VF Reports Record 2012 Fourth Quarter and Full Year Results, and Sets Guidance for Fiscal 2013

  • Fourth quarter adjusted EPS up 32% to $3.07 (up 31% to $2.98 on a GAAP basis)
  • Full year revenues up 15% to $10.9 billion (up 17% in constant dollars)
  • Full year gross margin up 75 basis points to 46.5%
  • Full year adjusted EPS up 17% to $9.63 (a record $9.70 on a GAAP basis)
  • 2013 revenues expected to increase about 6%
  • 2013 adjusted EPS expected to grow 11% to $10.70 (up 9% to $10.60 on a GAAP basis)
  • Gross margin expected to improve by 100 basis points, while operating margin should improve by nearly 100 basis points in 2013
  • 2013 cash flow from operations to approach $1.4 billion

GREENSBORO, N.C.--()--VF Corporation (NYSE: VFC) today reported financial results for its fourth quarter and full year ended December 29, 2012. All per share amounts are presented on a diluted basis. All references to “Timberland” include the Timberland® and Smartwool® brands. “Adjusted” amounts refer to non-GAAP measures that exclude Timberland acquisition-related expenses and the gain on the sale of John Varvatos Enterprises, Inc. (“John Varvatos”) as described in the “Adjusted Amounts” paragraph at the end of this release.

“2012 was another year of record revenues and profits for VF, with solid results across nearly every coalition, channel and geography,” said Eric Wiseman, VF Chairman and Chief Executive Officer. “Our performance is confirmation of our greatest competitive advantage – the diversity of our portfolio. It’s this strength, along with our focus on driving operational excellence into all areas of our business, that enables our brands to deliver the industry’s most innovative and meaningful products while deepening relationships with our customers and consumers, and consistently returning value to our shareholders.”

Fourth Quarter 2012 Review

Revenues rose 4 percent (5 percent in constant dollars) to a record $3.0 billion from $2.9 billion in the same period of 2011 driven by strength in the Outdoor & Action Sports and Sportswear coalitions, and in our international and direct-to-consumer businesses. The sale of John Varvatos in April 2012 negatively impacted VF’s revenue growth by 1 percentage point in the fourth quarter.

Gross margin rose by 220 basis points to a record 47.4 percent, compared with 45.2 percent in the same period of 2011, reflecting improvements in every coalition. The higher gross margin reflects the continued shift in our revenue mix towards higher margin businesses and lower year over year product costs.

Operating income on an adjusted basis grew 28 percent to $457 million in the fourth quarter of 2012 compared with $358 million in the same period of 2011. On a GAAP basis, fourth quarter operating income increased 28 percent to $450 million, compared with $351 million in last year’s same period. Acquisition-related expenses for Timberland were $7 million in the fourth quarters of both 2012 and 2011. Adjusted operating margin was 15.1 percent compared to 12.3 percent in the fourth quarter of 2011. On a GAAP basis, operating margin rose to 14.8 percent from 12.1 percent in the fourth quarter of 2011.

Net income on an adjusted basis grew by 32 percent to $344 million, compared with $262 million in the fourth quarter of 2011. Adjusted earnings per share – which excludes Timberland acquisition-related items of $0.09 per share in 2012 and $0.04 per share in 2011 – also increased 32 percent, to $3.07 from $2.32 during last year’s same period. This increase includes the negative impacts of foreign currency translation of $0.04 per share and higher pension expense of $0.05 per share. On a GAAP basis, fourth quarter net income was $334 million, with a 31 percent increase in earnings per share to $2.98.

Full Year 2012 Review

Revenues increased 15 percent to a record $10.9 billion from $9.5 billion in 2011. On a constant dollar basis, full year revenues increased 17 percent. The Timberland acquisition accounted for 9 percentage points, or $907 million, of the revenue growth in 2012. International revenues on a constant dollar basis were up 29 percent, of which Timberland accounted for 17 percent. Direct-to-consumer revenues were up 25 percent, with Timberland accounting for 15 percentage points of the growth. Full year revenue comparisons include a negative impact of about 1 percentage point from the sale of John Varvatos.

Gross margin rose by 75 basis points to a record 46.5 percent, compared with 45.8 percent in 2011, with improvements in nearly every business. The improvement in gross margin reflects the continued shift in our revenue mix towards higher margin businesses.

