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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended December 31, 1999
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
The Timberland Company
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 02-0312554
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
200 Domain Drive, Stratham, New Hampshire 03885
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (603) 772-9500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Class A Common Stock, par value $.01 per share New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of Class A Common Stock of the Company held by
non-affiliates of the Company was approximately $594,479,521 on February 25,
2000. For purposes of the foregoing sentence, the term "affiliate" includes each
director and executive officer of the Company. See Item 12 of this Form 10-K.
15,758,230 shares of Class A Common Stock and 4,675,200 shares of Class B Common
Stock of the Company were outstanding on February 25, 2000.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Company's Annual Report to security holders for the fiscal
year ended December 31, 1999 are incorporated by reference in Part I, Item 1,
and Part II, Items 5, 6, 7, 7A and 8, of this Form 10-K. Portions of the
Company's definitive Proxy Statement for the 2000 Annual Meeting of Stockholders
to be filed pursuant to Regulation 14A are incorporated by reference in Part
III, Items 10, 11, 12 and 13, of this Form 10-K.
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PART I
ITEM 1. BUSINESS
OVERVIEW
The Timberland Company was incorporated in Delaware on December 20, 1978.
It is the successor to Abington Shoe Company, which was incorporated in
Massachusetts in 1933 (The Timberland Company, together with its subsidiaries,
is referred to herein as "Timberland" or the "Company," unless the context
indicates otherwise).
The Company designs, develops, engineers, markets and distributes, under
the Timberland(R), Mountain Athletics(TM) by Timberland, and Timberland PRO(TM)
brands, premium-quality footwear and apparel and accessories products for men,
women and children. These products provide functional performance, classic
styling and lasting protection from the elements. The Company believes that the
combination of these features makes Timberland's products an outstanding value
and distinguishes Timberland from its competitors.
Timberland's products are sold primarily through independent retailers,
better-grade department stores and athletic stores that reinforce the high level
of quality, performance and service associated with Timberland. In addition,
Timberland's products are sold in Timberland(R) specialty stores and
Timberland(R) factory outlet stores dedicated exclusively to selling Timberland
products.
CURRENT PRODUCTS
The Company's products fall into two primary groups: (1) footwear and (2)
apparel and accessories (including product care and licensed products). The
following table presents the percentage of the Company's total product revenue
(excluding royalties from third party distributors and licensees) derived from
the Company's sales of footwear and of apparel and accessories for the past
three years:
Product 1999 1998 1997
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Footwear 79.1% 76.9% 75.4%
Apparel and Accessories 20.9 23.1 24.6
FOOTWEAR
In 1973, the Company produced its first pair of waterproof leather boots
under the Timberland brand. The Company currently offers a broad variety of
footwear products for men, women and children, featuring premium materials,
state-of-the-art functional design and components and advanced construction
methods. The Company's footwear design and development group is organized into
the following teams: men's, women's, kids, boots/Timberland PRO, performance and
Mountain Athletics. Each team is responsible for all aspects of the footwear
development process.
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Timberland(R) men's 1999 footwear products included the Work Casual,
Casual, Boat Shoes, Sandals and Rugged collections. Timberland(R) women's 1999
footwear products included the Work Casual, Rugged Casual, Casual and Sandals
collections. Timberland(R) kids' footwear products are scaled-down versions of
the Company's high-quality adult footwear products. Timberland(R) performance
footwear products for men and women included the Enthusiast, Recreational and
Classic Day Hiking collections and the Walking, Amphibious and Travel Adventure
Collections in 1999. Timberland(R) boots include the classic work boots for
which the Company is widely recognized.
In 1999, Timberland introduced its Timberland PRO(TM) and Mountain
Athletics(TM) by Timberland sub-brands. The Timberland PRO(TM) series of work
boots provides the professional tradesman with footwear that meets the specific
needs of his or her trade and the quality and innovation of Timberland(R) work
boots. Mountain Athletics by Timberland footwear is engineered to meet the
demanding needs of the outdoor athlete, and includes technical features designed
specifically for such outdoor sports as trail running, fastpacking, bouldering
and scrambling.
