##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the quarterly period endedJuly 3, 2009
 OR
 o
    
    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
 The Timberland Company
  Delaware
    
    02-0312554(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)200 Domain Drive, Stratham, New Hampshire
    
    03885(Address of principal executive offices)
    
    (Zip Code)
 (603) 772-9500
  þ o
  o o
  Large Accelerated Filer þ
Accelerated Filer o
Non-Accelerated Filer o(Do not check if a smaller reporting company)
Smaller Reporting Company o
  o þ




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##### 



THE TIMBERLAND COMPANY
 FORM 10-Q
 TABLE OF CONTENTS
 Page(s)Part I Financial InformationItem 1. Financial StatementsUnaudited Condensed Consolidated Balance Sheets -
July 3, 2009, December 31, 2008 and June 27, 2008
    
    
    4Unaudited Condensed Consolidated Statements of Operations -
For the Quarters and Six Months Ended July 3, 2009 and
June 27, 2008
    
    
    5Unaudited Condensed Consolidated Statements of Cash Flows -
For the Six Months Ended July 3, 2009 and June 27, 2008
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7-17Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    17-26Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    27Part II Other InformationItem 1A. Risk Factors
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Item 6. Exhibits
    
    
    30Signatures
    
    
    31Exhibit Index
    
    
    32Exhibits
    
    
    33-37EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2




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Cautionary Note Regarding Forward-Looking Statements




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##### Table of Contents



PART I FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 
 THE TIMBERLAND COMPANY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 July 3,
    
    
    December 31,
    
    
    June 27,2009
    
    
    2008
    
    
    2008AssetsCurrent assetsCash and equivalents
    
    $
    183,919
    
    
    $
    217,189
    
    
    $
    152,764Accounts receivable, net of allowance for doubtful accounts of $11,124
at July 3, 2009, $14,482 at December 31, 2008 and $16,810 at June 27,
2008
    
    
    100,126
    
    
    
    168,666
    
    
    
    121,482Inventory, net
    
    
    180,392
    
    
    
    179,688
    
    
    
    195,015Prepaid expense
    
    
    35,121
    
    
    
    37,139
    
    
    
    44,011Prepaid income taxes
    
    
    24,720
    
    
    
    16,687
    
    
    
    20,776Deferred income taxes
    
    
    19,024
    
    
    
    23,425
    
    
    
    21,822Derivative assets
    
    
    2,284
    
    
    
    7,109
    
    
    
    Total current assets
    
    
    545,586
    
    
    
    649,903
    
    
    
    555,870Property, plant and equipment, net
    
    
    74,185
    
    
    
    78,526
    
    
    
    84,553Deferred income taxes
    
    
    17,480
    
    
    
    18,528
    
    
    
    19,178Goodwill
    
    
    43,870
    
    
    
    43,870
    
    
    
    44,840Intangible assets, net
    
    
    46,572
    
    
    
    47,996
    
    
    
    52,815Other assets, net
    
    
    14,971
    
    
    
    10,576
    
    
    
    10,586Total assets
    
    $
    742,664
    
    
    $
    849,399
    
    
    $
    767,842Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    71,423
    
    
    $
    96,901
    
    
    $
    74,734Accrued expensePayroll and related
    
    
    22,395
    
    
    
    32,587
    
    
    
    27,605Other
    
    
    54,264
    
    
    
    79,503
    
    
    
    53,702Income taxes payable
    
    
    533
    
    
    
    20,697
    
    
    
    2,528Derivative liabilities
    
    
    4,565
    
    
    
    2,386
    
    
    
    6,594Total current liabilities
    
    
    153,180
    
    
    
    232,074
    
    
    
    165,163Other long-term liabilities
    
    
    35,809
    
    
    
    40,787
    
    
    
    41,474Commitments and contingenciesStockholders equityPreferred 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; 74,182,602 shares issued at July 3, 2009, 73,806,026
shares issued at December 31, 2008 and 73,715,661 shares issued at June
27, 2008
    
    
    742
    
    
    
    738
    
    
    
    737Class 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; 11,417,660 shares issued and outstanding at July 3, 2009,
and 11,529,160 shares issued and outstanding at December 31, 2008 and
June 27, 2008
    
    
    114
    
    
    
    115
    
    
    
    115Additional paid-in capital
    
    
    264,257
    
    
    
    260,267
    
    
    
    255,903Retained earnings
    
    
    914,672
    
    
    
    918,039
    
    
    
