Columbia Sportswear Co (COLM) 2004 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Columbia Sportswear Company fourth-quarter and fiscal year 2004 financial results conference call. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded today, Thursday, January 27 of 2005.

I would now like turn the conference over to Mr. David Kiser, Director of Investor Relations.

Please go ahead, sir.

Good afternoon and welcome to Columbia Sportswear's fourth-quarter and fiscal 2004 conference call.

With me are Gert Boyle, Columbia's Chairwoman;

Tim Boyle, Columbia's President and CEO;

Bryan Timm, Columbia's CFO;

Pat Anderson, Columbia's COO; and Peter Bragnan, Columbia's General Counsel.

Continuing our standard practice, we will review the results for the fourth quarter, provide some guidance on future periods and field any questions that you might have (technical difficulty) information the 8-K with earnings results information was inadvertently filed with the SEC in advance of the press release being disseminated across the wires today, but the information is the same.

You should have received a copy of the earnings release by now, but if have not, then please phone Carolyn Greene (ph) here at Columbia at 503-985-4310 and one will be sent to you.

In light of Regulation FD, we encourage you to ask as many questions during the call as you feel are necessary to understand the Company's business.

As a courtesy to all participants, and consistent with prior quarters, please limit your initial follow-up to one or two additional questions to allow all parties the opportunity to ask questions.

We invite you to re-enter the queue if you have any additional follow-up questions.

Before we begin, Columbia's Chairwoman, Gert Boyle has a comment to make.

Good afternoon.

This conference call will contain forward-looking statements regarding Columbia's business opportunities and anticipated results of operations.

Please bear in mind that forward-looking information is subject to many risks and uncertainties, and actual results may differ materially from what is projected.

Many of these risks and uncertainties are described in Columbia's Quarterly Report on Form 10-Q for the period ending September 30, 2004.

Forward-looking statements in this conference call are based on the current expectation and beliefs, and we do not undertake any duty to update any of the forward-looking statements after the date of this conference call to conform forward-looking statements to actual results or to change in our expectations.

At this point I will hand the call over to Tim Boyle, who will provide an overview of significant developments that occurred during the Company's fourth quarter of 2004.

Welcome, everyone, and thanks for joining us this afternoon.

Let's begin by reviewing some highlights from the earnings announcement.

Q4 2004 sales for the Company grew by a strong 17.2 percent year-over-year to 301.8 million, a fourth-quarter record.

Excluding changes in currency exchange rates, consolidated sales increased by 14.6 percent.

Net income for the fourth quarter was a record $39.4 million, a 22.4 percent year-over-year increase.

Diluted earnings per share for the fourth quarter came in at 97 cents compared to 79 cents for the fourth quarter of 2003.

For the full-year 2004 we reported exceptional sales results of nearly 1.1 billion, a 15.1 percent year-over-year increase.

Net income for the year increased a strong 15.4 percent to 138.6 million.

And full-year diluted EPS came in at $3.40 compared to $2.96 for 2003.

We're pleased with our fourth-quarter and full-year financial results.

These results were driven by outstanding sales growth of sportswear and footwear products in North America and strong sales of outerwear, sportswear and footwear products in international markets.

Updates.

Kentucky distribution center.

We have completed construction and testing of our new footwear distribution center in Robards, Kentucky, and earlier this month we successfully started shipping footwear products from the facility.

The launch has gone smoothly and we're very pleased with the progress.

We anticipate that this distribution center will support continued growth in our footwear category.

Our retail footwear customers have expressed enthusiasm for this new DC, which will improve our proximity to the majority of our footwear retailers and should facilitate shorter shipping times and reduce customer shipping costs.

Licensing -- net licensing income increased 50 percent to nearly $1 million in the fourth quarter with growth in home furnishings, socks, leather accessories, eyewear and watches.

For the full-year net licensing income increased 122.2 percent to $4 million, driven by the continued maturity of our licensee programs across multiple categories.

In 2004 we saw strong growth in socks, eyewear and watches, as well as our newer camping and home furnishing licensees.

We announced new agreements for fishing weighters and ankle fit boots, insulated coolers and outdoor accessories.

These new licensees will begin shipping products in 2005.

Sorel -- sales were 18.8 million for the fourth quarter, a 19 percent increase over last year.

For the full-year 2004, sales were 42.8 million, a 28.1 percent increase over 2003 results.

Growth for the year was the result of new account openings and improved productivity in existing doors, primarily in cold weather footwear products in the US and Canada.

Sales growth of Sorel's apparels line was also healthy, particularly in Canada.

We believe we have a strong team in place at Sorel that is committed to re-establishing the brand as a dominant cold weather footwear resource in North American markets.

Mountain Hardware -- sales were 11.2 million for the fourth quarter, a 33.3 percent increase over last year.

For the full-year 2004, sales were 45.9 million with strong growth in US and international markets.

US sell-through was mixed in the fourth quarter with strong sales in the West and Southeast and slower in the Midwest and Northeast due to warmer-than-normal weather conditions.

Despite the unseasonable weather in many parts of the country, Mountain Hardware's fall 2005 product lines have been well received.

Our Mountain Hardware team will continue to develop technical outerwear and sportswear products for the specialty dealer base and focus on expanding distribution in international markets with particular emphasis on European markets.

Mike Wallenfels assumed the position of President of Mountain Hardware, succeeding Jack Gilbert.

Mike has been with Mountain Hardware from its founding, and has served as most recently as VP of Sales and Marketing where he has been a key member of their senior management team.

I'm pleased with the progress Mountain Hardware is making to build the brand.

At this point I would like to hand the call over to Bryan Timm, our CFO, who will review fourth-quarter financial results and will discuss the financial guidance we reported today.

I'll begin with a brief review of the fourth-quarter income statement, and is customary I will compare current quarter line items with prior year period to facilitate an accurate comparison.

Net sales for the fourth quarter were 301.8 million, an increase of 17.2 percent over the 257.4 million of net sales for the same period last year.

Growth in consolidated net sales was driven by strong gains in our sportswear and footwear product categories in the United States and outerwear in our major international markets. (indiscernible) changes in currency exchange rates, consolidated net sales increased 14.6 percent in the fourth quarter.

Our consolidated gross margins for the fourth quarter of 2004 contracted by 230 basis points to 44.5 percent when compared to 46.8 percent during the fourth quarter of 2003.

This contraction was primarily the result of an increased volume of closeout product sale at lower margins, a sales mix shift between product categories, and an increase in sales from our lower-margin international distributor business.

These decreases in our gross margin were partially offset by the favorable impact from changes in currency exchange rates.

For the fourth quarter the Company's SG&A increased by 7 percent or 4.9 million on an absolute basis to 75 million or 24.9 percent of sales for the fourth quarter of 2004 versus 70.1 million or 27.2 percent of sales for the comparable period in 2003.

Selling expenses increased on an absolute basis, but decreased as a percentage of net sales due to the additional advertising and promotional spending during the fourth quarter of 2003.

Operating expenses increased primarily due to additional personnel-related costs, offset by a decrease in depreciation expense.

Depreciation and amortization totaled 4.4 million for the fourth quarter of 2004 compared to 5.6 million in the same period prior year as we experienced some depreciation roll-off this year.

Net licensing income increased 0.5 million or 50 percent to nearly 1 million for the fourth quarter of 2004.

Net interest income for the fourth quarter increased 0.6 million from 0.3 million last year, due to our strong cash position, increased capitalized interest related to the Kentucky distribution project, and the higher interest rate environment.

Our effective tax rate was 35.5 percent as compared to 37 percent in 2003, due primarily to increasing revenues in jurisdictions with the overall lower tax rates.

