Item 3. Legal Proceedings
	 None.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
	 None.
Part II
Item 5.

Item 5. Market for the Registrant's Common Equity and Related Stockholder 	 Matters
a) There is no established trading market for the certificates 	 representing ownership of the beneficial interest in the Trust.
b) As of March 29, 1996 there were two holders of certificates 	 representing ownership of the beneficial interest in the Trust.
Item 8.

Item 8. Financial Statements and Supplementary Data
	 See attached audited financial statements.
Item 9.

Item 9. Disagreements on Accounting and Financial Disclosure
	 None.
Part III
Item 13.

Item 13. Certain Relationships and Related Transactions
	 None.
Part IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports 	 on Form 8-K
a) The following documents are filed as part of this report:
	 1. Financial Statements 	 Report of Independent Public Accountants 	 Statement of Assets and Liabilities as of 		December 31, 1995 and 1994 	 Statement of Income and Expenses, for the Years Ended 		December 31, 1995, 1994 and 1993 	 Statement of Cash Flows, for the Years Ended 		December 31, 1995, 1994 and 1993 	 Notes to Financial Statements
	 2. Financial Statement Schedules are omitted because they are 	 inapplicable.
	 3. Exhibits
	 Exhibit 	 Number Description of Exhibit
		4.1 Form of Trust Agreement, including the form of 			 Rural Electric Cooperative Grantor Trust 			 Certificate (incorporated by reference to Exhibit 			 4.1 to Registration Statement on Form S-1 [No. 33- 			 20166]).
	 10.1 Loan Agreement (incorporated by reference to 			 Exhibit 10.1 to Registration Statement on Form S-1 			 [No. 33-20166]).
	 10.2 Loan Guarantee and Servicing Agreement 			 (incorporated by reference to Exhibit 10.2 to 			 Registration Statement on Form S-1 [No. 33-20166]).
b) Form 8-K dated December 20, 1995. 	 Semi-annual Report to Certificateholders dated December 15, 1995.
Supplemental information to be furnished with reports filed pursuant to Section 15(d) of the Act by Registrants which have not registered securities pursuant to Section 12 of the Act.
No annual report, proxy statement, form of proxy or other proxy soliciting material has been sent to Certificateholders, and the Registrant does not presently contemplate sending any such material subsequent to the filing of this report.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth of Virginia on the 29th day of March, 1996.
	 RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (TEX-LA) 1988 T-1
	 By: NATIONAL RURAL UTILITIES COOPERATIVE 		 FINANCE CORPORATION as Servicer
		 By: /s/ Sheldon C. Petersen 			 Sheldon C. Petersen, Governor and 			 Chief Executive Officer
		 RURAL ELECTRIC COOPERATIVE GRANTOR 			 TRUST (TEX-LA) 1988-T1
	 FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995, 1994 AND 1993 			TOGETHER WITH AUDITORS' REPORT
		 Report of Independent Public Accountants
To the Trustee of Rural Electric Cooperative Grantor Trust (Tex-La) 1988-T1, and
To the Board of Directors of National Rural Utilities Cooperative Finance Corporation
We have audited the accompanying statements of assets and liabilities of Rural Electric Cooperative Grantor Trust (Tex-La) 1988-T1 as of December 31, 1995 and 1994, and the related statements of income and expenses and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Trust's management. Our responsi- bility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Rural Electric Cooperative Grantor Trust (Tex-La) 1988-T1 as of December 31, 1995 and 1994, and its operations and its cash flows for the years ended December 31, 1995, 1994 and 1993, in conformity with generally accepted accounting principles.
March 11, 1996 /s/ Arthur Andersen LLP Washington, D. C.
	 RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (TEX-LA) 1988-T1
		 STATEMENTS OF ASSETS AND LIABILITIES
		 AS OF DECEMBER 31, 1995 AND 1994
						1995 1994
A S S E T S
Interest Receivable $ 86,689 $94,601
Note Receivable 12,325,000 13,450,000
Total Assets $12,411,689 $13,544,601
L I A B I L I T I E S
Interest Payable - Grantor Trust $ 84,118 $ 91,796 Certificates
Servicer Fees Payable 2,571 2,805
Rural Electric Cooperative Grantor Trust Certificates 12,325,000 13,450,000
Total Liabilities $12,411,689 $13,544,601
	RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (TEX-LA) 1988-T1
		 NOTES TO FINANCIAL STATEMENTS
		 DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND OPERATIONS
Rural Electric Cooperative Grantor Trust (Tex-La) 1988-T1 (the "Trust") was formed under a Trust Agreement dated February 15, 1988 among National Rural Utilities Cooperative Finance Corporation ("CFC"), Tex-La Electric Cooperative of Texas, Inc. (the "Cooperative") and The First National Bank of Chicago (the Trustee"). On that date, CFC made a loan to the Cooperative which issued a note (the "Note"), evidencing the borrowing, to the Trust. The Trust issued to CFC Rural Electric Cooperative Grantor Trust (Tex-La) 9.10% Certificates Due 2002 (the "Certificates") in the amount of $17,120,000. The Certificates are solely the obligations of the Trust and are not insured or guaranteed by CFC, the Cooperative, the Trustee, the Rural Utilities Service ("RUS") of the United States Department of Agriculture ("USDA") nor any other governmental agency. Each Certificate represents an undivided fractional interest in the Trust. CFC is the depositor of the Trust and acts as Servicer of the Note. CFC filed, on behalf of the Trust, a Registration Statement on Form S-1 (Registration No. 33-20166) which become effective on March 9, 1988, and CFC resold the Certificates thereunder.