    874,243Accumulated other comprehensive income
    
    
    9,088
    
    
    
    12,543
    
    
    
    24,837Treasury Stock at cost; 29,402,811 Class A shares at July 3, 2009,
27,766,651 Class A shares at December 31, 2008 and 26,542,340 Class A
shares at June 27, 2008
    
    
    (635,198
    )
    
    
    (615,164
    )
    
    
    (594,630
    )Total stockholders equity
    
    
    553,675
    
    
    
    576,538
    
    
    
    561,205Total liabilities and stockholders equity
    
    $
    742,664
    
    
    $
    849,399
    
    
    $
    767,842
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




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THE TIMBERLAND COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Quarter Ended
    
    
    For the Six Months EndedJuly 3,
    
    
    June 27,
    
    
    July 3,
    
    
    June 27,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    179,702
    
    
    $
    209,916
    
    
    $
    476,350
    
    
    $
    550,318Cost of goods sold
    
    
    104,194
    
    
    
    117,716
    
    
    
    264,153
    
    
    
    300,514Gross profit
    
    
    75,508
    
    
    
    92,200
    
    
    
    212,197
    
    
    
    249,804Operating expenseSelling
    
    
    85,027
    
    
    
    95,317
    
    
    
    177,295
    
    
    
    201,439General and administrative
    
    
    26,896
    
    
    
    26,539
    
    
    
    52,313
    
    
    
    54,227Impairment of intangible asset
    
    
    
    
    
    
    
    
    
    
    925
    
    
    
    Restructuring and related (credits)/costs
    
    
    (17
    )
    
    
    317
    
    
    
    (121
    )
    
    
    869Total operating expense
    
    
    111,906
    
    
    
    122,173
    
    
    
    230,412
    
    
    
    256,535Operating loss
    
    
    (36,398
    )
    
    
    (29,973
    )
    
    
    (18,215
    )
    
    
    (6,731
    )Other incomeInterest income
    
    
    299
    
    
    
    722
    
    
    
    739
    
    
    
    1,576Interest expense
    
    
    (117
    )
    
    
    54
    
    
    
    (238
    )
    
    
    (232
    )Other income/(expense), net
    
    
    1,666
    
    
    
    (379
    )
    
    
    1,003
    
    
    
    5,383Total other income, net
    
    
    1,848
    
    
    
    397
    
    
    
    1,504
    
    
    
    6,727Loss before income taxes
    
    
    (34,550
    )
    
    
    (29,576
    )
    
    
    (16,711
    )
    
    
    (4
    )Income tax (benefit)/provision
    
    
    (15,306
    )
    
    
    (10,647
    )
    
    
    (13,344
    )
    
    
    886Net loss
    
    $
    (19,244
    )
    
    $
    (18,929
    )
    
    $
    (3,367
    )
    
    $
    (890
    )Loss per shareBasic
    
    $
    (.34
    )
    
    $
    (.32
    )
    
    $
    (.06
    )
    
    $
    (.02
    )Diluted
    
    $
    (.34
    )
    
    $
    (.32
    )
    
    $
    (.06
    )
    
    $
    (.02
    )Weighted-average shares outstandingBasic
    
    
    56,273
    
    
    
    58,932
    
    
    
    56,695
    
    
    
    59,269Diluted
    
    
    56,273
    
    
    
    58,932
    
    
    
    56,695
    
    
    
    59,269
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




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##### Table of Contents



THE TIMBERLAND COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Six Months EndedJuly 3,
    
    
    June 27,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (3,367
    )
    
    $
    (890
    )Adjustments to reconcile net loss to net cash provided/(used) by
operating activities:Deferred income taxes
    
    
    5,224
    
    
    
    3,377Share-based compensation
    
    
    2,580
    
    
    
    4,218Depreciation and other amortization
    
    
    14,339
    
    
    
    16,124Provision for losses on accounts receivable
    
    
    1,564
    
    
    
    1,974Provision for intangible assets impairment
    
    
    925
    
    
    
    Tax expense from share-based compensation, net of excess benefit
    
    
    (444
    )
    
    
    (335
    )Unrealized loss on derivatives
    
    
    289
    
    
    
    16Other non-cash charges/(credits), net
    
    
    514
    
    
    
    1,992Increase/(decrease) in cash from changes in working capital:Accounts receivable
    
    
    67,098
    
    
    
    69,457Inventory
    
    
    1,089
    
    
    
