e10vq
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 3, 2009
OR
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-9548
The Timberland Company
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
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02-0312554 |
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(State or Other Jurisdiction of
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(I.R.S. Employer Identification No.) |
Incorporation or Organization) |
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200 Domain Drive, Stratham, New Hampshire
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03885 |
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(Address of Principal Executive Offices)
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(Zip Code) |
Registrants Telephone Number, Including Area Code: (603) 772-9500
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
þ Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
o Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.
See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer þ |
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Accelerated filer o |
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Non-accelerated filer o
(Do not check if a smaller reporting company) |
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Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
o Yes þ No
On May 1, 2009, 45,311,957 shares of the registrants Class A Common Stock were outstanding and
11,529,160 shares of the registrants Class B Common Stock were outstanding.
THE TIMBERLAND COMPANY
FORM 10-Q
TABLE OF CONTENTS
Form 10-Q
Page 2
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. As discussed in the
sections entitled Cautionary Statements for Purposes of the Safe Harbor Provisions of the
Private Securities Litigation Reform Act of 1995 on page 2 of our Annual Report on Form 10-K for
the year ended December 31, 2008 (our Annual Report on Form 10-K) and Forward Looking
Information in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K, investors should
be aware of certain risks, uncertainties and assumptions that could affect our actual results and
could cause such results to differ materially from those contained in forward-looking statements
made by or on behalf of us in our periodic reports filed with the Securities and Exchange
Commission, in our annual report to shareholders, in our proxy statement, in press releases and
other written materials and statements made by our officers, directors or employees to third
parties. Such statements are based on current expectations only and actual future results may
differ materially from those expressed or implied by such forward-looking statements due to certain
risks, uncertainties and assumptions. We encourage you to refer to our Annual Report on Form 10-K
and Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q to carefully consider
these risks, uncertainties and assumptions. We undertake no obligation to update publicly any
forward-looking statements, whether as a result of new information, future events or otherwise.
Form 10-Q
Page 3
Part I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
THE TIMBERLAND COMPANY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
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April 3, |
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December 31, |
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March 28, |
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2009 |
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2008 |
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2008 |
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Assets |
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Current assets |
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Cash and equivalents |
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$ |
159,195 |
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$ |
217,189 |
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$ |
134,829 |
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Accounts receivable, net of allowance for doubtful accounts of $13,239
at April 3, 2009, $14,482 at December 31, 2008 and $16,717 at March 28,
2008 |
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172,280 |
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168,666 |
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201,786 |
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Inventory, net |
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162,783 |
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179,688 |
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180,177 |
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Prepaid expense |
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37,576 |
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37,139 |
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42,019 |
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Prepaid income taxes |
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16,752 |
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16,687 |
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20,196 |
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Deferred income taxes |
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21,974 |
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23,425 |
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22,749 |
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Derivative assets |
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4,886 |
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7,109 |
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Total current assets |
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575,446 |
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649,903 |
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601,756 |
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Property, plant and equipment, net |
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74,576 |
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78,526 |
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86,461 |
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Deferred income taxes |
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17,204 |
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18,528 |
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19,075 |
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Goodwill |
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43,870 |
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43,870 |
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44,840 |
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Intangible assets, net |
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46,512 |
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47,996 |
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53,588 |
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Other assets, net |
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10,423 |
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10,576 |
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10,453 |
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Total assets |
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$ |
768,031 |
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$ |
849,399 |
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$ |
816,173 |
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Liabilities and Stockholders Equity |
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Current liabilities |
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Accounts payable |
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$ |
56,159 |
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$ |
96,901 |
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$ |
63,427 |
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Accrued expense |
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Payroll and related |
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18,966 |
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32,587 |
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30,085 |
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Other |
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61,309 |
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79,503 |
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65,250 |
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Income taxes payable |
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17,841 |
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20,697 |
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15,321 |
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Deferred income taxes |
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184 |
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Derivative liabilities |
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1,212 |
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2,386 |
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9,257 |
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Total current liabilities |
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155,671 |
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232,074 |
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183,340 |
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Other long-term liabilities |
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33,398 |
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40,787 |
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40,431 |
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Commitments and contingencies |
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Stockholders equity |
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Preferred Stock, $.01 par value; 2,000,000 shares authorized; none issued |
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Class A Common Stock, $.01 par value (1 vote per share); 120,000,000
shares authorized; 73,997,343 shares issued at April 3, 2009, 73,806,026
shares issued at December 31, 2008 and 73,471,161 shares issued at March
28, 2008 |
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740 |
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738 |
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735 |
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Class B Common Stock, $.01 par value (10 votes per share); convertible
into Class A shares on a one-for-one basis; 20,000,000 shares
authorized; 11,529,160 shares issued and outstanding at April 3, 2009
and December 31, 2008 and 11,743,660 shares issued and outstanding at
March 28, 2008 |
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115 |
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115 |
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117 |
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Additional paid-in capital |
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261,901 |
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260,267 |
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253,210 |
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Retained earnings |
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933,916 |
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918,039 |
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893,172 |
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Accumulated other comprehensive income |
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7,635 |
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12,543 |
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24,808 |
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Treasury Stock at cost; 28,685,386 Class A shares at April 3, 2009,
27,766,651 Class A shares at December 31, 2008 and 25,692,294 Class A
shares at March 28, 2008 |
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(625,345 |
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(615,164 |
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(579,640 |
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Total stockholders equity |
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578,962 |
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576,538 |
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592,402 |
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Total liabilities and stockholders equity |
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$ |
768,031 |
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$ |
849,399 |
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$ |
816,173 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Form 10-Q
Page 4
THE TIMBERLAND COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Per Share Data)
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For the Quarter Ended |
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April 3, 2009 |
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March 28, 2008 |
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Revenue |
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$ |
296,648 |
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$ |
340,402 |
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Cost of goods sold |
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159,959 |
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182,798 |
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Gross profit |
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136,689 |
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157,604 |
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Operating expense |
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Selling |
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92,268 |
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106,122 |
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General and administrative |
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25,417 |
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27,688 |
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Impairment of intangible asset |
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925 |
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Restructuring and related (credits)/costs |
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(104 |
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552 |
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Total operating expense |
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118,506 |
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134,362 |
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Operating income |
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18,183 |
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23,242 |
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Other income/(expense) |
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Interest income |
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440 |
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854 |
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Interest expense |
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(121 |
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(286 |
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Other income/(expense), net |
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(663 |
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5,762 |
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Total other income/(expense), net |
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(344 |
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6,330 |
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Income before provision for income taxes |
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17,839 |
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29,572 |
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Provision for income taxes |
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1,962 |
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11,533 |
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Net income |
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$ |
15,877 |
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$ |
18,039 |
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Earnings per share |
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Basic |
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$ |
.28 |
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$ |
.30 |
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Diluted |
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$ |
.27 |
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$ |
.30 |
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Weighted-average shares outstanding |
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Basic |
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57,108 |
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59,618 |
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Diluted |
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57,802 |
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60,016 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Form 10-Q
Page 5
THE TIMBERLAND COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
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For the Quarter Ended |
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April 3, 2009 |
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March 28, 2008 |
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Cash flows from operating activities: |
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Net income |
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$ |
15,877 |
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$ |
18,039 |
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Adjustments to reconcile net income to net cash
(used)/provided by operating activities: |
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Deferred income taxes |
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2,215 |
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2,554 |
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Share-based compensation |
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811 |
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1,539 |
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Depreciation and other amortization |
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7,141 |
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8,046 |
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Provision for losses on accounts receivable |
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1,912 |
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1,389 |
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Provision for intangible asset impairment |
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925 |
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Tax benefit/(expense) from share-based compensation, net of
excess benefit |
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(295 |
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151 |
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Unrealized (gain)/loss on derivatives |
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34 |
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(21 |
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Other non-cash charges, net |
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828 |
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520 |
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Increase/(decrease) in cash from changes in working capital: |
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Accounts receivable |
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(7,925 |
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(6,539 |
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Inventory |
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16,656 |
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24,086 |
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Prepaid expense |
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(1,652 |
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1,617 |
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Accounts payable |
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(40,269 |
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(23,644 |
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Accrued expense |
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(31,261 |
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(18,023 |
) |
Prepaid income taxes |
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(65 |
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(2,835 |
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Income taxes payable |
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(9,040 |
) |
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(2,544 |
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Other liabilities |
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(201 |
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(1,572 |
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Net cash (used)/provided by operating activities |
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(44,309 |
) |
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2,763 |
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Cash flows from investing activities: |
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Acquisition of business, net of cash acquired |
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(1,516 |
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Additions to property, plant and equipment |
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(2,838 |
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(4,116 |
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Other |
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(61 |
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2,170 |
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Net cash used by investing activities |
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(4,415 |
) |
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(1,946 |
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Cash flows from financing activities: |
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Common stock repurchases |
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(9,127 |
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(10,152 |
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Issuance of common stock |
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670 |
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453 |
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Excess tax benefit from share-based compensation |
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99 |
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122 |
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Other |
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(170 |
) |
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Net cash used by financing activities |
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(8,528 |
) |
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(9,577 |
) |
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Effect of exchange rate changes on cash and equivalents |
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(742 |
) |
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315 |
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Net decrease in cash and equivalents |
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(57,994 |
) |
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(8,445 |
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Cash and equivalents at beginning of period |
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217,189 |
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|
143,274 |
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Cash and equivalents at end of period |
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$ |
159,195 |
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$ |
134,829 |
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Supplemental disclosures of cash flow information: |
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Interest paid |
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$ |
156 |
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$ |
81 |
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Income taxes paid |
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$ |
8,311 |
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$ |
14,484 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Form 10-Q
Page 6
THE TIMBERLAND COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Share and Per Share Data)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements include the accounts of The Timberland
Company and its subsidiaries (we, our, us, its, Timberland or the Company). These
unaudited condensed consolidated financial statements should be read in conjunction with our
consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for
the year ended December 31, 2008.