Most Timberland(R) performance footwear products and many other
Timberland(R) footwear products offer advanced technologies such as Active
Comfort Technology(TM) (ACT(TM)), an integrated system developed by the Company
that combines some or all of the following features:
- - Advanced Combination Construction - designed to deliver forefoot
flexibility for maneuverability and rear-foot stability for rugged terrain;
- - B.S.F.P.(TM) motion efficiency system - Timberland's patent pending
technology designed to deliver improved traction, energy-return and length
of wear;
- - Guaranteed Waterproof Construction; and
- - Climate Control - moisture-wicking, breathable linings to help control foot
perspiration.
APPAREL AND ACCESSORIES
Timberland(R) adult apparel products consist primarily of rugged outerwear,
sweaters, shirts, pants and shorts for men. These products feature, in certain
models, premium waterproof leathers, waterproof and water resistant fabric,
rust-proof hardware, canvas, denim, high-quality specialty cotton, wool and
other quality performance materials. Timberland(R) boys' apparel products are
designed, manufactured and distributed pursuant to a license agreement. While
the Company currently does not manufacture or distribute women's apparel, it is
evaluating alternatives for women's apparel, including third party licensing.
Timberland will also offer Mountain Athletics(TM) apparel products for Fall
2000.
Timberland(R) and Mountain Athletics(TM) by Timberland accessories products
for men, women and children include all products other than footwear and apparel
products. Many of these products, including watches, men's belts, day packs and
travel gear, socks and legwear, gloves, sunglasses and ophthalmic frames, hats
and caps, and men's small leather goods, are designed, manufactured and
distributed pursuant to licensing agreements with third parties.
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Timberland receives a royalty on sales of these licensed products. Third-party
licensing enables the Company to expand Timberland's reach to appropriate and
well-defined product categories and to benefit from the expertise of the
licensees, in a manner that reduces the risks to the Company associated with
pursuing such opportunities. Timberland(R) accessories also include leather care
products and a limited collection of leather goods, including luggage,
briefcases, handbags, wardrobe accessories and small leather goods.
PRODUCT SALES; BUSINESS SEGMENTS AND OPERATIONS BY GEOGRAPHIC AREA
Timberland's products are sold in the United States and internationally
primarily through independent retailers, better-grade department stores and
athletic stores which reinforce the high level of quality, performance and
service associated with Timberland. In addition, Timberland's products are sold
in Timberland(R) specialty stores and Timberland(R) factory outlet stores
dedicated exclusively to selling Timberland(R) products.
The Company operates in an industry which includes the designing,
engineering, marketing and distribution of footwear and apparel and accessories
products for men, women and children. The Company has five revenue generating
business units with separate management teams and financial reporting
accountability. For financial reporting purposes, the Company aggregates these
business units into the following three reportable segments, each sharing
similar product, distribution, marketing and economic conditions: U.S.
Wholesale, U.S. Retail and International.
The U.S. Wholesale segment is comprised of the Company's worldwide product
development and manufacturing/sourcing for footwear and apparel and accessories,
and the sale of such products to wholesale customers in the United States. The
U.S. Wholesale segment also includes royalties from licensed products sold in
the United States and the management costs and expenses associated with the
Company's worldwide licensing efforts. The U.S. Retail segment includes the
Company-operated specialty and factory outlet stores in the United States. The
International segment consists of the marketing, selling and distribution of
footwear, apparel and accessories and licensed products outside of the United
States, including the Company's subsidiaries and operating divisions (which use
wholesale and retail channels to sell footwear and apparel and accessories),
independent distributors and licensees.
The following table presents the percentage of the Company's total revenue
generated by each of these reporting segments for the past three years:
1999 1998 1997
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U.S. Wholesale 53.2% 52.3% 53.7%
U.S. Retail 19.0 18.5 18.9
International 27.8 29.2 27.4
More detailed information regarding these reportable segments and each of
the geographic areas in which the Company operates, is set forth in Note 10 to
the Company's consolidated financial statements, entitled "Business Segments and
Geographical Information," appearing in the Company's 1999 Annual Report, which
information is incorporated herein by reference.
