Exhibit 99.1
Timberland Reports Second-Quarter 2009 Results
STRATHAM, N.H.--(BUSINESS WIRE)--July 29, 2009--The Timberland Company (NYSE: TBL) today reported a second-quarter 2009 net loss of $19.2 million and a loss per share of ($0.34). These results compare to a second-quarter 2008 net loss of $18.9 million and a loss per share of ($0.32).
Second-Quarter 2009 Results Summary:
- Revenue declined 14.4% to $179.7 million for the quarter, reflecting declines in Timberland® brand apparel and casual footwear. Foreign exchange rate changes decreased second-quarter 2009 revenue by approximately $11 million, or 5.3%, due to the strengthening of the U.S. dollar relative to the British Pound and the Euro.
- North America revenue declined 13.3% to $86.3 million, reflecting soft consumer spending in the U.S. Europe revenue decreased 16.6% to $65.7 million but was down only 2.5% on a constant dollar basis. European results reflect declines in the apparel, outdoor performance and casual footwear businesses, partially offset by strong sales of men’s and women’s boots. Asia revenue decreased 12.3% to $27.7 million, and decreased 13.3% on a constant dollar basis, driven by declines in casual footwear and apparel, partially offset by strengthening of the men’s and women’s boots businesses.
- Global footwear revenue decreased 11.2% to $127.0 million, primarily due to declines in the casual footwear business, which offset strength in the boots business in the European and Asian markets. Apparel and accessories revenue decreased 24.6% to $47.2 million, primarily due to softness in the European market.
- Global wholesale revenue decreased 20.3% to $108.4 million, in part reflecting global financial and credit market challenges that have caused customers to reduce inventory levels and to shift from placing future orders to placing at-once orders. Worldwide consumer direct revenue decreased 3.5% to $71.3 million, reflecting the adverse impact of a stronger U.S. dollar and a difficult worldwide retail environment.
- Operating loss for the second quarter of 2009 was $36.4 million, compared to a loss of $30.0 million in the prior year period. In the quarter, there was no material impact from foreign exchange on operating income.
- In the second quarter of 2009, the effective tax rate was 44.3% compared to 36.0% in the second quarter of 2008. For the full-year 2009, the Company anticipates that its effective tax rate will be approximately 33%.
- In connection with its stock buyback program, Timberland repurchased approximately 700 thousand shares in the second quarter of 2009 at a cost of approximately $10 million.
- Timberland ended the quarter with $183.9 million in cash and no debt. Inventory at quarter end was $180.4 million, down 7.5% versus 2008 second-quarter levels, reflecting the Company’s focus on maintaining clean inventory levels in the face of challenging market conditions. Accounts receivable decreased 17.6% to $100.1 million, compared to the prior year.
The Company anticipates that the back half of 2009 will continue to be challenging due to the low levels of consumer confidence and the financial health of the global economy. Given the continued volatile nature of current economic conditions, the Company continues to believe there is not sufficient visibility to set expectations for the remainder of 2009.
Jeffrey B. Swartz, Timberland’s President and Chief Executive Officer, stated, "The first half of 2009 has presented us with unprecedented challenges in the marketplace. We have tackled the challenges by sharpening our efforts to improve the overall efficiency of the organization, while recognizing that we must continue to invest in the long-term health of the brand. The strength of our balance sheet and our overall liquidity are a real strategic advantage in this environment. We will continue to invest in key areas such as product development and marketing that will build the overall health of the Timberland® brand and franchise and leave us well-positioned when the global economy improves.”
Note that comments made by the Company and Mr. Swartz are based on current expectations. These comments may be 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 706.643.2916 and providing access code number 80625518. 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. Timberland markets products under the Timberland®, Timberland PRO®, SmartWool®, Timberland Boot Company™, howies®, Mountain Athletics® and IPATH® brands, all of which 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, Africa and the Middle East. More information about Timberland is available in the Company’s reports filed with the Securities and Exchange Commission (SEC).
