The Timberland Company reported fourth quarter net income of $39.5 million, or $1.10 per per diluted share, compared with net income of $27.1 million, 73 cents per per diluted share, in the year-ago quarter 2002. Fourth quarter revenue increased 16.4% to $415.3 million, driven by strong global gains in footwear. Favorable foreign exchange rate changes also added $12.9 million (or 3.6%) to overall revenue growth.
The U.S. business increased 11.1% and international markets jumped 30.7%, or 17.1% in constant dollars.
Global footwear revenue expanded 20.7% to $320.3 million, driven by strong growth in boots, men's and women's casual, kids' and outdoor performance categories. Global apparel and accessories revenue grew 2.9% to $91.0 million, driven by gains in the Company's Asian business, which offset declines in European apparel impacted by comparisons to strong prior year performance.
The U.S. business increased 11.1% and international markets jumped 30.7%, or 17.1% in constant dollars. The U.S. consumer direct business grew +11.2%, driven by a 5.9% increase in comparable store sales.
Operating profit for the quarter increased 48.2% to $62.2 million. 2002 fourth quarter operating profit was negatively impacted by approximately $6 million of incremental transportation costs related to the West Coast work stoppage. Excluding this impact, 2003 fourth quarter operating profit rose 29.6%. Profit gains reflected strong revenue growth and significant improvement in gross margin, which benefited from lower product related costs, lower levels of off-price sales and favorable foreign exchange rate changes. For the quarter, foreign exchange rate changes contributed approximately $3.1 million to operating profit, which was leveraged to support continued investments against strategic priorities, including international business expansion and global brand building efforts.
For the full year, Timberland posted revenue of $1,342.1 million, +12.7% versus prior year, or +8.0% in constant dollars), operating profit of $184.3 million (+32.8% versus prior year) and generated nearly $200 million in net operating cash flow – all records for the Company.
Jeffrey B. Swartz, Timberland's President and Chief Executive
Officer, stated, “Timberland's fourth quarter capped an outstanding
year for our Company driven by strong performance across global
markets. In the United States, our focus on driving footwear
innovation across our portfolio, combined with significantly improved
performance in Timberland's consumer direct business, enabled us to
deliver double-digit revenue gains in a competitive retail
marketplace. Timberland's international business also posted strong
results, reflecting double-digit constant dollar sales gains in Europe
and Asia as we continue to benefit from efforts to enhance our premium
integrated brand positioning in those regions.”
“Overall, we are pleased to have delivered strong financial
results in 2003 and believe that we are on track for solid business
growth in 2004. We remain committed to delivering solid revenue
growth, double-digit profit gains and strong cash flow in 2004 and
beyond — and 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.”
THE TIMBERLAND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
For the For the
Three Months Ended Twelve Months Ended
----------------------------------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2003 2002 2003 2002
----------------------------------------------
Revenue $415,433 $357,029 $1,342,123 $1,190,896
Cost of goods sold 218,780 207,354 717,666 672,610
-------- -------- ---------- ----------
Gross profit 196,653 149,675 624,457 518,286
-------- -------- ---------- ----------
Operating expense
Selling 110,244 88,079 356,447 306,962
General and
administrative 24,221 19,619 83,708 72,499
-------- -------- ---------- ----------
Total operating
expense 134,465 107,698 440,155 379,461
-------- -------- ---------- ----------
Operating income 62,188 41,977 184,302 138,825
-------- -------- ---------- ----------
Other expense (income)
Interest expense 272 252 1,039 884
Other, net 732 737 506 (828)
-------- -------- ---------- ----------
Total other
expense 1,004 989 1,545 56
-------- -------- ---------- ----------
Income before income
taxes 61,184 40,988 182,757 138,769
-------- -------- ---------- ----------
Provision for income
taxes 21,720 13,857 64,878 48,569
-------- -------- ---------- ----------
Income before
cumulative effect of
change in accounting
principle $ 39,464 $ 27,131 $ 117,879 $ 90,200
======== ======== ========== ==========
Cumulative effect of
change in accounting
principle - - - 4,913
-------- -------- ---------- ----------
Net income $ 39,464 $ 27,131 $ 117,879 $ 95,113
======== ======== ========== ==========
Earnings per share
before cumulative
effect of change in
accounting principle
Basic $ 1.13 $ .74 $ 3.32 $ 2.42
======== ======== ========== ==========
Diluted $ 1.10 $ .73 $ 3.23 $ 2.36
======== ======== ========== ==========
Earnings per share after
cumulative effect of
change in accounting
principle
Basic $ 1.13 $ .74 $ 3.32 $ 2.55
======== ======== ========== ==========
Diluted $ 1.10 $ .73 $ 3.23 $ 2.49