The assets of the Trust consist primarily of the Note which is guaranteed (the "Guarantee") as to timely payment of principal and interest by the United States of America, acting through the Administrator of RUS. The amounts of principal and interest payments on the Note held by the Trust are sufficient to cover the scheduled principal and interest payments on the Certificates issued by the Trust and the scheduled amounts of servicer fees. The General Counsel of the USDA has issued an opinion that the Guarantee is supported by the full faith and credit of the United States of America.
Debt service and servicer fee payments on the Note are made to the Trustee semi-annually (June 4 and December 4) by the Cooperative. The Trustee deposits all such receipts in the Trust account. The Trustee is authorized by the Trust Agreement to invest all funds in the Trust account at the direction of CFC in certain eligible investments that mature no later than the business day next preceding the day (June 15 and December 15) such amounts are to be distributed to the Certificateholders and the Servicer. The interest earned on the investments is distributed to the Cooperative. Any funds that are not so invested must be held by the Trustee in the Trust account. The Trustee may not reinvest any returns of principal or investment earnings on eligible invest- ments and the Trustee may not sell any eligible investment prior to its maturity except, at the direction of CFC, to preserve the value of the corpus of the Trust.
On or before five business days after each date on which payments are made on the Certificates, the Trustee is obligated to supply the holders of such Certificate a report provided by the Servicer, which includes certain pertinent information as to how the payment is to be allocated to principal, interest, servicer fees and premium, if any, as well as the principal balance outstanding after such payment.
The fiscal year of the Trust is the calendar year. Within the prescribed period of time for tax reporting purposes, after the end of each calendar year during the term of the Trust Agreement, the Trustee is obligated to prepare and mail to each Certificateholder of record for the Trust, at any time during each year, a report setting forth the information as is reasonably necessary for the preparation of such Certificateholder's Federal income tax return.
Payments of principal on the Certificates are scheduled to be repaid over a period of thirteen years which began in 1990. The principal payments over the next 5 years and thereafter are as follows:
		 1996 $ 1,250,000 		 1997 1,400,000 		 1998 1,550,000 		 1999 1,725,000 		 2000 1,925,000 	 Thereafter 4,475,000
		 Total $ 12,325,000
The Certificates are not subject to full redemption prior to December 15, 1997. Thereafter, such Certificates are subject to optional redemption, for the entire remaining balance and without premium, upon redemption or purchase of the related Note. The Trust Agreement will terminate after payment in full has been made on the Certificates issued thereunder.
2. TAX STATUS OF THE TRUST
Milbank, Tweed, Hadley & McCloy, counsel to CFC, has advised CFC with respect to the Trust that, in its opinion, (i) the Trust will not be classified as an association taxable as a corporation, but will be classified as a grantor trust and (ii) each Certificateholder will be treated for Federal income tax purposes as the owner of an undivided fractional interest in each of the assets held by the Trust.
It is expected that the Trust will not have any liability for Federal or state income taxes for the current or future years.
3. INTEREST AND SERVICER FEE ACCOUNTING
The Trust records interest income as it is earned and accrues interest expense and servicer fees as they are incurred. Servicer fees represent ten basis points of the outstanding principal balance of the Certificates and the Note.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial instruments is made in accordance with FASB Statement No. 107, "Disclosure about Fair Value of Financial Instruments." Whenever possible, the estimated fair value amounts have been determined using quoted market information as of December 31, 1995, along with other valuation methodologies which are summarized below. Below is a summary of significant methodologies used in estimating fair value amounts and a schedule of fair values at December 31, 1995.
The carrying amounts reported for Interest Receivable, Interest Payable - Grantor Trust Certificates, and Servicer Fees Payable approximate fair values due to the short term maturity of these instruments.
