Comprehensive Financial Analysis: Columbia Sportswear vs. The Timberland Company

Comprehensive Financial Analysis
Columbia Sportswear Company vs. The Timberland Company

Prepared by Rachel Wilcox-Miano

NSCC Accounting 202: Principles of Accounting II

Comprehensive Financial Analysis Case Columbia vs. Timberland

Table of Contents

Financial Analysis – Part I

R1: Vertical and Horizontal Analysis ...........................................................................................................................2-5
Income Statement – Columbia Sportswear Company (Required)............................... 2
Income Statement – The Timberland Company (Supplemental) ................................ 2
Analysis ........................................................................................................................ 3
Columbia Sportswear Company (Required) – Balance Sheet, Analysis ....................... 4
The Timberland Company (Supplemental) – Balance Sheet, Analysis ........................ 5

R2: Basic Earnings Per Share (EPS)................................................................................................................................. 6
Columbia Sportswear Company (Required) – Data ..................................................... 6
The Timberland Company (Supplemental) – Data ...................................................... 6
Analysis ........................................................................................................................ 6

R3: Liquidity and Profitability Analysis – Working Capital, Ratios ................................................................................. 7
Columbia Sportswear Company (Required) – Data ..................................................... 7
The Timberland Company (Supplemental) – Data ...................................................... 7
Analysis ........................................................................................................................ 7

R4: Market Analysis – Columbia Sportswear Company vs. Industry Averages .............................................................. 8
P/E, Dividends Per Share Data ..................................................................................... 8
Analysis/Evaluation ..................................................................................................... 8

Financial Analysis – Part II

R1: Trend Analysis – Columbia vs. Timberland .........................................................................................................9-11
Discussion .................................................................................................................... 9
Common-size Income Statement ................................................................................ 9
Columbia Sportswear Company – Data, Analysis ...................................................... 10
The Timberland Company – Data, Analysis ............................................................... 11

R2: Analyst’s Recommendation ................................................................................................................................... 12

Appendices

Appendix A: Financial Reports, Columbia Sportswear Company ...........................................................................13-25
FY 2008 Annual Report – Financial Reports ................................................... 13, 15-19
FY 2007 Annual Report – Balance Sheet (FY 2006 Data) ........................................... 14
Appendix B: Financial Reports, The Timberland Company .....................................................................................20-26
FY 2008 Annual Report – Financial Reports ................................................... 20, 22-26
FY 2007 10K – Balance Sheet (FY 2006 Data) ............................................................ 21

• 1 •


Financial Analysis – Part I: Requirement 1

R1: Vertical Analysis - Consolidated Income Statement

Columbia Sportswear Company

The Timberland Company (Supplemental)

• 2 •


Financial Analysis – Part I: Requirement 1 (continued)

Analysis

A vertical analysis of Columbia Sportswear’s Income Statement reveals that Cost of Sales was 56.9% of Net Sales
compared with 57.2% in 2007, and 58.0% in 2006. Despite a decrease in Net Sales and Gross Profit from 2007 to
2008, due to the reduction in Cost of Sales, Gross Profit was 43.1% of Net Sales in 2008, compared with only 42.8%
in 2007 (and 42.0% in 2006).

The increase in SG&A expense in 2008 over 2007, (the causes of which are explained in great detail in the Notes to
the Financial Statements in the FY 2008 Annual Report), as well as the impairment of goodwill and an acquired
patent resulted in significantly reduced Income from Operations in 2008, which fell from 14.7% of Net Sales in
2007 to a mere 9.0% in 2008.

While on the surface these trends would tend to be cause for concern, a rapid comparison with one of Columbia
Sportswear’s biggest rivals for the outdoor apparel market, The Timberland Company, reveals that Columbia’s
situation, while somewhat in decline, is still significantly better than its competitor.

Although vertical analysis of a company can be a useful tool to gauge its trends over time, it is an insufficient tool
with which to make an informed decision unless used in tandem with other evaluation methods.

