Exhibit 99
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FOR IMMEDIATE RELEASE |
| CONTACT: |
| Susan Ostrow | ||
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| Director, Investor Relations | ||
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| (603) 773-1212 | ||
TIMBERLAND REPORTS SECOND QUARTER FINANCIAL RESULTS
STRATHAM, NH, July 18, 2003 – The Timberland Company (NYSE: TBL) today reported results for the quarter ended June 27, 2003. For the second quarter of 2003, Timberland reported revenue of $211.7 million, 10.5% higher than the $191.5 million reported for the second quarter of 2002. Constant dollar revenue growth, which excludes the impact of changes in foreign exchange rates, grew 5.3%. Solid revenue growth, improvement in gross margins and continued benefits from share repurchases contributed to strong profit and earnings per share (EPS) gains. EPS for the quarter was $0.16 per share diluted ($0.16 basic), 23.1% above second quarter 2002 EPS of $0.13 per share diluted ($0.13 basic).
Revenue growth in the second quarter of 2003 was driven by double-digit sales gains in international markets and moderate growth in the United States. Domestic revenue for the second quarter of 2003 was $129.2 million, 2.6% higher than the $125.9 million reported for the second quarter of 2002. International revenue for the quarter increased 25.8% to $82.6 million, compared with $65.7 million for the prior-year period. On a constant dollar basis, international revenue increased 10.4%. International revenue comprised 39.0% of total second quarter 2003 revenue, compared with 34.3% for the second quarter of 2002.
Worldwide footwear revenue for the second quarter of 2003 was $162.5 million, 11.8% higher than the $145.4 million reported for the second quarter of 2002. Worldwide apparel and accessories revenue for the quarter increased 7.7% to $46.7 million, compared with $43.3 million for the 2002 second quarter. Worldwide royalty revenue for the second quarter decreased 9.4% to $2.5 million, compared with $2.8 million for the comparable prior-year period.
Worldwide wholesale revenue for the second quarter of 2003 was $149.4 million, 10.7% higher than the $134.9 million reported for the second quarter of 2002. Worldwide consumer direct revenue, which includes Timberland’s worldwide retail and U.S. e-commerce businesses, increased 10.2% to $62.4 million for the quarter, compared to the $56.6 million reported for the second quarter of 2002. U.S. wholesale revenue for the 2003 second quarter increased 3.3% to $96.3 million, compared with the $93.3 million reported for the
second quarter of 2002. U.S. consumer direct revenue for the 2003 second quarter increased 0.8% to $32.9 million, compared with $32.6 million for the 2002 second quarter. Domestic comparable store sales for the quarter decreased by 1.9%.
Timberland’s net income was $5.8 million for the second quarter of 2003, compared with net income of $4.9 million for the prior-year period. Timberland’s second quarter ending cash balance increased to $82.6 million from $72.3 million in the second quarter of 2002, after financing operating requirements and share repurchases. The company repurchased 486 thousand shares in the second quarter at a cost of $24.7 million and 2.9 million shares over the past twelve months at a cost of $113.1 million. Timberland has 1.7 million shares remaining under its current four million share repurchase authorization. The Company may use Rule 10b5-1 plans to facilitate share repurchases.
Jeffrey B. Swartz, Timberland’s President and Chief Executive Officer, stated, “Timberland delivered strong results in the second quarter reflecting continued progress against our strategic objectives. Our financial results reflect gains across global markets and reinforce that we are on track toward delivering solid revenue and earnings gains in 2003. As we celebrate the 30th anniversary of the Timberland® brand, we intend to build on this momentum by driving a continued focus on product innovation, by amplifying our brand message to reinforce the values that will deepen our relationship with consumers and by delivering superior service to our retail partners.”
“Looking forward, we continue to believe that mid single-digit revenue growth represents an appropriate target for the second half of 2003, given macroeconomic conditions and comparisons to prior year results. We also remain committed to delivering moderate improvements in operating margins this year while investing to support our long-term goals for developing the Timberland brand.”
Note that comments made by Mr. Swartz are Timberland’s performance targets, based on current expectations. These comments are forward-looking, and actual results may differ materially.
As previously announced, Timberland will be hosting a conference call to discuss second quarter results today at 8:25 AM Eastern Time. Interested parties may listen to this call through the investor relations section of the Company’s website, www.timberland.com, or by calling (913) 981-5519. Replays of this conference call will be available through the investor relations section of the Company’s website.
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Timberland (NYSE: TBL) is a global leader in the design, engineering and marketing of premium-quality footwear, apparel, and accessories for consumers who value the outdoors and their time in it. TimberlandÒ products offer quality workmanship and detailing and are built to withstand the elements of nature. The Company’s products can be found in leading department and specialty stores as well as Timberland retail stores throughout North America, Europe, Asia, Latin America, South Africa and the Middle East. More information about Timberland is available in the Company’s reports filed with the Securities and Exchange Commission (SEC).
This press release contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Various factors could cause the results of The Timberland Company to be materially different from any future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to the Company’s ability to: (i) successfully market and sell its products in view of changing consumer trends, consumer acceptance of products, and other factors affecting retail market conditions, including the current U.S. economic environment and the global economic and political uncertainties resulting from the continuing war on terrorism; (ii) manage its foreign exchange rate risks; (iii) obtain adequate raw materials at competitive prices; and (iv) other factors, including those detailed from time to time in The Timberland Company’s SEC reports, including its Annual Report on Form 10-K filed on March 27, 2003. The Timberland Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
This press release also includes a discussion of constant dollar revenue growth, a non-GAAP measure. As required by SEC rules, we have provided a reconciliation of this measure on an attached table that follows our financial statements. Additional required information is located in the Form 8-K furnished to the SEC on July 18, 2003.
