Exhibit 99
VF Announces Record Second Quarter and Declares Dividend
-- Revenues Rise 12%, with Growth across All Businesses
-- EPS from Continuing Operations up 16% to $.93, Including $.04
Gain from Sale of H.I.S(R) Brand in Europe
-- Maintaining 2007 Guidance of 12% Growth in Both Revenues and
EPS
Information Regarding VF's Second Quarter Conference Call Webcast
Today at 8:30 A.M. Can Be Found at the End of This Release.
GREENSBORO, N.C.--(BUSINESS WIRE)--July 19, 2007--VF Corporation
(NYSE: VFC), a global leader in branded lifestyle apparel, today
announced results for the second quarter and first six months of 2007
ended June 30, 2007. All per share amounts are presented on a diluted
basis and, unless otherwise noted, reflect continuing operations.
Revenues rose 12% to a record $1,517.4 million, compared with
$1,351.3 million in the second quarter of 2006, driven by higher
revenues across our Outdoor, Jeanswear, Sportswear and Imagewear
businesses. Income from continuing operations in the current quarter
increased 18% to a record $105.8 million, compared with $89.6 million
in the prior year's quarter. Earnings per share from continuing
operations rose 16%, to a record $.93 from $.80 last year and included
a $.04 gain from the sale of the H.I.S(R) trademarks and related
intellectual property in Europe. Reflecting the impact of our
discontinued intimate apparel business, the sale of which was
concluded in the second quarter, net income was $81.7 million, or $.72
per share, compared with $99.0 million, or $.88 per share in the prior
year quarter.
For the first half of 2007, revenues rose 14% to a record $3,191.0
million from $2,806.9 million. Income from continuing operations
increased 15% to $239.9 million, compared with $207.7 million in the
prior year period. Earnings per share from continuing operations rose
14% to $2.10. Net income, including the effects of discontinued
operations in both periods, was $220.0 million, or $1.93 per share,
compared with $227.2 million, or $2.02 per share in the prior year
period. Year-to-date, the impact from discontinued operations was a
net loss of $19.9 million, or $.17 per share. Considering the
anticipated gain on assets yet to be sold throughout the remainder of
the year, the projected impact from discontinued operations for the
full year is an estimated loss of $.07 per share.
"The success of our brand portfolio management strategy is
evidenced by another record quarter. Our core businesses, which remain
strong and healthy, and the brands we have acquired over the last
several years continue to drive tremendous shareholder value. Most
importantly, we continue to see substantial opportunities for growth,
particularly across our lifestyle brands," said Mackey J. McDonald,
Chairman and Chief Executive Officer. "Our two most recent
acquisitions, the Eagle Creek(R) and Majestic(R) businesses, are
performing very well, and we remain confident in our ability to
successfully identify, acquire and integrate additional brands with
strong growth potential."
Second Quarter Business Review
Outdoor
Total revenues grew strongly in the quarter, up 20% to $446.8
million. Domestic revenues grew 10% in the quarter, driven by
double-digit growth in The North Face(R) and Reef(R) brands and
continued strong growth in our Vans(R) brand. JanSport(R) brand
revenues declined in the quarter, due primarily to a shift in the
timing of product shipments into the third quarter. The acquisition of
the Eagle Creek(R) brand of adventure travel gear added $10 million to
revenues in the quarter. International revenues rose 48%, with The
North Face(R), Vans(R), Kipling(R), Napapijri(R), Eastpak(R) and
Reef(R) brands each growing in excess of 35%. Outdoor operating income
grew 25% in the quarter, reflecting the strong increase in revenues.
Jeanswear
Revenues in our Jeanswear coalition, which includes our
Wrangler(R), Lee(R) and Riders(R) brands, rose 3%. The increase was
driven by a 14% increase in international revenues in the quarter, led
by continued strong performance of our Lee brand and rapid growth in
emerging markets such as China, Russia and India. Foreign currency
translation also contributed to the international revenue gain,
accounting for about half of the increase. Domestic revenues were flat
in the quarter, with revenues in our Lee, Mass Market and Western
Specialty businesses each approximately even with prior year levels.
Jeanswear operating income rose 14%, with a strong increase in
operating margins resulting from restructuring actions taken in prior
periods.
Sportswear
Total revenues of our Sportswear coalition, which includes our
Nautica(R) and John Varvatos(R) brands as well as the Kipling(R) brand
in North America, rose 9% in the quarter. Our Kipling(R) and John
Varvatos(R) businesses each posted revenue gains in excess of 25%, and
revenues of our Nautica(R) branded business grew 6%. Operating income
rose 5% in the quarter, with operating margins slightly below prior
year levels due to continued investments to build our women's
sportswear business.