Certain statements in this press release may be forward looking or “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which include statements regarding Timberland’s future financial results, are subject to risks, uncertainties and assumptions and are not guarantees of future financial performance or expected benefits. These risks, uncertainties and assumptions could cause Timberland’s results to be materially different from any future results or expected benefits expressed or implied by such forward-looking statements. Such risks, uncertainties and assumptions include, but are not limited to: (i) Timberland’s ability to 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) Timberland’s ability to execute key strategic initiatives; (iii) Timberland’s ability to procure a majority of its products from independent manufacturers; (iv) changes in foreign exchange rates; (v) Timberland’s ability to obtain adequate materials at competitive prices; and (vi) other factors, including those detailed from time to time in Timberland’s most recent Annual Report on Form 10-K and other filings we make with the SEC. Timberland undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
This press release includes discussion of constant dollar revenue change (which excludes the impact of changes in foreign currency exchange rates), which is a non-GAAP measure. As required by SEC rules, the Company has provided reconciliations of this measure on attached tables that follow its financial statements. Additional required information regarding this non-GAAP measure is located in the Form 8-K furnished to the SEC on July 29, 2009.
THE TIMBERLAND COMPANY | ||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(Dollars in Thousands) | ||||||
July 3, 2009 | December 31, 2008 | June 27, 2008 | ||||
Assets | ||||||
Current assets | ||||||
Cash and equivalents | $183,919 | $217,189 | $152,764 | |||
Accounts receivable, net | 100,126 | 168,666 | 121,482 | |||
Inventory, net | 180,392 | 179,688 | 195,015 | |||
Prepaid expense | 35,121 | 37,139 | 44,011 | |||
Prepaid income taxes | 24,720 | 16,687 | 20,776 | |||
Deferred income taxes | 19,024 | 23,425 | 21,822 | |||
Derivative assets | 2,284 | 7,109 | - | |||
Total current assets | 545,586 | 649,903 | 555,870 | |||
Property, plant and equipment, net | 74,185 | 78,526 | 84,553 | |||
Deferred income taxes | 17,480 | 18,528 | 19,178 | |||
Goodwill and intangible assets, net | 90,442 | 91,866 | 97,655 | |||
Other assets, net | 14,971 | 10,576 | 10,586 | |||
Total assets | $742,664 | $849,399 | $767,842 | |||
Liabilities and Stockholders’ Equity | ||||||
Current liabilities | ||||||
Accounts payable | $71,423 | $96,901 | $74,734 | |||
Accrued expense and other current liabilities | 76,659 | 112,090 | 81,307 | |||
Income taxes payable | 533 | 20,697 | 2,528 | |||
Derivative liabilities | 4,565 | 2,386 | 6,594 | |||
Total current liabilities | 153,180 | 232,074 | 165,163 | |||
Other long-term liabilities | 35,809 | 40,787 | 41,474 | |||
Stockholders’ equity | 553,675 | 576,538 | 561,205 | |||
Total liabilities and stockholders’ equity | $742,664 | $849,399 | $767,842 |
THE TIMBERLAND COMPANY | |||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(Amounts in Thousands, Except Per Share Data) | |||||||
For the Quarter Ended | For the Six Months Ended | ||||||
July 3, 2009 | June 27, 2008 | July 3, 2009 | June 27, 2008 | ||||
Revenue | $179,702 | $209,916 | $476,350 | $550,318 | |||
Cost of goods sold | 104,194 | 117,716 | 264,153 | 300,514 | |||
