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| 8-K - THE TIMBERLAND COMPANY 8-K - TIMBERLAND CO | a6615542.htm |
Exhibit 99.1
Timberland Reports Fourth-Quarter and Full-Year 2010 Results
Fourth Quarter
- Fourth quarter revenue increased 26.7% to $491.1 million; up 28.1% on a constant dollar basis
- Fourth quarter diluted earnings per share more than doubled to $0.82
- Global retail comparable store sales increased 17.6% versus prior year period
Full Year
- Full year revenue increased 11.2% to $1,429.5 million; up 11.7% on a constant dollar basis
- Full year diluted earnings per share increased 80.2% to $1.82
- Global retail comparable store sales increased 8.8% versus prior year period
STRATHAM, N.H.--(BUSINESS WIRE)--February 17, 2011--The Timberland Company (NYSE: TBL) today reported fourth-quarter 2010 net income of $42.1 million and diluted earnings per share of $0.82. These results compare to fourth-quarter 2009 net income of $22.3 million and diluted earnings per share of $0.40.
Fourth Quarter 2010 Results Summary:
- Revenue increased 26.7% compared to the prior year period and was up 28.1% on a constant dollar basis, reflecting growth across North America, Europe, and Asia.
- North America revenue increased 16.8% to $252.0 million compared to the prior year period, as a result of improved wholesale sell-in, specifically men’s footwear, and growth in SmartWool® apparel and accessories. Europe revenue increased 32.3% to $169.6 million versus 2009 fourth-quarter levels, and increased 40.1% on a constant dollar basis. European results reflect growth across the region, led by Germany, Scandinavia, and the Benelux region, driven by strong performance in men’s, women’s and kids’ footwear. Asia revenue increased 58.5% to $69.6 million compared to the prior year period, and increased 48.3% on a constant dollar basis, driven by growth across the region, led by Japan, Taiwan, and China, across men’s, women’s and kids’ products.
- Global footwear revenue increased 31.2% to $358.8 million from the fourth quarter of 2009, driven by men’s footwear and supported by strong growth in women’s and kids’ footwear in all three regions. Apparel and accessories revenue increased 16.6% to $125.1 million, reflecting growth in every region, led by strength in Timberland® apparel sales in Asia.
- Global wholesale revenue was up 30.9% to $326.6 million compared to the prior year period, with double-digit growth across all segments. Worldwide consumer direct revenue increased 19.0% to $164.5 million compared to the fourth quarter of 2009, driven by solid comparable store sales growth in each of our global regions and the net addition of ten stores.
- Operating income for the fourth quarter of 2010 was $61.7 million compared to operating income of $37.2 million in the prior year period. The improvement was driven by increased revenue and was partially offset by higher selling and marketing expenses. The gross margin rate declined approximately 200 basis points to 48.6% as benefits from mix and fewer and more profitable close-out sales were offset by pressure from higher input costs and freight expenses.
- In the fourth quarter of 2010, the effective tax rate was 33.1% compared to 39.9% in the fourth quarter of 2009. The tax rate for the full-year 2010 was 31.6% compared to 30.4% in 2009.
- In connection with its stock buyback program, the Company repurchased 402 thousand shares in the fourth quarter of 2010 at a cost of approximately $10 million.
- The Company ended the quarter with $272.2 million in cash and no debt. Accounts receivable increased 26.2% to $188.3 million compared to the prior year period, in line with the revenue increase. Inventory at year end was $180.1 million, an increase of 13.6% compared to prior year levels.
For the full-year 2010, Timberland reported revenue of $1,429.5 million, an increase of 11.2% over the prior year. 2010 net income was $96.6 million, an increase of 70.6% over the prior year. And diluted earnings per share were $1.82, an increase of 80.2% over the full-year 2009 diluted earnings per share of $1.01.