Imagewear
Total revenues of our Imagewear coalition rose 22% due to the
February 2007 acquisition of the Majestic Athletic business, which
contributed $45 million to revenues in the quarter. Imagewear
operating income and margins declined in the quarter compared with the
very strong results in last year's second quarter, reflecting business
and product mix changes in the current quarter. Operating income and
margin comparisons for the second half of the year are expected to
improve substantially.
Operating income, which includes a $7.5 million gain from the
H.I.S(R) sale, rose 16% in the quarter. Including this gain, operating
margins rose to 11.1% from 10.8%.
During the quarter we concluded the share repurchase that utilized
the proceeds from the sale of our Intimates business. We repurchased
2.1 million shares in the second quarter, bringing the total number of
shares repurchased this year to 4.1 million.
Our balance sheet continues to be in excellent shape. Our debt to
total capital ratio remains low, providing us with the flexibility to
continue to pursue acquisitions to further build our portfolio with
higher growth lifestyle brands and enhance shareholder value. Debt as
a percent of total capital was 20% at June 2007, compared with 25% at
June 2006.
A key growth strategy for VF is to expand our direct-to-consumer
business primarily through retail store expansion. We continue to grow
our retail store base, ending the quarter with 544 owned retail
stores, up from 533 at the end of the first quarter. Our retail
revenues grew 22% in the quarter, with strong growth in our Vans(R),
Nautica(R) and The North Face(R) brand stores.
Outlook
We continue to expect a fifth consecutive year of record results,
with healthy organic growth. We are taking a cautious outlook
regarding retail and consumer trends for the second half of the year
by maintaining our guidance for a 12% increase in both revenues and
EPS. We're looking forward to a record third quarter, with revenues
expected to rise approximately 12%, while earnings per share from
continuing operations should increase 10%. Operating margins should be
strong and stable in the quarter, while the tax rate will be slightly
higher, reflecting credits recorded in the prior year period. We also
continue to expect a very strong year of cash flow from operations of
approximately $625 million.
Dividend Declared
The Board of Directors declared a cash dividend of $.55 per share,
payable on September 20, 2007 to shareholders of record as of the
close of business on September 10, 2007.
Cautionary Statement on Forward-looking Statements
Certain statements included in this release are "forward-looking
statements" within the meaning of the federal securities laws.
Forward-looking statements are made based on our expectations and
beliefs concerning future events impacting VF and therefore involve a
number of risks and uncertainties. We caution that forward-looking
statements are not guarantees and that actual results could differ
materially from those expressed or implied in the forward-looking
statements.
Potential risks and uncertainties that could cause the actual
results of operations or financial condition of VF to differ
materially from those expressed or implied by forward-looking
statements in this release include VF's reliance on a small number of
large customers; the financial strength of VF's customers; changing
fashion trends and consumer demand; increasing pressure on margins;
VF's ability to implement its growth strategy; VF's ability to
successfully integrate and grow acquisitions; VF's ability to maintain
information technology systems; stability of VF's manufacturing
facilities and foreign suppliers; continued use by VF's suppliers of
ethical business practices; VF's ability to accurately forecast demand
for products; continuity of members of VF's management; VF's ability
to protect trademarks and other intellectual property rights;
maintenance by VF's licensees and distributors of the value of VF's
brands; the overall level of consumer spending; general economic
conditions and other factors affecting consumer confidence;
fluctuations in the price, availability and quality of raw materials
and contracted products; foreign currency fluctuations; and legal,
regulatory, political and economic risks in international markets.
More information on potential factors that could affect VF's financial
results is included from time to time in VF's public reports filed
with the Securities and Exchange Commission, including VF's Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q.