• 3 •



R1: Horizontal Analysis – Consolidated Balance Sheet


Analysis

Columbia Sportswear’s 20.1% increase of Cash and Cash Equivalents in 2008 is offset by the significant liquidation
of its short-term investments (a 72.5% reduction). Prepaid expenses and other current assets more than doubled,
resulting in a reduced, but relatively stable, 1.5% reduction to Total Current Assets. The increased PPE was offset
by the impairment to both Goodwill and the patent, resulting in a 1.6% decline in Total Assets.
Although the collective fluctuations to Columbia Sportswear’s liabilities could be considered volatile, after all
changes had been factored in, Total Liabilities increased just 4.0% over the course of the year.
Despite Columbia Sportswear and Timberland’s having both implemented a significant stock repurchase, unlike its
competitor, in 2008 Columbia Sportswear elected to record its substantial repurchase as a reduction to total
retained earnings rather than include a line item for Treasury Stock on its Balance Sheet, otherwise, as stated in its
Notes to Consolidated Financial Statements, the aggregate purchase price would have resulted in a negative stock
carrying amount.
• 4 •




Analysis

A horizontal analysis of The Timberline Company’s Balance Sheet yields a somewhat somber result. Although the
company appears stable with 1.6% growth overall, the decline in Inventory, Accounts Receivable, PPE and Other
Assets combined with a 51% growth in Cash and Cash Equivalents gives one the impression that the Timberland’s
management is striving to increase its liquidity. Although in and of itself not a red flag, the company merits further
investigation in order to determine the reasons behind this trend.

• 5 •



R2: Basic Earnings Per Share (EPS)



Analysis

Columbia Sportswear’s EPS remained relatively stable from 2004-06 (with an average value of $3.41), experienced
an 18.0% increase in 2007 only to decline by an astounding 31.3% from 2007 to 2008. Because EPS is calculated
using both Net Income as well as the number of shares of common stock outstanding, its decline can be attributed
to the cumulative effects of reduced Net Income in 2008 coupled with Columbia Sportswear’s corporate stock
repurchasing plan.

Again, a tacit examination of The Timberland Company’s historic EPS values puts Columbia’s situation in a better
light. Not only is Timberland’s EPS consistently lower than that of Columbia Sportswear, it has been in steady
decline since 2006, which corresponds notably with the implementation of Columbia Sportswear’s aggressive
corporate marketing and expansion strategy, and raises the question of whether Timberland’s market share has
suffered because of it, or whether other factors influenced its decline.

• 6 •



R3: Liquidity and Profitability Analysis



Analysis

Due to a 1.5% decrease in Current Assets and a 4.0% increase in Current Liabilities in 2008, the current ratio for
Columbia Sportswear fell 5.3% indicating a reduction in its liquidity; however, at 5.04, it remains strong. In most
cases, a 7.5% drop in the quick ratio would be cause for concern, but Columbia Sportswear’s stands a robust 3.19.
The drop in both ROS and ROE can be attributed to the 34.2% reduction in Net Income combined with an 11.6%
increase in SG&A expense, and indicate impaired profitability, but do not yet constitute a trend.

In contrast, Timberland’s ratios, while acceptable, pale in comparison with Columbia’s performance overall. Since
hitting a 3-year low in 206, Timberland has been steadily increasing its working capital; ROE has been significantly
affected by Timberland’s own stock repurchasing plan as well as its restructuring policies.

• 7 •



R4: Market Analysis


Analysis

Columbia Sportswear’s P/E ratio and dividend yield outperform the industry average, which indicates that
investors are willing to pay more for its shares than for its competitors’.

Evaluation

At 12.86, the 2008 P/E ratio for Columbia Sportswear is 7.17% higher than the industry average, indicating above-
average investor interest. At 1.8%, the dividend yield is slightly higher than the industry average of 1.7%, indicating
that the rate of return on an investment in Columbia Sportswear, while somewhat in line with its competitors, is
still the more favorable option.

• 8 •


Financial Analysis – Part II: Requirement 1

R1: Trend Analysis – Columbia Sportswear vs. Timberland

Discussion

Although the generation of a common-size Income Statement was not a requirement, a comparative analysis of
Columbia Sportswear vs. Timberland would be incomplete without it. Through consolidation of certain elements
and a slight rearrangement of Timberland’s Consolidated Statement of Income, the results are as shown below.

Despite higher Cost of Sales and Gross Profit percentages, Columbia Sportswear’s Income from Operations
outperforms Timberland’s by a margin of 4.1%, in part due to higher SG&A expenses. Columbia Sportswear enjoys
greater interest income and benefitted from its treatment of the 2008 Income Tax expense to arrive at a Net
Income that was of a significantly greater percentage of Net Sales than that of Timberland.

• 9 •


Financial Analysis – Part II: Requirement 1 (continued)


Analysis

Columbia Sportswear’s Net Sales remain strong and exhibit continued growth despite a difficult
economy; although Net Income has fallen drastically from 2007 to 2008, it is due in large part to
impaired goodwill and the impairment of an acquired patent that was determined to have no use
beyond 2009. The fall in Net Income has significantly affected both ROS and ROE, although both the
current and quick ratios remain relatively stable, and at very strong levels. EPS has also been affected by
the drop in Net Income, but the corporate stock repurchase plan also played a role in its decline.