Note Receivable
Fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
Rural Electric Cooperative Grantor Trust Certificates
The fair value of the Certificate is estimated using quoted market prices for similar notes over the same remaining maturities.
The carrying and estimated fair values of the Trust's financial instruments as of December 31, 1995, are as follows:
					 Carrying Fair 					 Value Value
Assets: Interest Receivable 86,689 86,689 Note Receivable 12,325,000 15,248,661
Liabilities: Interest Payable - Grantor Trust Certificates 84,118 84,118 Servicer Fees Payable 2,571 2,571 Rural Electric Cooperative Grantor Trust Certificates 12,325,000 15,257,064
	 RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (TEX-LA) 1988 T-1
				 Exhibit Index
Exhibit Number Description of Exhibit
4.1 Form of Trust Agreement, including the form of Rural Electric 	 Cooperative Grantor Trust Certificate (incorporated by reference 	 to Exhibit 4.1 to Registration Statement on Form S-1 	 [No. 33-20166]).
10.1 Loan Agreement (incorporated by reference to Exhibit 10.1 to 	 Registration Statement on Form S-1 [No. 33-20166]).
10.2 Loan Guarantee and Servicing Agreement (incorporated by reference to 	 Exhibit 10.2 to Registration Statement on Form S-1 [No. 33-20166]).


Item 1 regarding foreign and domestic sales and Part II, Items 5, 6, 7 and 8 of this report. Portions of the Registrant's definitive Proxy Statement for the 1995 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A are incorporated by reference in Part III of this report.
The Exhibits Index appears on page 10 of this report. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
PART I
ITEM 1. BUSINESS
OVERVIEW
The Timberland Company was incorporated in Delaware on December 20, 1978, and 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 men's and women's premium-quality footwear, apparel and accessories under the Timberland(R) brand. Timberland(R) products are sold primarily through better-grade department stores, independent retailers, athletic stores and other retail stores in the United States and in more than 60 countries worldwide. Timberland products are also sold through Timberland(R) specialty stores and factory outlet stores devoted exclusively to Timberland products. These two types of stores are operated by the Company in the United States and in parts of Europe and by certain of the Company's distributors in parts of Europe, South America, Mexico, the Middle East and the Asia/Pacific region.
The Company offers high-quality products that provide durability, functional performance, comfort, classic styling and lasting protection from the elements. The Company believes that the combination of these features distinguishes the Timberland brand from competing brands and makes Timberland products an outstanding value.
During 1995, the Company focused on improving its balance sheet through better working capital management. As part of this focus, the Company enhanced its business controls and exercised greater discipline in the day-to-day operation of its business. The Company reorganized into profit centers for its footwear, apparel and accessories, retail and international divisions. The Company also realigned the structure of its domestic wholesale sales organization from a structure organized by geographic regions to a structure organized by distribution channels. In addition, the Company strengthened its credit and cash collection procedures and policies. The Company closed two of its manufacturing facilities, downsized a third facility, and reorganized and consolidated the management of its remaining manufacturing facilities. The Company shifted the production which was performed formerly by these facilities to third party manufacturers. As a result of these actions, at the end of 1995, the Company reported a reduction in inventory, debt levels and days sales outstanding and an improvement in its cash position compared to the end of 1994.
In 1995, the Company also developed a marketing and merchandising strategy that defines its footwear and apparel and accessories products within the dress casual, rugged casual and performance categories. This strategy is designed to further integrate the Timberland brand and make it easier for wholesale customers to sell Timberland products to consumers based on end-user needs.
CURRENT PRODUCTS
The Company's products fall into two broad categories -- footwear (shoes, boots and sandals) and apparel and accessories. The Company's footwear sales represented 74.9%, 80.5% and 83.4% of total product sales for 1995, 1994 and 1993, respectively. Sales of apparel and accessories represented 25.1%, 19.5% and 16.6% of total product sales for 1995, 1994 and 1993, respectively.
Footwear
In 1973, the first pair of waterproof leather boots under the Timberland brand were produced. The Company currently offers a broad variety of footwear products for men and women featuring premium waterproof or water resistant leathers, fabric uppers, selected use of waterproof fabric linings and, in certain models, hand-sewn construction.
The Company's footwear lines included over 240 models and colors for Spring 1995 and over 250 models and colors for Fall 1995. New footwear product introductions in 1995 included a dressier line of waterproof Pinnacle Weatherbucks, Gore-Tex(R) chukka boots, canvas boots and shoes, performance sandals and the Treeline(TM) Aggressive Series of multi-purpose outdoor footwear, which will be available at retail in Spring
1996. The Company also expanded the number and levels of products featuring the Active Comfort Technology(TM) (ACT(TM)) system, a moisture management and climate control system developed by the Company.
