Exhibit 99.1
Timberland Reports Third-Quarter Results
STRATHAM, N.H.--(BUSINESS WIRE)--Nov. 1, 2007--The Timberland
Company (NYSE: TBL) today reported third-quarter net income of $25.9
million and diluted earnings per share (EPS) of $0.42. These results
compare to a third-quarter 2006 net income of $55.6 million, and EPS
of $0.88. Third-quarter net income was $30.4 million and EPS was $0.49
when adjusted to exclude restructuring costs principally related to
the Company's decision to close certain retail locations. As part of
its ongoing initiative to rationalize its operating expense structure,
Timberland also announced today plans to transition to a reorganized,
more efficient U.S. sales team and a streamlined global product
development organization, actions that it believes will result in
annual operating expense savings of approximately $10 million.
-- Third quarter revenue of $433.3 million was down 13.9%
compared to the prior year due to anticipated declines in the
boots and kids' businesses as well as declines in the
Timberland(R) apparel business. Foreign exchange rate changes
increased third-quarter revenues by $12.3 million, or 2.4%.
-- International revenue decreased 4.4%, or 9.3% on a constant
dollar basis, driven by declines in Europe and Canada, which
offset strong growth in Asia. U.S. revenues decreased 23.3%,
due to the anticipated declines in boots and kids' sales as
well as declines in Timberland(R) apparel, which offset strong
growth in SmartWool(R) apparel and accessories.
-- Global footwear revenues of $310.3 million were down 15.7%, as
anticipated declines in boots and kids' as well as modest
declines in casual footwear offset benefits from the addition
of IPATH. Apparel and accessories revenue decreased 10.2% to
$116.2 million driven by declines in Timberland(R) apparel,
which offset strong growth in SmartWool.
-- Global wholesale revenue decreased by 17.3% to $344.0 million.
Worldwide consumer direct revenue increased 2.9% to $89.3
million reflecting strong sales in Asia as a result of the
addition of new doors as well as gains in foreign currency.
Overall, global comparable store sales declined 5.6%
reflecting decreases in the U.S., Europe and Asia.
-- Operating income for the quarter was $44.7 million, compared
to $84.7 million in the prior year period driven by revenue
declines and gross margin pressures due to unfavorable mix
impacts from lower boot sales in the U.S. and Europe,
increased levels of off-price sales and markdowns, and higher
product costs. Operating income excluding restructuring costs
related to the decision to close certain retail locations was
$52.2 million. For the quarter, foreign exchange rate changes
increased operating income by $7.4 million.
-- Timberland ended the quarter with $44.0 million in cash and
$46.6 million in short-term debt to support seasonal working
capital needs. In the third quarter, the Company repurchased
approximately 778 thousand shares. Timberland currently has
2.4 million shares remaining under existing share repurchase
authorizations.
-- For the fourth quarter, Timberland anticipates revenue
declines in the mid-single digit range reflecting soft market
conditions in the U.S. and Europe and operating margin
declines in the range of 200 basis points compared to the
prior year excluding restructuring costs.
-- Consistent with trends Timberland has seen in the first nine
months of 2007, it continues to anticipate declines in boots
and kids' sales in 2007 to be in the range of $100 million
globally, which will offset gains in other parts of the
portfolio. For the full year, the Company now anticipates
revenue declines in the mid-single digit range and operating
margin declines in the range of 400 to 450 basis points
compared to prior-year levels excluding restructuring costs.
It anticipates that the full-year tax rate will be in the
range of 35.0% to 35.5%.
-- For 2008, Timberland is targeting mid-single digit first half
revenue declines and improved operating results, compared with
first half 2007 comparable results. The Company anticipates
that soft market trends will be offset by its efforts to drive
operational efficiencies across its organization and its
decision to close approximately 50 retail stores by the end of
the first quarter of 2008. Timberland's 2007 first half
comparable results exclude $7.5 million of restructuring costs
as well as approximately $12 million in revenues associated
with stores targeted for closure that generated an operating
loss of approximately $3 million, all of which are included in
its 2007 reported results.