“Our results this quarter are the culmination of disciplined focus on our operating model and targeted investments in our brand,” said Jeffrey B. Swartz, Timberland’s President and Chief Executive Officer. “As our progress in the North America business demonstrates, we have the right strategy and the right team in place to grow Timberland to be the number one outdoor brand on Earth.”
Webcast information
As previously announced, the Company will be hosting a conference call to discuss fourth quarter and full year results today at 8:25 AM Eastern Time. Interested parties may listen to this call through the investor relations section of the Company’s website, www.timberland.com, or by calling 706.643.2916 and providing access code number 40250864. Replays of this conference call will be available through the investor relations section of the Company’s website.
About Timberland
Timberland (NYSE: TBL) is a global leader in the design, engineering and marketing of premium-quality footwear, apparel and accessories for consumers who value the outdoors and their time in it. Timberland markets products under the Timberland®, Timberland PRO®, SmartWool®, Timberland Boot Company®, howies®, and Mountain Athletics® brands, all of which offer quality workmanship and detailing and are built to withstand the elements of nature. Timberland’s products can be found in leading department and specialty stores as well as Timberland® retail stores throughout North America, Europe, Asia, Latin America, Africa and the Middle East. More information about Timberland is available in its reports filed with the Securities and Exchange Commission (SEC).
Forward Looking Statements
Certain statements in this press release may be “forward-looking statements”, within the meaning of the federal securities laws, which are subject to material risks and uncertainties. These forward-looking statements are not guarantees of future financial performance or expected benefits. Many factors could affect our current expectations and our actual results, and could cause results to differ materially. Such factors include, but are not limited to: (i) Timberland’s ability to successfully market and sell its products in a highly competitive industry and in view of changing consumer trends, consumer acceptance of products and other factors affecting retail market conditions; (ii) Timberland’s ability to execute key strategic initiatives; (iii) Timberland’s ability to procure a majority of its products from independent manufacturers; (iv) changes in foreign exchange rates; (v) Timberland’s ability to obtain adequate materials at competitive prices; and (vi) other factors, including those detailed from time to time in Timberland’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q and other filings we make with the SEC. Timberland undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
This press release includes discussion of constant dollar revenue change, which excludes the impact of changes in foreign currency exchange rates, and is a non-GAAP measure. As required by SEC rules, the Company has provided reconciliations of this measure on attached tables that follow its financial statements. Additional required information regarding this non-GAAP measure is located in the Form 8-K furnished to the SEC on February 17, 2011.
| THE TIMBERLAND COMPANY | ||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (Dollars in Thousands) | ||||||
| December 31, 2010 | December 31, 2009 | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash and equivalents | $ | 272,221 | $ | 289,839 | ||
