Good afternoon. My name is Christian and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2009 earnings release conference call. (Operator Instructions) Mr. Ron Parham, you may begin your conference.

Thank you, Operator. Good afternoon, everyone and thanks for joining us on today’s call. About an hour ago, we issued our press release and financial schedules covering the results of our second quarter of 2009. With me today to discuss those results and answer your questions are Columbia’s Chairman, Gert Boyle; President and CEO, Tim Boyle; Vice President of Finance and Chief Financial Officer, Tom Cusick; Executive Vice President and Chief Operating Officer, Bryan Timm; Executive Vice President of Sales and Marketing, Mick McCormick; and Vice President and General Counsel Peter Bragdon. Before we begin, our Chairman, Gert Boyle, has an important reminder.

I would like to remind everyone that 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 annual report on Form 10-K for the year ending December 31, 2008 and its most recently filed quarterly report on Form 10-Q, as well as subsequent filings with the SEC. 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 call to conform the forward-looking statements to actual results or to report changes in our expectations.

Thank you, Gert. I will hand the call over to Tim.

Thanks, Ron. Welcome, everyone, and thank you for joining us this afternoon to discuss the results of our second quarter. I am going to keep my prepared remarks very brief today for two reasons; first, the second quarter is by far our smallest quarter of the year, typically accounting for approximately 15% of our annual net sales. Our fixed operating costs are not absorbed as effectively as in other quarters and we report the lowest operating earnings or loss, in this case, of any quarter. Second, during last quarter’s conference call, I focused my comments on the weak condition of the global retail environment. Since April, we have all seen and heard the continuing reports of weak retail sales, increasing unemployment, mounting mortgage foreclosures and additional corporate and individual bankruptcies. You are all well aware of these realities and that we and other consumer companies are operating under and I am not likely to add anything to the discussion that would be different than what you are hearing from others. As you know, the typical product cycle in this industry is about 18 months from product concept to retail floor. Over the past 18 months, you have heard us repeatedly describe the emphasis increasingly we are placing on product innovation focused around technologies that are easy to understand and that solve real problems for outdoor consumers. As one measure of that new focus, I am pleased to note that we have had more pending product -- excuse me; more pending patent applications today than at any time in our 71-year history. You have also heard us describe our new focus on developing products that address the needs of outdoor consumers within six broad categories -- winter, water, trail, travel, fish/hunt, and golf. Over the past year, you have watched as…

Thank you, Tim, and good afternoon, everyone. I will begin with the brief overview of the income statement and balance sheet. Please recall that Q2 is our lowest volume quarter of the year as we ramp down our spring shipments and begin fall delivery. Regional net sales comparisons often produce large percentage variances due to the small base of comparison and because of shifts in the timing of fall shipments to international distributors that may occur late in the second quarter or early in the third quarter. Overall, the second quarter came in better than the outlook we provided in April due to a smaller decline in net sales than anticipated, along with diligent expense management and a favorable effect of cost control measures that we have implemented over the past year. Second quarter net sales decreased 16% to $179.2 million with changes in foreign currency exchanges rates contributing 4 percentage points of that decrease. Looking at Q2 2009 net sales on a regional basis compared with Q2 2008, U.S. sales increased 2% to $97.7 million, driven by growth in U.S. retail as there were 16 more U.S. based retail stores operating at the end of Q2 2009 as compared to the same period last year. U.S. wholesale sales showed a high single digit percentage decline primarily due to the Columbia brand and primarily concentrated in our sportswear category, which is typically the largest category in our spring season business. The decrease in U.S. wholesale sales was also due in part to increased order cancellations, credit extension limitations, and the bankruptcy of several wholesale customers. EMEA sales declined 47% to $33.7 million, including a 5 percentage point drag from foreign currency exchange rates. Our EMEA distributor business declined mid 50s percent, reflecting very difficult macroeconomic conditions in our largest distributor…

