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Comprehensive Financial Analysis: Columbia Sportswear vs. The Timberland Company

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A case study completed as part of the coursework for Principles of Accounting II (ACCT&202), a comparative analysis' having been submitted rather than the assigned analysis of a single company.

A case study completed as part of the coursework for Principles of Accounting II (ACCT&202), a comparative analysis' having been submitted rather than the assigned analysis of a single company.

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  • 1. Comprehensive Financial AnalysisColumbia Sportswear Company vs. The Timberland Company Prepared by Rachel Wilcox-Miano NSCC Accounting 202: Principles of Accounting II
  • 2. Comprehensive Financial Analysis Case Columbia vs. TimberlandTable of ContentsFinancial Analysis – Part IR1: Vertical and Horizontal Analysis ...........................................................................................................................2-5 Income Statement – Columbia Sportswear Company (Required)............................... 2 Income Statement – The Timberland Company (Supplemental) ................................ 2 Analysis ........................................................................................................................ 3 Columbia Sportswear Company (Required) – Balance Sheet, Analysis ....................... 4 The Timberland Company (Supplemental) – Balance Sheet, Analysis ........................ 5R2: Basic Earnings Per Share (EPS)................................................................................................................................. 6 Columbia Sportswear Company (Required) – Data ..................................................... 6 The Timberland Company (Supplemental) – Data ...................................................... 6 Analysis ........................................................................................................................ 6R3: Liquidity and Profitability Analysis – Working Capital, Ratios ................................................................................. 7 Columbia Sportswear Company (Required) – Data ..................................................... 7 The Timberland Company (Supplemental) – Data ...................................................... 7 Analysis ........................................................................................................................ 7R4: Market Analysis – Columbia Sportswear Company vs. Industry Averages .............................................................. 8 P/E, Dividends Per Share Data ..................................................................................... 8 Analysis/Evaluation ..................................................................................................... 8Financial Analysis – Part IIR1: Trend Analysis – Columbia vs. Timberland .........................................................................................................9-11 Discussion .................................................................................................................... 9 Common-size Income Statement ................................................................................ 9 Columbia Sportswear Company – Data, Analysis ...................................................... 10 The Timberland Company – Data, Analysis ............................................................... 11R2: Analyst’s Recommendation ................................................................................................................................... 12AppendicesAppendix A: Financial Reports, Columbia Sportswear Company ...........................................................................13-25 FY 2008 Annual Report – Financial Reports ................................................... 13, 15-19 FY 2007 Annual Report – Balance Sheet (FY 2006 Data) ........................................... 14Appendix B: Financial Reports, The Timberland Company .....................................................................................20-26 FY 2008 Annual Report – Financial Reports ................................................... 20, 22-26 FY 2007 10K – Balance Sheet (FY 2006 Data) ............................................................ 21 • 1 •
  • 3. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part I: Requirement 1R1: Vertical Analysis - Consolidated Income StatementColumbia Sportswear CompanyThe Timberland Company (Supplemental) • 2 •
  • 4. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part I: Requirement 1 (continued)AnalysisA vertical analysis of Columbia Sportswear’s Income Statement reveals that Cost of Sales was 56.9% of Net Salescompared with 57.2% in 2007, and 58.0% in 2006. Despite a decrease in Net Sales and Gross Profit from 2007 to2008, due to the reduction in Cost of Sales, Gross Profit was 43.1% of Net Sales in 2008, compared with only 42.8%in 2007 (and 42.0% in 2006).The increase in SG&A expense in 2008 over 2007, (the causes of which are explained in great detail in the Notes tothe Financial Statements in the FY 2008 Annual Report), as well as the impairment of goodwill and an acquiredpatent resulted in significantly reduced Income from Operations in 2008, which fell from 14.7% of Net Sales in2007 to a mere 9.0% in 2008.While on the surface these trends would tend to be cause for concern, a rapid comparison with one of ColumbiaSportswear’s biggest rivals for the outdoor apparel market, The Timberland Company, reveals that Columbia’ssituation, while somewhat in decline, is still significantly better than its competitor.Although vertical analysis of a company can be a useful tool to gauge its trends over time, it is an insufficient toolwith which to make an informed decision unless used in tandem with other evaluation methods. • 3 •