| Accounts receivable, net | 188,336 | 149,178 | ||||
| Inventory | 180,068 | 158,541 | ||||
| Prepaid expense | 32,729 | 32,863 | ||||
| Prepaid income taxes | 25,083 | 11,793 | ||||
| Deferred income taxes | 22,562 | 26,769 | ||||
| Derivative assets | 29 | 1,354 | ||||
| Total current assets | 721,028 | 670,337 | ||||
| Property, plant and equipment, net | 68,043 | 69,820 | ||||
| Deferred income taxes | 15,594 | 14,903 | ||||
| Goodwill and intangible assets, net | 73,797 | 89,885 | ||||
| Other assets, net | 13,897 | 14,962 | ||||
| Total assets | $ | 892,359 | $ | 859,907 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Current liabilities | ||||||
| Accounts payable | $ | 91,025 | $ | 79,911 | ||
| Accrued expense and other current liabilities | 128,051 | 125,500 | ||||
| Income taxes payable | 25,760 | 21,959 | ||||
| Deferred income taxes | - | 48 | ||||
| Derivative liabilities | 1,690 | 389 | ||||
| Total current liabilities | 246,526 | 227,807 | ||||
| Other long-term liabilities | 34,322 | 36,483 | ||||
| Stockholders’ equity | 611,511 | 595,617 | ||||
| Total liabilities and stockholders’ equity | $ | 892,359 | $ | 859,907 | ||
| THE TIMBERLAND COMPANY | |||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (Amounts in Thousands, Except Per Share Data) | |||||||||||||||
| For the Quarter Ended | For the Year Ended | ||||||||||||||
| December 31, 2010 | December 31, 2009 | December 31, 2010 | December 31, 2009 | ||||||||||||
| Revenue | $ | 491,144 | $ | 387,760 | $ | 1,429,484 | $ | 1,285,876 | |||||||
| Cost of goods sold | 252,690 | 191,547 | 732,970 | 682,954 | |||||||||||
| Gross profit | 238,454 | 196,213 | 696,514 | 602,922 | |||||||||||
| Operating expense | |||||||||||||||
| Selling | 141,910 | 123,378 | 427,367 | 407,987 | |||||||||||
| General and administrative | 34,174 | 35,654 | 123,912 | 116,772 | |||||||||||
| Impairment of goodwill | - | - | 5,395 | - | |||||||||||
| Impairment of intangible asset | 702 | - | 8,556 | 925 | |||||||||||
| Gain on termination of licensing agreements | - | - | (3,000 | ) | - | ||||||||||
| Restructuring | - | (27 | ) | - | (236 | ) | |||||||||
| Total operating expense | 176,786 | 159,005 | 562,230 | 525,448 | |||||||||||
| Operating income | 61,668 | 37,208 | 134,284 | 77,474 | |||||||||||
| Other income/(expense), net | |||||||||||||||
| Interest, net | 5 | (85 | ) | (104 | ) | 405 | |||||||||
| Other, net | 1,341 | (123 | ) | 7,080 | 3,506 | ||||||||||
| Total other income/(expense), net | 1,346 | (208 | ) | 6,976 | 3,911 | ||||||||||
| Income before income taxes | 63,014 | 37,000 | 141,260 | 81,385 | |||||||||||
| Income tax provision | 20,882 | 14,746 | 44,638 | 24,741 | |||||||||||
| Net income | $ | 42,132 | $ | 22,254 | $ | 96,622 | $ | 56,644 | |||||||
| Earnings per share | |||||||||||||||
| Basic | $ | 0.83 | $ | 0.40 | $ | 1.84 | $ | 1.01 | |||||||
| Diluted | $ | 0.82 | $ | 0.40 | $ | 1.82 | $ | 1.01 | |||||||
| Weighted-average shares outstanding | |||||||||||||||
| Basic | 50,691 | 54,960 | 52,498 | 56,034 | |||||||||||
| Diluted | 51,310 | 55,329 | 52,990 | 56,352 | |||||||||||
| THE TIMBERLAND COMPANY | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Dollars in Thousands) | ||||||||
| For the Year Ended | ||||||||
| December 31, 2010 | December 31, 2009 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 96,622 | $ | 56,644 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Deferred income taxes | 3,407 | 450 | ||||||