    8,420Prepaid expense
    
    
    (1,802
    )
    
    
    72Accounts payable
    
    
    (25,977
    )
    
    
    (12,007
    )Accrued expense
    
    
    (35,674
    )
    
    
    (32,056
    )Prepaid income taxes
    
    
    (8,032
    )
    
    
    (3,415
    )Income taxes payable
    
    
    (24,678
    )
    
    
    (15,068
    )Other liabilities
    
    
    (226
    )
    
    
    (1,973
    )Net cash provided/(used) by operating activities
    
    
    (6,578
    )
    
    
    39,906Cash flows from investing activities:Acquisition of business, net of cash acquired
    
    
    (1,554
    )
    
    
    Additions to property, plant and equipment
    
    
    (7,757
    )
    
    
    (10,332
    )Other
    
    
    (380
    )
    
    
    2,909Net cash used by investing activities
    
    
    (9,691
    )
    
    
    (7,423
    )Cash flows from financing activities:Common stock repurchases
    
    
    (19,388
    )
    
    
    (24,983
    )Issuance of common stock
    
    
    1,373
    
    
    
    823Excess tax benefit from share-based compensation
    
    
    133
    
    
    
    179Other
    
    
    (177
    )
    
    
    Net cash used by financing activities
    
    
    (18,059
    )
    
    
    (23,981
    )Effect of exchange rate changes on cash and equivalents
    
    
    1,058
    
    
    
    988Net increase/(decrease) in cash and equivalents
    
    
    (33,270
    )
    
    
    9,490Cash and equivalents at beginning of period
    
    
    217,189
    
    
    
    143,274Cash and equivalents at end of period
    
    $
    183,919
    
    
    $
    152,764Supplemental disclosures of cash flow information:Interest paid
    
    $
    232
    
    
    $
    153Income taxes paid
    
    $
    13,935
    
    
    $
    12,412
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.




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##### Table of Contents



THE TIMBERLAND COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Summary of Significant Accounting Policies
 Basis of Presentation
    New Accounting Pronouncements
    Basis of
Presentation




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##### Table of Contents



Note 2. Fair Value Measurements
   Description
    
    Level 1
    
    Level 2
    
    Level 3
    
    Impact of Netting
    
    July 3, 2009Assets:Cash equivalents
    
    $
    138,623
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    138,623Derivative contracts:Derivative assets
    
    $
    
    
    
    $
    2,333
    
    
    $
    
    
    
    $
    (49
    )
    
    $
    2,284Cash surrender value
of life insurance
    
    $
    
    
    
    $
    6,815
    
    
    $
    
    
    
    $
    
    
    
    $
    6,815Liabilities:Derivative contracts:Derivative liabilities
    
    $
    
    
    
    $
    4,614
    
    
    $
    
    
    
    $
    (49
    )
    
    $
    4,565




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##### Table of Contents



Note 3. Derivatives
   Cash Flow Hedges
    ContractAmount(U.S.$
    
    
    MaturityCurrency
    
    Equivalent)
    
    
    DatePounds Sterling
    
    $
    15,267
    
    
    
    2009Pounds Sterling
    
    
    5,946
    
    
    
    2010Euro
    
    
    70,615
    
    
    
    2009Euro
    
    
    15,370
    
    
    
    2010Japanese Yen
    
    
    13,871
    
    
    
    2009Japanese Yen
    
    
    8,086
    
    
    
    2010$
    129,155




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##### Table of Contents



Other Derivative Contracts
   ContractAmount(U.S.$
    
    
    MaturityCurrency
    
    Equivalent)
    
    
    DatePounds Sterling
    
    $
    (16,989
    )
    
    
    2009Euro
    
    
    (16,043
    )
    
    
    2009Japanese Yen
    
    
    6,782
    
    
    
    2009Canadian Dollar
    
    
    5,995
    
    
    
    2009Norwegian Kroner
    
    
    1,559
    
    
    
    2009Swedish Krona
    
    
    1,284
    
    
    
    2009$
    (17,412
    )
 Fair Values of Derivative Instruments
 Asset Derivatives
    
    
    Liability DerivativesBalance SheetAs of July 3, 2009
    
    Location
    
    
    Fair Value
    
    
    Balance Sheet Location
    
    
    Fair ValueDerivatives designated as hedging
instruments under SFAS 133:Foreign exchange forward contracts
    