Gross profit | 75,508 | 92,200 | 212,197 | 249,804 | |||
Operating expense | |||||||
Selling | 85,027 | 95,317 | 177,295 | 201,439 | |||
General and administrative | 26,896 | 26,539 | 52,313 | 54,227 | |||
Impairment of intangible asset | - | - | 925 | - | |||
Restructuring and related costs | (17) | 317 | (121) | 869 | |||
Total operating expense | 111,906 | 122,173 | 230,412 | 256,535 | |||
Operating loss | (36,398) | (29,973) | (18,215) | (6,731) | |||
Other income/(expense) | |||||||
Interest income, net | 182 | 776 | 501 | 1,344 | |||
Other income/(expense), net | 1,666 | (379) | 1,003 | 5,383 | |||
Total other income, net | 1,848 | 397 | 1,504 | 6,727 | |||
Loss before provision for income taxes | (34,550) | (29,576) | (16,711) | (4) | |||
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Income tax (benefit)/provision | (15,306) | (10,647) | (13,344) | 886 | |||
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Net loss | ($19,244) | ($18,929) | ($3,367) | ($890) | |||
Loss per share | |||||||
Basic | ($0.34) | ($0.32) | ($0.06) | ($0.02) | |||
Diluted | ($0.34) | ($0.32) | ($0.06) | ($0.02) | |||
Weighted-average shares outstanding | |||||||
Basic | 56,273 | 58,932 | 56,695 | 59,269 | |||
Diluted | 56,273 | 58,932 | 56,695 | 59,269 |
THE TIMBERLAND COMPANY | |||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(Dollars in Thousands) | |||
For the Six Months Ended | |||
July 3, 2009 | June 27, 2008 | ||
Cash flows from operating activities: | |||
Net loss | ($3,367) | ($890) | |
Adjustments to reconcile net loss to net cash (used)/provided by operating activities: | |||
Deferred income taxes | 5,224 | 3,377 | |
Share-based compensation | 2,580 | 4,218 | |
Depreciation and other amortization | 14,339 | 16,124 | |
Provision for losses on accounts receivable | 1,564 | 1,974 | |
Provision for intangible asset impairment | 925 | - | |
Tax expense from share-based compensation, net of excess benefit | (444) | (335) | |
Unrealized loss on derivatives | 289 | 16 | |
Other non-cash charges, net | 514 | 1,992 | |
Increase/(decrease) in cash from changes in working capital: | |||
Accounts receivable | 67,098 | 69,457 | |
Inventory | 1,089 | 8,420 | |
Prepaid expense | (1,802) | 72 | |
Accounts payable | (25,977) | (12,007) | |
Accrued expense | (35,674) | (32,056) | |
Prepaid income taxes | (8,032) | (3,415) | |
Income taxes payable | (24,678) | (15,068) | |
Other liabilities | (226) | (1,973) | |
Net cash (used)/provided by operating activities | (6,578) | 39,906 | |
Cash flows from investing activities: | |||
Acquisition of business, net of cash acquired | (1,554) | - | |
Additions to property, plant and equipment | (7,757) | (10,332) | |
Other | (380) | 2,909 | |
Net cash used by investing activities | (9,691) | (7,423) | |
Cash flows from financing activities: | |||
Common stock repurchases | (19,388) | (24,983) | |
Issuance of common stock | 1,373 | 823 | |
Excess tax benefit from stock option and employee stock purchase plans | 133 | 179 | |
Other | (177) | - | |
Net cash used by financing activities | (18,059) | (23,981) | |
Effect of exchange rate changes on cash and equivalents | 1,058 | 988 | |
Net (decrease)/increase in cash and equivalents | (33,270) | 9,490 | |
Cash and equivalents at beginning of period | 217,189 | 143,274 | |
Cash and equivalents at end of period | $183,919 | $152,764 |
THE TIMBERLAND COMPANY | |||||||||||
REVENUE ANALYSIS | |||||||||||
(Amounts in Thousands, Unaudited) | |||||||||||
For the Quarter Ended | For the Six Months Ended | ||||||||||
