Columbia Sportswear Co (COLM) 2005 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Columbia Sportswear 2005 first quarter financial results conference -- conference call.

At this time, all participants are in a listen-only mode.

Following today's presentation, instructions will be given for the question-and-answer session.

If anyone needs assistance at any time during the conference, please press the star, followed by the 0.

As a reminder, this conference is being recorded today, Thursday, April 28th of 2005.

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

Please go ahead, sir.

Thank you.

Good afternoon, and welcome to Columbia Sportswear's first quarter 2005 financial results conference call.

With me are Gert Boyle, Columbia's Chairwoman;

Tim Boyle, Columbia's President and CEO;

Pat Anderson, Columbia's Operating Officer;

Bryan Timm, Columbia's CFO; and Peter Bragdon, Columbia's General Counsel.

Continuing our standard practice, we will review the results of the first quarter, provide some guidance on future periods, and field any questions that you might have.

You should have received a copy of the earning release by now, but if not, then please phone Carolyn Greenwood here at Columbia at 503-985-4000, 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, we request that you limit your initial follow-up to one or two additional questions, to allow all parties the opportunity to ask questions.

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

Before we begin, Gert has a comment to make.

Good afternoon.

The 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 annual report on Form 10-K for the year ending December 31, 2004.

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

Thank you, Gert.

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 first quarter of 2005.

Tim?

Thanks, David.

Welcome , everyone, and thanks for joining us.

Let's begin with a review of some highlights from the press announcement.

Q1 2005 net sales for the Company grew by a strong 18.9% over the comparable period last year, to a first quarter record of 245.7 million.

Excluding changes in currency exchange rate, consolidated net sales increased by 15.9% in the first quarter. [Inaudible] strong across product categories, driven by growth in sportswear and footwear, with healthy contribution in outerwear sales, which increased 26.7% in the quarter.

The increase in first quarter outerwear shipments was driven by increased shipments of spring outerwear products in key markets globally, and also an increase of -- in shipments of fall '04 closeout products in the U.S.A.

Net income for the first quarter came in at 21.3 million, compared to 20 million for the same period of 2004, a 6.5% increase.

Diluted earnings per share for the first quarter of 2005 was $0.52, compared to diluted earnings per share of $0.49 for the first quarter of 2004.

We are pleased with our first quarter results, which were driven by strong sales across all key product categories.

During the quarter, we increased sales in all major geographies worldwide.

Updates.

Turning first to the backlog numbers that were reported in the press release today, as of March 31, 2005, consolidated backlog decreased 2.4% to 758.9 million, compared to -- to consolidated backlog of 777.4 million at March 31, 2004.

Of this total, fall product backlog at March 31, 2005 was 645.6 million, a 2.8% decrease when compared to fall product backlog of 664 million from the prior year.

Consolidated global outerwear and accessories orders were down double-digit, offset by healthy mid-teens increases in sportswear and continued growth in footwear.

Geographically, total U.S. fall orders were down double-digits, driven by significant decreases in U.S. outerwear orders.

U.S. fall sportswear orders continue to be healthy, driven by strong increases in fleece-related products.

International bookings increased substantially in other international markets, particularly in international distributor markets, modestly in Europe, and decreased in Canada, due primarily to poor weather conditions and increased competition in the Canadian market.

Distribution projects.

During the first quarter, we successfully transitioned the shipment of U.S. footwear products to our new distribution center in Henderson County, Kentucky.

The systems and operations at the new facility are proceeding as planned.

We are currently evaluating additional distribution center capital expenditures at our Portland, Oregon and Cambrai, France facilities.

At our Portland facility, we anticipate capital investments to upgrade fully depreciated equipment systems and to better utilize the additional space generated when footwear products were transitioned to the new Kentucky DC.

In France, we are evaluating expanded capacity to support our continued growth in European markets.

We expect that total capital acquisitions in 2005 will be approximately $40 million.

Mountain Hardware.

Sales were 11.8 million during the first quarter, a 21.6% increase over last year.

Fall '04 bookings were very strong, particularly in fall-related sportswear products.

This is the second season Mountain Hardware offered fall sportswear products, and the line was received very well.

Our plans are to keep Mountain Hardware keenly focused on designing and marketing innovative, technical high-end products to the specialty dealer channel.

For fall 2005, we have been able to leverage Columbia's sourcing infrastructure to benefit Mountain Hardware's design expertise, enabling their team to create exceptional products at competitive price points.

We believe Mountain Hardware's technical and competitive strengths will give them an opportunity to expand their business in the specialty dealer channel.

Sorel.

Sorel sales were 4.9 million versus 3.5 million last year.

Growth in the quarter was driven by increased shipments of cold weather footwear in North American markets and outerwear in Canada.

All orders for Sorel products were soft as of March 31, due primarily to the timing of receipts of some key orders.

We expect growth in the brand for this upcoming fall season.

The cold-weather women's retro shell styles and the classic Caribou booked well for fall 05.

The Sorel team remains focused on reestablishing the brand as a dominant all-weather footwear resource in North American markets.

Licensing.

Net licensing income was $700,000 in the first quarter, with brisk first quarter sales of Columbia eyewear, camping gear and hosiery.

Columbia-branded insulated coolers started shipping in the first quarter, and our new outdoor accessories licensed products will start shipping this quarter.

While we do not expect licensing to be a significant income driver, through licensing we are able to generate highly profitable revenue as we extend the global awareness of our brands.

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

Thanks, Tim, and good afternoon everyone.

I'll begin with a brief review of the first quarter income statement, and as customary, I will compare current quarter line item with prior periods to facilitate an accurate comparison.

Net sales for the first quarter were 245.7 million, an increase of 18.9% over the 206.7 million of net sales for the same period last year.

Growth in consolidated net sales was the result of strong customer demand for our spring products and the continued strength in foreign currencies on our international direct businesses.

Excluding changes in currency exchange rates, consolidated net sales increased 15.9% in the first quarter.

Our consolidated gross margins for the first quarter of 2005 were 43.6%, compared to 45.4% for the first quarter of 2004.

A 180-basis-point decrease was driven primarily by lower margins on fall 2004 closeout products sales, and was offset by continued appreciation of foreign currencies in our European and Canadian direct businesses.

The Company's SG&A expenses increased by 19.1%, or 12.3 million on an absolute basis, to 76.8 million for the first quarter of 2005, versus 64.5 million for the comparable period in 2004, and remained flat as a percentage of sales at 31.2%.

Selling expenses increased in line with sales growth and reflected a higher advertising budget planned for the year.

General and administrative expenses increased, primarily due to additional personnel-related costs, as we highlighted last quarter.

Depreciation and amortization totaled 5.6 million for the first quarter of 2005, compared to 5.4 million in the same period of the prior year.

Net licensing income was essentially flat at 700,000, when compared to the same period last year, and net interest income increased 500,000 to 1.4 million, due to our strong cash position and the higher interest rate environment.

Our effective tax rate was 34.5%, as compared to 35.5% for the first quarter of 2004, due primarily to increasing income in jurisdictions with lower overall tax rates.

We reported net income of 21.3 million, or $0.52 per share for the first quarter of 2005, versus net income of 20 million, or $0.49 per share for the first quarter of 2004, based on a diluted share count of 40.7 million and 41 million, respectively.

I'll quickly touch on key items in the balance sheet, and again, I'll be comparing March 31, 2005 balances to March 31, 2004 balances.

The balance sheet remains very strong, with cash and short-term investments totaling 338.3 million, versus 298 million at the same time last year.

Consolidated accounts receivable at March 31, 2005 was 229.4 million, compared to 170 million last year, a 34.9% increase and higher than the 18.9% quarterly sales increase, due to the significant volume of February and March shipments.

Consolidated inventories were 164.8 million, compared to 128.1 million a year ago, a 28.6% increase.

The increase is largely attributed to both the current spring 2005 season and fall 2004 closeout inventory on hand.

Our spring inventory increase is a combination of replenishment inventory for our year-around products, planned inventory for our promotional events, and incremental second quarter sales.

We were -- we were able to liquidate the majority of our fall 2004 closeouts during the first quarter, and have orders for the most of the remaining balance.

An increased level of CMP method of sourcing also contributed to the increase in raw materials and work-in process inventory at March 31.

Capital acquisitions were 7.8 million during the first quarter.

