Exhibit 99
VF Delivers Double-Digit Sales and Earnings Increases for Fourth Quarter and
Declares Dividend
GREENSBORO, N.C.--(BUSINESS WIRE)--Feb. 8, 2005--VF Corporation
(NYSE:VFC):
Full Year Sales Top $6 Billion while EPS Reaches $4.21
-- Fourth quarter sales rise 12%; EPS up 15%
-- Fourth quarter gross margins top 40%; operating margins expand
to 13.1% from 11.7%
-- Annual cash flow from operations reaches $723 million
-- Expect 2005 sales growth of 6-8% and earnings growth
of at least 8%
Information regarding VF's fourth quarter conference call webcast
today can be found at the end of this release.
VF Corporation (NYSE:VFC), a leader in branded apparel, today
announced record results for the fourth quarter and full year 2004
that were well ahead of its previous guidance provided in October
2004. All per share amounts are presented on a diluted basis.
Commented Mackey J. McDonald, chairman and chief executive
officer, "This was a banner year for VF, capped by another great
quarter. We're delighted that we achieved growth across all businesses
- - jeanswear, outdoor, intimates, imagewear and sportswear - in the
quarter. We're benefiting from a powerful combination of very strong
category-driven businesses that are highly profitable and generate
healthy cash flow, plus the addition of new lifestyle brands with
great growth potential."
Fourth quarter sales rose 12% to $1,559.8 million from $1,387.3
million in the prior year's fourth quarter. Net income increased 19%
to $125.3 million from $105.6 million, with earnings per share rising
15% to $1.10 from $.96. Results in the 2003 period included a
favorable tax settlement, which benefited earnings by $.07 per share.
Nearly all the earnings gain in the quarter was generated by the
Company's core businesses, with acquisitions made in 2004 contributing
$.01 to earnings per share, reflecting the seasonal nature of these
businesses. The Company saw solid sales growth in its core businesses,
while the acquisitions of the Vans(R), Napapijri(R) and Kipling(R)
brands added $100 million to sales in the quarter. Jeanswear sales
increased 3%, Outdoor sales including acquisitions expanded 87%,
Intimate Apparel sales rose 4%, Imagewear sales grew 16% and
Sportswear sales were up 2%.
Full year sales for 2004 increased 16% to $6,054.5 million from
$5,207.5 million. Net income rose 19% to $474.7 million from $397.9
million, with earnings per share rising 17% to $4.21 from $3.61. These
results include $9.5 million ($.05 per share) of net charges related
to the disposition of the Playwear business. Acquisitions made during
2004 benefited sales and earnings per share by $296 million and $.14,
respectively. Full year Jeanswear sales were about flat with 2003
levels. Driven by strong increases in its core businesses as well as
by acquisitions, Outdoor achieved a 73% sales increase, with increases
of 9% and 6% achieved in Intimate Apparel and Imagewear, respectively.
Sportswear sales were $605 million in 2004, reflecting a full year of
sales compared with a partial year in 2003.
Fourth Quarter Business Review
Jeanswear
Total Jeanswear sales, which include the Lee(R), Wrangler(R),
Riders(R), Rustler(R), H.I.S(R), Maverick(R) and Old Axe(R) brands,
were $669 million, up 3% from $648 million in last year's fourth
quarter.
-- Domestic jeans sales were approximately even with prior year
levels. Our Mass Market business was flat in the quarter,
while our Western Specialty business was up. We continued to
see excellent response to our new lines, including Wrangler
Jeans Co.(TM), Riders(R) Coppercollection(TM) and Aura from
the Women at Wrangler(TM). Lee(R) brand sales were down in the
quarter, but the decline was due to lower sales of distressed
products.
-- International jeans sales rose 17% in the quarter, with the
favorable effects of foreign currency translation accounting
for 6% of the improvement. Despite challenging market
conditions across Europe, our business there has stabilized
and spring/summer bookings are running ahead of last year's
levels. Momentum is being provided by our Lee(R) X-line and
Wrangler(R) W Rivet lines in department and specialty stores,
and by our Hero by Wrangler(R) Easifit(TM) program in mass
market stores. We also achieved double-digit sales increases
in other international markets including Canada, Mexico,
Turkey and Asia.