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U.S. WHOLESALE
The Company's wholesale customer accounts within the United States range
from better-grade department and retail stores to athletic stores. Many of these
wholesale accounts merchandise Timberland's products in selling areas dedicated
exclusively to Timberland's products, or "concept shops." These accounts are
serviced through a combination of field and corporate-based sales teams
responsible for these distribution channels. The Company also services its
wholesale accounts through its principal showroom in New York City and a
regional showroom in Dallas, Texas.
U.S. RETAIL
At December 31, 1999, the Company operated 19 specialty stores and 45
factory outlet stores in the United States.
TIMBERLAND(R) SPECIALTY STORES. These stores carry current season, first
quality merchandise and provide:
- - an environment to showcase Timberland's products as an integrated source of
footwear and apparel and accessories;
- - sales and consumer-trend information which assists the Company in
developing its marketing strategies, including point-of-purchase marketing
materials; and
- - an opportunity to develop training and customer service programs, which
also serve as models which may be adopted by the Company's wholesale
customers.
TIMBERLAND(R) FACTORY OUTLET STORES. These stores serve as a primary
channel for the sale of excess, damaged or discontinued products. The Company
views these factory outlet stores as a way to preserve the integrity of the
Timberland name, while maximizing the return associated with the sale of such
products.
INTERNATIONAL
The Company sells its products internationally through its operating
divisions in the United Kingdom, France, Germany, Italy, Spain, Austria and
Chile. These operating divisions provide support for the sale of Timberland's
products to wholesale customers and operate Timberland specialty stores and
factory outlet stores in their respective countries. At December 31, 1999, the
Company operated 19 specialty stores and seven factory outlet stores in Europe
and Chile.
Timberland(R) products are sold elsewhere in Europe and in the Middle East,
Africa, Central America and South America by distributors, franchisees and
commission agents, some of which also may operate Timberland specialty and
factory outlet stores located in their respective countries.
The Company recently announced that it signed an agreement under which it
will re-acquire the exclusive distribution rights for the Asia-Pacific region
from Inchcape plc. The Company will manage the sale of
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Timberland(R) products in Japan, Singapore, Malaysia and Hong Kong through
subsidiaries. The Company plans to pursue arrangements with appropriate
distributors in other markets in the Asia-Pacific region.
DISTRIBUTION
The Company distributes its products through three Company-managed
distribution facilities which are located in Danville, Kentucky, Ontario,
California, and Enschede, Holland.
ADVERTISING AND MARKETING
The Company designs its advertising campaigns to increase brand awareness
among consumers and to emphasize the attributes that distinguish the
Timberland(R) brand from competing brands and make the Company's products an
outstanding value. The Company's distributors and licensees also fund marketing
campaigns, over which the Company maintains approval rights to ensure consistent
and effective brand presentation.
During 1999, the Company's national and regional advertising campaigns
mainly appeared in the following media: television; active-lifestyle, fashion,
business and sports-oriented consumer periodicals; trade press outlets; and
outdoor advertising placements. The Company's advertising campaigns focused on
the second half of 1999, particularly on the third quarter, when the Company's
revenue historically has been highest.
The Company reinforced these advertising efforts with a variety of
promotional campaigns, retail promotions, point-of-purchase displays and
materials, public relations efforts, and cooperative advertising programs with
its retailers, as well as retail sales clerk training and other sales incentive
programs. The Company maintains internet web sites at www.timberland.com and
www.mountainathletics.com for use in its marketing efforts. The Company also
promotes its products at various industry trade shows in the United States and
internationally.
SEASONALITY
In 1999, as has been historically the case, the Company's revenue was
higher in the last two quarters of the year than in the first two quarters.
Accordingly, the amount of fixed costs related to the Company's operations
typically represented a larger percentage of revenue in the first two quarters
of 1999 than in the last two quarters of 1999. The Company expects this
seasonality to continue in 2000.
BACKLOG
At December 31, 1999, Timberland's backlog of orders from its customers was
approximately $216 million, compared to $188 million at December 31, 1998 and
$186 million at December 31, 1997. While all orders in the backlog are subject
to cancellation by customers, the Company expects that the majority of such
orders will be filled in 2000. The Company does not believe that its order
backlog at year-end is representative of the orders which will be filled during
2000. The lack of reliability of backlog as an indication of orders to be filled
is due to the
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risk of cancellation associated with such orders, the seasonality of the
Company's revenue and the difficulty of planning in advance orders scheduled for
immediate fulfillment.