Operating income on an adjusted basis increased 17 percent to $1.5 billion in 2012. The Timberland acquisition accounted for 6 percentage points of the increase. On a GAAP basis, full year operating income rose 18 percent to $1.5 billion from $1.2 billion in 2011. Acquisition-related expenses for Timberland in 2012 and 2011 were $31 million and $33 million, respectively. Adjusted operating margin was 13.8 percent compared to 13.5 percent in 2011. On a GAAP basis, operating margin was 13.5 percent versus 13.2 percent in 2011. Excluding Timberland, the full year operating margin was 14.4 percent in 2012 and 13.6 percent in 2011.

Net income on an adjusted basis rose 18 percent to $1.1 billion compared to $913 million in 2011. Adjusted earnings per share – which excludes a $0.32 gain from the sale of John Varvatos and $0.25 in Timberland acquisition-related expenses – increased 17 percent to $9.63 from $8.20 in 2011. This increase includes the negative impacts of foreign currency translation ($0.32 per share) and higher pension expense ($0.19 per share). Timberland contributed $1.12 to adjusted earnings per share in 2012, up from $0.60 per share in 2011. On a GAAP basis, full year net income was $1.1 billion while earnings per share grew 22 percent to $9.70 per share.

Fourth Quarter Coalition Review

Outdoor & Action Sports revenues were up 6 percent in the quarter to $1.7 billion.

The North Face® brand’s momentum continued in the quarter despite a second year of unusually warm weather conditions in the U.S. and comparisons against exceptionally strong growth achieved in the prior year’s fourth quarter. Global revenues for The North Face® brand rose 10 percent (11 percent in constant dollars) with strong growth in both the Americas and Europe, and exceptional growth in Asia. The brand’s growth continues to be very well balanced, with double-digit revenue increases in both its wholesale and direct-to-consumer channels.

The Vans® brand achieved a 21 percent (22 percent in constant dollars) increase in global revenues in the fourth quarter, with 14 percent growth in the Americas region and continued outstanding momentum in Europe, where constant dollar revenues rose nearly 60 percent. The Vans® brand also posted double-digit revenue increases in both its wholesale and direct-to-consumer channels.

Timberland’s fourth quarter global revenues, which were also impacted by unseasonably warm weather, were down 4 percent with strong growth in Asia offset by declines in both the Americas and Europe. Timberland’s direct-to-consumer revenues increased by 5 percent in the fourth quarter. This increase was offset by a decline in its wholesale business due to lower closeout sales and other strategic distribution choices to position the brand for long-term growth and profitability.

Fourth quarter Outdoor & Action Sports operating income rose 18 percent and operating margin increased 190 basis points to 18.8 percent compared with 16.9 percent in the 2011 period.

Jeanswear revenues increased 3 percent (4 percent in constant dollars) to $735 million in the quarter. The Americas business grew by 5 percent in constant dollars during the quarter, while Europe posted a modest decline in revenues. Jeanswear revenues in Asia were up modestly reflecting the impact of a buildup in retailers’ inventories.

Global revenues for the Wrangler® brand on a constant dollar basis increased 5 percent driven by solid growth in its Western and Mass businesses in the U.S., and moderate growth in Latin America offset by a slight decline in Europe.

The Lee® brand’s global revenues were about flat on a constant dollar basis in the fourth quarter as the brand continues to navigate challenging dynamics in the mid-tier channel in the U.S. and weak macroeconomic conditions in Europe.

Jeanswear operating margin continued to improve, moving closer to historic levels. Both the Wrangler® and Lee® brands improved profitability in every region of the world, driven by lower year over year product costs and continued improvements in operating efficiencies.

Imagewear revenues grew 2 percent in the fourth quarter to $262 million, with a difficult comparison against strong growth achieved in the prior year period. As anticipated, the higher product costs that negatively impacted profitability in the first nine months of the year subsided, contributing to a 19 percent increase in operating income and 13.1 percent operating margin in the fourth quarter of 2012 versus 11.2 percent in the fourth quarter of 2011.