Jeffrey B. Swartz, Timberland's President and Chief Executive
Officer, stated, "I am not satisfied with our current financial
performance and, together with our leadership team, will continue to
review our entire portfolio to identify further opportunities to
enhance our effectiveness and deliver improved performance for our
shareholders. Following last month's announcement to close nearly 50
retail locations globally to improve our profitability, today we
announced a realignment of our U.S sales team and global product
development organization to eliminate redundancies and improve
efficiencies. We are also driving to strengthen our connection with
consumers by raising our marketing voice in conjunction with key
partners in Europe and the U.S. I am confident that we are
implementing strategic decisions that will reposition the
Timberland(R) brand for long-term growth, while preserving our strong
brand resonance with targeted consumers who appreciate our outdoor
heritage."
Note that comments made by the Company and 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 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 617-786-2903 and providing access code number 26254541.
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(R), Timberland
PRO(R), SmartWool(R), Timberland Boot Company(TM), Mion(R), GoLite(R)
Howies(R) and IPATH(R) 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(R) 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. These forward-looking
statements, which include statements regarding The Timberland
Company'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 the results of The Timberland Company 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) the
Company'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) the Company's ability to profitably sell
certain footwear products in European Member States in light of
anti-dumping duties and measures imposed by the European Commission
with respect to leather footwear imported from China and Vietnam;
(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; (vi) the Company's ability to execute key strategic
initiatives, including the closure of targeted stores within the
planned timetable and planned for costs; and (vii) 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 discussion of constant dollar
revenue changes and operating income, net income and diluted EPS
excluding restructuring and related costs, which are non-GAAP
measures. As required by SEC rules, the Company has provided
reconciliations of these measures on attached tables that follow its
financial statements. Additional required information is located in
the Form 8-K furnished to the SEC on November 1, 2007.
THE TIMBERLAND COMPANY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
September
December 29, 2006
September 31, (As
28, 2007 2006 Restated)
--------- -------- ----------
Assets
Current assets
Cash and equivalents $ 43,951 $181,698 $ 61,850
Accounts receivable, net 286,575 204,016 330,384
Inventory 259,207 186,765 250,522
Prepaid expense 42,081 42,130 41,059
Prepaid income taxes 21,309 12,353 -
Deferred income taxes 18,956 21,633 18,443
Derivative assets 57 176 1,388
--------- -------- ----------
Total current assets 672,136 648,771 703,646
--------- -------- ----------
Property, plant and equipment, net 88,098 94,640 86,201
Deferred income taxes 23,008 18,553 10,446
Goodwill and intangible assets, net 99,088 87,582 82,130
Other assets, net 12,810 10,831 10,467
--------- -------- ----------
Total assets $895,140 $860,377 $892,890
========= ======== ==========
Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ 46,600 $ - $ 54,200
Accounts payable 104,185 110,031 127,440
Accrued expense and other current
liabilities 114,019 122,734 122,806
Income taxes payable 12,243 49,938 35,443
Derivative liabilities 4,810 2,925 1,455
--------- -------- ----------
Total current liabilities 281,857 285,628 341,344
--------- -------- ----------
Deferred income taxes 26,406 - -
Other long-term liabilities 15,495 13,064 13,486
--------- -------- ----------
Total liabilities 323,758 298,692 354,830
--------- -------- ----------
Stockholders' equity 571,382 561,685 538,060
--------- -------- ----------