• 10 •


Financial Analysis – Part II: Requirement 1 (continued)

The Timberland Company

Analysis

By comparison, The Timberline Company appears to be in an overall decline despite strong current and
quick ratios and a steady increase in working capital since hitting its 3-year low of $363M in 2006. EPS,
ROS and ROE have all fallen significantly over the periods for which data is available. The strong current
and quick ratios offer hope to investors that the short-term effects of management decisions might
translate into an upward trend overall.

• 11 •


Financial Analysis – Part II: Requirement 2

Analyst’s Recommendation

• 12 •

Appendix A: Financial Reports– Columbia Sportswear Company (
Source: http://investor.columbia.com/annuals.cfm

COLUMBIA SPORTSWEAR COMPANY

CONSOLIDATED BALANCE SHEETS
(In thousands)

December 31,
2008 2007

ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 230,617 $ 191,950
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,433 81,598
Accounts receivable, net (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299,585 300,506
Inventories, net (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256,312 265,874
Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,867 31,169
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,705 14,567
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 872,519 885,664
Property, plant, and equipment, net (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229,693 210,450
Intangibles and other non-current assets (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,365 53,094
Goodwill (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,659 17,273
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,148,236 $1,166,481
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 104,354 $ 95,412
Accrued liabilities (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,085 62,549
Income taxes payable (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,718 7,436
Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,969 949
Other current liabilities (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 185
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,189 166,531
Income taxes payable (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,412 18,663
Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 8,968
Other long-term liabilities (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,545 2,198
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204,146 196,360
Commitments and contingencies (Note 11)
Shareholders’ Equity:
Preferred stock; 10,000 shares authorized; none issued and outstanding . . . . . . . . — —
Common stock (no par value); 125,000 shares authorized; 33,865 and 35,824
issued and outstanding (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,481 17,004
Retained earnings (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909,443 895,476
Accumulated other comprehensive income (Note 14) . . . . . . . . . . . . . . . . . . . . . . 33,166 57,641
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 944,090 970,121
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,148,236 $1,166,481

See accompanying notes to consolidated financial statements.

41

• 13 •



(In thousands)

December 31,
2007 2006

ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 191,950 $ 64,880
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,598 155,170
Accounts receivable, net (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,506 285,858
Inventories, net (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265,874 212,323
Deferred income taxes (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,169 26,740
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,567 12,713
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 885,664 757,684
Property, plant, and equipment, net (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,450 199,426
Intangibles and other non-current assets (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,094 52,681
Goodwill (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,273 17,498
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,166,481 $1,027,289
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Notes payable (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 3,540
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,412 88,107
Accrued liabilities (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,549 63,632
Income taxes payable (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,436 31,523
Deferred income taxes (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 949 948
Other (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 159
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,531 187,909
Other long-term liabilities (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,198 883
Deferred income taxes (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,968 7,794
Income taxes payable (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,663 —
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196,360 196,586
Commitments and contingencies (Note 12)
Shareholders’ Equity:
Preferred stock; 10,000 shares authorized; none issued and outstanding . . . . . . . . — —
Common stock (no par value); 125,000 shares authorized; 35,824 and 35,998
issued and outstanding (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,004 24,370
Retained earnings (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 895,476 771,939
Accumulated other comprehensive income (Note 15) . . . . . . . . . . . . . . . . . . . . . . 57,641 34,394
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970,121 830,703
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,166,481 $1,027,289


39

• 14 •



CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

Year Ended December 31,
2008 2007 2006

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,317,835 $1,356,039 $1,287,672
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,024 776,288 746,617
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567,811 579,751 541,055
Selling, general, and administrative expenses . . . . . . . . . . . . . . . . . . . . . . 430,350 385,769 366,768
Impairment of acquired intangible assets (Note 2) . . . . . . . . . . . . . . . . . . 24,742 — —
Net licensing income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,987 5,157 5,486
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,706 199,139 179,773
Interest income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,537 8,888 5,562
Income before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,243 208,027 185,335
Income tax expense (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31,196) (63,575) (62,317)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,047 $ 144,452 $ 123,018

Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.75 $ 4.00 $ 3.39
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.74 3.96 3.36
Cash dividends per share: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.64 $ 0.58 $ 0.14
Weighted average shares outstanding (Note 13):
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,610 36,106 36,245
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,711 36,434 36,644


42

• 15 •

Appendix A: Financial Reports– Columbia Sportswear Company (FY08-AR, FY07-AR)


CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
2008 2007 2006
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95,047 $ 144,452 $ 123,018
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,158 30,338 23,547
Loss on disposal of property, plant, and equipment . . . . . . . . . . . . 253 237 705
Deferred income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . (10,338) 278 (2,429)
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,302 7,260 10,120
Excess tax benefit from employee stock plans . . . . . . . . . . . . . . . (72) (1,811) (2,148)
Impairment of acquired intangibles . . . . . . . . . . . . . . . . . . . . . . . . 24,742 — —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 302
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,689) (3,093) 4,259
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,507 (46,010) (15,448)
Prepaid expenses and other current assets . . . . . . . . . . . . . . . (15,787) (1,355) (898)
Intangibles and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 101 592 (905)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,944 1,381 1,930
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,047) (4,400) 3,323
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,567 (5,665) 8,292
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,242 2,111 (559)
Net cash provided by operating activities . . . . . . . . . . . 144,930 124,315 153,109
Cash flows from investing activities:
Purchases of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . (72,337) (305,769) (346,615)
Sales of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131,565 379,460 350,520
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47,580) (31,971) (47,465)
Acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (35,377)
Proceeds from sale of licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1,700
Proceeds from sale of property, plant, and equipment . . . . . . . . . . . . . . 52 32 106
Net cash provided by (used in) investing activities . . . . 11,700 41,752 (77,131)
Cash flows from financing activities:
Proceeds from notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,727 30,651 43,585
Repayments on notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33,727) (34,276) (86,531)
Repayment on long-term debt and other long-term liabilities . . . . . . . . (21) (22) (13,759)
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . 3,488 14,162 21,712
Excess tax benefit from employee stock plans . . . . . . . . . . . . . . . . . . . 72 1,811 2,148
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (83,865) (31,819) (75,490)
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22,098) (20,915) (5,026)
Net cash used in financing activities . . . . . . . . . . . . . . . (102,424) (40,408) (113,361)
Net effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . (15,539) 1,411 1,172
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . 38,667 127,070 (36,211)
Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . . . . . . . . . 191,950 64,880 101,091
Cash and cash equivalents, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 230,617 $ 191,950 $ 64,880
Supplemental disclosures of cash flow information:
Cash paid during the year for interest, net of capitalized interest . . . . . $ 47 $ 148 $ 1,329
Cash paid during the year for income taxes . . . . . . . . . . . . . . . . . . . . . . 48,521 73,293 58,651
Supplemental disclosures of non-cash investing activities:
Capital expenditures incurred but not yet paid . . . . . . . . . . . . . . . . . . . 6,760 2,318 3,444
Supplemental disclosures of non-cash financing activities:
Assumption of Montrail debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 5,833


43

• 16 •

Appendix A: Financial Reports– Columbia Sportswear Company (FY08 FY07 )


CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)

Accumulated
Common Stock Other
Shares Retained Comprehensive Comprehensive
Outstanding Amount Earnings Income Income Total
BALANCE, JANUARY 1, 2006 . . . . . . . 36,863 $ 13,104 $704,724 $ 24,962 $742,790
Components of comprehensive income:
Net income . . . . . . . . . . . . . . . . . . . . . — — 123,018 — $123,018 123,018
Cash dividends ($0.14 per share) . . . . — — (5,026) — — (5,026)
Foreign currency translation
adjustment . . . . . . . . . . . . . . . . . . . — — — 11,167 11,167 11,167
Unrealized holding loss on derivative
transactions, net . . . . . . . . . . . . . . . — — — (1,735) (1,735) (1,735)
Comprehensive income . . . . . . . . . . . . . . . — — — — $132,450 —
Exercise of employee stock options . . . . . . 682 21,712 — — 21,712
Tax benefit from stock plans . . . . . . . . . . . — 4,147 — — 4,147
Stock-based compensation expense . . . . . . — 10,120 — — 10,120
Repurchase of common stock . . . . . . . . . . . (1,547) (24,713) (50,777) — (75,490)
BALANCE, DECEMBER 31, 2006 . . . . . 35,998 24,370 771,939 34,394 830,703
Net income . . . . . . . . . . . . . . . . . . . . . — — 144,452 — $144,452 144,452
adjustment . . . . . . . . . . . . . . . . . . . — — — 25,394 25,394 25,394
Unrealized holding loss on derivative
transactions, net . . . . . . . . . . . . . . . — — — (2,147) (2,147) (2,147)
Comprehensive income . . . . . . . . . . . . . . . — — — — $167,699 —
Issuance of common stock under employee
stock plans, net . . . . . . . . . . . . . . . . . . . . 416 14,162 — — 14,162
Tax benefit from stock plans . . . . . . . . . . . — 3,031 — — 3,031
Repurchase of common stock . . . . . . . . . . . (590) (31,819) — — (31,819)
BALANCE, DECEMBER 31, 2007 . . . . . 35,824 17,004 895,476 57,641 970,121
Net income . . . . . . . . . . . . . . . . . . . . . — — 95,047 — $ 95,047 95,047
adjustment . . . . . . . . . . . . . . . . . . . — — — (30,511) (30,511) (30,511)
Unrealized holding gain on derivative
transactions, net . . . . . . . . . . . . . . . — — — 6,036 6,036 6,036
Comprehensive income . . . . . . . . . . . . . . . — — — — $ 70,572 —
Issuance of common stock under employee
stock plans, net . . . . . . . . . . . . . . . . . . . . 131 3,488 — — 3,488
Tax adjustment from stock plans . . . . . . . . — (430) — — (430)
Repurchase of common stock . . . . . . . . . . . (2,090) (24,883) (58,982) — (83,865)
BALANCE, DECEMBER 31, 2008 . . . . . 33,865 $ 1,481 $909,443 $ 33,166 $944,090