Sportswear had an outstanding quarter with revenues increasing 15 percent to $183 million and both the Nautica® and Kipling® (U.S.) brands achieving strong double-digit revenue growth. Nautica® brand growth reflected double-digit revenue increases in both its wholesale and direct-to-consumer businesses. Sportswear operating income was up 70 percent in the quarter, with operating margin up 580 basis points over the prior year. An overall higher mix of direct-to-consumer business for the coalition and improved operating performance in Nautica® retail stores drove this significant improvement.

Contemporary Brands revenues were down 17 percent in the quarter to $107 million, with the decline due entirely to the sale of John Varvatos. Excluding John Varvatos in both the 2011 and 2012 periods, revenues increased 4 percent. Revenues for the 7 For All Mankind® brand rose modestly while the Splendid® and Ella Moss® brands, on a combined basis, achieved high single-digit revenue growth in the quarter.

Contemporary Brands’ operating income and profitability in the fourth quarter both improved, with operating income increasing 20 percent and operating margin expanding by 260 basis points (320 basis points excluding John Varvatos). This improvement was driven by improved direct-to-consumer performance and lower closeout sales.

International Review (In Constant Dollars)

Fourth quarter international revenues increased 7 percent driven by an 11 percent increase in Asia, a 10 percent increase in Americas (non-U.S) and 5 percent growth in Europe. For the full year 2012, international revenues grew 29 percent (11 percent excluding Timberland), with a 28 percent increase in Europe (10 percent excluding Timberland), 42 percent growth in Asia (19 percent excluding Timberland) and a 14 percent increase in the Americas non-U.S. region (10 percent excluding Timberland). International revenues accounted for 37 percent of total VF revenues in 2012 compared with 34 percent in 2011.

Direct-to-Consumer Review

Direct-to-consumer revenues increased 8 percent in the fourth quarter. The North Face® brand’s direct-to-consumer business continued to post strong growth, up 13 percent in the quarter. Direct-to-consumer revenues for the Vans® brand also demonstrated exceptional results with revenues rising by 18 percent. Direct-to-consumer revenues for the Nautica®, Timberland®, Kipling®, Splendid® and Ella Moss® brands each achieved healthy growth during the quarter. A total of 41 stores were opened across our brands in the quarter and 141 stores during the year, bringing the total number of owned retail stores to 1,129. For the full year 2012, direct-to-consumer revenues grew 25 percent and accounted for 21 percent of total VF revenues compared with 19 percent in 2011. Timberland accounted for 15 percentage points of the 25 percent total growth (28 percent excluding John Varvatos) in direct-to-consumer revenues in 2012.

Balance Sheet Review

Inventories remain well controlled, and were down $100 million, or 7 percent, from December 2011 levels. Cash flow from operations reached a record $1.3 billion in 2012, which funded the repayment of all outstanding commercial paper, the repurchase of two million shares, a pension plan contribution of $100 million and a healthy dividend increase.

2013 Guidance

“The year ahead presents tremendous opportunities for us to expand our presence globally, lead our industry in product innovation and identify new platforms to support long-term growth,” said Wiseman. “We are confident that we are the best positioned company in our industry, and look forward to delivering another year of record results to our shareholders.”

Key points related to our full year 2013 outlook include:

  • Strong, balanced revenue growth, with sales expected to increase by about 6 percent to $11.5 billion including growth in every coalition. Outdoor & Action Sports revenues should increase by about 10 percent with a near 20 percent increase for the Vans® brand, a high single-digit increase for The North Face® brand and mid single-digit growth for the Timberland® brand. Jeanswear is expecting modest revenue growth driven by a 3-4 percent increase in the Americas region. Contemporary Brands (excluding John Varvatos) and Sportswear are each expected to grow revenues at a high single-digit rate, and mid single-digit growth is expected in Imagewear.
  • 10 percent growth in international revenues, with continued strength in Asia, where revenues are expected to increase at a low teen rate; high single-digit revenue growth in Europe; and mid-teen growth in the Americas (non-U.S.) region. International revenues should approximate 38 percent of total revenues in 2013.
  • Mid-teen growth in direct-to-consumer revenues, driven by approximately 160 store openings in 2013, comp store growth and an increase of over 30 percent in e-commerce revenues. Direct-to-consumer revenues are expected to grow to 23 percent of total revenues in 2013.
  • Substantial margin expansion, including a 100 basis point improvement in gross margin and nearly a 100 basis point increase in operating margin.
  • Adjusted earnings per share grows to $10.70, representing an 11 percent increase. On a GAAP basis, earnings per share are expected to increase 9 percent to about $10.60 from $9.70 in the prior year, which included the $0.32 per share gain from the John Varvatos sale. In addition, 2013 GAAP earnings per share guidance include a negative $0.10 per share in Timberland acquisition-related expenses, which were $0.25 per share in 2012.
  • Record cash flow from operations, approaching $1.4 billion.
  • Other full year assumptions include a 24 percent effective tax rate, a euro to U.S. dollar conversion rate of 1.30 and capital expenditures of approximately $325 million.