MANUFACTURING
The Company has two manufacturing facilities located in Puerto Rico and the
Dominican Republic. During 1999, the Company manufactured approximately 18% of
its footwear unit volume, compared to approximately 20% during 1998 and 28%
during 1997. The remainder of the Company's footwear products and all of its
apparel and accessories products were produced by independent manufacturers and
licensees in Asia, Europe, South America and Mexico. Approximately 51% of the
Company's 1999 footwear unit volume was produced by independent manufacturers in
China and Taiwan. Three of these manufacturers produced approximately 10% to 18%
each of the Company's 1999 footwear volume. The Company currently plans to
retain its internal manufacturing capability in order to continue benefiting
from reduced lead times, favorable duty rates and tax benefits.
To the extent that the Company manufactures its products outside the United
States or is dependent upon foreign operations with unaffiliated parties, the
Company is subject to the usual risks of doing business abroad. These risks
potentially include, among other risks, foreign exchange rate fluctuations,
import restrictions, anti-dumping investigations, political or labor
disturbances, expropriation and acts of war.
The Company maintains a quality management group, which develops, reviews
and updates the Company's quality and production standards. To help ensure such
standards are met, the group also conducts product quality audits at the
Company's and independent manufacturers' factories and distribution centers. The
Company has offices in Bangkok, Thailand, Taichung, Taiwan, and Zhu Hai, China,
to supervise the Company's sourcing activities conducted in the Asia-Pacific
region.
RAW MATERIALS
In 1999, five suppliers provided, in the aggregate, approximately 70% of
the Company's leather purchases. One of these suppliers provided approximately
42% of the Company's leather purchases in 1999. The Company believes that
leather will continue to be available from these or alternative sources. The
Company has established a central network of suppliers through which the
Company's manufacturing facilities and independent manufacturers can purchase
raw materials. The Company seeks sources of raw materials local to
manufacturers, in an effort to reduce lead times while maintaining the Company's
high quality standards. The Company believes that key strategic alliances with
leading raw materials vendors help reduce the cost and provide greater
consistency of raw materials procured to produce Timberland(R) products and
improve compliance with the Company's production standards. In 1999, the Company
finalized contracts with global vendors for such raw materials as packaging,
insole board, leather laces, handsewing thread and selected synthetic linings.
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TRADEMARKS AND TRADE NAMES; PATENTS; RESEARCH & DEVELOPMENT
The Company's principal trade name is The Timberland Company and the
Company's principal trademarks are TIMBERLAND and the TREE DESIGN LOGO, which
have been registered in the United States and several foreign countries. Other
Company trademarks or registered trademarks are 24-7 Comfort Suspension, ACT,
Active Comfort Technology, Aero Balm, Balm Shelter, Bootness, B.S.F.P., Cream
Buff, Endoskeleton, Euro Rec, Euro TecRec, Fastpacker, Gear For Outdoor
Athletes, Grime Squad, Guaranteed Waterproof Construction, Hydro Balm, ISN,
Independent Suspension Network, Jackson Mountain, Lockseam, More Quality Than
You May Ever Need, Mountain Athletics, Path of Service, Pull On Your Boots, Pull
On Your Boots and Make a Difference, TBL, The Boot Company, This is a trip, This
is not baggage, This is your new best friend, Timberland Pro, Trail Grip,
Treeline, Waximum, Weathergear, Wind, Water, Earth and Sky, and Workboots For
The Professional, and the following design logos:
[TIMBERLAND PRODUCT LOGOS]
The Company regards its trade name and trademarks as valuable assets and
believes that they are important factors in marketing its products. The Company
seeks to protect and defend vigorously its trade name and trademarks against
infringement under the laws of the United States and other countries. In
addition, the Company seeks to protect and defend vigorously its patents,
designs, copyrights and all other proprietary rights under applicable laws.
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The Company conducts research, design and development efforts for its
products, including field testing of a number of its products to evaluate and
improve product performance. However, the Company's expenses relating to
research, design and development have not represented a material expenditure
relative to its other expenses.