    Derivative assets
    
    $
    2,099
    
    
    Derivative liabilities
    
    $
    4,513Foreign exchange forward contracts
    
    Derivative liabilities
    
    
    49
    
    
    Derivative assets
    
    
    Total derivatives designated as
hedging instruments under SFAS 133
    
    
    
    
    
    $
    2,148
    
    
    
    
    
    
    $
    4,513Derivatives not designated as hedging
instruments under SFAS 133:Foreign exchange forward contracts
    
    Derivative assets
    
    $
    185
    
    
    Derivative liabilities
    
    $
    101Foreign exchange forward contracts
    
    Derivative liabilities
    
    
    
    
    
    Derivative assets
    
    
    Total derivatives not designated as
hedging instruments under SFAS 133
    
    
    
    
    
    $
    185
    
    
    
    
    
    
    $
    101Total derivatives
    
    
    
    
    
    $
    2,333
    
    
    
    
    
    
    $
    4,614




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##### Table of Contents



The Effect of Derivative Instruments on the Statement of Operations for the Quarters Ended July
3, 2009 and June 27, 2008
 Amount ofGain/(Loss)Location of
    
    Reclassified fromAmount of Gain/(Loss)
    
    Gain/(Loss)
    
    Accumulated OCIRecognized in OCI on
    
    Reclassified from
    
    IntoDerivatives in
    
    Derivatives
    
    Accumulated OCI into
    
    IncomeSFAS 133 Cash Flow
    
    (Effective Portion)
    
    Income
    
    (Effective Portion)Hedging Relationships
    
    2009
    
    2008
    
    (Effective Portion)
    
    2009
    
    2008Foreign exchange forward contracts
    
    $
    (2,247
    )
    
    $
    (6,250
    )
    
    Cost of goods sold
    
    $
    343
    
    
    $
    (1,564
    )
 Location of Gain/(Loss)
    
    Amount of Gain/(Loss)Derivatives not Designated
    
    Recognized in
    
    Recognized inas Hedging Instruments
    
    Income on
    
    Income on DerivativeUnder SFAS 133
    
    Derivative
    
    2009
    
    2008Foreign exchange forward contracts
    
    Other income/(expense), net
    
    $
    223
    
    
    $
    1,788
  The Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended
July 3, 2009 and June 27, 2008
 Amount ofGain/(Loss)Location of
    
    Reclassified fromAmount of Gain/(Loss)
    
    Gain/(Loss)
    
    Accumulated OCIRecognized in OCI on
    
    Reclassified from
    
    IntoDerivatives in
    
    Derivatives
    
    Accumulated OCI into
    
    IncomeSFAS 133 Cash Flow
    
    (Effective Portion)
    
    Income
    
    (Effective Portion)Hedging Relationships
    
    2009
    
    2008
    
    (Effective Portion)
    
    2009
    
    2008Foreign exchange forward contracts
    
    $
    (2,247
    )
    
    $
    (6,250
    )
    
    Cost of goods sold
    
    $
    7,659
    
    
    $
    (5,787
    )




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##### Table of Contents



Location of Gain/(Loss)
    
    Amount of Gain/(Loss)Derivatives not Designated
    
    Recognized in
    
    Recognized inas Hedging Instruments
    
    Income on
    
    Income on DerivativeUnder SFAS 133
    
    Derivative
    
    2009
    
    2008Foreign exchange forward contracts
    
    Other income/(expense), net
    
    $
    2,647
    
    
    $
    2,442
 Note 4. Share-Based Compensation
  For the Quarter EndedJuly 3, 2009
    
    
    June 27, 2008Cost of goods sold
    
    $
    270
    
    
    $
    424Selling expense
    
    
    956
    
    
    
    1,434General and administrative expense
    
    
    543
    
    
    
    821Total share-based compensation
    
    $
    1,769
    
    
    $
    2,679
 For the Six Months EndedJuly 3, 2009
    
    
    June 27, 2008Cost of goods sold
    
    $
    358
    
    
    $
    626Selling expense
    
    
    1,424
    
    
    
    2,293General and administrative expense
    
    
    798
    
    
    
    1,299Total share-based compensation
    
    $
    2,580
    
    
    $
    4,218
 Performance-based Awards




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##### Table of Contents



For the Quarter Ended
    
    For the Six MonthsJuly 3, 2009
    
    Ended July 3, 2009Expected volatility
    
    
    43.9
    %
    
    
    41.9
    %Risk-free interest rate
    
    
    1.9
    %
    
    
    1.9
    %Expected life (in years)
    