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THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
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| June 27, |
| June 28, |
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ASSETS |
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Current assets |
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Cash and equivalents |
| $ | 82,578 |
| $ | 72,276 |
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Accounts receivable, net |
| 121,995 |
| 113,032 |
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Inventory |
| 173,047 |
| 160,259 |
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Prepaid expense |
| 21,448 |
| 17,413 |
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Deferred income taxes |
| 18,919 |
| 24,955 |
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Total current assets |
| $ | 417,987 |
| 387,935 |
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Net property, plant and equipment |
| 69,728 |
| 73,366 |
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Goodwill |
| 14,163 |
| 14,163 |
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Other assets, net |
| 10,750 |
| 9,243 |
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Total assets |
| $ | 512,628 |
| $ | 484,707 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable |
| $ | 45,618 |
| $ | 42,684 |
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Accrued expense |
| 72,619 |
| 64,768 |
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Income taxes payable |
| 4,739 |
| 6,894 |
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Derivative liabilities |
| 11,428 |
| 13,687 |
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Total current liabilities |
| 134,404 |
| 128,033 |
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Other liabilities |
| 5,002 |
| 3,059 |
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Deferred income taxes |
| 6,573 |
| 10,249 |
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Stockholders’ equity |
| 366,649 |
| 343,366 |
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Total liabilities and stockholders’ equity |
| $ | 512,628 |
| $ | 484,707 |
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THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Amounts in thousands, except per share data)
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| For the |
| For the |
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| June 27, |
| June 28, |
| June 27, |
| June 28, |
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Revenue |
| $ | 211,733 |
| $ | 191,529 |
| $ | 482,730 |
| $ | 417,227 |
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Cost of goods sold |
| 112,957 |
| 105,521 |
| 257,726 |
| 231,455 |
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Gross profit |
| 98,776 |
| 86,008 |
| 225,004 |
| 185,772 |
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Operating expense |
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Selling |
| 70,449 |
| 63,537 |
| 148,001 |
| 132,784 |
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General and administrative |
| 19,266 |
| 16,499 |
| 38,415 |
| 33,120 |
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Total operating expense |
| 89,715 |
| 80,036 |
| 186,416 |
| 165,904 |
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Operating income |
| 9,061 |
| 5,972 |
| 38,588 |
| 19,868 |
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Other expense (income) |
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Interest expense |
| 222 |
| 189 |
| 439 |
| 370 |
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Other, net |
| (103 | ) | (1,849 | ) | (531 | ) | (2,057 | ) | ||||
Total other expense (income) |
| 119 |
| (1,660 | ) | (92 | ) | (1,687 | ) | ||||
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Income before income taxes |
| 8,942 |
| 7,632 |
| 38,680 |
| 21,555 |
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Provision for income taxes |
| 3,130 |
| 2,709 |
| 13,538 |
| 7,652 |
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Income before cumulative effect of change in accounting principle |
| $ | 5,812 |
| $ | 4,923 |
| $ | 25,142 |
| $ | 13,903 |
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Cumulative effect of change in accounting principle |
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| 4,913 |
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Net income |
| $ | 5,812 |
| $ | 4,923 |
| $ | 25,142 |
| $ | 18,816 |
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Earnings per share before cumulative effect of change in accounting principle |
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Basic |
| $ | .16 |
| $ | .13 |
| $ | .70 |
| $ | .37 |
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Diluted |
| $ | .16 |
| $ | .13 |
| $ | .69 |
| $ | .36 |
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Earnings per share after cumulative effect of change in accounting principle |
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Basic |
| $ | .16 |
| $ | .13 |
| $ | .70 |
| $ | .50 |
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Diluted |
| $ | .16 |
| $ | .13 |
| $ | .69 |
| $ | .49 |
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Weighted-average shares outstanding |
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Basic |
| 35,678 |
| 37,710 |
| 35,841 |
| 37,854 |
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Diluted |
| 36,633 |
| 38,652 |
| 36,670 |
| 38,656 |
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THE TIMBERLAND COMPANY
RECONCILIATION OF TOTAL AND INTERNATIONAL REVENUE INCREASES
TO CONSTANT DOLLAR REVENUE INCREASES
(Amounts in Millions)
Total Company Revenue Reconciliation:
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| For the Three Months |
| For the Six Months |
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| $ Change |
| % Change |
| $ Change |
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Revenue increase (GAAP) |
| $ | 20.2 |
| 10.5 | % | $ | 65.5 |
| 15.7 | % |
Increase due to foreign exchange rate changes |
| 10.1 |
| 5.2 | % | 28.9 |
| 6.9 | % | ||
Revenue increase in constant dollars |
| 10.1 |
| 5.3 | % | 36.6 |
| 8.8 | % | ||
International Revenue Reconciliation:
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| For the Three Months |
| For the Six Months |
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| $ Change |
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| $ Change |
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Revenue increase (GAAP) |
| $ | 16.9 |
| 25.8 | % | $ | 50.0 |
| 30.0 | % |
Increase due to foreign exchange rate changes |
| 10.1 |
| 15.4 | % | 28.9 |
| 17.3 | % | ||
Revenue increase in constant dollars |
| 6.8 |
| 10.4 | % | 21.1 |
| 12.7 | % | ||
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