In terms of the quarterly revenue comparisons in 2013, first quarter revenue growth should be more modest, given seasonal shipments that boosted the prior year’s first quarter revenues. Fourth quarter revenue growth should be the strongest, reflecting the growing contribution and expansion of our direct-to-consumer business.

Adjusted Amounts

This release refers to adjusted amounts that exclude restructuring and other items related to the acquisition of Timberland, which approximated $7 million ($0.09 per share) in the fourth quarter of 2012 compared to $7 million ($0.04 per share) in the same period of 2011. Adjusted amounts for the full year exclude Timberland acquisition-related expenses of $33 million ($0.22 per share) in 2011, $31 million ($0.25 per share) in 2012, and $14 million ($0.10 per share), which is anticipated in 2013. Additionally, adjusted amounts in 2012 exclude the gain on the sale of John Varvatos of approximately $42 million ($0.32 per share inclusive of a $0.10 per share tax benefit triggered by the sale). Reconciliations of GAAP measures to adjusted amounts are presented in the supplemental financial information included with this release, which identify and quantify all excluded items.

Dividend Declared

VF’s Board of Directors declared a quarterly dividend of $0.87 per share, payable on March 18, 2013 to shareholders of record on March 8, 2013.

Webcast Information

VF will hold its fourth quarter conference call and webcast today at approximately 8:30 a.m. Eastern Time. Interested parties should call 800-946-0722 (domestic) or 719-325-2327 (international) to access the call. The conference call will be broadcast live and accessible at www.vfc.com. A replay of the conference call will be available from February 15 through February 22, 2013, via telephone at 877-870-5176 (access code: 4362236) or at www.vfc.com.

About VF

VF Corporation is a global leader in branded lifestyle apparel and footwear with more than 30 brands. The company’s largest five brands are The North Face®, Wrangler®, Timberland®, Vans®, and Lee®. Other brands include 7 For All Mankind®, Bulwark®, Eagle Creek®, Eastpak®, Ella Moss®, JanSport®, Kipling®, lucy®, Majestic®, Napapijri®, Nautica®, Red Kap®, Reef®, Riders®, Splendid® and Smartwool®. For more information, please visit www.vfc.com.

Forward Looking Statements

Certain statements included in this release and the attachments 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. You can identify these statements by the fact that they use words such as “will,” “anticipate,” “estimate,” “expect,” “should,” and “may” and other words and terms of similar meaning or use of future dates. 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, but are not limited to, the level of consumer confidence and overall level of consumer demand for apparel; fluctuations in the price, availability and quality of raw materials and contracted products; disruption to VF’s distribution system; disruption and volatility in the global capital and credit markets; VF's reliance on a small number of large customers; the financial strength of VF's customers; VF’s response to changing fashion trends; increasing pressure on margins; VF's ability to implement its growth strategy; VF's ability to grow its international and direct-to-consumer businesses; VF's ability to successfully integrate and grow acquisitions, including the Timberland acquisition; VF's ability to maintain the strength and security of its information technology systems; adverse unseasonable weather conditions; 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; foreign currency fluctuations; changes in tax liabilities, 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.