We are modeling CapEx of approximately 40 million in 2005, consisting of approximately 15 million in maintenance CapEx and 25 million in distribution projects, including the projects described by Tim.

We now expect approximately 24 million in depreciation and amortization in 2005.

During the first quarter, we -- we purchased approximately 82,000 shares at an aggregate purchase price of 4.5 million.

To date, we have repurchased a total of 1.2 million shares, at an aggregate purchase price of 62.2 million since the inception of the program.

That covers the financials for the first quarter of 2005.

I will reiterate that from a balance sheet perspective, we remain very pleased with the way the first quarter was managed.

Inventories and receivables remain in good shape, and the balance sheet very strong.

Now let's turn our intention attention to financial guidance.

Given the results and fall backlog we reported today, we are in a position to give guidance for the second quarter and for the full year 2005.

Please keep in mind that this information is forward-looking in nature and is therefore subject to certain risk factors, many of which are described in our annual report on Form 10-K for the year ended December 31, 2004, and which were expressed by Gert in her opening comments.

Additionally it's important to recall that the second quarter is our most volatile quarter, as we wind down our spring shipping and start our fall business, and variances can be amplified as it is our lowest-volume quarter.

Based on our current outlook, we anticipate Q2 2005 consolidated revenue growth to be between 4 and 6% when compared to the same period last year, and are anticipating Q2 gross margin contraction of approximately 170 basis points, placing us between 41% to 41.2% of estimated sales.

This contraction is the result of an increased volume of international distributor sales, which have lower gross margins when compared to our direct businesses.

As indicated in our fall backlog, we also plan to ship less fall 2005 outerwear products during this quarter, which will amplify product mix shift contraction.

Our current SG&A target for Q2 2005 as a percentage of estimated sales is 39.1% to 39.3%.

This increase is primarily due to additional personnel-related costs, advertising spend for the quarter, and depreciation.

At present, we are modeling the Company's quarterly and full-year effective tax rates at 34.5%, and we are using 40.5 million shares for purposes of Q2 and full-year EPS calculations.

We anticipate net licensing income of approximately 700,000, and net interest income of 1 million for Q2 2005.

This analysis implies net income of approximately 3 million for the second quarter of 2005, versus 10.7 million in 2004.

Turning our attention to full year 2005, and considering the fall backlog we reported today, we expect consolidated revenue growth of approximately 5% for the full year 2005, when compared to 2004 revenue, and we anticipate net income decline of approximately 8 to 12% for the full year 2005.

Factored into this guidance is approximately 100 basis points of gross margin contraction, due to the continued sales mix shift, the lower-margin product categories, and additional fall 2004 closeout sales.

Additionally, we plan SG&A expansion of approximately 250 basis points, or 29% of estimated net sales in 2005.

This increase is primarily due to the incremental personnel costs needed to support our growth strategies, as well as operating costs associated with our new distribution center in Kentucky.

We anticipate net licensing income of approximately 4 million, and net interest income of approximately 4 million for the year.

Again, please understand that this information is forward-looking in nature and is therefore subject to the risk factors as previously mentioned.

Please consult the Company's annual report on Form 10-K for the period ended December 31, 2004.

I'll now hand the call back to Tim, who will review both geographically and categorically our business environments.

Thanks, Bryan.

I'll begin with a review of the first quarter 2005 consolidated categorical sales results, with comparisons to the first quarter of '04.

Outerwear: 51.2 million versus 40.4 million last year, a 26.7% increase.

The increase in first quarter outerwear shipments was driven by increased shipments of spring outerwear products in key markets globally, and also an increase in shipments of U.S. fall '04 closeout products.

Sportswear: 132.2 million versus 117 million in Q1 of 2004, an increase of 13%.

Sportswear growth continued to be very strong, driven by significant increases in shipments of spring sportswear products in the U.S.

Footwear: 49.8 million versus 38.4 million, an increase of 29.7%.

U.S. spring footwear shipments were a key driver of growth in the footwear category.

Accessories: 9.1 million versus 8.2 million, an increase of 11%.

Equipment: 3.4 million compared to 2.7 million, a 25.9% increase.

Geographical sales.

Let me give you some additional geographic sales commentary for the first quarter, with comparisons to the same period of 2004.

U.S.A.: sales of 136.3 million compared to 115.3 million, an 18.2% increase for the quarter.

Continued strong demand for our spring sportswear and footwear products drove sales growth in the U.S. during the first quarter.

Shipments of spring shorts, woven and knit tops, pants and sweaters were very strong, particularly in men's styles and within the Columbia Outdoor Issue collection.

Footwear sales were also very strong in the first quarter.

Shipments of water sandals and casual land sandals, as well as hiking and trail styles, drove sales growth.

We saw strong growth across all genders, with particular emphasis in youth and women's footwear styles.

Outerwear sales in the first quarter were also up.

Spring shipments at [inaudible] showed a healthy increase.

We also had a substantial increase in low-margin fall outerwear closeout sales, due to the poor weather conditions last fall.

As Bryan mentioned we shipped the majority of the excess fall outerwear at year-end during the first quarter.

General retail conditions this spring have been fair.

Sell-through of sandals and shorts has generally been soft in markets where weather has been cool this spring.

However, it's still very early in the season to get a good indication of the overall spring sell-through.

Turning our attention to fall orders in the U.S., sportswear bookings for fall 2005 were very strong, as retail and consumer acceptance of our sportswear products continued to expand.

Orders for pants, hooded sweatshirts, women's sweaters and fleece products continue to excel.

Fall -- fall footwear bookings as of March 31 were soft, but we believe that this is a timing issue, as we have not yet received all of our orders from some key customers.

We expect modest growth in U.S. footwear sales this coming fall.

As I mentioned earlier, fall 2005 outerwear bookings at March 31 were down substantially in the U.S.

We continue to see softness in U.S. outerwear -- youth outerwear, but the decline in outerwear orders was not limited to the youth category.

The overall outerwear decrease -- order decrease can be attributed to a variety of factors, which include the negative impact of poor outerwear sell-through last fall due to unseasonably warm weather conditions; an increasing competitive -- an increasingly competitive U.S. outerwear market, both in high-end and low-end branded outerwear competition; and retail consolidation at key customers and timing of the receipts of some key outerwear customers' orders which have been received since the March 31 report date.

A portion of the U.S. outerwear decrease can be attributed to the poor weather conditions and excess fall '04 inventory.

However, weather alone does not account for the entire softness in U.S. outerwear orders.

The wholesale market for branded outerwear at moderate price points has become increasingly competitive in the U.S., both from the high-end branded competition and more moderately priced vendors and private label.

We recognize that to maintain and grow our U.S. outerwear market position, we must focus on three areas.

First, we must create outstanding outerwear products that provide retailers and consumers with exceptional value.

Value is a core tenet of the Columbia brand and must be maintained.

Second, our products must be relevant, clearly differentiated and segmented for the various distribution channels through which we sell.

And third, we must continue to strengthen the core Columbia brand.

The initiatives to improve outerwear sales began last year, with the announced reorganizations of our sportswear and outerwear design groups into one apparel merchandising and design team organized by gender.

New outerwear product development initiatives include further development of Columbia's men's and women's adult casual outerwear line and added freshness to our core outerwear products.

We also made changes in our European general management last fall.

We are reorganizing our European operations to provide increased emphasis on improving our results in the northern European markets of Germany, Austria, the U.K. and Scandinavian markets, where we have substantial market opportunity for all of our product categories, including outerwear.

We believe these initiatives will strengthen our global outerwear market opportunity.

Now that the fine -- primary fall booking season is largely concluded, the Company has completed its analysis to determine the appropriate unsold inventory level to carry into the fall 2005 season.

Based on our analysis of a variety of factors, including channel inventories, economic environment, financial health of customers, and the retail environment generally, we believe it's prudent and necessary to produce a lower unsold inventory position than last year's elevated level, but slightly more than average going into the fall season.

Overall, while disappointed with our fall outerwear orders, we are focused on maintaining and growing our outerwear market position in the U.S. and continuing to leverage the strength of our brands into the larger sportswear and footwear market opportunities.

Canada: sales of 25.9 million versus 22.4 million, an increase of 15.6% for the first quarter, or 7.1%, excluding changes in currency exchange rates.

