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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 28, 2001
or

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number 1-9548

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The Timberland Company

(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

02-0312554(IRS Employer Identification Number)200 Domain Drive, Stratham,
New Hampshire(Address of principal executive offices)

03885(Zip Code)


(603) 772-9500Registrant's telephone number, including area code:

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes /x/  No / /

On
October 19, 2001, 30,885,865 shares of the registrant's Class A Common Stock were outstanding and 7,932,018 shares of the registrant's Class B Common Stock
were outstanding.

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THE TIMBERLAND COMPANY  FORM 10-Q  TABLE OF CONTENTS

|                                         |                                                                                                                             | Page(s)
|---------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | -------
|Part I Financial Information (unaudited) |                                                                                                                             |        
|                                         | Condensed Consolidated Balance Sheets 
September 28, 2001 and December 31, 2000                                            |        
|                                         | Condensed Consolidated Statements of Income 
For the three and nine months ended September 28, 2001
and September 29, 2000 |        
|                                         | Condensed Consolidated Statements of Cash Flows 
For the nine months ended September 28, 2001 and
September 29, 2000       |        
|                                         | Notes to Condensed Consolidated Financial Statements                                                                        |        
|                                         | Management's Discussion and Analysis of Financial
Condition and Results of Operations                                       |        
|Part II Other Information                |                                                                                                                             | 14     

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Part I Financial Information

THE TIMBERLAND COMPANY  CONDENSED CONSOLIDATED BALANCE SHEETS  ASSETS  (Dollars in Thousands)  (Unaudited)

|                                                           |                                                                                                                               | September 28,
2001                |          | December 31,
2000 |         
|---------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | -------- | ----------------- | --------
|Current assets                                             |                                                                                                                               |                                   |          |                   |         
|                                                           | Cash and equivalents                                                                                                          |                                   | $ 15,752 |                   | $114,852
|                                                           | Accounts receivable, net of allowance for doubtful accounts of
  $6,534 at September 28, 2001 and $5,825 at December 31, 2000 |                                   | 257,911  |                   | 105,727 
|                                                           | Inventory                                                                                                                     |                                   | 184,234  |                   | 131,917 
|                                                           | Prepaid expense                                                                                                               |                                   | 17,506   |                   | 13,717  
|                                                           | Prepaid income taxes                                                                                                          |                                   | 17,369   |                   | 15,547  
|                                                           | Other assets                                                                                                                  |                                   | 1,388    |                   |        
|                                                           |                                                                                                                               |                                   |          |                   |         
|                                                           |                                                                                                                               | Total current assets              |          | 494,160           |         
|                                                           |                                                                                                                               |                                   |          |                   |         
|Property, plant and equipment                              |                                                                                                                               | 164,096                           |          | 150,462           |         
|Less accumulated depreciation and amortization             |                                                                                                                               | (88,031                           | )        | (76,817           | )       
|                                                           |                                                                                                                               |                                   |          |                   |         
|                                                           |                                                                                                                               | Net property, plant and equipment |          | 76,065            |         
|Excess of cost over fair value of net assets acquired, net |                                                                                                                               | 14,584                            |          | 15,848            |         
|Other assets, net                                          |                                                                                                                               | 7,925                             |          | 5,058             |         
|                                                           |                                                                                                                               |                                   |          |                   |         
|                                                           |                                                                                                                               | Total assets                      |          | $592,734          |         
|                                                           |                                                                                                                               |                                   |          |                   |         

See
accompanying notes to condensed consolidated financial statements.

