Exhibit 99.1
Timberland Reports Third-Quarter 2009 Results
STRATHAM, N.H.--(BUSINESS WIRE)--October 29, 2009--The Timberland Company (NYSE: TBL) today reported third-quarter 2009 net income of $37.8 million and diluted earnings per share of $0.68. These results compare to third-quarter 2008 net income of $30.7 million and diluted earnings per share of $0.52.
Third-Quarter 2009 Results Summary:
- Revenue remained relatively flat at $421.8 million compared to the prior year but was up 1.7% on a constant dollar basis, reflecting strong growth in the boots business in Europe and SmartWool® brand offset by declines in casual footwear and Timberland® brand apparel. Foreign exchange rate changes decreased third-quarter 2009 revenue by approximately $9 million due to the strength of the U.S. dollar relative to the British Pound and the Euro versus last year.
- North America revenue increased 2.0% to $188.2 million, reflecting strong growth in the kids’ boot business and in the SmartWool® brand. Europe revenue decreased 2.3% to $195.2 million but increased 3.3% on a constant dollar basis. European results reflect strong increases in the boots business across all categories which partially offset declines in the casual and apparel businesses. Asia revenue decreased 2.3% to $38.3 million, and decreased 9.1% on a constant dollar basis, driven by declines in casual footwear and apparel, partially offset by strengthening of the men’s and kids’ boots businesses.
- Global footwear revenue increased 1.8% to $319.1 million, primarily due to strength in the boots business across all markets. Apparel and accessories revenue decreased 6.7% to $95.8 million, due to softness across all regions.
- Global wholesale revenue was relatively flat at $342.2 million. Worldwide consumer direct revenue decreased 4.2% to $79.5 million, reflecting the adverse impact of foreign exchange and weakness in the North America outlet stores.
- Operating income for the third quarter of 2009 was $58.5 million, compared to operating income of $53.2 million in the prior year period. In the quarter, foreign exchange rate changes decreased operating income by approximately $7 million.
- In the third quarter of 2009, the effective tax rate was 38.2%. For the full-year 2009, the Company anticipates that its effective tax rate will be approximately 28.5%.
- In connection with its stock buyback program, the Company repurchased approximately 755 thousand shares in the third quarter of 2009 at a cost of approximately $10 million.
- The Company ended the quarter with $112.9 million in cash and no debt. Inventory at quarter end was $201.7 million, down 7.8% versus 2008 third-quarter levels, reflecting the Company’s continued focus on maintaining clean inventory levels. Accounts receivable increased 1.1% to $270.3 million, compared to the prior year.
Jeffrey B. Swartz, Timberland’s President and Chief Executive Officer, stated, “I am optimistic about what I am seeing this fall. Our product is better than ever, our marketing is loud and distinct and our team is focused and energized by the progress we have made against our strategic initiatives. We are finding new and unique ways to link commerce and justice with products like our Earthkeepers™ line and with marketing initiatives like Timberland PRO’s “Stay On Your Feet” campaign, dedicated to supporting workers with the highest quality footwear for their trade and, in addition, helping them stay on their feet by providing online job search capabilities. Given the overall economic conditions, we have a lot to feel good about but realize we still have hard work ahead of us before the Timberland® brand and enterprise has reached its full potential.”
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, the Company will be hosting a conference call to discuss third-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 80626074. 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. Timberland’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 its 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, Quarterly Report on Form 10-Q 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 October 29, 2009.