Sportswear and outerwear shipments were strong in Canada.

Spring tops, pants and shorts in the Outdoor Issue and GRT lines drove sportswear growth in the quarter.

Spring rainwear also shipped well, and we have seen some good sell-through at key retailers in this product.

Sell-through of key styles in women's pants has also been good this spring.

All bookings in Canada were soft, particularly in outerwear products, due to the challenges similar to those in the U.S. market.

Fall sportswear and footwear bookings increased in Canada.

The current retail environment in Canada is competitive, but healthy, and we believe that our relationship with key retailers positions us for longer-term growth in the market.

Europe: first quarter sales of 46.6 million versus 42.9 million for the same period last year, an increase of 8.6%, or 1.9% excluding changes in currency exchange rates.

Spring footwear shipments of trail, hiking, and casual styles, particularly in the sports specialty channel, drove growth in Europe during the first quarter.

Footwear continues to be Columbia's fastest growing product category in the European market.

Retail sell-through of weather-dependent fall merchandise was solid during the first quarter, as the continent experienced a late cold weather spike.

The late winter conditions have delayed spring sell-through, but it is still early in the spring season there.

Overall European fall orders at March 31 increased low double-digit, with continued strength in the footwear product category.

However, growth was less than historical averages for the region.

European orders are increasing in most countries, with the U.K. and Italy showing strong improvement in fall order growth.

We are pleased with the progress in the United Kingdom, which has been a focal point for improvement by our new European general management.

The U.K. is a market where we have historically underperformed.

Germany and Austria continue to be a challenging market, due to poor economic conditions, fragmented distribution, and strong competition.

The European team is focused on improving our results in this market, and has recently hired a new sales manager for Germany to direct our efforts in that region.

I continue to believe that Europe is our most important growth opportunity among international markets for the foreseeable future, and I'm encouraged by the level of acceptance our brands have experienced in the market.

Other international, which consists of the collected -- collective geographic regions of Japan and Korea, where we sell direct, and other international markets worldwide, where we sell through distributor relationships, recorded first quarter sales of 36.9 million versus 26.1 million for the same period of 2004, an increase of 41.4%, or 36.4% excluded -- excluding changes in currency exchange rates.

Japan, a component of other international, recorded first quarter sales of 10.4 million compared to 10.1 million, a 3% increase, or approximately flat excluding changes in currency exchange rates.

Shipments of fall and spring outerwear products were brisk in Japan during the first quarter, driven by unseasonably cold weather in late February and March.

The cold weather delayed shipments of spring-related sportswear, offsetting the growth in outerwear sales during the quarter, but recent warm weather has improved sell-through of spring sportswear products in the region.

All orders in Japan increased modestly, particularly in the footwear category.

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

International distributors, a component of other international, recorded sales of 19.1 million compared to 11 million in the first quarter of '04, a 73.6% increase.

The vast majority of all sales to international distributors are denominated in U.S. dollars.

We continued to see exceptional growth across multiple international distributor markets during the first quarter, with solid growth in Russia and Hong Kong, China, and increasing sales to distributors in Argentina, Norway, Australia, Chile and Central America.

Sales of outerwear and sportswear to our distributors continued to be strong, and fall 2005 orders indicate that shipments in international distributor markets will continue to be very robust this coming fall season.

Overall, while pleased with our first quarter sales results and the progress made during the quarter in growing our business across geographic and product categories, we recognize that challenges lay ahead, and we must continue to maintain the strengths of our brand as we execute our growth strategies.

In closing, we are disappointed with the fall poor -- with the poor -- excuse me -- poor fall backlog results we reported today, which can be attributed primarily to weakness in bookings in two key areas of our business, U.S. outerwear and orders in a few northern European countries.

While a portion of the U.S. outerwear decrease can be attributed to poor weather conditions, we recognize that there are steps that we must undertake to strengthen our U.S. outerwear market position.

First, we must create outstanding outerwear products that provide retailers and consumers with exceptional value.

Value is a core tenet of the Columbia brand and must be maintained.

Our new apparel merchandising and design team is focused on this effort.

Second, our outerwear products must be relevant, clearly differentiated and segmented for the various distribution channels through which we sell.

And third, we must continue to strengthen the core Columbia brand.

We're also focused on strengthening our market position in northern Europe, where we have historically underperformed.

These markets provide significant outerwear opportunities, and our new European management team is addressing sales and marketing efforts in these regions.

Going forward, our business strategy remains steady, and we have made significant investments in distribution infrastructure and the design, merchandising and production personnel that we believe position us for long-term growth.

We are committed to growing the business through our key growth strategies that we so frequently articulate.

First, we will continue to enhance the channel productivity of our existing customers through effective operations of retail merchandising programs, including concept shops in focused areas.

Last year we installed, on average, one new concept shop a day at retail.

This year that pace is accelerating.

Second, we will continue to leverage our brands internationally and focus on building the business in Europe in the near to mid-term.

Our European management team is committed to strengthening our market presence in the less-developed northern European markets, while maintaining the momentum we have developed in France, Spain and Italy.

Third, we will continue to develop the merchandising category of sportswear and footwear more completely, while maintaining the strength of our core outerwear business.

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

And last, but not least, we will continue to seek out attractive licensing opportunities as we attempt to leverage the Columbia Sportswear brands.

That concludes our report.

Thank you for listening.

We'd be happy to field any questions.

Operator, can you please help us?

Thank you, sir.

Ladies and gentlemen, at this time we will begin the question-and-answer session.

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One moment, please, for our first question.

Our first question is from Robert Drbul with Lehman Brothers.

Please go ahead.

Hi.

Good afternoon.

Hi, Bob.

Bob.

A couple of questions for you.

First, on the -- on the excess inventory, where you are with it, can you just talk a little bit how you've distributed it, what -- what channels it's going to show up in, Tim, and -- and which retailers have -- have taken a lot of this excess product?

Sure.

The -- the bulk of the excess inventory from fall '04 is being distributed as we normally distribute our excesses through our regular channels of distribution, meaning our -- our regular core customers, sporting goods and -- and department store base.

We are also distributing some of it through the remaining outlet stores that we have.

If you remember, we -- we closed one or two outlet stores over the last couple years.

And lastly, there will be some through the off-price channel.

Okay, and -- and -- and when -- when you look at the -- in the forward orders, the backlog for the fall, can you talk a little bit about sort of the -- the channel orders, any retailers significantly down with you, in terms of your order book, or when you look at whether it's some of the -- the chain stores versus the sporting goods, are you losing shelf space in any of these stores or major cutbacks that you're facing?

Well, when I look at the backlog, Bob, I really identify three primary areas of weakness for the Company.

I mean, first of all was the impact of -- and I'm going to leave -- give you these in order of how I feel they've impacted, in other words, the -- the scale at which they've impacted the business.

Number one, weather, obviously a poor weather year.

Secondarily, competition.

There's been increasing competition from recapitalized companies in the last 12 to 36 months, and they've obviously noticed our strong position in the market and have really come at us.

And thirdly, we can't ignore the fact that while -- while our products will never be perfect, we -- we could have offered a better selection of products this year, and that's -- those are areas that we can improve.

So that's how I would look at it.

And in terms of specific categories or channels of -- of stores, there wasn't any one particular area that showed significant weakness.

It was really an across-the-board disappointment.

Okay.

And then when you look at the -- the balance sheet, Tim, with the $338 million in cash, where are you -- what do you have left on your share repurchase program?

Any thoughts of a dividend at this point?

Well, I'm going to let Bryan speak to the specifics of the -- of where we are on -- on the remainder of the share repurchase allotment, but at this time we think the most prudent use of our cash will be to go forward with the -- with the established methods that we've been using over the last couple of quarters.

So, Bryan, you want to talk about the -- how loaded we are there?

Yes.

The -- the board has authorized 200 million in aggregate, and to date we've purchased about 62 million, so it leaves about 138 million left on that program.

Okay.

And -- and -- and, Tim, I guess one final point that I would just ask, like -- long -- longer term, you guys target a high-teens growth rate.

Do you think those days are over?

Do you think that there's a big change here coming for Columbia, or do you think you can get the business back on the right track?

No.

You know, I think we still -- the goals for the Company are unchanged, and frankly, we have been very clear with investors when we talk about the opportunities and the scale of opportunities we've got.

