Exhibit 99
VF Reports Record First Quarter Sales and Earnings and Declares Dividend
GREENSBORO, N.C.--(BUSINESS WIRE)--April 26, 2005--VF Corporation
(NYSE: VFC):
-- First quarter sales rise 9%; EPS up 15%
-- Gross margins up nearly three percentage points, to 41.5%;
operating margins expand to 12.7% from 12.0%
-- Maintaining full year sales and EPS guidance
Information regarding VF's first 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 its first quarter ended April 2, 2005.
All per share amounts are presented on a diluted basis.
First quarter sales rose 9% to $1,563.6 million from $1,432.7
million in the prior year's first quarter. Net income increased 18% to
$122.9 million from $103.9 million, with earnings per share rising 15%
to $1.07 from $.93. First quarter 2004 results included $34 million in
sales from the Company's Playwear business, which was sold in
mid-2004. The acquisitions of the Vans(R), Napapijri(R), Kipling(R)
and Holoubek businesses added $156 million to sales in the 2005
quarter and $.10 to earnings per share.
"We are delighted to deliver another record quarter to our
shareholders," commented Mackey J. McDonald, chairman and chief
executive officer. "Our Outdoor, Imagewear and Sportswear businesses
each delivered outstanding results during the quarter, with strong
increases in both sales and profits. We are gratified to see our
aggressive pursuit of new growth brands benefiting both our top and
bottom lines."
First 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 $707 million versus $708 million in last year's first quarter.
Sales increased across most international markets, due primarily to
favorable currency translation, offset by slightly lower domestic
jeans sales. Jeanswear margins remained at healthy levels, although
operating income dipped 3% in the quarter.
Outdoor
Our Outdoor businesses continued to grow rapidly 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 127% in the quarter to $282 million from $125 million.
Total sales of The North Face(R) brand rose 18% in the quarter. Fall
bookings for the brand are up 27% in the U.S. and 19% in Europe. Packs
sales also rose in the quarter. Our Vans(R), Napapijri(R) and
Kipling(R) brands continue to perform very well and contributed $141
million to Outdoor sales in the quarter. Operating income rose in line
with sales, with margins stable.
Intimate Apparel
Sales in our Intimate Apparel business, which includes our Vanity
Fair(R), Vassarette(R), Lily of France(R), Bestform(R) and
Curvation(R) brands and our Private Brands business, declined 9% in
the quarter, to $227 million from $249 million. We have noted
previously that 2004 results benefited from a large new product launch
with a private label specialty store customer, which will result in
difficult sales and profit comparisons throughout 2005. The decline in
operating income and margins primarily reflects the lower sales and
resulting impact on capacity and overhead absorption.
Imagewear
Our Imagewear coalition reported an 8% sales increase in the
quarter, to $187 million from $173 million. The coalition enjoyed a
strong increase in sales of licensed sports apparel, due primarily to
the January 2005 acquisition of the business of Holoubek, a licensee
of the Harley-Davidson Motor Company, Inc. Occupational apparel sales
were flat in the quarter. Operating income and margins rose sharply,
reflecting lower product costs in both our owned and sourced
operations.
Sportswear
Sales of our Sportswear businesses, which include the Nautica(R)
and John Varvatos(R) brands as well as Kipling(R) brand sales in North
America, rose 7% in the quarter, to $152 million from $142 million.
Operating income and margins nearly doubled. We saw improved
profitability in all Nautica businesses due to lower markdowns and
returns, particularly in our men's sportswear business, lower
inventory levels, a decline in operating expenses and savings from
restructuring actions taken in 2004.
Gross margins increased by nearly three full percentage points in
the quarter, to 41.5% from 38.7%. Over half of this increase resulted
from the inclusion of the higher margin acquisitions as well as growth
in our higher margin businesses, with the remainder relating to
operational improvements in most of our core businesses. Operating
margins reached 12.7% in the quarter, up from 12.0% in the prior year
period.
Our balance sheet remains very strong, and we ended the quarter
with $366 million in cash. Inventories were up 13%, with $55 million
of the total increase of $114 million due to 2004 and 2005
acquisitions. Debt as a percent of total capital was 27.6% at the end
of the quarter, or 19.5% net of cash. The increase in the current
portion of long term-debt reflects $400 million of long-term debt due
to be repaid in 2005.