  • 5. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part I: Requirement 1 (continued)R1: Horizontal Analysis – Consolidated Balance SheetColumbia Sportswear CompanyAnalysisColumbia Sportswear’s 20.1% increase of Cash and Cash Equivalents in 2008 is offset by the significant liquidationof its short-term investments (a 72.5% reduction). Prepaid expenses and other current assets more than doubled,resulting in a reduced, but relatively stable, 1.5% reduction to Total Current Assets. The increased PPE was offsetby the impairment to both Goodwill and the patent, resulting in a 1.6% decline in Total Assets.Although the collective fluctuations to Columbia Sportswear’s liabilities could be considered volatile, after allchanges had been factored in, Total Liabilities increased just 4.0% over the course of the year.Despite Columbia Sportswear and Timberland’s having both implemented a significant stock repurchase, unlike itscompetitor, in 2008 Columbia Sportswear elected to record its substantial repurchase as a reduction to totalretained earnings rather than include a line item for Treasury Stock on its Balance Sheet, otherwise, as stated in itsNotes to Consolidated Financial Statements, the aggregate purchase price would have resulted in a negative stockcarrying amount. • 4 •
  • 6. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part I: Requirement 1 (continued)The Timberland Company (Supplemental)AnalysisA horizontal analysis of The Timberline Company’s Balance Sheet yields a somewhat somber result. Although thecompany appears stable with 1.6% growth overall, the decline in Inventory, Accounts Receivable, PPE and OtherAssets combined with a 51% growth in Cash and Cash Equivalents gives one the impression that the Timberland’smanagement is striving to increase its liquidity. Although in and of itself not a red flag, the company merits furtherinvestigation in order to determine the reasons behind this trend. • 5 •
  • 7. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part I: Requirement 2R2: Basic Earnings Per Share (EPS)Columbia Sportswear CompanyThe Timberland Company (Supplemental)AnalysisColumbia Sportswear’s EPS remained relatively stable from 2004-06 (with an average value of $3.41), experiencedan 18.0% increase in 2007 only to decline by an astounding 31.3% from 2007 to 2008. Because EPS is calculatedusing both Net Income as well as the number of shares of common stock outstanding, its decline can be attributedto the cumulative effects of reduced Net Income in 2008 coupled with Columbia Sportswear’s corporate stockrepurchasing plan.Again, a tacit examination of The Timberland Company’s historic EPS values puts Columbia’s situation in a betterlight. Not only is Timberland’s EPS consistently lower than that of Columbia Sportswear, it has been in steadydecline since 2006, which corresponds notably with the implementation of Columbia Sportswear’s aggressivecorporate marketing and expansion strategy, and raises the question of whether Timberland’s market share hassuffered because of it, or whether other factors influenced its decline. • 6 •
  • 8. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part I: Requirement 3R3: Liquidity and Profitability AnalysisColumbia Sportswear CompanyThe Timberland Company (Supplemental)AnalysisDue to a 1.5% decrease in Current Assets and a 4.0% increase in Current Liabilities in 2008, the current ratio forColumbia Sportswear fell 5.3% indicating a reduction in its liquidity; however, at 5.04, it remains strong. In mostcases, a 7.5% drop in the quick ratio would be cause for concern, but Columbia Sportswear’s stands a robust 3.19.The drop in both ROS and ROE can be attributed to the 34.2% reduction in Net Income combined with an 11.6%increase in SG&A expense, and indicate impaired profitability, but do not yet constitute a trend.In contrast, Timberland’s ratios, while acceptable, pale in comparison with Columbia’s performance overall. Sincehitting a 3-year low in 206, Timberland has been steadily increasing its working capital; ROE has been significantlyaffected by Timberland’s own stock repurchasing plan as well as its restructuring policies. • 7 •
  • 9. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part I: Requirement 4R4: Market AnalysisColumbia Sportswear CompanyAnalysisColumbia Sportswear’s P/E ratio and dividend yield outperform the industry average, which indicates thatinvestors are willing to pay more for its shares than for its competitors’.EvaluationAt 12.86, the 2008 P/E ratio for Columbia Sportswear is 7.17% higher than the industry average, indicating above-average investor interest. At 1.8%, the dividend yield is slightly higher than the industry average of 1.7%, indicatingthat the rate of return on an investment in Columbia Sportswear, while somewhat in line with its competitors, isstill the more favorable option. • 8 •
  • 10. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part II: Requirement 1R1: Trend Analysis – Columbia Sportswear vs. TimberlandDiscussionAlthough the generation of a common-size Income Statement was not a requirement, a comparative analysis ofColumbia Sportswear vs. Timberland would be incomplete without it. Through consolidation of certain elementsand a slight rearrangement of Timberland’s Consolidated Statement of Income, the results are as shown below.Despite higher Cost of Sales and Gross Profit percentages, Columbia Sportswear’s Income from Operationsoutperforms Timberland’s by a margin of 4.1%, in part due to higher SG&A expenses. Columbia Sportswear enjoysgreater interest income and benefitted from its treatment of the 2008 Income Tax expense to arrive at a NetIncome that was of a significantly greater percentage of Net Sales than that of Timberland. • 9 •
  • 11. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part II: Requirement 1 (continued)Columbia Sportswear CompanyAnalysisColumbia Sportswear’s Net Sales remain strong and exhibit continued growth despite a difficulteconomy; although Net Income has fallen drastically from 2007 to 2008, it is due in large part toimpaired goodwill and the impairment of an acquired patent that was determined to have no usebeyond 2009. The fall in Net Income has significantly affected both ROS and ROE, although both thecurrent and quick ratios remain relatively stable, and at very strong levels. EPS has also been affected bythe drop in Net Income, but the corporate stock repurchase plan also played a role in its decline. • 10 •