The financial statements included in this Quarterly Report on Form 10-Q are unaudited, but in the
opinion of management, such financial statements include the adjustments, consisting of normal
recurring adjustments, necessary to present fairly the Companys financial position, results of
operations and changes in cash flows for the interim periods presented. The results reported in
these financial statements are not necessarily indicative of the results that may be expected for
the full year due, in part, to seasonal factors. Historically, our revenue has been more heavily
weighted to the second half of the year.
The Companys fiscal quarters end on the Friday closest to the day on which the calendar quarter
ends, except that the fourth quarter and fiscal year end on December 31. The first quarters of our
fiscal year in 2009 and 2008 ended on April 3, 2009 and March 28, 2008, respectively.
New Accounting Pronouncements
In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS 141R (revised
2007), Business Combinations (SFAS 141R). SFAS 141R was revised to improve the relevance,
representational faithfulness and comparability of the information that a reporting entity provides
in its financial reports about a business combination and its effects. It establishes principles
and requirements for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree;
recognizes and measures the goodwill acquired in the business combination or a gain from a bargain
purchase; and determines what information to disclose to enable users of the financial statements
to evaluate the nature and financial effects of the business combination. SFAS 141R is effective
for business combinations made by the Company on or after January 1, 2009.
In March 2008, the FASB issued SFAS 161, Disclosures About Derivative Instruments and Hedging
Activities an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 changes the
disclosure requirements for derivative instruments and hedging activities to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments; (b) how derivative
instruments and related hedged items are accounted for under SFAS 133 and its interpretations; and
(c) how derivative instruments and related hedged items affect an entitys financial position,
financial performance and cash flows. The Company adopted SFAS 161 effective with the interim
financial statements for the quarter ending April 3, 2009.
Note 2. Fair Value Measurements
Effective January 1, 2008, the Company implemented SFAS 157, Fair Value Measurements (SFAS 157)
relative to its financial assets and liabilities and nonfinancial assets and liabilities that are
recognized or disclosed at fair value in the financial statements at least annually. The
implementation of SFAS 157 relative to the Companys nonfinancial assets and nonfinancial
liabilities that are recognized and disclosed
Form 10-Q
Page 7
at fair value in the financial statements on a non-recurring basis became effective on January 1,
2009. The implementation of this standard to our nonfinancial assets and liabilities remeasured on
a non-recurring basis impacts the manner in which we will prospectively measure fair value
primarily in our goodwill, indefinite-lived and long-lived asset impairment tests, as well as
initial fair value measurements for new asset retirement obligations.
SFAS 157 establishes a fair value hierarchy that ranks the quality and reliability of the
information used to determine fair value. In general, fair values determined by Level 1 inputs
utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the
Company has the ability to access. Fair values determined by Level 2 inputs utilize data points
that are observable such as quoted prices, interest rates and yield curves. Level 3 inputs are
unobservable data points for the asset or liability, and include situations where there is little,
if any, market activity for the asset or liability. The following table presents information about
our assets and liabilities measured at fair value on a recurring basis as of April 3, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Impact of Netting |
|
April 3, 2009 |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets |
|
$ |
|
|
|
$ |
4,973 |
|
|
$ |
|
|
|
$ |
(87 |
) |
|
$ |
4,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash surrender value
of life insurance |
|
$ |
|
|
|
$ |
5,963 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
5,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
|
$ |
|
|
|
$ |
1,299 |
|
|
$ |
|
|
|
$ |
(87 |
) |
|
$ |
1,212 |
|
The fair value of the derivative contracts in the table above is reported on a gross basis by level
based on the fair value hierarchy with a corresponding adjustment for netting for financial
statement presentation purposes, where appropriate. The Company often enters into derivative
contracts with a single counterparty and certain of these contracts are covered under a master
netting agreement. The fair values of our foreign currency forward contracts are based on quoted
market prices or pricing models using current market rates.
The cash surrender value of life insurance represents insurance contracts held as assets in a rabbi
trust to fund the Companys deferred compensation plan. These assets are included in other assets,
net on our unaudited condensed consolidated balance sheet. The cash surrender value of life
insurance is based on the net asset values of the underlying funds available to plan participants.
On an on-going basis, the Company evaluates the carrying value of the GoLite trademark, which is
licensed to a third party, for events or changes in circumstances indicating the carrying value of
the asset may not be recoverable. Factors considered include the ability of the licensee to obtain
necessary financing, the impact of changes in economic conditions and an assessment of the
Companys ability to recover all contractual payments when due under the licensing arrangement.
During the first quarter of 2009, using Level 3 input factors noted above, the Company determined
that the carrying value of the GoLite trademark was impaired and recorded a pre-tax non-cash charge
of approximately $925, which reduced the carrying value of the trademark to zero at April 3, 2009.
The charge is reflected in our Europe segment.
Form 10-Q
Page 8
Note 3. Derivatives
In the normal course of business, the financial position and results of operations of the Company
are impacted by currency rate movements in foreign currency denominated assets, liabilities and
cash flows as we purchase and sell goods in local currencies. We have established policies and
business practices that are intended to mitigate a portion of the effect of these exposures. We
use derivative financial instruments, specifically forward contracts, to manage our currency
exposures. These derivative instruments are viewed as risk management tools and are not used for
trading or speculative purposes. Derivatives entered into by the Company are either designated as
cash flow hedges of forecasted foreign currency transactions or are undesignated economic hedges of
existing intercompany assets and liabilities, certain third party assets and liabilities and non-US
dollar-denominated cash balances.
Derivative instruments expose us to credit and market risk. The market risk associated with these
instruments resulting from currency exchange movements is expected to offset the market risk of the
underlying transactions being hedged. We do not believe there is a significant risk of loss in the
event of non-performance by the counterparties associated with these instruments because these
transactions are executed with a group of major financial institutions and have varying maturities
through January 2010. As a matter of policy, we enter into these contracts only with
counterparties having a minimum investment-grade or better credit rating. Credit risk is managed
through the continuous monitoring of exposures to such counterparties.
Cash Flow Hedges
The Company principally uses foreign currency forward contracts as cash flow hedges to offset a
portion of the effects of exchange rate fluctuations on certain of its forecasted foreign currency
denominated sales transactions. The Companys cash flow exposures include anticipated foreign
currency transactions, such as foreign currency denominated sales, costs, expenses, inter-company
charges, as well as collections and payments. The risk in these exposures is the potential for
losses associated with the remeasurement of non-functional currency cash flows into the functional
currency. The Company has a hedging program to aid in mitigating its foreign currency exposures
and to decrease the volatility in earnings. Under this hedging program, the Company performs a
quarterly assessment of the effectiveness of the hedge relationship and measures and recognizes any
hedge ineffectiveness in earnings. A hedge is effective if the changes in the fair value of the
derivative provide offset of at least 80 percent and not more than 125 percent of the changes in
the fair value or cash flows of the hedged item attributable to the risk being hedged. The Company
uses regression analysis to assess the effectiveness of a hedge relationship.
The Companys hedging strategy uses forward contracts as cash flow hedging instruments, which are
recorded in our unaudited condensed consolidated balance sheet at fair value. The effective
portion of gains and losses resulting from changes in the fair value of these hedge instruments are
deferred in accumulated other comprehensive income (OCI) and reclassified to earnings, in cost of
goods sold, in the period that the hedged transaction is recognized in earnings. Hedge
ineffectiveness is evaluated using the hypothetical derivative method, and the ineffective portion
of the hedge is reported in our unaudited condensed consolidated statement of operations in other
income/(expense), net.