(Financial Tables Follow)

VF CORPORATION

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

     
 
Three Months Ended December Twelve Months Ended December
  2012     2011     2012     2011  
 
Net sales $ 3,003,360 $ 2,879,431 $ 10,766,020 $ 9,365,477
 
Royalty income   29,900     30,808     113,835     93,755  
 
Total revenues   3,033,260     2,910,239     10,879,855     9,459,232  
 
Costs and operating expenses
Cost of goods sold 1,595,512 1,595,173 5,817,880 5,128,602
Marketing, administrative and general expenses   987,460     963,707     3,596,708     3,085,839  
  2,582,972  

 

  2,558,880     9,414,588     8,214,441  
 
Operating income 450,288 351,359 1,465,267 1,244,791
 
Interest income 495 931 3,353 4,778
Interest expense (22,826 ) (25,005 ) (93,605 ) (77,578 )
Other income (expense), net   1,988     3,891     46,860     (7,248 )
 
Income before income taxes 429,945 331,176 1,421,875 1,164,743
 
Income taxes   95,777     73,182     335,737     274,350  
 
Net income 334,168 257,994 1,086,138 890,393
 
Net (income) loss attributable to noncontrolling interests   -     (676 )   (139 )   (2,304 )
Net income attributable to VF Corporation $ 334,168   $ 257,318   $ 1,085,999   $ 888,089  
 
Earnings per common share attributable to VF
Corporation common stockholders
Basic $ 3.04 $ 2.33 $ 9.89 $ 8.13
Diluted 2.98 2.28 9.70 7.98
 
Weighted average shares outstanding
Basic 109,893 110,204 109,823 109,287
Diluted 112,060 112,668 111,904 111,288
 
Cash dividends per common share $ 0.87 $ 0.72 $ 3.03 $ 2.61
 
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 fourth quarter ends on the Saturday closest to December 31. For presentation purposes herein, all references to periods ended December 2012 and December 2011 relate to the 13 week and 52 week fiscal periods ended December 29, 2012 and December 31, 2011, respectively.

VF CORPORATION

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share amounts)

   
December December
  2012     2011  
 
ASSETS
Current assets
Cash and equivalents $ 597,461 $ 341,228

Accounts receivable, less allowance for doubtful accounts of $48,998 in 2012 and $54,010 in 2011

1,222,345 1,120,246
 
Inventories:
Finished products 1,099,229 1,197,928
Work in process 98,191 86,902
Materials and supplies   156,738     168,815  
1,354,158 1,453,645
 
Other current assets   275,619     272,825  
Total current assets 3,449,583 3,187,944
 
Property, plant and equipment 1,983,417 1,830,039
Less accumulated depreciation   1,155,199     1,092,588  
828,218 737,451
 
Intangible assets 2,917,058 2,958,463
Goodwill 2,009,757 2,023,460
Other assets   428,405     405,808  
Total assets $ 9,633,021   $ 9,313,126  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 12,559 $ 281,686
Current portion of long-term debt 402,873 2,744
Accounts payable 562,638 637,116
Accrued liabilities   754,142     744,486  
Total current liabilities 1,732,212 1,666,032
 
Long-term debt 1,429,166 1,831,781
Other liabilities 1,346,018 1,290,138
Commitments and contingencies
Stockholders' equity

Preferred Stock, par value $1; shares authorized, 25,000,000: no shares outstanding in 2012 or 2011

- -

Common Stock, stated value $1; shares authorized, 300,000,000; 110,204,734 shares outstanding in 2012 and 110,556,981 shares outstanding in 2011

110,205 110,557
Additional paid-in capital 2,527,868 2,316,107
Accumulated other comprehensive income (loss) (453,895 ) (421,477 )
Retained earnings   2,941,447     2,520,804  
Total equity attributable to VF Corporation 5,125,625 4,525,991
Noncontrolling interests   -     (816 )
Total stockholders' equity   5,125,625     4,525,175  
Total liabilities and stockholders' equity $ 9,633,021   $ 9,313,126  

VF CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

  Twelve Months Ended December
  2012       2011  
 
Operating activities
Net income $ 1,086,138 $ 890,393

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation 148,969 127,203
Amortization of intangible assets 47,929 41,708
Other amortization 41,058 29,824
Stock-based compensation 92,814 76,739
Provision for doubtful accounts 19,264 12,490
Pension expense in excess of (less than) contributions (20,198 ) 46,346
Deferred income taxes (20,797 ) (10,867 )
Gain on sale of businesses (44,485 ) -
Other, net (16,860 ) 32,665

Changes in operating assets and liabilities, net of purchases and sales of businesses:

Accounts receivable (111,571 ) (154,487 )
Inventories 87,620 (7,509 )
Other current assets 32,382 (18,449 )
Accounts payable (74,294 ) (32,898 )
Accrued compensation (18,907 ) 2,448
Accrued income taxes 2,142 16,009
Accrued liabilities (17,005 ) (10,834 )
Other assets and liabilities   40,801     40,590  
Cash provided by operating activities 1,275,000 1,081,371
 
Investing activities
Capital expenditures (251,940 ) (170,894 )
Business acquisition, net of cash acquired (1,750 ) (2,207,065 )
Proceeds from sale of businesses 72,519 -
Trademarks acquisition - (58,132 )
Software purchases (30,890 ) (20,102 )
Other, net   (8,230 )   (3,840 )
Cash used by investing activities (220,291 ) (2,460,033 )
 
Financing activities
Net increase (decrease) in short-term borrowings (269,010 ) 250,824
Payments on long-term debt (2,776 ) (2,738 )
Proceeds from long-term debt - 898,450
Payment of debt issuance costs - (55,536 )
Purchase of Common Stock (307,282 ) (7,420 )
Cash dividends paid (333,229 ) (285,722 )
Proceeds from issuance of Common Stock, net 62,770 134,012
Tax benefits of stock option exercises 47,213 33,153
Acquisition of noncontrolling interests - (52,440 )
Other, net   (201 )   (338 )
Cash provided (used) by financing activities (802,515 ) 912,245
 
 
Effect of foreign currency rate changes on cash and equivalents   4,039     15,406  
 
Net change in cash and equivalents 256,233 (451,011 )
 
Cash and equivalents - beginning of year   341,228     792,239  
 
Cash and equivalents - end of year $ 597,461   $ 341,228  

         

VF CORPORATION

Supplemental Financial Information

Business Segment Information

(Unaudited)

(In thousands)

 
Three Months Ended December Twelve Months Ended December
2012 2011 2012 2011
 
Coalition Revenues
Outdoor & Action Sports $ 1,709,863 $ 1,619,023

$5,866,071

$4,561,998
Jeanswear 734,764 711,565 2,789,293 2,731,770
Imagewear 262,137 256,768 1,075,677 1,025,214
Sportswear 182,724 159,523 577,317 543,515
Contemporary Brands 106,944 128,941 445,960 485,142
Other 36,828 34,419 125,537 111,593
 
Total coalition revenues $ 3,033,260 $ 2,910,239

 $10,879,855

$9,459,232

 
 
Coalition Profit
Outdoor & Action Sports $ 322,244 $ 273,975 $ 1,019,425 $ 828,228
Jeanswear 131,394 86,005 466,960 413,187
Imagewear 34,300 28,758 145,053 145,655
Sportswear 32,267 18,930 72,978 56,312
Contemporary Brands 8,896 7,411 49,182 35,860
Other (365) 979 (232) (1,024)
 
Total coalition profit 528,736 416,058 1,753,366 1,478,218
 
Corporate and Other Expenses (76,460) (60,808) (241,239) (240,675)
Interest, net (22,331) (24,074) (90,252) (72,800)
 
Income Before Income Taxes $ 429,945 $ 331,176 $ 1,421,875 $ 1,164,743

VF CORPORATION
Supplemental Financial Information
Business Segment Information – Constant Currency Basis
(Unaudited)
(In thousands)
     
 
 
Three Months Ended December 2012
Exclude
As Reported Impact of Foreign
under GAAP Currency Exchange Constant Currency
 
Coalition Revenues
Outdoor & Action Sports $ 1,709,863 $ (13,346 ) $ 1,723,209
Jeanswear 734,764 (3,554 ) 738,318
Imagewear 262,137 489 261,648
Sportswear 182,724 - 182,724
Contemporary Brands 106,944 (688 ) 107,632
Other   36,828     -     36,828  
 
Total coalition revenues $ 3,033,260   $ (17,099 ) $ 3,050,359  
 
 
Coalition Profit
Outdoor & Action Sports $ 322,244 $ (3,835 ) $ 326,079
Jeanswear 131,394 (626 ) 132,020
Imagewear 34,300 93 34,207
Sportswear 32,267 - 32,267
Contemporary Brands 8,896 (75 ) 8,971
Other   (365 )   -     (365 )
 