  • 12. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part II: Requirement 1 (continued)The Timberland CompanyAnalysisBy comparison, The Timberline Company appears to be in an overall decline despite strong current andquick ratios and a steady increase in working capital since hitting its 3-year low of $363M in 2006. EPS,ROS and ROE have all fallen significantly over the periods for which data is available. The strong currentand quick ratios offer hope to investors that the short-term effects of management decisions mighttranslate into an upward trend overall. • 11 •
  • 13. Comprehensive Financial Analysis Case Columbia vs. TimberlandFinancial Analysis – Part II: Requirement 2Analyst’s Recommendation • 12 •
  • 14. Appendix A: Financial Reports– Columbia Sportswear Company (Source: http://investor.columbia.com/annuals.cfm     COLUMBIA SPORTSWEAR COMPANY   CONSOLIDATED BALANCE SHEETS (In thousands) December 31, 2008 2007 ASSETS Current Assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 230,617 $ 191,950 Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,433 81,598 Accounts receivable, net (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299,585 300,506 Inventories, net (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256,312 265,874 Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,867 31,169 Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,705 14,567 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 872,519 885,664 Property, plant, and equipment, net (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229,693 210,450 Intangibles and other non-current assets (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,365 53,094 Goodwill (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,659 17,273 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,148,236 $1,166,481 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 104,354 $ 95,412 Accrued liabilities (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,085 62,549 Income taxes payable (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,718 7,436 Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,969 949 Other current liabilities (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 185 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,189 166,531 Income taxes payable (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,412 18,663 Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 8,968 Other long-term liabilities (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,545 2,198 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204,146 196,360 Commitments and contingencies (Note 11) Shareholders’ Equity: Preferred stock; 10,000 shares authorized; none issued and outstanding . . . . . . . . — — Common stock (no par value); 125,000 shares authorized; 33,865 and 35,824 issued and outstanding (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,481 17,004 Retained earnings (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909,443 895,476 Accumulated other comprehensive income (Note 14) . . . . . . . . . . . . . . . . . . . . . . 33,166 57,641 Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 944,090 970,121 Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,148,236 $1,166,481 See accompanying notes to consolidated financial statements. 41 •  13  •   
  • 15. Appendix A: Financial Reports– Columbia Sportswear Company (Source: http://investor.columbia.com/annuals.cfm     COLUMBIA SPORTSWEAR COMPANY   CONSOLIDATED BALANCE SHEETS (In thousands) December 31, 2007 2006 ASSETS Current Assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 191,950 $ 64,880 Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,598 155,170 Accounts receivable, net (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,506 285,858 Inventories, net (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265,874 212,323 Deferred income taxes (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,169 26,740 Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,567 12,713 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 885,664 757,684 Property, plant, and equipment, net (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,450 199,426 Intangibles and other non-current assets (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,094 52,681 Goodwill (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,273 17,498 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,166,481 $1,027,289 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Notes payable (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 3,540 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,412 88,107 Accrued liabilities (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,549 63,632 Income taxes payable (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,436 31,523 Deferred income taxes (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 949 948 Other (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 159 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,531 187,909 Other long-term liabilities (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,198 883 Deferred income taxes (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,968 7,794 Income taxes payable (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,663 — Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196,360 196,586 Commitments and contingencies (Note 12) Shareholders’ Equity: Preferred stock; 10,000 shares authorized; none issued and outstanding . . . . . . . . — — Common stock (no par value); 125,000 shares authorized; 35,824 and 35,998 issued and outstanding (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,004 24,370 Retained earnings (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 895,476 771,939 Accumulated other comprehensive income (Note 15) . . . . . . . . . . . . . . . . . . . . . . 57,641 34,394 Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970,121 830,703 Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,166,481 $1,027,289 See accompanying notes to consolidated financial statements. 39 •  14  •   