1

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THE TIMBERLAND COMPANY  CONDENSED CONSOLIDATED BALANCE SHEETS  LIABILITIES AND STOCKHOLDERS' EQUITY  (Dollars in Thousands, Except Per Share Data)  (Unaudited)

|                                                           |                                                                                                                                                                                                                                          | September 28,
2001  |                                            | December 31,
2000 |         
|---------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | ------------------------------------------ | ----------------- | --------
|Current liabilities                                        |                                                                                                                                                                                                                                          |                     |                                            |                   |         
|                                                           | Notes payable                                                                                                                                                                                                                            |                     | $ 65,000                                   |                   | $      
|                                                           | Accounts payable                                                                                                                                                                                                                         |                     | 52,002                                     |                   | 49,437  
|                                                           | Accrued expense                                                                                                                                                                                                                          |                     |                                            |                   |         
|                                                           |                                                                                                                                                                                                                                          | Payroll and related |                                            | 25,452            |         
|                                                           |                                                                                                                                                                                                                                          | Other               |                                            | 55,319            |         
|                                                           | Income taxes payable                                                                                                                                                                                                                     |                     | 30,167                                     |                   | 19,349  
|                                                           |                                                                                                                                                                                                                                          |                     |                                            |                   |         
|                                                           |                                                                                                                                                                                                                                          |                     | Total current liabilities                  |                   | 227,940 
|                                                           |                                                                                                                                                                                                                                          |                     |                                            |                   |         
|Deferred compensation                                      |                                                                                                                                                                                                                                          | 2,274               |                                            |                  |         
|Deferred income taxes                                      |                                                                                                                                                                                                                                          | 9,392               |                                            | 8,975             |         
|Excess of fair value of acquired net assets over cost, net |                                                                                                                                                                                                                                          | 5,063               |                                            | 5,512             |         
|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; 40,402,636 shares issued at September 28, 2001 and 39,833,928 shares at December 31, 2000                                                        |                     | 404                                        |                   | 398     
|                                                           | 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; 7,932,018 shares issued at September 28, 2001 and 7,932,900 shares at December
31, 2000 |                     | 79                                         |                   | 79      
|                                                           | Additional paid-in capital                                                                                                                                                                                                               |                     | 124,341                                    |                   | 109,756 
|                                                           | Deferred compensation                                                                                                                                                                                                                    |                     | (3,438                                     | )                 | (4,373  
|                                                           | Retained earnings                                                                                                                                                                                                                        |                     | 480,500                                    |                   | 403,972 
|                                                           | Accumulated other comprehensive loss                                                                                                                                                                                                     |                     | (8,287                                     | )                 | (7,292  
|                                                           | Less treasury stock at cost, 9,521,137 Class A shares at September 28, 2001 and 8,151,039 Class A shares at December 31, 2000                                                                                                            |                     | (245,534                                   | )                 | (185,789
|                                                           |                                                                                                                                                                                                                                          |                     |                                            |                   |         
|                                                           |                                                                                                                                                                                                                                          | 348,065             |                                            | 316,751           |         
|                                                           |                                                                                                                                                                                                                                          |                     |                                            |                   |         
|                                                           |                                                                                                                                                                                                                                          |                     | Total liabilities and stockholders' equity |                   | $592,734
|                                                           |                                                                                                                                                                                                                                          |                     |                                            |                   |         

See
accompanying notes to condensed consolidated financial statements.

2

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THE TIMBERLAND COMPANY  CONDENSED CONSOLIDATED STATEMENTS OF INCOME  (Amounts in Thousands, Except Per Share Data)  (Unaudited)

