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Timberland's operating income improves in Q3

31
Oct '08
The Timberland Company reported third-quarter 2008 net income of $30.7 million and earnings per share of $0.52. These results compare to third-quarter 2007 net income of $25.9 million and earnings per share of $0.42. When adjusted to exclude restructuring and related costs, earnings per share were $0.52 and $0.49 in the third quarters of 2008 and 2007, respectively.

Third-Quarter 2008 Results Summary:

* Revenue declined 2.2% to $423.6 million as declines in Timberland brand apparel, which reflect the Company's transition to a licensing model for its North American wholesale business, were partially offset by strong growth in Timberland PRO series footwear and SmartWool socks and apparel. Foreign exchange rate changes increased third-quarter 2008 revenue by approximately $10 million, or 2.2%, due to the strength of the Euro and the Yen, and increased operating income by approximately $3 million.

* North America revenue declined 8.8% to $184.5 million, reflecting soft consumer spending in the U.S. Europe revenue increased 4.4% to $199.9 million and increased slightly on a constant dollar basis, driven by strength in all footwear categories which offset declines in the apparel business. Asia revenue decreased slightly to $39.2 million, and decreased 5.4% on a constant dollar basis, driven by declines in the outdoor performance and casual footwear businesses.

* Apparel and accessories revenue decreased 11.7% to $102.7 million, driven by anticipated declines in Timberland brand apparel as a result of the Company's transition to a licensing model for its North American wholesale business. Global footwear revenue increased 1.0% to $313.5 million driven by strength in Timberland PRO series footwear as well as strength in the boots business in the European and Asian markets, which offset declines in the men's casual and outdoor performance categories.

* Global wholesale revenue decreased 1.0% to $340.6 million. Worldwide consumer direct revenue decreased 6.9% to $83.0 million, reflecting a difficult worldwide retail environment and revenue declines associated with our decision to close certain retail locations.

* Restructuring and related charges were $0.2 million in the third quarter of 2008, compared to $7.5 million for the third quarter of 2007.

* Operating income for the quarter was $53.2 million, a 19.2% improvement from the prior-year period. Operating income excluding restructuring and related costs was $53.4 million, a 2.3% improvement compared to the prior year level.
* In the third quarter of 2008, the effective tax rate was 40.0%, flat compared to the third quarter of 2007.

* In connection with its stock buyback program, Timberland repurchased approximately 1.2 million shares in the third quarter at a total cost of $20.1 million.

* Timberland ended the quarter with $62.7 million in cash and no debt. Inventory at quarter end was $218.9 million, down 15.6% versus 2007 third-quarter levels, reflecting the Company's disciplined inventory management in the face of challenging market conditions. Accounts receivable decreased 6.8% to $267.2 million, compared to the prior year.


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