COMPETITION
The Company's footwear, apparel and accessories products are marketed in
highly competitive environments that are subject to rapid changes in consumer
preference. Although the footwear industry is fragmented to a great degree, many
of the Company's competitors are larger and have substantially greater resources
than the Company, including athletic shoe companies, many of which compete
directly with some of the Company's products. In addition, the Company faces
competition from retailers that are establishing products under private labels
and from at least two direct mail companies in the United States.
Product quality, performance, design, styling and pricing, as well as
consumer awareness, are all important elements of competition in the footwear
and the apparel and accessories markets served by the Company. Although changing
fashion trends generally affect demand for particular products, the Company
believes that, because of the functional performance, classic styling and high
quality of Timberland(R) footwear products, demand for most Timberland footwear
products is less sensitive to changing trends in fashion than other products
that are designed specifically to meet such trends.
The Company does not believe that any of its principal competitors offers a
complete line of products that provide the same quality and performance as the
complete line of Timberland footwear and apparel and accessories products.
However, the Company does have a variety of major competitors, as follows:
Product Category Number of Competitors
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Footwear: work boots/Timberland PRO(TM) 9
casual and comfort 11
dress casual 12
Mountain Athletics(TM)/performance 13
kids' 6
Apparel: men's 12
kids' 10
ENVIRONMENTAL MATTERS
Compliance with federal, state and local environmental regulations has not
had, nor is it expected to have, any material effect on the capital
expenditures, earnings or competitive position of the Company based on
information and circumstances known to the Company at this time.
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EMPLOYEES
At December 31, 1999, the Company had approximately 4,800 employees
worldwide. Management considers its employee relations to be good. None of the
Company's employees is represented by a labor union, and the Company has never
suffered a material interruption of business caused by labor disputes.
ITEM 2. PROPERTIES
Since April 1994, the Company has leased its worldwide headquarters located
in Stratham, New Hampshire, under a lease that expires in September 2010, with
the option to extend the term for two additional five-year periods. The Company
considers its headquarters facilities adequate and suitable for its current
needs.
The Company leases its manufacturing facilities located in Isabela, Puerto
Rico, and Santiago, Dominican Republic, under 11 leasing arrangements, which
expire on various dates through April 2003. The Company owns its distribution
facility in Danville, Kentucky, and leases its facilities in Ontario,
California, and Enschede, Holland. The Company leases all of its specialty and
factory outlet stores. The Company's subsidiaries also lease office and
warehouse space to meet their individual requirements.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various litigation and legal matters that have
arisen in the ordinary course of business. Management believes that the ultimate
resolution of any existing matter will not have a material adverse effect on the
Company's consolidated financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended December 31, 1999, no
matter was submitted to a vote of security holders through the solicitation of
proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is included in the Company's 1999
Annual Report under the caption "Quarterly Market Information and Related
Matters" and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is included in the Company's 1999
Annual Report under the caption "Five Year Summary of Selected Financial Data"
and is incorporated herein by reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is included in the Company's 1999
Annual Report under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is included in the Company's 1999
Annual Report under the caption "Quantitative and Qualitative Disclosures about
Market Risk" and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is included in the Company's 1999
Annual Report and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the information set forth below and to the information
under the caption "Information with Respect to Nominees" in the Company's
definitive Proxy Statement (the "2000 Proxy Statement") relating to its 2000
Annual Meeting of Stockholders, to be filed with the Securities and Exchange
Commission (the "Commission") within 120 days after the close of the Company's
fiscal year ended December 31, 1999, which information is incorporated herein by
reference. Reference is also made to the information set forth in the Company's
2000 Proxy Statement with respect to compliance with Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
information is incorporated herein by reference.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists the names, ages and principal occupations during
the past five years of the Company's executive officers. All executive officers
serve at the discretion of the Company's Board of Directors.
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NAME AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
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Sidney W. Swartz 64 Chairman of the Board since June 1986; Chief Executive Officer and
President, June 1986-June 1998.
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Jeffrey B. Swartz 40 President and Chief Executive Officer since June 1998; Chief
Operating Officer, May 1991-June 1998; Executive Vice President,
March 1990-June 1998. Jeffrey Swartz is the son of Sidney Swartz.
