"We are making progress against our strategic objectives, and look forward to reviewing results on our quarterly conference call as soon as possible. In the meantime, we will continue to strive to make our financial reporting clear and transparent to shareholders, just as we strive to make products that exceed demanding consumers' expectations globally."
Revenues, cash flow and liquidity will not be impacted by this restatement. Timberland estimates that the cumulative impact of the restatement since the adoption of SFAS 133 in 2001 will reduce retained earnings by less than $10 million.
The Company expects an impact to 2007 financial results, which will be quantified when the Company reports first-quarter results. The Company expects first-half and full-year results in line with its previously announced outlook excluding the impact of this change in accounting treatment.
Under the Company's previously applied hedge accounting treatment, the derivative gains and losses designated as cash flow hedges had been included as a component of equity until the hedged transactions were settled, at which time the hedging gains and losses were reclassified to the income statement. The restatement will include these gains and losses in earnings on a current basis as the changes in value of the derivatives occur. Accordingly, the timing of when the gains and losses will be recognized in earnings will be changed.
John Crimmins, the Company's acting Chief Financial Officer said, "In light of recent developments related to the application of hedge accounting, we are restating our financial statements to reflect the proper application of this standard after the recent clarifying guidance. We constantly monitor interpretations of accounting standards by regulators and accounting professionals to evaluate our accounting practices. "
The Company will release its first-quarter earnings and hold its quarterly conference call as soon as the restatement is complete. The Company will also delay the filing of its first-quarter 10-Q accordingly.
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