Outdoor
Our Outdoor businesses continued to show excellent momentum in the
quarter. Combined sales of our Outdoor businesses, which include The
North Face(R), Vans(R), JanSport(R), Eastpak(R), Napapijri(R) and
Kipling(R) brands, jumped 87% in the quarter to $276 million from $148
million.
-- Sales of The North Face(R) brand grew by 26% in the U.S. and
48% internationally, with growth across most product
categories. Spring bookings for the brand are up 25% in the
U.S. and 22% in Europe.
-- Our Vans(R), Napapijri(R) and Kipling(R) brands all performed
above our expectations and contributed $100 million to Outdoor
sales in the quarter.
Intimate Apparel
Our Intimate Apparel business grew sales by 4% in the quarter, to
$185 million from $178 million, with growth across our private brands,
mass channel and international businesses.
-- Our private brands business enjoyed double-digit sales growth,
as we continued to reap the benefits of partnering with one of
our major customers on a significant product launch.
-- Our mass channel business also remains healthy, due to new
product successes and strong marketing programs across our
Vassarette(R), Bestform(R) and Curvation(TM) brands.
-- Our chain and department store business was mixed as this
channel remains promotionally driven and some of our customers
turned more cautious toward the end of the year.
Imagewear
Our Imagewear coalition reported a strong 16% sales increase in
the quarter, to $231 million from $199 million, with increases in both
our occupational and licensed sports apparel businesses. In addition,
Imagewear recently completed the acquisition of the net assets of
Holoubek, Inc., an apparel licensee of Harley-Davidson Motor Company,
which is expected to contribute approximately $40 million to 2005
sales.
-- Improving employment trends and our aggressive pursuit of new
businesses are contributing to sales gains in our occupational
apparel business.
-- Strength in our licensed sports apparel business was fueled by
strong baseball playoff and World Series business, and
continued strength in sales of our National Football League
and licensed Harley-Davidson products.
Sportswear
Our sales performance in Sportswear reflects our focus on
increasing sales of first quality products and improving
profitability. Sales of our Sportswear businesses, which include the
Nautica(R), Earl Jean(R) and John Varvatos(R) brands rose 2% in the
quarter, to $180 million from $177 million.
-- The Nautica(R) brand continued to improve its performance at
retail, with an increase in sales of full priced products.
-- Actions taken during the year have resulted in a substantial
improvement in profitability, and our Sportswear business is
now generating operating margins comparable to other VF
businesses.
-- Sales of our John Varvatos(R) men's collection business grew
strongly in the quarter.
As we experienced throughout the year, overall profitability was
strong in the fourth quarter, with improvements in operating margins
across most of our businesses, despite continued heavy investments to
support our future growth plans. During the quarter, growth plan
spending on a variety of brand marketing programs, customer team
initiatives and supply chain projects totaled approximately $17
million. For the full year, our growth plan spending totaled $40
million.
Gross margins increased by more than three full percentage points
in the fourth quarter, to 40.8% from 37.4%, with the improvement
coming from our acquisition of higher margin businesses, lower overall
sourcing costs and improved sales of full priced products. Operating
margins reached 13.1% in the quarter, up from 11.7% in the prior year
period.
During the year we invested $655 million in acquisitions, yet
total debt at year-end was only slightly above prior year levels, a
testament to our ability to generate strong cash flow. Cash flow from
operations reached $723 million in 2004, up from $544 million in 2003.
VF ended the year with $485 million in cash on its balance sheet.
Inventories were up approximately 4% at year-end, with all of the
increase due to the addition of $65 million of inventories from the
2004 acquisitions. Inventories in our core businesses actually
declined from the fourth quarter of 2003. Debt as a percent of total
capital was 28.4% at the end of the year, or 17.0% net of cash.
Outlook
In October we announced a new long-term annual sales growth target
of 8%. Currently, we are planning for 6-8% sales growth in 2005,
excluding any additional acquisitions. Specifically, we expect low to
mid single digit growth in each business except Outdoor, where sales
growth could exceed 25%. We're also anticipating another record year
in earnings per share. EPS are expected to rise at least 8%, excluding
the impact from expensing stock options as required under new
accounting rules, which we will implement at the beginning of the
third quarter of 2005.
We anticipate another strong year of cash flow from operations of
approximately $550 million in 2005. We plan to repurchase
approximately two million shares of common stock this year to offset
the dilution resulting from the exercise of stock options.