| Share-based compensation | 9,287 | 5,942 | ||||||
| Depreciation and amortization | 25,500 | 28,783 | ||||||
| Provision for losses on accounts receivable | 1,242 | 3,224 | ||||||
| Impairment of goodwill | 5,395 | - | ||||||
| Impairment of intangible assets | 8,556 | 925 | ||||||
| Impairment of other long-lived assets | 989 | 3,023 | ||||||
| Tax expense from share-based compensation, net of excess benefit | (463 | ) | (2,214 | ) | ||||
| Unrealized loss on derivatives | 422 | 333 | ||||||
| Other non-cash credits, net | (1,567 | ) | (1,381 | ) | ||||
|
Increase/(decrease) in cash from changes in operating assets and
liabilities, |
||||||||
| Accounts receivable | (43,559 | ) | 18,206 | |||||
| Inventory | (20,285 | ) | 24,178 | |||||
| Prepaid expense and other assets | 1,539 | 1,479 | ||||||
| Accounts payable | 9,013 | (17,762 | ) | |||||
| Accrued expense | 2,590 | 11,846 | ||||||
| Prepaid income taxes | (13,290 | ) | 4,894 | |||||
| Income taxes payable | 2,120 | (2,093 | ) | |||||
| Other liabilities | 332 | (626 | ) | |||||
| Net cash provided by operating activities | 87,850 | 135,851 | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of business and purchase price adjustments, net of cash acquired | - | (1,554 | ) | |||||
| Additions to property, plant and equipment | (19,917 | ) | (17,677 | ) | ||||
| Other | (707 | ) | (849 | ) | ||||
| Net cash used by investing activities | (20,624 | ) | (20,080 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Common stock repurchases | (85,233 | ) | (43,905 | ) | ||||
| Issuance of common stock | 4,406 | 1,962 | ||||||
| Excess tax benefit from stock option and employee stock purchase plans | 761 | 151 | ||||||
| Other | (971 | ) | (1,284 | ) | ||||
| Net cash used by financing activities | (81,037 | ) | (43,076 | ) | ||||
| Effect of exchange rate changes on cash and equivalents | (3,807 | ) | (45 | ) | ||||
| Net increase/(decrease) in cash and equivalents | (17,618 | ) | 72,650 | |||||
| Cash and equivalents at beginning of period | 289,839 | 217,189 | ||||||
| Cash and equivalents at end of period | $ | 272,221 | $ | 289,839 | ||||
| THE TIMBERLAND COMPANY | |||||||||||||||||||||
| REVENUE ANALYSIS | |||||||||||||||||||||
| (Amounts in Thousands, Unaudited) | |||||||||||||||||||||
| For the Quarter Ended | For the Year Ended | ||||||||||||||||||||
| December 31, 2010 | December 31, 2009 | Change | December 31, 2010 | December 31, 2009 | Change | ||||||||||||||||
| Revenue by Segment: | |||||||||||||||||||||
| North America | $ | 251,983 | $ | 215,745 | 16.8 | % | $ | 647,337 | $ | 610,164 | 6.1 | % | |||||||||
| Europe | 169,552 | 128,110 | 32.3 | % | 592,086 | 527,979 | 12.1 | % | |||||||||||||
| Asia |
|
69,609 | 43,905 | 58.5 | % | 190,061 | 147,733 | 28.7 | % | ||||||||||||
| Total Revenue | $ | 491,144 | $ | 387,760 | 26.7 | % | $ | 1,429,484 | $ | 1,285,876 | 11.2 | % | |||||||||
| Revenue by Product: | |||||||||||||||||||||
| Footwear | $ | 358,765 | $ | 273,440 | 31.2 | % | $ | 1,035,681 | $ | 931,179 | 11.2 | % | |||||||||
| Apparel and Accessories | 125,117 | 107,342 | 16.6 | % | 368,825 | 329,071 | 12.1 | % | |||||||||||||
| Royalty and Other | 7,262 | 6,978 | 4.1 | % | 24,978 | 25,626 | -2.5 | % | |||||||||||||
| Revenue by Channel: | |||||||||||||||||||||
| Wholesale | $ | 326,597 | $ | 249,523 | 30.9 | % | $ | 1,024,694 | $ | 918,796 | 11.5 | % | |||||||||
| Consumer Direct | 164,547 | 138,237 | 19.0 | % | 404,790 | 367,080 | 10.3 | % | |||||||||||||
| Comparable Store Sales: | |||||||||||||||||||||