July 3, 2009 | June 27, 2008 | % Change | July 3, 2009 | June 27, 2008 | % Change | ||||||
Revenue by Segment: | |||||||||||
North America | $86,314 | $99,556 | -13.3% | $206,172 | $237,286 | -13.1% | |||||
Europe | 65,681 | 78,760 | -16.6% | 205,669 | 243,511 | -15.5% | |||||
Asia | 27,707 | 31,600 | -12.3% | 64,509 | 69,521 | -7.2% | |||||
Total Revenue | $179,702 | $209,916 | -14.4% | $476,350 | $550,318 | -13.4% | |||||
Revenue by Product: | |||||||||||
Footwear | $126,954 | $142,935 | -11.2% | $338,595 | $379,551 | -10.8% | |||||
Apparel and Accessories | 47,241 | 62,635 | -24.6% | 125,905 | 160,558 | -21.6% | |||||
Royalty and Other | 5,507 | 4,346 | 26.7% | 11,850 | 10,209 | 16.1% | |||||
Revenue by Channel: | |||||||||||
Wholesale | $108,417 | $136,077 | -20.3% | $327,042 | $391,598 | -16.5% | |||||
Consumer Direct | 71,285 | 73,839 | -3.5% | 149,308 | 158,720 | -5.9% | |||||
Comparable Store Sales: | |||||||||||
Domestic Retail | -8.2% | -8.0% | -9.0% | -3.0% | |||||||
Global Retail | -2.5% | -1.1% | -2.1% | 2.4% |
THE TIMBERLAND COMPANY | |||||||
RECONCILIATION OF TOTAL AND INTERNATIONAL REVENUE CHANGES | |||||||
TO CONSTANT DOLLAR REVENUE CHANGES | |||||||
(Amounts in Thousands, Unaudited) | |||||||
Total Company Revenue Reconciliation: | |||||||
For the Quarter Ended | For the Six Months Ended | ||||||
July 3, 2009 | July 3, 2009 | ||||||
$ Change | % Change | $ Change | % Change | ||||
Revenue decrease (GAAP) | ($30,214) | -14.4% | ($73,968) | -13.4% | |||
Decrease due to foreign exchange rate changes | (11,173) | -5.3% | (32,772) | -5.9% | |||
Revenue decrease in constant dollars | ($19,041) | -9.1% | ($41,196) | -7.5% | |||
North America Revenue Reconciliation: | |||||||
For the Quarter Ended | For the Six Months Ended | ||||||
July 3, 2009 | July 3, 2009 | ||||||
$ Change | % Change | $ Change | % Change | ||||
Revenue decrease (GAAP) | ($13,242) | -13.3% | ($31,114) | -13.1% | |||
Decrease due to foreign exchange rate changes | (416) | -0.4% | (1,343) | -0.6% | |||
Revenue decrease in constant dollars | ($12,826) | -12.9% | ($29,771) | -12.5% | |||
Europe Revenue Reconciliation: | |||||||
For the Quarter Ended | For the Six Months Ended | ||||||
July 3, 2009 | July 3, 2009 | ||||||
$ Change | % Change | $ Change | % Change | ||||
Revenue decrease (GAAP) | ($13,079) | -16.6% | ($37,842) | -15.5% | |||
Decrease due to foreign exchange rate changes | (11,084) | -14.1% | (33,007) | -13.5% | |||
Revenue decrease in constant dollars | ($1,995) | -2.5% | ($4,835) | -2.0% | |||
Asia Revenue Reconciliation: | |||||||
For the Quarter Ended | For the Six Months Ended | ||||||
July 3, 2009 | July 3, 2009 | ||||||
$ Change | % Change | $ Change | % Change | ||||
Revenue decrease (GAAP) | ($3,893) | -12.3% | ($5,012) | -7.2% | |||
Increase due to foreign exchange rate changes | 327 | 1.0% | 1,578 | 2.3% | |||
Revenue decrease in constant dollars | ($4,220) | -13.3% | ($6,590) | -9.5% | |||
Constant dollar revenue changes, which exclude the impact of changes in foreign exchange rates, are not Generally Accepted Accounting Principle (“GAAP”) performance measures. We provide constant dollar revenue changes for total Company, North America, Europe, and Asia revenues because we use the measures to understand the underlying growth rate of revenue excluding the impact of items that are not under management’s direct control, such as changes in foreign exchange rates.
CONTACT:
The Timberland Company
Karen Blomquist, 603-773-1655
Senior Manager, Investor Relations