Outlook
"We have our sights firmly set on delivering another record year
in both sales and earnings. Our management team is focused and
energized on maintaining the momentum behind our growth plan. We
continue to search for additional growth brands to add to our
portfolio while at the same time investing behind our core brands to
keep them strong and healthy," concluded Mr. McDonald.
For the full year, we continue to expect sales growth of 6-8%,
excluding any additional acquisitions. We recently completed the
acquisition of the Reef(R) brand of premium surf-inspired footwear,
which we indicated should contribute $45 million to 2005 sales. Our
Jeanswear, Imagewear and Sportswear businesses remain on track to
deliver low to mid single digit growth, while Intimate Apparel sales
could be flat to down slightly in 2005. Sales growth in our Outdoor
business could exceed 30% this year. Second quarter sales should rise
by 10-12% over the prior year's second quarter. Sales in the second
half of the year should be up approximately 5%, recognizing that all
of the 2004 acquisitions occurred prior to the second half of that
year.
We also continue to expect that earnings per share will rise by at
least 8% in 2005. This reflects our expectation that second quarter
EPS could decline approximately 10%, followed by an increase of more
than 10% in the second half of the year. Second quarter EPS in 2004
included a net benefit of $.04 per share related to the exit of our
Playwear business. The decrease in the 2005 second quarter also
reflects the seasonal nature of our recent acquisitions, investment
spending to support our growth plans and the continued difficult
comparisons within our Intimates business.
Based on the SEC's recent announcement that the implementation
date of a rule change related to expensing stock options would be
delayed, we expect no impact from stock option expense in 2005.
We continue to anticipate another strong year of cash flow from
operations of approximately $550 million in 2005. During the quarter
we repurchased one million shares of common stock and expect to
repurchase a total of two million shares this year to offset the
dilution resulting from the exercise of stock options.
Dividend Declared
The Board of Directors declared a regular quarterly cash dividend
of $.27 per share, payable on June 20, 2005 to shareholders of record
as of the close of business on June 10, 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, trade regulation 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
brands include Lee(R), Wrangler(R), Riders(R), Rustler(R), Earl
Jean(R), Vanity Fair(R), Vassarette(R), Bestform(R), Lily of
France(R), Nautica(R), John Varvatos(R), JanSport(R), Eastpak(R), The
North Face(R), Vans(R), Reef(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 first quarter conference call and webcast at 2:00
p.m. ET. Interested parties should call (800) 257-7087, domestic, or
(303) 262-2052, international, to access the call. You may also access
this call via the Internet at www.vfc.com. A replay will be available
through May 10, 2005 and can be accessed by dialing (800) 405-2236,
domestic, and (303) 590-3000, international. The pass code is
11028468. A replay also can be accessed at the Company's website at
www.vfc.com.
VF CORPORATION
Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended March
---------------------------------
2005 2004
------------- -----------
Net Sales $1,563,643 $1,432,669
Costs and Operating Expenses
Cost of goods sold 914,424 878,393
Marketing, administrative
and general expenses 463,672 394,957
Royalty income and other (13,349) (13,240)
------------- -----------
1,364,747 1,260,110
------------- -----------
Operating Income 198,896 172,559
Other Income (Expense)
Interest, net (15,658) (16,781)
Miscellaneous, net 119 1,607
------------- -----------
(15,539) (15,174)
------------- -----------
Income Before Income Taxes 183,357 157,385
Income Taxes 60,489 53,511
------------- -----------
Net Income $122,868 $103,874
============= ===========
Earnings Per Common Share
Basic $1.10 $0.95
Diluted 1.07 0.93
Weighted Average Shares Outstanding
Basic 111,761 108,730
Diluted 114,926 111,515
Cash Dividends Per Common Share $0.27 $0.26
Basis of presentation: VF operates and reports using a 52/53 week
fiscal year ending on the Saturday closest to December 31 of each
year. Similarly, the fiscal first quarter ends on the Saturday closest
to March 31. For presentation purposes herein, all references to
periods ended March 2005, March 2004 and December 2004 relate to the
fiscal periods ended as of April 2, 2005, April 3, 2004 and January 1,
2005, respectively.
Reclassifications: Certain prior year amounts have been
reclassified to conform with the 2005 presentation.
