The Timberland Company reported fourth quarter net income of $46.9 million and diluted earnings per share of 71 cents, compared with fourth quarter 2004 net income of $45.0 million and diluted EPS of 64 cents. Fourth quarter 2005 results included pre-tax costs of $1.7 million related to the Company's previously disclosed restructuring of its Caribbean manufacturing facilities. Fourth quarter 2005 EPS excluding these restructuring charges was 73 cents. For the full year, Timberland posted revenue of $1,565.7 million (+4.3% versus prior year in actual and constant dollars) and diluted earnings per share of $2.43 (+13.6% versus prior year) – both records for the Company.

Fourth quarter revenue increased 2.3% over strong prior-year results to a record $465.3 million, driven by gains in both U.S. and international markets. U.S. revenues grew 2.6% as gains in kids', men's casual and Timberland PRO® series footwear and men's apparel sales offset anticipated decreases in women's casual footwear and boot sales. International results (+1.7% or +8.2% in constant dollars) were driven by strong constant dollar sales gains in Europe and Asia in both footwear and apparel. Foreign exchange rate changes reduced fourth quarter 2005 revenue by $9.6 million or 2.2%.

Fourth quarter results were supported by global gains in both footwear and apparel. Global footwear revenues grew 1.4% to $357.5 million driven by growth in kids', men's casual and Timberland PRO® series categories. Apparel and accessories revenue increased 5.4% to $103.2 million reflecting gains in both U.S. and international markets.
Global wholesale revenue expanded 1.3% to $313.4 million. Worldwide consumer direct revenue increased 4.5% to $151.9 million, reflecting a 1.7% increase in global comparable store sales.

Operating profit for the quarter was $70.0 million, including the above noted restructuring. Operating profit excluding restructuring costs was $71.7 million, 5.4% above prior-year levels. Comparable operating margins improved 40 basis points to 15.4%. For the quarter, foreign exchange rate changes contributed approximately $2.1 million to operating profit.

EPS for the quarter, excluding restructuring cost impacts of 2 cents per share, increased approximately 14% versus prior year levels. EPS gains reflected operating profit gains and benefits from lower levels of shares outstanding. During the quarter, the Company bought back 1.6 million shares at a total cost of $51.8 million. Timberland also announced today that its Board of Directors approved a new 6.0 million share repurchase authorization. This additional program supplements the Company's existing share authorization, of which approximately 1.5 million shares were outstanding as of December 31, 2005.

Timberland ended the quarter with $213.2 million in cash and no debt outstanding. Strong operating margins and disciplined asset management supported a 31.7% annual return on capital. Timberland's inventory at the end of the fourth quarter of 2005 was $167.1 million, 30.3% higher than at the end of the 2004 fourth quarter, reflecting impacts from the Company's previously disclosed 2005 conversion to new sourcing arrangements with independent suppliers, resulting in an earlier transfer of title for certain third party shipments.

If similar agreements had been in place in 2004, Timberland estimates that fourth quarter 2004 inventory and accounts payable balances would have increased by approximately $35.2 million. Year-end inventory also includes the addition of $9.5 million related to the Company's acquisition of SmartWool Corporation on December 20, 2005. On a comparable basis, inventory decreased 3.6%.

For 2006, the Company is targeting mid single-digit revenue growth and moderate declines in comparable EPS to 2005. For the purpose of comparison, Timberland estimates that its 2005 EPS would have been approximately $2.35, after excluding restructuring costs and including costs related to stock options and its employee stock purchase plan. Restructuring costs related to the Company's Caribbean manufacturing operations were $4.3 million in 2005 and are estimated to be approximately $300,000 in Q1 2006.

Timberland's financial outlook reflects anticipated pressure on gross margins in 2006, driven by product mix changes and macro factors such as higher oil-related product costs. The Company is also planning for high single-digit growth in operating expenses, driven by investments to advance Timberland's global development and organization capability and by incremental equity based compensation costs, reflecting new accounting requirements.

Impacts from these factors are expected to be greater in the first half of 2006, and, combined with relatively flat first half revenue growth and likely first quarter sales declines, will contribute to anticipated earnings declines during that period. The Company is targeting improved earnings in the second half of the year, with gains weighted toward the fourth quarter.

Jeffrey B. Swartz, Timberland's President and Chief Executive Officer, stated, “Timberland delivered solid revenue growth and record profits in the fourth quarter, resulting in record full year revenue and earnings results. Our strong financial performance in 2005 reflects benefits from our continued global expansion of the Timberland brand, supported by development of our integrated brand presence and our commitment to driving superior customer service through operational excellence.”

“As we enter 2006, we are focused on strengthening our foundation for long-term success through strategies targeted at accelerating our growth with casual consumers, re-asserting our heritage strengths in the outdoor and industrial categories and through the expansion of our new brands – SmartWool®, Mion(TM) and Timberland Boot Company(TM). While we anticipate continued growth challenges in our U.S. boot business, which will pressure 2006 financial results, we believe the strategies we are advancing will strengthen our brand and business portfolio and enable us to capture the significant potential we see for Timberland.”

                        THE TIMBERLAND COMPANY
             (Amounts in Thousands, Except Per Share Data)

                             For the Three         For the Twelve
                               Months Ended         Months Ended
                           ------------------- -----------------------
                           December  December   December    December
                            31, 2005  31, 2004   31, 2005    31, 2004
                           --------- --------- ----------- -----------
Revenue                    $465,288  $454,660  $1,565,681  $1,500,580
Cost of goods sold          240,882   240,305     788,776     761,505
                           --------- --------- ----------- -----------

 Gross profit               224,406   214,355     776,905     739,075
                           --------- --------- ----------- -----------

Operating expense
 Selling                    120,205   117,983     417,441     405,412
 General and administrative  32,527    28,364     109,831      99,800
 Restructuring and related
  costs                       1,720         -       4,251           -
                           --------- --------- ----------- -----------
   Total operating expense  154,452   146,347     531,523     505,212
                           --------- --------- ----------- -----------

Operating income             69,954    68,008     245,382     233,863
                           --------- --------- ----------- -----------

Other income
 Interest income, net           601       459       3,335       1,095
 Other, net                      98     1,364         336       1,775
                           --------- --------- ----------- -----------
   Total other income           699     1,823       3,671       2,870
                           --------- --------- ----------- -----------

Income before provision for
 income taxes                70,653    69,831     249,053     236,733
                           --------- --------- ----------- -----------
Provision for income taxes   23,773    24,790      84,429      84,040
                           --------- --------- ----------- -----------

Net income                  $46,880   $45,041    $164,624    $152,693
                           ========= ========= =========== ===========

Earnings per share
 Basic                        $0.73     $0.66       $2.48       $2.19
 Diluted                      $0.71     $0.64       $2.43       $2.14

Weighted-average shares
 Basic                       64,644    68,597      66,325      69,628
 Diluted                     65,913    70,012      67,744      71,311