EXHIBIT 99
P r e s s R e l e a s e |
FOR IMMEDIATE RELEASE |
| CONTACT: |
| Susan Ostrow |
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| Director, Investor Relations |
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| (603) 773-1212 |
TIMBERLAND REPORTS RECORD REVENUE AND OPERATING PROFIT FOR FOURTH QUARTER AND FULL YEAR
STRATHAM, NH, February 3, 2004 – The Timberland Company (NYSE: TBL) today reported fourth quarter net income of $39.5 million and diluted earnings per share (EPS) of $1.10, compared with fourth quarter 2002 net income of $27.1 million and diluted EPS of $0.73.
• Fourth quarter revenue increased 16.4% to $415.3 million, driven by strong global gains in footwear. Global footwear revenue expanded 20.7% to $320.3 million, driven by strong growth in boots, men’s and women’s casual, kids’ and outdoor performance categories. Global apparel and accessories revenue grew 2.9% to $91.0 million, driven by gains in the Company’s Asian business, which offset declines in European apparel impacted by comparisons to strong prior year performance.
• Revenue results reflected strong gains in both U.S. (+11.1%) and international markets (+30.7% or +17.1% in constant dollars). U.S. revenue growth benefited from growth in the U.S. consumer direct business (+11.2%), driven by a 5.9% increase in comparable store sales. Favorable foreign exchange rate changes also added $12.9 million (or 3.6%) to overall revenue growth.
• Operating profit for the quarter increased 48.2% to $62.2 million. 2002 fourth quarter operating profit was negatively impacted by approximately $6 million of incremental transportation costs related to the West Coast work stoppage. Excluding this impact, 2003 fourth quarter operating profit rose 29.6%. Profit gains reflected strong revenue growth and significant improvement in gross margin, which benefited from lower product related costs, lower levels of off-price sales and favorable foreign exchange rate changes. For the quarter, foreign exchange rate changes contributed approximately $3.1 million to operating profit, which was leveraged to support continued investments against strategic priorities, including international business expansion and global brand building efforts.
• EPS for the quarter expanded 50.7% to $1.10, reflecting profit gains and continued benefits from share repurchases. In the fourth quarter, the Company bought back 391 thousand shares at a total cost of $19.7 million. For the full year, Timberland repurchased 2,291 thousand shares at a total cost of $103.8 million. The Company currently has 4.6 million shares remaining under existing share repurchase programs.
• A disciplined approach to asset management drove strong gains in cash management and return on capital. Timberland ended the quarter with $241.8 million in cash and no debt outstanding while driving improvements in annual inventory turns and receivables management. Timberland’s annual return on capital reached 30.4%.
For the full year, Timberland posted revenue of $1,342.1 million (+12.7% versus prior year, or +8.0% in constant dollars), operating profit of $184.3 million (+32.8% versus prior year) and generated nearly $200 million in net operating cash flow – all records for the Company.
Jeffrey B. Swartz, Timberland’s President and Chief Executive Officer, stated, “Timberland’s fourth quarter capped an outstanding year for our Company driven by strong performance across global markets. In the United States, our focus on driving footwear innovation across our portfolio, combined with significantly improved performance in Timberland’s consumer direct business, enabled us to deliver double-digit revenue gains in a competitive retail marketplace. Timberland’s international business also posted strong results, reflecting double-digit constant dollar sales gains in Europe and Asia as we continue to benefit from efforts to enhance our premium integrated brand positioning in those regions.”
“Overall, we are pleased to have delivered strong financial results in 2003 and believe that we are on track for solid business growth in 2004. We remain committed to delivering solid revenue growth, double-digit profit gains and strong cash flow in 2004 and beyond — and believe that the strategies we are pursuing will enable us to continue to deliver strong financial performance while capturing the great potential that we see for the Timberland enterprise.”
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 fourth quarter and full year 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) 981-5592. Replays of this conference call will be available through the investor relations section of the Company’s website.
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 a highly competitive industry and in view of changing consumer trends, consumer acceptance of products and other factors affecting retail market conditions; (ii) procure a majority of its products from independent manufacturers; (iii) manage its foreign exchange rate risks; and (iv) other factors, including those detailed from time to time in The Timberland Company’s filings made with the SEC. 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 February 3, 2004.