In 1995, the Company focused the design and development of its footwear lines for Fall 1996 into the dress casual, rugged casual and performance categories. The dress casual category has been expanded from the classic Weatherbuck collection and loafers to include cap toes, wing tips, tassel slip-ons and oxfords for men and more fashion-focused hand-sewn wovens, pumps, slip-ons and loafers for women. The rugged casual category includes rugged hand-sewn shoes, Bush Hikers, classic work boots and boat shoes. Timberland(R) performance footwear products include hiking boots, field boots and multi-purpose outdoor footwear featuring the ACT system and other advanced technologies.
The Company also designs, develops, engineers, markets and distributes, under the Timberland(R) Work Division, a line of boots designed to fit the needs of construction workers, carpenters, assembly-line workers and skilled workers in other crafts and trades. These boots are sold in the United States and Italy through leading consumer product and independent retail stores. The Company expects to market these products under the name Timberland Mill River(TM) beginning in Fall 1996.
Apparel and Accessories
Timberland(R) apparel products consist primarily of rugged outerwear, sweaters, shirts, pants, shorts and skirts. 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. During 1995, the Company implemented a forecasting and delivery system designed specifically for its apparel products. The Company's men's apparel offerings for 1995 were coordinated and merchandised into apparel collections to compete in the collection sportswear market. The Company targeted its women's apparel offerings for 1995 to focus on classic items distributed principally through Timberland(R) specialty stores and several premium retailers. For 1996, the Company plans to expand its Men's Collection Sportswear line and to continue the limited focus of its women's line. The Company plans to promote its apparel products in a manner consistent with its dress casual, rugged casual and performance product categories.
Timberland(R) accessories products for 1995 focused principally on leather goods -- luggage, briefcases, handbags, wardrobe accessories and other small leather goods -- with a lesser focus on caps, hats and leather care products and, through Timberland specialty stores only, gloves and socks. Beginning in the second half of 1996, many Timberland accessories, including day packs, travel gear, socks, legwear, gloves and leather care products, will be more widely distributed through licensing arrangements with third parties, as further described in the "Licensing" section of this report.
In 1995, the Company introduced City Year Gear(TM), a limited line of T-shirts, caps and bags. City Year Gear products are sold exclusively through Timberland specialty stores. Any profits from the sale of these products will help support City Year(R), an urban youth corps sponsored partially by the Company, and other Company-sponsored community service activities.
DISTRIBUTION
The Company's strategy is to distribute its products through its specialty stores and through better-grade department stores, independent retailers and athletic stores which reinforce the Timberland image of quality, performance and service. For 1996, the Company plans to continue the integrated presentation of the Timberland(R) brand, which will be based on showcasing Timberland(R) footwear, apparel and accessories within the dress casual, rugged casual and performance categories. The Company also plans to expand the presentation of its Men's Collection Sportswear apparel offerings in selected collection sportswear locations during 1996.
United States Operations
In 1995, 1994 and 1993, 70.2%, 73.5% and 70.8%, respectively, of the Company's revenues were generated in the United States. The Company's wholesale customer accounts within the United States range
from better-grade department stores and retail stores to athletic and sporting goods stores, marinas and specialty retailers. These accounts are serviced through a combination of field and corporate-based sales teams and through the Company's six showrooms. The Company's principal showroom is located on Fifth Avenue in New York City. The Company's regional showrooms are located in Chicago, Dallas, Atlanta, Denver and Seattle.
At the end of 1995, the Company had 157 concept shops featuring Timberland(R) footwear and apparel, including 82 apparel shops in men's collection sportswear departments. Concept shops are areas of third-party stores dedicated exclusively to the presentation, merchandising and sale of Timberland(R) products. Some existing concept shops were also expanded during 1995.
The Company operates footwear distribution facilities in Danville, Kentucky and Hampton, New Hampshire. The Company also fills footwear orders from a third-party operated distribution facility in Industry, California. All apparel and accessories orders are centrally distributed from the Company's facility in Grove City, Ohio. In 1995 and early 1996, the Company closed its Portsmouth, New Hampshire and Wilmington, Massachusetts distribution facilities, as part of the consolidation of its domestic distribution operations.
International Operations
In 1995, international revenues accounted for 29.8% of the Company's revenues, compared to 26.5% in 1994 and 29.2% in 1993. Timberland products are sold internationally through distributors and commission agents and by the Company through its operating divisions in England, France, Germany, Italy, Spain and Austria. The Company's European operating divisions provide sales, administrative and, in some cases, warehousing support for the sale of Timberland products to wholesale customers in their respective countries, and in certain instances, to distributors and commission agents in other countries. Additionally, certain of the Company's international distributors operate specialty stores and concept shops devoted exclusively to Timberland products in Europe, South America and the Asia/Pacific region. The Company's international distributors opened nine such specialty stores and 24 such concept shops in 1995.