| U.S. Retail | 6.2 | % | -4.7 | % | 3.1 | % | -8.7 | % | |||||||||||||
| Global Retail | 17.6 | % | -0.3 | % | 8.8 | % | -2.4 | % | |||||||||||||
| THE TIMBERLAND COMPANY | ||||||||||||||
| RECONCILIATION OF TOTAL COMPANY, | ||||||||||||||
| NORTH AMERICA, EUROPE AND ASIA REVENUE CHANGES | ||||||||||||||
| TO CONSTANT DOLLAR REVENUE CHANGES | ||||||||||||||
| (Amounts in Thousands, Unaudited) | ||||||||||||||
| Total Company Revenue Reconciliation: | ||||||||||||||
| For the Quarter Ended | For the Year Ended | |||||||||||||
| December 31, 2010 | December 31, 2010 | |||||||||||||
|
$ Change |
% Change |
$ Change |
% Change | |||||||||||
| Revenue increase (GAAP) | $ | 103,384 | 26.7 | % | $ | 143,608 | 11.2 | % | ||||||
| Decrease due to foreign exchange rate changes | (5,286 | ) | -1.4 | % | (7,017 | ) | -0.5 | % | ||||||
| Revenue increase in constant dollars | $ | 108,670 | 28.1 | % | $ | 150,625 | 11.7 | % | ||||||
| North America Revenue Reconciliation: | ||||||||||||||
| For the Quarter Ended | For the Year Ended | |||||||||||||
| December 31, 2010 | December 31, 2010 | |||||||||||||
|
$ Change |
% Change |
$ Change |
% Change | |||||||||||
| Revenue increase (GAAP) | $ | 36,238 | 16.8 | % | $ | 37,173 | 6.1 | % | ||||||
| Increase due to foreign exchange rate changes | 260 | 0.1 | % | 1,868 | 0.3 | % | ||||||||
| Revenue increase in constant dollars | $ | 35,978 | 16.7 | % | $ | 35,305 | 5.8 | % | ||||||
| Europe Revenue Reconciliation: | ||||||||||||||
| For the Quarter Ended | For the Year Ended | |||||||||||||
| December 31, 2010 | December 31, 2010 | |||||||||||||
|
$ Change |
% Change |
$ Change |
% Change | |||||||||||
| Revenue increase (GAAP) | $ | 41,442 | 32.3 | % | $ | 64,107 | 12.1 | % | ||||||
| Decrease due to foreign exchange rate changes | (10,009 | ) | -7.8 | % | (18,760 | ) | -3.6 | % | ||||||
| Revenue increase in constant dollars | $ | 51,451 | 40.1 | % | $ | 82,867 | 15.7 | % | ||||||
| Asia Revenue Reconciliation: | ||||||||||||||
| For the Quarter Ended | For the Year Ended | |||||||||||||
| December 31, 2010 | December 31, 2010 | |||||||||||||
|
$ Change |
% Change | $ Change | % Change | |||||||||||
| Revenue increase (GAAP) | $ | 25,704 | 58.5 | % | $ | 42,328 | 28.7 | % | ||||||
| Increase due to foreign exchange rate changes | 4,463 | 10.2 | % | 9,875 | 6.7 | % | ||||||||
| Revenue increase in constant dollars | $ | 21,241 | 48.3 | % | $ | 32,453 | 22.0 | % | ||||||
| Constant dollar revenue changes, which exclude the impact of changes in foreign exchange rates, are not Generally Accepted Accounting Principle (“GAAP”) performance measures. We calculate constant dollar revenue changes by recalculating current year revenue using the prior year’s exchange rates and comparing it to prior year revenue reported on a GAAP basis. We provide constant dollar revenue changes for Total Company, North America, Europe, and Asia revenues because we use the measures to understand the underlying results and trends of the business segments excluding the impact of exchange rate changes that are not under management’s direct control. We have a foreign exchange rate risk management program intended to minimize both the positive and negative effects of currency fluctuations on our reported consolidated results of operations, financial position and cash flows. The actions taken by us to mitigate foreign exchange risk are reflected in cost of goods sold and other, net. | ||||||||||||||
CONTACT:
The Timberland Company
Kristyn Van Ostern, 603-773-1655
Investor
Relations
kvanostern@timberland.com