In terms of the first quarter, we currently expect sales to rise
approximately 6-8%, with earnings up approximately 8%.
Dividend Declared
The Board of Directors declared a regular quarterly cash dividend
of $.27 per share, payable on March 21, 2005 to shareholders of record
as of the close of business on March 11, 2005.
Cautionary Statement on Forward-looking Statements
Certain statements included in this release are "forward-looking
statements" within the meaning of the federal securities laws.
Management cautions that forward-looking statements are not guarantees
and that actual results could differ materially from those expressed
or implied in the forward-looking statements. Important risk factors
that could cause the actual results of operations or financial
condition of the Company to differ include, but are not limited to,
the overall level of consumer spending for apparel; changes in trends
in the segments of the market in which the Company competes; the
financial strength and competitive conditions, including
consolidation, of our suppliers and of our customers; actions of
competitors, customers, suppliers and service providers that may
impact the Company's business; the Company's ability to make and
integrate acquisitions successfully; the Company's ability to achieve
expected sales and earnings growth from ongoing businesses and
acquisitions; the Company's ability to achieve its planned cost
savings; terrorist actions; and the impact of economic and political
factors in the markets where the Company competes, such as recession
or changes in interest rates, currency exchange rates, price levels,
capital market valuations and other factors over which the Company has
no control. Investors are also directed to consider the risks and
uncertainties discussed in documents filed by the Company with the
Securities and Exchange Commission.
About the Company
VF Corporation is a leader in branded apparel including jeanswear,
outdoor products, intimate apparel, image apparel and sportswear. Its
principal brands include Lee(R), Wrangler(R), Riders(R), Rustler(R),
Vanity Fair(R), Vassarette(R), Bestform(R), Lily of France(R),
Nautica(R), Earl Jean(R), John Varvatos(R), JanSport(R), Eastpak(R),
The North Face(R), Vans(R), Napapijri(R), Kipling(R), Lee Sport(R) and
Red Kap(R).
VF Corporation's press releases, annual report and other
information can be accessed through the Company's home page,
www.vfc.com.
Webcast Information
VF will hold its fourth quarter conference call and webcast at
2:00 p.m. ET. Interested parties should call 800-240-6709, domestic,
or 303-262-2211, international, to access the call. You may also
access this call via the Internet at www.vfc.com. A replay will be
available through February 22, 2005 and can be accessed by dialing
800-405-2236, domestic, and 303-590-3000, international. The pass code
is 11022825. A replay also can be accessed at the Company's web site
at www.vfc.com.
VF CORPORATION
Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended Year Ended
---------------------------------------------
January 1 January 3 January 1 January 3
2005 2004 2005 2004
---------------------------------------------
Net Sales $1,559,761 $1,387,259 $6,054,536 $5,207,459
Costs and Operating
Expenses
Cost of goods sold 923,413 868,747 3,644,255 3,262,375
Marketing, administrative
and general expenses 446,776 366,462 1,676,769 1,331,814
Royalty income
and other (14,478) (9,891) (44,276) (31,619)
---------- ---------- ---------- ----------
1,355,711 1,225,318 5,276,748 4,562,570
---------- ---------- ---------- ----------
Operating Income 204,050 161,941 777,788 644,889
Other Income (Expense)
Interest income 2,303 6,844 7,151 11,456
Interest expense (19,067) (17,966) (76,087) (61,368)
Miscellaneous, net 1,312 745 3,268 3,529
---------- ---------- ---------- ----------
(15,452) (10,377) (65,668) (46,383)
---------- ---------- ---------- ----------
Income Before Income
Taxes 188,598 151,564 712,120 598,506
Income Taxes 63,295 45,931 237,418 200,573
---------- ---------- ---------- ----------
Net Income $ 125,303 $ 105,633 $ 474,702 $ 397,933
========== ========== ========== ==========
Earnings Per Common Share
Basic $ 1.13 $ 0.97 $ 4.30 $ 3.67
Diluted 1.10 0.96 4.21 3.61
Weighted Average Shares
Outstanding
Basic 110,956 107,845 109,872 107,713