Thanks, Tom. We are only about halfway through the process of taking orders for the Spring 2010 season and we will report our spring order backlog in October, along with our 2009 third quarter results. I am not going to go out on a limb and make any characterizations about what we are seeing so far in those orders because it’s just simply too early and there are too many unpredictable forces at work across the global retail landscape. We think there are still some rough patches for the economies in our key markets that for reasons well beyond our control could continue to dampen the immediate effects of our revitalized product and marketing strategies. These macro realities continue to have an impact on how we are managing our business in the near-term with a strong focus on expense management and inventory control. Those macro challenges are not deterring us from bringing much-needed innovation to the outdoor industry. Our product teams are well down the road on Fall 2010 and have started planning the concepts that will drive the Spring 2011 lines. Our balance sheet, with $318 million in cash and no long-term debt, continues to provide us with the financial flexibility to invest in our strategic initiatives to position our brands for when the global economy recovers. At this time, we would like to open up the call to questions. Operator, can you help us with that, please?

(Operator Instructions) Bob Drbul, Barclays Capital.

A couple of questions -- I guess first, with the completion of the Tour de France, I was just wondering, you guys have gotten a lot of press in terms of your sponsorship and I just -- from your perspective, can you maybe give us a little bit of insight in terms of how you feel like it’s impacting your business at all on the marketing side?

Well, we’re just thrilled with how the team performed and especially Mark Cavendish with the six stage wins, which is really unprecedented, especially for a guy from the U.K., so you can imagine our coverage in the U.K. and in Europe generally was phenomenal. So lots of exposure for the brand and -- but we frankly haven’t seen as much direct pick-up in the business but certainly the brand is on the tips of the tongues of sports fans and cycling fans across the U.S. and Europe.

And then I just have a couple of questions on the outlook for the third quarter and the fourth quarter. I guess the first one is when you look at the visibility levels and the guidance that you’ve given, or the guidelines that you’ve given us for the third and fourth quarter, how firm are you plans for shipping in terms of the third and fourth quarter in terms of looking at what is implied with the fourth quarter guidance when you consider given the third quarter guidance?

I’ll let Tom speak to it specifically because I know there has been some movement between the quarters but in general, as is our history and the way we give our outlooks is that it’s with a high degree of review of the existing order book with an understanding that we get cancels every day, we get orders every day, but -- so our outlook today is our best view of what we see as the future but I know there’s -- that Tom will have a little bit more color on that.

Bob, I would say that probably the biggest unknown is really the macroeconomic and credit environment, so barring any major fallout there, I would say it’s generally fairly consistent with the last few years.

Okay. And just Tim, I guess a final question for you is as you look at the outlook for the business and you look to the spring period, at what point in time do you think the retailers have cut too deep in terms of inventory, or do you think that there’s a possibility of any replenishment type sales as you look the next six to nine months?

Well, it’s my experience that retailers are being ultra conservative in their purchases for the future and I believe that they may well be planning themselves into a decline, which is sort of guaranteed -- if you buy not enough, you can’t fulfill the consumer demand. I don’t know what our other competitors are doing. We’re taking a very, very conservative view of speculative inventory and we are going to make sure that we’ve got the right inventory and levels which can support orders that we receive but we are really not going to go much beyond that.

Great. Thank you very much.

Your next question comes from the line of Eric Tracy with BB&T Capital Markets. Eric Tracy - BB&T Capital Markets : First, if we could talk a little bit about pricing. I know last week you talked about ASPs, at least on the apparel side, up 10%. Maybe talk a little bit about what you are seeing sort of in the core sporting goods channel with apparel and then again sort of the evolution of some of the product innovations you’ve made, how that flows through. And then again possibly if I could push just on the product cost side around that as well -- is it a margin neutral event that we should think about as we look to the spring [inaudible]?

Okay, let me make sure I’ve got it all -- I’ll just run through the questions as I’ve noted them here. So as it relates to ASPs, I know the bulk of our innovations have been in items that have more technology and more focus on solutions and so naturally, they are slightly higher in average selling price. But we always have to remember that our key -- one of our key words in the company’s key word set is value. We want to make sure that our democratic innovations are available at multiple price points across our product range. As it relates to costing, the demand in Asia obviously is reduced based on the macroeconomic conditions, so we are seeing more timely deliveries from our factories as a result of that and also less pressure on costing. So we are really -- we’re not able to talk about whether or not we are going to be able to capture much of that reduction in price yet but the expectation is that we’ll have competitive pricing for future seasons. Eric Tracy - BB&T Capital Markets : Okay, and just with respect to again kind of within the current environment in the sporting goods channel, again the dynamic of be it potential pressure on some of the higher end premium product versus private label and sort of where you feel like you are positioned from a value proposition.