  • 16. Appendix A: Financial Reports– Columbia Sportswear Company (Source: http://investor.columbia.com/annuals.cfm     COLUMBIA SPORTSWEAR COMPANY   CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Year Ended December 31, 2008 2007 2006 Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,317,835 $1,356,039 $1,287,672 Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,024 776,288 746,617 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567,811 579,751 541,055 Selling, general, and administrative expenses . . . . . . . . . . . . . . . . . . . . . . 430,350 385,769 366,768 Impairment of acquired intangible assets (Note 2) . . . . . . . . . . . . . . . . . . 24,742 — — Net licensing income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,987 5,157 5,486 Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,706 199,139 179,773 Interest income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,537 8,888 5,562 Income before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,243 208,027 185,335 Income tax expense (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31,196) (63,575) (62,317) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,047 $ 144,452 $ 123,018 Earnings per share: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.75 $ 4.00 $ 3.39 Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.74 3.96 3.36 Cash dividends per share: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.64 $ 0.58 $ 0.14 Weighted average shares outstanding (Note 13): Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,610 36,106 36,245 Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,711 36,434 36,644 See accompanying notes to consolidated financial statements. 42 •  15  •   
  • 17. Appendix A: Financial Reports– Columbia Sportswear Company (FY08-AR, FY07-AR)Source: http://investor.columbia.com/annuals.cfm     COLUMBIA SPORTSWEAR COMPANY   CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2008 2007 2006 Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,047 $ 144,452 $ 123,018 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,158 30,338 23,547 Loss on disposal of property, plant, and equipment . . . . . . . . . . . . 253 237 705 Deferred income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . (10,338) 278 (2,429) Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,302 7,260 10,120 Excess tax benefit from employee stock plans . . . . . . . . . . . . . . . (72) (1,811) (2,148) Impairment of acquired intangibles . . . . . . . . . . . . . . . . . . . . . . . . 24,742 — — Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 302 Changes in operating assets and liabilities: Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,689) (3,093) 4,259 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,507 (46,010) (15,448) Prepaid expenses and other current assets . . . . . . . . . . . . . . . (15,787) (1,355) (898) Intangibles and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 101 592 (905) Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,944 1,381 1,930 Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,047) (4,400) 3,323 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,567 (5,665) 8,292 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,242 2,111 (559) Net cash provided by operating activities . . . . . . . . . . . 144,930 124,315 153,109 Cash flows from investing activities: Purchases of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . (72,337) (305,769) (346,615) Sales of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131,565 379,460 350,520 Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47,580) (31,971) (47,465) Acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (35,377) Proceeds from sale of licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1,700 Proceeds from sale of property, plant, and equipment . . . . . . . . . . . . . . 52 32 106 Net cash provided by (used in) investing activities . . . . 11,700 41,752 (77,131) Cash flows from financing activities: Proceeds from notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,727 30,651 43,585 Repayments on notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33,727) (34,276) (86,531) Repayment on long-term debt and other long-term liabilities . . . . . . . . (21) (22) (13,759) Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . 3,488 14,162 21,712 Excess tax benefit from employee stock plans . . . . . . . . . . . . . . . . . . . 72 1,811 2,148 Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (83,865) (31,819) (75,490) Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,098) (20,915) (5,026) Net cash used in financing activities . . . . . . . . . . . . . . . (102,424) (40,408) (113,361) Net effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . (15,539) 1,411 1,172 Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . 38,667 127,070 (36,211) Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . . . . . . . . . 191,950 64,880 101,091 Cash and cash equivalents, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 230,617 $ 191,950 $ 64,880 Supplemental disclosures of cash flow information: Cash paid during the year for interest, net of capitalized interest . . . . . $ 47 $ 148 $ 1,329 Cash paid during the year for income taxes . . . . . . . . . . . . . . . . . . . . . . 48,521 73,293 58,651 Supplemental disclosures of non-cash investing activities: Capital expenditures incurred but not yet paid . . . . . . . . . . . . . . . . . . . 6,760 2,318 3,444 Supplemental disclosures of non-cash financing activities: Assumption of Montrail debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 5,833 See accompanying notes to consolidated financial statements. 43 •  16  •   