Form 10-Q
Page 9
As of April 3, 2009, we had forward contracts maturing at various dates through January 2010 to
sell the equivalent of $104,532 in foreign currencies at contracted rates. The contract amount
represents the net amount of all purchase and sale contracts of a foreign currency.
|
|
|
|
|
|
|
|
|
|
|
Contract |
|
|
|
|
|
|
Amount |
|
|
|
|
|
|
(U.S.$ |
|
|
Maturity |
|
Currency |
|
Equivalent) |
|
|
Date |
|
Pounds Sterling |
|
$ |
17,264 |
|
|
|
2009 |
|
Pounds Sterling |
|
|
1,934 |
|
|
|
2010 |
|
Euro |
|
|
59,777 |
|
|
|
2009 |
|
Euro |
|
|
4,047 |
|
|
|
2010 |
|
Japanese Yen |
|
|
17,397 |
|
|
|
2009 |
|
Japanese Yen |
|
|
4,113 |
|
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
104,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Derivative Contracts
We also enter into derivative contracts to manage foreign currency exchange risk on intercompany
accounts receivable and payable, third-party accounts receivable and payable, and non-U.S.
dollar-denominated cash balances using forward contracts. These forward contracts, which are
undesignated hedges of economic risk, are recorded at fair value in the balance sheet, with changes
in the fair value of these instruments recognized in earnings immediately. The gains or losses
related to the contracts largely offset the remeasurement of those assets and liabilities.
As of April 3, 2009, we had forward contracts maturing at various dates through July 2009 to sell
the equivalent of $49,596 in foreign currencies at contracted rates and to buy the equivalent of
$(24,705) in foreign currencies at contracted rates. The contract amount represents the net amount
of all purchase and sale contracts of a foreign currency.
|
|
|
|
|
|
|
|
|
|
|
Contract |
|
|
|
|
|
|
Amount |
|
|
|
|
|
|
(U.S.$ |
|
|
Maturity |
|
Currency |
|
Equivalent) |
|
|
Date |
|
Pounds Sterling |
|
$ |
(15,985 |
) |
|
|
2009 |
|
Euro |
|
|
13,053 |
|
|
|
2009 |
|
Japanese Yen |
|
|
17,071 |
|
|
|
2009 |
|
Canadian Dollar |
|
|
6,661 |
|
|
|
2009 |
|
Norwegian Kroner |
|
|
1,971 |
|
|
|
2009 |
|
Swedish Krona |
|
|
2,120 |
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
24,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Form 10-Q
Page 10
Fair Values of Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
As of April 3, 2009 |
|
Balance Sheet Location |
|
Fair Value |
|
|
Balance Sheet Location |
|
Fair Value |
|
Derivatives designated as hedging
instruments under SFAS 133: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts |
|
Derivative assets |
|
$ |
4,803 |
|
|
Derivative liabilities |
|
$ |
1,068 |
|
Foreign exchange forward contracts |
|
Derivative liabilities |
|
|
|
|
|
Derivative assets |
|
|
75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives designated as
hedging instruments under SFAS 133 |
|
|
|
$ |
4,803 |
|
|
|
|
$ |
1,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging
instruments under SFAS 133: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts |
|
Derivative assets |
|
$ |
170 |
|
|
Derivative liabilities |
|
$ |
144 |
|
Foreign exchange forward contracts |
|
Derivative liabilities |
|
|
|
|
|
Derivative assets |
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives not designated as
hedging instruments under SFAS 133 |
|
|
|
$ |
170 |
|
|
|
|
$ |
156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives |
|
|
|
$ |
4,973 |
|
|
|
|
$ |
1,299 |
|
|
|
|
|
|
|
|
|
|
|
|
The Effect of Derivative Instruments on the Statement of Operations for the Quarters Ended
April 3, 2009 and March 28, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain/(Loss) |
|
|
Amount of Gain/(Loss) |
|
Location of Gain/(Loss) |
|
Reclassified from |
|
|
Recognized in OCI on |
|
Reclassified from |
|
Accumulated OCI into |
Derivatives in |
|
Derivatives |
|
Accumulated OCI into |
|
Income |
SFAS 133 Cash Flow |
|
(Effective Portion) |
|
Income |
|
(Effective Portion) |
Hedging Relationships |
|
2009 |
|
2008 |
|
(Effective Portion) |
|
2009 |
|
2008 |
Foreign exchange forward contracts |
|
$ |
3,477 |
|
|
$ |
(8,815 |
) |
|
Cost of goods sold |
|
$ |
7,316 |
|
|
$ |
(4,223 |
) |
The Company expects to reclassify pre-tax gains of $3,661 to the income statement within the next
twelve months.
Form 10-Q
Page 11
Hedge ineffectiveness is evaluated using the hypothetical derivative method, and the ineffective
portion of the hedge is reported in our unaudited condensed consolidated statement of income in
other income/(expense), net. The amount of hedge ineffectiveness reported in other
income/(expense), net for the quarters ended April 3, 2009 and March 28, 2008 was not material.
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of Gain/(Loss) |
|
Amount of Gain/(Loss) |
Derivatives not Designated |
|
Recognized in |
|
Recognized in |
as Hedging Instruments |
|
Income on |
|
Income on Derivative |
Under SFAS 133 |
|
Derivative |
|
2009 |
|
2008 |
Foreign exchange forward contracts |
|
Other income/(expense), net |
|
$ |
2,424 |
|
|
$ |
653 |
|
Note 4. Share-Based Compensation
Share-based compensation costs were recorded in Cost of goods sold, Selling expense and General and
administrative expense as follows for the quarters ended April 3, 2009 and March 28, 2008,
respectively:
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
|
|
April 3, 2009 |
|
|
March 28, 2008 |
|
Cost of goods sold |
|
$ |
89 |
|
|
$ |
202 |
|
Selling expense |
|
|
468 |
|
|
|
859 |
|
General and administrative expense |
|
|
254 |
|
|
|
478 |
|
|
|
|
|
|
|
|
Total share-based compensation |
|
$ |
811 |
|
|
$ |
1,539 |
|
|
|
|
|
|
|
|
Performance-based Awards
On March 4, 2009, the Management Development and Compensation Committee of the Board of Directors
approved the terms of The Timberland Company 2009 Executive Long Term Incentive Program (2009
LTIP) with respect to equity awards to be made to certain of the Companys executives and
management team. On March 5, 2009, the Board of Directors also approved the 2009 LTIP with respect
to the Companys Chief Executive Officer. The 2009 LTIP was established under the
Companys 2007 Incentive Plan. The awards are subject to future performance, and consist of
performance stock units (PSUs), equal in value to one share of the Companys Class A Common
Stock, and performance vested stock options (PVSOs), with an exercise price of $9.34 (the closing
price of the Companys Class A Common Stock as quoted on the New York Stock Exchange on March 5,
2009, the date of grant). Shares with respect to the PSUs will be granted and will vest following
the end of the applicable performance period and approval by the Board of Directors, or a committee
thereof, of the achievement of the applicable performance metric. The PVSOs will vest in three
equal annual installments following the end of the applicable performance period and approval by
the Board of Directors, or a committee thereof, of the achievement of the applicable performance
metric. The payout of the performance awards will be based on the Companys achievement of certain
levels of earnings before interest, taxes, depreciation and amortization (EBITDA), with
threshold, budget, target and maximum award levels based upon actual EBITDA of the Company during
the applicable performance periods equaling or exceeding such levels. The performance period for
the PSUs is the three-year period from January 1, 2009 through December 31, 2011, and the
performance period for the PVSOs is the twelve-month period from January 1, 2009 through
Form 10-Q
Page 12
December
31, 2009. No awards shall be made or earned, as the case may be, unless the threshold goal is
attained, and the maximum payout may not exceed 200% of the target award.
The maximum number of shares to be awarded with respect to PSUs under the March 5, 2009 grants is
845,000, which, if earned, will be settled in early 2012. Based on current estimates of the
performance metrics, unrecognized compensation expense with respect to PSUs was $1,404 as of April
3, 2009. This expense is expected to be recognized over a weighted average period of 2.9 years.
The maximum number of shares subject to exercise with respect to PVSOs under the March 5, 2009
grants is 1,126,667, which, if earned, will be settled, subject to the vesting schedule noted
above, in early 2010. The Company estimates the fair value of its PVSOs on the date of grant using
the Black-Scholes option valuation model, which employs the following assumptions:
|
|
|
|
|
|
|
For the Quarter |
|
|
Ended April 3, |
|
|
2009 |
Expected volatility |
|
|
41.8 |
% |
Risk-free interest rate |
|
|
1.9 |
% |
Expected life (in years) |
|
|
6.5 |
|
Expected dividends |
|
|
|
|
Based on current estimates of the performance metrics, unrecognized compensation expense related to
PVSOs was $843 as of April 3, 2009. This expense is expected to be recognized over a weighted
average period of 3.9 years.