|                                                                           |                            | For the
Three Months Ended           |         | For the
Nine Months Ended |        
|-------------------------------------------------------------------------- | -------------------------- | ------------------------------------ | ------- | ------------------------- | -------
|
|Revenue                                                                    |                            | $396,219                             |         | $375,246                  |        
|Cost of goods sold                                                         |                            | 221,645                              |         | 197,094                   |        
|                                                                           |                            |                                      |         |                           |        
|                                                                           | Gross profit               |                                      | 174,574 |                           | 178,152
|                                                                           |                            |                                      |         |                           |        
|Operating expense                                                          |                            |                                      |         |                           |        
|                                                                           | Selling                    |                                      | 82,673  |                           | 75,197 
|                                                                           | General and administrative |                                      | 16,357  |                           | 15,999 
|                                                                           | Amortization of goodwill   |                                      | 271     |                           | 321    
|                                                                           |                            |                                      |         |                           |        
|                                                                           |                            | Total operating expense              |         | 99,301                    |        
|                                                                           |                            |                                      |         |                           |        
|                                                                           |                            | Operating income                     |         | 75,273                    |        
|                                                                           |                            |                                      |         |                           |        
|Other expense (income)                                                     |                            |                                      |         |                           |        
|                                                                           | Interest expense           |                                      | 798     |                           | 760    
|                                                                           | Other, net                 |                                      | 946     |                           | (786   
|                                                                           |                            |                                      |         |                           |        
|                                                                           |                            | Total other                          |         | 1,744                     |        
|                                                                           |                            |                                      |         |                           |        
|                                                                           |                            | Income before income taxes           |         | 73,529                    |        
|                                                                           |                            |                                      |         |                           |        
|Provision for income taxes                                                 |                            | 25,000                               |         | 29,208                    |        
|                                                                           |                            |                                      |         |                           |        
|                                                                           |                            | Net income before extraordinary item |         | $ 48,529                  |        
|                                                                           |                            |                                      |         |                           |        
|Extraordinary item  loss on debt prepayment, net of tax benefit of $1,071 |                            |                                     |         |                          |        
|                                                                           |                            |                                      |         |                           |        
|                                                                           |                            | Net income                           |         | $ 48,529                  |        
|                                                                           |                            |                                      |         |                           |        
|Earnings per share before extraordinary item                               |                            |                                      |         |                           |        
|                                                                           |                            | Basic                                |         | $   1.25                  |        
|                                                                           |                            |                                      |         |                           |        
|                                                                           |                            | Diluted                              |         | $   1.22                  |        
|                                                                           |                            |                                      |         |                           |        
|Earnings per share after extraordinary item                                |                            |                                      |         |                           |        
|                                                                           |                            | Basic                                |         | $   1.25                  |        
|                                                                           |                            |                                      |         |                           |        
|                                                                           |                            | Diluted                              |         | $   1.22                  |        
|                                                                           |                            |                                      |         |                           |        
|Weighted-average shares outstanding                                        |                            |                                      |         |                           |        
|                                                                           |                            | Basic                                |         | 38,953                    |        
|                                                                           |                            |                                      |         |                           |        
|                                                                           |                            | Diluted                              |         | 39,912                    |        
|                                                                           |                            |                                      |         |                           |        

See
accompanying notes to condensed consolidated financial statements.

3

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THE TIMBERLAND COMPANY  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (Dollars in Thousands)  (Unaudited)

|                                                  |                                                                               | For the
Nine Months Ended                                          |                                                 
|------------------------------------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------------
|
|Cash flows from operating activities:             |                                                                               |                                                                    |                                                 
|                                                  | Net income                                                                    |                                                                    | $                                               
|                                                  | Adjustments to reconcile net income to net cash used by operating activities: |                                                                    |                                                 
|                                                  |                                                                               | Deferred income taxes                                              |                                                 
|                                                  |                                                                               | Depreciation and amortization                                      |                                                 
|                                                  |                                                                               | Tax benefit from stock option plans                                |                                                 
|                                                  |                                                                               | Extraordinary item                                                 |                                                 
|                                                  |                                                                               | Increase (decrease) in cash from changes in working capital items: |                                                 
|                                                  |                                                                               |                                                                    | Accounts receivable                             
|                                                  |                                                                               |                                                                    | Inventory                                       
|                                                  |                                                                               |                                                                    | Prepaid expense                                 
|                                                  |                                                                               |                                                                    | Accounts payable                                
|                                                  |                                                                               |                                                                    | Accrued expense                                 
|                                                  |                                                                               |                                                                    | Income taxes                                    
|                                                  |                                                                               |                                                                    |                                                 
|                                                  |                                                                               |                                                                    | Net cash used by operating activities           
|                                                  |                                                                               |                                                                    |                                                 
|Cash flows from investing activities:             |                                                                               |                                                                    |                                                 
|                                                  | Acquisition of Asian Distributor business                                     |                                                                    |                                                 
|                                                  | Additions to property, plant and equipment, net                               |                                                                    |                                                 
|                                                  | Other, net                                                                    |                                                                    |                                                 
|                                                  |                                                                               |                                                                    |                                                 
|                                                  |                                                                               |                                                                    | Net cash used by investing activities           
|                                                  |                                                                               |                                                                    |                                                 
|Cash flows from financing activities:             |                                                                               |                                                                    |                                                 
|                                                  | Net borrowing under short-term credit facilities                              |                                                                    |                                                 
|                                                  | Prepayment of debt                                                            |                                                                    |                                                 
|                                                  | Extraordinary item                                                            |                                                                    |                                                 
|                                                  | Common stock repurchases                                                      |                                                                    |                                                 
|                                                  | Issuance of common stock                                                      |                                                                    |                                                 
|                                                  |                                                                               |                                                                    |                                                 
|                                                  |                                                                               |                                                                    | Net cash provided (used) by financing activities
|                                                  |                                                                               |                                                                    |                                                 
|Effect of exchange rate changes on cash           |                                                                               |                                                                    | (1,004                                          
|                                                  |                                                                               |                                                                    |                                                 
|Net decrease in cash and equivalents              |                                                                               |                                                                    | (99,100                                         
|Cash and equivalents at beginning of period       |                                                                               |                                                                    | 114,852                                         
|                                                  |                                                                               |                                                                    |                                                 
|Cash and equivalents at end of period             |                                                                               | $                                                                  | 15,752                                          
|                                                  |                                                                               |                                                                    |                                                 
|Supplemental disclosure of cash flow information: |                                                                               |                                                                    |                                                 
|                                                  | Interest paid                                                                 |                                                                    | $                                               
|                                                  | Income taxes paid                                                             |                                                                    |                                                 