44

• 17 •


Item 6. SELECTED FINANCIAL DATA

Selected Consolidated Financial Data
The selected consolidated financial data presented below for, and as of the end of, each of the years in the
five-year period ended December 31, 2008 have been derived from our audited consolidated financial statements.
The consolidated financial data should be read in conjunction with the Consolidated Financial Statements and
Accompanying Notes that appear elsewhere in this annual report and Management’s Discussion and Analysis of
Financial Condition and Results of Operations set forth in Item 7.

2008 2007 2006 (1) 2005 2004
(In thousands, except per share amounts)
Statement of Operations Data:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,317,835 $1,356,039 $1,287,672 $1,155,791 $1,095,307
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 95,047 144,452 123,018 130,736 138,624
Per Share of Common Stock Data:
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.75 $ 4.00 $ 3.39 $ 3.39 $ 3.44
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . 2.74 3.96 3.36 3.36 3.40
Cash dividends per share . . . . . . . . . . . . . . . . 0.64 0.58 0.14 — —
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,610 36,106 36,245 38,549 40,266
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . 34,711 36,434 36,644 38,943 40,812

December 31,
2008 2007 2006 2005 2004

Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $1,148,236 $1,166,481 $1,027,289 $ 967,640 $ 947,625
Long-term obligations, net of current
maturities . . . . . . . . . . . . . . . . . . . . . . . . . . 15 61 136 7,414 12,636

(1) Effective January 1, 2006, we adopted the fair value recognition provisions of Statement of Financial
Accounting Standards (“SFAS”) No. 123R, Share-Based Payment, under which compensation expense is
recognized in the Consolidated Statement of Operations for the fair value of employee stock-based
compensation. Prior to the adoption of SFAS No. 123R, we accounted for stock-based compensation using
the intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations. Accordingly, under APB Opinion No. 25, no
compensation expense was recognized because the exercise price of our employee stock options was equal
to the market price of the underlying stock on the date of grant. We applied the disclosure provisions of
SFAS No. 123, Accounting for Stock Based Compensation, as amended by SFAS No. 148, Accounting for
Stock Based Compensation—Transition and Disclosure, as if the fair value method had been applied in
measuring compensation expense. See Note 12 of Notes to Consolidated Financial Statements for further
discussion.

23

• 18 •


Performance Graph

The line graph below compares the cumulative total shareholder return of our Common Stock with the
cumulative total return of the Standard & Poor’s (“S&P”) 400 Mid-Cap Index and the Russell 3000 Textiles
Apparel Manufacturers for the period beginning December 31, 2003 and ending December 31, 2008. The graph
assumes that $100 was invested on December 31, 2003, and that any dividends were reinvested.

Historical stock price performance should not be relied on as indicative of future stock price performance.

Stock Price Performance
December 31, 2003—December 31, 2008

Total Return to Stockholders
(Assumes $100 investment on 12/31/03)
$200

$150

$100

$50

$0
12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008
Columbia Sportswear Co. S&P 400 MidCap Index Russell 3000 Textiles Apparel Mfrs.

Total Return Analysis
12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008

Columbia Sportswear Co. . . . . . . . . . . . . . . $100.00 $109.36 $ 87.58 $102.45 $ 81.91 $66.77
S&P 400 Mid-Cap Index . . . . . . . . . . . . . . . $100.00 $116.47 $131.09 $144.61 $156.14 $99.55
Russell 3000 Textiles Apparel Mfrs. . . . . . . $100.00 $128.84 $135.78 $174.78 $134.12 $78.91

Securities Authorized for Issuance Under Equity Compensation Plans
See Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters, of this Annual Report on Form 10-K for information regarding our securities authorized for
issuance under equity compensation plans.

