EXHIBIT 99
VF Announces Record Third Quarter and Increases Dividend
-- Revenues rise 15% to more than $2 billion; international
revenues up 19%
-- EPS from continuing operations up 13% to $1.86
-- Quarterly dividend increased 5% to $.58 per share
-- Raising 2007 revenue and EPS guidance to reflect strong third
quarter results
Information regarding VF's third quarter conference call webcast
today at 4:30 p.m. ET can be found at the end of this release.
GREENSBORO, N.C.--(BUSINESS WIRE)--Oct. 18, 2007--VF Corporation
(NYSE: VFC), a global leader in branded lifestyle apparel, today
announced results for the third quarter and nine months ended
September 29, 2007. All per share amounts are presented on a diluted
basis and, unless otherwise noted, reflect continuing operations.
Revenues rose 15% to a record $2,073.2 million, compared with
$1,810.1 million in the third quarter of 2006, driven by higher
revenues across our Outdoor, Jeanswear and Imagewear businesses and
from revenues from our 2007 acquisitions, including, most recently,
Seven For All Mankind and lucy activewear. Income from continuing
operations in the current quarter increased 13% to a record $209.3
million, compared with $186.0 million in the prior year's quarter.
Earnings per share from continuing operations rose 13%, to a record
$1.86 from $1.64 last year. Net income, including the effects of
discontinued operations was $207.2 million, or $1.84 per share,
compared with $197.7 million, or $1.75 per share in the prior year
quarter.
For the nine months of 2007, revenues rose 14% to a record
$5,264.2 million from $4,617.0 million. Income from continuing
operations also increased 14% to $449.2 million, compared with $393.7
million in the prior year period. Earnings per share from continuing
operations rose 13% to $3.96. Net income, including the effects of
discontinued operations, was $427.2 million, or $3.76 per share,
compared with $424.9 million, or $3.77 per share in the prior year
period.
"These results - in this environment - prove that VF has the right
brands and strategies to win," said Mackey J. McDonald, Chairman and
Chief Executive Officer. "We are uniquely positioned within the
apparel industry for long-term success. Due to our successful
transformation, VF is a very different company than it used to be.
What sets VF apart today is our highly diversified base of products
and customers, our large and rapidly growing international business,
our expanding base of owned retail stores and our very successful
track record of acquisitions. Above all, it is our ability to
consistently execute on well-defined goals and strategies that will
enable us to continue to generate strong returns for our
shareholders."
Third Quarter Business Review
Outdoor
Our Outdoor coalition continues to experience tremendous growth.
Revenues increased 22% to $806 million, with our domestic and
international businesses each growing more than 20% during the
quarter. The North Face(R), Vans(R), JanSport(R), Kipling(R) and
Napapijri(R) brands each enjoyed double-digit revenue gains in the
quarter. The early 2007 acquisition of the Eagle Creek(R) brand of
adventure travel gear added $10 million to revenues in the quarter.
Outdoor operating income grew 16% in the quarter, with operating
margins remaining at the 20% level.
Jeanswear
Revenues in our Jeanswear coalition, which includes our
Wrangler(R), Lee(R) and Riders(R) brands, rose 3% in the quarter,
driven by a 13% increase in revenues of our international jeans
business. Foreign currency translation contributed to the
international revenue gain, accounting for about half of the increase.
Our Lee(R) and Wrangler(R) brands both experienced strong growth in
Europe. Our jeans business in China grew more than 40% in the quarter,
with healthy revenue gains also in Canada, Mexico and Russia. Domestic
jeanswear revenues declined slightly in the quarter, reflecting softer
retail market conditions in the U.S. Total Jeanswear operating income
rose strongly, up 15%, with operating margins reaching nearly 18% in
the quarter.
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, declined 6% in the quarter. Our Kipling(R) and John
Varvatos(R) businesses each posted double-digit revenue growth.
Revenues of our Nautica(R) branded business declined 10% in the
quarter, reflecting the impact of a shift in shipping dates by most of
the brand's customers and generally sluggish conditions in department
stores. Operating income declined in the quarter due to the Nautica(R)
brand volume decrease and increased promotional activity. We expect
more favorable comparisons in the fourth quarter, with an increase in
revenues and operating margins more consistent with prior year levels.