They are going to be primarily Europe and primarily footwear.

We've always talked about our most mature business being North American outerwear, and frankly, we -- we didn't do as good a job as we should have done protecting our turf there.

We will improve there.

But, no, the -- the organic growth drivers for the Company, in my opinion, are still strong.

Great.

Thank you.

Thank you.

Our next question is from Virginia Genereux with Merrill Lynch.

Please go ahead.

Thank you, and good afternoon.

Tim, does your -- does your outlook for the year -- you -- you mentioned that backlog -- that you were getting some later orders, not just on the footwear side, but that some retailers had replaced -- had placed outerwear orders later, too.

Does your -- does your -- one, does your revenue outlook reflect that, and does your -- does that change the -- the -- would that -- would that impact your backlog at March 31, too?

No, we're -- we're -- we're clear about making the punctuation point March 31, in terms of reporting our backlog to investors.

We want to make sure that that's always consistent.

But we receive new orders every day and we receive lots of support from the customers, and we -- we believe that the guidance that Bryan has given -- we -- the Company has given today would include our expectations of additional orders to be received, and -- and -- and that have been received since March 31.

Okay.

Thank you.

And then let me ask you, does my math -- if I assume -- I think I'm in the neighborhood -- that your U.S. outerwear business is maybe a third of -- of the backlog, that it was down -- that your -- your backlog guidance implies -- I mean, your backlog numbers imply that U.S. outerwear was down something like 30%.

I mean, it's something like a third of the -- that it -- that it's down something like a third, if I listen --

I know Bryan -- Bryan's got these things right at his finger tips here.

I'm going to --

No, mean, I -- I would -- I would -- I'm definitely not a third, Virginia.

I think definitely we had some -- as -- as Tim alluded to, some weakness in North American outerwear with respect to our backlog.

But again, let's not forget about all the other -- the other -- the other direct markets in which we sell.

So we did have good growth in outerwear in -- in certain of the other countries in those direct markets, so I think overall we do expect to get some growth in -- in the -- in the outerwear.

It's just not necessarily going to come from the U.S.

Okay, Bryan, so I -- I guess I'm -- I'm still sort of stymied as to why the constant dollar backlog would be down 4.5.

If you had growth in any -- was growth less in -- if U.S. outerwear is a third and the other businesses are two-thirds, was -- was growth in those areas slower than -- ?

Yes, I'm not sure -- I'm not sure exactly where you're headed, Virginia.

I mean, In terms of -- in terms the areas of, I guess of strength, and I don't -- I don't want to go into specifics.

Right.

But just to add a little bit of color, on a consolidated basis, outerwear -- we do -- we do expect that -- that product category to grow this year, albeit not in the U.S. markets.

With respect to sportswear, again, I think you -- you've seen over the years that that's been kind of in that -- in the mid-teens range.

I'm not sure that's going to equal those -- those rates, at least in '05, but footwear is definitely going to continue to be our biggest driver on a consolidated basis, and overall, as -- as -- as we've laid out, we think around that 5% is going to be the right number, at least as we see the business right now for the full year.

Okay.

Thank you.

And then just one quick -- quick -- Bryan on the SG&A spend, it looks like it -- it came in a little higher than I think you had said -- than your -- it came in a little higher than your guidance on absolute dollar terms for the March quarter, and for the year it was a little higher than I would have expected.

Are you guys choosing to spend more around some of the initiatives that Tim mentioned?

I know you had some fixed cost increases, but are you also saying we're going to spend more on the shopping shops, etc.?

Right.

No.

Yes, to answer your question, it's -- it's definitely a factor of some of the things that Tim laid out.

We did mention that we are going to spend a little bit more of a budget this year on the advertising spend, so that's a part of what you're seeing on -- on the costs in the first quarter.

Also, I think we laid out at the end of last -- or, excuse me, last quarter-end that we have some incremental fixed costs added to the business, and so that, for the most part, will roll through for the full year.

I think we commented that incremental fixed costs around the $25 million range.

I think that number still is in a reasonable range, in terms of what we expect to add on to the business this year, and what's giving rise to pressure on the SG&A.

Thank you.

Thank you.

Our next question is from Noelle Grainger with JPMorgan.

Please go ahead.

Hi.

Good afternoon.

Hi, Noelle.

First, Bryan, for you on the inventory increase up 29%, how much of that is still leftover follow for goods, and -- and maybe how much of it is -- is already placed?

Yes, I would say that to kind of break it out in three different major groups, I would say that, number one, as we mentioned, the CMP method of sourcing, we've got some incremental dollars there, both in the raw materials and work-in-process.

That's where we are producing our goods in -- in China -- more where we're taking the inventory risks sooner in the process and putting that on our balance sheet.

Secondarily, in both finished goods, which relate to fall 2004, as well as we have some fall 2005 products already on hand.

I would say that that fall number is probably half the other piece of it, mostly related to the fall '05.

I think '04, we mentioned last time, that we had probably $20 million worth of incremental fixed fall 2004 we needed to put -- liquidate through the channels.

We've got the majority of that pushed through in Q1, and remainder of that will probably go in -- in for the most part Q2 and maybe a little bit dribble into Q3.

Spring-related items, again, as we mentioned, we do have some replenishment business, some promotional events, and most of the inventory we have there we feel very confident is a manageable amount of inventory to move through the channel, and all baked into the guidance that we've given.

Okay, so you are through more than half of that 20 million?

Yes.

Okay.

Tim, can you talk a little bit in terms of Europe and the initiatives that you've put in place, and really what in your mind, from a management perspective as you look at the business, is the time line that you expect to see a reacceleration there, given that's really an important long-term growth driver?

Right.

You said Europe, right?

Correct.

Okay.

Well, as you know, we made a change in the senior management of our team in Europe.

I mean, I -- I think its official start date was something like mid-December or something like that.

So Paul Gils has been on board now for four or five months and he's already made significant changes in the -- in the tenor of the team there, primarily changing in the -- hat I call the blocking and tackling of what we need to accomplish in northern Europe.

The product selection, as we -- as we all talk about, is never perfect, but it's quite good, and it's -- it's resulted in very significant growth for the Company over time in the Latin markets and the markets of Spain and France.

Where we've been under performing, in the U.K., in Germany, Austria, and in the Scandinavian countries, Paul has made steps to effect changes in the teams there and -- and make a true force out of our selling teams there.

That's where I think the shortfall has been to date.

He's also made steps to beef up the -- the team of merchants that are working in the area, so I -- I guess I would say I believe that our -- our opportunities in Europe are still enormous and -- but that they are really going to be -- they are going to come to the Company as a result of some basic changes that need to be made in -- in the guys on the ground, the -- the foot soldiers there, and I -- and we've made steps to do that.

And you really -- is your hope that that materializes for you for fall '06?

Oh, no, spring -- we're -- we're making changes in the German market which I think we will see at the senior levels this -- for -- sorry, for spring '06, and the U.K., we've already seen good results.

Those are changes that -- that took place just around the time that -- that Paul Gils came on board, and we've already seen good results there in -- in -- in growth and backlog in the U.K.

So I think we'll see that -- we'll start to see some changes in spring '06, and of course, more complete changes in -- in fall '06.

Okay.

And then on the -- the kind of advertising plan and increased emphasis on advertising, could you detail a little bit where you're focusing, in terms of either markets with certain channels of distribution, types of media, etc.?

And -- and I guess address -- is -- is it mainly coming in your in-store shops' acceleration, or -- ?

Yes, I would say not primarily.

However, it's -- we're going to be spending a little bit more as a percentage of sales there than we have in the past.

Not -- not significantly, but where we have the opportunity and -- and requests from our customers to install retail fixturing systems and shops, we want to continue to maintain those -- those install bases and grow them.

So that's -- that's a growing part of the ad spending, but we are going to be spending additional capital in -- in paid advertising, both some additional TV -- we are -- we were -- we had a reduced TV budget last year.

We are going to go back into TV slightly heavier, and we're also going to be doing a -- a significant amount of outdoor billboards.

And really it's across all markets, so that -- it's just the -- an increased opportunity for us to strengthen the brand.

Okay.

Thank you.

Thanks, Noelle.

Thank you.

Our next question is from John Shanley with Susquehanna Financial Group.

Please go ahead.

