The Timberland Company (NYSE: TBL) today reported first-quarter
2009 net income of $15.9 million and earnings per share of $0.27.
These results compare to first-quarter 2008 net income of $18.0
million and earnings per share of $0.30.
First-Quarter 2009 Results Summary:
- Revenue declined 12.9% to $296.6
million for the quarter, reflecting declines in Timberland� brand
apparel, in part due to the transition to a licensing model for the
Company�s North American wholesale apparel business, and declines
in Timberland� branded casual footwear, partially offset by
continued growth in SmartWool� brand products. Foreign exchange
rate changes decreased first-quarter 2009 revenue by approximately
$22 million, or 6.4%, due to the strengthening of the U.S.
dollar.
- North America revenue declined
13.0% to $119.9 million, reflecting soft consumer spending in the
U.S. Europe revenue decreased 15.0% to $140.0 million but was down
only 1.7% on a constant dollar basis. European results reflect
declines in the apparel and casual footwear businesses, partially
offset by strong sales of men�s and women�s boots. Asia revenue
decreased 2.9% to $36.8 million, and decreased 6.2% on a constant
dollar basis driven by declines in the apparel business and the
casual footwear business, partially offset by strengthening of the
men�s boots business.
- Global footwear revenue
decreased 10.5% to $211.6 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 19.7% to $78.7 million, due to softness in the
European market as well as the Company�s transition to a licensing
model for its North American wholesale apparel business.
- Global wholesale revenue
decreased 14.4% to $218.6 million. Worldwide consumer direct
revenue decreased 8.1% to $78.0 million, reflecting the adverse
impact of a stronger U.S. dollar and a difficult worldwide retail
environment, especially in North America.
- Operating income for the first
quarter of 2009 was $18.2 million, compared to $23.2 million in the
prior year period. The 2009 first quarter included a $0.9 million
non-cash intangible asset impairment charge. In the quarter,
foreign exchange rate changes decreased operating income by
approximately $1 million due to the strengthening of the U.S.
dollar.
- In the first quarter of 2009,
the effective tax rate was 11.0% compared to 39.0% in the first
quarter of 2008. During the first quarter of 2009, the Company
recorded a net non-cash tax benefit of $6.4 million, which was
reflected in income tax expense. The benefit resulted from the
reversal of tax reserves for the completion of certain tax audits
for our 2006 to 2007 tax years.
- In connection with its stock
buyback program, Timberland repurchased approximately 1 million
shares in the first quarter of 2009 at a total cost of $10.0
million.
- Timberland ended the quarter
with $159.2 million in cash and no debt. Inventory at quarter end
was $162.8 million, down 9.7% versus 2008 first-quarter levels,
reflecting the Company�s focus on maintaining clean inventory
levels in the face of challenging market conditions. Accounts
receivable decreased 14.6% to $172.3 million, compared to the prior
year.
The Company anticipates that 2009 will continue to be
challenging due to the uncertainty around consumer spending
patterns and the financial health of the retail industry. Given the
volatile nature of current economic conditions, the Company
believes there is not sufficient visibility to set expectations for
the performance of the business.
Jeffrey B. Swartz, Timberland�s President and Chief Executive
Officer, stated, "As 2009 begins to unfold, we are seeing consumers
becoming more selective in their purchases, and turning
increasingly to trusted authentic brands like Timberland. The
Timberland brand heritage, known for quality, durability and
values�coupled with our long held financial conservatism�provides a
strong foundation that gives us stability in this difficult
economic environment. This foundation allows us to continue to stay
committed to our brand-invigorating strategies and positions us
well for growth when the economy recovers.�
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 first-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 80624230. 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
in nature 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 also 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 April 30, 2009.