    
    5.0
    
    
    
    6.4Expected dividends
    
    
    
    
    
    
    
  Stock Options
  For the Quarter Ended
    
    For the Six Months EndedJuly 3, 2009
    
    June 27, 2008
    
    July 3, 2009
    
    June 27, 2008Expected volatility
    
    
    43.9
    %
    
    
    33.1
    %
    
    
    43.2
    %
    
    
    32.3
    %Risk-free interest rate
    
    
    1.9
    %
    
    
    3.9
    %
    
    
    2.0
    %
    
    
    3.0
    %Expected life (in years)
    
    
    5.0
    
    
    
    9.9
    
    
    
    6.2
    
    
    
    6.5Expected dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Weighted-Weighted-Average
    
    
    Average Remaining
    
    
    Aggregate IntrinsicShares
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    ValueOutstanding at January 1, 2009
    
    
    4,163,628
    
    
    $
    26.03Granted
    
    
    380,779
    
    
    
    11.17Exercised
    
    
    (102,800
    )
    
    
    8.41Expired or forfeited
    
    
    (231,661
    )
    
    
    27.18Outstanding at July 3, 2009
    
    
    4,209,946
    
    
    $
    25.05
    
    
    
    5.8
    
    
    $
    796Vested or expected to vest at
July 3, 2009
    
    
    4,031,459
    
    
    $
    25.53
    
    
    
    5.7
    
    
    $
    616Exercisable at July 3, 2009
    
    
    3,403,987
    
    
    $
    27.36
    
    
    
    5.1
    
    
    $
    76




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##### Table of Contents



Nonvested Shares
  Weighted-Average
    
    
    
    
    
    
    Weighted-AverageGrant Date Fair
    
    
    
    
    
    
    Grant Date FairStock Awards
    
    
    Value
    
    
    Stock Units
    
    
    ValueNonvested at January 1, 2009
    
    
    278,553
    
    
    $
    25.39
    
    
    
    182,600
    
    
    $
    14.45Awarded
    
    
    62,399
    
    
    
    9.34
    
    
    
    165,171
    
    
    
    12.93Vested
    
    
    (11,904
    )
    
    
    14.70
    
    
    
    (48,730
    )
    
    
    14.76Forfeited
    
    
    
    
    
    
    
    
    
    
    (10,098
    )
    
    
    13.34Nonvested at July 3, 2009
    
    
    329,048
    
    
    $
    22.73
    
    
    
    288,943
    
    
    $
    13.57
  Note 5. Loss Per Share
   For the Quarter Ended
    
    For the Six Months EndedJuly 3, 2009
    
    June 27, 2008
    
    July 3, 2009
    
    June 27, 2008Anti-dilutive securities
    
    
    4,683
    
    
    
    4,958
    
    
    
    4,694
    
    
    
    4,947




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Note 6. Comprehensive Income/(Loss)
  For the Quarter Ended
    
    
    For the Six Months EndedJuly 3, 2009
    
    
    June 27, 2008
    
    
    July 3, 2009
    
    
    June 27, 2008Net loss
    
    $
    (19,244
    )
    
    $
    (18,929
    )
    
    $
    (3,367
    )
    
    $
    (890
    )Change in cumulative translation adjustment
    
    
    7,152
    
    
    
    (2,536
    )
    
    
    3,382
    
    
    
    7,356Change in fair value of cash flow hedges,
net of taxes
    
    
    (5,699
    )
    
    
    2,565
    
    
    
    (6,837
    )
    
    
    (2,625
    )Comprehensive income/(loss)
    
    $
    (17,791
    )
    
    $
    (18,900
    )
    
    $
    (6,822
    )
    
    $
    3,841
  July 3, 2009
    
    
    December 31, 2008
    
    
    June 27, 2008Cumulative translation adjustment
    
    $
    11,158
    
    
    $
    7,776
    
    
    $
    31,087Fair value of cash flow hedges, net of taxes of $(118)
at July 3, 2009, $244 at December 31, 2008 and $(344)
at June 27, 2008
    
    
    (2,208
    )
    
    
    4,629
    
    
    
    (6,250
    )Other adjustments, net of taxes of $7 at July 3, 2009 and
December 31, 2008
    
    
    138
    
    
    
    138
    
    
    
