The Timberland Company reported results for the quarter and year ended December 31, 2002. For the fourth quarter of 2002, Timberland earned $27.1 million, or $0.73 per share diluted ($0.74 basic), compared with net income of $30.2 million, or $0.77 per share diluted ($0.79 basic), for the fourth quarter of 2001. Revenue for the fourth quarter of 2002 totaled $357.0 million, 4.7 percent higher than the $341.1 million reported for the fourth quarter of 2001. Timberland ended the quarter with $141.2 million in cash and no debt outstanding. Over the last twelve months, the Company has improved its net cash position by $35.5 million while investing $101.2 million in share repurchases.
Domestic revenue for the fourth quarter of 2002 was $262.0 million, 1.0 percent higher than the $259.5 million reported for the fourth quarter of 2001. International revenue for the quarter increased 16.4 percent to $95.0 million, compared with $81.6 million for the prior-year period. On a constant dollar basis, international revenue increased 8.8 percent. International revenue comprised 26.6 percent of total fourth quarter 2002 revenue, compared with 23.9 percent for the fourth quarter of 2001.
Worldwide footwear revenue for the fourth quarter of 2002 was $265.3 million, 4.1 percent higher than the $254.8 million reported for the fourth quarter of 2001. Worldwide apparel and accessories revenue for the quarter increased 6.2 percent to $88.4 million, compared with $83.3 million for the 2001 fourth quarter.
Worldwide wholesale revenue for the fourth quarter of 2002 was $239.7 million, 5.8 percent higher than the $226.7 million reported for the fourth quarter of 2001. Worldwide retail revenue for the quarter increased 2.5 percent to $117.3 million, compared to the $114.4 million reported for the fourth quarter of 2001. U.S. wholesale revenue for the 2002 fourth quarter increased 2.6 percent to $184.0 million, compared with the $179.4 million reported for the fourth quarter of 2001. U.S. consumer direct revenue for the 2002 fourth quarter decreased 2.6 percent to $78.0 million, compared with $80.1 million for the 2001 fourth quarter. Domestic comparable store sales for the quarter decreased by 5.8 percent.
For the full year 2002, Timberland earned $95.1 million, or $2.49 per share diluted ($2.55 basic), compared with net income of $106.7 million, or $2.65 per share diluted ($2.73 basic) for 2001. Earnings for 2002 included a $4.9 million after-tax gain ($0.13 per share diluted) related to the Company’s adoption of Statement of Financial Accounting Standards 141. Net income for 2002, excluding this cumulative effect of change in accounting principle, was $90.2 million, or $2.36 per share diluted ($2.42 basic). Earnings per share for 2002 benefited from the repurchase of 838 thousand shares in the fourth quarter and 2.8 million shares for the year.
Revenue for the 2002 full year was $1,190.9 million, 0.6 percent higher than the $1,183.6 million reported for 2001.
Jeffrey B. Swartz, Timberland’s President and Chief Executive Officer, stated, “We are pleased to have delivered record revenues and strong cash management in the fourth quarter, despite challenging market conditions. Our better than expected performance reflects solid progress on key strategic fronts — including expanding our international operations, strengthening our U.S. footwear business, and extending our brand reach through the development of our apparel and accessories businesses, while continuing to advance our efforts to make a positive difference in our community.”
“We plan to build on this positive momentum in 2003. Based on our current indicators, we are targeting low double-digit revenue growth for the first half of this year. For the second half of 2003, we continue to maintain a prudent outlook on growth and believe that mid single-digit revenue growth represents an appropriate goal for our business. Consistent with our long-term financial objectives, we are targeting moderate improvements in operating margins as we move forward. While these goals will be challenging given current economic and political conditions around the world, we remain committed to delivering strong financial results to our shareholders and believe we are on the right path to capturing Timberland’s broad range of growth opportunities.”
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, 2002 2001 2002 2001 Revenue $357,029 $341,125 $1,190,896 $1,183,623 Cost of goods sold 207,354 195,294 672,610 662,848 Gross profit 149,675 145,831 518,286 520,775 Operating expense Selling 88,079 81,772 306,962 291,953 General and administrative 19,619 17,193 72,499 64,644 Amortization of goodwill - 271 - 1,085 Total operating expense 107,698 99,236 379,461 357,682 Operating income 41,977 46,595 138,825 163,093 Other expense (income) Interest expense 252 501 884 1,560 Other, net 737 318 (828) (196) Total other expense (income) 989 819 56 1,364 Income before income taxes 40,988 45,776 138,769 161,729 Provision for income taxes 13,857 15,564 48,569 54,988 Net income before cumulative effect of change in accounting principle $ 27,131 $ 30,212 $ 90,200 $106,741 Cumulative effect of change in accounting principle - - 4,913 - Net income $27,131 $30,212 $95,113 $106,741