VF CORPORATION
Consolidated Balance Sheets
(In thousands)
March December March
2005 2004 2004
----------- ----------- -----------
ASSETS
Current Assets
Cash and equivalents $365,864 $485,507 $551,688
Accounts receivable, net 844,009 751,582 747,337
Inventories 986,961 973,248 872,568
Other current assets 156,347 168,231 125,937
----------- ----------- -----------
Total current assets 2,353,181 2,378,568 2,297,530
Property, Plant and Equipment 1,544,786 1,539,490 1,564,833
Less accumulated depreciation 972,382 967,236 985,446
----------- ----------- -----------
572,404 572,254 579,387
Intangible Assets 653,574 639,520 317,293
Goodwill 1,028,235 1,031,594 700,170
Other Assets 400,333 382,342 443,541
----------- ----------- -----------
$5,007,727 $5,004,278 $4,337,921
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $37,852 $42,830 $36,587
Current portion of long-term
debt 401,563 401,232 1,143
Accounts payable 319,010 369,937 256,899
Accrued liabilities 502,849 558,215 416,932
----------- ----------- -----------
Total current liabilities 1,261,274 1,372,214 711,561
Long-term Debt 558,863 556,639 956,731
Other Liabilities 547,578 536,131 513,213
Commitments and Contingencies
Redeemable Preferred Stock 24,935 26,053 28,289
Common Stockholders' Equity
Common Stock 111,830 111,388 109,458
Additional paid-in capital 1,151,694 1,087,641 1,010,395
Accumulated other comprehensive
income (loss) (110,062) (113,071) (135,529)
Retained earnings 1,461,615 1,427,283 1,143,803
----------- ----------- -----------
Total common stockholders'
equity 2,615,077 2,513,241 2,128,127
----------- ----------- -----------
$5,007,727 $5,004,278 $4,337,921
=========== =========== ===========
VF CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
March
-----------------------
2005 2004
---------- ---------
Operations
Net income $122,868 $103,874
Adjustments to reconcile net
income to cash provided by operating
activities:
Depreciation 22,199 23,963
Amortization of intangible assets 3,696 1,340
Other amortization 4,207 3,700
Provision for doubtful accounts 4,524 5,615
Pension funding in excess of expense (44,739) (41,182)
Other, net 3,291 9,442
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable (100,070) (122,846)
Inventories (10,106) 58,486
Accounts payable (52,157) (57,504)
Accrued liabilities and other 26,144 57,998
---------- ---------
Cash provided (used) by operating
activities (20,143) 42,886
Investments
Capital expenditures (29,229) (13,036)
Business acquisitions, net of cash acquired (23,817) -
Software purchases (5,964) (1,418)
Other, net 4,410 377
---------- ---------
Cash used by investing activities (54,600) (14,077)
Financing
Increase in short-term borrowings (4,751) 3,247
Payments on long-term debt (531) (492)
Purchase of Common Stock (59,073) -
Cash dividends paid (30,801) (28,941)
Proceeds from issuance of Common Stock 54,495 41,986
Other, net (122) (418)
---------- ---------
Cash provided (used) by financing
activities (40,783) 15,382
Net Cash Used by Discontinued Operations - (3,136)
Effect of Foreign Currency Rate Changes on
Cash (4,117) (4,152)
---------- ---------
Net Change in Cash and Equivalents (119,643) 36,903
Cash and Equivalents - Beginning of Year 485,507 514,785
---------- ---------
Cash and Equivalents - End of Period $365,864 $551,688
========== =========
VF CORPORATION
Supplemental Financial Information
Business Segment Information
(In thousands)
Three Months Ended March
------------------------
2005 2004
------------ -----------
Coalition sales
Jeanswear $706,721 $708,280
Outdoor Apparel and Equipment 282,296 124,579
Intimate Apparel 227,276 249,420
Imagewear 187,168 173,032
Sportswear 151,762 141,652
Other 8,420 35,706
------------ -----------
Net sales $1,563,643 $1,432,669
============ ===========
Coalition profit
Jeanswear $119,209 $122,335
Outdoor Apparel and Equipment 32,394 13,902
Intimate Apparel 23,528 35,256
Imagewear 30,290 21,845
Sportswear 26,901 13,187
Other (547) (4,172)
------------ -----------
Total coalition profit 231,775 202,353
Corporate and other expenses (32,760) (28,187)
Interest, net (15,658) (16,781)
------------ -----------
Income before income taxes $183,357 $157,385
============ ===========
CONTACT: VF Services, Inc.
Cindy Knoebel, 336-424-6189 or 212-841-7141