Reference is made to the information set forth in Note 13 to the Company's consolidated financial statements, entitled "Industry Segment and Geographical Area Information," appearing in the Company's 1995 Annual Report to security holders, which information is incorporated herein by reference.
RETAIL
In 1995, revenues from the specialty and outlet stores operated by the Company accounted for 19.6% of the Company's revenues, compared to 11.3% in 1994 and 10.2% in 1993. This increase reflects the expansion of the Company's retail operations. In 1995, the Company opened six specialty stores, bringing to 29 the total number of specialty stores operated by the Company worldwide. In addition to providing an environment to showcase the Timberland(R) brand as an integrated source of footwear, apparel and accessories, these specialty stores provide sales and consumer-trend information which assists the Company in developing its marketing strategies, including point-of-purchase marketing materials. The training and customer service programs established in the Company's specialty stores also serve as a model which may be adopted by the Company's other retail accounts. In 1995, the Company opened fifteen outlet stores, bringing to 33 the total number of outlet stores operated by the Company worldwide. These outlet stores serve as the primary channel for the sale of factory-second and close-out product offerings, and enable the Company to protect and control the integrity of the Timberland brand and maximize the return associated with the sale of such products.
LICENSING
In 1995, the Company sought to broaden the reach of the Timberland brand by capitalizing on several licensing opportunities. These licensing agreements enable the Company to expand the Timberland brand to appropriate and well-defined product categories and geographical territories in which the Company has not had an appreciable presence, in a manner designed to reduce the risk and investment associated with pursuing such opportunities.
Product Licensing
Under a licensing agreement with Timex Nederland B.V., Timberland offers a line of outdoor watches which were available for distribution in late 1995. During 1995 and early 1996, the Company entered into licensing agreements with other industry leaders for the manufacture and distribution of several new product categories, including: The Coleman Company for fabric and leather-accented day packs and travel gear, Kayser-Roth Corporation for socks and legwear and SWANY America for gloves. The Company anticipates that products under each of these new licensing agreements will be available for distribution beginning in late 1996.
Territory Licensing
In 1995, the Company entered into two license agreements with distributors to expand the reach of the Timberland(R) brand. The Company appointed Inchcape plc as the exclusive distributor and retailer of Timberland(R) products throughout most of the Asia/Pacific region. The transaction also included Inchcape's acquisition of the Company's Australian and New Zealand subsidiaries and the operation of existing Timberland(R) specialty stores and concept shops in these countries. In 1995, the Company also appointed Sao Paulo Alpargatas S.A. as the exclusive distributor and retailer, as well as a non-exclusive manufacturer, of Timberland products throughout much of South America. Both of these agreements provide for the opening of new specialty stores and concept shops devoted exclusively to Timberland products and require the licensee to exceed minimum purchases of Timberland products during each year. The license agreement with Sao Paulo Alpargatas S.A. also requires the licensee to achieve specified annual minimum sales increases.
ADVERTISING AND MARKETING
The Company's advertising campaigns are designed to increase brand awareness among consumers and to emphasize the features that distinguish the Timberland brand from competing brands and make Timberland products an outstanding value. During 1995, the Company's national and regional advertising campaigns appeared mainly in various trade press outlets and active-lifestyle, fashion and sports-focused consumer periodicals. The Company reinforced these advertising campaigns with a variety of in-store promotions, point-of-purchase marketing materials and a cooperative advertising program with its retailers, as well as retail sales clerk training and other sales incentive programs and promotional campaigns. Timberland's product and territory licensing arrangements also require licensees to fund marketing campaigns, over which Timberland maintains approval and design rights to ensure consistent and effective brand presentation.
During 1995, the Company expanded its internal creative resource staff to enhance the Company's corporate and promotional communication capabilities and to better manage the presentation of the Timberland brand. The Company plans to produce internally all advertising, product catalogs and point-of-purchase marketing materials and all packaging and hang-tag designs for its 1996 product offerings.
SEASONALITY
In 1995, as has traditionally been the case, the Company's revenues were higher in the last two quarters of the year than in the first two quarters. The Company expects this seasonality to continue in 1996.
BACKLOG
At December 31, 1995, Timberland's backlog of orders from its customers was approximately $102 million, compared to $132 million at December 31, 1994 and $69 million at December 31, 1993. 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 1996. The Company does not believe that its backlog of orders at year-end is representative of the orders which will be filled during 1996, due to the shift towards "at-once orders" being adopted by many retailers.