Thank you, and good afternoon, folks.

Hi, John.

Tim, I wonder if you could just comment a little bit more on your explanation of some of the challenges being faced by the outerwear business, specifically the mention that you made about the timing of receipt of products?

Is there a fundamental and lasting shift occurring within your retail customer base which may change the way you do business with these folks on -- on an ongoing basis, and could that lessen your future orders as a percentage of your [inaudible] business?

No.

You're talking about receipt of orders, I think, John, and --

Yes.

Yes, well, we've seen as the -- as our business in -- in some of the replenishment -- as the Company has grown in some of the businesses that require replenishment styles, and I guess I would call those the men's pants, like our rock pants, we still receive customers' orders in advance on that merchandise, but it may not correspond right to the March 31 date the way some of our other products do, and -- but I -- I wouldn't see that as a fundamental shift.

It's still, at -- at the end of the day, a small part of our total business.

What we are seeing is when customers are buying container-direct merchandise from Asia, some -- some of those orders have come behind what a typical order deadline, March 31 deadline is, in order to -- to -- to link up the -- the shipments directly from Asia to their factory, to -- to their store, excuse me.

So I don't see it as a fundamental shift.

I would say it's a slight shift, that it might be exacerbated this year based on the poor weather that -- and -- and we've seen this happen in the past after poor weather years, we just don't get the kind of enthusiasm for early ordering that we get in a year when it's been quite cold.

So I don't think I -- I see this as a fundamental shift of the -- of the Company's basic business model.

I see it more of an aberration for this year.

All right, and that includes outerwear?

Are -- are the retailers willing to give you a commitment to basically ship to them early in the year, like they've done in the past, in terms of getting the goods in in July and August for the entire fall season?

Are they still willing to do that?

Oh, I see what you're saying.

Well, no, we've seen a shift over many, many years now for -- for shipments to go from time -- to be parceled out over the year.

That's something that's been happening for quite some time, but in terms of the requirement for us to have an order in -- in time to make the merchandise, that's -- that's unchanged.

Well, I -- what I was really getting to, I guess, is -- is there a chance that you may have to build inventory on a spec basis and wait for your retail clients to take the orders out on an as-need basis?

Yes, I see what you're saying.

Well, we -- the Company analyzes and makes a speculative purchase every year.

We're -- we've taken a reduced speculative position this year as against last year, and it does not change our fundamental view of the business that we need -- we can't be responsible for the -- for the inventory we have.

If a customer wants to buy it from us, he'll have to -- he'll have to buy it.

Okay, and that -- that's great.

Then, either Tim or Bryan, the 29% build on the inventory position, can you give us an indication of how much of that is fall '04 outerwear overhang, and what's the timing, in terms of liquidating the rest of the -- the residue of the fall outerwear product -- I'm talking about fall '04 outerwear product, in -- in this current fiscal year?

Sure.

As -- as I mentioned, I think -- as they relate to fall '04 inventory, we -- we've got the lion's share of that, at least the majority of -- of which liquidated in Q1, and I would expect that Q2 will be the -- really the quarter for us to -- to move the majority of what's left.

Again, the other piece that's happening there is, again, as Tim mentioned, the replenishment piece of the business and in some of the sportswear product categories, coupled with fall '05 receipts.

I think Q1 is not a heavy fall '05 receipt month, more like Q2 is -- is a heavy receipt month for us there, but we do have some spring inventory that we move -- also need to move through the channel.

All right.

So the -- the vision now, Bryan, is by the time we get into the important back half of the year, we will be in, what, fairly clean inventory?

That is certainly the expectation at this point, yes.

Super.

And the last question I have is, on the footwear side of the business, Tim, is the -- are you seeing any new avenues of opportunity, either with opening new doors with new accounts or new existing retail accounts that you have with being able to get into additional outlets of those stores, with the ability of now supplying East Coast people with footwear products on a more timely basis?

Well, I would say that we haven't seen any really new customers come on board, but certainly increased penetration with some of the bigger ones, and -- and -- an East Coast location for the inventory has certainly been a positive for us with those primary customers, certainly.

Can you see this building as the DC center gets more established, or have we pretty much seen whatever benefits you're going to get?

Well, I think there's no question that the biggest product category growth for the Company is in footwear, and this -- this will just continue to -- to give us an opportunity to be strong in those -- in the -- in the very significant fulfillment areas where -- where these large retailers really want-- want to see performance, so --

Okay.

Is -- is the majority of that growth occurring in the East Coast, or is it pretty much across the country?

I would say it's across the country.

Okay, fair enough.

Okay, thanks a lot, folks.

Thanks, John.

Thanks.

Thank you.

Our next question is from Liz Dunn with Prudential Equity Group.

Please go ahead.

Hi.

Thank you.

The first question is on the -- the product.

You mentioned some disappointment in -- in what you delivered.

What exactly would you say was -- was wrong with the product?

That's the first question.

Sure.

I mean, it's hard to -- it's hard to point with specificity in any particular point without sort of getting into a very descriptive --

I mean, is that color blocking -- you stocked with color blocking and the market moved to sort of a monochromatic thing or --?

Well, I think that's -- that's part of it.

We have a -- we have solid business in what people would refer to as ski or -- or color-blocked items, and we -- we've had that business for a long time, and we -- we probably, frankly, didn't offer as many monochromatic options to our customers.

And there's -- there's other areas that we can point to where we think we may -- should, frankly, have been more updated and -- and more current than we -- we were.

But it was just more to point out to investors that we -- we aren't -- we aren't running from this.

We think that there are areas of the business that, regardless of competition or weather, that we can improve on.

And so it was -- it was merely to point out that that factor exists.

Okay.

On the competition front, you guys still don't pay markdown money.

Are your competitors paying markdown money, and do you think that there's any -- or do you have any concern that you might have to sort of change your terms, relative to markdown money, to compete?

And then also as a related question, is it true that you -- while you don't pay markdown money, you may from time to time offer discounts on -- on forward orders to sort of make up for -- for poor performance in a prior period?

Okay.

Well , I -- I really can't comment on our traditional branded customers -- excuse me, competitors, in terms of their selling terms.

I know we would have a bigger business if we agreed to -- to give out markdown money, but we -- we've chosen to avoid that.

We -- we basically negotiate terms with our customers for all sorts of products over many, many periods of time, and so we want to make sure that customers feel like they are getting a very high return on the Company's products, and that we're competitive whenever -- whenever we need to be on terms of pricing.

Is there a meaning -- any sort of meaningful difference in the -- in the nature of orders from sort of your department store accounts versus the sporting goods channel?

Because it seems like the -- at least in outerwear, the competition in the department store channel hasn't been as intense for you guys.

Anything to say there?

No, I think we -- we were -- we had sort of an equal disappointment across all channels.

Okay.

And then finally, is there anywhere -- I know that you guys have sort of -- you're investing in your business this year, but is there anywhere that you could potential potentially cut spending, given the tough sales expectation this year to -- to potentially offset some of the results?

Well, we -- we've done a thorough analysis of the -- the SG&A spending for the Company, and we have significant initiatives in-house to -- to manage the expense levels where we believe it's appropriate and prudent to -- to constrain them.

However, if we're going to grow the business, which we intend to do, we'll need to be making investments in some of the areas which are critical, and those -- and those are the areas where we've decided to -- to continue to invest, and frankly, I believe they'll -- they'll yield great rewards for the Company over time.

But those areas where we can constrain, we certainly have been doing that.

Okay, thanks.

Good luck.

Thank you.

Our next question is from Jeff Edleman with UBS.

Please go ahead.

Thank you.

Tim, as we look at your -- or, Bryan, as we look at the cash position, if -- if you were to achieve your current target of net income and you see yourself correcting some of the problems, is there any reason you would not spend your -- or reinvest your free -- the remaining free cash flow back into stock repurchases, given what we're looking at here?

Bryan, you want to take that one?

Sure.

With respect to the stock repurchase, I think our -- our plans would -- we've -- we've laid out another $138 million that we have access to.

I guess we would intend on using that.

How fast we will do that, I really don't want to comment to at this point in time.

I will say that, at least as where our business has us for this particular year, a little bit of a slow down in the top line is obviously going to give a little bit of a surplus of working capital, and I would expect our free cash flow, at least as we see it at -- at this point in time, would probably be close to about 100 million this year, so we certainly liquify and -- and use a great deal of that cash

Okay.