21

• 19 •

Appendix B: Financial Reports – The Timberland Company (FY08-AR, FY07-10K)
Source: http://www.timberland.com/category/index.jsp?categoryId=4304478

THE TIMBERLAND COMPANY


As of December 31, 2008 and 2007

2008 2007
(Dollars in thousands,
except per share data)
ASSETS
Current assets
Cash and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 217,189 $ 143,274
Accounts receivable, net of allowance for doubtful accounts
of $14,482 in 2008 and $14,762 in 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168,666 188,091
Inventory, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,688 201,932
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,139 41,572
Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,687 17,361
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,425 24,927
Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,109 —
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 649,903 617,157
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,526 87,919
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,528 19,451
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,870 44,840
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,996 54,382
Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,576 12,596
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 849,399 $ 836,345

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 96,901 $ 86,101
Accrued expense
Payroll and related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,587 29,752
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,503 79,151
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,697 19,215
Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,386 3,816
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,074 218,035
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,787 41,150
Commitments and contingencies
Stockholders’ equity
Preferred Stock, $.01 par value; 2,000,000 shares authorized; none issued . . . . . . . — —
Class A Common Stock, $.01 par value (1 vote per share); 120,000,000 shares
authorized; 73,806,026 shares issued at December 31, 2008 and
73,393,951 shares issued at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . 738 734
Class B Common Stock, $.01 par value (10 votes per share); convertible into
Class A shares on a one-for-one basis; 20,000,000 shares authorized;
11,529,160 shares issued and outstanding at December 31, 2008 and
11,743,660 shares issued and outstanding at December 31, 2007 . . . . . . . . . . . . 115 117
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260,267 251,063
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 918,039 875,133
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,543 20,106
Treasury Stock at cost; 27,766,651 Class A shares at December 31, 2008 and
25,024,194 Class A shares at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . (615,164) (569,993)
Total stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576,538 577,160
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 849,399 $ 836,345

The accompanying notes are an integral part of these consolidated financial statements.

45

• 20 •

Appendix B: Financial Reports – The Timberland Company (FY08- FY07 )

• 21 •



CONSOLIDATED STATEMENTS OF INCOME

For the Years Ended December 31, 2008, 2007 and 2006

2008 2007 2006
(Amounts in thousands, except per share data)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,364,550 $1,436,451 $1,567,619
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 743,817 771,723 823,446
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620,733 664,728 744,173
Operating expense
Selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 437,730 464,689 452,236
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . .... 113,011 116,201 125,433
Litigation settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... (2,630) — —
Impairment of intangible asset . . . . . . . . . . . . . . . . . . . . . . . .... 2,061 — —
Restructuring and related costs . . . . . . . . . . . . . . . . . . . . . . .... 925 24,659 3,868
Total operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551,097 605,549 581,537
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,636 59,179 162,636
Other income
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,371 2,545 2,665
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (652) (1,710) (1,699)
Other income/(expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,455 (289) (5,962)
Total other income/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . . 7,174 546 (4,996)
Income before provision for income taxes . . . . . . . . . . . . . . . . . . . . 76,810 59,725 157,640
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,904 19,726 56,435
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,906 $ 39,999 $ 101,205
Earnings per share
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... $ 0.73 $ 0.65 $ 1.62
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... $ 0.73 $ 0.65 $ 1.59
Weighted-average shares outstanding
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 58,442 61,087 62,510
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 58,786 61,659 63,690


