The Timberland Company third-quarter net income was $51.9 million and diluted earnings per share was 82 cents, compared with third-quarter 2005 net income of $69.2 million and diluted EPS of $1.02, or $1.01 when adjusted to exclude restructuring and related costs and include stock option and employee stock purchase plan expenses.

Third-quarter revenues were down slightly as gains in new brands – including SmartWool – Timberland apparel, casual footwear, and Timberland PRO series were offset by anticipated declines in boots and kids' sales. Foreign exchange rate changes increased third-quarter revenues by approximately $7.9 million, or 1.5% due to the strength of the Euro and the British Pound, but had limited impact on its profitability as a result of the Company's hedging program.

International revenue increased 6.9%, or 3.6% on a constant dollar basis, supported by growth in southern Europe, distributor markets, Canada, and Japan. U.S. revenues decreased 7.2%, due primarily to lower boots and kids' sales, which offset benefits from the addition of the SmartWool® brand to the Company's product portfolio and strong growth in key expansion categories such as Timberland PRO® series footwear and Timberland® apparel.

Third-quarter results reflected global gains in apparel and accessories revenue, which partially offset anticipated declines in footwear revenue. Apparel and accessories revenue increased 27.5% to $129.4 million supported by the addition of the SmartWool® brand and growth in Timberland® apparel sales globally. Global footwear revenues fell 7.8% to $368.0 million as gains in casual footwear and Timberland PRO® series partially offset declines in boots and kids' sales.

Global wholesale revenue decreased by 1.0% to $416.2 million. Worldwide consumer direct revenue increased by 1.3% to $86.8 million, reflecting gains in international retail and U.S. e-commerce which offset declines in U.S. outlet store sales.

Operating profit for the quarter was $80.8 million, down 23.1% from $105.1 million in the prior year, but was better than anticipated due in part to lower than expected markdowns and closeout sales, reflecting benefits from disciplined inventory management efforts.

Timberland repurchased 929 thousand shares in the third quarter at a total cost of $25.2 million. It ended the quarter with $61.9 million in cash and $54.2 million in short-term debt as a result of seasonal working capital needs, and effectively controlled working capital levels. Inventory at quarter end was $250.5 million, 3.3% higher than at the end of the 2005 third quarter. Accounts receivable increased 10.8% to $330.4 million, reflecting later timing of shipments in the quarter.

While pleased with its continuing progress on key strategic fronts, Timberland is maintaining a cautious outlook and is now targeting fourth-quarter revenue growth in the mid-single digit range. This outlook reflects expectations for relatively flat U.S. growth, which will offset targeted double-digit gains in its international business. The Company also expects continued pressure on gross margins, in the range of 200 basis points for the fourth quarter, reflecting anticipated business mix changes and an estimated $3 million of costs associated with the implementation of definitive anti-dumping duties on European Union footwear sourced in China and Vietnam.

Considering these factors, for the full year the Company now expects declines in comparable EPS performance in the 30% range. For the purpose of EPS comparisons, Timberland estimates that its 2005 EPS would have been approximately $2.35 after excluding restructuring and related costs and including costs related to stock options and its employee stock purchase plan.

Timberland anticipates continued pressure on operating profit through the first half of 2007. While investing to drive growth across casual, outdoor and industrial categories, it expects continued pressure on boots and kids' sales, which will likely constrain overall first-half revenue growth to the low-single digit range. The Company also anticipates continued pressure on gross margins reflecting impacts from the implementation of the definitive European Union anti-dumping duties, which will add approximately $5 million to first-half costs, as well as effects from rising material costs and wage pressures in Asia.

The Company intends to leverage its strategic actions to drive positive revenue and earnings gains in the second half of 2007, but its preliminary outlook is that first-half profit pressures will likely limit full-year 2007 earnings per share to prior-year levels.

Jeffrey B. Swartz, Timberland's President and Chief Executive Officer, stated, “We are pleased with our progress in strengthening Timberland's foundation for growth. We are driving continued progress against our strategies to expand Timberland's business portfolio with casual, outdoor and industrial consumers, and to strengthen our foundation for long-term growth in the U.S. urban business. We also continue to expand our presence globally, with international sales approaching nearly 50% of Timberland's overall business. This progress reflects our intense focus on discrete consumer segmentation and leverage of the innovation capability which is at the core of Timberland's products, heritage and long-term success. While we anticipate continued near-term pressures on our financial results, the strategies we are advancing are gaining traction and positioning us to capture the significant potential we see for our brand and enterprise.”

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

                          For the Three Months  For the Nine Months
                                  Ended                 Ended
                          -------------------- -----------------------
                          September  September September   September
                           29, 2006   30, 2005   29, 2006    30, 2005
                          ---------- --------- ----------- -----------
Revenue                   $ 502,980  $505,913  $1,079,396  $1,100,393
Cost of goods sold          266,324   258,555     563,816     547,894
                          ---------- --------- ----------- -----------

 Gross profit               236,656   247,358     515,580     552,499
                          ---------- --------- ----------- -----------

Operating expense
 Selling                    123,660   111,259     324,014     297,236
 General and
  administrative             32,300    28,462      88,568      77,304
 Restructuring and
  related costs                 (92)    2,531         820       2,531
                          ---------- --------- ----------- -----------
   Total operating
    expense                 155,868   142,252     413,402     377,071
                          ---------- --------- ----------- -----------

Operating income             80,788   105,106     102,178     175,428
                          ---------- --------- ----------- -----------

Other income/(expense)
  income/(expense), net        (308)      570       1,463       2,734
 Other, net                     494      (900)      2,087         238
                          ---------- --------- ----------- -----------
   Total other
    income/(expense)            186      (330)      3,550       2,972
                          ---------- --------- ----------- -----------

Income before provision
 for income taxes            80,974   104,776     105,728     178,400

Provision for income
 taxes                       29,099    35,624      37,639      60,656
                          ---------- --------- ----------- -----------

Net income                $  51,875  $ 69,152  $   68,089  $  117,744
                          ========== ========= =========== ===========

Earnings per share
 Basic                    $     .84  $   1.04  $     1.08  $     1.76
 Diluted                  $     .82  $   1.02  $     1.06  $     1.72

Weighted-average shares
 Basic                       62,120    66,175      62,910      66,892
 Diluted                     63,062    67,697      64,069      68,359