    Total
    
    $
    9,088
    
    
    $
    12,543
    
    
    $
    24,837
 Note 7. Business Segments and Geographic Information




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##### Table of Contents



For the Quarter Ended July 3, 2009 and June 27, 2008
 UnallocatedNorth America
    
    Europe
    
    Asia
    
    Corporate
    
    Consolidated2009Revenue
    
    $
    86,314
    
    
    $
    65,681
    
    
    $
    27,707
    
    
    $
    
    
    
    $
    179,702Operating income/(loss)
    
    
    5,087
    
    
    
    (9,916
    )
    
    
    (599
    )
    
    
    (30,970
    )
    
    
    (36,398
    )Income/(loss) before income taxes
    
    
    5,087
    
    
    
    (9,916
    )
    
    
    (599
    )
    
    
    (29,122
    )
    
    
    (34,550
    )Total assets
    
    
    225,085
    
    
    
    292,668
    
    
    
    42,697
    
    
    
    182,214
    
    
    
    742,664Goodwill
    
    
    36,876
    
    
    
    6,994
    
    
    
    
    
    
    
    
    
    
    
    43,8702008Revenue
    
    $
    99,556
    
    
    $
    78,760
    
    
    $
    31,600
    
    
    $
    
    
    
    $
    209,916Operating income/(loss)
    
    
    9,534
    
    
    
    (8,205
    )
    
    
    (1,405
    )
    
    
    (29,897
    )
    
    
    (29,973
    )Income/(loss) before income taxes
    
    
    9,534
    
    
    
    (8,205
    )
    
    
    (1,405
    )
    
    
    (29,500
    )
    
    
    (29,576
    )Total assets
    
    
    244,031
    
    
    
    272,410
    
    
    
    76,070
    
    
    
    175,331
    
    
    
    767,842Goodwill
    
    
    37,846
    
    
    
    6,994
    
    
    
    
    
    
    
    
    
    
    
    44,840
 For the Six Months Ended July 3, 2009 and June 27, 2008
 North America
    
    Europe
    
    Asia
    

UnallocatedCorporate
    
    Consolidated2009Revenue
    
    $
    206,172
    
    
    $
    205,669
    
    
    $
    64,509
    
    
    $
    
    
    
    $
    476,350Operating income/(loss)
    
    
    20,133
    
    
    
    20,197
    
    
    
    1,231
    
    
    
    (59,776
    )
    
    
    (18,215
    )Income/(loss) before income taxes
    
    
    20,133
    
    
    
    20,197
    
    
    
    1,231
    
    
    
    (58,272
    )
    
    
    (16,711
    )2008Revenue
    
    $
    237,286
    
    
    $
    243,511
    
    
    $
    69,521
    
    
    $
    
    
    
    $
    550,318Operating income/(loss)
    
    
    30,886
    
    
    
    24,916
    
    
    
    (709
    )
    
    
    (61,824
    )
    
    
    (6,731
    )Income/(loss) before income taxes
    
    
    30,886
    
    
    
    24,916
    
    
    
    (709
    )
    
    
    (55,097
    )
    
    
    (4
    )
  For the Quarter Ended
    
    
    For the Six Months EndedJuly 3, 2009
    
    
    June 27, 2008
    
    
    July 3, 2009
    
    
    June 27, 2008Footwear
    
    $
    126,954
    
    
    $
    142,935
    
    
    $
    338,595
    
    
    $
    379,551Apparel and accessories
    
    
    47,241
    
    
    
    62,635
    
    
    
    125,905
    
    
    
    160,558Royalty and other
    
    
    5,507
    
    
    
    4,346
    
    
    
    11,850
    
    
    
    10,209$
    179,702
    
    
    $
    209,916
    
    
    $
    476,350
    
    
    $
    550,318




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Note 8. Inventory, net
  July 3, 2009
    
    
    December 31, 2008
    
    
    June 27, 2008Materials
    
    $
    8,368
    
    
    $
    7,708
    
    
    $
    8,457Work-in-process
    
    
    920
    
    
    
    825
    
    
    
    989Finished goods
    
    
    171,104
    
    
    
    171,155
    
    
    
    185,569Total
    
    $
    180,392
    
    
    $
    179,688
    
    
    $
    195,015
 Note 9. Acquisition
  Note 10. Income Taxes
  Note 11. Share Repurchase
   Note 12. Litigation
  
 Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS




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##### Table of Contents



Critical Accounting Policies
  Overview
 â
   
    
    Second quarter revenue decreased 14.4%, or 9.1% on a constant dollar basis, to $179.7
million.
    
