Timberland Buys IPATH, Sets Revisions

by MR Magazine Staff Apr 26, 2007

NEW YORK – The Timberland Co. late Wednesday acquired the assets of skateboarding-oriented footwear brand IPATH.

Concurrently, the Stratham, NH-based firm said that it would restate its financial results for the years 2001 through 2006 and delay the release of its first-quarter results for 2007 to accommodate non-cash adjustments based on its accounting for derivative investments and hedging activities.

Terms of the IPATH acquisition weren’t disclosed, although Timberland said that the founders of the company, Brian Krauss and Matt Field, will continue to lead the firm with its current management team based in Torrance, California. The acquisition of substantially all the assets of IPATH LLC was made through IPATH Footwear, a newly formed subsidiary of Timberland.

“IPATH brings a unique and authentic brand, business and consumer relationship, rooted in a distinctive persona that extends far beyond skateboarding,” said Jeffrey Swartz, president and chief executive officer of Timberland, in a statement issued as the acquisition was announced late Wednesday. “We believe that a combination of highest quality product, a commitment to environmental sustainability and a unique consumer ‘voice’ make IPATH a powerful source of new growth and excitement within our brand and business portfolio.”

Timberland in general and Swartz in particular have been closely identified with the push for corporate environmental responsibility, one closely aligned to its identity as a company firmly rooted in the outdoors. While IPATH may share its environmental awareness, its appeal is squarely to the young skateboarder, and its Web site boasts video clips and photos of skateboarders in tandem with music clips favored by members of the extended skateboarding community.

Timberland in February licensed the rights to its sportswear to Phillips-Van Heusen.

The company was scheduled to release its first-quarter financial results today but postponed doing so because of the upcoming revisions. Timberland said that it would file an amendment to its Form 10-K for 2006 to restate financial information for the years 2002 through 2006 and for the eight quarters of 2005 and 2006.

Timberland estimated that the cumulative effect on retained earnings for the years in question would be less than $10 million. Revenues, cash flow and liquidity won’t be affected by the non-cash adjustment, it said.