We reported net income of 39.4 million or 97 cents per share for the fourth quarter of 2004 versus net income of 32.2 million or 79 cents per share for the fourth quarter of 2003 based on a diluted share count of 40.6 million and 40.9 million respectively.

Now focusing on full-year operations, net sales for the full-year 2004 were 1 billion 95.3 million, an increase of 15.1 percent over the 951.8 million of net sales for 2003.

Growth in consolidated net sales was primarily the result of the continued strength of our sportswear and footwear product categories, expansion of our international operations, and associated foreign currency benefits.

Excluding changes in current exchange rates, consolidated net sales increased 12.1 percent for the year.

Our consolidated gross margins for the year contracted by 80 basis points to 45.5 percent compared to 46.3 percent during 2003.

This contraction was due to the higher mix of sportswear and footwear sales which have lower gross margins than outerwear, shifts in product mix within each of our product categories, partially offset by appreciation of foreign currencies.

For the full-year 2004, the Company's SG&A remained constant as a percentage of sales at 26.5 percent.

On an absolute dollar basis, SG&A increased by 15.1 percent to 290.5 million versus 252.3 million for 2003.

Selling expenses were slightly ahead of last year as a percentage of sales as we made additional investments in promotional activities.

During 2004 operating expenses were down slightly as a percentage of sales as we made investment in personnel to support the continued growth of our footwear and sportswear product categories, partially offset by decreases in depreciation expense.

Depreciation and amortization totaled 18 million for 2004, a decrease of 4.8 million as compared to 2003.

Net licensing income increased 2.2 million or 122.2 percent to 4 million for the full-year, driven by the continued maturity of our licensee programs.

Net interest income for 2004 was 3.5 million or 0.5 million last year due to our strong cash position, increased capitalized interest related to Kentucky distribution project, and the higher interest rate environment.

Our effective tax rate was 35.5 percent compared to 37 percent in 2003, due primarily to increasing revenues in jurisdictions with overall lower tax rates.

The Company reported net income of 138.6 million or $3.40 per share for 2004 versus net income of 120.1 million or $2.96 per share for 2003, based on a diluted share count of 40.8 million and 40.6 million respectively.

I will quickly touch on key items in the balance sheet.

Again, I will be comparing December 31, 2004 balances to December 31, 2003 balances.

The balance sheet remains very strong with cash and cash equivalents totaling 290.2 million versus 264.6 million at the same time last year.

Consolidated accounts receivable at December 31, 2004 was 267.7 million compared to 206 million a year ago.

The increase is more than a 17.2 percent quarterly sales increase, due primarily to the appreciation of foreign currencies, as well as the significant growth in December net sales.

Consolidated inventories were 165.4 million compared to 126.8 million a year ago, a 30.4 percent increase.

Our increased inventory is attributable to the higher speculative inventory position that we took for fall 2004, an unplanned increase in net cancellations of US orders due to unfavorable weather conditions, increased 2005 raw materials and work-in-process inventory in China, and our current outlook for spring growth.

Capital expenditures were 6 million for the fourth quarter, the majority of which were to increase our distribution capacity.

Total capital expenditures were 44.5 million in 2004, consisting of approximately 12.3 million in maintenance CapEx and 32.2 million in distribution project capital expenditures, primarily related to our Kentucky distribution project.

In April 2004, our Board of Directors authorized a purchase of up to 100 million of common stock.

During the fourth quarter, we repurchased approximately 145,000 shares in an aggregate purchase price of 7.9 million.

We have repurchased a total of approximately 885,000 shares at an aggregate purchase price of 47.6 million since the inception of this program.

Now let's turn our attention to financial guidance.

Given the results that we reported today, we're in a position to update everyone on our guidance for the first quarter of 2005.

Please keep in mind this information is forward-looking in nature, and is therefore subject are certain risk factors, many of which are described in our 10-Q for the period ended September 30, 2004 and which were expressed by Gert in her opening comments.

Based on our current outlook and reported spring backlog, and taking into account increased sales of closeout products at lower margins, we currently anticipate Q1 2005 consolidated revenue growth to be approximately 15 percent when compared to the same period last year and Q1 gross margin contraction of approximately 170 basis points, placing us between 43.6 percent to 43.8 percent of estimated sales.

Our current SG&A target as a percentage of estimated sales for Q1 2005 is 31.3 percent to 31.5 percent.

We anticipate SG&A expense will increase as a percentage of net sales, primarily through the operating costs associated with our new distribution center in Kentucky, as well as incremental personnel costs needed to support our growth strategies.

We expect that depreciation and amortization will increase to 25 million in 2005 as we place new distribution capital acquisitions in service.

The Company's 2005 effective tax rate is modeled to be at 34.5 percent, and we're using 40.7 million shares for purposes of Q1 EPS calculations.

This analysis implies flat Q1 2005 net income when compared to the first quarter of 2004.

Please note that we're still taking orders for our fall 2005 season and do not have complete visibility of our fall order backlog.

However, unseasonably warm weather conditions in North America during the fourth quarter negatively impacted sell-through rates of our products at retail and increased order cancellations, resulting in higher year-end inventory levels, which may make for a challenging sales environment.

During 2004, we made additional personnel and distribution capacity investments to support our long-term growth strategies, which may pressure SG&A in the current year.

As we mentioned last fall, we expect to provide detailed full-year 2005 guidance at our first-quarter conference call in April, when we will have substantially our fall 2005 order taking season.

Again, please understand that the guidance provided today is forward-looking in nature, and is therefore subject to a number of risks and uncertainties, as previously mentioned.

I will now hand the call back to Tim to review both geographical and categorically our business environment.

I will begin with a review of the fourth-quarter 2004 consolidated categorical sales results with comparisons to the fourth quarter of '03.

Outerwear -- 154.7 million versus 140 million last year, an increase of 10.5 percent.

In the fourth quarter we saw healthy growth in international markets in the outerwear category with significant contributions from Europe and Canada.

Sportswear -- 80.7 million versus 58.7 million, an increase of 37.5 percent.

US sportswear growth was exceptionally strong in the fourth quarter, particularly in men's and women's fleece styles and other heavier-weight sportswear, driving overall sales growth for the product category.

Footwear -- 52.8 million versus 44.4 million, an increase of 18.9 percent.

Domestic and European footwear shipments were strong in the fourth quarter.

Accessories -- 12.6 million versus 13.4 million.

Equipment -- $974,000 versus $920,000 last year.

Let's run through the categorical results for the full-year 2004 with comparisons to the full-year 2003.

Total sales for the year were nearly 1.1 billion, a 15.1 percent increase over last year.

Outerwear -- 460.3 million versus 443.7 million last year, an increase of 3.7 percent.

For the full-year, outerwear sales were 42 percent of total sales compared to 46.6 percent.

We are pleased with the growth of outerwear sales in Europe and other international markets, which offset a decline in US outerwear sales for the year.

Sportswear -- 396.4 million versus 311.3 million, an increase of 27.3 percent.

Sportswear sales were 36.2 percent of total sales compared to 32.7 percent last year.

Sportswear growth was strong in all global markets in 2004, led by exceptional gains in the US.

For the year we saw strong growth in men's and women's knits and woven tops, sweaters and shorts.

Sales of heavier-weight sportswear items such as fleece sweaters, vests and pullovers were also exceptionally strong.

Footwear -- 184.6 million versus 148.6 million, an increase of 24.2 percent.

Footwear sales were 16.9 percent of total sales compared to 15.6 percent last year.

We're particularly pleased with the continued strength of our footwear product category in 2004.