  • 18. Appendix A: Financial Reports– Columbia Sportswear Company (FY08 FY07 )Source: http://investor.columbia.com/annuals.cfm     COLUMBIA SPORTSWEAR COMPANY   CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (In thousands) Accumulated Common Stock Other Shares Retained Comprehensive Comprehensive Outstanding Amount Earnings Income Income Total BALANCE, JANUARY 1, 2006 . . . . . . . 36,863 $ 13,104 $704,724 $ 24,962 $742,790 Components of comprehensive income: Net income . . . . . . . . . . . . . . . . . . . . . — — 123,018 — $123,018 123,018 Cash dividends ($0.14 per share) . . . . — — (5,026) — — (5,026) Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . — — — 11,167 11,167 11,167 Unrealized holding loss on derivative transactions, net . . . . . . . . . . . . . . . — — — (1,735) (1,735) (1,735) Comprehensive income . . . . . . . . . . . . . . . — — — — $132,450 — Exercise of employee stock options . . . . . . 682 21,712 — — 21,712 Tax benefit from stock plans . . . . . . . . . . . — 4,147 — — 4,147 Stock-based compensation expense . . . . . . — 10,120 — — 10,120 Repurchase of common stock . . . . . . . . . . . (1,547) (24,713) (50,777) — (75,490) BALANCE, DECEMBER 31, 2006 . . . . . 35,998 24,370 771,939 34,394 830,703 Components of comprehensive income: Net income . . . . . . . . . . . . . . . . . . . . . — — 144,452 — $144,452 144,452 Cash dividends ($0.58 per share) . . . . — — (20,915) — — (20,915) Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . — — — 25,394 25,394 25,394 Unrealized holding loss on derivative transactions, net . . . . . . . . . . . . . . . — — — (2,147) (2,147) (2,147) Comprehensive income . . . . . . . . . . . . . . . — — — — $167,699 — Issuance of common stock under employee stock plans, net . . . . . . . . . . . . . . . . . . . . 416 14,162 — — 14,162 Tax benefit from stock plans . . . . . . . . . . . — 3,031 — — 3,031 Stock-based compensation expense . . . . . . — 7,260 — — 7,260 Repurchase of common stock . . . . . . . . . . . (590) (31,819) — — (31,819) BALANCE, DECEMBER 31, 2007 . . . . . 35,824 17,004 895,476 57,641 970,121 Components of comprehensive income: Net income . . . . . . . . . . . . . . . . . . . . . — — 95,047 — $ 95,047 95,047 Cash dividends ($0.64 per share) . . . . — — (22,098) — — (22,098) Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . — — — (30,511) (30,511) (30,511) Unrealized holding gain on derivative transactions, net . . . . . . . . . . . . . . . — — — 6,036 6,036 6,036 Comprehensive income . . . . . . . . . . . . . . . — — — — $ 70,572 — Issuance of common stock under employee stock plans, net . . . . . . . . . . . . . . . . . . . . 131 3,488 — — 3,488 Tax adjustment from stock plans . . . . . . . . — (430) — — (430) Stock-based compensation expense . . . . . . — 6,302 — — 6,302 Repurchase of common stock . . . . . . . . . . . (2,090) (24,883) (58,982) — (83,865) BALANCE, DECEMBER 31, 2008 . . . . . 33,865 $ 1,481 $909,443 $ 33,166 $944,090 See accompanying notes to consolidated financial statements. 44 •  17  •   
  • 19. Appendix A: Financial Reports– Columbia Sportswear Company (FY08 FY07 )Source: http://investor.columbia.com/annuals.cfm     Item 6. SELECTED FINANCIAL DATA   Selected Consolidated Financial Data The selected consolidated financial data presented below for, and as of the end of, each of the years in the five-year period ended December 31, 2008 have been derived from our audited consolidated financial statements. The consolidated financial data should be read in conjunction with the Consolidated Financial Statements and Accompanying Notes that appear elsewhere in this annual report and Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 7. Year Ended December 31, 2008 2007 2006 (1) 2005 2004 (In thousands, except per share amounts) Statement of Operations Data: Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,317,835 $1,356,039 $1,287,672 $1,155,791 $1,095,307 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 95,047 144,452 123,018 130,736 138,624 Per Share of Common Stock Data: Earnings per share: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.75 $ 4.00 $ 3.39 $ 3.39 $ 3.44 Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . 2.74 3.96 3.36 3.36 3.40 Cash dividends per share . . . . . . . . . . . . . . . . 0.64 0.58 0.14 — — Weighted average shares outstanding: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,610 36,106 36,245 38,549 40,266 Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . 34,711 36,434 36,644 38,943 40,812 December 31, 2008 2007 2006 2005 2004 Balance Sheet Data: Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $1,148,236 $1,166,481 $1,027,289 $ 967,640 $ 947,625 Long-term obligations, net of current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . 15 61 136 7,414 12,636 (1) Effective January 1, 2006, we adopted the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123R, Share-Based Payment, under which compensation expense is recognized in the Consolidated Statement of Operations for the fair value of employee stock-based compensation. Prior to the adoption of SFAS No. 123R, we accounted for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. Accordingly, under APB Opinion No. 25, no compensation expense was recognized because the exercise price of our employee stock options was equal to the market price of the underlying stock on the date of grant. We applied the disclosure provisions of SFAS No. 123, Accounting for Stock Based Compensation, as amended by SFAS No. 148, Accounting for Stock Based Compensation—Transition and Disclosure, as if the fair value method had been applied in measuring compensation expense. See Note 12 of Notes to Consolidated Financial Statements for further discussion. 23 •  18  •   