Total coalition profit 528,736 (4,443 ) 533,179
 
Corporate and Other Expenses (76,460 ) - (76,460 )
Interest, net   (22,331 )   -     (22,331 )
 
Income Before Income Taxes $ 429,945   $ (4,443 ) $ 434,388  
 
 
Constant Currency Financial Information

VF is a global company that reports financial information in U.S. dollars in accordance with generally accepted accounting principles. Foreign currency exchange rate fluctuations affect the amounts reported by VF from translating its foreign revenues and expenses into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results. As a supplement to our reported operating results, we present constant currency financial information, which is a non-GAAP financial measure. We use constant currency information to provide a framework to assess how our businesses performed excluding the effects of changes in foreign currency translation rates. Management believes this information is useful to investors to facilitate comparisons of operating results and better identify trends in our businesses.

 

To calculate coalition revenues and profits on a constant currency basis, operating results for the current year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).

 

These constant currency performance measures should be viewed in addition to, and not in lieu of or superior to, our operating performance measures calculated in accordance with GAAP. The constant currency information presented may not be comparable to similarly titled measures reported by other companies.

 

VF CORPORATION
Supplemental Financial Information
Business Segment Information – Constant Currency Basis
(Unaudited)
(In thousands)
     
 
 
Twelve Months Ended December 2012
Exclude
As Reported Impact of Foreign
under GAAP Currency Exchange Constant Currency
 
Coalition Revenues
Outdoor & Action Sports $ 5,866,071 $ (117,896 ) $ 5,983,967
Jeanswear 2,789,293 (43,577 ) 2,832,870
Imagewear 1,075,677 (1,230 ) 1,076,907
Sportswear 577,317 - 577,317
Contemporary Brands 445,960 (7,054 ) 453,014
Other   125,537     -     125,537  
 
Total coalition revenues $ 10,879,855   $ (169,757 ) $ 11,049,612  
 
 
Coalition Profit
Outdoor & Action Sports $ 1,019,425 $ (33,263 ) $ 1,052,688
Jeanswear 466,960 (4,148 ) 471,108
Imagewear 145,053 (335 ) 145,388
Sportswear 72,978 - 72,978
Contemporary Brands 49,182 (1,142 ) 50,324
Other   (232 )   -     (232 )
 
Total coalition profit 1,753,366 (38,888 ) 1,792,254
 
Corporate and Other Expenses (241,239 ) - (241,239 )
Interest, net   (90,252 )   -     (90,252 )
 
Income Before Income Taxes $ 1,421,875   $ (38,888 ) $ 1,460,763  
 
 

Constant Currency Financial Information

VF is a global company that reports financial information in U.S. dollars in accordance with generally accepted accounting principles. Foreign currency exchange rate fluctuations affect the amounts reported by VF from translating its foreign revenues and expenses into U.S. dollars. These rate fluctuations can have a significant effect on reported operating results. As a supplement to our reported operating results, we present constant currency financial information, which is a non-GAAP financial measure. We use constant currency information to provide a framework to assess how our businesses performed excluding the effects of changes in foreign currency translation rates. Management believes this information is useful to investors to facilitate comparisons of operating results and better identify trends in our businesses.

 

To calculate coalition revenues and profits on a constant currency basis, operating results for the current year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).

 

These constant currency performance measures should be viewed in addition to, and not in lieu of or superior to, our operating performance measures calculated in accordance with GAAP. The constant currency information presented may not be comparable to similarly titled measures reported by other companies.

VF CORPORATION
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(Unaudited)
(In thousands)
       
 
Three Months Three Months
Ended Operating Ended Operating
December 2012 Margin December 2011   Margin
 
 
Operating Income, as reported under GAAP $ 450,288 14.8% $ 351,359 12.1%
 
Timberland acquisition-related expenses   6,811   6,664
 
Operating Income, as adjusted $ 457,099 15.1% $ 358,023 12.3%
 
 
 
 
Net Income, as reported under GAAP $ 334,168 $ 257,318
 
Timberland acquisition-related expenses   10,226   4,575
 
Net Income, as adjusted $ 344,394 $ 261,893
 
 
 