Our spring products such as our sandals and light hikers were well received and the momentum carried into fall.

Footwear shipments for the year were strong in all major geographic markets, led by gains in North America and Europe.

We have made significant strides in migrating from mostly a winter-footwear supplier to a year-round footwear source for our customers.

We believe our investment in the Kentucky footwear distribution center will support continued domestic growth in this category.

Accessories -- 46.1 million versus 43.5 million, an increase of 6 percent.

Mountain Hardware equipment sales were 7.9 million for the year.

Overall during 2004, we made significant strides in diversifying our revenue base, increasing our sportswear and footwear categories from approximately 48.3 percent of our sales in 2003 to 53 percent in 2004, further establishing Columbia as a comprehensive outdoor brand.

Geographical sales.

Let me give you some basic background and additional sales commentary for the fourth quarter and for the full-year 2004 with comparisons to the same periods of '03.

USA -- fourth-quarter sales of 181.1 million versus 156.9 million, an increase of 15.4 percent.

Sales for the full-year 2004 were 666.7 million compared to 596.8 million, an 11.7 percent increase for the year.

For the full-year, US sales were 60.9 percent of total sales compared to 62.7 percent in 2003.

US sportswear sales were exceptional in the fourth quarter.

Shipments and sell-through of men's and women's fleece, pullovers and sweaters and men's pants were outstanding, and represented the primary drivers of sales growth in the sportswear category.

Fall '04 sell-through has also been strong and the fall '05 sportswear line is being well received.

US shipments of key men's and women's cold-weather footwear styles were also strong in the fourth quarter.

Fall '04 footwear sell-through has been generally healthy, despite warmer-than-average temperatures in many parts of the country.

The fall '05 footwear line is showing well.

US outerwear shipments were also up in the fourth quarter, driven by attached insulation parka styles in the outdoor issue line.

Sell-through of fall '04 outerwear has been negatively impacted by unseasonable weather conditions in key US markets and an increasingly competitive environment.

Sales trends continue to indicate that consumers are purchasing more lightweight, middle layer fleece products instead of heavyweight parkas or interchange jackets.

This trend continued to be particularly evident in the youth category.

We added additional freshness and value to our fall '05 youth product line to address the needs of a changing US youth outerwear market.

We have received good response to the updated line.

However, the trends toward heavier-weight sportswear in the youth category is expected to continue through the fall '05 selling season.

Overall the response to the fall '05 outwear line has been positive.

However, US outerwear sales growth will be challenging due to increased inventory levels at retail, trends toward heavier-weight sportswear items and overall market penetration.

Canada -- fourth-quarter sales of 32.6 million versus 28.3 million, an increase of 15.2 percent.

Excluding changes in currency exchange rates, sales increased 6.5 percent in the fourth quarter.

Sales for the full-year 2004 were 116.9 million compared to 106.7 million, a 9.6 percent increase for the year.

Excluding changes in currency exchange rates, sales increased 2 percent for the year.

For the full-year, sales in the region were 10.7 percent of total sales compared to 11.2 percent in 2003.

Fourth quarter sales in Canada were strong, and as we mentioned in some of last quarter's conference call, were benefited by the timing of some fall-related product shipments that shift from the third to the fourth quarter of '04.

Outerwear shipments of attached insulation styles for men and women in Columbia's Outdoor Issue line and shipments of Sorel footwear and apparel were strong in the fourth quarter.

Outerwear penetration in the Canadian markets is high.

The greatest opportunity for growth in the region are in sportswear and footwear under the Columbia brand and all footwear and apparel for Sorel.

Although '04 sportswear sell-through has been very good, sell-through of winter footwear and outerwear has not been as strong due to warmer-than-average weather.

Fall '05 sportswear growth should be strong and footwear should continue to grow.

Sorel apparel as receiving very good reviews, both for outerwear and sportswear.

And sales of Sorel insulated boots and work safety footwear should continue to grow.

In general we are well positioned with strong and growing relationships with key customers in the region.

Europe -- fourth quarter sales of 44 million versus 37 million, an increase of 18.9 percent.

Excluding changes in currency exchange rates, sales increased 9.7 percent in the fourth quarter.

Sales for the full-year 2004 were 170.3 million compared to 135.2 million, a 26 percent increase for the year.

Excluding changes in currency exchange rates, sales increased 14 percent for the year.

For the full-year, sales in the region were 15.5 percent of total sales compared to 14.2 percent in 2003.

Fourth-quarter sales were very strong in Europe, driven by accelerating outerwear sales.

Shipments of men's attached insulation parkas and non-insulated shells in the Titanium line drove fourth-quarter European sales.

Footwear sales growth was also strong in cold weather boots and trail, and to a lesser extent in our casual footwear line.

Sell-through of our products has been steady despite a weak retail environment in Europe, which should positively impact fall '05 order taking.

Footwear sales growth should continue to be strong in Europe, and we expect solid growth in outerwear, driven by sales of products in our Titanium line.

Our broadening relationship with key customers across the continent is broadening, and our new team is focused on developing new relationships and identifying additional distribution opportunities.

Our goal is to grow the business by increasing product lines and improving productivity within our existing channels and by adding new customers and doors.

We continue to receive very high marks for service levels from our distribution center in Cambrai, France.

Our significant investment in product distribution demonstrates our commitment to the European markets and provide a competitive advantage in growing our market share in the region.

Overall we continue to be well positioned in the European markets when compared to our competition.

Other international, which consists of the collective geographic regions of Japan and Korea where we sell direct and other international markets worldwide where we sell through distributor relationships, recorded fourth quarter sales of 44.1 million versus 35.2 million for the same period of 2003, an increase of 25.3 percent or 22.2 percent excluding changes in currency exchange rates.

For the full-year '04, other international sales were 141.4 million compared to 113.1 million during '03, and increase of 25 percent year-over-year.

Excluding changes in currency exchange rates, other international sales increased 21.7 percent during '04.

For the full-year, sales in the collective geographic regions were 12.9 percent of total sales compared to 11.9 percent in 2003.

Japan, a component of other international, recorded fourth-quarter sales of 15.8 million compared to 15 million in the fourth quarter of '03, a 5.3 percent increase.

Sales for the full-year were full-year 2004 were 43.1 million, compared to 38.7 million during 2003, an increase of 11.4 percent.

Outerwear shipments of men's interchange and attached insulation parkas drove sales growth in the fourth quarter.

Sportswear sell-through has generally been good, but weather-dependent outerwear has been impacted by a warm winter.

We are optimistic about the prospects for growth in Japan as the economic environment in that market continue to improve.

International distributors, a component of other international and the collective markets worldwide where we sell through distributors, recorded fourth-quarter sales of 19.1 million compared to 13.6 million in the fourth quarter of 2003, a 40.4 percent increase.

In fiscal 2004 international distributor sales were 74 million compared to 56.5 million during 2003, an increase of 31 percent for the full-year.

We saw exceptional growth across multiple international distributor markets during the fourth quarter, with specific emphasis on Hong Kong, China, South America and Russia.

Sportswear shipments of key styles in men's pants and woven tops in the Outdoor Issue and Gore-Tex sub-brands, and outerwear shipments of insulated and interchange parkas were key drivers of growth in international distributor markets during the fourth quarter.

During 2004 we began shipping products to new distributors in South Africa and Turkey and signed new distributor agreements for shipments in the Philippines and Israel during 2005.

We also changed distributors in Norway and Iceland, and we will begin shipping products through our new distributor there this spring.

We're very pleased with the progress of our international distributor business and the solid job these distributors are doing of promoting and distributing our products in their respective markets.

