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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Commission File Number 1-9548

The Timberland Company
(Exact name of registrant as specified in its charter)

Registrant's 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. Yes ý    No o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes ý    No o

        On November 5, 2004, 28,542,528 shares of the registrant's Class A Common Stock were outstanding and 5,871,830 shares of the registrant's Class B Common Stock were outstanding.

THE TIMBERLAND COMPANY

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

THE TIMBERLAND COMPANY

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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THE TIMBERLAND COMPANY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in Thousands, Except Per Share Data)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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THE TIMBERLAND COMPANY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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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

        In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain the adjustments necessary to present fairly The Timberland Company's ("we", "our", "us", "Timberland" or the "Company") financial position, results of operations and changes in cash flows for the interim periods presented. Such adjustments consist of normal recurring items. The 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, 2003.

Our revenue consists of sales to wholesale customers, retail store revenues, license fees and royalties. We record wholesale revenues when title passes and the risks and rewards of ownership have passed to the customer, based on the terms of sale. Title passes generally upon shipment or upon receipt by the customer, depending on the country of sale and the agreement with the customer. Retail store revenues are recorded at the time of the sale. License fees and royalties are recognized as earned per the terms of our licensing agreements.

In accordance with Emerging Issues Task Force ("EITF") Issue No. 00-10, in the third quarter and the first nine months of 2004 we recorded approximately $1,520 and $3,704 of reimbursement of shipping expenses within revenues and the related shipping costs within selling expense, respectively. In the third quarter of 2003 we recorded approximately $1,500 of reimbursement of shipping expenses within revenues and the related shipping costs within selling expense. For the first six months of 2003, shipping reimbursements of $2,100 were recorded as an offset to selling expenses. Shipping costs included in selling expense were approximately $4,800 and $4,700 for the third quarters of 2004 and 2003, respectively, and $12,000 and $11,400 for the first nine months of 2004 and 2003, respectively.

We maintain allowances for doubtful accounts for estimated losses resulting from the potential inability of our customers to make required payments. We estimate potential losses primarily based on our historical rate of credit losses and our knowledge of the financial condition of our customers.

Note 2. Historical Financial Results

        The results of operations for the three and nine months ended October 1, 2004 are not necessarily indicative of the results to be expected for the full year. Historically, our revenue has been more heavily weighted to the second half of the year.

Note 3. Stock-based Compensation

        We apply Accounting Principle Board ("APB") Opinion No. 25 and related interpretations in accounting for our stock plans. We follow Statement of Financial Accounting Standards ("SFAS") No. 123 "Accounting for Stock-Based Compensation" and SFAS No. 148 "Accounting for Stock-Based Compensation—Transitional and Disclosure—An Amendment of FASB Statement No. 123" for disclosure purposes.

In our consolidated financial statements, no compensation cost has been recognized for stock option grants issued under any of our stock option plans, however, the Company has recognized compensation cost for restricted stock awards. Had compensation cost for stock option grants issued been determined

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under the fair value method of SFAS No. 123, our net income and diluted earnings per share for the three and nine months ended October 1, 2004 and September 26, 2003 would have been:

The fair value of each stock option granted for the three months ended October 1, 2004 and September 26, 2003 under our plans was estimated on the date of grant using the Black-Scholes option pricing model. The following weighted-average assumptions were used to value grants issued under the plans: expected volatility of 34.0% and 38.1%; risk-free interest rates of 2.8% and 1.7%; expected lives of 5.3 and 4.4 years; and no dividend payments. The weighted-average fair values per share of stock options granted, exercise price equals market value, for the three months ending October 1, 2004 and September 26, 2003 were $20.22 and $15.24, respectively.

The following weighted-average assumptions were used to value grants issued under our plans for the nine months ended October 1, 2004 and September 26, 2003, respectively: expected volatility of 36.4% and 41.1%; risk-free interest rates of 1.8% and 1.7%; expected lives of 4.7 and 5.0 years; and no dividend payments. The weighted-average fair values per share of stock options granted, exercise price equals market value, for the nine months ending October 1, 2004 and September 26, 2003 were $20.66 and $15.42, respectively.

Note 4. Earnings Per Share

        Basic earnings per share ("EPS") excludes dilution 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 securities such as stock options were exercised. Dilutive securities included in the calculation of diluted weighted-average shares were 749,810 and 811,080 for the three months ended October 1, 2004 and September 26, 2003, respectively, and 882,745 and 827,807 for the first nine months of 2004 and 2003, respectively. Anti-dilutive securities excluded from the calculation of diluted weighted-average shares were 609,410 and 572,806 for the third quarters

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of 2004 and 2003, respectively, and 455,014 and 562,643 for the first nine months of 2004 and 2003, respectively.

Note 5. Goodwill and Other Intangible Assets

        Our annual impairment tests, conducted as of July 1, 2004, have determined that no impairment of goodwill has occurred.