Stock Options
The Company estimates the fair value of its stock option awards on the date of grant using the
Black-Scholes option valuation model, which employs the assumptions noted in the following table,
for stock option awards excluding the performance-based awards noted above for which performance
conditions have not been met:
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
|
April 3, 2009 |
|
March 28, 2008 |
Expected volatility |
|
|
42.4 |
% |
|
|
32.0 |
% |
Risk-free interest rate |
|
|
2.1 |
% |
|
|
2.8 |
% |
Expected life (in years) |
|
|
7.5 |
|
|
|
5.3 |
|
Expected dividends |
|
|
|
|
|
|
|
|
The following summarizes transactions under stock option arrangements excluding the
performance-based awards noted above for which performance conditions have not been met:
Form 10-Q
Page 13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
Average |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Remaining |
|
|
Aggregate |
|
|
|
|
|
|
|
Exercise |
|
|
Contractual |
|
|
Intrinsic |
|
|
|
Shares |
|
|
Price |
|
|
Term |
|
|
Value |
|
Outstanding at January 1, 2009 |
|
|
4,163,628 |
|
|
$ |
26.03 |
|
|
|
|
|
|
|
|
|
Granted |
|
|
187,194 |
|
|
|
9.34 |
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(81,800 |
) |
|
|
8.19 |
|
|
|
|
|
|
|
|
|
Expired or forfeited |
|
|
(149,255 |
) |
|
|
27.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at April 3, 2009 |
|
|
4,119,767 |
|
|
$ |
25.57 |
|
|
|
5.8 |
|
|
$ |
1,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested or expected to vest at
April 3, 2009 |
|
|
3,966,690 |
|
|
$ |
25.96 |
|
|
|
5.7 |
|
|
$ |
902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at April 3, 2009 |
|
|
3,351,413 |
|
|
$ |
27.62 |
|
|
|
5.1 |
|
|
$ |
222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized compensation expense related to nonvested stock options was $3,135 as of April 3,
2009. This expense is expected to be recognized over a weighted average period of 1.4 years.
Nonvested Shares and Restricted Stock Units
Changes in the Companys nonvested shares and restricted stock units that are not performance based
for the quarter ended April 3, 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
|
|
Stock |
|
|
Grant Date |
|
|
Stock |
|
|
Grant Date |
|
|
|
Awards |
|
|
Fair Value |
|
|
Units |
|
|
Fair Value |
|
Nonvested at January 1, 2009 |
|
|
278,553 |
|
|
$ |
25.39 |
|
|
|
182,600 |
|
|
$ |
14.45 |
|
Awarded |
|
|
62,399 |
|
|
|
9.34 |
|
|
|
|
|
|
|
|
|
Vested |
|
|
(11,904 |
) |
|
|
14.70 |
|
|
|
(47,118 |
) |
|
|
14.70 |
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
(2,364 |
) |
|
|
14.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested at April 3, 2009 |
|
|
329,048 |
|
|
$ |
22.73 |
|
|
|
133,118 |
|
|
$ |
14.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized compensation expense related to nonvested restricted stock awards was $919 as of April
3, 2009. The expense is expected to be recognized over a weighted-average period of 0.7 years. As
of April 3, 2009, 329,048 nonvested stock awards, with a
weighted-average grant date fair value of
$22.73, are expected to vest. Unrecognized compensation expense related to nonvested restricted
stock units was $1,588 as of April 3, 2009. The expense is expected to be recognized over a
weighted-average period of 2.0 years. As of April 3, 2009, 104,337 nonvested stock units, with a
weighted-average grant date fair value of $14.37 are expected to vest in the future.
Note 5. Earnings Per Share (EPS)
Basic EPS excludes common stock equivalents and is computed by dividing net income by the
weighted-average number of common shares outstanding for the periods presented. Diluted EPS
reflects the potential dilution that would occur if potentially dilutive securities such as stock
options were exercised and nonvested shares vested, to the extent such securities would not be
anti-dilutive.
The following is a reconciliation of the number of shares (in thousands) for the basic and diluted
EPS computations for the quarters ended April 3, 2009 and March 28, 2008:
Form 10-Q
Page 14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
|
|
April 3, 2009 |
|
|
March 28, 2008 |
|
|
|
|
|
|
|
Weighted |
|
|
Per- |
|
|
|
|
|
|
Weighted |
|
|
Per- |
|
|
|
Net |
|
|
-Average |
|
|
Share |
|
|
Net |
|
|
-Average |
|
|
Share |
|
|
|
Income |
|
|
Shares |
|
|
Amount |
|
|
Income |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
Basic EPS |
|
$ |
15,877 |
|
|
|
57,108 |
|
|
$ |
.28 |
|
|
$ |
18,039 |
|
|
|
59,618 |
|
|
$ |
.30 |
|
Effect of dilutive
securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and
employee stock
purchase plan
shares |
|
|
|
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
55 |
|
|
|
|
|
Nonvested shares |
|
|
|
|
|
|
678 |
|
|
|
(.01 |
) |
|
|
|
|
|
|
343 |
|
|
|
|
|
|
|
|
|
|
Diluted EPS |
|
$ |
15,877 |
|
|
|
57,802 |
|
|
$ |
.27 |
|
|
$ |
18,039 |
|
|
|
60,016 |
|
|
$ |
.30 |
|
|
|
|
|
|
The following stock options and nonvested shares (in thousands) were outstanding as of April 3,
2009 and March 28, 2008, but were not included in the computation of diluted EPS as their inclusion
would be anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
|
April 3, 2009 |
|
March 28, 2008 |
Anti-dilutive securities |
|
|
4,031 |
|
|
|
4,351 |
|
Note 6. Comprehensive Income
Comprehensive income for the quarters ended April 3, 2009 and March 28, 2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
|
|
April 3, 2009 |
|
|
March 28, 2008 |
|
Net income |
|
$ |
15,877 |
|
|
$ |
18,039 |
|
Change in cumulative translation adjustment |
|
|
(3,770 |
) |
|
|
9,892 |
|
Change in fair value of cash flow hedges,
net of taxes |
|
|
(1,138 |
) |
|
|
(5,190 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
10,969 |
|
|
$ |
22,741 |
|
|
|
|
|
|
|
|
The components of accumulated other comprehensive income as of April 3, 2009, December 31,
2008 and March 28, 2008 were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 3, 2009 |
|
|
December 31, 2008 |
|
|
March 28, 2008 |
|
Cumulative translation adjustment |
|
$ |
4,006 |
|
|
$ |
7,776 |
|
|
$ |
33,623 |
|
Fair value of cash flow hedges, net of taxes of $183
at April 3, 2009, $244 at December 31, 2008 and $(442)
at March 28, 2008 |
|
|
3,491 |
|
|
|
4,629 |
|
|
|
(8,815 |
) |
Other adjustments, net of taxes of $7 at April 3, 2009 and
December 31, 2008 |
|
|
138 |
|
|
|
138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
7,635 |
|
|
$ |
12,543 |
|
|
$ |
24,808 |
|
|
|
|
|
|
|
|
|
|
|
Note 7. Business Segments and Geographic Information
The Company has three reportable segments: North America, Europe and Asia. The composition of the
segments is consistent with that used by the Companys chief operating decision maker.
The North America segment is comprised of the sale of products to wholesale and retail customers in
North America. It includes Company-operated specialty and factory outlet stores in the United
States and our United States e-commerce business. This segment also includes royalties from
licensed products sold worldwide, the related management costs and expenses associated with our
worldwide licensing efforts, and certain marketing expenses and value-added services.
The Europe and Asia segments each consist of the marketing, selling and distribution of footwear,
apparel and accessories outside of the United States. Products are sold outside of the United
States through our
Form 10-Q
Page 15
subsidiaries (which use wholesale, retail and e-commerce channels to sell
footwear, apparel and accessories), franchisees and independent distributors.
Unallocated Corporate consists primarily of corporate finance, information services, legal and
administrative expenses, share-based compensation costs, distribution expenses, global marketing
support expenses, worldwide product development costs and other costs incurred in support of
Company-wide activities. Additionally, Unallocated Corporate includes total other
income/(expense), net, which is comprised of interest income, interest expense, and other
income/(expense), net, which includes foreign exchange gains and losses resulting from changes in
the fair value of financial derivatives not designated as hedges, currency gains and losses
incurred on the settlement of local currency denominated assets and liabilities, and other
miscellaneous non-operating income/(expense). Such income/(expense) is not allocated among the
reportable business segments.
The accounting policies of the segments are the same as those described in the summary of
significant accounting policies. We evaluate segment performance based on revenue and operating
income. Total assets are disaggregated to the extent that assets apply specifically to a single
segment. Unallocated Corporate assets primarily consist of cash and equivalents, tax assets,
manufacturing/sourcing assets, computers and related equipment, and transportation and distribution
equipment.