Well, yeah, as it relates to value proposition, we are generally not at the same price point as private label. We are generally above that. But at the end of the day, retailers have to decide whether or not they want to take the risk of an enhanced private label position against a slightly lower risk buying products from brands like Columbia, which can be close to private label but offer them the ability to -- more flexibility on product selection and so our typical competitive set has been private label but I think we’re positioning ourselves to move not only above that but into a more premium position, especially as it relates to specialty stores. Eric Tracy - BB&T Capital Markets : Okay, and then maybe just lastly, just from a -- sort of embedded within the guidance I think relatively flattish G&A for the balance of the year, but how we should think about again additional opportunities from a cost saving perspective should top line come in a little bit lighter, sort of leverage you can pull there, as well as maybe the cadence around the marketing. I would assume some bit of ramp heading into the ‘010 line, or is that primarily Q1 type event?

So as it relates to the marketing, our marketing spend generally comes in in line with sales, so as we look at marketing spend for the year, [I think we’re off] a bit less than 20 basis points relative to last year, so I would expect that margin spend to be pro rata to sales in the back half.

There are other levers we can still pull to reduce costs and we’ve shown over the last several years that we are prepared to make decisions that can get our costs in line with our revenues. Eric Tracy - BB&T Capital Markets : Okay, great. Thank you, all. Best of luck.

Your next question comes from the line of Kate McShane with Citigroup.

This follows Bob Drbul’s question a little bit but I was wondering if you could help us understand a little bit better the mechanics of how you will manage your winter business this year. If retailers have to chase inventory in the fall, how will you be able to address this if you are taking a conservative stance on the speculative inventory?

Well, Kate, in historical periods we have taken our order book and made a speculative purchase on top of that to give ourselves the ability to chase business. This year as we talked early in the season when we released our order backlog for fall, we said we were going to take a very conservative approach, which we have, and our expectation is that retailers -- if they come chasing merchandise to Columbia for any significant quantities, they are going to be disappointed. We will have some, obviously, because we’ve got cancellations and we’ve had some bankruptcies, but we have by far the smallest amount of speculative inventory that we’ve had in the years that I can recollect. So retailers will be -- won't be able to find everything they need from us if the trends continue that business will be robust and they will just be -- they will have to find it somewhere else.

Okay, and I may have missed it in your prepared comments but can you just explain why sales in the quarter were slightly better than your original guidance?

Yes, it’s predominantly related to some shift in timing of the U.S. wholesale sales, predominantly, from the third quarter to the second quarter.

Okay, great. Thanks so much.

Your next question comes from the line of Reed Anderson with D.A. Davidson. Reed Anderson - D.A. Davidson & Co.: A question on the direct piece of the business -- it looks -- by looking back at my notes, it looks like you’ve stepped up at least a little bit the store growth expectations for this year. I mean, presumably that means you feel good about where that business is performing, or is it also a reflection of just there’s ample product out there you want to clean out, that sort of thing. Can you just talk a little bit about how you are thinking about that right now?

Sure, Reed. Well, I think -- I have to check with Tom to be sure but I think we are right on pace with where we though we’d be with our direct to consumer business. I don’t think we’ve grown it faster than we had planned. We are looking now at inventory levels that are much cleaner, frankly, than they’ve been in past years and we are really looking now at how we want to go forward with the retail business, and whether or not we need to be as growing as rapidly as we are today. It’s been a real significant part of the business and we’ve been pleased with the results so far, but we’re not going to -- our goal is to continue to remain primarily a wholesale business and our outlet stores are specifically to help us relieve inventories from time to time, and then the branded stores are really a very effective marketing tool for us. So we’ll be analyzing over the course of the next several months our performances and we have planned continued investments both here and in Europe and in Canada, but maybe not for the pace that they’ve been. Reed Anderson - D.A. Davidson & Co.: Okay, and then in terms of -- when you get to the end of this year, you are going to have 50, 60 stores. I mean, it makes sense that we start to see a little lift on the gross margin next year because of that, all other things being equal?

I’ll let Tom speak to that.

