , or Other non-operating income (expense), net on the unaudited Condensed Consolidated Statements of Operations. Refer to Note 10 for further information regarding reclassifications. NOTE 9 — SEGMENT INFORMATION 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. Each geographic segment operates predominantly in one industry: the design, development, marketing, and distribution of outdoor, active and lifestyle products, including apparel, footwear, accessories, and equipment. 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 departmental functions, including information technology, certain supply chain functions, finance, human resources and legal, as well as executive compensation, unallocated benefit program expense, and other miscellaneous costs. The following tables present financial information for the Company's reportable segments: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Net sales to unrelated entities: U.S. $ 340,228 $ 399,109 $ 814,634 $ 916,584 LAAP 99,484 93,329 238,130 229,742 EMEA 103,922 100,854 208,442 209,143 Canada 26,610 27,641 79,020 86,057 $ 570,244 $ 620,933 $ 1,340,226 $ 1,441,526 Segment operating income (loss): U.S. $ 23,466 $ 55,058 $ 96,459 $ 136,658 LAAP 6,082 4,097 27,904 22,423 EMEA 14,419 15,041 33,565 35,395 Canada ( 23 ) 114 11,145 10,915 Total segment operating income 43,944 74,310 169,073 205,391 Unallocated corporate expenses ( 67,746 ) ( 68,081 ) ( 148,194 ) ( 142,735 ) Interest income, net 8,344 3,506 17,541 6,789 Other non-operating income (expense), net 476 ( 185 ) 747 665 Income (loss) before income tax $ ( 14,982 ) $ 9,550 $ 39,167 $ 70,110 CONCENTRATIONS The Company had one customer that accounted for approximately 13.7 % , 19.8 % and 14.6 % of Accounts receivable, net as of June 30, 2024, December 31, 2023 and June 30, 2023, respectively. The Company did not have any customers that accounted for 10% or more of Net sales for the three and six months ended June 30, 2024 and 2023. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 15 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 10 — FINANCIAL INSTRUMENTS AND RISK MANAGEMENT In the normal course of business, the Company's financial position, results of operations and cash flows are routinely subject to a variety of risks. These risks include risks associated with financial markets, primarily currency exchange rate risk and, to a lesser extent, interest rate risk and equity market risk. The Company regularly assesses these risks and has established policies and business practices designed to mitigate them. The Company does not engage in speculative trading in any financial market. The Company actively manages the risk of changes in functional currency equivalent cash flows resulting from anticipated non-functional currency denominated purchases and sales. 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 British pound sterling. The Company seeks to manage these risks by using currency forward contracts formally designated and effective as cash flow hedges. Hedge effectiveness is generally determined by evaluating the ability of a hedging instrument's cumulative change in fair value to offset the cumulative change in the present value of expected cash flows on the underlying exposures. Time value components ("forward points") for forward contracts are included in the fair value of the cash flow hedge. These costs or benefits are 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, renminbi, or won as their functional currency. Non-functional currency denominated monetary assets and liabilities consists of cash and cash equivalents, short-term investments, receivables, payables, deferred income taxes, and intercompany loans and dividends. The gains and losses generated on these currency forward contracts not formally designated as hedges are expected to be largely offset in Other non-operating income (expense), net by the gains and losses generated from the remeasurement of the non-functional currency denominated monetary assets and liabilities. The following table presents the gross notional amount of outstanding derivative instruments: (in thousands) June 30, 2024 December 31, 2023 June 30, 2023 Derivative instruments designated as cash flow hedges: Currency forward contracts $ 488,039 $ 634,676 $ 598,621 Derivative instruments not designated as hedges: Currency forward contracts $ 377,391 $ 342,532 $ 465,182 As of June 30, 2024 , $ 16.3 million of deferred net gains on both outstanding and matured derivatives recorded in Accumulated 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 sales or Cost of sales in the unaudited Condensed Consolidated Statements of Operations. When outstanding derivative contracts mature, actual amounts ultimately reclassified to Net sa les or Cost of sales in the unaudited Condensed Consolidated Statements of Operations are dependent on United States dollar exchange rates in effect against the euro, pound sterling, renminbi, Canadian dollar, won, and yen as well as the euro exchange rate in effect against the pound sterling. As of June 30, 2024, the Company's derivative contracts had a remaining maturity of less than 3 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 $ 5.9 million as of June 30, 2024. 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. The Company has not pledged assets or posted collateral as a requirement for entering into or maintaining derivative positions. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 16 The following table presents the balance sheet classification and fair value of derivative instruments: (in thousands) Balance Sheet Classification June 30, 2024 December 31, 2023 June 30, 2023 Derivative instruments designated as cash flow hedges: Derivative instruments in asset positions: Currency forward contracts Prepaid expenses and other current assets $ 10,688 $ 7,367 $ 13,448 Currency forward contracts Other non-current assets 6,492 961 3,535 Derivative instruments in liability positions: Currency forward contracts Accrued liabilities 1,106 4,121 3,229 Currency forward contracts Other long-term liabilities 65 2,629 1,532 Derivative instruments not designated as cash flow hedges: Derivative instruments in asset positions: Currency forward contracts Prepaid expenses and other current assets 6,046 2,833 5,860 Derivative instruments in liability positions: Currency forward contracts Accrued liabilities 993 2,269 1,936 The following table presents the statement of operations effect and classification of derivative instruments: Statement Of Operations Classification Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Currency forward contracts: Derivative instruments designated as cash flow hedges: Gain recognized in other comprehensive income (loss), net of tax — $ 5,451 $ 2,404 $ 17,178 $ 726 Gain (loss) reclassified from accumulated other comprehensive income (loss) to income for the effective portion Net sales ( 60 ) 55 ( 342 ) 246 Gain reclassified from accumulated other comprehensive income (loss) to income for the effective portion Cost of sales 2,005 3,513 4,976 9,275 Gain (loss) reclassified from accumulated other comprehensive income (loss) to income as a result of cash flow hedge discontinuance Other non-operating income (expense), net — 5 68 ( 2 ) Derivative instruments not designated as cash flow hedges: Gain (loss) recognized in income Other non-operating income (expense), net 1,604 ( 93 ) 4,529 ( 1,280 ) COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 17 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements NOTE 11 — 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: Level 1 — observable inputs such as quoted prices for identical assets or liabilities in active liquid markets; Level 2 — inputs, other than the quoted market prices in active markets, that are observable, either directly or indirectly; or observable market prices in markets with insufficient volume or infrequent transactions; and Level 3 — unobservable inputs for which there is little or no market data available, that require the reporting entity to develop its own assumptions. The Company's assets and liabilities measured at fair value are categorized as Level 1 or Level 2 instruments. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from inputs, other than quoted market prices in active markets, that are directly or indirectly observable in the marketplace and quoted prices in markets with limited volume or infrequent transactions. Assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 are as follows: (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 20,204 $ — $ — $ 20,204 U.S. Government treasury bills — 34,813 — 34,813 Time deposits (1) — 47,781 — 47,781 Short-term investments: Available-for-sale short-term investments: (2) U.S. Government treasury bills — 367,031 — 367,031 Other short-term investments: Money market funds 343 — — 343 Mutual fund shares 1,902 — — 1,902 Prepaid expenses and other current assets: Derivative financial instruments — 16,734 — 16,734 Other non-current assets: Money market funds 1,502 — — 1,502 Mutual fund shares 26,343 — — 26,343 Derivative financial instruments — 6,492 — 6,492 Total assets measured at fair value $ 50,294 $ 472,851 $ — $ 523,145 Liabilities: Accrued liabilities: Derivative financial instruments $ — $ 2,099 $ — $ 2,099 Other long-term liabilities: Derivative financial instruments — 65 — 65 Total liabilities measured at fair value $ — $ 2,164 $ — $ 2,164 (1) Time deposits are carried at amortized cost on the unaudited Condensed Consolidated Balance Sheets, which reasonably approximates fair value. (2) Available-for-sale short-term investments have remaining maturities of less than one year. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 18 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements Assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 are as follows: (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 75,758 $ — $ — $ 75,758 U.S. Government treasury bills — 9,977 — 9,977 Time deposits (1) — 40,876 — 40,876 Short-term investments: Available-for-sale short-term investments: (2) U.S. Government treasury bills — 412,987 — 412,987 Other short-term investments: Money market funds 314 — — 314 Mutual fund shares 884 — — 884 Prepaid expenses and other current assets: Derivative financial instruments — 10,200 — 10,200 Other non-current assets: Money market funds 1,796 — — 1,796 Mutual fund shares 24,808 — — 24,808 Derivative financial instruments — 961 — 961 Total assets measured at fair value $ 103,560 $ 475,001 $ — $ 578,561 Liabilities: Accrued liabilities: Derivative financial instruments $ — $ 6,390 $ — $ 6,390 Other long-term liabilities: Derivative financial instruments — 2,629 — 2,629 Total liabilities measured at fair value $ — $ 9,019 $ — $ 9,019 (1) Time deposits are carried at amortized cost on the unaudited Condensed Consolidated Balance Sheets, which reasonably approximates fair value. (2) Available-for-sale short-term investments have remaining maturities of less than one year. COLUMBIA SPORTSWEAR COMPANY | Q2 2024 FORM 10-Q | 19 Table of Contents Notes to unaudited Condensed Consolidated Financial Statements Assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 are as follows: (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 60,565 $ — $ — $ 60,565 Short-term investments: Available-for-sale short-term investments: (1) U.S. Government treasury bills — 69,751 — 69,751 Other short-term investments: Money market funds 287 — — 287 Mutual fund shares 1,187 — — 1,187 Prepaid expenses and other current assets: Derivative financial instruments — 19,308 — 19,308 Other non-current assets: Money market funds 1,688 — — 1,688 Mutual fund shares 22,137 — — 22,137 Derivative financial instruments — 3,535 — 3,535 Total assets measured at fair value $ 85,864 $ 92,594 $ — $ 178,458 Liabilities: Accrued liabilities: Derivative financial instruments $ — $ 5,165 $ — $ 5,165 Other long-term liabilities: Derivative financial instruments — 1,532 — 1,532 Total liabilities measured at fair value $ — $ 6,697 $ — $ 6,697 (1) Available-for-sale short-term investments have remaining maturities of less than one year. NON-RECURRING FAIR VALUE MEASUREMENTS The Company measured the fair value of certain trademark indefinite-lived intangible assets and goodwill as part of impairment testing for the year ended December 31, 2023. The inputs used to measure the fair value of these assets are primarily significant unobservable inputs and, as such, considered Level 3 fair value measurements. Refer to Note 6 in Part II, Item 8 in the Annual Report on Form 10-K for further discussion.