About the Company
VF Corporation is a leader in branded lifestyle apparel including
jeanswear, outdoor products, image apparel and sportswear. Its
principal brands include Wrangler(R), Lee(R), Riders(R), Rustler(R),
The North Face(R), Vans(R), Reef(R), Napapijri(R), Kipling(R),
Nautica(R), John Varvatos(R), JanSport(R), Eastpak(R), Eagle Creek(R),
Red Kap(R)and Majestic(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 today
at 8:30 a.m. ET. Interested parties should call 1-800-811-8824
domestic, or 1-913-981-4903 international, to access the call. You may
also access this call via the Internet at www.vfc.com. A replay will
be available through Aug. 2, 2007, and can be accessed by dialing
1-888-203-1112 domestic, and 1-719-457-0820 international. The pass
code is 1156764. 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 Six Months
Ended June Ended June
----------------------- -----------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Net Sales $1,500,431 $1,332,892 $3,154,039 $2,769,598
Royalty Income 16,962 18,421 36,973 37,337
----------- ----------- ----------- -----------
Total Revenues 1,517,393 1,351,313 3,191,012 2,806,935
----------- ----------- ----------- -----------
Costs and Operating
Expenses
Cost of goods sold 865,727 765,554 1,811,610 1,590,154
Marketing,
administrative and
general expenses 483,204 439,970 995,615 883,679
----------- ----------- ----------- -----------
1,348,931 1,205,524 2,807,225 2,473,833
----------- ----------- ----------- -----------
Operating Income 168,462 145,789 383,787 333,102
Other Income (Expense)
Interest income 2,848 1,292 5,292 2,710
Interest expense (13,101) (13,856) (27,024) (26,535)
Miscellaneous, net 1,483 542 1,749 1,371
----------- ----------- ----------- -----------
(8,770) (12,022) (19,983) (22,454)
----------- ----------- ----------- -----------
Income from Continuing
Operations Before
Income Taxes 159,692 133,767 363,804 310,648
Income Taxes 53,887 44,208 123,921 102,947
----------- ----------- ----------- -----------
Income from Continuing
Operations 105,805 89,559 239,883 207,701
Discontinued Operations
Income from operations 171 9,473 4,437 19,516
Loss on disposal (24,314) - (24,314) -
----------- ----------- ----------- -----------
(24,143) 9,473 (19,877) 19,516
----------- ----------- ----------- -----------
Net Income $ 81,662 $ 99,032 $ 220,006 $ 227,217
=========== =========== =========== ===========
Earnings Per Common
Share - Basic
Income from continuing
operations $ 0.96 $ 0.81 $ 2.16 $ 1.88
Discontinued
operations - income
from operations 0.00 0.09 0.04 0.18
Discontinued
operations - loss on
disposal (0.22) - (0.22) -
Net income 0.74 0.90 1.98 2.06
Earnings Per Common
Share - Diluted
Income from continuing
operations $ 0.93 $ 0.80 $ 2.10 $ 1.85
Discontinued
operations - income
from operations 0.00 0.08 0.04 0.17
Discontinued
operations - loss on
disposal (0.21) - (0.21) -
Net income 0.72 0.88 1.93 2.02
Weighted Average Shares
Outstanding
Basic 110,504 109,854 111,199 109,867
Diluted 113,473 112,539 114,146 112,440
Cash Dividends Per
Common Share $ 0.55 $ 0.55 $ 1.10 $ 0.84
NOTE: 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 second quarter ends on the Saturday closest to June 30. For
presentation purposes herein, all references to periods ended June
2007, December 2006 and June 2006 relate to the fiscal periods ended
as of June 30, 2007, December 30, 2006 and July 1, 2006,
respectively.
VF CORPORATION
Consolidated Balance Sheets
(In thousands)
June December June
2007 2006 2006
----------- ----------- -----------
ASSETS
Current Assets
Cash and equivalents $ 177,849 $ 343,224 $ 161,672
Accounts receivable, net 924,455 809,594 768,773
Inventories 1,217,721 958,262 1,044,444
Other current assets 198,851 205,004 244,789
Current assets of discontinued
operations 17,871 261,926 314,436
----------- ----------- -----------
Total current assets 2,536,747 2,578,010 2,534,114
Property, Plant and Equipment 1,466,736 1,455,154 1,408,471
Less accumulated depreciation 871,850 862,096 849,394
----------- ----------- -----------
594,886 593,058 559,077
Intangible Assets 854,381 755,693 747,839
Goodwill 1,048,348 1,030,925 990,958
Other Assets 378,660 348,862 387,746
Noncurrent Assets of Discontinued
Operations - 159,145 186,835
----------- ----------- -----------
$5,413,022 $5,465,693 $5,406,569
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Short-term borrowings $ 107,586 $ 88,467 $ 229,145
Current portion of long-term debt 97,435 68,876 36,164
Accounts payable 424,229 385,700 413,187
Accrued liabilities 438,075 392,815 419,429
Current liabilities of