46

• 22 •



CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Accumulated
Class A Class B Additional Other Total
Common Common Paid-in Deferred Retained Comprehensive Treasury Comprehensive Stockholders’
Stock Stock Capital Compensation Earnings Income/(Loss) Stock Income Equity
(Dollars in thousands)
Balance, January 1, 2006 . . . . . . $718 $117 $214,483 $(19,943) $737,257 $ 2,954 $(407,665) $ 527,921
Reclassification of deferred
compensation . . . . . . . . . . .. — — (19,943) 19,943 — — — —
Issuance of shares of common
stock . . . . . . . . . . . . . . . .. 9 — 6,842 — — — 9,553 16,404
Repurchase of common stock . .. — — — — — — (119,450) (119,450)
Share-based compensation
expense . . . . . . . . . . . . . .. — — 18,918 — — — — 18,918
Tax benefit from stock option
plans . . . . . . . . . . . . . . . .. — — 4,311 — — — — 4,311
Comprehensive income:
Net income . . . . . . . . . . . .. — — — — 101,205 — — $101,205 101,205
Translation adjustment . . . . .. — — — — — 12,376 — 12,376 12,376
Comprehensive income . . . . . . . — — — — — — — $113,581 —
Balance, December 31, 2006 . . . 727 117 224,611 — 838,462 15,330 (517,562) 561,685
Impact of adoption of FIN 48 . . . — — — — (3,328) — — (3,328)
Issuance of shares of common
stock . . . . . . . . . . . . . . . . . 7 — 13,096 — — — — 13,103
Cancellation/surrender of shares
of common stock . . . . . . . . . — — 4,381 — — — (7,371) (2,990)
Repurchase of common stock . . . — — — — — — (45,060) (45,060)
expense . . . . . . . . . . . . . . . — — 8,969 — — — — 8,969
Tax benefit from share-based
compensation . . . . . . . . . . . . — — 6 — — — — 6
Net income . . . . . . . . . . . . . — — — — 39,999 — — $ 39,999 39,999
Translation adjustment . . . . . . — — — — — 8,401 — 8,401 8,401
Change in fair value of cash
flow hedges, net of taxes . . . — — — — — (3,625) — (3,625) (3,625)
Comprehensive income . . . . . . . — — — — — — — $ 44,775 —
Balance, December 31, 2007 . . . 734 117 251,063 — 875,133 20,106 (569,993) 577,160
Issuance/conversion of shares of
common stock . . . . . . . . . . . 4 (2) 2,121 — — — — 2,123
Cancellation/surrender of shares
of common stock . . . . . . . . . — — — — — — (410) (410)
Repurchase of common stock . . . — — — — — — (44,761) (44,761)
expense . . . . . . . . . . . . . . . — — 8,166 — — — — 8,166
Tax deficiency from share-based
compensation . . . . . . . . . . . . — — (1,083) — — — — (1,083)
Net income . . . . . . . . . . . . . — — — — 42,906 — — $ 42,906 42,906
Translation adjustment . . . . . . — — — — — (15,955) — (15,955) (15,955)
Change in fair value of cash
flow hedges, net of taxes . . . — — — — — 8,254 — 8,254 8,254
Other adjustment, net of
taxes . . . . . . . . . . . . . . . . — — — — — 138 — 138 138
Comprehensive income . . . . . . . — — — — — — — $ 35,343 —
Balance, December 31, 2008 . . . $738 $115 $260,267 $ — $918,039 $ 12,543 $(615,164) $ 576,538


47

• 23 •



CONSOLIDATED STATEMENTS OF CASH FLOWS


2008 2007 2006
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,906 $ 39,999 $ 101,205
Adjustments to reconcile net income to net cash provided by
operating activities:
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,784 1,007 (11,207)
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,518 9,051 19,610
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,345 31,307 27,885
Provision for losses on accounts receivable . . . . . . . . . . . . . . . . . . . 7,575 7,406 5,661
Provision for asset impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,061 5,817 —
Litigation settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,630) — —
Tax expense from share-based compensation, net of excess
benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,254) (1,095) (95)
Unrealized (gain)/loss on derivatives . . . . . . . . . . . . . . . . . . . . . . . . (131) (2,749) 8,793
Other non-cash charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,428 3,798 686
Increase/(decrease) in cash from changes in working capital:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,847 17,247 (32,953)
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,789 (12,010) (16,315)
Prepaid expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,963 154 (6,395)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,533 (26,155) 9,728
Accrued expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,809 (16,496) 18,070
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (767) 4,462 (3,013)
Income taxes prepaid and payable, net . . . . . . . . . . . . . . . . . . . . 7,944 (23,135) (9,970)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . 147,720 38,608 111,690
Cash flows from investing activities:
Acquisition of business and purchase price adjustments, net of cash
acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970 (12,843) (6,381)
Additions to property, plant and equipment . . . . . . . . . . . . . . . . . . . . . (22,316) (30,479) (36,590)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 (1,073) (4,409)
Net cash used by investing activities . . . . . . . . . . . . . . . . . . . . (21,205) (44,395) (47,380)
Cash flows from financing activities:
Common stock repurchases . . . . . . . . . . . . . . . . . . . . . . . ......... (46,261) (47,748) (120,719)
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . ......... 1,875 12,574 16,407
Excess tax benefit from share-based compensation . . . . . . ......... 183 1,101 4,406
Net cash used by financing activities . . . . . . . . . . . ......... (44,203) (34,073) (99,906)
Effect of exchange rate changes on cash and equivalents. . . . . . . . . . . . . (8,397) 1,436 4,131
Net increase/(decrease) in cash and equivalents . . . . . . . . . . . . . . . . . . . 73,915 (38,424) (31,465)
Cash and equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . 143,274 181,698 213,163
Cash and equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . $217,189 $143,274 $ 181,698
Supplemental disclosures of cash flow information:
Interest paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 486 $ 1,564 $ 1,569
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,863 $ 40,453 $ 73,341


48

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ISSUER PURCHASES OF EQUITY SECURITIES

The Company made no repurchases of its common shares during the quarter ended December 31, 2008.
See Note 12 to our consolidated financial statements, entitled “Stockholders’ Equity”, in Part II, Item 8 of this
Annual Report on Form 10-K for additional information regarding activity under our repurchase programs and
shares available under such programs as of December 31, 2008.

ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with our consolidated financial
statements and related notes, included in Part II, Item 8 of this Annual Report on Form 10-K.

Selected Statement of Income Data
Years Ended December 31, 2008 2007 2006(1) 2005 2004
(Dollars in thousands, except per share data)
Revenue . . . . . . . . . . . . . . . . . . . . . . . $1,364,550 $1,436,451 $1,567,619 $1,565,681 $1,500,580
Net income . . . . . . . . ............. 42,906 39,999 101,205 180,216 145,114
Earnings per share
Basic . . . . . . . . . . ............. $ 0.73 $ 0.65 $ 1.62 $ 2.72 $ 2.08
Diluted . . . . . . . . . ............. $ 0.73 $ 0.65 $ 1.59 $ 2.66 $ 2.03

(1) Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards 123(R),
Share-Based Payment. See Note 13 to our consolidated financial statements in Part II, Item 8 of this
Annual Report on Form 10-K.

Selected Consolidated Balance Sheet Data
December 31, 2008 2007 2006 2005 2004
Cash and equivalents . . . . . . . . . . . . . . . . . . . . $217,189 $143,274 $181,698 $213,163 $309,116
Working capital . . . . . . . . . . . . . . . . . . . . . . . . 417,829 399,122 363,143 369,176 417,176
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 849,399 836,345 860,377 790,699 751,642
Total long-term obligations . . . . . . . . . . . . . . . . — — — — —
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . 576,538 577,160 561,685 527,921 507,414

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is management’s discussion and analysis of the financial condition and results of operations
of The Timberland Company and its subsidiaries (“we”, “our”, “us”, “its”, “Timberland” or the “Company”),
as well as our liquidity and capital resources. The discussion, including known trends and uncertainties
identified by management, should be read in conjunction with the consolidated financial statements and related
notes included in this Annual Report on Form 10-K. Included herein with respect to 2008 versus 2007 and
2007 versus 2006 comparisons are discussions and reconciliations of (i) total Company, Europe and Asia
revenue changes to constant dollar revenue changes; and (ii) net income and diluted earnings per share
(“EPS”) to net income excluding restructuring and related costs and diluted EPS excluding restructuring and
related costs, respectively.
Constant dollar revenue changes, which exclude the impact of changes in foreign exchange rates, and net
income and diluted EPS, each excluding restructuring and related costs are not performance measures
recognized under generally accepted accounting principles in the United States (“GAAP”). The difference
between changes in reported revenue (the most comparable GAAP measure) and constant dollar revenue
changes is the impact of movement in foreign currencies. We provide constant dollar revenue changes for total
Company, Europe and Asia results because we use the measure to understand the underlying changes in our

25

• 25 •


Performance Graph

The following graph shows the five year cumulative total return of Class A Common Stock as compared

with the Standard & Poor’s (S&P) 500 Stock Index and the weighted average of the S&P 500 Footwear Index
and the S&P 500 Apparel, Accessories and Luxury Goods Index. The total return for the Footwear and
Apparel, Accessories and Luxury Goods indices is weighted in proportion to the percent of the Company’s
revenue derived from sales of footwear and from apparel and accessories (excluding royalties on products sold
by licensees), respectively, for each year.
200

150

100

50

0
20031 2004 2005 2006 2007 2008

Timberland S&P 500 Index Weighted Average of
S&P 500 Footwear Index and
S&P 500 Apparel, Accessories
& Luxury Goods Index

2003(1) 2004 2005 2006 2007 2008
Timberland . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 120.36 125.02 121.30 69.44 44.36
S&P 500 Index . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 110.88 116.33 134.70 142.10 89.53
Weighted Average of S&P 500 Footwear Index
and S&P 500 Apparel, Accessories & Luxury
Goods Index . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00 130.81 132.35 159.86 179.68 141.35

(1) Indexed to December 31, 2003.

24

• 26 •

Comprehensive Financial Analysis: Columbia Sportswear vs. The Timberland Company

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