Overall we are pleased with our fourth-quarter and 2004 sales results, and the progress we're making in growing our business across geographic and product categories.

The business is developing a diverse revenue base, driven by market opportunities in multiple product categories and seasons throughout the world.

In closing, going forward our business strategy remains steady and we will continue to focus our attention on growing the business through our 4.5 key growth strategies.

To reiterate, we will, first, continue to enhance the channel productivity of our existing customers through effective point-of-purchase marketing activities.

Second, we will continue to leverage our brand internationally and focus on building the business in Europe.

Third, we will continue to develop the merchandise categories of sportswear and footwear.

Fourth, we will continue to selectively add distribution as we seek to grow our department store and specialty footwear businesses.

And last but not least, we will continue to seek out favorable licensing opportunities as we leverage the strength of our brand.

That concludes our report.

Thank you for listening in.

We'd be happy to field any questions.

Operator, could you help us with that?

(OPERATOR INSTRUCTIONS) Bob Drbul, Lehman Brothers.

Good afternoon.

Tim, a couple of questions on the inventory, if we could start there.

Can you give us an idea how much of the canceled inventory that you had -- can you quantify it a little bit in terms of cancellations?

How much of it sort of went through the fourth quarter so far and how much it are you still sitting on?

And do you expect to be done with it in the first quarter?

Let me ask Bryan to talk about that because we've done a lot of analysis on it.

If we try to break our inventory into a couple of different components, Bob, first and foremost the question you're asking is from a fall 2004 standpoint, we did actually ship a lot of the products that we had available to us in Q4.

Hence the additional sales that we had from guidance provided earlier.

As Tim started to say, in terms of reorder activity, with whether really not happening in our favor, we just didn't get the reorder rates that we would otherwise been expecting in Q4.

So there's probably -- in terms of the growth, I think to the growth in inventory is something close to about 39, $38.5 million.

Probably I would say close to maybe a little over -- or right about half of that is probably fall '04 inventory in terms of the increase, of which we expect probably half of that to be sold in Q1.

That's modeled into the guidance that we've given today.

And then as usual, we will ship some of the balance and Q2 and Q3.

As it relates to spring inventory, because that's also giving rise to our inventory increase, we have had significant spring receipts from a timing standpoint to get ready for the spring growth.

That, coupled with some in transit inventory straddling year end, has really given rise to maybe close to a $15 million increase in spring '05 versus spring '04.

And then finally, just from a sourcing standpoint we have kind of picked up our CNPQ (ph) method of sourcing versus delivery basis, which we put about an additional $5 million into raw materials for fall '05 that were on the books at year end also giving rise to our inventory increase.

Have you had cancellations for spring inventories as well, or was this all just fall related?

No, this was an accommodation to some customers -- many customers for fall '04, which has given rise to cancellations.

Spring is starting off great.

When you look to the future and to the fall of '05, Tim, how much of the negative would you expect what you've seen with the weather and with some of these cancellations to impact the order book on the fall for next year?

It's really undetermined at this time.

We've got great things happening in Europe and in other parts of the world.

And there's so many moving parts to the business today that it's difficult to be able to with any kind of certainty predict it.

That's why we're making sure that we can give highly-accurate guidance at the end of Q1.

The business, as we said, is moving now away from a USA-centered business to a more international business where our order deadline dates are later.

We also have different product categories including footwear which have later deadlines.

So it's difficult to say particularly.

And then there will be significant impact on the weather in the first quarter as well.

We're getting great weather now in the Northeast.

So if that continues and improves, it will be a much different story.

If I could shift gears for a minute?

On the quotas, have you seen any major impact to the pricing scenario for any of the apparel that you're sourcing given the New Year?

No significant difference.

We have been building additional make into the garments and taking some of the savings that would otherwise be there into the make.

But no, not significantly.

Tim, can you give us an update on the situation with finding the new footwear person?

We're continuing our search, and we've got a few highly qualified candidates.

We're just sort of getting down to the last several, and I think that we will have an announcement here soon.

But there seems to be a significant interest, and we hope to have that concluded soon.

Thank you.

Virginia Genereux, Merrill Lynch.

Maybe first, Tim and Bryan, if you guys can review for us, the speculative inventory that you guys book, if your -- I'm looking at your fall backlog for '04 was 654 (ph).

And if it was 7.5 percent of that, is it 50 million?

Is that a fair -- I'm trying, Tim, to get at sort of what is speculative inventory versus what is sort of replenishment, what is not, what are the businesses not done on backlog now.

But maybe if you could start -- is that the way to think about it, that was 7.5 percent of sort of the --?

Not really, because we only really take a speculative position in outerwear.

So that is our primary.

We take virtually zero speculative inventory on sportswear.

There are a few items that we replenish in sportswear, but in total they are insignificant to the backlog.

The speculative inventory position we take is we really talk about outerwear.

So if I take 7.5 percent of your back-half outerwear business, that's 28 million.

Your back-half '04.

Is that the kind of magnitude?

Bryan, is that a fair --?

You're talking about the specific --

Yes, I think that sounds a little bit high.

Again, as Tim would say, it is really only in outerwear.

And also, when we take a speculative inventory in certain styles, it really is those styles that we believe have the ability to be very big volume type styles for us.

So I think that that's kind of evident in terms of the way that we've been able to move through -- some of these products through system in Q4, and why we feel that there should be a good ability to move these through the system in Q1.

And yes, our margin is guided a little bit down from where we expected probably three months ago when we last spoke.

But again, that's moving a little bit higher volume through Q1 than we would have otherwise anticipated a bit ago.

Bryan, I'm getting a -- I feel like you just told Bob that half of your fall -- half of the inventory coming out of December was some of this excess.

And that was about 20 million in inventory, which to me is about 40 million in sales.

But then your December numbers -- your December revenue was also ahead of your -- was a few points ahead of your initial outlook, maybe even adjusting for currencies.

I'm just I feel like I'm getting to sort of a speculative number that is higher than what I had thought it was -- what I had always understood it to be.

Do you see where I'm at?

Yes, but I was trying to explain the fall '04 growth, in terms of the growth of the year-end inventory on a year-over-year basis.

So fall '04 versus fall '03.

That's where I mentioned right around that 19, $20 million number is the additional growth in the fall inventory position.

We also had some unexpected cancels, some customers which -- so you wouldn't be able to back into that number identically.

Okay.

That's helpful.

And then Tim, if you were -- last year you guys kind of gave -- and I know your fall backlog is yet coming together.

The reason -- last year you gave a view on sort of your full-year revenue and net income growth, even though you said it was going to be more refined in April.

And the reason you don't feel comfortable doing that now, is it a function of -- is it more so retail uncertainty or the whole dynamic of retailers ordering later and these pieces of your business becoming later?

When we look historically back on our guidance models, we just felt that we were giving much better guidance in second quarter.

That's why last quarter's call we told investors that we weren't going to be giving guidance here for the first -- we weren't going to be giving guidance for the full-year on this call, because we found our best view of the future was really the end of first quarter.

So we wanted to make sure that we have most accurate information disseminated.

I'll let somebody else ask you about sort of the components of the business.

But Bryan, maybe one more.

On the SG&A side, you guys are -- your SG&A -- depreciation and amortization, Bryan, went your way this year.

It was (technical difficulty) D&A was down in '04; it is going to be up in '05.

So my question, is the $10 million increase in SG&A in March, is that representative of what you guys have to sort of -- is that representative of the quarterly increase in SG&A?

I don't think -- it's not exactly linear from the $10 million you're referring to.

I think if I tried to just boil it down to some of the fixed costs, additional fixed costs, I know we talked about Kentucky.