  • 20. Appendix A: Financial Reports– Columbia Sportswear Company (FY08 FY07 )Source: http://investor.columbia.com/annuals.cfm     Performance Graph   The line graph below compares the cumulative total shareholder return of our Common Stock with the cumulative total return of the Standard & Poor’s (“S&P”) 400 Mid-Cap Index and the Russell 3000 Textiles Apparel Manufacturers for the period beginning December 31, 2003 and ending December 31, 2008. The graph assumes that $100 was invested on December 31, 2003, and that any dividends were reinvested. Historical stock price performance should not be relied on as indicative of future stock price performance. Columbia Sportswear Company Stock Price Performance December 31, 2003—December 31, 2008 Total Return to Stockholders (Assumes $100 investment on 12/31/03) $200 $150 $100 $50 $0 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 Columbia Sportswear Co. S&P 400 MidCap Index Russell 3000 Textiles Apparel Mfrs. Total Return Analysis 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 Columbia Sportswear Co. . . . . . . . . . . . . . . $100.00 $109.36 $ 87.58 $102.45 $ 81.91 $66.77 S&P 400 Mid-Cap Index . . . . . . . . . . . . . . . $100.00 $116.47 $131.09 $144.61 $156.14 $99.55 Russell 3000 Textiles Apparel Mfrs. . . . . . . $100.00 $128.84 $135.78 $174.78 $134.12 $78.91 Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this Annual Report on Form 10-K for information regarding our securities authorized for issuance under equity compensation plans. 21 •  19  •   
  • 21. Appendix B: Financial Reports – The Timberland Company (FY08-AR, FY07-10K)Source: http://www.timberland.com/category/index.jsp?categoryId=4304478   THE TIMBERLAND COMPANY   CONSOLIDATED BALANCE SHEETS   As of December 31, 2008 and 2007 2008 2007 (Dollars in thousands, except per share data) ASSETS Current assets Cash and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 217,189 $ 143,274 Accounts receivable, net of allowance for doubtful accounts of $14,482 in 2008 and $14,762 in 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168,666 188,091 Inventory, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,688 201,932 Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,139 41,572 Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,687 17,361 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,425 24,927 Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,109 — Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649,903 617,157 Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,526 87,919 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,528 19,451 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,870 44,840 Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,996 54,382 Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,576 12,596 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 849,399 $ 836,345 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 96,901 $ 86,101 Accrued expense Payroll and related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,587 29,752 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,503 79,151 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,697 19,215 Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,386 3,816 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,074 218,035 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,787 41,150 Commitments and contingencies Stockholders’ equity Preferred Stock, $.01 par value; 2,000,000 shares authorized; none issued . . . . . . . — — Class A Common Stock, $.01 par value (1 vote per share); 120,000,000 shares authorized; 73,806,026 shares issued at December 31, 2008 and 73,393,951 shares issued at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . 738 734 Class B Common Stock, $.01 par value (10 votes per share); convertible into Class A shares on a one-for-one basis; 20,000,000 shares authorized; 11,529,160 shares issued and outstanding at December 31, 2008 and 11,743,660 shares issued and outstanding at December 31, 2007 . . . . . . . . . . . . 115 117 Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260,267 251,063 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 918,039 875,133 Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,543 20,106 Treasury Stock at cost; 27,766,651 Class A shares at December 31, 2008 and 25,024,194 Class A shares at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . (615,164) (569,993) Total stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576,538 577,160 Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 849,399 $ 836,345 The accompanying notes are an integral part of these consolidated financial statements. 45 •  20  •   
  • 22. Appendix B: Financial Reports – The Timberland Company (FY08- FY07 )Source: http://www.timberland.com/category/index.jsp?categoryId=4304478       •  21  •   
  • 23. Appendix B: Financial Reports – The Timberland Company (FY08-AR, FY07-10K)Source: http://www.timberland.com/category/index.jsp?categoryId=4304478   THE TIMBERLAND COMPANY   CONSOLIDATED STATEMENTS OF INCOME   For the Years Ended December 31, 2008, 2007 and 2006 2008 2007 2006 (Amounts in thousands, except per share data) Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,364,550 $1,436,451 $1,567,619 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 743,817 771,723 823,446 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620,733 664,728 744,173 Operating expense Selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 437,730 464,689 452,236 General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . .... 113,011 116,201 125,433 Litigation settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... (2,630) — — Impairment of intangible asset . . . . . . . . . . . . . . . . . . . . . . . .... 2,061 — — Restructuring and related costs . . . . . . . . . . . . . . . . . . . . . . .... 925 24,659 3,868 Total operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551,097 605,549 581,537 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,636 59,179 162,636 Other income Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,371 2,545 2,665 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (652) (1,710) (1,699) Other income/(expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,455 (289) (5,962) Total other income/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . . 7,174 546 (4,996) Income before provision for income taxes . . . . . . . . . . . . . . . . . . . . 76,810 59,725 157,640 Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,904 19,726 56,435 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,906 $ 39,999 $ 101,205 Earnings per share Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... $ 0.73 $ 0.65 $ 1.62 Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... $ 0.73 $ 0.65 $ 1.59 Weighted-average shares outstanding Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 58,442 61,087 62,510 Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 58,786 61,659 63,690 The accompanying notes are an integral part of these consolidated financial statements. 46 •  22  •   
