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VF Reports Record 2012 Fourth Quarter And Full Year Results, And Sets Guidance For Fiscal 2013

Stocks in this article: VFC

(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.

 





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