Contemporary Brands
In August we completed the acquisitions of the Seven For All
Mankind premium denim and lucy women's activewear businesses, and
formed our new Contemporary Brands coalition. Reflecting the revenues
of the two businesses since being acquired, our Contemporary Brands
coalition generated $33 million in revenues and $5 million in
operating income in the quarter. Both the 7 For All Mankind(R) and
lucy(R) brands continue to have great potential and will be important
contributors to the future growth of our lifestyle brand portfolio.
Imagewear
Total revenues of our Imagewear coalition rose 24%. The February
2007 acquisition of the Majestic Athletic business contributed $44
million to revenues in the quarter. Organic growth was 4% in the
quarter, driven by a double-digit revenue increase in our licensed
sports apparel business. As part of its acquisition of Majestic
Athletic, VF Imagewear extended its licensing agreements with both
Major League Baseball and the Major League Baseball Players
Association. These license agreements cover authentic, replica and
fanwear products across multiple channels of distribution.
Additionally, we recently renewed our licensing agreement with the
National Football League for fanwear products across various
distribution channels. Operating income increased 23% in the quarter,
with margins remaining strong and stable.
VF's gross margins moved to 43.9% from 43.8%, while operating
income rose 15% in the quarter, with operating margins reaching 16.0%.
Our balance sheet continues to be in excellent shape. On October
15 we completed the placement of $600 million of long-term debt, with
the proceeds used to repay short-term borrowings related to recent
acquisitions. While we have invested over $1 billion in acquisitions
this year, we continue to expect our year-end debt to capital ratio to
be near prior year levels.
International growth continues to be a key driver. International
revenues grew 19% in the third quarter and comprised 30% of total
revenues in the period. Excluding the impact of foreign currency
translation, international revenues were up 12%.
Another key growth driver is the expansion of our
direct-to-consumer business primarily through retail store expansion.
We continue to grow our retail store base, ending the quarter with 608
owned retail stores, up from 544 at the end of the second quarter and
reflecting the addition of 50 lucy(R) stores. Our retail revenues grew
21% in the quarter, with double-digit revenue growth in our Vans(R),
The North Face(R), Kipling(R) and John Varvatos(R) brand stores.
Outlook
We continue to expect very strong fourth quarter and full year
results, despite current retail market conditions. For the fourth
quarter, we expect an increase in revenues and earnings per share of
18% and 13%, respectively. Reflecting the better-than-anticipated
results in the third quarter and our fourth quarter expectations, we
now see full year revenues rising 15%, up from our previous guidance
of 14%. Earnings per share should increase slightly more than 13%,
versus our previous guidance of 12%. We also continue to expect
another very strong year of cash flow from operations of approximately
$625 million.
"We're looking forward to wrapping up another record year in both
revenues and earnings, and to continuing the momentum into next year,"
said Mr. McDonald. "At the present time, we are optimistic that we can
deliver another record year in 2008, with strong top and bottom line
growth. We are gratified by the tremendous success of our Growth Plan
and transformation, yet we are perpetually driven to execute at
continually higher levels. We expect to continue our momentum with a
focus on organic growth, growing our retail sales, expanding our
international business, adding new lifestyle brands and continuing to
transform our mix of business toward higher growth, higher margin
businesses."
Dividend Increased
The Board of Directors declared a quarterly cash dividend of $.58
per share, an increase of $.03. The dividend is payable on December
20, 2007 to shareholders of record as of the close of business on
December 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 global leader in lifestyle apparel with a
diverse portfolio of jeanswear, outdoor, imagewear, sportswear and
contemporary apparel brands. Its principal brands include Wrangler(R),
Lee(R), Riders(R), The North Face(R), Vans(R), Reef(R), Eagle
Creek(R), Eastpak(R), JanSport(R), Napapijri(R), Nautica(R),
Kipling(R), John Varvatos(R), 7 For All Mankind(R), lucy(R),