See
accompanying notes to condensed consolidated financial statements.

4

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THE TIMBERLAND COMPANY  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Dollars in Thousands)  (Unaudited)



5

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| |  | 2001                              |  | U.S.
Wholesale |         | U.S.
Retail |   | International |  | Unallocated
Corporate |         | Consolidated
| |  | --------------------------------- |  | -------------- | ------- | ----------- | - | ------------- |  | --------------------- | ------- | ------------
| |  | Revenue                           |  | $              | 226,132 |             | $ | 52,448        |  | $                     | 117,639 |             
| |  | Income (loss) before income taxes |  |                | 81,053  |             |   | 7,036         |  |                       | 21,993  |             
| |  | Total assets                      |  |                | 300,239 |             |   | 34,689        |  |                       | 176,288 |             
|
| |  | Revenue                           |  | $              | 218,424 |             | $ | 53,575        |  | $                     | 103,247 |             
| |  | Income (loss) before income taxes |  |                | 86,341  |             |   | 9,245         |  |                       | 21,053  |             
| |  | Total assets                      |  |                | 251,608 |             |   | 36,443        |  |                       | 149,191 |             



| |  | 2001                              |  | U.S.
Wholesale |         | U.S.
Retail |   | International |  | Unallocated
Corporate |         | Consolidated
| |  | --------------------------------- |  | -------------- | ------- | ----------- | - | ------------- |  | --------------------- | ------- | ------------
| |  | Revenue                           |  | $              | 451,167 |             | $ | 123,482       |  | $                     | 267,850 |             
| |  | Income (loss) before income taxes |  |                | 146,446 |             |   | 7,665         |  |                       | 41,147  |             
|
| |  | Revenue                           |  | $              | 405,559 |             | $ | 122,694       |  | $                     | 232,661 |             
| |  | Income (loss) before income taxes |  |                | 142,961 |             |   | 12,927        |  |                       | 38,882  |             