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Kenneth P. Pucker 37 Executive Vice President, Footwear and Apparel since September,
1999; Senior Vice President and General Manager-Footwear, December
1997-September 1999; Vice President and General Merchandising
Manager-Footwear, April 1996-December 1997; Vice President-Strategic
Initiatives, January 1995-April 1996; General Manager-The Outdoor
Footwear Company (a subsidiary of the Company), October 1993-January
1995.
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Geoffrey J. Hibner 50 Senior Vice President - Finance and Administration and Chief
Financial Officer, May 1997-March 2000.
Frontier Technologies Corporation: Chief Financial Officer, August
1995-May 1997.
Universal Foods Corporation: Vice President, Finance, July
1988-January 1995.
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Carden N. Welsh 46 Senior Vice President-International since May 1998; Treasurer, April
1991-May 1998.
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David N. Smith 43 Senior Vice President-Supply Chain since January 2000.
The Estee Lauder Companies Inc.: Vice President-Strategy, Global
Operations, August 1995-January 2000.
Fisons, plc: General Manager, May 1992-August 1995.
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Dennis W. Hagele 56 Vice President-Finance and Corporate Controller (Chief Accounting
Officer) since October 1994.
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Danette Wineberg 53 Vice President and General Counsel since October 1997.
Little Caesar Enterprises, Inc.: General Counsel, November
1993-October 1997.
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ITEM 11. EXECUTIVE COMPENSATION
Reference is made to the information set forth under the caption "Executive
Compensation" in the Company's 2000 Proxy Statement, which information is
incorporated herein by reference.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reference is made to the information set forth under the caption "Security
Ownership of Certain Beneficial Owners and Management" in the Company's 2000
Proxy Statement, which information is incorporated herein by reference. The
aggregate market value of the Class A Common Stock held by non-affiliates of the
Company appearing on the cover page of this report includes the shares owned by
The Sidney W. Swartz 1982 Family Trust, The Swartz Foundation and The Sidney and
Judith Swartz Charitable Remainder Unitrust.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to the information set forth under the caption "Certain
Relationships and Related Transactions" in the Company's 2000 Proxy Statement,
which information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS. The following financial statements appearing
in the Company's 1999 Annual Report are incorporated by reference in this
report:
ANNUAL REPORT
PAGE
----
Consolidated Balance Sheets as of December 31, 1999 and 1998 17
For the years ended December 31, 1999, 1998 and 1997:
Consolidated Statements of Income 18
Consolidated Statements of Changes in Stockholders' Equity 19
Consolidated Statements of Cash Flows 20
Notes to Consolidated Financial Statements 21
Independent Auditors' Report 32
(a)(2) FINANCIAL STATEMENT SCHEDULE. The following additional financial
data should be read in conjunction with the consolidated financial statements in
the Company's 1999 Annual Report:
FORM 10-K PAGE
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Independent Auditors' Report on Schedule II F-1
14
Schedule II - Valuation and Qualifying Accounts F-2
All other schedules for which provision is made in the applicable
accounting regulations of the Commission are not required under the related
instructions or are inapplicable and have, therefore, been omitted.
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed by the Company
during the fourth quarter of 1999.
(c) EXHIBITS. Listed below are all the Exhibits filed as part of this
report, some of which are incorporated by reference from documents previously
filed by the Company with the Commission in accordance with the provisions of
Rule 12b-32 of the Exchange Act.