| THE TIMBERLAND COMPANY | ||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (Dollars in Thousands) | ||||||
| October 2, 2009 | December 31, 2008 | September 26, 2008 | ||||
| Assets | ||||||
| Current assets | ||||||
| Cash and equivalents | $112,851 | $217,189 | $62,686 | |||
| Accounts receivable, net | 270,272 | 168,666 | 267,246 | |||
| Inventory, net | 201,733 | 179,688 | 218,884 | |||
| Prepaid expense | 32,919 | 37,139 | 41,465 | |||
| Prepaid income taxes | 18,287 | 16,687 | 21,190 | |||
| Deferred income taxes | 23,512 | 23,425 | 21,826 | |||
| Derivative assets | 839 | 7,109 | 4,365 | |||
| Total current assets | 660,413 | 649,903 | 637,662 | |||
| Property, plant and equipment, net | 70,664 | 78,526 | 80,225 | |||
| Deferred income taxes | 13,825 | 18,528 | 20,132 | |||
| Goodwill and intangible assets, net | 90,301 | 91,866 | 95,828 | |||
| Other assets, net | 15,161 | 10,576 | 11,670 | |||
| Total assets | $850,364 | $849,399 | $845,517 | |||
| Liabilities and Stockholders’ Equity | ||||||
| Current liabilities | ||||||
| Accounts payable | $89,681 | $96,901 | $94,834 | |||
| Accrued expense and other current liabilities | 118,734 | 112,090 | 112,005 | |||
| Income taxes payable | 18,224 | 20,697 | 23,529 | |||
| Derivative liabilities | 3,994 | 2,386 | 1,724 | |||
| Total current liabilities | 230,633 | 232,074 | 232,092 | |||
| Other long-term liabilities | 36,146 | 40,787 | 41,774 | |||
| Stockholders’ equity | 583,585 | 576,538 | 571,651 | |||
| Total liabilities and stockholders’ equity | $850,364 | $849,399 | $845,517 | |||
| THE TIMBERLAND COMPANY | |||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| (Amounts in Thousands, Except Per Share Data) | |||||||
| For the Quarter Ended | For the Nine Months Ended | ||||||
| October 2, 2009 | September 26, 2008 | October 2, 2009 | September 26, 2008 | ||||
| Revenue | $421,766 | $423,606 | $898,116 | $973,924 | |||
| Cost of goods sold | 227,254 | 226,595 | 491,407 | 527,109 | |||
| Gross profit | 194,512 | 197,011 | 406,709 | 446,815 | |||
| Operating expense | |||||||
| Selling | 107,314 | 114,100 | 284,609 | 315,539 | |||
| General and administrative | 28,805 | 29,486 | 81,118 | 83,713 | |||
| Impairment of intangible asset | - | - | 925 | - | |||
| Restructuring and related costs | (88) | 185 | (209) | 1,054 | |||
| Total operating expense | 136,031 | 143,771 | 366,443 | 400,306 | |||
| Operating income | 58,481 | 53,240 | 40,266 | 46,509 | |||
| Other income/(expense) | |||||||
| Interest income, net | (11) | 336 | 490 | 1,680 | |||
| Other income/(expense), net | 2,626 | (2,454) | 3,629 | 2,929 | |||
| Total other income/(expense), net | 2,615 | (2,118) | 4,119 | 4,609 | |||
| Income before provision for income taxes | 61,096 | 51,122 | 44,385 | 51,118 | |||
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| Provision for income taxes | 23,339 | 20,464 | 9,995 | 21,350 | |||
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| Net income | $37,757 | $30,658 | $34,390 | $29,768 | |||
| Earnings per share | |||||||
| Basic | $0.68 | $0.53 | $0.61 | $0.51 | |||
| Diluted | $0.68 | $0.52 | $0.61 | $0.50 | |||
| Weighted-average shares outstanding | |||||||
| Basic | 55,744 | 58,078 | 56,385 | 58,868 | |||
| Diluted | 55,908 | 58,471 | 56,692 | 59,271 | |||
| THE TIMBERLAND COMPANY | |||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
| (Dollars in Thousands) | |||
| For the Nine Months Ended | |||
| October 2, 2009 | September 26, 2008 | ||
| Cash flows from operating activities: | |||
| Net income | $34,390 | $29,768 | |
| Adjustments to reconcile net income to net cash used by operating activities: | |||
| Deferred income taxes | 5,041 | 2,420 | |
| Share-based compensation | 4,163 | 6,225 | |
| Depreciation and other amortization | 21,582 | 24,239 | |
| Provision for losses on accounts receivable | 4,180 | 4,517 | |
| Provision for intangible asset impairment | 925 | - | |
| Tax expense from share-based compensation, net of excess benefit | (1,804) | (1,161) | |
| Unrealized loss/(gain) on derivatives | 554 | (268) | |
| Other non-cash charges, net | 930 | 964 | |
| Increase/(decrease) in cash from changes in working capital: | |||
| Accounts receivable | (103,264) | (82,671) | |
| Inventory | (18,891) | (17,063) | |
| Prepaid expense and other assets | 1,265 | 401 | |
| Accounts payable | (8,099) | 9,009 | |
| Accrued expense | 5,263 | 756 | |