6

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| |  |                                                                        |  | For the
Three Months Ended |   | For the
Nine Months Ended |  
| |  | ---------------------------------------------------------------------- |  | -------------------------- | - | ------------------------- | -
|
| |  | Net income                                                             |  | $48,529                    |   | $57,453                   |  
| |  | Change in cumulative translation adjustment                            |  | (1,171                     | ) | (2,495                    | )
| |  | Fair value of derivative financial instruments at
January 1, 2001      |  |                           |   |                          |  
| |  | Change in fair value of derivative financial instruments, net of taxes |  | (3,702                     | ) |                          |  
| |  |                                                                        |  |                            |   |                           |  
| |  | Comprehensive income                                                   |  | $43,656                    |   | $54,958                   |  
| |  |                                                                        |  |                            |   |                           |  

| |  |                 |  | September 28,
2001 |         | December 31,
2000
| |  | --------------- |  | ------------------ | ------- | -----------------
| |  | Raw materials   |  | $                  | 6,132   |                  
| |  | Work-in-process |  |                    | 2,842   |                  
| |  | Finished goods  |  |                    | 175,260 |                  
| |  |                 |  |                    |         |                  
| |  |                 |  | $                  | 184,234 |                  
| |  |                 |  |                    |         |                  

7

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8

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THE TIMBERLAND COMPANY  MANAGEMENT'S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND RESULTS OF OPERATIONS  (Unaudited)

RESULTS OF OPERATIONS

THIRD QUARTER 2001 COMPARED WITH THIRD QUARTER 2000

Revenue for the third quarter of 2001 was $396.2 million, an increase of $21.0 million, or 5.6%, compared with the $375.2 million in
revenue reported for the third quarter of 2000.

Domestic
revenue for the third quarter of 2001 was $278.6 million, an increase of $6.6 million, or 2.4%, compared with the same period in 2000. Domestic revenue
represented 70.3% of total revenue for the third quarter of 2001, compared with 72.5% for the third quarter of 2000. The U.S. Wholesale segment revenue increased 3.5% in the third quarter of 2001,
compared with the same period in 2000, due to higher unit sales primarily in footwear and, to a lesser degree, apparel and accessories. The unit sales increase was partially offset by a 3.4% reduction
in footwear average selling prices. The U.S. Retail segment revenue decreased 2.1%, or 9.1% on a comparable basis, compared with the same period in 2000, due to a comparable store reduction in units
and average selling prices, partially offset by new store additions. The decrease in revenue reflects a difficult retail environment. The challenging U.S. market environment may continue to pressure
domestic wholesale and retail revenues.

International
segment revenue for the third quarter of 2001 was $117.6 million, an increase of $14.4 million, or 13.9%, compared with the third quarter of 2000.
International revenue comprised 29.7% of total revenue for the third quarter of 2001, compared with 27.5% for the third quarter of 2000. The increase in revenue over the prior year period was
primarily due to increased European wholesale apparel and accessories unit sales and Asian wholesale footwear unit sales. International revenue increases were partially offset by the impact of foreign
exchange and a decrease in wholesale footwear average selling prices. Given current market conditions, the Company anticipates that adverse
effects on International revenue from foreign exchange declines will continue into 2002. On a constant dollar basis, International revenue increased 16.5%, compared with the same period in 2000.

Footwear
revenue for the third quarter of 2001 was $305.0 million, an increase of $7.6 million, or 2.6%, compared with the same period in 2000. The improvement was
primarily attributable to increases in unit sales in U.S. Wholesale and, to a lesser degree, Asian wholesale unit sales. These increases were primarily offset by decreases in average selling prices
and, to a lesser degree, the impact of foreign exchange. By category, the increase was primarily attributable to Boots and, to a lesser degree, Kids'. In total, footwear unit sales increased 7.0% over
the same period last year and average selling prices decreased 4.2%.

Apparel
and accessories revenue for the third quarter of 2001 was $86.9 million, an increase of $13.3 million, or 18.0%, compared with the same period in 2000. The
increase occurred primarily in European wholesale and, to a lesser degree, U.S. Wholesale and European retail unit sales, partially offset by a reduction in U.S. Retail average selling prices. In
total, apparel and accessories unit sales improved 13.7% over the comparable prior year period and average selling prices improved 3.8%.

Worldwide
wholesale revenue for the third quarter of 2001 was $320.4 million, an increase of $19.2 million, or 6.4%, compared with the same period in 2000. While U.S.
Wholesale footwear and, to a lesser degree, Asian wholesale footwear unit sales increased, these increases were partially offset by a decrease in average selling prices and, to a lesser degree, the
impact of foreign exchange. Improved European wholesale apparel and accessories unit sales and average selling prices increased revenue by $10.0 million, or 42.5%, while U.S. Wholesale apparel
and accessories unit sales increased revenue by $3.3 million, or 28.5%, compared with the prior year period.