MANUFACTURING
During 1995, approximately 40% of the unit volume of the Company's footwear products was manufactured by the Company, compared to approximately 60% during 1994. The remainder of the Company's footwear products and all of its apparel and accessories were produced by independent manufacturers in Asia, Europe and the Americas. Over 20% and 15% of the unit volume of the Company's footwear products was produced in Thailand and Taiwan, respectively.
During 1995, the Company closed its footwear manufacturing facilities located in Boone, North Carolina and Mountain City, Tennessee, and downsized its footwear manufacturing facility in the Dominican Republic. The Company increased its use of independent manufacturers to replace most of the manufacturing operations conducted formerly at its manufacturing facilities. This restructuring was a result of the Company's overall effort to improve product quality, to reduce manufacturing overhead and product costs, and to increase the Company's flexibility to meet consumer demand for particular product lines. The Company currently plans to retain its internal manufacturing capability in order to continue benefiting from expertise the Company has gained with respect to the footwear manufacturing methods and from the research and development activities conducted at its manufacturing facilities.
As part of the Company's efforts to improve the reliability and quality of the manufacturing operations conducted by the Company and its independent manufacturers, the Company in 1995 reorganized and consolidated the management of these functions and expanded its quality control group. The Company's quality and production standards were reviewed and updated, and product quality audits were conducted at the factories and distribution centers to ensure such standards were being met. In 1995, the Company also opened offices in Bangkok, Thailand and Taichung, Taiwan in order to more closely supervise the Company's sourcing activities conducted in the Asia/Pacific region. In addition, the Company enhanced and expanded the data available through its information systems to enable the Company to better match product supply and demand.
To the extent 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, import restrictions, anti-dumping investigations, political or labor disturbances, expropriation and acts of war.
RAW MATERIALS
During 1995, the Company consolidated its base of raw materials suppliers; however, only two suppliers provided more than 10% each of the Company's leather purchases for 1995. The Company has no reason to believe that leather will not continue to be available from these or alternative sources. The Company also began to establish a central network of suppliers through which the Company's manufacturing facilities and independent manufacturers could purchase raw materials. The Company believes that this approach will reduce the cost and provide greater consistency of the raw materials procured to produce Timberland(R) products, and increase compliance with the Company's production standards.
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 [TIMBERLAND LOGO], which have been registered in the United States and in certain foreign countries. Other Company trademarks or registered trademarks are Treeline; Weathergear; [WORK LOGO]; [MILL RIVER LOGO]; More Quality Than You May Ever Need; Active Comfort Technology; ACT; Mountain to River; Toporelief; Topozoic; Boots, Shoes, Clothing, Wind, Water, Earth & Sky; Wind, Water, Earth & Sky; Elements; The Elements of Design are the Elements themselves, Wind, Water, Earth and Sky; Nothing Can Stop You; Blackridge Mountain; Blackridge Mountain Logo Design; Mill River; Mill River Logo Design; TBL 30; Timberland 1049; Trail Grip; and Tims. The Company regards its trade name and trademarks as valuable assets and believes that they are important factors in marketing its products, particularly in the case of the Timberland(R) brand. It is the policy of the Company 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 of its proprietary rights under applicable laws.
The Company conducts research, design and development efforts for its footwear, apparel and accessories. The Company tests a number of its products under actual field conditions to evaluate and improve product performance. The Company's expenses relating to research, design and development, however, have not represented a material expenditure relative to its other expenses.
COMPETITION
The Company does not believe any of its principal competitors offers a complete line of products that provide the same quality and performance as the complete line of Timberland(R) footwear, apparel and accessories products. The Company does, however, have a variety of major competitors in each of its separate footwear, apparel and accessories product offerings.
The Company's footwear and apparel and accessories products are marketed in highly competitive environments which 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 which compete with the Company's products.
The Company has at least nine major competitors in classic work boot sales, at least seven major competitors in sales of rugged casual footwear sales, at least twelve major competitors in sales of performance boots and sandals, and at least thirteen major competitors in sales of dress casual footwear. The Company's major competitors for its footwear products are located principally in the United States. The Company also faces competition from many international footwear manufacturers.
The Company's line of men's and women's apparel faces competition from at least ten major apparel companies in the United States and from a variety of major apparel companies internationally. The Company's men's and women's lines of footwear and apparel face competition from at least two direct mail companies in the United States.
The Company's accessories products line faces competition from at least seven major companies in the United States and from several major accessories companies internationally.