I think we talked last call that the D&A or depreciation for Kentucky is probably close to that $5 million mark.

If you add in some additional operating cost for that facility, you're probably at another 3.

So call in 8 for Kentucky.

Additional personnel, we've mentioned numerous times in terms of really adding personnel, especially in the product categories of footwear and sportswear where we really want to make sure we can continue to grow, we probably added close to about -- let's say $13 million there of again estimated or anticipated fixed-cost increases.

And then finally, there's just a lot of other fixed costs, everything from office expenses, professional fees, T&E, that you could make an argument that is either fixed or semi variable, kind of maybe getting to about maybe a $25 million increase in fixed cost for next year.

That's maybe a little bit different than the 10 million that you were suggesting on a linear basis per quarter.

Does that help?

That helps.

The variable component then, can you give me a sense of what that is as a percent of revenues on just the SG&A line?

Again, I think we need to boil it down to the fixed cost.

Variable is going to be in the same relation to our top line, which as Tim pointed out, we don't have enough visibility at this point.

Thank you all.

Noelle Grainger, J.P. Morgan.

Good afternoon.

Sorry to do this, but back on the speculative inventory, I guess I'm not entirely clear how much of it you moved through in the fourth quarter versus what you have left to move through in the first quarter.

Could you give us a better sense of that?

And then what you moved in the fourth quarter, could you -- was it -- did it move out at cost or did you make a profit on it?

What does the margin look like?

I know Bryan is going to weigh in on this as well, but I guess the key thing to remember from the speculative inventory that we invest in in March or April of the year, early in the year, is that we tell investors that based on what we think is going to happen, we think it's a great investment, and we model that inventory to be sold at something less than full price.

So in the event of full-price selling due to good weather and good selling conditions, there can be a significant increase in the operating margin of the Company, but not necessarily a big top line increase.

And from a defensive position, we build that stuff in to sell it at some discount so that when we liquidate it we're able to hit the guidance that we give to our investors and still end up with a positive business environment.

So that in summary maybe just describes how we do it.

It was a poor year for weather and not a great year for apparel sales, and we still ended up after managing the inventories approximately where investors expected us to land.

There's still a little bit of inventory to liquidate, but frankly at the end of the day it's not significant in my opinion.

Again, if we go back, it really does vary in terms of the quantity of closeouts that we moved for our fall goods.

If you go back to Q1 of 2003, I know that was a quarter where again we didn't necessarily get the weather in Q4.

But the weather finally came late, and we did move a lot of our closeout products at very good margins in Q1.

So the answer to your question (indiscernible) in terms of the margins, it certainly varies.

It is better than cost in most cases, but again it varies per order.

So I think we try to model over the most part that it is better than cost.

And again, I would point out that it's all baked into Q1 guidance that we've given here today.

And again, over half of that inventory that we have at year end for 2004 is expected to ship in Q1.

In fact, if you look at the orders that we have against some of that inventory, I would say also that probably close to half of that is either shipped in the first 27 days of the month and/or we do have orders against it at this point.

What about, Bryan, could you address -- the gross margin was down considerably in the fourth quarter Maybe could -- you talked about the pieces.

Could you give us a bit of a sense of magnitude on closeouts versus mix versus what FX added?

I don't want to sound like it was only one thing, but it really was a factor of the closeout product shipped in Q4.

And then from a product mix versus currency going the other way, kind of mitigated -- those kind of balanced each other out.

And at the end of the day it really was the closeout margins that contracted our margins in Q4.

Maybe just one other one, which is on your receivables, in talking about them you mentioned that you had strong December shipments.

But you also said obviously reorder business was weak.

So was that the closeout shipments?

Correct.

Yes, that was exactly what I was referring to, is as we didn't get the reorder activity that would start predominantly in the November timeframe and go into December, when that didn't come we definitely went off price and shipped quite a bit of closeouts in December of 2004.

So that is the biggest reason for that kind of late or sequencing of the quarter in terms of its shipments.

Do you have a DSO number?

I think our DSO is right around -- I think on a consolidated basis probably close to 80.

Thanks.

Jeff Edelman, UBS.

Just a couple of questions here.

When you provided us guidance for the first quarter back in November or at the end of October, you were talking about summer sales and relatively flat earnings.

The disappointing Christmas sales we had obviously -- or weather -- obviously is cutting into the first quarter margins, but you have still maintained the flat earnings.

Is there something else that is going more positive that is beneath the surface there you really haven't talked about?

Let me let Bryan answer that.

I think for the first time we guided Q1 we gave top line guidance of around 13 percent and flat, you're right.

We have inched that up; certainly a factor of the amount of closeouts that we plan on shipping in Q1.

So that's giving a rise to the top line.

That, couple with currency translation on the top line, and then, as you also pointed out, the weather that never really happened is dampening our gross margins in Q1.

So at the bottom line, we anticipate it being flat.

I guess the only other component is our tax rate has decreased a bit, call it 50 to 100 basis points probably, since the last time we talked.

Typically, if you get to the end of a quarter and you know you've got inventories that are going to have to be moved out at a lower price, do you make a -- can you take a gross margin adjustment in your fourth quarter for product that's going to be shipped in the first quarter?

No.

We recognize these sales as they ship.

Secondly, as we look out in the fall, you've been through a number of years where you have had great weather, bad weather.

And at the end of the day, very few of the retailers really carry over product to the following year.

So given that, don't they generally order at least what they've ordered the preceding year?

And are you being unduly conservative from that point of view?

No, I don't think so.

As we mentioned during the call, there's pieces of the business now which are much more significant than they had been in the past, including areas outside the US and categories and merchandise, i.e. footwear, that are later.

So we want to make sure that people recognize that we're not just an outerwear company anymore and we're not just a USA company anymore.

So we're just trying to provide the most accurate guidance we can, and that's just going to be later.

I know.

Let me put it a different way then.

Obviously this is a poor year for domestic outerwear.

Your customers, when they plan for the following year historically, whether they have had a great season or bad season, they don't really alter their orders that much when it comes time to place any orders, do they?

They normally would try and protect their full-price sales.

So if customer A sold, I don't know, a high percentage of his business at full price, he'd buy back into that quantity for sure and expect to be able to purchase some speculative --some inventory later at better prices if the weather were not spectacular.

But yes, it varies.

But typically they're going to be buying outerwear to put in the stores.

So yes, the business is ongoing obviously.

But each customer might have different views as to what he believes the future will hold.

Right, I got that.

Okay, thank you.

John Shanley, Susquehanna Financial Group.

Tim, you mentioned that you were doing particularly well pretty much across the board in terms of your European penetration, and certainly a 9.4 percent currency neutral gain is impressive.

I was wondering if you could tell us if that strength is due to adding new retail channels of distribution.

I think you mentioned that there were some new players.

And are you going into new or expanded markets or new countries that you had not previously served that have been able to drive that sales result, which is certainly a lot stronger than most other brands are reporting?

Probably the single biggest impact that the Company will have in Europe in the future will be the addition of Paul Gils, who is the European GM that's just been added to the Company in late December.

Paul comes to us from a significant background at Nike where he was most recently a German country manager, but also had responsibility in the US during a period of his career there.

As you know, the Company does spectacularly well in France and in Spain.

But in the colder countries, which are really much more appropriate for our products, Germany, Scandinavia, and the UK, we've really under-performed.

We have made changes in many of those markets to improve our sales penetration, but that's where we would expect the improved sales volume for outerwear certainly to be and cold weather footwear.

That having been said, our footwear penetration is increasing and we are really become a significant player in many of those markets on the footwear side as well.