    Gross margin decreased from 43.9% to 42.0%.
    
    Operating expenses were $111.9 million, down 8.4% from $122.2 million in the prior year
period.
    
    We recorded an operating loss of $36.4 million in the second quarter of 2009, compared
to an operating loss of $30.0 million in the prior year period.
    
    Net loss was $19.2 million in the second quarter of 2009, compared to $18.9 million in
the second quarter of 2008.
    
    Loss per share increased from $(.32) in the second quarter of 2008 to $(.34) in the
second quarter of 2009.
    
    Cash at the end of the quarter was $183.9 million with no debt outstanding.




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##### Table of Contents



Results of Operations for the Quarter Ended July 3, 2009 as Compared to the Quarter Ended June
27, 2008
 Revenue
 ®
 Segments Review
   ®
  Products
 ®
 Channels




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##### Table of Contents



Gross Profit
   Operating Expense
        Operating Income/(Loss)




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##### Table of Contents



Other Income/(Expense) and Taxes
    Results of Operations for the Six Months Ended July 3, 2009 as Compared to the Six Months Ended
June 27, 2008
 Revenue
 ®
 Segments Review
 ®




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##### Table of Contents



Products
 ® ®
 Channels
   Gross Profit
   Operating Expense




---



##### Table of Contents



Operating Income/(Loss)
      Other Income/(Expense) and Taxes




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##### Table of Contents



Reconciliation of Total Company, Europe and Asia Revenue Increases/(Decreases) To Constant
Dollar Revenue Increases/(Decreases)
  For the Quarter
    
    For the Six MonthsEnded July 3, 2009
    
    Ended July 3, 2009$ Millions
    
    
    
    
    
    $ MillionsChange
    
    % Change
    
    Change
    
    % ChangeRevenue decrease (GAAP)
    
    $
    (30.2
    )
    
    
    -14.4
    %
    
    $
    (74.0
    )
    
    
    -13.4
    %Decrease due to foreign exchange rate changes
    
    
    (11.2
    )
    
    
    -5.3
    %
    
    
    (32.8
    )
    
    
    -5.9
    %Revenue decrease in constant dollars
    
    $
    (19.0
    )
    
    
    -9.1
    %
    
    $
    (41.2
    )
    
    
    -7.5
    %
  For the Quarter
    
    For the Six MonthsEnded July 3, 2009
    
    Ended July 3, 2009$ Millions
    
    
    
    
    
    $ MillionsChange
    
    % Change
    
    Change
    
    % ChangeRevenue decrease (GAAP)
    
    $
    (13.1
    )
    
    
    -16.6
    %
    
    $
    (37.8
    )
    
    
    -15.5
    %Decrease due to foreign exchange rate changes
    
    
    (11.1
    )
    
    
    -14.1
    %
    
    
    (33.0
    )
    
    
    -13.5
    %Revenue decrease in constant dollars
    
    $
    (2.0
    )
    
    
    -2.5
    %
    
    $
    (4.8
    )
    
    
    -2.0
    %
  For the Quarter
    
    For the Six MonthsEnded July 3, 2009
    
    Ended July 3, 2009$ Millions
    
    
    
    
    
    $ MillionsChange
    
    % Change
    
    Change
    
    % ChangeRevenue decrease (GAAP)
    
    $
    (3.9
    )
    
    
    -12.3
    %
    
    $
    (5.0
    )
    
    
    -7.2
    %Increase due to foreign exchange rate changes
    
    
    0.3
    
    
    
    1.0
    %
    
    
    1.6
    
    
    
    2.3
    %Revenue decrease in constant dollars
    
    $
    (4.2
    )
    
    
    -13.3
    %
    
    $
    (6.6
    )
    
    
    -9.5
    %




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##### Table of Contents



Accounts Receivable and Inventory
   Liquidity and Capital Resources




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##### Table of Contents



Off-Balance Sheet Arrangements
 Letters of Credit
   New Accounting Pronouncements
  
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




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##### Table of Contents



Item 4. CONTROLS AND PROCEDURES
   
 Part II OTHER INFORMATION
 
 Item 1A. RISK FACTORS
   We conduct business outside the United States,
which exposes us to foreign currency, import restrictions, taxes, duties and other risks




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##### Table of Contents



Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 ISSUER PURCHASES OF EQUITY SECURITIES(1)
 For the Three Fiscal Months Ended July 3, 2009Total Number
    