THE TIMBERLAND COMPANY UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS (Dollars in Thousands) � � �
April 3,
2009 December 31, 2008 March 28, 2008
Assets Current assets Cash and equivalents $159,195 $217,189
$134,829 Accounts receivable, net 172,280 168,666 201,786
Inventory, net 162,783 179,688 180,177 Prepaid expense 37,576
37,139 42,019 Prepaid income taxes 16,752 16,687 20,196 Deferred
income taxes 21,974 23,425 22,749 Derivative assets 4,886 7,109 -
Total current assets 575,446 649,903 601,756 � Property, plant and
equipment, net 74,576 78,526 86,461 Deferred income taxes 17,204
18,528 19,075 Goodwill and intangible assets, net 90,382 91,866
98,428 Other assets, net 10,423 10,576 10,453 � Total assets
$768,031 $849,399 $816,173 �
Liabilities and Stockholders�
Equity Current liabilities Accounts payable $56,159 $96,901
$63,427 Accrued expense and other current liabilities 80,275
112,090 95,335 Income taxes payable 17,841 20,697 15,321 Deferred
income taxes 184 - - Derivative liabilities 1,212 2,386 9,257 Total
current liabilities 155,671 232,074 183,340 � Other long-term
liabilities 33,398 40,787 40,431 � Stockholders� equity 578,962
576,538 592,402 � Total liabilities and stockholders� equity
$768,031 $849,399 $816,173
THE TIMBERLAND COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data) � �
For the
Quarter Ended April 3, 2009 March 28, 2008
Revenue $296,648 $340,402 Cost of goods sold 159,959 182,798 �
Gross profit 136,689 157,604 � Operating expense Selling 92,268
106,122 General and administrative 25,417 27,688 Impairment of
intangible asset 925 - Restructuring and related costs (104) 552
Total operating expense 118,506 134,362 � Operating income 18,183
23,242 �
Other income/(expense)
Interest income/(expense), net
319 568 Other income/(expense), net (663) 5,762 Total other
income/(expense), net (344) 6,330 � Income before provision for
income taxes 17,839 29,572
�
�
Provision for income taxes
1,962
11,533
�
�
Net income
$15,877
$18,039
� Earnings per share Basic $0.28 $0.30 Diluted $0.27 $0.30
Weighted-average shares outstanding Basic 57,108 59,618 Diluted
57,802 60,016
THE TIMBERLAND COMPANY UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) �
� �
For the Quarter Ended April 3, 2009 March 28,
2008 Cash flows from operating activities: Net income $15,877
$18,039 Adjustments to reconcile net income to net cash
(used)/provided by operating activities: Deferred income taxes
2,215 2,554 Share-based compensation 811 1,539 Depreciation and
other amortization 7,141 8,046 Provision for losses on accounts
receivable 1,912 1,389 Provision for intangible asset impairment
925 - Tax benefit/(expense) from share-based compensation, net of
excess benefit (295) 151 Unrealized (gain)/loss on derivatives 34
(21) Other non-cash charges, net 828 520 Increase/(decrease) in
cash from changes in working capital: Accounts receivable (7,925)
(6,539) Inventory 16,656 24,086 Prepaid expense (1,652) 1,617
Accounts payable (40,269) (23,644) Accrued expense (31,261)
(18,023) Prepaid income taxes (65) (2,835) Income taxes payable
(9,040) (2,544) Other liabilities (201) (1,572) Net cash
(used)/provided by operating activities (44,309) 2,763 � Cash flows
from investing activities: Acquisition of business, net of cash
acquired (1,516) - Additions to property, plant and equipment
(2,838) (4,116) Other (61) 2,170 Net cash used by investing
activities (4,415) (1,946) � Cash flows from financing activities:
Common stock repurchases (9,127) (10,152) Issuance of common stock
670 453 Excess tax benefit from stock option and employee stock
purchase plans 99 122 Other (170) - Net cash used by financing
activities (8,528) (9,577) � Effect of exchange rate changes on
cash and equivalents (742) 315 � Net decrease in cash and
equivalents (57,994) (8,445) Cash and equivalents at beginning of
period 217,189 143,274 Cash and equivalents at end of period
$159,195 $134,829
THE TIMBERLAND COMPANY REVENUE
ANALYSIS (Amounts in Thousands, Unaudited) � � �
For the
Quarter Ended April 3, 2009 March 28, 2008
% Change
�
Revenue by Segment: North America $119,858 $137,730 -13.0%
Europe 139,988 164,751 -15.0% Asia 36,802 37,921 -2.9% Total
Revenue $296,648 $340,402 -12.9% �
Revenue by Product:
Footwear $211,641 $236,598 -10.5% Apparel and Accessories 78,664
97,942 -19.7% Royalty and Other 6,343 5,862 8.2% �
Revenue by
Channel: Wholesale $218,625 $255,521 -14.4% Consumer Direct
78,023 84,881 -8.1% �
Comparable Store Sales: Domestic
Retail -9.8% 1.9% Global Retail -1.6% 5.7%
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 April 3,
2009 $ Change �
% Change
Revenue decrease (GAAP) ($43,754) -12.9% Decrease due to foreign
exchange rate changes (21,599) � -6.4% Revenue decrease in constant
dollars ($22,155) -6.5% �
North America Revenue
Reconciliation: �
For the Quarter Ended April 3,
2009 $ Change � % Change Revenue decrease (GAAP) ($17,872)
-13.0% Decrease due to foreign exchange rate changes (927) � -0.7%
Revenue decrease in constant dollars ($16,945) -12.3% �
Europe
Revenue Reconciliation: �
For the Quarter Ended April
3, 2009 $ Change � % Change Revenue decrease (GAAP) ($24,763)
-15.0% Decrease due to foreign exchange rate changes (21,923) �
-13.3% Revenue decrease in constant dollars ($2,840) -1.7% �
Asia Revenue Reconciliation: �
For the Quarter Ended
April 3, 2009 $ Change � % Change Revenue decrease (GAAP)
($1,119) -2.9% Increase due to foreign exchange rate changes 1,251
� 3.3% Revenue decrease in constant dollars ($2,370) -6.2%
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.
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