Are you taking the product away from other brands or is it just organic growth based on the new markets like Germany that you may be doing better in?

It's mostly a market share gain for the Company, because our largest competitor in every one of those markets is generally a small local brand.

They’re large in their local market, but small by comparison to ourselves.

So generally our market share gains are coming at the expense of those competitors.

That's great.

Based on your preview discussions with your key US vendors, or retailers rather, for your fall '05 line, do you get a sense that you're going to be able to maintain the 90 or so percent of your business that's only done on a future contract basis for the outerwear products in the back half of the year?

Or is that percentage likely to decline somewhat from what it had been historically?

We're not going to be changing the Company's model.

We're going to be basing the business on our future bookings for outerwear and footwear.

So we're still a future booking model.

Are the retailers still receptive to that or are they giving you any difficulty in terms of committing up front in terms of the fall line?

They don't like it to be less speculative on their part, but frankly our model works only really when we can get advance commitments from our customers.

And at the end of the day the leadtime for outerwear and cold weather footwear and even sportswear for that matter is so long that the commitment have to be made in advance.

Lastly, I wonder if you can drill down a little bit more on the Kentucky distribution center.

What do you anticipate that facility will allow in terms of added penetration on some of the East Coast accounts?

And how much of a timeline are you taking out of the supply from previously shipping your goods from Portland to be able to supply out of Kentucky instead for the East Coast retailers?

The difficult transport time -- Pat, correct me if I'm wrong here -- was around 10 days from Portland to the East Coast.

More like 7.

7 to 10 days, depending on weather.

And our Robards, Kentucky operation is now two days to the bulk of the East Coast.

So very significant reduction in time.

Also a significant reduction in expense to the retailer on transporting merchandise from there.

So we expect that in addition to showing a significant commitment to the footwear business, we will be able to provide real savings to our customers in terms of time and money on their shipments.

And it opens up additional retail accounts for you, Tim, in terms of the people you were not able to service in the past?

Not really, although I think it can change the matrix on the profitability of the Company's products when sold through those retailers.

So that's going to be the primary changes -- it will be more profitable for the retailer and taken more seriously from that standpoint.

Super.

Thank you very much.

Ed Aaron, RBC Capital Markets.

Good afternoon.

I actually have a few questions.

First, I was just hoping you could maybe just give us kind of a qualitative feel about retailer moves in general right now.

And then if you take a step back and look at the bigger picture, are you feeling less optimistic about 2005 than you were a quarter ago because of the weather issues?

Or do the positive things happening in the other parts of your business neutralize it?

Certainly.

Well, I can tell you the retailer mood has improved today, especially East Coast retailers when they compare, I would say, four weeks ago, based on the fact that we have some weather now and they've been able to clean up a lot of their inventory.

So the mood has improved.

I think to people are looking forward to spring '05 with some excitement right now.

Our mood on '05, frankly I continue to see great opportunities for the Company '05 and beyond just because of some of the steps we're taking to increase the ability for the business to grow, i.e. our Robards facility, personnel changes that we've made in Europe and elsewhere in the business.

And I just continue to see us moving forward and becoming a better, stronger company.

So we've got high expectations and high plans for the Company to become a larger, more dominant global provider of outdoor products.

And nothing has changed from that standpoint for me.

I was hoping you could maybe talk a little bit about the department store opportunity.

I know that that's been an area of more focus for you.

And specifically with some of the larger national accounts, maybe any headway that you might be making there, and any implications from the May-Federated merger as to how that might affect your ability to go after those accounts?

Certainly.

Our best successes on the national standpoint have been with both J.C.

Penney and Kohl's.

And they're good solid customers of the Company, and we appreciate their business.

When we talk about the department store opportunity, it's obviously very large.

That's where Americans shop for sportswear and many other kinds of products, but specifically for sportswear.

Our best successes have come at more regional department store operations, including Saks Group, Belk's, and other -- Gottschalks -- other significant regional department store chains.

We almost have no business with May and Federated today.

We do have a fairly significant business with the Marshall Field's Group, which is a division of May.

So there's opportunity with those large folks.

And the combination -- the impact of a combination of May and Federated if it happens would probably be better answer by somebody that knows those guys better than I do.

Okay, and one just more point of clarification on the sales number this quarter.

I understand that some of the reorders that you didn't have were replaced by shipments of closeout products, but help me understand how you actually got to the revenue upside relative to your guidance this quarter.

It was just increased sales of outerwear merchandise at closeout prices.

We always talk about the impact of the speculative position being marginal on the top line, but highly impactful on the bottom line.

So unfortunately due to the weather, we just didn't have the bump that we expected and invested to see (technical difficulty)

Was it all outerwear in terms of the cancellations?

Or is there some footwear and apparel included in that as well, because I've seen a fair amount of footwear in the off-price channel?

We have cancels on new orders every day.

But the bulk of our issues that we have talked about are outerwear related.

In footwear we actually were quite conservative on our footwear investment for 2004 year end because we were moving our inventories to Kentucky.

So we took a rather conservative stand on that.

You may be seeing some inventory in off-price, which is a result of this warehouse change.

Okay.

The second question is just a pretty broad question.

What are you seeing on the competitive front with North Face and anyone else, and then also some of the customer consolidation and your realignments of strategies from some of your key customers?

Can you just broadly discuss us?

Certainly.

On the competitive front we talk a lot about our biggest competitor being our customers, and that's certainly still the case.

However, we've been quite transparent with investors about the Company's significant margin in outerwear, and it's not gone unheeded by our competitors as well.

So there are more competitors.

But frankly, I would say that they're not significant about more competitors than what we've had in the past and I still would list our customers as our largest competitor.

But it's becoming more competitive than it has been in the past.

Regarding consolidation, the Company does not have a 10 percent customer, so we're not tremendously reliant on any one particular customer.

However, we have seen consolidation not only here but in Europe.

And generally the consolidation does not equal -- one plus one does not equal two generally.

There's some reduction in total volumes when customers combine.

That's the negative part.

The positive part is that generally a larger customer has to be more cognizant of their vendor base in order to protect the larger customer.

So our investments in infrastructure and distribution center and computers make us generally the supplier of choice.

So it cuts both ways.

But generally it's not an enhancement to our business.

Finally, is there any possibility that we may at some point in the next couple of years see a change in your thinking about your 4.5 growth strategies, particularly thinking about getting at all more aggressive with acquisitions?

As I see it, even if you completed 100 million in buybacks in the next year, you would probably end up with the same, if not a little bit more cash, on the balance sheet, and it is just piling up.

Any thoughts about anything that you would like to do with that cash?

We talk about our 4.5 strategies, and that's the way we're going to continue to organically grow our business.

We think they all are viable, and I don't see any additional ones coming on board.

As it relates to acquisitions, we don't state that as a significant growth strategy.

However, the Company has made acquisitions in the past, and continues to look for opportunities where our strengths in capital base, sourcing, physical distribution of apparel and related products can be leveraged under another brand.

Would you ever do anything that was a little bit larger than the transactions you have done in the past?

What do you see as kind of the limit of where you feel comfortable in terms of an acquisition?

I guess that would depend.

I think having done two successful acquisitions certainly wouldn't to most investors say that we are an expert on acquisitions.

Again, since our strategies don't include specifically growing through acquisitions, we would probably tend to look at opportunities on the lower end of the sales-volume spectrum.

But it's certainly a potential use of cash, as are other uses of cash including dividends.

Our always first use is to grow the business, to use it through working capital.

So the Company has an opportunity to look at lots of companies, and we're always mindful that our job is to provide high returns for all of the Company's assets, and those include cash as well.

