Business Acquisition

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Business Acquisition

BUSINESS ACQUISITION

On May 30, 2014, the Company purchased 100% of the equity interest in prAna Living LLC (“prAna”) for $188,467,000, net of acquired cash of$4,946,000. PrAna is a lifestyle apparel brand sold through approximately 1,400 select specialty and online retailers across North America, as well as through five company-owned retail stores, an e-commerce site and direct-mail catalogs. The acquisition of prAna strengthens and diversifies the Company's brand portfolio and generally offsets some of the more seasonal sales effects found within existing Columbia brands. The acquisition was funded with cash on hand.

PrAna contributed net sales of $53,715,000 and net loss of $2,434,000 to the Company from May 31, 2014 to December 31, 2014, including amortization of acquired assets of $7,326,000. In addition, the Company incurred transaction costs of $3,387,000 during the year ended December 31, 2014. These acquisition and integration costs are included in SG&A expenses in the Consolidated Statements of Operations for the year ended December 31, 2014.

Purchase price allocation

Acquired assets and liabilities were recorded at estimated fair value as of the acquisition date. The excess of the purchase price over the estimated fair value of identifiable net assets resulted in the recognition of goodwill of $54,156,000, all of which was assigned to the United States segment, and is attributable to future growth opportunities and any intangible assets that did not qualify for separate recognition. The goodwill is expected to be deductible for tax purposes.

The following table summarizes the fair value of the net assets acquired and liabilities assumed and measurement period adjustments since May 30, 2014, the acquisition date (in thousands). Measurement period adjustments since the May 30, 2014 acquisition date were not significant.

	Valuation at December 31, 2014
Cash	$	4,946
Accounts receivable	10,021
Inventories	9,641
Other current assets	2,531
Property, plant and equipment	5,192
Acquired intangible assets	114,500
Other non-current assets	258
Total assets acquired	147,089
Accounts payable	2,803
Other current liabilities	5,029
Total liabilities assumed	7,832
Net identifiable assets acquired	139,257
Goodwill	54,156
Net assets acquired	$	193,413

The following table sets forth the components of identifiable intangible assets and their estimated useful lives as of May 30, 2014, the acquisition date (in thousands, except for estimated useful lives, in years):

	Estimated fair value		Estimated useful life, in years
Trade name	$	88,000	Indefinite
Customer relationships	23,000		3-10 years
Order backlog	3,500		Less than 1 year
Total	$	114,500

The order backlog was fully amortized during the year ending December 31, 2014.

At the time of acquisition, the value of acquired inventory was increased by $1,600,000 based on its estimated fair value. This valuation adjustment was charged to cost of sales in the second and third quarters of 2014.

Summary of Unaudited Pro forma Information

The following table reflects the unaudited pro forma consolidated results of operations for the periods presented, as though the acquisition of prAna had occurred on January 1, 2013 (in thousands):

	(unaudited)
	Year Ended December 31,
	2014		2013
Net sales	$	2,144,022	$	1,767,505
Net income attributable to Columbia Sportswear Company	145,483		94,170
Earnings per share attributable to Columbia Sportswear Company:
Basic	$	2.08	$	1.37
Diluted	2.06		1.36

The unaudited pro forma financial information is presented for illustrative purposes only and is not indicative of the results of operations that would have been realized if the acquisition had been completed on the date indicated, nor is it indicative of future operating results. The unaudited pro forma consolidated net income includes differences in the amount and timing of amortization of acquired intangible assets and the fair value adjustment for acquired inventory. As a result, under the assumed pro forma acquisition date of January 1, 2013, net income for the year ended December 31, 2014 and 2013 includes pre-tax purchase accounting amortization of $3,817,000 and $8,917,000, respectively. The pro forma net income attributable to the Company excludes nonrecurring transaction costs of $3,387,000. The pro forma results also do not include, among other items, the effects of anticipated synergies from combining the two companies or differences in the combined Company's operating cost structure.