For the Quarters Ended April 3, 2009 and March 28, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated |
|
|
|
|
North America |
|
Europe |
|
Asia |
|
Corporate |
|
Consolidated |
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
119,858 |
|
|
$ |
139,988 |
|
|
$ |
36,802 |
|
|
$ |
|
|
|
$ |
296,648 |
|
Operating income/(loss) |
|
|
15,045 |
|
|
|
30,113 |
|
|
|
1,830 |
|
|
|
(28,805 |
) |
|
|
18,183 |
|
Income/(loss) before income taxes |
|
|
15,045 |
|
|
|
30,113 |
|
|
|
1,830 |
|
|
|
(29,149 |
) |
|
|
17,839 |
|
Total assets |
|
|
239,796 |
|
|
|
273,040 |
|
|
|
72,989 |
|
|
|
182,206 |
|
|
|
768,031 |
|
Goodwill |
|
|
36,876 |
|
|
|
6,994 |
|
|
|
|
|
|
|
|
|
|
|
43,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
137,730 |
|
|
$ |
164,751 |
|
|
$ |
37,921 |
|
|
$ |
|
|
|
$ |
340,402 |
|
Operating income/(loss) |
|
|
21,353 |
|
|
|
33,121 |
|
|
|
696 |
|
|
|
(31,928 |
) |
|
|
23,242 |
|
Income/(loss) before income taxes |
|
|
21,353 |
|
|
|
33,121 |
|
|
|
696 |
|
|
|
(25,598 |
) |
|
|
29,572 |
|
Total assets |
|
|
257,815 |
|
|
|
291,016 |
|
|
|
81,892 |
|
|
|
185,450 |
|
|
|
816,173 |
|
Goodwill |
|
|
37,846 |
|
|
|
6,994 |
|
|
|
|
|
|
|
|
|
|
|
44,840 |
|
The following summarizes our revenue by product for the quarters ended April 3, 2009 and March 28,
2008:
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
|
|
April 3, 2009 |
|
|
March 28, 2008 |
|
Footwear |
|
$ |
211,641 |
|
|
$ |
236,598 |
|
Apparel and accessories |
|
|
78,664 |
|
|
|
97,942 |
|
Royalty and other |
|
|
6,343 |
|
|
|
5,862 |
|
|
|
|
|
|
|
|
Total |
|
$ |
296,648 |
|
|
$ |
340,402 |
|
|
|
|
|
|
|
|
Form 10-Q
Page 16
Note 8. Inventory, net
Inventory, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 3, 2009 |
|
|
December 31, 2008 |
|
|
March 28, 2008 |
|
Materials |
|
$ |
7,978 |
|
|
$ |
7,708 |
|
|
$ |
7,116 |
|
Work-in-process |
|
|
1,189 |
|
|
|
825 |
|
|
|
924 |
|
Finished goods |
|
|
153,616 |
|
|
|
171,155 |
|
|
|
172,137 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
162,783 |
|
|
$ |
179,688 |
|
|
$ |
180,177 |
|
|
|
|
|
|
|
|
|
|
|
Note 9. Acquisition
On March 16, 2009, we acquired 100% of the stock of Glaudio Fashion B.V. (Glaudio) for
approximately $1,500, net of cash acquired. Glaudio operates nine Timberland retail stores in the
Netherlands and Belgium which sell Timberland footwear, apparel, leather goods and product-care
products for men, women and kids. The acquisition was effective March 1, 2009, and its results
have been included in our Europe segment from the effective date of the acquisition. The
acquisition of Glaudio was not material to the results of operations, financial position or cash
flows of the Company.
Note 10. Income Taxes
In February 2009, the Company received notification that our U.S. federal tax examinations for 2006
and 2007 had been completed. Accordingly, in the first quarter of 2009, we reversed approximately
$6,400 of accruals related to uncertain tax positions.
Note 11. Share Repurchase
On March 10, 2008, our Board of Directors approved the repurchase of up to 6,000,000 shares of our
Class A Common Stock. Shares repurchased under this authorization totaled 900,509 for the quarter
ended April 3, 2009. As of April 3, 2009, 3,668,393 shares remained available for repurchase under
this authorization.
From time to time, we use plans adopted under Rule 10b5-1 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, to facilitate share
repurchases.
Note 12. Litigation
We are involved in various litigation and legal proceedings that have arisen in the ordinary course
of business. Management believes that the ultimate resolution of any such matters will not have a
material adverse effect on our consolidated financial statements.
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is managements discussion and analysis of the financial condition and results of
operations of The Timberland Company and its subsidiaries (we, our, us, its, Timberland
or the Company), as well as our liquidity and capital resources. The discussion, including known
trends and uncertainties identified by management, should be read in conjunction with the Companys
unaudited condensed consolidated financial statements and related notes included in this Quarterly
Report on Form 10-Q, as
Form 10-Q
Page 17
well as our audited consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended December 31, 2008.
Included herein are discussions and reconciliations of total Company, Europe and Asia revenue
changes to constant dollar revenue changes. Constant dollar revenue changes, which exclude the
impact of changes in foreign exchange rates, are not Generally Accepted Accounting Principle
(''GAAP) performance measures. The difference between changes in reported revenue (the most
comparable GAAP measure) and constant dollar revenue changes is the impact of foreign currency
exchange rate fluctuations. We provide constant dollar revenue changes for total Company, Europe
and Asia results because we use the measure to understand the underlying growth rate of revenue
excluding the impact of items that are not under managements direct control, such as changes in
foreign exchange rates. The limitation of this measure is that it excludes items that have an
impact on the Companys revenue. This limitation is best addressed by using constant dollar
revenue changes in combination with the GAAP numbers.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our
unaudited condensed consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported amounts
of assets, liabilities, revenues, expenses and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates, including those related to sales
returns and allowances, realization of outstanding accounts receivable, the carrying value of
inventories, derivatives, other contingencies, impairment of assets, incentive compensation
accruals, share-based compensation and income taxes. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Historically, actual
results have not been materially different from our estimates. Because of the uncertainty inherent
in these matters, actual results could differ from the estimates used in, or that result from,
applying our critical accounting policies. Our significant accounting policies are described in
Note 1 to the Companys consolidated financial statements included in Part II, Item 8 of our Annual
Report on Form 10-K for the year ended December 31, 2008. Our estimates, assumptions and judgments
involved in applying the critical accounting policies are described in Part II, Item 7:
Managements Discussion and Analysis of Financial Condition and Results of Operations, of our
Annual Report on Form 10-K for the year ended December 31, 2008.
Overview
Our principal strategic goal is to become the authentic outdoor brand of choice globally. We
continue to develop a diverse portfolio of footwear, apparel and accessories that reinforces the
functional performance, benefits and classic styling that consumers have come to expect from our
brand. We sell our products to consumers who embrace an outdoor-inspired lifestyle through
high-quality distribution channels, including our own retail stores, which reinforce the premium
positioning of the Timberlandâ brand.
To deliver against our long-term goals, we are focused on driving progress on key strategic fronts.
These include enhancing our leadership position in our core footwear business, capturing the
opportunity that we see for outdoor-inspired apparel, extending enterprise reach through
brand-building licensing arrangements, expanding geographically and driving operational and
financial excellence while setting the standard for commitment to the community and striving to be
a global employer of choice.
Form 10-Q
Page 18
A summary of our first quarter of 2009 financial performance, compared to the first quarter of
2008, follows:
|
|
|
First quarter revenue decreased 12.9%, or 6.5% on a constant dollar basis, to $296.6
million, compared to $340.4 million in the prior year period. |
|
|
|
|
Gross margin decreased from 46.3% to 46.1%. |
|
|
|
|
Operating expenses were $118.5 million, down 11.8% from $134.4 million in the prior year
period. |
|
|
|
|
We recorded operating income of $18.2 million in the first quarter of 2009, compared to
$23.2 million in the prior year period. |
|
|
|
|
Net income was $15.9 million in the first quarter of 2009, compared to $18.0 million in
the first quarter of 2008. |
|
|
|
|
Diluted earnings per share decreased from $0.30 in the first quarter of 2008 to $0.27 in
the first quarter of 2009. |
|
|
|
|
Cash at the end of the quarter was $159.2 million with no debt outstanding. |
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.
Results of Operations for the Quarter Ended April 3, 2009 as Compared to the Quarter Ended March 28, 2008
Revenue
Consolidated revenue of $296.6 million for the first quarter of 2009 decreased $43.8 million, or
12.9%, compared to the first quarter of 2008, driven by declines in Timberland® apparel
and casual footwear, and impacted by the strengthening of the U.S. dollar. On a constant dollar
basis, consolidated revenues were down 6.5%. North America revenue totaled $119.8 million for the
first quarter of 2009, a 13.0% decline from the first quarter of 2008. Europe revenues were $140.0
million in the first quarter of 2009, a 15% decrease over the same period in 2008. Europe revenues
were down 1.7% as compared to the prior year quarter on a constant dollar basis. Asia revenues were
$36.8 million for the first quarter of 2009, a decrease of 2.9% from the same period in 2008, but
declined 6.2% on a constant dollar basis.
Segments Review
We have three reportable business segments (see Note 7 to the unaudited condensed consolidated
financial statements contained herein): North America, Europe and Asia.