discontinued operations 675 78,990 82,129
----------- ----------- -----------
Total current liabilities 1,068,000 1,014,848 1,180,054
Long-term Debt 602,229 635,359 693,359
Other Liabilities 565,613 536,728 587,080
Noncurrent Liabilities of
Discontinued Operations - 13,586 24,669
Commitments and Contingencies
Common Stockholders' Equity
Common Stock 109,717 112,185 110,640
Additional paid-in capital 1,585,105 1,469,764 1,368,082
Accumulated other comprehensive
income (loss) (58,336) (123,652) (180,782)
Retained earnings 1,540,694 1,806,875 1,623,467
----------- ----------- -----------
Total common stockholders'
equity 3,177,180 3,265,172 2,921,407
----------- ----------- -----------
$5,413,022 $5,465,693 $5,406,569
=========== =========== ===========
VF CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
Six Months
Ended June
---------------------
2007 2006
---------- ----------
Operating Activities
Net income $ 220,006 $ 227,217
Adjustments to reconcile net income to cash
used by operating activities of continuing
operations:
Loss/(income) from discontinued operations 19,877 (19,516)
Depreciation 46,350 43,177
Amortization of intangible assets 10,281 8,386
Other amortization 13,321 11,199
Stock-based compensation 34,227 27,204
Pension funding under/(over) expense 4,993 (52,442)
Other, net (33,801) (9,552)
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Accounts receivable (68,705) (89,138)
Inventories (197,058) (136,159)
Accounts payable 28,687 16,490
Accrued compensation (28,284) (51,038)
Accrued income taxes 6,624 (26,035)
Accrued liabilities and other 36,096 31,306
---------- ----------
Cash provided/(used) by operating activities
of continuing operations 92,614 (18,901)
(Loss)/income from discontinued operations (19,877) 19,516
Adjustments to reconcile (loss)/income from
discontinued operations to cash used by
discontinued operations:
Loss on disposal of discontinued operations 24,314 -
Other, net (15,601) (20,643)
---------- ----------
Cash used by discontinued operations (11,164) (1,127)
---------- ----------
Cash provided/(used) by operating activities 81,450 (20,028)
Investing Activities
Capital expenditures (50,385) (55,018)
Business acquisitions, net of cash acquired (178,639) (3,893)
Proceeds from sale of Intimate Apparel
business 348,714 -
Software purchases (777) (7,196)
Other, net 3,676 9,204
---------- ----------
Cash provided/(used) by investing activities
of continuing operations 122,589 (56,903)
Discontinued operations, net (243) 2,875
---------- ----------
Cash provided/(used) by investing activities 122,346 (54,028)
Financing Activities
Increase in short-term borrowings 18,565 88,175
Payments on long-term debt (8,531) (1,444)
Purchase of Common Stock (350,000) (118,582)
Cash dividends paid (122,359) (93,607)
Proceeds from issuance of Common Stock, net 75,519 53,542
Tax benefits of stock option exercises 14,667 7,824
---------- ----------
Cash used by financing activities (372,139) (64,092)
Effect of Foreign Currency Rate Changes on Cash 2,968 3,263
---------- ----------
Net Change in Cash and Equivalents (165,375) (134,885)
Cash and Equivalents - Beginning of Year 343,224 296,557
---------- ----------
Cash and Equivalents - End of Period $ 177,849 $ 161,672
========== ==========
VF CORPORATION
Supplemental Financial Information
Business Segment Information
(In thousands)
Three Months Six Months
Ended June Ended June
----------------------- -----------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Coalition Revenues
Jeanswear $ 655,402 $ 638,170 $1,416,206 $1,341,990
Outdoor 446,745 371,047 985,498 756,692
Imagewear 229,885 188,496 443,576 382,461
Sportswear 153,651 141,210 302,091 304,231
Other 31,710 12,390 43,641 21,561
----------- ----------- ----------- -----------
Total coalition
revenues $1,517,393 $1,351,313 $3,191,012 $2,806,935
=========== =========== =========== ===========
Coalition Profit
Jeanswear $ 101,437 $ 88,850 $ 230,890 $ 211,873
Outdoor 52,962 42,355 136,707 92,947
Imagewear 26,052 29,107 56,506 59,158
Sportswear 18,834 17,885 28,808 38,338
Other 3,670 283 2,458 (927)
----------- ----------- ----------- -----------
Total coalition
profit 202,955 178,480 455,369 401,389
Corporate and Other
Expenses (33,010) (32,149) (69,833) (66,916)
Interest, net (10,253) (12,564) (21,732) (23,825)
----------- ----------- ----------- -----------
Income from Continuing
Operations Before
Income Taxes $ 159,692 $ 133,767 $ 363,804 $ 310,648
=========== =========== =========== ===========
CONTACT: VF Services, Inc.
Cindy Knoebel, CFA, 212-841-7141 or 336-424-6189
VP, Financial & Corporate Communications