As it relates to 2010, our 2010 retail business, Reed, we’d prefer not to comment on 2010 at this point. I think that’s a little premature. Reed Anderson - D.A. Davidson & Co.: That’s fine. I was just in general -- that’s fine, though. And then in terms of -- just switching gears a little bit, in terms of the -- you know, we saw a lot of new product last week and you are taking a little bit younger look at your demographic or at least from a positioning standpoint. I was just curious -- is that also going to involve maybe some new fixturing perhaps at the store? Is that a piece that we should think about that as we look at your presentation at retail, that might change a little bit as we move into that line being introduced?

I think whether to not you have seen any of the new blue fixturing that we’ve been installing over time, that’s -- we consider to be a significant improvement and a higher visibility in-store and more excitement, but we aren’t going to be able to refurbish all these fixtures that we have placed globally quickly so we are going to be doing it over time, with some enhancements to allow us to chill off the product line. And a good place for you to take a peak at that might be at the Mall of America where I think we’ve got the new fixturing systems installed there and the retrofits, as you will, for the existing fixtures, we will carry off some of that blue signage as well as some of the paper point-of-purchase systems that we’ll be using over the next several seasons will also brighten them up as well. Reed Anderson - D.A. Davidson & Co.: And then lastly, I was just curious -- I know it’s a small piece but the Canadian piece, the comment that you had -- I think in the press release you had exited some channels. Just curious what that was.

Well, you know, over time we just want to make sure that the brands, all the brands that we have are situated in the right places and we’ve -- as an example, we’ve taken the Sorel product and really elevated it to where we believe it properly belongs, which meant frankly in a Walmart environment, as an example, in Canada, we just couldn’t continue with that kind of a business and have Holt Renfrew and Walmart carrying the same product. Reed Anderson - D.A. Davidson & Co.: That’s what I figured. Thank you.

Your next question comes from the line of Michelle Tan with Goldman Sachs.

Great, thanks. Good afternoon. I was wondering if -- you know, I know it’s a small quarter but what’s the offset to beating plan on sales and costs for this quarter that has you not raising the full year guidance?

I would say with regard to the outlook for the full year, the over-ship in Q2 was predominantly the U.S. wholesale business, as I alluded to earlier, and that’s really a timing shift. As it relates to the back half, we don’t feel like we are being anymore conservative or anymore aggressive in our outlook than we were 90 days ago or how we have planned the business historically. We did under-spend on the SG&A front, so if there was any upside opportunity for the year, I would say it would be more SG&A related than top line related.

Okay.

And then secondarily, as it relates to the back half, I would expect that we’ll experience another shift when we look at our distributor business, that the spring ’10 business ships between December and January. And as we’ve seen that business shift from Q2 to Q3 this year for fall, I would expect a similar happening for the spring business that ships in December and some shift into January.

Okay, and that’s reflected in the plan or is that --

That is reflect in our guidance, yes.

Okay, great. And then on the gross margin side, you know, up this quarter, but the third quarter guidance has more severe erosion. Is there markdown activity that is shifting out of Q2 into Q3?

No, the predominant effect of the margin decline in Q3 is the hedge rates for the Canadian business. Cost of goods in Canada, when we generally hedge upwards of a year in advance when the goods ship and we’ve experienced roughly a 20% devaluation in the Canadian dollar, so their cost of goods has gone up on a year-over-year basis. And they ship the majority of their fall in Q3.

Okay. So that’s basically the lag impact from last year’s currency move because of the hedging strategy? Is that the right way to think about it?

The hedging strategy is consistent with past practice. However, the change in hedge rates year over year is very unfavorable for Canada this year compared to last year.

And how big is Canada out of your third quarter business?

I don’t have that number. I’ll come back at you with that.

Okay, that’s great. And then I just have a couple more -- first on the inventory increase, how much of that was the timing shift? Have you quantified it?

The vast majority of that increase is timing.

So without it, it would have been more like flattish?

I would say without -- all things being equal, we should have been down. If you look at the last, you know, again with our inventory, our inventory, the majority of our inventory is received in June and July for fall and similarly December and January for the spring business, so it’s very hard to predict inventory at June and December. If you look at the last couple of quarters, say March and September of last year, our inventory actually comped down I think it was roughly 6% in both of those periods, so you can see that we truly managed inventory down.