North America revenues were $119.8 million in the first quarter of 2009, a decrease of 13.0% as
compared to the same period in 2008, driven by declines in boots, as well as Timberland®
apparel, due in part to anticipated declines from the decision in 2008 to transition our North
America wholesale apparel business to a licensing arrangement. The continued weakness in these
areas was partially offset by growth in performance footwear and SmartWool apparel and accessories.
Within North America, our retail business had revenue declines of 8.5%, driven by a 9.8% decrease
in comparable store sales.
Europe recorded revenues of $140.0 million in the first quarter of 2009, which was a 15.0% decrease
from the first quarter of 2008. The impact of changes in foreign exchange rates reduced Europes
revenues by 13.3%, masking growth in our distributor businesses, as well as the German and Benelux
regions. These
Form 10-Q
Page 19
growth areas were offset by continued weakness across the U.K. and Southern Europe.
Declines in casual footwear and Timberland® apparel were partially offset by continued
improvement in boots, as well as SmartWool apparel and accessories.
In Asia, revenues decreased 2.9% to $36.8 million in the first quarter of 2009, but declined 6.2%
in constant dollars as compared to the first quarter of 2008, due to softness in our retail
business, primarily in apparel. Growth in Japan was offset by declines in our distributor
business, as well as lower revenues in Hong Kong, Singapore and Taiwan.
Products
Worldwide footwear revenue was $211.6 million in the first quarter of 2009, down $25.0 million, or
10.5%, from the first quarter of 2008, driven by global declines in casual footwear and our boot
business in North America. Outside North America, we continue to see encouraging signs that our
boot business is strengthening. Worldwide apparel and accessories revenue fell 19.7% to $78.7
million in the first quarter of 2009. Timberland® apparel revenues decreased worldwide,
reflecting the strengthening of the U.S. dollar in Europe, softness in international markets, and
the impact of the transitioning of our North America wholesale apparel business to a licensing
arrangement. The Company ceased sales of in-house
Timberland® brand apparel in North America through the wholesale channel during the
second quarter of 2008. We saw double-digit growth in SmartWool products, both in North America
and in Europe. Royalty and other revenue was $6.3 million in the first quarter of 2009, compared
to $5.9 million in the prior year quarter, primarily due to our wholesale apparel licensing
arrangement in North America, offset by a decline in licensed kids apparel in Europe.
Channels
Wholesale revenue was $218.6 million in the first quarter of 2009, a 14.4% decrease compared to the
prior year quarter. Continued softness in the wholesale markets was the primary driver of sales
declines in mens casual footwear globally, and performance footwear in Europe and Asia. Declines
in Timberland® brand apparel were due in part to the transition of the North American
wholesale apparel business to a licensing arrangement.
Retail revenues decreased 8.1% to $78.0 million in the first quarter of 2009, driven by unfavorable
foreign exchange rate impacts and a worldwide retail market that continues to be difficult,
especially in North America. Overall, comparable store sales were down 1.6% on a global basis as
compared to the first quarter of 2008, with favorable comparable store results in Europe and Asia
being offset by declines in our North America outlet stores. We had 213 stores, shops and outlets
worldwide at the end of the first quarter of 2009 compared to 220 at the end of the first quarter
of 2008.
Gross Profit
Gross profit as a percentage of sales, or gross margin, was 46.1% for the first quarter of 2009, 20
basis points lower than in the first quarter of 2008. The impact of higher product costs was
partially offset by favorable changes in business unit and channel mix.
We include the costs of procuring inventory (inbound freight and duty, overhead and other similar
costs) in cost of goods sold. These costs amounted to $13.9 million and $19.5 million for the first
quarters of 2009 and 2008, respectively. The decrease was primarily driven by lower costs
associated with our wholesale apparel business as we transitioned to a licensing arrangement in
2008, as well as reduced footwear sourcing and logistics costs as a result of a decrease in volume.
Operating Expense
Operating expense for the first quarter of 2009 was $118.5 million, a decrease of $15.9 million, or
11.8%,
Form 10-Q
Page 20
over the first quarter of 2008. The decrease was driven primarily by a $16.1 million
decrease in selling, general and administrative expenses, partially offset by an intangible asset
impairment charge of $0.9 million. Overall, changes in foreign exchange rates reduced operating
expense by approximately $8.6 million in the first quarter of 2009.
Selling expense was $92.3 million in the first quarter of 2009, a decrease of $13.8 million, or
13.1%, over the same period in 2008. The decrease in selling expense was due primarily to reduced
sales, marketing and distribution costs in both our retail and wholesale businesses as a result of
lower volume due to softness in the markets, a reduced cost base due to the transitioning of our
North American wholesale apparel business to a licensing arrangement, the exiting of certain
specialty brands in 2008, and a reduction in share-based and incentive compensation costs.
Expenses also benefited from changes in foreign exchange rates.
We include the costs of physically managing inventory (warehousing and handling costs) in selling
expense. These costs totaled $9.2 million and $9.9 million in the first quarters of 2009 and 2008,
respectively.
In the first quarters of 2009 and 2008, we recorded $0.6 million and $0.8 million, respectively, of
reimbursed shipping expenses within revenues and the related shipping costs within selling expense.
Shipping costs are included in selling expense and were $4.7 million and $5.2 million for the
quarters ended April 3, 2009 and March 28, 2008, respectively.
Advertising expense, which is included in selling expense, was $4.6 million and $5.1 million in
the first quarter of 2009 and 2008, respectively. Advertising expense includes co-op advertising
costs, consumer-facing advertising costs such as print, television and internet campaigns,
production costs including agency fees, and catalog costs. Our continued investment in global
marketing and branding initiatives, primarily through consumer-facing advertising programs, was
offset by reduced spending in co-op advertising. Advertising costs are expensed at the time the
advertising is used, predominantly in the season that the advertising costs are incurred. Prepaid
advertising recorded on our unaudited condensed consolidated balance sheets as of April 3, 2009
and March 28, 2008 was $2.3 million and $0.3 million, respectively. These investments demonstrate
our continued commitment to strengthen our premium brand position despite adverse economic
conditions.
General and administrative expense for the first quarter of 2009 was $25.4 million, down 8.2%
compared to the $27.7 million reported in the first quarter of 2008, driven by reductions in
incentive and share-based compensation costs, the savings associated with ongoing actions taken to
streamline our global operations, and the benefits of changes in foreign exchange rates.
Total operating expense in the first quarter of 2009 also included a charge of $0.9 million to
reflect the impairment of a trademark, and restructuring credits of $0.1 million. We recorded net
restructuring charges of $0.6 million in the first quarter of 2008.
Operating Income/(Loss)
We recorded operating income of $18.2 million in the first quarter of 2009, compared to operating
income of $23.2 million in the prior year period. Operating income included an intangible asset
impairment charge of $0.9 million and restructuring credits of $0.1 million in the first quarter of
2009, compared to restructuring charges of $0.6 million in the first quarter of 2008.
Operating income for our North America segment was $15.0 million, a decrease of 29.5% from the
first quarter of 2008. The decrease was driven by a 330 basis point decline in gross margin, due
primarily to increased product costs, the write-off of inventory and higher than anticipated sales
returns and allowances, partially offset by a 14.2% decrease in operating expenses principally due
to decreases in selling, marketing and distribution expenses as a result of lower volume. Savings
associated with the
Form 10-Q
Page 21
exiting of certain specialty brands in 2008 were offset by fixed asset
write-offs related to our e-commerce business and underperforming retail stores.
Timberlands European segment recorded operating income of $30.1 million in the first quarter of
2009, compared to operating income of $33.1 million in the first quarter of 2008, principally due
to a 14.5% decrease in gross profit, in line with a 15.0% decrease in revenue. This decrease was
partially offset by a 18.1% decrease in operating expenses as a result of reduced agency, marketing
and distribution costs in light of lower sales volume and the impact of changes in foreign exchange
rates, partially offset by a charge for the impairment of a trademark.
We had operating income in our Asia segment of $1.8 million for the first quarter of 2009, compared
to operating income of $0.7 million for the first quarter of 2008, driven by reduced operating
expenses, primarily in our retail business.
Our Unallocated Corporate expenses, which include central support and administrative costs not
allocated to our business segments, decreased 9.8% to $28.8 million, which reflects the benefit
from the revaluation of the Companys existing inventory to new standard prices that is not
allocated to the Companys reportable segments.
Other Income/(Expense) and Taxes
Interest income was $0.4 million and $0.9 million in the first quarters of 2009 and 2008,
respectively, reflecting lower interest rates. Interest expense, which is comprised of fees
related to the establishment and maintenance of our revolving credit facility and interest paid on
short-term borrowings, was $0.1 million and $0.3 million in the first quarters of 2009 and 2008,
respectively.