  • 24. Appendix B: Financial Reports – The Timberland Company (FY08-AR, FY07-10K)Source: http://www.timberland.com/category/index.jsp?categoryId=4304478   THE TIMBERLAND COMPANY   CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY   For the Years Ended December 31, 2008, 2007 and 2006 Accumulated Class A Class B Additional Other Total Common Common Paid-in Deferred Retained Comprehensive Treasury Comprehensive Stockholders’ Stock Stock Capital Compensation Earnings Income/(Loss) Stock Income Equity (Dollars in thousands) Balance, January 1, 2006 . . . . . . $718 $117 $214,483 $(19,943) $737,257 $ 2,954 $(407,665) $ 527,921 Reclassification of deferred compensation . . . . . . . . . . .. — — (19,943) 19,943 — — — — Issuance of shares of common stock . . . . . . . . . . . . . . . .. 9 — 6,842 — — — 9,553 16,404 Repurchase of common stock . .. — — — — — — (119,450) (119,450) Share-based compensation expense . . . . . . . . . . . . . .. — — 18,918 — — — — 18,918 Tax benefit from stock option plans . . . . . . . . . . . . . . . .. — — 4,311 — — — — 4,311 Comprehensive income: Net income . . . . . . . . . . . .. — — — — 101,205 — — $101,205 101,205 Translation adjustment . . . . .. — — — — — 12,376 — 12,376 12,376 Comprehensive income . . . . . . . — — — — — — — $113,581 — Balance, December 31, 2006 . . . 727 117 224,611 — 838,462 15,330 (517,562) 561,685 Impact of adoption of FIN 48 . . . — — — — (3,328) — — (3,328) Issuance of shares of common stock . . . . . . . . . . . . . . . . . 7 — 13,096 — — — — 13,103 Cancellation/surrender of shares of common stock . . . . . . . . . — — 4,381 — — — (7,371) (2,990) Repurchase of common stock . . . — — — — — — (45,060) (45,060) Share-based compensation expense . . . . . . . . . . . . . . . — — 8,969 — — — — 8,969 Tax benefit from share-based compensation . . . . . . . . . . . . — — 6 — — — — 6 Comprehensive income: Net income . . . . . . . . . . . . . — — — — 39,999 — — $ 39,999 39,999 Translation adjustment . . . . . . — — — — — 8,401 — 8,401 8,401 Change in fair value of cash flow hedges, net of taxes . . . — — — — — (3,625) — (3,625) (3,625) Comprehensive income . . . . . . . — — — — — — — $ 44,775 — Balance, December 31, 2007 . . . 734 117 251,063 — 875,133 20,106 (569,993) 577,160 Issuance/conversion of shares of common stock . . . . . . . . . . . 4 (2) 2,121 — — — — 2,123 Cancellation/surrender of shares of common stock . . . . . . . . . — — — — — — (410) (410) Repurchase of common stock . . . — — — — — — (44,761) (44,761) Share-based compensation expense . . . . . . . . . . . . . . . — — 8,166 — — — — 8,166 Tax deficiency from share-based compensation . . . . . . . . . . . . — — (1,083) — — — — (1,083) Comprehensive income: Net income . . . . . . . . . . . . . — — — — 42,906 — — $ 42,906 42,906 Translation adjustment . . . . . . — — — — — (15,955) — (15,955) (15,955) Change in fair value of cash flow hedges, net of taxes . . . — — — — — 8,254 — 8,254 8,254 Other adjustment, net of taxes . . . . . . . . . . . . . . . . — — — — — 138 — 138 138 Comprehensive income . . . . . . . — — — — — — — $ 35,343 — Balance, December 31, 2008 . . . $738 $115 $260,267 $ — $918,039 $ 12,543 $(615,164) $ 576,538 The accompanying notes are an integral part of these consolidated financial statements. 47 •  23  •   
  • 25. Appendix B: Financial Reports – The Timberland Company (FY08-AR, FY07-10K)Source: http://www.timberland.com/category/index.jsp?categoryId=4304478   THE TIMBERLAND COMPANY   CONSOLIDATED STATEMENTS OF CASH FLOWS   For the Years Ended December 31, 2008, 2007 and 2006 2008 2007 2006 (Dollars in thousands) Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,906 $ 39,999 $ 101,205 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,784 1,007 (11,207) Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,518 9,051 19,610 Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,345 31,307 27,885 Provision for losses on accounts receivable . . . . . . . . . . . . . . . . . . . 7,575 7,406 5,661 Provision for asset impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,061 5,817 — Litigation settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,630) — — Tax expense from share-based compensation, net of excess benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,254) (1,095) (95) Unrealized (gain)/loss on derivatives . . . . . . . . . . . . . . . . . . . . . . . . (131) (2,749) 8,793 Other non-cash charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,428 3,798 686 Increase/(decrease) in cash from changes in working capital: Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,847 17,247 (32,953) Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,789 (12,010) (16,315) Prepaid expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,963 154 (6,395) Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,533 (26,155) 9,728 Accrued expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,809 (16,496) 18,070 Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (767) 4,462 (3,013) Income taxes prepaid and payable, net . . . . . . . . . . . . . . . . . . . . 7,944 (23,135) (9,970) Net cash provided by operating activities . . . . . . . . . . . . . . . . . 147,720 38,608 111,690 Cash flows from investing activities: Acquisition of business and purchase price adjustments, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970 (12,843) (6,381) Additions to property, plant and equipment . . . . . . . . . . . . . . . . . . . . . (22,316) (30,479) (36,590) Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 (1,073) (4,409) Net cash used by investing activities . . . . . . . . . . . . . . . . . . . . (21,205) (44,395) (47,380) Cash flows from financing activities: Common stock repurchases . . . . . . . . . . . . . . . . . . . . . . . ......... (46,261) (47,748) (120,719) Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . ......... 