Diluted 114,153 110,572 112,730 110,323
Cash Dividends Per
Common Share $ 0.27 $ 0.26 $ 1.05 $ 1.01
VF CORPORATION
Consolidated Balance Sheets
(In thousands)
January 1 January 3
2005 2004
------------ -------------
ASSETS
Current Assets
Cash and equivalents $485,507 $514,785
Accounts receivable, net 751,582 633,863
Inventories 973,248 932,985
Deferred income taxes 99,338 92,828
Other current assets 68,893 34,070
------------ -------------
Total current assets 2,378,568 2,208,531
Property, Plant and Equipment 1,539,490 1,559,846
Less accumulated depreciation 967,236 968,166
------------- -------------
572,254 591,680
Intangible Assets 639,520 318,634
Goodwill 1,031,594 700,972
Deferred Income Taxes 16,630 117,436
Other Assets 369,866 308,299
------------- -------------
$5,008,432 $4,245,552
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $42,830 $33,948
Current portion of long-term debt 401,232 1,144
Accounts payable 369,937 315,219
Accrued liabilities 558,215 438,939
------------------- -------------
Total current liabilities 1,372,214 789,250
Long-term Debt 556,639 956,383
Other Liabilities 536,131 518,625
Redeemable Preferred Stock 26,053 29,987
Common Stockholders' Equity
Common Stock 111,388 108,170
Additional paid-in capital 1,087,641 964,990
Accumulated other comprehensive
income (loss) (108,917) (189,455)
Retained earnings 1,427,283 1,067,602
------------------- -------------
Total common stockholders'
equity 2,517,395 1,951,307
------------------- -------------
$5,008,432 $4,245,552
=================== =============
VF CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
Year Ended
--------------------
January 1 January 3
2005 2004
--------- ---------
Operations
Net income $ 474,702 $ 397,933
Adjustments to reconcile net income
to cash provided by operating activities
of continuing operations:
Depreciation 110,868 104,463
Amortization 29,849 13,675
Provision for doubtful accounts 3,516 11,197
Pension funding in excess of expense (236) (21,785)
Deferred income taxes 16,172 30,961
Stock-based compensation 10,956 1,584
Other, net 13,367 12,543
Changes in current assets and liabilities:
Accounts receivable (19,815) 47,502
Inventories 51,938 61,596
Other current assets (19,006) 22,865
Accounts payable 3,789 (60,636)
Accrued compensation 48,897 (42,823)
Accrued liabilities (2,325) (35,371)
--------- ---------
Cash provided by operating activities of
continuing operations 722,672 543,704
Investments
Capital expenditures (78,759) (86,619)
Business acquisitions, net of cash acquired (655,089) (578,038)
Software purchases (13,018) (12,775)
Sale of property, plant and equipment 17,456 17,964
Sale of Playwear business 4,517 -
Other, net (103) (51)
--------- ---------
Cash used by investing activities of
continuing operations (724,996) (659,519)
Financing
Decrease in short-term borrowings (19,056) (30,080)
Proceeds from long-term debt - 292,110
Payments on long-term debt (3,494) (16,183)
Purchase of Common Stock - (61,400)
Cash dividends paid (117,731) (111,258)
Proceeds from issuance of Common Stock 106,613 32,631
Other, net (730) (510)
--------- ---------
Cash provided (used) by financing activities of
continuing operations (34,398) 105,310
Net Cash Used by Discontinued Operations (3,320) (1,417)
Effect of Foreign Currency Rate Changes on Cash 10,764 30,340
--------- ---------
Net Change in Cash and Equivalents (29,278) 18,418
Cash and Equivalents - Beginning of Year 514,785 496,367
--------- ---------
Cash and Equivalents - End of Year $ 485,507 $ 514,785
VF CORPORATION
Supplemental Financial Information
Sales by Business Coalition
(In thousands)
Three Months Ended Year Ended
----------------------- -----------------------
January 1 January 3 January 1 January 3
2005 2004 2005 2004
----------- ----------- ----------- -----------
Jeanswear $669,340 $647,581 $2,661,946 $2,666,815
Outdoor Apparel and
Equipment 276,454 147,999 1,003,851 580,663
Intimate Apparel 184,746 178,267 903,552 830,225
Imagewear 230,558 199,283 769,552 727,223
Sportswear 179,595 176,536 604,879 248,967
All Other 19,068 37,593 110,756 153,566
----------- ----------- ----------- -----------
Total $1,559,761 $1,387,259 $6,054,536 $5,207,459
=========== =========== =========== ===========
CONTACT: VF Services, Inc.
Cindy Knoebel, 212-841-7141 or 336-424-6189