Okay, perfect. And then just on the bigger picture, recognizing the environment is challenging, would we hope to start to at least see some market share gains, you know, the relative share gains from some of the product category initiatives for spring 2010 or is that more developing throughout the year?

Well, I think the plan obviously is with our 2010 business that the expectation is that we can start again to gain market share against our competitors. You know, at the end of the day, who knows what the results are going to be of this CIT, how that resolves itself, but many of our smaller competitors that take portions of market share are capitalized through CIT and if they are unable to fulfill their orders, we will have a quicker gain.

Got it. That’s very helpful. Thank you and good luck.

Michelle, this is Tom -- just to circle back on the Canadian business in Q3; it’s a low double-digit percentage of the total business for Q3.

Great. Thanks for the help.

Your next question comes from the line of Chris Svezia with SIG Capital.

A couple of questions -- I guess first, Tom, for you just on the direct to consumer piece of the business, can you maybe just quantify maybe in the quarter the percentage of the business it was versus last year? And then maybe any thoughts for maybe year-end based on your guidance roughly what percentage of the business that potentially could be. And if at all, any color on comps, if you provide that, during the quarter from your company-owned retail stores, that would be helpful.

We’ve made a decision internally that we are not going to disclose our U.S. retail business comp store data or the sales themselves at this time.

Okay.

And historically we’ve not disclosed that.

Okay. I guess the other question I have is Tim, for you, when you have, when you go to these trade shows and you speak to your retail customers in the sporting goods and the outdoor specialty channels of distribution, can you maybe just talk about, maybe not so much to your business specifically but how they are looking at sort of frame of reference for spring and any thoughts about how they are looking at inventory commitments, what’s their commentary or what’s their thought about how they look at, sort of the [inaudible] this year and the [turn into] spring of next year in terms of their commitment to product and to innovation?

Well, I think they are all looking for innovative products and so they have selling staff on the floor that can truly explain these more unusual products and can really make sure the consumers understand how different they are from prior products. So I think they are on the forefront of these new categories of merchandise that we offer and that others offer. I would say that specialty retailers are still going to be very conservative in their approach to business for spring ’10. So our expectations are that we are going to get our share and better but we don’t know for sure how big an order that we are going to get from these guys and again, we want to be very cautious in terms of talking about the great reception that we’ve had for spring ’10 and for ’10 in general, but we’ve got our fingers crossed.

Okay, and then just on -- when you guys think about your business and some of these new initiatives and the product that we saw at OR, I guess when you step back and you look at the level of investment you might need to make in the business to potentially grow it, I’m not throwing anything for next year but I’m just trying to think about -- do you have to step back and start to make investments in sales team or in infrastructure to start potentially growing the business, or do you look at your infrastructure right now and believe that you have what you have in place to grow this business at this point?

Well, we have -- we’ve over-invested in our physical distribution facilities and capacities, not only here in the U.S. in anticipation of growth, but especially in Europe, so we aren’t going to need to make any investments in infrastructure to support a solid and frankly large wholesale business. And our sales teams are well in place and we believe we are poised and you know, with the expectation that there could be some significant leverage once we start getting some growth out of the top line.

And I would say you can see that fixed costs deleverage happening this year, so -- I mean, that’s obviously evidence that that infrastructure is in place. We’ve not taken that out of the [system].

Okay. Thank you very much, appreciate it.

Your next question comes from the line of Mitch Kummetz with Robert W. Baird.

Thank you. I’ve got a couple of questions on retail and a few on FX, so on the retail side, could you just update us on what your quarter end store counts were by geography?

I’ll ask Tom to help with that, Mitch.

So in the U.S., we had 26 stores. In Europe, let me see here -- I think we’re at 6 stores. And Canada, 2.

Okay, and did you say that year-end, you were looking at -- I thought you said 48 in the U.S.

I’m sorry -- I’m a year off here. We’re at 42 in the U.S.

42?

Yeah, expecting to end the year in 48.

Okay, six in Europe and then two in Canada, right?

Correct.