9

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Worldwide revenue from Company-owned retail and factory stores, along with the Company's newly formed e-commerce business, for the third quarter of 2001 was
$75.8 million, an increase of $1.8 million, or 2.5%, compared with the same period in 2000. The increase was primarily due to new stores, worldwide, and to increased European unit sales.
These increases were partially offset by a decline in U.S. Retail revenue, as discussed previously, and the impact of foreign exchange. During the third quarter of 2001, the Company opened eight
retail stores and closed one retail store, worldwide.

Gross
profit as a percentage of revenue for the third quarter of 2001 was 44.1%, a decrease of 3.4 percentage points from the 47.5%, reported for the third quarter of 2000. The
decrease in gross profit percentage was primarily due to increases in leather costs which lowered the gross margin rate by 1.1 percentage points, an increase in U.S. Wholesale footwear sales
returns and allowances (primarily due to soft market conditions) which lowered the gross margin rate by 1.0 percentage point, and pressure from foreign exchange declines which lowered the gross
margin rate by 0.4 percentage points, compared with the same period in 2000. Under current conditions, the Company anticipates that the
impact of higher leather prices will continue into early 2002 and that the impact of foreign exchange declines will also continue into next year. Soft market conditions may also continue to pressure
margins. The Company will continue to review and develop and may implement cost efficiencies across the supply chain in its efforts to improve gross margins.

Operating
expense was $99.3 million for the third quarter of 2001, up $7.8 million, or 8.5%, from the $91.5 million reported for the third quarter of 2000.
Operating expense as a percentage of revenue for the third quarter of 2001 increased to 25.1%, from 24.4% for the third quarter of 2000. The dollar and percentage increase was primarily due to
selling, marketing, distribution and product development expenses incurred in support of the Company's growth. For the third quarter of 2001, general and administrative expenses were leveraged to 4.1%
of revenue, compared with 4.3% in the third quarter of 2000.

Interest
expense for the third quarter of 2001 and 2000 was $0.8 million. Other expense was $0.9 million for the third quarter of 2001, compared with other income of
$0.8 million for the third quarter of 2000. The increase in other expense was due to both foreign exchange and to a $0.6 million gain in 2000 related to the settlement of the Company's
Asian business acquisition in February 2000.

Income
before income taxes for the third quarter of 2001, compared with the prior year period, decreased in the U.S. Wholesale segment. The decrease was primarily due to footwear
gross margin rate reductions, discussed previously and, to a lesser degree, a higher operating expense rate compared to the 1.7% revenue increase. The U.S. Retail segment decrease was primarily due to
an increase in operating expense rate, resulting from a 9.9% increase in operating expense, including new stores, on a 2.1% revenue decrease and, to a lesser degree, reduced gross margin rates as a
result of the difficult retail climate, as discussed previously. The International segment improvement was due to double-digit constant dollar revenue growth on comparable gross margin rates and
comparable operating expense rates, partially offset by the impact of foreign exchange. The increase in Unallocated Corporate was primarily due to corporate support for company-wide
activities.

The
effective tax rate for the three months ended September 28, 2001 and September 29, 2000, was 34.0% and 33.7%, respectively. The Company anticipates that federal tax
law, which has benefited its Puerto Rico operations, will change effective in 2002, thereby raising the Company's 2002 effective tax rate by approximately two percentage points.