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THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
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| Dec. 31, |
| Dec. 31, |
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ASSETS |
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Current assets |
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Cash and equivalents |
| $ | 241,803 |
| $ | 141,195 |
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Accounts receivable, net |
| 125,088 |
| 132,110 |
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Inventory |
| 119,581 |
| 122,417 |
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Prepaid expenses |
| 25,906 |
| 21,493 |
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Deferred income taxes |
| 27,182 |
| 24,568 |
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Total current assets |
| 539,560 |
| 441,783 |
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Net property, plant and equipment |
| 76,360 |
| 73,370 |
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Goodwill |
| 14,163 |
| 14,163 |
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Intangible assets |
| 3,807 |
| 3,732 |
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Other assets, net |
| 7,826 |
| 5,623 |
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Total assets |
| $ | 641,716 |
| $ | 538,671 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable |
| $ | 38,026 |
| $ | 33,678 |
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Accrued expenses |
| 115,425 |
| 89,430 |
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Income taxes payable |
| 27,482 |
| 20,134 |
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Derivative liabilities |
| 16,058 |
| 12,514 |
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Total current liabilities |
| 196,991 |
| 155,756 |
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Other liabilities |
| 9,318 |
| 3,072 |
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Deferred income taxes |
| 6,944 |
| 7,058 |
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Stockholders’ equity |
| 428,463 |
| 372,785 |
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Total liabilities and stockholders’ equity |
| $ | 641,716 |
| $ | 538,671 |
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THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
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| For the |
| For the |
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| Dec. 31, |
| Dec. 31, |
| Dec. 31, |
| Dec. 31, |
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Revenue |
| $ | 415,433 |
| $ | 357,029 |
| $ | 1,342,123 |
| $ | 1,190,896 |
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Cost of goods sold |
| 218,780 |
| 207,354 |
| 717,666 |
| 672,610 |
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Gross profit |
| 196,653 |
| 149,675 |
| 624,457 |
| 518,286 |
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Operating expense |
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Selling |
| 110,244 |
| 88,079 |
| 356,447 |
| 306,962 |
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General and administrative |
| 24,221 |
| 19,619 |
| 83,708 |
| 72,499 |
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Total operating expense |
| 134,465 |
| 107,698 |
| 440,155 |
| 379,461 |
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Operating income |
| 62,188 |
| 41,977 |
| 184,302 |
| 138,825 |
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Other expense (income) |
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Interest expense |
| 272 |
| 252 |
| 1,039 |
| 884 |
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Other, net |
| 732 |
| 737 |
| 506 |
| (828 | ) | ||||
Total other expense |
| 1,004 |
| 989 |
| 1,545 |
| 56 |
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Income before income taxes |
| 61,184 |
| 40,988 |
| 182,757 |
| 138,769 |
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Provision for income taxes |
| 21,720 |
| 13,857 |
| 64,878 |
| 48,569 |
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Income before cumulative effect of change in accounting principle |
| $ | 39,464 |
| $ | 27,131 |
| $ | 117,879 |
| $ | 90,200 |
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Cumulative effect of change in accounting Principle |
| — |
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| 4,913 |
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Net income |
| $ | 39,464 |
| $ | 27,131 |
| $ | 117,879 |
| $ | 95,113 |
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Earnings per share before cumulative effect of change in accounting principle |
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Basic |
| $ | 1.13 |
| $ | .74 |
| $ | 3.32 |
| $ | 2.42 |
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Diluted |
| $ | 1.10 |
| $ | .73 |
| $ | 3.23 |
| $ | 2.36 |
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Earnings per share after cumulative effect of change in accounting principle |
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Basic |
| $ | 1.13 |
| $ | .74 |
| $ | 3.32 |
| $ | 2.55 |
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Diluted |
| $ | 1.10 |
| $ | .73 |
| $ | 3.23 |
| $ | 2.49 |
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Weighted-average shares outstanding |
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Basic |
| 34,976 |
| 36,480 |
| 35,498 |
| 37,308 |
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Diluted |
| 35,838 |
| 37,135 |
| 36,475 |
| 38,142 |
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THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
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| For the |
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| Dec. 31, |
| Dec. 31, |