And then secondly, you mentioned at the outset your fully depreciated facility in Portland and -- and also the one in -- in France.

Are we going to be looking at another -- or reinvestment which would then cause a noticeable step-up in costs and depreciation that's going to be kind of a -- a depressant on -- on margins going forward?

All right, well, Jeff, just -- just to clarify the earlier comments, the -- the facility in France is only a year old, so it's -- we don't have any -- any issues with depreciation there.

What we've seen is a -- is a rapid growth in footwear in Europe, and it's really -- we didn't anticipate our footwear business would grow as fast as it has, so there'll be -- there's some modifications in place to -- to make sure that we can continue to -- to provide high levels of service to our customers on footwear specifically from that facility, but they are not going to be significant.

When we talk about the depreciation, our Rivergate distribution center was opened first in 1993, if I'm not mistaken, and we have some pieces of equipment there which have -- which are outside their useful lives, and those are areas where we need to go back in and -- and work on those things specifically, but we don't anticipate any -- any additional CapEx requirements for new -- new initiatives, other than -- than those two that we've talked about.

Okay.

And then finally, a few years ago you sort of ran into the same problem in -- in -- in sportswear, the product was -- was a little tired, a competitive market, and -- and you certainly-- you made some changes and -- and you bounced back.

Have you gotten any feedback yet from -- from your customer base as to some of the changes you've made, thinking about, or is it show me first and then I'll let you know?

Well, again, if we -- if we really segregate it into the two areas of primary concern for the Company, one being those northern European markets where we've got issues on blocking and tackling, certainly, I think, we won't even need to have the customers tell us.

We know we're doing the right things there, and we've got the team in place that can -- that can fix that.

So that's -- that's -- I have a high degree of confidence there.

In the U.S., I have a high degree of confidence in our team's ability to -- to fix the -- the product things, which I -- again, I -- in order of importance, I think that was our least, but we're not running from any issues.

So those areas I think we can fix , and it's going to be a combination of just competing and -- and taking the gloves off and providing terrific product for our customers.

Okay.

Has relative value come into the equation at all, as you're talking to your customers?

Yes.

Certainly -- certainly, we -- we've had several recapitalized companies competing with us now and targeting us, that we -- we did -- we haven't had in the past, and -- and we'll need to be mindful of those folks and others, and again, we'll just -- we just need to take the gloves off and get back in there and do it.

Great.

Okay, thank you.

Thanks, Jeff.

Thank you.

Our next question is from David Campbell with Thomas -- Thompson Davis.

Please go ahead.

Thank you.

Hi, Tim.

Hi, David.

With the strong growth of the international distributor business, have you had any thoughts about bringing any of those in-house at this point?

Well, the bulk of our growth in those international markets have been in either markets which are relatively small and new for us.

We didn't call out South Africa specifically in the -- in the conference call, but that's another area that's been quite good for us, and growing.

And so I would say in -- in aggregate, many of our -- much of the growth in those international markets has been in -- in those small population base, but brand-new -- brand-new markets for us.

In areas of -- where there's large populations and significant business, I would -- and I would point out both Russia and Hong Kong, China, those -- those geographic areas are -- I don't want to say difficult, but there -- they require a high degree of speciality when it comes to -- to working in those markets, and we're fortunate to have great distributor partners in those markets, where we believe that they can do a better job of distributing the product and -- and collecting the cash, doing all those kind of things in a -- much better than we can at this time, so we -- we're not looking at taking any of those markets back.

Okay.

And also, how are the backlogs for Sorel and Mountain Hardware?

Yes, those have both been quite -- by comparison, good for -- for the Company.

And how is the -- the Sorel apparel doing?

Is that gaining any traction in the market?

I would say it's an area we still need some work on.

It's a small business today and well received in -- in many geographic markets, but I would say that's an area that still requires continued work.

Thank you very much.

Good luck.

Thanks, David.

Thank you.

Our next question is from Elizabeth Montgomery with SG Cowen.

Please go ahead.

Hi, guys.

Hello.

Hi.

I -- I guess I only have two questions left.

What kind of response have you gotten to the casual styles for outerwear for fall '05?

They've been good.

We've had growth in the casual outerwear style.

We just haven't had enough depth, frankly, in my opinion.

Okay.

And it's -- it's probably too small to really balance things out?

Yes.

Okay.

And then, can you remind me, how much of the revenue for sportswear and footwear is through prebook orders versus at-once?

Oh, sportswear is very -- well, yes, very high 90s, I would say, and footwear is probably in the 85% range, some of that, I would say those would be reasonably accurate numbers to work on.

And the -- and the -- the incremental inventory that you're going to take for '05 in those categories is the same as -- as you did in '04?

Sportswear will -- yes -- yes -- I -- I'm -- we're just scratching at a couple pieces of paper here, but yes, they would be about the same.

Okay.

Thanks a lot.

Thanks.

Thank you.

Our next question is from Margaret Mager with Goldman Sachs.

Please go ahead.

Hi, Tim.

Hi, Margaret.

Can you tell us what the closeout levels were in 1Q '05 versus 1Q '04 in the margin -- closeout margins?

I don't know if I can or not.

I'm not sure -- I'm not sure I have the specific numbers in front of me.

I think that certainly we -- we sold a lot more volume of fall '04 closeouts in Q1 than we did the prior year at -- at, I think, overall probably a little bit lesser margin.

And that's obviously baked -- was baked into the -- baked into the guidance and -- and certainly the results that we reported today.

Okay.

The -- the backlog that you provided for, it's for the fall '05 season, is that right?

I think we -- we provide both global and -- and fall, yes.

Okay.

So the product line hasn't been changed yet, so it's really a change in your outerwear product, in terms of the improvements you -- you feel you need to make.

That won't really occur until the fall '06 line?

That's correct.

That's correct.

And again, I -- I don't mean to overemphasize the product.

I mean, I -- I -- in my opinion, our disappointments today are a result, in order of importance, the weather, competition, and product.

I just want investors to understand that we're not saying that we can't improve here.

We -- we -- we think we have areas to improve.

Okay.

And then with regard to the competition, can you just be a little bit more descriptive about what -- what is going on on that front?

Is there a price compression?

Are opening price points getting lower through private label or through other brands, or is the high end coming down on price?

Is there something moving on quality?

If you could -- if you could talk a bit more about the dynamic of the competitive environment?

Sure.

Well, on the top end we have some recapitalized companies.

There's several of them that have changed hands recently, within the last call it a broad-brush 12 to 36 months, who have not been [inaudible] of the Company's -- our Company's success in outerwear and have -- have really targeted the Company as a -- as a competitor, and they've been successful in gaining entry into some of our traditionally solid markets, where we still have a solid position but we're giving up growth in many cases in those -- in those markets.

Secondarily, private label and other sort of quasi private-label companies have also been taking shots at us, and so the -- the business is just getting more competitive in the outerwear market from both categories, and we -- we haven't been as responsive, frankly, as we should have been, so --

Tim, if you analyze the backlog in outerwear by price zone, would you -- would your backlog be weaker in high-end, or -- or the lower-price points?

No, I would say, frankly, it's across the board.

Okay. hat's interesting, because -- that it would all happen at the same time and it's not just on sort of one front.

With regard to retail -- your retail customers in the U.S., I think I heard you say in answering another question that you saw a similar sort of reductions across channels of distribution.

Is that -- did I get that right?

Yes.

Okay.

Can you just talk about your comment regarding retail consolidation and how that's impacting you, if you can be a little bit more detailed there?

Is it just the Dick's/Galyan's situation, or is there more than that?

Well, I would say with -- we -- we always try and make sure that we're -- we're being not too descriptive of our -- of our -- of our customers, but certainly that amalgamation, which were two great customers of the Company, and -- and their surviving company, Dick's, maintains a real great relationship with the Company, but the merchandising strategies changed there and the combined volumes between those two companies didn't -- didn't survive -- so in other words, one plus one didn't equal two for us, in terms of our -- of our backlog.

So that comment really is that -- is that customer, because there's not other factors in retail consolidation that are impacting you?

I know you -- you don't do business with May-Federated.

We have a little bit of business with May-Federated, but no, we're really talking primarily in those areas, and there also -- there's been some European consolidation as well, which has been impactful.