NINE MONTHS ENDED SEPTEMBER 28, 2001 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 29, 2000

Revenue for the first nine months of 2001 was $842.5 million, an increase of $81.6 million, or 10.7%, from the $760.9 million reported for
the comparable period in 2000. All segments increased compared with 2000. The U.S. Wholesale segment revenue increased 11.2%, or $45.6 million, compared with the prior year period. This
increase was primarily due to footwear and, to a lesser

10

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degree, apparel and accessories unit sales, partially offset by a decrease in footwear average selling prices. The U.S. Retail segment increased $0.8 million, or 0.6%, compared with the prior
year period, primarily due to new store additions. By product, the U.S. Retail segment had increases in both footwear and, to a lesser degree, apparel and accessories unit sales, primarily offset by
declines in average selling prices. Internationally, revenue increased $35.2 million, or 15.1%, compared with the prior year period. This increase was primarily due to Asian and European
wholesale footwear unit sales, European apparel and accessories unit sales and, to a lesser degree, the inclusion of Asian revenue for nine months in 2001, compared with eight months in 2000, due to
the acquisition of the Asian business in February 2000. On a constant dollar basis, International segment revenue increased 21.0% over the comparable period in 2000.

Gross
profit as a percentage of revenue for the first nine months of 2001 was 44.5%, compared with 46.8% for the comparable period in 2000. This decline in gross profit was primarily
attributable to the same reasons cited in the third quarter discussion, with leather cost increases and foreign exchange declines both responsible for lowering the gross margin rate by
1.0 percentage point.

Operating
expense for the first nine months of 2001 was $258.4 million, up $26.3 million, or 11.3%, from the $232.2 million reported for the comparable period in
2000. Operating expense, as a percentage of revenue, was 30.7% for the first nine months of 2001, compared with 30.5% for the same period in 2000. The dollar increase was primarily due to the same
reasons cited in the third quarter discussion.

Income
before income taxes for the first nine months of 2001, compared with the prior year period, improved in the U.S. Wholesale segment primarily due to increased footwear unit
sales, but with lower gross margin rates and higher expense rates, consistent with the third quarter discussion. The decrease in income in the U.S. Retail segment was primarily due to a 10.4% increase
in operating expense, including new stores, on a 0.6% revenue increase and, to a lesser degree, a decrease in gross margin rate. The improvement in the International segment's income was primarily due
to double-digit constant dollar revenue growth on comparable gross margin rates and reduced operating expense rates, partially offset by the impact of foreign exchange. Unallocated Corporate increased
primarily due to the same reason as cited in the third quarter discussion.

Interest
expense for the first nine months of 2001 was $1.1 million, a decrease of $4.3 million from the comparable period in 2000 due to the prepayment of
$100.0 million in debt in the second quarter of 2000. Other income, at $0.5 million, decreased $6.2 million from the comparable prior year period primarily due to interest income
in 2000 prior to the debt prepayment and, to a lesser degree, proceeds in 2000 of $2.7 million related to the settlement of the Company's Asian business acquisition in February of 2000.

The
effective tax rate for the nine months ended September 28, 2001 and September 29, 2000 was 34.0% and 33.5%, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operations during the first nine months of 2001 was $92.6 million, compared with $34.3 million used during the same period in
2000. The use of cash in 2001 was primarily due to an increase in accounts receivable and inventory. Additionally, in 2001, less cash was provided by accounts payable and accrued expense, primarily
due to timing of payments, compared with 2000. In 2001, the increase in accounts receivable was primarily due to timing of shipments in the third quarter as retailers are ordering closer to need in
the soft retail environment, and to a slowing of payments. Days sales outstanding increased to 59 days at September 28, 2001 from 49 days at September 29, 2000. Wholesale
days sales outstanding increased to 66 days at September 28, 2001 from 52 days at September 29, 2000. The increase in inventory in 2001 reflects the seasonal nature of the
Company's business, as well as planned increases for growth, and is consistent with the increase in the prior year period. Quarterly inventory turns were 4.5 times for the third quarter of 2001,
compared with the 4.4

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times for the third quarter of 2000. On a 12 month rolling basis, inventory turns improved from 3.7 times for the third quarter of 2000 to 3.9 times for the third quarter of 2001.