Total liabilities and stockholders'
equity $895,140 $860,377 $892,890
========= ======== ==========
THE TIMBERLAND COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
For the Quarter For the Nine Months
Ended Ended
-------------------- --------------------
September September
29, 2006 29, 2006
September (As September (As
28, 2007 Restated) 28, 2007 Restated)
--------- ---------- --------- ----------
Revenue $433,294 $502,980 $993,749 $1,079,396
Cost of goods sold 229,891 263,151 529,600 562,886
--------- ---------- --------- ----------
Gross profit 203,403 239,829 464,149 516,510
--------- ---------- --------- ----------
Operating expense
Selling 122,260 123,178 331,890 323,046
General and administrative 28,943 32,044 90,385 88,054
Restructuring and related
costs, net 7,545 (92) 15,059 820
--------- ---------- --------- ----------
Total operating expense 158,748 155,130 437,334 411,920
--------- ---------- --------- ----------
Operating income 44,655 84,699 26,815 104,590
--------- ---------- --------- ----------
Other income
Interest income/(expense),
net (420) (308) 1,376 1,463
Other income/(expense), net (1,128) 2,137 (310) (4,816)
--------- ---------- --------- ----------
Total other
income/(expense), net (1,548) 1,829 1,066 (3,353)
--------- ---------- --------- ----------
Income before provision for
income taxes 43,107 86,528 27,881 101,237
Provision for income taxes 17,242 30,977 11,989 36,243
--------- ---------- --------- ----------
Net income $ 25,865 $ 55,551 $ 15,892 $ 64,994
========= ========== ========= ==========
Earnings per share
Basic $ .42 $ .89 $ .26 $ 1.03
Diluted $ .42 $ .88 $ .26 $ 1.01
Weighted-average shares
outstanding
Basic 61,352 62,120 61,310 62,910
Diluted 61,860 63,062 61,974 64,069
THE TIMBERLAND COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
For the Nine Months
Ended
---------------------
September
29,
2006
September (As
28, 2007 Restated)
---------- ----------
Cash flows from operating activities:
Net income $ 15,892 $ 64,994
Adjustments to reconcile net income to net
cash used by operating activities:
Deferred income taxes 1,978 90
Share-based compensation 7,328 14,796
Depreciation and other amortization 23,598 20,413
Provision for asset impairment 5,817 -
Tax benefit from share-based compensation,
net of excess benefit (829) 1,284
Unrealized (gain)/loss on derivatives 26 6,111
Non-cash charges/(credits), net 3,897 (1,969)
Increase/(decrease) in cash from changes in
working capital:
Accounts receivable (72,753 ) (155,614)
Inventory (69,202 ) (79,369)
Prepaid expense 1,202 (6,302)
Accounts payable (8,087 ) 27,204
Accrued expense (11,015 ) 19,365
Other liability 1,176 -
Income taxes prepaid and payable, net (30,537 ) (12,184)
---------- ----------
Net cash used by operating activities (131,509 ) (101,181)
---------- ----------
Cash flows from investing activities:
Acquisition of business, net of cash acquired (12,811 ) (30)
Additions to property, plant and equipment (20,264 ) (21,878)
Other (1,640 ) (4,211)
---------- ----------
Net cash used by investing activities (34,715 ) (26,119)
---------- ----------
Cash flows from financing activities:
Common stock repurchases (28,512 ) (95,543)
Net short-term borrowings 46,600 54,200
Issuance of common stock 11,957 13,478
Excess tax benefit from share-based
compensation 1,097 2,605
---------- ----------
Net cash provided (used) by financing
activities 31,142 (25,260)
---------- ----------
---------- ----------
Effect of exchange rate changes on cash and
equivalents (2,665 ) 1,247
---------- ----------
Net decrease in cash and equivalents (137,747 ) (151,313)
Cash and equivalents at beginning of period 181,698 213,163
---------- ----------
Cash and equivalents at end of period $ 43,951 $ 61,850
========== ==========
THE TIMBERLAND COMPANY
UNAUDITED REVENUE ANALYSIS
(Amounts in Thousands)
For the Quarter Ended For the Nine Months Ended
--------------------------- ----------------------------
September September September September
28, 2007 29, 2006 Change 28, 2007 29, 2006 Change
--------------------------- ----------------------------
Revenue by
Segment:
U.S.
Wholesale $ 148,087 $ 204,953 -27.7% $331,843 $ 420,524 -21.1%
U.S.