EXHIBIT DESCRIPTION
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(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Restated Certificate of Incorporation(1)
3.2 By-Laws, as amended May 19, 1993(2)
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
(See also Exhibits 3.1 and 3.2)
4.1 Specimen stock certificate for shares of the Company's Class A Common
Stock(3)
(10) MATERIAL CONTRACTS
10.1 Agreement dated as of August 29, 1979 between The Timberland Company
and Sidney W. Swartz(1)
10.2 (a) The Company's 1987 Stock Option Plan, as amended(4)
(b) The Company's 1997 Stock Option Plan for Non-Executive
Employees(5)
(c) The Company's 1997 Incentive Plan(4)
10.3 The Company's 1991 Employee Stock Purchase Plan, as amended(6)
10.4 The Company's 1991 Stock Option Plan for Non-Employee Directors(7)
10.5 The Timberland Company Short Term Incentive Plan(2)
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EXHIBIT DESCRIPTION
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10.6 The Timberland Company Retirement Earnings 401(k) Plan and Trust
Agreements(8)
10.7 The Timberland Company Profit Sharing Plan and Trust Agreements(8)
10.8 Credit Agreement dated as of April 30, 1998 among The Timberland
Company, certain banks listed therein and Morgan Guaranty Trust
Company of New York, as Agent(9)
10.9 (a) Note Agreements dated as of December 15, 1994 regarding 8.94%
Senior Notes due December 15, 2001(10)
(b) Amendment No. 1 dated as of April 1, 1995 to Note Agreements(11)
(c) Amendment No. 2 dated as of June 28, 1995 to Note Agreements(11)
(d) Amendment No. 3 dated as of June 21, 1996 to Amended and Restated
Note Agreements(12)
(13) ANNUAL REPORT TO SECURITY HOLDERS
13. Portions of the 1999 Annual Report as incorporated herein by
reference, filed herewith
(21) SUBSIDIARIES
21. List of subsidiaries of the registrant, filed herewith
(23) CONSENT OF EXPERTS AND COUNSEL
23. Consent of Deloitte & Touche LLP, filed herewith
(27) FINANCIAL DATA SCHEDULE
27. Financial Data Schedule for the year ended December 31, 1999, filed
herewith
(99) ADDITIONAL EXHIBIT
99. Cautionary Statements for Purposes of the "Safe Harbor" Provisions of
the Private Securities Litigation Reform Act of 1995, filed herewith
Pursuant to paragraph 4(iii) of Item 601(b), Regulation S-K, the Company
has filed as Exhibits only the instruments defining the rights of holders of
long-term debt of the Company and its consolidated subsidiaries with respect to
which the total amount of securities authorized thereunder exceeds 10% of the
total assets of the Company and its subsidiaries on a consolidated
16
EXHIBIT DESCRIPTION
- ------- -----------
basis. The Company agrees to furnish to the Commission, upon its request, copies
of other instruments defining the rights of holders of long-term debt of the
Company and its subsidiaries, with respect to which the total amount does not
exceed 10% of such assets. The Company also agrees to furnish to the Commission,
upon its request, copies of any omitted schedule or exhibit to any Exhibit filed
herewith.
- ---------------------------
(1) Filed as an exhibit to Registration Statement on Form S-1, numbered
33-14319, and incorporated herein by reference.
(2) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, and incorporated herein by reference.
(3) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, and incorporated herein by reference.
(4) Filed on June 21, 1995, as an exhibit to Registration Statement on Form S-8,
numbered 33-60457, and incorporated herein by reference.
(5) Filed on September 9, 1997 as an exhibit to Registration Statement on Form
S-8, numbered 333-35223, and incorporated herein by reference.
(6) Filed on June 21, 1995, as an exhibit to Registration Statement on Form S-8,
numbered 33-60459, and incorporated herein by reference.
(7) Filed on August 18, 1992, as an exhibit to Registration Statement on Form
S-8, numbered 33-50998, and incorporated herein by reference.
(8) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, and incorporated herein by reference.
(9) Filed as an exhibit to the Quarterly Report on Form 10-Q for the fiscal
period ended June 26, 1998, and incorporated herein by reference.
(10) Filed as an exhibit to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, and incorporated herein by reference.
(11) Filed as an exhibit to the Quarterly Report on Form 10-Q for the fiscal
period ended June 30, 1995, and incorporated herein by reference.
