The Timberland Company (NYSE: TBL) today reported third quarter net income of $53.3
million, or diluted earnings per share (EPS) of $1.47, compared with
third quarter 2002 net income of $49.2 million, or diluted EPS of
Third quarter revenue increased 6.6% to $444.0 million,
reflecting strong growth in international markets (22.2% or
12.2% in constant dollars) which offset a modest decline in
the U.S. (-1.7%). Overall, Timberland's international business
grew to nearly 40% of Company revenues. Benefits from foreign
exchange rate changes added $14.3 million (or 3.4%) to overall
Revenue growth for the quarter reflected global gains in both
footwear and apparel. Footwear revenue expanded 8.4% to $341.8
million, driven by growth in boots and men's and women's
casual footwear. Global apparel and accessories revenue grew
2.6% to $98.4 million, reflecting gains in the Company's U.S.
Wholesale and Asian businesses.
Operating profit for the quarter increased 8.5% to $83.5
million, reflecting revenue growth and higher gross margins,
which benefited from foreign exchange rate changes and reduced
levels of footwear off-price sales and product returns.
Timberland's progress in developing its international business
enabled the Company to take advantage of the strengthening of
foreign currencies. For the quarter, foreign exchange rate
changes contributed approximately $8.7 million to operating
profits, which was leveraged to support continued investments
against strategic priorities, including international business
EPS for the quarter expanded 13.1% to $1.47, reflecting profit
gains and continued benefits from share repurchases.
A disciplined approach to asset management drove strong gains
in cash management and return on capital. Timberland ended the
quarter with $35.9 million in cash and no debt outstanding
while driving improvements in rolling annual inventory turns
and receivables management. Timberland's annual return on
capital reached 28.1%.
Timberland's share repurchase program continued in the third
quarter as the Company bought back 637 thousand shares at a
total cost of $29.8 million. The Company also announced today
that its Board of Directors has authorized the repurchase of
up to an additional four million shares of the Company's Class
A Common Stock. The additional program supplements the
Company's current four million share authorization, of which
approximately one million shares remained outstanding at the
end of the third quarter.
Jeffrey B. Swartz, Timberland's President and Chief Executive Officer, stated, #'Timberland delivered strong performance in the third quarter, reflecting continued progress against our strategic initiatives. Timberland's international business, which drove our revenue growth in the quarter, delivered solid gains in both Europe and Asia as we continued to enhance our premium integrated brand positioning in those regions. In the United States, our focus on driving footwear innovation across our portfolio, combined with the expansion of our wholesale apparel business, enabled us to deliver solid results in a competitive retail marketplace.''
#'Overall, we are pleased to have delivered solid financial results in the third quarter and believe that we are on track towards achieving our performance goals for the second half of 2003 – and towards delivering strong revenue and earnings gains for the full year. Based on current trends, we believe that mid to high single-digit revenue growth represents an appropriate goal for our business for the balance of 2003. We also continue to target relatively flat operating margins for the second half of 2003 (excluding $6 million of one-time costs associated with last year's West Coast work stoppage). Looking ahead to 2004, we remain committed to delivering strong financial performance and intend to leverage solid revenue growth and operating margin gains to drive double-digit earnings growth and strong cash flow, consistent with our long-term financial objectives. We believe that the strategies we are pursuing will enable us to continue to deliver strong financial performance while capturing the great potential that we see for the Timberland enterprise.''
Note that comments made by Mr. Swartz are Timberland's performance targets, based on current expectations. These comments are forward-looking, and actual results may differ materially.