During
the first nine months of 2001, $18.0 million of cash was used by investing activities, compared with $20.2 million used during the same period in 2000. Net cash
from investing activities in 2000 includes $5.2 million of cash received from the acquisition of the Asian subsidiaries. Capital expenditures for the first nine months of 2001 were
$16.2 million, compared with $23.6 million for the same period in 2000. Net cash provided by financing activities was $12.5 million for the first nine months of 2001, compared
with $133.2 million used for the first nine months of 2000, reflecting the prepayment of $100.0 million in senior notes. Common stock repurchases amounted to $60.3 million and
$61.6 million in the first nine months of 2001 and 2000, respectively. During the first nine months of 2001, the Company received $65.0 million in net borrowings under
short-term credit facilities for seasonal cash needs, compared with $21.0 million in 2000.

The
Company has available unsecured revolving and committed lines of credit as sources of financing for its seasonal and other working capital requirements. On May 3, 2001, the
Company signed a $200.0 million revolving credit agreement which replaced the $100.0 million revolving credit agreement that was due to expire in June 2001 (see Note 9 to
the Company's condensed consolidated financial statements).

The
Company had $65.0 million in short-term debt on September 28, 2001, no debt at December 31, 2000 and $21.0 million in
short-term debt at September 29, 2000. The Company's debt-to-capital ratio was 15.7% at September 28, 2001, 0.0% at December 31, 2000 and 6.6%
at September 29, 2000.

Management
believes that the Company's capital needs for 2001 will be met through its existing credit facilities and cash flows from operations without the need for additional
permanent financing. However, as subsequently discussed in "Forward-Looking Information," several risks and uncertainties could cause the Company to need to raise additional capital through equity
and/or debt financing. The availability and terms of any such financing would be subject to prevailing market conditions and other factors at that time.

NEW ACCOUNTING PRONOUNCEMENTS

The Company adopted SFAS No. 133, SFAS No. 137 and SFAS No. 138 in the first quarter of 2001. The impact of the adoption of those
statements is discussed in Note 4 to the Company's condensed consolidated financial statements.

In
the second quarter of 2001, the FASB issued SFAS No. 141 and SFAS No. 142. In the third quarter of 2001, the FASB issued SFAS No. 144. Those statements are
discussed in Note 10 to the Company's condensed consolidated financial statements.

In
the third quarter of 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." This statement is effective for fiscal years beginning after
June 15, 2002. The Company is evaluating the impact of the adoption of this standard but does not expect it to have a material impact on its financial position or results of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's current policies and business practices regarding derivative instruments are consistent with its fiscal year end 2000 Annual Report disclosure.
At September 28, 2001, the Company had $65.0 million in short-term debt outstanding and no long-term debt outstanding. The Company's foreign currency exposure is
generated primarily from its European and, to a lesser degree, its Asian operating subsidiaries. Based upon sensitivity analysis, a 10% change in foreign exchange rates would cause the fair value of
the Company's financial instruments to increase/decrease by approximately $12.0 million.

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FORWARD-LOOKING INFORMATION

The statements contained in this report, which are not historical facts, including, without limitation, statements that relate to future performance and/or
statements regarding the Company's anticipated results or business level for 2001 or any other future period, may be deemed to constitute forward-looking statements within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations only and actual future results may differ materially from those expressed
or implied by such forward-looking statements due to certain factors. Such factors include, but are not limited to, the Company's ability to: (i) manage its foreign exchange rate risks;
(ii) successfully market and sell its products in view of changing consumer trends, consumer acceptance of products and economic and other factors affecting retail market conditions, including
the events of September 11, 2001 and uncertainties related to the ongoing conflict; (iii) obtain adequate raw materials at competitive prices; and (iv) other factors, including
those detailed from time to time in the Company's SEC reports, including its Annual Report on Form 10-K filed on March 28, 2001. The Company undertakes no obligation to
update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

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Part II Other Information

Item 6. Exhibits and Reports on Form 8-K



Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                       | THE TIMBERLAND COMPANY(Registrant)                                                                            
|---------------------- | --------------------------------------------------------------------------------------------------------------
|Date: October 29, 2001 | /s/BRIAN P. MCKEONBrian P. McKeon Senior Vice President and Chief Financial Officer                           
|Date: October 29, 2001 | /s/DENNIS W. HAGELEDennis W. Hagele Vice President-Finance and Corporate Controller (Chief Accounting Officer)

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