Other income/(expense), net, included foreign exchange gains/(losses) of $(0.3) million and $5.1
million in the first quarters of 2009 and 2008, respectively, resulting from changes in the fair
value of financial derivatives, specifically forward contracts not designated as cash flow hedges,
and the currency gains and losses incurred on the settlement of local currency denominated
receivables and payables. These results were driven by the volatility of exchange rates within the
first quarters of 2009 and 2008 and should not be considered indicative of expected future results.
The effective income tax rate for the first quarter of 2009 was 11.0%. The rate was impacted by
the release of approximately $6.4 million in specific tax reserves due to the closure of certain
audits in the first quarter of 2009, and the geographic mix of our profits. The effective income
tax rate for the first quarter of 2008 was 39.0%.
Form 10-Q
Page 22
Reconciliation of Total Company, Europe and Asia Revenue Increases/(Decreases) To Constant Dollar Revenue Increases/(Decreases)
Total Company Revenue Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
For the Quarter |
|
|
Ended April 3, 2009 |
|
|
$ Millions |
|
|
|
|
Change |
|
% Change |
|
|
|
Revenue decrease (GAAP) |
|
$ |
(43.8 |
) |
|
|
-12.9 |
% |
Decrease due to foreign exchange rate changes |
|
|
(21.6 |
) |
|
|
-6.4 |
% |
|
|
|
Revenue decrease in constant dollars |
|
$ |
(22.2 |
) |
|
|
-6.5 |
% |
Europe Revenue Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
For the Quarter |
|
|
Ended April 3, 2009 |
|
|
$ Millions |
|
|
|
|
Change |
|
% Change |
|
|
|
Revenue decrease (GAAP) |
|
$ |
(24.7 |
) |
|
|
-15.0 |
% |
Decrease due to foreign exchange rate changes |
|
|
(21.9 |
) |
|
|
-13.3 |
% |
|
|
|
Revenue decrease in constant dollars |
|
$ |
( 2.8 |
) |
|
|
-1.7 |
% |
Asia Revenue Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
For the Quarter |
|
|
Ended April 3, 2009 |
|
|
$ Millions |
|
|
|
|
Change |
|
% Change |
|
|
|
Revenue decrease (GAAP) |
|
$ |
(1.1 |
) |
|
|
-2.9 |
% |
Increase due to foreign exchange rate changes |
|
|
1.3 |
|
|
|
3.3 |
% |
|
|
|
Revenue decrease in constant dollars |
|
$ |
(2.4 |
) |
|
|
-6.2 |
% |
The difference between changes in reported revenue (the most comparable GAAP measure) and constant
dollar revenue changes is the impact of foreign currency. We provide constant dollar revenue
changes for total Company, Europe and Asia results because we use the measure to understand the
underlying growth rate of revenue excluding the impact of items that are not under managements direct control, such
as changes in foreign exchange rates.
Accounts Receivable and Inventory
Accounts receivable decreased 14.6% to $172.3 million as of April 3, 2009, compared with $201.8
million at March 28, 2008. Days sales outstanding were 52 days as of April 3, 2009, compared with
53 days as of March 28, 2008. Wholesale days sales outstanding were 58 days and 60 days for the
first quarters of 2009 and 2008, respectively. We maintained our collection performance despite
the difficult economic environment and lower sales.
Inventory decreased 9.7% to $162.8 million as of April 3, 2009, compared with $180.2 million as of
March 28, 2008, reflecting continued discipline against excess inventory.
Liquidity and Capital Resources
Net cash used by operations for the first quarter of 2009 was $44.3 million, compared with $2.8
million of cash provided by operations for the first quarter of 2008. The cash usage was due
primarily to increased usage of cash for accounts payable, associated with the timing of inventory
payments, and accrued expenses, including incentive compensation for 2008 results paid in the first
quarter of 2009, as compared to minimal incentive compensation in the prior year period.
Net cash used for investing activities was $4.4 million in the first quarter of 2009, compared with
$1.9 million in the first quarter of 2008. Cash used for the acquisition of Glaudio, net of cash
acquired, was $1.5 million in the first quarter of 2009. Capital spending totaled $2.8 million in
the first quarter of 2009, compared with $4.1 million in the first quarter of 2008.
Net cash used by financing activities was $8.5 million in the first quarter of 2009, compared with
$9.6 million in the first quarter of 2008. We had no short-term borrowings as of April 3, 2009 or
March 28, 2008. Cash flows for financing activities reflected share repurchases of $9.1 million in
the first quarter of 2009, compared with $10.2 million in the first quarter of 2008.
Form 10-Q
Page 23
We are exposed to the credit risk of those parties with which we do business including
counterparties on our derivative contracts and our customers. Derivative instruments expose us to
credit and market risk. The market risk associated with these instruments resulting from currency
exchange movements is expected to offset the market risk of the underlying transactions being
hedged. We do not believe there is a significant risk of loss in the event of non-performance by
the counterparties associated with these instruments because these transactions are executed with a
group of major financial institutions and have varying maturities through January 2010. As a
matter of policy, we enter into these contracts only with counterparties having a minimum
investment-grade or better credit rating. Credit risk is managed through the continuous monitoring
of exposures to such counterparties.
Additionally, consumer spending is being affected by the current macro-economic environment,
particularly the disruption of the credit and stock markets and increased unemployment. Continued
deterioration in the markets and economic conditions generally could adversely impact our customers
and their ability to access credit.
We may utilize our committed and uncommitted lines of credit to fund our seasonal working capital
needs. We have not experienced any restrictions on the availability of these lines and the adverse
capital and credit market conditions are not expected to significantly affect our ability to meet
our liquidity needs.
We have an unsecured committed revolving credit agreement with a group of banks, which matures on
June 2, 2011 (Agreement). The Agreement provides for $200 million of committed borrowings, of
which up to $125 million may be used for letters of credit. Upon approval of the bank group, we
may increase the
committed borrowing limit by $100 million for a total commitment of $300 million. Under the terms
of the Agreement, we may borrow at interest rates based on Eurodollar rates (approximately 1.0% at
April 3, 2009), plus an applicable margin based on a fixed-charge coverage grid of between 13.5 and
47.5 basis points that is adjusted quarterly. As of April 3, 2009, the applicable margin under the
facility was 47.5 basis points. We pay a utilization fee of an additional 5 basis points if our
outstanding borrowings under the facility exceed $100 million. We also pay a commitment fee of 6.5
to 15 basis points per annum on the total commitment, based on a fixed-charge coverage grid that is
adjusted quarterly. As of April 3, 2009, the commitment fee was 15 basis points. The Agreement
places certain limitations on additional debt, stock repurchases, acquisitions, and the amount of
dividends we may pay, and includes certain other financial and non-financial covenants. The
primary financial covenants relate to maintaining a minimum fixed-charge coverage ratio of 2.25:1
and a maximum leverage ratio of 2:1. We measure compliance with the financial and non-financial
covenants and ratios as required by the terms of the Agreement on a fiscal quarter basis.
We have uncommitted lines of credit available from certain banks which totaled $30 million at April
3, 2009. Any borrowings under these lines would be at prevailing money market rates. Further, we
have an uncommitted letter of credit facility of $80 million to support inventory purchases. These
arrangements may be terminated at any time at the option of the banks or at our option.
As of April 3, 2009 and March 28, 2008, we had no borrowings outstanding under any of our credit
facilities. The amount of peak borrowing under our facilities in 2008 was approximately $20.0
million, and occurred during the fourth quarter of 2008 to fund our seasonal working capital
requirements. In 2009, we expect to utilize our facilities in a similar fashion to 2008, primarily
to fund seasonal working capital requirements in the latter half of the year.
Management believes that our operating costs, capital requirements and funding for our share
repurchase program for the balance of 2009 will be funded through our current cash balances, our
existing credit facilities (which place certain limitations on additional debt, stock repurchases,
acquisitions and on the amount of dividends we may pay, and also contain certain other financial
and operating covenants) and cash from operations, without the need for additional financing.
However, as discussed in the sections entitled Cautionary Statements for Purposes of the Safe
Harbor Provisions of the Private Securities Litigation Reform Act of 1995 on page 2 of our Annual
Report on Form 10-K for the year ended December
Form 10-Q
Page 24
31, 2008 (our Annual Report on Form 10-K), and
Forward Looking Information in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K,
and in Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q, several risks and
uncertainties could require that the Company raise additional capital through equity and/or debt
financing. From time to time, the Company considers acquisition opportunities which, if pursued,
could also result in the need for additional financing. However, if the need arises, our ability
to obtain any additional credit facilities will depend upon prevailing market conditions, our
financial condition and the terms and conditions of such additional facilities. The continued
volatility in the credit markets could result in significant increases in borrowing costs for any
new debt we may require.
Off-Balance Sheet Arrangements
Letters of Credit
As of April 3, 2009 and March 28, 2008, we had letters of credit outstanding of $15.7 million and
$17.1 million, respectively. These letters of credit were issued predominantly for the purchase of
inventory.