Majestic(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 third quarter conference call and webcast today
at 4:30 p.m. ET. Interested parties should call 1- 888-254-2798
domestic, or 1-913-312-0399 international, to access the call. You may
also access this call via the Internet at www.vfc.com. A replay will
be available through Oct. 25, 2007, and can be accessed by dialing 1-
888-203-1112 domestic, and 1-719-457-0820 international. The pass code
is 4079550. 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 Nine Months Ended
September September
-----------------------------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Net Sales $2,053,136 $1,791,648 $5,207,175 $4,561,246
Royalty Income 20,023 18,450 56,996 55,787
----------- ----------- ----------- -----------
Total Revenues 2,073,159 1,810,098 5,264,171 4,617,033
----------- ----------- ----------- -----------
Costs and Operating
Expenses
Cost of goods sold 1,163,399 1,018,021 2,975,009 2,608,175
Marketing,
administrative and
general expenses 578,721 504,253 1,574,336 1,387,932
----------- ----------- ----------- -----------
1,742,120 1,522,274 4,549,345 3,996,107
----------- ----------- ----------- -----------
Operating Income 331,039 287,824 714,826 620,926
Other Income (Expense)
Interest income 2,202 1,439 7,494 4,149
Interest expense (19,349) (15,835) (46,373) (42,370)
Miscellaneous, net 1,834 1,869 3,583 3,240
----------- ----------- ----------- -----------
(15,313) (12,527) (35,296) (34,981)
----------- ----------- ----------- -----------
Income from Continuing
Operations Before
Income Taxes 315,726 275,297 679,530 585,945
Income Taxes 106,409 89,340 230,330 192,287
----------- ----------- ----------- -----------
Income from Continuing
Operations 209,317 185,957 449,200 393,658
Discontinued Operations
Income (loss) from
operations (1,870) 11,750 2,567 31,266
Loss on disposal (240) - (24,554) -
----------- ----------- ----------- -----------
(2,110) 11,750 (21,987) 31,266
----------- ----------- ----------- -----------
Net Income $ 207,207 $ 197,707 $ 427,213 $ 424,924
=========== =========== =========== ===========
Earnings Per Common
Share - Basic
Income from continuing
operations $ 1.91 $ 1.68 $ 4.06 $ 3.57
Discontinued
operations - income
(loss) from
operations (0.02) 0.11 0.02 0.28
Discontinued
operations - loss on
disposal - - (0.22) -
Net income 1.89 1.78 3.86 3.85
Earnings Per Common
Share - Diluted
Income from continuing
operations $ 1.86 $ 1.64 $ 3.96 $ 3.49
Discontinued
operations - income
(loss) from
operations (0.02) 0.10 0.02 0.28
Discontinued
operations - loss on
disposal - - (0.22) -
Net income 1.84 1.75 3.76 3.77
Weighted Average Shares
Outstanding
Basic 109,671 110,802 110,689 110,179
Diluted 112,424 113,062 113,568 112,649
Cash Dividends Per
Common Share $ 0.55 $ 0.55 $ 1.65 $ 1.39
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 third quarter ends on the Saturday closest to September 30.
For presentation purposes herein, all references to periods ended
September 2007, December 2006 and September 2006 relate to the fiscal
periods ended as of September 29, 2007, December 30, 2006 and
September 30, 2006, respectively.
VF CORPORATION
Consolidated Balance Sheets
(In thousands)
September December September
2007 2006 2006
----------- ----------- -----------
ASSETS
Current Assets
Cash and equivalents $ 193,855 $ 343,224 $ 154,196
Accounts receivable, net 1,266,490 809,594 1,078,172
Inventories 1,295,994 958,262 1,040,024
Other current assets 209,422 205,004 211,861
Current assets of discontinued
operations 14,861 261,926 281,214
----------- ----------- -----------
Total current assets 2,980,622 2,578,010 2,765,467
Property, Plant and Equipment 1,524,030 1,455,154 1,415,282
Less accumulated depreciation 883,304 862,096 855,239
----------- ----------- -----------
640,726 593,058 560,043
Intangible Assets 1,434,904 755,693 761,895
Goodwill 1,265,878 1,030,925 1,016,264
Other Assets 373,854 348,862 382,735
Noncurrent Assets of Discontinued
Operations - 159,145 190,053
----------- ----------- -----------
$6,695,984 $5,465,693 $5,676,457
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities
Short-term borrowings $1,053,043 $ 88,467 $ 302,641
Current portion of long-term debt 67,403 68,876 35,670
Accounts payable 413,814 385,700 357,370
Accrued liabilities 606,348 392,815 473,696
Current liabilities of
discontinued operations 267 78,990 76,404
----------- ----------- -----------
Total current liabilities 2,140,875 1,014,848 1,245,781
Long-term Debt 594,792 635,359 665,475
Other Liabilities 592,524 536,728 628,500