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Cash flows from operating activities: |
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Net income |
| $ | 117,879 |
| $ | 95,113 |
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Adjustments to reconcile net income to net cash provided/(used) by operating activities: |
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Deferred income taxes |
| (1,346 | ) | (954 | ) | ||
Depreciation and amortization |
| 23,644 |
| 22,503 |
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Loss on disposal of property, plant & equipment |
| 1,637 |
| 1,836 |
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Cumulative effect of change in accounting principle |
| — |
| (4,913 | ) | ||
Tax benefit from stock option plans |
| 9,641 |
| 6,211 |
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Increase/(decrease) in cash from changes in working capital items: |
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Accounts receivable |
| 15,933 |
| 7,150 |
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Inventory |
| 4,798 |
| 6,313 |
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Prepaid expenses |
| (2,672 | ) | (3,279 | ) | ||
Accounts payable |
| (325 | ) | (11,088 | ) | ||
Accrued expenses |
| 22,746 |
| 20,548 |
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Income taxes |
| 7,097 |
| (1,546 | ) | ||
Net cash provided by operating Activities |
| 199,032 |
| 137,894 |
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Cash flows from investing activities: |
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Additions to property, plant and equipment, net |
| (24,855 | ) | (17,930 | ) | ||
Other, net |
| 4,393 |
| 291 |
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Net cash used by investing activities |
| (20,462 | ) | (17,639 | ) | ||
Cash flows from financing activities: |
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Common stock repurchases |
| (103,807 | ) | (101,174 | ) | ||
Issuance of common stock |
| 19,011 |
| 12,478 |
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Net cash used by financing activities |
| (84,796 | ) | (88,696 | ) | ||
Effect of exchange rate changes on cash |
| 6,834 |
| 3,978 |
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Net increase in cash and equivalents |
| 100,608 |
| 35,537 |
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Cash and equivalents at beginning of year |
| 141,195 |
| 105,658 |
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Cash and equivalents at end of year |
| $ | 241,803 |
| $ | 141,195 |
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THE TIMBERLAND COMPANY
REVENUE ANALYSIS
(Dollars in thousands)
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| For the Three Months Ended |
| For the Twelve Months Ended |
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| Dec. 31, |
| Dec. 31, |
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| Dec. 31, |
| Dec. 31, |
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Revenue by Segment: |
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US Wholesale |
| $ | 204,524 |
| $ | 184,017 |
| 11.1 |
| $ | 625,843 |
| $ | 595,242 |
| 5.1 |
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US Consumer Direct |
| 86,714 |
| 78,015 |
| 11.2 |
| 200,003 |
| 190,433 |
| 5.0 |
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Total US |
| 291,238 |
| 262,032 |
| 11.1 |
| 825,846 |
| 785,675 |
| 5.1 |
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International |
| 124,195 |
| 94,997 |
| 30.7 |
| 516,277 |
| 405,221 |
| 27.4 |
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Revenue by Product |
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Footwear |
| 320,349 |
| 265,310 |
| 20.7 |
| 1,018,368 |
| 888,633 |
| 14.6 |
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Apparel and Accessories |
| 90,999 |
| 88,446 |
| 2.9 |
| 309,798 |
| 287,384 |
| 7.8 |
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Royalty and Other |
| 4,085 |
| 3,273 |
| 24.8 |
| 13,957 |
| 14,879 |
| (6.2 | ) | ||||
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Revenue by Channel |
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Wholesale |
| 277,720 |
| 239,736 |
| 15.8 |
| 1,001,754 |
| 886,770 |
| 13.0 |
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Consumer Direct |
| 137,713 |
| 117,293 |
| 17.4 |
| 340,369 |
| 304,126 |
| 11.9 |
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Note: Domestic Retail Comparable Store Sales |
| 5.9 | % | (5.8 | )% |
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| 1.6 | % | (8.5 | )% |
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RECONCILIATION OF TOTAL AND INTERNATIONAL REVENUE INCREASES
TO CONSTANT DOLLAR REVENUE INCREASES
(Dollars in millions)
Total Company Revenue Reconciliation:
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| For the Three Months |
| For the Twelve Months |
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| $ Change |
| % Change |
| $ Change |
| % Change |
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Revenue increase (GAAP) |
| $ | 58.4 |
| 16.4 | % | $ | 151.2 |
| 12.7 | % |
Increase due to foreign exchange rate changes |
| 12.9 |
| 3.6 | % | 56.0 |
| 4.7 | % | ||
Revenue increase in constant dollars |
| 45.5 |
| 12.8 | % | 95.2 |
| 8.0 | % | ||
International Revenue Reconciliation:
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| For the Three Months |
| For the Twelve Months |
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| $ Change |
| % Change |
| $ Change |
| % Change |
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Revenue increase (GAAP) |
| $ | 29.2 |
| 30.7 | % | $ | 111.1 |
| 27.4 | % |
Increase due to foreign exchange rate changes |
| 12.9 |
| 13.6 | % | 56.0 |
| 13.8 | % | ||
Revenue increase in constant dollars |
| 16.3 |
| 17.1 | % | 55.1 |
| 13.6 | % | ||