We use funds from operations and unsecured committed and uncommitted lines of credit as the primary
sources of financing for our seasonal and other working capital requirements. Our principal risks
related to these sources of financing are the impact on our financial condition from economic
downturns, a decrease in the demand for our products, increases in the prices of materials and a
variety of other factors.
New Accounting Pronouncements
A discussion of new accounting pronouncements is included in Note 1 to the unaudited condensed
consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, our financial position and results of operations are routinely
subject to a variety of risks, including market risk associated with interest rate movements on
borrowings and investments and currency rate movements on non-U.S. dollar denominated assets,
liabilities and cash flows. We regularly assess these risks and have established policies and
business practices that should mitigate a portion of the adverse effect of these and other
potential exposures.
We utilize cash from operations and U.S. dollar denominated borrowings to fund our working capital
and investment needs. Short-term debt, if required, is used to meet working capital requirements
and long-term debt, if required, is generally used to finance long-term investments. In addition,
we use derivative instruments to manage the impact of foreign currency fluctuations on a portion of
our foreign currency transactions. These derivative instruments are viewed as risk management
tools and are not used for trading or speculative purposes. Cash balances are invested in
high-grade securities with terms of less than three months.
We have available unsecured committed and uncommitted lines of credit as sources of financing for
our working capital requirements. Borrowings under these credit agreements bear interest at
variable rates based on either lenders cost of funds, plus an applicable spread, or prevailing
money market rates. As of April 3, 2009 and March 28, 2008, we had no short-term or long-term debt
outstanding.
Our foreign currency exposure is generated primarily from our European operating subsidiaries and,
to a lesser degree, our Asian and Canadian operating subsidiaries. We seek to mitigate the impact
of these foreign currency fluctuations through a risk management program that includes the use of
derivative financial instruments, primarily foreign currency forward contracts. These derivative
instruments are carried at fair value on our balance sheet. The Company has implemented a program
that qualifies for
Form 10-Q
Page 25
hedge accounting treatment to aid in mitigating our foreign currency exposures
and decreasing the volatility of our earnings. The foreign currency forward contracts under this
program will expire in 10 months or less. Based upon a sensitivity analysis as of April 3, 2009, a
10% change in foreign exchange rates would cause the fair value of our derivative instruments to
increase/decrease by approximately $12.6 million, compared to an increase/decrease of $15.1 million
at December 31, 2008 and an increase/decrease of $13.4 million at March 28, 2008.
Item 4. CONTROLS AND PROCEDURES
We maintain a system of disclosure controls and procedures which are designed to ensure that
information required to be disclosed by us in reports we file or submit under the Securities
Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commissions rules and forms. These
disclosure controls and procedures include controls and procedures designed to ensure that
information required to be disclosed under the federal securities laws is accumulated and
communicated to our management on a timely basis to allow decisions regarding required disclosure.
Based on their evaluation, our principal executive officer and principal financial officer have
concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act, were effective as of the end of the period covered by this report.
There were no changes in our internal control over financial reporting, as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the quarter ended April 3,
2009 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Part II OTHER INFORMATION
Item 1A. RISK FACTORS
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should
carefully consider the factors discussed in the sections entitled Cautionary Statements for
Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
on page 2 of our Annual Report on Form 10-K for the year ended December 31, 2008 (our Annual
Report on Form 10-K) and Forward-Looking Information in Part I, Item 1A, Risk Factors, of our
Annual Report on Form 10-K, which could materially affect our business, financial condition or
future results. The risks described in this Quarterly Report on Form 10-Q and in our Annual Report
on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not
currently known to us or that we currently deem to be immaterial also may materially adversely
affect our business, financial condition or future results.
Form 10-Q
Page 26
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ISSUER PURCHASES OF EQUITY SECURITIES(1)
For the Three Fiscal Months Ended April 3, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number |
|
|
Maximum Number |
|
|
|
|
|
|
|
|
|
|
|
of Shares |
|
|
of Shares |
|
|
|
|
|
|
|
|
|
|
|
Purchased as Part |
|
|
That May Yet |
|
|
|
Total Number |
|
|
|
|
|
|
of Publicly |
|
|
be Purchased |
|
|
|
of Shares |
|
|
Average Price |
|
|
Announced |
|
|
Under the Plans |
|
Period* |
|
Purchased ** |
|
|
Paid per Share |
|
|
Plans or Programs |
|
|
or Programs |
|
January 1 January 30 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
4,568,902 |
|
January 31 February 27 |
|
|
233,264 |
|
|
|
11.36 |
|
|
|
233,264 |
|
|
|
4,335,638 |
|
February 28 April 3 |
|
|
667,245 |
|
|
|
11.03 |
|
|
|
667,245 |
|
|
|
3,668,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 Total |
|
|
900,509 |
|
|
$ |
11.12 |
|
|
|
900,509 |
|
|
|
|
|
Footnote (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approved |
|
|
|
|
Announcement |
|
Program |
|
Expiration |
|
|
Date |
|
Size (Shares) |
|
Date |
Program 1 |
|
|
03/10/2008 |
|
|
|
6,000,000 |
|
|
None |
|
|
|
No existing programs expired or were terminated during the reporting period.
|
|
|
|
* |
|
Fiscal month |
|
** |
|
Based on trade date not settlement date |
Form 10-Q
Page 27
Item 6. EXHIBITS
|
|
|
Exhibits. |
|
|
|
|
|
Exhibit 10.1
|
|
The Timberland Company 2009 Executive Long Term Incentive Program, filed
herewith. |
|
|
|
Exhibit 10.2
|
|
Form of Performance Stock Unit Agreement under The Timberland Company 2007
Incentive Plan (2007 IP), filed herewith. |
|
|
|
Exhibit 10.3
|
|
Form of Performance Vested Stock Option Agreement under 2007 IP, filed
herewith. |
|
|
|
Exhibit 10.4
|
|
Form of Non-Qualified Stock Option Agreement under 2007 IP, filed herewith. |
|
|
|
Exhibit 10.5
|
|
Form of Restricted Stock Unit Agreement under 2007 IP, filed herewith. |
|
|
|
Exhibit 10.6
|
|
Form of Restricted Stock Award Agreement under 2007 IP, filed herewith. |
|
|
|
Exhibit 10.7
|
|
Summary of Non-Employee Director Compensation, filed herewith. |
|
|
|
Exhibit 31.1
|
|
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed herewith. |
|
|
|
Exhibit 31.2
|
|
Principal Financial Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed herewith. |
|
|
|
Exhibit 32.1
|
|
Chief Executive Officer Certification Pursuant to Section 1350, Chapter 63
of Title 18, United States Code, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, furnished herewith. |
|
|
|
Exhibit 32.2
|
|
Chief Financial Officer Certification Pursuant to Section 1350, Chapter 63
of Title 18, United States Code, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, furnished herewith. |
Form 10-Q
Page 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
THE TIMBERLAND COMPANY
(Registrant)
|
|
Date: May 8, 2009 |
By: |
/s/ JEFFREY B. SWARTZ
|
|
|
|
Jeffrey B. Swartz |
|
|
|
Chief Executive Officer |
|
|
|
|
|
Date: May 8, 2009 |
By: |
/s/ JOHN D. CRIMMINS, III
|
|
|
|
John D. Crimmins, III |
|
|
|
Chief Financial Officer |
|
|
Form 10-Q
Page 29
EXHIBIT INDEX
|
|
|
Exhibit |
|
Description |
Exhibit 10.1 |
|
The Timberland Company 2009 Executive Long Term Incentive Program, filed
herewith. |
|
|
|
Exhibit 10.2 |
|
Form of Performance Stock Unit Agreement under The Timberland Company 2007
Incentive Plan (2007 IP), filed herewith. |
|
|
|
Exhibit 10.3 |
|
Form of Performance Vested Stock Option Agreement under 2007 IP, filed
herewith. |
|
|
|
Exhibit 10.4 |
|
Form of Non-Qualified Stock Option Agreement under 2007 IP, filed herewith. |
|
|
|
Exhibit 10.5 |
|
Form of Restricted Stock Unit Agreement under 2007 IP, filed herewith. |
|
|
|
Exhibit 10.6 |
|
Form of Restricted Stock Award Agreement under 2007 IP, filed herewith. |
|
|
|
Exhibit 10.7 |
|
Summary of Non-Employee Director Compensation, filed herewith. |
|
|
|
Exhibit 31.1 |
|
Principal Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed herewith. |
|
|
|
Exhibit 31.2 |
|
Principal Financial Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed herewith. |
|
|
|
Exhibit 32.1 |
|
Chief Executive Officer Certification Pursuant to Section 1350, Chapter 63
of Title 18, United States Code, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, furnished herewith. |
|
|
|
Exhibit 32.2 |
|
Chief Financial Officer Certification Pursuant to Section 1350, Chapter 63
of Title 18, United States Code, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, furnished herewith. |