Product quality, performance, design, styling and pricing, as well as consumer awareness, are all important elements of competition in the footwear, apparel and accessories markets served by the Company. Although changing fashion trends generally affect demand for particular footwear, apparel and accessories products, the Company believes that, because Timberland(R) products are designed primarily for functionality and performance, demand for Timberland products (except for the new, more fashion-focused models introduced under Timberland's Fall 1996 dress casual footwear line) is less sensitive to changing trends in fashion than other products that are designed specifically to meet such trends.
ENVIRONMENTAL MATTERS
Compliance with federal, state and local environmental regulations have not had, nor are they expected to have, any material effect on the capital expenditures, earnings or competitive position of the Company, based on information and circumstances currently known to the Company.
EMPLOYEES
As of December 31, 1995, the Company had approximately 5,500 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.

ITEM 2. PROPERTIES
The Company owns a facility in Hampton, New Hampshire, which served as the Company's headquarters until November 1994 and currently is used for warehousing and distribution of certain of the Company's products. In connection with the purchase financing for such property, industrial revenue bonds are outstanding in the principal amount of $5,345,000, which are due in 2014. These bonds bear interest at 6.20% through 1999 and thereafter at rates adjusted every five years, through maturity. These bonds are secured by a mortgage on such real estate and by a security interest on assets located there.
The Company also leases distribution facilities in Grove City, Ohio and Wilmington, Massachusetts, for the distribution of certain products, under lease agreements which expire in May 1998 and April 1996, respectively. In February 1996, the Company acquired its distribution facility in Danville, Kentucky.
Since April 1994, the Company has leased property in Stratham, New Hampshire that serves as its worldwide headquarters, under a lease which expires in July 1999, with options to extend the expiration. The Company considers its current headquarters facilities adequate and suitable for its present needs. The Company leases its manufacturing facilities which are located in Isabela, Puerto Rico and Santiago, Dominican Republic. These manufacturing facilities are occupied under 11 leasing arrangements which expire at various times through February 1998.
The Company leases 19 domestic specialty stores, ten international specialty stores, six domestic showrooms, 29 domestic factory outlet stores, and four international factory outlet stores. The Company's subsidiaries also lease office and warehouse space to meet their individual requirements.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various litigation and legal matters which 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.
The Company and two of its officers and directors have been named as defendants in two actions filed in the United States District Court for the District of New Hampshire, one filed by Jerrold Schaffer on December 12, 1994, and the other filed by Gershon Kreuser on January 4, 1995. On April 24, 1995, the District Court granted plaintiffs' motion, assented to by defendants, to consolidate the two actions. On June 23, 1995, plaintiffs filed a consolidated amended complaint (the "Amended Complaint") with the District Court. The Amended Complaint alleges that defendants violated the federal securities laws by making material misstatements and omissions in certain of the Company's public filings and statements in 1994. Specifically, the Amended Complaint alleges that such statements and omissions had the effect of artificially inflating the market price for the Company's Class A Common Stock until the disclosure by the Company on December 9, 1994 of its expectation that results for the fourth quarter were not likely to meet analysts' anticipated levels. Damages are unspecified. On March 18, 1996, the Court denied defendants' motion to dismiss the Amended Complaint. On March 19, 1996, the Court granted plaintiffs' motion for class certification for all purchasers of the Company's Class A Common Stock between May 12, 1994 and December 9, 1994. Management believes this action is without merit and intends to defend it vigorously. Accordingly, at this time, management does not expect the outcome of such litigation to have a material adverse effect on the Company's consolidated financial statements.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no matter was submitted to a vote of security holders through the solicitation of proxies or otherwise.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
All executive officers serve at the discretion of the Board of Directors.
Sidney W. Swartz has served the Company as Chairman of the Board, Chief Executive Officer and President since June 1986 when he and his family trust became the then sole security holders of the Company. During the prior 20 years, Mr. Swartz, as the owner of 50% of the Company, was responsible for the manufacturing, marketing, distribution and financial aspects of the Company.
Jeffrey B. Swartz has served the Company as Executive Vice President since March 1990 and as Chief Operating Officer since May 1991. From June 1986 to February 1990, Mr. Swartz served the Company in a variety of positions, including Senior Vice President of International Operations, Vice President-Operations/Manufacturing, Vice President-International and General Manager of International Business. Jeffrey Swartz is the son of Sidney W. Swartz.
Keith D. Monda joined the Company in December 1993 as Senior Vice President-Finance and Administration and Chief Financial Officer. From May 1990 to December 1993, Mr. Monda was Executive Vice President of Finance and Administration of J. Crew Group, Inc.; from July 1989 to May 1990, he was Senior Vice President and Chief Financial Officer of Bunge Corporation (an integrated food company); and from April 1986 to July 1989, he was Vice President of Finance and Chief Financial Officer of the chemical division of Pfizer, Inc.