Thank you.

Margaret Mager, Goldman Sachs.

I got on about 15 minutes late, so sorry if I ask something you answered in your prepared remarks.

The cancellations, was that all in the US or was there anything outside the US?

We talk about getting -- we get cancels every day.

We get new orders every day.

But the primary blip was here in the US.

Can you quantify how much was canceled?

I don't have that number in front of me.

I don't think it was tremendously significant, but it's just one of the list of contributors to a slight bump in inventory levels.

I think part of the confusion here too is we're talking more or less about net cancellations.

So when Tim keeps coming back, we get reorders every fall season as well.

It is just that the amount of typical reorders that we get never came to pass because we did get the weather.

It's not necessarily that we had this significant or material type volume of cancellations.

It's just the reorder percentage that we put in our models just didn't come to pass.

It is tough to quantify the actual cancellations.

So no one stood out in the customer list as far as canceling because we know like Sports Authority, for example, had a preannouncement.

We know that Dick's and Galyan's is going through a merger.

And maybe Kohl's hasn't been as robust as people might have expected.

Is there any stand out among customers that could account for some of the cancellation activity?

There wasn't one customer that was significant out of all of our customers.

I guess at the end of the day the important thing to keep in mind is that we have a very conservative inventory model, and the Company believes it can appropriately hit the guidance that we give to investors under many conditions, including the ones we encountered this year.

With regard to the guidance, you didn't give anything really for 2005 except for sales in the first quarter.

Can you just reiterate what are your objectives for growth, and then give us your spin if you think that '05 is the year that trends above or below your long-term growth objectives?

We've been pretty clear about what the Company's long-term growth opportunities are.

They're significant and they span the 4.5 strategies that we talk so much about.

As it relates to '05, it's just too soon for us to know much about what the balance of the year is going to be or enough to be able to guide investors with some certainty.

It's really a focus for us to give the most accurate information to investors that we can.

Can you just remind me, Tim, what are the objectives for the top line and the bottom line?

The top line objectives are high teens growth over the several years and leverage.

So those are the growth strategies we talk about frequently.

With regard to the outlook for outerwear, do you think that 2005 is likely to be another down year for outerwear as it was in 2004 in the US?

It's just too soon to tell.

There's just so many opportunities for us, and we just don't know yet.

Okay.

You did cite rising competition as one of the reasons why US outerwear was down in 2004, yet it was actually up in the fourth quarter.

Can you elaborate on the two things?

First of all, the competitive front, what specifically you're referring to in that comment?

And then secondly, with regard to the course of the year with an up fourth quarter, where were you down?

Just remind me, which quarter and why outerwear was down.

I'm going to let Bryan answer the second question.

I'll answer the first one.

We talk a lot about that the fact of the Company operates in a competitive environment, and our biggest competitors are our customers.

So that doesn't change.

That doesn't change globally.

We also talk about the transparency the Company's been famous for in terms of its gross margins by product category, and certainly we have many, many customers that would love to have that business.

Customers?

Competitors.

So there's a myriad of them from Nike to Timberland to VF Corp. and Spider, Marmot, others.

The environment for competition has increased.

We've pointed to one component of our outerwear, being youth, that we struggled a bit with this year.

Predominantly that starts to ship in Q2, just to stay ahead of the retail demand.

So I would say from which quarters took probably a little bit of a hit for outerwear, I'd start in quarter two.

And then quarter three probably took a little bit of a hit as well.

So those are probably the two quarters.

In terms of looking forward in outerwear, I guess I share Tim's comments that the Company is trying to address a lot of these things, one being in youth in terms of reinvigorating the products, price points in youth.

And it is a little bit too early to tell right now in terms of whether or not those are working for our retail base.

The other thing is casual outerwear that we've tried to also incorporate more into the line for fall '05.

With regard to the outerwear competitive environment and Columbia's relative position, as you pointed out, you have very good margins, and that's in part because you're a really good operator.

But do you think that maybe you need to bring the umbrella down and lower your prices somewhat and maybe take your margins down a bit?

We want to measure ourselves against other people in the field, including our customers.

And those are areas that we look at all the time.

And of course, you know we have a very broad spectrum of outerwear that runs the gamut from very light-weight merchandise to heavy-weight merchandise, hunting and fishing.

So the margins are not all the same in every single category and every single product line.

So we think we have appropriate margins.

And we're competing in an area where we think we can win more frequently than others.

And so I don't think we would change our business model much from where we've historically been successful.

That's helpful, thanks.

Thanks for that.

Okay.

With regard to the shift towards more light-weight type outerwear as being more popular, that would translate to me as a lower average price point business.

We report the sales of our fleece products in our sportswear category.

And it's not the only reason our sportswear business is up so much, but that is a part of it.

Right, that came through.

And I guess with regards to that mix shift, there is a margin implication, because as I remember, and maybe you should update us on this for your full-year '04 results, your apparel category has lower margins than your outerwear category.

So is that a factor as well as just generally a lower-price that you get for light-weight outerwear?

And do you see that trend catching on in adult products?

Is it just a US trend or is it also happening in Europe?

I think, frankly, much of the change in the weight that people are buying in outerwear and fleece is a function of the weather.

It's very difficult to be comfortable in light-weight fleece if the weather's inclement.

So I think much of impact that we saw this year was just a function of the weather.

But yes, our outerwear product carries a higher gross margin than the sportswear product that we sell.

And that would include fleece to a certain extent.

Last question.

Tim, why is it that footwear sold through well in the fourth quarter despite weather when outerwear struggled a bit because of whether reasons?

I think it's just the fact that the Company's got a unique product in much of its winter footwear products and certainly with the Sorel brand have a high brand awareness.

And there's a certain amount of cachet around some of the Sorel products.

We saw it advertised in some of the more upscale books.

I know that Saks 5th Avenue used some of the Sorel boots as an accessory to sell some of their very expensive fur garments.

So there's a little bit of that.

And again, we mentioned that we were in conservative in our approach to footwear specifically this year, because we knew we were changing physical distribution of the product and we didn't want to have to move a bunch of inventory around if we didn't have to.

So we were slightly more conservative on our inventories there in that period.

But the footwear business just continues to get better.

And we're also very embryonic in footwear in total, so there's just probably more opportunity.

We're less mature in footwear.

One last question.

With regard to the outerwear performance in the US, do you think that there was anything related to the product or the line that was not quite right or could be better as you look out to '05 that was part of the assessment in addition to weather?

No.

I think frankly if there was anything we just haven't spent as much time as we should have on this opportunity in casual outerwear.

There's just obviously opportunities there that we haven't capitalized on and will in the future.

Have in '05 and will for the future.

I don't mean to be overly obsessed with the outerwear in the US, which was the only little teeny hiccup in an otherwise yet another great year for the Company.

So you guys have done a great job since you went public, and I'm sure your shareholders want you to keep it up.

So do we, Margaret.

Thank you very much.

Jennifer Black, Jennifer Black & Associates.

I just had a couple of questions.

I wondered first if you could talk about women's.

I know that you're not considered to be a fashion company, but I did see some faux fur trims on some of your outerwear, and I wonder how that performed relative to your other outerwear.

And I wonder too how you feel -- we're kind in the fashion cycle right now.

Do you think that that's something in your long years of experience that this is something that just comes and goes just as the fashion comes and goes?

I just kind of wanted your comments there, if you could start.

Certainly.

Women's has been a growing part of the Company's business, not only in outerwear, but in footwear and in all the brands in footwear, Sorel and Columbia as well.

And yes, our women's product, the stuff that performed very well, probably best, might have been that the Voulez Vous Parka.