Okay, and then in the press release, it was mentioned on the U.S. business that your retail increased significantly for the quarter year over year. Could you just give us a little more color on that? I mean, does that mean -- what is that in percentage terms? Is that like a 50% increase or -- I mean, can you just give us some better sense as to what significantly means in that --

Yeah, it is that order of magnitude, yes.

Okay. All right, that’s helpful. And then on the FX, I think it was a 4% drag on sales for the quarter -- what was the EPS impact of FX on Q2?

So roughly $0.02.

Okay. All right, and then when you think about -- I think in your guidance, FX is about a 3% tailwind on sales for the full year. How do you think about that over the next couple of quarters? I would guess that by the fourth quarter, you would be in a favorable FX comparison, at least on the top line.

Yeah, relatively neutral by year-end on the top line, just purely from a translation perspective but again, we’ve got some headwinds from a hedge rate perspective.

Yeah, and that’s my next question because you said that you got about 12 months hedging the inventory, so at what point do you think FX moves from a headwind to a tailwind on gross margin? I mean, it doesn’t sound like over the balance of this year but do you think you could get there by Q1 or Q2 next year, just given kind of the spot rates that you are hedging at today versus your --

Yeah, assuming things stay generally where they are at, I would say by end of Q2 next year, we should stabilize.

Okay, that’s very helpful. That’s all I had. Thanks and good luck.

Your next question comes from the line of Tara Gary with RBC Capital Markets.

At the retail division, I was just wondering if you could talk a little bit about early reads from a product standpoint, such as any categories that are performing well or possibly any different compared to what you are seeing in the wholesale division?

Well, we are just now delivering our fall merchandise, so we really don’t have -- we have very little information as it relates to fall. I can tell you that for spring ’09, some of our best-selling merchandise was really in our PFG product category, where we had very significant sales and good solid sell-throughs everywhere it was placed, so you know, expectations are high for that product category. Other than that, fall is just now landing in the stores and we just don’t have any information -- somebody just anecdotally told me that Sorel footwears are starting to sell much better than in the past but it’s still -- it’s 100 degrees here in Portland today, so --

Okay, yeah, understandable. And then my second question is the new fall product lineup, how does that compare to the lineup that you had last year?

Well, I think when we’re talking about fall ’09 or fall ’10?

Sorry -- yeah, we’re coming out -- what’s coming out this fall?

Okay, so the fall ’09 I would say is an improvement over our fall ’08 product line but it’s nowhere near the improvements that we have in the pipeline for fall ’10, so our expectations are that fall ’09 is an improvement and really speaks to some of the issues that we’ve had historically with the fall outerwear and footwear lines, and our expectations are high for high quality sell-through, assuming the macroeconomic trends don’t deteriorate. So that’s the expectation -- fall ’10 should be very exciting as well.

Any numbers that you can put behind that? Like if you have 10 new, like absolute new, innovative products versus the prior year?

You know, I don’t know the specific numerical comparisons but we’ve made significant changes in our fall ’09 line, even though we didn’t have the kinds of robust backlog increase that we expected, but those products that did get placed we think are better than the ’08 comparisons.

Okay, great. Well, thanks so much.

(Operator Instructions) Our next question comes from the line of Jim Duffy with Thomas Weisel.

This is actually [Christian Booth] in for Jim. He’s traveling right now. I was wondering if you could talk a little bit about the margin dynamics in the fourth quarter, particularly gross margin?

So probably the biggest impact for margin this Q4 will be the expanded U.S. retail business, which carries a higher margin, so if we look from Q3 to Q4, we will see significant margin differential, predominantly driven by that phenomena.

And will clearance activity moderate or sort of the margin pressure from discounting moderate? Is that the expectation now?

Generally speaking, I would say yes. We cleared most of our fall ’08 product in the first quarter of last year.

Okay, and then just sort of a final follow-up on that, if I’m doing my math right based on the guidance, it looks like I should be looking for a year-over-year improvement in gross margin in the fourth quarter. Am I thinking about things correctly?

Yes, that’s correct.

Okay. Thank you.

And again, that’s mostly driven by retail, and let me make sure I made my last statement accurately -- we cleared most of our fall ’08 business in the first quarter of this year. I \think I said the first quarter of last year.

Okay, that’s helpful. Thank you.

(Operator Instructions)

All right. Thank you very much for listening in. We look forward to talking to you in October.