Okay.

You don't see your department store customers, Kohl's or Penney's, doing anything different with regard to their view of fall '05 as a result of the May-Federated merger, do you?

No.

I see no reaction there.

Okay.

And then lastly, regarding the outlook for the fall -- fall -- second half of 2005, what would -- what is your assessment of the view of retail at this point for the second half?

Do you think retailers are bracing themselves for a slowdown in consumer spending, or are at they just plodding along, still looking for mid single-digit comp store sales increases?

How -- how do things look from your vantage point?

Yes, I -- I find the mood of the retailers is -- is not depressed, I mean, I think it's they are rather expecting a good season, frankly.

Okay.

That's very helpful, Tim.

Thank you.

Thanks, Margaret.

Good luck in '05.

Hi, Margaret.

Okay, Gert.

Take care.

Thank you.

Our next question is from Jamelah Reddy [ph] with McAdams Wright Ragen.

Please go ahead.

Thank you.

Could you talk a little bit about where you stand in the process of hiring your new footwear executive?

Yes, Jamelah, we're not ready to -- to make an announcement there on that subject.

Okay.

With respect to your increased ad spending, is that a result of the increased competition in the United States, or is it independent of that?

Well, I think we realized that we -- many -- among the other things we need to do is to continue to strengthen our brand, and -- and we want to make sure that to the extent we -- when we talk about paid advertising, that we're -- what we're optimizing consumers' awareness of the brand, and -- and really it's a function of -- of that as much as anything, but certainly we want to make sure we're -- we're -- we're top-of-mind, to the extent we can make that happen through advertising.

Okay.

Thank you.

And just lastly, from a very big-picture perspective, these are some things I've heard you talk about in the past and I think in answering a question you referred to your long-term growth rate and your -- the growth in footwear, but I just wanted to sort of hear you maybe reiterate your feelings towards footwear becoming larger than outerwear eventually, as well as long-term growth rates at the mid-teens.

Are those still two things that you feel comfortable with?

Yes.

We believe that the strategies that we talk about so often we -- can yield organic growth in the high teens, and that's -- we -- we -- we think that that opportunity certainly exists for us, and in terms -- from a categorical standpoint, we believe that footwear will ultimately be the largest product category, but we'll have to work hard to make that happen.

Okay, great.

Thank you very much.

Thanks, Jamelah.

Thank you.

Our next question is from Ed Aaron with RBC Capital Markets.

Please go ahead.

Thanks.

Good afternoon, everybody.

Hi, Ed.

Ed.

A couple questions for you.

First of all, you changed the timing of when you give guidance this year, giving it after Q1 instead of after Q4.

It makes it a little bit more difficult for us to gauge any -- any changes in the outlook from -- from last quarter to this quarter.

Could you maybe just talk about how things shook out and -- versus what you were expecting 90 days ago?

Yes, I think you are referring to the fact that I think the year before last, we -- we tried to at least put a fence around what we thought the -- the opportunities for the year were, and I think even we can get somewhat [inaudible] at that point in time, just because we don't have real clarity from where our customers' demand is going to be, so we -- I think we gave everybody a heads-up back in the third quarter conference call that we'd be deferring until we have all of our backlog in, and we'd give better guidance once we have the bulk of our orders in, and we just feel that that's a better time for us, in terms of this quarter's conference call, to really give respectable guidance for -- for outlook for the full year.

And -- and -- and versus when you did your Q4 call, are you -- is your view of the world about the same, or is it -- has it changed much?

Well, again, I don't know -- I don't know that we had a real -- a real clear view of the world at the end of -- at the end of Q4, just because the bulk of our orders were not in.

So it -- it really was one of continuing to get out of the market and have -- have more order deadlines for our customers to meet and -- and compile and aggregate all the orders, so I don't think we had a clear look at that particular time, so I really can't comment whether it's changed a lot.

Okay.

What -- what about just with retailer sentiment, kind of to follow up on the last question.

Is it -- would you characterize it about the same as you would have last quarter?

Retailers' moods?

I'm sorry -- yes, I'm sorry, one more time.

I didn't under -- I didn't really understand the question.

Just your view of -- just retailer sentiment right now, compared to 90 days ago?

You know, I think it's probably unchanged.

The further they get a way from a poor winter, frankly, as it relates to Columbia, the better they feel.

Great.

Okay.

And then one more question just on -- on footwear.

There seems to be a -- a difference in terms of the growth rate on spring and -- and fall.

Is -- is that just a matter of fall footwear being a more mature business, or -- or are there some things happening on the merchandising front that are making maybe the spring line grow faster than the fall line?

Well, when we look at the opportunities for the Company from -- in footwear. because there's -- there's such a high population base in areas of the United States, certainly, where it's -- it -- they never need winter footwear from Los Angeles to San Antonio to Miami.

It's just the -- the natural growth for the Company will be in less weather-sensitive product.

Okay, okay.

Thank you very much.

Thanks.

Thank you.

Our next question is from Mike Marianacci [ph] with [inaudible] Capital.

Please go ahead.

Yes, hi, Bryan.

Just couple of quick things.

Regarding the accounts receivable.

I think you said something to the effect that February and March shipments were significant.

Is that different than in years past?

I -- I'm not quite understanding why the -- the DSO is higher this March as opposed to the last two.

I mean, any time -- any time you've -- as you go through the quarter, there's going to be different months that just, depending on all of our customers, and it's -- obviously we're a global company now, so it's not just here in the States, but -- but -- but everywhere we're direct, there's -- there are different shipping windows that we -- that we try to, obviously, get to with our customers, and as it -- as it turned out during Q1 of this year, we had a significant increase.

The bulk of our Q1 increase over Q1 of 2004 came in the month of February, and maybe more importantly, in March.

So it certainly backends the -- the waiting with respect to not really having as great a chance at collecting all those customers' bills, and really that's the primary driver.

There's no real changes in customers' terms, there's no real new terms being offered to customers.

Obviously a lot of our terms and arrangements that we make with customers are really broad-based and they really happen at the start of the season.

So, again, it's a waiting factor, and again, the -- where we -- where the allowance is, is an appropriate level for the -- for the -- both the amount of receivables and the -- and the aging.

Okay.

Just to follow up on that, I don't know if you gave it or not, what -- what was the allowance at March 31?

I believe the allowance was a little under -- at little under 9 -- or 8 million, right around -- I believe it's 7.9 million at the end of March this year.

Okay.

Now -- now, if I look at that as a percentage of the gross AR over the past couple of years, then -- the percentage has trended down a lot, and you're doing business in jurisdictions that you hadn't done in the past, and I'm just wondering why the allowance as a percentage is -- is trending down so dramatically?

I mean, it was 6.6 two years ago.

It's 3.3 now

Right.

I think you look -- if you look at the accounts receivable allowance, it -- it's pretty consistent with that of year-end.

I will say that we've had some significant writeoffs, that's the other factor that you do have to look at in -- in analyzing this, and we did have probably close to four accounts that we did write off in Q1, and obviously felt that hit because we needed to add back that provision, because we felt it was warranted to get the reserve to where it was, so --

So how much were the writeoffs in -- in the first quarter?

Writeoffs in the first quarter, I think were -- I don't have the exact number -- I think it was over a million bucks, call it.

I think it was around a million 2, a million 3 range.

Okay.

Writeoffs in the first quarter.

All right.

Okay, thank you.

You bet.

Thank you.

Our next question is from Steve MacMillan with KBSH.

Please go ahead.

Hi.

Are 20% operating margins a distant memory, or are they something we will eventually return to in the long return?

Well, again, in addition to the Company's high-teens growth goals over the long term, leverage is also one of the key goals for the Company.

Obviously, when you're at 20% operating margins, it's difficult to have leverage there, but still even at today's guided numbers, we're still a very profitable company with significant assets, and our goal is to have leverage, and -- and to the extent that we can grow our business and start making better utilization or more full utilization of the distribution assets we've got, we believe that higher operating margins can -- can be returned to the Company.

Do you think you've lost more market share -- or if you did, indeed, lose market share on your backlog -- to private label or to the new well-capitalized competitors?

I think it's probably a combination.

All right.

And that should be -- that's it for me.

Thank you very much.

Thank you, Steve.

Thank you.