    
    Maximum Numberof Shares
    
    
    of SharesPurchased as Part
    
    
    that May YetTotal Number
    
    
    
    
    
    of Publicly
    
    
    Be Purchasedof Shares
    
    
    Average Price
    
    
    Announced
    
    
    Under the PlansPeriod*
    
    Purchased **
    
    
    Paid per Share
    
    
    Plans or Programs
    
    
    or ProgramsApril 4  May 1
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    3,668,393May 2  May 29
    
    
    313,030
    
    
    
    13.49
    
    
    
    313,030
    
    
    
    3,355,363May 30   July 3
    
    
    403,890
    
    
    
    13.92
    
    
    
    403,890
    
    
    
    2,951,473Total
    
    
    716,920
    
    
    $
    13.73
    
    
    
    716,920
 Footnote (1)
 ApprovedAnnouncement
    
    Program
    
    ExpirationDate
    
    Size (Shares)
    
    DateProgram 1
    
    
    03/10/2008
    
    
    
    6,000,000
    
    
    None
 
 *
    
    Fiscal month**
    
    Based on trade date  not settlement date




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##### Table of Contents



Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 (a)
    
    We held our Annual Meeting of Stockholders on May 21, 2009 (the Annual Meeting).(b)
    
    At the Annual Meeting, proxies were solicited pursuant to Regulation 14A of the Securities
Exchange Act of 1934 and all nominees for director were elected as indicated by the following
schedule of votes cast for each director.
  Total Votes for
    
    Total Votes Withheld from EachNominee
    
    Each Director
    
    DirectorIan W. Diery
    
    
    38,125,661
    
    
    
    4,662,508Irene M. Esteves (1)
    
    
    36,512,749
    
    
    
    6,275,420John A. Fitzsimmons
    
    
    36,502,723
    
    
    
    6,285,446
 
 (1)
    
    Effective June 18, 2009, Ms. Esteves resigned from the Board of
Directors. The resignation was not due to any form of disagreement with the
Company.  Total Votes for
    
    Total Votes Withheld from EachNominee
    
    Each Director
    
    DirectorSidney W. Swartz
    
    
    153,250,468
    
    
    
    4,829,301Jeffrey B. Swartz
    
    
    153,436,750
    
    
    
    4,643,019Virginia H. Kent
    
    
    153,397,189
    
    
    
    4,682,580Kenneth T. Lombard
    
    
    151,083,516
    
    
    
    6,996,253Edward W. Moneypenny
    
    
    151,804,400
    
    
    
    6,275,369Peter R. Moore
    
    
    151,809,888
    
    
    
    6,269,881Bill Shore
    
    
    153,345,413
    
    
    
    4,734,356Terdema L. Ussery, II
    
    
    153,445,325
    
    
    
    4,634,444Carden N. Welsh
    
    
    157,609,051
    
    
    
    470,718




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##### Table of Contents



Item 6. EXHIBITS
 Exhibits.Exhibit 10.1 
    
    Form of Director Restricted Stock Unit Agreement under The Timberland
Company 2007 Incentive Plan, filed herewith.Exhibit 31.1 
    
    Principal Executive Officer Certification Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, filed herewith.Exhibit 31.2 
    
    Principal Financial Officer Certification Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, filed herewith.Exhibit 32.1 
    
    Chief Executive Officer Certification Pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, furnished herewith.Exhibit 32.2 
    
    Chief Financial Officer Certification Pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, furnished herewith.




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##### Table of Contents



SIGNATURES
  THE TIMBERLAND COMPANY

(Registrant)Date: August 6, 2009
    By:
    /s/ JEFFREY B. SWARTZJeffrey B. SwartzChief Executive OfficerDate: August 6, 2009
    By:
    /s/ JOHN D. CRIMMINS, IIIJohn D. Crimmins, IIIChief Financial Officer




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    DescriptionExhibit 10.1
    
    Form of Director Restricted Stock Unit Agreement under The
Timberland Company 2007 Incentive Plan, filed herewith.Exhibit 31.1
    
    Principal Executive Officer Certification Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002, filed herewith.Exhibit 31.2
    
    Principal Financial Officer Certification Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002, filed herewith.Exhibit 32.1
    
    Chief Executive Officer Certification Pursuant to Section
1350, Chapter 63 of Title 18, United States Code, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
furnished herewith.Exhibit 32.2
    
    Chief Financial Officer Certification Pursuant to Section
1350, Chapter 63 of Title 18, United States Code, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
furnished herewith.