VF Corporation Timberland VF Corporation Timberland
Three Months Three Months Three Months Three Months
Ended Ended Ended Ended
December 2012 December 2012 December 2011 December 2011
 
Diluted earnings per share, as reported under GAAP $ 2.98 $ 0.50 $ 2.28 $ 0.30
 
Timberland acquisition-related expenses   0.09   0.09   0.04   0.04  
 
Diluted earnings per share, as adjusted $ 3.07 $ 2.32
 
Timberland impact on diluted earnings per share, as adjusted $ 0.59 $ 0.34  
 
Non-GAAP Financial Information

The financial information above has been presented on a GAAP basis and on an adjusted basis which excludes the impact of costs related to the acquisition of The Timberland Company and the gain on the sale of John Varvatos Enterprises, Inc. These adjusted presentations are non-GAAP measures. Management believes these measures provide investors with useful supplemental information regarding VF's underlying business trends and the performance of VF's ongoing operations and are useful for period-over-period comparisons of such operations.

 

Management uses the above financial measures internally in its budgeting and review process and, in some cases, as a factor in determining compensation. While management believes that these non-GAAP financial measures are useful in evaluating the business, this information should be considered as supplemental in nature and should be viewed in addition to, and not in lieu of or superior to, VF's operating performance measures calculated in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures presented by other companies.

 

VF CORPORATION

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(Unaudited)

(In thousands)

 

       

 

 
 
Twelve Months Twelve Months
Ended Operating Ended Operating
December 2012 Margin December 2011 Margin
 
 
Operating Income, as reported under GAAP $ 1,465,267 13.5% $ 1,244,791 13.2%
 
Timberland acquisition-related expenses   30,765     33,490
 
Operating Income, as adjusted $ 1,496,032 13.8% $ 1,278,281 13.5%
 
Timberland profit, excluding acquisition-related expenses   (163,961 )
 
Operating Income, excluding Timberland $ 1,332,071   14.4%
 
 
 
Net Income, as reported under GAAP $ 1,085,999 $ 888,089
 
Timberland acquisition-related expenses 27,927 24,647
 
Gain on sale of John Varvatos Enterprises, Inc.   (35,814 )   -
 
Net Income, as adjusted $ 1,078,112   $ 912,736
 
 
 
VF Corporation Timberland VF Corporation Timberland
Twelve Months Twelve Months Twelve Months Twelve Months
Ended Ended Ended Ended
December 2012 December 2012 December 2011 December 2011
 
Diluted earnings per share, as reported under GAAP $ 9.70 $ 0.87 $ 7.98 $ 0.38
 
Timberland acquisition-related expenses 0.25 0.25 0.22 0.22
 
Gain on sale of John Varvatos Enterprises, Inc.   (0.32 )   -   -   -
 
Diluted earnings per share, as adjusted $ 9.63   $ 8.20
 
Timberland impact on diluted earnings per share, as adjusted $ 1.12 $ 0.60
 
Non-GAAP Financial Information

The financial information above has been presented on a GAAP basis and on an adjusted basis which excludes the impact of costs related to the acquisition of The Timberland Company and the gain on the sale of John Varvatos Enterprises, Inc. These adjusted presentations are non-GAAP measures. Management believes these measures provide investors with useful supplemental information regarding VF's underlying business trends and the performance of VF's ongoing operations and are useful for period-over-period comparisons of such operations.

 

 

Management uses the above financial measures internally in its budgeting and review process and, in some cases, as a factor in determining compensation. While management believes that these non-GAAP financial measures are useful in evaluating the business, this information should be considered as supplemental in nature and should be viewed in addition to, and not in lieu of or superior to, VF's operating performance measures calculated in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures presented by other companies.

 

Contacts

VF Contacts:
Cindy Knoebel, CFA
VP, Corporate Relations
VF Services
212-841-7141 / 336-424-6189
or
Lance Allega, 336-424-6082
Director, Investor Relations
or
Carole Crosslin, 336-424-7836
Director, Corporate Communications

Sharing

Contacts

VF Contacts:
Cindy Knoebel, CFA
VP, Corporate Relations
VF Services
212-841-7141 / 336-424-6189
or
Lance Allega, 336-424-6082
Director, Investor Relations
or
Carole Crosslin, 336-424-7836
Director, Corporate Communications