Consumer
Direct 44,189 45,857 -3.6% 110,737 112,157 -1.3%
-------------------- ---------------------
Total U.S. 192,276 250,810 -23.3% 442,580 532,681 -16.9%
Inter-
national $ 241,018 $ 252,170 -4.4% $551,169 $ 546,715 0.8%
Revenue by
Product:
Footwear $ 310,300 $ 367,982 -15.7% $700,448 $ 772,694 -9.3%
Apparel and
Accessories 116,237 129,439 -10.2% 278,146 292,366 -4.9%
Royalty and
Other 6,757 5,559 21.6% 15,155 14,336 5.7%
Revenue by
Channel:
Wholesale $ 343,979 $ 416,165 -17.3% $753,928 $ 851,799 -11.5%
Consumer
Direct 89,315 86,815 2.9% 239,821 227,597 5.4%
Comparable
Store Sales:
Domestic
Retail -4.8% -4.5% -1.2 % -7.7%
Global
Retail -5.6% -4.1% -3.8 % -6.7%
THE TIMBERLAND COMPANY
UNAUDITED RECONCILIATION OF TOTAL AND INTERNATIONAL REVENUE
INCREASES/(DECREASES) TO CONSTANT DOLLAR REVENUE
INCREASES/(DECREASES)
(Amounts in Thousands)
Total Company Revenue Reconciliation:
For the Nine
For the Quarter Months Ended
Ended September September 28,
28, 2007 2007
------------------ -------------------
$Change % Change $ Change % Change
------------------ -------------------
Revenue decrease (GAAP) $(69,686) -13.9% $ (85,647) -7.9%
Increase due to foreign exchange
rate changes 12,322 2.4% 28,441 2.7%
------------------ -------------------
Revenue decrease in constant
dollars $(82,008) -16.3% $(114,088) -10.6%
International Revenue Reconciliation:
For the Nine
For the Quarter Months Ended
Ended September September 28,
28, 2007 2007
------------------ ------------------
$ Change % Change $ Change % Change
------------------ ------------------
Revenue increase /(decrease)
(GAAP) $(11,152) -4.4% $ 4,454 0.8%
Increase due to foreign exchange
rate changes 12,322 4.9% 28,441 5.2%
------------------ ------------------
Revenue decrease in constant
dollars $(23,474) -9.3% $(23,987) -4.4%
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 and International
revenues because we use the measures to understand revenue changes
excluding the impact of items which are not under management's direct
control, such as changes in foreign exchange rates.
THE TIMBERLAND COMPANY
UNAUDITED RECONCILIATION OF DILUTED EPS TO
DILUTED EPS EXCLUDING RESTRUCTURING AND RELATED COSTS
For the For the
Quarter Quarter
Ended Ended
September September
28, 2007 29, 2006
---------- ----------
Diluted EPS (GAAP) $.42 $.88
Per share impact of restructuring and related
costs .07 -
---------- ----------
Diluted EPS excluding restructuring and related
costs $.49 $.88
========== ==========
UNAUDITED RECONCILIATION OF NET INCOME TO
NET INCOME EXCLUDING RESTRUCTURING AND RELATED COSTS
(Dollars in Thousands)
For the For the
Quarter Quarter
Ended Ended
September September
28, 2007 29, 2006
---------- ----------
Net income (GAAP) $25,865 $55,551
Restructuring and related costs, net of tax 4,527 (59)
---------- ----------
Net income excluding restructuring and related
costs $30,392 $55,492
========== ==========
UNAUDITED RECONCILIATION OF OPERATING INCOME TO
OPERATING INCOME EXCLUDING RESTRUCTURING AND RELATED COSTS
(Dollars in Thousands)
For the For the
Quarter Quarter
Ended Ended
September September
28, 2007 29, 2006
---------- ----------
Operating income (GAAP) $44,655 $84,699
Restructuring and related costs 7,545 (92)
---------- ----------
Operating income excluding restructuring and
related costs $52,200 $84,607
========== ==========
For the For the
Quarter Year
Ended Ended
December December
31, 2006 31, 2006
--------- ---------
Operating income (GAAP) $58,045 $162,636
Restructuring and related costs 3,049 3,868
--------- ---------
Operating income excluding restructuring and
related costs $61,094 $166,504
========= =========
Diluted EPS, Net income, and Operating income excluding
restructuring and related costs are not Generally Accepted Accounting
Principle ("GAAP") performance measures. We provide diluted EPS, Net
income and Operating income excluding restructuring and related costs
because they are used to analyze the earnings of the Company.
Management believes these measures are a reasonable reflection of the
earnings levels from ongoing business activities.
CONTACT: The Timberland Company
Karen Blomquist, 603-773-1655
Senior Manager, Investor Relations