1,875 12,574 16,407 Excess tax benefit from share-based compensation . . . . . . ......... 183 1,101 4,406 Net cash used by financing activities . . . . . . . . . . . ......... (44,203) (34,073) (99,906) Effect of exchange rate changes on cash and equivalents. . . . . . . . . . . . . (8,397) 1,436 4,131 Net increase/(decrease) in cash and equivalents . . . . . . . . . . . . . . . . . . . 73,915 (38,424) (31,465) Cash and equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . 143,274 181,698 213,163 Cash and equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . $217,189 $143,274 $ 181,698 Supplemental disclosures of cash flow information: Interest paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 486 $ 1,564 $ 1,569 Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,863 $ 40,453 $ 73,341 The accompanying notes are an integral part of these consolidated financial statements. 48 •  24  •   
  • 26. Appendix B: Financial Reports – The Timberland Company (FY08- FY07 )Source: http://www.timberland.com/category/index.jsp?categoryId=4304478   ISSUER PURCHASES OF EQUITY SECURITIES     The Company made no repurchases of its common shares during the quarter ended December 31, 2008. See Note 12 to our consolidated financial statements, entitled “Stockholders’ Equity”, in Part II, Item 8 of this Annual Report on Form 10-K for additional information regarding activity under our repurchase programs and shares available under such programs as of December 31, 2008. ITEM 6. SELECTED FINANCIAL DATA The following selected financial data should be read in conjunction with our consolidated financial statements and related notes, included in Part II, Item 8 of this Annual Report on Form 10-K. Selected Statement of Income Data Years Ended December 31, 2008 2007 2006(1) 2005 2004 (Dollars in thousands, except per share data) Revenue . . . . . . . . . . . . . . . . . . . . . . . $1,364,550 $1,436,451 $1,567,619 $1,565,681 $1,500,580 Net income . . . . . . . . ............. 42,906 39,999 101,205 180,216 145,114 Earnings per share Basic . . . . . . . . . . ............. $ 0.73 $ 0.65 $ 1.62 $ 2.72 $ 2.08 Diluted . . . . . . . . . ............. $ 0.73 $ 0.65 $ 1.59 $ 2.66 $ 2.03 (1) Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards 123(R), Share-Based Payment. See Note 13 to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K. Selected Consolidated Balance Sheet Data December 31, 2008 2007 2006 2005 2004 (Dollars in thousands) Cash and equivalents . . . . . . . . . . . . . . . . . . . . $217,189 $143,274 $181,698 $213,163 $309,116 Working capital . . . . . . . . . . . . . . . . . . . . . . . . 417,829 399,122 363,143 369,176 417,176 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 849,399 836,345 860,377 790,699 751,642 Total long-term obligations . . . . . . . . . . . . . . . . — — — — — Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . 576,538 577,160 561,685 527,921 507,414 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management’s discussion and analysis of the financial condition and results of operations of The Timberland Company and its subsidiaries (“we”, “our”, “us”, “its”, “Timberland” or the “Company”), as well as our liquidity and capital resources. The discussion, including known trends and uncertainties identified by management, should be read in conjunction with the consolidated financial statements and related notes included in this Annual Report on Form 10-K. Included herein with respect to 2008 versus 2007 and 2007 versus 2006 comparisons are discussions and reconciliations of (i) total Company, Europe and Asia revenue changes to constant dollar revenue changes; and (ii) net income and diluted earnings per share (“EPS”) to net income excluding restructuring and related costs and diluted EPS excluding restructuring and related costs, respectively. Constant dollar revenue changes, which exclude the impact of changes in foreign exchange rates, and net income and diluted EPS, each excluding restructuring and related costs are not performance measures recognized under generally accepted accounting principles in the United States (“GAAP”). The difference between changes in reported revenue (the most comparable GAAP measure) and constant dollar revenue changes is the impact of movement in foreign currencies. We provide constant dollar revenue changes for total Company, Europe and Asia results because we use the measure to understand the underlying changes in our 25 •  25  •   
  • 27. Appendix B: Financial Reports – The Timberland Company (FY08- FY07 )Source: http://www.timberland.com/category/index.jsp?categoryId=4304478   Performance Graph   The following graph shows the five year cumulative total return of Class A Common Stock as compared   with the Standard & Poor’s (S&P) 500 Stock Index and the weighted average of the S&P 500 Footwear Index and the S&P 500 Apparel, Accessories and Luxury Goods Index. The total return for the Footwear and Apparel, Accessories and Luxury Goods indices is weighted in proportion to the percent of the Company’s revenue derived from sales of footwear and from apparel and accessories (excluding royalties on products sold by licensees), respectively, for each year. 200 150 100 50 0 20031 2004 2005 2006 2007 2008 Timberland S&P 500 Index Weighted Average of S&P 500 Footwear Index and S&P 500 Apparel, Accessories & Luxury Goods Index 2003(1) 2004 2005 2006 2007 2008 Timberland . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 120.36 125.02 121.30 69.44 44.36 S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 110.88 116.33 134.70 142.10 89.53 Weighted Average of S&P 500 Footwear Index and S&P 500 Apparel, Accessories & Luxury Goods Index . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 130.81 132.35 159.86 179.68 141.35 (1) Indexed to December 31, 2003. 24 •  26  •