Our next question is from Jim Duffy with Thomas Weisel Partners.

Please go ahead.

Hi.

Thanks for taking my question, and I'll try to be brief here.

I guess a strategic question, the first of your three focus principles for outerwear value, do you think that private label has kind of commoditized the -- the notion of value?

No.

I -- I -- I mean, it certainly has made it more challenging, and we'll need to be better and provide greater value, but I don't -- I don't think we're at -- we're not at cotton T-shirt area yet.

I think there's still lots of opportunity for brand -- for the brand to -- to grow and -- and have significant value, and -- but not -- not the brand alone.

It has to be a true unique product and -- and value as it -- with all the things that means.

Tim, on the outerwear front, have you considered retrenching some and going back upstream, up price point with products?

Well, certainly we think that we've covered ourselves with Mountain Hardware with that area.

We certainly have a -- a fine brand there at -- at really the top-of-the-pyramid price points, and so I think as that brand continues to expand and -- and gain traction and -- and more distribution that -- that that will cover us off for that area, but that having been said, Titanium is still a significant part of the future for the business, and -- and we --we -- we can improve there, as well.

Okay.

Thank you very much

Thanks, Jim.

Our next question is from Mitch Kummetz with D.A. Davidson.

Please go ahead.

Thanks.

A few questions.

First of all, with the backlog, I know spring is a small percentage of the back -- the consolidated backlog here, but still I would think a meaningful contributor to the second quarter.

It looks like it's basically flat year-over-year.

I was hoping you could address that.

I don't know.

Bryan, you want to take that question?

Sure.

I think we -- we give -- we give the numbers for both fall and spring.

I think spring is fairly flat.

I don't know if I can add a lot of color there.

I think in terms of -- again, I think that's a -- a -- not as meaningful of a number at this point in time in our -- in our -- in our cycle, so really the relevant thing to take away from our backlog reported today is -- is certainly fall.

But it would -- still represents, I think, around $113 million worth of business.

Does that hit in the second quarter, or does that get spread out over the -- the next few quarters?

Well, again, most of it's going to hit in -- in -- in -- in the second quarter.

And -- and then again, as Tim and I both have referred to earlier in the call, it -- it -- there's going to be a piece of that that's held kind of more as a replenishment type of an item.

It's labeled as spring -- spring merchandise currently.

Okay.

And -- and -- and Bryan, maybe you could address the -- the guidance.

I know in your remarks you mentioned gross margin down 100 bips for the year, SG&A up 250, and couple that with the sales increase of 5%, that gets me to the low end of your net income range of down 12%.

Where could you potentially see upside to that, to where you would be at the negative 8%?

Would it be on the gross margin side, the SG&A side, the sales side?

Where -- where is there upside relative to those parameters that you laid out on the call?

Sure.

In terms of -- I guess I just went down the P&L and -- and, again, I -- I think I'll just -- I'll just kind of blanket this statement with -- with really that this is the best guidance that we have at this particular time with current information that we have.

So certainly our backlog, coupled with the fact that we moderate exchange rates, coupled with the new orders that we have since 3/31, we're obviously giving a -- a picture of the year that's better than what the backlog announced today, so I think we factored in some of these sales.

Gross margin contraction, again, is going to be both focused on the fall 2004 closeouts that we've already had, both in Q1 and will -- we're -- we'll also have a little bit more in Q2, coupled with the -- the contraction in -- on our product mix shift.

Again, disappointing outerwear backlog numbers is -- is certainly going to amplify a little bit of that product mix shift.

Again, that's all baked into that 100 basis point, so I think -- again, I think that's a -- a good number, at -- at least as I look at the business today.

Probably the -- the one area where, again, as Tim mentioned earlier, that we're going to continue and we've already got certain initiatives underway currently, is -- is to really watch the SG&A costs.

We added a lot of incremental cost to the business last year.

We're mindful of that, and without the top line sales, certainly we need to be mindful this year as we -- as we proceed through the year to -- to curtail costs.

We're going to do so, as long as it doesn't impede our business going forward, and -- and that's what we're certainly focused on at this point in time, is -- is 2006

And I assume some of that's already reflected in your outlook for the back half of this year, because it appears as if your sales outlook for the -- for -- for Q2 is not as bad as your outlook for -- for -- for the second half of the year, but it looks like you're getting more deleverage in the second quarter versus the second half, even with a better second-half sales outlook.

Is that -- does that reflect the cost-cutting initiatives in the second half?

Yes, I would believe that would -- well, absolutely they are going to be a little bit more prevalent in the -- in the back half, and again, Q2 volume is also very small, compared to the back half of the year as well.

Okay.

Let me ask you just one last -- last question.

This kind of goes back to another question that was already asked, and that is, if -- if you were to assume more normal weather patterns in the back half of this year for fall holiday, which I would assume would mean less excess inventory coming across year-end and -- and probably a better fall backlog for next year, how much margin do you think you can recover next year?

It looks like what you're saying, operating margin maybe is in around the 16% range this year.

I mean, can you recover 100 basis points of that next year?

More or less?

Do you have any sense of that?

Well, a lot of it is going to have to do with the -- the mix of products, because we're expecting and -- and the goals of the Company to have high growth in -- in all of these product categories that we -- that we -- that are -- are involved in, and it's just the question of which -- which ones were successful.

And we -- we are obviously are very focused on the outerwear.

Today the topic of the day has really been about outerwear and -- and what we've done there, but we have -- there's lots of other initiatives in the business to -- to --to get us growing, and so it's just how successful we will be with all of those.

It's hard to predict.

Right.

And -- and -- and it -- and it truly is one of -- of -- of where that top line is.

I think you've seen this year that -- that the -- the impact to our operating margin is certainly more of a -- a factor of SG&A deleverage than it is necessarily gross margin contraction.

So again, looking out to 2006, it's -- it's clearly a top line story.

Okay.

Thanks, guys

Thank you.

Our next question is from John Rouleau with Wachovia Securities.

Please go ahead.

Hi, guys.

I don't mean to keep beating the outerwear competitive question, but I guess I just want to make sure I'm clear.

I mean, of the competing brands has -- has fairly successfully kind of reinvented itself more around let's say fashion and style, a little less around value and -- and utility, if you will.

I'm sensing that you're still squarely focused on value, maybe to a lesser degree fashion.

Is that likely to change?

Is that an accurate statement?

I mean, how do you kind of look at the fashion component versus value?

Well, we don't -- we don't consider you ourselves to be a fashion company.

We consider ourselves to be a solid performance protection company.

No, so I -- I would expect that the -- the tenets of the Company are still going to be maintained and -- and strengthened, and we've found that over -- over time, fashion can come and go, but the -- the brands that really protect and offer real value are -- are long- term, so that's -- we're going to stay right where we've been.

Got it.

Okay.

And then, again, going back to the competitive side, I'm wondering how you're looking at this kind of quick -- Quicksilver-Rossignol merger, whether your sources are indicating Rossignol kind of may line up more with Columbia in the past, maybe on a pricing or distribution side.

I mean, I know it's still very early on, but outerwear is obviously an area that I would expect the combined entity to kind of compete.

Any ideas on kind of may -- where or how that lines up with -- with your existing business?

No.

Obviously there's lots of great companies out there we compete with, and -- and the folks at Quicksilver would certainly be one.

We actually compete with them quite directly in Europe.

They have a fairly significant outerwear business at this time under the Quick brand.

Right.

So, yes, we -- we want to make sure that we give them all the respect that they are due.

I don't know how -- how impactful the Rossignol brand will be , just based on how the ski -- the -- the -- the hardgoods ski business is sort of going globally.

It's not a -- it's not an area where there's lots of activity, so --

Right.

Yes, it's not a big factor right now.

Okay.

Thanks, guys.

Thanks.

Thank you.

Gentlemen, that was our final question.

Please continue with any closing comments.

Well, we want to thank everyone for listening in.

Obviously, we're disappointed with the results of our backlog we are announcing today, but I just want you to know that we're significantly moving forward on initiatives to get ourselves back on track, and we appreciate all your support.

Thank you very much.

We look forward to talking to you soon.

Ladies and gentlemen, this concludes the Columbia Sportswear 2005 first quarter financial results conference call.

We thank you for your participation.

Have a pleasant evening.

You may now disconnect.