| Prepaid income taxes | (1,600) | (3,829) | |
| Income taxes payable | (7,208) | 8,413 | |
| Other liabilities | (175) | (3,239) | |
| Net cash used by operating activities | (62,748) | (21,519) | |
| Cash flows from investing activities: | |||
| Acquisition of business, net of cash acquired | (1,554) | - | |
| Additions to property, plant and equipment | (11,078) | (15,313) | |
| Other | (601) | 3,627 | |
| Net cash used by investing activities | (13,233) | (11,686) | |
| Cash flows from financing activities: | |||
| Common stock repurchases | (29,285) | (45,081) | |
| Issuance of common stock | 1,373 | 1,407 | |
| Excess tax benefit from stock option and employee stock purchase plans | 136 | 179 | |
| Other | (1,248) | - | |
| Net cash used by financing activities | (29,024) | (43,495) | |
| Effect of exchange rate changes on cash and equivalents | 667 | (3,888) | |
| Net decrease in cash and equivalents | (104,338) | (80,588) | |
| Cash and equivalents at beginning of period | 217,189 | 143,274 | |
| Cash and equivalents at end of period | $112,851 | $62,686 | |
| THE TIMBERLAND COMPANY | ||||||||||||||||||||
| REVENUE ANALYSIS | ||||||||||||||||||||
| (Amounts in Thousands, Unaudited) | ||||||||||||||||||||
| For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||
| October 2, 2009 | September 26, 2008 | % Change | October 2, 2009 | September 26, 2008 | % Change | |||||||||||||||
| Revenue by Segment: | ||||||||||||||||||||
| North America | $188,247 | $184,516 | 2.0% | $394,419 | $421,807 | -6.5% | ||||||||||||||
| Europe | 195,244 | 199,933 | -2.3% | 400,913 | 443,406 | -9.6% | ||||||||||||||
| Asia | 38,275 | 39,157 | -2.3% | 102,784 | 108,711 | -5.5% | ||||||||||||||
| Total Revenue | $421,766 | $423,606 | -0.4% | $898,116 | $973,924 | -7.8% | ||||||||||||||
| Revenue by Product: | ||||||||||||||||||||
| Footwear | $319,145 | $313,544 | 1.8% | $657,739 | $693,094 | -5.1% | ||||||||||||||
| Apparel and Accessories | 95,824 | 102,678 | -6.7% | 221,729 | 263,244 | -15.8% | ||||||||||||||
| Royalty and Other | 6,797 | 7,384 | -7.9% | 18,648 | 17,586 | 6.0% | ||||||||||||||
| Revenue by Channel: | ||||||||||||||||||||
| Wholesale | $342,231 | $340,608 | 0.5% | $669,273 | $732,206 | -8.6% | ||||||||||||||
| Consumer Direct | 79,535 | 82,998 | -4.2% | 228,843 | 241,718 | -5.3% | ||||||||||||||
| Comparable Store Sales: | ||||||||||||||||||||
| Domestic Retail | -14.6% | -13.8% | -11.1% | -7.4% | ||||||||||||||||
| Global Retail | -6.6% | -6.4% | -3.6% | -0.9% | ||||||||||||||||
| 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 Nine Months Ended | ||||||||||
| October 2, 2009 | October 2, 2009 | ||||||||||
| $ Change | % Change | $ Change | % Change | ||||||||
| Revenue decrease (GAAP) | ($1,840) | -0.4% | ($75,808) | -7.8% | |||||||
| Decrease due to foreign exchange rate changes | (9,005) | -2.1% | (41,776) | -4.3% | |||||||
| Revenue increase/(decrease) in constant dollars | $7,165 | 1.7% | ($34,032) | -3.5% | |||||||
| North America Revenue Reconciliation: | |||||||||||
| For the Quarter Ended | For the Nine Months Ended | ||||||||||
| October 2, 2009 | October 2, 2009 | ||||||||||
| $ Change | % Change | $ Change | % Change | ||||||||
| Revenue increase/(decrease) (GAAP) | $3,731 | 2.0% | ($27,388) | -6.5% | |||||||
| Decrease due to foreign exchange rate changes | (343) | -0.2% | (1,686) | -0.4% | |||||||
| Revenue increase/(decrease) in constant dollars | $4,074 | 2.2% | ($25,702) | -6.1% | |||||||
| Europe Revenue Reconciliation: | |||||||||||
| For the Quarter Ended | For the Nine Months Ended | ||||||||||
| October 2, 2009 | October 2, 2009 | ||||||||||
| $ Change | % Change | $ Change | % Change | ||||||||
| Revenue decrease (GAAP) | ($4,689) | -2.3% | ($42,493) | -9.6% | |||||||
| Decrease due to foreign exchange rate changes | (11,328) | -5.6% | (44,334) | -10.0% | |||||||
| Revenue increase in constant dollars | $6,639 | 3.3% | $1,841 | 0.4% | |||||||
| Asia Revenue Reconciliation: | |||||||||||
| For the Quarter Ended | For the Nine Months Ended | ||||||||||
| October 2, 2009 | October 2, 2009 | ||||||||||
| $ Change | % Change | $ Change | % Change | ||||||||
| Revenue decrease (GAAP) | ($882) | -2.3% | ($5,927) | -5.5% | |||||||
| Increase due to foreign exchange rate changes | 2,666 | 6.8% | 4,244 | 3.9% | |||||||
| Revenue decrease in constant dollars | ($3,548) | -9.1% | ($10,171) | -9.4% | |||||||
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