The Timberland Company provided its preliminary estimated impact from the European Commission's decision to impose provisional duties on leather upper footwear originating from China and Vietnam and imported into European Member States. These provisional duties are expected to be effective for a six-month period beginning on April 7, 2006, and phased in over a period of five months, beginning at a rate of about 4% and ending at a 19.4% rate for China sourced footwear and at a 16.8% rate for Vietnam sourced footwear. These duties may become definitive on or before October 7, 2006.
While Timberland is advancing strategies in response to this action, including potential price increases on footwear products sold in Europe, its preliminary estimate is that the implementation of such duties will likely reduce its 2006 operating profits in the range of $10 million.
Jeffrey B. Swartz, Timberland's President and Chief Executive Officer, stated “As a premium footwear provider, we do not believe that our footwear is being imported into Europe at below market costs, and we believe that the imposition of percentage duties disproportionately impacts premium branded footwear companies, like Timberland, which have not caused injury to Europe-based footwear manufacturers. While we are disappointed by the decision of the European Commission, we will continue to work with the Commission to put forth our position with a view to finding a constructive solution.”