Information regarding our other intangible assets and related expenses follows:

Amortization expense for the third quarters of 2004 and 2003 was $378 and $344, respectively, and $1,068 and $988 for the first nine months of 2004 and 2003, respectively. The estimated amortization for existing intangible assets as of October 1, 2004, for each of the five succeeding fiscal years is as follows: 2004: $1,464; 2005: $1,334; 2006: $1,033; 2007: $704; 2008: $399. The amortization period for other tangible assets and related expenses is five years.

Note 6. Derivatives

        All derivatives entered into by the Company are designated as either cash flow or fair value hedges. Cash flow hedges are derivative contracts hedging forecasted transactions. Fair value hedges are derivatives hedging existing foreign currency assets or liabilities. The change in value of cash flow hedges is recorded in other comprehensive income until the hedged transaction affects earnings at which point the other comprehensive income is reclassified to earnings. The change in value of fair value hedges is recorded in earnings and is largely offset by the change in the fair value of the underlying asset or liability. We are required to measure the effectiveness of our cash flow hedges. If it is determined that a cash flow hedge is not effective, the ineffective portion of a derivative's change in fair value will be immediately recognized in earnings.

In the normal course of business, the financial position and results of operations of the Company are routinely subject to currency rate movements in non-U.S. Dollar denominated assets, liabilities and income as we purchase and sell goods in local currencies. We have established policies and business practices that should result in an appropriate level of protection against the adverse effect of these exposures. We use derivative instruments, specifically forward contracts, to hedge a portion of our forecasted foreign currency transactions, typically for a period not greater than 18 months. Those derivative instruments are viewed as risk management tools and are not used for trading or speculative purposes. As of October 1, 2004, we had forward contracts maturing at various dates through January 2006 to sell the equivalent of $231,862 in foreign currencies at contracted rates and to buy the equivalent of $1,071 in foreign currencies at contracted rates. As of September 26, 2003, we had forward contracts maturing at various dates through January 2005 to sell the equivalent of $236,715 in foreign currencies at contracted rates and to buy the equivalent of $6,983 in foreign currencies at contracted rates.

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On October 1, 2004, September 26, 2003 and December 31, 2003, we had $4,264, $6,334 and $16,058 in derivative liabilities, respectively. Those amounts reflect the fair value of our cash flow hedges. The $4,264 derivative liability as of October 1, 2004 represents hedges in place through the fourth quarter of 2005.

Note 7. Comprehensive Income

        Comprehensive income for the three and nine months ended October 1, 2004 and September 26, 2003 follows:

For the three months ended October 1, 2004 and September 26, 2003, the after tax hedging losses reclassified to earnings were $2,995 and $5,498, respectively, and for the nine months ended October 1, 2004 and September 26, 2003, the after tax hedging losses reclassified to earnings were $6,262 and $12,577, respectively. The decrease in 2004 hedging losses compared to 2003 resulted from exchange rate fluctuation.

Note 8. Business Segments and Geographic Information

        We manage our business in three reportable segments, each sharing similar product, distribution, marketing and economic conditions. The reportable segments are U.S. Wholesale, U.S. Consumer Direct and International. The U.S. Wholesale segment is comprised of the sale of products to wholesale customers in the United States. This segment also includes royalties from licensed products sold in the United States and the management costs and expenses associated with our worldwide licensing efforts. The U.S. Consumer Direct segment includes the Company-operated specialty and factory outlet stores in the United States and our e-commerce business. The International segment consists of the marketing, selling and distribution of footwear, apparel and accessories and licensed products outside of the United States. Products are sold outside of the United States through our subsidiaries (which use wholesale and retail channels to sell footwear and apparel and accessories), independent distributors and licensees.

The Unallocated Corporate component of segment reporting consists primarily of the corporate finance, legal, information services and administrative expenses, United States distribution expenses, a majority of United States marketing expenses and other costs incurred in support of company-wide activities. This segment now includes costs related to worldwide product development, which were previously included in U.S. Wholesale. In the table below, Unallocated Corporate expenses for the

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three months and nine months of 2003 increased by $4,006 and $11,733, respectively, to reflect this reclassification. For the three months and nine months of 2004 worldwide product development costs were $5,385 and $16,341, respectively. Unallocated Corporate also includes other expense/(income), which is primarily interest expense, interest income and other miscellaneous expense/(income). Such expenses are not allocated among the reported 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 operating contribution, which represents pre-tax income before unallocated corporate expenses, interest and other expenses, net; and on operating cash flow measurements. Total assets are disaggregated to the extent that assets apply specifically to a single segment. Unallocated Corporate assets primarily consist of cash and equivalents, manufacturing/sourcing assets, computers and related equipment, and United States transportation and distribution equipment.

For the Three Months Ended October 1, 2004 and September 26, 2003