(12) Filed as an exhibit to the Quarterly Report on Form 10-Q for the fiscal
period ended June 27, 1996, and incorporated herein by reference.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
March 24, 2000 By: /s/ Jeffrey B. Swartz
---------------------
Jeffrey B. Swartz, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Sidney W. Swartz Chairman of the Board
- -------------------- and Director March 24, 2000
Sidney W. Swartz
/s/ Jeffrey B. Swartz President, Chief Executive
- --------------------- Officer and Director (Principal
Jeffrey B. Swartz Executive Officer) March 24, 2000
/s/ Geoffrey J. Hibner Senior Vice President-Finance
- ---------------------- and Administration and Chief
Geoffrey J. Hibner Financial Officer March 10, 2000
/s/ Dennis W. Hagele Vice President-Finance
- -------------------- and Corporate Controller
Dennis W. Hagele (Chief Accounting Officer) March 24, 2000
/s/ Robert M. Agate Director March 24, 2000
- -------------------
Robert M. Agate
/s/ John F. Brennan Director March 24, 2000
- -------------------
John F. Brennan
/s/ Ian W. Diery Director March 24, 2000
- ----------------
Ian W. Diery
/s/ John A. Fitzsimmons Director March 24, 2000
- -----------------------
John A. Fitzsimmons
/s/ Virginia H. Kent Director March 24, 2000
- --------------------
Virginia H. Kent
/s/ Indra K. Nooyi Director March 24, 2000
- ------------------
Indra K. Nooyi
/s/ Abraham Zaleznik Director March 24, 2000
- --------------------
Abraham Zaleznik
18
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of The Timberland Company:
We have audited the consolidated financial statements of The Timberland
Company and subsidiaries as of December 31, 1999 and 1998 and for each of the
three years in the period ended December 31, 1999, and have issued our report
thereon dated February 2, 2000 (February 18, 2000 as to Note 15); such
consolidated financial statements and report are included in your 1999 Annual
Report to security holders and are incorporated herein by reference. Our audits
also included the consolidated financial statement schedule of The Timberland
Company listed in Item 14(a)(2). This consolidated financial statement schedule
is the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 2, 2000
(February 18, 2000 as to Note 15)
F-1
19
SCHEDULE II
THE TIMBERLAND COMPANY
VALUATION AND QUALIFYING ACCOUNTS
(Dollars In Thousands)
- ---------------------------------------------------------------------------------------------------------------------
Additions Deductions
- ---------------------------------------------------------------------------------------------------------------------
Balance at Charged to Write-Offs,
Beginning of Costs and Charged to Other Net of Balance at End
Period Expenses Accounts Recoveries Of Period
- ---------------------------------------------------------------------------------------------------------------------
Description
- ---------------------------------------------------------------------------------------------------------------------
Allowance for
doubtful accounts:
- ---------------------------------------------------------------------------------------------------------------------
Year ended
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1999 $4,769 $3,618 -- $3,477 $4,910
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1998 3,742 2,383 -- 1,356 4,769
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1997 3,540 3,605 -- 3,403 3,742
- ---------------------------------------------------------------------------------------------------------------------
Group insurance
reserve:
- ---------------------------------------------------------------------------------------------------------------------
Year ended
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1999 $1,077 $5,793 -- $5,746 $1,124
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1998 1,100 4,377 -- 4,400 1,077
- ---------------------------------------------------------------------------------------------------------------------
December 31, 1997 1,035 6,803 -- 6,738 1,100
- ---------------------------------------------------------------------------------------------------------------------
F-2
20
TIMBERLAND, the TREE DESIGN LOGO, 24-7 Comfort Suspension, ACT, Active Comfort
Technology, Aero Balm, Balm Shelter, Bootness, B.S.F.P., Cream Buff,
Endoskeleton, Euro Rec, Euro TecRec, Fastpacker, Gear For Outdoor Athletes,
Grime Squad, Guaranteed Waterproof Construction, Hydro Balm, ISN, Independent
Suspension Network, Jackson Mountain, Lockseam, More Quality Than You May Ever
Need, Mountain Athletics, Path of Service, Pull On Your Boots, Pull On Your
Boots and Make a Difference, TBL, The Boot Company, This is a trip, This is not
baggage, This is your new best friend, Timberland Pro, Trail Grip, Treeline,
Waximum, Weathergear, Wind, Water, Earth and Sky, Workboots For The
Professional, the 24-7 Comfort Suspension logo, the PRO and PRO Series logos,
the Mountain Athletics logos, the Endoskeleton logo and the Independent
Suspension Network logo are trademarks or registered trademarks of The
Timberland Company.
(C)The Timberland Company 2000
All Rights Reserved.