Gregory W. VanWormer joined the Company in May 1994 as Senior Vice President-Retail. Effective January 1, 1995, Mr. VanWormer's title was changed to Senior Vice President-General Manager Apparel/Retail. From August 1991 to April 1994, Mr. VanWormer was the Vice President-General Merchandise Manager of G.H. Bass & Co.; and from June 1988 to June 1991, he held the following positions with C.M.L. Inc.: Vice President-General Merchandise Manager of Carroll Reed (a retail company) and President of The Gokey Company (a retail, catalog and manufacturing company).
Dennis W. Hagele joined the Company in October 1994 as Vice President-Finance and Corporate Controller. From July 1993 to September 1994, Mr. Hagele was an independent financial consultant; and from August 1981 to June 1993, he was Assistant Controller of Sara Lee Corporation.
Jane E. Owens joined the Company in September 1992 as Vice President and General Counsel. From June 1990 to August 1992, Ms. Owens was Counsel for Reebok International Ltd.; and from March 1988 to June 1990, she was a partner in the law firm of Gaston & Snow.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is included in the Registrant's 1995 Annual Report to security holders under the caption "Quarterly Market Information and Related Matters" and is incorporated herein by reference.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is included in the Registrant's 1995 Annual Report to security holders under the caption "Five Year Summary of Selected Financial Data" and is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this item is included in the Registrant's 1995 Annual Report to security holders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and is incorporated herein by reference.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is included in the Registrant's 1995 Annual Report to security holders and is incorporated herein by reference.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the information set forth under the caption, "Executive Officers of the Registrant," in Item 4A of Part I of this report and to information under the caption, "Information with Respect to Nominees" in the Registrant's definitive proxy statement (the "Registrant's 1996 Proxy Statement") relating to its 1996 Annual Meeting of Stockholders, to be filed with the Commission within 120 days after the close of the Registrant's fiscal year ended December 31, 1995, which information is incorporated herein by reference. Reference is also made to the information set forth in the Registrant's 1996 Proxy Statement with respect to compliance with Section 16(a) of the Exchange Act, which information is incorporated herein by reference.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Reference is made to the information set forth under the caption "Executive Compensation," in the Registrant's 1996 Proxy Statement, which information is incorporated herein by reference.
ITEM 12.

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 Registrant's 1996 Proxy Statement, which information is incorporated herein by reference. For purposes of calculating the aggregate market value of the Class A Common Stock on March 1, 1996, the shares owned by The Sidney W. Swartz 1982 Family Trust, The Swartz Foundation and The Sidney and Judith Swartz Charitable Remainder Unitrust have not been considered owned by an affiliate.
ITEM 13.

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 Registrant's 1996 Proxy Statement, which information is incorporated herein by reference.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
List of Financial Statements and Financial Statement Schedules.
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and have therefore been omitted.
(b) No reports on Form 8-K were filed by the Company during the fourth quarter of 1995.
Pursuant to paragraph 4(iii) of Item 601, Regulation S-K, the Registrant has filed as Exhibits only the instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries with respect to which the total amount of securities authorized thereunder exceeds 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant agrees to furnish to the Commission upon its request copies of other instruments defining the rights of holders of long-term debt of the Registrant and its subsidiaries, with respect to which the total amount does not exceed 10% of such assets. The Registrant also agrees to furnish to the Commission upon its request copies of any omitted schedule or exhibit to any Exhibit filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE TIMBERLAND COMPANY
/S/ SIDNEY W. SWARTZ By:................................. SIDNEY W. SWARTZ, PRESIDENT
March 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
ITEM 14(d)
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 as of December 31, 1995 and 1994 and for the three years in the period ended December 31, 1995, and have issued our report thereon dated February 7, 1996; such consolidated financial statements and report are included in your 1995 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. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audit. 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 7, 1996
SCHEDULE VIII
THE TIMBERLAND COMPANY
Timberland; [TIMBERLAND LOGO]; Treeline; Weathergear; [WORK LOGO]; [MILL RIVER LOGO]; More Quality Than You May Ever Need; Active Comfort Technology; ACT; Mountain to River; Toporelief; Topozoic; Boots, Shoes, Clothing, Wind, Water, Earth & Sky; Wind, Water, Earth & Sky; Elements; The Elements of Design are the Elements themselves, Wind, Water, Earth and Sky; Nothing Can Stop You; Blackridge Mountain; Blackridge Mountain Logo Design; Mill River; Mill River Logo Design; TBL 30; Timberland 1049; Trail Grip; and Tims are trademarks or registered trademarks of The Timberland Company.
Gore-Tex is a registered trademark of W.L. Gore & Associates, Inc.
(C) The Timberland Company 1996 All Rights Reserved.