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
Provision for income taxes
23,339
20,464
9,995
21,350
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.
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