Noncurrent Liabilities of
Discontinued Operations - 13,586 13,575
Commitments and Contingencies
Common Stockholders' Equity
Common Stock 109,737 112,185 111,208
Additional paid-in capital 1,601,708 1,469,764 1,407,986
Accumulated other comprehensive
income (loss) (29,634) (123,652) (155,956)
Retained earnings 1,685,982 1,806,875 1,759,888
----------- ----------- -----------
Total common stockholders'
equity 3,367,793 3,265,172 3,123,126
----------- ----------- -----------
$6,695,984 $5,465,693 $5,676,457
=========== =========== ===========
VF CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
Nine Months Ended
September
-----------------------
2007 2006
------------ ----------
Operating Activities
Net income $ 427,213 $ 424,924
Adjustments to reconcile net income to cash
provided (used) by operating activities of
continuing operations:
Loss (income) from discontinued operations 21,987 (31,266)
Depreciation 69,081 65,857
Amortization of intangible assets 17,655 13,130
Other amortization 17,507 15,293
Stock-based compensation 47,682 36,054
Pension funding under (over) expense 4,621 (42,901)
Other, net (9,150) 3,396
Changes in operating assets and
liabilities,
net of acquisitions:
Accounts receivable (353,469) (384,930)
Inventories (196,290) (121,011)
Accounts payable (9,694) (45,090)
Accrued income taxes 60,792 (18,088)
Accrued liabilities and other 67,858 84,410
------------ ----------
Cash provided (used) by operating
activities of continuing operations 165,793 (222)
(Loss) income from discontinued operations (21,987) 31,266
Adjustments to reconcile (loss) income from
discontinued operations to cash provided
(used) by discontinued operations:
Loss on disposal of discontinued operations 24,554 -
Other, net (15,738) (7,869)
------------ ----------
Cash provided (used) by discontinued
operations (13,171) 23,397
------------ ----------
Cash provided by operating activities 152,622 23,175
Investing Activities
Capital expenditures (79,085) (76,691)
Business acquisitions, net of cash acquired (1,082,844) (69,611)
Proceeds from sale of Intimate Apparel
business 348,714 -
Proceeds from sale of Playwear business 884 4,667
Software purchases (1,885) (8,598)
Other, net 11,458 4,159
------------ ----------
Cash used by investing activities of
continuing operations (802,758) (146,074)
Discontinued operations, net (243) 3,163
------------ ----------
Cash used by investing activities (803,001) (142,911)
Financing Activities
Increase in short-term borrowings 963,713 154,802
Payments on long-term debt (29,628) (1,519)
Purchase of Common Stock (350,000) (118,582)
Cash dividends paid (182,831) (154,775)
Proceeds from issuance of Common Stock, net 77,594 79,699
Tax benefits of stock option exercises 15,119 12,063
------------ ----------
Cash provided (used) by financing
activities 493,967 (28,312)
Effect of Foreign Currency Rate Changes on
Cash 7,043 5,687
------------ ----------
Net Change in Cash and Equivalents (149,369) (142,361)
Cash and Equivalents - Beginning of Year 343,224 296,557
------------ ----------
Cash and Equivalents - End of Period $ 193,855 $ 154,196
============ ==========
VF CORPORATION
Supplemental Financial Information
Business Segment Information
(In thousands)
Three Months Ended Nine Months Ended
September September
-----------------------------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Coalition Revenues
Jeanswear $ 758,485 $ 738,171 $2,174,691 $2,080,161
Outdoor 806,113 658,987 1,791,611 1,415,679
Imagewear 267,470 215,743 711,046 598,204
Sportswear 172,964 183,995 475,055 488,226
Contemporary Brands 32,667 - 32,667 -
Other 35,460 13,202 79,101 34,763
----------- ----------- ----------- -----------
Total coalition
revenues $2,073,159 $1,810,098 $5,264,171 $4,617,033
=========== =========== =========== ===========
Coalition Profit
Jeanswear $ 135,727 $ 117,766 $ 366,617 $ 329,639
Outdoor 161,305 139,606 298,012 232,553
Imagewear 41,553 33,734 98,059 92,892
Sportswear 17,110 24,919 45,918 63,257
Contemporary Brands 4,854 - 4,854 -
Other 530 405 2,988 (522)
----------- ----------- ----------- -----------
Total coalition
profit 361,079 316,430 816,448 717,819
Corporate and Other
Expenses (28,206) (26,737) (98,039) (93,653)
Interest, net (17,147) (14,396) (38,879) (38,221)
----------- ----------- ----------- -----------
Income from Continuing
Operations Before
Income Taxes $ 315,726 $ 275,297 $ 679,530 $ 585,945
=========== =========== =========== ===========
CONTACT: VF Services, Inc.
Cindy Knoebel, CFA, VP, Financial &
Corporate Communications, 212-841-7141