You might have seen that.

It's one of our Titanium garment.

It has got a little faux fur lining in it.

And one of the best-selling items, not only for the Company, but also for many of our dealers.

It's a fashionable garment, and it's surprising how well women respond to fashion.

We like that.

So that was a strong seller?

That's a very strong seller.

And as it relates to fashion cycles, I'm probably the wrong guy to answer that question --

Since you're not a woman?

Since I'm not fashionable.

But we talk a lot about the fact that the Company needs to the appropriate for the cycles that are happening and to be color correct.

But we certainly don't consider ourselves to be a fashion brand.

But it's always good when the technical aspects of our apparel and the right color and appearance link up.

That's a great -- good things happen then.

And then I just kind of wondered, as far as looking at the different areas, it's been kind of a strange winter across the country.

And I was curious to know where in the Pacific Northwest we have like no snow and in other areas of the country there's snow, and I just wondered if there's a direct correlation in each area.

If you could just speak to that?

I'm talking about like as far as sporting, like skiing, snowboarding.

It's been a poor weather year across really the major markets that the Company has and operates in with the exception of the Southern California market, which is not a historical strong market for the Company in outerwear.

So very great sales there, but in the rest of the country probably not areas of significant excitement.

But the Company's products have been performing well, and we're just anxious to get to the end of the ordering season and compile our footwear and sportswear and international orders to get a high degree of visibility of what the future looks like for us.

Then I wondered if there's any new areas.

You didn't really talk about snowboarding, I don't think.

And you didn't -- did you mention golf?

I just wondered if there were any newer areas that you were looking at or that you're -- do you have any other comments?

Not really.

The snowboard category we have well covered with our Convert brand, and that's been a solid performer for us.

But golf was an area we tried several years ago, and we really found that it was more appropriate for us to be in more outdoor kinds of categories.

So nothing new to report there.

Good luck and I'll see you on the (indiscernible)

Robbie Ohmes, Banc of America Securities.

Hopefully I'm the last question on this call.

But just real quick, sportswear and footwear, can you kind of update us on where the growth came from in the fourth quarter in terms of new versus existing accounts and how you're thinking about that for '05, and also update us on the rollout of the in-store concept shops?

Are you most of the way through that or are there still a lot of opportunities there?

Regards to sportswear, really our sales growth in those categories was just continued penetration in our existing accounts.

There's no new distribution to talk about with those categories frankly or with the outerwear category.

Our business continues to roll out on a regular basis with our regular customers.

Talking about the concept shops, we're still -- maybe we're in the bottom of the second inning, but we're nowhere near the full potential of what that is for us for continued expansion of the brand.

So we continue to build out those things for our customers, and we installed hundreds of them this year, and there's just many more opportunities for us in the future.

SO you expect hundreds in '05 as well?

Yes, exactly.

Terrific, guys.

Thanks.

Mike Miranacci (ph), Ragnarok Capital (ph).

When you gave guidance for the first quarterback in, I guess it was October, did that include revenues from closeouts?

It included some.

As we pointed out, with weather not happening, even though we shipped quite a few closeouts in Q4, there is a higher volume of closeouts to ship in Q1 as well.

So it did include some closeouts, just not what we're trying to -- what we're model currently.

Because it looks like the revenue guidance from then is up about 4 million.

But it seems like the shipments of closeouts is up more than that.

Am I wrong there?

Again, with closeouts it depends on ultimately what those are sold at, whether they're appropriator -- or they are closer to full price or whether or not they are sold closer to cost.

So that, coupled with the fact that we do have a little bit better translation currencies, all that really modeled into Q1 guidance that we've given.

Okay.

Do have the AR allowance handy?

I can probably put my hands on that.

I think in the press release we show it net, so --

While you're looking for that, if you look at the AR over the past two years, the DSO is 65 days December '02, 73 days in December '03 and 81 days in December '04.

The number is going the wrong way.

Can you explain the difference between DSO on reorder shipments versus closeouts?

They seem to be -- would be at the same time of the year.

I don't understand why that would account for a higher DSO.

If you look back at '03, I think our DSO was probably closer to 70.

And again, I can't stress enough that in 2003 the amount of closeouts we shipped in Q4 in terms of -- definitely we shipped more closeouts in Q4 of 2004 than we did in '03, and it was definitely much more weighted toward the December timeframe than in the previous year as well.

So to answer your questions, we have different terms for different shipments.

For reorder activity, most of that is paid in more of a net 30 kind of sales terms, as opposed to shipments at the first part of the quarter in some cases have dating associated with them.

It's also much cheaper for us to give extended terms to good quality customers than it is to give them an additional discount since the Company's got heavy cash balance.

We're close to this allowance number.

The allowance at year end is around 7.8 million.

Again, looking at that over the past two years, December '02 it was 5.7 percent of growth AR; last year it was 4.1; this year it's 2.8.

Given that you're doing more business in other international and Europe, why is the allowance coming down as a percentage?

Obviously part of a factor is that we choose in some cases and in certain jurisdictions to go ahead and have credit insurance.

So that obviously reduces the Company's risk with respect to credit risk.

It really is more in terms of the account by account where the sales are coming from in terms of whether not those are bigger account; in terms of net 30 type terms or whether they're more on the specialty channel or smaller accounts which do choose to take days.

So it is a customer mix, it is a geographical mix that's all putting a little bit of variability with respect to our allowance.

It's also reflective of the Company's actual bad debt loss.

That seems to be going in your favor.

Thanks very much.

Sam Posner (ph), Mosaic Research.

Just a couple questions.

Not to be beat this dead horse anymore, but you said that the net reorders were down and that contributed to some of the increase of inventory at the end of the quarter.

Is that correct?

Yes, that's accurate.

What is the difference, in that case, from inventory for net reorders and speculative inventory?

Nothing.

The speculative inventory is available for reorder.

But the inventories that you are expecting to sell on net reorders was expected to be sold at full margin, I would assume.

Sorry?

One more time.

The merchandise that you had left over for net reorders was expected to be sold at full margin.

No, not necessarily.

In fact, it was modeled to be not sold at full margin.

SO basically net reorders and spec inventory are the same thing?

That inventory for net reorders and inventory for -- the speculative inventory is the same?

Yes.

One other question.

By channel, can you talk about where you saw the best performance, be it sporting goods department store, independent specialty?

I don't know if I have that stuff right at my fingertips, especially when we talk about the international scope of the business.

I guess I could say we didn't see any specific deterioration in any particular customer type across all geographic periods.

And then one last thing, and I promise, is with that excess inventory, are you selling it -- do you perceived in January and in Q1, are you seeing the leftover inventory (indiscernible) outerwear being sold more internationally than domestically?

We have inventories all over the world, as you know.

So those inventories will be liquidated in an orderly fashion during the first -- well, they're being sold in first quarter for delivery in first, second and probably some in third quarter, I would guess.

For instance, if you have a disproportionate amount of inventory in the United States where the business appeared to be softer, would you be selling some of that overseas?

No, we can't do it.

Any merchandise entered into the commerce of United States, or in Europe for that matter, has to be liquidated in that market.

Very good.

Thank you very much.

Elizabeth Montgomery, SG Cowen.

Actually, all my questions have been answered.

Thanks.

Virginia Genereux.

You know what?

I'll follow up with you guys later.

Mr. Boyle, there are no further questions at this time.

Please continue.

Thank you very much for listening in, and we will look forward to talking to all of you at the next quarterly conference call.

Ladies and gentlemen, this concludes the Columbia Sportswear Company fourth-quarter and fiscal year 2004 financial results conference call.

You may now disconnect and thank you for your participation.